Exhibit 99.1

 

8815 Centre Park Drive, Suite 400
Columbia, Maryland 21045-2272
Telephone 410-730-9092
Facsimile 410-740-1174
www.copt.com
NYSE: OFC

 

 

 

NEWS RELEASE

 

 

FOR IMMEDIATE RELEASE

Contact:
Mary Ellen Fowler
Vice President - Finance & Investor Relations
410-992-7324
maryellen.fowler@copt.com

 

CORPORATE OFFICE PROPERTIES TRUST REPORTS
2005 FOURTH QUARTER AND  YEAR END RESULTS

 

COLUMBIA, MD February 15, 2006 — Corporate Office Properties Trust (NYSE: OFC) announced today financial and operating results for the full year and quarter ended December 31, 2005.

 

Shareholder Return

The Company’s shareholders earned a total return of 25.4% for the year 2005, the third highest among all publicly traded office REITs. For the past five years, the Company’s shareholders earned a total return of 365.5%, the highest five year return among all publicly traded office REITs based on numbers compiled by NAREIT as of December 31, 2005. These return computations include the re-investment of dividends on the ex-dividend date and share price appreciation.

 

2005 Highlights

      16.7% increase in Earnings per Share (“EPS”) diluted to $.63 for year ended 2005 from $.54 per share diluted for the year ended 2004.

 

      6.9% increase in Funds from Operations (“FFO”) per diluted share to $1.86 for the year ended 2005 from $1.74 for 2004.

 

      56.3% Diluted FFO payout ratio, 78.8% Diluted AFFO payout ratio for the year.

 

      $75.3 million in gross equity raised through the issuance of 2.3 million common shares.

 

      66.6% renewal rate on expiring leases for the year, 888,000 square feet renewed with an average capital cost of $3.98 per square foot.

 

      Placed into service 764,000 square feet of development projects, that were 100% leased at December 31, 2005.

 

      $364 million in acquisitions for 3.1 million square feet, including $49 million for land and $31 million for joint venture re-development projects.

 



 

      $95.5 million in dispositions, representing 824,000 square feet, including an 80% interest in the Harrisburg portfolio and a portion of the New Jersey portfolio.

 

      9.8% increase in quarterly common dividend.

 

      94.0% occupied and 95.4% leased for our wholly-owned portfolio as of December 31, 2005.

 

“Our core markets in the Greater Washington, DC region are strong, as evidenced by the 9% and 10% same store NOI growth for the last two quarters, respectively, as well as our 2.1 million square feet of leasing activity for 2005. During 2005, we have taken a number of steps to  position the Company for future growth, including entering two new markets based on our tenant driven focus, more than doubling our land control, and forming a joint venture to redevelop warehouse into office space within our core markets,” stated Randall M. Griffin, President and CEO, Corporate Office Properties Trust.

 

Fourth Quarter 2005 Highlights

      6.7% increase in Earnings per Share (“EPS”) diluted to $.16 for the fourth quarter of 2005 as compared to $.15 per diluted share for the fourth quarter of 2004.

 

      6.7% increase in Funds from Operations (“FFO”) per diluted share to $.48 for the fourth quarter 2005 from $.45 per diluted share for fourth quarter 2004.

 

      $161 million in acquisitions for 25 office buildings totaling 1.4 million square feet.

 

      1.2 million square feet under construction, 42% leased at December 31, 2005.

 

      10% increase in Same Property NOI on a cash basis, representing 115 properties and 77.3% of the portfolio.

 

Financial Results

EPS for the year ended December 31, 2005 totaled $.63 per diluted share and net income available to common shareholders totaled $24.4 million, as compared to $.54 per diluted share, and $18.9 million net income available to common shareholders for the year ended December 31, 2004.

 

For the quarter ended December 31, 2005, EPS totaled $.16 per diluted share and net income available to common shareholders totaled $6.6 million, as compared to $.15 per diluted share and $5.8 million net income available to common shareholders for the quarter ended December 31, 2004.

 

Diluted FFO for the year ended December 31, 2005 totaled $88.8 million, or $1.86 per diluted share, as compared to $76.2 million, or $1.74 per diluted share, for the year ended December 31, 2004, representing a 6.9% increase on a per share basis.

 

The Company’s diluted FFO for the three months ended December 31, 2005 totaled $23.8 million, or $.48 per diluted share, as compared to $20.9 million, or $.45 per diluted share, for the three months ended December 31, 2004, representing a 6.7% increase on a per share basis.

 

Diluted FFO payout ratio was 56.3% for year ended 2005 compared to 55.7% for the comparable 2004 period. The Company’s diluted FFO payout ratio for the three months ended December 31, 2005 was 57.0%, as compared to 55.4% for the comparable 2004 period.

 



 

Diluted AFFO for the year ended December 31, 2005 totaled $63.4 million, as compared to $51.4 million for the year ended December 31, 2004, representing an increase of 23.4%. Diluted AFFO payout ratio was 78.8% for year ended 2005, compared to 82.7% for the comparable 2004 period.

 

Diluted AFFO for the three months ended December 31, 2005 totaled $15.9 million, as compared to $13.2 million for the three months ended December 31, 2004, representing a 20.7% increase. The Company’s diluted AFFO payout ratio for the three months ended December 31, 2005 was 85.3%, as compared to 87.9% for the comparable 2004 period. A reconciliation of non GAAP measures to the comparable GAAP measures are included in the tables that follow the text of this press release.

 

Revenues from real estate operations for the year ended December 31, 2005 were $249.9 million, as compared to the year ended December 31, 2004 of $211.3 million. As of December 31, 2005, the Company had a total market capitalization of over $3.2 billion, with $1.3 billion in debt outstanding, equating to a 41.5% debt-to-total market capitalization ratio. Total Debt to Undepreciated Book Value of Real Estate Assets was 62.6%. The Company’s total quarterly weighted average interest rate was 5.9% and 68% of total debt was subject to fixed interest rates.

 

For the fourth quarter 2005, EBITDA interest coverage ratio was 2.8x, and the EBITDA fixed charge ratio was 2.3x.

 

Operating Results

At December 31, 2005, the Company’s wholly-owned portfolio of 165 office properties totaling 13.7 million square feet, was 94.0% occupied and 95.4% leased. On December 22, 2005, the Company purchased a 21-building portfolio totaling 1.1 million square feet. Without this acquisition, the Company’s wholly-owned portfolio would have been 94.9% occupied and 96.1% leased.

 

The weighted average remaining lease term for the portfolio was 5.0 years and the average rental rate (including tenant reimbursements) was $20.28 per square foot.

 

During 2005, the Company leased 2.1 million square feet including 1.5 million square feet of renewed and retenanted space, 256,000 square feet of previously unoccupied space and 380,000 square feet of new development space.

 

For the year, the Company renewed 888,000 square feet or 66.6% of leases expiring (based on square footage), at an average capital cost of $3.98 per square foot. For the 1.5 million square feet renewed and retenanted during the year, total rent decreased 1.5% on a straight-line basis, as measured from the GAAP straight-line rent in effect preceding the renewal date. Total rent decreased 8.6%, on a cash basis. The average capital cost for the renewed and retenanted space was $8.23 per square foot.

 

For the quarter ended December 2005, the Company renewed 50.6% of leases expiring with total rent increasing 1.7%, as measured from the GAAP straight-line rent in effect preceding the renewal date. Total rent for renewed space, on a cash basis decreased 4.4%. For renewed and retenanted space totaling 219,000 square feet, total rent increased 7.5% on a GAAP basis and increased .4% on a cash basis. The average capital cost for all renewed space was $2.89 per square foot. The average capital cost for renewed and retenanted space was $10.54 per square foot.

 

Same property Cash Net Operating Income increased 10.0% for fourth quarter 2005 as compared to the comparable 2004 period. The Company’s same property portfolio consists of 115 buildings and represents 77.3% of the total square feet owned as of December 31, 2005.

 



 

Development Activity

During the year, the Company placed five buildings into service for a total of 764,000 square feet, that were 100% leased.

 

At the end of the fourth quarter 2005, the Company had nine buildings under construction totaling 1.2 million square feet for a total cost of about $220 million, that are 42% leased.

 

The Company has six buildings under development totaling 722,000 square feet at a total projected cost of $135 million. In addition, the Company has three projects under redevelopment, two of which are owned in joint ventures with a total projected cost of $74.4 million, and the third is a wholly-owned building, Airport Square 7, at a cost of $5.5 million.

 

The Company’s land inventory at year end totaled 532 acres that can support 7.7 million square feet of development. Significant additions to the Company’s wholly-owned land control during the year were 52 acres at Patriot Park that can support up to 560,000 square feet and 27 acres in San Antonio that can support up to 350,000 square feet.

 

The total land inventory includes 199 acres of land controlled through joint ventures that can support 2.8 million square feet of office development. The two primary parcels of land, both added during 2005, include the 56 acres at Arundel Preserve (can support up to 1.6 million square feet) located in the BWI submarket and a 50% undivided interest in 132 acres at InterQuest Park (can support up to 935,000 square feet) located in Colorado Springs, Colorado.

 

Acquisition Activity

For the year, the Company acquired $364 million of property composed of $284 million for 38 wholly-owned buildings with a total of 2.5 million square feet, $31 million in two buildings owned through joint ventures totaling 611,000 square feet, and $49 million in land composed of 173 acres of wholly-owned land that can support 1.8 million square feet of office development and 199 acres owned through joint ventures that can support 2.8 million square feet of office development.

 

During 2005, the Company entered two new markets in line with our tenant expansion strategy: San Antonio with a two building 470,000 square foot facility and Colorado Springs with five buildings totaling 317,000 square feet. In both markets, the Company also added land inventory during the year and subsequent to year end and currently owns 58 acres that can support 725,000 square feet in San Antonio and owns (or controls through a joint venture) interests in 184 acres that can support 1.5 million square feet of development in Colorado Springs.

 



 

Disposition Activity

During the year, the Company sold 824,000 square feet in 19 buildings for $95 million. Three buildings were located in the Company’s New Jersey portfolio and 16 buildings comprised the Harrisburg portfolio that was sold into a joint venture, with the Company retaining a 20% interest.

 

Financing and Capital Transactions

The Company executed the following transactions during the year:

      $75.3 million raised through issuance of 2.3 million common shares.

      $212 million financed under two non recourse loans, both with a ten year term, at an average fixed interest rate of 5.5%.

 

Subsequent Events

The Company executed the following transactions subsequent to year end:

      Placed 304 NBP, a 162,000 square foot fully leased building, into service as of January 1, 2006.

      Acquired a 60,000 square foot building to be redeveloped for $2.6 million located in Colorado Springs, Colorado.

      Acquired a 31 acre land parcel in San Antonio that can support 375,000 square feet for $7.2 million. This parcel is adjacent to the 27 acres and the 470,000 square foot complex that the Company acquired during 2005.

      Disposed of two buildings totaling 142,000 square feet located in Laurel, Maryland for $17 million. These buildings were determined to be non core to the Company’s Baltimore Washington Corridor portfolio.

 

Earnings Guidance

The Company’s 2006 EPS guidance is $.54 – $.61 per diluted share. The 2006 FFO guidance is $1.98 – $2.05 per diluted share. The Company’s first quarter 2006 FFO guidance range is $.48 to $.50 per diluted share. The Company’s first quarter 2006 EPS guidance range is $.13 to $.15 per diluted share. Both FFO and EPS guidance exclude the impact of preferred share redemptions.

 

Company Information

Corporate Office Properties Trust (COPT) is a fully integrated, self-managed real estate investment trust (REIT) that focuses on the ownership, management, leasing, acquisition and development of suburban office properties primarily in select Mid-Atlantic submarkets. The Company is among the largest owners of suburban office properties in the Greater Washington, DC region. The Company currently owns 182 office properties totaling 14.6 million rentable square feet, which includes 18 properties totaling 885,000 rentable square feet held through joint ventures. The Company has implemented a core customer expansion strategy that is built around meeting, through acquisitions and development, the multi-location requirements of the Company’s existing strategic tenants. The Company’s property management services team provides comprehensive property and asset management to company owned properties and select third party clients. The Company’s development and construction services team provides a wide range of development and construction management services for company owned properties, as well as land planning, design/build services, consulting, and merchant development to select third party clients. The Company’s shares are traded on the New York Stock Exchange under the symbol OFC. More information on Corporate Office Properties Trust can be found on the Internet at www.copt.com.

 



 

Forward Looking Information

This press release may contain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company’s current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as “may”, “will”, “should”, “expect”, “estimate” or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Accordingly, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements.

 

Important factors that may affect these expectations, estimates, and projections include, but are not limited to:

 

      the Company’s ability to borrow on  favorable terms;

      general economic and business conditions, which will, among other things, affect office property demand and rents, tenant creditworthiness, interest rates and financing availability;

      adverse changes in the real estate markets including, among other things, increased competition with other companies;

      risk of real estate acquisition and development, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development or operating costs may be greater than anticipated;

      risks of investing through joint venture structures, including risks that the Company’s joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with the Company’s objectives;

      our ability to satisfy and operate effectively under federal income tax rules relating to real estate investment trusts and partnerships;

      governmental actions and initiatives; and

      environmental requirements.

 

The Company undertakes no obligation to update or supplement any forward-looking statements. For further information, please refer to the Company’s filings with the Securities and Exchange Commission, particularly the section entitled “Risk Factors” in Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

 



 

Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)

 

 

 

Three Months Ended
December 31,

 

 

 

2005

 

2004

 

Revenues

 

 

 

 

 

Real estate revenues

 

$

67,024

 

$

57,776

 

Service operations revenues

 

13,889

 

7,715

 

Total revenues

 

80,913

 

65,491

 

Expenses

 

 

 

 

 

Property operating expenses

 

20,087

 

16,876

 

Depreciation and other amortization associated with real estate operations

 

15,604

 

13,668

 

Service operations expenses

 

13,595

 

7,276

 

General and administrative expenses

 

3,774

 

3,467

 

Total operating expenses

 

53,060

 

41,287

 

Operating income

 

27,853

 

24,204

 

Interest expense

 

(15,374

)

(12,483

)

Amortization of deferred financing costs

 

(732

)

(495

)

Income from continuing operations before equity in loss of unconsolidated entities, income taxes and minority interests

 

11,747

 

11,226

 

Equity in loss of unconsolidated entities

 

(88

)

 

Income tax benefit (expense)

 

265

 

(420

)

Income from continuing operations before minority interests

 

11,924

 

10,806

 

Minority interests in income from continuing operations

 

(1,655

)

(1,530

)

Income from continuing operations

 

10,269

 

9,276

 

(Loss) income from discontinued operations, net of minority interests

 

(8

)

150

 

Income before gain on sales of real estate

 

10,261

 

9,426

 

Gain on sales of real estate, net

 

21

 

20

 

Net income

 

10,282

 

9,446

 

Preferred share dividends

 

(3,654

)

(3,654

)

Net income available to common shareholders

 

$

6,628

 

$

5,792

 

 

 

 

 

 

 

Earnings per share “EPS” computation

 

 

 

 

 

Numerator:

 

$

6,628

 

$

5,792

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Weighted average common shares - basic

 

39,297

 

36,296

 

Assumed conversion of dilutive options

 

1,678

 

1,638

 

Weighted average common shares - diluted

 

40,975

 

37,934

 

 

 

 

 

 

 

EPS

 

 

 

 

 

Basic

 

$

0.17

 

$

0.16

 

Diluted

 

$

0.16

 

$

0.15

 

 



 

Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)

 

 

 

Three Months Ended
December 31,

 

 

 

2005

 

2004

 

Net income

 

$

10,282

 

$

9,446

 

Add: Real estate-related depreciation and amortization

 

15,410

 

13,625

 

Add: Depreciation and amortization on unconsolidated real estate entities

 

182

 

 

Less: Depreciation and amortization allocable to minority interests in other consolidated entities

 

(29

)

(30

)

Less: Gain on sales of real estate, excluding development portion

 

(14

)

(24

)

Funds from operations (“FFO”)

 

25,831

 

23,017

 

Add: Minority interests-common units in the Operating Partnership

 

1,520

 

1,418

 

Less: Preferred share dividends

 

(3,654

)

(3,654

)

Funds from Operations - basic (“Basic FFO”)

 

23,697

 

20,781

 

Add: Restricted common share dividends

 

107

 

98

 

Funds from Operations - diluted (“Diluted FFO”)

 

23,804

 

20,879

 

Less: Straight-line rent adjustments

 

(2,292

)

(2,895

)

Less: Recurring capital expenditures

 

(5,226

)

(4,695

)

Less: Amortization of deferred market rental revenue

 

(394

)

(125

)

Adjusted Funds from Operations - diluted (“Diluted AFFO”)

 

$

15,892

 

$

13,164

 

 

 

 

 

 

 

Weighted average shares

 

 

 

 

 

Weighted average common shares

 

39,297

 

36,296

 

Conversion of weighted average common units

 

8,688

 

8,588

 

Weighted average common shares/units - basic FFO per share

 

47,985

 

44,884

 

Assumed conversion of share options

 

1,678

 

1,638

 

Restricted common shares

 

224

 

238

 

Weighted average common shares/units - diluted FFO per share

 

49,887

 

46,760

 

 

 

 

 

 

 

Diluted FFO per common share

 

$

0.48

 

$

0.45

 

Dividends/distributions per common share/unit

 

$

0.28

 

$

0.255

 

Earnings payout ratio

 

167.0

%

160.4

%

Diluted FFO payout ratio

 

57.0

%

55.4

%

Diluted AFFO payout ratio

 

85.3

%

87.9

%

EBITDA interest coverage ratio

 

2.82

x

3.04

x

EBITDA fixed charge coverage ratio

 

2.26

x

2.33

x

 

 

 

 

 

 

Reconciliation of denominators for diluted EPS and diluted FFO per share

 

 

 

 

 

Denominator for diluted EPS

 

40,975

 

37,934

 

Weighted average common units

 

8,688

 

8,588

 

Restricted common shares

 

224

 

238

 

Denominator for diluted FFO per share

 

49,887

 

46,760

 

 



 

Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)

 

 

 

Year Ended
December 31,

 

 

 

2005

 

2004

 

Revenues

 

 

 

 

 

Real estate revenues

 

$

249,911

 

$

211,299

 

Service operations revenues

 

79,234

 

28,903

 

Total revenues

 

329,145

 

240,202

 

Expenses

 

 

 

 

 

Property operating expenses

 

75,258

 

61,738

 

Depreciation and other amortization associated with real estate operations

 

63,063

 

51,180

 

Service operations expenses

 

77,287

 

26,996

 

General and administrative expenses

 

13,534

 

10,938

 

Total operating expenses

 

229,142

 

150,852

 

Operating income

 

100,003

 

89,350

 

Interest expense

 

(56,655

)

(43,600

)

Amortization of deferred financing costs

 

(2,240

)

(2,431

)

Income from continuing operations before equity in loss of unconsolidated entities, income taxes and minority interests

 

41,108

 

43,319

 

Equity in loss of unconsolidated entities

 

(88

)

(88

)

Income tax expense

 

(668

)

(795

)

Income from continuing operations before minority interests

 

40,352

 

42,436

 

Minority interests in income from continuing operations

 

(5,444

)

(5,739

)

Income from continuing operations

 

34,908

 

36,697

 

Income from discontinued operations, net of minority interests

 

3,855

 

448

 

Income before gain (loss) on sales of real estate

 

38,763

 

37,145

 

Gain (loss) on sales of real estate, net

 

268

 

(113

)

Net income

 

39,031

 

37,032

 

Preferred share dividends

 

(14,615

)

(16,329

)

Issuance costs associated with redeemed preferred shares

 

 

(1,813

)

Net income available to common shareholders

 

$

24,416

 

$

18,890

 

 

 

 

 

 

 

Earnings per share “EPS” computation

 

 

 

 

 

Numerator:

 

 

 

 

 

Net income available to common shareholders

 

$

24,416

 

$

18,890

 

Dividends on convertible preferred shares

 

 

21

 

Numerator for diluted EPS

 

$

24,416

 

$

18,911

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Weighted average common shares - basic

 

37,371

 

33,173

 

Assumed conversion of dilutive options

 

1,626

 

1,675

 

Assumed conversion of preferred shares

 

 

134

 

Weighted average common shares - diluted

 

38,997

 

34,982

 

 

 

 

 

 

 

EPS

 

 

 

 

 

Basic

 

$

0.65

 

$

0.57

 

Diluted

 

$

0.63

 

$

0.54

 

 



 

Corporate Office Properties Trust
Summary  Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)

 

 

 

Year Ended
December 31,

 

 

 

2005

 

2004

 

Net income

 

$

39,031

 

$

37,032

 

Add: Real estate-related depreciation and amortization

 

62,850

 

51,371

 

Add: Depreciation and amortization on unconsolidated real estate entities

 

182

 

106

 

Less: Depreciation and amortization allocable to minority interests in other consolidated entities

 

(114

)

(86

)

Less: Gain on sales of real estate, excluding development portion

 

(4,422

)

(95

)

Less: Issuance costs associated with redeemed preferred shares

 

 

(1,813

)

Funds from operations (“FFO”)

 

97,527

 

86,515

 

Add: Minority interests-common units in the Operating Partnership

 

5,889

 

5,659

 

Less: Preferred share dividends

 

(14,615

)

(16,329

)

Funds from Operations - basic (“Basic FFO”)

 

88,801

 

75,845

 

Add: Restricted common share dividends

 

 

382

 

Add: Convertible preferred share dividends

 

 

21

 

Funds from Operations - diluted (“Diluted FFO”)

 

88,801

 

76,248

 

Less: Straight-line rent adjustments

 

(6,763

)

(8,364

)

Less: Recurring capital expenditures

 

(18,198

)

(17,394

)

Less: Amortization of deferred market rental revenue

 

(426

)

(931

)

Add: Issuance costs associated with redeemed preferred shares

 

 

1,813

 

Adjusted Funds from Operations - diluted (“Diluted AFFO”)

 

$

63,414

 

$

51,372

 

 

 

 

 

 

 

Weighted average shares

 

 

 

 

 

Weighted average common shares

 

37,371

 

33,173

 

Conversion of weighted average common units

 

8,702

 

8,726

 

Weighted average common shares/units - basic FFO per share

 

46,073

 

41,899

 

Assumed conversion of share options

 

1,626

 

1,675

 

Assumed conversion of weighted average convertible preferred shares

 

 

134

 

Restricted common shares

 

 

221

 

Weighted average common shares/units - diluted FFO per share

 

47,699

 

43,929

 

 

 

 

 

 

 

Diluted FFO per common share

 

$

1.86

 

$

1.74

 

Dividends/distributions per common share/unit

 

$

1.07

 

$

0.98

 

Earnings payout ratio

 

166.9

%

177.8

%

Diluted FFO payout ratio

 

56.3

%

55.7

%

Diluted AFFO payout ratio

 

78.8

%

82.7

%

 

 

 

 

 

 

Reconciliation of denominators for diluted EPS and diluted FFO per share

 

 

 

 

 

Denominator for diluted EPS

 

38,997

 

34,982

 

Weighted average common units

 

8,702

 

8,726

 

Restricted common shares

 

 

221

 

Denominator for diluted FFO per share

 

47,699

 

43,929

 

 



 

Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)

 

 

 

December 31,
2005

 

December 31,
2004

 

Balance Sheet Data (in thousands) (as of period end):

 

 

 

 

 

Investment in real estate, net of accumulated depreciation

 

$

1,887,867

 

$

1,544,501

 

Total assets

 

2,130,376

 

1,732,026

 

Mortgage and other loans payable

 

1,348,351

 

1,022,688

 

Total liabilities

 

1,442,036

 

1,111,224

 

Minority interests

 

105,827

 

98,878

 

Beneficiaries’ equity

 

582,513

 

521,924

 

 

 

 

 

 

 

Debt to Total Assets

 

63.3

%

59.0

%

Debt to Undepreciated Book Value of Real Estate Assets

 

62.6

%

58.3

%

Debt to Total Market Capitalization

 

41.5

%

40.4

%

 

 

 

 

 

 

Property Data (wholly owned properties)
(as of period ended):

 

 

 

 

 

Number of operating properties owned

 

165

 

 

 

Total net rentable square feet owned (in thousands)

 

13,708

 

 

 

Occupancy

 

94.0

%

 

 

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2005

 

2004

 

2005

 

2004

 

Reconciliation of tenant improvements and incentives, capital improvements and leasing costs for operating properties to recurring capital expenditures

 

 

 

 

 

 

 

 

 

Total tenant improvements and incentives on operating properties

 

$

6,146

 

$

3,455

 

$

30,452

 

$

14,067

 

Total capital improvements on operating properties

 

2,944

 

4,121

 

9,782

 

10,349

 

Total leasing costs on operating properties

 

3,743

 

2,761

 

9,843

 

11,718

 

Less: Nonrecurring tenant improvements and incentives on operating properties

 

(4,872

)

(772

)

(21,505

)

(3,993

)

Less: Nonrecurring capital improvements on operating properties

 

(954

)

(2,834

)

(4,522

)

(7,100

)

Less: Nonrecurring leasing costs incurred on operating properties

 

(1,969

)

(2,036

)

(6,040

)

(7,647

)

Add: Recurring improvements on operating properties held through joint ventures

 

188

 

 

188

 

 

Recurring capital expenditures

 

$

5,226

 

$

4,695

 

$

18,198

 

$

17,394

 

 



 

Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2005

 

2004

 

2005

 

2004

 

Reconciliation of dividends for Earnings Payout Ratio to dividends and distributions for FFO & AFFO Payout Ratio

 

 

 

 

 

 

 

 

 

Common share dividends for earnings payout ratio

 

$

11,069

 

$

9,288

 

$

40,755

 

$

33,579

 

Common unit distributions

 

2,386

 

2,179

 

9,222

 

8,512

 

Common share dividends on restricted shares

 

107

 

98

 

 

382

 

Convertible preferred share dividends

 

 

 

 

21

 

Dividends and distributions for FFO & AFFO payout ratio

 

$

13,562

 

$

11,565

 

$

49,977

 

$

42,494

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income to earnings before interest, income taxes, depreciation and amortization (“EBITDA”)

 

 

 

 

 

 

 

 

 

Net income

 

$

10,282

 

$

9,446

 

 

 

 

 

Interest expense on continuing operations

 

15,374

 

12,483

 

 

 

 

 

Interest expense on discontinued operations

 

 

165

 

 

 

 

 

Income tax (benefit) expense

 

(265

)

420

 

 

 

 

 

Real estate-related depreciation and amortization

 

15,410

 

13,625

 

 

 

 

 

Amortization of deferred financing costs

 

732

 

495

 

 

 

 

 

Other depreciation and amortization

 

195

 

234

 

 

 

 

 

Minority interests

 

1,658

 

1,571

 

 

 

 

 

EBITDA

 

$

43,386

 

$

38,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of interest expense from continuing operations to the denominators for interest coverage-EBITDA and fixed charge coverage-EBITDA

 

 

 

 

 

 

 

 

 

Interest expense from continuing operations

 

$

15,374

 

$

12,483

 

 

 

 

 

Interest expense from discontinued operations

 

 

165

 

 

 

 

 

Denominator for interest coverage-EBITDA

 

15,374

 

12,648

 

 

 

 

 

Preferred share dividends

 

3,654

 

3,654

 

 

 

 

 

Preferred unit distributions

 

165

 

165

 

 

 

 

 

Denominator for fixed charge coverage-EBITDA

 

$

19,193

 

$

16,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of same property net operating income to same property cash net operating income

 

 

 

 

 

 

 

 

 

Same property net operating income

 

$

40,887

 

$

38,630

 

 

 

 

 

Less: Straight-line rent adjustments

 

(1,377

)

(2,880

)

 

 

 

 

Less: Amortization of deferred market rental revenue

 

(217

)

(35

)

 

 

 

 

Same property cash net operating income

 

$

39,293

 

$

35,715

 

 

 

 

 

 



 

Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)

 

 

 

December 31,
2005

 

December 31,
2004

 

Reconciliation of denominator for debt to total assets to denominator for debt to undepreciated book value of real estate assets

 

 

 

 

 

Denominator for debt to total assets

 

$

2,130,376

 

$

1,732,026

 

Assets other than assets included in investment in real estate

 

(242,509

)

(187,525

)

Accumulated depreciation on real estate assets

 

174,935

 

141,716

 

Intangible assets on real estate acquisitions, net

 

90,984

 

67,560

 

Denominator for debt to undepreciated book value of real estate assets

 

$

2,153,786

 

$

1,753,777

 

 

 

 

Year Ended
December 31,
2004

 

Reconciliation of numerators for diluted EPS and diluted FFO as reported to numerators for diluted EPS and diluted FFO excluding issuance costs associated with redeemed preferred shares

 

 

 

Numerator for diluted EPS, as reported

 

$

18,911

 

Add: Issuance costs associated with redeemed preferred shares

 

1,813

 

Numerator for diluted EPS, as adjusted

 

$

20,724

 

 

 

 

 

Numerator for diluted FFO, as reported

 

$

76,248

 

Add: Issuance costs associated with redeemed preferred shares

 

1,813

 

Numerator for diluted FFO, as adjusted

 

$

78,061

 

 

 

 

Three Months Ending
March 31, 2006

 

Year Ending
December 31, 2006

 

 

 

Low

 

High

 

Low

 

High

 

Reconciliation of projected EPS-diluted to projected diluted FFO per share

 

 

 

 

 

 

 

 

 

Reconciliation of numerators

 

 

 

 

 

 

 

 

 

Numerator for projected EPS-diluted

 

$

5,500

 

$

6,300

 

$

23,400

 

$

26,400

 

Gain on sales of real estate, excluding development portion

 

(2,400

)

(2,400

)

(2,400

)

(2,400

)

Real estate-related depreciation and amortization

 

19,448

 

19,448

 

76,880

 

76,880

 

Minority interests-common units

 

1,234

 

1,414

 

4,998

 

5,639

 

Numerator for projected diluted FFO per share

 

$

23,782

 

$

24,762

 

$

102,878

 

$

106,519

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of denominators

 

 

 

 

 

 

 

 

 

Denominator for projected EPS-diluted

 

41,331

 

41,331

 

43,481

 

43,481

 

Weighted average common units

 

8,523

 

8,523

 

8,523

 

8,523

 

Denominator for projected diluted FFO per share

 

49,854

 

49,854

 

52,004

 

52,004

 

 

 

 

 

 

 

 

 

 

 

EPS - diluted

 

$

0.13

 

$

0.15

 

$

0.54

 

$

0.61

 

FFO per share - diluted

 

$

0.48

 

$

0.50

 

$

1.98

 

$

2.05

 

 

This projection excludes any impact on earnings per share - diluted and funds from operations - diluted from the write-off of issuance costs associated with the potential redemptions of our Series E & F Preferred Shares.

 



 

Top Twenty Office Tenants of Wholly Owned Properties as of December 31, 2005
(Dollars and square feet in thousands)

 

Tenant

 

Number of
Leases

 

Total
Occupied
Square Feet

 

Percentage of
Total
Occupied
Square Feet

 

Total
Annualized
Rental
Revenue (1) (6)

 

Percentage
of Total
Annualized Rental
Revenue

 

Weighted
Average
Remaining
Lease Term (2)

 

United States of America (3)

 

43

 

2,037,616

 

15.8

%

$

39,589

 

15.2

%

6.2

 

Booz Allen Hamilton, Inc.

 

11

 

534,632

 

4.2

%

13,052

 

5.0

%

7.0

 

Northrop Grumman Corporation

 

15

 

532,582

 

4.1

%

11,755

 

4.5

%

3.2

 

Computer Sciences Corporation (4)

 

5

 

454,902

 

3.5

%

10,701

 

4.1

%

5.4

 

L-3 Communications Titan Corporation (4)

 

5

 

239,153

 

1.9

%

8,849

 

3.4

%

7.6

 

Unisys (5)

 

3

 

741,284

 

5.8

%

8,060

 

3.1

%

3.5

 

AT&T Corporation (4)

 

8

 

302,810

 

2.4

%

7,055

 

2.7

%

2.8

 

General Dynamics Corporation

 

9

 

278,239

 

2.2

%

6,765

 

2.6

%

3.0

 

The Aerospace Corporation

 

2

 

221,785

 

1.7

%

5,811

 

2.2

%

8.9

 

Wachovia Bank

 

4

 

183,641

 

1.4

%

5,523

 

2.1

%

12.6

 

The Boeing Company (4)

 

5

 

162,279

 

1.3

%

4,208

 

1.6

%

3.2

 

Ciena Corporation

 

3

 

221,609

 

1.7

%

3,333

 

1.3

%

2.4

 

VeriSign, Inc.

 

1

 

99,121

 

0.8

%

3,272

 

1.3

%

8.6

 

Magellan Health Services, Inc.

 

2

 

142,199

 

1.1

%

2,867

 

1.1

%

5.6

 

PricewaterhouseCoopers

 

1

 

97,638

 

0.8

%

2,720

 

1.0

%

0.2

 

Lockheed Martin Corporation

 

6

 

159,677

 

1.2

%

2,709

 

1.0

%

3.4

 

Johns Hopkins University (4)

 

7

 

106,473

 

0.8

%

2,609

 

1.0

%

1.7

 

Merck & Co., Inc. (Unisys) (5)

 

1

 

219,065

 

1.7

%

2,419

 

0.9

%

3.5

 

Wyle Laboratories, Inc.

 

4

 

174,792

 

1.4

%

2,348

 

0.9

%

6.6

 

Carefirst, Inc. and Subsidiaries (4)

 

3

 

94,223

 

0.7

%

2,318

 

0.9

%

1.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Top 20 Office Tenants

 

138

 

7,003,720

 

54.4

%

145,961

 

55.9

%

5.5

 

All remaining tenants

 

526

 

5,878,369

 

45.6

%

115,276

 

44.1

%

4.4

 

Total/Weighted Average

 

664

 

12,882,089

 

100.0

%

$

261,236

 

100.0

%

5.0

 

 


(1)   Total Annualized Rental Revenue is the monthly contractual base rent as of December 31, 2005 multiplied by 12 plus the estimated annualized expense reimbursements under existing office leases.

(2)   The weighting of the lease term was computed using Total Rental Revenue.

(3)   Many of our government leases are subject to early termination provisions which are customary to government leases.  The weighted average remaining lease term was computed assuming no exercise of such early termination rights.

(4)   Includes affiliated organizations or agencies.

(5)   Merck & Co., Inc. subleases 219,065 rentable square feet from Unisys’ 960,349 leased rentable square feet.

(6)   Order of tenants is based on Annualized Rent.