Exhibit 99.1
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6711 Columbia Gateway Drive, Suite 300
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Columbia, Maryland 21046
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Telephone 443-285-5400
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Facsimile 443-285-7650
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www.copt.com
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NYSE: OFC
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NEWS RELEASE
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FOR IMMEDIATE RELEASE
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Contact:
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Mary Ellen Fowler
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Vice President and Treasurer
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443-285-5450
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maryellen.fowler@copt.com
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CORPORATE
OFFICE PROPERTIES TRUST
REPORTS
FIRST QUARTER 2007 RESULTS
COLUMBIA,
MD May 2, 2007 - Corporate Office Properties Trust (COPT)
(NYSE: OFC) announced today financial and operating results for the quarter
ended March 31, 2007.
Highlights
· Earnings
per Share (“EPS”) diluted of $.03 for the first quarter 2007 compared to $.15
per diluted share for the first quarter 2006, representing an 80% decrease per
share. Included in the first quarter 2007 net income is a $7.9 million increase
in depreciation and amortization associated with real estate operations, as
compared to the first quarter 2006, contributing to the significant decline in
EPS. The acquisition of the Nottingham portfolio generated depreciation and
amortization of $6.3 million, the primary driver of the $7.9 million increase.
· 4.1%
increase in Funds from Operations (“FFO”) per diluted share to $.51, or $28.3
million, for first quarter 2007 from $.49, or $24.4 million, for first quarter
2006. First quarter 2007 was adversely impacted by $1.1 million in expenses
primarily related to unrecoverable snow removal and electric costs.
· $362.5 million acquisition of the Nottingham
portfolio consisting of 56 operating properties with approximately 2.4 million
square feet and 187 acres of land, that can accommodate a minimum of 2 million
square feet of development.
· 935,000
square feet under construction in 9 buildings that were 71.9% leased at March
31, 2007.
· 1.3
million square feet under development in 11 buildings at March 31, 2007.
· 93.0% occupied and 93.7% leased for our
wholly-owned portfolio as of March 31, 2007.
· 60.4%
Diluted FFO payout ratio, 77.4% Diluted Adjusted Funds from Operations (“AFFO”)
payout ratio for the quarter.
· 72.1%
of leases expiring during the quarter were renewed, with a 7.4% increase in
total straight line rent for renewed and retenanted space.
“We are excited about the growth opportunities for 2007. We have fully
integrated the Nottingham acquisition into the Company and are diligently
working to increase NOI significantly as we bring occupancy levels up to our
projected 94% level over the next two years. We are seeing positive leasing
activity which will impact the Company later in the year,” stated
Randall M. Griffin, President and CEO, Corporate Office Properties Trust. “We
expect to place approximately 550,000 square feet of development into service
which will accelerate our growth during the second half of the year,” he added.
Financial
Results
EPS for the
quarter ended March 31, 2007 totaled $.03 per diluted share, or $1.6 million of
net income available to common shareholders, as compared to $.15 per diluted
share, or $6.3 million for the quarter ended March 31, 2006. Included in the first quarter 2007 net income
is a $7.9 million increase in depreciation and amortization associated with
real estate operations, as compared to the first quarter 2006, contributing to
the significant decline in EPS. The acquisition of the Nottingham portfolio
generated depreciation and amortization of $6.3 million, the primary driver of
the $7.9 million increase.
Diluted FFO for
the quarter ended March 31, 2007 totaled $28.3 million, or $.51 per diluted
share, as compared to $24.4 million, or $.49 per diluted share, for the quarter
ended March 31, 2006, representing a 4.1% increase on a per share basis. First
quarter 2007 was adversely impacted by $1.1 million in expenses primarily
related to unrecoverable snow removal and electric costs.
Diluted FFO payout
ratio was 60.4% for first quarter 2007 compared to 56.0% for the comparable
2006 period.
Diluted AFFO for
the quarter ended March 31, 2007 totaled $22.1 million, as compared to $18.9
million for the quarter ended March 31, 2006, representing a 17.0% increase.
The Company’s AFFO
payout ratio was 77.4% for first quarter 2007 compared to 72.3% for the
comparable 2006 period.
Revenues from real
estate operations for the quarter ended March 31, 2007 were $89.7 million, as
compared to revenue for the quarter ended March 31, 2006 of $69.2 million. As of March 31, 2007, the Company had a total
market capitalization of $4.5 billion, with $1.7 billion in debt outstanding,
equating to a 38.5% debt-to-total market capitalization ratio. The Company’s
total quarterly weighted average interest rate was 5.8%. The Company had 78.8%
of the total debt subject to fixed interest rates.
For the first
quarter 2007, EBITDA interest coverage ratio was 2.66x and EBITDA fixed charge
coverage ratio was 2.21x.
Operating Results
At March 31, 2007,
the Company’s wholly-owned portfolio of 226 office properties totaling 17.4
million square feet was 93.0% occupied and 93.7% leased. The weighted average remaining lease term for the
portfolio was 4.8 years and the average rental rate (including tenant
reimbursements) was $20.93 per square foot.
During the quarter, 571,000 square feet were renewed equating to a
72.1% renewal rate, at an average capital cost of $7.98 per square foot. Total
rent on renewed space increased 10.1% on a
straight line basis and 3.1% on a cash basis. The Company achieved a
7.4% increase in total straight line rent and a 1.1% increase in total cash
rent for 780,000 square feet of renewed and retenanted space. The average
capital cost for renewed and retenanted space was $10.06 per square foot.
Same property cash NOI increased by 2.4% for the
quarter compared to the quarter ended March 31, 2006. Our same office property
cash NOI was positively impacted by an increase of $.5 million in termination
fees and improved occupancy and negatively impacted by unrecoverable costs. The
Company’s same property portfolio consists of 157 buildings and represents
75.7% of the total square feet owned as of March 31, 2007.
The Company recognized lease termination fees of $1.7 million for the
quarter, net of write-offs of related straight-line rents and accretion of
intangible assets and liabilities, as compared to $348,000 in the first quarter
of 2006.
Development Activity
At quarter end March 31, the Company’s development pipeline consisted
of:
· Nine buildings under construction totaling
935,000 square feet for a total cost of $212.1 million, that are 71.9% leased.
· Eleven buildings under development totaling 1.3
million square feet at a total projected cost of $260.0 million.
· Four projects under redevelopment totaling
740,000 square feet for a total projected cost of $88.6 million.
The Company’s land inventory (wholly-owned and joint venture) at
quarter end totaled 1,594 acres that can support 14.3 million square feet of
development.
Acquisition Activity
During the quarter, the Company acquired the Nottingham portfolio:
· 56 operating properties containing 2.4 million
square feet that were 84.9% occupied at closing and 187 acres of land with a
minimum of 2.0 million developable square feet for $362.5 million, plus
approximately $1.4 million in transaction costs. The buildings are located in
Maryland in the submarkets of White Marsh, Columbia, BWI, Towson and Hunt
Valley. The total price was funded through $182.4 million in debt assumption
and cash, with the seller receiving $154.9 million in the form of common shares
issued at a deemed value of $49.00 per share and $26.6 million in Series K
Cumulative Redeemable Convertible Preferred Shares with a fixed coupon of 5.6%.
Financing and Capital Transactions
The Company executed the following
transaction during the quarter:
· Assumed $38.0 million
of indebtedness with an average fixed interest rate of 6.03% and an average
term of 8.5 years, in connection with the Nottingham portfolio acquisition.
Additionally, we closed on an $89.1 million variable rate loan which matures in
June 2007 and bears interest at the same rate as the Company’s Revolving Line
of Credit.
Subsequent Events
The Company executed the following
transaction subsequent to quarter end:
· Purchased the remaining
50% interest in a joint venture for $14.0 million which holds title to 132
acres that can support future development of 1.75 million square feet of office
space in Colorado Springs, Colorado. The Company issued 262,165 common units
valued at $47.68 per unit for total consideration of $12.5 million.
Conference Call
The Company will hold an
investor/analyst conference call:
Conference Call and
Webcast Date: Thursday,
May 3, 2007
Time: 4:00 p.m. Eastern Time
Dial In Number: 866-711-8198
Passcode: 85741802
A replay of this
call will be available beginning Thursday, May 3, 2007 at 6:00 p.m. Eastern
Time through Thursday, May 17, 2007 at midnight Eastern Time. To access the
replay, please call 888-286-8010 and use passcode 67566640.
The conference call will also be available via live webcast in the
Investor Relations section of the Company’s website at www.copt.com. A replay
of the conference call will be immediately available via webcast in the
Investor Relations section of the Company’s website.
Definitions
Please refer to our Form 8-K or our website (www.copt.com) for
definitions of certain terms used in this press release. Reconciliations of
GAAP and non-GAAP measurements are included in the attached tables.
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
located primarily in submarkets within the Greater Washington, DC region. As of March 31, 2007, the Company
owned 244 office properties totaling 18.2 million
rentable square feet, which included 18 properties totaling 806,000 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 exwpectations, 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, 2006.