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 STRONG 2008 YEAR END RESULTS
COLUMBIA, MD February 11, 2009 — Corporate
Office Properties Trust (COPT) (NYSE: OFC) announced today financial and operating
results for the full year and quarter ended December 31, 2008.
Shareholder
Return
The Company’s
shareholders earned a total return of 2% for the year 2008, the highest among
all publicly traded office REITs and the ninth highest among all equity REITs.
For the past ten years, the Company’s shareholders earned a total return of
648%, the highest ten year return among all equity REITs based on numbers
compiled by NAREIT as of December 31, 2008.
2008 Highlights
· 18%
increase in Diluted Funds from Operations (“Diluted FFO”) per share to $2.64
for the year ended 2008 from $2.24 for 2007. Included in the 2008 Diluted FFO
was a $10.4 million gain recognized for the repurchase of a $37.5 million
aggregate principal amount of 3.5% Exchangeable Senior Notes. Excluding this
gain, 2008 Diluted FFO per share would have been $2.46, representing a year
over year increase of 10%.
· 123% increase in diluted earnings per
share (“Diluted EPS”) to $.87 for the year ended 2008 as compared to $.39 per
diluted share for the year ended 2007. Included in 2008 net income was a $10.4
million gain recognized for the repurchase of a $37.5 million aggregate
principal amount of 3.5% Exchangeable Senior Notes. Excluding this gain, 2008
net income would have been $.69 per share, representing a year over year
increase of 77%.
· 23% increase in Adjusted Funds from
Operations (“AFFO”) diluted to $111.8 million for the year ended 2008 as
compared to $90.8 million for the year ended 2007.
· 55%
Diluted FFO payout ratio and 74% Diluted AFFO payout ratio for the year.
· 524,000
square feet in 9 development properties placed into service, with 2 of the
properties containing an aggregate of 89,000 square feet placed into service
during 2007. The space placed in service in these properties was 87.5% leased
at December 31, 2008.
· 642,000
square feet of space under construction and development leased.
· 93.2%
occupied and 93.7% leased for our wholly-owned portfolio as of December 31,
2008.
· $139.2 million of net proceeds raised through
the issuance of 3.7 million common shares at a public offering price of $39.00
per share.
· 78%
renewal rate on expiring leases for the year, 1.9 million square feet renewed
with an average capital cost of $7.12 per square foot.
· 4%
increase in same office property cash NOI for the year, excluding the effect of
a $2.3 million reduction in lease termination fees. Including the effect of
lower lease termination fees, same office property cash NOI increased 3% for
the year. The Company’s same office portfolio for the year ended December 31,
2008 represents 80% of the rentable square feet of its consolidated portfolio
and consists of 162 properties.
· 10%
increase of quarterly common dividend in September 2008.
“We had excellent FFO growth in 2008
and are well positioned for continued growth in 2009. We have conservatively planned for a recession in our guidance,” stated
Randall M. Griffin, President and Chief Executive Officer, Corporate Office
Properties Trust. “The Company is fortunate to begin 2009 with strong financial
flexibility, a healthy capital position and a development pipeline, totally
concentrated in the U.S. Government and Defense Information Technology sector
where we continue to see strong demand,” he stated.
Financial Results
Revenues from real estate operations for the
year ended December 31, 2008 were $399.6 million, as compared to the year
ended December 31, 2007 of $365.9 million.
As of December 31, 2008, the Company had
a total market capitalization of $3.9 billion, with $1.9 billion in debt
outstanding, equating to a 48% debt-to-total market capitalization ratio.
As of December 31, 2008, the Company’s
weighted average interest rate was 5% and the Company had 74% of the total debt
subject to fixed interest rates.
For the fourth quarter 2008, the Company’s
EBITDA to interest expense coverage ratio was 3.7x, and the EBITDA fixed charge
coverage ratio was 3.1x.
Reconciliations of
non-GAAP measures to the most directly comparable GAAP measures are included in
the tables that follow the text of this press release.
Operating Results
At December 31, 2008, the Company’s
wholly-owned portfolio of 238 office properties totaled 18.5 million square
feet. The weighted average remaining lease term for the portfolio was 4.8 years
and the average rental rate (including tenant reimbursements) was $22.40 per
square foot.
For the year, 1.9 million square feet was
renewed equating to a 78% renewal rate, at an average committed cost of $7.12
per square foot. Total rent on renewed space increased 16% on a straight-line
basis, as measured from the straight-line rent in effect preceding the renewal
date and increased 6% on a cash basis. For renewed and retenanted space of 2.3
million square feet, total straight-line rent increased 12% and total rent on a
cash basis increased 3%. The average committed cost for renewed and retenanted
space was $9.25 per square foot.
For the quarter ended December 31, 2008,
315,000 square feet was renewed equating to a 79% renewal rate, at an average
committed cost of $10.38 per square foot. Total rent on renewed space increased
5% on a straight-line basis, as measured from the straight-line rent in effect
preceding the renewal date and decreased 3% on a cash basis. For renewed and
retenanted space of 347,000 square feet, total straight-line rent increased 5%
and total rent on a cash basis decreased 3%. The average committed cost for
renewed and retenanted space was $11.08 per square foot.
The Company recognized lease termination fees
of $481,000, net of write-offs of related straight-line rents and write-off of
previously unamortized deferred market revenue for the year ended December 31,
2008, as compared to $4.1 million for the year ended December 31, 2007,
representing a decrease of 88%.
For the fourth quarter 2008, the Company
recognized lease termination fees of $183,000, net of write-offs of related
straight-line rents and accretion of intangible assets and liabilities, as
compared to $578,000 in the fourth quarter 2007, representing a decrease of
68%.
During 2008, the Company signed leases for
375,000 square feet of space at the Unisys Campus in Blue Bell, Pennsylvania.
Included in this total are the following:
· a new lease with Merck, Inc. to continue
occupancy of the entire 219,000 square foot property located at 785 Jolly Road.
· a renewal of Unisys Corporation for 156,000
square feet representing 75% of the property located at 760 Jolly Road.
Development Activity
At December 31, 2008, the Company had
2.3 million square feet under construction, development and redevelopment for a
total projected cost of $464.9 million.
The Company’s land inventory (wholly-owned
and joint venture) at December 31, 2008 totaled 1,885 acres that can
support 17.0 million square feet of development.
The Company completed the formation of M
Square Associates, LLC, a joint venture in which the Company holds a 45%
economic interest, located adjacent to the University of Maryland campus in
College Park, Maryland. The venture will develop, ground lease and manage the
office buildings totaling approximately 750,000 square feet, including 222,000
square feet under construction at December 31, 2008 that is 77% leased.
Acquisition Activity
During the year, the Company
acquired 3 buildings totaling 247,000 square feet for $40.5
million.
Included
in these totals, are the following assets:
· 124,000 square foot property for $23.2
million, located in the Colorado Springs Airport Business Park, known as
Cresterra, at 3535 Northrop Grumman Point in Colorado Springs, Colorado, 100%
leased long term to Northrop Grumman Corporation.
· 123,000 square feet in two properties for
$17.3 million, located at 1560 Cable Ranch Road, known collectively as 151
Technology Center in San Antonio, Texas, 100% leased long term to Sears, Air
Force Federal Credit Union and AFNI.
Disposition Activity
During the year, the Company sold 223,000
square feet in 3 buildings for $25.3 million and realized gains of $2.6
million. The buildings were located in the Company’s New Jersey and Baltimore
County submarkets.
Financing and Capital Transactions
The Company executed the following
transactions during the year:
· Closed on a $221.4 million loan requiring
interest only payments for the term at variable rate of LIBOR plus 225 basis
points. The loan has a four year term with an option to extend by an additional
year.
· Closed
on a $225.0 million construction loan facility that will be used to fund most
of the Company’s construction costs over the next several years. The facility
has a three year term with a one year extension option, and requires interest
only payments throughout the term.
· Repurchased
a $37.5 million aggregate principal amount in the Company’s 3.5% Exchangeable
Senior Notes for $26.7 million, recognizing a gain of $10.4 million during the
fourth quarter 2008.
Subsequent Events
The Company executed the
following transactions subsequent to quarter end:
· 54,000
square feet of the 82,000 square foot property to be constructed at North Gate
Business Park in Aberdeen, Maryland was leased long-term to The MITRE
Corporation.
· 67,000
square feet of the 175,000 square foot property located at 2900 Towerview Road
in Herndon, Virginia was leased long-term to Qwest Corporation, bringing the
property to 100% leased.
Earnings Guidance
The Company revised its
2009 EPS guidance from a range of $.77 to $.85 (adjusted for the change in
accounting for interest on convertible debt effective January 1, 2009) to
a range of $.73 to $.83 per diluted share.
The Company revised its
2009 FFO per share guidance from a range of $2.52 to $2.60 to a range of $2.48
to $2.58, representing growth of 4% to 8% compared to 2008 diluted FFO per
share, as adjusted, of $2.39 (which includes a reduction of $.07 per share for
the change in accounting for interest on convertible debt effective January 1,
2009).
Conference Call
The Company will hold an
investor/analyst conference call:
Conference Call (within the United States)
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Date:
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Thursday, February 12, 2009
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Time:
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11:00 a.m. Eastern Time
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Telephone Number:
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888-679-8018
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Conference Call (outside the United States)
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Date:
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Thursday, February 12, 2009
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Time:
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11:00 a.m. Eastern Time
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Telephone Number:
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617-213-4845
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Passcode:
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33600894
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Please use the following link to pre-register and view important
information about this conference call. Pre-registering is not mandatory but is
recommended as it will provide you immediate entry into the call and will
facilitate the timely start of the conference. Pre-registration only takes a
few moments and you may pre-register at anytime, including up to and after the
call start time. To pre-register, please click on the below link:
https://www.theconferencingservice.com/prereg/key.process?key=P8Y7M99DB
You may also pre-register in the Investor Relations section of the
Company’s website at www.copt.com. Alternatively, you may be placed into the
call by an operator by calling the number provided above at least 5 to 10
minutes before the start of the call. A replay of this call will be available
beginning Thursday, February 12 at 3:00 p.m. Eastern Time through
Thursday, February 26 at midnight Eastern Time. To access the replay
within in the United States, please call 888-286-8010 and use passcode
41186431. To access the replay outside the United States, please call
617-801-6888 and use passcode 41186431.
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 non-GAAP measures to the most directly comparable
GAAP measures are included in the attached tables.
Company Information
Corporate Office Properties Trust (COPT) (NYSE: OFC) is a specialty
office real estate investment trust (REIT) that focuses on strategic customer
relationships and specialized tenant requirements in the U.S. Government, Defense
Information Technology and Data sectors. The Company acquires, develops,
manages and leases properties which are typically concentrated in large office
parks primarily located adjacent to government demand drivers and/or in growth
corridors. As of December 31, 2008, the Company owned 256 office and data
properties totaling 19.2 million
rentable square feet, which includes 18 properties totaling 769,000 square feet
held through joint ventures. The Company’s portfolio primarily consists of
technically sophisticated buildings in visually appealing settings that are
environmentally sensitive, sustainable and meet unique customer requirements.
More information on COPT can be found 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, 2007.
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
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Three Months Ended
December 31,
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2008
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2007
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Revenues
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Real estate revenues
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$
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103,599
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$
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94,352
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Service operations revenues
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65,345
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8,498
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Total revenues
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168,944
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102,850
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Expenses
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Property operating expenses
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36,786
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31,090
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Depreciation and other amortization
associated with real estate operations
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27,290
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25,889
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Service operations expenses
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64,052
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8,330
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General and administrative expenses
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7,257
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5,758
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Total operating expenses
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135,385
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71,067
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Operating income
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33,559
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31,783
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Interest expense
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(20,512
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)
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(21,689
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)
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Interest and other income
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1,146
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215
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Gain on sales of non-real estate
investments
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10,376
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—
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Income from continuing operations before
equity in income (loss) of unconsolidated entities, income taxes and minority
interests
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24,569
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10,309
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Equity in income (loss) of unconsolidated
entities
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20
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(27
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)
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Income tax expense
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(99
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)
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(89
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Income from continuing operations before
minority interests
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24,490
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10,193
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Minority interests in income from
continuing operations
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(3,019
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)
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(1,049
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)
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Income from continuing operations
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21,471
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9,144
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Income from discontinued operations, net
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—
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424
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Income before gain on sales of real estate
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21,471
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9,568
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Gain on sales of real estate, net
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—
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361
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Net income
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21,471
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9,929
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Preferred share dividends
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(4,026
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)
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(4,025
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)
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Net income available to common shareholders
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$
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17,445
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$
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5,904
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Earnings per share “EPS” computation
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Numerator
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$
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17,445
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$
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5,904
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Denominator:
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Weighted average common shares - basic
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51,120
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46,947
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Dilutive effect of share-based compensation
awards
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640
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914
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Weighted average common shares - diluted
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51,760
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47,861
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EPS
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Basic
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$
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0.34
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$
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0.13
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Diluted
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$
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0.34
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$
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0.12
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Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
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Three Months Ended
December 31,
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2008
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2007
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Net income
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$
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21,471
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$
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9,929
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Add: Real estate-related depreciation and
amortization
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27,290
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26,607
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Add: Depreciation and amortization on
unconsolidated real estate entities
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159
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163
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Less: Depreciation and amortization
allocable to minority interests in other consolidated entities
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(72
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)
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(51
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Gain on sales of real estate, excluding
development portion
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—
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(1,049
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)
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Funds from operations (“FFO”)
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48,848
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35,599
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Add: Minority interests-common units in the
Operating Partnership
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2,814
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1,258
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Less: Preferred share dividends
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(4,026
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)
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(4,025
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Basis and diluted funds from operations
(“Basic and Diluted FFO”)
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47,636
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32,832
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Less: Straight-line rent adjustments
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(1,927
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)
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(2,680
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)
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Less: Recurring capital expenditures
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(8,682
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)
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(6,504
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)
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Less: Amortization of deferred market
rental revenue
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(606
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)
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(416
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)
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Diluted adjusted funds from operations
(“Diluted AFFO”)
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$
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36,421
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$
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23,232
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|
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Weighted average shares
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|
|
|
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Weighted average common shares
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51,120
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46,947
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|
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Conversion of weighted average common units
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|
7,993
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8,167
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Weighted average common shares/units -
basic FFO per share
|
|
59,113
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|
55,114
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Dilutive effect of share-based compensation
awards
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|
640
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914
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|
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Weighted average common shares/units -
diluted FFO per share
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|
59,753
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|
56,028
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Diluted FFO per share
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$
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0.80
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$
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0.59
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Dividends/distributions per common
share/unit
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$
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0.3725
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$
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0.3400
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Earnings payout ratio
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110.5
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%
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272.6
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%
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Diluted FFO payout ratio
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46.7
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%
|
57.5
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%
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Diluted AFFO payout ratio
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61.0
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%
|
81.2
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%
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EBITDA interest coverage ratio
|
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3.74
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x
|
2.95
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x
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EBITDA fixed charge coverage ratio
|
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3.08
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x
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2.45
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x
|
|
|
|
|
|
|
|
|
Reconciliation of denominators for diluted
EPS and diluted FFO per share
|
|
|
|
|
|
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Denominator for diluted EPS
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|
51,760
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|
47,861
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|
|
Weighted average common units
|
|
7,993
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|
8,167
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Denominator for diluted FFO per share
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|
59,753
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|
56,028
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|
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
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|
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Year Ended
December 31,
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|
|
|
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2008
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|
2007
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|
|
Revenues
|
|
|
|
|
|
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Real estate revenues
|
|
$
|
399,633
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|
$
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365,914
|
|
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Service operations revenues
|
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188,385
|
|
41,225
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|
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Total revenues
|
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588,018
|
|
407,139
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|
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Expenses
|
|
|
|
|
|
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Property operating expenses
|
|
141,139
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|
123,258
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|
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Depreciation and other amortization
associated with real estate operations
|
|
102,720
|
|
104,700
|
|
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Service operations expenses
|
|
184,142
|
|
39,793
|
|
|
General and administrative expenses
|
|
25,329
|
|
21,704
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|
|
Total operating expenses
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453,330
|
|
289,455
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|
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Operating income
|
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134,688
|
|
117,684
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|
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Interest expense
|
|
(83,646
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)
|
(85,576
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)
|
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Interest and other income
|
|
2,070
|
|
3,030
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|
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Gain on early extinguishment of debt
|
|
10,376
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—
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|
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Income from continuing operations before
equity in loss of unconsolidated entities, income taxes and minority
interests
|
|
63,488
|
|
35,138
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|
|
Equity in loss of unconsolidated entities
|
|
(147
|
)
|
(224
|
)
|
|
Income tax expense
|
|
(201
|
)
|
(569
|
)
|
|
Income from continuing operations before
minority interests
|
|
63,140
|
|
34,345
|
|
|
Minority interests in income from
continuing operations
|
|
(7,488
|
)
|
(3,331
|
)
|
|
Income from continuing operations
|
|
55,652
|
|
31,014
|
|
|
Income from discontinued operations, net
|
|
2,179
|
|
2,210
|
|
|
Income before gain on sales of real estate
|
|
57,831
|
|
33,224
|
|
|
Gain on sales of real estate, net
|
|
837
|
|
1,560
|
|
|
Net income
|
|
58,668
|
|
34,784
|
|
|
Preferred share dividends
|
|
(16,102
|
)
|
(16,068
|
)
|
|
Net income available to common shareholders
|
|
$
|
42,566
|
|
$
|
18,716
|
|
|
|
|
|
|
|
|
|
Earnings per share “EPS” computation
|
|
|
|
|
|
|
Numerator
|
|
$
|
42,566
|
|
$
|
18,716
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
Weighted average common shares - basic
|
|
48,132
|
|
46,527
|
|
|
Dilutive effect of share-based compensation
awards
|
|
733
|
|
1,103
|
|
|
Weighted average common shares - diluted
|
|
48,865
|
|
47,630
|
|
|
|
|
|
|
|
|
|
EPS
|
|
|
|
|
|
|
Basic
|
|
$
|
0.88
|
|
$
|
0.40
|
|
|
Diluted
|
|
$
|
0.87
|
|
$
|
0.39
|
|
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
|
|
|
Year Ended
December 31,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
58,668
|
|
$
|
34,784
|
|
|
Add: Real estate-related depreciation and
amortization
|
|
102,772
|
|
106,260
|
|
|
Add: Depreciation and amortization on
unconsolidated real estate entities
|
|
648
|
|
666
|
|
|
Less: Depreciation and amortization
allocable to minority interests in other consolidated entities
|
|
(270
|
)
|
(188
|
)
|
|
Gain on sales of real estate, excluding
development portion
|
|
(2,630
|
)
|
(3,827
|
)
|
|
FFO
|
|
159,188
|
|
137,695
|
|
|
Add: Minority interests-common units in the
Operating Partnership
|
|
7,315
|
|
3,682
|
|
|
Less: Preferred share dividends
|
|
(16,102
|
)
|
(16,068
|
)
|
|
Basic and Diluted FFO
|
|
150,401
|
|
125,309
|
|
|
Less: Straight-line rent adjustments
|
|
(10,211
|
)
|
(11,722
|
)
|
|
Less: Recurring capital expenditures
|
|
(26,293
|
)
|
(20,835
|
)
|
|
Less: Amortization of deferred market
rental revenue
|
|
(2,064
|
)
|
(1,985
|
)
|
|
Diluted AFFO
|
|
$
|
111,833
|
|
$
|
90,767
|
|
|
|
|
|
|
|
|
|
Weighted average shares
|
|
|
|
|
|
|
Weighted average common shares
|
|
48,132
|
|
46,527
|
|
|
Conversion of weighted average common units
|
|
8,107
|
|
8,296
|
|
|
Weighted average common shares/units -
basic FFO per share
|
|
56,239
|
|
54,823
|
|
|
Dilutive effect of share-based compensation
awards
|
|
733
|
|
1,103
|
|
|
Weighted average common shares/units -
diluted FFO per share
|
|
56,972
|
|
55,926
|
|
|
|
|
|
|
|
|
|
Diluted FFO per share
|
|
$
|
2.64
|
|
$
|
2.24
|
|
|
Dividends/distributions per common
share/unit
|
|
$
|
1.425
|
|
$
|
1.300
|
|
|
Earnings payout ratio
|
|
166.4
|
%
|
327.7
|
%
|
|
Diluted FFO payout ratio
|
|
54.8
|
%
|
57.5
|
%
|
|
Diluted AFFO payout ratio
|
|
73.6
|
%
|
79.3
|
%
|
|
EBITDA interest coverage ratio
|
|
3.21
|
x
|
2.82
|
x
|
|
EBITDA fixed charge coverage ratio
|
|
2.65
|
x
|
2.35
|
x
|
|
|
|
|
|
|
|
|
Reconciliation of denominators for diluted
EPS and diluted FFO per share
|
|
|
|
|
|
|
Denominator for diluted EPS
|
|
48,865
|
|
47,630
|
|
|
Weighted average common units
|
|
8,107
|
|
8,296
|
|
|
Denominator for diluted FFO per share
|
|
56,972
|
|
55,926
|
|
Corporate Office Properties
Trust
Summary Financial Data
(unaudited)
(Dollars and shares in
thousands, except per share data)
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
Balance Sheet Data (in thousands) (as of period
end)
|
|
|
|
|
|
|
|
|
|
|
Investment in real estate, net of accumulated depreciation
|
|
$
|
2,776,889
|
|
$
|
2,603,939
|
|
|
|
|
|
|
Total assets
|
|
3,112,867
|
|
2,931,853
|
|
|
|
|
|
|
Debt
|
|
1,866,623
|
|
1,825,842
|
|
|
|
|
|
|
Total liabilities
|
|
2,041,688
|
|
1,979,116
|
|
|
|
|
|
|
Minority interests
|
|
137,865
|
|
130,095
|
|
|
|
|
|
|
Beneficiaries’ equity
|
|
933,314
|
|
822,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt to total assets
|
|
60.0
|
%
|
62.3
|
%
|
|
|
|
|
|
Debt to undepreciated book value of real estate assets
|
|
58.1
|
%
|
60.8
|
%
|
|
|
|
|
|
Debt to total market capitalization
|
|
47.6
|
%
|
48.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Data (wholly owned properties) (as of
period end)
|
|
|
|
|
|
|
|
|
|
|
Number of operating properties owned
|
|
238
|
|
228
|
|
|
|
|
|
|
Total net rentable square feet owned (in thousands)
|
|
18,462
|
|
17,832
|
|
|
|
|
|
|
Occupancy
|
|
93.2
|
%
|
92.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
3,112,867
|
|
$
|
2,931,853
|
|
|
|
|
|
|
Assets other than assets included in investment in real estate
|
|
(335,978
|
)
|
(327,914
|
)
|
|
|
|
|
|
Accumulated depreciation on real estate assets
|
|
343,110
|
|
288,747
|
|
|
|
|
|
|
Intangible assets on real estate acquisitions, net
|
|
91,848
|
|
108,661
|
|
|
|
|
|
|
Denominator for debt to undepreciated book value of real estate
assets
|
|
$
|
3,211,847
|
|
$
|
3,001,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
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
|
|
$
|
5,472
|
|
$
|
2,692
|
|
$
|
20,355
|
|
$
|
21,487
|
|
|
Total capital improvements on operating properties
|
|
4,434
|
|
4,748
|
|
11,261
|
|
11,230
|
|
|
Total leasing costs on operating properties
|
|
1,269
|
|
1,850
|
|
4,033
|
|
7,562
|
|
|
Less: Nonrecurring tenant improvements and incentives on operating
properties
|
|
(1,615
|
)
|
(811
|
)
|
(5,692
|
)
|
(12,192
|
)
|
|
Less: Nonrecurring capital improvements on operating properties
|
|
(836
|
)
|
(1,442
|
)
|
(3,503
|
)
|
(4,494
|
)
|
|
Less: Nonrecurring leasing costs incurred on operating properties
|
|
(49
|
)
|
(575
|
)
|
(318
|
)
|
(2,856
|
)
|
|
Add: Recurring improvements on operating properties held through
joint ventures
|
|
7
|
|
42
|
|
157
|
|
98
|
|
|
Recurring capital expenditures
|
|
$
|
8,682
|
|
$
|
6,504
|
|
$
|
26,293
|
|
$
|
20,835
|
|
Corporate
Office Properties Trust
Summary
Financial Data
(unaudited)
(Dollars
in thousands)
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
Reconciliation of dividends for earnings
payout ratio to dividends and distributions for FFO & AFFO payout
ratio
|
|
|
|
|
|
|
|
|
|
|
Common share dividends for earnings payout
ratio
|
|
$
|
19,283
|
|
$
|
16,097
|
|
$
|
70,836
|
|
$
|
61,331
|
|
|
Common unit distributions
|
|
2,946
|
|
2,777
|
|
11,510
|
|
10,682
|
|
|
Dividends and distributions for
FFO & AFFO payout ratio
|
|
$
|
22,229
|
|
$
|
18,874
|
|
$
|
82,346
|
|
$
|
72,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of diluted AFFO and
numerators for diluted EPS and diluted FFO, as reported, to diluted AFFO and
numerators for diluted EPS and diluted FFO excluding gain on early extinguishment
of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted EPS, as reported
|
|
$
|
17,445
|
|
$
|
5,904
|
|
$
|
42,566
|
|
$
|
18,716
|
|
|
Less: Gain on early extinguishment of debt
|
|
(10,376
|
)
|
—
|
|
(10,376
|
)
|
—
|
|
|
Add: Minority interests share of gain on
early extinguishment of debt
|
|
1,438
|
|
—
|
|
1,438
|
|
—
|
|
|
Numerator for diluted EPS, as adjusted
|
|
$
|
8,507
|
|
$
|
5,904
|
|
$
|
33,628
|
|
$
|
18,716
|
|
|
Diluted EPS, as adjusted for gain on early
extinguishment of debt
|
|
$
|
0.16
|
|
$
|
0.12
|
|
$
|
0.69
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted FFO per share, as
reported
|
|
$
|
47,636
|
|
$
|
32,832
|
|
$
|
150,401
|
|
$
|
125,309
|
|
|
Less: Gain on early extinguishment of debt
|
|
(10,376
|
)
|
—
|
|
(10,376
|
)
|
—
|
|
|
Numerator for diluted FFO per share, as
adjusted
|
|
$
|
37,260
|
|
$
|
32,832
|
|
$
|
140,025
|
|
$
|
125,309
|
|
|
Diluted FFO per share, as adjusted for gain
on early extinguishment of debt
|
|
$
|
0.62
|
|
$
|
0.59
|
|
$
|
2.46
|
|
$
|
2.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted AFFO, as reported
|
|
$
|
36,421
|
|
$
|
23,232
|
|
$
|
111,833
|
|
$
|
90,767
|
|
|
Less: Gain on early extinguishment of debt
|
|
(10,376
|
)
|
—
|
|
(10,376
|
)
|
—
|
|
|
Diluted AFFO, as adjusted
|
|
$
|
26,045
|
|
$
|
23,232
|
|
$
|
101,457
|
|
$
|
90,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP net income to
earnings before interest, income taxes, depreciation and amortization
(“EBITDA”)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
21,471
|
|
$
|
9,929
|
|
$
|
58,668
|
|
$
|
34,784
|
|
|
Interest expense on continuing operations
|
|
20,512
|
|
21,689
|
|
83,646
|
|
85,576
|
|
|
Interest expense on discontinued operations
|
|
—
|
|
80
|
|
51
|
|
1,382
|
|
|
Income tax expense
|
|
99
|
|
1,201
|
|
779
|
|
1,684
|
|
|
Real estate-related depreciation and
amortization
|
|
27,290
|
|
26,607
|
|
102,772
|
|
106,260
|
|
|
Other depreciation and amortization
|
|
393
|
|
358
|
|
1,570
|
|
1,365
|
|
|
Minority interests
|
|
3,019
|
|
1,391
|
|
8,147
|
|
4,220
|
|
|
EBITDA
|
|
$
|
72,784
|
|
$
|
61,255
|
|
$
|
255,633
|
|
$
|
235,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of interest expense from
continuing operations to the denominators for interest coverage-EBITDA and
fixed charge coverage-EBITDA
|
|
|
|
|
|
|
|
|
|
|
Interest expense from continuing operations
|
|
$
|
20,512
|
|
$
|
21,689
|
|
$
|
83,646
|
|
$
|
85,576
|
|
|
Interest expense from discontinued
operations
|
|
—
|
|
80
|
|
51
|
|
1,382
|
|
|
Less amortization of deferred financing
costs
|
|
(1,073
|
)
|
(970
|
)
|
(3,955
|
)
|
(3,676
|
)
|
|
Denominator for interest coverage-EBITDA
|
|
19,439
|
|
20,799
|
|
79,742
|
|
83,282
|
|
|
Preferred share dividends
|
|
4,026
|
|
4,025
|
|
16,102
|
|
16,068
|
|
|
Preferred unit distributions
|
|
165
|
|
165
|
|
660
|
|
660
|
|
|
Denominator for fixed charge
coverage-EBITDA
|
|
$
|
23,630
|
|
$
|
24,989
|
|
$
|
96,504
|
|
$
|
100,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of same property net
operating income to same property cash net operating income and same property
cash net operating income, adjusted for lease termination fees
|
|
|
|
|
|
|
|
|
|
|
Same property net operating income
|
|
$
|
60,792
|
|
$
|
60,641
|
|
$
|
210,570
|
|
$
|
207,792
|
|
|
Less: Straight-line rent adjustments
|
|
(1,057
|
)
|
(2,025
|
)
|
(4,452
|
)
|
(7,081
|
)
|
|
Less: Amortization of deferred market
rental revenue
|
|
(436
|
)
|
(342
|
)
|
(1,385
|
)
|
(1,902
|
)
|
|
Same property cash net operating income
|
|
$
|
59,299
|
|
$
|
58,274
|
|
$
|
204,733
|
|
$
|
198,809
|
|
|
Less: Lease termination fees, gross
|
|
(200
|
)
|
(688
|
)
|
(554
|
)
|
(2,891
|
)
|
|
Same property cash net operating income,
adjusted for lease termination fees
|
|
$
|
59,099
|
|
$
|
57,586
|
|
$
|
204,179
|
|
$
|
195,918
|
|
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Reconciliation of projected EPS-diluted to projected
diluted FFO per share
|
|
|
Year Ending
|
|
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December 31, 2009
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Low
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High
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Reconciliation of numerators
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Numerator for projected EPS-diluted
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$
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38,300
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$
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43,475
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Real estate-related depreciation and
amortization (1)
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105,600
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105,600
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Minority interests-common units
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6,100
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6,925
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Numerator for projected diluted FFO per
share
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$
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150,000
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$
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156,000
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Reconciliation of denominators
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Denominator for projected EPS-diluted
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52,600
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52,600
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Weighted average common units
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7,900
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7,900
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Denominator for projected diluted FFO per
share
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60,500
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60,500
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Projected EPS - diluted
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$
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0.73
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$
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0.83
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Projected diluted FFO per share
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$
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2.48
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$
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2.58
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(1)
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The estimate
of real estate-related depreciation and amortization excludes any impact of
potential write-offs resulting from lease terminations.
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Top
Twenty Office Tenants of Wholly Owned Properties as of December 31, 2008
(1)
(Dollars
in thousands)
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Percentage of
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Total
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Percentage
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Weighted
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Total
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Total
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Annualized
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of Total
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Average
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Number of
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Occupied
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Occupied
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Rental
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Annualized Rental
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Remaining
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Tenant
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Leases
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Square Feet
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Square Feet
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Revenue (2) (3)
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Revenue
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Lease Term (4)
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United States of America (5)
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67
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2,584,112
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15.0
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%
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$
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66,782
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17.3
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%
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6.3
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Northrop Grumman Corporation (6)
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16
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1,139,591
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6.6
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%
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28,375
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7.4
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%
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7.7
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Booz Allen Hamilton, Inc.
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8
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710,692
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4.1
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%
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19,985
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5.2
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%
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5.6
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Computer Sciences Corporation (6)
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4
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454,645
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2.6
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%
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11,875
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3.1
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%
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2.6
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L-3 Communications Holdings, Inc. (6)
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5
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267,354
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1.6
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%
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9,730
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2.5
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%
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5.3
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Unisys Corporation (7)
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5
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760,145
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4.4
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%
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9,052
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2.3
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%
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4.7
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General Dynamics Corporation (6)
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10
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293,329
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1.7
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%
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7,753
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2.0
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%
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1.6
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The Aerospace Corporation
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3
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245,598
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1.4
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%
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7,301
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1.9
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%
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6.1
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ITT Corporation (6)
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9
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290,312
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1.7
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%
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6,820
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1.8
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%
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5.5
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Wachovia Corporation (6)
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4
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183,577
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1.1
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%
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6,622
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1.7
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%
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9.6
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Comcast Corporation (6)
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11
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342,266
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2.0
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%
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6,514
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1.7
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%
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3.2
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AT&T Corporation (6)
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8
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306,988
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1.8
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%
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5,692
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1.5
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%
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4.5
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The Boeing Company (6)
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4
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143,480
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0.8
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%
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4,241
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1.1
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%
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4.7
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Ciena Corporation
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4
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229,848
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1.3
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%
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4,200
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1.1
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%
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3.3
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BAE Systems PLC (6)
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7
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212,339
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1.2
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%
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3,171
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0.8
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%
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3.9
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The Johns Hopkins Institutions (6)
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4
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128,827
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0.7
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%
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3,011
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0.8
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%
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7.7
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Science Applications International Corp. (6)
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9
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137,142
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0.8
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%
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2,957
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0.8
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%
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0.8
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Merck & Co., Inc. (Unisys) (6) (7)
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2
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225,900
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1.3
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%
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2,719
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0.7
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%
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3.6
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Magellan Health Services, Inc.
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2
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113,727
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0.7
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%
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2,673
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0.7
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%
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2.6
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AARP
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1
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104,695
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0.6
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%
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2,571
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0.7
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%
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12.9
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Subtotal Top 20 Office Tenants
|
|
183
|
|
8,874,567
|
|
51.6
|
%
|
212,044
|
|
55.0
|
%
|
5.7
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|
All remaining tenants
|
|
778
|
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8,333,261
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|
48.4
|
%
|
173,326
|
|
45.0
|
%
|
3.7
|
|
|
Total/Weighted Average
|
|
961
|
|
17,207,828
|
|
100.0
|
%
|
$
|
385,370
|
|
100.0
|
%
|
4.8
|
|
|
(1)
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Table
excludes owner occupied leasing activity which represents 149,601 square feet
with a weighted average remaining lease term of 6.5 years as of
December 31, 2008.
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|
(2)
|
|
Total
Annualized Rental Revenue is the monthly contractual base rent as of
December 31, 2008, multiplied by 12, plus the estimated annualized
expense reimbursements under existing office leases.
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|
(3)
|
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Order of
tenants is based on Annualized Rent.
|
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(4)
|
|
The
weighting of the lease term was computed using Total Rental Revenue.
|
|
(5)
|
|
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.
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|
(6)
|
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Includes
affiliated organizations or agencies.
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|
(7)
|
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Merck &
Co., Inc. subleases 219,065 rentable square feet from Unisys’ 960,349
leased rentable square feet in our Greater Philadelphia region.
|