Exhibit 99.1

 

Item 6. Selected Financial Data

 

The following table sets forth summary financial data as of and for each of the years ended December 31, 2004 through 2008. Certain information in this table has been retrospectively adjusted for our adoption of certain accounting standards effective January 1, 2009 as discussed further in Note 2 to the Consolidated Financial Statements. The table illustrates the significant growth our Company experienced over the periods reported. Most of this growth, particularly pertaining to revenues, operating income and total assets, was attributable to our addition of properties through acquisition and development activities. We financed most of the acquisition and development activities by incurring debt and issuing preferred and common equity, as indicated by the growth in our interest expense, preferred share dividends and weighted average common shares outstanding. The growth in our general and administrative expenses reflects, in large part, the growth in management resources required to support the increased size of our portfolio. Since this information is only a summary, you should refer to our Consolidated Financial Statements and notes thereto and the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

 

Corporate Office Properties Trust and Subsidiaries

(in thousands, except per share data and number of properties)

 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

Revenues from real estate operations (1)

 

$

399,633

 

$

365,914

 

$

291,444

 

$

235,956

 

$

198,672

 

Construction contract and other service operations revenues

 

188,385

 

41,225

 

60,084

 

79,234

 

28,903

 

Total revenues

 

588,018

 

407,139

 

351,528

 

315,190

 

227,575

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses (1)

 

141,139

 

123,258

 

93,088

 

70,202

 

57,745

 

Depreciation and other amortization associated with real estate operations (1)

 

102,720

 

104,700

 

76,344

 

60,342

 

48,623

 

Construction contract and other service operations expenses

 

184,142

 

39,793

 

57,345

 

77,287

 

26,996

 

General and administrative expenses

 

25,329

 

21,704

 

18,048

 

13,533

 

10,938

 

Total operating expenses

 

453,330

 

289,455

 

244,825

 

221,364

 

144,302

 

Operating income

 

134,688

 

117,684

 

106,703

 

93,826

 

83,273

 

Interest expense

 

(86,870

)

(88,638

)

(74,023

)

(55,979

)

(43,663

)

Interst and other income

 

2,070

 

3,030

 

1,077

 

304

 

269

 

Gain on early extinguishment of debt

 

8,101

 

 

 

 

 

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

 

57,989

 

32,076

 

33,757

 

38,151

 

39,879

 

Equity in loss of unconsolidated entities

 

(147

)

(224

)

(92

)

(88

)

(88

)

Income tax expense

 

(201

)

(569

)

(887

)

(668

)

(795

)

Income from continuing operations

 

57,641

 

31,283

 

32,778

 

37,395

 

38,996

 

Discontinued operations (1)(2)

 

2,571

 

2,622

 

22,321

 

7,766

 

4,012

 

Income before gain (loss) on sales of real estate, net of income taxes

 

60,212

 

33,905

 

55,099

 

45,161

 

43,008

 

Gain (loss) on sales of real estate, net of income taxes (1)(3)

 

1,104

 

2,037

 

889

 

334

 

(150

)

Net income

 

61,316

 

35,942

 

55,988

 

45,495

 

42,858

 

Net income attributable to noncontrolling interests

 

(7,351

)

(3,741

)

(7,621

)

(6,464

)

(5,826

)

Net income attributable to Corporate Office Properties Trust

 

53,965

 

32,201

 

48,367

 

39,031

 

37,032

 

Preferred share dividends

 

(16,102

)

(16,068

)

(15,404

)

(14,615

)

(16,329

)

Issuance costs associated with redeemed preferred shares (4)

 

 

 

(3,896

)

 

(1,813

)

Net income attributable to Corporate Office Properties Trust common shareholders

 

$

37,863

 

$

16,133

 

$

29,067

 

$

24,416

 

$

18,890

 

Basic earnings per common share (5)

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.73

 

$

0.29

 

$

0.25

 

$

0.49

 

$

0.47

 

Net income

 

$

0.77

 

$

0.34

 

$

0.69

 

$

0.65

 

$

0.57

 

Diluted earnings per common share (5)

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.72

 

$

0.28

 

$

0.24

 

$

0.47

 

$

0.45

 

Net income

 

$

0.76

 

$

0.33

 

$

0.67

 

$

0.63

 

$

0.54

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

48,132

 

46,527

 

41,463

 

37,371

 

33,173

 

Weighted average common shares outstanding – diluted

 

48,820

 

47,518

 

43,031

 

38,997

 

34,982

 

 

32



 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

Balance Sheet Data (as of year end):

 

 

 

 

 

 

 

 

 

 

 

Investment in real estate

 

$

2,778,466

 

$

2,604,836

 

$

2,111,517

 

$

1,888,106

 

$

1,544,501

 

Total assets

 

$

3,114,239

 

$

2,932,364

 

$

2,419,329

 

$

2,129,759

 

$

1,732,026

 

Debt

 

$

1,856,751

 

$

1,809,610

 

$

1,478,460

 

$

1,348,351

 

$

1,022,688

 

Total liabilities

 

$

2,031,816

 

$

1,962,884

 

$

1,609,034

 

$

1,442,036

 

$

1,111,224

 

Total equity

 

$

1,082,423

 

$

969,480

 

$

810,295

 

$

687,723

 

$

620,802

 

Other Financial Data (for the year ended):

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

$

180,892

 

$

138,391

 

$

113,358

 

$

95,944

 

$

84,494

 

Investing activities

 

$

(290,822

)

$

(328,404

)

$

(254,041

)

$

(420,301

)

$

(268,720

)

Financing activities

 

$

92,067

 

$

206,728

 

$

137,822

 

$

321,320

 

$

188,566

 

Numerator for diluted EPS

 

$

37,135

 

$

15,616

 

$

28,618

 

$

24,416

 

$

18,911

 

Diluted funds from operations (6)

 

$

143,592

 

$

121,371

 

$

97,165

 

$

88,490

 

$

75,549

 

Diluted funds from operations per share (6)

 

$

2.52

 

$

2.17

 

$

1.89

 

$

1.86

 

$

1.73

 

Cash dividends declared per common share

 

$

1.43

 

$

1.30

 

$

1.18

 

$

1.07

 

$

0.98

 

Property Data (as of year end):

 

 

 

 

 

 

 

 

 

 

 

Number of properties owned (1)(7)

 

238

 

228

 

170

 

165

 

143

 

Total rentable square feet owned (1)(7)

 

18,462

 

17,832

 

15,050

 

13,708

 

11,765

 

 


(1)   Certain prior period amounts pertaining to properties included in discontinued operations have been reclassified to conform with the current presentation. These reclassifications did not affect consolidated net income or shareholders’ equity.

(2)   Reflects income derived from three operating properties we sold in 2005, seven operating real estate properties we sold in 2006, four operating real estate properties we sold in 2007 and three operating real estate properties we sold in 2008 (see Note 17 to our Consolidated Financial Statements).

(3)   Reflects gain (loss) from sales of properties and unconsolidated real estate joint ventures not associated with discontinued operations.

(4)   Reflects a decrease to net income available to common shareholders pertaining to the original issuance costs recognized upon the redemption of the Series E and Series F Preferred Shares of beneficial interest in 2006 and the Series B Preferred Shares of beneficial interest in 2004.

(5)   Basic and diluted earnings per common share are calculated based on amounts attributable to common shareholders of Corporate Office Properties Trust.

(6)   For definitions of diluted funds from operations per share and diluted funds from operations and reconciliations of these measures to their comparable measures under generally accepted accounting principles, you should refer to the section entitled “Funds from Operations” within the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(7)   Amounts reported reflect only wholly owned properties.

 

33