Exhibit 99.2

 

Supplemental Information

(Unaudited)

 

 

June 30, 2009

 

 

 

 

Corporate Office Properties Trust

Index to Supplemental Information (Unaudited)

June 30, 2009

 

	Page
Highlights and Discussion
Reporting Period Highlights — Periods Ended June 30, 2009	1
Forward-Looking Statements	3
Financial Statements
Year to Date Selected Financial Summary Data	4
Quarterly Selected Financial Summary Data	5
Quarterly Consolidated Balance Sheets	6
Year to Date Consolidated Statements of Operations	7
Year to Date Consolidated Reconciliations of Funds From Operations (FFO), Adjusted FFO (AFFO), Earnings Per Share (EPS)	8
Year to Date Consolidated Reconciliations of Earnings Before Interest, income Taxes, Depreciation and Amortization (EBITDA), Net Operating Income (NOI), Discontinued Operations, Gains on Sales of Real Estate and Certain Non-GAAP Measures	9
Quarterly Consolidated Statements of Operations	10
Quarterly Consolidated Reconciliations of FFO, AFFO, EPS and as adjusted amounts	11
Quarterly Consolidated Reconciliations of EBITDA, NOI, Discontinued Operations, Gains on Sales of Real Estate and Certain Non-GAAP Measures	12
Selected Financial Analyses
Quarterly Equity Analysis	13
Quarterly Debt Analysis	14
Debt Maturity Schedule — June 30, 2009	15
Quarterly Operating Ratios	16
Quarterly Dividend Analysis	17
Investor Composition and Analyst Coverage	18
Portfolio Summary
Property Summary by Region — June 30, 2009 — Wholly Owned Properties	19
Property Summary by Region — June 30, 2009 — Joint Venture Properties	25
Property Occupancy Rates by Region by Quarter — Wholly Owned Properties	26
Property Occupancy Rates by Region by Quarter — Joint Venture Properties	27
Top Twenty Office Tenants of Wholly Owned Properties as of June 30, 2009	28
Real Estate Revenues from Continuing and Discontinued Operations and Net Operating Income by Geographic Region by Year to Date Period	29
Real Estate Revenues from Continuing and Discontinued Operations and Net Operating Income by Geographic Region by Quarter	30
Same Office Property Cash and GAAP Net Operating Income by Year to Date Period	31
Same Office Property Cash and GAAP Net Operating Income by Quarter	32
Average Occupancy Rates by Region for Same Office Properties for Quarter	33
Office Lease Expiration Analysis by Year for Wholly Owned Properties	34
Quarterly Office Renewal Analysis for Wholly Owned Properties as of June 30, 2009	35
Year to Date Wholly Owned Acquisition Summary	36
Development Summary as of June 30, 2009	37
Total Development Placed into Service as of June 30, 2009	39
Land Inventory as of June 30, 2009	40
Joint Venture Summary as of June 30, 2009	41
Reconciliations of Year to Date Non GAAP Measurements	42
Reconciliations of Quarter to Date Non GAAP Measurements	43

 

 

To Members of the Investment Community:

 

We prepared this supplemental information package to provide you with additional detail on our properties and operations.  The information in this package is unaudited, furnished to the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our quarterly and annual reports.  If you have any questions or comments, please contact Ms. Mary Ellen Fowler, Senior Vice President and Treasurer at (443) 285-5450 or maryellen.fowler@copt.com.  Reconciliations between GAAP and non GAAP measurements have been provided.  Refer to our Form 8-K for definitions of certain terms used herein.

 

Corporate Office Properties Trust (COPT) (NYSE: OFC) is a specialty office real estate investment trust (REIT) that focuses primarily 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 that are typically concentrated in large office parks primarily located adjacent to government demand drivers and/or in growth corridors.  More information on COPT can be found at www.copt.com.

 

Reporting Period Highlights — Periods Ended June 30, 2009

 

Financial Results

For the Six Month Period:

·                  We reported net income available to common shareholders of $24.7 million, or $0.44 per diluted share, for the six months ended June 30, 2009 as compared to $14.8 million, or $0.30 per diluted share, for the six months ended June 30, 2008, representing an increase of 47% per share.

·                  We reported FFO of $91.7 million, or $1.34 per diluted share, for the six months ended June 30, 2009 as compared to $73.7 million, or $1.15 per diluted share, for the six months ended June 30, 2008, representing an increase of 17% per share.

·                  We reported diluted AFFO available to common share and common unit holders of $69.6 million for the six months ended June 30, 2009 as compared to $49.1 million for the six months ended June 30, 2008, representing an increase of 42%.

·                  Our diluted FFO payout ratio was 56% for the six months ended June 30, 2009 as compared to 59% for the six months ended June 30, 2008.  Our diluted AFFO payout ratio was 66% for the six months ended June 30, 2009 as compared to 77% for the six months ended June 30, 2008.

 

For the Quarter Period:

·                  We reported net income available to common shareholders of $12.6 million, or $0.22 per diluted share, for the quarter ended June 30, 2009 as compared to $8.1 million, or $0.17 per diluted share, for the quarter ended June 30, 2008, representing an increase of 29% per share.

·                  We reported FFO of $46.9 million, or $0.67 per diluted share, for the quarter ended June 30, 2009 as compared to $37.8 million, or $0.59 per diluted share, for the quarter ended June 30, 2008, representing an increase of 14% per share.

·                  We reported diluted AFFO available to common share and common unit holders of $36.2 million for the quarter ended June 30, 2009 as compared to $24.8 million for the quarter ended June 30, 2008, representing an increase of 46%.

·                  Our diluted FFO payout ratio was 56% for the quarter ended June 30, 2009 as compared to 57% for the quarter ended June 30, 2008.  Our diluted AFFO payout ratio was 65% for the quarter ended June 30, 2009 as compared to 76% for the quarter ended June 30, 2008.

 

Acquisition

·                  We acquired for $12.5 million a 61,000 square foot operating property located in Colorado Springs, Colorado that we believe can also support up to 90,000 additional developable square feet.  The operating property is 100% leased for a 12 year term to Real Time Logic, Inc., a wholly owned subsidiary of Integral Systems, Inc.

 

1

 

Development Activities

·                  We placed into service an aggregate of 258,000 square feet in newly-constructed space in five properties during the six month ended June 30, 2009, of which 175,000 square feet were placed in service during the quarter ended June 30, 2009.

 

Operations

·                  Our wholly owned portfolio was 92.3% occupied and 93.2% leased as of June 30, 2009.  Our entire portfolio was 91.9% occupied and 92.8% leased as of June 30, 2009.

·                  The weighted average remaining lease term of our wholly owned portfolio was 4.7 years as of June 30, 2009, with an average contractual rental rate (including tenant reimbursements of operating costs) of $23.12 per square foot.

 

For the Six Month Period:

·                  Same office property cash NOI for the six months ended June 30, 2009, excluding gross lease termination fees, increased by $4.1 million, or 3%, as compared to the six months ended June 30, 2008.  Including gross lease termination fees, our same office property cash NOI increased $8.2 million, or 7%, as compared to the six months ended June 30, 2008.  Our same office portfolio for the six months consists of 223 properties and represents 90.6% of the rentable square footage of our consolidated properties as of June 30, 2009.

·                  We renewed 822,000 square feet, or 74%, of our expiring office leases for the six months ended June 30, 2009 (based upon square footage), with an average committed cost of $6.84 per square foot.

·                  We recognized $3.7 million in lease termination fees for the six months ended June 30, 2009, net of write-offs of related straight-line rents and accretion of intangible assets and liabilities (i.e., SFAS 141 revenues), as compared to $109,000 in the six months ended June 30, 2008.

 

For the Quarter Period:

·                  Same office property cash NOI, excluding gross lease termination fees, for the quarter ended June 30, 2009 increased by $2.8 million, or 5%, as compared to the quarter ended June 30, 2008.  Including gross lease termination fees, our same office property cash NOI increased $3.3 million, or 5%, as compared to the quarter ended June 30, 2008.  Our same office portfolio for the quarter consists of 228 properties and represents 92.3% of the rentable square footage of our consolidated properties as of June 30, 2009.

·                  We renewed 499,000 square feet, or 70%, of our expiring office leases (based upon square footage), with an average committed cost of $9.42 per square foot.  For our renewed space during the quarter ended June 30, 2009, we realized an increase of 11% in total rent, as measured from the GAAP straight-line rent in effect preceding the renewal date, while cash rent remained relatively flat.  For our renewed and retenanted space of 630,000 square feet during the quarter ended June 30, 2009, we realized an increase of 8% in total rent, as measured from the GAAP straight-line rent in effect preceding the renewal date, and a decrease of 4% in total cash rent.  The average committed cost for our space renewed and retenanted during the quarter ended June 30, 2009 totaled $10.79 per square foot.

·                  We recognized $568,000 in lease termination fees for the quarter ended June 30, 2009, net of write-offs of related straight-line rents and accretion of intangible assets and liabilities (i.e., SFAS 141 revenues), as compared to $53,000 in the quarter ended June 30, 2008.

 

Financing Activity and Capital Transactions

·                  In April 2009, we issued approximately 3.0 million common shares in an underwritten public offering made in conjunction with our inclusion in the S&P MidCap 400 Index effective April 1, 2009.  The shares were issued at a public offering price of $24.35 per share for net proceeds of $72.1 million after underwriting discounts but before offering expenses.  The net proceeds were used to pay down our Revolving Credit Facility and for general corporate purposes.

 

2

 

·                  We closed on the following financing arrangements, using most of the proceeds to repay maturing debt and pay down our Revolving Credit Facility:

·                  a $50.0 million secured loan in June 2009 with a five-year term that bears interest at LIBOR plus 3.0% (subject to a LIBOR floor of 2.5%); and

·                  a $23.4 million joint venture construction loan in May 2009 with a two-year term and the right to extend for an additional year that bears interest at LIBOR plus 2.75%.

·                  As of June 30, 2009, our ratio of debt to total market capitalization was 47% and our ratio of debt to undepreciated book value of real estate assets was 55%.  We achieved an EBITDA interest coverage ratio of 3.73x and an EBITDA fixed charge coverage ratio of 3.01x for the quarter ended June 30, 2009.

 

Subsequent Event

·                  On July 27, 2009, we repaid our remaining 2009 maturing debt of approximately $22.5 million using proceeds from our unsecured credit facility.  On July 28, 2009, we closed on a $90 million secured loan with a five-year term that bears interest at 7.25%, using most of the proceeds to pay down our unsecured credit facility.

 

Forward-Looking Statements

 

This supplemental information contains “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 our current expectations, estimates and projections about future events and financial trends affecting us.  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 we cannot predict with accuracy and some of which we might not even anticipate.  Accordingly, we 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:

 

·                  our 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 our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our 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.

 

We undertake no obligation to update or supplement any forward-looking statements.  For further information, please refer to our filings with the Securities and Exchange Commission, particularly the section entitled “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008.

 

3

 

Year to Date Selected Financial Summary Data

(dollars in thousands, except per share data)

 

		Six Months Ended June 30,
		2009			2008
Real estate revenues from continuing operations		$	212,562		$	194,948
Total revenues from continuing operations		$	390,775		$	227,986
NOI		$	136,367		$	126,606
EBITDA		$	130,443		$	120,477
Net income		$	36,217		$	26,091
Net income attributable to noncontrolling interests		(3,431		)	(3,215		)
Preferred share dividends		(8,051		)	(8,051		)
Net income available to common shareholders		$	24,735		$	14,825
Diluted EPS		$	0.44		$	0.30
FFO		$	91,737		$	73,687
Basic and diluted FFO available to common share and common unit holders		$	82,268		$	64,378
Diluted FFO per share		$	1.34		$	1.15
Diluted AFFO available to common share and common unit holders (“diluted AFFO”)		$	69,569		$	49,056
Payout ratios:
Earnings payout ratio		169.2		%	218.3		%
Diluted FFO payout ratio		55.7		%	58.9		%
Diluted AFFO payout ratio		65.9		%	77.3		%
Total dividends/distributions		$	54,221		$	46,294

 

4

 

Quarterly Selected Financial Summary Data

(dollars in thousands, except per share data)

 

		2009						2008
		June 30			March 31			December 31			September 30			June 30
Real estate revenues from continuing operations		$	105,718		$	106,844		$	103,599		$	101,086		$	97,946
Total revenues from continuing operations		$	209,042		$	181,733		$	168,944		$	191,088		$	120,370
NOI		$	68,556		$	67,811		$	66,813		$	65,223		$	64,063
EBITDA		$	65,904		$	64,539		$	70,509		$	62,372		$	60,327
Net income		$	18,051		$	18,166		$	21,437		$	13,788		$	13,910
Net income attributable to noncontrolling interests		(1,412		)	(2,019		)	(2,594		)	(1,542		)	(1,748		)
Preferred share dividends		(4,026		)	(4,025		)	(4,026		)	(4,025		)	(4,026		)
Net income available to common shareholders		$	12,613		$	12,122		$	14,817		$	8,221		$	8,136
Diluted EPS		$	0.22		$	0.23		$	0.28		$	0.17		$	0.17
Diluted EPS, excluding gain on early extinguishment of debt		$	0.22		$	0.23		$	0.15		$	0.17		$	0.17
FFO		$	46,920		$	44,817		$	48,886		$	39,533		$	37,778
Basic and diluted FFO available to common share and common unit holders		$	42,197		$	40,071		$	44,176		$	35,038		$	33,082
Diluted FFO per share		$	0.67		$	0.67		$	0.74		$	0.62		$	0.59
Diluted FFO per share, excluding gain on early extinguishment of debt		$	0.67		$	0.67		$	0.61		$	0.62		$	0.59
Diluted AFFO available to common share and common unit holders		$	36,203		$	33,366		$	25,638		$	25,453		$	24,840
Payout ratios:
Earnings payout ratio		171.2		%	167.2		%	130.1		%	233.3		%	199.1		%
Diluted FFO payout ratio		55.7		%	55.8		%	50.3		%	63.4		%	57.3		%
Diluted AFFO payout ratio		64.9		%	67.0		%	86.7		%	87.2		%	76.4		%
Total dividends/distributions		$	27,682		$	26,539		$	26,420		$	26,394		$	23,160

 

5

 

Quarterly Consolidated Balance Sheets

(dollars in thousands)

 

		2009						2008
		June 30			March 31			December 31			September 30			June 30
Assets
Properties, net
Land - operational		$	429,064		$	423,985		$	423,985		$	421,311		$	420,182
Land - development		219,775			222,242			220,863			221,066			208,742
Construction in progress		293,787			295,686			273,733			276,221			248,660
Buildings and improvements		2,293,895			2,229,817			2,202,995			2,159,530			2,145,700
Less: accumulated depreciation		(382,385		)	(362,318		)	(343,110		)	(339,429		)	(320,879		)
Properties, net		2,854,136			2,809,412			2,778,466			2,738,699			2,702,405
Cash and cash equivalents		11,931			12,702			6,775			21,316			12,857
Restricted cash		17,879			15,408			13,745			15,534			23,066
Accounts receivable, net		13,776			12,737			13,684			13,044			23,452
Deferred rent receivable		67,137			65,346			64,131			62,137			59,238
Intangible assets on real estate acquisitions, net		81,090			85,774			91,848			98,282			104,136
Deferred charges, net		48,812			47,350			51,801			51,371			48,286
Prepaid and other assets		103,914			88,561			93,789			100,448			37,934
Total assets		$	3,198,675		$	3,137,290		$	3,114,239		$	3,100,831		$	3,011,374
Liabilities and shareholders’ equity
Liabilities:
Mortgage and other loans payable		$	1,677,351		$	1,715,144		$	1,704,123		$	1,656,280		$	1,704,351
3.5% Exchangeable Senior Notes		154,362			153,488			152,628			186,806			185,779
Accounts payable and accrued expenses		142,734			111,135			93,625			93,676			82,526
Rents received in advance and security deposits		29,936			31,524			30,464			26,372			32,569
Dividends and distributions payable		27,057			25,891			25,794			25,774			22,548
Deferred revenue associated with acquired operating leases		8,926			9,880			10,816			11,832			12,762
Distributions in excess of investment in unconsolidated real estate joint ventures		4,873			4,809			4,770			4,668			4,506
Other liabilities		7,029			8,793			9,596			7,059			8,820
Total liabilities		2,052,268			2,060,664			2,031,816			2,012,467			2,053,861
Commitments and contingencies		—			—			—			—			—
COPT’s shareholders’ equity:
Preferred shares (aggregate liquidation preference of $216,333)		81			81			81			81			81
Common shares		580			544			518			515			477
Additional paid-in capital		1,229,931			1,148,424			1,112,734			1,107,053			977,528
Cumulative distributions in excess of net income		(179,698		)	(170,714		)	(162,572		)	(158,106		)	(147,145		)
Accumulated other comprehensive loss		(1,176		)	(3,256		)	(4,749		)	(1,676		)	(2,615		)
Total COPT shareholders’ equity		1,049,718			975,079			946,012			947,867			828,326
Noncontrolling interests
Common units in the Operating Partnership		76,873			81,793			117,356			121,528			110,128
Preferred units in the Operating Partnership		8,800			8,800			8,800			8,800			8,800
Other consolidated real estate joint ventures		11,016			10,954			10,255			10,169			10,259
Total noncontrolling interests		96,689			101,547			136,411			140,497			129,187
Total equity		1,146,407			1,076,626			1,082,423			1,088,364			957,513
Total liabilities and equity		$	3,198,675		$	3,137,290		$	3,114,239		$	3,100,831		$	3,011,374

 

6

 

Year to Date Consolidated Statements of Operations

(in thousands, except per share data)

 

		Six Months Ended June 30,
		2009			2008
Revenues
Rental revenue		$	177,848		$	164,864
Tenant recoveries and other real estate operations revenue		34,714			30,084
Construction contract revenues		177,292			32,035
Other service operations revenues		921			1,003
Total revenues		390,775			227,986
Expenses
Property operating expenses		76,195			68,499
Depreciation and amortization associated with real estate operations		55,199			49,847
Construction contract expenses		173,545			31,377
Other service operations expenses		939			1,056
General and administrative expenses		11,377			11,704
Business development		1,092			265
Total operating expenses		318,347			162,748
Operating income		72,428			65,238
Interest expense		(38,102		)	(43,077		)
Interest and other income		2,330			365
Income from continuing operations before equity in loss of unconsolidated entities and income taxes		36,656			22,526
Equity in loss of unconsolidated entities		(317		)	(110		)
Income tax expense		(122		)	(5		)
Income from continuing operations		36,217			22,411
Discontinued operations, net of income taxes		—			2,580
Income before gain on sales of real estate		36,217			24,991
Gain on sales of real estate, net of income taxes		—			1,100
Net income		36,217			26,091
Less net income attributable to noncontrolling interests
Common units in the Operating Partnership		(3,076		)	(2,663		)
Preferred units in the Operating Partnership		(330		)	(330		)
Other consolidated entities		(25		)	(222		)
Net income attributable to COPT		32,786			22,876
Preferred share dividends		(8,051		)	(8,051		)
Net income available to common shareholders		$	24,735		$	14,825
For diluted EPS computations:
Numerator for diluted EPS
Net income available to common shareholders		$	24,735		$	14,825
Amount allocable to restricted shares		(510		)	(336		)
Numerator for diluted EPS		$	24,225		$	14,489
Denominator:
Weighted average common shares - basic		54,296			47,055
Dilutive effect of stock option awards		522			746
Weighted average common shares - diluted		54,818			47,801
Diluted EPS		$	0.44		$	0.30

 

7

 

Year to Date Consolidated Reconciliations of FFO, AFFO, EPS

(in thousands, except per share data)

 

		Six Months Ended June 30,
		2009			2008
Net income		$	36,217		$	26,091
Real estate-related depreciation and amortization		55,199			49,899
Depreciation and amortization on unconsolidated real estate entities		321			327
Gain on sales of operating properties, net of income taxes		—			(2,630		)
FFO		91,737			73,687
Noncontrolling interests - preferred units in the Operating Partnership		(330		)	(330		)
Noncontrolling interests - other consolidated entities		(25		)	(222		)
Preferred share dividends		(8,051		)	(8,051		)
Depreciation and amortization allocable to noncontrolling interests in other consol. entities		(160		)	(124		)
Basic and diluted FFO allocable to restricted shares		(903		)	(582		)
Basic and diluted FFO available to common share and common unit holders		82,268			64,378
Straight line rent adjustments		(2,858		)	(5,434		)
Amortization of deferred market rental revenue		(996		)	(903		)
Recurring capital expenditures		(10,266		)	(10,603		)
Amortization of discount on Exchangeable Senior Notes, net of amounts capitalized		1,421			1,618
Diluted AFFO available to common share and common unit holders		$	69,569		$	49,056
Preferred dividends		$	8,051		$	8,051
Preferred distributions		330			330
Common distributions		3,979			5,543
Common dividends		41,861			32,370
Total dividends/distributions		$	54,221		$	46,294
Denominator for diluted EPS		54,818			47,801
Common units		6,363			8,153
Denominator for diluted FFO per share		61,181			55,954

 

8

 

Year to Date Consolidated Reconciliations of EBITDA, NOI, Discontinued Operations,

Gains on Sales of Real Estate and Certain Non-GAAP Measures

(in thousands)

 

		Six Months Ended June 30,
		2009			2008
Net income		$	36,217		$	26,091
Interest expense on continuing and discontinued operations		38,102			43,128
Total income tax expense (1)		122			583
Depreciation of furniture, fixtures and equipment (FF&E)		803			776
Real estate-related depreciation and other amortization		55,199			49,899
EBITDA		$	130,443		$	120,477
Add back:
General and administrative		11,377			11,704
Business development		1,092			265
Depreciation of FF&E included in general and administrative expense		(803		)	(776		)
Income from construction contracts and other service operations		(3,729		)	(605		)
Interest and other income		(2,330		)	(365		)
Gain on sales of operating properties		—			(2,526		)
Non-operational property sales and real estate services		—			(1,678		)
Equity in loss of unconsolidated entities		317			110
NOI		$	136,367		$	126,606
Discontinued Operations
Revenues from real estate operations		$	—		$	355
Property operating expenses		—			(198		)
Depreciation and amortization		—			(52		)
Interest		—			(51		)
Gain on sales of depreciated real estate properties		—			2,526
Discontinued operations, net		$	—		$	2,580
Gain on sales of real estate, net, per statements of operations		$	—		$	1,100
Add income taxes		—			578
Gain on sales of real estate from discontinued operations		—			2,526
Gain on sales of real estate from continuing and discontinued operations		—			4,204
Non-operational property sales and real estate services		—			(1,678		)
Gain on sales of operating properties		$	—		$	2,526

 

(1) Includes income taxes from continuing operations, discontinued operations and gains on other sales of real estate (see components on page 42).

 

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Quarterly Consolidated Statements of Operations

(in thousands, except per share data)

 

		2009						2008
		June 30			March 31			December 31			September 30			June 30
Revenues
Rental revenue		$	88,326		$	89,522		$	87,018		$	85,060		$	83,154
Tenant recoveries and other real estate operations revenue		17,392			17,322			16,581			16,026			14,792
Construction contract revenues		102,753			74,539			64,920			89,653			21,899
Other service operations revenues		571			350			425			349			525
Total revenues		209,042			181,733			168,944			191,088			120,370
Expenses
Property operating expenses		37,162			39,033			36,786			35,854			33,957
Depreciation and amortization associated with real estate operations		28,708			26,491			27,290			25,583			24,955
Construction contract expenses		100,647			72,898			63,623			87,111			21,472
Other service operations expenses		514			425			429			546			454
General and administrative expenses		5,834			5,543			6,488			5,904			5,934
Business development expenses		446			646			769			199			102
Total operating expenses		173,311			145,036			135,385			155,197			86,874
Operating income		35,731			36,697			33,559			35,891			33,496
Interest expense		(18,678		)	(19,424		)	(21,290		)	(22,503		)	(21,162		)
Interest and other income		1,252			1,078			1,146			559			170
Gain on early extinguishment of debt		—			—			8,101			—			—
Income from continuing operations before equity in (loss) income of unconsolidated entities and income taxes		18,305			18,351			21,516			13,947			12,504
Equity in (loss) income of unconsolidated entities		(202		)	(115		)	20			(57		)	(56		)
Income tax (expense) benefit		(52		)	(70		)	(99		)	(97		)	107
Income from continuing operations		18,051			18,166			21,437			13,793			12,555
Discontinued operations, net of income taxes		—			—			—			(9		)	1,314
Income before gain on sales of real estate		18,051			18,166			21,437			13,784			13,869
Gain on sales of real estate, net of income taxes		—			—			—			4			41
Net income		18,051			18,166			21,437			13,788			13,910
Less net income attributable to noncontrolling interests
Common units in the Operating Partnership		(1,272		)	(1,804		)	(2,389		)	(1,467		)	(1,461		)
Preferred units in the Operating Partnership		(165		)	(165		)	(165		)	(165		)	(165		)
Other consolidated entities		25			(50		)	(40		)	90			(122		)
Net income attributable to COPT		16,639			16,147			18,843			12,246			12,162
Preferred share dividends		(4,026		)	(4,025		)	(4,026		)	(4,025		)	(4,026		)
Net income available to common shareholders		$	12,613		$	12,122		$	14,817		$	8,221		$	8,136
For diluted EPS computations:
Numerator for diluted EPS
Net income available to common shareholders		$	12,613		$	12,122		$	14,817		$	8,221		$	8,136
Amount allocable to restricted shares		(242		)	(268		)	(200		)	(192		)	(166		)
Numerator for diluted EPS		$	12,371		$	11,854		$	14,617		$	8,029		$	7,970
Denominator:
Weighted average common shares - basic		56,637			51,930			51,120			47,273			47,110
Dilutive effect of stock option awards		546			498			567			779			790
Weighted average common shares - diluted		57,183			52,428			51,687			48,052			47,900
Diluted EPS		$	0.22		$	0.23		$	0.28		$	0.17		$	0.17

 

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