Supplemental Information

(Unaudited)

 

December 31, 2010

 

 

 

Corporate Office Properties Trust

Index to Supplemental Information (Unaudited)

December 31, 2010

 

	Page
Highlights and Discussion
Reporting Period Highlights — Periods Ended December 31, 2010	1
Forward-Looking Statements	4
Financial Statements
Selected Financial Summary Data	5
Quarterly Consolidated Balance Sheets	6
Consolidated Statements of Operations	7
Consolidated Reconciliations of Funds From Operations (FFO), Adjusted FFO (AFFO), Earnings Per Share (EPS)	8
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
Reconciliations of Non-GAAP Measurements	10
Selected Financial Analyses
Real Estate Revenues from Continuing and Discontinued Operations and NOI by Geographic Region	11
Same Office Property Cash and GAAP NOI	12
Operating Ratios	13
Debt Analysis	14
Debt Maturity Schedule — December 31, 2010	15
Quarterly Equity Analysis	16
Dividend Analysis	17
Investor Composition and Analyst Coverage	18
Portfolio Summary
Property Summary by Region — December 31, 2010 — Wholly Owned Office Properties	19
Property Summary by Region — December 31, 2010 — Joint Venture Office Properties	25
Property Occupancy Rates by Region by Quarter — Wholly Owned Office Properties	26
Property Occupancy Rates by Region by Quarter — Joint Venture Office Properties	27
Top Twenty Tenants of Wholly Owned Office Properties as of December 31, 2010	28
Average Occupancy Rates by Region for Same Office Properties	29
Lease Expiration Analysis by Year for Wholly Owned Operating Office Properties	30
Renewal Analysis for Wholly Owned Office Properties for Periods Ended December 31, 2010	31
Office Property Development Summary as of December 31, 2010	32
Office Property Construction Placed into Service as of December 31, 2010	34
Office Property Construction Leasing as of December 31, 2010	35
Land Controlled as of December 31, 2010	36
Wholesale Data Center Summary as of December 31, 2010	37
Real Estate Joint Venture Summary as of December 31, 2010	38

 

 

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 Stephanie Krewson, Vice President, Investor Relations at (443) 285-5453 or stephanie.krewson@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 and defense information technology sectors and data centers serving such sectors.  The Company acquires, develops, manages and leases office and data center properties that are typically concentrated in large office parks primarily located adjacent to government demand drivers and/or in strong markets that we believe possess growth opportunities.  More information on COPT can be found at www.copt.com.

 

Reporting Period Highlights — Year Ended December 31, 2010

 

Financial Results

·                  FFO, excluding the effect of $3.4 million in operating property acquisition costs ($0.06 per diluted share), was $171.7 million, or $2.36 per diluted share, for the year ended December 31, 2010 as compared to $173.3 million, or $2.49 per diluted share, for the year ended December 31, 2009, representing a decrease of 5% per share.  FFO was $168.3 million, or $2.30 per diluted share, for the year ended December 31, 2010.  The decrease in FFO was due primarily to a $19.7 million increase in interest expense, an $8.0 million decrease in NOI from same office properties and a $5.4 million decrease in NOI from three properties that we expect to redevelop, including two properties in Greater Philadelphia.  These decreases were partially offset by NOI from acquired properties and development placed in service and gains recognized on our investment in The KEYW Holding Corporation.

·                  Net income attributable to COPT common shareholders was $26.7 million, or $0.43 per diluted share, for the year ended December 31, 2010 as compared to $40.2 million, or $0.70 per diluted share, for the year ended December 31, 2009, a decrease of 39% per share.

·                  Diluted AFFO available to common share and common unit holders was $112.7 million for the year ended December 31, 2010 as compared to $119.8 million for the year ended December 31, 2009, a decrease of 6%.

·                  Our diluted FFO payout ratio, excluding the effect of operating property acquisition costs, was 70% for the year ended December 31, 2010 as compared to 62% for the year ended December 31, 2009.  Our diluted AFFO payout ratio was 94% for the year ended December 31, 2010 as compared to 80% for the year ended December 31, 2009.

 

Acquisitions / Dispositions

·                  In 2010, we completed the following acquisitions totaling $317 million:

·                  1550 Westbranch Drive, a 152,000 square feet office property in McLean, Virginia that is 100% leased to The MITRE Corporation, for $40.0 million on June 28, 2010.

·                  9651 Hornbaker Road, a 233,000 square foot wholesale data center known as Power Loft @ Innovation in Manassas, Virginia, for $115.5 million on September 14, 2010.  Rents for this property are based on the amount of megawatts of power made available for the exclusive use of tenants in the property (referred to as critical load).  This property, the shell of which was completed in early 2010, was 17% leased on the date of acquisition to two tenants that have a combined initial critical load of three megawatts and further expansion rights of up to a combined five megawatts.  We expect to complete the development of the property to an initial stabilization critical load of 18 megawatts for additional development costs initially estimated at $166 million.  Full critical load of the property is expected to be up to 30 megawatts.

·                  Two office properties totaling 362,000 square feet at 1201 M Street SE and 1220 12th Street SE (known as Maritime Plaza I and II) in the Capitol Riverfront submarket of Washington, DC that were 100% leased on September 28, 2010 for approximately $119 million, including the assumption of a $70.1 million mortgage loan having a fair value of $73.3 million with a fixed interest rate of 5.35% that matures in March 2014.  The buildings are subject to ground leases that expire in 2099 and 2100.

 

1

 

·                  3120 Fairview Park Drive, a 183,000 square foot, shell-complete, office property in Falls Church, Virginia that was 4% leased, for $43.0 million on November 23, 2010.

·                  On September 8, 2010, we sold two office properties in Dayton, New Jersey totaling 201,000 square feet for $20.9 million and recognized a gain of $780,000.  We also on September 8, 2010 sold a land parcel that was contiguous to these properties for $3.0 million and recognized a gain of $2.5 million.

 

Development Activities

·                  We entered two new submarkets by:

·                  Completing the formation of LW Redstone Company, LLC, a joint venture created to develop Redstone Gateway, a 468 acre land parcel adjacent to Redstone Arsenal in Huntsville, Alabama.  The land is owned by the U.S. Government and is under a long term master lease to the joint venture through the Enhanced Use Lease program.  Through this master lease, we will work closely with Redstone Arsenal to create a business park that we expect will total approximately 4.6 million square feet of office and retail space when completed, including approximately 4.4 million square feet of Class A office space.  In addition, the business park will include hotel and other amenities.  We are the managing partner of the joint venture with a controlling interest and responsibility for development, leasing and management of the office space at the business park.  Development and construction of the business park is expected to take place over a 15 to 20 year period.

·                  Acquiring 15 acres on which we are entitled to develop up to 978,000 square feet in Springfield, Virginia.  The property, which is known as Patriot Ridge, is located adjacent to the new 2.4 million square foot National Geospatial Intelligence Agency (NGA) headquarters currently under construction at Fort Belvoir, a government demand driver that we expect to benefit as a result of mandates by the Base Realignment and Closure Commission.

·                  We placed into service an aggregate of 816,000 square feet in newly-constructed space in nine properties during the year ended December 31, 2010.  These properties were 77% leased as of December 31, 2010.

·                  We completed leasing on an aggregate of 808,000 square feet in newly-constructed space during the year ended December 31, 2010.

 

Operations

·                  Same office cash NOI for the year ended December 31, 2010, excluding gross lease termination fees, decreased by $3.1 million, or 1%, as compared to the year ended December 31, 2009.  Including gross lease termination fees, our same office property cash NOI decreased by $5.0 million, or 2%, as compared to the year ended December 31, 2009.  Our same office portfolio consists of 230 properties and represents 85% of the rentable square footage of our consolidated office properties as of December 31, 2010.

·                  We renewed 2.5 million square feet in the year ended December 31, 2010 with an average committed cost of $7.84 per square foot.  For our renewed space during the year ended December 31, 2010, we realized an increase of 3% in total rent, as measured from the GAAP straight-line rent in effect preceding the renewal date, and a decrease of 5% in total cash rent.  For our renewed and retenanted space of 3.2 million square feet during the year ended December 31, 2010, we realized an increase of 2% in total rent, as measured from the GAAP straight-line rent in effect preceding the renewal date, and a decrease of 6% in total cash rent.  The average committed cost for our space renewed and retenanted during the year ended December 31, 2010 totaled $11.72 per square foot.

·                 We recognized $3.4 million in lease termination fees for the year ended December 31, 2010, net of write-offs of related straight-line rents and intangible assets and liabilities, as compared to $4.6 million in the year ended December 31, 2009.

 

Financing Activity and Capital Transactions

·                  On April 7, 2010, we issued $240.0 million aggregate principal amount of 4.25% Exchangeable Senior Notes due 2030.  The notes have an exchange settlement feature that provides that the notes may, under certain circumstances, be exchangeable for cash and our common shares at an initial exchange rate (subject to adjustment) of 20.7658 shares per $1,000 principal amount of the notes (equivalent to an exchange price of $48.16 per common share, a 20% premium over the closing price on the NYSE on the transaction pricing date).  On or after April 20, 2015, we may redeem the notes in cash, in whole or in part.  The holders of the notes have the right to require us to repurchase the notes in cash, in whole or in part, on each of April 15, 2015, April 15, 2020 and April 15, 2025, or in the event of a “fundamental change,” as defined under the terms of the notes.  We used the proceeds for general corporate purposes, including repayment of borrowings under our Revolving Credit Facility.

 

2

 

·                  On November 5, 2010, we issued 7.5 million common shares at a public offering price of $34.25 per share for net proceeds of $245.8 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.

·                  During 2010, we increased the borrowing capacity under our Revolving Credit Facility by $200.0 million, from $600.0 million to $800.0 million.

·                  For the year ended December 31, 2010, we achieved an EBITDA interest coverage ratio of 3.01x and an EBITDA fixed charge coverage ratio of 2.54x.

 

Reporting Period Highlights — Quarter Ended December 31, 2010

 

Financial Results

·                  FFO, excluding the effect of $470,000 in operating property acquisition costs ($0.01 per diluted share), was $52.7 million, or $0.70 per diluted share, for the quarter ended December 31, 2010 as compared to $39.1 million, or $0.55 per diluted share, for the quarter ended December 31, 2009, representing an increase of 27% per share.  Including these costs, FFO was $52.2 million, or $0.69 per diluted share, for the quarter ended December 31, 2010.  The increase in FFO was due primarily to NOI from acquired properties and development placed in service and gains recognized on our investment in The KEYW Holding Corporation.

·                  Net income attributable to COPT common shareholders was $11.5 million, or $0.18 per diluted share, for the quarter ended December 31, 2010 as compared to $5.1 million, or $0.08 per diluted share, for the quarter ended December 31, 2009, an increase of 125% per share.

·                  Diluted AFFO available to common share and common unit holders was $31.0 million for the quarter ended December 31, 2010 as compared to $22.4 million for the quarter ended December 31, 2009, an increase of 38%.

·                  Our diluted FFO payout ratio, excluding the effect of operating property acquisition costs, was 62% for the quarter ended December 31, 2010 as compared to 72% for the quarter ended December 31, 2009.  Our diluted AFFO payout ratio was 95% for the quarter ended December 31, 2010 as compared to 111% for the quarter ended December 31, 2009.

 

Operations

·                  Our wholly owned office property portfolio was 88.2% occupied and 89.5% leased as of December 31, 2010.  Our entire office property portfolio was 87.2% occupied and 88.5% leased as of December 31, 2010.

·                  The weighted average remaining lease term of our wholly owned office portfolio was 4.9 years as of December 31, 2010, with an average contractual rental rate (including tenant reimbursements of operating costs) of $25.56 per square foot.

·                  Same office property cash NOI for the quarter ended December 31, 2010, excluding gross lease termination fees, decreased by $1.7 million, or 3%, as compared to the quarter ended December 31, 2009.  Including gross lease termination fees, our same office property cash NOI was flat as compared to the quarter ended December 31, 2009.

·                  We renewed 1.1 million square feet in the quarter ended December 31, 2010 with an average committed cost of $8.13 per square foot.  For our renewed space during the quarter ended December 31, 2010, we realized an increase of 3% in total rent, as measured from the GAAP straight-line rent in effect preceding the renewal date, and a decrease of 5% in total cash rent.  For our renewed and retenanted space of 1.5 million square feet during the quarter ended December 31, 2010, we realized an increase of 4% 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 December 31, 2010 totaled $14.02 per square foot.

·                  We recognized $2.0 million in lease termination fees for the quarter ended December 31, 2010, net of write-offs of related straight-line rents and intangible assets and liabilities, as compared to $236,000 in the quarter ended December 31, 2009.

 

Financing Activity and Capital Transactions

·                  As of December 31, 2010, our ratio of debt to total market capitalization was 46% and our ratio of debt to undepreciated book value of real estate assets was 57%.

·                  For the quarter ended December 31, 2010, we achieved an EBITDA interest coverage ratio of 3.36x and an EBITDA fixed charge coverage ratio of 2.86x.

·                  For the quarter ended December 31, 2010, our debt to EBITDA ratio was 7.29x and our adjusted debt to EBITDA ratio (excluding construction in progress) was 6.08x.

 

3

 

·                  As of December 31, 2010, 78% of our debt had fixed interest rates, including the effect of interest rate swaps in effect.

 

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,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” 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:

 

·                  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;

·                  our ability to borrow on favorable terms;

·                  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;

·                  changes in our plans or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of impairment losses;

·                  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, 2009.

 

4

 

Selected Financial Summary Data

(dollars in thousands, except per share data)

 

		Three Months Ended															Year Ended
		12/31/10			9/30/10			6/30/10			3/31/10			12/31/09			12/31/10			12/31/09
Real estate revenues from continuing operations		$	123,765		$	114,550		$	109,257		$	112,228		$	108,737		$	459,800		$	423,984
Total revenues from continuing operations		$	151,402		$	128,158		$	135,322		$	149,593		$	178,290		$	564,475		$	767,071
NOI		$	76,694		$	70,724		$	69,847		$	64,700		$	66,822		$	281,965		$	269,449
EBITDA		$	79,652		$	66,976		$	65,259		$	61,683		$	61,056		$	273,570		$	255,726
Net income		$	16,752		$	8,926		$	9,151		$	10,675		$	9,546		$	45,504		$	61,299
Net income attributable to noncontrolling interests		(1,228		)	(94		)	(685		)	(737		)	(458		)	(2,744		)	(4,970		)
Preferred share dividends		(4,026		)	(4,025		)	(4,026		)	(4,025		)	(4,026		)	(16,102		)	(16,102		)
Net income attributable to COPT common shareholders		$	11,498		$	4,807		$	4,440		$	5,913		$	5,062		$	26,658		$	40,227
Diluted EPS		$	0.18		$	0.08		$	0.07		$	0.10		$	0.08		$	0.43		$	0.70
FFO		$	52,222		$	39,053		$	38,870		$	38,156		$	37,180		$	168,301		$	171,325
FFO, excluding operating property acquisition costs		$	52,692		$	41,717		$	39,141		$	38,175		$	39,147		$	171,725		$	173,292
Basic and diluted FFO available to common share and common unit holders		$	47,227		$	34,278		$	33,880		$	33,260		$	32,586		$	148,645		$	152,626
Diluted FFO per share		$	0.69		$	0.54		$	0.53		$	0.53		$	0.52		$	2.30		$	2.46
Diluted FFO per share, excluding operating property acquisition costs		$	0.70		$	0.58		$	0.54		$	0.53		$	0.55		$	2.36		$	2.49
Diluted AFFO available to common share and common unit holders		$	30,962		$	29,498		$	26,992		$	25,234		$	22,422		$	112,686		$	119,837
Payout ratios:
Diluted FFO payout ratio, excluding operating property acquisition costs		61.7		%	71.3		%	73.2		%	75.2		%	72.0		%	69.6		%	61.8		%
Diluted AFFO payout ratio		95.0		%	89.3		%	92.6		%	99.2		%	110.9		%	93.9		%	79.7		%
Total dividends/distributions		$	33,604		$	30,518		$	29,199		$	29,217		$	29,063		$	122,538		$	112,320

 

5

 

Quarterly Consolidated Balance Sheets

(dollars in thousands)

 

		12/31/10			9/30/10			6/30/10			3/31/10			12/31/09
Assets
Properties, net
Operating properties		$	3,305,805		$	3,241,507		$	3,040,414		$	2,954,575		$	2,950,327
Land - development		256,487			241,937			234,662			236,350			231,809
Construction in progress		386,195			344,924			319,846			317,283			270,376
Less: accumulated depreciation		(503,032		)	(479,218		)	(464,408		)	(443,246		)	(422,612		)
Total properties, net		3,445,455			3,349,150			3,130,514			3,064,962			3,029,900
Cash and cash equivalents		10,102			11,733			9,879			10,180			8,262
Restricted cash and marketable securities		22,582			21,095			20,738			18,981			16,549
Accounts receivable, net		18,938			18,906			12,552			13,982			17,459
Deferred rent receivable		79,160			76,833			75,683			74,113			71,805
Intangible assets on real estate acquisitions, net		113,735			123,307			96,151			94,925			100,671
Deferred leasing and financing costs, net		60,649			56,568			55,762			50,974			51,570
Prepaid expenses and other assets		93,896			79,780			66,004			70,235			83,806
Total assets		$	3,844,517		$	3,737,372		$	3,467,283		$	3,398,352		$	3,380,022
Liabilities and equity
Liabilities:
Debt, net		$	2,323,681		$	2,468,419		$	2,182,375		$	2,107,131		$	2,053,841
Accounts payable and accrued expenses		99,699			88,461			84,164			86,650			116,455
Rents received in advance and security deposits		31,603			26,919			28,328			32,575			32,177
Dividends and distributions payable		32,986			29,899			28,580			28,556			28,440
Deferred revenue associated with operating leases		14,802			15,790			12,929			13,827			14,938
Distributions received in excess of investment in unconsolidated real estate joint venture		5,545			5,458			5,351			5,238			5,088
Other liabilities		13,063			12,698			13,990			13,836			8,451
Total liabilities		2,521,379			2,647,644			2,355,717			2,287,813			2,259,390
Commitments and contingencies		—			—			—			—			—
Equity:
COPT’s shareholders’ equity:
Preferred shares (aggregate liquidation preference of $216,333)		81			81			81			81			81
Common shares		669			594			593			589			583
Additional paid-in capital		1,511,844			1,271,363			1,269,142			1,244,046			1,238,704
Cumulative distributions in excess of net income		(281,794		)	(265,695		)	(246,008		)	(227,189		)	(209,941		)
Accumulated other comprehensive loss		(4,163		)	(4,861		)	(4,263		)	(3,278		)	(1,907		)
Total COPT’s shareholders’ equity		1,226,637			1,001,482			1,019,545			1,014,249			1,027,520
Noncontrolling interests in subsidiaries
Common units in the Operating Partnership		69,337			61,867			63,675			68,113			73,892
Preferred units in the Operating Partnership		8,800			8,800			8,800			8,800			8,800
Other consolidated entities		18,364			17,579			19,546			19,377			10,420
Total noncontrolling interests in subsidiaries		96,501			88,246			92,021			96,290			93,112
Total equity		1,323,138			1,089,728			1,111,566			1,110,539			1,120,632
Total liabilities and equity		$	3,844,517		$	3,737,372		$	3,467,283		$	3,398,352		$	3,380,022

 

6

 

Consolidated Statements of Operations

(in thousands, except per share data)

 

		Three Months Ended															Year Ended
		12/31/10			9/30/10			6/30/10			3/31/10			12/31/09			12/31/10			12/31/09
Revenues
Rental revenue		$	100,584		$	93,345		$	91,173		$	91,010		$	89,346		$	376,112		$	352,813
Tenant recoveries and other real estate operations revenue		23,181			21,205			18,084			21,218			19,391			83,688			71,171
Construction contract and other service revenues		27,637			13,608			26,065			37,365			69,553			104,675			343,087
Total revenues		151,402			128,158			135,322			149,593			178,290			564,475			767,071
Expenses
Property operating expenses		47,019			44,260			40,005			48,135			42,567			179,419			157,154
Depreciation and amortization associated with real estate operations		35,347			30,745			29,548			27,596			27,261			123,236			108,529
Construction contract and other service expenses		27,154			13,347			25,402			36,399			68,230			102,302			336,519
General and administrative expenses		6,103			6,079			5,926			5,900			5,965			24,008			23,240
Business development expenses		691			2,886			465			155			2,149			4,197			3,699
Total operating expenses		116,314			97,317			101,346			118,185			146,172			433,162			629,141
Operating income		35,088			30,841			33,976			31,408			32,118			131,313			137,930
Interest expense		(26,878		)	(26,537		)	(25,812		)	(22,638		)	(23,273		)	(101,865		)	(82,187		)
Interest and other income		7,626			395			245			1,302			215			9,568			5,164
Income from continuing operations before equity in income (loss) of unconsolidated entities and income taxes		15,836			4,699			8,409			10,072			9,060			39,016			60,907
Equity in income (loss) of unconsolidated entities		1,005			648			(72		)	(205		)	134			1,376			(941		)
Income tax expense		(33		)	(27		)	(7		)	(41		)	(27		)	(108		)	(196		)
Income from continuing operations		16,808			5,320			8,330			9,826			9,167			40,284			59,770
Discontinued operations		(56		)	1,129			486			832			379			2,391			1,529
Income before gain on sales of real estate		16,752			6,449			8,816			10,658			9,546			42,675			61,299
Gain on sales of real estate, net of income taxes		—			2,477			335			17			—			2,829			—
Net income		16,752			8,926			9,151			10,675			9,546			45,504			61,299
Less net income attributable to noncontrolling interests
Common units in the Operating Partnership		(862		)	(363		)	(364		)	(527		)	(463		)	(2,116		)	(4,495		)
Preferred units in the Operating Partnership		(165		)	(165		)	(165		)	(165		)	(165		)	(660		)	(660		)
Other consolidated entities		(201		)	434			(156		)	(45		)	170			32			185
Net income attributable to COPT		15,524			8,832			8,466			9,938			9,088			42,760			56,329
Preferred share dividends		(4,026		)	(4,025		)	(4,026		)	(4,025		)	(4,026		)	(16,102		)	(16,102		)
Net income attributable to COPT common shareholders		$	11,498		$	4,807		$	4,440		$	5,913		$	5,062		$	26,658		$	40,227
For diluted EPS computations:
Numerator for diluted EPS
Net income attributable to common shareholders		$	11,498		$	4,807		$	4,440		$	5,913		$	5,062		$	26,658		$	40,227
Amount allocable to restricted shares		(264		)	(267		)	(250		)	(290		)	(247		)	(1,071		)	(1,010		)
Numerator for diluted EPS		$	11,234		$	4,540		$	4,190		$	5,623		$	4,815		$	25,587		$	39,217
Denominator:
Weighted average common shares - basic		63,404			58,656			58,489			57,844			57,604			59,611			55,930
Dilutive effect of share-based compensation awards		236			296			421			364			413			333			477
Weighted average common shares - diluted		63,640			58,952			58,910			58,208			58,017			59,944			56,407
Diluted EPS		$	0.18		$	0.08		$	0.07		$	0.10		$	0.08		$	0.43		$	0.70

 

7

 

 

Consolidated Reconciliations of FFO, AFFO, EPS

(in thousands, except per share data)

 

		Three Months Ended															Year Ended
		12/31/10			9/30/10			6/30/10			3/31/10			12/31/09			12/31/10			12/31/09
Net income		$	16,752		$	8,926		$	9,151		$	10,675		$	9,546		$	45,504		$	61,299
Real estate-related depreciation and amortization		35,347			30,745			29,548			27,603			27,475			123,243			109,386
Depreciation and amortization on unconsolidated real estate entities		119			166			171			175			159			631			640
Gain on sales of previously depreciated operating properties, net of income taxes		4			(784		)	—			(297		)	—			(1,077		)	—
FFO		52,222			39,053			38,870			38,156			37,180			168,301			171,325
Noncontrolling interests - preferred units in the Operating Partnership		(165		)	(165		)	(165		)	(165		)	(165		)	(660		)	(660		)
Noncontrolling interests - other consolidated entities		(201		)	434			(156		)	(45		)	170			32			185
Preferred share dividends		(4,026		)	(4,025		)	(4,026		)	(4,025		)	(4,026		)	(16,102		)	(16,102		)
Depreciation and amortization allocable to noncontrolling interests in other consolidated entities		(157		)	(666		)	(297		)	(282		)	(242		)	(1,402		)	(493		)
Basic and diluted FFO allocable to restricted shares		(446		)	(353		)	(346		)	(379		)	(331		)	(1,524		)	(1,629		)
Basic and diluted FFO available to common share and common unit holders		47,227			34,278			33,880			33,260			32,586			148,645			152,626
Straight line rent adjustments		(2,047		)	1,267			(1,473		)	(2,346		)	1,676			(4,599		)	(3,847		)
Amortization of acquisition intangibles included in NOI		(231		)	(96		)	(94		)	(270		)	(679		)	(691		)	(2,126		)
Recurring capital expenditures		(15,960		)	(10,156		)	(7,080		)	(6,211		)	(13,900		)	(39,407		)	(31,738		)
Amortization of discount on Exchangeable Senior Notes, net of amounts capitalized		1,503			1,541			1,488			782			772			5,314			2,955
Operating property acquisition costs		470			2,664			271			19			1,967			3,424			1,967
Diluted AFFO available to common share and common unit holders		$	30,962		$	29,498		$	26,992		$	25,234		$	22,422		$	112,686		$	119,837
Preferred dividends		$	4,026		$	4,025		$	4,026		$	4,025		$	4,026		$	16,102		$	16,102
Preferred distributions		165			165			165			165			165			660			660
Common distributions		1,816			1,834			1,749			1,867			1,988			7,266			7,962
Common dividends		27,597			24,494			23,259			23,160			22,884			98,510			87,596
Total dividends/distributions		$	33,604		$	30,518		$	29,199		$	29,217		$	29,063		$	122,538		$	112,320
Denominator for diluted EPS		63,640			58,952			58,910			58,208			58,017			59,944			56,407
Weighted average common units		4,412			4,453			4,558			5,017			5,078			4,608			5,717
Denominator for diluted FFO per share		68,052			63,405			63,468			63,225			63,095			64,552			62,124
FFO		$	52,222		$	39,053		$	38,870		$	38,156		$	37,180		168,301			171,325
Operating property acquisition costs		470			2,664			271			19			1,967			3,424			1,967
FFO, excluding operating property acquisition costs		$	52,692		$	41,717		$	39,141		$	38,175		$	39,147		171,725			173,292
Diluted FFO available to common share and common unit holders		$	47,227		$	34,278		$	33,880		$	33,260		$	32,586		$	148,645		$	152,626
Operating property acquisition costs		470			2,664			271			19			1,967			3,424			1,967
Diluted FFO available to common share and common unit holders, excluding operating property acquisition costs		$	47,697		$	36,942		$	34,151		$	33,279		$	34,553		$	152,069		$	154,593
Diluted FFO per share, excluding operating property acquisition costs		$	0.70		$	0.58		$	0.54		$	0.53		$	0.55		$	2.36		$	2.49

 

8