Exhibit 99.1

 

 

Earnings Release & Supplemental Information — Unaudited

March 31, 2011

 

OVERVIEW:		Section I
Earnings Release		—
Summary Description		1
Research Coverage		2
Selected Financial Summary Data		3-4
FINANCIAL STATEMENTS:		Section II
Quarterly Consolidated Balance Sheets		5
Consolidated Statements of Operations		6
Consolidated Reconciliations of FFO and AFFO		7
PORTFOLIO INFORMATION:		Section III
Office Property Summary by Region — Wholly Owned Office Properties		8-13
Land Controlled		14
Top 20 Tenants — Wholly Owned office Properties		15
OPERATING STATISTICS:		Section IV
Renewal Analysis for Wholly Owned Office Properties		16
Lease Expiration Analysis for Wholly Owned Office Properties		17
Property Occupancy by Region by Quarter for Wholly Owned Office Properties		18
Real Estate Revenues & NOI by Region		19
Same Office Properties Average Occupancy by Region		20
Same Office Property Revenues & NOI by Region		21
INVESTING ACTIVITY:		Section V
Summary of Construction Projects		22
Summary of Development and Redevelopment Projects		23
Construction and Development Summary		24
2011 Office Property Construction Placed into Service		25
Construction Leasing Progression Over Previous Five Quarters		26
WHOLESALE DATA CENTERS:		Section VI
Wholesale Data Center Summary		27
CAPITALIZATION:		Section VII
Quarterly Common Equity Analysis		28
Quarterly Preferred Equity and Total Market Capitalization Analysis		29
Dividend Analysis		30
Debt Analysis		31
Debt Maturity Schedule		32
CAPITALIZATION:		Section VIII
Summary of Consolidated Joint Ventures		33
Summary of Unconsolidated Joint Ventures		34
RECONCILIATIONS & DEFINITIONS:		Section IX
Supplementary Reconciliations of Non-GAAP Measures		35-36
Definitions		37-40

 

Please refer to the section entitled “Definitions” for definitions of non-GAAP measures and other terms we use herein that may not be customary or commonly known.

 

 

	6711 Columbia Gateway Drive, Suite 300
	Columbia, Maryland 21046
	Telephone 443-285-5400
	Facsimile 443-285-7650
	www.copt.com
	NYSE: OFC
	NEWS RELEASE
	IR Contacts:
FOR IMMEDIATE RELEASE	Stephanie Krewson	Michelle Layne
	VP, Investor Relations	Investor Relations Specialist
	443-285-5453	443-285-5452
	stephanie.krewson@copt.com	michelle.layne@copt.com

 

COPT REPORTS FIRST QUARTER 2011 RESULTS AND LAUNCHES

STRATEGIC REALLOCATION PLAN

 

COLUMBIA, MD April 28, 2011 — Corporate Office Properties Trust (COPT) (NYSE: OFC) today announced financial and operating results for the first quarter ended March 31, 2011. Diluted earnings per share was ($0.33) for the quarter ended March 31, 2011 as compared to $0.10 for the quarter ended March 31, 2010. Excluding a previously announced, non-cash impairment charge associated with the Company’s Fort Ritchie investment, funds from operations (FFO) per diluted share for the first quarter of 2011 was $0.52, a 2% decline from the $0.53 FFO per share reported in the first quarter of 2010. Including the impairment charge, FFO per diluted share for the quarter ended March 31, 2011 was $0.13.

 

Strategic Reallocation Plan:

COPT’s management also announced it is accelerating asset dispositions as part of a Strategic Reallocation Plan designed to increase its concentration of buildings serving the specialized needs of tenants in the U.S. Government and Defense Information Technology industries (Defense IT), and Data Centers catering to both sectors.

 

“By executing our Strategic Reallocation Plan, COPT will increase its percentage of real estate revenues serving our super core customers from 59% today, to 67% at the end of 2013,” stated Randall M. Griffin, Chief Executive Officer of Corporate Office Properties Trust. “We also will decrease our exposure to traditional suburban office buildings, which will position us to better weather future economic downturns. In short, COPT will be an even stronger, more focused company that can deliver impressive earnings growth and shareholder returns.”

 

Revised 2011 Guidance:

Management is revising its prior earnings and FFO guidance to reflect its updated outlook for the year and the near-term dilution it anticipates from assets to be sold as part of the Strategic Reallocation Plan. Details will be provided on its conference call today at 11:00 a.m. Eastern Time. Conference call details are provided later in this press release.

 

First Quarter 2011 Results:

For the first quarter ended March 31, 2011 — EPS was ($0.33) for the quarter ended March 31, 2011 as compared to $0.10 for the quarter ended March 31, 2010. Excluding a $27.7 million non-cash impairment charge associated with its investment in Fort Ritchie, FFO for the first quarter ended March 31, 2011 totaled $42.3 million, or $0.52 per diluted share. First quarter 2011 results

 

 

represent a 2% decrease on a per share basis from the $0.53 per diluted share, or $38.2 million of FFO for the first quarter of 2010. Including the impairment charge, FFO per diluted share for the first quarter of 2011 was $0.13 versus $0.53 reported in the first quarter of 2010.

 

Operating Performance:

Portfolio Summary — At March 31, 2011, the Company’s wholly-owned portfolio of 252 office properties totaled 20.2 million square feet. The weighted average remaining lease term for the portfolio was 4.9 years and the average rental rate (including tenant reimbursements) was $25.75 per square foot. The Company’s wholly-owned portfolio was 87.0% occupied and 89.2% leased as of March 31, 2011.

 

Same Office Performance — The Company’s same office portfolio for the quarter ended March 31, 2011 represents 91% of the rentable square feet of its consolidated portfolio and consists of 241 properties. For the quarter ended March 31, 2011, the Company’s same office property cash NOI decreased 5% as compared to the three months ended March 31, 2010.

 

Leasing — For the quarter ended March 31, 2011, 784,000 square feet were renewed equating to a 67% renewal rate, at an average committed cost of $10.69 per square foot. Total rent on renewed space increased 5.5% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date, and remained flat on a cash basis. For renewed and retenanted space of 1.0 million square feet, total straight-line rent increased 4.3% and total rent on a cash basis remained flat. The average committed cost for renewed and retenanted space was $15.61 per square foot.

 

Investment Activity:

Developments — At March 31, 2011, the Company had properties totaling 3.1 million square feet under construction, development and redevelopment for a total projected cost of $672.8 million. The Company controlled land at March 31, 2011 of 2,265 acres that can support up to 21.8 million square feet of development.

 

Acquisitions — The Company did not complete any acquisitions during the first quarter 2011.

 

Balance Sheet and Financial Flexibility:

As of March 31, 2011, the Company had a total market capitalization of $5.2 billion, with $2.4 billion in debt outstanding, equating to a 46% debt-to-total market capitalization ratio. Also, the Company’s weighted average interest rate was 4.9% for the quarter ended March 31, 2011 and 82% of its debt was subject to fixed interest rates as of March 31, 2011.

 

For the first quarter 2011, the Company’s adjusted EBITDA to interest expense coverage ratio was 2.93x, and the adjusted EBITDA fixed charge coverage ratio was 2.49x. Adjusting for construction in progress, the Company’s adjusted debt-to-adjusted EBITDA ratio was 7.23x as of March 31, 2011.

 

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.

 

Conference Call:

Supplemental presentation — COPT will be posting a supplemental presentation that discusses the Strategic Reallocation Plan approximately 15 minutes before its 11:00 a.m. Eastern Time conference call in the Investor Relations section of COPT’s website, www.copt.com.

 

 

Management will discuss first quarter earnings results, the details of its Strategic Reallocation Plan and its revised earnings and FFO guidance for 2011 on its conference call today at 11:00 a.m. Eastern Time, details of which are listed below:

 

Conference Call Date:		Thursday, April 28, 2011
Time:		11:00 a.m. Eastern Time
Telephone Number: (within the U.S.)		888-679-8034
Telephone Number: (outside the U.S.)		617-213-4847
Passcode:		18057385

 

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=PG9V4G73R

 

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, April 28 at 2:00 p.m. Eastern Time through Thursday, May 5 at midnight Eastern Time. To access the replay within in the United States, please call 888-286-8010 and use passcode 96513809. To access the replay outside the United States, please call 617-801-6888 and use passcode 96513809.

 

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 the information furnished with 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 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. As of March 31, 2011, the Company owned 272 office properties totaling 21.3 million rentable square feet, which includes 20 properties totaling 1.1 million 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. COPT is an S&P MidCap 400 company and more information 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,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” 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:

·      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;

·      the Company’s ability to borrow on favorable terms;

·      risks of real estate acquisition and development activities, 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;

·      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.

 

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 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Amounts in thousands, except per share data)

 

		Three Months Ended March 31,
		2011			2010
Revenues
Real estate revenues		$	122,367		$	112,228
Construction contract and other service revenues		21,028			37,365
Total revenues		143,395			149,593
Expenses
Property operating expenses		50,905			48,135
Depreciation and amortization associated with real estate operations		33,020			27,596
Construction contract and other service expenses		20,618			36,399
Impairment loss		27,742			—
General and administrative expenses		6,777			5,900
Business development expenses		488			155
Total operating expenses		139,550			118,185
Operating income		3,845			31,408
Interest expense		(26,928		)	(22,638		)
Interest and other income		1,168			1,302
(Loss) income from continuing operations before equity in income (loss) of unconsolidated entities and income taxes		(21,915		)	10,072
Equity in income (loss) of unconsolidated entities		30			(205		)
Income tax benefit (expense)		544			(41		)
(Loss) income from continuing operations		(21,341		)	9,826
Discontinued operations		74			832
(Loss) income before gain on sales of real estate		(21,267		)	10,658
Gain on sales of real estate, net of income taxes		2,701			17
Net (loss) income		(18,566		)	10,675
Less net (loss) income attributable to noncontrolling interests
Common units in the Operating Partnership		1,479			(527		)
Preferred units in the Operating Partnership		(165		)	(165		)
Other consolidated entities		(538		)	(45		)
Net (loss) income attributable to COPT		(17,790		)	9,938
Preferred share dividends		(4,025		)	(4,025		)
Net (loss) income attributable to COPT common shareholders		$	(21,815	)	$	5,913
Earnings per share “EPS” computation:
Numerator for diluted EPS:
Net (loss) income attributable to common shareholders		$	(21,815	)	$	5,913
Amount allocable to restricted shares		(282		)	(290		)
Numerator for diluted EPS		(22,097		)	5,623
Denominator:
Weighted average common shares - basic		66,340			57,844
Dilutive effect of share-based compensation awards		—			364
Weighted average common shares - diluted		66,340			58,208
Diluted EPS		$	(0.33	)	$	0.10

 

 

Corporate Office Properties Trust

Summary  Financial Data

(unaudited)

(Amounts in thousands, except per share data and ratios)

 

		Three Months Ended March 31,
		2011			2010
Net (loss) income		$	(18,566	)	$	10,675
Add: Real estate-related depreciation and amortization		33,020			27,603
Add: Depreciation and amortization on unconsolidated real estate entities		119			175
Less: Gain on sales of previously depreciated operating properties, net of income taxes		—			(297		)
Funds from operations (“FFO”)		14,573			38,156
Less: Noncontrolling interests - preferred units in the Operating Partnership		(165		)	(165		)
Less: Noncontrolling interests - other consolidated entities		(538		)	(45		)
Less: Preferred share dividends		(4,025		)	(4,025		)
Less: Depreciation and amortization allocable to noncontrolling interests in other consolidated entities		(65		)	(282		)
Less: Basic and diluted FFO allocable to restricted shares		(282		)	(379		)
Basic and diluted FFO available to common share and common unit holders (“Basic and diluted FFO”)		9,498			33,260
Less: Straight line rent adjustments		(3,912		)	(2,346		)
Less: Amortization of acquisition intangibles included in net operating income		161			(270		)
Less: Recurring capital expenditures		(14,344		)	(6,211		)
Add: Amortization of discount on Exchangeable Senior Notes, net of amounts capitalized		1,558			782
Add: Impairment loss		27,742			—
Add: Operating property acquisition costs		23			19
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)		$	20,726		$	25,234
Weighted average shares
Weighted average common shares		66,340			57,844
Conversion of weighted average common units		4,396			5,017
Weighted average common shares/units - basic FFO per share		70,736			62,861
Dilutive effect of share-based compensation awards		261			364
Weighted average common shares/units - diluted FFO per share		70,997			63,225
Diluted FFO per share		$	0.13		$	0.53
Diluted FFO per share, as adjusted for comparability		$	0.52		$	0.53
Dividends/distributions per common share/unit		$	0.4125		$	0.3925
Diluted FFO payout ratio, as adjusted for comparability		79.2		%	75.2		%
Diluted AFFO payout ratio		142.4		%	99.2		%
Adjusted EBITDA interest coverage ratio		2.93		x	2.97		x
Adjusted EBITDA fixed charge coverage ratio		2.49		x	2.47		x
Debt to Adjusted EBITDA ratio (1)		8.66		x	8.54		x
Adjusted debt to Adjusted EBITDA ratio (2)		7.23		x	7.25		x
Reconciliation of denominators for diluted EPS and diluted FFO per share
Denominator for diluted EPS		66,340			58,208
Weighted average common units		4,396			5,017
Anti-dilutive EPS effect of share-based compensation awards		261			—
Denominator for diluted FFO per share		70,997			63,225

 

(1) Represents debt divided by Adjusted EBITDA for the three month period multiplied by four.

(2) Represents debt adjusted to subtract construction in progress as of period end divided by Adjusted EBITDA for the three month period multiplied by four.

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars and shares in thousands, except per share data)

 

		March 31,			December 31,
		2011			2010
Balance Sheet Data (in thousands) (as of period end)
Properties, net of accumulated depreciation		$	3,468,771		$	3,445,455
Total assets		3,865,809			3,844,517
Debt, net		2,396,795			2,323,681
Total liabilities		2,594,151			2,521,379
Beneficiaries’ equity		1,271,658			1,323,138
Debt to total assets		62.0		%	60.4		%
Debt to undepreciated book value of real estate assets		58.4		%	57.2		%
Debt to total market capitalization		46.0		%	46.1		%
Property Data (wholly owned office properties) (as of period end)
Number of operating properties owned		252			252
Total net rentable square feet owned (in thousands)		20,183			19,990
Occupancy		87.0		%	88.2		%
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		$	3,865,809		$	3,844,517
Assets other than assets included in properties, net		(397,038		)	(399,062		)
Accumulated depreciation on real estate assets		526,825			503,032
Intangible assets on real estate acquisitions, net		106,444			113,735
Denominator for debt to undepreciated book value of real estate assets		$	4,102,040		$	4,062,222

 

		Three Months Ended
		March 31,
		2011			2010
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		$	13,270		$	4,071
Total capital improvements on operating properties		1,990			870
Total leasing costs on operating properties		2,736			1,338
Less: Nonrecurring tenant improvements and incentives on operating properties		(2,448		)	(77		)
Less: Nonrecurring capital improvements on operating properties		(610		)	(60		)
Less: Nonrecurring leasing costs incurred on operating properties		(616		)	54
Add: Recurring capital expenditures on operating properties held through joint ventures		22			15
Recurring capital expenditures		$	14,344		$	6,211

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

 

		Three Months Ended March 31,
		2011			2010
Reconciliation of common share dividends to dividends and distributions for payout ratios
Common share dividends		$	27,704		$	23,160
Common unit distributions		1,809			1,867
Dividends and distributions for payout ratios		$	29,513		$	25,027
Reconciliation of FFO to FFO, as adjusted for comparability
FFO		$	14,573		$	38,156
Impairment loss		27,742			—
Operating property acquisition costs		23			19
FFO, as adjusted for comparability		$	42,338		$	38,175
Reconciliation of diluted FFO to diluted FFO available to common share and common unit holders, as adjusted for comparability
Diluted FFO		$	9,498		$	33,260
Impairment loss		27,742			—
Operating property acquisition costs		23			19
Diluted FFO available to common share and common unit holders, as adjusted for comparability		$	37,263		$	33,279
Reconciliation of GAAP net income to adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”)
Net income		$	(18,566	)	$	10,675
Interest expense on continuing operations		26,928			22,638
Interest expense on discontinued operations		—			65
Income tax (benefit) expense		(544		)	52
Real estate-related depreciation and amortization		33,020			27,603
Depreciation of furniture, fixtures and equipment		625			650
Impairment loss		27,742			—
Adjusted EBITDA		$	69,205		$	61,683
Reconciliation of interest expense from continuing operations to the denominators for interest coverage-Adjusted EBITDA and fixed charge coverage-Adjusted EBITDA
Interest expense from continuing operations		$	26,928		$	22,638
Interest expense from discontinued operations		—			65
Less: Amortization of deferred financing costs		(1,759		)	(1,126		)
Less: Amortization of discount on Exchangeable Senior Notes, net of amounts capitalized		(1,558		)	(782		)
Denominator for interest coverage-Adjusted EBITDA		23,611			20,795
Preferred share dividends		4,025			4,025
Preferred unit distributions		165			165
Denominator for fixed charge coverage-Adjusted EBITDA		$	27,801		$	24,985
Reconciliation of same office property net operating income to same office property cash net operating income and same office property cash net operating income, excluding gross lease termination fees
Same office property net operating income		$	62,123		$	64,935
Less: Straight-line rent adjustments		(3,136		)	(2,293		)
Less: Amortization of deferred market rental revenue		(278		)	(605		)
Same office property cash net operating income		$	58,709		$	62,037
Less: Lease termination fees, gross		(157		)	(278		)
Same office property cash net operating income, excluding gross lease termination fees		$	58,552		$	61,759
Reconciliation of debt, net to denominator for adjusted debt to Adjusted EBITDA ratio
Debt, net		$	2,396,795		$	2,107,131
Less: Construction in progress		(396,170		)	(317,283		)
Denominator for adjusted debt to Adjusted EBITDA ratio		$	2,000,625		$	1,789,848

 

 

First Quarter 2011

 

Top 20 Tenants

(Based on Annualized Rental Revenue of

wholly owned office properties, dollars in thousands)

 

							Percentage of		Total			Percentage		Weighted
					Total		Total		Annualized			of Total		Average
			Number of		Occupied		Occupied		Rental			Annualized Rental		Remaining
Tenant			Leases		Square Feet		Square Feet		Revenue (2)			Revenue		Lease Term (3)
United States of America	(4)		77		3,165,508		18.0	%	$	95,956		21.2	%	5.9
Northrop Grumman Corporation	(5)		16		1,204,210		6.9	%	31,957			7.1	%	6.5
Booz Allen Hamilton, Inc.			9		806,288		4.6	%	24,627			5.5	%	4.9
Computer Sciences Corporation	(5)		6		609,715		3.5	%	18,539			4.1	%	2.9
ITT Corporation	(5)		9		332,490		1.9	%	8,162			1.8	%	3.9
The MITRE Corporation			4		267,087		1.5	%	7,880			1.7	%	5.6
Wells Fargo & Company	(5)		6		216,374		1.2	%	7,780			1.7	%	7.2
The Aerospace Corporation			3		238,610		1.4	%	7,631			1.7	%	3.9
L-3 Communications Holdings, Inc.	(5)		4		258,192		1.5	%	7,521			1.7	%	3.0
CareFirst, Inc.			2		222,610		1.3	%	7,247			1.6	%	5.5
Integral Systems, Inc.	(5)		4		241,627		1.4	%	6,249			1.4	%	8.9
Comcast Corporation	(5)		7		308,332		1.8	%	6,156			1.4	%	2.5
The Boeing Company	(5)		6		196,939		1.1	%	5,974			1.3	%	3.5
AT&T Corporation	(5)		4		317,570		1.8	%	5,408			1.2	%	7.7
Ciena Corporation			5		270,557		1.5	%	5,074			1.1	%	2.0
General Dynamics Corporation	(5)		6		208,264		1.2	%	4,601			1.0	%	2.4
Raytheon Company			6		164,404		0.9	%	4,402			1.0	%	3.0
Unisys Corporation			1		156,695		0.9	%	4,143			0.9	%	9.2
The Johns Hopkins Institutions	(5)		5		141,403		0.8	%	3,634			0.8	%	5.6
Merck & Co., Inc.			2		225,894		1.3	%	2,949			0.7	%	1.3
Subtotal Top 20 Office Tenants			182		9,552,769		54.4	%	265,890			58.8	%	5.3
All remaining tenants			713		7,998,604		45.6	%	185,971			41.2	%	4.2
Total/Weighted Average			895		17,551,373		100.0	%	$	451,861		100.0	%	4.9

 

(1) Table excludes owner occupied leasing activity which represents 173,085 square feet with total annualized rental revenue of $4.0 million, and a weighted average remaining lease term of 4.9 years as of March 31, 2011.

(2) Total Annualized Rental Revenue is the monthly contractual base rent as of March 31, 2011, multiplied by 12, plus the estimated annualized expense reimbursements under existing office leases.

(3) The weighting of the lease term was computed using Total Rental Revenue.

(4) 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.

(5) Includes affiliated organizations or agencies.

 

 

First Quarter 2011

 

Summary Description

 

The Company — Corporate Office Properties Trust (the “Company” or “COPT”) is a self-managed, specialty office real estate investment trust (“REIT”). As of March 31, 2011, COPT derived 59% of its annualized rental revenue from wholly owned properties occupied primarily by tenants in the U.S. Government and/or defense information technology (“Defense IT”) sectors and data centers serving such sectors and  84% of the Company’s square footage was located in the Greater Washington/Baltimore region. At March 31, 2011, COPT’s wholly-owned portfolio of 252 office properties encompassed 20.2 million square feet and was 89.2% leased. At the same date, COPT also owns one wholesale data center that was 17% leased.

 

Corporate Strategy — Through acquiring and developing, COPT has assembled a portfolio of Class-A office parks located adjacent to knowledge-based defense installation (rather than weapons production-oriented bases) that are executing programs deemed critical to the nation’s current and future security needs. COPT also owns dedicated data centers that serve the specialized requirements of our government and Defense IT tenants and a wholesale data center.

 

Management:	Investor Relations:
Randall M. Griffin, CEO	Stephanie M. Krewson, VP of IR
Roger A. Waesche, Jr., President & COO	443-285-5453,  stephanie.krewson@copt.com
Stephen E. Riffee, EVP & CFO
Wayne H. Lingafelter, EVP, Development & Construction	Michelle Layne, IR Specialist
	443-285-5452,  michelle.layne@copt.com

 

Disclosure Statement — This supplemental package contains forward-looking statements within the meaning of the Federal securities laws. 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.  Although we believe that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, 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; risks of real estate acquisition and development activities, 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 and 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 for properties 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, 2010.

 

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First Quarter 2011

 

Research Coverage

 

EQUITY RESEARCH COVERAGE:

 

Firm		Analyst		Phone		Email
Bank of America Merrill Lynch		Jamie Feldman		646-855-5808		james.feldman@baml.com
BMO Capital Markets		Richard Anderson		212-885-4180		richard.anderson@bmo.com
Citigroup Global Markets		Michael Bilerman		212-816-1383		michael.bilerman@citi.com
Cowen and Company		Michael Gorman		646-562-1381		michael.gorman@cowen.com
Friedman Billings Ramsey & Co.		Sri Nagarajan		646-885-5429		snagarajan@fbr.com
Green Street Advisors		Michael Knott		949-640-8780		mknott@greenstreetadvisors.com
ISI Group		Steve Sakwa		212-446-9462		ssakwa@isigrp.com
Jeffries & Co.		Steve Benyik		212-707-6348		sbenyik@jefferies.com
JP Morgan		Anthony Paolone		212-622-6682		anthony.paolone@jpmorgan.com
Keefe, Bruyette & Woods		Sheila McGrath		212-887-7793		smcgrath@kbw.com
KeyBanc Capital Markets		Jordan Sadler		917-368-2280		jsadler@keybanccm.com
Macquarie Securities		Rob Stevenson		212-231-8068		rob.stevenson@macquarie.com
Raymond James		Bill Crow		727-567-2594		bill.crow@raymondjames.com
RBC Capital Markets		Dave Rodgers		440-715-2647		dave.rodgers@rbccm.com
Robert W. Baird & Co., Inc.		Chris Lucas		703-821-5780		crlucas@rwbaird.com
Stifel, Nicolaus & Company, Inc.		John Guinee		443-224-1307		jwguinee@stifel.com
Wells Fargo Securities		Brendan Maiorana		443-263-6516		brendan.maiorana@wachovia.com

 

With the exception of Green Street Advisors, the above-listed firms are those whose analysts publish research material on the Company and whose estimates of our FFO per share can be tracked through Thomson’s First Call Corporation. Any opinions, estimates, or forecasts the above analysts make regarding COPT’s future performance are their own and do not represent the views, estimates, or forecasts of COPT’s management.

 

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First Quarter 2011

 

Selected Financial Summary Data

(in thousands, except per share data)

 

		Three Months Ended
		3/31/11			12/31/10			9/30/10			6/30/10			3/31/10
SUMMARY OF RESULTS
NOI		$	71,536		$	76,694		$	70,724		$	69,847		$	64,700
Adjusted EBITDA		$	69,205		$	79,652		$	66,976		$	65,259		$	61,683
Net (loss) income		$	(18,566	)	$	16,752		$	8,926		$	9,151		$	10,675
Net (loss) income attributable to noncontrolling interests		776			(1,228		)	(94		)	(685		)	(737		)
Preferred share dividends		(4,025		)	(4,026		)	(4,025		)	(4,026		)	(4,025		)
Net (loss) income attributable to COPT common shareholders		$	(21,815	)	$	11,498		$	4,807		$	4,440		$	5,913
FFO - per NAREIT		$	14,573		$	52,222		$	39,053		$	38,870		$	38,156
FFO - as adjusted for comparability		$	42,338		$	52,692		$	41,717		$	39,141		$	38,175
Basic and diluted FFO available to common share and common unit holders		$	9,498		$	47,227		$	34,278		$	33,880		$	33,260
Diluted AFFO available to common share and common unit holders		$	20,726		$	30,962		$	29,498		$	26,992		$	25,234
Per share - diluted:
EPS		$	(0.33	)	$	0.18		$	0.08		$	0.07		$	0.10
FFO - NAREIT		$	0.13		$	0.69		$	0.54		$	0.53		$	0.53
FFO - as adjusted for comparability		$	0.52		$	0.70		$	0.58		$	0.54		$	0.53
Dividend per common share		$	0.4125		$	0.4125		$	0.4125		$	0.3925		$	0.3925
Payout ratios:
Diluted FFO - as adjusted for comparability		79.2		%	61.7		%	71.3		%	73.2		%	75.2		%
Diluted AFFO		142.4		%	95.0		%	89.3		%	92.6		%	99.2		%
Diluted AFFO, as adjusted for recurring capital expenditures of properties included in disposition plan		111.9		%	N/A			N/A			N/A			N/A

 

CAPITALIZATION
Debt, net		$	2,396,795		$	2,323,681		$	2,468,419		$	2,182,375		$	2,107,131
Debt to Total Market Capitalization		46.0		%	46.1		%	48.6		%	45.3		%	43.1		%
Debt to Undepreciated Book Value of Real Estate Assets		58.4		%	57.2		%	62.5		%	59.1		%	58.5		%
Adjusted EBITDA fixed charge coverage ratio		2.5		x	2.9		x	2.4		x	2.4		x	2.5		x
Adjusted Debt to Adjusted EBITDA ratio		7.2		x	6.1		x	7.9		x	7.1		x	7.3		x

 

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