Exhibit 99.1

 

Earnings Release & Supplemental Information — Unaudited June 30, 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
	Summary of Wholly Owned Operating Office Properties by Region	8
	Property Occupancy Rates by Region by Quarter for Wholly Owned Office Properties	9
	Summary of Operating, Construction and Redevelopment Office Properties Ownership	9
	Office Properties by Region — Wholly Owned Office Properties	10-15
	Renewal Analysis for Wholly Owned Office Properties	16
	Lease Expiration Analysis for Wholly Owned Office Properties	17
	Top 20 Tenants — 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 IV
	Disposition Summary for Wholly Owned Operating Office Properties	22
	Construction, Development and Land Controlled Summary	23
	Land Controlled	24
	Summary of Construction Projects	25
	Summary of Development and Redevelopment Projects	26
	Office Property Construction Placed into Service in 2011	27
	Construction Leasing Trend Analysis Over Previous Five Quarters	28
WHOLESALE DATA CENTER:		Section V
	Wholesale Data Center Summary	29
CAPITALIZATION:		Section VI
	Quarterly Common Equity Analysis	30
	Quarterly Preferred Equity and Total Market Capitalization Analysis	31
	Dividend Analysis	32
	Debt Analysis	33
	Debt Maturity Schedule	34
JOINT VENTURES:		Section VII
	Summary of Consolidated Joint Ventures	35
	Summary of Unconsolidated Joint Ventures	36
RECONCILIATIONS & DEFINITIONS:		Section VIII
	Supplementary Reconciliations of Non-GAAP Measures	37-38
	Definitions	39-42

 

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 SECOND QUARTER 2011 RESULTS

 

COLUMBIA, MD July 28, 2011 — Corporate Office Properties Trust (COPT) (NYSE: OFC) today announced financial and operating results for the quarter ended June 30, 2011. Diluted loss per share was $0.42 for the quarter ended June 30, 2011 as compared to earnings per share of $0.07 for the quarter ended June 30, 2010. Excluding a non-cash impairment charge associated primarily with the Company’s Strategic Reallocation Plan and operating property acquisition costs, funds from operations (FFO) per diluted share for the second quarter of 2011 was $0.57, a 6% increase from the $0.54 FFO per share reported in the second quarter of 2010. This increase was primarily attributable to the operations of properties acquired or placed into service in 2010, and to gains on other investments. Including the impairment charge, FFO per diluted share for the quarter ended June 30, 2011 was $0.02.

 

“Despite the challenging leasing environment presented by the tepid economic recovery, we modestly outperformed our expectations for the second quarter. We leased over a million square feet and same office cash net operating income (NOI), excluding gross lease termination fees, increased 10% sequentially over the first quarter of 2011,” stated Randall M. Griffin, Chief Executive Officer of Corporate Office Properties Trust.

 

Operating Performance:

 

Portfolio Summary — At June 30, 2011, the Company’s wholly-owned portfolio of 249 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 $25.91 per square foot. The Company’s wholly-owned portfolio was 87.3% occupied and 89.4% leased as of June 30, 2011.

 

Same Office Performance — The Company’s same office portfolio for the quarter ended June 30, 2011 represents 81% of the rentable square feet of its consolidated portfolio and consists of 190 properties. For the quarter ended June 30, 2011, the Company’s same office property cash NOI, excluding lease termination fees, increased 10% as compared to the first quarter of 2011 and decreased 0.6% as compared to the quarter ended June 30, 2010.

 

Leasing — For the quarter ended June 30, 2011, 768,000 square feet were renewed equating to an 89% renewal rate, at an average committed cost of $11.49 per square foot. Total rent on renewed space increased 1.7%, as measured from the straight-line rent in effect preceding the renewal date, and decreased 7.7% on a cash basis. For renewed and retenanted space of 911,000 square feet, total

 

 

straight-line rent increased 2.1% and total rent on a cash basis decreased 7.3%. The average committed cost for renewed and retenanted space was $13.21 per square foot.

 

Investment Activity:

 

Construction — At June 30, 2011, the Company had properties totaling 1.2 million square feet under construction for a total projected cost of $271.9 million.

 

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

 

Dispositions — The Company sold three buildings located in Commons Corporate Center in Hanover, Maryland, totaling 39,000 square feet for $3.8 million.

 

Capital Raises:

 

On May 25, the Company completed a public offering of 4,600,000 newly issued common shares. The offering generated net proceeds, before offering expenses, of approximately $145.7 million.

 

Balance Sheet and Financial Flexibility:

 

As of June 30, 2011, the Company had a total market capitalization of $4.9 billion, with $2.3 billion in debt outstanding, equating to a 47% debt-to-total market capitalization ratio. Also, the Company’s weighted average interest rate was 4.9% for the quarter ended June 30, 2011 and 81% of the Company’s debt was subject to fixed interest rates, including the effect of interest rate swaps.

 

For the second quarter 2011, the Company’s adjusted EBITDA to interest expense coverage ratio was 3.10x, and the adjusted EBITDA fixed charge coverage ratio was 2.63x. Adjusting for construction in progress, the Company’s adjusted debt-to-adjusted EBITDA ratio was 6.39x for the three months ended June 30, 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.

 

2011 Guidance and Conference Call Information:

 

Management will discuss second quarter earnings results and any adjustments to earnings and FFO guidance for 2011, if applicable, on its conference call today at 11:00 a.m. Eastern Time, details of which are listed below:

 

Conference Call Date:	Thursday, July 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:	36436732

 

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=PAL8ATKPJ

 

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, July 28 at 2:00 p.m. Eastern Time through Thursday, August 4 at midnight Eastern Time. To access the replay within in the United States, please call 888-286-8010 and use passcode 33182288. To access the replay outside the United States, please call 617-801-6888 and use passcode 33182288.

 

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 June 30, 2011, the Company owned 269 office properties totaling 21.4 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, including risks associated with the impact of a government shutdown such as a reduction in rental revenues or non-renewal of leases;

·      the dilutive effect of issuing additional common shares; 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  June 30,						Six Months Ended  June 30,
		2011			2010			2011			2010
Revenues
Real estate revenues		$	118,543		$	106,729		$	238,701		$	216,360
Construction contract and other service revenues		28,097			26,065			49,125			63,430
Total revenues		146,640			132,794			287,826			279,790
Expenses
Property operating expenses		44,721			39,260			94,431			86,206
Depreciation and amortization associated with real estate operations		31,440			28,720			62,830			55,531
Construction contract and other service expenses		26,909			25,402			47,527			61,801
Impairment losses		38,290			—			66,032			—
General and administrative expenses		6,320			5,926			13,097			11,826
Business development expenses		588			465			1,076			620
Total operating expenses		148,268			99,773			284,993			215,984
Operating (loss) income		(1,628		)	33,021			2,833			63,806
Interest expense		(26,607		)	(25,576		)	(53,246		)	(48,068		)
Interest and other income		2,756			245			3,924			1,547
Loss on early extinguishment of debt		(25		)	—			(25		)	—
(Loss) income from continuing operations before equity in loss of unconsolidated entities and income taxes		(25,504		)	7,690			(46,514		)	17,285
Equity in loss of unconsolidated entities		(94		)	(72		)	(64		)	(277		)
Income tax benefit (expense)		5,042			(7		)	5,586			(48		)
(Loss) income from continuing operations		(20,556		)	7,611			(40,992		)	16,960
Discontinued operations		(5,467		)	1,205			(6,298		)	2,514
(Loss) income before gain on sales of real estate		(26,023		)	8,816			(47,290		)	19,474
Gain on sales of real estate, net of income taxes		16			335			2,717			352
Net (loss) income		(26,007		)	9,151			(44,573		)	19,826
Net loss (income) attributable to noncontrolling interests:
Common units in the Operating Partnership		1,887			(364		)	3,366			(891		)
Preferred units in the Operating Partnership		(165		)	(165		)	(330		)	(330		)
Other consolidated entities		61			(156		)	(477		)	(201		)
Net (loss) income attributable to COPT		(24,224		)	8,466			(42,014		)	18,404
Preferred share dividends		(4,026		)	(4,026		)	(8,051		)	(8,051		)
Net (loss) income attributable to COPT common shareholders		$	(28,250	)	$	4,440		$	(50,065	)	$	10,353
Earnings per share (“EPS”) computation:
Numerator for diluted EPS:
Net (loss) income attributable to common shareholders		$	(28,250	)	$	4,440		$	(50,065	)	$	10,353
Dilutive effect of common units in the Operating Partnership		(1,887		)	—			(3,366		)	—
Amount allocable to restricted shares		(237		)	(250		)	(519		)	(540		)
Numerator for diluted EPS		$	(30,374	)	$	4,190		$	(53,950	)	$	9,813
Denominator:
Weighted average common shares - basic		68,446			58,489			67,399			58,169
Dilutive effect of common units		4,382			—			4,389			—
Dilutive effect of share-based compensation awards		—			421			—			405
Weighted average common shares - diluted		72,828			58,910			71,788			58,574
Diluted EPS		$	(0.42	)	$	0.07		$	(0.75	)	$	0.17

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

 

		Three Months Ended  June 30,						Six Months Ended  June 30,
		2011			2010			2011			2010
Net (loss) income		$	(26,007	)	$	9,151		$	(44,573	)	$	19,826
Add: Real estate-related depreciation and amortization		32,049			29,548			65,069			57,151
Add: Depreciation and amortization on unconsolidated real estate entities		115			171			234			346
Less: Gain on sales of previously depreciated operating properties, net of income taxes		(150		)	—			(150		)	(297		)
Funds from operations (“FFO”)		6,007			38,870			20,580			77,026
Noncontrolling interests - preferred units in the Operating Partnership		(165		)	(165		)	(330		)	(330		)
Noncontrolling interests - other consolidated entities		61			(156		)	(477		)	(201		)
Preferred share dividends		(4,026		)	(4,026		)	(8,051		)	(8,051		)
Depreciation and amortization allocable to noncontrolling interests in other consolidated entities		(225		)	(297		)	(290		)	(579		)
Basic and diluted FFO allocable to restricted shares		(237		)	(346		)	(519		)	(725		)
Basic and diluted FFO available to common share and common unit holders (“Basic and diluted FFO”)		1,415			33,880			10,913			67,140
Straight line rent adjustments		(2,611		)	(1,473		)	(6,523		)	(3,819		)
Amortization of acquisition intangibles included in net operating income		227			(94		)	388			(364		)
Recurring capital expenditures		(14,913		)	(7,080		)	(29,257		)	(13,291		)
Amortization of discount on Exchangeable Senior Notes, net of amounts capitalized		1,582			1,488			3,140			2,270
Impairment losses		44,605			—			72,347			—
Income tax benefit from impairment losses		(4,598		)	—			(4,598		)	—
Operating property acquisition costs		52			271			75			290
Loss on early extinguishment of debt		25			—			25			—
Diluted adjusted funds from operations available to common share and common unit
holders (“Diluted AFFO”)		$	25,784		$	26,992		$	46,510		$	52,226
Recurring capital expenditures on properties included in Strategic Reallocation Plan		2,475						8,130
Diluted AFFO, as adjusted for recurring capital expenditures on properties included in Strategic Reallocation Plan		$	28,259					$	54,640
Weighted average shares
Weighted average common shares		68,446			58,489			67,399			58,169
Conversion of weighted average common units		4,382			4,558			4,389			4,786
Weighted average common shares/units - basic FFO per share		72,828			63,047			71,788			62,955
Dilutive effect of share-based compensation awards		151			421			205			405
Weighted average common shares/units - diluted FFO per share		72,979			63,468			71,993			63,360
Diluted FFO per share		$	0.02		$	0.53		$	0.15		$	1.06
Diluted FFO per share, as adjusted for comparability		$	0.57		$	0.54		$	1.09		$	1.06
Dividends/distributions per common share/unit		$	0.4125		$	0.3925		$	0.8250		$	0.7850
Payout ratios
Diluted FFO, as adjusted for comparability		75.8		%	73.2		%	77.4		%	74.2		%
Diluted AFFO		121.9		%	92.6		%	131.1		%	95.8		%
Diluted AFFO, as adjusted for recurring capital expenditures on properties included in Strategic Reallocation Plan		111.3		%	N/A			111.6		%	N/A
Adjusted EBITDA interest coverage ratio		3.10x			2.85x			3.02x			2.90x
Adjusted EBITDA fixed charge coverage ratio		2.63x			2.41x			2.56x			2.44x
Debt to Adjusted EBITDA ratio (1)		7.87x			8.36x			N/A			N/A
Adjusted debt to Adjusted EBITDA ratio (2)		6.39x			7.14x			N/A			N/A
Reconciliation of denominators for diluted EPS and diluted FFO per share
Denominator for diluted EPS		72,828			58,910			71,788			58,574
Weighted average common units		—			4,558			—			4,786
Anti-dilutive EPS effect of share-based compensation awards		151			—			205			—
Denominator for diluted FFO per share		72,979			63,468			71,993			63,360

 

(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)

 

		June 30,			December 31,
		2011			2010
Balance Sheet Data (in thousands) (as of period end)
Properties, net of accumulated depreciation		$	3,472,861		$	3,445,455
Total assets		3,868,230			3,844,517
Debt, net		2,299,416			2,323,681
Total liabilities		2,514,858			2,521,379
Beneficiaries’ equity		1,353,372			1,323,138
Debt to total assets		59.4		%	60.4		%
Debt to undepreciated book value of real estate assets		56.0		%	57.2		%
Debt to total market capitalization		47.0		%	46.1		%
Property Data (wholly owned office properties) (as of period end)
Number of operating properties owned		249			252
Total net rentable square feet owned (in thousands)		20,244			19,990
Occupancy		87.3		%	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		$	3,868,230		$	3,844,517
Assets other than assets included in properties, net		(395,369		)	(399,062		)
Accumulated depreciation on real estate assets		534,407			503,032
Intangible assets on real estate acquisitions, net		99,917			113,735
Denominator for debt to undepreciated book value of real estate assets		$	4,107,185		$	4,062,222

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2011			2010			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		$	11,116		$	4,630		$	24,386		$	8,701
Total capital improvements on operating properties		2,426			1,524			4,416			2,394
Total leasing costs on operating properties		3,388			1,350			6,124			2,688
Less: Nonrecurring tenant improvements and incentives on operating properties		(875		)	(136		)	(3,323		)	(213		)
Less: Nonrecurring capital improvements on operating properties		(820		)	(293		)	(1,430		)	(353		)
Less: Nonrecurring leasing costs for operating properties		(347		)	(3		)	(963		)	51
Add: Recurring capital expenditures on operating properties held through joint ventures		25			8			47			23
Recurring capital expenditures		$	14,913		$	7,080		$	29,257		$	13,291

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2011			2010			2011			2010
Reconciliation of common share dividends to dividends and distributions for payout ratios
Common share dividends		$	29,632		$	23,259		$	57,336		$	46,419
Common unit distributions		1,808			1,749			3,617			3,616
Dividends and distributions for payout ratios		$	31,440		$	25,008		$	60,953		$	50,035
Reconciliation of FFO to FFO, as adjusted for comparability
FFO		$	6,007		$	38,870		$	20,580		$	77,026
Impairment losses, net of related tax benefit		40,007			—			67,749			—
Operating property acquisition costs		52			271			75			290
Loss on early extinguishment of debt		25			—			25			—
FFO, as adjusted for comparability		$	46,091		$	39,141		$	88,429		$	77,316
Reconciliation of diluted FFO to diluted FFO available to common share and common unit holders, as adjusted for comparability
Diluted FFO		$	1,415		$	33,880		$	10,913		$	67,140
Impairment losses, net of related tax benefit		40,007			—			67,749			—
Operating property acquisition costs		52			271			75			290
Loss on early extinguishment of debt		25			—			25			—
Diluted FFO available to common share and common unit holders, as adjusted for comparability		$	41,499		$	34,151		$	78,762		$	67,430
Reconciliation of GAAP net (loss) income to adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”)
Net (loss) income		$	(26,007	)	$	9,151		$	(44,573	)	$	19,826
Interest expense on continuing operations		26,607			25,576			53,246			48,068
Interest expense on discontinued operations		223			345			512			556
Income tax (benefit) expense		(5,042		)	7			(5,586		)	59
Real estate-related depreciation and amortization		32,049			29,548			65,069			57,151
Depreciation of furniture, fixtures and equipment		623			632			1,248			1,282
Impairment losses		44,605			—			72,347			—
Adjusted EBITDA		$	73,058		$	65,259		$	142,263		$	126,942
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		$	26,607		$	25,576		$	53,246		$	48,068
Interest expense from discontinued operations		223			345			512			556
Less: Amortization of deferred financing costs		(1,702		)	(1,495		)	(3,461		)	(2,621		)
Less: Amortization of discount on Exchangeable Senior Notes, net of amounts capitalized		(1,582		)	(1,488		)	(3,140		)	(2,270		)
Denominator for interest coverage-Adjusted EBITDA		23,546			22,938			47,157			43,733
Preferred share dividends		4,026			4,026			8,051			8,051
Preferred unit distributions		165			165			330			330
Denominator for fixed charge coverage-Adjusted EBITDA		$	27,737		$	27,129		$	55,538		$	52,114
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		$	62,961		$	64,263		$	122,021		$	125,023
Less: Straight-line rent adjustments		(1,581		)	(1,511		)	(4,662		)	(3,842		)
Less: Amortization of deferred market rental revenue		(193		)	(281		)	(432		)	(736		)
Same office property cash net operating income		$	61,187		$	62,471		$	116,927		$	120,445
Less: Lease termination fees, gross		(46		)	(976		)	(183		)	(1,066		)
Same office property cash net operating income, excluding
gross lease termination fees		$	61,141		$	61,495		$	116,744		$	119,379
Reconciliation of debt, net to denominator for adjusted debt to Adjusted EBITDA ratio
Debt, net		$	2,299,416		$	2,182,375
Less: Construction in progress, including held for sale properties		(430,608		)	(319,846		)
Denominator for adjusted debt to Adjusted EBITDA ratio		$	1,868,808		$	1,862,529

 

 

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 June 30, 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 June 30, 2011, COPT’s wholly-owned portfolio of 249 office properties encompassed 20.2 million square feet and was 89.4% leased. As of 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 installations (rather than weapons production-oriented bases) that are executing programs deemed critical to the nation’s current and future security. 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	Michelle Layne, IR Specialist
& Construction	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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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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Selected Financial Summary Data

(in thousands, except per share data)

 

		Three Months Ended																				Six Months Ended
		6/30/11				3/31/11				12/31/10				9/30/10				6/30/10				6/30/11				6/30/2010
SUMMARY OF RESULTS
NOI		$		75,352		$		71,536		$		76,694		$		70,724		$		69,847		$		146,888		$		134,547
Adjusted EBITDA		$		73,058		$		69,205		$		79,652		$		66,976		$		65,259		$		142,263		$		126,942
Net (loss) income attributable to COPT common shareholders		$		(28,250	)	$		(21,815	)	$		11,498		$		4,807		$		4,440		$		(50,065	)	$		10,353
FFO - per NAREIT		$		6,007		$		14,573		$		52,222		$		39,053		$		38,870		$		20,580		$		77,026
FFO - as adjusted for comparability		$		46,091		$		42,338		$		52,692		$		41,717		$		39,141		$		88,429		$		77,316
Basic and diluted FFO available to common share and common unit holders		$		1,415		$		9,498		$		47,227		$		34,278		$		33,880		$		10,913		$		67,140
Diluted AFFO available to common share and common unit holders		$		25,784		$		20,726		$		30,962		$		29,498		$		26,992		$		46,510		$		52,226
Per share - diluted:
EPS		$		(0.42	)	$		(0.33	)	$		0.18		$		0.08		$		0.07		$		(0.75	)	$		0.17
FFO - NAREIT		$		0.02		$		0.13		$		0.69		$		0.54		$		0.53		$		0.15		$		1.06
FFO - as adjusted for comparability		$		0.57		$		0.52		$		0.70		$		0.58		$		0.54		$		1.09		$		1.06
Dividend per common share		$		0.4125		$		0.4125		$		0.4125		$		0.4125		$		0.3925		$		0.8250		$		0.7850
Payout ratios:
Diluted FFO - as adjusted for comparability		75.8			%	79.2			%	61.7			%	71.3			%	73.2			%	77.4			%	74.2			%
Diluted AFFO		121.9			%	142.4			%	95.0			%	89.3			%	92.6			%	131.1			%	95.8			%
Diluted AFFO, as adjusted for recurring capital expenditures of properties included in disposition plan or are held for sale		111.3			%	111.9			%	N/A				N/A				N/A				111.6			%	N/A
CAPITALIZATION
Debt, net		$		2,299,416		$		2,396,795		$		2,323,681		$		2,468,419		$		2,182,375
Debt to Total Market Capitalization		47.0			%	46.0			%	46.1			%	48.6			%	45.3			%
Debt to Undepreciated Book Value of Real Estate Assets		56.0			%	58.4			%	57.2			%	62.5			%	59.1			%
Adjusted EBITDA fixed charge coverage ratio		2.6			x	2.5			x	2.9			x	2.4			x	2.4			x
Adjusted Debt to Adjusted EBITDA ratio		6.4			x	7.2			x	6.1			x	7.9			x	7.1			x
OTHER
Revenue from early termination of leases		$		196		$		146		$		2,014		$		182		$		955		$		342		$		1,189
Capitalized interest costs		$		4,308		$		4,341		$		4,520		$		3,861		$		4,208		$		8,649		$		8,144

 

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