Exhibit 99.1

Earnings Release & Supplemental Information — Unaudited

March 31, 2012

 

OVERVIEW:

Section I

Earnings Release

Summary Description

1

Equity Research Coverage

2

Selected Financial Summary Data

3

Selected Portfolio Data

4

 

 

FINANCIAL STATEMENTS:

Section II

Quarterly Consolidated Balance Sheets

5

Consolidated Statements of FFO

6

Consolidated Statements of Operations

7

Consolidated Reconciliations of AFFO

8

 

 

PORTFOLIO INFORMATION:

Section III

Consolidated Office Properties by Region

9

NOI from Real Estate Operations and Occupancy by Property Grouping

10

Real Estate Revenues & NOI from Real Estate Operations by Segment

11

Consolidated Office Occupancy Rates by Region by Quarter

12

Same Office Properties Average Occupancy Rates by Region

13

Same Office Property Real Estate Revenues & NOI by Region

14

Unstabilized Office Properties

15

Office Leasing for the Quarter Ended

16

Office Lease Expiration Analysis

17

Top 20 Office Tenants

18

 

 

INVESTING ACTIVITY:

Section IV

Dispositions and Acquisitions

19

Construction, Redevelopment, Wholesale Data Center, Land Held

 

& Pre-Construction

20

Summary of Construction Projects

21

Summary of Redevelopment Projects

22

Wholesale Data Center

23

Summary of Land Held and Pre-Construction

24

 

 

CAPITALIZATION:

Section V

Quarterly Common Equity Analysis

25

Quarterly Preferred Equity and Total Market Capitalization Analysis

26

Dividend Analysis

27

Debt Analysis

28-29

Debt Maturity Schedule

30

Consolidated Joint Ventures

31

Unconsolidated Joint Venture

32

 

 

RECONCILIATIONS & DEFINITIONS:

Section VI

Supplementary Reconciliations of Non-GAAP Measures

33-34

Definitions

35-39

 

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.

 



 

GRAPHIC

 

6711 Columbia Gateway Drive, Suite 300

 

Columbia, Maryland 21046

 

Telephone 443-285-5400

 

Facsimile 443-285-7650

 

www.copt.com

 

NYSE: OFC

 

 

 

 

 

NEWS RELEASE

 

 

 

 

FOR IMMEDIATE RELEASE

 

IR Contacts:

 

 

 

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 2012 RESULTS

 

COLUMBIA, MD April 26, 2012 — Corporate Office Properties Trust (COPT) (NYSE: OFC), an office real estate investment trust (REIT) that focuses primarily on serving the specialized requirements of U.S. Government and Defense Information Technology tenants, announced financial and operating results for the first quarter ended March 31, 2012.

 

“While we continue to operate in a challenging economic environment, 2012 is starting off well, as evidenced by our quarterly results,” stated Roger A. Waesche, Jr., President and Chief Executive Officer of Corporate Office Properties Trust. “We continue to make solid progress executing on our Strategic Reallocation Plan and we are pleased with the performance of our same office portfolio,” he added.

 

Results:

 

Diluted earnings per share (EPS) was $0.04 for the quarter ended March 31, 2012 as compared to an EPS loss of ($0.33) in the first quarter of 2011. Diluted funds from operations per share (FFOPS), as adjusted for comparability, was $0.53 for the first quarter ended March 31, 2012, which represented an 8% increase from the $0.49 reported for the first quarter of 2011. Adjustments for comparability encompass items such as acquisition costs, impairments and gains on non-operating properties, gains (losses) on early extinguishment of debt and derivative losses. Please refer to the reconciliation tables that appear later in this press release. Per NAREIT’s definition, FFOPS for the first quarter of 2012 was $0.54 versus $0.13 reported in the first quarter of 2011.

 

Operating Performance:

 

Portfolio Summary — At March 31, 2012, the Company’s consolidated portfolio of 231 operating office properties totaled 20.2 million square feet. The weighted average remaining lease term for the portfolio was 4.7 years and the average rental rate (including tenant reimbursements) was $26.95 per square foot. The Company’s consolidated portfolio was 87% occupied and 89% leased as of March 31, 2012, up 80 and 70 basis points, respectively, from December 31, 2011 levels.

 

Same Office Performance — The Company’s same office portfolio excludes properties identified for eventual disposal as part of the Company’s Strategic Reallocation Plan. For the quarter ended March 31, 2012, COPT’s same office portfolio represents 79% of the rentable square feet of the portfolio and consists of 169 properties. The Company’s same office portfolio occupancy was 89.5% at the end of the first quarter of 2012, down 10 basis points from year end 2011.

 



 

For the first quarter ended March 31, 2012, the Company’s same office property cash NOI, excluding gross lease termination fees, increased 7% as compared to the first quarter ended 2011. Including gross lease termination fees, same office property cash NOI for the first quarter ended March 31, 2012 increased 8% over the same period in 2011.

 

Leasing — COPT leased a total of 570,000 square feet during the quarter ended March 31, 2012, which included 86,000 square feet of development leasing. During this same period, the Company’s renewal rate was 59%. For the quarter ended March 31, 2012, total rent on renewed space increased 2% as measured from the straight-line rent in effect preceding the renewal date; on a cash basis, renewal rents decreased 8%.

 

Investment Activity:

 

Construction — At March 31, 2012, the Company had six office properties totaling 789,000 square feet under construction for a total projected cost of $197.7 million, of which $136.4 million had been incurred.

 

Dispositions — In the first quarter of 2012, COPT sold seven stabilized properties, two vacant properties and a land parcel for net proceeds of approximately $61 million. The stabilized buildings contained an aggregate of 219,000 square feet and were 80% occupied (63 leases) at the time of sale.

 

Capital Transactions:

 

In February, the Company entered into a $250 million term loan agreement with its bank group. The Term Loan has a five-year term and a variable interest rate of LIBOR plus 1.65% to 2.40%, depending on the Company’s leverage levels. The Company used proceeds from the Term Loan to repay outstanding balances on its unsecured line of credit.

 

Balance Sheet and Financial Flexibility:

 

As of March 31, 2012, the Company had a total market capitalization of $4.4 billion, with $2.4 billion in debt outstanding, equating to a 55% debt-to-total market capitalization ratio. Also, the Company’s weighted average interest rate was 4.37% for the quarter ended March 31, 2012 and 80% of the Company’s debt was subject to fixed interest rates, including the effect of interest rate swaps.

 

For the first quarter 2012, the Company’s adjusted EBITDA to interest expense coverage ratio was 3.20x, and the adjusted EBITDA fixed charge coverage ratio was 2.72x. Adjusting for construction in progress, the Company’s adjusted debt-to-adjusted EBITDA ratio was 6.69x for the three months ended March 31, 2012.

 

2012 FFO Guidance:

 

Management is affirming its previously issued guidance for 2012 FFOPS of between $2.02 and $2.18, and is issuing second quarter 2012 FFOPS guidance of $0.48 to $0.52. A reconciliation of projected diluted EPS to projected FFOPS for the quarter ending June 30, 2012 and the year ending December 31, 2012 is provided, as follows:

 



 

 

 

Quarter Ending

 

Year Ending

 

 

 

June 30, 2012

 

December 31, 2012

 

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

 

 

FFOPS

 

$

0.48

 

$

0.52

 

$

2.02

 

$

2.18

 

Real estate depreciation and amortization

 

(0.44

)

(0.44

)

(1.73

)

(1.73

)

Impairments of previously depreciated properties

 

 

 

(0.16

)

(0.16

)

Gains on sales of previously depreciated properties

 

 

 

0.05

 

0.05

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$

0.04

 

$

0.08

 

$

0.18

 

$

0.34

 

 

Conference Call Information:

 

Management will discuss first quarter 2012 earnings results, as well as its 2012 guidance, on its conference call today at 11:00 a.m. Eastern Time, details of which are listed below:

 

Conference Call Date:

 

Thursday, April 26, 2012

 

 

 

Time:

 

11:00 a.m. Eastern Time

 

 

 

Telephone Number: (within the U.S.)

 

888-679-8035

 

 

 

Telephone Number: (outside the U.S.)

 

617-213-4848

 

 

 

Passcode:

 

35166438

 

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=PJAUAWVD7

 

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 26 at 3:00 p.m. Eastern Time through Thursday, May 10 at midnight Eastern Time. To access the replay within the United States, please call 888-286-8010 and use passcode 94646315. To access the replay outside the United States, please call 617-801-6888 and use passcode 94646315.

 

The conference calls 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 calls will be immediately available via webcast in the Investor Relations section of the Company’s website.

 



 

Company Information:

 

COPT is an office 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, 2012, the Company’s consolidated portfolio consisted of 231 office properties totaling 20.2 million rentable square feet. 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 and data center demand and rents, tenant creditworthiness, interest rates, financing availability and property values;

·                  adverse changes in the real estate markets including, among other things, increased competition with other companies;

·                  governmental actions and initiatives, including risks associated with the impact of a government shutdown or budgetary reductions or impasses, such as a reduction in rental revenues,  non-renewal of leases, and/or a curtailment of demand for additional space by strategic tenants;

·                  the Company’s ability to sell properties included in its Strategic Reallocation Plan;

·                  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 the Company’s plans or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of impairment losses;

·                  the Company’s ability to satisfy and operate effectively under Federal income tax rules relating to real estate investment trusts and partnerships;

·                  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, 2011.

 

Reconciliations:

 

Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the tables, below. Please refer to the information furnished with our Form 8-K on our website (www.copt.com) for definitions of these non-GAAP measures and other terms used in this press release.

 



 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Amounts in thousands, except per share data)

 

 

 

Three Months Ended
March 31,

 

 

 

2012

 

2011

 

Revenues

 

 

 

 

 

Real estate revenues

 

$

121,939

 

$

116,461

 

Construction contract and other service revenues

 

21,534

 

21,028

 

Total revenues

 

143,473

 

137,489

 

Expenses

 

 

 

 

 

Property operating expenses

 

47,202

 

47,061

 

Depreciation and amortization associated with real estate operations

 

31,066

 

30,043

 

Construction contract and other service expenses

 

20,607

 

20,618

 

Impairment losses

 

5,126

 

27,742

 

General and administrative expenses

 

7,017

 

6,777

 

Business development expenses and land carry costs

 

1,594

 

1,241

 

Total operating expenses

 

112,612

 

133,482

 

Operating income

 

30,861

 

4,007

 

Interest expense

 

(25,224

)

(26,115

)

Interest and other income

 

1,217

 

1,168

 

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

 

6,854

 

(20,940

)

Equity in (loss) income of unconsolidated entities

 

(89

)

30

 

Income tax (expense) benefit

 

(4,173

)

544

 

Income (loss) from continuing operations

 

2,592

 

(20,366

)

Discontinued operations

 

4,385

 

(901

)

Income (loss) before gain on sales of real estate

 

6,977

 

(21,267

)

Gain on sales of real estate, net of income taxes

 

 

2,701

 

Net income (loss)

 

6,977

 

(18,566

)

Net (income) loss attributable to noncontrolling interests

 

 

 

 

 

Common units in the Operating Partnership

 

(159

)

1,479

 

Preferred units in the Operating Partnership

 

(165

)

(165

)

Other consolidated entities

 

24

 

(538

)

Net income (loss) attributable to COPT

 

6,677

 

(17,790

)

Preferred share dividends

 

(4,025

)

(4,025

)

Net income (loss) attributable to COPT common shareholders

 

$

2,652

 

$

(21,815

)

 

 

 

 

 

 

Earnings per share (“EPS”) computation:

 

 

 

 

 

Numerator for diluted EPS:

 

 

 

 

 

Net income (loss) attributable to common shareholders

 

$

2,652

 

$

(21,815

)

Dilutive effect of common units in the Operating Partnership

 

 

(1,479

)

Amount allocable to restricted shares

 

(141

)

(282

)

Numerator for diluted EPS

 

$

2,511

 

$

(23,576

)

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Weighted average common shares - basic

 

71,458

 

66,340

 

Dilutive effect of common units in the Operating Partnership

 

 

4,396

 

Weighted average common shares - diluted

 

71,458

 

70,736

 

 

 

 

 

 

 

Diluted EPS

 

$

0.04

 

$

(0.33

)

 



 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

 

 

 

Three Months Ended
March 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Net income (loss)

 

$

6,977

 

$

(18,566

)

Real estate-related depreciation and amortization

 

31,087

 

33,020

 

Impairment losses on previously depreciated operating properties

 

11,833

 

 

Depreciation and amortization on unconsolidated real estate entities

 

114

 

119

 

Gain on sales of previously depreciated operating properties, net of income taxes

 

(4,138

)

 

Funds from operations (“FFO”)

 

45,873

 

14,573

 

Noncontrolling interests - preferred units in the Operating Partnership

 

(165

)

(165

)

Noncontrolling interests - other consolidated entities

 

24

 

(538

)

Preferred share dividends

 

(4,025

)

(4,025

)

Depreciation and amortization allocable to noncontrolling interests in other consolidated entities

 

(284

)

(65

)

Basic and diluted FFO allocable to restricted shares

 

(294

)

(282

)

Basic and diluted FFO available to common share and common unit holders (“Basic and diluted FFO”)

 

41,129

 

9,498

 

Operating property acquisition costs

 

 

23

 

Gain on sales of non-operating properties, net of income taxes

 

 

(2,701

)

Impairment (recoveries) losses on other properties

 

(5,246

)

27,742

 

Income tax expense on impairment recoveries on other properties

 

4,642

 

 

Diluted FFO available to common share and common unit holders, as adjusted for comparability

 

40,525

 

34,562

 

Straight line rent adjustments

 

(2,179

)

(3,912

)

Amortization of acquisition intangibles included in net operating income

 

190

 

161

 

Share-based compensation, net of amounts capitalized

 

3,402

 

2,759

 

Amortization of deferred financing costs

 

1,572

 

1,759

 

Amortization of net debt discounts, net of amounts capitalized

 

663

 

1,398

 

Amortization of settled debt hedges

 

16

 

16

 

Recurring capital expenditures on properties not in disposition plans

 

(1,875

)

(7,976

)

Diluted adjusted funds from operations available to common share and common unit holders, excluding recurring capital expenditures on properties sold or in disposition plans

 

42,314

 

28,767

 

Recurring capital expenditures on properties sold or in disposition plans

 

(1,548

)

(6,368

)

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)

 

$

40,766

 

$

22,399

 

 

 

 

 

 

 

Weighted average shares

 

 

 

 

 

Weighted average common shares

 

71,458

 

66,340

 

Conversion of weighted average common units

 

4,281

 

4,396

 

Weighted average common shares/units - basic FFO per share

 

75,739

 

70,736

 

Dilutive effect of share-based compensation awards

 

44

 

261

 

Weighted average common shares/units - diluted FFO per share

 

75,783

 

70,997

 

 

 

 

 

 

 

Diluted FFO per share

 

$

0.54

 

$

0.13

 

Diluted FFO per share, as adjusted for comparability

 

$

0.53

 

$

0.49

 

Dividends/distributions per common share/unit

 

$

0.2750

 

$

0.4125

 

Payout ratios

 

 

 

 

 

Diluted FFO

 

51.0

%

310.7

%

Diluted FFO, as adjusted for comparability

 

51.8

%

85.4

%

Diluted AFFO, excluding recurring capital expenditures on properties sold or in disposition plans

 

49.6

%

102.6

%

Adjusted EBITDA interest coverage ratio

 

3.20x

 

2.91x

 

Adjusted EBITDA fixed charge coverage ratio

 

2.72x

 

2.48x

 

Debt to Adjusted EBITDA ratio (1)

 

8.05x

 

8.66x

 

Adjusted debt to Adjusted EBITDA ratio (2)

 

6.69x

 

7.23x

 

 

 

 

 

 

 

Reconciliation of denominators for diluted EPS and diluted FFO per share

 

 

 

 

 

Denominator for diluted EPS

 

71,458

 

70,736

 

Weighted average common units

 

4,281

 

 

Anti-dilutive EPS effect of share-based compensation awards

 

44

 

261

 

Denominator for diluted FFO per share

 

75,783

 

70,997

 

 


(1)          Represents debt as of period end divided by Adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

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

 



 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

 

 

 

March 31,

 

December 31,

 

 

 

2012

 

2011

 

Balance Sheet Data (in thousands) (as of period end)

 

 

 

 

 

Properties, net of accumulated depreciation

 

$

3,338,291

 

$

3,352,975

 

Total assets

 

3,797,368

 

3,867,524

 

Debt, net

 

2,418,078

 

2,426,303

 

Total liabilities

 

2,596,572

 

2,649,459

 

Beneficiaries’ equity

 

1,200,796

 

1,218,065

 

 

 

 

 

 

 

Debt to undepreciated book value of real estate assets

 

59.4

%

58.8

%

Debt to total market capitalization

 

54.8

%

56.8

%

 

 

 

 

 

 

Property Data (consolidated office properties) (as of period end)

 

 

 

 

 

Number of operating properties owned

 

231

 

238

 

Total net rentable square feet owned (in thousands)

 

20,236

 

20,514

 

Occupancy

 

87.0

%

86.2

%

 

 

 

 

 

 

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

 

$

3,797,368

 

$

3,867,524

 

Assets other than assets included in properties, net and assets held for sale

 

(377,725

)

(397,933

)

Accumulated depreciation on real estate assets

 

570,242

 

559,679

 

Accumulated depreciation included in assets held for sale

 

5,840

 

17,922

 

Intangible assets on real estate acquisitions, net

 

83,940

 

89,120

 

Non real estate assets included in assets held for sale

 

(5,664

)

(6,523

)

Denominator for debt to undepreciated book value of real estate assets

 

$

4,074,001

 

$

4,129,789

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2012

 

2011

 

Reconciliations of tenant improvements and incentives, capital improvements and leasing costs for operating properties to recurring capital expenditures

 

 

 

 

 

 

 

 

 

 

 

Properties not sold or in disposition plans

 

 

 

 

 

Tenant improvements and incentives on operating properties

 

$

666

 

$

7,435

 

Building improvements on operating properties

 

871

 

944

 

Leasing costs for operating properties

 

1,299

 

2,601

 

Less: Nonrecurring tenant improvements and incentives on operating properties

 

(561

)

(2,211

)

Less: Nonrecurring building improvements on operating properties

 

(407

)

(199

)

Less: Nonrecurring leasing costs for operating properties

 

 

(616

)

Add: Recurring capital expenditures on operating properties held through joint ventures

 

7

 

22

 

Recurring capital expenditures on properties not sold or in disposition plans

 

$

1,875

 

$

7,976

 

 

 

 

 

 

 

Properties sold or in disposition plans

 

 

 

 

 

Tenant improvements and incentives on operating properties

 

$

930

 

$

5,835

 

Building improvements on operating properties

 

823

 

1,046

 

Leasing costs for operating properties

 

142

 

135

 

Less: Nonrecurring tenant improvements and incentives on operating properties

 

(158

)

(237

)

Less: Nonrecurring building improvements on operating properties

 

(189

)

(411

)

Recurring capital expenditures on properties sold or in disposition plans

 

$

1,548

 

$

6,368

 

 



 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2012

 

2011

 

Reconciliation of common share dividends to dividends and distributions for payout ratios

 

 

 

 

 

Common share dividends

 

$

19,819

 

$

27,704

 

Common unit distributions

 

1,173

 

1,809

 

Dividends and distributions for payout ratios

 

$

20,992

 

$

29,513

 

 

 

 

 

 

 

Reconciliation of FFO to FFO, as adjusted for comparability

 

 

 

 

 

FFO

 

$

45,873

 

$

14,573

 

Gain on sales of non-operating properties, net of income taxes

 

 

(2,701

)

Impairment (recoveries) losses on non-operating properties, net of associated tax

 

(604

)

27,742

 

Operating property acquisition costs

 

 

23

 

FFO, as adjusted for comparability

 

$

45,269

 

$

39,637

 

 

 

 

 

 

 

Reconciliation of GAAP net (loss) income to adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”)

 

 

 

 

 

Net income (loss)

 

$

6,977

 

$

(18,566

)

Interest expense on continuing operations

 

25,224

 

26,115

 

Interest expense on discontinued operations

 

451

 

813

 

Income tax expense (benefit)

 

4,173

 

(544

)

Real estate-related depreciation and amortization

 

31,087

 

33,020

 

Depreciation of furniture, fixtures and equipment

 

618

 

625

 

Impairment losses

 

6,587

 

27,742

 

Adjusted EBITDA

 

$

75,117

 

$

69,205

 

 

 

 

 

 

 

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

 

$

25,224

 

$

26,115

 

Interest expense from discontinued operations

 

451

 

813

 

Less: Amortization of deferred financing costs

 

(1,572

)

(1,759

)

Less: Amortization of net debt discount, net of amounts capitalized

 

(663

)

(1,398

)

Denominator for interest coverage-Adjusted EBITDA

 

23,440

 

23,771

 

Preferred share dividends

 

4,025

 

4,025

 

Preferred unit distributions

 

165

 

165

 

Denominator for fixed charge coverage-Adjusted EBITDA

 

$

27,630

 

$

27,961

 

 

 

 

 

 

 

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

 

$

64,826

 

$

61,775

 

Less: Straight-line rent adjustments

 

(1,992

)

(3,515

)

Less: Amortization of deferred market rental revenue

 

(103

)

(124

)

Add: Amortization of above-market cost arrangements

 

353

 

434

 

Same office property cash net operating income

 

63,084

 

58,570

 

Less: Lease termination fees, gross

 

(534

)

(138

)

Same office property cash net operating income, excluding gross lease termination fees

 

$

62,550

 

$

58,432

 

 

 

 

 

 

 

Reconciliation of debt, net to denominator for adjusted debt to Adjusted EBITDA ratio

 

 

 

 

 

Debt, net

 

$

2,418,078

 

$

2,396,795

 

Less: Construction in progress

 

(408,883

)

(396,170

)

Less: Construction in progress on assets held for sale

 

(75

)

 

Denominator for adjusted debt to adjusted EBITDA ratio

 

$

2,009,120

 

$

2,000,625

 

 



 

Summary Description

 

The Company — Corporate Office Properties Trust (the “Company” or “COPT”) is a self-managed office real estate investment trust (“REIT”). As of March 31, 2012, COPT derived 60% of its annualized rental revenue from properties occupied primarily by tenants in the U.S. Government and/or defense information technology (“Defense IT”) sectors and 83% of the Company’s square footage was located in the Greater Washington/Baltimore region. At March 31, 2012, COPT’s operating portfolio of 231 office properties encompassed 20.2 million square feet and was 88.9% leased. As of the same date, COPT also owned one wholesale data center that was 17% leased.

 

Corporate Strategy — Through acquisitions and development activities, 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:

Roger A. Waesche, Jr., President & CEO

Stephanie M. Krewson, VP of IR

Stephen E. Budorick, EVP & COO

443-285-5453, stephanie.krewson@copt.com

Wayne H. Lingafelter, EVP, Development

Michelle Layne, IR Specialist

& Construction

443-285-5452, michelle.layne@copt.com

Stephen E. Riffee, EVP & CFO

 

 

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 and data center demand and rents, tenant creditworthiness, interest rates, financing availability and property values; adverse changes in the real estate markets, including, among other things, increased competition with other companies; governmental actions and initiatives, including risks associated with the impact of a government shutdown or budgetary reductions or impasses, such as a reduction in rental revenues, non-renewal of leases and/or a curtailment of demand for additional space by our strategic customers; our ability to sell properties included in our Strategic Reallocation Plan; 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; the dilutive effects of issuing additional common shares; 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, 2011.

 

1



 

Corporate Office Properties Trust

Equity Research Coverage

 

Firm

 

Senior 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

 

James Sullivan

 

646-562-1380

 

james.sullivan@cowen.com

Green Street Advisors

 

Michael Knott

 

949-640-8780

 

mknott@greenstreetadvisors.com

ISI Group

 

Steve Sakwa

 

212-446-9462

 

ssakwa@isigrp.com

Jefferies & Co.

 

Omotayo Okusanya

 

212-336-7076

 

tokusanya@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.

 

Dave Aubuchon

 

314-445-6520

 

DAubuchon@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.

 

2



 

 

Corporate Office Properties Trust

Selected Financial Summary Data

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

SUMMARY OF RESULTS 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Office NOI

 

$64,826

 

$64,693

 

$64,943

 

$64,140

 

$61,775

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI from real estate operations

 

$76,917

 

$77,261

 

$77,135

 

$76,133

 

$72,289

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$75,117

 

$75,173

 

$69,288

 

$73,058

 

$69,205

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to COPT common shareholders

 

$2,652

 

$(86,253

)

$2,541

 

$(28,250

)

$(21,815

)

 

 

 

 

 

 

 

 

 

 

 

 

FFO - per NAREIT

 

$45,873

 

$(17,924

)

$42,319

 

$37,038

 

$14,573

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO - as adjusted for comparability

 

$45,269

 

$46,935

 

$44,391

 

$46,075

 

$39,637

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted FFO available to common share and common unit holders

 

$41,129

 

$(22,653

)

$37,029

 

$32,446

 

$9,498

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted AFFO available to common share and common unit holders

 

$40,766

 

$24,846

 

$33,300

 

$30,005

 

$22,399

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$0.04

 

$(1.21

)

$0.03

 

$(0.42

)

$(0.33

)

FFO - NAREIT

 

$0.54

 

$(0.30

)

$0.49

 

$0.44

 

$0.13

 

FFO - as adjusted for comparability

 

$0.53

 

$0.56

 

$0.52

 

$0.57

 

$0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend per common share

 

$0.2750

 

$0.4125

 

$0.4125

 

$0.4125

 

$0.4125

 

 

 

 

 

 

 

 

 

 

 

 

 

Payout ratios:

 

 

 

 

 

 

 

 

 

 

 

Diluted FFO

 

51.0

%

-138.9

%

85.0

%

96.9

%

310.7

%

Diluted FFO - as adjusted for comparability

 

51.8

%

74.6

%

80.5

%

75.8

%

85.4

%

Diluted AFFO, excluding recurring capital expenditures on properties in disposition plans

 

49.6

%

93.4

%

87.0

%

90.8

%

102.6

%

 

 

 

 

 

 

 

 

 

 

 

 

CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

Debt, net

 

$2,418,078

 

$2,426,303

 

$2,420,073

 

$2,299,416

 

$2,396,795

 

Debt to Total Market Capitalization

 

54.8

%

56.8

%

56.2

%

47.0

%

46.0

%

Debt to Undepreciated Book Value of Real Estate Assets

 

59.4

%

58.8

%

57.6

%

56.0

%

58.4

%

Adjusted EBITDA fixed charge coverage ratio

 

2.7 x

 

2.8 x

 

2.6 x

 

2.6 x

 

2.5 x

 

Adjusted Debt to Adjusted EBITDA ratio

 

6.7 x

 

6.7 x

 

7.0 x

 

6.4 x

 

7.2 x

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER

 

 

 

 

 

 

 

 

 

 

 

Revenue from early termination of leases

 

$395

 

$45

 

$103

 

$196

 

$146

 

Capitalized interest costs

 

$3,809

 

$4,294

 

$4,458

 

$4,308

 

$4,341

 

 

3



 

Corporate Office Properties Trust

Selected Portfolio Data

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

# of Operating Office Properties

 

 

 

 

 

 

 

 

 

 

 

Wholly-owned

 

227

 

234

 

246

 

249

 

252

 

+ Consolidated JV

 

4

 

4

 

4

 

4

 

4

 

Consolidated properties

 

231

 

238

 

250

 

253

 

256

 

 

 

 

 

 

 

 

 

 

 

 

 

% Occupied

 

 

 

 

 

 

 

 

 

 

 

Wholly-owned

 

87.6

%

86.9

%

88.0

%

87.3

%

87.0

%

+ Consolidated JV

 

60.0

%

56.6

%

60.0

%

58.9

%

61.5

%

Consolidated properties

 

87.0

%

86.2

%

87.4

%

86.6

%

86.4

%

 

 

 

 

 

 

 

 

 

 

 

 

% Leased

 

 

 

 

 

 

 

 

 

 

 

Wholly-owned

 

89.2

%

88.7

%

89.8

%

89.4

%

89.2

%

+ Consolidated JV

 

78.4

%

67.3

%

63.6

%

60.1

%

62.8

%

Consolidated properties

 

88.9

%

88.2

%

89.2

%

88.7

%

88.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Square Feet of Office Properties (in thousands)

 

 

 

 

 

 

 

 

 

 

 

Wholly-owned

 

19,793

 

20,072

 

20,205

 

20,244

 

20,183

 

+ Consolidated JV Square Footage

 

444

 

442

 

442

 

442

 

442

 

Consolidated Square Footage

 

20,236

 

20,514

 

20,647

 

20,686

 

20,625

 

 

4



 

Corporate Office Properties Trust

Quarterly Consolidated Balance Sheets

(dollars in thousands)

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Properties, net

 

 

 

 

 

 

 

 

 

 

 

Operating properties

 

$

3,274,565

 

$

3,273,735

 

$

3,325,609

 

$

3,269,049

 

$

3,345,921

 

Less: accumulated depreciation

 

(570,242

)

(559,679

)

(553,306

)

(527,616

)

(526,825

)

Projects in development or held for future development, including associated land costs (1)

 

633,968

 

638,919

 

696,914

 

656,321

 

649,675

 

Total properties, net

 

3,338,291

 

3,352,975

 

3,469,217

 

3,397,754

 

3,468,771

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets held for sale

 

81,352

 

116,616

 

72,767

 

77,410

 

 

Cash and cash equivalents

 

7,987

 

5,559

 

11,504

 

11,703

 

12,606

 

Restricted cash and marketable securities

 

21,711

 

36,232

 

39,232

 

22,909

 

24,094

 

Accounts receivable, net

 

11,231

 

26,032

 

20,991

 

13,083

 

19,765

 

Deferred rent receivable

 

89,337

 

86,856

 

87,148

 

84,397

 

82,901

 

Intangible assets on real estate acquisitions, net

 

83,940

 

89,120

 

97,954

 

99,231

 

106,444

 

Deferred leasing and financing costs, net

 

66,987

 

66,515

 

70,791

 

60,164

 

60,479

 

Prepaid expenses and other assets

 

96,532

 

87,619

 

95,788

 

101,579

 

90,749

 

Total assets

 

$

3,797,368

 

$

3,867,524

 

$

3,965,392

 

$

3,868,230

 

$

3,865,809

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Debt, net

 

$

2,418,078

 

$

2,426,303

 

$

2,420,073

 

$

2,299,416

 

$

2,396,795

 

Accounts payable and accrued expenses

 

93,156

 

96,425

 

114,834

 

115,154

 

103,043

 

Rents received in advance and security deposits

 

27,647

 

29,548

 

28,241

 

26,779

 

29,427

 

Dividends and distributions payable

 

24,544

 

35,038

 

35,029

 

35,021

 

33,048

 

Deferred revenue associated with operating leases

 

15,258

 

15,554

 

15,621

 

12,883

 

13,897

 

Distributions received in excess of investment in unconsolidated real estate joint venture

 

6,178

 

6,071

 

5,953

 

5,841

 

5,686

 

Interest rate derivatives

 

2,673

 

30,863

 

30,629

 

10,020

 

3,564

 

Other liabilities

 

9,038

 

9,657

 

7,389

 

9,744

 

8,691

 

Total liabilities

 

2,596,572

 

2,649,459

 

2,657,769

 

2,514,858

 

2,594,151

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

COPT’s shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

Preferred shares (aggregate liquidation preference of $216,333)

 

81

 

81

 

81

 

81

 

81

 

Common shares

 

720

 

720

 

720

 

719

 

671

 

Additional paid-in capital

 

1,670,451

 

1,668,645

 

1,663,850

 

1,657,536

 

1,511,638

 

Cumulative distributions in excess of net income

 

(549,456

)

(532,288

)

(416,342

)

(389,195

)

(331,313

)

Accumulated other comprehensive loss

 

(2,201

)

(1,733

)

(28,618

)

(9,624

)

(3,197

)

Total COPT’s shareholders’ equity

 

1,119,595

 

1,135,425

 

1,219,691

 

1,259,517

 

1,177,880

 

Noncontrolling interests in subsidiaries

 

 

 

 

 

 

 

 

 

 

 

Common units in the Operating Partnership

 

53,883

 

55,281

 

60,583

 

66,482

 

66,016

 

Preferred units in the Operating Partnership

 

8,800

 

8,800

 

8,800

 

8,800

 

8,800

 

Other consolidated entities

 

18,518

 

18,559

 

18,549

 

18,573

 

18,962

 

Total noncontrolling interests in subsidiaries

 

81,201

 

82,640

 

87,932

 

93,855

 

93,778

 

Total equity

 

1,200,796

 

1,218,065

 

1,307,623

 

1,353,372

 

1,271,658

 

Total liabilities and equity

 

$

3,797,368

 

$

3,867,524

 

$

3,965,392

 

$

3,868,230

 

$

3,865,809

 

 


(1) Please refer to pages 20-24 for detail.

 

5



 

Corporate Office Properties Trust

Consolidated Statements of FFO

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

NOI from real estate operations (1)

 

 

 

 

 

 

 

 

 

 

 

Real estate revenues

 

$

125,304

 

$

127,456

 

$

125,129

 

$

120,806

 

$

122,441

 

Real estate property operating expenses

 

(48,387

)

(50,195

)

(47,994

)

(44,673

)

(50,152

)

NOI from real estate operations (1)

 

76,917

 

77,261

 

77,135

 

76,133

 

72,289

 

General and administrative expenses

 

(7,017

)

(6,592

)

(6,154

)

(6,320

)

(6,777

)

Business development expenses and land carry costs

 

(1,594

)

(1,819

)

(1,768

)

(1,369

)

(1,241

)

NOI from construction contracts and other service operations

 

927

 

550

 

558

 

1,188

 

410

 

Impairment recoveries (losses) on non-operating properties

 

5,246

 

(39,193

)

 

(13,574

)

(27,742

)

Equity in (loss) income of unconsolidated entities

 

(89

)

(108

)

(159

)

(94

)

30

 

Depreciation and amortization on unconsolidated real estate entities

 

114

 

142

 

116

 

115

 

119

 

Interest and other income (loss)

 

1,217

 

1,921

 

(242

)

2,756

 

1,168

 

Loss on early extinguishment of debt, continuing and discontinued operations

 

 

(3

)

(1,995

)

(25

)

 

Loss on interest rate derivatives

 

 

(29,805

)

 

 

 

Gain on sales of non-operating properties, net of income taxes

 

 

 

 

16

 

2,701

 

Total interest expense

 

(25,675

)

(24,914

)

(25,629

)

(26,830

)

(26,928

)

Income tax (expense) benefit

 

(4,173

)

4,636

 

457

 

5,042

 

544

 

FFO - per NAREIT (1)

 

45,873

 

(17,924

)

42,319

 

37,038

 

14,573

 

Preferred share dividends

 

(4,025

)

(4,026

)

(4,025

)

(4,026

)

(4,025

)

Noncontrolling interests - preferred units in the Operating Partnership

 

(165

)

(165

)

(165

)

(165

)

(165

)

Noncontrolling interests - other consolidated entities

 

24

 

 

(561

)

61

 

(538

)

Depreciation and amortization allocable to noncontrolling interests in other consolidated entities

 

(284

)

(283

)

(276

)

(225

)

(65

)

Basic and diluted FFO allocable to restricted shares

 

(294

)

(255

)

(263

)

(237

)

(282

)

Basic and diluted FFO available to common share and common unit holders (1)

 

41,129

 

(22,653

)

37,029

 

32,446

 

9,498

 

Operating property acquisition costs

 

 

4

 

77

 

52

 

23

 

Gain on sales of non-operating properties, net of income taxes

 

 

 

 

(16

)

(2,701

)

Impairment (recoveries) losses on non-operating properties, net of associated tax

 

(604

)

35,047

 

 

8,976

 

27,742

 

Loss on interest rate derivatives

 

 

29,805

 

 

 

 

Loss on early extinguishment of debt, continuing and discontinued operations

 

 

3

 

1,995

 

25

 

 

Diluted FFO available to common share and common unit holders, as adjusted for comparability (1)

 

$

40,525

 

$

42,206

 

$

39,101

 

$

41,483

 

$

34,562

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

6,977

 

$

(87,215

)

$

7,470

 

$

(26,007

)

$

(18,566

)

Real estate-related depreciation and amortization

 

31,087

 

33,030

 

36,032

 

32,049

 

33,020

 

Impairment losses on previously depreciated operating properties

 

11,833

 

39,481

 

 

31,031

 

 

Gain on sales of previously depreciated operating properties, net of income taxes

 

(4,138

)

(3,362

)

(1,299

)

(150

)

 

Depreciation and amortization on unconsolidated real estate entities

 

114

 

142

 

116

 

115

 

119

 

FFO - per NAREIT (1)

 

45,873

 

(17,924

)

42,319

 

37,038

 

14,573

 

Operating property acquisition costs

 

 

4

 

77

 

52

 

23

 

Gain on sales of non-operating properties, net of income taxes

 

 

 

 

(16

)

(2,701

)

Impairment (recoveries) losses on non-operating properties, net of associated tax

 

(604

)

35,047

 

 

8,976

 

27,742

 

Loss on interest rate derivatives

 

 

29,805

 

 

 

 

Loss on early extinguishment of debt, continuing and discontinued operations

 

 

3

 

1,995

 

25

 

 

FFO - as adjusted for comparability (1)

 

$

45,269

 

$

46,935

 

$

44,391

 

$

46,075

 

$

39,637

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares for period ended:

 

 

 

 

 

 

 

 

 

 

 

Common Shares Outstanding

 

71,458

 

71,351

 

71,312

 

68,446

 

66,340

 

Dilutive effect of share-based compensation awards

 

44

 

29

 

52

 

151

 

261

 

Common Units

 

4,281

 

4,308

 

4,336

 

4,382

 

4,396

 

Denominator for FFO per share - diluted

 

75,783

 

75,688

 

75,700

 

72,979

 

70,997

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator for diluted EPS

 

71,458

 

71,351

 

71,312

 

72,828

 

70,736

 

Anti-dilutive EPS effect of share-based compensation awards

 

44

 

29

 

52

 

151

 

261

 

Weighted average common units

 

4,281

 

4,308

 

4,336

 

 

 

Denominator for FFO per share - diluted

 

75,783

 

75,688

 

75,700

 

72,979

 

70,997

 

 


(1) Please refer to the section entitled “Definitions” for a definition of this measure.

 

6



 

Corporate Office Properties Trust

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

99,144

 

$

98,299

 

$

96,704

 

$

95,521

 

$

94,249

 

Tenant recoveries and other real estate operations revenue

 

22,795

 

24,209

 

22,084

 

19,215

 

22,212

 

Construction contract and other service revenues

 

21,534

 

16,491

 

18,729

 

28,097

 

21,028

 

Total revenues

 

143,473

 

138,999

 

137,517

 

142,833

 

137,489

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

47,202

 

48,247

 

45,862

 

42,593

 

47,061

 

Depreciation and amortization associated with real estate operations

 

31,066

 

32,402

 

34,801

 

30,156

 

30,043

 

Construction contract and other service expenses

 

20,607

 

15,941

 

18,171

 

26,909

 

20,618

 

Impairment losses

 

5,126

 

77,373

 

 

22,650

 

27,742

 

General and administrative expenses

 

7,017

 

6,592

 

6,154

 

6,320

 

6,777

 

Business development expenses and land carry costs

 

1,594

 

1,819

 

1,768

 

1,369

 

1,241

 

Total operating expenses

 

112,612

 

182,374

 

106,756

 

129,997

 

133,482

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

30,861

 

(43,375

)

30,761

 

12,836

 

4,007

 

Interest expense

 

(25,224

)

(24,224

)

(24,879

)

(26,039

)

(26,115

)

Interest and other income (loss)

 

1,217

 

1,921

 

(242

)

2,756

 

1,168

 

Loss on interest rate derivatives

 

 

(29,805

)

 

 

 

Loss on early extinguishment of debt

 

 

(3

)

(1,655

)

(25

)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

6,854

 

(95,486

)

3,985

 

(10,472

)

(20,940

)

Equity in (loss) income of unconsolidated entities

 

(89

)

(108

)

(159

)

(94

)

30

 

Income tax (expense) benefit

 

(4,173

)

4,636

 

457

 

5,042

 

544

 

Income (loss) from continuing operations

 

2,592

 

(90,958

)

4,283

 

(5,524

)

(20,366

)

Discontinued operations

 

4,385

 

3,739

 

3,187

 

(20,499

)

(901

)

Income (loss) before gain on sales of real estate

 

6,977

 

(87,219

)

7,470

 

(26,023

)

(21,267

)

Gain on sales of real estate, net of income taxes

 

 

4

 

 

16

 

2,701

 

Net income (loss)

 

6,977

 

(87,215

)

7,470

 

(26,007

)

(18,566

)

Net (income) loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

Common units in the Operating Partnership

 

(159

)

5,153

 

(178

)

1,887

 

1,479

 

Preferred units in the Operating Partnership

 

(165

)

(165

)

(165

)

(165

)

(165

)

Other consolidated entities

 

24

 

 

(561

)

61

 

(538

)

Net income (loss) attributable to COPT

 

6,677

 

(82,227

)

6,566

 

(24,224

)

(17,790

)

Preferred share dividends

 

(4,025

)

(4,026

)

(4,025

)

(4,026

)

(4,025

)

Net income (loss) attributable to COPT common shareholders

 

$

2,652

 

$

(86,253

)

$

2,541

 

$

(28,250

)

$

(21,815

)

 

 

 

 

 

 

 

 

 

 

 

 

For diluted EPS computations:

 

 

 

 

 

 

 

 

 

 

 

Numerator for diluted EPS

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

 

$

2,652

 

$

(86,253

)

$

2,541

 

$

(28,250

)

$

(21,815

)

Dilutive effect of common units in the Operating Partnership

 

 

 

 

(1,887

)

(1,479

)

Amount allocable to restricted shares

 

(141

)

(256

)

(262

)

(237

)

(282

)

Numerator for diluted EPS

 

$

2,511

 

$

(86,509

)

$

2,279

 

$

(30,374

)

$

(23,576

)

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares - basic

 

71,458

 

71,351

 

71,312

 

68,446

 

66,340

 

Dilutive effect of common units in the Operating Partnership

 

 

 

 

4,382

 

4,396

 

Weighted average common shares - diluted

 

71,458

 

71,351

 

71,312

 

72,828

 

70,736

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.04

 

$

(1.21

)

$

0.03

 

$

(0.42

)

$

(0.33

)

 

7



 

Corporate Office Properties Trust

Consolidated Reconciliations of AFFO

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Diluted FFO available to common share and common unit holders, as adjusted for comparability

 

$

40,525

 

$

42,206

 

$

39,101

 

$

41,483

 

$

34,562

 

Straight line rent adjustments

 

(2,179

)

(2,144

)

(2

)

(2,611

)

(3,912

)

Amortization of acquisition intangibles included in NOI

 

190

 

249

 

212

 

227

 

161

 

Share-based compensation, net of amounts capitalized

 

3,402

 

3,764

 

2,759

 

2,638

 

2,759

 

Amortization of deferred financing costs

 

1,572

 

1,506

 

1,629

 

1,702

 

1,759

 

Amortization of net debt discounts, net of amounts capitalized

 

663

 

634

 

1,184

 

1,464

 

1,398

 

Amortization of settled debt hedges

 

16

 

15

 

16

 

15

 

16

 

Recurring capital expenditures on properties not sold or in disposition plans

 

(1,875

)

(12,550

)

(8,710

)

(10,274

)

(7,976

)

Diluted AFFO, excluding recurring capital expenditures on properties in disposition plans

 

42,314

 

33,680

 

36,189

 

34,644

 

28,767

 

Recurring capital expenditures on properties sold or in disposition plans

 

(1,548

)

(8,834

)

(2,889

)

(4,639

)

(6,368

)

Diluted AFFO available to common share and common unit holders (“diluted AFFO”)

 

$

40,766

 

$

24,846

 

$

33,300

 

$

30,005

 

$

22,399

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring capital expenditures on properties not sold or in disposition plans

 

 

 

 

 

 

 

 

 

 

 

Tenant improvements and incentives on operating properties

 

$

666

 

$

10,036

 

$

5,533

 

$

7,752

 

$

7,435

 

Building improvements on operating properties

 

871

 

4,519

 

2,239

 

2,138

 

944

 

Leasing costs for operating properties

 

1,299

 

1,448

 

3,933

 

2,492

 

2,601

 

Less: Nonrecurring tenant improvements and incentives on operating properties

 

(561

)

(1,371

)

(1,816

)

(866

)

(2,211

)

Less: Nonrecurring building improvements on operating properties

 

(407

)

(2,106

)

(1,069

)

(920

)

(199

)

Less: Nonrecurring leasing costs for operating properties

 

 

(5

)

(130

)

(347

)

(616

)

Add: Recurring capital expenditures on operating properties held through joint ventures

 

7

 

29

 

20

 

25

 

22

 

Recurring capital expenditures on properties not sold or in disposition plans

 

$

1,875

 

$

12,550

 

$

8,710

 

$

10,274

 

$

7,976

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring capital expenditures on properties sold or in disposition plans

 

 

 

 

 

 

 

 

 

 

 

Tenant improvements and incentives on operating properties

 

$

930

 

$

7,648

 

$

1,549

 

$

3,364

 

$

5,835

 

Building improvements on operating properties

 

823

 

2,256

 

3,141

 

288

 

1,046

 

Leasing costs for operating properties

 

142

 

145

 

290

 

896

 

135

 

Less: Nonrecurring tenant improvements and incentives on operating properties

 

(158

)

(244

)

(10

)

(9

)

(237

)

Less: Nonrecurring building improvements on operating properties

 

(189

)

(1,162

)

(1,977

)

100

 

(411

)

Less: Nonrecurring leasing costs for operating properties

 

 

191

 

(104

)

 

 

Recurring capital expenditures on properties sold or in disposition plans

 

$

1,548

 

$

8,834

 

$

2,889

 

$

4,639

 

$

6,368

 

 

8



 

Corporate Office Properties Trust

Consolidated Office Properties by Region - March 31, 2012

 

 

 

Operational

 

Under Construction/
Redevelopment

 

Property Region and Business Park/Submarket

 

# of
Properties

 

Total
Square Feet

 

Occupancy
%

 

Leased
 %

 

# of
Properties

 

Total
Square Feet

 

Baltimore/Washington Corridor:

 

 

 

 

 

 

 

 

 

 

 

 

 

National Business Park

 

26

 

3,069,552

 

95

%

98

%

2

 

153,489

 

Columbia Gateway

 

28

 

2,221,742

 

88

%

88

%

 

 

Airport Square/bwtech

 

26

 

1,941,695

 

82

%

85

%

 

 

Commons/Parkway

 

11

 

506,579

 

75

%

78

%

 

 

Other

 

20

 

1,114,084

 

82

%

89

%

1

 

89,268

 

Subtotal

 

111

 

8,853,652

 

88

%

90

%

3

 

242,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northern Virginia:

 

 

 

 

 

 

 

 

 

 

 

 

 

Westfields Corporate Center

 

9

 

1,435,652

 

86

%

86

%

 

 

Patriot Ridge

 

 

 

0

%

0

%

1

 

237,000

 

Herndon, Tysons Corner and Merrifield

 

8

 

1,500,744

 

87

%

88

%

 

 

Subtotal

 

17

 

2,936,396

 

86

%

87

%

1

 

237,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Antonio, Texas

 

 

 

 

 

 

 

 

 

 

 

 

 

Sentry Gateway

 

6

 

792,454

 

100

%

100

%

 

 

Other

 

2

 

122,975

 

74

%

74

%

 

 

Subtotal

 

8

 

915,429

 

96

%

96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Huntsville (1)

 

1

 

138,466

 

100

%

100

%

1

 

114,377

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC- Capital Riverfront (Maritime)

 

2

 

360,326

 

89

%

89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

St. Mary’s & King George Counties

 

19

 

903,534

 

88

%

88

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Baltimore:

 

 

 

 

 

 

 

 

 

 

 

 

 

White Marsh and Rt 83 Corridor

 

36

 

2,126,605

 

86

%

87

%

 

 

Canton Crossing-Baltimore City

 

1

 

481,279

 

94

%

94

%

 

 

North Gate Business Park

 

2

 

156,765

 

67

%

68

%

1

 

128,119

 

Subtotal

 

39

 

2,764,649

 

86

%

87

%

1

 

128,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Maryland

 

8

 

1,018,922

 

80

%

86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colorado Springs

 

21

 

1,569,300

 

77

%

79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Philadelphia, Pennsylvania

 

3

 

479,957

 

100

%

100

%

1

 

71,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (1)

 

2

 

295,842

 

100

%

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

231

 

20,236,473

 

87

%

89

%

7

 

793,307

 

 


(1) For purposes of this summary, Huntsville is reported as a separate region. Other presentations within this package include Huntsville in our “Other” region.

 

9



 

Corporate Office Properties Trust

NOI from Real Estate Operations and Occupancy by Property Grouping

(dollars and square feet in thousands)

 

 

 

As of 3/31/2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of Total

 

NOI from Real

 

 

 

# of

 

 

 

 

 

 

 

Annualized

 

Annualized

 

Estate Operations

 

 

 

Operating

 

Operational

 

 

 

 

 

Rental

 

Rental

 

for Three Months

 

Property Grouping

 

Properties

 

Square Feet

 

% Occupied (1)

 

% Leased (1)

 

Revenue

 

Revenue

 

Ended 3/31/12

 

Same Office Properties (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stabilized properties

 

166

 

15,606

 

91.0

%

91.7

%

$

397,427

 

83.8

%

$

64,377

 

Unstabilized properties (3)

 

3

 

445

 

36.8

%

58.0

%

5,425

 

1.1

%

449

 

Total Same Office Properties

 

169

 

16,051

 

89.5

%

90.7

%

402,852

 

84.9

%

64,826

 

Office Properties Placed in Service (4)

 

8

 

844

 

78.9

%

88.0

%

19,120

 

4.0

%

3,427

 

Acquired Office Properties (5)

 

1

 

138

 

100.0

%

100.0

%

3,667

 

0.8

%

759

 

Subtotal

 

178

 

17,033

 

89.0

%

90.7

%

425,639

 

89.7

%

69,012

 

Strategic Reallocation Plan Properties (6)

 

53

 

3,203

 

76.2

%

79.6

%

48,782

 

10.3

%

8,063

 

Other

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

(158

)

Total Portfolio

 

231

 

20,236

 

87.0

%

88.9

%

$

474,421

 

100.0

%

$

76,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strategic Tenant Properties

 

103

 

10,578

 

90.5

%

91.9

%

$

283,203

 

59.7

%

$

47,910

 

 


(1) Percentages calculated based on operational square feet.

(2) Properties owned and 100% operational since 1/1/11.

(3) Properties with first generation operational space less than 90% occupied at 3/31/12.

(4) Newly constructed or redeveloped properties placed in service that were not fully operational by 1/1/11.

(5) Acquired properties that were not owned and fully operational by 1/1/11.

(6) The carrying value of operating property assets associated with the Strategic Reallocation Properties totaled $368,745 at 3/31/12.

 

10



 

Corporate Office Properties Trust

Real Estate Revenues* by Segment

(dollars in thousands)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Office Properties:

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

$

56,250

 

$

57,195

 

$

54,744

 

$

52,860

 

$

53,252

 

Northern Virginia

 

18,560

 

18,855

 

18,640

 

18,445

 

18,274

 

San Antonio

 

7,608

 

7,613

 

7,701

 

7,089

 

7,663

 

Washington, DC - Capitol Riverfront

 

3,894

 

4,529

 

4,507

 

4,252

 

4,590

 

St. Mary’s and King George Counties

 

4,212

 

3,760

 

3,508

 

3,564

 

3,534

 

Greater Baltimore

 

15,372

 

17,017

 

18,193

 

17,846

 

17,612

 

Suburban Maryland

 

5,749

 

5,400

 

5,648

 

5,325

 

5,609

 

Colorado Springs

 

6,453

 

5,991

 

6,037

 

5,912

 

5,920

 

Greater Philadelphia

 

2,172

 

2,143

 

1,701

 

1,675

 

1,939

 

Other

 

3,618

 

3,668

 

3,167

 

2,562

 

2,838

 

Wholesale Data Center

 

1,416

 

1,285

 

1,283

 

1,276

 

1,210

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate revenues

 

$

125,304

 

$

127,456

 

$

125,129

 

$

120,806

 

$

122,441

 

 

NOI from Real Estate Operations* by Segment

(dollars in thousands)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Office Properties:

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

$

36,099

 

$

35,192

 

$

35,116

 

$

34,877

 

$

32,194

 

Northern Virginia

 

11,160

 

11,715

 

11,362

 

11,169

 

10,684

 

San Antonio

 

3,791

 

3,816

 

3,877

 

3,951

 

3,850

 

Washington, DC - Capitol Riverfront

 

1,984

 

2,733

 

2,699

 

2,595

 

2,963

 

St. Mary’s and King George Counties

 

2,954

 

2,578

 

2,365

 

2,603

 

2,520

 

Greater Baltimore

 

9,482

 

9,936

 

10,640

 

10,613

 

9,160

 

Suburban Maryland

 

3,228

 

2,902

 

3,673

 

3,147

 

2,948

 

Colorado Springs

 

4,068

 

3,383

 

3,572

 

3,932

 

3,577

 

Greater Philadelphia

 

1,557

 

1,655

 

1,284

 

1,330

 

1,521

 

Other

 

2,385

 

2,964

 

2,318

 

1,469

 

2,371

 

Wholesale Data Center

 

209

 

387

 

229

 

447

 

501

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI from real estate operations

 

$

76,917

 

$

77,261

 

$

77,135

 

$

76,133

 

$

72,289

 

 


*Includes continuing and discontinued operations.

 

11



 

Corporate Office Properties Trust

Consolidated Office Occupancy Rates by Region by Quarter

 

 

 

Baltimore /

 

 

 

 

 

 

 

St. Mary’s &

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington

 

Northern

 

San

 

Washington, DC-

 

King George

 

Greater

 

Suburban

 

Colorado

 

Greater

 

 

 

 

 

 

 

Corridor

 

Virginia

 

Antonio

 

Capitol Riverfront

 

Counties

 

Baltimore

 

Maryland

 

Springs

 

Philadelphia

 

Other

 

Total

 

March 31, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

111

 

17

 

8

 

2

 

19

 

39

 

8

 

21

 

3

 

3

 

231

 

Rentable Square Feet

 

8,853,652

 

2,936,396

 

915,429

 

360,326

 

903,534

 

2,764,649

 

1,018,922

 

1,569,300

 

479,957

 

434,308

 

20,236,473

 

Occupied %

 

87.6

%

86.4

%

96.5

%

89.0

%

88.4

%

86.1

%

79.6

%

77.0

%

99.7

%

100.0

%

87.0

%

Leased %

 

90.2

%

87.2

%

96.5

%

89.0

%

88.4

%

87.1

%

86.2

%

79.3

%

99.7

%

100.0

%

88.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

111

 

17

 

9

 

2

 

19

 

46

 

8

 

21

 

2

 

3

 

238

 

Rentable Square Feet

 

8,859,080

 

2,935,786

 

1,010,349

 

361,186

 

903,534

 

2,984,071

 

1,018,922

 

1,569,336

 

437,718

 

434,308

 

20,514,290

 

Occupied %

 

87.9

%

84.8

%

90.7

%

89.6

%

87.3

%

84.5

%

79.6

%

74.9

%

99.7

%

100.0

%

86.2

%

Leased %

 

90.0

%

87.3

%

90.7

%

93.3

%

88.0

%

86.4

%

84.2

%

76.9

%

99.7

%

100.0

%

88.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

110

 

17

 

8

 

2

 

18

 

61

 

8

 

21

 

2

 

3

 

250

 

Rentable Square Feet

 

8,725,790

 

2,801,546

 

915,429

 

362,209

 

820,692

 

3,572,775

 

1,007,342

 

1,569,336

 

437,718

 

434,308

 

20,647,145

 

Occupied %

 

89.4

%

88.2

%

100.0

%

97.4

%

87.4

%

83.8

%

75.5

%

76.7

%

89.9

%

100.0

%

87.4

%

Leased %

 

90.1

%

90.2

%

100.0

%

97.4

%

87.8

%

86.1

%

86.8

%

77.3

%

99.7

%

100.0

%

89.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

109

 

17

 

8

 

2

 

18

 

66

 

8

 

21

 

2

 

2

 

253

 

Rentable Square Feet

 

8,662,140

 

2,828,117

 

915,429

 

362,209

 

820,692

 

3,784,852

 

1,009,394

 

1,569,336

 

437,718

 

295,842

 

20,685,729

 

Occupied %

 

88.6

%

87.6

%

100.0

%

95.4

%

87.0

%

83.9

%

74.9

%

76.0

%

85.8

%

100.0

%

86.6

%

Leased %

 

90.4

%

89.3

%

100.0

%

98.3

%

87.4

%

85.1

%

84.7

%

76.7

%

99.7

%

100.0

%

88.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Buildings

 

112

 

17

 

8

 

2

 

18

 

66

 

8

 

21

 

2

 

2

 

256

 

Rentable Square Feet

 

8,701,349

 

2,809,317

 

915,429

 

361,674

 

820,692

 

3,764,456

 

1,009,394

 

1,571,334

 

375,760

 

295,842

 

20,625,247

 

Occupied %

 

87.7

%

86.4

%

100.0

%

95.4

%

88.8

%

83.6

%

75.5

%

76.1

%

100.0

%

100.0

%

86.4

%

Leased %

 

90.0

%

88.8

%

100.0

%

95.4

%

88.8

%

85.7

%

85.2

%

76.3

%

100.0

%

100.0

%

88.6

%

 

Summary of Operating, Construction and Redevelopment Office Properties at March 31, 2012

 

 

 

 

 

 

 

 

 

Partially

 

 

 

 

 

Operating

 

Under

 

Under

 

Operational

 

 

 

 

 

Properties

 

Construction

 

Redevelopment

 

Properties (1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

# of Properties

 

231

 

6

 

1

 

(2

)

236

 

Total Square Feet

 

20,236,473

 

789,318

 

113,293

 

(109,304

)

21,029,780

 

Leased Square Feet

 

17,993,851

 

 

 

 

 

 

 

 

 

% Leased

 

88.9

%

 

 

 

 

 

 

 

 

 


(1) Adjustment for partially operational properties included in both operating properties and under construction or redevelopment.

                                                                                                                                                                                                                                                        

12



 

Corporate Office Properties Trust

Same Office Properties (1) Average Occupancy Rates by Region

 

 

 

Number

 

Rentable

 

 

 

 

 

 

 

 

 

 

 

 

 

of

 

Square

 

Three Months Ended

 

 

 

Buildings

 

Feet

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baltimore Washington Corridor

 

88

 

7,888,063

 

89.6

%

90.2

%

90.1

%

89.3

%

89.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northern Virginia

 

16

 

2,784,899

 

86.8

%

88.0

%

90.2

%

89.7

%

88.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Antonio

 

8

 

915,429

 

97.6

%

100.0

%

100.0

%

100.0

%

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington, DC - Capitol Riverfront

 

2

 

360,326

 

91.7

%

92.8

%

98.0

%

95.4

%

97.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

St. Mary’s and King George Counties

 

12

 

585,699

 

94.9

%

95.6

%

96.9

%

97.7

%

97.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Baltimore

 

33

 

2,361,793

 

87.5

%

86.2

%

85.5

%

86.1

%

86.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Maryland

 

2

 

242,069

 

90.0

%

90.0

%

89.2

%

87.6

%

87.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colorado Springs

 

5

 

398,356

 

74.7

%

79.0

%

84.6

%

86.3

%

86.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Philadelphia

 

1

 

219,065

 

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

2

 

295,842

 

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Office

 

169

 

16,051,541

 

89.5

%

90.1

%

90.6

%

90.2

%

90.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Same Office Properties occupancy as of period end

 

 

 

 

 

89.5

%

89.6

%

90.7

%

90.4

%

89.7

%

 


(1)  Same office properties represent buildings owned and 100% operational since January 1, 2011, excluding properties held for future disposition.

 

13



 

Corporate Office Properties Trust

Same Office Property Real Estate Revenues by Region

(dollars in thousands)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Office Properties:

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

$

51,962

 

$

53,026

 

$

51,051

 

$

49,127

 

$

50,114

 

Northern Virginia

 

17,996

 

18,471

 

18,246

 

18,082

 

17,883

 

San Antonio

 

7,614

 

7,610

 

7,698

 

7,089

 

7,663

 

Washington, DC - Capitol Riverfront

 

3,894

 

4,529

 

4,507

 

4,252

 

4,590

 

St. Mary’s and King George Counties

 

2,995

 

2,866

 

2,935

 

3,008

 

2,957

 

Greater Baltimore

 

13,143

 

12,926

 

12,543

 

12,673

 

12,660

 

Suburban Maryland

 

2,051

 

1,994

 

2,207

 

1,961

 

2,222

 

Colorado Springs

 

1,627

 

1,469

 

1,507

 

1,438

 

1,497

 

Greater Philadelphia

 

731

 

711

 

707

 

715

 

506

 

Other

 

2,403

 

2,449

 

2,377

 

2,151

 

2,436

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate revenues

 

$

104,416

 

$

106,051

 

$

103,778

 

$

100,496

 

$

102,528

 

 

Same Office Property NOI by Region

(dollars in thousands)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Office Properties:

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

$

33,207

 

$

32,156

 

$

32,673

 

$

32,181

 

$

30,432

 

Northern Virginia

 

10,729

 

11,458

 

11,129

 

10,963

 

10,436

 

San Antonio

 

3,847

 

3,885

 

3,879

 

3,951

 

3,850

 

Washington, DC - Capitol Riverfront

 

1,984

 

2,733

 

2,699

 

2,595

 

2,963

 

St. Mary’s and King George Counties

 

2,107

 

2,016

 

2,051

 

2,256

 

2,171

 

Greater Baltimore

 

7,985

 

7,587

 

7,190

 

7,537

 

7,046

 

Suburban Maryland

 

1,276

 

1,218

 

1,819

 

1,250

 

1,426

 

Colorado Springs

 

881

 

731

 

741

 

807

 

783

 

Greater Philadelphia

 

649

 

675

 

669

 

680

 

457

 

Other

 

2,161

 

2,234

 

2,093

 

1,920

 

2,211

 

 

 

 

 

 

 

 

 

 

 

 

 

Same office property NOI

 

64,826

 

64,693

 

64,943

 

64,140

 

61,775

 

Add (less): Straight-line rent adjustments

 

(1,992

)

(697

)

1,135

 

(2,023

)

(3,515

)

Less: Amortization of deferred market rental revenue

 

(103

)

(90

)

(84

)

(57

)

(124

)

Add: Amortization of above-market cost arrangements

 

353

 

434

 

434

 

434

 

434

 

Same office property cash NOI

 

63,084

 

64,340

 

66,428

 

62,494

 

58,570

 

Less: Lease termination fees, gross

 

(534

)

(48

)

(130

)

(221

)

(138

)

Same office property cash NOI, excluding gross lease termination fees

 

$

62,550

 

$

64,292

 

$

66,298

 

$

62,273

 

$

58,432

 

 

Note:  Same office properties represent buildings owned and 100% operational since January 1, 2011, excluding properties held for future disposition.

 

14



 

 

Corporate Office Properties Trust

Unstabilized Office Properties (1) - March 31, 2012

 

 

 

Operational

 

 

 

 

 

Property Grouping

 

Square Feet

 

Occupancy %

 

Leased %

 

Same Office Properties (2) 

 

 

 

 

 

 

 

3120 Fairview Park Drive

 

180,853

 

24.9

%

38.2

%

7740 Milestone Parkway

 

145,638

 

16.7

%

58.7

%

5825 University Research Court

 

118,620

 

79.5

%

87.2

%

Total Unstabilized Same Office Properties

 

445,111

 

36.8

%

58.0

%

 

 

 

 

 

 

 

 

Office Properties Placed in Service (3) 

 

 

 

 

 

 

 

316 Sentinel Way

 

125,150

 

0.0

%

60.4

%

210 Research Boulevard

 

79,573

 

34.6

%

37.0

%

Total Unstabilized Office Properties Placed in Service

 

204,723

 

13.5

%

51.3

%

 

 

 

 

 

 

 

 

Total Unstabilized Office Properties, Excluding Properties in Strategic Reallocation Plan

 

649,834

 

29.4

%

55.9

%

Unstabilized Strategic Reallocation Plan Office Properties (3 Properties)

 

309,590

 

25.7

%

36.9

%

Total Unstabilized Office Properties

 

959,424

 

28.2

%

49.7

%

 


(1) Properties with first generation operational space less than 90% occupied at 3/31/12.

(2) Properties owned and 100% operational since 1/1/11.

(3) Newly constructed or redeveloped properties placed in service that were not fully operational by 1/1/11.

 

15



 

Corporate Office Properties Trust

Office Leasing (1)

Quarter Ended March 31, 2012

 

 

 

Baltimore/
Washington
Corridor

 

Northern
Virginia

 

San Antonio

 

St. Mary’s
and King
George
Counties

 

Greater
Baltimore

 

Suburban
Maryland

 

Colorado
Springs

 

Greater
Philadelphia

 

Total
Office

 

First Generation Space Leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction and Redevelopment Space

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leased Square Feet

 

61,009

 

 

 

 

1,863

 

 

18,160

 

4,804

 

85,836

 

Average Committed Cost Per Square Foot

 

$

52.78

 

$

0.00

 

$

0.00

 

$

0.00

 

$

0.00

 

$

0.00

 

$

47.42

 

$

53.56

 

$

50.64

 

Weighted Average Lease Term in years

 

7.0

 

 

 

 

5.1

 

 

5.3

 

5.3

 

6.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other First Generation Space

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leased Square Feet

 

20,168

 

 

 

 

10,928

 

9,155

 

3,109

 

 

43,360

 

Average Committed Cost Per Square Foot

 

$

33.20

 

$

0.00

 

$

0.00

 

$

0.00

 

$

30.75

 

$

40.95

 

$

15.00

 

$

0.00

 

$

32.69

 

Weighted Average Lease Term in years

 

7.7

 

 

 

 

6.6

 

5.2

 

4.1

 

 

6.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total First Generation Space Leased

 

81,177

 

 

 

 

12,791

 

9,155

 

21,269

 

4,804

 

129,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Generation Space Leasing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewed Space

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewal Square Feet Leased

 

200,507

 

26,478

 

 

8,193

 

65,067

 

11,127

 

8,499

 

 

319,871

 

Expiring Square Feet

 

369,074

 

29,012

 

32,424

 

8,193

 

80,952

 

11,127

 

8,499

 

 

539,281

 

Vacated Square Feet

 

168,567

 

2,534

 

32,424

 

 

15,885

 

 

 

 

219,410

 

Retention Rate (% based upon square feet)

 

54.33

%

91.27

%

0.00

%

100.00

%

80.38

%

100.00

%

100.00

%

0.00

%

59.31

%

Renewed Space Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Committed Cost per Square Foot

 

$

7.89

 

$

10.94

 

$

0.00

 

$

1.78

 

$

6.57

 

$

3.41

 

$

6.08

 

$

0.00

 

$

7.52

 

Weighted Average Lease Term in years

 

3.9

 

4.6

 

 

3.0

 

4.1

 

7.2

 

3.6

 

 

4.1

 

Change in Total Rent - GAAP

 

3.1

%

-6.2

%

0.0

%

10.7

%

-1.0

%

6.4

%

-0.1

%

0.0

%

1.6

%

Change in Total Rent - Cash

 

-5.8

%

-15.5

%

0.0

%

-3.8

%

-15.0

%

-1.3

%

-3.0

%

0.0

%

-8.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retenanted Space

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leased Square Feet

 

87,840

 

7,877

 

 

 

13,341

 

11,513

 

 

 

120,571

 

Retenanted Space Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Committed Cost per Square Foot

 

$

18.24

 

$

23.21

 

$

0.00

 

$

0.00

 

$

6.60

 

$

17.46

 

$

0.00

 

$

0.00

 

$

17.20

 

Weighted Average Lease Term in years

 

4.1

 

6.1

 

 

 

4.5

 

5.4

 

 

 

4.4

 

Change in Total Rent - GAAP

 

4.4

%

-1.5

%

0.0

%

0.0

%

-27.4

%

-21.7

%

0.0

%

0.0

%

-1.8

%

Change in Total Rent - Cash

 

-6.6

%

-5.4

%

0.0

%

0.0

%

-29.4

%

-29.2

%

0.0

%

0.0

%

-10.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Second Generation Space Leased

 

288,347

 

34,355

 

 

8,193

 

78,408

 

22,640

 

8,499

 

 

440,442

 

Total Second Generation Space Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Committed Cost per Square Foot

 

$

11.05

 

$

13.75

 

$

0.00

 

$

1.78

 

$

6.57

 

$

10.55

 

$

6.08

 

$

0.00

 

$

10.17

 

Weighted Average Lease Term in Years

 

4.0

 

4.9

 

 

3.0

 

4.1

 

6.3

 

3.6

 

 

4.2

 

Change in Total Rent - GAAP

 

3.4

%

-5.1

%

0.0

%

10.7

%

-5.9

%

-9.2

%

-0.1

%

0.0

%

0.8

%

Change in Total Rent - Cash

 

-6.0

%

-13.3

%

0.0

%

-3.8

%

-17.6

%

-16.9

%

-3.0

%

0.0

%

-8.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Square Feet Leased

 

369,524

 

34,355

 

 

8,193

 

91,199

 

31,795

 

29,768

 

4,804

 

569,638

 

 


(1) This presentation reflects consolidated properties.

Notes:  No expiration, renewal or retenanting activity transpired in our Washington DC-Capital Riverfront or Other regions.

Activity is exclusive of owner occupied space and leases with less than a one-year term.

Retention rate includes early renewals.

 

16



 

Corporate Office Properties Trust

Office Lease Expiration Analysis as of 3/31/12 (1)

 

 

 

Total Office Portfolio

 

Strategic Tenant Properties Only

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

 

 

 

 

 

 

Annual. Rental

 

Percentage

 

Annual. Rental

 

 

 

 

 

Annual. Rental

 

Strategic Tenant

 

Annual. Rental

 

 

 

 

 

Square

 

Revenue of

 

of Total

 

Revenue of

 

 

 

Square

 

Revenue of

 

Properties

 

Revenue of

 

Year and Region

 

Number

 

Footage

 

Expiring

 

Annualized Rental

 

Expiring Leases

 

Number

 

Footage

 

Expiring

 

Annualized Rental

 

Expiring Leases

 

of Lease

 

of Leases

 

of Leases

 

Leases (3)

 

Revenue

 

per Occupied

 

of Leases

 

of Leases

 

Leases (3)

 

Revenue

 

per Occupied

 

Expiration (2)

 

Expiring

 

Expiring

 

(000’s)

 

Expiring

 

Square Foot

 

Expiring

 

Expiring

 

(000’s)

 

Expiring

 

Square Foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

53

 

799,110

 

$

21,549

 

4.5

%

$

26.97

 

12

 

492,822

 

$

14,663

 

5.2

%

$

29.75

 

Northern Virginia

 

17

 

341,027

 

10,114

 

2.1

%

29.66

 

7

 

271,426

 

7,628

 

2.7

%

28.10

 

San Antonio

 

1

 

45,935

 

610

 

0.1

%

13.29

 

1

 

45,935

 

610

 

0.2

%

13.29

 

Washington, DC-Capitol Riverfront

 

3

 

9,272

 

427

 

0.1

%

46.05

 

3

 

9,272

 

427

 

0.2

%

46.05

 

St. Mary’s and King George Cos.

 

17

 

341,818

 

6,906

 

1.5

%

20.20

 

17

 

341,818

 

6,906

 

2.4

%

20.20

 

Greater Baltimore

 

18

 

226,699

 

4,597

 

1.0

%

20.28

 

0

 

 

 

0.0

%

0.00

 

Suburban Maryland

 

4

 

25,112

 

450

 

0.1

%

17.92

 

0

 

 

 

0.0

%

0.00

 

Colorado Springs

 

11

 

105,523

 

1,492

 

0.3

%

14.14

 

5

 

22,690

 

254

 

0.1

%

11.18

 

2012

 

124

 

1,894,496

 

46,146

 

9.7

%

24.36

 

45

 

1,183,963

 

30,488

 

10.8

%

25.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

52

 

1,324,061

 

41,254

 

8.7

%

31.16

 

16

 

905,036

 

31,361

 

11.1

%

34.65

 

Northern Virginia

 

9

 

141,477

 

3,760

 

0.8

%

26.58

 

3

 

34,576

 

1,141

 

0.4

%

32.99

 

Washington, DC-Capitol Riverfront

 

5

 

131,948

 

5,817

 

1.2

%

44.08

 

5

 

131,948

 

5,817

 

2.1

%

44.08

 

St. Mary’s and King George Cos.

 

10

 

123,434

 

2,300

 

0.5

%

18.64

 

10

 

123,434

 

2,300

 

0.8

%

18.64

 

Greater Baltimore

 

17

 

113,655

 

2,633

 

0.6

%

23.17

 

0

 

 

 

0.0

%

0.00

 

Suburban Maryland

 

4

 

56,398

 

1,624

 

0.3

%

28.80

 

0

 

 

 

0.0

%

0.00

 

Colorado Springs

 

11

 

139,711

 

2,971

 

0.6

%

21.26

 

7

 

22,737

 

555

 

0.2

%

24.40

 

2013

 

108

 

2,030,684

 

60,360

 

12.7

%

29.72

 

41

 

1,217,731

 

41,173

 

14.5

%

33.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

51

 

860,650

 

24,252

 

5.1

%

28.18

 

15

 

602,334

 

17,690

 

3.7

%

29.37

 

Northern Virginia

 

9

 

470,075

 

14,631

 

3.1

%

31.13

 

5

 

253,787

 

7,903

 

1.7

%

31.14

 

Washington, DC-Capitol Riverfront

 

6

 

70,200

 

3,150

 

0.7

%

44.88

 

6

 

70,200

 

3,150

 

0.7

%

44.88

 

St. Mary’s and King George Cos.

 

12

 

84,068

 

1,659

 

0.3

%

19.73

 

12

 

84,068

 

1,659

 

0.3

%

19.73

 

Greater Baltimore

 

27

 

212,547

 

4,426

 

0.9

%

20.82

 

0

 

 

 

0.0

%

0.00

 

Suburban Maryland

 

6

 

110,167

 

2,473

 

0.5

%

22.45

 

0

 

 

 

0.0

%

0.00

 

Colorado Springs

 

10

 

167,418

 

3,356

 

0.7

%

20.05

 

5

 

52,528

 

1,215

 

0.3

%

23.13

 

Other

 

1

 

138,466

 

3,667

 

0.8

%

26.49

 

0

 

 

 

0.0

%

0.00

 

2014

 

122

 

2,113,591

 

57,614

 

12.1

%

27.26

 

43

 

1,062,917

 

31,617

 

11.2

%

29.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

112

 

2,777,543

 

72,938

 

15.4

%

26.26

 

49

 

1,649,809

 

49,489

 

17.5

%

30.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

90

 

1,814,931

 

46,734

 

9.9

%

25.75

 

29

 

874,348

 

24,140

 

8.5

%

27.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thereafter

 

207

 

6,973,973

 

190,629

 

40.2

%

27.33

 

69

 

3,585,757

 

106,295

 

37.5

%

29.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Average

 

763

 

17,605,218

 

$

474,421

 

100.0

%

$

26.95

 

276

 

9,574,525

 

$

283,203

 

100.0

%

$

29.58

 

 


NOTE:  As of March 31, 2012, the weighted average lease term is 4.7 years for both the entire portfolio and for the Strategic Tenant Properties.

 

(1)  This presentation reflects consolidated properties.  This expiration analysis includes the effect of early renewals completed on existing leases but excludes the effect of new tenant leases on square feet yet to commence as of March 31, 2012 of 388,633 for the portfolio, including 144,592 for the Strategic Tenant Properties.

(2)  Many of our government leases are subject to certain early termination provisions which are customary to government leases.  The year of lease expiration was computed assuming no exercise of such early termination rights.

(3)  Total Annualized Rental Revenue is the monthly contractual base rent as of March 31, 2012 multiplied by 12 plus the estimated annualized expense reimbursements under existing leases.

 

17



 

Corporate Office Properties Trust

Top 20 Office Tenants as of 3/31/12

(Based on Annualized Rental Revenue of

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 (1)

 

Revenue

 

Lease Term (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States of America

(3)

65

 

3,309,557

 

18.8

%

$

106,556

 

22.5

%

5.4

 

Northrop Grumman Corporation

 

16

 

1,206,380

 

6.9

%

32,352

 

6.8

%

5.9

 

Booz Allen Hamilton, Inc.

 

8

 

778,777

 

4.4

%

24,975

 

5.3

%

4.1

 

Computer Sciences Corporation

 

7

 

735,354

 

4.2

%

22,719

 

4.8

%

2.0

 

The MITRE Corporation

 

4

 

286,553

 

1.6

%

8,495

 

1.8

%

4.8

 

ITT Corporation

 

8

 

332,490

 

1.9

%

8,272

 

1.7

%

3.8

 

Wells Fargo & Company

 

5

 

209,793

 

1.2

%

7,989

 

1.7

%

6.3

 

The Aerospace Corporation

 

3

 

254,869

 

1.4

%

7,892

 

1.7

%

2.9

 

CareFirst, Inc.

 

2

 

222,607

 

1.3

%

7,194

 

1.5

%

9.6

 

Kratos Defense & Security Solution, Inc.

 

5

 

251,793

 

1.4

%

6,856

 

1.4

%

7.9

 

L-3 Communications Holdings, Inc.

 

3

 

214,236

 

1.2

%

6,322

 

1.3

%

2.6

 

The Boeing Company

 

6

 

198,081

 

1.1

%

6,189

 

1.3

%

3.4

 

General Dynamics Corporation

 

7

 

209,934

 

1.2

%

6,046

 

1.3

%

4.2

 

AT&T Corporation

 

4

 

315,353

 

1.8

%

5,620

 

1.2

%

6.8

 

Comcast Corporation

 

6

 

308,262

 

1.8

%

5,608

 

1.2

%

6.9

 

Raytheon Company

 

8

 

164,287

 

0.9

%

4,857

 

1.0

%

3.2

 

Ciena Corporation

 

4

 

236,678

 

1.3

%

4,678

 

1.0

%

1.6

 

Science Applications International Corp.

 

4

 

133,408

 

0.8

%

4,483

 

0.9

%

6.2

 

The Johns Hopkins Institutions

 

5

 

141,403

 

0.8

%

3,787

 

0.8

%

4.6

 

Unisys Corporation

 

1

 

156,695

 

0.9

%

3,697

 

0.8

%

8.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Top 20 Office Tenants

 

171

 

9,666,510

 

54.9

%

284,587

 

60.0

%

5.0

 

All remaining tenants

 

592

 

7,938,708

 

45.1

%

189,835

 

40.0

%

4.3

 

Total/Weighted Average

 

763

 

17,605,218

 

100.0

%

$

474,421

 

100.0

%

4.7

 

 


(1)  Total Annualized Rental Revenue is the monthly contractual base rent as of March 31, 2012, multiplied by 12, plus the estimated annualized expense reimbursements under existing leases.

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

(3)  Substantially all of our government leases are subject to early termination provisions which are customary in government leases. The weighted average remaining lease term was computed assuming no exercise of such early termination rights.

 

18



 

Corporate Office Properties Trust

Dispositions and Acquisitions

 

Location

 

Property Region

 

Business Park/Submarket

 

Square Feet

 

Transaction
Date

 

Transaction Price
(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposition Summary - Three Months Ended March 31, 2012

 

Operating Properties

 

 

 

 

 

 

 

 

 

 

 

White Marsh Professional Center, 8615 Ridgely’s Choice and 8114 Sandpiper Circle

 

Greater Baltimore

 

White Marsh Portfolio

 

163,000

 

1/30/2012

 

$

19,100

 

1101 Sentry Gateway

 

San Antonio

 

San Antonio

 

95,000

 

1/31/2012

 

13,500

 

222 and 224 Schilling Circle

 

Greater Baltimore

 

Hunt Valley

 

56,000

 

2/10/2012

 

4,400

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Properties

 

 

 

 

 

314,000

 

 

 

37,000

 

Non Operating Properties

 

 

 

 

 

N/A

 

Various

 

25,695

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

314,000

 

 

 

$

62,695

 

 

19



 

Corporate Office Properties Trust

Construction, Redevelopment, Wholesale Data Center, Land Held and Pre-Construction as of 3/31/12

(dollars in thousands)

 

 

 

 

 

 

 

 

 

Land Held and

 

 

 

 

 

Construction

 

Redevelopment

 

Wholesale Data

 

Pre-Construction

 

 

 

 

 

Projects (1)

 

Projects (2)

 

Center (3)

 

(4)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

309,822

 

 

N/A

 

4,137,000

 

4,446,822

 

Northern Virginia

 

237,000

 

 

N/A

 

1,764,000

 

2,001,000

 

San Antonio

 

 

 

N/A

 

1,157,600

 

1,157,600

 

Huntsville, Alabama

 

114,377

 

 

N/A

 

4,485,000

 

4,599,377

 

St. Mary’s and King George Counties

 

 

 

N/A

 

109,000

 

109,000

 

Greater Baltimore

 

128,119

 

 

N/A

 

2,692,000

 

2,820,119

 

Suburban Maryland

 

 

 

N/A

 

1,900,000

 

1,900,000

 

Colorado Springs

 

 

 

N/A

 

2,570,000

 

2,570,000

 

Greater Philadelphia

 

 

113,293

 

N/A

 

722,000

 

835,293

 

Other

 

 

 

N/A

 

967,000

 

967,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

789,318

 

113,293

 

N/A

 

20,503,600

 

21,406,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs to date by region

 

 

 

 

 

 

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

$

55,101

 

$

 

$

 

$

108,274

 

$

163,375

 

Northern Virginia

 

46,775

 

 

 

61,203

 

107,978

 

San Antonio

 

 

 

 

23,433

 

23,433

 

Huntsville, Alabama

 

16,135

 

 

 

15,520

 

31,655

 

St. Mary’s and King George Counties

 

 

 

 

2,690

 

2,690

 

Greater Baltimore

 

18,407

 

 

 

83,663

 

102,070

 

Suburban Maryland

 

 

 

 

17,504

 

17,504

 

Colorado Springs

 

 

 

 

24,882

 

24,882

 

Greater Philadelphia

 

 

14,162

 

 

29,220

 

43,382

 

Wholesale Data Center

 

 

 

200,342

 

 

200,342

 

Other

 

 

 

 

7,396

 

7,396

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

136,418

 

$

14,162

 

$

200,342

 

$

373,785

 

$

724,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs to date, by Balance Sheet line item

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating properties

 

$

15,793

 

$

6,142

 

$

44,599

 

$

19,393

 

$

85,927

 

Projects in development or held for future

 

 

 

 

 

 

 

 

 

 

 

development, including associated land costs

 

118,977

 

7,756

 

155,743

 

351,492

 

633,968

 

Assets held for sale

 

 

 

 

2,872

 

2,872

 

Deferred leasing costs

 

1,648

 

264

 

 

28

 

1,940

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

136,418

 

$

14,162

 

$

200,342

 

$

373,785

 

$

724,707

 

 


(1) Represents construction projects as listed on page 21.

(2) Represents redevelopment projects as listed on page 22.

(3) Represents our wholesale data center as listed on page 23.

(4) Represents our land held and pre-construction as listed on page 24.

 

20



 

Corporate Office Properties Trust

Summary of Construction Projects as of 3/31/12

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual or

 

 

 

 

 

 

 

Total

 

Percentage

 

as of March 31, 2012 (1)

 

Anticipated

 

 

 

 

 

 

 

Rentable

 

Leased

 

Anticipated

 

 

 

Cost to

 

Shell

 

Anticipated

 

 

 

Park/

 

Square

 

as of

 

Total

 

Cost

 

Date Placed

 

Completion

 

Operational

 

Property and Location

 

Submarket

 

Feet

 

3/31/12

 

Cost

 

to Date

 

in Service

 

Date

 

Date (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government Demand Drivers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7205 Riverwood Road Columbia, Maryland

 

Howard Co. Perimeter

 

89,268

 

0

%

$

21,725

 

$

15,144

 

$

 

1Q 12

 

1Q 13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Government

 

 

 

89,268

 

0

%

$

21,725

 

$

15,144

 

$

 

 

 

 

 

% of Total Demand Drivers

 

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

Defense IT Demand Drivers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

410 National Business Parkway Annapolis Junction, Maryland

 

BWI Airport

 

110,418

 

48

%

$

25,615

 

$

17,941

 

 

4Q 11

 

4Q 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

430 National Business Parkway  Annapolis Junction, Maryland

(3)

BWI Airport

 

110,136

 

80

%

24,291

 

22,016

 

15,793

 

2Q 11

 

2Q 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7770 Backlick Road (Patriot Ridge) Springfield, Virginia

 

Springfield

 

237,000

 

44

%

77,172

 

46,775

 

 

2Q 12

 

2Q 13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

206 Research Boulevard Aberdeen, Maryland

 

Harford County

 

128,119

 

0

%

26,653

 

18,407

 

 

3Q 11

 

3Q 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1000 Redstone Gateway Huntsville, Alabama

 

Huntsville

 

114,377

 

0

%

22,194

 

16,135

 

 

1Q 12

 

1Q 13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Defense IT Demand Drivers

 

 

 

700,050

 

35

%

$

175,925

 

$

121,274

 

$

15,793

 

 

 

 

 

% of Total Demand Drivers

 

 

 

89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Under Construction

 

 

 

789,318

 

31

%

$

197,650

 

$

136,418

 

$

15,793

 

 

 

 

 

 


(1) Cost includes land, construction, leasing costs and allocated portion of structured parking and other shared infrastructure, if applicable.

(2) Anticipated operational date is the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.

(3) Although classified as “Under Construction,” 67,065 square feet are operational.

 

Demand Driver Categories (as classified by COPT management):

* Defense IT:  Development opportunity created through our current and future relationships with defense information technology contractors and, possibly, minor Government tenancy.

* Government:  Development opportunity created through our existing and future relationship with various agencies of the government of the United States of America.  Excludes Government tenancy included in Defense Information Technology.

* Market Demand:  Development opportunity created through projected unfulfilled space requirements within a specific submarket; potential submarket demand exceeds existing supply.

* Research Park:  Development opportunity created through specific research park relationship.

 

21



 

Corporate Office Properties Trust

Summary of Redevelopment Projects as of 3/31/12

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual or

 

 

 

 

 

 

 

Total

 

Percentage

 

as of March 31, 2012 (1)

 

Anticipated

 

 

 

 

 

 

 

Rentable

 

Leased

 

Anticipated

 

 

 

Cost to

 

Shell

 

Anticipated

 

 

 

Park/

 

Square

 

as of

 

Total

 

Cost

 

Date Placed

 

Completion

 

Operational

 

Property and Location

 

Submarket

 

Feet

 

3/31/12

 

Cost

 

to Date

 

in Service

 

Date

 

Date (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Demand Drivers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

751 Arbor Way (Hillcrest I) Blue Bell, Pennsylvania

(3)

Greater Philadelphia

 

113,293

 

42

%

$

20,572

 

$

14,162

 

$

6,142

 

1Q 12

 

1Q 13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Under Redevelopment -All Market Demand

 

 

 

113,293

 

 

 

$

20,572

 

$

14,162

 

$

6,142

 

 

 

 

 

 


(1) Cost includes construction, leasing costs and allocated portion of shared infrastructure.

(2) Anticipated operational date is the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.

(3) Although classified as “Under Redevelopment,” 42,239 square feet are operational.

 

22



 

Corporate Office Properties Trust

Wholesale Data Center as of 3/31/12

(dollars in thousands)

 

 

 

 

 

 

 

Initial

 

Critical Load

 

 

 

 

 

 

 

 

 

 

 

 

 

Raised Floor

 

Stabilization

 

Upon

 

 

 

Anticipated

 

 

 

Cash NOI for

 

 

 

Gross Building

 

Square

 

Critical Load

 

Completion

 

MW

 

Total

 

Cost

 

Three Months

 

Property and Location

 

Area

 

Footage (1)

 

(in MWs) (2)

 

Leased

 

Operational

 

Cost (3)

 

to date

 

Ended 3/31/12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power Loft @ Innovation 9651 Hornbaker Road Manassas, Virginia

 

233,000

 

100,000

 

18

 

17

%

17

%

$

275,230

 

$

200,342

 

$

111

 

 

Lease Expiration Analysis

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Number

 

 

 

 

 

 

 

Annual Rental

 

 

 

of Leases

 

Raised Floor

 

Critical Load

 

Critical Load

 

Revenue of

 

Year of Lease Expiration

 

Expiring

 

Square Footage

 

Leased (MW)

 

Used (MW)

 

Expiring Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

1

 

7,172

 

1

 

1.00

 

$

2,090

 

2020

 

1

 

19,023

 

2

 

1.25

 

2,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

2.25

 

$

4,660

 

 


(1) Raised floor square footage is that portion of the gross building area where tenants locate their computer servers.

Raised floor area is considered to be the net rentable square footage.

(2) Critical load is the power available for exclusive use of tenants in the property (expressed in terms of megawatts (“MWs”)).

(3) Anticipated total cost includes land, construction and leasing costs.

 

23



 

Corporate Office Properties Trust

Summary of Land Held and Pre-Construction as of 3/31/12 (1)

 

 

 

 

 

Estimated

 

 

 

 

 

Developable

 

Location

 

Acres

 

Square Feet

 

 

 

 

 

 

 

Baltimore/Washington Corridor

 

 

 

 

 

National Business Park

 

195

 

2,059,000

 

Columbia Gateway

 

22

 

520,000

 

Airport Square

 

6

 

89,000

 

Arundel Preserve

 

84

up to

1,382,000

 

Other

 

11

 

87,000

 

Subtotal

 

318

 

4,137,000

 

 

 

 

 

 

 

Northern Virginia

 

 

 

 

 

Westfields Corporate Center

 

23

 

400,000

 

Westfields Park Center

 

33

 

400,000

 

Woodland Park

 

5

 

225,000

 

Patriot Ridge

 

11

 

739,000

 

Subtotal

 

72

 

1,764,000

 

 

 

 

 

 

 

San Antonio, Texas

 

 

 

 

 

8100 Potranco Road

 

9

 

125,000

 

Northwest Crossroads

 

31

 

375,000

 

Sentry Gateway

 

38

 

657,600

 

Subtotal

 

78

 

1,157,600

 

 

 

 

 

 

 

Huntsville, Alabama

 

465

 

4,485,000

 

St. Mary’s & King George Counties

 

44

 

109,000

 

Greater Baltimore

 

187

 

2,692,000

 

Suburban Maryland

 

172

 

1,900,000

 

Colorado Springs

 

175

 

2,570,000

 

Greater Philadelphia, Pennsylvania

 

8

 

722,000

 

Other

 

808

 

967,000

 

 

 

 

 

 

 

Total land held and pre-construction

 

2,327

 

20,503,600

 

 

 

 

 

 

 

Total costs to date (2)

 

 

 

$

373,785

 

 


(1) This land inventory schedule excludes all properties listed as construction or redevelopment as detailed on pages 21 and 22, and includes properties under ground lease to us.

(2) Represents total costs to date, as reported on page 20.

 

24



 

Corporate Office Properties Trust

Quarterly Common Equity Analysis

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

 

SHAREHOLDER CLASSIFICATION

 

 

 

 

 

 

 

As if Converted

 

 

 

Diluted

 

 

 

Common

 

Common

 

Preferred

 

 

 

Ownership

 

As of March 31, 2012:

 

Shares

 

Units

 

Shares/Units

 

Total

 

% of Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Insiders

 

1,076,497

 

3,628,416

 

 

4,704,913

 

6.12

%

Non-insiders

 

70,961,130

 

638,822

 

610,014

 

72,209,966

 

93.88

%

 

 

72,037,627

 

4,267,238

 

610,014

 

76,914,879

 

100.00

%

 

COMMON EQUITY - End of Quarter

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Unrestricted Common Shares

 

71,558

 

71,363

 

71,336

 

71,260

 

66,477

 

Restricted Common Shares

 

480

 

648

 

651

 

632

 

627

 

Common Shares

 

72,038

 

72,011

 

71,987

 

71,892

 

67,104

 

Common Units

 

4,267

 

4,302

 

4,319

 

4,382

 

4,386

 

Total

 

76,305

 

76,313

 

76,306

 

76,274

 

71,490

 

End of Quarter Common Share Price

 

$

23.21

 

$

21.26

 

$

21.78

 

$

31.11

 

$

36.14

 

Market Value of Common Shares/Units

 

$

1,771,045

 

$

1,622,417

 

$

1,661,948

 

$

2,372,863

 

$

2,583,646

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares Trading Volume

 

 

 

 

 

 

 

 

 

 

 

Average Daily Volume (Shares)

 

809

 

842

 

951

 

779

 

711

 

Average Daily Volume

 

$

19,218

 

$

18,604

 

$

25,589

 

$

26,322

 

$

25,009

 

As a Percentage of Weighted Average Common Shares

 

1.1

%

1.2

%

1.3

%

1.1

%

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Common Share Price Range

 

 

 

 

 

 

 

 

 

 

 

Quarterly High

 

$

25.48

 

$

25.96

 

$

32.07

 

$

36.79

 

$

36.90

 

Quarterly Low

 

$

20.58

 

$

19.35

 

$

21.75

 

$

30.63

 

$

33.83

 

Quarterly Average

 

$

23.76

 

$

22.11

 

$

26.90

 

$

33.81

 

$

35.20

 

 

25



 

Corporate Office Properties Trust

Quarterly Preferred Equity and Total Market Capitalization Analysis

(dollars and shares in thousands, except per share amounts)

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

PREFERRED EQUITY

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Equity - End of Quarter

 

 

 

 

 

 

 

 

 

 

 

Convertible Series I Preferred Units Outstanding

 

352

 

352

 

352

 

352

 

352

 

Conversion Ratio

 

0.5000

 

0.5000

 

0.5000

 

0.5000

 

0.5000

 

Common Shares Issued Assuming Conversion

 

176

 

176

 

176

 

176

 

176

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Series K Preferred Shares Outstanding

 

532

 

532

 

532

 

532

 

532

 

Conversion Ratio

 

0.8163

 

0.8163

 

0.8163

 

0.8163

 

0.8163

 

Common Shares Issued Assuming Conversion

 

434

 

434

 

434

 

434

 

434

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonconvertible Preferred Equity - End of Quarter

 

 

 

 

 

 

 

 

 

 

 

Redeemable Series G Shares Outstanding - 8.0%

 

2,200

 

2,200

 

2,200

 

2,200

 

2,200

 

Redeemable Series H Shares Outstanding - 7.5%

 

2,000

 

2,000

 

2,000

 

2,000

 

2,000

 

Redeemable Series J Shares Outstanding - 7.625%

 

3,390

 

3,390

 

3,390

 

3,390

 

3,390

 

Total Nonconvertible Preferred Equity

 

7,590

 

7,590

 

7,590

 

7,590

 

7,590

 

Convertible Preferred Equity

 

 

 

 

 

 

 

 

 

 

 

Convertible Series K Shares Outstanding - 7.5%

 

884

 

884

 

884

 

884

 

884

 

Total Preferred Equity

 

8,474

 

8,474

 

8,474

 

8,474

 

8,474

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonconvertible Preferred Equity ($25 par value)

 

 

 

 

 

 

 

 

 

 

 

Redeemable Series G Shares - 8.0%

 

$

55,000

 

$

55,000

 

$

55,000

 

$

55,000

 

$

55,000

 

Redeemable Series H Shares - 7.5%

 

50,000

 

50,000

 

50,000

 

50,000

 

50,000

 

Redeemable Series J Shares - 7.625%

 

84,750

 

84,750

 

84,750

 

84,750

 

84,750

 

Total Nonconvertible Preferred Equity

 

189,750

 

189,750

 

189,750

 

189,750

 

189,750

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Equity ($25 liquidation value)

 

 

 

 

 

 

 

 

 

 

 

Convertible Series I Units - 7.5%

 

8,800

 

8,800

 

8,800

 

8,800

 

8,800

 

Convertible Preferred Equity ($50 liquidation value)

 

 

 

 

 

 

 

 

 

 

 

Convertible Series K Shares - 5.6%

 

26,583

 

26,583

 

26,583

 

26,583

 

26,583

 

Total Convertible Preferred Equity

 

35,383

 

35,383

 

35,383

 

35,383

 

35,383

 

Total Liquidation Value of Preferred Equity

 

$

225,133

 

$

225,133

 

$

225,133

 

$

225,133

 

$

225,133

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITALIZATION

 

 

 

 

 

 

 

 

 

 

 

Liquidation Value of Preferred Shares/Units

 

$

225,133

 

$

225,133

 

$

225,133

 

$

225,133

 

$

225,133

 

Market Value of Common Shares/Units

 

1,771,045

 

1,622,417

 

1,661,948

 

2,372,863

 

2,583,646

 

Total Equity Market Capitalization

 

1,996,178

 

1,847,550

 

1,887,081

 

2,597,996

 

2,808,779

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

 

2,418,078

 

2,426,303

 

2,420,073

 

2,299,416

 

2,396,795

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Market Capitalization

 

$

4,414,256

 

$

4,273,853

 

$

4,307,154

 

$

4,897,412

 

$

5,205,574

 

 

26



 

Corporate Office Properties Trust

Dividend Analysis

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Common Share Dividends

 

 

 

 

 

 

 

 

 

 

 

Dividends per share/unit

 

$

0.2750

 

$

0.4125

 

$

0.4125

 

$

0.4125

 

$

0.4125

 

Change over prior period

 

-33.3

%

0.0

%

0.0

%

0.0

%

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Common Dividend Payout Ratios

 

 

 

 

 

 

 

 

 

 

 

Diluted FFO Payout

 

51.0

%

-138.9

%

85.0

%

96.9

%

310.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Diluted FFO Payout, as adjusted for comparability

 

51.8

%

74.6

%

80.5

%

75.8

%

85.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Diluted AFFO Payout

 

51.5

%

126.7

%

94.5

%

104.8

%

131.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Diluted AFFO Payout, excluding recurring capital expenditures on properties in disposition plans

 

49.6

%

93.4

%

87.0

%

90.8

%

102.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Coverage - Diluted FFO

 

1.96x

 

-0.72x

 

1.18x

 

1.03x

 

0.32x

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Coverage - Diluted FFO, as adjusted for comparability

 

1.93x

 

1.34x

 

1.24x

 

1.32x

 

1.17x

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Coverage - Diluted AFFO

 

1.94x

 

0.79x

 

1.06x

 

0.95x

 

0.76x

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Dividend Yields

 

 

 

 

 

 

 

 

 

 

 

Dividend Yield at Quarter End

 

4.74

%

7.76

%

7.58

%

5.30

%

4.57

%

 

 

 

 

 

 

 

 

 

 

 

 

Series I Preferred Unit Distributions

 

 

 

 

 

 

 

 

 

 

 

Preferred Unit Distributions Per Unit

 

$

0.46875

 

$

0.46875

 

$

0.46875

 

$

0.46875

 

$

0.46875

 

Preferred Unit Distributions Yield

 

7.500

%

7.500

%

7.500

%

7.500

%

7.500

%

Quarter End Recorded Book Value

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Series G Preferred Share Dividends

 

 

 

 

 

 

 

 

 

 

 

Preferred Share Dividends Per Share

 

$

0.50000

 

$

0.50000

 

$

0.50000

 

$

0.50000

 

$

0.50000

 

Preferred Share Dividend Yield

 

8.000

%

8.000

%

8.000

%

8.000

%

8.000

%

Quarter End Recorded Book Value

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Series H Preferred Share Dividends

 

 

 

 

 

 

 

 

 

 

 

Preferred Share Dividends Per Share

 

$

0.46875

 

$

0.46875

 

$

0.46875

 

$

0.46875

 

$

0.46875

 

Preferred Share Dividend Yield

 

7.500

%

7.500

%

7.500

%

7.500

%

7.500

%

Quarter End Recorded Book Value

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Series J Preferred Share Dividends

 

 

 

 

 

 

 

 

 

 

 

Preferred Share Dividends Per Share

 

$

0.47656

 

$

0.47656

 

$

0.47656

 

$

0.47656

 

$

0.47656

 

Preferred Share Dividend Yield

 

7.625

%

7.625

%

7.625

%

7.625

%

7.625

%

Quarter End Recorded Book Value

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

$

25.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Series K Preferred Share Dividends

 

 

 

 

 

 

 

 

 

 

 

Preferred Share Dividends Per Share

 

$

0.70000

 

$

0.70000

 

$

0.70000

 

$

0.70000

 

$

0.70000

 

Preferred Share Dividend Yield

 

5.600

%

5.600

%

5.600

%

5.600

%

5.600

%

Quarter End Recorded Book Value

 

$

50.00

 

$

50.00

 

$

50.00

 

$

50.00

 

$

50.00

 

 

27



 

Corporate Office Properties Trust

Debt Analysis

(dollars in thousands)

 

 

 

3/31/12

 

 

 

 

 

 

 

 

 

 

 

 

 

Stated

 

GAAP Effective

 

 

 

 

 

 

 

 

 

 

 

 

 

Rate

 

Rate

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

Debt Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured debt

 

6.01

%

5.93

%

$

1,049,204

 

$

1,052,421

 

$

1,055,540

 

$

1,063,369

 

$

1,169,688

 

Exchangeable Senior Notes

 

4.25

%

6.05

%

228,175

 

227,283

 

226,404

 

387,375

 

385,538

 

Other Unsecured Debt

 

0.00

%

6.18

%

5,078

 

5,050

 

5,022

 

4,995

 

4,968

 

Total fixed rate debt

 

5.65

%

5.95

%

1,282,457

 

1,284,754

 

1,286,966

 

1,455,739

 

1,560,194

 

Variable rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured debt

 

2.49

%

2.49

%

$

39,027

 

$

39,213

 

$

39,397

 

$

309,923

 

$

310,236

 

Unsecured Revolving Credit Facility (1)

 

2.24

%

2.24

%

396,000

 

662,000

 

671,000

 

342,000

 

348,000

 

Construction Loans

 

2.73

%

2.73

%

50,594

 

40,336

 

22,710

 

191,754

 

178,365

 

Other Unsecured Debt

 

2.15

%

2.15

%

650,000

 

400,000

 

400,000

 

 

 

Total variable rate debt

 

2.22

%

2.22

%

$

1,135,621

 

$

1,141,549

 

$

1,133,107

 

$

843,677

 

$

836,601

 

Total debt outstanding

 

 

 

 

 

$

2,418,078

 

$

2,426,303

 

$

2,420,073

 

$

2,299,416

 

$

2,396,795

 

Variable Rate Loans Subject to Interest Rate Swaps (2)

 

 

 

 

 

$

659,027

 

$

659,213

 

$

409,397

 

$

409,576

 

$

409,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Fixed Rate Loans (2)

 

 

 

 

 

80.29

%

80.12

%

70.10

%

81.12

%

82.19

%

% of Variable Rate Loans (2)

 

 

 

 

 

19.71

%

19.88

%

29.90

%

18.88

%

17.81

%

 

 

 

 

 

 

100.00

%

100.00

%

100.00

%

100.00

%

100.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recourse debt

 

 

 

 

 

$

1,350,311

 

$

1,359,343

 

$

1,355,846

 

$

972,126

 

$

962,986

 

Nonrecourse debt

 

 

 

 

 

1,067,767

 

1,066,960

 

1,064,227

 

1,327,290

 

1,433,809

 

Total debt outstanding

 

 

 

 

 

$

2,418,078

 

$

2,426,303

 

$

2,420,073

 

$

2,299,416

 

$

2,396,795

 

 


(1) As of March 31, 2012, our borrowing capacity under the new facility was $1.0 billion, of which $590.6 million was available.

(2) Includes the effect of interest rate swaps in effect during certain of the periods set forth above that hedge the risk of changes in interest rates on certain of our one-month LIBOR-based variable rate debt.

 

28



 

Corporate Office Properties Trust

Debt Analysis  (continued)

(dollars in thousands)

 

 

 

Three Months Ended

 

 

 

3/31/2012

 

12/31/2011

 

9/30/2011

 

6/30/2011

 

3/31/2011

 

Average Stated Interest Rates

 

 

 

 

 

 

 

 

 

 

 

Fixed rate

 

 

 

 

 

 

 

 

 

 

 

Secured debt

 

6.01

%

6.01

%

6.01

%

5.98

%

5.97

%

Exchangeable Senior Notes

 

4.25

%

4.25

%

3.96

%

3.95

%

3.95

%

Other Unsecured Debt

 

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

Total fixed rate debt

 

5.65

%

5.66

%

5.45

%

5.42

%

5.44

%

Variable rate (1)

 

 

 

 

 

 

 

 

 

 

 

Secured debt

 

3.83

%

3.83

%

4.40

%

4.39

%

4.39

%

Unsecured Revolving Credit Facility

 

2.68

%

2.76

%

2.35

%

2.12

%

2.18

%

Construction Loans

 

2.78

%

2.90

%

2.24

%

2.11

%

2.08

%

Other Unsecured Debt

 

2.70

%

2.17

%

2.13

%

0.00

%

0.00

%

Total variable rate debt (1)

 

2.73

%

2.60

%

2.76

%

2.93

%

2.99

%

Total debt outstanding

 

4.37

%

4.33

%

4.46

%

4.59

%

4.64

%

 

 

 

 

 

 

 

 

 

 

 

 

Debt ratios (coverage ratios excluding capitalized interest) — All coverage computations include the effect of discontinued operations

 

 

 

 

 

 

 

 

 

 

 

NOI interest coverage ratio

 

3.28x

 

3.39x

 

3.38x

 

3.22x

 

3.04x

 

Adjusted EBITDA interest coverage ratio

 

3.20x

 

3.30x

 

3.04x

 

3.09x

 

2.91x

 

NOI debt service coverage ratio

 

2.89x

 

2.99x

 

2.96x

 

2.79x

 

2.62x

 

Adjusted EBITDA debt service coverage ratio

 

2.82x

 

2.90x

 

2.66x

 

2.68x

 

2.51x

 

NOI fixed charge coverage ratio

 

2.78x

 

2.87x

 

2.86x

 

2.73x

 

2.59x

 

Adjusted EBITDA fixed charge coverage ratio

 

2.72x

 

2.79x

 

2.57x

 

2.62x

 

2.48x

 

Debt to Adjusted EBITDA ratio

 

8.05x

 

8.07x

 

8.73x

 

7.87x

 

8.66x

 

Adjusted debt to Adjusted EBITDA ratio

 

6.69x

 

6.67x

 

7.03x

 

6.39x

 

7.23x

 

 


(1) Includes the effect of interest rate swaps in effect during certain of the periods set forth above that hedge the risk of changes in interest rates on certain of our one-month LIBOR-based variable rate debt.

 

29


 


 

Corporate Office Properties Trust

Debt Maturity Schedule

(dollars in thousands)

 

 

 

Fixed Rate Debt

 

Variable Rate Debt

 

 

 

 

 

Annual

 

 

 

Stated

 

Annual

 

 

 

Stated

 

 

 

 

 

 

 

Amortization

 

Balloon

 

Interest Rate of

 

Amortization

 

Balloon

 

Interest Rate of

 

Revolving

 

Total

 

 

 

of Monthly

 

Payments Due

 

Amounts

 

of Monthly

 

Payments Due

 

Amounts

 

Credit

 

Scheduled

 

 

 

Payments

 

on Maturity

 

Maturing

 

Payments

 

on Maturity

 

Maturing

 

Facility

 

Payments

 

April - June

 

3,261

 

 

N/A

 

184

 

16,829

(1)

3.00

%

 

20,274

 

July - September

 

3,037

 

21,587

 

6.51

%

173

 

 

N/A

 

 

24,797

 

October - December

 

3,004

 

14,537

 

6.25

%

195

 

 

N/A

 

 

17,736

 

Total 2012

 

$

9,302

 

$

36,124

 

6.41

%

$

552

 

$

16,829

 

3.00

%

$

 

$

62,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

9,502

 

134,843

 

 

 

783

 

24,215

 

 

 

 

169,343

 

2014

 

6,284

 

151,681

(2)

 

 

815

 

 

 

 

396,000

(3)

554,780

 

2015

 

5,037

 

358,558

(4)

 

 

701

 

445,726

(5)

 

 

 

810,022

 

2016

 

4,037

 

274,605

 

 

 

 

 

 

 

 

278,642

 

Thereafter

 

3,258

 

300,621

 

 

 

 

250,000

 

 

 

 

553,879

 

 

 

$

37,420

 

$

1,256,432

 

 

 

$

2,851

 

$

736,770

 

 

 

$

396,000

 

$

2,429,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net discount

 

(11,394

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

 

$

2,418,079

 

 

Interest Rate Hedges at 3/31/12

 

Notional

 

Fixed

 

Floating Rate

 

 

 

Effective

 

Expiration

 

Amount

 

Rate

 

Index

 

 

 

Date

 

Date

 

$

120,000

 

1.7600

%

One-Month LIBOR

 

 

 

1/2/2009

 

5/1/2012

 

100,000

 

1.9750

%

One-Month LIBOR

 

 

 

1/1/2010

 

5/1/2012

 

39,027

(6)

3.8300

%

One-Month LIBOR

 

 

 

11/2/2010

 

11/2/2015

 

100,000

 

0.6100

%

One-Month LIBOR

 

 

 

1/3/2012

 

9/1/2014

 

100,000

 

0.6123

%

One-Month LIBOR

 

 

 

1/3/2012

 

9/1/2014

 

100,000

 

0.8320

%

One-Month LIBOR

 

 

 

1/3/2012

 

9/1/2015

 

100,000

 

0.8320

%

One-Month LIBOR

 

 

 

1/3/2012

 

9/1/2015

 

659,027

 

 

 

 

 

 

 

 

 

 

 

 


Notes:

 

(1) May be extended by one year at our option, subject to certain conditions.

(2) We have $72.4 million of fixed debt maturing in 2034 that may be prepaid in 2014, subject to certain conditions. The above table includes $69.2 million in maturities on these loans in 2014.

(3) Our Revolving Credit Facility matures in September 2014 and may be extended by one year at our option, subject to certain conditions.

(4) 4.25% Exchangeable Senior Notes totaling $240.0 million mature in April 2030 but are subject to a put by the holders in April 2015 and every five years thereafter.

(5) Includes $400.0 million pertaining to a term credit agreement that matures in September 2015 and may be extended by one year at our option, subject to certain conditions.

(6) The notional amount is scheduled to amortize to $36.2 million.

 

30



 

Corporate Office Properties Trust

Consolidated Joint Ventures as of 3/31/12

(dollars in thousands)

 

 

 

Operational

 

 

 

Total

 

Property Level

 

% COPT

 

Operating Properties

 

Square Feet

 

Occupancy

 

Assets (1)

 

Debt

 

Owned

 

Baltimore/Washington Corridor:

 

 

 

 

 

 

 

 

 

 

 

Arundel Preserve #5 (1 property)

 

145,638

 

16.7

%

$

 31,044

 

$

16,829

 

50

%

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Maryland:

 

 

 

 

 

 

 

 

 

 

 

MOR Forbes 2 LLC

 

55,866

 

43.0

%

3,836

 

 

50

%

M Square Associates, LLC (2 properties)

 

242,069

 

90.0

%

56,386

 

39,027

 

50

%

 

 

 

 

 

 

 

 

 

 

 

 

Total/Average

 

443,573

 

60.0

%

$

 91,266

 

$

55,856

 

 

 

NOI of Operating Properties for Three Months Ended 3/31/12 (2)

 

$

1,201

 

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

 

 

 

 

 

 

 

 

 

 

Developable

 

 

 

Total

 

Property-Level

 

% COPT

 

Non-operational Properties

 

Square Feet

 

 

 

Assets (1)

 

Debt

 

Owned

 

Baltimore/Washington Corridor:

 

 

 

 

 

 

 

 

 

 

 

Arundel Preserve

 

1,382,000

 

 

 

$

 5,410

 

$

 

50

%

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Maryland:

 

 

 

 

 

 

 

 

 

 

 

Indian Head Technology Center

 

 

 

 

 

 

 

 

 

 

 

Business Park

 

967,000

 

 

 

6,544

 

 

75

%

M Square Research Park

 

510,000

 

 

 

3,874

 

 

50

%

 

 

 

 

 

 

 

 

 

 

 

 

Huntsville, AL:

 

 

 

 

 

 

 

 

 

 

 

Redstone Gateway

 

4,485,000

 

 

 

55,255

 

9,550

 

85

%

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

7,344,000

 

 

 

$

 71,083

 

$

9,550

 

 

 

 


(1) Total assets includes the total assets recorded on the books of the consolidated joint venture plus any outside investment basis related to the applicable joint venture and related joint ventures (formed and to be formed).

(2) Represents gross NOI of the joint venture operating properties before allocation to joint venture partners.

 

31



 

 

Corporate Office Properties Trust

Unconsolidated Joint Venture as of 3/31/12

(dollars in thousands)

 

 

 

Operational

 

 

 

Property and Location

 

Square Feet

 

Occupancy

 

Greater Harrisburg:

 

 

 

 

 

 

 

 

 

 

 

Total/Average (16 properties)

 

671,260

 

69.5

%

 

 

 

 

 

 

COPT Investment

 

$

(6,178

)

 

 

Total Assets

 

$

63,736

 

 

 

Property Level Debt

 

$

64,718

 

 

 

NOI of Operating Properties for Three Months Ended 3/31/12 (1)

 

$

1,157

 

 

 

% COPT Owned

 

20

%

 

 

 


(1) Represents gross NOI of the joint venture operating properties before allocation to joint venture partners.

 

32



 

Corporate Office Properties Trust

Supplementary Reconciliations of Non-GAAP Measures

(in thousands)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

6,977

 

$

(87,215

)

$

7,470

 

$

(26,007

)

$

(18,566

)

Interest expense on continuing and discontinued operations

 

25,675

 

24,914

 

25,629

 

26,830

 

26,928

 

Total income tax expense (benefit)

 

4,173

 

(4,636

)

(457

)

(5,042

)

(544

)

Depreciation of furniture, fixtures and equipment (FF&E)

 

618

 

601

 

614

 

623

 

625

 

Real estate-related depreciation and amortization

 

31,087

 

33,030

 

36,032

 

32,049

 

33,020

 

Impairment losses

 

6,587

 

78,674

 

 

44,605

 

27,742

 

Loss on interest rate derivatives

 

 

29,805

 

 

 

 

Adjusted EBITDA

 

$

75,117

 

$

75,173

 

$

69,288

 

$

73,058

 

$

69,205

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

7,017

 

6,592

 

6,154

 

6,320

 

6,777

 

Business development expenses and land carry costs

 

1,594

 

1,819

 

1,768

 

1,369

 

1,241

 

Depreciation of FF&E

 

(618

)

(601

)

(614

)

(623

)

(625

)

Income from construction contracts and other service operations

 

(927

)

(550

)

(558

)

(1,188

)

(410

)

Interest and other (income) loss

 

(1,217

)

(1,921

)

242

 

(2,756

)

(1,168

)

Loss on early extinguishment of debt on continuing and discontinued operations

 

 

3

 

1,995

 

25

 

 

Gain on sales of operating properties

 

(4,138

)

(3,362

)

(1,299

)

(150

)

 

Non-operational property sales

 

 

 

 

(16

)

(2,701

)

Equity in loss (income) of unconsolidated entities

 

89

 

108

 

159

 

94

 

(30

)

NOI from real estate operations

 

$

76,917

 

$

77,261

 

$

77,135

 

$

76,133

 

$

72,289

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

Revenues from real estate operations

 

$

3,365

 

$

4,948

 

$

6,341

 

$

6,070

 

$

5,980

 

Property operating expenses

 

(1,185

)

(1,948

)

(2,132

)

(2,080

)

(3,091

)

Depreciation and amortization

 

(21

)

(628

)

(1,231

)

(1,893

)

(2,977

)

Interest

 

(451

)

(690

)

(750

)

(791

)

(813

)

Loss on early extinguishment of debt

 

 

 

(340

)

 

 

Impairment losses

 

(1,461

)

(1,301

)

 

(21,955

)

 

Gain on sales of depreciated real estate properties

 

4,138

 

3,358

 

1,299

 

150

 

 

Discontinued operations

 

$

4,385

 

$

3,739

 

$

3,187

 

$

(20,499

)

$

(901

)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP revenues from real estate operations from continuing operations

 

$

121,939

 

$

122,508

 

$

118,788

 

$

114,736

 

$

116,461

 

Revenues from discontinued operations

 

3,365

 

4,948

 

6,341

 

6,070

 

5,980

 

Real estate revenues

 

$

125,304

 

$

127,456

 

$

125,129

 

$

120,806

 

$

122,441

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP property operating expenses from continuing operations

 

$

47,202

 

$

48,247

 

$

45,862

 

$

42,593

 

$

47,061

 

Property operating expenses from discontinued operations

 

1,185

 

1,948

 

2,132

 

2,080

 

3,091

 

Real estate property operating expenses

 

$

48,387

 

$

50,195

 

$

47,994

 

$

44,673

 

$

50,152

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization associated with real estate operations from continuing operations

 

$

31,066

 

$

32,402

 

$

34,801

 

$

30,156

 

$

30,043

 

Depreciation and amortization from discontinued operations

 

21

 

628

 

1,231

 

1,893

 

2,977

 

Real estate-related depreciation and amortization

 

$

31,087

 

$

33,030

 

$

36,032

 

$

32,049

 

$

33,020

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sales of real estate, net, per statements of operations

 

$

 

$

4

 

$

 

$

16

 

$

2,701

 

Add income taxes

 

 

 

 

 

 

Gain on sales of real estate from discontinued operations

 

4,138

 

3,358

 

1,299

 

150

 

 

Gain on sales of real estate from continuing and discontinued operations

 

4,138

 

3,362

 

1,299

 

166

 

2,701

 

Less: Gain on sales of non-operating properties

 

 

 

 

(16

)

(2,701

)

Gain on sales of operating properties

 

$

4,138

 

$

3,362

 

$

1,299

 

$

150

 

$

 

 

33



 

Corporate Office Properties Trust

Supplementary Reconciliations of Non-GAAP Measures (continued)

(dollars in thousands)

 

 

 

Three Months Ended

 

 

 

3/31/12

 

12/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets or Denominator for Debt to Total Assets

 

$

3,797,368

 

$

3,867,524

 

$

3,965,392

 

$

3,868,230

 

$

3,865,809

 

Accumulated depreciation

 

570,242

 

559,679

 

553,306

 

527,616

 

526,825

 

Accumulated depreciation included in assets held for sale

 

5,840

 

17,922

 

6,791

 

6,791

 

 

Intangible assets on real estate acquisitions, net

 

83,940

 

89,120

 

97,954

 

99,231

 

106,444

 

Assets other than assets included in properties, net and assets held for sale

 

(377,725

)

(397,933

)

(423,408

)

(393,066

)

(397,038

)

Non real estate assets included in assets held for sale

 

(5,664

)

(6,523

)

(1,946

)

(1,617

)

 

Denominator for Debt to Undepreciated Book Value of Real Estate Assets

 

$

4,074,001

 

$

4,129,789

 

$

4,198,089

 

$

4,107,185

 

$

4,102,040

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment losses, per statements of operations

 

$

5,126

 

$

77,373

 

$

 

$

22,650

 

$

27,742

 

Impairment losses on discontinued operations

 

1,461

 

1,301

 

 

21,955

 

 

Total impairment losses

 

6,587

 

78,674

 

 

44,605

 

27,742

 

Less: Impairment losses on previously depreciated operating properties

 

(11,833

)

(39,481

)

 

(31,031

)

 

Impairment (recoveries) losses on non-operating properties

 

(5,246

)

39,193

 

 

13,574

 

27,742

 

Less: Income tax expense (benefit) from impairments on non-operating properties

 

4,642

 

(4,146

)

 

(4,598

)

 

Impairment (recoveries) losses on non-operating properties, net of related tax

 

$

(604

)

$

35,047

 

$

 

$

8,976

 

$

27,742

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense from continuing operations

 

$

25,224

 

$

24,224

 

$

24,879

 

$

26,039

 

$

26,115

 

Interest expense from discontinued operations

 

451

 

690

 

750

 

791

 

813

 

Total interest expense

 

25,675

 

24,914

 

25,629

 

26,830

 

26,928

 

Less: Amortization of deferred financing costs

 

(1,572

)

(1,506

)

(1,629

)

(1,702

)

(1,759

)

Less: Amortization of net debt discounts and premiums, net of amounts capitalized

 

(663

)

(634

)

(1,184

)

(1,464

)

(1,398

)

Denominator for interest coverage

 

23,440

 

22,774

 

22,816

 

23,664

 

23,771

 

Scheduled principal amortization

 

3,207

 

3,108

 

3,226

 

3,623

 

3,798

 

Denominator for debt service coverage

 

26,647

 

25,882

 

26,042

 

27,287

 

27,569

 

Scheduled principal amortization

 

(3,207

)

(3,108

)

(3,226

)

(3,623

)

(3,798

)

Preferred share dividends - redeemable non-convertible

 

4,025

 

4,026

 

4,025

 

4,026

 

4,025

 

Preferred unit distributions

 

165

 

165

 

165

 

165

 

165

 

Denominator for fixed charge coverage

 

$

27,630

 

$

26,965

 

$

27,006

 

$

27,855

 

$

27,961

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred share dividends

 

$

4,025

 

$

4,026

 

$

4,025

 

$

4,026

 

$

4,025

 

Preferred unit distributions

 

165

 

165

 

165

 

165

 

165

 

Common share dividends

 

19,819

 

29,693

 

29,688

 

29,632

 

27,704

 

Common unit distributions

 

1,173

 

1,775

 

1,781

 

1,808

 

1,809

 

Total dividends/distributions

 

$

25,182

 

$

35,659

 

$

35,659

 

$

35,631

 

$

33,703

 

 

 

 

 

 

 

 

 

 

 

 

 

Common share dividends

 

$

19,819

 

$

29,693

 

$

29,688

 

$

29,632

 

$

27,704

 

Common unit distributions

 

1,173

 

1,775

 

1,781

 

1,808

 

1,809

 

Dividends and distributions for payout ratios

 

$

20,992

 

$

31,468

 

$

31,469

 

$

31,440

 

$

29,513

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt, net

 

$

2,418,078

 

$

2,426,303

 

$

2,420,073

 

$

2,299,416

 

$

2,396,795

 

Less: Construction in progress on assets held for sale

 

(75

)

(12,277

)

(22,936

)

(22,934

)

 

Less: Construction in progress

 

(408,883

)

(409,086

)

(447,969

)

(407,674

)

(396,170

)

Adjusted debt for adjusted debt to adjusted EBITDA ratio

 

$

2,009,120

 

$

2,004,940

 

$

1,949,168

 

$

1,868,808

 

$

2,000,625

 

 

34



 

Corporate Office Properties Trust

Definitions

Non-GAAP Measures

 

We believe that the measures defined below that are not determined in accordance with generally accepted accounting principles (“GAAP”) are helpful to investors in measuring our performance and comparing it to that of other real estate investment trusts (“REITs”).  Since these measures exclude certain items includable in their respective most comparable GAAP measures, reliance on the measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are weighed in balance with other GAAP and non-GAAP measures.  These measures are not necessarily indications of our cash flow available to fund cash needs.  Additionally, they should not be used as an alternative to the respective most comparable GAAP measures when evaluating our financial performance or to cash flow from operating, investing and financing activities when evaluating our liquidity or ability to make cash distributions or pay debt service.

 

Adjusted Debt to Adjusted EBITDA ratio

 

Defined as (1) debt adjusted to subtract construction in progress as of the end of the period divided by (2) Adjusted EBITDA for the three month period that is annualized by multiplying by four.

 

Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization (“Adjusted EBITDA”)

 

Adjusted EBITDA is net (loss) income adjusted for the effects of interest expense, depreciation and amortization, impairment losses, loss on interest rate derivatives and income taxes.  We believe that adjusted EBITDA is a useful supplemental measure of performance for assessing our un-levered performance.  We believe that net (loss) income is the most directly comparable GAAP measure to adjusted EBITDA.

 

Basic FFO available to common share and common unit holders (“Basic FFO”)

 

This measure is FFO adjusted to subtract (1) preferred share dividends, (2) income attributable to noncontrolling interests through ownership of preferred units in Corporate Office Properties, L.P. (the “Operating Partnership”) or interests in other consolidated entities not owned by us, (3) depreciation and amortization allocable to noncontrolling interests in other consolidated entities, (4) Basic FFO allocable to restricted shares and (5) issuance costs associated with redeemed preferred shares.  With these adjustments, Basic FFO represents FFO available to common shareholders and holders of common units in the Operating Partnership (“common units”).  Common units are substantially similar to our common shares of beneficial interest (“common shares”) and are exchangeable into common shares, subject to certain conditions.  We believe that Basic FFO is useful to investors due to the close correlation of common units to common shares.  We believe that net (loss) income is the most directly comparable GAAP measure to Basic FFO.

 

Cash net operating income (“Cash NOI”)

 

Defined as NOI from real estate operations adjusted to eliminate the effects of noncash rental revenues and property operating expenses (comprised of straight-line rental adjustments, which includes the amortization of tenant incentives, and amortization of acquisition intangibles included in FFO and NOI).  Under GAAP, rental revenue is recognized evenly over the term of tenant leases.  Many leases provide for contractual rent increases and the effect of accounting under GAAP for such leases is to accelerate the recognition of lease revenue.  Since some leases provide for periods under the lease in which rental concessions are provided to tenants, the effect of accounting under GAAP is to allocate rental revenue to such periods.  Also under GAAP, when a property is acquired, we allocate the acquisition to certain intangible components (including above- and below-market leases and above- or below- market cost arrangements), which are then amortized into FFO and NOI over their estimated lives.  We believe that Cash NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it makes adjustments to NOI for the above stated items that are not associated with cash to us.  As is the case with NOI, the measure is useful in our opinion in evaluating and comparing the performance of geographic segments, same-office property groupings and individual properties.  We believe that net (loss) income is the most directly comparable GAAP measure to Cash NOI.

 

Cash NOI, excluding gross lease termination fees

 

Defined as Cash NOI adjusted to eliminate the effects of lease termination fees paid by tenants to terminate their lease obligations prior to the end of the agreed lease terms.  Lease termination fees are often recognized as revenue in large one-time lump sum amounts upon the termination of tenant leases.  We believe that Cash NOI adjusted for lease termination fees is a useful supplemental measure of operating performance in evaluating same-office property groupings because it provides a means of evaluating the effect that

 

35



 

Corporate Office Properties Trust

Definitions

 

lease terminations had on the performance of the property groupings.  We believe that net (loss) income is the most directly comparable GAAP measure to Cash NOI, excluding gross lease termination fees.

 

Debt to Adjusted EBITDA ratio

 

Defined as debt divided by Adjusted EBITDA for the three month period that is annualized by multiplying by four.

 

Debt to Undepreciated Book Value of Real Estate Assets

 

Defined as the carrying value of our debt divided by total properties, net presented on our consolidated balance sheet excluding the effect of accumulated depreciation incurred to date on such properties.

 

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)

 

Defined as Diluted FFO, as adjusted for comparability, adjusted for the following: (1) the elimination of the effect of (a) noncash rental revenues and property operating expenses (comprised of straight-line rental adjustments, which includes the amortization of recurring tenant incentives, and amortization of acquisition intangibles included in FFO and NOI, both of which are described under “Cash NOI” below), (b) share-based compensation, net of amounts capitalized, (c) amortization of deferred financing costs, (d) amortization of debt discounts and premiums and (e) amortization of settlements of debt hedges; and (2) recurring capital expenditures.  Recurring capital expenditures are defined as tenant improvements and incentives, building improvements and leasing costs for operating properties that are not (1) items contemplated prior to the acquisition of a property, (2) improvements associated with the expansion of a building or its improvements, (3) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class B office) or (4) capital improvements that represent the addition of something new to the property rather than the replacement of something (for example, the addition of a new heating and air conditioning unit that is not replacing one that was previously there).  We believe that Diluted AFFO is an important supplemental measure of liquidity for an equity REIT because it provides management and investors with an indication of our ability to incur and service debt and to fund dividends and other cash needs.  We believe that the numerator to diluted EPS is the most directly comparable GAAP measure to Diluted AFFO.

 

Diluted AFFO, as adjusted for recurring capital expenditures of properties included in disposition plans

 

Defined as Diluted AFFO adjusted to add back recurring capital expenditures of properties included in disposition plans during the period that were already sold or are held for future disposition.  We believe that this measure is a useful supplemental measure of liquidity because it provides management and investors with an additional indication of our ability to incur and service debt and to fund dividends and other cash needs without the effect of the recurring capital expenditures that we expect to recover through the proceeds from the property dispositions.  We believe that the numerator to diluted EPS is the most directly comparable GAAP measure to this measure.

 

Diluted FFO available to common share and common unit holders (“Diluted FFO”)

 

Diluted FFO is Basic FFO adjusted to add back any changes in Basic FFO that would result from the assumed conversion of securities that are convertible or exchangeable into common shares.  The computation of Diluted FFO assumes the conversion of common units in the Operating Partnership but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase Diluted FFO per share in a given period.  We believe that Diluted FFO is useful to investors because it is the numerator used to compute Diluted FFO per share, discussed below.  We believe that the numerator to diluted EPS is the most directly comparable GAAP measure to Diluted FFO.

 

Diluted FFO available to common share and common unit holders, as adjusted for comparability (“Diluted FFO, as adjusted for comparability”) and FFO, as adjusted for comparability

 

Defined as Diluted FFO or FFO adjusted to exclude operating property acquisition costs, gains on sales of, and impairment losses on, properties other than previously depreciated operating properties, net of associated income tax, gain or loss on early extinguishment of debt, loss on interest rate derivatives and accounting charges for original issuance costs associated with redeemed preferred shares.  We believe that the excluded items are not reflective of normal operations and, as a result, believe that a measure that excludes these items is a useful supplemental measure in evaluating operating performance.  We believe that the numerator to diluted EPS is the most directly comparable GAAP measure to this non-GAAP measure.

 

36



 

Corporate Office Properties Trust

Definitions

 

Diluted FFO per share

 

Diluted FFO per share is (1) Diluted FFO divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged.  The computation of Diluted FFO per share assumes the conversion of common units in the Operating Partnership but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase Diluted FFO per share in a given period.  We believe that Diluted FFO per share is useful to investors because it provides investors with a further context for evaluating our FFO results in the same manner that investors use earnings per share (“EPS”) in evaluating net (loss) income available to common shareholders.  We believe that diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share.

 

Diluted FFO per share, as adjusted for comparability

 

Defined as (1) Diluted FFO available to common share and common unit holders, as adjusted for comparability divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged.  The computation of this measure assumes the conversion of common units in the Operating Partnership but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase the per share measure in a given period.  As discussed above, we believe that the excluded items are not indicative of normal operations.  As such, we believe that a measure that excludes these items is a useful supplemental measure in evaluating our operating performance.  We believe that diluted EPS is the most directly comparable GAAP measure.

 

Dividend Coverage-Diluted FFO, Diluted FFO, as adjusted for comparability, and Dividend Coverage-Diluted AFFO

 

These measures divide either Diluted FFO, Diluted FFO, as adjusted for comparability, or Diluted AFFO by the sum of (1) dividends on common shares and (2) distributions to holders of interests in the Operating Partnership and dividends on convertible preferred shares when such distributions and dividends are included in Diluted FFO.

 

Funds from operations (“FFO” or “FFO per NAREIT”)

 

Defined as net (loss) income computed using GAAP, excluding gains on sales of, and impairment losses on, previously depreciated operating properties and real estate-related depreciation and amortization.  We believe that we use the National Association of Real Estate Investment Trust’s (“NAREIT”) definition of FFO, although others may interpret the definition differently and, accordingly, our presentation of FFO may differ from those of other REITs.  We believe that FFO is useful to management and investors as a supplemental measure of operating performance because, by excluding gains related to sales of, and impairment losses on, previously depreciated operating properties and excluding real estate-related depreciation and amortization, FFO can help one compare our operating performance between periods.  We believe that net (loss) income is the most directly comparable GAAP measure to FFO.

 

Net operating income (“NOI”) from real estate operations

 

NOI is real estate revenues from continuing and discontinued operations reduced by total property expenses associated with real estate operations, including discontinued operations; total property expenses, as used in this definition, do not include depreciation, amortization or interest expense associated with real estate operations.  We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core real estate operations that is unaffected by depreciation, amortization, financing and general and administrative expenses; we believe this measure is particularly useful in evaluating the performance of geographic segments, same-office property groupings and individual properties.  We believe that net (loss) income is the most directly comparable GAAP measure to NOI.

 

NOI Debt Service Coverage Ratio and Adjusted EBITDA Debt Service Coverage Ratio

 

These measures divide either NOI from real estate operations or Adjusted EBITDA by the sum of interest expense on continuing and discontinued operations (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized) and scheduled principal amortization on mortgage loans for continuing and discontinued operations.

 

37



 

Corporate Office Properties Trust

Definitions

 

NOI Fixed Charge Coverage Ratio and Adjusted EBITDA Fixed Charge Coverage Ratio

 

These measures divide either NOI from real estate operations or Adjusted EBITDA by the sum of (1) interest expense on continuing and discontinued operations (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized), (2) dividends on preferred shares and (3) distributions on preferred units in the Operating Partnership not owned by us.

 

NOI Interest Coverage Ratio and Adjusted EBITDA Interest Coverage Ratio

 

These measures divide either NOI from real estate operations or Adjusted EBITDA by interest expense on continuing and discontinued operations (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized).

 

Payout ratios based on: (1) Diluted FFO; (2) Diluted FFO, as adjusted for comparability; (3) Diluted AFFO; and (4) Diluted AFFO, as adjusted for recurring capital expenditures of properties included in disposition plan

 

These payout ratios are defined as (1) the sum of (a) dividends on common shares and (b) distributions to holders of interests in the Operating Partnership and dividends on convertible preferred shares when such distributions and dividends are included in Diluted FFO divided by (2) the respective non-GAAP measures on which the payout ratios are based.

 

Recurring Capital Expenditures

 

Definition is included above in the definition for Diluted AFFO.

 

Same Office Property NOI

 

Defined as NOI from real estate operations of Same Office Properties.  We believe that Same Office Property NOI is an important supplemental measure of operating performance of Same Office Properties for the same reasons discussed above for NOI from real estate operations.

 

Other Definitions

 

Acquisition costs — Transaction costs expensed in connection with executed or anticipated acquisitions of operating properties.

 

Annualized Rental Revenue — The monthly contractual base rent as of the reporting date multiplied by 12, plus the estimated annualized expense reimbursements under existing office leases.

 

Demand Drivers Categories — Demand opportunity created through:

·                  Defense IT — current and future relationships with defense information technology contractors and, possibly, minor Government tenancy.

·                  Government — existing and future relationship with various agencies of the government of the United States of America.  Excludes Government tenancy included in Defense Information IT.

·                  Market — projected unfulfilled space requirements within a specific submarket; potential submarket demand exceeds existing supply.

·                  Research Park — specific research park relationship.

 

First Generation Space — Newly constructed or redeveloped space that has never been occupied.

 

Greater Washington/Baltimore Region — Includes counties that comprise the Baltimore/Washington Corridor, Northern Virginia,

Greater Baltimore, Suburban Maryland, St. Mary’s & King George Counties, and the Washington, DC-Capitol Riverfront.

 

38



 

Corporate Office Properties Trust

Definitions

 

Operational Space — The portion of a property in operations (excludes portion under construction or redevelopment).

 

Retenanted Space — Space leased to a new tenant after being occupied by a previous tenant.

 

Same Office Properties — Operating office properties owned and 100% operational since January 1, 2011, excluding properties held for future disposition.

 

Second Generation Space — Space leased that has been previously occupied.

 

Strategic Reallocation Plan — Plan approved by our Board of Trustees to dispose of properties that are no longer closely aligned with our strategy.

 

Strategic Tenant Properties — Properties occupied primarily by tenants in the United States Government and defense information technology sectors and data centers serving such sectors.

 

Under Construction — Properties on which vertical construction activities are underway.

 

Under Pre-Construction — Properties on which work associated with one or more of the following tasks is underway on a regular basis: pursuing entitlements, planning, design and engineering, bidding, permitting and premarketing/preleasing. Typically, these projects, as categorized in this Supplemental Information package, are targeted to begin construction in 12 months or less.

 

Under Redevelopment — Properties previously in operations on which activities to substantially renovate such properties are underway.

 

Unstabilized Properties — Properties with first generation operational space less than 90% occupied at period end.

 

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