| Properties, Net |
Properties, Net
Operating properties, net consisted of the following (in thousands):
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September 30,
2016 |
|
December 31,
2015 |
Land |
$ |
424,627 |
|
|
$ |
463,305 |
|
Buildings and improvements |
2,888,918 |
|
|
3,157,587 |
|
Less: Accumulated depreciation |
(681,476 |
) |
|
(700,363 |
) |
Operating properties, net |
$ |
2,632,069 |
|
|
$ |
2,920,529 |
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Projects in development or held for future development consisted of the following (in thousands):
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September 30,
2016 |
|
December 31,
2015 |
Land |
$ |
199,038 |
|
|
$ |
207,774 |
|
Development in progress, excluding land |
197,231 |
|
|
221,445 |
|
Projects in development or held for future development |
$ |
396,269 |
|
|
$ |
429,219 |
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Our properties held for sale included:
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• |
as of September 30, 2016: nine operating properties in White Marsh (included primarily in our Regional Office segment); two operating properties in our Northern Virginia Defense/IT sub-segment; six operating properties in our Fort Meade/BW Corridor sub-segment; two operating properties in San Antonio, Texas (included in our Other segment); and land in White Marsh, Northern Virginia and Colorado Springs; and
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• |
as of December 31, 2015: 13 operating properties in White Marsh (included in our Regional Office segment); two operating properties in San Antonio, Texas (included in our Other segment); and land in Northern Virginia and Colorado Springs.
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The table below sets forth the components of assets held for sale on our consolidated balance sheet for these properties (in thousands):
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September 30, 2016 |
|
December 31, 2015 |
Properties, net |
$ |
147,236 |
|
|
$ |
90,188 |
|
Deferred rent receivable |
6,642 |
|
|
2,891 |
|
Intangible assets on real estate acquisitions, net |
1,540 |
|
|
1,591 |
|
Deferred leasing costs, net |
4,901 |
|
|
1,391 |
|
Lease incentives, net |
1,135 |
|
|
721 |
|
Assets held for sale, net |
$ |
161,454 |
|
|
$ |
96,782 |
|
Acquisitions
We acquired the following operating properties in 2015:
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• |
250 W. Pratt Street, a 367,000 square foot office property in Baltimore, Maryland that was 96.2% leased, for $61.8 million on March 19, 2015;
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• |
2600 Park Tower Drive, a 237,000 square foot office property in Vienna, Virginia (in the Northern Virginia region) that was 100% leased, for $80.5 million on April 15, 2015; and
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• |
100 Light Street, a 558,000 square foot office property in Baltimore, Maryland that was 93.5% leased, and its structured parking garage, 30 Light Street, for $121.2 million on August 7, 2015. In connection with that acquisition, we assumed a $55.0 million mortgage loan with a fair value at assumption of $55.5 million.
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These properties contributed:
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• |
revenues of $9.2 million for the three months ended September 30, 2016, $6.9 million for the three months ended September 30, 2015, $27.6 million for the nine months ended September 30, 2016 and $11.2 million for the nine months ended September 30, 2015; and
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|
• |
net income from continuing operations of $432,000 for the three months ended September 30, 2016, $487,000 for the three months ended September 30, 2015, $2.4 million for the nine months ended September 30, 2016 and $697,000 for the nine months ended September 30, 2015.
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We accounted for these acquisitions as business combinations. We included the results of operations for the acquisitions in our consolidated statements of operations from their respective purchase dates through September 30, 2016. The following table presents pro forma information for COPT and subsidiaries as if these acquisitions had occurred on January 1, 2014. This pro forma information also includes adjustments to reclassify operating property acquisition costs to the nine months ended September 30, 2014 from the 2015 periods in which they were actually incurred. The pro forma financial information was prepared for comparative purposes only and is not necessarily indicative of what would have occurred had these acquisitions been made at that time or of results which may occur in the future (in thousands, except per share amounts).
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For the Three Months Ended September 30, 2015 |
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For the Nine Months Ended September 30, 2015 |
|
(Unaudited) |
Pro forma total revenues |
$ |
152,736 |
|
|
$ |
498,657 |
|
Pro forma net income attributable to COPT common shareholders |
$ |
88,836 |
|
|
$ |
112,941 |
|
Pro forma EPS: |
|
|
|
Basic |
$ |
0.94 |
|
|
$ |
1.20 |
|
Diluted |
$ |
0.94 |
|
|
$ |
1.20 |
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2016 Dispositions
During the nine months ended September 30, 2016, we completed dispositions of the following operating properties (dollars in thousands):
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Project Name |
|
City, State |
|
Segment |
|
Date of Disposition |
|
Number of Buildings |
|
Total Rentable Square Feet |
|
Transaction Value |
|
Gain on Disposition |
Arborcrest Corporate Campus (1) |
|
Philadelphia, PA |
|
Regional Office |
|
8/4/2016 |
|
4 |
|
|
654,000 |
|
|
$ |
142,800 |
|
|
$ |
4,742 |
|
8003 Corporate Drive |
|
White Marsh, MD |
|
Regional Office |
|
8/17/2016 |
|
1 |
|
|
18,000 |
|
|
2,400 |
|
|
— |
|
1341 & 1343 Ashton Road |
|
Hanover, MD |
|
Fort Meade/BW Corridor |
|
9/9/2016 |
|
2 |
|
|
25,000 |
|
|
2,900 |
|
|
848 |
|
8007, 8013, 8015, 8019 and 8023-8027 Corporate Drive (1) |
|
White Marsh, MD |
|
Regional Office |
|
9/21/2016 |
|
5 |
|
|
130,000 |
|
|
14,513 |
|
|
1,906 |
|
1302, 1304 and 1306 Concourse Drive |
|
Linthicum, MD |
|
Fort Meade/BW Corridor |
|
9/29/2016 |
|
3 |
|
|
299,000 |
|
|
48,100 |
|
|
8,683 |
|
|
|
|
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|
15 |
|
|
1,126,000 |
|
|
$ |
210,713 |
|
|
$ |
16,179 |
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(1) This disposition also included land.
We also sold:
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• |
a 50% interest in six triple-net leased, single-tenant data center properties in Virginia by contributing them into a newly-formed joint venture, GI-COPT DC Partnership LLC (“GI-COPT”), for an aggregate property value of $147.6 million on July 21, 2016. We obtained $60.0 million in non-recourse mortgage loans on the properties through the joint venture immediately prior to the sale of our interest and received the net proceeds. Our partner in the joint venture acquired the 50% interest in the joint venture from us for $44.3 million. We account for our 50% interest in the joint venture using the equity method of accounting as described further in Note 5. We recognized a partial gain on the sale of our interest of $17.9 million; and
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• |
other land for $5.7 million, with no gain recognized.
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2016 Construction Activities
During the nine months ended September 30, 2016, we placed into service 490,000 square feet in five newly constructed office properties (including a partially operational property) and 55,000 square feet in two redeveloped properties (including a partially operational property). As of September 30, 2016, we had seven office properties under construction, or for which we were contractually committed to construct, that we estimate will total 1.1 million square feet upon completion (including two properties completed but held for future lease to the United States Government) and three office properties under redevelopment that we estimate will total 104,000 square feet upon completion.
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