COPT Defense Properties Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Properties, Net

Properties, Net

3 Months Ended

Mar. 31, 2018

Operating properties, net consisted of the following (in thousands):



	March 31, 2018			December 31, 2017
Land	$	457,459		$	455,680
Buildings and improvements	3,096,262			3,068,124
Less: Accumulated depreciation	(813,457		)	(786,193		)
Operating properties, net	$	2,740,264		$	2,737,611

Projects in development or held for future development consisted of the following (in thousands):



	March 31, 2018		December 31, 2017
Land	$	239,141	$	240,825
Development in progress, excluding land	178,874		162,669
Projects in development or held for future development	$	418,015	$	403,494

Our property held for sale is 11751 Meadowville Lane, a property in our Data Center Shells sub-segment, the sale of which was not recognized for accounting purposes. We provided a financial guaranty to the buyer under which we provide an indemnification for up to $20 million in losses it could incur related to a potential defined capital event occurring on the property by June 30, 2019. We account for this transaction as a financing arrangement. Accordingly, we did not recognize the sale of this property for accounting purposes (and will not until the guaranty expires) and we reported the sales proceeds as a liability on the consolidated balance sheets as of March 31, 2018 and December 31, 2017 on the line entitled deferred property sale. We do not expect to incur any losses under this financial guaranty. The table below sets forth the components of this property’s assets as of March 31, 2018 and December 31, 2017 (in thousands):



Properties, net	$	38,670
Deferred rent receivable	3,237
Deferred leasing costs, net	319
Assets held for sale, net	$	42,226

2018 Construction Activities

During the three months ended March 31, 2018, we placed into service 74,000 square feet in one newly-constructed property and 11,000 square feet in one partially-operational property under redevelopment. As of March 31, 2018, we had six properties under construction, or which we were contractually committed to construct, that we estimate will total 597,000 square feet upon completion and one partially-operational property under redevelopment that we estimate will total 22,000 square feet upon completion.