Annual report pursuant to Section 13 and 15(d)

Information by Business Segment

v3.22.0.1
Information by Business Segment
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
Information by Business Segment Information by Business SegmentWe have the following reportable segments: Defense/IT Locations; Regional Office; Wholesale Data Center; and Other. We also report on Defense/IT Locations sub-segments, which include the following: Fort George G. Meade and the Baltimore/Washington Corridor (“Fort Meade/BW Corridor”); NoVA Defense/IT; Lackland Air Force Base (in San Antonio); locations serving the U.S. Navy (“Navy Support”), which included properties proximate to the Washington Navy Yard, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; Redstone Arsenal (in Huntsville); and data center shells (properties leased to tenants to be operated as data centers in which the tenants fund the costs for the power, fiber connectivity and data center infrastructure). In 2021, we retrospectively classified certain activities with our Other reportable segment that were previously classified with our Wholesale Data Center reportable segment.We measure the performance of our segments through the measure we define as net operating income from real estate operations (“NOI from real estate operations”), which includes: real estate revenues and property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate joint ventures (“UJVs”) that is allocable to our ownership interest (“UJV NOI allocable to COPT”). Amounts reported for segment assets represent long-lived assets associated with consolidated operating properties (including the carrying value of properties, right-of-use assets, net of related lease liabilities, intangible assets, deferred leasing costs, deferred rents receivable and lease incentives) and the carrying value of investments in UJVs owning operating properties. Amounts reported as additions to long-lived assets represent additions to existing consolidated operating properties, excluding transfers from non-operating properties, which we report separately.
The table below reports segment financial information for our reportable segments (in thousands):
Defense/IT Locations
  Fort Meade/BW Corridor NoVA Defense/IT Lackland Air Force Base Navy Support Redstone Arsenal Data Center Shells Total Defense/IT Locations Regional Office
Wholesale
Data Center 		Other Total
Year Ended December 31, 2021
                  
Revenues from real estate operations $ 262,120  $ 62,390  $ 57,756  $ 33,757  $ 35,727  $ 31,582  $ 483,332  $ 66,570  $ 30,490  $ 6,668  $ 587,060 
Property operating expenses (92,521) (23,218) (30,535) (13,617) (11,618) (4,086) (175,595) (32,623) (17,424) (4,577) (230,219)
UJV NOI allocable to COPT —  —  —  —  —  4,029  4,029  —  —  —  4,029 
NOI from real estate operations $ 169,599  $ 39,172  $ 27,221  $ 20,140  $ 24,109  $ 31,525  $ 311,766  $ 33,947  $ 13,066  $ 2,091  $ 360,870 
Additions to long-lived assets $ 45,647  $ 5,823  $ —  $ 4,193  $ 3,542  $ —  $ 59,205  $ 35,412  $ 1,680  $ 488  $ 96,785 
Transfers from non-operating properties $ 70,514  $ 90,050  $ 59,323  $ —  $ 22,739  $ 3,004  $ 245,630  $ 39,319  $ —  $ —  $ 284,949 
Segment assets at December 31, 2021
 $ 1,332,399  $ 471,760  $ 198,200  $ 170,985  $ 300,252  $ 350,098  $ 2,823,694  $ 555,090  $ 192,647  $ 4,031  $ 3,575,462 
Year Ended December 31, 2020
                    
Revenues from real estate operations $ 254,197  $ 57,817  $ 50,982  $ 32,869  $ 22,515  $ 29,139  $ 447,519  $ 60,627  $ 27,011  $ 3,568  $ 538,725 
Property operating expenses (85,032) (21,321) (29,055) (12,655) (8,119) (3,195) (159,377) (29,144) (13,543) (1,776) (203,840)
UJV NOI allocable to COPT —  —  —  —  —  6,951  6,951  —  —  —  6,951 
NOI from real estate operations $ 169,165  $ 36,496  $ 21,927  $ 20,214  $ 14,396  $ 32,895  $ 295,093  $ 31,483  $ 13,468  $ 1,792  $ 341,836 
Additions to long-lived assets $ 31,295  $ 11,620  $ —  $ 7,104  $ 2,905  $ —  $ 52,924  $ 17,232  $ 10,856  $ 467  $ 81,479 
Transfers from non-operating properties $ 21,859  $ 2,557  $ 456  $ —  $ 138,122  $ 230,277  $ 393,271  $ 83,091  $ —  $ —  $ 476,362 
Segment assets at December 31, 2020
 $ 1,277,849  $ 392,714  $ 142,137  $ 178,897  $ 281,386  $ 419,929  $ 2,692,912  $ 490,422  $ 201,820  $ 3,824  $ 3,388,978 
Year Ended December 31, 2019
                    
Revenues from real estate operations $ 252,781  $ 55,742  $ 51,140  $ 32,659  $ 16,593  $ 26,571  $ 435,486  $ 59,611  $ 29,405  $ 2,961  $ 527,463 
Property operating expenses (82,815) (19,779) (29,042) (13,579) (6,626) (1,962) (153,803) (29,682) (13,213) (1,445) (198,143)
UJV NOI allocable to COPT —  —  —  —  —  5,705  5,705  —  —  —  5,705 
NOI from real estate operations $ 169,966  $ 35,963  $ 22,098  $ 19,080  $ 9,967  $ 30,314  $ 287,388  $ 29,929  $ 16,192  $ 1,516  $ 335,025 
Additions to long-lived assets $ 34,618  $ 9,326  $ —  $ 8,912  $ 1,548  $ —  $ 54,404  $ 20,925  $ 893  $ 128  $ 76,350 
Transfers from non-operating properties $ 18,606  $ 4,548  $ 10,781  $ —  $ 33,606  $ 159,472  $ 227,013  $ —  $ (1,012) $ —  $ 226,001 
Segment assets at December 31, 2019
 $ 1,280,656  $ 396,914  $ 146,592  $ 184,257  $ 138,501  $ 279,099  $ 2,426,019  $ 392,319  $ 202,935  $ 3,685  $ 3,024,958 
The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):
For the Years Ended December 31,
  2021 2020 2019
Segment revenues from real estate operations $ 587,060  $ 538,725  $ 527,463 
Construction contract and other service revenues 107,876  70,640  113,763 
Less: Revenues from discontinued operations (Note 4)
 (30,490) (27,011) (29,405)
Total revenues $ 664,446  $ 582,354  $ 611,821 

The following table reconciles our segment property operating expenses to property operating expenses as reported on our consolidated statements of operations (in thousands):

For the Years Ended December 31,
  2021 2020 2019
Segment property operating expenses $ 230,219  $ 203,840  $ 198,143 
Less: Property operating expenses from discontinued operations (Note 4)
 (16,842) (13,044) (12,694)
Total property operating expenses $ 213,377  $ 190,796  $ 185,449 

 The following table reconciles UJV NOI allocable to COPT to equity in income of unconsolidated entities as reported on our consolidated statements of operations (in thousands):
For the Years Ended December 31,
  2021 2020 2019
UJV NOI allocable to COPT $ 4,029  $ 6,951  $ 5,705 
Less: Income from UJVs allocable to COPT attributable to depreciation and amortization expense and interest expense (2,930) (5,120) (4,065)
Add: Equity in loss of unconsolidated non-real estate entities (6) (6) (7)
Equity in income of unconsolidated entities $ 1,093  $ 1,825  $ 1,633 

As previously discussed, we provide real estate services such as property management, development and construction services primarily for our properties but also for third parties.  The primary manner in which we evaluate the operating performance of our service activities is through a measure we define as net operating income from service operations (“NOI from service operations”), which is based on the net of revenues and expenses from these activities.  Construction contract and other service revenues and expenses consist primarily of subcontracted costs that are reimbursed to us by the customer along with a management fee. The operating margins from these activities are small relative to the revenue.  We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations. The table below sets forth the computation of our NOI from service operations (in thousands):
For the Years Ended December 31,
  2021 2020 2019
Construction contract and other service revenues $ 107,876  $ 70,640  $ 113,763 
Construction contract and other service expenses (104,053) (67,615) (109,962)
NOI from service operations $ 3,823  $ 3,025  $ 3,801 
The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to income from continuing operations as reported on our consolidated statements of operations (in thousands):
For the Years Ended December 31,
  2021 2020 2019
NOI from real estate operations $ 360,870  $ 341,836  $ 335,025 
NOI from service operations 3,823  3,025  3,801 
Interest and other income 7,879  8,574  7,894 
Credit loss recoveries 1,128  933  — 
Gain on sales of real estate 65,590  30,209  105,230 
Gain on sale of investment in unconsolidated real estate joint venture —  29,416  — 
Equity in income of unconsolidated entities 1,093  1,825  1,633 
Income tax (expense) benefit (145) (353) 217 
Depreciation and other amortization associated with real estate operations (137,543) (126,503) (125,008)
Impairment losses —  (1,530) (329)
General, administrative and leasing expenses (36,127) (33,001) (35,402)
Business development expenses and land carry costs (4,647) (4,473) (4,239)
Interest expense (65,398) (67,937) (71,052)
UJV NOI allocable to COPT included in equity in income of unconsolidated entities (4,029) (6,951) (5,705)
Revenues from real estate operations from discontinued operations (Note 4)
 (30,490) (27,011) (29,405)
Property operating expenses from discontinued operations (Note 4)
 16,842  13,044  12,694 
Loss on early extinguishment of debt (100,626) (7,306) — 
Loss on interest rate derivatives —  (53,196) — 
Income from continuing operations $ 78,220  $ 100,601  $ 195,354 

The following table reconciles our segment assets to our consolidated total assets (in thousands): 
As of December 31,
2021 2020
Segment assets $ 3,575,462  $ 3,388,978 
Operating properties lease liabilities included in segment assets 29,342  30,721 
Non-operating property assets 449,144  466,991 
Other assets 208,504  190,333 
Total consolidated assets $ 4,262,452  $ 4,077,023 
 
The accounting policies of the segments are the same as those used to prepare our consolidated financial statements, except that discontinued operations are not presented separately for segment purposes. In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization, impairment losses, gain on sales of real estate, gain on sale of investment in unconsolidated real estate joint venture, loss on early extinguishment of debt, loss on interest rate derivatives and equity in income of unconsolidated entities not included in NOI to our real estate segments since they are not included in the measure of segment profit reviewed by management.  We also did not allocate general, administrative and leasing expenses, business development expenses and land carry costs, interest and other income, credit loss recoveries, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.