COPT Reports Third Quarter 2013 Results
COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the third quarter ended September 30, 2013.
“Driven by strong NOI margins, third quarter results were at the high end of our expectations. We are increasing our prior guidance range for the fourth quarter and full year,” stated Roger A. Waesche, Jr., COPT’s President & Chief Executive Officer. “Looking ahead, we expect stable performance from our current same office portfolio in 2014 and anticipate that our development pipeline and property dispositions will add tremendous value for investors,” he added.
Results:
For the quarter ended September 30, 2013, the Company reported a diluted earnings per share (“EPS”) loss of $0.09 as compared to an EPS loss of $0.39 in the third quarter of 2012. Diluted funds from operations per share (“FFOPS”), as adjusted for comparability, was $0.49 for the third quarter ended September 30, 2013 as compared to $0.53 reported for the third quarter of 2012. The 7.5% year-over-year decrease reflects the Company’s successful portfolio repositioning and de-leveraging. Adjustments for comparability encompass items such as acquisition costs, impairment losses and gains on non-operating properties, gains (losses) on early extinguishment of debt, derivative losses and write-offs of original issuance costs for redeemed preferred stock. Please refer to the reconciliation tables that appear later in this press release. Per NAREIT’s definition, FFOPS for the third quarter of 2013 was $0.48 versus $0.52 reported in the third quarter of 2012.
Operating Performance:
Portfolio Summary – At September 30, 2013, the Company’s consolidated portfolio of 210 operating office properties totaled 19.2 million square feet. The weighted average remaining lease term for the portfolio was 4.3 years and the average rental rate (including tenant reimbursements) was $28.26 per square foot. The Company’s consolidated portfolio was 88.5% occupied and 89.7% leased as of September 30, 2013.
Same Office Performance – The Company’s same office portfolio excludes properties identified for eventual disposition, including those in its Strategic Reallocation Plan. For the quarter ended September 30, 2013, COPT’s same office portfolio represents 76% of the rentable square feet of the portfolio and consists of 165 properties.
For the third quarter ended September 30, 2013, the Company’s same office property cash NOI, excluding gross lease termination fees, increased 2.4% as compared to the third quarter of 2012. The Company’s same office portfolio was 90.3% occupied and 91.5% leased as of September 30, 2013.
Leasing – COPT completed a total of 898,000 square feet of leasing for the quarter ended September 30, 2013. During this same period, the Company’s renewal rate was 72%. Consistent with expectations, for the quarter ended September 30, 2013, total rent on renewed space increased 4.4% on a GAAP basis and decreased 2.6% on a cash basis.
Investment Activity:
At September 30, 2013, the Company had nine properties totaling 1.3 million square feet under construction for a total projected cost of $234.0 million, of which $134.4 million had been incurred. As of the same date, COPT had 235,000 square feet in two properties under redevelopment for a total projected cost of $44.2 million, of which $30.5 million has been incurred. As of September 30, 2013, the Company’s nine properties under construction, on average, were 88% pre-leased, and its redevelopment properties were 51% pre-leased.
Balance Sheet and Capital Transactions:
As of September 30, 2013, the Company’s debt to adjusted book ratio was 46.6% and its fixed charge coverage ratio was 2.9x for the three months then ended. Also, the Company’s weighted average interest rate was 4.2% for the quarter ended September 30, 2013 and 90% of the Company’s debt was subject to fixed interest rates, including the effect of interest rate swaps.
In early July, the Company issued 1.5 million shares of common stock through its at-the-market (“ATM”) stock offering program. The average price per share was $26.05 and the net proceeds were $38.5 million.
During the quarter, the Company amended the terms of its $800 million line of credit to extend the maturity date from September 1, 2014, to July 14, 2017 plus a one-year extension option; and lowered the interest rate spread over 30-day LIBOR to 130 basis points. The Company also amended the terms of its $300 million and $250 million term loan agreements to grant additional extension options and lower the interest spread over LIBOR.
The Company also completed a registered exchange offer to exchange any and all of its outstanding 3.6% Senior Notes due 2023, which were issued in a private placement for an equal principal amount of new 3.6% Senior Notes due 2023 that have been registered under the Securities Act of 1933.
In September, the Company priced an offering of $250 million aggregate principal amount of 5.25% senior unsecured notes due February 15, 2024 at a price equal to 98.783% of the principal amount.
2013 FFO Guidance:
Management is increasing its previous guidance for the fourth quarter and full year 2013 FFOPS, as adjusted for comparability, from prior ranges of between $0.45–$0.48 and $1.92–$1.97, respectively, to new ranges of between $0.47–$0.49 and $1.96–$1.98. A reconciliation of projected diluted EPS to projected FFOPS for the quarter ending and the year ending December 31, 2013 is provided, as follows:
| Quarter Ending | Year Ending | |||||||||||||
| December 31, 2013 | December 31, 2013 | |||||||||||||
| Low | High | Low | High | |||||||||||
| EPS | $ | 0.14 | $ | 0.16 | $ | (0.01 | ) | $ | 0.01 | |||||
| Real estate depreciation and amortization | 0.33 | 0.33 | 1.31 | 1.31 | ||||||||||
| Impairments and exit costs on previously depreciated properties | - | - | 0.35 | 0.35 | ||||||||||
| FFOPS, NAREIT definition | 0.47 | 0.49 | 1.65 | 1.67 | ||||||||||
| Net losses on early extinguishment of debt | - | - | 0.31 | 0.31 | ||||||||||
| Gains on sales of non-operating properties | - | - | (0.03 | ) | (0.03 | ) | ||||||||
| Issuance costs on redeemed preferred shares | - | - | 0.03 | 0.03 | ||||||||||
| FFOPS, as adjusted for comparability | $ | 0.47 | $ | 0.49 | $ | 1.96 | $ | 1.98 | ||||||
Conference Call Information:
Management will discuss third quarter 2013 earnings results, as well as its 2013 guidance, on its conference call on October 25, 2013 at 12:00 p.m. Eastern Time, details of which are listed below:
| Earnings Release Date: | Friday, October 25, 2013 at 6:00 a.m. Eastern Time | ||
| Conference Call Date: | Friday, October 25, 2013 | ||
| Time: | 12:00 p.m. Eastern Time | ||
| Telephone Number: (within the U.S.) | 888-679-8018 | ||
| Telephone Number: (outside the U.S.) | 617-213-4845 | ||
| Passcode: | 31730330 | ||
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=PXHEGMLBC
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 Friday, October 25 at 1:00 p.m. Eastern Time through Friday, November 8 at midnight Eastern Time. To access the replay within the United States, please call 888-286-8010 and use passcode 16654891. To access the replay outside the United States, please call 617-801-6888 and use passcode 16654891.
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.
Definitions:
For definitions of certain terms used in this press release, please refer to the information furnished in our Supplemental Information Package filed as a Form 8-K which can be found on our website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.
Company Information
COPT is an office REIT that focuses primarily on serving the specialized requirements of U.S. Government agencies and defense contractors, most of whom are engaged in defense information technology and national security-related activities. The Company generally acquires, develops, manages and leases office and data center properties concentrated in large office parks primarily located near knowledge-based government demand drivers and/or in targeted markets or submarkets in the Greater Washington, DC/Baltimore region. As of September 30, 2013, the Company’s consolidated portfolio consisted of 210 office properties totaling 19.2 million rentable square feet. COPT is an S&P MidCap 400 company.
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 the Company's strategic customers;
- 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;
- the Company’s ability to sell properties included in its Strategic Reallocation Plan;
- 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 for properties or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of significant 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 Company's ability to achieve projected results;
- the dilutive effects 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, 2012.
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenues | ||||||||||||||||
| Real estate revenues | $ | 119,040 | $ | 114,362 | $ | 355,127 | $ | 335,231 | ||||||||
| Construction contract and other service revenues | 16,991 | 15,283 | 52,048 | 53,812 | ||||||||||||
| Total revenues | 136,031 | 129,645 | 407,175 | 389,043 | ||||||||||||
| Expenses | ||||||||||||||||
| Property operating expenses | 43,482 | 41,474 | 129,409 | 122,102 | ||||||||||||
| Depreciation and amortization associated with real estate operations | 29,210 | 28,604 | 86,239 | 84,633 | ||||||||||||
| Construction contract and other service expenses | 16,306 | 14,410 | 49,165 | 51,302 | ||||||||||||
| Impairment losses | 16,300 | 46,096 | 16,300 | 41,260 | ||||||||||||
| General and administrative expenses | 6,237 | 5,062 | 17,213 | 20,531 | ||||||||||||
| Leasing expenses | 1,790 | 1,315 | 5,217 | 4,266 | ||||||||||||
| Business development expenses and land carry costs | 1,383 | 1,632 | 4,069 | 4,506 | ||||||||||||
| Total operating expenses | 114,708 | 138,593 | 307,612 | 328,600 | ||||||||||||
| Operating income (loss) | 21,323 | (8,948 | ) | 99,563 | 60,443 | |||||||||||
| Interest expense | (21,242 | ) | (23,239 | ) | (66,851 | ) | (71,909 | ) | ||||||||
| Interest and other (loss) income | (3 | ) | 1,095 | 2,949 | 3,152 | |||||||||||
| Loss on early extinguishment of debt | (374 | ) | (768 | ) | (27,028 | ) | (937 | ) | ||||||||
| (Loss) income from continuing operations before equity in income (loss) of unconsolidated entities and income taxes | (296 | ) | (31,860 | ) | 8,633 | (9,251 | ) | |||||||||
| Equity in income (loss) of unconsolidated entities | 44 | (246 | ) | 211 | (522 | ) | ||||||||||
| Income tax expense | (24 | ) | (106 | ) | (61 | ) | (327 | ) | ||||||||
| (Loss) income from continuing operations | (276 | ) | (32,212 | ) | 8,783 | (10,100 | ) | |||||||||
| Discontinued operations | (1,724 | ) | 11,447 | (2,594 | ) | 11,410 | ||||||||||
| (Loss) income before gain on sales of real estate | (2,000 | ) | (20,765 | ) | 6,189 | 1,310 | ||||||||||
| Gain on sales of real estate, net of income taxes | — | — | 2,683 | 21 | ||||||||||||
| Net (loss) income | (2,000 | ) | (20,765 | ) | 8,872 | 1,331 | ||||||||||
| Net loss (income) attributable to noncontrolling interests | ||||||||||||||||
| Common units in the Operating Partnership | 232 | 1,533 | 474 | 738 | ||||||||||||
| Preferred units in the Operating Partnership | (165 | ) | (165 | ) | (495 | ) | (495 | ) | ||||||||
| Other consolidated entities | (1,031 | ) | 235 | (2,160 | ) | 864 | ||||||||||
| Net (loss) income attributable to COPT | (2,964 | ) | (19,162 | ) | 6,691 | 2,438 | ||||||||||
| Preferred share dividends | (4,490 | ) | (6,546 | ) | (15,481 | ) | (14,738 | ) | ||||||||
| Issuance costs associated with redeemed preferred shares | — | (1,827 | ) | (2,904 | ) | (1,827 | ) | |||||||||
| Net loss attributable to COPT common shareholders | $ | (7,454 | ) | $ | (27,535 | ) | $ | (11,694 | ) | $ | (14,127 | ) | ||||
| Earnings per share (“EPS”) computation: | ||||||||||||||||
| Numerator for diluted EPS: | ||||||||||||||||
| Net (loss) income attributable to common shareholders | $ | (7,454 | ) | $ | (27,535 | ) | $ | (11,694 | ) | $ | (14,127 | ) | ||||
| Amount allocable to restricted shares | (97 | ) | (111 | ) | (317 | ) | (357 | ) | ||||||||
| Numerator for diluted EPS | $ | (7,551 | ) | $ | (27,646 | ) | $ | (12,011 | ) | $ | (14,484 | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted average common shares - basic and diluted | 86,760 | 71,688 | 84,547 | 71,590 | ||||||||||||
| Diluted EPS | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.14 | ) | $ | (0.20 | ) | ||||
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net (loss) income | $ | (2,000 | ) | $ | (20,765 | ) | $ | 8,872 | $ | 1,331 | ||||||
| Real estate-related depreciation and amortization | 29,210 | 30,624 | 86,397 | 93,377 | ||||||||||||
| Impairment losses on previously depreciated operating properties | 22,074 | 55,829 | 31,126 | 70,016 | ||||||||||||
| Gain on sales of previously depreciated operating properties | — | (16,913 | ) | — | (20,936 | ) | ||||||||||
| Depreciation and amortization on unconsolidated real estate entities | — | 113 | — | 346 | ||||||||||||
| Funds from operations (“FFO”) | 49,284 | 48,888 | 126,395 | 144,134 | ||||||||||||
|
Noncontrolling interests - preferred units in the Operating Partnership |
(165 | ) | (165 | ) | (495 | ) | (495 | ) | ||||||||
| FFO allocable to other noncontrolling interests | (833 | ) | (571 | ) | (2,830 | ) | (1,251 | ) | ||||||||
| Preferred share dividends | (4,490 | ) | (6,546 | ) | (15,481 | ) | (14,738 | ) | ||||||||
| Issuance costs associated with redeemed preferred shares | — | (1,827 | ) | (2,904 | ) | (1,827 | ) | |||||||||
| Basic and diluted FFO allocable to restricted shares | (178 | ) | (214 | ) | (450 | ) | (728 | ) | ||||||||
| Basic and diluted FFO available to common share and common unit holders (“Basic and diluted FFO”) | 43,618 | 39,565 | 104,235 | 125,095 | ||||||||||||
| Operating property acquisition costs | — | 222 | — | 229 | ||||||||||||
| Gain on sales of non-operating properties | — | — | (2,683 | ) | (33 | ) | ||||||||||
| Impairment recoveries on non-operating properties | — | — | — | (5,246 | ) | |||||||||||
| Income tax expense on impairment recoveries on non-operating properties | — | — | — | 673 | ||||||||||||
| Loss (gain) on early extinguishment of debt | 374 | (970 | ) | 27,028 | (799 | ) | ||||||||||
| Issuance costs associated with redeemed preferred shares | — | 1,827 | 2,904 | 1,827 | ||||||||||||
| Diluted FFO available to common share and common unit holders, as adjusted for comparability | 43,992 | 40,644 | 131,484 | 121,746 | ||||||||||||
| Straight line rent adjustments | (980 | ) | (2,595 | ) | (6,824 | ) | (6,631 | ) | ||||||||
| Amortization of intangibles included in net operating income | 230 | 251 | 579 | 659 | ||||||||||||
| Share-based compensation, net of amounts capitalized | 1,573 | 1,703 | 4,869 | 8,262 | ||||||||||||
| Amortization of deferred financing costs | 1,321 | 1,527 | 4,292 | 4,696 | ||||||||||||
| Amortization of net debt discounts, net of amounts capitalized | (121 | ) | 683 | 1,063 | 2,028 | |||||||||||
| Amortization of settled debt hedges | 16 | 15 | 46 | 46 | ||||||||||||
| Recurring capital expenditures | (10,528 | ) | (8,518 | ) | (21,698 | ) | (16,467 | ) | ||||||||
| Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) | $ | 35,503 | $ | 33,710 | $ | 113,811 | $ | 114,339 | ||||||||
| Diluted FFO per share | $ | 0.48 | $ | 0.52 | $ | 1.18 | $ | 1.65 | ||||||||
| Diluted FFO per share, as adjusted for comparability | $ | 0.49 | $ | 0.53 | $ | 1.49 | $ | 1.60 | ||||||||
| Dividends/distributions per common share/unit | $ | 0.2750 | $ | 0.2750 | $ | 0.8250 | $ | 0.8250 | ||||||||
| Corporate Office Properties Trust | ||||||||
| Summary Financial Data | ||||||||
| (unaudited) | ||||||||
| (Dollars and shares in thousands, except per share data) | ||||||||
|
September 30, |
December 31, |
|||||||
| Balance Sheet Data | ||||||||
| Properties, net of accumulated depreciation | $ | 3,239,746 | $ | 3,163,044 | ||||
| Total assets | 3,755,588 | 3,653,759 | ||||||
| Debt, net | 2,135,031 | 2,019,168 | ||||||
| Total liabilities | 2,304,732 | 2,206,962 | ||||||
| Redeemable noncontrolling interest | 16,789 | 10,298 | ||||||
| Equity | 1,434,067 | 1,436,499 | ||||||
| Debt to adjusted book | 46.6 | % | 45.8 | % | ||||
| Debt to total market capitalization | 47.4 | % | 45.0 | % | ||||
| Consolidated Property Data (as of period end) | ||||||||
| Number of operating properties | 210 | 208 | ||||||
| Total net rentable square feet owned (in thousands) | 19,204 | 18,831 | ||||||
| Occupancy % | 88.5 | % | 87.8 | % | ||||
| Leased % | 89.7 | % | 89.2 | % | ||||
| Reconciliation of total assets to denominator for debt to adjusted book | ||||||||
| Total assets | $ | 3,755,588 | $ | 3,653,759 | ||||
| Accumulated depreciation | 612,369 | 555,975 | ||||||
| Accumulated depreciation included in assets held for sale | 8,845 | 12,201 | ||||||
| Accumulated amortization of real estate intangibles and deferred leasing costs | 195,559 | 181,834 | ||||||
| Accumulated amortization of real estate intangibles and deferred leasing costs included in assets held for sale | 9,224 | 9,199 | ||||||
| Denominator for debt to adjusted book | $ | 4,581,585 | $ | 4,412,968 | ||||
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Payout ratios | ||||||||||||||||
| Diluted FFO | 57.6 | % | 53.1 | % | 71.4 | % | 50.3 | % | ||||||||
| Diluted FFO, as adjusted for comparability | 57.1 | % | 51.7 | % | 56.6 | % | 51.7 | % | ||||||||
| Diluted AFFO | 70.7 | % | 62.3 | % | 65.4 | % | 55.1 | % | ||||||||
| Adjusted EBITDA interest coverage ratio | 3.6x | 3.4x | 3.6x | 3.2x | ||||||||||||
| Adjusted EBITDA fixed charge coverage ratio | 2.9x | 2.6x | 2.8x | 2.6x | ||||||||||||
| Debt to Adjusted EBITDA ratio (1) | 7.4x | 7.5x | 7.3x | 7.6x | ||||||||||||
|
Reconciliation of denominators for diluted EPS and diluted FFO per share |
||||||||||||||||
| Denominator for diluted EPS | 86,760 | 71,688 | 84,547 | 71,590 | ||||||||||||
| Weighted average common units | 3,804 | 4,233 | 3,832 | 4,256 | ||||||||||||
| Anti-dilutive EPS effect of share-based compensation awards | 45 | 73 | 63 | 48 | ||||||||||||
| Denominator for diluted FFO per share | 90,609 | 75,994 | 88,442 | 75,894 | ||||||||||||
| Reconciliation of FFO to FFO, as adjusted for comparability | ||||||||||||||||
| FFO, per NAREIT | $ | 49,284 | $ | 48,888 | $ | 126,395 | $ | 144,134 | ||||||||
| Gain on sales of non-operating properties | — | — | (2,683 | ) | (33 | ) | ||||||||||
| Impairment recoveries on non-operating properties, net of associated tax | — | — | — | (4,573 | ) | |||||||||||
| Operating property acquisition costs | — | 222 | — | 229 | ||||||||||||
| Loss (gain) on early extinguishment of debt, continuing and discontinued operations | 374 | (970 | ) | 27,028 | (799 | ) | ||||||||||
| Issuance costs associated with redeemed preferred shares | — | 1,827 | 2,904 | 1,827 | ||||||||||||
| FFO, as adjusted for comparability | $ | 49,658 | $ | 49,967 | $ | 153,644 | $ | 140,785 | ||||||||
(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).
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Reconciliation of common share dividends to dividends and distributions for payout ratios | ||||||||||||||||
| Common share dividends | $ | 24,022 | $ | 19,837 | $ | 71,220 | $ | 59,465 | ||||||||
| Common unit distributions | 1,094 | 1,157 | 3,186 | 3,498 | ||||||||||||
| Dividends and distributions for payout ratios | $ | 25,116 | $ | 20,994 | $ | 74,406 | $ | 62,963 | ||||||||
| Reconciliation of GAAP net (loss) income to adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) | ||||||||||||||||
| Net (loss) income | $ | (2,000 | ) | $ | (20,765 | ) | $ | 8,872 | $ | 1,331 | ||||||
| Interest expense on continuing operations | 21,242 | 23,239 | 66,851 | 71,909 | ||||||||||||
| Interest expense on discontinued operations | 68 | 127 | 199 | 2,107 | ||||||||||||
| Income tax expense | 24 | 106 | 61 | 327 | ||||||||||||
| Real estate-related depreciation and amortization | 29,210 | 30,624 | 86,397 | 93,377 | ||||||||||||
| Depreciation of furniture, fixtures and equipment | 502 | 624 | 1,559 | 1,871 | ||||||||||||
| Impairment losses | 22,074 | 55,829 | 31,126 | 64,770 | ||||||||||||
| Loss (gain) on early extinguishment of debt on continuing and discontinued operations | 374 | (970 | ) | 27,028 | (799 | ) | ||||||||||
| Gain on sales of operating properties | — | (16,913 | ) | — | (20,936 | ) | ||||||||||
| Gain on sales of non-operational properties | — | — | (2,683 | ) | (33 | ) | ||||||||||
| Net loss (gain) on investments in unconsolidated entities included in interest and other income | 1,006 | (81 | ) | (15 | ) | (597 | ) | |||||||||
| Operating property acquisition costs | — | 222 | — | 229 | ||||||||||||
| Adjusted EBITDA | $ | 72,500 | $ | 72,042 | $ | 219,395 | $ | 213,556 | ||||||||
| 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 | $ | 21,242 | $ | 23,239 | $ | 66,851 | $ | 71,909 | ||||||||
| Interest expense from discontinued operations | 68 | 127 | 199 | 2,107 | ||||||||||||
| Less: Amortization of deferred financing costs | (1,321 | ) | (1,527 | ) | (4,292 | ) | (4,696 | ) | ||||||||
| Less: Amortization of net debt discount, net of amounts capitalized | 121 | (683 | ) | (1,063 | ) | (2,028 | ) | |||||||||
| Denominator for interest coverage-Adjusted EBITDA | 20,110 | 21,156 | 61,695 | 67,292 | ||||||||||||
| Preferred share dividends | 4,490 | 6,546 | 15,481 | 14,738 | ||||||||||||
| Preferred unit distributions | 165 | 165 | 495 | 495 | ||||||||||||
| Denominator for fixed charge coverage-Adjusted EBITDA | $ | 24,765 | $ | 27,867 | $ | 77,671 | $ | 82,525 | ||||||||
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Reconciliations of tenant improvements and incentives, capital improvements and leasing costs for operating properties to recurring capital expenditures | ||||||||||||||||
| Tenant improvements and incentives on operating properties | $ | 4,894 | $ | 7,774 | $ | 10,983 | $ | 11,103 | ||||||||
| Building improvements on operating properties | 4,857 | 4,646 | 8,995 | 6,813 | ||||||||||||
| Leasing costs for operating properties | 2,260 | 947 | 5,114 | 5,109 | ||||||||||||
| Less: Nonrecurring tenant improvements and incentives on operating properties | (230 | ) | (3,852 | ) | (238 | ) | (4,510 | ) | ||||||||
| Less: Nonrecurring building improvements on operating properties | (1,266 | ) | (940 | ) | (3,113 | ) | (1,919 | ) | ||||||||
| Less: Nonrecurring leasing costs for operating properties | 14 | (130 | ) | (36 | ) | (209 | ) | |||||||||
| Add: Recurring capital expenditures on operating properties held through joint ventures | (1 | ) | 73 | (7 | ) | 80 | ||||||||||
| Recurring capital expenditures | $ | 10,528 | $ | 8,518 | $ | 21,698 | $ | 16,467 | ||||||||
| 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 | $ | 64,601 | $ | 63,968 | $ | 193,324 | $ | 189,762 | ||||||||
| Less: Straight-line rent adjustments | (1,029 | ) | (1,584 | ) | (3,149 | ) | (4,992 | ) | ||||||||
| Less: Amortization of deferred market rental revenue | 22 | (17 | ) | (43 | ) | (95 | ) | |||||||||
| Add: Amortization of above-market cost arrangements | 320 | 371 | 958 | 1,095 | ||||||||||||
| Same office property cash net operating income | 63,914 | 62,738 | 191,090 | 185,770 | ||||||||||||
| Less: Lease termination fees, gross | (306 | ) | (636 | ) | (1,280 | ) | (1,507 | ) | ||||||||
| Same office property cash net operating income, excluding gross lease termination fees | $ | 63,608 | $ | 62,102 | $ | 189,810 | $ | 184,263 | ||||||||
Corporate Office Properties Trust
Stephanie Krewson, 443-285-5453
stephanie.krewson@copt.com
or
Michelle
Layne, 443-285-5452
michelle.layne@copt.com
Source: Corporate Office Properties Trust (COPT)
Released October 25, 2013