Corporate Office Properties Trust Updates 2011 Earnings Guidance to Reflect Fort Ritchie Impairment Charge
COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (COPT) (NYSE: OFC) announced today that it would recognize a non-cash impairment loss of approximately $28 million, or $0.39 per diluted share, related to its investment in Fort Ritchie in Cascade, MD ("Fort Ritchie" or the "Property"). The impairment loss will be reflected in the Company's operating results for the three months ended March 31, 2011.
As detailed in a Company press release dated February 18, 2011, in mid-February the United States Army (the "Army") provided COPT with disclosures regarding the past testing and use of tactical herbicides at Fort Ritchie. Upon receiving these new disclosures, the Company commenced a review of its development plans and prospects for the Property. On March 31, 2011, COPT's management, in conjunction with the Audit Committee of its Board of Trustees, determined that the carrying amount of Fort Ritchie exceeded its estimated fair value by approximately $28 million, and thus recognized a non-cash impairment loss in that amount.
The Army has certain environmental indemnity obligations regarding the Property, including its obligation to hold harmless, defend and indemnify the subsidiary of the Company that owns Fort Ritchie with respect to any cost, expense or fee arising from a requirement or claim for personal injury, environmental remediation or property damage resulting from the release of hazardous substances, all as more particularly described and limited by Section 330 of the Department of Defense Authorization Act of 1993, Public Law 102-484.
Updated Earnings Guidance - COPT previously announced guidance for diluted earnings (loss) per share ("Diluted EPS") and for diluted funds from operations per share ("Diluted FFOPS") for 2011. For the year ending December 31, 2011, the Company previously provided guidance for Diluted EPS of between $0.51 and $0.69 and for Diluted FFOPS of between $2.35 and $2.57. COPT also previously announced guidance for Diluted EPS of between $0.04 and $0.07 and for Diluted FFOPS of between $0.51 and $0.54 for the three months ending March 31, 2011.
Adjusting for the effect of the impairment of Fort Ritchie, the Company has modified its guidance for Diluted EPS to between $0.12 and $0.30 and its guidance for Diluted FFOPS to between $1.96 and $2.18 for the year ending December 31, 2011. The Company also modified its guidance for Diluted EPS to between ($0.35) and ($0.32) and its guidance for Diluted FFOPS to between $0.12 and $0.15 for the three months ended March 31, 2011.
The Company believes that diluted EPS is the most directly comparable GAAP measure to Diluted FFOPS. The tables below set forth reconciliations of projected Diluted FFOPS to projected diluted EPS for the year ending December 31, 2011 and the three months ended March 31, 2011.
Year Ending
December 31, 2011
Low High
Projected diluted EPS $ 0.12 $ 0.30
Adjustments for per share effect of:
Real estate-related depreciation and amortization 1.85 1.89
Other (0.01 ) (0.01 )
Projected diluted FFO per share $ 1.96 $ 2.18
Quarter Ended
March 31, 2011
Low High
Projected diluted EPS $ (0.35 ) $ (0.32 )
Adjustments for per share effect of:
Real estate-related depreciation and amortization 0.47 0.47
Projected diluted FFO per share $ 0.12 $ 0.15
Company Information
Corporate Office Properties Trust (COPT) (NYSE: OFC) is a specialty office real estate investment trust (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 December 31, 2010, the Company owned 272 office properties totaling 21.1 million rentable square feet, which includes 20 properties totaling 1.1 million square feet held through joint ventures. 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 demand and rents, tenant
creditworthiness, interest rates and financing availability;
-- adverse changes in the real estate markets including, among other
things, increased competition with other companies;
-- the Company's ability to borrow on favorable terms;
-- risk of real estate acquisition and development, 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 our plans 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;
-- governmental actions and initiatives; 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, 2010.
Source: Corporate Office Properties Trust
Released April 5, 2011