Corporate Office Properties Trust Reports Fourth Quarter & Full Year 2010 Results
COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (COPT) (NYSE: OFC) today announced financial and operating results for the fourth quarter and full year ended December 31, 2010. Excluding costs associated with the purchase of operating properties, funds from operations (FFO) per diluted share for the fourth quarter and full year of 2010, respectively, were $0.70 and $2.36.
"The COPT team achieved 4.3 million square feet of leasing, the highest volume in the Company's history, despite the challenges presented by the broader economy. We believe that this leasing momentum will continue into 2011," stated Randall M. Griffin, Chief Executive Officer of Corporate Office Properties Trust. "In 2010, the COPT team further strengthened our portfolio's ability to serve the needs of our U.S. Government and Defense Information Technology tenants through strategic acquisitions, dispositions and development starts," he added.
2010 Full Year Highlights:
-- Diluted earnings per share was $0.43 for the year ended December 31,
2010 as compared to $0.70 for 2009, a decrease of 39%.
-- FFO per diluted share for 2010, excluding operating property acquisition
costs, was $2.36, a 5% decline over 2009 full year results. Including
acquisition costs, FFO per diluted share was $2.30 for 2010 versus $2.46
for 2009.
-- Diluted adjusted funds from operations (Diluted AFFO) available to
common share and common unit holders was $112.7 million for 2010 as
compared to $119.8 million for 2009, a decrease of 6%. Diluted FFO
payout ratio of 70%, excluding the effect of operating property
acquisition costs, and a 94% Diluted AFFO payout ratio for the year.
-- Same office property cash net operating income (NOI) decreased 1% for
the year, excluding gross lease termination fees. Including gross lease
termination fees, same office property cash NOI decreased 2% for the
year.
-- Leasing volume of 4.3 million square feet, a company record, and 1.1
million square feet more than the previous best year in 2008.
-- Renewed 2.5 million square feet, equating to a 68% renewal rate.
-- Placed in service 816,000 square feet in nine development properties.
These properties were 77% leased at year end. Started construction on
732,000 square feet, all focused on the U.S. Government and Defense IT
sectors.
-- Acquired $317 million of strategic, high-quality assets ($202 million
for office and $115 million for a wholesale data center).
-- Increased quarterly common cash dividend 5.1% in September 2010.
Results:
For the fourth quarter ended December 31, 2010 - EPS was $0.18 for the quarter ended December 31, 2010 as compared to $0.08 for 2009, an increase of 125%. Excluding $470,000 (or $0.01 per diluted share) of acquisition costs, FFO for the fourth quarter ended December 31, 2010 totaled $52.7 million, or $0.70 per diluted share. Fourth quarter 2010 results represent a 27% increase on a per share basis from the $0.55 per diluted share, or $39.1 million of FFO for the fourth quarter of 2009. Including acquisition costs, FFO per diluted share for the fourth quarter of 2010 was $0.69 versus $0.52 reported in the fourth quarter of 2009.
For the year ended December 31, 2010 - EPS was $0.43 for the year ended December 31, 2010 as compared to $0.70 for 2009, a decrease of 39%. FFO, for the full year 2010, excluding $3.4 million (or $0.06 per diluted share) of acquisition costs, was $171.7 million, or $2.36 per diluted share. FFO per diluted share in 2010 represented a 5% decrease from the $2.49 per diluted share, or $173.3 million of FFO reported in 2009. Including acquisition costs, FFO per diluted share for 2010 was $2.30 as compared to $2.46 per diluted share for the full year 2009.
Operating Performance:
Portfolio Summary - At December 31, 2010, the Company's wholly-owned portfolio of 252 office properties totaled 20 million square feet. The weighted average remaining lease term for the portfolio was 4.9 years and the average rental rate (including tenant reimbursements) was $25.56 per square foot. The Company's wholly-owned portfolio was 88.2% occupied and 89.5% leased as of December 31, 2010.
Same Office Performance - The Company's same office portfolio for the year ended December 31, 2010 represents 85% of the rentable square feet of its consolidated portfolio and consists of 230 properties. For the year ended December 31, 2010, the Company's same office property cash NOI decreased 1%, excluding gross lease termination fees as compared to 2009. Including gross lease termination fees, same office property cash NOI decreased 2% for the year as compared to 2009.
Leasing - For the quarter ended December 31, 2010, 1.1 million square feet was renewed equating to an 84% renewal rate, at an average committed cost of $8.13 per square foot. Total rent on renewed space increased 3.3% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and decreased 4.6% on a cash basis. For renewed and retenanted space of 1.5 million square feet, total straight-line rent increased 3.7% and total rent on a cash basis decreased 4.5%. The average committed cost for renewed and retenanted space was $14.02 per square foot.
For the year, 2.5 million square feet was renewed equating to a 68% renewal rate, at an average capital cost of $7.84 per square foot. Total rent on renewed space increased 3.3% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and decreased 4.8% on a cash basis. For the year, 3.2 million square feet was renewed and retenanted. Total straight-line rent for renewed and retenanted space increased 2.3% and total rent on a cash basis decreased 5.6%. The average committed cost for renewed and retenanted space was $11.72 per square foot. The Company recognized lease termination fees of $3.4 million, net of write-offs of related straight-line rents and above- and below-market leases for the year ended December 31, 2010, as compared to $4.6 million for the year ended December 31, 2009.
Investment Activity:
Developments - At December 31, 2010, the Company had 3.2 million square feet under construction, development and redevelopment for a total projected cost of $698.5 million.
The Company controlled land at December 31, 2010 of 2,252 acres that can support up to 21.8 million square feet of development.
During the year, the Company entered two new submarkets by:
-- Completing the formation of LW Redstone Company, LLC, a joint venture
created to develop Redstone Gateway, a 468 acre land parcel adjacent to
Redstone Arsenal in Huntsville, Alabama. The land is owned by the U.S.
Government and is under a long term master lease to the joint venture
through the Enhanced Use Lease program. The joint venture will work
closely with Redstone Arsenal to create a business park that will total
approximately 4.6 million square feet of office and retail space when
completed, including 4.4 million square feet of Class A office space. In
addition, the business park will include hotel and other amenities. The
Company is the managing partner of the joint venture with a controlling
interest and responsibility for development, leasing and management of
the office space at Redstone Gateway. Development and construction of
Redstone Gateway is expected to take place over a 15 to 20 year period.
-- Acquiring 15 acres and the development potential of up to 978,000 square
feet in the Northern Virginia submarket of Springfield. This project,
known as Patriot Ridge, is adjacent to the new 2.4 million square foot
National Geospatial Intelligence Agency (NGA) headquarters currently
under construction at Fort Belvoir, the beneficiary of the largest BRAC
gain of any military installation in the country.
Acquisitions - For 2010, the Company completed the following acquisitions totaling $317 million:
-- 152,000 square foot building for $40 million, located at 1550 Westbranch
Drive in McLean, Virginia. The building is 100% leased to The MITRE
Corporation.
-- 233,000 square foot wholesale data center known as Power Loft @
Innovation in Manassas, Virginia for $115.5 million. The shell of the
data center was completed in early 2010 and the property was 17% leased,
long term, on the acquisition date to two tenants who have a combined
initial critical load of 3 megawatts and further expansion rights of up
to a combined 5 megawatts. The Company expects to eventually complete
the remaining development with an initial stabilization at 18 megawatts
with additional development costs estimated upon acquisition at $166
million. Full critical load of the property is expected to be up to 30
megawatts.
-- 362,000 square feet in two Class A office buildings known as Maritime
Plaza I and II in the Capitol Riverfront submarket of Washington, DC for
approximately $119 million. In connection with the acquisition, we
assumed a $70.1 million mortgage loan with a fixed interest rate of
5.35% that matures in March 2014. The buildings are subject to ground
leases that expire in 2099 and 2100. The buildings are 100% leased with
over 50% of the space leased to investment grade tenants in the
Company's targeted niche, such as Computer Sciences Corporation, General
Dynamics and SAIC.
-- 183,000 square foot, shell-complete, office building for $43 million,
located at 3120 Fairview Park Drive in Falls Church, Virginia.
Dispositions - During the year, the Company sold two properties in Dayton, New Jersey totaling 201,000 square feet for $20.9 million and recognized a gain of $780,000. The Company also sold a contiguous land parcel for $3 million and recognized a gain of $2.5 million.
Financing and Capital Transactions:
The Company executed the following significant transactions during the year:
-- On April 7, 2010, the Company issued $240 million aggregate principal
amount of 4.25% Exchangeable Senior Notes due 2030. The notes have an
exchange settlement feature that provides that the notes may, under
certain circumstances, be exchangeable for cash and our common shares at
an initial exchange rate (subject to adjustment) of 20.7658 shares for
$1,000 principal amount of the notes (equivalent to an exchange price of
$48.16 per common share, a 20% premium over the closing price on the
NYSE on the transaction pricing date). On or after April 20, 2015, the
Company may redeem the notes in cash, in whole or in part, on each of
April 15, 2015, April 15, 2020 and April 15, 2025, or in the event of a
"fundamental change," as defined under the terms of the notes. The
Company used the proceeds for general corporate purposes, including
repayment of borrowings under its unsecured revolving credit facility.
-- On November 5, 2010, the Company issued 7.5 million common shares at a
public offering price of $34.25 per share for net proceeds of $245.8
million after underwriting discounts but before offering expenses. The
Company used the proceeds to pay down the Company's unsecured revolving
credit facility and for general corporate purposes.
-- During 2010, the Company increased its revolving credit facility by $200
million, from $600 million to $800 million.
Balance Sheet and Financial Flexibility:
As of December 31, 2010, the Company had a total market capitalization of $5 billion, with $2.3 billion in debt outstanding, equating to a 46% debt-to-total market capitalization ratio. Also, the Company's weighted average interest rate was 4.9% for the quarter ended December 31, 2010 and the Company had 78% of the total debt subject to fixed interest rates as of December 31, 2010.
For the year 2010, the Company's EBITDA to interest expense coverage ratio was 3.01x, and the EBITDA fixed charge coverage ratio was 2.54x. Accounting for construction in progress, the Company's adjusted debt to EBITDA ratio was 6.08x as of December 31, 2010.
Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the tables that follow the text of this press release.
Shareholder Return:
For 2010, the Company's total shareholder return was essentially flat, lagging the NAREIT office sector and the Morgan Stanley REIT Index (RMS). However, for the three years ended December 31, 2010, the Company achieved the second highest total return among all office REITs. Additionally, the Company's 456% total return for the last ten years ranks first among all office REITs and fourteenth among all equity REITs, based on numbers compiled by NAREIT as of December 31, 2010.
Conference Call:
The Company will hold an investor/analyst conference call:
Conference Call Date: Thursday, February 10, 2011 Time: 11:00 a.m. Eastern Time Telephone Number: (within the U.S.) 888-679-8035 Telephone Number: (outside the U.S.) 617-213-4848 Passcode: 74089715
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=PRQDHQKKG
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 Thursday, February 10 at 2:00 p.m. Eastern Time through Thursday, February 24 at midnight Eastern Time. To access the replay within in the United States, please call 888-286-8010 and use passcode 71577427. To access the replay outside the United States, please call 617-801-6888 and use passcode 71577427.
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:
Please refer to our Form 8-K or our website (www.copt.com) for definitions of certain terms used in this press release. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.
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 271 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, 2009.
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
Revenues
Real estate revenues $ 123,765 $ 108,737 $ 459,800 $ 423,984
Construction contract and 27,637 69,553 104,675 343,087
other service revenues
Total revenues 151,402 178,290 564,475 767,071
Expenses
Property operating expenses 47,019 42,567 179,419 157,154
Depreciation and
amortization associated 35,347 27,261 123,236 108,529
with real estate operations
Construction contract and 27,154 68,230 102,302 336,519
other service expenses
General and administrative 6,103 5,965 24,008 23,240
expenses
Business development 691 2,149 4,197 3,699
expenses
Total operating expenses 116,314 146,172 433,162 629,141
Operating income 35,088 32,118 131,313 137,930
Interest expense (26,878 ) (23,273 ) (101,865 ) (82,187 )
Interest and other income 7,626 215 9,568 5,164
Income from continuing
operations before equity in
income (loss) of 15,836 9,060 39,016 60,907
unconsolidated entities and
income taxes
Equity in income (loss) of 1,005 134 1,376 (941 )
unconsolidated entities
Income tax expense (33 ) (27 ) (108 ) (196 )
Income from continuing 16,808 9,167 40,284 59,770
operations
Discontinued operations (56 ) 379 2,391 1,529
Income before gain on sales 16,752 9,546 42,675 61,299
of real estate
Gain on sales of real - - 2,829 -
estate, net of income taxes
Net income 16,752 9,546 45,504 61,299
Less net income
attributable to
noncontrolling interests
Common units in the (862 ) (463 ) (2,116 ) (4,495 )
Operating Partnership
Preferred units in the (165 ) (165 ) (660 ) (660 )
Operating Partnership
Other consolidated entities (201 ) 170 32 185
Net income attributable to 15,524 9,088 42,760 56,329
COPT
Preferred share dividends (4,026 ) (4,026 ) (16,102 ) (16,102 )
Net income attributable to $ 11,498 $ 5,062 $ 26,658 $ 40,227
COPT common shareholders
Earnings per share "EPS"
computation:
Numerator for diluted EPS:
Net income attributable to $ 11,498 $ 5,062 $ 26,658 $ 40,227
common shareholders
Amount allocable to (264 ) (247 ) (1,071 ) (1,010 )
restricted shares
Numerator for diluted EPS 11,234 4,815 25,587 39,217
Denominator:
Weighted average common 63,404 57,604 59,611 55,930
shares - basic
Dilutive effect of
share-based compensation 236 413 333 477
awards
Weighted average common 63,640 58,017 59,944 56,407
shares - diluted
Diluted EPS $ 0.18 $ 0.08 $ 0.43 $ 0.70
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
Net income $ 16,752 $ 9,546 $ 45,504 $ 61,299
Add: Real estate-related
depreciation and 35,347 27,475 123,243 109,386
amortization
Add: Depreciation and
amortization on 119 159 631 640
unconsolidated real estate
entities
Less: Gain on sales of
previously depreciated 4 - (1,077 ) -
operating properties, net
of income taxes
Funds from operations 52,222 37,180 168,301 171,325
("FFO")
Less: Noncontrolling
interests - preferred units (165 ) (165 ) (660 ) (660 )
in the Operating
Partnership
Less: Noncontrolling
interests - other (201 ) 170 32 185
consolidated entities
Less: Preferred share (4,026 ) (4,026 ) (16,102 ) (16,102 )
dividends
Less: Depreciation and
amortization allocable to (157 ) (242 ) (1,402 ) (493 )
noncontrolling interests in
other consolidated entities
Less: Basic and diluted FFO
allocable to restricted (446 ) (331 ) (1,524 ) (1,629 )
shares
Basic and diluted FFO
available to common share 47,227 32,586 148,645 152,626
and common unit holders
("Basic and diluted FFO")
Less: Straight line rent (2,047 ) 1,676 (4,599 ) (3,847 )
adjustments
Less: Amortization of
acquisition intangibles (231 ) (679 ) (691 ) (2,126 )
included in net operating
income
Less: Recurring capital (15,960 ) (13,900 ) (39,407 ) (31,738 )
expenditures
Add: Amortization of
discount on Exchangeable 1,503 772 5,314 2,955
Senior Notes, net of
amounts capitalized
Operating property 470 1,967 3,424 1,967
acquisition costs
Diluted adjusted funds from
operations available to
common share and common $ 30,962 $ 22,422 $ 112,686 $ 119,837
unit holders ("Diluted
AFFO")
Weighted average shares
Weighted average common 63,404 57,604 59,611 55,930
shares
Conversion of weighted 4,412 5,078 4,608 5,717
average common units
Weighted average common
shares/units - basic FFO 67,816 62,682 64,219 61,647
per share
Dilutive effect of
share-based compensation 236 413 333 477
awards
Weighted average common
shares/units - diluted FFO 68,052 63,095 64,552 62,124
per share
Diluted FFO per share $ 0.69 $ 0.52 $ 2.30 $ 2.46
Diluted FFO per share,
excluding operating $ 0.70 $ 0.55 $ 2.36 $ 2.49
property acquisition costs
Dividends/distributions per $ 0.4125 $ 0.3925 $ 1.6100 $ 1.5300
common share/unit
Diluted FFO payout ratio,
excluding operating 61.7 % 72.0 % 69.6 % 61.8 %
property acquisition costs
Diluted AFFO payout ratio 95.0 % 110.9 % 93.9 % 79.7 %
EBITDA interest coverage 3.36x 2.85x 3.01x 3.40x
ratio
EBITDA fixed charge 2.86x 2.38x 2.54x 2.78x
coverage ratio
Debt to EBITDA ratio (1) 7.29x 8.41x
Adjusted debt to EBITDA 6.08x 7.30x
ratio (2)
Reconciliation of
denominators for diluted
EPS and diluted FFO per
share
Denominator for diluted EPS 63,640 58,017 59,944 56,407
Weighted average common 4,412 5,078 4,608 5,717
units
Denominator for diluted FFO 68,052 63,095 64,552 62,124
per share
(1) Represents debt divided by EBITDA for the three month period multiplied by
four.
(2) Represents debt adjusted to subtract construction in progress as of period
end divided by EBITDA for the three month period multiplied by four.
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)
December 31, December 31,
2010 2009
Balance Sheet Data (in
thousands) (as of period
end)
Properties, net of $ 3,445,455 $ 3,029,900
accumulated depreciation
Total assets 3,844,517 3,380,022
Debt, net 2,323,681 2,053,841
Total liabilities 2,521,379 2,259,390
Beneficiaries' equity 1,323,138 1,120,632
Debt to total assets 60.4 % 60.8 %
Debt to undepreciated book
value of real estate 57.2 % 57.8 %
assets
Debt to total market 46.1 % 44.6 %
capitalization
Property Data (wholly
owned office properties)
(as of period end)
Number of operating 252 245
properties owned
Total net rentable square 19,990 19,086
feet owned (in thousands)
Occupancy 88.2 % 90.8 %
Reconciliation of
denominator for debt to
total assets to
denominator for debt to
undepreciated book value
of
real estate assets
Denominator for debt to $ 3,844,517 $ 3,380,022
total assets
Assets other than assets
included in properties, (399,062 ) (350,122 )
net
Accumulated depreciation 503,032 422,612
on real estate assets
Intangible assets on real 113,735 100,671
estate acquisitions, net
Denominator for debt to
undepreciated book value $ 4,062,222 $ 3,553,183
of real estate assets
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
Reconciliation of tenant
improvements and
incentives, capital
improvements and leasing
costs for operating
properties to
recurring capital
expenditures
Total tenant improvements
and incentives on $ 8,761 $ 2,359 $ 25,251 $ 13,931
operating properties
Total capital improvements 6,879 9,475 10,990 16,270
on operating properties
Total leasing costs on 4,573 2,801 9,265 7,232
operating properties
Less: Nonrecurring tenant
improvements and (3,003 ) (851 ) (4,283 ) (3,631 )
incentives on operating
properties
Less: Nonrecurring capital
improvements on operating (1,342 ) (117 ) (1,866 ) (1,457 )
properties
Less: Nonrecurring leasing
costs incurred on 10 (186 ) (59 ) (1,102 )
operating properties
Add: Recurring capital
expenditures on operating 82 419 109 495
properties held through
joint ventures
Recurring capital $ 15,960 $ 13,900 $ 39,407 $ 31,738
expenditures
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
Reconciliation of common
share dividends to
dividends and
distributions for payout
ratios
Common share dividends $ 27,597 $ 22,884 $ 98,510 $ 87,596
Common unit 1,816 1,988 7,266 7,962
distributions
Dividends and
distributions for payout $ 29,413 $ 24,872 $ 105,776 $ 95,558
ratios
Reconciliation of
diluted FFO to diluted
FFO available to common
share and common
unit holders, excluding
operating property
acquisition costs
Diluted FFO $ 47,227 $ 32,586 $ 148,645 $ 152,626
Operating property 470 1,967 3,424 1,967
acquisition costs
Diluted FFO available to
common share and common
unit holders, excluding $ 47,697 $ 34,553 $ 152,069 $ 154,593
operating property
acquisition costs
Reconciliation of GAAP
net income to earnings
before interest,
income taxes,
depreciation and
amortization ("EBITDA")
Net income $ 16,752 $ 9,546 $ 45,504 $ 61,299
Interest expense on 26,878 23,273 101,865 82,187
continuing operations
Interest expense on - 59 263 233
discontinued operations
Income tax expense 33 27 119 196
Real estate-related
depreciation and 35,347 27,475 123,243 109,386
amortization
Depreciation of
furniture, fixtures and 642 676 2,576 2,425
equipment
EBITDA $ 79,652 $ 61,056 $ 273,570 $ 255,726
Reconciliation of
interest expense from
continuing operations
to the denominators for
interest coverage-EBITDA
and fixed charge
coverage-EBITDA
Interest expense from $ 26,878 $ 23,273 $ 101,865 $ 82,187
continuing operations
Interest expense from - 59 263 233
discontinued operations
Less: Amortization of (1,696 ) (1,125 ) (5,871 ) (4,214 )
deferred financing costs
Less: Amortization of
discount on Exchangeable (1,503 ) (772 ) (5,314 ) (2,955 )
Senior Notes, net of
amounts capitalized
Denominator for interest 23,679 21,435 90,943 75,251
coverage-EBITDA
Preferred share 4,026 4,026 16,102 16,102
dividends
Preferred unit 165 165 660 660
distributions
Denominator for fixed $ 27,870 $ 25,626 $ 107,705 $ 92,013
charge coverage-EBITDA
Reconciliation of same
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 $ 63,734 $ 62,642 $ 249,104 $ 257,096
operating income
Less: Straight-line rent (433 ) 640 (137 ) (3,305 )
adjustments
Less: Amortization of
deferred market rental (661 ) (623 ) (2,145 ) (1,983 )
revenue
Same office property
cash net operating $ 62,640 $ 62,659 $ 246,822 $ 251,808
income
Less: Lease termination (2,059 ) (347 ) (3,632 ) (5,531 )
fees, gross
Same office property
cash net operating $ 60,581 $ 62,312 $ 243,190 $ 246,277
income, excluding gross
lease termination fees
Reconciliation of debt,
net to denominator for
adjusted debt to EBITDA
ratio
Debt, net $ 2,323,681 $ 2,053,841
Less: Construction in (386,195 ) (270,376 )
progress
Denominator for adjusted $ 1,937,486 $ 1,783,465
debt to EBITDA ratio
Top Twenty Tenants of Wholly Owned Office Properties as of December 31, 2010 (1)
(Dollars in thousands)
Percentage Total Percentage Weighted
of
Total Total Annualized of Total Average
Number Occupied Occupied Rental Annualized Remaining
of Rental
Tenant Leases Square Square Revenue Revenue Lease
Feet Feet (2) (3) Term (4)
United States (5) 74 3,133,808 17.8% $95,049 21.1% 6.2
of America
Northrop
Grumman (6) 17 1,259,167 7.1% 32,857 7.3% 6.6
Corporation
Booz Allen 8 726,070 4.1% 21,311 4.7% 4.5
Hamilton, Inc.
Computer
Sciences (6) 6 612,024 3.5% 18,788 4.2% 3.1
Corporation
ITT (6) 9 333,169 1.9% 8,095 1.8% 4.1
Corporation
The MITRE 4 260,348 1.5% 8,044 1.8% 5.8
Corporation
The Aerospace (6) 3 247,253 1.4% 7,763 1.7% 4.1
Corporation
CareFirst, 2 221,893 1.3% 7,661 1.7% 5.8
Inc.
Wells Fargo & (6) 6 215,620 1.2% 7,484 1.7% 7.4
Company
L-3
Communications (6) 4 256,120 1.5% 7,484 1.7% 3.3
Holdings, Inc.
Integral (6) 4 241,627 1.4% 6,205 1.4% 9.1
Systems, Inc.
Comcast (6) 7 308,332 1.7% 6,131 1.4% 2.8
Corporation
The Boeing (6) 5 192,719 1.1% 5,875 1.3% 3.9
Company
AT&T (6) 5 321,063 1.8% 5,490 1.2% 7.8
Corporation
Ciena 5 263,724 1.5% 4,956 1.1% 2.2
Corporation
General
Dynamics (6) 5 174,719 1.0% 4,679 1.0% 2.7
Corporation
Unisys 1 156,695 0.9% 4,143 0.9% 9.4
Corporation
The Johns
Hopkins (6) 5 140,837 0.8% 3,674 0.8% 5.9
Institutions
Merck & Co., (6) 2 225,894 1.3% 2,950 0.7% 1.6
Inc.
First Mariner (6) 2 75,461 0.4% 2,929 0.7% 5.7
Bank
Subtotal Top
20 Office 174 9,366,543 53.1% 261,568 58.1% 5.5
Tenants
All remaining 709 8,260,979 46.9% 189,000 41.9% 3.9
tenants
Total/Weighted 883 17,627,522 100.0% $450,568 100.0% 4.9
Average
Table excludes owner occupied leasing activity which represents 170,855
(1) square feet with total annualized rental revenue of $4.0 million, and a
weighted average remaining lease term of 4.9 years as of December 31, 2010.
Total Annualized Rental Revenue is the monthly contractual base rent as of
(2) December 31, 2010, multiplied by 12, plus the estimated annualized expense
reimbursements under existing office leases.
(3) Order of tenants is based on Total Annualized Rental Revenue.
(4) The weighting of the lease term was computed using Total Rental Revenue.
(5) Many of our government leases are subject to early termination provisions
which are customary to government leases.
The weighted average remaining lease term was computed assuming no exercise
of such early termination rights.
(6) Includes affiliated organizations or agencies.
Source: Corporate Office Properties Trust
Released February 9, 2011