Corporate Office Properties Trust Reports Strong 2008 Year End Results
COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (COPT) (NYSE:OFC) announced today financial and operating results for the full year and quarter ended December 31, 2008.
Shareholder Return
The Company's shareholders earned a total return of 2% for the year 2008, the highest among all publicly traded office REITs and the ninth highest among all equity REITs. For the past ten years, the Company's shareholders earned a total return of 648%, the highest ten year return among all equity REITs based on numbers compiled by NAREIT as of December 31, 2008.
2008 Highlights
-- 18% increase in Diluted Funds from Operations ("Diluted FFO") per share
to $2.64 for the year ended 2008 from $2.24 for 2007. Included in the
2008 Diluted FFO was a $10.4 million gain recognized for the repurchase
of a $37.5 million aggregate principal amount of 3.5% Exchangeable
Senior Notes. Excluding this gain, 2008 Diluted FFO per share would have
been $2.46, representing a year over year increase of 10%.
-- 123% increase in diluted earnings per share ("Diluted EPS") to $.87 for
the year ended 2008 as compared to $.39 per diluted share for the year
ended 2007. Included in 2008 net income was a $10.4 million gain
recognized for the repurchase of a $37.5 million aggregate principal
amount of 3.5% Exchangeable Senior Notes. Excluding this gain, 2008 net
income would have been $.69 per share, representing a year over year
increase of 77%.
-- 23% increase in Adjusted Funds from Operations ("AFFO") diluted to
$111.8 million for the year ended 2008 as compared to $90.8 million for
the year ended 2007.
-- 55% Diluted FFO payout ratio and 74% Diluted AFFO payout ratio for the
year.
-- 524,000 square feet in 9 development properties placed into service,
with 2 of the properties containing an aggregate of 89,000 square feet
placed into service during 2007. The space placed in service in these
properties was 87.5% leased at December 31, 2008.
-- 642,000 square feet of space under construction and development leased.
-- 93.2% occupied and 93.7% leased for our wholly-owned portfolio as of
December 31, 2008.
-- $139.2 million of net proceeds raised through the issuance of 3.7
million common shares at a public offering price of $39.00 per share.
-- 78% renewal rate on expiring leases for the year, 1.9 million square
feet renewed with an average capital cost of $7.12 per square foot.
-- 4% increase in same office property cash NOI for the year, excluding the
effect of a $2.3 million reduction in lease termination fees. Including
the effect of lower lease termination fees, same office property cash
NOI increased 3% for the year. The Company's same office portfolio for
the year ended December 31, 2008 represents 80% of the rentable square
feet of its consolidated portfolio and consists of 162 properties.
-- 10% increase of quarterly common dividend in September 2008.
"We had excellent FFO growth in 2008 and are well positioned for continued growth in 2009. We have conservatively planned for a recession in our guidance," stated Randall M. Griffin, President and Chief Executive Officer, Corporate Office Properties Trust. "The Company is fortunate to begin 2009 with strong financial flexibility, a healthy capital position and a development pipeline, totally concentrated in the U.S. Government and Defense Information Technology sector where we continue to see strong demand," he stated.
Financial Results
Revenues from real estate operations for the year ended December 31, 2008 were $399.6 million, as compared to the year ended December 31, 2007 of $365.9 million.
As of December 31, 2008, the Company had a total market capitalization of $3.9 billion, with $1.9 billion in debt outstanding, equating to a 48% debt-to-total market capitalization ratio.
As of December 31, 2008, the Company's weighted average interest rate was 5% and the Company had 74% of the total debt subject to fixed interest rates.
For the fourth quarter 2008, the Company's EBITDA to interest expense coverage ratio was 3.7x, and the EBITDA fixed charge coverage ratio was 3.1x.
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.
Operating Results
At December 31, 2008, the Company's wholly-owned portfolio of 238 office properties totaled 18.5 million square feet. The weighted average remaining lease term for the portfolio was 4.8 years and the average rental rate (including tenant reimbursements) was $22.40 per square foot.
For the year, 1.9 million square feet was renewed equating to a 78% renewal rate, at an average committed cost of $7.12 per square foot. Total rent on renewed space increased 16% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and increased 6% on a cash basis. For renewed and retenanted space of 2.3 million square feet, total straight-line rent increased 12% and total rent on a cash basis increased 3%. The average committed cost for renewed and retenanted space was $9.25 per square foot.
For the quarter ended December 31, 2008, 315,000 square feet was renewed equating to a 79% renewal rate, at an average committed cost of $10.38 per square foot. Total rent on renewed space increased 5% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and decreased 3% on a cash basis. For renewed and retenanted space of 347,000 square feet, total straight-line rent increased 5% and total rent on a cash basis decreased 3%. The average committed cost for renewed and retenanted space was $11.08 per square foot.
The Company recognized lease termination fees of $481,000, net of write-offs of related straight-line rents and write-off of previously unamortized deferred market revenue for the year ended December 31, 2008, as compared to $4.1 million for the year ended December 31, 2007, representing a decrease of 88%.
For the fourth quarter 2008, the Company recognized lease termination fees of $183,000, net of write-offs of related straight-line rents and accretion of intangible assets and liabilities, as compared to $578,000 in the fourth quarter 2007, representing a decrease of 68%.
During 2008, the Company signed leases for 375,000 square feet of space at the Unisys Campus in Blue Bell, Pennsylvania. Included in this total are the following:
-- a new lease with Merck, Inc. to continue occupancy of the entire 219,000
square foot property located at 785 Jolly Road.
-- a renewal of Unisys Corporation for 156,000 square feet representing 75%
of the property located at 760 Jolly Road.
Development Activity
At December 31, 2008, the Company had 2.3 million square feet under construction, development and redevelopment for a total projected cost of $464.9 million.
The Company's land inventory (wholly-owned and joint venture) at December 31, 2008 totaled 1,885 acres that can support 17.0 million square feet of development.
The Company completed the formation of M Square Associates, LLC, a joint venture in which the Company holds a 45% economic interest, located adjacent to the University of Maryland campus in College Park, Maryland. The venture will develop, ground lease and manage the office buildings totaling approximately 750,000 square feet, including 222,000 square feet under construction at December 31, 2008 that is 77% leased.
Acquisition Activity
During the year, the Company acquired 3 buildings totaling 247,000 square feet for $40.5 million.
Included in these totals, are the following assets:
-- 124,000 square foot property for $23.2 million, located in the Colorado
Springs Airport Business Park, known as Cresterra, at 3535 Northrop
Grumman Point in Colorado Springs, Colorado, 100% leased long term to
Northrop Grumman Corporation.
-- 123,000 square feet in two properties for $17.3 million, located at 1560
Cable Ranch Road, known collectively as 151 Technology Center in San
Antonio, Texas, 100% leased long term to Sears, Air Force Federal Credit
Union and AFNI.
Disposition Activity
During the year, the Company sold 223,000 square feet in 3 buildings for $25.3 million and realized gains of $2.6 million. The buildings were located in the Company's New Jersey and Baltimore County submarkets.
Financing and Capital Transactions
The Company executed the following transactions during the year:
-- Closed on a $221.4 million loan requiring interest only payments for the
term at variable rate of LIBOR plus 225 basis points. The loan has a
four year term with an option to extend by an additional year.
-- Closed on a $225.0 million construction loan facility that will be used
to fund most of the Company's construction costs over the next several
years. The facility has a three year term with a one year extension
option, and requires interest only payments throughout the term.
-- Repurchased a $37.5 million aggregate principal amount in the Company's
3.5% Exchangeable Senior Notes for $26.7 million, recognizing a gain of
$10.4 million during the fourth quarter 2008.
Subsequent Events
The Company executed the following transactions subsequent to quarter end:
-- 54,000 square feet of the 82,000 square foot property to be constructed
at North Gate Business Park in Aberdeen, Maryland was leased long-term
to The MITRE Corporation.
-- 67,000 square feet of the 175,000 square foot property located at 2900
Towerview Road in Herndon, Virginia was leased long-term to Qwest
Corporation, bringing the property to 100% leased.
Earnings Guidance
The Company revised its 2009 EPS guidance from a range of $.77 to $.85 (adjusted for the change in accounting for interest on convertible debt effective January 1, 2009) to a range of $.73 to $.83 per diluted share.
The Company revised its 2009 FFO per share guidance from a range of $2.52 to $2.60 to a range of $2.48 to $2.58, representing growth of 4% to 8% compared to 2008 diluted FFO per share, as adjusted, of $2.39 (which includes a reduction of $.07 per share for the change in accounting for interest on convertible debt effective January 1, 2009).
Conference Call
The Company will hold an investor/analyst conference call:
Conference Call (within the United States) Date: Thursday, February 12, 2009 Time: 11:00 a.m. Eastern Time Telephone Number: 888-679-8018 Passcode: 33600894 Conference Call (outside the United States) Date: Thursday, February 12, 2009 Time: 11:00 a.m. Eastern Time Telephone Number: 617-213-4845 Passcode: 33600894
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=P8Y7M99DB
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 12 at 3:00 p.m. Eastern Time through Thursday, February 26 at midnight Eastern Time. To access the replay within in the United States, please call 888-286-8010 and use passcode 41186431. To access the replay outside the United States, please call 617-801-6888 and use passcode 41186431.
The conference call 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 call 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 on strategic customer relationships and specialized tenant requirements in the U.S. Government, Defense Information Technology and Data sectors. The Company acquires, develops, manages and leases properties which are typically concentrated in large office parks primarily located adjacent to government demand drivers and/or in growth corridors. As of December 31, 2008, the Company owned 256 office and data properties totaling 19.2 million rentable square feet, which includes 18 properties totaling 769,000 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. More information on COPT 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", "expect", "estimate" 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:
-- the Company's ability to borrow on favorable terms;
-- 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;
-- 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;
-- 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 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2007.
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Three Months Ended
December 31,
2008 2007
Revenues
Real estate revenues $ 103,599 $ 94,352
Service operations revenues 65,345 8,498
Total revenues 168,944 102,850
Expenses
Property operating expenses 36,786 31,090
Depreciation and other amortization associated with 27,290 25,889
real estate operations
Service operations expenses 64,052 8,330
General and administrative expenses 7,257 5,758
Total operating expenses 135,385 71,067
Operating income 33,559 31,783
Interest expense (20,512 ) (21,689 )
Interest and other income 1,146 215
Gain on sales of non-real estate investments 10,376 -
Income from continuing operations before equity in
income (loss) of unconsolidated entities, income taxes 24,569 10,309
and minority interests
Equity in income (loss) of unconsolidated entities 20 (27 )
Income tax expense (99 ) (89 )
Income from continuing operations before minority 24,490 10,193
interests
Minority interests in income from continuing (3,019 ) (1,049 )
operations
Income from continuing operations 21,471 9,144
Income from discontinued operations, net - 424
Income before gain on sales of real estate 21,471 9,568
Gain on sales of real estate, net - 361
Net income 21,471 9,929
Preferred share dividends (4,026 ) (4,025 )
Net income available to common shareholders $ 17,445 $ 5,904
Earnings per share "EPS" computation
Numerator $ 17,445 $ 5,904
Denominator:
Weighted average common shares - basic 51,120 46,947
Dilutive effect of share-based compensation awards 640 914
Weighted average common shares - diluted 51,760 47,861
EPS
Basic $ 0.34 $ 0.13
Diluted $ 0.34 $ 0.12
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Three Months Ended
December 31,
2008 2007
Net income $ 21,471 $ 9,929
Add: Real estate-related depreciation and amortization 27,290 26,607
Add: Depreciation and amortization on unconsolidated 159 163
real estate entities
Less: Depreciation and amortization allocable to (72 ) (51 )
minority interests in other consolidated entities
Gain on sales of real estate, excluding development - (1,049 )
portion
Funds from operations ("FFO") 48,848 35,599
Add: Minority interests-common units in the Operating 2,814 1,258
Partnership
Less: Preferred share dividends (4,026 ) (4,025 )
Basis and diluted funds from operations ("Basic and 47,636 32,832
Diluted FFO")
Less: Straight-line rent adjustments (1,927 ) (2,680 )
Less: Recurring capital expenditures (8,682 ) (6,504 )
Less: Amortization of deferred market rental revenue (606 ) (416 )
Diluted adjusted funds from operations ("Diluted AFFO") $ 36,421 $ 23,232
Weighted average shares
Weighted average common shares 51,120 46,947
Conversion of weighted average common units 7,993 8,167
Weighted average common shares/units - basic FFO per 59,113 55,114
share
Dilutive effect of share-based compensation awards 640 914
Weighted average common shares/units - diluted FFO per 59,753 56,028
share
Diluted FFO per share $ 0.80 $ 0.59
Dividends/distributions per common share/unit $ 0.3725 $ 0.3400
Earnings payout ratio 110.5 % 272.6 %
Diluted FFO payout ratio 46.7 % 57.5 %
Diluted AFFO payout ratio 61.0 % 81.2 %
EBITDA interest coverage ratio 3.74x 2.95x
EBITDA fixed charge coverage ratio 3.08x 2.45x
Reconciliation of denominators for diluted EPS and
diluted FFO per share
Denominator for diluted EPS 51,760 47,861
Weighted average common units 7,993 8,167
Denominator for diluted FFO per share 59,753 56,028
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Year Ended
December 31,
2008 2007
Revenues
Real estate revenues $ 399,633 $ 365,914
Service operations revenues 188,385 41,225
Total revenues 588,018 407,139
Expenses
Property operating expenses 141,139 123,258
Depreciation and other amortization associated with 102,720 104,700
real estate operations
Service operations expenses 184,142 39,793
General and administrative expenses 25,329 21,704
Total operating expenses 453,330 289,455
Operating income 134,688 117,684
Interest expense (83,646 ) (85,576 )
Interest and other income 2,070 3,030
Gain on early extinguishment of debt 10,376 -
Income from continuing operations before equity in
loss of unconsolidated entities, income taxes and 63,488 35,138
minority interests
Equity in loss of unconsolidated entities (147 ) (224 )
Income tax expense (201 ) (569 )
Income from continuing operations before minority 63,140 34,345
interests
Minority interests in income from continuing (7,488 ) (3,331 )
operations
Income from continuing operations 55,652 31,014
Income from discontinued operations, net 2,179 2,210
Income before gain on sales of real estate 57,831 33,224
Gain on sales of real estate, net 837 1,560
Net income 58,668 34,784
Preferred share dividends (16,102 ) (16,068 )
Net income available to common shareholders $ 42,566 $ 18,716
Earnings per share "EPS" computation
Numerator $ 42,566 $ 18,716
Denominator:
Weighted average common shares - basic 48,132 46,527
Dilutive effect of share-based compensation awards 733 1,103
Weighted average common shares - diluted 48,865 47,630
EPS
Basic $ 0.88 $ 0.40
Diluted $ 0.87 $ 0.39
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Year Ended
December 31,
2008 2007
Net income $ 58,668 $ 34,784
Add: Real estate-related depreciation and amortization 102,772 106,260
Add: Depreciation and amortization on unconsolidated 648 666
real estate entities
Less: Depreciation and amortization allocable to (270 ) (188 )
minority interests in other consolidated entities
Gain on sales of real estate, excluding development (2,630 ) (3,827 )
portion
FFO 159,188 137,695
Add: Minority interests-common units in the Operating 7,315 3,682
Partnership
Less: Preferred share dividends (16,102 ) (16,068 )
Basic and Diluted FFO 150,401 125,309
Less: Straight-line rent adjustments (10,211 ) (11,722 )
Less: Recurring capital expenditures (26,293 ) (20,835 )
Less: Amortization of deferred market rental revenue (2,064 ) (1,985 )
Diluted AFFO $ 111,833 $ 90,767
Weighted average shares
Weighted average common shares 48,132 46,527
Conversion of weighted average common units 8,107 8,296
Weighted average common shares/units - basic FFO per 56,239 54,823
share
Dilutive effect of share-based compensation awards 733 1,103
Weighted average common shares/units - diluted FFO per 56,972 55,926
share
Diluted FFO per share $ 2.64 $ 2.24
Dividends/distributions per common share/unit $ 1.425 $ 1.300
Earnings payout ratio 166.4 % 327.7 %
Diluted FFO payout ratio 54.8 % 57.5 %
Diluted AFFO payout ratio 73.6 % 79.3 %
EBITDA interest coverage ratio 3.21x 2.82x
EBITDA fixed charge coverage ratio 2.65x 2.35x
Reconciliation of denominators for diluted EPS and
diluted FFO per share
Denominator for diluted EPS 48,865 47,630
Weighted average common units 8,107 8,296
Denominator for diluted FFO per share 56,972 55,926
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)
December 31, December 31,
2008 2007
Balance Sheet Data (in thousands) (as of period
end)
Investment in real estate, net of accumulated $ 2,776,889 $ 2,603,939
depreciation
Total assets 3,112,867 2,931,853
Debt 1,866,623 1,825,842
Total liabilities 2,041,688 1,979,116
Minority interests 137,865 130,095
Beneficiaries' equity 933,314 822,642
Debt to total assets 60.0 % 62.3 %
Debt to undepreciated book value of real estate 58.1 % 60.8 %
assets
Debt to total market capitalization 47.6 % 48.0 %
Property Data (wholly owned properties) (as of
period end)
Number of operating properties owned 238 228
Total net rentable square feet owned (in 18,462 17,832
thousands)
Occupancy 93.2 % 92.6 %
Reconciliation of denominator for debt to total
assets to denominator for debt to undepreciated
book value of real estate assets
Denominator for debt to total assets $ 3,112,867 $ 2,931,853
Assets other than assets included in investment in (335,978 ) (327,914 )
real estate
Accumulated depreciation on real estate assets 343,110 288,747
Intangible assets on real estate acquisitions, net 91,848 108,661
Denominator for debt to undepreciated book value $ 3,211,847 $ 3,001,347
of real estate assets
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Reconciliation of tenant
improvements and incentives,
capital improvements and
leasing costs for operating
properties to recurring capital
expenditures
Total tenant improvements and
incentives on operating $ 5,472 $ 2,692 $ 20,355 $ 21,487
properties
Total capital improvements on 4,434 4,748 11,261 11,230
operating properties
Total leasing costs on 1,269 1,850 4,033 7,562
operating properties
Less: Nonrecurring tenant
improvements and incentives on (1,615 ) (811 ) (5,692 ) (12,192 )
operating properties
Less: Nonrecurring capital
improvements on operating (836 ) (1,442 ) (3,503 ) (4,494 )
properties
Less: Nonrecurring leasing
costs incurred on operating (49 ) (575 ) (318 ) (2,856 )
properties
Add: Recurring improvements on
operating properties held 7 42 157 98
through joint ventures
Recurring capital expenditures $ 8,682 $ 6,504 $ 26,293 $ 20,835
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Reconciliation of dividends
for earnings payout ratio to
dividends and distributions
for FFO & AFFO payout ratio
Common share dividends for $ 19,283 $ 16,097 $ 70,836 $ 61,331
earnings payout ratio
Common unit distributions 2,946 2,777 11,510 10,682
Dividends and distributions $ 22,229 $ 18,874 $ 82,346 $ 72,013
for FFO & AFFO payout ratio
Reconciliation of diluted
AFFO and numerators for
diluted EPS and diluted FFO,
as reported, to diluted AFFO
and numerators for diluted
EPS and diluted FFO
excluding gain on early
extinguishment of debt
Numerator for diluted EPS, $ 17,445 $ 5,904 $ 42,566 $ 18,716
as reported
Less: Gain on early (10,376 ) - (10,376 ) -
extinguishment of debt
Add: Minority interests
share of gain on early 1,438 - 1,438 -
extinguishment of debt
Numerator for diluted EPS, $ 8,507 $ 5,904 $ 33,628 $ 18,716
as adjusted
Diluted EPS, as adjusted for
gain on early extinguishment $ 0.16 $ 0.12 $ 0.69 $ 0.39
of debt
Numerator for diluted FFO $ 47,636 $ 32,832 $ 150,401 $ 125,309
per share, as reported
Less: Gain on early (10,376 ) - (10,376 ) -
extinguishment of debt
Numerator for diluted FFO $ 37,260 $ 32,832 $ 140,025 $ 125,309
per share, as adjusted
Diluted FFO per share, as
adjusted for gain on early $ 0.62 $ 0.59 $ 2.46 $ 2.24
extinguishment of debt
Diluted AFFO, as reported $ 36,421 $ 23,232 $ 111,833 $ 90,767
Less: Gain on early (10,376 ) - (10,376 ) -
extinguishment of debt
Diluted AFFO, as adjusted $ 26,045 $ 23,232 $ 101,457 $ 90,767
Reconciliation of GAAP net
income to earnings before
interest, income taxes,
depreciation and
amortization ("EBITDA")
Net income $ 21,471 $ 9,929 $ 58,668 $ 34,784
Interest expense on 20,512 21,689 83,646 85,576
continuing operations
Interest expense on - 80 51 1,382
discontinued operations
Income tax expense 99 1,201 779 1,684
Real estate-related
depreciation and 27,290 26,607 102,772 106,260
amortization
Other depreciation and 393 358 1,570 1,365
amortization
Minority interests 3,019 1,391 8,147 4,220
EBITDA $ 72,784 $ 61,255 $ 255,633 $ 235,271
Reconciliation of interest
expense from continuing
operations to the
denominators for interest
coverage-EBITDA and fixed
charge coverage-EBITDA
Interest expense from $ 20,512 $ 21,689 $ 83,646 $ 85,576
continuing operations
Interest expense from - 80 51 1,382
discontinued operations
Less amortization of (1,073 ) (970 ) (3,955 ) (3,676 )
deferred financing costs
Denominator for interest 19,439 20,799 79,742 83,282
coverage-EBITDA
Preferred share dividends 4,026 4,025 16,102 16,068
Preferred unit distributions 165 165 660 660
Denominator for fixed charge $ 23,630 $ 24,989 $ 96,504 $ 100,010
coverage-EBITDA
Reconciliation of same
property net operating
income to same property cash
net operating income and
same property cash net
operating income, adjusted
for lease termination fees
Same property net operating $ 60,792 $ 60,641 $ 210,570 $ 207,792
income
Less: Straight-line rent (1,057 ) (2,025 ) (4,452 ) (7,081 )
adjustments
Less: Amortization of
deferred market rental (436 ) (342 ) (1,385 ) (1,902 )
revenue
Same property cash net $ 59,299 $ 58,274 $ 204,733 $ 198,809
operating income
Less: Lease termination (200 ) (688 ) (554 ) (2,891 )
fees, gross
Same property cash net
operating income, adjusted $ 59,099 $ 57,586 $ 204,179 $ 195,918
for lease termination fees
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Reconciliation of projected EPS-diluted to projected
diluted FFO per share
Year Ending
December 31,
2009
Low High
Reconciliation of numerators
Numerator for projected EPS-diluted $ 38,300 $ 43,475
Real estate-related depreciation and amortization (1) 105,600 105,600
Minority interests-common units 6,100 6,925
Numerator for projected diluted FFO per share $ 150,000 $ 156,000
Reconciliation of denominators
Denominator for projected EPS-diluted 52,600 52,600
Weighted average common units 7,900 7,900
Denominator for projected diluted FFO per share 60,500 60,500
Projected EPS - diluted $ 0.73 $ 0.83
Projected diluted FFO per share $ 2.48 $ 2.58
(1) The estimate of real estate-related depreciation and amortization excludes
any impact of potential write-offs resulting from lease terminations.
Top Twenty Office Tenants of Wholly Owned Properties as of December 31, 2008 (1)
(Dollars in thousands)
Percentage Total Percentage Weighted
Number Total of Annualized of Total Average
Tenant of Occupied Total Rental Annualized Remaining
Leases Square Occupied Revenue Rental Lease
Feet Square (2) (3) Revenue Term (4)
Feet
United States (5) 67 2,584,112 15.0% $66,782 17.3% 6.3
of America
Northrop
Grumman (6) 16 1,139,591 6.6% 28,375 7.4% 7.7
Corporation
Booz Allen 8 710,692 4.1% 19,985 5.2% 5.6
Hamilton, Inc.
Computer
Sciences (6) 4 454,645 2.6% 11,875 3.1% 2.6
Corporation
L-3
Communications (6) 5 267,354 1.6% 9,730 2.5% 5.3
Holdings, Inc.
Unisys (7) 5 760,145 4.4% 9,052 2.3% 4.7
Corporation
General
Dynamics (6) 10 293,329 1.7% 7,753 2.0% 1.6
Corporation
The Aerospace 3 245,598 1.4% 7,301 1.9% 6.1
Corporation
ITT (6) 9 290,312 1.7% 6,820 1.8% 5.5
Corporation
Wachovia (6) 4 183,577 1.1% 6,622 1.7% 9.6
Corporation
Comcast (6) 11 342,266 2.0% 6,514 1.7% 3.2
Corporation
AT&T (6) 8 306,988 1.8% 5,692 1.5% 4.5
Corporation
The Boeing (6) 4 143,480 0.8% 4,241 1.1% 4.7
Company
Ciena 4 229,848 1.3% 4,200 1.1% 3.3
Corporation
BAE Systems (6) 7 212,339 1.2% 3,171 0.8% 3.9
PLC
The Johns
Hopkins (6) 4 128,827 0.7% 3,011 0.8% 7.7
Institutions
Science
Applications (6) 9 137,142 0.8% 2,957 0.8% 0.8
International
Corp.
Merck & Co., (6) 2 225,900 1.3% 2,719 0.7% 3.6
Inc. (Unisys) (7)
Magellan
Health 2 113,727 0.7% 2,673 0.7% 2.6
Services, Inc.
AARP 1 104,695 0.6% 2,571 0.7% 12.9
Subtotal Top 20 183 8,874,567 51.6% 212,044 55.0% 5.7
Office Tenants
All remaining 778 8,333,261 48.4% 173,326 45.0% 3.7
tenants
Total/Weighted 961 17,207,828 100.0% $385,370 100.0% 4.8
Average
Table excludes owner occupied leasing activity which represents 149,601
(1) square feet with a weighted average remaining lease term of 6.5 years as of
December 31, 2008.
Total Annualized Rental Revenue is the monthly contractual base rent as of
(2) December 31, 2008, multiplied by 12, plus the estimated annualized expense
reimbursements under existing office leases.
(3) Order of tenants is based on Annualized Rent.
(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.
(7) Merck & Co., Inc. subleases 219,065 rentable square feet from Unisys'
960,349 leased rentable square feet in our Greater Philadelphia region.
Source: Corporate Office Properties Trust (COPT)
Released February 11, 2009