Corporate Office Properties Trust Reports Strong Third Quarter 2008 Results
COLUMBIA, Md.--(BUSINESS WIRE)--
Corporate Office Properties Trust (COPT) (NYSE:OFC) announced today financial and operating results for the quarter ended September 30, 2008.
Highlights
-- 10.3% increase to $.64 per share in Diluted Funds from
Operations ("Diluted FFO") or $36.2 million for the third
quarter 2008, from $.58 or $32.4 million for the third quarter
2007.
-- Diluted earnings per share ("Diluted EPS") of $.19 or $8.9
million of net income available to common shareholders for the
third quarter 2008 as compared to $.15 per diluted share or
$7.4 million of net income available to common shareholders
for the third quarter 2007.
-- 8.0% increase in Adjusted Funds from Operations ("AFFO")
diluted to $25.8 million for the third quarter 2008 as
compared to $23.9 million for the third quarter 2007. 11.7%
increase in AFFO to $75.4 million for the nine months ended
September 30, 2008 as compared to $67.5 million for the nine
months ended September 30, 2007.
-- 93.2% occupied and 94.3% leased for our wholly-owned portfolio
as of September 30, 2008.
-- 1.1 million square feet of overall leasing for the third
quarter 2008, including renewal, retenanting and development
space.
-- 79.6% renewal rate on expiring leases for the third quarter
2008, with a 26.7% increase in total straight-line rent for
renewed space.
-- 3.1% increase in same office property cash NOI for the
quarter, excluding the effect of a $431,000 reduction in lease
termination fees. Including the effect of lower lease
termination fees, same office property cash NOI increased 2.4%
for the quarter. The Company's same office portfolio for the
quarter ended September 30, 2008 represents 89.9% of the
rentable square feet of its consolidated portfolio and
consists of 218 properties.
-- 9.6% increase in quarterly common dividend from $.34 to $.3725
per share.
-- 3.7 million common shares issued at a public offering price of
$39.00 per share. The net proceeds were used to pay down the
Company's Revolving Credit Facility.
"We are pleased with our strong third quarter results which indicate that despite a deteriorating economy, we are well positioned for the balance of 2008 and into 2009 to deliver strong FFO growth," stated Randall M. Griffin, President and CEO, Corporate Office Properties Trust. "We have no remaining debt maturities for the balance of 2008 and have minimal debt maturities for 2009 and 2010. Our core business remains strong as demonstrated by our year to date renewal rate of 78%," he added.
Financial Results
Revenues from real estate operations for the quarter ended September 30, 2008 were $101.6 million, as compared to revenue for the quarter ended September 30, 2007 of $94.1 million.
Diluted FFO payout ratio year to date was 58.5% and 61.4% for the third quarter 2008 as compared to 58.3% for the third quarter 2007. Diluted AFFO payout ratio year to date was 79.7% and 86.1% for the third quarter 2008 as compared to 79.1% for the third quarter 2007.
As of September 30, 2008, the Company had a total market capitalization of $4.5 billion, with $1.9 billion in debt outstanding, equating to a 41.4% debt-to-total market capitalization ratio.
As of September 30, 2008, the Company's weighted average interest rate was 5.1% and the Company had 71.2% of the total debt subject to fixed interest rates.
For the third quarter 2008, the Company's EBITDA to interest expense coverage ratio was 3.04x and the EBITDA to fixed charge coverage ratio was 2.53x.
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 September 30, 2008, the Company's wholly-owned portfolio of 235 office properties totaled 18.3 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 $22.17 per square foot.
For the quarter ended September 30, 2008, 850,000 square feet was renewed equating to a 79.6% renewal rate, at an average committed cost of $8.24 per square foot. Total rent on renewed space increased 26.7% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and increased 13.1% on a cash basis. For renewed and retenanted space of 950,000 square feet, total straight-line rent increased 23.1% and total rent on a cash basis increased 9.8%. The average committed cost for renewed and retenanted space was $10.14 per square foot. For the nine months ended September 30, 2008, 1.6 million square feet was renewed equating to a 77.9% renewal rate, at an average committed cost of $6.49 per square foot.
The Company recognized total lease termination fees of $188,000, net of write-offs of related straight-line rents and accretion of intangible assets and liabilities for the quarter, as compared to $1.2 million in the third quarter of 2007.
During the quarter, the Company signed leases for 333,000 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 the entire 114,000 square
foot property located at 751 Jolly Road.
Development Activity
At quarter end, the Company had 2.7 million square feet under construction, development and redevelopment for a total projected cost of $526.3 million.
The Company's land inventory (wholly-owned and joint venture) at quarter end totaled 1,872 acres that can support 16.5 million square feet of development.
During the quarter, the Company placed 44,000 square feet of development projects into service.
The Company signed leases for 122,000 square feet of space under construction and development during the quarter. Included in this total are the following:
-- 39,000 square feet of the 156,000 square foot property located
at 302 Sentinel Drive (302 NBP) in Annapolis Junction,
Maryland, leased to a large credit worthy tenant.
-- 34,000 square feet of the 146,000 square foot property located
at 10807 New Allegiance Drive (Epic One) in Colorado Springs,
Colorado, leased to Lockheed Martin Corporation.
-- 28,000 square feet of the 106,000 square foot property located
at 5520 Research Park Drive (UMBC) in Baltimore, Maryland,
leased to RMF Engineering, Inc.
-- 21,000 square feet of the 116,000 square foot property located
at 5825 University Research Court (M Square Research Park) in
College Park, Maryland.
Acquisition Activity
The Company acquired 138 acres during the quarter for $16.1 million. Included in this total, are the following:
-- 31 acre land parcel in San Antonio, Texas for $8.1 million
that can support approximately 500,000 developable square
feet.
-- 107 acre land parcel in close proximity to Fort Detrick in
Frederick, Maryland for $8.0 million that can support
approximately 1.0 million developable square feet.
Financing and Capital Transactions
During the quarter, the Company completed the following transactions:
-- Issued 3.7 million common shares at a public offering price of
$39.00 per share for net proceeds after underwriting discounts
but before offering expenses of $139.2 million. The net
proceeds were used to pay down the Company's Revolving Credit
Facility.
-- 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. The Company used $63.5 million of the
proceeds to repay construction loan facilities due to mature
in 2008, $11.8 million to repay borrowings under the Company's
Construction Revolver, $142.0 million to repay borrowings
under the Company's Revolving Credit Facility and the balance
to fund transaction costs.
-- The aggregate amount of maturing debt repaid by the Company
totaled $187.6 million during the quarter, excluding scheduled
principal amortization payments and repayments of our
revolving credit facilities. The Company has no remaining debt
scheduled to mature during 2008 and only $92.8 million of
loans maturing in 2009.
Subsequent Event
The Company placed into service 91,000 square feet in two properties located at 7700 Potranco Road in San Antonio, Texas, leased entirely to a large credit worthy tenant.
Earnings Guidance
The Company's 2008 EPS guidance has been revised from a range of $.62 to $.70 to a range of $.70 to $.73 per diluted share.
The Company's 2008 FFO guidance has been revised from a range of $2.42 to $2.48 to a range of $2.43 to $2.46 per diluted share, representing FFO growth of 8.5% to 9.8% compared to 2007 actual results.
Conference Call
The Company will hold an investor/analyst conference call:
Within the United States: Conference Call and Webcast Date: Thursday, October 30, 2008 Time: 11:00 a.m. Eastern Time Dial In Number: 888-713-4215 Passcode: 27345433 Outside the United States: Conference Call and Webcast Date: Thursday, October 30, 2008 Time: 11:00 a.m. Eastern Time Dial In Number: 617-213-4867 Passcode: 27345433
A replay of this call will be available beginning Thursday, October 30 at 1:00 p.m. Eastern Time through Thursday, November 13 at midnight Eastern Time. To access the replay, please call 888-286-8010 and use passcode 51167930.
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.
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: www.theconferencingservice.com/prereg/key.process?key=PG3YGJYDN
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.
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 September 30, 2008, the Company owned 254 office and data properties totaling 19.1 million rentable square feet, which includes 19 properties totaling 847,000 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
September 30,
-------------------
2008 2007
--------- ---------
Revenues
Real estate revenues $101,644 $ 94,102
Service operations revenues 90,002 10,957
--------- ---------
Total revenues 191,646 105,059
--------- ---------
Expenses
Property operating expenses 35,854 31,577
Depreciation and other amortization associated
with real estate operations 25,583 26,025
Service operations expenses 87,657 10,313
General and administrative expenses 6,103 5,743
--------- ---------
Total operating expenses 155,197 73,658
--------- ---------
Operating income 36,449 31,401
Interest expense (20,506) (20,968)
Amortization of deferred financing costs (1,169) (901)
Gain on sales of non-real estate investments 1 -
--------- ---------
Income from continuing operations before equity in
loss of unconsolidated entities, income taxes and
minority interests 14,775 9,532
Equity in loss of unconsolidated entities (57) (46)
Income tax expense (97) (197)
--------- ---------
Income from continuing operations before minority
interests 14,621 9,289
Minority interests in income from continuing
operations (1,668) (942)
--------- ---------
Income from continuing operations 12,953 8,347
(Loss) income from discontinued operations, net (8) 2,046
--------- ---------
Income before gain on sales of real estate 12,945 10,393
Gain on sales of real estate, net 4 1,038
--------- ---------
Net income 12,949 11,431
Preferred share dividends (4,025) (4,025)
--------- ---------
Net income available to common shareholders $ 8,924 $ 7,406
========= =========
Earnings per share "EPS" computation
Numerator $ 8,924 $ 7,406
========= =========
Denominator:
Weighted average common shares - basic 47,273 46,781
Dilutive effect of share-based compensation awards 916 1,005
--------- ---------
Weighted average common shares - diluted 48,189 47,786
========= =========
EPS
Basic $ 0.19 $ 0.16
========= =========
Diluted $ 0.19 $ 0.15
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Three Months Ended
September 30,
-------------------
2008 2007
--------- ---------
Net income $ 12,949 $ 11,431
Add: Real estate-related depreciation and
amortization 25,583 26,266
Add: Depreciation and amortization on
unconsolidated real estate entities 162 166
Less: Depreciation and amortization allocable to
minority interests in other consolidated entities (74) (48)
Gain on sales of real estate, excluding
development portion - (2,789)
--------- ---------
Funds from operations ("FFO") 38,620 35,026
Add: Minority interests-common units in the
Operating Partnership 1,592 1,351
Less: Preferred share dividends (4,025) (4,025)
--------- ---------
Funds from operations - basic and diluted ("Basic
and Diluted FFO") 36,187 32,352
Less: Straight-line rent adjustments (2,850) (3,247)
Less: Recurring capital expenditures (7,008) (4,664)
Less: Amortization of deferred market rental
revenue (555) (585)
--------- ---------
Adjusted funds from operations - diluted ("Diluted
AFFO") $ 25,774 $ 23,856
========= =========
Weighted average shares
Weighted average common shares 47,273 46,781
Conversion of weighted average common units 8,130 8,297
--------- ---------
Weighted average common shares/units - basic FFO
per share 55,403 55,078
Dilutive effect of share-based compensation
awards 916 1,005
--------- ---------
Weighted average common shares/units - diluted
FFO per share 56,319 56,083
========= =========
Diluted FFO per common share $ 0.64 $ 0.58
========= =========
Dividends/distributions per common share/unit $ 0.3725 $ 0.3400
========= =========
Earnings payout ratio 215.0% 217.3%
========= =========
Diluted FFO payout ratio 61.4% 58.3%
========= =========
Diluted AFFO payout ratio 86.1% 79.1%
========= =========
EBITDA interest coverage ratio 3.04x 2.92x
========= =========
EBITDA fixed charge coverage ratio 2.53x 2.44x
========= =========
Reconciliation of denominators for diluted EPS and
diluted FFO per share
Denominator for diluted EPS 48,189 47,786
Weighted average common units 8,130 8,297
--------- ---------
Denominator for diluted FFO per share 56,319 56,083
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Nine Months Ended
September 30,
-------------------
2008 2007
--------- ---------
Revenues
Real estate revenues $296,906 $273,344
Service operations revenues 123,040 32,727
--------- ---------
Total revenues 419,946 306,071
--------- ---------
Expenses
Property operating expenses 104,353 92,168
Depreciation and other amortization associated
with real estate operations 75,430 78,811
Service operations expenses 120,090 31,463
General and administrative expenses 18,072 15,946
--------- ---------
Total operating expenses 317,945 218,388
--------- ---------
Operating income 102,001 87,683
Interest expense (60,252) (61,181)
Amortization of deferred financing costs (2,882) (2,706)
Gain on sales of non-real estate investments 52 1,033
--------- ---------
Income from continuing operations before equity in
loss of unconsolidated entities, income taxes and
minority interests 38,919 24,829
Equity in loss of unconsolidated entities (167) (197)
Income tax expense (102) (480)
--------- ---------
Income from continuing operations before minority
interests 38,650 24,152
Minority interests in income from continuing
operations (4,469) (2,282)
--------- ---------
Income from continuing operations 34,181 21,870
Income from discontinued operations, net 2,179 1,786
--------- ---------
Income before gain on sales of real estate 36,360 23,656
Gain on sales of real estate, net 837 1,199
--------- ---------
Net income 37,197 24,855
Preferred share dividends (12,076) (12,043)
--------- ---------
Net income available to common shareholders $ 25,121 $ 12,812
========= =========
Earnings per share "EPS" computation
Numerator $ 25,121 $ 12,812
========= =========
Denominator:
Weighted average common shares - basic 47,128 46,386
Dilutive effect of share-based compensation awards 820 1,180
--------- ---------
Weighted average common shares - diluted 47,948 47,566
========= =========
EPS
Basic $ 0.53 $ 0.28
========= =========
Diluted $ 0.52 $ 0.27
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Nine Months Ended
September 30,
-------------------
2008 2007
--------- ---------
Net income $ 37,197 $ 24,855
Add: Real estate-related depreciation and
amortization 75,482 79,653
Add: Depreciation and amortization on
unconsolidated real estate entities 489 503
Less: Depreciation and amortization allocable to
minority interests in other consolidated entities (198) (137)
Gain on sales of real estate, excluding
development portion (2,630) (2,778)
--------- ---------
Funds from operations ("FFO") 110,340 102,096
Add: Minority interests-common units in the
Operating Partnership 4,501 2,424
Less: Preferred share dividends (12,076) (12,043)
--------- ---------
Funds from Operations - basic and diluted ("Basic
and Diluted FFO") 102,765 92,477
Less: Straight-line rent adjustments (8,284) (9,042)
Less: Recurring capital expenditures (17,611) (14,331)
Less: Amortization of deferred market rental
revenue (1,458) (1,569)
--------- ---------
Adjusted funds from operations - diluted ("Diluted
AFFO") $ 75,412 $ 67,535
========= =========
Weighted average shares
Weighted average common shares 47,128 46,386
Conversion of weighted average common units 8,145 8,339
--------- ---------
Weighted average common shares/units - basic FFO
per share 55,273 54,725
Dilutive effect of share-based compensation
awards 820 1,180
--------- ---------
Weighted average common shares/units - diluted
FFO per share 56,093 55,905
========= =========
Diluted FFO per common share $ 1.83 $ 1.65
========= =========
Dividends/distributions per common share/unit $ 1.0525 $ 0.9600
========= =========
Earnings payout ratio 205.2% 353.1%
========= =========
Diluted FFO payout ratio 58.5% 57.5%
========= =========
Diluted AFFO payout ratio 79.7% 78.7%
========= =========
Reconciliation of denominators for diluted EPS and
diluted FFO per share
Denominator for diluted EPS 47,948 47,566
Weighted average common units 8,145 8,339
--------- ---------
Denominator for diluted FFO per share 56,093 55,905
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)
September December
30, 31,
2008 2007
----------- -----------
Balance Sheet Data (in
thousands) (as of period
end)
Investment in real estate,
net of accumulated
depreciation $2,743,576 $2,603,939
Total assets 3,099,728 2,931,853
Debt 1,856,280 1,825,842
Total liabilities 2,025,661 1,979,116
Minority interests 141,526 130,095
Beneficiaries' equity 932,541 822,642
Debt to total assets 59.9% 62.3%
Debt to undepreciated book
value of real estate
assets 58.3% 60.8%
Debt to total market
capitalization 41.4% 48.0%
Property Data (wholly owned
properties)
(as of period end)
Number of operating
properties owned 235 228
Total net rentable square
feet owned (in thousands) 18,283 17,832
Occupancy 94.3% 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 $3,099,728 $2,931,853
Assets other than assets
included in investment in
real estate (356,152) (327,914)
Accumulated depreciation on
real estate assets 339,429 288,747
Intangible assets on real
estate acquisitions, net 98,282 108,661
----------- -----------
Denominator for debt to
undepreciated book value
of real estate assets $3,181,287 $3,001,347
=========== ===========
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ------------------
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 properties $ 6,305 $ 4,605 $14,883 $ 18,795
Total capital improvements
on operating properties 3,179 2,514 6,827 6,482
Total leasing costs on
operating properties 999 719 2,764 5,712
Less: Nonrecurring tenant
improvements and
incentives on operating
properties (1,995) (1,887) (4,077) (11,381)
Less: Nonrecurring capital
improvements on operating
properties (1,299) (1,198) (2,667) (3,052)
Less: Nonrecurring leasing
costs incurred on
operating properties (217) (89) (269) (2,281)
Add: Recurring improvements
on operating properties
held through joint
ventures 36 - 150 56
----------- ----------- -------- ---------
Recurring capital
expenditures $ 7,008 $ 4,664 $17,611 $ 14,331
=========== =========== ======== =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- ---------------
2008 2007 2008 2007
-------- -------- ------- -------
Reconciliation of dividends for
earnings payout ratio to dividends
and distributions for FFO & AFFO
payout ratio
Common share dividends for earnings
payout ratio $19,183 $16,092 $51,553 $45,234
Common unit distributions 3,021 2,777 8,564 7,905
-------- -------- ------- -------
Dividends and distributions for FFO
& AFFO payout ratio $22,204 $18,869 $60,117 $53,139
======== ======== ======= =======
Reconciliation of GAAP net income to
earnings before interest, income
taxes, depreciation and
amortization ("EBITDA")
Net income $12,949 $11,431
Interest expense on continuing
operations 20,506 20,968
Interest expense on discontinued
operations - 177
Income tax expense 97 197
Real estate-related depreciation and
amortization 25,583 26,266
Amortization of deferred financing
costs-continuing operations 1,169 901
Other depreciation and amortization 401 339
Minority interests 1,667 1,504
-------- --------
EBITDA $62,372 $61,783
======== ========
Reconciliation of interest expense
from continuing operations to the
denominators for interest coverage-
EBITDA and fixed charge coverage-
EBITDA
Interest expense from continuing
operations $20,506 $20,968
Interest expense from discontinued
operations - 177
-------- --------
Denominator for interest coverage-
EBITDA 20,506 21,145
Preferred share dividends 4,025 4,025
Preferred unit distributions 165 165
-------- --------
Denominator for fixed charge
coverage-EBITDA $24,696 $25,335
======== ========
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 income $61,294 $60,879
Less: Straight-line rent adjustments (2,001) (2,816)
Less: Amortization of deferred
market rental revenue (381) (506)
-------- --------
Same property cash net operating
income $58,912 $57,557
Less: Lease termination fees, gross (188) (619)
-------- --------
Same property cash net operating
income, adjusted
for lease termination fees $58,724 $56,938
======== ========
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, 2008
-------------------
Low High
--------- ---------
Reconciliation of numerators
--------------------------------------------------
Numerator for projected EPS-diluted $ 34,311 $ 35,773
Less: Gain on sales of real estate, net of taxes,
excluding development portion (1) (2,630) (2,630)
Real estate-related depreciation and amortization
(2) 101,429 101,429
Minority interests-common units 6,007 6,263
--------- ---------
Numerator for projected diluted FFO per share $139,117 $140,835
========= =========
Reconciliation of denominators
--------------------------------------------------
Denominator for projected EPS-diluted 49,122 49,122
Weighted average common units 8,128 8,128
--------- ---------
Denominator for projected diluted FFO per share 57,250 57,250
========= =========
Projected EPS - diluted $ 0.70 $ 0.73
========= =========
Projected diluted FFO per share $ 2.43 $ 2.46
========= =========
(1) Reconciliation excludes any potential gains or losses from the future sale of previously depreciated operating properties. (2) 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 September
30, 2008 (1)
(Dollars in thousands)
Percentage of
Total Total
Number of Occupied Occupied
Tenant Leases Square Feet Square Feet
-------------------------- --------- ----------- -------------
United States of America (5) 66 2,496,636 14.7%
Northrop Grumman
Corporation (6) 16 1,139,591 6.7%
Booz Allen Hamilton, Inc. 8 710,692 4.2%
Computer Sciences
Corporation (6) 4 454,533 2.7%
L-3 Communications
Holdings, Inc. (6) 5 267,354 1.6%
Unisys Corporation (7) 5 760,145 4.5%
General Dynamics
Corporation (6) 9 288,600 1.7%
The Aerospace Corporation 3 245,598 1.4%
ITT Corporation (6) 14 290,312 1.7%
Wachovia Corporation (6) 4 183,577 1.1%
Comcast Corporation (6) 11 342,266 2.0%
AT&T Corporation (6) 8 306,988 1.8%
Ciena Corporation 4 229,848 1.3%
The Boeing Company (6) 4 143,480 0.8%
BAE Systems PLC (6) 7 212,339 1.2%
Science Applications
International Corp. (6) 9 137,142 0.8%
The Johns Hopkins
Institutions (6) 4 124,749 0.7%
Merck & Co., Inc. (Unisys)(6) (7) 2 227,273 1.3%
Magellan Health Services,
Inc. 2 113,727 0.7%
AARP 1 104,695 0.6%
Subtotal Top 20 Office
Tenants 186 8,779,545 51.5%
All remaining tenants 771 8,253,548 48.5%
-------------------------------------
Total/Weighted Average 957 17,033,093 100.0%
=====================================
Total Percentage Weighted
Annualized of Total Average
Rental Annualized Rental Remaining
Tenant Revenue (2)(3) Revenue Lease Term (4)
--------------- --------------- ----------------- --------------
United States
of America (5) $60,530 16.0% 6.3
Northrop
Grumman
Corporation (6) 28,457 7.5% 7.5
Booz Allen
Hamilton, Inc. 19,932 5.3% 5.8
Computer
Sciences
Corporation (6) 11,875 3.1% 2.8
L-3
Communications
Holdings, Inc. (6) 9,590 2.5% 5.5
Unisys
Corporation (7) 9,048 2.4% 2.5
General
Dynamics
Corporation (6) 7,668 2.0% 1.9
The Aerospace
Corporation 7,268 1.9% 6.4
ITT Corporation (6) 6,833 1.8% 5.6
Wachovia
Corporation (6) 6,613 1.8% 9.9
Comcast
Corporation (6) 6,509 1.7% 3.4
AT&T
Corporation (6) 5,692 1.5% 4.6
Ciena
Corporation 4,200 1.1% 3.6
The Boeing
Company (6) 4,199 1.1% 2.9
BAE Systems PLC (6) 3,164 0.8% 4.0
Science
Applications
International
Corp. (6) 2,957 0.8% 1.1
The Johns
Hopkins
Institutions (6) 2,911 0.8% 7.8
Merck & Co.,
Inc. (Unisys) (6) (7) 2,747 0.7% 3.5
Magellan Health
Services, Inc. 2,673 0.7% 2.8
AARP 2,571 0.7% 13.2
Subtotal Top 20
Office Tenants 205,436 54.4% 5.6
All remaining
tenants 172,177 45.6% 3.8
---------------------------------
Total/Weighted
Average $377,613 100.0% 4.8
=================================
(1) Table excludes owner occupied leasing activity which represents
150,373 square feet with a weighted average remaining lease term
of 6.5 years as of September 30, 2008.
(2) Total Annualized Rental Revenue is the monthly contractual base
rent as of September 30, 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
Released October 29, 2008