Corporate Office Properties Trust Reports Strong Third Quarter 2007 Results
COLUMBIA, Md.--(BUSINESS WIRE)--
Corporate Office Properties Trust (COPT) (NYSE:OFC) announced today financial and operating results for the quarter ended September 30, 2007.
Highlights
-- Earnings per diluted share ("EPS") of $.15 for the third
quarter of 2007 as compared to $.33 per diluted share for the
third quarter of 2006. Included in third quarter 2007 net
income is gain on sales of real estate net of minority
interests of $3.4 million, as compared to $12.7 million
included in third quarter 2006. Also included in 2006 net
income is an accounting charge of $1.8 million or ($.04) per
share reflecting the write-off of initial issuance costs of
the Series E preferred shares redeemed July 15, 2006.
-- 26.1% increase in Funds from Operations ("FFO") per diluted
share to $.58 or $32.4 million for third quarter 2007 compared
to $.46 or $24.3 million for third quarter 2006. Included in
the third quarter 2006 FFO was the accounting charge of $1.8
million for the Series E preferred share redemption. Without
this charge, FFO per diluted share for the third quarter 2006,
as adjusted, would have been $.50 per share representing an
increase of 16.0% for the third quarter 2007.
-- 24.4% increase in Adjusted Funds from Operations ("AFFO")
diluted to $23.9 million for third quarter 2007 as compared to
$19.2 million for third quarter 2006.
-- 58.3% Diluted FFO payout ratio, 79.1% Diluted AFFO payout
ratio for the quarter.
-- 56 acres of land acquired for $10.0 million that can support
800,000 square feet of development located at the north
entrance of Aberdeen Proving Ground. The Company's land
inventory totals 1,705 acres that can support 14.6 million
square feet of development.
-- $12.6 million of dispositions closed in third quarter 2007,
including two buildings located in New Jersey, one non-core
building located in the BWI Corridor and a land parcel located
in White Marsh.
-- 92.8% occupied and 93.2% leased for the Company's wholly owned
portfolio as of September 30, 2007.
-- 2.9 million square feet under construction, development and
redevelopment for a total projected cost of $535.9 million.
-- 73.3% of leases expiring during the quarter were renewed, with
a 7.8% increase in total straight line rent for renewed space.
-- 10% increase in quarterly common dividend from $.31 to $.34
per share.
"We are pleased with our financial performance for the quarter which reflects additional development coming on-line," stated Randall M. Griffin, President and Chief Executive Officer for Corporate Office Properties Trust. "Our initial 2008 FFO guidance reflects continued strong FFO growth for next year as we complete more development and increase both fee income and our core operating NOI," he added.
Financial Results
EPS for the quarter ended September 30, 2007 totaled $.15 per diluted share, or $7.4 million of net income available for common shareholders, as compared to $.33 per diluted share, or $14.5 million for the quarter ended September 30, 2006. Included in third quarter 2007 net income is gain on sales of real estate net of minority interests of $3.4 million, as compared to $12.7 million included in third quarter 2006. Also included in 2006 net income is an accounting charge of $1.8 million or ($.04) per share reflecting the write-off of initial issuance costs of the Series E preferred shares redeemed July 15, 2006.
Diluted FFO for the quarter ended September 30, 2007 totaled $32.4 million, or $.58 per diluted share, as compared to $24.3 million, or $.46 per diluted share, for the quarter ended September 30, 2006, representing an increase of 26.1% per share. Included in the third quarter 2006 FFO was the accounting charge of $1.8 million for the Series E preferred share redemption. Without this charge, FFO per diluted share for the third quarter 2006, as adjusted, would have been $.50 per share representing an increase of 16.0% for the third quarter 2007.
Diluted AFFO for the quarter ended September 30, 2007 totaled $23.9 million as compared to $19.2 million for third quarter 2006, representing an increase of 24.4%. The Company's diluted AFFO payout ratio was 79.1% for third quarter 2007 compared to 83.0% for third quarter 2006.
As of September 30, 2007, the Company had a total market capitalization of $4.3 billion, with $1.8 billion in debt outstanding, equating to a 41.5% debt-to-total market capitalization ratio. The Company's total quarterly weighted average interest rate was 5.9%, and 79.7% of total debt was subject to fixed interest rates. For the third quarter 2007, EBITDA interest coverage ratio was 2.92x and EBITDA fixed charge coverage ratio was 2.44x.
Operating Results
At September 30, 2007, the Company's wholly owned portfolio of 229 office properties totaling 17.7 million square feet, was 92.8% occupied and 93.2% leased. The weighted average remaining lease term for the portfolio was 4.9 years and the average rental rate (including tenant reimbursements of operating costs) was $21.20 per square foot.
During the quarter, 312,000 square feet was renewed, equating to a 73.3% renewal rate, at an average capital cost of $5.58 per square foot. Total rent on renewed space increased 7.8% on a straight-line basis and 2.1% on a cash basis. For renewed and retenanted space of 401,000 square feet, total straight-line rent increased 7.5% and total cash rent increased 1.7%. The average committed capital cost for renewed and retenanted space was $8.21 per square foot.
Same office property cash NOI remained flat compared to the quarter ended September 30, 2006, despite a $1.3 million drop in same office termination fees as compared to the quarter ended September 30, 2006. Excluding the effect of termination fees, our same office property cash NOI would have increased 2.6%, or $1.2 million, as compared to the quarter ended September 30, 2006. The Company's same office portfolio consists of 160 properties and represents 79.8% of our wholly owned portfolio as of September 30, 2007.
The Company recognized total termination fees of $1.2 million, net of write-offs of related straight-line rents and the write-off of previously unamortized deferred market revenue, as compared to $1.3 million in the third quarter of 2006.
Development Activity
At quarter end September 30, the Company's development pipeline consisted of:
-- Eight buildings under construction totaling 856,000 square
feet for a total projected cost of $182.0 million, that are
43.1% leased.
-- Twelve buildings under development totaling 1.3 million square
feet for a total projected cost of $261.7 million.
-- Three projects under redevelopment totaling 740,000 square
feet for a total projected cost of $92.2 million.
The Company's land inventory (wholly owned and joint venture) at quarter end totaled 1,705 acres that can support 14.6 million square feet of development.
During the quarter, the Company placed 106,000 square feet into service. As of September 30, 2007, the Company's development placed into service was 92.7% leased.
During the quarter, the Company was selected as master developer for the 272 acre Colorado Springs Airport Mixed-Use Business Park. The business park is strategically located at the entrance of the Colorado Springs Airport and adjacent to the Peterson Air Force Base. The park can support approximately 3.5 million square feet of development of which 1.3 million square feet would be office development. The Company's multi-year phased development plan is to create a business park and regional gateway that provides a dynamic mix of office space, industrial/flex space, retail and hospitality services. The Company will lease the land on a long-term basis as each parcel commences development, will oversee the development, construction, leasing and management of the business park and will have a leasehold interest in the buildings.
Acquisition Activity
During the quarter, the Company acquired the following assets:
-- 56 acres of land for $10.0 million that can support 800,000
square feet of office development. The site will be known as
Northgate Business Park and is strategically located at the
north entrance to Aberdeen Proving Ground in Aberdeen,
Maryland.
-- A 50.0% joint venture interest in ArundelPreserve #5, LLC on
July 2, 2007, which owns 23 acres of land in Hanover, Maryland
that can support up to 455,000 square feet of office
development. The first building of 152,000 square feet is
under construction with a targeted operational date of second
quarter 2009.
Disposition Activity
During the quarter, the Company disposed of the following assets:
-- Two office buildings totaling 32,000 square feet within its
Northern/Central New Jersey portfolio for $6.0 million. The
Company recognized an aggregate gain of $1.9 million.
-- 40,000 square foot office building in the BWI Airport
submarket for $5.0 million and recognized a gain of $868,000.
-- 3.5 acre parcel of land located in White Marsh, Maryland and
recognized a gain of $1.1 million.
Financing and Capital Transactions
During the quarter, the Company increased its quarterly common dividend 10%, from $.31 to $.34 per share.
Subsequent Events
Since September 30, 2007, the Company has:
-- Increased its borrowing capacity under its unsecured line of
credit from $500.0 million to $600.0 million and extended its
maturity date to September 30, 2011, which is subject to a
one-year extension option. As part of the second amended and
restated credit agreement, the Company achieved favorable
interest rate pricing ranging from 75 basis points to 125
basis points over LIBOR, depending upon the Company's leverage
ratio.
-- Placed into service the 103,000 square feet development
property located at 201 Technology Park Drive in Lebanon,
Virginia. This building is leased through 2022 to Northrop
Grumman Corporation and will house both the Virginia
Information Technologies Agency (VITA) and Northrop Grumman
operations.
-- Executed a swap for an aggregate notional amount of $50.0
million at a fixed one-month LIBOR rate of 4.33%, which
commenced October 23, 2007 and expires October 23, 2009.
Earnings Guidance
The Company has revised its 2007 EPS guidance from $.34 - $.39 to $.39 - $.41 per diluted share, excluding any potential gains or losses from future sales of previously depreciated operating properties. The Company has also updated its 2007 FFO guidance to a range of $2.23 - $2.25 per diluted share from $2.20 - $2.25 per diluted share.
The Company's 2008 EPS guidance is $.58 - $.67 per diluted share, excluding any potential gains or losses from the sale of previously depreciated operating properties. The 2008 FFO guidance is $2.40 - $2.49 per diluted share, representing FFO growth of 8.0% - 11.0%. The Company will discuss the assumptions for the 2008 guidance during the earnings conference call.
Conference Call
The Company will hold an investor/analyst conference call:
Conference Call and Webcast Date: Tuesday, November 6, 2007
Time: 11:00 a.m. Eastern Time
Dial In Number: 800-638-5439
Passcode: 23616751
A replay of this call will be available beginning Tuesday, November 6 at 2:00 p.m. Eastern Time through Tuesday, November 20, 2007 at midnight Eastern Time. To access the replay, please call 888-286-8010 and use passcode 27041914.
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 8K or our website (www.copt.com) for definitions of certain terms used in this press release. Reconciliations of GAAP and non-GAAP measurements are included in the attached tables.
Company Information
Corporate Office Properties Trust (COPT) is a fully integrated, self-managed real estate investment trust (REIT) that focuses on the ownership, management, leasing, acquisition and development of suburban office properties located primarily in submarkets within the Greater Washington, DC region. As of September 30, 2007, the Company owned 247 office properties totaling 18.5 million rentable square feet, which includes 18 properties totaling 806,000 square feet held through joint ventures. The Company has implemented a core customer expansion strategy that is built around meeting, through acquisitions and development, the multi-location requirements of the Company's existing strategic tenants. The Company's property management services team provides comprehensive property and asset management to company owned properties and select third party clients. The Company's development and construction services team provides a wide range of development and construction management services for company owned properties, as well as land planning, design/build services, consulting, and merchant development to select third party clients. The Company's shares are traded on the New York Stock Exchange under the symbol OFC. More information on Corporate Office Properties Trust can be found on the Internet 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, 2006.
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Three Months Ended
September 30,
-------------------
2007 2006
--------- ---------
Revenues
Real estate revenues $ 94,564 $ 76,869
Service operations revenues 10,957 14,791
--------- ---------
Total revenues 105,521 91,660
--------- ---------
Expenses
Property operating expenses 31,642 24,983
Depreciation and other amortization associated
with real estate operations 26,587 21,510
Service operations expenses 10,313 13,960
General and administrative expenses 5,423 4,226
--------- ---------
Total operating expenses 73,965 64,679
--------- ---------
Operating income 31,556 26,981
Interest expense (21,000) (17,678)
Amortization of deferred financing costs (901) (736)
--------- ---------
Income from continuing operations before equity in
(loss) income of unconsolidated entities, income
taxes and minority interests 9,655 8,567
Equity in (loss) income of unconsolidated entities (46) 15
Income tax expense (197) (202)
--------- ---------
Income from continuing operations before minority
interests 9,412 8,380
Minority interests in income from continuing
operations (961) (873)
--------- ---------
Income from continuing operations 8,451 7,507
Income from discontinued operations, net of
minority interests 1,942 12,483
--------- ---------
Income before gain on sales of real estate 10,393 19,990
Gain on sales of real estate, net 1,038 597
--------- ---------
Net income 11,431 20,587
Preferred share dividends (4,025) (4,307)
Issuance costs associated with redeemed preferred
shares - (1,829)
--------- ---------
Net income available to common shareholders $ 7,406 $ 14,451
========= =========
Earnings per share "EPS" computation
Numerator $ 7,406 $ 14,451
========= =========
Denominator:
Weighted average common shares - basic 46,781 42,197
Dilutive effect of share-based compensation awards 1,005 1,649
--------- ---------
Weighted average common shares - diluted 47,786 43,846
========= =========
EPS
Basic $ 0.16 $ 0.34
========= =========
Diluted $ 0.15 $ 0.33
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Three Months Ended
September 30,
-------------------
2007 2006
--------- ---------
Net income $ 11,431 $ 20,587
Add: Real estate-related depreciation and
amortization 26,266 21,305
Add: Depreciation and amortization on
unconsolidated real estate entities 166 362
Less: Depreciation and amortization allocable to
minority interests in other consolidated entities (48) (36)
Less: Gain on sales of real estate, excluding
development portion (2,789) (15,262)
Less: Issuance costs associated with redeemable
preferred shares - (1,829)
--------- ---------
Funds from operations ("FFO") 35,026 25,127
Add: Minority interests-common units in the
Operating Partnership 1,351 3,509
Less: Preferred share dividends (4,025) (4,307)
--------- ---------
Funds from Operations - basic and diluted ("Basic
and Diluted FFO") 32,352 24,329
Less: Straight-line rent adjustments (3,247) (2,819)
Less: Recurring capital expenditures (4,664) (3,890)
Less: Amortization of deferred market rental
revenue (585) (276)
Add: Issuance costs associated with redeemable
preferred shares - 1,829
--------- ---------
Adjusted Funds from Operations - diluted ("Diluted
AFFO") $ 23,856 $ 19,173
========= =========
Weighted average shares
Weighted average common shares 46,781 42,197
Conversion of weighted average common units 8,297 8,562
--------- ---------
Weighted average common shares/units - basic FFO
per share 55,078 50,759
Dilutive effect of share-based compensation
awards 1,005 1,649
--------- ---------
Weighted average common shares/units - diluted
FFO per share 56,083 52,408
========= =========
Diluted FFO per common share $ 0.58 $ 0.46
========= =========
Dividends/distributions per common share/unit $ 0.34 $ 0.31
========= =========
Earnings payout ratio 217.3% 91.8%
========= =========
Diluted FFO payout ratio 58.3% 65.4%
========= =========
Diluted AFFO payout ratio 79.1% 83.0%
========= =========
EBITDA interest coverage ratio 2.92x 3.60x
========= =========
EBITDA fixed charge coverage ratio 2.44x 2.89x
========= =========
Reconciliation of denominators for diluted EPS and
diluted FFO per share
Denominator for diluted EPS 47,786 43,846
Weighted average common units 8,297 8,562
--------- ---------
Denominator for diluted FFO per share 56,083 52,408
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Nine Months Ended
September 30,
-------------------
2007 2006
--------- ---------
Revenues
Real estate revenues $274,702 $216,087
Service operations revenues 32,727 45,240
--------- ---------
Total revenues 307,429 261,327
--------- ---------
Expenses
Property operating expenses 92,222 67,460
Depreciation and other amortization associated
with real estate operations 80,487 58,138
Service operations expenses 31,463 43,125
General and administrative expenses 15,122 11,894
--------- ---------
Total operating expenses 219,294 180,617
--------- ---------
Operating income 88,135 80,710
Interest expense (61,261) (51,635)
Amortization of deferred financing costs (2,706) (1,898)
Gain on sale of non-real estate investment 1,033 -
--------- ---------
Income from continuing operations before equity in
loss of unconsolidated entities, income taxes and
minority interests 25,201 27,177
Equity in loss of unconsolidated entities (197) (40)
Income tax expense (480) (623)
--------- ---------
Income from continuing operations before minority
interests 24,524 26,514
Minority interests in income from continuing
operations (2,341) (3,029)
--------- ---------
Income from continuing operations 22,183 23,485
Income from discontinued operations, net of
minority interests 1,473 15,423
--------- ---------
Income before gain on sales of real estate 23,656 38,908
Gain on sales of real estate, net 1,199 732
--------- ---------
Net income 24,855 39,640
Preferred share dividends (12,043) (11,614)
Issuance costs associated with redeemed preferred
shares - (1,829)
--------- ---------
Net income available to common shareholders $ 12,812 $ 26,197
========= =========
Earnings per share "EPS" computation
Numerator $ 12,812 $ 26,197
========= =========
Denominator:
Weighted average common shares - basic 46,386 41,134
Dilutive effect of share-based compensation awards 1,180 1,785
--------- ---------
Weighted average common shares - diluted 47,566 42,919
========= =========
EPS
Basic $ 0.28 $ 0.64
========= =========
Diluted $ 0.27 $ 0.61
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Nine Months Ended
September 30,
-------------------
2007 2006
--------- ---------
Net income $ 24,855 $ 39,640
Add: Real estate-related depreciation and
amortization 79,653 58,863
Add: Depreciation and amortization on
unconsolidated real estate entities 503 565
Less: Depreciation and amortization allocable to
minority interests in other consolidated entities (137) (122)
Less: Gain on sales of real estate, excluding
development portion (2,778) (17,715)
Less: Issuance costs associated with redeemable
preferred shares - (1,829)
--------- ---------
Funds from operations ("FFO") 102,096 79,402
Add: Minority interests-common units in the
Operating Partnership 2,424 6,072
Less: Preferred share dividends (12,043) (11,614)
--------- ---------
Funds from Operations - basic and diluted ("Basic
and Diluted FFO") 92,477 73,860
Less: Straight-line rent adjustments (9,042) (7,256)
Less: Recurring capital expenditures (14,331) (10,123)
Less: Amortization of deferred market rental
revenue (1,569) (1,326)
Add: Issuance costs associated with redeemable
preferred shares - 1,829
--------- ---------
Adjusted Funds from Operations - diluted ("Diluted
AFFO") $ 67,535 $ 56,984
========= =========
Weighted average shares
Weighted average common shares 46,386 41,134
Conversion of weighted average common units 8,339 8,516
--------- ---------
Weighted average common shares/units - basic FFO
per share 54,725 49,650
Dilutive effect of share-based compensation
awards 1,180 1,785
--------- ---------
Weighted average common shares/units - diluted
FFO per share 55,905 51,435
========= =========
Diluted FFO per common share $ 1.65 $ 1.44
========= =========
Dividends/distributions per common share/unit $ 0.96 $ 0.87
========= =========
Earnings payout ratio 353.1% 138.9%
========= =========
Diluted FFO payout ratio 57.5% 59.2%
========= =========
Diluted AFFO payout ratio 78.7% 76.8%
========= =========
Reconciliation of denominators for diluted EPS and
diluted FFO per share
Denominator for diluted EPS 47,566 42,919
Weighted average common units 8,339 8,516
--------- ---------
Denominator for diluted FFO per share 55,905 51,435
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)
September 30, December 31,
2007 2006
------------- ------------
Balance Sheet Data (in thousands) (as of
period end):
Investment in real estate, net of
accumulated depreciation $ 2,584,945 $ 2,111,310
Total assets 2,916,023 2,419,601
Debt 1,799,912 1,498,537
Total liabilities 1,951,648 1,629,111
Minority interests 131,607 116,187
Beneficiaries' equity 832,768 674,303
Debt to Total Assets 61.7% 61.9%
Debt to Undepreciated Book Value of Real
Estate Assets 60.6% 62.0%
Debt to Total Market Capitalization 41.5% 34.9%
Property Data (wholly owned properties) (as
of period end):
Number of operating properties owned 229 170
Total net rentable square feet owned (in
thousands) 17,722 15,050
Occupancy 92.8% 92.8%
Reconciliation of denominator for debt to
total assets to denominator for debt to
undepreciated book value of real estate
assets
Denominator for debt to total assets $ 2,916,023 $ 2,419,601
Assets other than assets included in
investment in real estate (331,078) (308,291)
Accumulated depreciation on real estate
assets 270,580 219,574
Intangible assets on real estate
acquisitions, net 116,368 87,325
------------- ------------
Denominator for debt to undepreciated book
value of real estate assets $ 2,971,893 $ 2,418,209
============= ============
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -------------------
2007 2006 2007 2006
---------- ---------- --------- ---------
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 $ 4,605 $ 4,552 $ 18,795 $ 10,742
Total capital improvements
on operating properties 2,514 2,276 6,482 7,935
Total leasing costs on
operating properties 719 3,416 5,712 5,783
Less: Nonrecurring tenant
improvements and incentives
on operating properties (1,887) (3,340) (11,381) (6,373)
Less: Nonrecurring capital
improvements on operating
properties (1,198) (467) (3,052) (4,054)
Less: Nonrecurring leasing
costs incurred on operating
properties (89) (2,783) (2,281) (4,217)
Add: Recurring improvements
on operating properties
held through joint ventures - 236 56 307
---------- ---------- --------- ---------
Recurring capital
expenditures $ 4,664 $ 3,890 $ 14,331 $ 10,123
========== ========== ========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
---------- -------- --------- -------
Reconciliation of dividends for
Earnings Payout Ratio to
dividends and distributions
for FFO & AFFO Payout Ratio
Common share dividends for
earnings payout ratio $16,092 $13,265 $45,234 $36,378
Common unit distributions 2,777 2,643 7,905 7,374
---------- -------- --------- -------
Dividends and distributions for
FFO & AFFO payout ratio $18,869 $15,908 $53,139 $43,752
========== ======== ========= =======
Reconciliation of numerators
for diluted EPS and diluted
FFO as reported to numerators
for diluted EPS and diluted
FFO excluding issuance costs
associated with redeemed
preferred shares
Numerator for diluted EPS, as
reported $ 7,406 $14,451 $12,812 $26,197
Add: Issuance costs associated
with redeemed preferred shares - 1,829 - 1,829
---------- -------- --------- -------
Numerator for diluted EPS, as
adjusted $ 7,406 $16,280 $12,812 $28,026
========== ======== ========= =======
Numerator for diluted FFO, as
reported $32,352 $24,329 $92,477 $73,860
Add: Issuance costs associated
with redeemed preferred shares - 1,829 - 1,829
---------- -------- -----------------
Numerator for diluted FFO, as
adjusted $32,352 $26,158 $92,477 $75,689
========== ======== =================
Reconciliation of GAAP net
income to earnings before
interest, income taxes,
depreciation and amortization
("EBITDA")
Net income $11,431 $20,587
Interest expense on continuing
operations 21,000 17,678
Interest expense on
discontinued operations 145 506
Income tax expense 197 202
Real estate-related
depreciation and amortization 26,266 21,305
Amortization of deferred
financing costs-continuing
operations 901 736
Amortization of deferred
financing costs-discontinued
operations - 128
Other depreciation and
amortization 339 601
Minority interests 1,504 3,636
---------- --------
EBITDA $61,783 $65,379
========== ========
Reconciliation of interest
expense from continuing
operations to the denominators
for interest coverage-EBITDA
and fixed charge coverage-
EBITDA
Interest expense from
continuing operations $21,000 $17,678
Interest expense from
discontinued operations 145 506
---------- --------
Denominator for interest
coverage-EBITDA 21,145 18,184
Preferred share dividends 4,025 4,307
Preferred unit distributions 165 165
---------- --------
Denominator for fixed charge
coverage-EBITDA $25,335 $22,656
========== ========
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 $50,530 $50,793
Less: Straight-line rent
adjustments (1,951) (2,533)
Less: Amortization of deferred
market rental revenue (541) (159)
---------- --------
Same property cash net
operating income 48,038 48,101
Less: Lease termination fees,
gross (610) (1,883)
---------- --------
Same property cash net
operating income, adjusted for
lease termination fees $47,428 $46,218
========== ========
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 Low High
--------- ---------
Year Ending
December 31, 2007
-------------------
Reconciliation of numerators
--------------------------------------------------
Numerator for projected EPS-diluted $ 18,500 $ 19,500
Less: Gain on sales of real estate, excluding
development portion (1) (2,778) (2,778)
Real estate-related depreciation and amortization 105,415 105,415
Minority interests-common units 3,419 3,604
--------- ---------
Numerator for projected diluted FFO per share $124,556 $125,741
========= =========
Reconciliation of denominators
--------------------------------------------------
Denominator for projected EPS-diluted 47,630 47,630
Weighted average common units 8,297 8,297
--------- ---------
Denominator for projected diluted FFO per share 55,927 55,927
========= =========
Projected EPS - diluted $ 0.39 $ 0.41
========= =========
Projected diluted FFO per share $ 2.23 $ 2.25
========= =========
(1) Reconciliation excludes any potential gains or losses from future
sales of previously depreciated operating properties.
Year Ending
December 31, 2008
-------------------
Reconciliation of numerators (1)
--------------------------------------------------
Numerator for projected EPS-diluted $ 28,174 $ 32,451
Real estate-related depreciation and amortization
(2) 101,983 101,983
Minority interests-common units 5,089 5,862
--------- ---------
Numerator for projected diluted FFO per share $135,246 $140,296
========= =========
Reconciliation of denominators
--------------------------------------------------
Denominator for projected EPS-diluted 48,257 48,257
Weighted average common units 8,168 8,168
--------- ---------
Denominator for projected diluted FFO per share 56,425 56,425
========= =========
Projected EPS - diluted $ 0.58 $ 0.67
========= =========
Projected diluted FFO per share $ 2.40 $ 2.49
========= =========
(1) Reconciliation excludes any potential gains or losses from the
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, 2007 (1)
(Dollars in thousands)
Percentage
of
Total Total
Occupied Occupied
Number of Square Square
Tenant Leases Feet Feet
--------------------------------- ---------- ---------- ----------
United States of America (5) 59 2,338,501 14.2%
Northrop Grumman Corporation (6) 16 942,600 5.7%
Booz Allen Hamilton, Inc. 9 723,255 4.4%
Computer Sciences Corporation (6) 4 454,645 2.8%
Unisys Corporation (7) 4 760,145 4.6%
L-3 Communications Holdings,
Inc. (6) 4 221,493 1.3%
General Dynamics Corporation 9 284,415 1.7%
Wachovia Corporation (6) 5 189,478 1.2%
The Aerospace Corporation 2 221,785 1.3%
Comcast Corporation 11 342,266 2.1%
AT&T Corporation (6) 9 337,052 2.0%
The Boeing Company (6) 4 143,480 0.9%
Ciena Corporation 3 221,609 1.3%
Science Applications
International Corp. 12 170,839 1.0%
Magellan Health Services, Inc. 3 142,199 0.9%
BAE Systems PLC (6) 7 212,339 1.3%
The Johns Hopkins University 4 129,735 0.8%
Merck & Co., Inc. (Unisys) (7) 2 227,273 1.4%
Wyle Laboratories, Inc. 4 174,792 1.1%
AARP 1 104,695 0.6%
Subtotal Top 20 Office Tenants 172 8,342,596 50.7%
All remaining tenants 766 8,103,712 49.3%
--------------------------------
Total/Weighted Average 938 16,446,308 100.0%
================================
Total Percentage Weighted
Annualized of Total Average
Rental Annualized Remaining
Revenue Rental Lease Term
Tenant (2) (3) Revenue (4)
--------------------------------- ---------- ---------- ----------
United States of America (5) $53,843 15.4% 6.1
Northrop Grumman Corporation (6) 23,085 6.6% 6.8
Booz Allen Hamilton, Inc. 19,643 5.6% 6.7
Computer Sciences Corporation (6) 11,446 3.3% 3.7
Unisys Corporation (7) 8,843 2.5% 2.0
L-3 Communications Holdings,
Inc. (6) 8,838 2.5% 6.2
General Dynamics Corporation 7,249 2.1% 2.5
Wachovia Corporation (6) 6,744 1.9% 10.7
The Aerospace Corporation 6,504 1.9% 7.2
Comcast Corporation 6,091 1.8% 4.4
AT&T Corporation (6) 6,041 1.7% 5.1
The Boeing Company (6) 4,085 1.2% 4.0
Ciena Corporation 3,675 1.1% 4.4
Science Applications
International Corp. 3,238 0.9% 1.4
Magellan Health Services, Inc. 3,021 0.9% 3.2
BAE Systems PLC (6) 2,873 0.8% 3.3
The Johns Hopkins University 2,834 0.8% 8.4
Merck & Co., Inc. (Unisys) (7) 2,670 0.8% 1.7
Wyle Laboratories, Inc. 2,461 0.7% 5.0
AARP 2,454 0.7% 14.2
Subtotal Top 20 Office Tenants 185,638 53.2% 5.7
All remaining tenants 163,099 46.8% 4.0
----------------------
Total/Weighted Average $348,737 100.0% 4.9
======================
(1) Table excludes owner occupied leasing activity which represents
151,127 square feet with a weighted average remaining lease term
of 7.1 years as of September 30, 2007.
(2) Total Annualized Rental Revenue is the monthly contractual base
rent as of September 30, 2007, 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 November 5, 2007