[February 07, 2019] |
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COPT Reports 4Q and Full Year 2018 Results
Corporate Office Properties Trust ("COPT" or the "Company") (NYSE: OFC)
announced financial and operating results for the fourth quarter and
full year ended December 31, 2018.
Management Comments
"Our fourth quarter represented a strong finish to a solid year," stated
Stephen E. Budorick, COPT's President & Chief Executive Officer.
"Leasing further accelerated during the fourth quarter, resulting in
nearly 250,000 square feet of vacancy leasing, 377,000 square feet of
development leasing, and 700,000 square feet of renewals, resulting in a
robust 82% retention rate. For the year, we leased over 4.2 million
square feet, including nearly 600,000 square feet of vacancy leasing,
and 1.1 million square feet of development leasing-the second highest
level in our 20 year history as a public company." He continued, "Thus
far in 2019, we have completed the lease for the second floor at 310 NBP
with the U.S. Government, are in advanced negotiations on a significant
level of development leasing, and are on track to register another
strong year of leasing in the operating portfolio."
Financial Highlights
4th Quarter Financial Results:
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Diluted earnings per share ("EPS") was $0.16 for the quarter ended
December 31, 2018 as compared to $0.10 for the fourth quarter of 2017.
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Diluted funds from operations per share ("FFOPS"), as calculated in
accordance with NAREIT's definition, was $0.47 for the fourth quarter
of 2018, equal to fourth quarter 2017 results.
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FFOPS, as adjusted for comparability, was $0.50 for the quarter ended
December 31, 2018 as compared to $0.53 for the fourth quarter of 2017.
Full Year 2018 Financial Results:
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EPS for the year ended December 31, 2018 was $0.69 as compared to
$0.56 for 2017.
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Per NAREIT's definition, FFOPS for 2018 was $1.97 as compared to $1.94
for 2017.
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FFOPS, as adjusted for comparability, for 2018 was $2.01 as compared
to $2.02 for 2017.
Adjustments for comparability encompass items such as gains and
impairment losses on non-operating properties, losses on early
extinguishment of debt, derivative gains (losses), issuance costs
associated with redeemed preferred shares, demolition costs of
redevelopment and nonrecurring improvements, and executive transition
costs.
Operating Performance Highlights
Operating Portfolio Summary:
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At December 31, 2018, the Company's core portfolio of 161 operating
office properties was 93.1% occupied and 94.0% leased.
During
the quarter, the Company placed two developments aggregating 238,000
square feet plus our build-to-suit for a defense contractor into
service; all three developments were 100% leased. During the year, the
Company placed seven developments totaling 688,000 square feet that
were 90% leased and the build-to-suit for a defense contractor that
was 100% leased into service.
Same-Property Performance:
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At December 31, 2018, COPT's same-property portfolio of 147 buildings
was 93.0% occupied and 93.8% leased.
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For the quarter and year ended December 31, 2018, the Company's
same-property cash NOI from Defense/IT locations increased 1.0% and
2.1%, respectively, over the prior year's comparable periods. For the
same time periods, the Company's total same-property cash NOI
decreased 1.1% and 0.4%, respectively, over the prior year's
comparable periods.
Leasing:
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Square Feet Leased?For the quarter ended
December 31, 2018, the Company leased 1.3 million total square feet,
including 704,000 square feet of renewing leases, 248,000 square feet
of new leases on vacant space, and 377,000 square feet in development
projects.
For the year ended December 31, 2018, the Company
leased 4.2 million total square feet, including 2.5 million square
feet of renewing leases, 596,000 square feet of new leases on vacant
space, and 1.1 million square feet in development projects.
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Renewal Rates?During the fourth quarter
and year ended December 31, 2018, the Company renewed 82.2% and 78.4%,
respectively, of total expiring leases.
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Rent Spreads & Average Escalations on Renewing
Leases?For the quarter ended December 31, 2018, rents on
renewed space increased 3.0% on a GAAP basis and decreased 6.9% on a
cash basis; average annual escalations on renewing leases in the
fourth quarter were 2.7%. For the year ended December 31, 2018, rents
on renewed space increased 6.8% on a GAAP basis and decreased 2.0% on
a cash basis; average annual escalations on renewing leases for the
year were 2.6%.
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Lease Terms?In the fourth quarter, lease
terms averaged 4.6 years on renewing leases, 8.5 years on new leasing
of vacant space, and 14.7 years on development leasing. For the year,
lease terms averaged 3.8 years on renewing leases, 7.4 years on new
leasing of vacant space, and 12.4 years on development leasing.
Investment Activity Highlights
Development & Redevelopment Projects:
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Construction Pipeline. At January 2, 2019, the Company's
construction pipeline consisted of nine properties totaling 1.1
million square feet that were 81% leased. These projects have a total
estimated cost of $332.5 million, of which $162.4 million has been
incurred.
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Redevelopment. At the end of the quarter, one project was under
redevelopment totaling 106,000 square feet that was 0% leased.
Subsequent to the quarter, the Company executed a 10,000 square foot
pre-lease, bringing the project to 9% leased. The Company has invested
$11.6 million of the $25.1 million anticipated total cost.
Balance Sheet and Capital Transaction Highlights
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As of December 31, 2018, the Company's net debt plus preferred equity
to adjusted book ratio was 39.1% and its net debt plus preferred
equity to in-place adjusted EBITDA ratio was 6.0x. For the same
period, the Company's adjusted EBITDA fixed charge coverage ratio was
3.6x.
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As of December 31, 2018 and including the effect of interest rate
swaps, the Company's weighted average effective interest rate was
4.1%; additionally, 93% of the Company's debt was subject to fixed
interest rates and the consolidated debt portfolio had a weighted
average maturity of 4.5 years.
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During the fourth quarter and year ended December 31, 2018, the
Company issued 1.4 million and 5.9 million common shares under its
forward equity sale agreement for net proceeds of $40.0 million and
$172.5 million, respectively. Also during the year, the Company issued
992,000 common shares through its At-the-Market ("ATM") program at an
average gross price of $30.46 per share for net proceeds of $29.8
million.
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In October, the Company entered into a new $800 million credit
agreement to replace its existing $800 million revolving credit
facility. The new credit facility has a maturity date of March 2023,
plus two six-month extension options. The new facility's interest rate
is calculated as LIBOR plus 77.5-145 basis points; based on the
Company's current credit ratings, the initial spread over LIBOR is 110
basis points.
Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to
accompany management's prepared remarks for its fourth quarter and year
end 2018 conference call, the details of which are provided below. The
accompanying slide presentation can be viewed on and downloaded from the
'Latest Updates' section of COPT's Investors website: https://investors.copt.com/
Conference Call Information
Management will discuss fourth quarter and year end 2018 results on its
conference call tomorrow at 12:00 p.m. Eastern Time, details of which
are listed below:
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Conference Call Date:
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Friday, February 8, 2019
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Time:
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12:00 p.m. Eastern Time
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Telephone Number: (within the U.S.)
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855-463-9057
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Telephone Number: (outside the U.S.)
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661-378-9894
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Passcode:
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1485747
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The conference call will also be available via live webcast in the
'Latest Updates' section of COPT's Investors website: https://investors.copt.com/
Replay Information
A replay of the conference call will be immediately available via
webcast on the Investors website. Additionally, a telephonic replay of
this call will be available beginning at 3:00 p.m. Eastern Time on
Friday, February 8, through 3:00 p.m. Eastern Time on Friday, February
22. To access the replay within the United States, please call
855-859-2056; to access it from outside the United States, please call
404-537-3406. In either case, use passcode 1485747.
Definitions
For definitions of certain terms used in this press release, please
refer to the information furnished in the Company's Supplemental
Information Package furnished on a Form 8-K which can be found on its
website (www.copt.com).
Reconciliations of non-GAAP measures to the most directly comparable
GAAP measures are included in the attached tables.
Company Information
COPT is a REIT that owns, manages, leases, develops and selectively
acquires office and data center properties in locations that support the
United States Government and its contractors, most of whom are engaged
in national security, defense and information technology ("IT") related
activities servicing what it believes are growing, durable, priority
missions ("Defense/IT Locations"). The Company also owns a portfolio of
office properties located in select urban/urban-like submarkets in the
Greater Washington, DC/Baltimore region with durable Class-A office
fundamentals and characteristics ("Regional Office Properties"). As of
December 31, 2018, the Company derived 88% of its core portfolio
annualized revenue from Defense/IT Locations and 12% from its Regional
Office Properties. As of the same date and including six buildings owned
through an unconsolidated joint venture, COPT's core portfolio of 161
office and data center shell properties encompassed 17.9 million square
feet and was 94.0% leased; the Company also owned one wholesale data
center with a critical load of 19.25 megawatts.
Forward-Looking Information
This press release may contain "forward-looking" statements, as
defined in Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, that are based on the Company's
current expectations, estimates and projections about future events and
financial trends affecting the Company. Forward-looking statements can
be identified by the use of words such as "may," "will," "should,"
"could," "believe," "anticipate," "expect," "estimate," "plan" or other
comparable terminology. Forward-looking statements are inherently
subject to risks and uncertainties, many of which the Company cannot
predict with accuracy and some of which the Company might not even
anticipate. Although the Company believes that the expectations,
estimates and projections reflected in such forward-looking statements
are based on reasonable assumptions at the time made, 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:
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general economic and business conditions, which will, among other
things, affect office property and data center demand and rents,
tenant creditworthiness, interest rates, financing availability and
property values;
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adverse changes in the real estate markets including, among other
things, increased competition with other companies;
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governmental actions and initiatives, including risks associated
with the impact of a prolonged government shutdown or budgetary
reductions or impasses, such as a reduction in rental revenues,
non-renewal of leases, and/or a curtailment of demand for additional
space by the Company's strategic customers;
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the Company's ability to borrow on favorable terms;
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risks of real estate acquisition and development activities,
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;
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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;
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changes in the Company's plans for properties or views of market
economic conditions or failure to obtain development rights, either of
which could result in recognition of significant impairment losses;
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the Company's ability to satisfy and operate effectively under
Federal income tax rules relating to real estate investment trusts and
partnerships;
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possible adverse changes in tax laws;
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the dilutive effects of issuing additional common shares;
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the Company's ability to achieve projected results;
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security breaches relating to cyber attacks, cyber intrusions or
other factors; and
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environmental requirements.
The Company undertakes no obligation to update or supplement any
forward-looking statements. For further information, please refer to the
Company's filings with the Securities and Exchange Commission,
particularly the section entitled "Risk Factors" in Item 1A of the
Company's Annual Report on Form 10-K for the year ended December 31,
2017.
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Corporate Office Properties Trust
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Summary Financial Data
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(unaudited)
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(in thousands, except per share data)
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For the Three Months Ended December 31,
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For the Years Ended December 31,
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2018
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2017
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2018
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2017
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Revenues
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Real estate revenues
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$
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130,825
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$
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127,685
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$
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517,253
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$
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509,980
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Construction contract and other service revenues
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7,657
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36,882
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60,859
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102,840
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Total revenues
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138,482
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164,567
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578,112
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612,820
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Expenses
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Property operating expenses
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51,298
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47,449
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201,035
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190,964
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Depreciation and amortization associated with real estate operations
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36,219
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33,938
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137,116
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134,228
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Construction contract and other service expenses
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7,111
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36,029
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58,326
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99,618
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Impairment losses
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2,367
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13,659
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2,367
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15,123
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General and administrative expenses
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5,105
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5,552
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22,829
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24,008
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Leasing expenses
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1,976
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1,447
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6,071
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6,829
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Business development expenses and land carry costs
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1,425
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1,646
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5,840
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6,213
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Total operating expenses
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105,501
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139,720
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433,584
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476,983
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Operating income
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32,981
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24,847
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144,528
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135,837
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Interest expense
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(18,475
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(19,211
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(75,385
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(76,983
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Interest and other income
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74
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1,501
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4,358
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6,318
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Gain on sales of real estate
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2,367
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4,452
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2,340
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9,890
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Loss on early extinguishment of debt
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(258
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(258
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(513
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Income before equity in income of unconsolidated entities and income
taxes
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16,689
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11,589
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75,583
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74,549
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Equity in income of unconsolidated entities
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1,577
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372
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2,697
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1,490
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Income tax benefit (expense)
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190
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(953
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363
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(1,098
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Net income
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18,456
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11,008
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78,643
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74,941
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Net income attributable to noncontrolling interests:
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Common units in the Operating Partnership ("OP")
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(210
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(314
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(1,742
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(1,890
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Preferred units in the OP
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(165
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(165
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(660
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(660
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Other consolidated entities
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(1,061
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(908
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(3,940
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(3,646
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Net income attributable to COPT
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17,020
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9,621
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72,301
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68,745
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Preferred share dividends
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-
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-
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-
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(6,219
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Issuance costs associated with redeemed preferred shares
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-
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-
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-
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(6,847
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Net income attributable to COPT common shareholders
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$
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17,020
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$
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9,621
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$
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72,301
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$
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55,679
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Earnings per share ("EPS") computation:
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Numerator for diluted EPS:
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Net income attributable to COPT common shareholders
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$
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17,020
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$
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9,621
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$
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72,301
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$
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55,679
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Amount allocable to share-based compensation awards
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(114
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(112
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(462
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(449
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)
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Numerator for diluted EPS
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$
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16,906
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$
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9,509
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$
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71,839
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$
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55,230
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Denominator:
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Weighted average common shares - basic
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108,528
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99,304
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103,946
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98,969
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Dilutive effect of share-based compensation awards
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45
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68
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134
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132
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Dilutive effect of forward equity sale agreements
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-
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215
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45
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54
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Weighted average common shares - diluted
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108,573
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99,587
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104,125
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99,155
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Diluted EPS
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$
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0.16
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$
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0.10
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$
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0.69
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$
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0.56
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Corporate Office Properties Trust
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Summary Financial Data
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(unaudited)
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(in thousands, except per share data)
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For the Three Months Ended December 31,
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For the Years Ended December 31,
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2018
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2017
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2018
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2017
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Net income
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$
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18,456
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$
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11,008
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$
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78,643
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$
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74,941
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Real estate-related depreciation and amortization
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36,219
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33,938
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137,116
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134,228
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Impairment losses on previously depreciated operating properties
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6
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9,004
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6
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10,455
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Gain on sales of previously depreciated operating properties
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(2,367
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)
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(4,452
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)
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(2,340
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)
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(4,491
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)
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Depreciation and amortization on unconsolidated real estate JV
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565
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563
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2,256
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2,252
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Funds from operations ("FFO")
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52,879
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50,061
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215,681
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217,385
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Preferred share dividends
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-
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-
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-
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(6,219
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)
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Issuance costs associated with redeemed preferred shares
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-
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-
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-
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(6,847
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)
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Noncontrolling interests - preferred units in the OP
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(165
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(165
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(660
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(660
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)
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FFO allocable to other noncontrolling interests
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(1,011
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)
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(874
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)
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(3,768
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(3,675
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)
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Basic and diluted FFO allocable to share-based compensation awards
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(200
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(198
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(851
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(814
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)
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Basic FFO available to common share and common unit holders ("Basic
FFO")
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51,503
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48,824
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210,402
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199,170
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Redeemable noncontrolling interests
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331
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-
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1,540
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-
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Diluted FFO available to common share and common unit holders
("Diluted FFO")
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51,834
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48,824
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211,942
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199,170
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Gain on sales of non-operating properties
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-
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-
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-
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(5,399
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)
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Impairment losses on non-operating properties
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2,361
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|
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4,655
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2,361
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4,668
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Income tax expense associated with FFO comparability adjustments
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|
-
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800
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-
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800
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Gain on interest rate derivatives
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-
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(191
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-
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(234
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)
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Loss on early extinguishment of debt
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258
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-
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258
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|
513
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Issuance costs associated with redeemed preferred shares
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-
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-
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-
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6,847
|
|
Demolition costs on redevelopment and nonrecurring improvements
|
|
163
|
|
|
-
|
|
|
462
|
|
|
294
|
|
Executive transition costs
|
|
371
|
|
|
-
|
|
|
793
|
|
|
732
|
|
Diluted FFO comparability adjustments allocable to share-based
compensation awards
|
|
(13
|
)
|
|
(23
|
)
|
|
(16
|
)
|
|
(35
|
)
|
Diluted FFO available to common share and common unit holders, as
adjusted for comparability
|
|
54,974
|
|
|
54,065
|
|
|
215,800
|
|
|
207,356
|
|
Straight line rent adjustments and lease incentive amortization
|
|
(46
|
)
|
|
(1,343
|
)
|
|
(1,487
|
)
|
|
46
|
|
Amortization of intangibles included in net operating income
|
|
153
|
|
|
342
|
|
|
893
|
|
|
1,344
|
|
Share-based compensation, net of amounts capitalized
|
|
1,601
|
|
|
1,523
|
|
|
6,193
|
|
|
5,353
|
|
Amortization of deferred financing costs
|
|
550
|
|
|
443
|
|
|
1,954
|
|
|
2,928
|
|
Amortization of net debt discounts, net of amounts capitalized
|
|
365
|
|
|
350
|
|
|
1,439
|
|
|
1,379
|
|
Accum. other comprehensive loss on derivatives amortized to expense
|
|
34
|
|
|
54
|
|
|
135
|
|
|
143
|
|
Replacement capital expenditures
|
|
(14,848
|
)
|
|
(23,475
|
)
|
|
(64,784
|
)
|
|
(63,026
|
)
|
Other diluted AFFO adjustments associated with real estate JVs
|
|
(28
|
)
|
|
(39
|
)
|
|
121
|
|
|
(210
|
)
|
Diluted adjusted funds from operations available to common share and
common unit holders ("Diluted AFFO")
|
|
$
|
42,755
|
|
|
$
|
31,920
|
|
|
$
|
160,264
|
|
|
$
|
155,313
|
|
Diluted FFO per share
|
|
$
|
0.47
|
|
|
$
|
0.47
|
|
|
$
|
1.97
|
|
|
$
|
1.94
|
|
Diluted FFO per share, as adjusted for comparability
|
|
$
|
0.50
|
|
|
$
|
0.53
|
|
|
$
|
2.01
|
|
|
$
|
2.02
|
|
Dividends/distributions per common share/unit
|
|
$
|
0.275
|
|
|
$
|
0.275
|
|
|
$
|
1.100
|
|
|
$
|
1.100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Office Properties Trust
|
Summary Financial Data
|
(unaudited)
|
(Dollars and shares in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
Balance Sheet Data
|
|
|
|
|
|
|
Properties, net of accumulated depreciation
|
|
|
|
$
|
3,250,626
|
|
|
$
|
3,141,105
|
|
Total assets
|
|
|
|
|
3,656,005
|
|
|
|
3,595,205
|
|
Debt, per balance sheet
|
|
|
|
|
1,823,909
|
|
|
|
1,828,333
|
|
Total liabilities
|
|
|
|
|
2,002,697
|
|
|
|
2,103,773
|
|
Redeemable noncontrolling interest
|
|
|
|
|
26,260
|
|
|
|
23,125
|
|
Equity
|
|
|
|
|
1,627,048
|
|
|
|
1,468,307
|
|
Net debt to adjusted book
|
|
|
|
|
38.9
|
%
|
|
|
40.8
|
%
|
|
|
|
|
|
|
|
Core Portfolio Data (as of period end) (1)
|
|
|
|
|
|
|
Number of operating properties
|
|
|
|
|
161
|
|
|
|
156
|
|
Total net rentable square feet owned (in thousands)
|
|
|
|
|
17,937
|
|
|
|
17,059
|
|
Occupancy %
|
|
|
|
|
93.1
|
%
|
|
|
94.5
|
%
|
Leased %
|
|
|
|
|
94.0
|
%
|
|
|
95.1
|
%
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December 31,
|
|
For the Years Ended December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Payout ratios
|
|
|
|
|
|
|
|
|
Diluted FFO
|
|
59.0
|
%
|
|
58.7
|
%
|
|
|
56.0
|
%
|
|
|
56.8
|
%
|
Diluted FFO, as adjusted for comparability
|
|
55.6
|
%
|
|
53.0
|
%
|
|
|
55.0
|
%
|
|
|
54.6
|
%
|
Diluted AFFO
|
|
71.5
|
%
|
|
89.7
|
%
|
|
|
74.1
|
%
|
|
|
72.9
|
%
|
Adjusted EBITDA fixed charge coverage ratio
|
|
3.6x
|
|
3.7x
|
|
3.6x
|
|
3.4x
|
Net debt to in-place adjusted EBITDA ratio (2)
|
|
6.0x
|
|
6.1x
|
|
|
N/A
|
|
|
N/A
|
Net debt plus preferred equity to in-place adjusted EBITDA ratio (3)
|
|
6.0x
|
|
6.1x
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of denominators for per share measures
|
|
|
|
|
|
|
|
|
Denominator for diluted EPS
|
|
108,573
|
|
|
99,587
|
|
|
|
104,125
|
|
|
|
99,155
|
|
Weighted average common units
|
|
1,345
|
|
|
3,252
|
|
|
|
2,468
|
|
|
|
3,362
|
|
Redeemable noncontrolling interests
|
|
1,126
|
|
|
-
|
|
|
|
936
|
|
|
|
-
|
|
Denominator for diluted FFO per share and as adjusted for
comparability
|
|
111,044
|
|
|
102,839
|
|
|
|
107,529
|
|
|
|
102,517
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents Defense/IT Locations and Regional Office properties.
|
(2)
|
|
Represents net debt as of period end divided by in-place adjusted
EBITDA for the period, as annualized (i.e. three month periods are
multiplied by four).
|
(3)
|
|
Represents net debt plus the total liquidation preference of
preferred equity as of period end divided by in-place adjusted
EBITDA for the period, as annualized (i.e. three month periods are
multiplied by four).
|
|
|
|
|
|
|
|
|
Corporate Office Properties Trust
|
Summary Financial Data
|
(unaudited)
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
For the Three Months Ended December 31,
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Reconciliation of common share dividends to dividends and
distributions for payout ratios
|
|
|
|
|
|
|
|
|
Common share dividends - unrestricted shares
|
|
$
|
30,206
|
|
|
$
|
27,747
|
|
|
$
|
116,285
|
|
|
$
|
109,489
|
|
Common unit distributions
|
|
367
|
|
|
894
|
|
|
2,498
|
|
|
3,661
|
|
Dividends and distributions for payout ratios
|
|
$
|
30,573
|
|
|
$
|
28,641
|
|
|
$
|
118,783
|
|
|
$
|
113,150
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP net income to earnings before interest,
income taxes, depreciation and amortization for real estate
("EBITDAre"), adjusted EBITDA and in-place adjusted EBITDA
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
18,456
|
|
|
$
|
11,008
|
|
|
$
|
78,643
|
|
|
$
|
74,941
|
|
Interest expense
|
|
18,475
|
|
|
19,211
|
|
|
75,385
|
|
|
76,983
|
|
Income tax (benefit) expense
|
|
(190
|
)
|
|
953
|
|
|
(363
|
)
|
|
1,098
|
|
Depreciation of furniture, fixtures and equipment
|
|
404
|
|
|
600
|
|
|
1,947
|
|
|
2,273
|
|
Real estate-related depreciation and amortization
|
|
36,219
|
|
|
33,938
|
|
|
137,116
|
|
|
134,228
|
|
Impairment losses on previously depreciated operating properties
|
|
6
|
|
|
9,004
|
|
|
6
|
|
|
10,455
|
|
Gain on sales of previously depreciated operating properties
|
|
(2,367
|
)
|
|
(4,452
|
)
|
|
(2,340
|
)
|
|
(4,491
|
)
|
Adjustments from unconsolidated real estate JV
|
|
832
|
|
|
829
|
|
|
3,314
|
|
|
3,310
|
|
EBITDAre
|
|
71,835
|
|
|
71,091
|
|
|
293,708
|
|
|
298,797
|
|
Impairment losses on non-operating properties
|
|
2,361
|
|
|
4,655
|
|
|
2,361
|
|
|
4,668
|
|
Loss on early extinguishment of debt
|
|
258
|
|
|
-
|
|
|
258
|
|
|
513
|
|
Gain on sales of non-operating properties
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,399
|
)
|
Net gain on other investments
|
|
(449
|
)
|
|
-
|
|
|
(449
|
)
|
|
-
|
|
Business development expenses
|
|
661
|
|
|
1,116
|
|
|
3,114
|
|
|
3,786
|
|
Demolition costs on redevelopment and nonrecurring improvements
|
|
163
|
|
|
-
|
|
|
462
|
|
|
294
|
|
Executive transition costs
|
|
371
|
|
|
-
|
|
|
793
|
|
|
732
|
|
Adjusted EBITDA
|
|
75,200
|
|
|
76,862
|
|
|
$
|
300,247
|
|
|
$
|
303,391
|
|
Proforma net operating income adjustment for property changes within
period
|
|
2,052
|
|
|
(578
|
)
|
|
|
|
|
In-place adjusted EBITDA
|
|
$
|
77,252
|
|
|
$
|
76,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of interest expense to the denominators for fixed
charge coverage-Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
18,475
|
|
|
$
|
19,211
|
|
|
$
|
75,385
|
|
|
$
|
76,983
|
|
Less: Amortization of deferred financing costs
|
|
(550
|
)
|
|
(443
|
)
|
|
(1,954
|
)
|
|
(2,928
|
)
|
Less: Amortization of net debt discounts, net of amounts capitalized
|
|
(365
|
)
|
|
(350
|
)
|
|
(1,439
|
)
|
|
(1,379
|
)
|
Less: Accum. other comprehensive loss on derivatives amortized to
expense
|
|
(34
|
)
|
|
(54
|
)
|
|
(135
|
)
|
|
(143
|
)
|
Gain on interest rate derivatives
|
|
-
|
|
|
191
|
|
|
-
|
|
|
234
|
|
COPT's share of interest expense of unconsolidated real estate JV,
excluding deferred financing costs
|
|
260
|
|
|
260
|
|
|
1,034
|
|
|
1,034
|
|
Scheduled principal amortization
|
|
1,079
|
|
|
1,034
|
|
|
4,240
|
|
|
4,062
|
|
Capitalized interest
|
|
1,748
|
|
|
1,032
|
|
|
5,929
|
|
|
5,229
|
|
Preferred share dividends
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,219
|
|
Preferred unit distributions
|
|
165
|
|
|
165
|
|
|
660
|
|
|
660
|
|
Denominator for fixed charge coverage-Adjusted EBITDA
|
|
$
|
20,778
|
|
|
$
|
21,046
|
|
|
$
|
83,720
|
|
|
$
|
89,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Office Properties Trust
|
Summary Financial Data
|
(unaudited)
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December 31,
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Reconciliations of tenant improvements and incentives, capital
improvements and leasing costs for operating properties to
replacement capital expenditures
|
|
|
|
|
|
|
|
|
Tenant improvements and incentives
|
|
$
|
7,876
|
|
|
$
|
14,804
|
|
|
$
|
37,502
|
|
|
$
|
37,034
|
|
Building improvements
|
|
|
9,306
|
|
|
|
9,241
|
|
|
|
22,977
|
|
|
|
22,308
|
|
Leasing costs
|
|
|
3,800
|
|
|
|
3,242
|
|
|
|
9,847
|
|
|
|
8,487
|
|
Net (exclusions from) additions to tenant improvements and incentives
|
|
|
(2,131
|
)
|
|
|
(2,929
|
)
|
|
|
1,577
|
|
|
|
2,984
|
|
Excluded building improvements
|
|
|
(3,984
|
)
|
|
|
(853
|
)
|
|
|
(7,073
|
)
|
|
|
(7,757
|
)
|
Excluded leasing costs
|
|
|
(19
|
)
|
|
|
(30
|
)
|
|
|
(46
|
)
|
|
|
(30
|
)
|
Replacement capital expenditures
|
|
$
|
14,848
|
|
|
$
|
23,475
|
|
|
$
|
64,784
|
|
|
$
|
63,026
|
|
|
|
|
|
|
|
|
|
|
Same Properties cash NOI
|
|
$
|
70,923
|
|
|
$
|
71,711
|
|
|
$
|
283,450
|
|
|
$
|
284,470
|
|
Straight line rent adjustments and lease incentive amortization
|
|
|
(638
|
)
|
|
|
(1,050
|
)
|
|
|
(4,287
|
)
|
|
|
(2,808
|
)
|
Amortization of acquired above- and below-market rents
|
|
|
(97
|
)
|
|
|
(287
|
)
|
|
|
(671
|
)
|
|
|
(1,123
|
)
|
Amortization of below-market cost arrangements
|
|
|
(147
|
)
|
|
|
(147
|
)
|
|
|
(589
|
)
|
|
|
(590
|
)
|
Lease termination fees, gross
|
|
|
906
|
|
|
|
828
|
|
|
|
3,231
|
|
|
|
2,911
|
|
Tenant funded landlord assets and lease incentives
|
|
|
409
|
|
|
|
1,118
|
|
|
|
3,421
|
|
|
|
4,488
|
|
Cash NOI adjustments in unconsolidated real estate JV
|
|
|
57
|
|
|
|
73
|
|
|
|
254
|
|
|
|
336
|
|
Same Properties NOI
|
|
$
|
71,413
|
|
|
$
|
72,246
|
|
|
$
|
284,809
|
|
|
$
|
287,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
Reconciliation of total assets to adjusted book
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
$
|
3,656,005
|
|
|
$
|
3,595,205
|
|
Accumulated depreciation
|
|
|
|
|
|
|
897,903
|
|
|
|
786,193
|
|
Accumulated amortization of real estate intangibles and deferred
leasing costs
|
|
|
|
|
|
|
204,882
|
|
|
|
193,151
|
|
COPT's share of liabilities of unconsolidated real estate JV
|
|
|
|
|
|
|
29,917
|
|
|
|
29,908
|
|
COPT's share of accumulated depreciation and amortization of
unconsolidated real estate JV
|
|
|
|
|
|
|
5,446
|
|
|
|
3,189
|
|
Less: Disposed property included in assets held for sale
|
|
|
|
|
|
|
-
|
|
|
|
(42,226
|
)
|
Less: Cash and cash equivalents
|
|
|
|
|
|
|
(8,066
|
)
|
|
|
(12,261
|
)
|
Less: COPT's share of cash of unconsolidated real estate JV
|
|
|
|
|
|
|
(293
|
)
|
|
|
(371
|
)
|
Adjusted book
|
|
|
|
|
|
$
|
4,785,794
|
|
|
$
|
4,552,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of debt outstanding to net debt and net debt plus
preferred equity
|
|
|
|
|
|
|
|
|
Debt outstanding (excluding net debt discounts and deferred
financing costs)
|
|
|
|
|
|
$
|
1,868,504
|
|
|
$
|
1,872,167
|
|
Less: Cash and cash equivalents
|
|
|
|
|
|
|
(8,066
|
)
|
|
|
(12,261
|
)
|
Less: COPT's share of cash of unconsolidated real estate JV
|
|
|
|
|
|
|
(293
|
)
|
|
|
(371
|
)
|
Net debt
|
|
|
|
|
|
$
|
1,860,145
|
|
|
$
|
1,859,535
|
|
Preferred equity
|
|
|
|
|
|
|
8,800
|
|
|
|
8,800
|
|
Net debt plus preferred equity
|
|
|
|
|
|
$
|
1,868,945
|
|
|
$
|
1,868,335
|
|
|
|
|
|
|
|
|
|
|

View source version on businesswire.com: https://www.businesswire.com/news/home/20190207005854/en/
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