COLUMBIA, Md.--(BUSINESS WIRE)--Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced that it completed the transfer of 14 operating properties in satisfaction of $146.5 million of secured indebtedness. In total, the properties contained 1.0 million square feet and were 73% occupied. Nine of the properties are located in Linthicum, MD, and five are in Colorado Springs, CO.
Combined with the Company’s prior disposition of 15 operating properties in Colorado (see press release dated December 13, 2013), COPT has completed its strategic exit from the Colorado Springs market. Together, the 20 Colorado Springs assets totaled 1.6 million square feet and were disposed of for a total of $177 million.
NAREIT FFOPS Guidance for 2013 Revised Upward
In the fourth quarter of 2013 the Company expects to recognize a non-cash accounting gain estimated to be approximately $67 million (or $0.74 per diluted share), representing the difference between the face value of the $146.5 million secured debt over the book value of the properties at the date of the transfer. This gain affects the Company’s previously issued fourth quarter and full year 2013 FFO per share (“FFOPS”), per NAREIT, and earnings per share (“EPS”), but not its FFOPS, as adjusted for comparability.
| Quarter Ending | Year Ending | |||||||||||||||
| December 31, 2013 | December 31, 2013 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| EPS | $ | 0.88 | $ | 0.90 | $ | 0.73 | $ | 0.75 | ||||||||
| Real estate depreciation and amortization | 0.33 | 0.33 | 1.31 | 1.31 | ||||||||||||
| Impairments and exit costs on previously depreciated properties | - | - | 0.35 | 0.35 | ||||||||||||
| FFOPS, NAREIT definition | 1.21 | 1.23 | 2.39 | 2.41 | ||||||||||||
| Net gains on early extinguishment of debt | (0.74 | ) | (0.74 | ) | (0.43 | ) | (0.43 | ) | ||||||||
| Gains on sales of non-operating properties | - | - | (0.03 | ) | (0.03 | ) | ||||||||||
| Issuance costs of redeemed preferred shares | - | - | 0.03 | 0.03 | ||||||||||||
| FFOPS, as adjusted for comparability | $ | 0.47 | $ | 0.49 | $ | 1.96 | $ | 1.98 | ||||||||
Accordingly, management is increasing its previous guidance for the fourth quarter and full year 2013 FFOPS, per NAREIT, from prior ranges of between $0.47–$0.49 and $1.65–$1.67, respectively, to new ranges of between $1.21–$1.23 and $2.39–$2.41. Management is affirming its previous guidance for the fourth quarter and full year 2013 FFOPS, as adjusted for comparability. A reconciliation of projected diluted EPS to projected FFOPS for the quarter ending and the year ending December 31, 2013 is provided in the table above.
Company Information
COPT is an office REIT that focuses primarily on serving the specialized requirements of U.S. Government agencies and defense contractors, most of which are engaged in defense information technology and national security-related activities. As of September 30, 2013, COPT derived 64% of its annualized revenue from its strategic tenant niche properties and 21% from its regional office properties. The Company generally acquires, develops, manages and leases office and data center properties concentrated in large office parks primarily located near knowledge-based government demand drivers and/or in targeted markets or submarkets in the Greater Washington, DC/Baltimore region. As of September 30, 2013, the Company’s consolidated portfolio consisted of 210 office properties totaling 19.2 million rentable square feet. COPT is an S&P MidCap 400 company.
Forward-Looking Information
This press release may contain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company’s current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Accordingly, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements.
Important factors that may affect these expectations, estimates, and projections include, but are not limited to:
- general economic and business conditions, which will, among other things, affect office property and data center demand and rents, tenant creditworthiness, interest rates, financing availability and property values;
- adverse changes in the real estate markets including, among other things, increased competition with other companies;
- governmental actions and initiatives, including risks associated with the impact of a 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;
- the Company’s ability to borrow on favorable terms;
- 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;
- the Company’s ability to sell properties included in its Strategic Reallocation Plan;
- risks of investing through joint venture structures, including risks that the Company’s joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with the Company’s objectives;
- changes in 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;
- the Company’s ability to satisfy and operate effectively under Federal income tax rules relating to real estate investment trusts and partnerships;
- the Company's ability to achieve projected results;
- the dilutive effects of issuing additional common shares; and
- environmental requirements.
The Company undertakes no obligation to update or supplement any forward-looking statements. For further information, please refer to the Company’s filings with the Securities and Exchange Commission, particularly the section entitled “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
