COLUMBIA, Md.--(BUSINESS WIRE)--Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the second quarter and six months ended June 30, 2018.
Management Comments
“We had a strong second quarter during which we completed the lease with the U.S. Government for a 159,000 square foot ATFP-compliant facility known as ‘NoVA Office B’, executed three new contracts for build-to-suit projects within our Defense/IT segment, and outperformed our quarterly guidance,” stated Stephen E. Budorick, COPT’s President & Chief Executive Officer. “Increased funding for Defense has enabled defense contractors and U.S. Government agencies to begin planning for new, strategically located facilities to accommodate mission growth, achieve operating efficiencies, and comply with security mandates. Based on our success to date and active opportunities, we are increasing our development leasing guidance for this year by 200,000 square feet, to 1.1 million square feet.”
Financial Highlights
2nd Quarter Financial Results:
- Diluted earnings per share (“EPS”) was $0.19 for the quarter ended June 30, 2018 as compared to $0.08 for the second quarter of 2017.
- Diluted funds from operations per share (“FFOPS”), as calculated in accordance with NAREIT’s definition, was $0.51 for the second quarter of 2018 as compared to $0.42 for the second quarter of 2017.
- FFOPS, as adjusted for comparability, was $0.51 for the quarter ended June 30, 2018 as compared to $0.49 for the second quarter of 2017.
Adjustments for comparability encompass items such as gains and impairment losses on non-operating properties, executive transition costs, gains (losses) on early extinguishment of debt, derivative gains (losses), and write-offs of original issuance costs for redeemed preferred shares.
Operating Performance Highlights
Operating Portfolio Summary:
- At June 30, 2018, the Company’s core portfolio of 157 operating office properties was 91.5% occupied and 93.4% leased.
- During the quarter, the Company placed 151,000 square feet of development into service that was 100% leased. During the six months ended June 30, 2018, the Company placed 236,000 square feet into service in properties that were 76% leased.
Same-Property Performance:
- At June 30, 2018, COPT’s same-property portfolio of 147 buildings was 91.2% occupied and 93.3% leased.
- For the quarter and six months ended June 30, 2018, the Company’s same-property cash NOI from Defense/IT locations increased 3.4% and 2.3%, respectively, over the prior year’s comparable periods. For the same time periods, the Company’s total same-property cash NOI increased 1.0% and decreased 0.3%, respectively, over the prior year’s comparable periods.
Leasing:
-
Square Feet Leased―For the quarter ended
June 30, 2018, the Company leased 1.2 million total square feet,
including 504,000 square feet of renewing leases, 116,000 square feet
of new leases on vacant space, and 604,000 square feet in development
projects. Included in development leasing is the full-building,
159,000 square foot lease at NoVA Office B with the U.S. Government.
For the six months ended June 30, 2018, the Company leased 2.1 million total square feet, including 1.2 million square feet of renewing leases, 187,000 square feet of new leases on vacant space, and 675,000 square feet in development projects.
- Renewal Rates―During the second quarter, the Company renewed 84% of total expiring leases, which increased the renewal rate for the six months ended June 30, 2018, to 77%.
- Rent Spreads & Average Escalations on Renewing Leases―For the quarter ended June 30, 2018, rents on renewed space increased 6.5% on a GAAP basis and 1.1% on a cash basis; average annual escalations on renewing leases in the second quarter were 2.3%. For the six months ended June 30, 2018, rents on renewed space increased 9.3% on a GAAP basis and 1.1% on a cash basis; average annual escalations on renewing leases for the six months were 2.6%.
- Lease Terms―In the second quarter, lease terms averaged 1.6 years on renewing leases, 7.5 years on new leasing of vacant space, and 11.4 years on development leasing. For the six months, lease terms averaged 3.2 years on renewing leases, 6.7 years on new leasing of vacant space, and 11.2 years on development leasing.
Investment Activity Highlights
Development & Redevelopment Projects:
- Starts. During the second quarter, the Company executed two build-to-suit leases totaling 432,000 square feet in its data center shell subsegment, as well as a long-term contract with a Fortune 500 company for a Defense/IT Location project.
- Construction Pipeline. At July 25, 2018, the Company’s construction pipeline consisted of eight properties totaling 880,000 square feet that were 94% leased. These projects have a total estimated cost of $186.5 million, of which $91.2 million has been incurred.
- Redevelopment. At the end of the quarter, two projects were under redevelopment totaling 128,000 square feet that were 17% leased. The Company has invested $15.5 million of the $30.8 million anticipated total cost.
- Pre-Construction. At June 30, 2018, the Company had one property under pre-construction. Based on an expected size of 190,000 square feet, the project is 43% pre-leased. The Company commenced construction on the $170 million project in July 2018.
Balance Sheet and Capital Transaction Highlights
- During the second quarter, the Company issued 1.1 million common shares under its forward equity sale agreement for net proceeds of $32 million.
- As of June 30, 2018, the Company’s net debt plus preferred equity to adjusted book ratio was 41.3% and its net debt plus preferred equity to in-place adjusted EBITDA ratio was 6.3x. For the same period, the Company’s adjusted EBITDA fixed charge coverage ratio was 3.6x.
- As of June 30, 2018 and including the effect of interest rate swaps, the Company’s weighted average effective interest rate was 4.1%; additionally, 91% of the Company’s debt was subject to fixed interest rates and the debt portfolio had a weighted average maturity of 4.5 years.
2018 Guidance
Management is increasing the mid-point of its previously issued guidance range for full year EPS and FFOPS, as adjusted for comparability, to revised ranges of $0.63―$0.69 and $1.98―$2.04, respectively. Management also is establishing EPS and FFOPS, as adjusted for comparability, guidance for the third quarter ending September 30, 2018 at ranges of $0.15―$0.17 and $0.49―$0.51, respectively, and also for the fourth quarter ending December 31, 2018, at ranges of $0.13―$0.17 and $0.48―$0.52, respectively. Reconciliations of projected diluted EPS to projected FFOPS are as follows:
| Quarter Ending | Quarter Ending | Year Ending | ||||||||||||||||
| September 30, 2018 | December 31, 2018 | December 31, 2018 | ||||||||||||||||
| Low | High | Low | High | Low | High | |||||||||||||
| EPS | $ | 0.15 | $ | 0.17 | $ | 0.13 | $ | 0.17 | $ | 0.63 | $ | 0.69 | ||||||
| Real estate depreciation and amortization | 0.34 | 0.34 | 0.35 | 0.35 | 1.34 | 1.34 | ||||||||||||
| FFOPS, NAREIT definition | 0.49 | 0.51 | 0.48 | 0.52 | 1.97 | 2.03 | ||||||||||||
| Other | - | - | - | - | 0.01 | 0.01 | ||||||||||||
| FFOPS, as adjusted for comparability | $ | 0.49 | $ | 0.51 | $ | 0.48 | $ | 0.52 | $ | 1.98 | $ | 2.04 | ||||||
Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its second quarter 2018 conference call, the details of which are provided below. The accompanying slide presentation can be viewed on and downloaded from the ‘Investors’ section of the Company’s website (www.copt.com).
Conference Call Information
Management will discuss second quarter 2018 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:
| Conference Call Date: | Friday, July 27, 2018 | ||
| Time: | 12:00 p.m. Eastern Time | ||
| Telephone Number: (within the U.S.) | 855-463-9057 | ||
| Telephone Number: (outside the U.S.) | 661-378-9894 | ||
| Passcode: | 4378216 | ||
The conference call will also be available via live webcast in the ‘Investors’ section of the Company’s website at www.copt.com.
Replay Information
A replay of the conference call will be immediately available via webcast in the ‘Investors’ section of the Company’s website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Friday, July 27, through 3:00 p.m. Eastern Time on Friday, August 10. 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 4378216.
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 June 30, 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 157 office and data center shell properties encompassed 17.5 million square feet and was 93.4% 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:
- 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 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;
- 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;
- 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;
- possible adverse changes in tax laws;
- 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, 2017.
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
|
For the Three Months |
For the Six Months |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenues | ||||||||||||||||
| Real estate revenues | $ | 129,162 | $ | 128,297 | $ | 257,440 | $ | 255,064 | ||||||||
| Construction contract and other service revenues | 17,581 | 23,138 | 44,779 | 36,172 | ||||||||||||
| Total revenues | 146,743 | 151,435 | 302,219 | 291,236 | ||||||||||||
| Expenses | ||||||||||||||||
| Property operating expenses | 49,446 | 48,628 | 100,397 | 97,147 | ||||||||||||
| Depreciation and amortization associated with real estate operations | 33,190 | 32,793 | 66,702 | 65,852 | ||||||||||||
| Construction contract and other service expenses | 16,941 | 22,315 | 43,157 | 34,801 | ||||||||||||
| Impairment losses | — | 1,625 | — | 1,625 | ||||||||||||
| General and administrative expenses | 6,067 | 6,017 | 11,928 | 12,764 | ||||||||||||
| Leasing expenses | 1,561 | 1,842 | 2,992 | 3,706 | ||||||||||||
| Business development expenses and land carry costs | 1,234 | 1,597 | 2,848 | 3,290 | ||||||||||||
| Total operating expenses | 108,439 | 114,817 | 228,024 | 219,185 | ||||||||||||
| Operating income | 38,304 | 36,618 | 74,195 | 72,051 | ||||||||||||
| Interest expense | (18,945 | ) | (19,163 | ) | (37,729 | ) | (38,157 | ) | ||||||||
| Interest and other income | 1,439 | 1,583 | 2,798 | 3,309 | ||||||||||||
| Loss on early extinguishment of debt | — | (513 | ) | — | (513 | ) | ||||||||||
| Income before equity in income of unconsolidated entities and income taxes | 20,798 | 18,525 | 39,264 | 36,690 | ||||||||||||
| Equity in income of unconsolidated entities | 373 | 370 | 746 | 747 | ||||||||||||
| Income tax expense | (63 | ) | (48 | ) | (118 | ) | (88 | ) | ||||||||
| Gain on sales of real estate | (23 | ) | 12 | (27 | ) | 4,250 | ||||||||||
| Net income | 21,085 | 18,859 | 39,865 | 41,599 | ||||||||||||
| Net income attributable to noncontrolling interests | ||||||||||||||||
| Common units in the Operating Partnership (“OP”) | (608 | ) | (261 | ) | (1,152 | ) | (883 | ) | ||||||||
| Preferred units in the OP | (165 | ) | (165 | ) | (330 | ) | (330 | ) | ||||||||
| Other consolidated entities | (878 | ) | (907 | ) | (1,799 | ) | (1,841 | ) | ||||||||
| Net income attributable to COPT | 19,434 | 17,526 | 36,584 | 38,545 | ||||||||||||
| Preferred share dividends | — | (3,039 | ) | — | (6,219 | ) | ||||||||||
| Issuance costs associated with redeemed preferred shares | — | (6,847 | ) | — | (6,847 | ) | ||||||||||
| Net income attributable to COPT common shareholders | $ | 19,434 | $ | 7,640 | $ | 36,584 | $ | 25,479 | ||||||||
| Earnings per share (“EPS”) computation: | ||||||||||||||||
| Numerator for diluted EPS: | ||||||||||||||||
| Net income attributable to COPT common shareholders | $ | 19,434 | $ | 7,640 | $ | 36,584 | $ | 25,479 | ||||||||
| Amount allocable to share-based compensation awards | (117 | ) | (117 | ) | (234 | ) | (242 | ) | ||||||||
| Numerator for diluted EPS | $ | 19,317 | $ | 7,523 | $ | 36,350 | $ | 25,237 | ||||||||
| Denominator: | ||||||||||||||||
| Weighted average common shares - basic | 101,789 | 99,036 | 101,397 | 98,725 | ||||||||||||
| Dilutive effect of share-based compensation awards | 119 | 160 | 131 | 158 | ||||||||||||
| Weighted average common shares - diluted | 101,908 | 99,196 | 101,528 | 98,883 | ||||||||||||
| Diluted EPS | $ | 0.19 | $ | 0.08 | $ | 0.36 | $ | 0.26 | ||||||||
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
|
For the Three Months |
For the Six Months |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net income | $ | 21,085 | $ | 18,859 | $ | 39,865 | $ | 41,599 | ||||||||
| Real estate-related depreciation and amortization | 33,190 | 32,793 | 66,702 | 65,852 | ||||||||||||
| Impairment losses on previously depreciated operating properties | — | 1,610 | — | 1,610 | ||||||||||||
| Gain on sales of previously depreciated operating properties | 23 | (12 | ) | 27 | (31 | ) | ||||||||||
| Depreciation and amortization on unconsolidated real estate JV | 564 | 563 | 1,127 | 1,126 | ||||||||||||
| Funds from operations (“FFO”) | 54,862 | 53,813 | 107,721 | 110,156 | ||||||||||||
| Preferred share dividends | — | (3,039 | ) | — | (6,219 | ) | ||||||||||
| Issuance costs associated with redeemed preferred shares | — | (6,847 | ) | — | (6,847 | ) | ||||||||||
| Noncontrolling interests - preferred units in the OP | (165 | ) | (165 | ) | (330 | ) | (330 | ) | ||||||||
| FFO allocable to other noncontrolling interests | (753 | ) | (906 | ) | (1,697 | ) | (1,884 | ) | ||||||||
| Basic and diluted FFO allocable to share-based compensation awards | (224 | ) | (185 | ) | (437 | ) | (401 | ) | ||||||||
| Basic and Diluted FFO available to common share and common unit holders (“Diluted FFO”) | 53,720 | 42,671 | 105,257 | 94,475 | ||||||||||||
| Gain on sales of non-operating properties | — | — | — | (4,219 | ) | |||||||||||
| Impairment losses on non-operating properties | — | 15 | — | 15 | ||||||||||||
| Loss (gain) on interest rate derivatives | — | 444 | — | (9 | ) | |||||||||||
| Loss on early extinguishment of debt | — | 513 | — | 513 | ||||||||||||
| Issuance costs associated with redeemed preferred shares | — | 6,847 | — | 6,847 | ||||||||||||
| Demolition costs on redevelopment and nonrecurring improvements | 9 | 72 | 48 | 294 | ||||||||||||
| Executive transition costs | 213 | 31 | 376 | 730 | ||||||||||||
| Diluted FFO comparability adjustments allocable to share-based compensation awards | (1 | ) | (31 | ) | (2 | ) | (17 | ) | ||||||||
| Diluted FFO available to common share and common unit holders, as adjusted for comparability | 53,941 | 50,562 | 105,679 | 98,629 | ||||||||||||
| Straight line rent adjustments and lease incentive amortization | (1,195 | ) | 1,517 | (2,023 | ) | 1,950 | ||||||||||
| Amortization of intangibles included in net operating income | 231 | 325 | 587 | 684 | ||||||||||||
| Share-based compensation, net of amounts capitalized | 1,550 | 1,309 | 3,035 | 2,558 | ||||||||||||
| Amortization of deferred financing costs | 468 | 922 | 936 | 1,931 | ||||||||||||
| Amortization of net debt discounts, net of amounts capitalized | 358 | 343 | 712 | 682 | ||||||||||||
| Accum. other comprehensive loss on derivatives amortized to expense | 34 | 36 | 68 | 36 | ||||||||||||
| Replacement capital expenditures | (15,613 | ) | (11,269 | ) | (31,133 | ) | (24,318 | ) | ||||||||
| Other diluted AFFO adjustments associated with real estate JVs | (32 | ) | (58 | ) | 99 | (118 | ) | |||||||||
| Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) | $ | 39,742 | $ | 43,687 | $ | 77,960 | $ | 82,034 | ||||||||
| Diluted FFO per share | $ | 0.51 | $ | 0.42 | $ | 1.00 | $ | 0.92 | ||||||||
| Diluted FFO per share, as adjusted for comparability | $ | 0.51 | $ | 0.49 | $ | 1.01 | $ | 0.96 | ||||||||
| Dividends/distributions per common share/unit | $ | 0.275 | $ | 0.275 | $ | 0.550 | $ | 0.550 | ||||||||
| Corporate Office Properties Trust | ||||||||||||||
| Summary Financial Data | ||||||||||||||
| (unaudited) | ||||||||||||||
| (Dollars and shares in thousands, except per share data) | ||||||||||||||
|
June 30, |
December 31, |
|||||||||||||
| Balance Sheet Data | ||||||||||||||
| Properties, net of accumulated depreciation | $ | 3,183,537 | $ | 3,141,105 | ||||||||||
| Total assets | 3,612,362 | 3,595,205 | ||||||||||||
| Debt, per balance sheet | 1,871,445 | 1,828,333 | ||||||||||||
| Total liabilities | 2,079,333 | 2,103,773 | ||||||||||||
| Redeemable noncontrolling interest | 24,544 | 23,125 | ||||||||||||
| Equity | 1,508,485 | 1,468,307 | ||||||||||||
| Net debt to adjusted book | 41.1 | % | 40.8 | % | ||||||||||
| Core Portfolio Data (as of period end) (1) | ||||||||||||||
| Number of operating properties | 157 | 156 | ||||||||||||
| Total net rentable square feet owned (in thousands) | 17,498 | 17,059 | ||||||||||||
| Occupancy % | 91.5 | % | 94.5 | % | ||||||||||
| Leased % | 93.4 | % | 95.1 | % | ||||||||||
|
For the Three Months |
For the Six Months Ended |
|||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| Payout ratios | ||||||||||||||
| Diluted FFO | 54.3 | % | 66.0 | % | 55.1 | % | 59.6 | % | ||||||
| Diluted FFO, as adjusted for comparability | 54.1 | % | 55.7 | % | 54.9 | % | 57.1 | % | ||||||
| Diluted AFFO | 73.4 | % | 64.5 | % | 74.4 | % | 68.7 | % | ||||||
| Adjusted EBITDA fixed charge coverage ratio | 3.6 | x | 3.2 | x | 3.6 | x | 3.1 | x | ||||||
| Net debt to in-place adjusted EBITDA ratio (2) | 6.3 | x | 6.4 | x | N/A | N/A | ||||||||
| Net debt plus preferred equity to in-place adjusted EBITDA ratio (3) | 6.3 | x | 6.4 | x | N/A | N/A | ||||||||
| Reconciliation of denominators for per share measures | ||||||||||||||
| Denominator for diluted EPS | 101,908 | 99,196 | 101,528 | 98,883 | ||||||||||
| Weighted average common units | 3,197 | 3,405 | 3,208 | 3,425 | ||||||||||
| Denominator for diluted FFO per share and as adjusted for comparability | 105,105 | 102,601 | 104,736 | 102,308 | ||||||||||
| (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 |
For the Six Months |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Reconciliation of common share dividends to dividends and distributions for payout ratios | ||||||||||||||||
| Common share dividends - unrestricted shares | $ | 28,284 | $ | 27,241 | $ | 56,258 | $ | 54,460 | ||||||||
| Common unit distributions | 879 | 936 | 1,758 | 1,872 | ||||||||||||
| Dividends and distributions for payout ratios | $ | 29,163 | $ | 28,177 | $ | 58,016 | $ | 56,332 | ||||||||
| 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 | $ | 21,085 | $ | 18,859 | $ | 39,865 | $ | 41,599 | ||||||||
| Interest expense | 18,945 | 19,163 | 37,729 | 38,157 | ||||||||||||
| Income tax expense | 63 | 48 | 118 | 88 | ||||||||||||
| Depreciation of furniture, fixtures and equipment | 459 | 585 | 982 | 1,096 | ||||||||||||
| Real estate-related depreciation and amortization | 33,190 | 32,793 | 66,702 | 65,852 | ||||||||||||
| Impairment losses on previously depreciated operating properties | — | 1,610 | — | 1,610 | ||||||||||||
| Gain on sales of previously depreciated operating properties | 23 | (12 | ) | 27 | (31 | ) | ||||||||||
| Adjustments from unconsolidated real estate JV | 828 | 827 | 1,652 | 1,651 | ||||||||||||
| EBITDAre | 74,593 | 73,873 | 147,075 | 150,022 | ||||||||||||
| Impairment losses on non-operating properties | — | 15 | — | 15 | ||||||||||||
| Loss on early extinguishment of debt | — | 513 | — | 513 | ||||||||||||
| Gain on sales of non-operating properties | — | — | — | (4,219 | ) | |||||||||||
| Business development expenses | 757 | 995 | 1,780 | 1,933 | ||||||||||||
| Demolition costs on redevelopment and nonrecurring improvements | 9 | 72 | 48 | 294 | ||||||||||||
| Executive transition costs | 213 | 31 | 376 | 730 | ||||||||||||
| Adjusted EBITDA | 75,572 | 75,499 | $ | 149,279 | $ | 149,288 | ||||||||||
| Proforma net operating income adjustment for property changes within period | 418 | 421 | ||||||||||||||
| In-place adjusted EBITDA | $ | 75,990 | $ | 75,920 | ||||||||||||
| Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA | ||||||||||||||||
| Interest expense | $ | 18,945 | $ | 19,163 | $ | 37,729 | $ | 38,157 | ||||||||
| Less: Amortization of deferred financing costs | (468 | ) | (922 | ) | (936 | ) | (1,931 | ) | ||||||||
| Less: Amortization of net debt discounts, net of amounts capitalized | (358 | ) | (343 | ) | (712 | ) | (682 | ) | ||||||||
| Less: Accum. other comprehensive loss on derivatives amortized to expense | (34 | ) | (36 | ) | (68 | ) | (36 | ) | ||||||||
| (Loss) gain on interest rate derivatives | — | (444 | ) | — | 9 | |||||||||||
| COPT’s share of interest expense of unconsolidated real estate JV, excluding deferred financing costs | 258 | 258 | 513 | 513 | ||||||||||||
| Scheduled principal amortization | 1,049 | 1,005 | 2,101 | 2,013 | ||||||||||||
| Capitalized interest | 1,397 | 1,611 | 2,771 | 3,142 | ||||||||||||
| Preferred share dividends | — | 3,039 | — | 6,219 | ||||||||||||
| Preferred unit distributions | 165 | 165 | 330 | 330 | ||||||||||||
| Denominator for fixed charge coverage-Adjusted EBITDA | $ | 20,954 | $ | 23,496 | $ | 41,728 | $ | 47,734 | ||||||||
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
|
For the Three Months |
For the Six Months Ended |
|||||||||||||||
| 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 | $ | 8,117 | $ | 6,148 | $ | 16,732 | $ | 10,888 | ||||||||
| Building improvements | 5,775 | 5,972 | 7,696 | 9,202 | ||||||||||||
| Leasing costs | 1,822 | 1,666 | 3,102 | 2,817 | ||||||||||||
| Net additions to tenant improvements and incentives | 1,315 | 626 | 4,604 | 7,422 | ||||||||||||
| Excluded building improvements | (1,370 | ) | (3,143 | ) | (955 | ) | (6,011 | ) | ||||||||
| Excluded leasing costs | (46 | ) | — | (46 | ) | — | ||||||||||
| Replacement capital expenditures | $ | 15,613 | $ | 11,269 | $ | 31,133 | $ | 24,318 | ||||||||
| Same Properties cash NOI | $ | 71,809 | $ | 71,102 | $ | 140,714 | $ | 141,143 | ||||||||
| Straight line rent adjustments and lease incentive amortization | (1,005 | ) | (662 | ) | (2,561 | ) | (460 | ) | ||||||||
| Amortization of acquired above- and below-market rents | (176 | ) | (270 | ) | (476 | ) | (573 | ) | ||||||||
| Amortization of below-market cost arrangements | (148 | ) | (147 | ) | (295 | ) | (295 | ) | ||||||||
| Lease termination fees, gross | 558 | 517 | 1,566 | 1,223 | ||||||||||||
| Tenant funded landlord assets and lease incentives | 831 | 1,470 | 2,694 | 2,579 | ||||||||||||
| Cash NOI adjustments in unconsolidated real estate JV | 68 | 89 | 135 | 181 | ||||||||||||
| Same Properties NOI | $ | 71,937 | $ | 72,099 | $ | 141,777 | $ | 143,798 | ||||||||
|
June 30, |
December 31, |
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| Reconciliation of total assets to adjusted book | ||||||||||||||||
| Total assets | $ | 3,612,362 | $ | 3,595,205 | ||||||||||||
| Accumulated depreciation | 839,478 | 786,193 | ||||||||||||||
| Accumulated amortization of real estate intangibles and deferred leasing costs | 201,645 | 193,151 | ||||||||||||||
| COPT’s share of liabilities of unconsolidated real estate JV | 30,015 | 29,908 | ||||||||||||||
| COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JV | 4,317 | 3,189 | ||||||||||||||
| Less: Disposed property included in assets held for sale | (42,226 | ) | (42,226 | ) | ||||||||||||
| Less: Cash and cash equivalents | (8,472 | ) | (12,261 | ) | ||||||||||||
| Less: COPT’s share of cash of unconsolidated real estate JV | (410 | ) | (371 | ) | ||||||||||||
| Adjusted book | $ | 4,636,709 | $ | 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) | $ | 1,914,066 | $ | 1,872,167 | ||||||||||||
| Less: Cash and cash equivalents | (8,472 | ) | (12,261 | ) | ||||||||||||
| Less: COPT’s share of cash of unconsolidated real estate JV | (410 | ) | (371 | ) | ||||||||||||
| Net debt | $ | 1,905,184 | $ | 1,859,535 | ||||||||||||
| Preferred equity | 8,800 | 8,800 | ||||||||||||||
| Net debt plus preferred equity | $ | 1,913,984 | $ | 1,868,335 | ||||||||||||
