COPT Reports Third Quarter 2016 Results
COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the third quarter ended September 30, 2016.
Management Comments
“As the third quarter demonstrated, we are executing well on all aspects of our 2016 plan, and key performance metrics were in-line with our guidance and expectations,” stated Stephen E. Budorick, COPT’s President & Chief Executive Officer. “Same office cash NOI grew 1.1% in the quarter and 4.1% for the first nine months of the year, and we have completed over $300 million of asset sales to date.” He added, “Demand throughout our portfolio is steady and provides solid momentum for 2017.”
Financial Highlights
3rd Quarter Financial Results:
- Diluted earnings per share (“EPS”) was $0.25 for the quarter ended September 30, 2016 as compared to $0.91 for the third quarter of 2015.
- Diluted funds from operations per share (“FFOPS”), as calculated in accordance with NAREIT’s definition, was $0.49 for the third quarter of 2016 as compared to $1.32 for the third quarter of 2015.
- FFOPS, as adjusted for comparability, was $0.51 for the quarter ended September 30, 2016 and $0.52 for the third quarter of 2015.
Adjustments for comparability encompass items such as impairment losses and gains on non-operating properties, gains (losses) on early extinguishment of debt, derivative gains (losses), executive transition costs and write-offs of original issuance costs for redeemed preferred shares.
Operating Performance Highlights
Portfolio Summary:
- At September 30, 2016, the Company’s core portfolio of 146 operating office properties were 93.0% occupied and 94.4% leased.
- During the quarter, the Company placed 192,000 square feet of development in service that, at September 30, 2016, were 83% leased.
- At September 30, 2016, the Company had approximately $161 million of assets held for sale composed of 19 operating properties that contain a total of 1.3 million square feet and 153 acres of non-strategic land.
Same Office Performance:
- At September 30, 2016, COPT’s same office portfolio of 129 buildings was 91.4% occupied and 93.2% leased.
- For the quarter ended September 30, 2016, the Company’s same office property cash NOI increased 1.1% as compared to the quarter ended September 30, 2015. For the nine months ended September 30, 2016, same office cash NOI grew 4.1% versus the comparable period in 2015.
Leasing:
- Square Feet Leased ‒ For the quarter ended September 30, 2016, the Company leased a total of 741,000 square feet, including 26,000 square feet in development projects. During the first nine months of the year, we executed on 2.3 million square feet of leasing, including 571,000 square feet in development projects.
- Renewal Rates ‒ During the three and nine months ended September 30, 2016, the Company renewed 83% and 79%, respectively, of expiring leases.
- Rent Spreads on Renewing Leases ‒ In the quarter, the Company successfully executed early renewals on three large, non-defense tenant leases, representing 275,000 square feet, to assure long-term, steady cash flows from all three assets. The impact of these renewals was a decline in cash renewal rates in the third quarter. For the quarter ended September 30, 2016 and as compared to expiring rents, rents on renewed space decreased 2.2% on a GAAP basis and decreased 11.9% on a cash basis. For the nine months of 2016, GAAP rents on renewing leases increased 4.5% and cash rents decreased 5.7%. Excluding these three early renewals, cash renewal rents declined only 1.9% for the nine months ended September 30, 2016.
- Lease Terms ‒ In the third quarter, lease terms averaged 7.6 years on the 597,000 square feet of renewing leases, and 7.0 years on the 144,000 square feet of development and other new leasing, for an average lease term of 7.5 years on all leasing completed in the quarter.For the nine months ended September 30, 2016, lease terms averaged 6.0 years on the 1.4 million square feet of renewing leases, and 8.5 years on the 938,000 square feet of development and other new leasing, for an average lease term of 7.0 years on all leasing completed in the nine months of the year.
Investment Activity Highlights
Development & Redevelopment Projects:
- The Company has five properties totaling 769,000 square feet under construction that, at September 30, 2016, were 89% pre-leased. The five projects have a total estimated cost of $149.7 million, of which $64.3 million has been incurred.
- The Company also has two recently completed properties that total 352,000 square feet which are being held for the U.S. Government. In the third quarter ended September 30, 2016, the Company leased 15,000 square feet in The National Business Park to a U.S. Government tenant and expects further leasing progress in the coming quarters. The Company anticipates leasing the balance of the building during 2017.
- Including these two U.S. Government projects, the Company’s construction pipeline totals 1.1 million square feet and is 63% leased.
- COPT has 104,000 square feet in three properties under redevelopment, representing a total expected cost of $27.7 million, of which $20.3 million has been invested. The three projects were 19% leased at quarter end.
Dispositions: During the quarter, the Company closed on $285 million of sales detailed as follows:
- $74 million from six data center properties contributed to a newly-formed, 50% unconsolidated joint venture with an institutional partner.
- $143 million from four properties and land at the Arborcrest Campus in the Plymouth Meeting submarket of Philadelphia.
- $17 million from six properties in the White Marsh submarket of Baltimore.
- $51 million from five properties in the Airport Square / BWI South submarkets in the B/W Corridor.
Subsequent to the quarter, the Company sold another 151,000 square foot operating property in Northern Virginia and a parcel of non-strategic land for an aggregate of $14.1 million, bringing total assets to-date to $304 million, or 69% of the full year goal.
Balance Sheet and Capital Transaction Highlights
- As of September 30, 2016, the Company’s net debt to adjusted book ratio was 41.2% and its net debt to in-place adjusted EBITDA ratio was 6.3x. For the quarter ended September 30, 2016, its adjusted EBITDA fixed charge coverage ratio was 3.1x.
- The Company’s weighted average effective interest rate was 3.8% as of September 30, 2016; including the effect of interest rate swaps, 96% of the Company’s debt was subject to fixed interest rates and the debt portfolio had a weighted average maturity of 6.1 years.
- Subsequent to the quarter, the Company used cash on hand and capacity on its line of credit to repay a $120 million term loan. As a result, the Company has no debt maturities until 2020.
2016 FFO Guidance Update
Management is narrowing its guidance range for full year FFOPS, as adjusted for comparability, of $2.00―$2.02. The Company also is maintaining its previously established guidance for the fourth quarter ending December 31, 2016, for FFOPS, as adjusted for comparability, of $0.50―$0.52. Reconciliations of projected diluted EPS to projected FFOPS are as follows:
| Three Months Ending | Year Ending | |||||||||||||||
| December 31, 2016 | December 31, 2016 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| EPS | $ | 0.24 | $ | 0.26 | $ | (0.02 | ) | $ | - | |||||||
| Real estate depreciation and amortization | 0.34 | 0.34 | 1.37 | 1.37 | ||||||||||||
| Impairment losses on operating properties | - | - | 0.83 | 0.83 | ||||||||||||
| Gains on sales of operating properties | (0.01 | ) | (0.01 | ) | (0.36 | ) | (0.36 | ) | ||||||||
| FFOPS, NAREIT definition | 0.57 | 0.59 | 1.82 | 1.84 | ||||||||||||
| Executive transition costs | - | - | 0.06 | 0.06 | ||||||||||||
| Impairment losses on non-operating properties | - | - | 0.18 | 0.18 | ||||||||||||
| Gains on sales of non-operating properties | (0.08 | ) | (0.08 | ) | (0.08 | ) | (0.08 | ) | ||||||||
| Loss on interest rate derivatives and other | 0.01 | 0.01 | 0.02 | 0.02 | ||||||||||||
| FFOPS, as adjusted for comparability | $ | 0.50 | $ | 0.52 | $ | 2.00 | $ | 2.02 | ||||||||
Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its third quarter 2016 conference call, the details of which are provided below. You may access the slide presentation on the ‘Investors’ section of the website (www.copt.com). Please have the slides available to review during management’s comments.
Conference Call Information
Management will discuss third quarter 2016 earnings results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:
| Earnings Release Date: | Thursday, October 27, 2016 after market closes | ||
| Conference Call Date: | Friday, October 28, 2016 | ||
| Time: | 12:00 p.m. Eastern Time | ||
| Telephone Number: (within the U.S.) | 888-713-4218 | ||
| Telephone Number: (outside the U.S.) | 617-213-4870 | ||
| Passcode: | 86051712# | ||
Please use the following link to pre-register and view important information about this conference call. Pre-registering is not mandatory but is recommended as it will provide you immediate entry into the call and will facilitate the timely start of the conference. To pre-register, please click on the below link: https://www.theconferencingservice.com/prereg/key.process?key=PAX84XXNT.
You may also pre-register in the Investors section of the Company’s website at www.copt.com. Alternatively, you may be placed into the call by an operator by calling the number provided above at least 5 to 10 minutes before the start of the call.
Replay Information
A replay of this call will be available beginning at 3:00 p.m. Eastern Time on Friday, October 28, through midnight Eastern Time on Friday, November 11. To access the replay within the United States, please call 888-286-8010 and use passcode 93348081. To access the replay outside the United States, please call 617-801-6888 and use passcode 93348081.
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 calls will be immediately available via webcast in the Investor Relations section of the Company’s website.
Definitions
For definitions of certain terms used in this press release, please refer to the information furnished in our Supplemental Information Package filed as a Form 8-K which can be found on our 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 an office REIT that owns, manages, develops and selectively acquires office and data center properties in locations that support United States Government agencies and their contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing priority missions (“Defense/IT Locations”). We also own a complementary portfolio of traditional Class-A office properties located in select urban/urban-like submarkets within our regional footprint (“Regional Office Properties”). As of September 30, 2016, we derived 86% of core portfolio annualized revenue from Defense/IT Locations and 14% from our Regional Office Properties. As of September 30, 2016, our core portfolio of 146 office properties encompassed 15.9 million square feet and was 94.4% leased.
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 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;
- 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, 2015.
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues | ||||||||||||||||
| Real estate revenues | $ | 130,954 | $ | 133,686 | $ | 397,965 | $ | 384,587 | ||||||||
| Construction contract and other service revenues | 11,149 | 17,058 | 34,372 | 97,554 | ||||||||||||
| Total revenues | 142,103 | 150,744 | 432,337 | 482,141 | ||||||||||||
| Expenses | ||||||||||||||||
| Property operating expenses | 49,952 | 48,897 | 149,968 | 145,996 | ||||||||||||
| Depreciation and amortization associated with real estate operations | 32,015 | 38,403 | 99,790 | 103,788 | ||||||||||||
| Construction contract and other service expenses | 10,341 | 16,132 | 32,513 | 94,923 | ||||||||||||
| Impairment losses | 27,699 | 2,307 | 99,837 | 3,545 | ||||||||||||
| General and administrative expenses | 7,242 | 5,783 | 23,884 | 17,917 | ||||||||||||
| Leasing expenses | 1,613 | 1,656 | 4,880 | 4,947 | ||||||||||||
| Business development expenses and land carry costs | 1,716 | 5,573 | 6,497 | 10,986 | ||||||||||||
| Total operating expenses | 130,578 | 118,751 | 417,369 | 382,102 | ||||||||||||
| Operating income | 11,525 | 31,993 | 14,968 | 100,039 | ||||||||||||
| Interest expense | (18,301 | ) | (24,121 | ) | (64,499 | ) | (66,727 | ) | ||||||||
| Interest and other income | 1,391 | 692 | 3,877 | 3,217 | ||||||||||||
| (Loss) gain on early extinguishment of debt | (59 | ) | 85,745 | (37 | ) | 85,677 | ||||||||||
| (Loss) income from continuing operations before equity in income of unconsolidated entities and income taxes | (5,444 | ) | 94,309 | (45,691 | ) | 122,206 | ||||||||||
| Equity in income of unconsolidated entities | 594 | 18 | 614 | 52 | ||||||||||||
| Income tax benefit (expense) | 21 | (48 | ) | 28 | (153 | ) | ||||||||||
| (Loss) income from continuing operations | (4,829 | ) | 94,279 | (45,049 | ) | 122,105 | ||||||||||
| Discontinued operations | — | — | — | 156 | ||||||||||||
| (Loss) income before gain on sales of real estate | (4,829 | ) | 94,279 | (45,049 | ) | 122,261 | ||||||||||
| Gain on sales of real estate | 34,101 | 15 | 34,101 | 4,000 | ||||||||||||
| Net income (loss) | 29,272 | 94,294 | (10,948 | ) | 126,261 | |||||||||||
| Net (income) loss attributable to noncontrolling interests | ||||||||||||||||
| Common units in the Operating Partnership (“OP”) | (901 | ) | (3,357 | ) | 948 | (4,231 | ) | |||||||||
| Preferred units in the OP | (165 | ) | (165 | ) | (495 | ) | (495 | ) | ||||||||
| Other consolidated entities | (907 | ) | (972 | ) | (2,799 | ) | (2,599 | ) | ||||||||
| Net income (loss) attributable to COPT | 27,299 | 89,800 | (13,294 | ) | 118,936 | |||||||||||
| Preferred share dividends | (3,552 | ) | (3,552 | ) | (10,657 | ) | (10,657 | ) | ||||||||
| Net income (loss) attributable to COPT common shareholders | $ | 23,747 | $ | 86,248 | $ | (23,951 | ) | $ | 108,279 | |||||||
| Earnings per share (“EPS”) computation: | ||||||||||||||||
| Numerator for diluted EPS: | ||||||||||||||||
| Net income (loss) attributable to common shareholders | $ | 23,747 | $ | 86,248 | $ | (23,951 | ) | $ | 108,279 | |||||||
| Dividends on dilutive convertible preferred shares | — | 372 | — | — | ||||||||||||
| Common units in the OP | — | — | — | 4,231 | ||||||||||||
| Amount allocable to share-based compensation awards | (105 | ) | (369 | ) | (319 | ) | (475 | ) | ||||||||
| Numerator for diluted EPS | $ | 23,642 | $ | 86,251 | $ | (24,270 | ) | $ | 112,035 | |||||||
| Denominator: | ||||||||||||||||
| Weighted average common shares - basic | 94,433 | 94,153 | 94,312 | 93,830 | ||||||||||||
| Dilutive convertible preferred shares | — | 434 | — | — | ||||||||||||
| Common units in the OP | — | — | — | 3,697 | ||||||||||||
| Dilutive effect of share-based compensation awards | 81 | 21 | — | 82 | ||||||||||||
| Weighted average common shares - diluted | 94,514 | 94,608 | 94,312 | 97,609 | ||||||||||||
| Diluted EPS | $ | 0.25 | $ | 0.91 | $ | (0.26 | ) | $ | 1.15 | |||||||
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income (loss) | $ | 29,272 | $ | 94,294 | $ | (10,948 | ) | $ | 126,261 | |||||||
| Real estate-related depreciation and amortization | 32,015 | 38,403 | 99,790 | 103,788 | ||||||||||||
| Impairment losses on previously depreciated operating properties | 25,857 | 2,307 | 81,828 | 3,779 | ||||||||||||
| Gain on sales of previously depreciated operating properties | (34,101 | ) | (15 | ) | (34,101 | ) | (15 | ) | ||||||||
| Depreciation and amortization on unconsolidated real estate entities | 207 | — | 207 | — | ||||||||||||
| Funds from operations (“FFO”) | 53,250 | 134,989 | 136,776 | 233,813 | ||||||||||||
| Noncontrolling interests - preferred units in the OP | (165 | ) | (165 | ) | (495 | ) | (495 | ) | ||||||||
| FFO allocable to other noncontrolling interests | (894 | ) | (1,027 | ) | (2,935 | ) | (2,769 | ) | ||||||||
| Preferred share dividends | (3,552 | ) | (3,552 | ) | (10,657 | ) | (10,657 | ) | ||||||||
| Basic and diluted FFO allocable to share-based compensation awards | (190 | ) | (541 | ) | (486 | ) | (926 | ) | ||||||||
| Basic FFO available to common share and common unit holders (“Basic FFO”) | 48,449 | 129,704 | 122,203 | 218,966 | ||||||||||||
| Dividends on dilutive convertible preferred shares | — | 372 | — | — | ||||||||||||
| Distributions on dilutive preferred units in the OP | — | 165 | — | — | ||||||||||||
| Diluted FFO available to common share and common unit holders (“Diluted FFO”) | 48,449 | 130,241 | 122,203 | 218,966 | ||||||||||||
| Operating property acquisition costs | — | 2,695 | — | 4,102 | ||||||||||||
| Gain on sales of non-operating properties | — | — | — | (3,985 | ) | |||||||||||
| Impairment losses on other properties | 1,842 | — | 18,009 | — | ||||||||||||
| (Gain) loss on interest rate derivatives | (1,523 | ) | — | 347 | — | |||||||||||
| Loss (gain) on early extinguishment of debt | 59 | (85,745 | ) | 37 | (86,057 | ) | ||||||||||
| Add: Negative FFO of properties conveyed to extinguish debt in default (1) | — | 2,766 | — | 10,456 | ||||||||||||
| Demolition costs on redevelopment properties | — | 930 | 578 | 1,171 | ||||||||||||
| Executive transition costs | 1,639 | — | 6,023 | — | ||||||||||||
| Diluted FFO comparability adjustments allocable to share-based compensation awards | (5 | ) | 334 | (99 | ) | 313 | ||||||||||
| Dividends and distributions on antidilutive preferred securities (2) | — | (537 | ) | — | — | |||||||||||
| Diluted FFO available to common share and common unit holders, as adjusted for comparability | 50,461 | 50,684 | 147,098 | 144,966 | ||||||||||||
| Straight line rent adjustments | 691 | (5,625 | ) | 206 | (10,820 | ) | ||||||||||
| Straight line rent adjustments - properties in default conveyed | — | (19 | ) | — | (115 | ) | ||||||||||
| Amortization of intangibles included in net operating income | 349 | 474 | 1,025 | 1,063 | ||||||||||||
| Share-based compensation, net of amounts capitalized | 1,258 | 1,739 | 4,375 | 4,949 | ||||||||||||
| Amortization of deferred financing costs | 1,126 | 1,203 | 3,480 | 3,339 | ||||||||||||
| Amortization of net debt discounts, net of amounts capitalized | 332 | 321 | 976 | 849 | ||||||||||||
| Replacement capital expenditures | (16,120 | ) | (12,126 | ) | (39,386 | ) | (29,180 | ) | ||||||||
| Diluted AFFO adjustments allocable to other noncontrolling interests | 42 | (81 | ) | 137 | 55 | |||||||||||
| Diluted AFFO adjustments on unconsolidated real estate JV | (141 | ) | — | (141 | ) | — | ||||||||||
| Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) | $ | 37,998 | $ | 36,570 | $ | 117,770 | $ | 115,106 | ||||||||
| Diluted FFO per share | $ | 0.49 | $ | 1.32 | $ | 1.25 | $ | 2.24 | ||||||||
| Diluted FFO per share, as adjusted for comparability | $ | 0.51 | $ | 0.52 | $ | 1.50 | $ | 1.49 | ||||||||
| Dividends/distributions per common share/unit | $ | 0.275 | $ | 0.275 | $ | 0.825 | $ | 0.825 | ||||||||
| (1) | Interest expense exceeded net operating income from these properties by the amounts in the statement. |
| Corporate Office Properties Trust | ||||||||
| Summary Financial Data | ||||||||
| (unaudited) | ||||||||
| (Dollars and shares in thousands, except per share data) | ||||||||
| September 30, 2016 | December 31, 2015 | |||||||
| Balance Sheet Data | ||||||||
| Properties, net of accumulated depreciation | $ | 3,028,338 | $ | 3,349,748 | ||||
| Total assets | 3,634,194 | 3,909,312 | ||||||
| Debt, per balance sheet | 1,873,836 | 2,077,752 | ||||||
| Total liabilities | 2,110,559 | 2,273,530 | ||||||
| Redeemable noncontrolling interest | 22,848 | 19,218 | ||||||
| Equity | 1,500,787 | 1,616,564 | ||||||
| Net debt to adjusted book | 41.2 | % | 42.6 | % | ||||
| Core Portfolio Data (as of period end) (1) | ||||||||
| Number of operating properties | 146 | 157 | ||||||
| Total net rentable square feet owned (in thousands) | 15,938 | 17,038 | ||||||
| Occupancy % | 93.0 | % | 92.7 | % | ||||
| Leased % | 94.4 | % | 93.9 | % | ||||
| For the Three Months | For the Nine Months | |||||||||||
| Ended September 30, | Ended September 30, | |||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Payout ratios | ||||||||||||
| Diluted FFO | 55.8 | % | 21.2 | % | 66.4 | % | 37.0 | % | ||||
| Diluted FFO, as adjusted for comparability | 53.6 | % | 53.3 | % | 55.2 | % | 55.9 | % | ||||
| Diluted AFFO | 71.2 | % | 73.9 | % | 68.9 | % | 70.4 | % | ||||
| Adjusted EBITDA fixed charge coverage ratio | 3.1 | x | 2.9 | x | 2.9 | x | 3.0 | x | ||||
| Net debt to in-place adjusted EBITDA ratio (2) | 6.3 | x | 6.6 | x | N/A | N/A | ||||||
| Reconciliation of denominators for per share measures | ||||||||||||
| Denominator for diluted EPS | 94,514 | 94,608 | 94,312 | 97,609 | ||||||||
| Weighted average common units | 3,591 | 3,679 | 3,648 | — | ||||||||
| Dilutive noncontrolling interests - preferred units in the OP | — | 176 | — | — | ||||||||
| Anti-dilutive EPS effect of share-based compensation awards | — | — | 98 | — | ||||||||
| Denominator for diluted FFO per share | 98,105 | 98,463 | 98,058 | 97,609 | ||||||||
| Antidilutive preferred securities for dilutive FFO, as adj. for comparability | — | (610 | ) | — | — | |||||||
| Denominator for diluted FFO per share, as adj. for comparability | 98,105 | 97,853 | 98,058 | 97,609 | ||||||||
| (1) | Represents Defense/IT Locations and Regional Office properties excluding properties held for sale, and includes six properties owned through an unconsolidated joint venture totaling 962,000 square feet that were 100% occupied and leased. | |
| (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). |
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Reconciliation of common share dividends to dividends and distributions for payout ratios | ||||||||||||||||
| Common share dividends | $ | 26,068 | $ | 26,000 | $ | 78,139 | $ | 78,000 | ||||||||
| Common unit distributions | 988 | 1,011 | 3,003 | 3,035 | ||||||||||||
| Dividends and distributions on dilutive preferred securities | — | 537 | — | — | ||||||||||||
| Dividends and distributions for diluted FFO payout ratio | 27,056 | 27,548 | 81,142 | 81,035 | ||||||||||||
| Dividends and distributions on antidilutive preferred securities (1) | — | (537 | ) | — | — | |||||||||||
| Dividends and distributions for other payout ratios | $ | 27,056 | $ | 27,011 | $ | 81,142 | $ | 81,035 | ||||||||
| Reconciliation of GAAP net income to adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) and in-place adjusted EBITDA | ||||||||||||||||
| Net income (loss) | $ | 29,272 | $ | 94,294 | $ | (10,948 | ) | $ | 126,261 | |||||||
| Interest expense on continuing operations | 18,301 | 24,121 | 64,499 | 66,727 | ||||||||||||
| Income tax (benefit) expense | (21 | ) | 48 | (28 | ) | 153 | ||||||||||
| Real estate-related depreciation and amortization | 32,015 | 38,403 | 99,790 | 103,788 | ||||||||||||
| Depreciation of furniture, fixtures and equipment | 513 | 590 | 1,639 | 1,609 | ||||||||||||
| Impairment losses | 27,699 | 2,307 | 99,837 | 3,779 | ||||||||||||
| Loss (gain) on early extinguishment of debt on continuing and discontinued operations | 59 | (85,745 | ) | 37 | (86,057 | ) | ||||||||||
| Gain on sales of operating properties | (34,101 | ) | (15 | ) | (34,101 | ) | (15 | ) | ||||||||
| Gain on sales of non-operational properties | — | — | — | (3,985 | ) | |||||||||||
| Net loss (gain) on investments in unconsolidated entities included in interest and other income | 27 | 98 | (32 | ) | 121 | |||||||||||
| Business development expenses | 1,016 | 1,221 | 3,656 | 3,263 | ||||||||||||
| Operating property acquisition costs | — | 2,695 | — | 4,102 | ||||||||||||
| EBITDA from properties conveyed to extinguish debt in default | — | (15 | ) | — | (768 | ) | ||||||||||
| Demolition costs on redevelopment properties | — | 930 | 578 | 1,171 | ||||||||||||
| Adjustments from unconsolidated real estate JV | 415 | — | 415 | — | ||||||||||||
| Executive transition costs | 1,639 | — | 6,023 | — | ||||||||||||
| Adjusted EBITDA | $ | 76,834 | $ | 78,932 | $ | 231,365 | $ | 220,149 | ||||||||
| Proforma net operating income adjustment for property changes within period | (2,469 | ) | 1,309 | |||||||||||||
| In-place adjusted EBITDA | $ | 74,365 | $ | 80,241 | ||||||||||||
| Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA | ||||||||||||||||
| Interest expense | $ | 18,301 | $ | 24,121 | $ | 64,499 | $ | 66,727 | ||||||||
| Less: Amortization of deferred financing costs | (1,126 | ) | (1,203 | ) | (3,480 | ) | (3,339 | ) | ||||||||
| Less: Amortization of net debt discount, net of amounts capitalized | (332 | ) | (321 | ) | (976 | ) | (849 | ) | ||||||||
| Less: Gain (loss) on interest rate derivatives | 1,523 | — | (347 | ) | — | |||||||||||
| Less: Interest expense on debt in default extinguished via conveyance of properties | — | (2,781 | ) | — | (11,224 | ) | ||||||||||
| COPT’s share of interest expense of unconsolidated real estate JV, excluding deferred financing costs | 204 | — | 204 | — | ||||||||||||
| Scheduled principal amortization | 922 | 1,692 | 4,454 | 5,011 | ||||||||||||
| Capitalized interest | 1,242 | 1,559 | 4,304 | 5,641 | ||||||||||||
| Preferred share dividends | 3,552 | 3,552 | 10,657 | 10,657 | ||||||||||||
| Preferred unit distributions | 165 | 165 | 495 | 495 | ||||||||||||
| Denominator for fixed charge coverage-Adjusted EBITDA | $ | 24,451 | $ | 26,784 | $ | 79,810 | $ | 73,119 | ||||||||
| Corporate Office Properties Trust | ||||||||||||||||
| Summary Financial Data | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
|
2016 |
2015 |
2016 |
2015 |
|||||||||||||
| Reconciliations of tenant improvements and incentives, capital improvements and leasing costs for operating properties to replacement capital expenditures | ||||||||||||||||
| Tenant improvements and incentives | $ | 21,470 | $ | 6,374 | $ | 37,020 | $ | 17,408 | ||||||||
| Building improvements | 5,707 | 4,223 | 14,962 | 11,969 | ||||||||||||
| Leasing costs | 5,182 | 2,547 | 7,978 | 4,986 | ||||||||||||
| Less: Excluded tenant improvements and incentives | (12,706 | ) | 205 | (14,944 | ) | (1,045 | ) | |||||||||
| Less: Excluded building improvements | (3,533 | ) | (1,155 | ) | (5,211 | ) | (3,328 | ) | ||||||||
| Less: Excluded leasing costs | — | (68 | ) | (419 | ) | (810 | ) | |||||||||
| Replacement capital expenditures | $ | 16,120 | $ | 12,126 | $ | 39,386 | $ | 29,180 | ||||||||
| Same office property cash NOI | $ | 60,952 | $ | 60,297 | $ | 182,098 | $ | 174,942 | ||||||||
| Straight line rent adjustments | (2,230 | ) | 965 | (7,163 | ) | 3,175 | ||||||||||
| Add: Amortization of deferred market rental revenue | 22 | 16 | 90 | 71 | ||||||||||||
| Less: Amortization of below-market cost arrangements | (218 | ) | (264 | ) | (655 | ) | (775 | ) | ||||||||
| Add: Lease termination fee, gross | 390 | 185 | 1,679 | 1,950 | ||||||||||||
| Add: Cash NOI on tenant-funded landlord assets | 2,379 | 390 | 5,790 | 390 | ||||||||||||
| Same office property NOI | $ | 61,295 | $ | 61,589 | $ | 181,839 | $ | 179,753 | ||||||||
|
September 30, 2016 |
December 31, 2015 | |||||||
| Reconciliation of total assets to adjusted book | ||||||||
| Total assets | $ | 3,634,194 | $ | 3,909,312 | ||||
| Accumulated depreciation | 681,476 | 700,363 | ||||||
| Accumulated depreciation included in assets held for sale | 22,938 | 18,317 | ||||||
| Accumulated amortization of real estate intangibles and deferred leasing costs | 201,414 | 195,506 | ||||||
| Accumulated amortization of real estate intangibles and deferred leasing costs included in assets held for sale | 21,469 | 17,456 | ||||||
| COPT’s share of liabilities of unconsolidated real estate JV | 30,013 | — | ||||||
| COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JV | 375 | — | ||||||
| Less: Cash and cash equivalents | (47,574 | ) | (60,310 | ) | ||||
| COPT’s share of cash of unconsolidated real estate JV | (444 | ) | — | |||||
| Adjusted book | $ | 4,543,861 | $ | 4,780,644 | ||||
| Reconciliation of debt outstanding to net debt | ||||||||
| Debt outstanding (excluding net debt discounts and deferred financing costs) | $ | 1,921,219 | $ | 2,097,230 | ||||
| Less: Cash and cash equivalents | (47,574 | ) | (60,310 | ) | ||||
| COPT’s share of cash of unconsolidated real estate JV | (444 | ) | — | |||||
| Net debt | $ | 1,873,201 | $ | 2,036,920 | ||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20161027006918/en/
Corporate Office Properties Trust
IR Contacts:
Stephanie
Krewson-Kelly, 443-285-5453
[email protected]
or
Michelle
Layne, 443-285-5452
[email protected]
Source: Corporate Office Properties Trust