COPT Reports Second Quarter 2019 Results
EPS of $0.95 & FFO per Share of $0.52 Exceed Guidance
$0.75 per Share Gain on JV Contribution Drove EPS Outperformance
Strong Same-Property Cash NOI Growth of 4.5% Drove FFO Outperformance
Core Portfolio 92.9% Occupied & 94.1% Leased
606,000 SF of Development Placed into Service 100% Leased
Record Leasing Volumes
1.6 Million SF Total Leasing Completed in 2Q19
2Q19 and 1H19 Vacancy Leasing Volumes Are Double 2018 Levels
Solid Tenant Retention in 2Q19 of 81.1%; Increasing Annual Guidance to 75%─80%
Adjusting Full Year 2019 Cash Rent Spreads on Renewals to Incorporate Incremental Early Renewals
Development Leasing of 652,000 SF in 2Q19; 1.7 Million SF To-Date
Raising 2019 Development Leasing Goal Further; Now Expect 2 Million SF
Affirming Full-Year FFO per Share Guidance
Increasing Development Spend Guidance by another $75 Million, to $400─$450 Million
Contributing Two Additional Data Center Shells in 4Q19 to Recent Joint Venture
Highly-Leased Development Pipeline Expected to Drive Outsized FFO Growth in 2021
COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the second quarter ended June 30, 2019.
Management Comments
Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Second quarter FFO per share exceeded the high-end of our guidance, driven in part by stronger-than-anticipated growth in same-property cash NOI of 4.5%. The strength of demand recovery throughout our Defense/IT locations continues to support record-levels of lease achievement, and we have already exceeded our previously elevated full-year goal of leasing 1.4 million square feet in development projects, setting a new corporate record for annual development leasing volume. Based on the pipeline of opportunities before us, we are increasing our development leasing target to 2.0 million square feet.” He continued, “As important, in June we created a strategic joint venture with a world class investment group. Proceeds from this venture fund our 2019 development investment needs, as well as most of our expected 2020 development investment.”
Financial Highlights
2nd Quarter Financial Results:
- Diluted earnings per share (“EPS”) was $0.95 for the quarter ended June 30, 2019 as compared to $0.19 for the second quarter of 2018. Second quarter 2019 EPS included a $0.75 per share gain on sale from contributing a 90% interest in seven data center shells to a joint venture with Blackstone Real Estate Income Trust, Inc. (“BREIT”).
- Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition and as adjusted for comparability, was $0.52 for the second quarter of 2019 as compared to $0.51 for second quarter 2018 results.
Operating Performance Highlights
Operating Portfolio Summary:
- At June 30, 2019, the Company’s core portfolio of 167 operating office properties was 92.9% occupied and 94.1% leased.
- During the quarter, the Company placed all or portions of five developments aggregating 606,000 square feet into service that were 100% leased. During the six months ended June 30, 2019, the Company placed 787,000 square feet into service in properties that were 100% leased.
Same-Property Performance:
- At June 30, 2019, COPT’s same-property portfolio of 150 buildings was 92.0% occupied and 93.3% leased.
- For the quarter ended June 30, 2019, the Company’s total same-property cash NOI increased 4.5% over the prior year’s comparable period, driven by a 5.4% increase in same-property cash NOI from Defense/IT locations.
Leasing:
-
Total Square Feet Leased―For the quarter ended June 30, 2019, the Company leased 1.6 million total square feet, including 659,000 square feet of renewing leases, 245,000 square feet of new leases on vacant space, and 652,000 square feet in development projects.
For the six months ended June 30, 2019, the Company leased 2.5 million total square feet, including 950,000 square feet of renewing leases, 371,000 square feet of new leases on vacant space, and 1.2 million square feet in development projects. - Renewal Rates―During the quarter and six months ended June 30, 2019, the Company respectively renewed 81.1% and 77.8% of total expiring leases.
- Cash Rent Spreads & Average Escalations on Renewing Leases―For the quarter and six months ended June 30, 2019, cash rents on renewed space decreased 3.3% and 4.6%, respectively. For the same time periods, average annual escalations on renewing leases were 2.6%.
- Lease Terms―In the second quarter, lease terms averaged 2.8 years on renewing leases, 6.4 years on new leasing of vacant space, and 11.0 years on development leasing. For the six months, lease terms averaged 3.1 years on renewing leases, 6.1 years on new leasing of vacant space, and 12.0 years on development leasing.
Investment Activity Highlights
Development & Redevelopment Projects:
- Construction Pipeline. At July 29, 2019, the Company’s construction pipeline consisted of 13 properties totaling 2.1 million square feet that were 83% leased. These projects have a total estimated cost of $579.3 million, of which $236.3 million has been incurred.
- Redevelopment. At June 30, 2019, one project was under redevelopment totaling 106,000 square feet that was 67% leased. The Company has invested $18.1 million of the $25.5 million anticipated total cost.
Balance Sheet and Capital Transaction Highlights
- On June 20, 2019, the Company raised $238.5 million of proceeds to fund development by contributing a 90% interest in seven data center shell properties to a joint venture with BREIT. The Company owns a 10% interest in the joint venture.
- As of June 30, 2019, the Company’s net debt plus preferred equity to adjusted book ratio was 36.2% and its net debt plus preferred equity to in-place adjusted EBITDA ratio was 5.7x. For the same period, the Company’s adjusted EBITDA fixed charge coverage ratio was 3.7x.
- As of June 30, 2019, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate was 4.15%; additionally, 95.1% of the Company’s debt was subject to fixed interest rates and the consolidated debt portfolio had a weighted average maturity of 4.0 years.
2019 Guidance
Management is increasing its previously issued guidance range of $1.34―$1.38 for full year EPS to include the gain on sale from contributing two more data center shell properties in the fourth quarter. The new range for full year EPS is $1.52─$1.56. The Company is reiterating its previously issued guidance range for full year FFOPS, as adjusted for comparability, of $2.01―$2.05.
Management also is establishing EPS and FFOPS, as adjusted for comparability, guidance for the third quarter ending September 30, 2019 at ranges of $0.14―$0.16 and $0.49―$0.51, respectively. Reconciliations of projected diluted EPS to projected FFOPS are as follows:
| Reconciliation of EPS to FFOPS, per Nareit and | Quarter ending |
Year ending |
||||||||||||
| As Adjusted for Comparability | September 30, 2019 |
December 31, 2019 |
||||||||||||
Low |
High |
Low |
High |
|||||||||||
| EPS | $ |
0.14 |
$ |
0.16 |
$ |
1.52 |
|
$ |
1.56 |
|
||||
| Real estate depreciation and amortization |
|
0.35 |
|
0.35 |
|
1.40 |
|
|
1.40 |
|
||||
| Gain on sales of real estate |
|
- |
|
- |
|
(0.91 |
) |
|
(0.91 |
) |
||||
| FFOPS, Nareit definition and as adjusted for comparability | $ |
0.49 |
$ |
0.51 |
$ |
2.01 |
|
$ |
2.05 |
|
||||
Updated Full-Year Guidance Assumptions—Management is updating the following assumptions for its full-year guidance:
- Development Leasing Objective. Management is increasing its development leasing goal for the year, from the previously elevated target of 1.4 million square feet, to a new target of 2.0 million square feet.
- Development Spend. Due to its expanded set of development opportunities, the Company is increasing its development investment guidance by $75 million, from the prior elevated range of $325─$375 million, to a new range of $400─$450 million.
- Proceeds from Asset Sales. To fund its value-added developments, the Company is increasing its disposition guidance for the year from the previously elevated range of $200─$225 million, to $300 million.
- Same Property Cash NOI Growth. The Company’s initial guidance assumes cash NOI from same-properties would increase 1.5%-3% for the year; the Company is increasing its assumption to growth of between 2.75%─3.25%.
- Renewal Rates. The Company is increasing its tenant retention guidance for the full year from its original range of 70%─75% to a new range of 75%─80%.
- Cash Rent Spreads on Renewing Leases. To incorporate the impact of executing sizeable early renewals that will be incremental to its original forecast, the Company is lowering its full-year guidance for cash rents on renewing leases, from the prior range of flat to down 2%, to a new range of (5%)─(4%).
Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its second quarter 2019 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 second quarter 2019 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:
Conference Call Date: |
Tuesday, July 30, 2019 |
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Time: |
12:00 p.m. Eastern Time |
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Telephone Number: (within the U.S.) |
855-463-9057 |
|||
Telephone Number: (outside the U.S.) |
661-378-9894 |
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Passcode: |
9254219 |
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 available immediately via webcast on COPT’s Investors website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Tuesday, July 30 through 3:00 p.m. Eastern Time on Tuesday, August 13. 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 9254219.
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, 2019, 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 13 buildings owned through unconsolidated joint ventures, COPT’s core portfolio of 167 office and data center shell properties encompassed 18.8 million square feet and was 94.1% 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 reduced or delayed 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 dilutive effects of issuing additional common shares;
- the Company's ability to achieve projected results;
- security breaches relating to cyber attacks, cyber intrusions or other factors; 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, 2018.
Corporate Office Properties Trust
|
||||||||||||||||
|
For the Three Months
|
|
For the Six Months
|
|||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
Revenues |
|
|
|
|
|
|
|
|||||||||
Revenues from real estate operations |
$ |
132,771 |
|
|
$ |
129,162 |
|
|
$ |
264,761 |
|
|
$ |
257,440 |
|
|
Construction contract and other service revenues |
42,299 |
|
|
17,581 |
|
|
59,249 |
|
|
44,779 |
|
|||||
Total revenues |
175,070 |
|
|
146,743 |
|
|
324,010 |
|
|
302,219 |
|
|||||
Operating expenses |
|
|
|
|
|
|
|
|||||||||
Property operating expenses |
47,886 |
|
|
49,446 |
|
|
97,331 |
|
|
100,397 |
|
|||||
Depreciation and amortization associated with real estate operations |
34,802 |
|
|
33,190 |
|
|
69,598 |
|
|
66,702 |
|
|||||
Construction contract and other service expenses |
41,002 |
|
|
16,941 |
|
|
57,328 |
|
|
43,157 |
|
|||||
General and administrative expenses |
7,650 |
|
|
6,067 |
|
|
14,369 |
|
|
11,928 |
|
|||||
Leasing expenses |
1,736 |
|
|
1,561 |
|
|
3,768 |
|
|
2,992 |
|
|||||
Business development expenses and land carry costs |
870 |
|
|
1,234 |
|
|
1,983 |
|
|
2,848 |
|
|||||
Total operating expenses |
133,946 |
|
|
108,439 |
|
|
244,377 |
|
|
228,024 |
|
|||||
Interest expense |
(18,475 |
) |
|
(18,945 |
) |
|
(37,149 |
) |
|
(37,729 |
) |
|||||
Interest and other income |
1,849 |
|
|
1,439 |
|
|
4,135 |
|
|
2,798 |
|
|||||
Gain on sales of real estate |
84,469 |
|
|
(23 |
) |
|
84,469 |
|
|
(27 |
) |
|||||
Income before equity in income of unconsolidated entities and income taxes |
108,967 |
|
|
20,775 |
|
|
131,088 |
|
|
39,237 |
|
|||||
Equity in income of unconsolidated entities |
420 |
|
|
373 |
|
|
811 |
|
|
746 |
|
|||||
Income tax benefit (expense) |
176 |
|
|
(63 |
) |
|
(18 |
) |
|
(118 |
) |
|||||
Net income |
109,563 |
|
|
21,085 |
|
|
131,881 |
|
|
39,865 |
|
|||||
Net income attributable to noncontrolling interests: |
|
|
|
|
|
|
|
|||||||||
Common units in the Operating Partnership (“OP”) |
(1,339 |
) |
|
(608 |
) |
|
(1,596 |
) |
|
(1,152 |
) |
|||||
Preferred units in the OP |
(165 |
) |
|
(165 |
) |
|
(330 |
) |
|
(330 |
) |
|||||
Other consolidated entities |
(1,268 |
) |
|
(878 |
) |
|
(2,305 |
) |
|
(1,799 |
) |
|||||
Net income attributable to COPT common shareholders |
$ |
106,791 |
|
|
$ |
19,434 |
|
|
$ |
127,650 |
|
|
$ |
36,584 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Earnings per share (“EPS”) computation: |
|
|
|
|
|
|
|
|||||||||
Numerator for diluted EPS: |
|
|
|
|
|
|
|
|||||||||
Net income attributable to COPT common shareholders |
$ |
106,791 |
|
|
$ |
19,434 |
|
|
$ |
127,650 |
|
|
$ |
36,584 |
|
|
Distributions on dilutive convertible preferred units |
165 |
|
|
— |
|
|
— |
|
|
— |
|
|||||
Redeemable noncontrolling interests |
902 |
|
|
— |
|
|
66 |
|
|
— |
|
|||||
Common units in the OP |
— |
|
|
— |
|
|
1,515 |
|
|
— |
|
|||||
Amount allocable to share-based compensation awards |
(346 |
) |
|
(117 |
) |
|
(391 |
) |
|
(234 |
) |
|||||
Numerator for diluted EPS |
$ |
107,512 |
|
|
$ |
19,317 |
|
|
$ |
128,840 |
|
|
$ |
36,350 |
|
|
Denominator: |
|
|
|
|
|
|
|
|||||||||
Weighted average common shares - basic |
111,557 |
|
|
101,789 |
|
|
110,759 |
|
|
101,397 |
|
|||||
Dilutive effect of share-based compensation awards |
310 |
|
|
119 |
|
|
289 |
|
|
131 |
|
|||||
Dilutive effect of redeemable noncontrolling interests |
1,062 |
|
|
— |
|
|
130 |
|
|
— |
|
|||||
Dilutive convertible preferred units |
176 |
|
|
— |
|
|
— |
|
|
— |
|
|||||
Common units in the OP |
— |
|
|
— |
|
|
1,329 |
|
|
— |
|
|||||
Weighted average common shares - diluted |
113,105 |
|
|
101,908 |
|
|
112,507 |
|
|
101,528 |
|
|||||
Diluted EPS |
$ |
0.95 |
|
|
$ |
0.19 |
|
|
$ |
1.15 |
|
|
$ |
0.36 |
|
|
Corporate Office Properties Trust
|
||||||||||||||||
|
For the Three Months
|
|
For the Six Months
|
|||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
Net income |
$ |
109,563 |
|
|
$ |
21,085 |
|
|
$ |
131,881 |
|
|
$ |
39,865 |
|
|
Real estate-related depreciation and amortization |
34,802 |
|
|
33,190 |
|
|
69,598 |
|
|
66,702 |
|
|||||
Gain on sales of real estate |
(84,469 |
) |
|
23 |
|
|
(84,469 |
) |
|
27 |
|
|||||
Depreciation and amortization on unconsolidated real estate JVs |
566 |
|
|
564 |
|
|
1,132 |
|
|
1,127 |
|
|||||
Funds from operations (“FFO”) |
60,462 |
|
|
54,862 |
|
|
118,142 |
|
|
107,721 |
|
|||||
Noncontrolling interests - preferred units in the OP |
(165 |
) |
|
(165 |
) |
|
(330 |
) |
|
(330 |
) |
|||||
FFO allocable to other noncontrolling interests |
(1,188 |
) |
|
(753 |
) |
|
(2,159 |
) |
|
(1,697 |
) |
|||||
Basic and diluted FFO allocable to share-based compensation awards |
(229 |
) |
|
(224 |
) |
|
(414 |
) |
|
(437 |
) |
|||||
Basic FFO available to common share and common unit holders (“Basic FFO”) |
58,880 |
|
|
53,720 |
|
|
115,239 |
|
|
105,257 |
|
|||||
Redeemable noncontrolling interests |
33 |
|
|
— |
|
|
942 |
|
|
— |
|
|||||
Diluted FFO available to common share and common unit holders (“Diluted FFO”) |
58,913 |
|
|
53,720 |
|
|
116,181 |
|
|
105,257 |
|
|||||
Demolition costs on redevelopment and nonrecurring improvements |
— |
|
|
9 |
|
|
44 |
|
|
48 |
|
|||||
Executive transition costs |
— |
|
|
213 |
|
|
4 |
|
|
376 |
|
|||||
Non-comparable professional and legal expenses |
311 |
|
|
— |
|
|
311 |
|
|
— |
|
|||||
Diluted FFO comparability adjustments allocable to share-based compensation awards |
(2 |
) |
|
(1 |
) |
|
(2 |
) |
|
(2 |
) |
|||||
Diluted FFO available to common share and common unit holders, as adjusted for comparability |
59,222 |
|
|
53,941 |
|
|
116,538 |
|
|
105,679 |
|
|||||
Straight line rent adjustments and lease incentive amortization |
1,051 |
|
|
(1,195 |
) |
|
(616 |
) |
|
(2,023 |
) |
|||||
Amortization of intangibles included in net operating income |
(50 |
) |
|
231 |
|
|
12 |
|
|
587 |
|
|||||
Share-based compensation, net of amounts capitalized |
1,623 |
|
|
1,550 |
|
|
3,296 |
|
|
3,035 |
|
|||||
Amortization of deferred financing costs |
529 |
|
|
468 |
|
|
1,057 |
|
|
936 |
|
|||||
Amortization of net debt discounts, net of amounts capitalized |
374 |
|
|
358 |
|
|
744 |
|
|
712 |
|
|||||
Accum. other comprehensive loss on derivatives amortized to expense |
33 |
|
|
34 |
|
|
67 |
|
|
68 |
|
|||||
Replacement capital expenditures |
(16,002 |
) |
|
(15,613 |
) |
|
(27,175 |
) |
|
(31,133 |
) |
|||||
Other diluted AFFO adjustments associated with real estate JVs |
181 |
|
|
(32 |
) |
|
214 |
|
|
99 |
|
|||||
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) |
$ |
46,961 |
|
|
$ |
39,742 |
|
|
$ |
94,137 |
|
|
$ |
77,960 |
|
|
Diluted FFO per share |
$ |
0.52 |
|
|
$ |
0.51 |
|
|
$ |
1.02 |
|
|
$ |
1.00 |
|
|
Diluted FFO per share, as adjusted for comparability |
$ |
0.52 |
|
|
$ |
0.51 |
|
|
$ |
1.03 |
|
|
$ |
1.01 |
|
|
Dividends/distributions per common share/unit |
$ |
0.275 |
|
|
$ |
0.275 |
|
|
$ |
0.550 |
|
|
$ |
0.550 |
|
|
Corporate Office Properties Trust
|
|||||||
|
June 30,
|
|
December 31,
|
||||
Balance Sheet Data |
|
|
|
||||
Properties, net of accumulated depreciation |
$ |
3,194,372 |
|
|
$ |
3,250,626 |
|
Total assets |
|
3,803,469 |
|
|
|
3,656,005 |
|
Debt, per balance sheet |
|
1,784,362 |
|
|
|
1,823,909 |
|
Total liabilities |
|
2,054,555 |
|
|
|
2,002,697 |
|
Redeemable noncontrolling interest |
|
29,803 |
|
|
|
26,260 |
|
Equity |
|
1,719,111 |
|
|
|
1,627,048 |
|
Net debt to adjusted book |
|
36.1 |
% |
|
|
38.9 |
% |
|
|
|
|
||||
Core Portfolio Data (as of period end) (1) |
|
|
|
||||
Number of operating properties |
|
167 |
|
|
|
161 |
|
Total net rentable square feet owned (in thousands) |
|
18,788 |
|
|
|
17,937 |
|
Occupancy % |
|
92.9 |
% |
|
|
93.1 |
% |
Leased % |
|
94.1 |
% |
|
|
94.0 |
% |
|
|
|
|
||||
|
For the Three Months
|
|
For the Six Months
|
||||||||
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||
Payout ratios |
|
|
|
|
|
|
|
||||
Diluted FFO |
52.7 |
% |
|
54.3 |
% |
|
53.5 |
% |
|
55.1 |
% |
Diluted FFO, as adjusted for comparability |
52.4 |
% |
|
54.1 |
% |
|
53.3 |
% |
|
54.9 |
% |
Diluted AFFO |
66.1 |
% |
|
73.4 |
% |
|
66.0 |
% |
|
74.4 |
% |
Adjusted EBITDA fixed charge coverage ratio |
3.7x |
|
3.6x |
|
3.7x |
|
3.6x |
||||
Net debt to in-place adjusted EBITDA ratio (2) |
5.7x |
|
6.3x |
|
N/A |
|
|
N/A |
|
||
Net debt plus preferred equity to in-place adjusted EBITDA ratio (3) |
5.7x |
|
6.3x |
|
N/A |
|
|
N/A |
|
||
|
|
|
|
|
|
|
|
||||
Reconciliation of denominators for per share measures |
|||||||||||
Denominator for diluted EPS |
113,105 |
|
|
101,908 |
|
|
112,507 |
|
|
101,528 |
|
Weighted average common units |
1,327 |
|
|
3,197 |
|
|
— |
|
3,208 |
|
|
Redeemable noncontrolling interests |
(926 |
) |
|
— |
|
907 |
|
|
— |
||
Dilutive convertible preferred units |
(176 |
) |
|
— |
|
— |
|
— |
|||
Denominator for diluted FFO per share and as adjusted for comparability |
113,330 |
|
|
105,105 |
|
|
113,414 |
|
|
104,736 |
|
|
|
|
|
|
|
|
|
||||
(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
|
|||||||||||||||
|
For the Three Months
|
|
For the Six Months
|
||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Reconciliation of common share dividends to dividends and distributions for payout ratios |
|
|
|
|
|
|
|
||||||||
Common share dividends - unrestricted shares and deferred shares |
$ |
30,693 |
|
|
$ |
28,284 |
|
|
$ |
61,378 |
|
|
$ |
56,258 |
|
Common unit distributions - unrestricted units |
365 |
|
|
879 |
|
|
730 |
|
|
1,758 |
|
||||
Dividends and distributions for payout ratios |
$ |
31,058 |
|
|
$ |
29,163 |
|
|
$ |
62,108 |
|
|
$ |
58,016 |
|
|
|
|
|
|
|
|
|
||||||||
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 |
$ |
109,563 |
|
|
$ |
21,085 |
|
|
$ |
131,881 |
|
|
$ |
39,865 |
|
Interest expense |
18,475 |
|
|
18,945 |
|
|
37,149 |
|
|
37,729 |
|
||||
Income tax (benefit) expense |
(176 |
) |
|
63 |
|
|
18 |
|
|
118 |
|
||||
Depreciation of furniture, fixtures and equipment |
496 |
|
|
459 |
|
|
929 |
|
|
982 |
|
||||
Real estate-related depreciation and amortization |
34,802 |
|
|
33,190 |
|
|
69,598 |
|
|
66,702 |
|
||||
Gain on sales of real estate |
(84,469 |
) |
|
23 |
|
|
(84,469 |
) |
|
27 |
|
||||
Adjustments from unconsolidated real estate JVs |
830 |
|
|
828 |
|
|
1,657 |
|
|
1,652 |
|
||||
EBITDAre |
79,521 |
|
|
74,593 |
|
|
156,763 |
|
|
147,075 |
|
||||
Net gain on other investments |
(12 |
) |
|
— |
|
|
(400 |
) |
|
— |
|
||||
Business development expenses |
460 |
|
|
757 |
|
|
1,008 |
|
|
1,780 |
|
||||
Non-comparable professional and legal expenses |
311 |
|
|
— |
|
|
311 |
|
|
— |
|
||||
Demolition costs on redevelopment and nonrecurring improvements |
— |
|
|
9 |
|
|
44 |
|
|
48 |
|
||||
Executive transition costs |
— |
|
|
213 |
|
|
4 |
|
|
376 |
|
||||
Adjusted EBITDA |
80,280 |
|
|
75,572 |
|
|
$ |
157,730 |
|
|
$ |
149,279 |
|
||
Proforma net operating income adjustment for property changes within period |
(1,981 |
) |
|
418 |
|
|
|
|
|
||||||
In-place adjusted EBITDA |
$ |
78,299 |
|
|
$ |
75,990 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA |
|
|
|
|
|
|
|
||||||||
Interest expense |
$ |
18,475 |
|
|
$ |
18,945 |
|
|
$ |
37,149 |
|
|
$ |
37,729 |
|
Less: Amortization of deferred financing costs |
(529 |
) |
|
(468 |
) |
|
(1,057 |
) |
|
(936 |
) |
||||
Less: Amortization of net debt discounts, net of amounts capitalized |
(374 |
) |
|
(358 |
) |
|
(744 |
) |
|
(712 |
) |
||||
Less: Accum. other comprehensive loss on derivatives amortized to expense |
(33 |
) |
|
(34 |
) |
|
(67 |
) |
|
(68 |
) |
||||
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs |
258 |
|
|
258 |
|
|
513 |
|
|
513 |
|
||||
Scheduled principal amortization |
1,095 |
|
|
1,049 |
|
|
2,193 |
|
|
2,101 |
|
||||
Capitalized interest |
2,388 |
|
|
1,397 |
|
|
4,392 |
|
|
2,771 |
|
||||
Preferred unit distributions |
165 |
|
|
165 |
|
|
330 |
|
|
330 |
|
||||
Denominator for fixed charge coverage-Adjusted EBITDA |
$ |
21,445 |
|
|
$ |
20,954 |
|
|
$ |
42,709 |
|
|
$ |
41,728 |
|
|
|
|
|
|
|
|
|
||||||||
Corporate Office Properties Trust
|
|||||||||||||||
|
For the Three Months
|
|
For the Six Months
|
||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures |
|
|
|
|
|
|
|
||||||||
Tenant improvements and incentives |
$ |
8,568 |
|
|
$ |
8,117 |
|
|
$ |
15,720 |
|
|
$ |
16,732 |
|
Building improvements |
4,333 |
|
|
5,775 |
|
|
8,864 |
|
|
7,696 |
|
||||
Leasing costs |
2,761 |
|
|
1,822 |
|
|
5,943 |
|
|
3,102 |
|
||||
Net additions to tenant improvements and incentives |
1,759 |
|
|
1,315 |
|
|
290 |
|
|
4,604 |
|
||||
Excluded building improvements |
(1,419 |
) |
|
(1,370 |
) |
|
(3,642 |
) |
|
(955 |
) |
||||
Excluded leasing costs |
— |
|
|
(46 |
) |
|
— |
|
|
(46 |
) |
||||
Replacement capital expenditures |
$ |
16,002 |
|
|
$ |
15,613 |
|
|
$ |
27,175 |
|
|
$ |
31,133 |
|
|
|
|
|
|
|
|
|
||||||||
Same Properties cash NOI |
$ |
73,436 |
|
|
$ |
70,304 |
|
|
$ |
144,322 |
|
|
$ |
138,062 |
|
Straight line rent adjustments and lease incentive amortization |
(1,071 |
) |
|
447 |
|
|
(1,136 |
) |
|
16 |
|
||||
Amortization of acquired above- and below-market rents |
73 |
|
|
(176 |
) |
|
33 |
|
|
(476 |
) |
||||
Amortization of below-market cost arrangements |
(23 |
) |
|
(55 |
) |
|
(46 |
) |
|
(110 |
) |
||||
Lease termination fees, gross |
285 |
|
|
558 |
|
|
806 |
|
|
1,566 |
|
||||
Tenant funded landlord assets and lease incentives |
522 |
|
|
831 |
|
|
910 |
|
|
2,694 |
|
||||
Cash NOI adjustments in unconsolidated real estate JV |
46 |
|
|
68 |
|
|
105 |
|
|
135 |
|
||||
Same Properties NOI |
$ |
73,268 |
|
|
$ |
71,977 |
|
|
$ |
144,994 |
|
|
$ |
141,887 |
|
|
|
|
|
|
|
|
|
||||||||
|
June 30,
|
|
December 31,
|
||||
Reconciliation of total assets to adjusted book |
|
|
|
||||
Total assets |
$ |
3,803,469 |
|
|
$ |
3,656,005 |
|
Accumulated depreciation |
949,111 |
|
|
897,903 |
|
||
Accumulated depreciation included in assets held for sale |
1,397 |
|
|
— |
|
||
Accumulated amortization of real estate intangibles and deferred leasing costs |
210,183 |
|
|
204,882 |
|
||
Accumulated amortization of real estate intangibles and deferred leasing costs included in assets held for sale |
4 |
|
|
— |
|
||
COPT’s share of liabilities of unconsolidated real estate JVs |
30,588 |
|
|
29,917 |
|
||
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs |
6,578 |
|
|
5,446 |
|
||
Less: Property - operating lease liabilities |
(16,640 |
) |
|
— |
|
||
Less: Property - finance lease liabilities |
(712 |
) |
|
(660 |
) |
||
Less: Cash and cash equivalents |
(46,282 |
) |
|
(8,066 |
) |
||
Less: COPT’s share of cash of unconsolidated real estate JVs |
(406 |
) |
|
(293 |
) |
||
Adjusted book |
$ |
4,937,290 |
|
|
$ |
4,785,134 |
|
|
|
|
|
||||
Reconciliation of debt outstanding to net debt and net debt plus preferred equity |
|
|
|
||||
Debt outstanding (excluding net debt discounts and deferred financing costs) |
$ |
1,827,304 |
|
|
$ |
1,868,504 |
|
Less: Cash and cash equivalents |
(46,282 |
) |
|
(8,066 |
) |
||
Less: COPT’s share of cash of unconsolidated real estate JVs |
(406 |
) |
|
(293 |
) |
||
Net debt |
$ |
1,780,616 |
|
|
$ |
1,860,145 |
|
Preferred equity |
8,800 |
|
|
8,800 |
|
||
Net debt plus preferred equity |
$ |
1,789,416 |
|
|
$ |
1,868,945 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190729005754/en/
IR Contacts:
Stephanie Krewson-Kelly
443-285-5453
[email protected]
Michelle Layne
443-285-5452
[email protected]
Source: Corporate Office Properties Trust