COPT Reports Third Quarter 2019 Results

EPS of $0.19 Exceeded & FFO per Share of $0.51 Met High-End of Guidance

Achieved Same-Property Cash NOI Growth of 0.5% in 3Q19 and 3.2% in First Nine Months

Core Portfolio 92.8% Occupied & 94.5% Leased

804,000 SF of 100% Leased Developments Placed into Service through 9/30/19

2.6 Million SF Under Construction are 82% Leased; Should Drive Outsized FFO Growth in 2021

Record Leasing Volumes

1.7 Million & 4.2 Million SF of Total Leasing Completed, Respectively, in 3Q19 & First Nine Months

Record U.S. Government Total Leasing Volume of 546,000 SF in First Nine Months

622,000 SF of Vacancy Leasing in First Nine Months Exceeds 2018’s Entire Annual Volume

164,000 SF of U.S. Government Leasing in Operating Portfolio Sets New Annual Record

Solid Tenant Retention of 72% in 3Q19 & 75% in First Nine Months

Development Leasing of 875,000 SF in 3Q19; Record 2.1 Million SF Year-to-Date

Raising 2019 Development Leasing Goal Further, to 2.2 Million SF

Tightening Full-Year FFO per Share Guidance to $2.02─$2.04

Establishing 4Q19 FFO per Share Guidance of $0.49─$0.51

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, 2019.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Third quarter FFO per share met the high-end of our guidance, and the strengthening demand taking place throughout our Defense/IT locations continued to support record-levels of leasing, both for new developments and within our operating portfolio. Our 2.1 million square feet of development leasing through the third quarter is 68% greater than our prior full-year record set in 2012, and our 622,000 square feet of vacancy leasing this year is on-pace to set a new annual record.” He continued, “We expect to finish the year with strength, and for leasing momentum to carry into 2020.”

Financial Highlights

3rd Quarter Financial Results:

  • Diluted earnings per share (“EPS”) was $0.19 for the quarter ended September 30, 2019 as compared to $0.18 for the third quarter of 2018.
  • Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition and as adjusted for comparability, was $0.51 for the third quarter of 2019 as compared to $0.50 for third quarter 2018 results.

Operating Performance Highlights

Operating Portfolio Summary:

  • At September 30, 2019, the Company’s core portfolio of 167 operating office and data center shell properties was 92.8% occupied and 94.5% leased.
  • During the quarter, the Company placed portions of two developments aggregating 17,000 square feet into service that were 100% leased. During the nine months ended September 30, 2019, the Company placed 804,000 square feet into service in properties that were 100% leased.

Same-Property Performance:

  • At September 30, 2019, COPT’s same-property portfolio of 150 buildings was 91.9% occupied and 93.8% leased.
  • For the quarter and nine months ended September 30, 2019, the Company’s same-property cash NOI increased 0.5% and 3.2%, respectively, over the prior year’s comparable periods.

Leasing:

  • Total Square Feet Leased―For the quarter ended September 30, 2019, the Company leased 1.7 million total square feet, including 592,000 square feet of renewals, 251,000 square feet of new leases on vacant space, and 875,000 square feet in development projects.

    During the nine months ended September 30, 2019, the Company leased 4.2 million total square feet, including 1.5 million square feet of renewals, 622,000 square feet of new leases on vacant space, and 2.1 million square feet in development projects.

  • Renewal Rates―During the quarter and nine months ended September 30, 2019, the Company respectively renewed 71.9% and 75.4% of total expiring leases.
  • Cash Rent Spreads & Average Escalations on Renewing Leases―For the quarter and nine months ended September 30, 2019, cash rents on renewed space decreased 6.3% and 5.3%, respectively. For the same time periods, average annual escalations on renewing leases were 2.2% and 2.4%, respectively.
  • Lease Terms―In the third quarter, lease terms averaged 3.8 years on renewing leases, 5.8 years on new leasing of vacant space, and 13.6 years on development leasing. For the nine months, lease terms averaged 3.4 years on renewing leases, 6.0 years on new leasing of vacant space, and 12.7 years on development leasing.

Investment Activity Highlights

Development & Redevelopment Projects:

  • Construction Pipeline―At October 9, 2019, the Company’s construction pipeline consisted of 14 properties totaling 2.5 million square feet that were 82% leased. These projects have a total estimated cost of $715.4 million, of which $304.5 million has been incurred.
  • Redevelopment―At September 30, 2019, one project was under redevelopment totaling 106,000 square feet that was 80% leased. The Company has invested $22.4 million of the $25.9 million anticipated total cost.

Balance Sheet and Capital Transaction Highlights

  • As of September 30, 2019, the Company’s net debt plus preferred equity to adjusted book ratio was 37.5% and its net debt plus preferred equity to in-place adjusted EBITDA ratio was 6.1x. For the same period, the Company’s adjusted EBITDA fixed charge coverage ratio was 3.7x.
  • As of September 30, 2019, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate was 4.1%; additionally, 86.4% of the Company’s debt was subject to fixed interest rates and the consolidated debt portfolio had a weighted average maturity of 3.8 years.
  • During the third quarter, the Company’s joint venture with Blackstone Real Estate Income Trust, Inc. (“BREIT”) placed $154 million of mortgage debt on its seven data center shells. The mortgage debt matures in July 2029, is interest-only for the term, and bears interest at 3.64%. COPT received its 10% share of the mortgage proceeds.

2019 Guidance

Management is updating its previously issued guidance range of $1.52―$1.56 for full year EPS to a new range of $1.53─$1.55. The Company is tightening its previously issued guidance range for full year FFOPS, as adjusted for comparability, of $2.01―$2.05, to a new range of $2.02―$2.04.

Management also is establishing EPS and FFOPS, as adjusted for comparability, guidance for the fourth quarter ending December 31, 2019 at ranges of $0.30―$0.32 and $0.49―$0.51, respectively. Reconciliations of projected diluted EPS to projected FFOPS are as follows:

Table 1: Reconciliation of EPS to FFOPS, per Nareit® and Quarter ending Year ending
As Adjusted for Comparability December 31, 2019 December 31, 2019
Low High Low High
 
EPS

$0.30

 

$0.32

 

$1.53

 

$1.55

 

Real estate depreciation and amortization

0.35

 

0.35

 

1.40

 

1.40

 

Gain on sales of real estate

(0.16

)

(0.16

)

(0.91

)

(0.91

)

FFOPS, Nareit definition and as adjusted for comparability

$0.49

 

$0.51

 

$2.02

 

$2.04

 

Updated Full-Year Guidance Assumptions—As a reminder, Management expects to complete the sale of two additional data center shells to the BREIT joint venture during 4Q19 to fund additional development. 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 2.0 million square feet, to a new target of 2.2 million square feet.
  • Same-Property Cash NOI Growth. Management is increasing and tightening its previously increased guidance for full-year same-property cash NOI growth, from the prior range of 2.75%─3.25% to the new range of 3.25%─3.5%. The increase reflects expense management improvements at the property level.
  • Same-Property Year-End Occupancy. The Company is adjusting its expectation for same-property occupancy at year end from the prior range of 92%─93%, to 91.5%─92.0%. The decrease reflects expected occupancy dates on approximately 50,000 square feet of new tenancy slipping from late 4Q19 into 1Q20.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its third 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 third 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, October 29, 2019

 

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:

 

3489935

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, October 29 through 2:00 p.m. Eastern Time on Tuesday, November 12. 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 3489935.

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 September 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 94.5% 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 and the Company undertakes no obligation to update or supplement any forward-looking statements.

The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

 

 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

 

2019

 

2018

 

2019

 

2018

Revenues

 

 

 

 

 

 

 

Revenues from real estate operations

$

130,734

 

 

$

128,988

 

 

$

395,495

 

 

$

386,428

 

Construction contract and other service revenues

28,697

 

 

8,423

 

 

87,946

 

 

53,202

 

Total revenues

159,431

 

 

137,411

 

 

483,441

 

 

439,630

 

Operating expenses

 

 

 

 

 

 

 

Property operating expenses

49,714

 

 

49,340

 

 

147,045

 

 

149,737

 

Depreciation and amortization associated with real estate operations

34,692

 

 

34,195

 

 

104,290

 

 

100,897

 

Construction contract and other service expenses

27,802

 

 

8,058

 

 

85,130

 

 

51,215

 

Impairment losses

327

 

 

 

 

327

 

 

 

General and administrative expenses

6,105

 

 

5,796

 

 

20,474

 

 

17,724

 

Leasing expenses

1,824

 

 

1,103

 

 

5,592

 

 

4,095

 

Business development expenses and land carry costs

964

 

 

1,567

 

 

2,947

 

 

4,415

 

Total operating expenses

121,428

 

 

100,059

 

 

365,805

 

 

328,083

 

Interest expense

(17,126

)

 

(19,181

)

 

(54,275

)

 

(56,910

)

Interest and other income

1,842

 

 

1,486

 

 

5,977

 

 

4,284

 

Gain on sales of real estate

 

 

 

 

84,469

 

 

(27

)

Income before equity in income of unconsolidated entities and income taxes

22,719

 

 

19,657

 

 

153,807

 

 

58,894

 

Equity in income of unconsolidated entities

396

 

 

374

 

 

1,207

 

 

1,120

 

Income tax benefit

131

 

 

291

 

 

113

 

 

173

 

Net income

23,246

 

 

20,322

 

 

155,127

 

 

60,187

 

Net income attributable to noncontrolling interests:

 

 

 

 

 

 

 

Common units in the Operating Partnership (“OP”)

(267

)

 

(380

)

 

(1,863

)

 

(1,532

)

Preferred units in the OP

(157

)

 

(165

)

 

(487

)

 

(495

)

Other consolidated entities

(1,565

)

 

(1,080

)

 

(3,870

)

 

(2,879

)

Net income attributable to COPT common shareholders

$

21,257

 

 

$

18,697

 

 

$

148,907

 

 

$

55,281

 

 

 

 

 

 

 

 

 

Earnings per share (“EPS”) computation:

 

 

 

 

 

 

 

Numerator for diluted EPS:

 

 

 

 

 

 

 

Net income attributable to COPT common shareholders

$

21,257

 

 

$

18,697

 

 

$

148,907

 

 

$

55,281

 

Redeemable noncontrolling interests

 

 

 

 

100

 

 

 

Amount allocable to share-based compensation awards

(118

)

 

(114

)

 

(469

)

 

(348

)

Numerator for diluted EPS

$

21,139

 

 

$

18,583

 

 

$

148,538

 

 

$

54,933

 

Denominator:

 

 

 

 

 

 

 

Weighted average common shares – basic

111,582

 

 

104,379

 

 

111,036

 

 

102,401

 

Dilutive effect of share-based compensation awards

361

 

 

231

 

 

313

 

 

165

 

Dilutive effect of redeemable noncontrolling interests

 

 

 

 

123

 

 

 

Dilutive effect of forward equity sale agreements

 

 

178

 

 

 

 

60

 

Weighted average common shares – diluted

111,943

 

 

104,788

 

 

111,472

 

 

102,626

 

Diluted EPS

$

0.19

 

 

$

0.18

 

 

$

1.33

 

 

$

0.54

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

 

 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

 

2019

 

2018

 

2019

 

2018

Net income

$

23,246

 

 

$

20,322

 

 

$

155,127

 

 

$

60,187

 

Real estate-related depreciation and amortization

34,692

 

 

34,195

 

 

104,290

 

 

100,897

 

Impairment losses on real estate

327

 

 

 

 

327

 

 

 

Gain on sales of real estate

 

 

 

 

(84,469

)

 

27

 

Depreciation and amortization on unconsolidated real estate JVs

790

 

 

564

 

 

1,922

 

 

1,691

 

Funds from operations (“FFO”)

59,055

 

 

55,081

 

 

177,197

 

 

162,802

 

Noncontrolling interests – preferred units in the OP

(157

)

 

(165

)

 

(487

)

 

(495

)

FFO allocable to other noncontrolling interests

(1,429

)

 

(1,060

)

 

(3,588

)

 

(2,757

)

Basic and diluted FFO allocable to share-based compensation awards

(248

)

 

(214

)

 

(662

)

 

(651

)

Basic FFO available to common share and common unit holders (“Basic FFO”)

57,221

 

 

53,642

 

 

172,460

 

 

158,899

 

Redeemable noncontrolling interests

34

 

 

 

 

100

 

 

 

Diluted FFO available to common share and common unit holders (“Diluted FFO”)

57,255

 

 

53,642

 

 

172,560

 

 

158,899

 

Demolition costs on redevelopment and nonrecurring improvements

 

 

251

 

 

44

 

 

299

 

Executive transition costs

 

 

46

 

 

4

 

 

422

 

Non-comparable professional and legal expenses

175

 

 

 

 

486

 

 

 

Diluted FFO comparability adjustments allocable to share-based compensation awards

 

 

(1

)

 

(2

)

 

(3

)

Diluted FFO available to common share and common unit holders, as adjusted for comparability

57,430

 

 

53,938

 

 

173,092

 

 

159,617

 

Straight line rent adjustments and lease incentive amortization

(515

)

 

582

 

 

(1,131

)

 

(1,441

)

Amortization of intangibles included in net operating income

(59

)

 

153

 

 

(47

)

 

740

 

Share-based compensation, net of amounts capitalized

1,697

 

 

1,557

 

 

4,993

 

 

4,592

 

Amortization of deferred financing costs

538

 

 

468

 

 

1,595

 

 

1,404

 

Amortization of net debt discounts, net of amounts capitalized

377

 

 

362

 

 

1,121

 

 

1,074

 

Accum. other comprehensive loss on derivatives amortized to expense

12

 

 

33

 

 

79

 

 

101

 

Replacement capital expenditures

(16,752

)

 

(18,803

)

 

(43,927

)

 

(49,936

)

Other diluted AFFO adjustments associated with real estate JVs

66

 

 

50

 

 

280

 

 

149

 

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)

$

42,794

 

 

$

38,340

 

 

$

136,055

 

 

$

116,300

 

Diluted FFO per share

$

0.51

 

 

$

0.50

 

 

$

1.53

 

 

$

1.51

 

Diluted FFO per share, as adjusted for comparability

$

0.51

 

 

$

0.50

 

 

$

1.53

 

 

$

1.51

 

Dividends/distributions per common share/unit

$

0.275

 

 

$

0.275

 

 

$

0.825

 

 

$

0.825

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars and shares in thousands, except per share data)

         
   

September 30,

 2019

 

December 31,

 2018

Balance Sheet Data

 

 

   

 

 

Properties, net of accumulated depreciation

 

$

3,258,823

 

 

$

3,250,626

 

Total assets

 

3,855,369

 

 

3,656,005

 

Debt, per balance sheet

 

1,862,301

 

 

1,823,909

 

Total liabilities

 

2,130,745

 

 

2,002,697

 

Redeemable noncontrolling interest

 

28,677

 

 

26,260

 

Equity

 

1,695,947

 

 

1,627,048

 

Net debt to adjusted book

 

37.3

%

 

38.9%

 

 

 

 

   

 

 

Core Portfolio Data (as of period end) (1)

 

 

   

 

 

Number of operating properties

 

167

 

 

161

 

Total net rentable square feet owned (in thousands)

 

18,799

 

 

17,937

 

% Occupied

 

92.8

%

 

93.1%

 

% Leased

 

94.5

%

 

94.0%

 

 

 

 

   

 

 

 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

2019

 

2018

 

2019

 

2018

Payout ratios

 

 

 

 

 

   

 

 

Diluted FFO

54.2

%

 

56.3

%

 

54.0

%

 

55.5

%

Diluted FFO, as adjusted for comparability

54.1

%

 

56.0

%

 

53.8

%

 

55.3

%

Diluted AFFO

72.6

%

 

78.8

%

 

68.5

%

 

75.8

%

Adjusted EBITDA fixed charge coverage ratio

3.7

x

 

3.6

x

 

3.7

x

 

3.6

x

Net debt to in-place adjusted EBITDA ratio (2)

6.1

x

 

6.1

x

 

N/A

   

N/A

 

Net debt plus preferred equity to in-place adjusted EBITDA ratio (3)

6.1

x

 

6.1

x

 

N/A

   

N/A

 

 

 

 

 

 

 

   

 

 

Reconciliation of denominators for per share measures

 

 

 

 

   

 

 

Denominator for diluted EPS

111,943

 

 

104,788

 

 

111,472

 

 

102,626

 

Weighted average common units

1,312

 

 

2,135

 

 

1,323

 

 

2,847

 

Redeemable noncontrolling interests

109

 

 

 

 

 

 

 

Denominator for diluted FFO per share and as adjusted for comparability

113,364

 

 

106,923

 

 

112,795

 

 

105,473

 

(1)

 

Represents Defense/IT Locations and Regional Office properties.

(2)

 

Represents net debt as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

(3)

 

Represents net debt plus the total liquidation preference of preferred equity as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

 

 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

 

2019

 

2018

 

2019

 

2018

Reconciliation of common share dividends to dividends and distributions for payout ratios

 

 

 

 

 

 

 

Common share dividends – unrestricted shares and deferred shares

$

30,721

 

 

$

29,821

 

 

$

92,099

 

 

$

86,079

 

Common unit distributions – unrestricted units

338

 

 

373

 

 

1,068

 

 

2,131

 

Dividends and distributions for payout ratios

$

31,059

 

 

$

30,194

 

 

$

93,167

 

 

$

88,210

 

 

 

 

 

 

 

 

 

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

$

23,246

 

 

$

20,322

 

 

$

155,127

 

 

$

60,187

 

Interest expense

17,126

 

 

19,181

 

 

54,275

 

 

56,910

 

Income tax benefit

(131

)

 

(291

)

 

(113

)

 

(173

)

Depreciation of furniture, fixtures and equipment

467

 

 

561

 

 

1,396

 

 

1,543

 

Real estate-related depreciation and amortization

34,692

 

 

34,195

 

 

104,290

 

 

100,897

 

Impairment losses on real estate

327

 

 

 

 

327

 

 

 

Gain on sales of real estate

 

 

 

 

(84,469

)

 

27

 

Adjustments from unconsolidated real estate JVs

1,202

 

 

830

 

 

2,859

 

 

2,482

 

EBITDAre

76,929

 

 

74,798

 

 

233,692

 

 

221,873

 

Net gain on other investments

 

 

 

 

(400

)

 

 

Business development expenses

419

 

 

673

 

 

1,427

 

 

2,453

 

Non-comparable professional and legal expenses

175

 

 

 

 

486

 

 

 

Demolition costs on redevelopment and nonrecurring improvements

 

 

251

 

 

44

 

 

299

 

Executive transition costs

 

 

46

 

 

4

 

 

422

 

Adjusted EBITDA

77,523

 

 

75,768

 

 

$

235,253

 

 

$

225,047

 

Proforma net operating income adjustment for property changes within period

 

 

166

 

 

 

 

 

In-place adjusted EBITDA

$

77,523

 

 

$

75,934

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA

 

 

 

 

 

 

 

Interest expense

$

17,126

 

 

$

19,181

 

 

$

54,275

 

 

$

56,910

 

Less: Amortization of deferred financing costs

(538

)

 

(468

)

 

(1,595

)

 

(1,404

)

Less: Amortization of net debt discounts, net of amounts capitalized

(377

)

 

(362

)

 

(1,121

)

 

(1,074

)

Less: Accum. other comprehensive loss on derivatives amortized to expense

(12

)

 

(33

)

 

(79

)

 

(101

)

COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs

403

 

 

261

 

 

916

 

 

774

 

Scheduled principal amortization

1,107

 

 

1,060

 

 

3,300

 

 

3,161

 

Capitalized interest

2,927

 

 

1,410

 

 

7,319

 

 

4,181

 

Preferred unit distributions

157

 

 

165

 

 

487

 

 

495

 

Denominator for fixed charge coverage-Adjusted EBITDA

$

20,793

 

 

$

21,214

 

 

$

63,502

 

 

$

62,942

 

 

 

 

 

 

 

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

 

 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

 

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

$

10,880

 

 

$

12,894

 

 

$

26,600

 

 

$

29,626

 

Building improvements

8,908

 

 

5,975

 

 

17,772

 

 

13,671

 

Leasing costs

2,722

 

 

2,945

 

 

8,665

 

 

6,047

 

Net (exclusions from) additions to tenant improvements and incentives

(2,156

)

 

(896

)

 

(1,866

)

 

3,708

 

Excluded building improvements

(3,602

)

 

(2,134

)

 

(7,244

)

 

(3,089

)

Excluded leasing costs

 

 

19

 

 

 

 

(27

)

Replacement capital expenditures

$

16,752

 

 

$

18,803

 

 

$

43,927

 

 

$

49,936

 

 

 

 

 

 

 

 

 

Same Properties cash NOI

$

72,792

 

 

$

72,406

 

 

$

217,114

 

 

$

210,468

 

Straight line rent adjustments and lease incentive amortization

(735

)

 

(1,699

)

 

(1,871

)

 

(1,683

)

Amortization of acquired above- and below-market rents

82

 

 

(98

)

 

115

 

 

(574

)

Amortization of below-market cost arrangements

(23

)

 

(56

)

 

(69

)

 

(166

)

Lease termination fees, gross

823

 

 

759

 

 

1,629

 

 

2,325

 

Tenant funded landlord assets and lease incentives

519

 

 

318

 

 

1,429

 

 

3,012

 

Cash NOI adjustments in unconsolidated real estate JV

42

 

 

62

 

 

147

 

 

197

 

Same Properties NOI

$

73,500

 

 

$

71,692

 

 

$

218,494

 

 

$

213,579

 

 

 

 

 

 

 

 

 

 

September 30,

 2019

 

December 31,

 2018

Reconciliation of total assets to adjusted book

 

 

 

Total assets

$

3,855,369

 

 

$

3,656,005

 

Accumulated depreciation

979,353

 

 

897,903

 

Accumulated depreciation included in assets held for sale

1,397

 

 

 

Accumulated amortization of real estate intangibles and deferred leasing costs

212,222

 

 

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

46,061

 

 

29,917

 

COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs

7,376

 

 

5,446

 

Less: Property – operating lease liabilities

(16,686

)

 

 

Less: Property – finance lease liabilities

(702

)

 

(660

)

Less: Cash and cash equivalents

(34,005

)

 

(8,066

)

Less: COPT’s share of cash of unconsolidated real estate JVs

(505

)

 

(293

)

Adjusted book

$

5,049,884

 

 

$

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)

$

1,920,179

 

 

$

1,868,504

 

Less: Cash and cash equivalents

(34,005

)

 

(8,066

)

Less: COPT’s share of cash of unconsolidated real estate JVs

(505

)

 

(293

)

Net debt

$

1,885,669

 

 

$

1,860,145

 

Preferred equity

8,800

 

 

8,800

 

Net debt plus preferred equity

$

1,894,469

 

 

$

1,868,945

 

Contacts

IR:

Stephanie Krewson-Kelly

443-285-5453

stephanie.kelly@copt.com

Michelle Layne

443-285-5452

michelle.layne@copt.com

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