OFC - COPT Reports 2Q 2022 Results
Raises Midpoint of Full-Year Guidance for FFOPS, As Adjusted for Comparability by 1-Cent to $2.35, Implying 2.6% Growth
Reports EPS of $0.29 in 2Q22;
FFO per Share, as Adjusted for Comparability, of $0.59 at High-End of Guidance
Increased Midpoint of Full-Year Same-Property Occupancy to 92.5%;
Maintains Full-Year Guidance for Change in Same-Property Cash NOI at (2%)-0%;
2.4% Decrease in Same-Property Cash NOI During Quarter, In-Line with Expectations
Core Portfolio 91.8% Occupied & 93.7% Leased
80,000 SF of 94% Leased Developments Placed into Service in 2Q22
1.9 Million SF of Active Developments are 91% Leased
Solid Leasing
Total Leasing of 558,000 SF in 2Q22 and 1.4 Million SF Year-to-Date
Tenant Retention of 58% in 2Q22 and 62% Year-to-Date;
Increased Midpoint of Year-End Tenant Retention Rate to 75%
Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the second quarter ended June 30, 2022.
Management Comments
Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Our Defense/IT investment strategy concentrating on priority missions at U.S. defense installations continues to produce strong, reliable results that are not correlated to traditional office fundamentals. Second quarter results were slightly favorable to our plan, positioning the Company to achieve or exceed our full-year operating, leasing, and FFOPS objectives. Second quarter FFOPS exceeded the midpoint of guidance by $0.01, and we are elevating full-year guidance by $0.01 at the midpoint and narrowing the range. Same-property cash NOI was slightly better than expectations, declining 2.4% as a result of prior quarter non-renewals. Leasing volume met our expectations and sets the stage for a very strong remainder of the year. We pre-leased another full building build-to-suit in The National Business Park for a Fortune 100 defense contractor, our second in the past year. The 120,000 square feet of vacancy leasing we achieved was concentrated in Defense/IT Locations and equaled our 5-year average for the second quarter. The 58% tenant retention rate in the quarter was expected and reflected some proactive portfolio management in Huntsville, transitioning space from an existing tenant to a new contractor to support another new development in Redstone Gateway. We expect full-year retention to exceed our initial guidance, and we are elevating our target range.”
He continued, “During the quarter, we placed 80,000 square feet into service, bringing our year-to-date deliveries to 363,000 square feet that are 99% leased. We further expanded our active development pipeline to 1.9 million square feet that are 91% leased and we expect to place another 900,000 square feet of fully leased projects into service by year end. Lastly, the midpoint of our elevated full-year guidance implies 2.6% growth in diluted FFO per share, as adjusted for comparability, reduced by roughly 2% from the dilutive sale of DC-6 during the first quarter.”
Financial Highlights
2 nd Quarter Financial Results:
- Diluted earnings per share (“EPS”) was $0.29 for the quarter ended June 30, 2022 compared to $0.38 for the second quarter of 2021.
- Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.59 for the second quarter of 2022 compared to $0.35 for the second quarter of 2021.
- FFOPS, as adjusted for comparability, was $0.59 for the second quarter of 2022 compared to $0.58 for the second quarter of 2021.
Operating Performance Highlights
Operating Portfolio Summary:
- At June 30, 2022, the Company’s 21.9 million square foot core portfolio was 91.8% occupied and 93.7% leased.
- During the quarter, the Company placed into service 80,000 square feet of developments that were 94% leased.
Same-Property Performance:
- At June 30, 2022, COPT’s 20.3 million square foot same-property portfolio was 91.6% occupied and 93.6% leased.
- For the quarter ended June 30, 2022, the Company’s same-property cash NOI decreased 2.4% compared to the second quarter of 2021.
Leasing:
- Total Square Feet Leased : For the quarter ended June 30, 2022, the Company leased 558,000 square feet, including 228,000 square feet of renewals, 120,000 square feet of new leases on vacant space, and 211,000 square feet in development projects. For the six months ended June 30, 2022, the Company executed 1.4 million square feet of total leasing, including 676,000 square feet of renewals, 277,000 square feet of vacancy leasing, and 476,000 square feet in development projects.
- Tenant Retention Rates : During the quarter and six months ended June 30, 2022, the Company renewed 58% and 62%, respectively, of expiring square feet.
- Rent Spreads & Average Escalations on Renewing Leases : For the quarter and six months ended June 30, 2022, straight-line rents on renewals increased 7.8% and 1.2%, respectively, and cash rents on renewed space decreased 0.8% and 4.1%, respectively. For the same time periods, annual escalations on renewing leases averaged 1.9% and 2.3%, respectively.
- Lease Terms : In the second quarter of 2022, lease terms averaged 4.3 years on renewing leases, 6.4 years on vacancy leasing, and 11.1 years on development leasing. For the first six months, lease terms averaged 3.6 years on renewing leases, 6.4 years on vacancy leasing, and 13.3 years on development leasing.
Investment Activity Highlights
- Development Pipeline : The Company’s development pipeline consists of 12 properties and an expansion of one fully-operational property totaling 1.9 million square feet that were 91% leased at June 30, 2022. These projects represent a total estimated investment of $646.3 million, of which $274.9 million has been spent.
Balance Sheet and Capital Transaction Highlights
- For the quarter ended June 30, 2022, the Company’s adjusted EBITDA fixed charge coverage ratio was 5.3x.
- At June 30, 2022, the Company’s net debt to in-place adjusted EBITDA ratio was 6.4x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 5.8x.
- At June 30, 2022, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 2.75% with a weighted average maturity of 6.7 years; additionally, 96.3% of the Company’s debt was subject to fixed interest rates.
Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its second quarter 2022 conference call; the presentation can be viewed and downloaded from the ‘Financial Info – Financial Results’ section of COPT’s Investors website: https://investors.copt.com/financial-information/financial-results
2022 Guidance
Management is updating its full-year guidance for diluted EPS and diluted FFOPS, per Nareit and as adjusted for comparability, from the prior range of $1.16-$1.22, and $2.31-$2.37, respectively, to new ranges of $1.33-$1.37, and $2.33-$2.37, respectively. Management is establishing third quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.27-$0.29 and $0.57-$0.59, respectively. Reconciliations of projected diluted EPS to projected diluted FFOPS, in accordance with Nareit and as adjusted for comparability are as follows:
| Reconciliation of Diluted EPS to Diluted FFOPS, per Nareit and |
| Quarter ending |
|
|
| Year ending |
| As Adjusted for Comparability |
| September 30, 2022 |
|
|
| December 31, 2022 |
| Low |
|
|
| High |
|
|
| Low |
|
|
| High |
| Diluted EPS |
| $ |
| 0.27 |
| $ |
| 0.29 |
| $ |
| 1.33 |
|
|
| $ |
| 1.37 |
|
|
| Real estate-related depreciation and amortization |
|
|
| 0.30 |
|
|
| 0.30 |
|
|
| 1.25 |
|
|
|
|
| 1.25 |
|
|
| Gain on sales of real estate |
|
|
| - |
|
|
| - |
|
|
| (0.25 |
| ) |
|
|
| (0.25 |
| ) |
| Diluted FFOPS, Nareit definition and as adjusted for comparability |
| $ |
| 0.57 |
| $ |
| 0.59 |
| $ |
| 2.33 |
|
|
| $ |
| 2.37 |
|
|
Conference Call Information
Management will discuss second quarter 2022 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:
| Conference Call Date: |
| Friday, July 29, 2022 |
| Time: |
| 12:00 p.m. Eastern Time |
Participants must register for the conference call at the link below to receive the dial-in number and personal pin. Registering only takes a few moments and provides direct access to the conference call without waiting for an operator. You may register at any time, including up to and after the call start time:
https://register.vevent.com/register/BIc8c0e17ac73c4a0fa291f2b763956f45
The conference call will also be available via live webcast in the ‘News & Events – IR Calendar’ section of COPT’s Investors website: https://investors.copt.com/news-events/ir-calendar
Replay Information
A replay of the conference call will be immediately available via webcast only on COPT’s Investors website.
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.
About COPT
COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is 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 the Company 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, 2022, the Company derived 90% of its core portfolio annualized rental revenue from Defense/IT Locations and 10% from its Regional Office Properties. As of the same date and including 19 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 186 properties encompassed 21.9 million square feet and was 93.7% 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. 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, 2021.
Source: Corporate Office Properties Trust
| Corporate Office Properties Trust |
|
|
| For the Three Months |
|
|
| For the Six Months |
|
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues from real estate operations |
| $ |
| 143,246 |
|
|
|
|
| $ |
| 137,219 |
|
|
|
|
| $ |
| 285,526 |
|
|
|
|
| $ |
| 275,049 |
|
|
| Construction contract and other service revenues |
|
|
| 42,557 |
|
|
|
|
|
|
| 19,988 |
|
|
|
|
|
|
| 95,757 |
|
|
|
|
|
|
| 36,546 |
|
|
| Total revenues |
|
|
| 185,803 |
|
|
|
|
|
|
| 157,207 |
|
|
|
|
|
|
| 381,283 |
|
|
|
|
|
|
| 311,595 |
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property operating expenses |
|
|
| 54,116 |
|
|
|
|
|
|
| 50,914 |
|
|
|
|
|
|
| 111,297 |
|
|
|
|
|
|
| 104,190 |
|
|
| Depreciation and amortization associated with real estate operations |
|
|
| 34,812 |
|
|
|
|
|
|
| 34,732 |
|
|
|
|
|
|
| 69,076 |
|
|
|
|
|
|
| 69,232 |
|
|
| Construction contract and other service expenses |
|
|
| 41,304 |
|
|
|
|
|
|
| 19,082 |
|
|
|
|
|
|
| 92,954 |
|
|
|
|
|
|
| 34,875 |
|
|
| General and administrative expenses |
|
|
| 6,467 |
|
|
|
|
|
|
| 7,293 |
|
|
|
|
|
|
| 13,137 |
|
|
|
|
|
|
| 13,355 |
|
|
| Leasing expenses |
|
|
| 1,888 |
|
|
|
|
|
|
| 1,929 |
|
|
|
|
|
|
| 3,762 |
|
|
|
|
|
|
| 4,273 |
|
|
| Business development expenses and land carry costs |
|
|
| 701 |
|
|
|
|
|
|
| 1,372 |
|
|
|
|
|
|
| 1,484 |
|
|
|
|
|
|
| 2,466 |
|
|
| Total operating expenses |
|
|
| 139,288 |
|
|
|
|
|
|
| 115,322 |
|
|
|
|
|
|
| 291,710 |
|
|
|
|
|
|
| 228,391 |
|
|
| Interest expense |
|
|
| (14,808 |
| ) |
|
|
|
|
| (15,942 |
| ) |
|
|
|
|
| (29,232 |
| ) |
|
|
|
|
| (33,461 |
| ) |
| Interest and other income |
|
|
| 1,818 |
|
|
|
|
|
|
| 2,228 |
|
|
|
|
|
|
| 3,711 |
|
|
|
|
|
|
| 4,093 |
|
|
| Credit loss (expense) recoveries |
|
|
| (225 |
| ) |
|
|
|
|
| (193 |
| ) |
|
|
|
|
| 91 |
|
|
|
|
|
|
| 714 |
|
|
| Gain on sales of real estate |
|
|
| (19 |
| ) |
|
|
|
|
| 40,233 |
|
|
|
|
|
|
| (4 |
| ) |
|
|
|
|
| 39,743 |
|
|
| Loss on early extinguishment of debt |
|
|
| — |
|
|
|
|
|
|
| (25,228 |
| ) |
|
|
|
|
| (342 |
| ) |
|
|
|
|
| (58,394 |
| ) |
| Income from continuing operations before equity in income of unconsolidated entities and income taxes |
|
|
| 33,281 |
|
|
|
|
|
|
| 42,983 |
|
|
|
|
|
|
| 63,797 |
|
|
|
|
|
|
| 35,899 |
|
|
| Equity in income of unconsolidated entities |
|
|
| 318 |
|
|
|
|
|
|
| 260 |
|
|
|
|
|
|
| 1,206 |
|
|
|
|
|
|
| 482 |
|
|
| Income tax expense |
|
|
| (4 |
| ) |
|
|
|
|
| (24 |
| ) |
|
|
|
|
| (157 |
| ) |
|
|
|
|
| (56 |
| ) |
| Income from continuing operations |
|
|
| 33,595 |
|
|
|
|
|
|
| 43,219 |
|
|
|
|
|
|
| 64,846 |
|
|
|
|
|
|
| 36,325 |
|
|
| Discontinued operations |
|
|
| — |
|
|
|
|
|
|
| 679 |
|
|
|
|
|
|
| 29,573 |
|
|
|
|
|
|
| 1,494 |
|
|
| Net Income |
|
|
| 33,595 |
|
|
|
|
|
|
| 43,898 |
|
|
|
|
|
|
| 94,419 |
|
|
|
|
|
|
| 37,819 |
|
|
| Net income attributable to noncontrolling interests: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common units in the Operating Partnership (“OP”) |
|
|
| (496 |
| ) |
|
|
|
|
| (559 |
| ) |
|
|
|
|
| (1,352 |
| ) |
|
|
|
|
| (474 |
| ) |
| Other consolidated entities |
|
|
| (789 |
| ) |
|
|
|
|
| (938 |
| ) |
|
|
|
|
| (1,438 |
| ) |
|
|
|
|
| (1,613 |
| ) |
| Net income attributable to COPT common shareholders |
| $ |
| 32,310 |
|
|
|
|
| $ |
| 42,401 |
|
|
|
|
| $ |
| 91,629 |
|
|
|
|
| $ |
| 35,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share (“EPS”) computation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Numerator for diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to COPT common shareholders |
| $ |
| 32,310 |
|
|
|
|
| $ |
| 42,401 |
|
|
|
|
| $ |
| 91,629 |
|
|
|
|
| $ |
| 35,732 |
|
|
| Amount allocable to share-based compensation awards |
|
|
| (75 |
| ) |
|
|
|
|
| (125 |
| ) |
|
|
|
|
| (259 |
| ) |
|
|
|
|
| (235 |
| ) |
| Redeemable noncontrolling interests |
|
|
| (30 |
| ) |
|
|
|
|
| (20 |
| ) |
|
|
|
|
| (69 |
| ) |
|
|
|
|
| 7 |
|
|
| Numerator for diluted EPS |
| $ |
| 32,205 |
|
|
|
|
| $ |
| 42,256 |
|
|
|
|
| $ |
| 91,301 |
|
|
|
|
| $ |
| 35,504 |
|
|
| Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares - basic |
|
|
| 112,082 |
|
|
|
|
|
|
| 111,974 |
|
|
|
|
|
|
| 112,052 |
|
|
|
|
|
|
| 111,931 |
|
|
| Dilutive effect of share-based compensation awards |
|
|
| 429 |
|
|
|
|
|
|
| 297 |
|
|
|
|
|
|
| 427 |
|
|
|
|
|
|
| 280 |
|
|
| Dilutive effect of redeemable noncontrolling interests |
|
|
| 126 |
|
|
|
|
|
|
| 133 |
|
|
|
|
|
|
| 129 |
|
|
|
|
|
|
| 125 |
|
|
| Weighted average common shares - diluted |
|
|
| 112,637 |
|
|
|
|
|
|
| 112,404 |
|
|
|
|
|
|
| 112,608 |
|
|
|
|
|
|
| 112,336 |
|
|
| Diluted EPS |
| $ |
| 0.29 |
|
|
|
|
| $ |
| 0.38 |
|
|
|
|
| $ |
| 0.81 |
|
|
|
|
| $ |
| 0.32 |
|
|
| Corporate Office Properties Trust |
|
|
| For the Three Months |
|
|
| For the Six Months |
|
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
| Net income |
| $ |
| 33,595 |
|
|
|
|
| $ |
| 43,898 |
|
|
|
|
| $ |
| 94,419 |
|
|
|
|
| $ |
| 37,819 |
|
|
| Real estate-related depreciation and amortization |
|
|
| 34,812 |
|
|
|
|
|
|
| 37,555 |
|
|
|
|
|
|
| 69,076 |
|
|
|
|
|
|
| 74,876 |
|
|
| Gain on sales of real estate from continuing and discontinued operations |
|
|
| 19 |
|
|
|
|
|
|
| (40,233 |
| ) |
|
|
|
|
| (28,560 |
| ) |
|
|
|
|
| (39,743 |
| ) |
| Depreciation and amortization on unconsolidated real estate JVs |
|
|
| 525 |
|
|
|
|
|
|
| 476 |
|
|
|
|
|
|
| 1,051 |
|
|
|
|
|
|
| 930 |
|
|
| Funds from operations (“FFO”) |
|
|
| 68,951 |
|
|
|
|
|
|
| 41,696 |
|
|
|
|
|
|
| 135,986 |
|
|
|
|
|
|
| 73,882 |
|
|
| FFO allocable to other noncontrolling interests |
|
|
| (1,178 |
| ) |
|
|
|
|
| (1,302 |
| ) |
|
|
|
|
| (2,220 |
| ) |
|
|
|
|
| (2,329 |
| ) |
| Basic FFO allocable to share-based compensation awards |
|
|
| (357 |
| ) |
|
|
|
|
| (193 |
| ) |
|
|
|
|
| (719 |
| ) |
|
|
|
|
| (353 |
| ) |
| Basic FFO available to common share and common unit holders (“Basic FFO”) |
|
|
| 67,416 |
|
|
|
|
|
|
| 40,201 |
|
|
|
|
|
|
| 133,047 |
|
|
|
|
|
|
| 71,200 |
|
|
| Redeemable noncontrolling interests |
|
|
| 4 |
|
|
|
|
|
|
| 11 |
|
|
|
|
|
|
| (2 |
| ) |
|
|
|
|
| 70 |
|
|
| Diluted FFO adjustments allocable to share-based compensation awards |
|
|
| 27 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 54 |
|
|
|
|
|
|
| — |
|
|
| Diluted FFO available to common share and common unit holders (“Diluted FFO”) |
|
|
| 67,447 |
|
|
|
|
|
|
| 40,212 |
|
|
|
|
|
|
| 133,099 |
|
|
|
|
|
|
| 71,270 |
|
|
| Loss on early extinguishment of debt |
|
|
| — |
|
|
|
|
|
|
| 25,228 |
|
|
|
|
|
|
| 342 |
|
|
|
|
|
|
| 58,394 |
|
|
| Demolition costs on redevelopment and nonrecurring improvements |
|
|
| — |
|
|
|
|
|
|
| 302 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 302 |
|
|
| Executive transition costs |
|
|
| 137 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 137 |
|
|
|
|
|
|
| — |
|
|
| Diluted FFO comparability adjustments allocable to share-based compensation awards |
|
|
| — |
|
|
|
|
|
|
| (137 |
| ) |
|
|
|
|
| (2 |
| ) |
|
|
|
|
| (304 |
| ) |
| Diluted FFO available to common share and common unit holders, as adjusted for comparability |
|
|
| 67,584 |
|
|
|
|
|
|
| 65,605 |
|
|
|
|
|
|
| 133,576 |
|
|
|
|
|
|
| 129,662 |
|
|
| Straight line rent adjustments and lease incentive amortization |
|
|
| (3,198 |
| ) |
|
|
|
|
| (1,288 |
| ) |
|
|
|
|
| (6,387 |
| ) |
|
|
|
|
| (4,645 |
| ) |
| Amortization of intangibles and other assets included in net operating income |
|
|
| 49 |
|
|
|
|
|
|
| 41 |
|
|
|
|
|
|
| (323 |
| ) |
|
|
|
|
| 81 |
|
|
| Share-based compensation, net of amounts capitalized |
|
|
| 2,154 |
|
|
|
|
|
|
| 2,009 |
|
|
|
|
|
|
| 4,265 |
|
|
|
|
|
|
| 3,913 |
|
|
| Amortization of deferred financing costs |
|
|
| 541 |
|
|
|
|
|
|
| 811 |
|
|
|
|
|
|
| 1,138 |
|
|
|
|
|
|
| 1,604 |
|
|
| Amortization of net debt discounts, net of amounts capitalized |
|
|
| 608 |
|
|
|
|
|
|
| 520 |
|
|
|
|
|
|
| 1,213 |
|
|
|
|
|
|
| 1,062 |
|
|
| Replacement capital expenditures |
|
|
| (17,717 |
| ) |
|
|
|
|
| (13,095 |
| ) |
|
|
|
|
| (35,075 |
| ) |
|
|
|
|
| (25,325 |
| ) |
| Other |
|
|
| 406 |
|
|
|
|
|
|
| 178 |
|
|
|
|
|
|
| 445 |
|
|
|
|
|
|
| 419 |
|
|
| Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) |
| $ |
| 50,427 |
|
|
|
|
| $ |
| 54,781 |
|
|
|
|
| $ |
| 98,852 |
|
|
|
|
| $ |
| 106,771 |
|
|
| Diluted FFO per share |
| $ |
| 0.59 |
|
|
|
|
| $ |
| 0.35 |
|
|
|
|
| $ |
| 1.17 |
|
|
|
|
| $ |
| 0.63 |
|
|
| Diluted FFO per share, as adjusted for comparability |
| $ |
| 0.59 |
|
|
|
|
| $ |
| 0.58 |
|
|
|
|
| $ |
| 1.17 |
|
|
|
|
| $ |
| 1.14 |
|
|
| 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 |
| $ |
| 3,639,751 |
|
|
|
|
| $ |
| 3,532,944 |
|
|
| Total assets |
|
|
| 4,185,193 |
|
|
|
|
|
|
| 4,262,452 |
|
|
| Debt, per balance sheet |
|
|
| 2,177,811 |
|
|
|
|
|
|
| 2,272,304 |
|
|
| Total liabilities |
|
|
| 2,462,490 |
|
|
|
|
|
|
| 2,578,479 |
|
|
| Redeemable noncontrolling interests |
|
|
| 26,752 |
|
|
|
|
|
|
| 26,898 |
|
|
| Equity |
|
|
| 1,695,951 |
|
|
|
|
|
|
| 1,657,075 |
|
|
| Net debt to adjusted book |
|
|
| 39.4 |
| % |
|
|
|
|
| 40.5 |
| % |
|
|
|
|
|
|
|
|
| Core Portfolio Data (as of period end) (1) |
|
|
|
|
|
|
| Number of operating properties |
|
|
| 186 |
|
|
|
|
|
|
| 184 |
|
|
| Total operational square feet (in thousands) |
|
|
| 21,932 |
|
|
|
|
|
|
| 21,553 |
|
|
| % Occupied |
|
|
| 91.8 |
| % |
|
|
|
|
| 92.6 |
| % |
| % Leased |
|
|
| 93.7 |
| % |
|
|
|
|
| 94.4 |
| % |
|
|
| For the Three Months |
|
|
| For the Six Months |
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
| Payout ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted FFO |
| 46.3 |
| % |
|
|
| 77.5 |
| % |
|
|
| 47.0 |
| % |
|
|
| 87.4 |
| % |
| Diluted FFO, as adjusted for comparability |
| 46.3 |
| % |
|
|
| 47.5 |
| % |
|
|
| 46.8 |
| % |
|
|
| 48.1 |
| % |
| Diluted AFFO |
| 62.0 |
| % |
|
|
| 56.9 |
| % |
|
|
| 63.2 |
| % |
|
|
| 58.4 |
| % |
| Adjusted EBITDA fixed charge coverage ratio |
| 5.3x |
|
|
| 4.9x |
|
|
| 5.3x |
|
|
| 4.6x |
| Net debt to in-place adjusted EBITDA ratio (2) |
| 6.4x |
|
|
| 6.3x |
|
|
| N/A |
|
|
| N/A |
| Net debt adj. for fully-leased development to in-place adj. EBITDA ratio (3) |
| 5.8x |
|
|
| 5.8x |
|
|
| N/A |
|
|
| N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of denominators for per share measures |
|
|
|
|
|
|
|
|
|
|
|
|
| Denominator for diluted EPS |
| 112,637 |
|
|
|
|
| 112,404 |
|
|
|
|
| 112,608 |
|
|
|
|
| 112,336 |
|
|
| Weighted average common units |
| 1,476 |
|
|
|
|
| 1,262 |
|
|
|
|
| 1,430 |
|
|
|
|
| 1,254 |
|
|
| Denominator for diluted FFO per share and as adjusted for comparability |
| 114,113 |
|
|
|
|
| 113,666 |
|
|
|
|
| 114,038 |
|
|
|
|
| 113,590 |
|
|
| (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 less costs incurred on properties under development that were 100% leased 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 |
|
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
| Reconciliation of common share dividends to dividends and distributions for payout ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common share dividends - unrestricted shares and deferred shares |
| $ |
| 30,842 |
|
|
|
|
| $ |
| 30,811 |
|
|
|
|
| $ |
| 61,679 |
|
|
|
|
| $ |
| 61,616 |
|
|
| Common unit distributions - unrestricted units |
|
|
| 407 |
|
|
|
|
|
|
| 347 |
|
|
|
|
|
|
| 811 |
|
|
|
|
|
|
| 694 |
|
|
| Common unit distributions - dilutive restricted units |
|
|
| 12 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 25 |
|
|
|
|
|
|
| — |
|
|
| Dividends and distributions for payout ratios |
| $ |
| 31,261 |
|
|
|
|
| $ |
| 31,158 |
|
|
|
|
| $ |
| 62,515 |
|
|
|
|
| $ |
| 62,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
| $ |
| 33,595 |
|
|
|
|
| $ |
| 43,898 |
|
|
|
|
| $ |
| 94,419 |
|
|
|
|
| $ |
| 37,819 |
|
|
| Interest expense |
|
|
| 14,808 |
|
|
|
|
|
|
| 15,942 |
|
|
|
|
|
|
| 29,232 |
|
|
|
|
|
|
| 33,461 |
|
|
| Income tax expense |
|
|
| 4 |
|
|
|
|
|
|
| 24 |
|
|
|
|
|
|
| 157 |
|
|
|
|
|
|
| 56 |
|
|
| Real estate-related depreciation and amortization |
|
|
| 34,812 |
|
|
|
|
|
|
| 37,555 |
|
|
|
|
|
|
| 69,076 |
|
|
|
|
|
|
| 74,876 |
|
|
| Other depreciation and amortization |
|
|
| 552 |
|
|
|
|
|
|
| 1,045 |
|
|
|
|
|
|
| 1,159 |
|
|
|
|
|
|
| 1,600 |
|
|
| Gain on sales of real estate |
|
|
| 19 |
|
|
|
|
|
|
| (40,233 |
| ) |
|
|
|
|
| (28,560 |
| ) |
|
|
|
|
| (39,743 |
| ) |
| Adjustments from unconsolidated real estate JVs |
|
|
| 760 |
|
|
|
|
|
|
| 711 |
|
|
|
|
|
|
| 1,518 |
|
|
|
|
|
|
| 1,404 |
|
|
| EBITDAre |
|
|
| 84,550 |
|
|
|
|
|
|
| 58,942 |
|
|
|
|
|
|
| 167,001 |
|
|
|
|
|
|
| 109,473 |
|
|
| Loss on early extinguishment of debt |
|
|
| — |
|
|
|
|
|
|
| 25,228 |
|
|
|
|
|
|
| 342 |
|
|
|
|
|
|
| 58,394 |
|
|
| Net gain on other investments |
|
|
| 1 |
|
|
|
|
|
|
| (63 |
| ) |
|
|
|
|
| (564 |
| ) |
|
|
|
|
| (63 |
| ) |
| Credit loss expense (recoveries) |
|
|
| 225 |
|
|
|
|
|
|
| 193 |
|
|
|
|
|
|
| (91 |
| ) |
|
|
|
|
| (714 |
| ) |
| Business development expenses |
|
|
| 385 |
|
|
|
|
|
|
| 584 |
|
|
|
|
|
|
| 711 |
|
|
|
|
|
|
| 1,132 |
|
|
| Demolition costs on redevelopment and nonrecurring improvements |
|
|
| — |
|
|
|
|
|
|
| 302 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 302 |
|
|
| Executive transition costs |
|
|
| 137 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 137 |
|
|
|
|
|
|
| — |
|
|
| Adjusted EBITDA |
|
|
| 85,298 |
|
|
|
|
|
|
| 85,186 |
|
|
|
|
| $ |
| 167,536 |
|
|
|
|
| $ |
| 168,524 |
|
|
| Pro forma net operating income adjustment for property changes within period |
|
|
| 127 |
|
|
|
|
|
|
| (379 |
| ) |
|
|
|
|
|
|
|
|
| Change in collectability of deferred rental revenue |
|
|
| 231 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
|
|
|
| In-place adjusted EBITDA |
| $ |
| 85,656 |
|
|
|
|
| $ |
| 84,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
| $ |
| 14,808 |
|
|
|
|
| $ |
| 15,942 |
|
|
|
|
| $ |
| 29,232 |
|
|
|
|
| $ |
| 33,461 |
|
|
| Less: Amortization of deferred financing costs |
|
|
| (541 |
| ) |
|
|
|
|
| (811 |
| ) |
|
|
|
|
| (1,138 |
| ) |
|
|
|
|
| (1,604 |
| ) |
| Less: Amortization of net debt discounts, net of amounts capitalized |
|
|
| (608 |
| ) |
|
|
|
|
| (520 |
| ) |
|
|
|
|
| (1,213 |
| ) |
|
|
|
|
| (1,062 |
| ) |
| COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs and amortization of net debt premium |
|
|
| 233 |
|
|
|
|
|
|
| 236 |
|
|
|
|
|
|
| 464 |
|
|
|
|
|
|
| 470 |
|
|
| Scheduled principal amortization |
|
|
| 844 |
|
|
|
|
|
|
| 959 |
|
|
|
|
|
|
| 1,618 |
|
|
|
|
|
|
| 1,921 |
|
|
| Capitalized interest |
|
|
| 1,376 |
|
|
|
|
|
|
| 1,707 |
|
|
|
|
|
|
| 2,905 |
|
|
|
|
|
|
| 3,512 |
|
|
| Denominator for fixed charge coverage-Adjusted EBITDA |
| $ |
| 16,112 |
|
|
|
|
| $ |
| 17,513 |
|
|
|
|
| $ |
| 31,868 |
|
|
|
|
| $ |
| 36,698 |
|
|
| Corporate Office Properties Trust |
|
|
| For the Three Months |
|
|
| For the Six Months |
|
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
| Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tenant improvements and incentives |
| $ |
| 10,655 |
|
|
|
|
| $ |
| 8,303 |
|
|
|
|
| $ |
| 20,665 |
|
|
|
|
| $ |
| 15,442 |
|
|
| Building improvements |
|
|
| 6,751 |
|
|
|
|
|
|
| 6,771 |
|
|
|
|
|
|
| 13,583 |
|
|
|
|
|
|
| 10,399 |
|
|
| Leasing costs |
|
|
| 1,748 |
|
|
|
|
|
|
| 2,805 |
|
|
|
|
|
|
| 4,018 |
|
|
|
|
|
|
| 3,934 |
|
|
| Net additions to (exclusions from) tenant improvements and incentives |
|
|
| 474 |
|
|
|
|
|
|
| (988 |
| ) |
|
|
|
|
| 2,282 |
|
|
|
|
|
|
| 1,912 |
|
|
| Excluded building improvements and leasing costs |
|
|
| (1,911 |
| ) |
|
|
|
|
| (3,796 |
| ) |
|
|
|
|
| (5,473 |
| ) |
|
|
|
|
| (6,362 |
| ) |
| Replacement capital expenditures |
| $ |
| 17,717 |
|
|
|
|
| $ |
| 13,095 |
|
|
|
|
| $ |
| 35,075 |
|
|
|
|
| $ |
| 25,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Same Properties cash NOI |
| $ |
| 81,641 |
|
|
|
|
| $ |
| 83,648 |
|
|
|
|
| $ |
| 161,208 |
|
|
|
|
| $ |
| 162,298 |
|
|
| Straight line rent adjustments and lease incentive amortization |
|
|
| (1,385 |
| ) |
|
|
|
|
| (1,045 |
| ) |
|
|
|
|
| (2,888 |
| ) |
|
|
|
|
| 679 |
|
|
| Amortization of acquired above- and below-market rents |
|
|
| 97 |
|
|
|
|
|
|
| 98 |
|
|
|
|
|
|
| 616 |
|
|
|
|
|
|
| 197 |
|
|
| Lease termination fees, net |
|
|
| 399 |
|
|
|
|
|
|
| 1,094 |
|
|
|
|
|
|
| 620 |
|
|
|
|
|
|
| 2,456 |
|
|
| Tenant funded landlord assets and lease incentives |
|
|
| 1,265 |
|
|
|
|
|
|
| 535 |
|
|
|
|
|
|
| 2,728 |
|
|
|
|
|
|
| 763 |
|
|
| Cash NOI adjustments in unconsolidated real estate JVs |
|
|
| 77 |
|
|
|
|
|
|
| 96 |
|
|
|
|
|
|
| 160 |
|
|
|
|
|
|
| 197 |
|
|
| Same Properties NOI |
| $ |
| 82,094 |
|
|
|
|
| $ |
| 84,426 |
|
|
|
|
| $ |
| 162,444 |
|
|
|
|
| $ |
| 166,590 |
|
|
|
|
|
|
| June 30, |
|
|
| December 31, |
| Reconciliation of total assets to adjusted book |
|
|
|
|
|
|
|
|
| Total assets |
|
|
| $ |
| 4,185,193 |
|
|
|
|
| $ |
| 4,262,452 |
|
|
| Accumulated depreciation |
|
|
|
|
| 1,213,711 |
|
|
|
|
|
|
| 1,152,523 |
|
|
| Accumulated depreciation included in assets held for sale |
|
|
|
|
| — |
|
|
|
|
|
|
| 82,385 |
|
|
| Accumulated amortization of intangibles on property acquisitions and deferred leasing costs |
|
|
|
|
| 218,560 |
|
|
|
|
|
|
| 215,925 |
|
|
| Accumulated amortization of intangibles on property acquisitions and deferred leasing costs included in assets held for sale |
|
|
|
|
| — |
|
|
|
|
|
|
| 4,547 |
|
|
| COPT’s share of liabilities of unconsolidated real estate JVs |
|
|
|
|
| 27,296 |
|
|
|
|
|
|
| 27,312 |
|
|
| COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs |
|
|
|
|
| 4,911 |
|
|
|
|
|
|
| 3,744 |
|
|
| Less: Property - operating lease liabilities |
|
|
|
|
| (29,412 |
| ) |
|
|
|
|
| (29,342 |
| ) |
| Less: Cash and cash equivalents |
|
|
|
|
| (20,735 |
| ) |
|
|
|
|
| (13,262 |
| ) |
| Less: COPT’s share of cash of unconsolidated real estate JVs |
|
|
|
|
| (457 |
| ) |
|
|
|
|
| (434 |
| ) |
| Adjusted book |
|
|
| $ |
| 5,599,067 |
|
|
|
|
| $ |
| 5,705,850 |
|
|
| Corporate Office Properties Trust |
|
|
|
|
| June 30, |
|
|
| December 31, |
|
|
| June 30, |
| Reconciliation of debt to net debt, net debt adjusted for fully-leased development and pro forma net debt adjusted for fully-leased development |
|
|
|
|
|
|
|
|
|
|
|
|
| Debt, per balance sheet |
|
|
| $ |
| 2,177,811 |
|
|
|
|
| $ |
| 2,272,304 |
|
|
|
|
| $ |
| 2,109,640 |
|
|
| Net discounts and deferred financing costs |
|
|
|
|
| 23,857 |
|
|
|
|
|
|
| 25,982 |
|
|
|
|
|
|
| 21,435 |
|
|
| COPT’s share of unconsolidated JV gross debt |
|
|
|
|
| 26,250 |
|
|
|
|
|
|
| 26,250 |
|
|
|
|
|
|
| 26,250 |
|
|
| Gross debt |
|
|
| $ |
| 2,227,918 |
|
|
|
|
| $ |
| 2,324,536 |
|
|
|
|
| $ |
| 2,157,325 |
|
|
| Less: Cash and cash equivalents |
|
|
|
|
| (20,735 |
| ) |
|
|
|
|
| (13,262 |
| ) |
|
|
|
|
| (17,182 |
| ) |
| Less: COPT’s share of cash of unconsolidated real estate JVs |
|
|
|
|
| (457 |
| ) |
|
|
|
|
| (434 |
| ) |
|
|
|
|
| (373 |
| ) |
| Net debt |
|
|
| $ |
| 2,206,726 |
|
|
|
|
| $ |
| 2,310,840 |
|
|
|
|
| $ |
| 2,139,770 |
|
|
| Costs incurred on fully-leased development properties |
|
|
|
|
| (223,485 |
| ) |
|
|
|
|
| (162,884 |
| ) |
|
|
|
|
| (171,453 |
| ) |
| Net debt adjusted for fully-leased development |
|
|
| $ |
| 1,983,241 |
|
|
|
|
| $ |
| 2,147,956 |
|
|
|
|
| $ |
| 1,968,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net debt |
|
|
| $ |
| 2,206,726 |
|
|
|
|
| $ |
| 2,310,840 |
|
|
|
|
| $ |
| 2,139,770 |
|
|
| Debt pay down from Wholesale Data Center sale proceeds |
|
|
|
|
| N/A |
|
|
|
|
|
|
| (216,000 |
| ) |
|
|
|
|
| N/A |
|
|
| Pro forma net debt |
|
|
| $ |
| 2,206,726 |
|
|
|
|
| $ |
| 2,094,840 |
|
|
|
|
| $ |
| 2,139,770 |
|
|
| Costs incurred on fully-leased development properties |
|
|
|
|
| (223,485 |
| ) |
|
|
|
|
| (162,884 |
| ) |
|
|
|
|
| (171,453 |
| ) |
| Pro forma net debt adjusted for fully-leased development |
|
|
| $ |
| 1,983,241 |
|
|
|
|
| $ |
| 1,931,956 |
|
|
|
|
| $ |
| 1,968,317 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220728006007/en/
IR Contact:
Michelle Layne
443-285-5452
michelle.layne@copt.com