OFC - COPT Reports 3Q 2022 Results
Reports EPS of $0.27 in 3Q22;
FFO per Share, as Adjusted for Comparability, of $0.58 at Midpoint of Guidance
Core Portfolio 93% Occupied & 95% Leased
1.9 million SF of Active Developments are 91% Leased
Outstanding Leasing
Total Leasing of 857,000 SF in 3Q22 and 2.3 million SF Year-to-Date
Record Level of Quarterly New Leasing Achieved at 351,000 SF
Tenant Retention of 92% in 3Q22 and 72% Year-to-Date
Guidance
Maintains Midpoint of Full-Year Guidance for FFOPS, As Adjusted for Comparability
at $2.35, Implying 2.6% Growth
Maintains Midpoint of Full-Year Same-Property Occupancy at 92.5% and
Narrows Full-Year Guidance for Change in Same-Property Cash NOI at (2%)-(1%)
Midpoint of Year-End Tenant Retention Rate Expected to be 75%
Narrows Change in Cash Rents on Renewals to (2%)-(1%)
Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the third quarter ended September 30, 2022.
Management Comments
Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Our Defense/IT investment strategy which has concentrated our portfolio near priority U.S. defense installations continues to produce strong results. Third quarter FFOPS of $0.58 was at the midpoint of our guidance and we remain on track to achieve our annual objective which implies 2.6% growth in FFOPS, as adjusted for comparability. Leasing during the quarter was exceptional, achieving our highest level of vacancy leasing in over a decade and renewing over 92% of expiring leases. Despite the historic vacancy leasing volume, our vacancy leasing activity ratio stands at 89%. Development leasing activity also remains strong, and we are confident that we will achieve our 700,000 square foot goal for the year. Our lease structures continue to insulate our results from the impacts of the record inflationary environment, however the elevated interest expense environment will put some pressure on 2023 FFO growth.”
He continued, “We are very pleased to have closed our new Revolving Credit Facility and Term Loan that extends these maturities to 2027 and 2028, and as a result, we have no significant debt maturing until 2026.”
Financial Highlights
3rd Quarter Financial Results:
- Diluted earnings per share (“EPS”) was $0.27 for the quarter ended September 30, 2022 compared to $0.24 for the third quarter of 2021.
- Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.58 for the third quarter of 2022 compared to $0.56 for the third quarter of 2021.
- FFOPS, as adjusted for comparability, was $0.58 for the third quarter of 2022 compared to $0.57 for the third quarter of 2021.
Operating Performance Highlights
Operating Portfolio Summary:
- At September 30, 2022, the Company’s 21.9 million square foot core portfolio was 92.8% occupied and 95.0% leased.
Same-Property Performance:
- At September 30, 2022, COPT’s 20.3 million square foot same-property portfolio was 92.7% occupied and 94.9% leased.
- For the quarter ended September 30, 2022, the Company’s same-property cash NOI decreased 1.4% compared to the third quarter of 2021.
Leasing:
- Total Square Feet Leased : For the quarter ended September 30, 2022, the Company leased 857,000 square feet, including 506,000 square feet of renewals, and 351,000 square feet of new leases on vacant space. For the nine months ended September 30, 2022, the Company executed 2.3 million square feet of total leasing, including 1.2 million square feet of renewals, 628,000 square feet of vacancy leasing, and 476,000 square feet in development projects.
- Tenant Retention Rates : During the quarter and nine months ended September 30, 2022, the Company renewed 92.2% and 72.0%, respectively, of expiring square feet.
- Rent Spreads & Average Escalations on Renewing Leases : For the quarter and nine months ended September 30, 2022, straight-line rents on renewals increased 5.0% and 2.9%, respectively, and cash rents on renewed space decreased 1.1% and 2.7%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.6% and 2.5%, respectively.
- Lease Terms : In the third quarter of 2022, lease terms averaged 3.7 years on renewing leases, and 6.9 years on vacancy leasing. For the first nine months, lease terms averaged 3.6 years on renewing leases, 6.7 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 91.0% leased at September 30, 2022. These projects represent a total estimated investment of $642.7 million, of which $337.1 million has been spent.
Balance Sheet and Capital Transaction Highlights
- On October 26, 2022, the Company entered into a credit agreement with a group of lenders for an aggregate of $725.0 million of available borrowings including an unsecured revolving credit facility with a lender commitment of $600.0 million that replaced its existing Revolving Credit Facility; and a $125.0 million unsecured term loan, the proceeds of which were used to pay off the remaining $100.0 million outstanding under an existing unsecured term loan and pay down a portion of its Revolving Credit Facility.
- For the quarter ended September 30, 2022, the Company’s adjusted EBITDA fixed charge coverage ratio was 5.1x.
- At September 30, 2022, the Company’s net debt to in-place adjusted EBITDA ratio was 6.7x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 5.9x.
- At September 30, 2022, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 2.85% with a weighted average maturity of 6.9 years including the maturity dates and extension options available under the October 26, 2022 credit agreement; additionally, 92.5% 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 third 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 narrowing its full-year guidance for diluted EPS and diluted FFOPS, per Nareit and as adjusted for comparability, from the prior range of $1.33-$1.37, and $2.33-$2.37, respectively, to new ranges of $1.35-$1.37, and $2.34-$2.36, respectively. Management is establishing fourth quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.27-$0.29 and $0.59-$0.61, 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 FFOPS, per Nareit, and As Adjusted for Comparability |
|
|
| Quarter Ending |
|
|
| Year Ending |
|
|
|
|
| Low |
|
|
| High |
|
|
| Low |
|
|
| High |
| Diluted EPS |
|
|
| $ |
| 0.27 |
|
|
| $ |
| 0.29 |
|
|
| $ |
| 1.35 |
|
|
|
|
| $ |
| 1.37 |
|
|
| Real estate-related depreciation and amortization |
|
|
|
|
| 0.32 |
|
|
|
|
| 0.32 |
|
|
|
|
| 1.24 |
|
|
|
|
|
|
| 1.24 |
|
|
| Gain on sales of real estate |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| (0.25 |
| ) |
|
|
|
|
| (0.25 |
| ) |
| Diluted FFOPS, Nareit definition and as adjusted for comparability |
|
|
| $ |
| 0.59 |
|
|
| $ |
| 0.61 |
|
|
| $ |
| 2.34 |
|
|
|
|
| $ |
| 2.36 |
|
|
Conference Call Information
Management will discuss third 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, October 28, 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/BI72a10ea2a80646dc85eef9257f7c258b
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 September 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 95.0% 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 |
| Summary Financial Data |
| (unaudited) |
| (dollars and shares in thousands, except per share data) |
|
|
| For the Three Months |
|
|
| For the Nine Months |
|
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues from real estate operations |
| $ |
| 147,687 |
|
|
|
|
| $ |
| 138,873 |
|
|
|
|
| $ |
| 433,213 |
|
|
|
|
| $ |
| 413,922 |
|
|
| Construction contract and other service revenues |
|
|
| 34,813 |
|
|
|
|
|
|
| 28,046 |
|
|
|
|
|
|
| 130,570 |
|
|
|
|
|
|
| 64,592 |
|
|
| Total revenues |
|
|
| 182,500 |
|
|
|
|
|
|
| 166,919 |
|
|
|
|
|
|
| 563,783 |
|
|
|
|
|
|
| 478,514 |
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property operating expenses |
|
|
| 57,663 |
|
|
|
|
|
|
| 52,728 |
|
|
|
|
|
|
| 168,960 |
|
|
|
|
|
|
| 156,918 |
|
|
| Depreciation and amortization associated with real estate operations |
|
|
| 35,247 |
|
|
|
|
|
|
| 33,807 |
|
|
|
|
|
|
| 104,323 |
|
|
|
|
|
|
| 103,039 |
|
|
| Construction contract and other service expenses |
|
|
| 33,555 |
|
|
|
|
|
|
| 27,089 |
|
|
|
|
|
|
| 126,509 |
|
|
|
|
|
|
| 61,964 |
|
|
| General and administrative expenses |
|
|
| 6,558 |
|
|
|
|
|
|
| 7,269 |
|
|
|
|
|
|
| 19,695 |
|
|
|
|
|
|
| 20,624 |
|
|
| Leasing expenses |
|
|
| 2,340 |
|
|
|
|
|
|
| 2,073 |
|
|
|
|
|
|
| 6,102 |
|
|
|
|
|
|
| 6,346 |
|
|
| Business development expenses and land carry costs |
|
|
| 552 |
|
|
|
|
|
|
| 1,093 |
|
|
|
|
|
|
| 2,036 |
|
|
|
|
|
|
| 3,559 |
|
|
| Total operating expenses |
|
|
| 135,915 |
|
|
|
|
|
|
| 124,059 |
|
|
|
|
|
|
| 427,625 |
|
|
|
|
|
|
| 352,450 |
|
|
| Interest expense |
|
|
| (15,123 |
| ) |
|
|
|
|
| (15,720 |
| ) |
|
|
|
|
| (44,355 |
| ) |
|
|
|
|
| (49,181 |
| ) |
| Interest and other income |
|
|
| 2,290 |
|
|
|
|
|
|
| 1,818 |
|
|
|
|
|
|
| 6,001 |
|
|
|
|
|
|
| 5,911 |
|
|
| Credit loss (expense) recoveries |
|
|
| (1,693 |
| ) |
|
|
|
|
| 326 |
|
|
|
|
|
|
| (1,602 |
| ) |
|
|
|
|
| 1,040 |
|
|
| Gain on sales of real estate |
|
|
| 16 |
|
|
|
|
|
|
| (32 |
| ) |
|
|
|
|
| 12 |
|
|
|
|
|
|
| 39,711 |
|
|
| Loss on early extinguishment of debt |
|
|
| — |
|
|
|
|
|
|
| (1,159 |
| ) |
|
|
|
|
| (342 |
| ) |
|
|
|
|
| (59,553 |
| ) |
| Income from continuing operations before equity in income of unconsolidated entities and income taxes |
|
|
| 32,075 |
|
|
|
|
|
|
| 28,093 |
|
|
|
|
|
|
| 95,872 |
|
|
|
|
|
|
| 63,992 |
|
|
| Equity in income of unconsolidated entities |
|
|
| 308 |
|
|
|
|
|
|
| 297 |
|
|
|
|
|
|
| 1,514 |
|
|
|
|
|
|
| 779 |
|
|
| Income tax expense |
|
|
| (67 |
| ) |
|
|
|
|
| (47 |
| ) |
|
|
|
|
| (224 |
| ) |
|
|
|
|
| (103 |
| ) |
| Income from continuing operations |
|
|
| 32,316 |
|
|
|
|
|
|
| 28,343 |
|
|
|
|
|
|
| 97,162 |
|
|
|
|
|
|
| 64,668 |
|
|
| Discontinued operations |
|
|
| — |
|
|
|
|
|
|
| 451 |
|
|
|
|
|
|
| 29,573 |
|
|
|
|
|
|
| 1,945 |
|
|
| Net Income |
|
|
| 32,316 |
|
|
|
|
|
|
| 28,794 |
|
|
|
|
|
|
| 126,735 |
|
|
|
|
|
|
| 66,613 |
|
|
| Net income attributable to noncontrolling interests: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common units in the Operating Partnership (“OP”) |
|
|
| (476 |
| ) |
|
|
|
|
| (357 |
| ) |
|
|
|
|
| (1,828 |
| ) |
|
|
|
|
| (831 |
| ) |
| Other consolidated entities |
|
|
| (919 |
| ) |
|
|
|
|
| (1,336 |
| ) |
|
|
|
|
| (2,357 |
| ) |
|
|
|
|
| (2,949 |
| ) |
| Net income attributable to COPT common shareholders |
| $ |
| 30,921 |
|
|
|
|
| $ |
| 27,101 |
|
|
|
|
| $ |
| 122,550 |
|
|
|
|
| $ |
| 62,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share (“EPS”) computation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Numerator for diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to COPT common shareholders |
| $ |
| 30,921 |
|
|
|
|
| $ |
| 27,101 |
|
|
|
|
| $ |
| 122,550 |
|
|
|
|
| $ |
| 62,833 |
|
|
| Amount allocable to share-based compensation awards |
|
|
| (75 |
| ) |
|
|
|
|
| (79 |
| ) |
|
|
|
|
| (334 |
| ) |
|
|
|
|
| (320 |
| ) |
| Redeemable noncontrolling interests |
|
|
| (40 |
| ) |
|
|
|
|
| (89 |
| ) |
|
|
|
|
| (109 |
| ) |
|
|
|
|
| (82 |
| ) |
| Numerator for diluted EPS |
| $ |
| 30,806 |
|
|
|
|
| $ |
| 26,933 |
|
|
|
|
| $ |
| 122,107 |
|
|
|
|
| $ |
| 62,431 |
|
|
| Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares - basic |
|
|
| 112,093 |
|
|
|
|
|
|
| 111,985 |
|
|
|
|
|
|
| 112,066 |
|
|
|
|
|
|
| 111,949 |
|
|
| Dilutive effect of share-based compensation awards |
|
|
| 433 |
|
|
|
|
|
|
| 375 |
|
|
|
|
|
|
| 429 |
|
|
|
|
|
|
| 285 |
|
|
| Dilutive effect of redeemable noncontrolling interests |
|
|
| 105 |
|
|
|
|
|
|
| 138 |
|
|
|
|
|
|
| 121 |
|
|
|
|
|
|
| 130 |
|
|
| Weighted average common shares - diluted |
|
|
| 112,631 |
|
|
|
|
|
|
| 112,498 |
|
|
|
|
|
|
| 112,616 |
|
|
|
|
|
|
| 112,364 |
|
|
| Diluted EPS |
| $ |
| 0.27 |
|
|
|
|
| $ |
| 0.24 |
|
|
|
|
| $ |
| 1.08 |
|
|
|
|
| $ |
| 0.56 |
|
|
|
|
| Corporate Office Properties Trust |
| Summary Financial Data |
| (unaudited) |
| (in thousands, except per share data) |
|
|
| For the Three Months |
|
|
| For the Nine Months |
|
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
| Net income |
| $ |
| 32,316 |
|
|
|
|
| $ |
| 28,794 |
|
|
|
|
| $ |
| 126,735 |
|
|
|
|
| $ |
| 66,613 |
|
|
| Real estate-related depreciation and amortization |
|
|
| 35,247 |
|
|
|
|
|
|
| 36,611 |
|
|
|
|
|
|
| 104,323 |
|
|
|
|
|
|
| 111,487 |
|
|
| Gain on sales of real estate from continuing and discontinued operations |
|
|
| (16 |
| ) |
|
|
|
|
| 32 |
|
|
|
|
|
|
| (28,576 |
| ) |
|
|
|
|
| (39,711 |
| ) |
| Depreciation and amortization on unconsolidated real estate JVs |
|
|
| 524 |
|
|
|
|
|
|
| 525 |
|
|
|
|
|
|
| 1,575 |
|
|
|
|
|
|
| 1,455 |
|
|
| Funds from operations (“FFO”) |
|
|
| 68,071 |
|
|
|
|
|
|
| 65,962 |
|
|
|
|
|
|
| 204,057 |
|
|
|
|
|
|
| 139,844 |
|
|
| FFO allocable to other noncontrolling interests |
|
|
| (1,348 |
| ) |
|
|
|
|
| (1,696 |
| ) |
|
|
|
|
| (3,568 |
| ) |
|
|
|
|
| (4,025 |
| ) |
| Basic FFO allocable to share-based compensation awards |
|
|
| (354 |
| ) |
|
|
|
|
| (313 |
| ) |
|
|
|
|
| (1,073 |
| ) |
|
|
|
|
| (663 |
| ) |
| Basic FFO available to common share and common unit holders (“Basic FFO”) |
|
|
| 66,369 |
|
|
|
|
|
|
| 63,953 |
|
|
|
|
|
|
| 199,416 |
|
|
|
|
|
|
| 135,156 |
|
|
| Redeemable noncontrolling interests |
|
|
| (5 |
| ) |
|
|
|
|
| (68 |
| ) |
|
|
|
|
| (7 |
| ) |
|
|
|
|
| 1 |
|
|
| Diluted FFO adjustments allocable to share-based compensation awards |
|
|
| 27 |
|
|
|
|
|
|
| 13 |
|
|
|
|
|
|
| 81 |
|
|
|
|
|
|
| 27 |
|
|
| Diluted FFO available to common share and common unit holders (“Diluted FFO”) |
|
|
| 66,391 |
|
|
|
|
|
|
| 63,898 |
|
|
|
|
|
|
| 199,490 |
|
|
|
|
|
|
| 135,184 |
|
|
| Loss on early extinguishment of debt |
|
|
| — |
|
|
|
|
|
|
| 1,159 |
|
|
|
|
|
|
| 342 |
|
|
|
|
|
|
| 59,553 |
|
|
| Demolition costs on redevelopment and nonrecurring improvements |
|
|
| — |
|
|
|
|
|
|
| 129 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 431 |
|
|
| Executive transition costs |
|
|
| 206 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 343 |
|
|
|
|
|
|
| — |
|
|
| Diluted FFO comparability adjustments allocable to share-based compensation awards |
|
|
| (2 |
| ) |
|
|
|
|
| (7 |
| ) |
|
|
|
|
| (4 |
| ) |
|
|
|
|
| (300 |
| ) |
| Diluted FFO available to common share and common unit holders, as adjusted for comparability |
|
|
| 66,595 |
|
|
|
|
|
|
| 65,179 |
|
|
|
|
|
|
| 200,171 |
|
|
|
|
|
|
| 194,868 |
|
|
| Straight line rent adjustments and lease incentive amortization |
|
|
| 605 |
|
|
|
|
|
|
| (1,806 |
| ) |
|
|
|
|
| (5,782 |
| ) |
|
|
|
|
| (6,451 |
| ) |
| Amortization of intangibles and other assets included in net operating income |
|
|
| 50 |
|
|
|
|
|
|
| 41 |
|
|
|
|
|
|
| (273 |
| ) |
|
|
|
|
| 122 |
|
|
| Share-based compensation, net of amounts capitalized |
|
|
| 2,188 |
|
|
|
|
|
|
| 2,048 |
|
|
|
|
|
|
| 6,453 |
|
|
|
|
|
|
| 5,961 |
|
|
| Amortization of deferred financing costs |
|
|
| 540 |
|
|
|
|
|
|
| 736 |
|
|
|
|
|
|
| 1,678 |
|
|
|
|
|
|
| 2,340 |
|
|
| Amortization of net debt discounts, net of amounts capitalized |
|
|
| 612 |
|
|
|
|
|
|
| 567 |
|
|
|
|
|
|
| 1,825 |
|
|
|
|
|
|
| 1,629 |
|
|
| Replacement capital expenditures |
|
|
| (17,528 |
| ) |
|
|
|
|
| (13,331 |
| ) |
|
|
|
|
| (52,603 |
| ) |
|
|
|
|
| (38,656 |
| ) |
| Other |
|
|
| 377 |
|
|
|
|
|
|
| 201 |
|
|
|
|
|
|
| 822 |
|
|
|
|
|
|
| 620 |
|
|
| Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) |
| $ |
| 53,439 |
|
|
|
|
| $ |
| 53,635 |
|
|
|
|
| $ |
| 152,291 |
|
|
|
|
| $ |
| 160,433 |
|
|
| Diluted FFO per share |
| $ |
| 0.58 |
|
|
|
|
| $ |
| 0.56 |
|
|
|
|
| $ |
| 1.75 |
|
|
|
|
| $ |
| 1.19 |
|
|
| Diluted FFO per share, as adjusted for comparability |
| $ |
| 0.58 |
|
|
|
|
| $ |
| 0.57 |
|
|
|
|
| $ |
| 1.75 |
|
|
|
|
| $ |
| 1.71 |
|
|
| 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, |
|
|
| December 31, |
| Balance Sheet Data |
|
|
|
|
|
|
| Properties, net of accumulated depreciation |
| $ |
| 3,691,411 |
|
|
|
|
| $ |
| 3,532,944 |
|
|
| Total assets |
|
|
| 4,269,329 |
|
|
|
|
|
|
| 4,262,452 |
|
|
| Debt, per balance sheet |
|
|
| 2,269,834 |
|
|
|
|
|
|
| 2,272,304 |
|
|
| Total liabilities |
|
|
| 2,543,216 |
|
|
|
|
|
|
| 2,578,479 |
|
|
| Redeemable noncontrolling interests |
|
|
| 25,447 |
|
|
|
|
|
|
| 26,898 |
|
|
| Equity |
|
|
| 1,700,666 |
|
|
|
|
|
|
| 1,657,075 |
|
|
| Net debt to adjusted book |
|
|
| 40.3 |
| % |
|
|
|
|
| 40.5 |
| % |
|
|
|
|
|
|
|
|
| Core Portfolio Data (as of period end) (1) |
|
|
|
|
|
|
| Number of operating properties |
|
|
| 186 |
|
|
|
|
|
|
| 184 |
|
|
| Total operational square feet (in thousands) |
|
|
| 21,928 |
|
|
|
|
|
|
| 21,553 |
|
|
| % Occupied |
|
|
| 92.8 |
| % |
|
|
|
|
| 92.6 |
| % |
| % Leased |
|
|
| 95.0 |
| % |
|
|
|
|
| 94.4 |
| % |
|
|
| For the Three Months |
|
|
| For the Nine Months |
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
| Payout ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted FFO |
| 47.1% |
|
|
| 48.8% |
|
|
| 47.0% |
|
|
| 69.2% |
| Diluted FFO, as adjusted for comparability |
| 46.9% |
|
|
| 47.8% |
|
|
| 46.8% |
|
|
| 48.0% |
| Diluted AFFO |
| 58.5% |
|
|
| 58.1% |
|
|
| 61.6% |
|
|
| 58.3% |
| Adjusted EBITDA fixed charge coverage ratio |
| 5.1x |
|
|
| 4.8x |
|
|
| 5.2x |
|
|
| 4.7x |
| Net debt to in-place adjusted EBITDA ratio (2) |
| 6.7x |
|
|
| 6.3x |
|
|
| N/A |
|
|
| N/A |
| Net debt adj. for fully-leased development to in-place adj. EBITDA ratio (3) |
| 5.9x |
|
|
| 5.9x |
|
|
| N/A |
|
|
| N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of denominators for per share measures |
|
|
|
|
|
|
|
|
|
|
|
|
| Denominator for diluted EPS |
| 112,631 |
|
|
| 112,498 |
|
|
| 112,616 |
|
|
| 112,364 |
| Weighted average common units |
| 1,477 |
|
|
| 1,262 |
|
|
| 1,446 |
|
|
| 1,257 |
| Anti-dilutive EPS effect of share-based compensation awards |
| — |
|
|
| — |
|
|
| — |
|
|
| 26 |
| Denominator for diluted FFO per share and as adjusted for comparability |
| 114,108 |
|
|
| 113,760 |
|
|
| 114,062 |
|
|
| 113,647 |
| (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 |
| Summary Financial Data |
| (unaudited) |
| (in thousands) |
| For the Three Months |
|
|
| For the Nine 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 |
| $ |
| 30,844 |
|
|
|
|
| $ |
| 30,813 |
|
|
|
|
| $ |
| 92,523 |
|
|
|
|
| $ |
| 92,429 |
|
|
| Common unit distributions - unrestricted units |
|
|
| 406 |
|
|
|
|
|
|
| 347 |
|
|
|
|
|
|
| 1,217 |
|
|
|
|
|
|
| 1,041 |
|
|
| Common unit distributions - dilutive restricted units |
|
|
| 13 |
|
|
|
|
|
|
| 6 |
|
|
|
|
|
|
| 38 |
|
|
|
|
|
|
| 19 |
|
|
| Dividends and distributions for payout ratios |
| $ |
| 31,263 |
|
|
|
|
| $ |
| 31,166 |
|
|
|
|
| $ |
| 93,778 |
|
|
|
|
| $ |
| 93,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
| $ |
| 32,316 |
|
|
|
|
| $ |
| 28,794 |
|
|
|
|
| $ |
| 126,735 |
|
|
|
|
| $ |
| 66,613 |
|
|
| Interest expense |
|
|
| 15,123 |
|
|
|
|
|
|
| 15,720 |
|
|
|
|
|
|
| 44,355 |
|
|
|
|
|
|
| 49,181 |
|
|
| Income tax expense |
|
|
| 67 |
|
|
|
|
|
|
| 47 |
|
|
|
|
|
|
| 224 |
|
|
|
|
|
|
| 103 |
|
|
| Real estate-related depreciation and amortization |
|
|
| 35,247 |
|
|
|
|
|
|
| 36,611 |
|
|
|
|
|
|
| 104,323 |
|
|
|
|
|
|
| 111,487 |
|
|
| Other depreciation and amortization |
|
|
| 602 |
|
|
|
|
|
|
| 589 |
|
|
|
|
|
|
| 1,761 |
|
|
|
|
|
|
| 2,189 |
|
|
| Gain on sales of real estate |
|
|
| (16 |
| ) |
|
|
|
|
| 32 |
|
|
|
|
|
|
| (28,576 |
| ) |
|
|
|
|
| (39,711 |
| ) |
| Adjustments from unconsolidated real estate JVs |
|
|
| 762 |
|
|
|
|
|
|
| 763 |
|
|
|
|
|
|
| 2,280 |
|
|
|
|
|
|
| 2,167 |
|
|
| EBITDAre |
|
|
| 84,101 |
|
|
|
|
|
|
| 82,556 |
|
|
|
|
|
|
| 251,102 |
|
|
|
|
|
|
| 192,029 |
|
|
| Loss on early extinguishment of debt |
|
|
| — |
|
|
|
|
|
|
| 1,159 |
|
|
|
|
|
|
| 342 |
|
|
|
|
|
|
| 59,553 |
|
|
| Net gain on other investments |
|
|
| — |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| (564 |
| ) |
|
|
|
|
| (63 |
| ) |
| Credit loss expense (recoveries) |
|
|
| 1,693 |
|
|
|
|
|
|
| (326 |
| ) |
|
|
|
|
| 1,602 |
|
|
|
|
|
|
| (1,040 |
| ) |
| Business development expenses |
|
|
| 386 |
|
|
|
|
|
|
| 473 |
|
|
|
|
|
|
| 1,097 |
|
|
|
|
|
|
| 1,605 |
|
|
| Demolition costs on redevelopment and nonrecurring improvements |
|
|
| — |
|
|
|
|
|
|
| 129 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 431 |
|
|
| Executive transition costs |
|
|
| 206 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
| 343 |
|
|
|
|
|
|
| — |
|
|
| Adjusted EBITDA |
|
|
| 86,386 |
|
|
|
|
|
|
| 83,991 |
|
|
|
|
| $ |
| 253,922 |
|
|
|
|
| $ |
| 252,515 |
|
|
| Pro forma net operating income adjustment for property changes within period |
|
|
| — |
|
|
|
|
|
|
| 3,240 |
|
|
|
|
|
|
|
|
|
|
| Change in collectability of deferred rental revenue |
|
|
| 13 |
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
|
|
|
| In-place adjusted EBITDA |
| $ |
| 86,399 |
|
|
|
|
| $ |
| 87,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
| $ |
| 15,123 |
|
|
|
|
| $ |
| 15,720 |
|
|
|
|
| $ |
| 44,355 |
|
|
|
|
| $ |
| 49,181 |
|
|
| Less: Amortization of deferred financing costs |
|
|
| (540 |
| ) |
|
|
|
|
| (736 |
| ) |
|
|
|
|
| (1,678 |
| ) |
|
|
|
|
| (2,340 |
| ) |
| Less: Amortization of net debt discounts, net of amounts capitalized |
|
|
| (612 |
| ) |
|
|
|
|
| (567 |
| ) |
|
|
|
|
| (1,825 |
| ) |
|
|
|
|
| (1,629 |
| ) |
| COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs and amortization of net debt premium |
|
|
| 236 |
|
|
|
|
|
|
| 236 |
|
|
|
|
|
|
| 700 |
|
|
|
|
|
|
| 706 |
|
|
| Scheduled principal amortization |
|
|
| 851 |
|
|
|
|
|
|
| 989 |
|
|
|
|
|
|
| 2,469 |
|
|
|
|
|
|
| 2,910 |
|
|
| Capitalized interest |
|
|
| 1,969 |
|
|
|
|
|
|
| 1,763 |
|
|
|
|
|
|
| 4,874 |
|
|
|
|
|
|
| 5,275 |
|
|
| Denominator for fixed charge coverage-Adjusted EBITDA |
| $ |
| 17,027 |
|
|
|
|
| $ |
| 17,405 |
|
|
|
|
| $ |
| 48,895 |
|
|
|
|
| $ |
| 54,103 |
|
|
| Corporate Office Properties Trust |
| Summary Financial Data |
| (unaudited) |
| (in thousands) |
|
|
| For the Three Months |
|
|
| For the Nine 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 |
| $ |
| 8,848 |
|
|
|
|
| $ |
| 8,654 |
|
|
|
|
| $ |
| 29,513 |
|
|
|
|
| $ |
| 24,096 |
|
|
| Building improvements |
|
|
| 7,477 |
|
|
|
|
|
|
| 7,793 |
|
|
|
|
|
|
| 21,060 |
|
|
|
|
|
|
| 18,192 |
|
|
| Leasing costs |
|
|
| 3,073 |
|
|
|
|
|
|
| 2,939 |
|
|
|
|
|
|
| 7,091 |
|
|
|
|
|
|
| 6,873 |
|
|
| Net (exclusions from) additions to tenant improvements and incentives |
|
|
| (57 |
| ) |
|
|
|
|
| (1,523 |
| ) |
|
|
|
|
| 2,225 |
|
|
|
|
|
|
| 389 |
|
|
| Excluded building improvements and leasing costs |
|
|
| (1,813 |
| ) |
|
|
|
|
| (4,532 |
| ) |
|
|
|
|
| (7,286 |
| ) |
|
|
|
|
| (10,894 |
| ) |
| Replacement capital expenditures |
| $ |
| 17,528 |
|
|
|
|
| $ |
| 13,331 |
|
|
|
|
| $ |
| 52,603 |
|
|
|
|
| $ |
| 38,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Same Properties cash NOI |
| $ |
| 82,711 |
|
|
|
|
| $ |
| 83,927 |
|
|
|
|
| $ |
| 243,919 |
|
|
|
|
| $ |
| 246,225 |
|
|
| Straight line rent adjustments and lease incentive amortization |
|
|
| (2,866 |
| ) |
|
|
|
|
| (1,432 |
| ) |
|
|
|
|
| (5,754 |
| ) |
|
|
|
|
| (753 |
| ) |
| Amortization of acquired above- and below-market rents |
|
|
| 97 |
|
|
|
|
|
|
| 99 |
|
|
|
|
|
|
| 713 |
|
|
|
|
|
|
| 296 |
|
|
| Lease termination fees, net |
|
|
| 591 |
|
|
|
|
|
|
| 853 |
|
|
|
|
|
|
| 1,211 |
|
|
|
|
|
|
| 3,309 |
|
|
| Tenant funded landlord assets and lease incentives |
|
|
| 1,973 |
|
|
|
|
|
|
| 1,057 |
|
|
|
|
|
|
| 4,701 |
|
|
|
|
|
|
| 1,820 |
|
|
| Cash NOI adjustments in unconsolidated real estate JVs |
|
|
| 73 |
|
|
|
|
|
|
| 91 |
|
|
|
|
|
|
| 233 |
|
|
|
|
|
|
| 288 |
|
|
| Same Properties NOI |
| $ |
| 82,579 |
|
|
|
|
| $ |
| 84,595 |
|
|
|
|
| $ |
| 245,023 |
|
|
|
|
| $ |
| 251,185 |
|
|
|
|
|
|
| September 30, |
|
|
| December 31, |
| Reconciliation of total assets to adjusted book |
|
|
|
|
|
|
|
|
| Total assets |
|
|
| $ |
| 4,269,329 |
|
|
|
|
| $ |
| 4,262,452 |
|
|
| Accumulated depreciation |
|
|
|
|
| 1,245,313 |
|
|
|
|
|
|
| 1,152,523 |
|
|
| Accumulated depreciation included in assets held for sale |
|
|
|
|
| — |
|
|
|
|
|
|
| 82,385 |
|
|
| Accumulated amortization of intangibles on property acquisitions and deferred leasing costs |
|
|
|
|
| 221,646 |
|
|
|
|
|
|
| 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 |
|
|
|
|
| 27,272 |
|
|
|
|
|
|
| 27,312 |
|
|
| COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs |
|
|
|
|
| 5,495 |
|
|
|
|
|
|
| 3,744 |
|
|
| Less: Property - operating lease liabilities |
|
|
|
|
| (29,088 |
| ) |
|
|
|
|
| (29,342 |
| ) |
| Less: Cash and cash equivalents |
|
|
|
|
| (12,643 |
| ) |
|
|
|
|
| (13,262 |
| ) |
| Less: COPT’s share of cash of unconsolidated real estate JVs |
|
|
|
|
| (547 |
| ) |
|
|
|
|
| (434 |
| ) |
| Adjusted book |
|
|
| $ |
| 5,726,777 |
|
|
|
|
| $ |
| 5,705,850 |
|
|
| Corporate Office Properties Trust |
| Summary Financial Data |
| (unaudited) |
| (in thousands) |
|
|
|
|
| September 30, |
|
|
| December 31, |
|
|
| September 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 |
|
|
| $ |
| 2,269,834 |
|
|
|
|
| $ |
| 2,272,304 |
|
|
|
|
| $ |
| 2,159,732 |
|
|
| Net discounts and deferred financing costs |
|
|
|
|
| 22,984 |
|
|
|
|
|
|
| 25,982 |
|
|
|
|
|
|
| 22,941 |
|
|
| COPT’s share of unconsolidated JV gross debt |
|
|
|
|
| 26,250 |
|
|
|
|
|
|
| 26,250 |
|
|
|
|
|
|
| 26,250 |
|
|
| Gross debt |
|
|
| $ |
| 2,319,068 |
|
|
|
|
| $ |
| 2,324,536 |
|
|
|
|
| $ |
| 2,208,923 |
|
|
| Less: Cash and cash equivalents |
|
|
|
|
| (12,643 |
| ) |
|
|
|
|
| (13,262 |
| ) |
|
|
|
|
| (14,570 |
| ) |
| Less: COPT’s share of cash of unconsolidated real estate JVs |
|
|
|
|
| (547 |
| ) |
|
|
|
|
| (434 |
| ) |
|
|
|
|
| (530 |
| ) |
| Net debt |
|
|
| $ |
| 2,305,878 |
|
|
|
|
| $ |
| 2,310,840 |
|
|
|
|
| $ |
| 2,193,823 |
|
|
| Costs incurred on fully-leased development properties |
|
|
|
|
| (275,359 |
| ) |
|
|
|
|
| (162,884 |
| ) |
|
|
|
|
| (119,981 |
| ) |
| Net debt adjusted for fully-leased development |
|
|
| $ |
| 2,030,519 |
|
|
|
|
| $ |
| 2,147,956 |
|
|
|
|
| $ |
| 2,073,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net debt |
|
|
| $ |
| 2,305,878 |
|
|
|
|
| $ |
| 2,310,840 |
|
|
|
|
| $ |
| 2,193,823 |
|
|
| Debt pay down from Wholesale Data Center sale proceeds |
|
|
|
|
| N/A |
|
|
|
|
|
|
| (216,000 |
| ) |
|
|
|
|
| N/A |
|
|
| Pro forma net debt |
|
|
| $ |
| 2,305,878 |
|
|
|
|
| $ |
| 2,094,840 |
|
|
|
|
| $ |
| 2,193,823 |
|
|
| Costs incurred on fully-leased development properties |
|
|
|
|
| (275,359 |
| ) |
|
|
|
|
| (162,884 |
| ) |
|
|
|
|
| (119,981 |
| ) |
| Pro forma net debt adjusted for fully-leased development |
|
|
| $ |
| 2,030,519 |
|
|
|
|
| $ |
| 1,931,956 |
|
|
|
|
| $ |
| 2,073,842 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221027006030/en/
IR Contact:
Michelle Layne
443-285-5452
michelle.layne@copt.com