COLUMBIA, Md.--(BUSINESS WIRE)--Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the second quarter ended June 30, 2023.
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 solid results. Since 2022, the significant growth in defense spending has materialized into elevated tenant demand for our portfolio, resulting in a 96.8% leased rate in our Defense/IT Locations segment, which accounts for 90% of our core portfolio annualized rental revenue. This is the highest leased rate since we started reporting the segment in 2015. Our second quarter results were strong as FFO per share exceeded the midpoint of our guidance range by $0.02. Given our outperformance year to date, we are increasing the midpoint of our full year FFO per share guidance by $0.02 to $2.40 per share, which represents a 2% increase over 2022’s results. Same-property cash NOI increased 5.8% for 2Q23 over 2Q22, and 7.0% for the first half of 2023 over the first half of 2022, which led us to again increase our full year change in cash NOI guidance by 100 basis points. Our leasing activity is right on track as we are roughly halfway towards our full year vacancy leasing goal and 70% towards our development leasing goal. Our investment grade rated balance sheet is well positioned to navigate the challenging capital markets environment as we have no significant debt maturities until 2026, with 96% of our NOI unencumbered. We remain confident in our strategy and expect to continue to allocate capital to investments at our Defense/IT Locations that will support continued growth in FFO per share and shareholder value.”
Financial Highlights
2nd Quarter Financial Results:
- Diluted earnings per share (“EPS”) was $0.27 for the quarter ended June 30, 2023 compared to $0.29 for the quarter ended June 30, 2022.
- Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, and FFOPS, as adjusted for comparability, were $0.60 for the quarter ended June 30, 2023 compared to $0.59 for the quarter ended June 30, 2022.
Operating Performance Highlights
Operating Portfolio Summary:
- At June 30, 2023, the Company’s 22.9 million square foot core portfolio was 93.6% occupied and 95.0% leased.
Same-Property Performance:
- At June 30, 2023, the Company’s 20.6 million square foot same-property portfolio was 92.8% occupied and 94.4% leased.
- The Company’s same-property cash NOI increased 5.8% for the three months ended June 30, 2023 compared to the same period in 2022.
Leasing:
- Total Square Feet Leased: For the quarter ended June 30, 2023, the Company leased 891,000 square feet, including 803,000 square feet of renewals and 88,000 square feet of vacancy leasing. For the six months ended June 30, 2023, the Company executed 1.7 million square feet of total leasing, including 1.0 million square feet of renewals, 187,000 square feet of vacancy leasing, and 495,000 square feet in development projects.
- Tenant Retention Rates: During the quarter and six months ended June 30, 2023, the Company renewed 89.0% and 82.7%, respectively, of expiring square feet.
- Rent Spreads & Average Escalations on Renewing Leases: For the quarter and six months ended June 30, 2023, straight-line rents on renewals increased 7.4% and 6.9%, respectively, and cash rents on renewed space increased 1.3% and 1.1%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.6%.
- Lease Terms: In the quarter ended June 30, 2023, lease terms averaged 5.0 years on renewing leases and 6.9 years on vacancy leasing. For the six months ended June 30, 2023, lease terms averaged 4.5 years on renewing leases, 7.4 years on vacancy leasing, and 14.3 years on development leasing.
Investment Activity Highlights
- Development Pipeline: The Company’s development pipeline consists of nine properties totaling 1.5 million square feet that were 92% leased at June 30, 2023. These projects represent a total estimated investment of $480.8 million, of which $222.1 million has been spent.
Balance Sheet and Capital Transaction Highlights
- For the quarter ended June 30, 2023, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.9x.
- At June 30, 2023, the Company’s net debt to in-place adjusted EBITDA ratio was 6.3x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 5.7x.
- At June 30, 2023, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.1% with a weighted average maturity of 6.2 years; additionally, 95.6% 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 2023 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
2023 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 $1.46-$1.52, and $2.35-$2.41, respectively, to new ranges of $1.49-$1.53, and $2.38-$2.42, respectively. Management is establishing third quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.26-$0.28 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 September 30, 2023 |
|
Year Ending December 31, 2023 |
||||||||||
|
|
Low |
|
High |
|
Low |
|
High |
||||||
Diluted EPS |
|
$ |
0.26 |
|
$ |
0.28 |
|
$ |
1.49 |
|
|
$ |
1.53 |
|
Real estate-related depreciation and amortization |
|
|
0.33 |
|
|
0.33 |
|
|
1.32 |
|
|
|
1.32 |
|
Gain on sales of real estate |
|
|
— |
|
|
— |
|
|
(0.43 |
) |
|
|
(0.43 |
) |
Diluted FFOPS, Nareit definition and as adjusted for comparability |
|
$ |
0.59 |
|
$ |
0.61 |
|
$ |
2.38 |
|
|
$ |
2.42 |
|
Conference Call Information
Management will discuss second quarter 2023 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:
Conference Call Date: |
Friday, July 28, 2023 |
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/BI48eea2c0fe934b24aefdd77f5c963ea1
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 submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office Properties”). As of June 30, 2023, 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 24 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 192 properties encompassed 22.9 million square feet and was 95% 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, 2022.
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 Ended June 30, |
|
For the Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
|
|
|
|
|
|
|
||||||||
Lease revenue |
$ |
153,682 |
|
|
$ |
142,277 |
|
|
$ |
304,242 |
|
|
$ |
283,666 |
|
Other property revenue |
|
1,271 |
|
|
|
969 |
|
|
|
2,392 |
|
|
|
1,860 |
|
Construction contract and other service revenues |
|
14,243 |
|
|
|
42,557 |
|
|
|
30,063 |
|
|
|
95,757 |
|
Total revenues |
|
169,196 |
|
|
|
185,803 |
|
|
|
336,697 |
|
|
|
381,283 |
|
Operating expenses |
|
|
|
|
|
|
|
||||||||
Property operating expenses |
|
61,600 |
|
|
|
54,116 |
|
|
|
121,020 |
|
|
|
111,297 |
|
Depreciation and amortization associated with real estate operations |
|
37,600 |
|
|
|
34,812 |
|
|
|
74,595 |
|
|
|
69,076 |
|
Construction contract and other service expenses |
|
13,555 |
|
|
|
41,304 |
|
|
|
28,756 |
|
|
|
92,954 |
|
General and administrative expenses |
|
7,287 |
|
|
|
6,467 |
|
|
|
15,283 |
|
|
|
13,137 |
|
Leasing expenses |
|
2,345 |
|
|
|
1,888 |
|
|
|
4,344 |
|
|
|
3,762 |
|
Business development expenses and land carry costs |
|
726 |
|
|
|
701 |
|
|
|
1,221 |
|
|
|
1,484 |
|
Total operating expenses |
|
123,113 |
|
|
|
139,288 |
|
|
|
245,219 |
|
|
|
291,710 |
|
Interest expense |
|
(16,519 |
) |
|
|
(14,808 |
) |
|
|
(32,961 |
) |
|
|
(29,232 |
) |
Interest and other income, net |
|
2,143 |
|
|
|
1,593 |
|
|
|
4,399 |
|
|
|
3,802 |
|
Gain on sales of real estate |
|
14 |
|
|
|
(19 |
) |
|
|
49,392 |
|
|
|
(4 |
) |
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(342 |
) |
Income from continuing operations before equity in income of unconsolidated entities and income taxes |
|
31,721 |
|
|
|
33,281 |
|
|
|
112,308 |
|
|
|
63,797 |
|
Equity in income of unconsolidated entities |
|
111 |
|
|
|
318 |
|
|
|
47 |
|
|
|
1,206 |
|
Income tax expense |
|
(190 |
) |
|
|
(4 |
) |
|
|
(315 |
) |
|
|
(157 |
) |
Income from continuing operations |
|
31,642 |
|
|
|
33,595 |
|
|
|
112,040 |
|
|
|
64,846 |
|
Discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
29,573 |
|
Net Income |
|
31,642 |
|
|
|
33,595 |
|
|
|
112,040 |
|
|
|
94,419 |
|
Net income attributable to noncontrolling interests: |
|
|
|
|
|
|
|
||||||||
Common units in the Operating Partnership (“OP”) |
|
(516 |
) |
|
|
(496 |
) |
|
|
(1,809 |
) |
|
|
(1,352 |
) |
Other consolidated entities |
|
(839 |
) |
|
|
(789 |
) |
|
|
(1,165 |
) |
|
|
(1,438 |
) |
Net income attributable to common shareholders |
$ |
30,287 |
|
|
$ |
32,310 |
|
|
$ |
109,066 |
|
|
$ |
91,629 |
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share (“EPS”) computation: |
|
|
|
|
|
|
|
||||||||
Numerator for diluted EPS: |
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders |
$ |
30,287 |
|
|
$ |
32,310 |
|
|
$ |
109,066 |
|
|
$ |
91,629 |
|
Amount allocable to share-based compensation awards |
|
(98 |
) |
|
|
(75 |
) |
|
|
(349 |
) |
|
|
(259 |
) |
Redeemable noncontrolling interests |
|
(51 |
) |
|
|
(30 |
) |
|
|
(115 |
) |
|
|
(69 |
) |
Numerator for diluted EPS |
$ |
30,138 |
|
|
$ |
32,205 |
|
|
$ |
108,602 |
|
|
$ |
91,301 |
|
Denominator: |
|
|
|
|
|
|
|
||||||||
Weighted average common shares - basic |
|
112,188 |
|
|
|
112,082 |
|
|
|
112,157 |
|
|
|
112,052 |
|
Dilutive effect of share-based compensation awards |
|
426 |
|
|
|
429 |
|
|
|
418 |
|
|
|
427 |
|
Dilutive effect of redeemable noncontrolling interests |
|
62 |
|
|
|
126 |
|
|
|
77 |
|
|
|
129 |
|
Weighted average common shares - diluted |
|
112,676 |
|
|
|
112,637 |
|
|
|
112,652 |
|
|
|
112,608 |
|
Diluted EPS |
$ |
0.27 |
|
|
$ |
0.29 |
|
|
$ |
0.96 |
|
|
$ |
0.81 |
|
Corporate Office Properties Trust |
||||||||||||
Summary Financial Data |
||||||||||||
(unaudited) |
||||||||||||
(in thousands, except per share data) |
||||||||||||
|
||||||||||||
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
$ |
31,642 |
|
$ |
33,595 |
|
$ |
112,040 |
|
$ |
94,419 |
|
Real estate-related depreciation and amortization |
|
37,600 |
|
|
34,812 |
|
|
74,595 |
|
|
69,076 |
|
Gain on sales of real estate from continuing and discontinued operations |
|
(14 |
) |
|
19 |
|
|
(49,392 |
) |
|
(28,560 |
) |
Depreciation and amortization on unconsolidated real estate JVs |
|
805 |
|
|
525 |
|
|
1,606 |
|
|
1,051 |
|
Funds from operations (“FFO”) |
|
70,033 |
|
|
68,951 |
|
|
138,849 |
|
|
135,986 |
|
FFO allocable to other noncontrolling interests |
|
(1,239 |
) |
|
(1,178 |
) |
|
(1,947 |
) |
|
(2,220 |
) |
Basic FFO allocable to share-based compensation awards |
|
(480 |
) |
|
(357 |
) |
|
(946 |
) |
|
(719 |
) |
Basic FFO available to common share and common unit holders (“Basic FFO”) |
|
68,314 |
|
|
67,416 |
|
|
135,956 |
|
|
133,047 |
|
Redeemable noncontrolling interests |
|
(28 |
) |
|
4 |
|
|
(58 |
) |
|
(2 |
) |
Diluted FFO adjustments allocable to share-based compensation awards |
|
37 |
|
|
27 |
|
|
76 |
|
|
54 |
|
Diluted FFO available to common share and common unit holders (“Diluted FFO”) |
|
68,323 |
|
|
67,447 |
|
|
135,974 |
|
|
133,099 |
|
Loss on early extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
342 |
|
Executive transition costs |
|
248 |
|
|
137 |
|
|
248 |
|
|
137 |
|
Diluted FFO comparability adjustments allocable to share-based compensation awards |
|
(2 |
) |
|
— |
|
|
(2 |
) |
|
(2 |
) |
Diluted FFO available to common share and common unit holders, as adjusted for comparability |
|
68,569 |
|
|
67,584 |
|
|
136,220 |
|
|
133,576 |
|
Straight line rent adjustments and lease incentive amortization |
|
(3,161 |
) |
|
(3,198 |
) |
|
(6,677 |
) |
|
(6,387 |
) |
Amortization of intangibles and other assets included in net operating income (“NOI”) |
|
17 |
|
|
49 |
|
|
(2 |
) |
|
(323 |
) |
Share-based compensation, net of amounts capitalized |
|
2,213 |
|
|
2,154 |
|
|
3,946 |
|
|
4,265 |
|
Amortization of deferred financing costs |
|
628 |
|
|
541 |
|
|
1,260 |
|
|
1,138 |
|
Amortization of net debt discounts, net of amounts capitalized |
|
622 |
|
|
608 |
|
|
1,240 |
|
|
1,213 |
|
Replacement capital expenditures |
|
(22,664 |
) |
|
(17,717 |
) |
|
(50,874 |
) |
|
(35,075 |
) |
Other |
|
(221 |
) |
|
406 |
|
|
(494 |
) |
|
445 |
|
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) |
$ |
46,003 |
|
$ |
50,427 |
|
$ |
84,619 |
|
$ |
98,852 |
|
Diluted FFO per share |
$ |
0.60 |
|
$ |
0.59 |
|
$ |
1.19 |
|
$ |
1.17 |
|
Diluted FFO per share, as adjusted for comparability |
$ |
0.60 |
|
$ |
0.59 |
|
$ |
1.19 |
|
$ |
1.17 |
|
Dividends/distributions per common share/unit |
$ |
0.285 |
|
$ |
0.275 |
|
$ |
0.57 |
|
$ |
0.55 |
|
Corporate Office Properties Trust |
|||||||
Summary Financial Data |
|||||||
(unaudited) |
|||||||
(Dollars and shares in thousands, except per share data) |
|||||||
|
|||||||
|
June 30,
|
|
December 31,
|
||||
Balance Sheet Data |
|
|
|
||||
Properties, net of accumulated depreciation |
$ |
3,672,235 |
|
|
$ |
3,556,398 |
|
Total assets |
$ |
4,246,346 |
|
|
$ |
4,257,275 |
|
Debt per balance sheet |
$ |
2,176,174 |
|
|
$ |
2,231,794 |
|
Total liabilities |
$ |
2,447,436 |
|
|
$ |
2,509,527 |
|
Redeemable noncontrolling interests |
$ |
22,215 |
|
|
$ |
26,293 |
|
Total equity |
$ |
1,776,695 |
|
|
$ |
1,721,455 |
|
Debt to assets |
|
51.2 |
% |
|
|
52.4 |
% |
Net debt to adjusted book |
|
38.4 |
% |
|
|
39.8 |
% |
|
|
|
|
||||
Core Portfolio Data (as of period end) |
|
|
|
||||
Number of operating properties |
|
192 |
|
|
|
192 |
|
Total operational square feet (in thousands) |
|
22,878 |
|
|
|
22,849 |
|
% Occupied |
|
93.6 |
% |
|
|
92.8 |
% |
% Leased |
|
95.0 |
% |
|
|
95.3 |
% |
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
||||||||
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
GAAP |
|
|
|
|
|
|
|
||||
Payout ratio: |
|
|
|
|
|
|
|
||||
Net income |
103.1 |
% |
|
93.4 |
% |
|
58.3 |
% |
|
66.5 |
% |
Debt ratios: |
|
|
|
|
|
|
|
||||
Net income to interest expense ratio |
1.9x |
|
2.3x |
|
3.4x |
|
3.2x |
||||
Debt to net income ratio |
17.2x |
|
16.2x |
|
N/A |
|
|
N/A |
|
||
Non-GAAP |
|
|
|
|
|
|
|
||||
Payout ratios: |
|
|
|
|
|
|
|
||||
Diluted FFO |
47.5 |
% |
|
46.3 |
% |
|
47.7 |
% |
|
47.0 |
% |
Diluted FFO, as adjusted for comparability |
47.3 |
% |
|
46.3 |
% |
|
47.6 |
% |
|
46.8 |
% |
Diluted AFFO |
70.5 |
% |
|
62.0 |
% |
|
76.6 |
% |
|
63.2 |
% |
Debt ratios: |
|
|
|
|
|
|
|
||||
Adjusted EBITDA fixed charge coverage ratio |
4.9x |
|
5.3x |
|
5.0x |
|
5.3x |
||||
Net debt to in-place adjusted EBITDA ratio |
6.3x |
|
6.4x |
|
N/A |
|
|
N/A |
|
||
Net debt adj. for fully-leased development to in-place adj. EBITDA ratio |
5.7x |
|
5.8x |
|
N/A |
|
|
N/A |
|
||
|
|
|
|
|
|
|
|
||||
Reconciliation of denominators for per share measures |
|
|
|
|
|
|
|||||
Denominator for diluted EPS |
112,676 |
|
|
112,637 |
|
|
112,652 |
|
|
112,608 |
|
Weighted average common units |
1,514 |
|
|
1,476 |
|
|
1,502 |
|
|
1,430 |
|
Denominator for diluted FFO per share and as adjusted for comparability |
114,190 |
|
|
114,113 |
|
|
114,154 |
|
|
114,038 |
|
Corporate Office Properties Trust |
|||||||||||||||
Summary Financial Data |
|||||||||||||||
(unaudited) |
|||||||||||||||
(in thousands) |
|||||||||||||||
|
|||||||||||||||
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Numerators for Payout Ratios |
|
|
|
|
|
|
|
||||||||
Dividends on unrestricted common and deferred shares |
$ |
31,995 |
|
|
$ |
30,842 |
|
|
$ |
63,984 |
|
|
$ |
61,679 |
|
Distributions on unrestricted common units |
|
433 |
|
|
|
407 |
|
|
|
863 |
|
|
|
811 |
|
Dividends and distributions on restricted shares and units |
|
204 |
|
|
|
135 |
|
|
|
419 |
|
|
|
293 |
|
Total dividends and distributions for GAAP payout ratio |
|
32,632 |
|
|
|
31,384 |
|
|
|
65,266 |
|
|
|
62,783 |
|
Dividends and distributions on antidilutive shares and units |
|
(205 |
) |
|
|
(123 |
) |
|
|
(421 |
) |
|
|
(268 |
) |
Dividends and distributions for non-GAAP payout ratios |
$ |
32,427 |
|
|
$ |
31,261 |
|
|
$ |
64,845 |
|
|
$ |
62,515 |
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of net income to earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”), adjusted EBITDA and in-place adjusted EBITDA |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
31,642 |
|
|
$ |
33,595 |
|
|
$ |
112,040 |
|
|
$ |
94,419 |
|
Interest expense |
|
16,519 |
|
|
|
14,808 |
|
|
|
32,961 |
|
|
|
29,232 |
|
Income tax expense |
|
190 |
|
|
|
4 |
|
|
|
315 |
|
|
|
157 |
|
Real estate-related depreciation and amortization |
|
37,600 |
|
|
|
34,812 |
|
|
|
74,595 |
|
|
|
69,076 |
|
Other depreciation and amortization |
|
609 |
|
|
|
552 |
|
|
|
1,211 |
|
|
|
1,159 |
|
Gain on sales of real estate from continuing and discontinued operations |
|
(14 |
) |
|
|
19 |
|
|
|
(49,392 |
) |
|
|
(28,560 |
) |
Adjustments from unconsolidated real estate JVs |
|
1,559 |
|
|
|
760 |
|
|
|
3,263 |
|
|
|
1,518 |
|
EBITDAre |
|
88,105 |
|
|
|
84,550 |
|
|
|
174,993 |
|
|
|
167,001 |
|
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
342 |
|
Net gain on other investments |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
(564 |
) |
Credit loss expense (recoveries) |
|
238 |
|
|
|
225 |
|
|
|
305 |
|
|
|
(91 |
) |
Business development expenses |
|
394 |
|
|
|
385 |
|
|
|
635 |
|
|
|
711 |
|
Executive transition costs |
|
307 |
|
|
|
137 |
|
|
|
554 |
|
|
|
137 |
|
Adjusted EBITDA |
|
89,044 |
|
|
|
85,298 |
|
|
$ |
176,487 |
|
|
$ |
167,536 |
|
Pro forma NOI adjustment for property changes within period |
|
56 |
|
|
|
127 |
|
|
|
|
|
||||
Change in collectability of deferred rental revenue |
|
28 |
|
|
|
231 |
|
|
|
|
|
||||
In-place adjusted EBITDA |
$ |
89,128 |
|
|
$ |
85,656 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures |
|
|
|
|
|
|
|
||||||||
Tenant improvements and incentives |
$ |
32,619 |
|
|
$ |
10,655 |
|
|
$ |
52,605 |
|
|
$ |
20,665 |
|
Building improvements |
|
2,766 |
|
|
|
6,751 |
|
|
|
4,907 |
|
|
|
13,583 |
|
Leasing costs |
|
3,542 |
|
|
|
1,748 |
|
|
|
5,292 |
|
|
|
4,018 |
|
Net (exclusions from) additions to tenant improvements and incentives |
|
(16,007 |
) |
|
|
474 |
|
|
|
(11,168 |
) |
|
|
2,282 |
|
Excluded building improvements and leasing costs |
|
(256 |
) |
|
|
(1,911 |
) |
|
|
(762 |
) |
|
|
(5,473 |
) |
Replacement capital expenditures |
$ |
22,664 |
|
|
$ |
17,717 |
|
|
$ |
50,874 |
|
|
$ |
35,075 |
|
Corporate Office Properties Trust |
|||||||||||||||
Summary Financial Data |
|||||||||||||||
(unaudited) |
|||||||||||||||
(in thousands) |
|||||||||||||||
|
|||||||||||||||
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA |
|
|
|
|
|
|
|
||||||||
Interest expense |
$ |
16,519 |
|
|
$ |
14,808 |
|
|
$ |
32,961 |
|
|
$ |
29,232 |
|
Less: Amortization of deferred financing costs |
|
(628 |
) |
|
|
(541 |
) |
|
|
(1,260 |
) |
|
|
(1,138 |
) |
Less: Amortization of net debt discounts, net of amounts capitalized |
|
(622 |
) |
|
|
(608 |
) |
|
|
(1,240 |
) |
|
|
(1,213 |
) |
COPT’s share of interest expense of unconsolidated real estate JVs, excluding amortization of deferred financing costs and net debt premium and loss on interest rate derivatives |
|
791 |
|
|
|
233 |
|
|
|
1,564 |
|
|
|
464 |
|
Scheduled principal amortization |
|
746 |
|
|
|
844 |
|
|
|
1,536 |
|
|
|
1,618 |
|
Capitalized interest |
|
1,194 |
|
|
|
1,376 |
|
|
|
1,964 |
|
|
|
2,905 |
|
Denominator for fixed charge coverage-Adjusted EBITDA |
$ |
18,000 |
|
|
$ |
16,112 |
|
|
$ |
35,525 |
|
|
$ |
31,868 |
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of net income to NOI from real estate operations, same properties NOI from real estate operations and same properties cash NOI from real estate operations |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
31,642 |
|
|
$ |
33,595 |
|
|
$ |
112,040 |
|
|
$ |
94,419 |
|
Construction contract and other service revenues |
|
(14,243 |
) |
|
|
(42,557 |
) |
|
|
(30,063 |
) |
|
|
(95,757 |
) |
Depreciation and other amortization associated with real estate operations |
|
37,600 |
|
|
|
34,812 |
|
|
|
74,595 |
|
|
|
69,076 |
|
Construction contract and other service expenses |
|
13,555 |
|
|
|
41,304 |
|
|
|
28,756 |
|
|
|
92,954 |
|
General and administrative expenses |
|
7,287 |
|
|
|
6,467 |
|
|
|
15,283 |
|
|
|
13,137 |
|
Leasing expenses |
|
2,345 |
|
|
|
1,888 |
|
|
|
4,344 |
|
|
|
3,762 |
|
Business development expenses and land carry costs |
|
726 |
|
|
|
701 |
|
|
|
1,221 |
|
|
|
1,484 |
|
Interest expense |
|
16,519 |
|
|
|
14,808 |
|
|
|
32,961 |
|
|
|
29,232 |
|
Interest and other income, net |
|
(2,143 |
) |
|
|
(1,593 |
) |
|
|
(4,399 |
) |
|
|
(3,802 |
) |
Gain on sales of real estate from continuing operations |
|
(14 |
) |
|
|
19 |
|
|
|
(49,392 |
) |
|
|
4 |
|
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
342 |
|
Equity in income of unconsolidated entities |
|
(111 |
) |
|
|
(318 |
) |
|
|
(47 |
) |
|
|
(1,206 |
) |
Unconsolidated real estate JVs NOI allocable to COPT included in equity in income of unconsolidated entities |
|
1,671 |
|
|
|
1,080 |
|
|
|
3,313 |
|
|
|
2,160 |
|
Income tax expense |
|
190 |
|
|
|
4 |
|
|
|
315 |
|
|
|
157 |
|
Discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(29,573 |
) |
Revenues from real estate operations from discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,980 |
|
Property operating expenses from discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(971 |
) |
NOI from real estate operations |
|
95,024 |
|
|
|
90,210 |
|
|
|
188,927 |
|
|
|
177,398 |
|
Non-Same Properties NOI from real estate operations |
|
(8,770 |
) |
|
|
(6,603 |
) |
|
|
(18,221 |
) |
|
|
(12,365 |
) |
Same Properties NOI from real estate operations |
|
86,254 |
|
|
|
83,607 |
|
|
|
170,706 |
|
|
|
165,033 |
|
Straight line rent adjustments and lease incentive amortization |
|
1,232 |
|
|
|
(1,301 |
) |
|
|
2,624 |
|
|
|
(3,592 |
) |
Amortization of acquired above- and below-market rents |
|
(129 |
) |
|
|
(97 |
) |
|
|
(295 |
) |
|
|
(616 |
) |
Lease termination fees, net |
|
(1,059 |
) |
|
|
(399 |
) |
|
|
(2,280 |
) |
|
|
(620 |
) |
Tenant funded landlord assets and lease incentives |
|
(1,191 |
) |
|
|
(1,311 |
) |
|
|
(2,379 |
) |
|
|
(2,821 |
) |
Cash NOI adjustments in unconsolidated real estate JVs |
|
(70 |
) |
|
|
(92 |
) |
|
|
(145 |
) |
|
|
(190 |
) |
Same Properties Cash NOI from real estate operations |
$ |
85,037 |
|
|
$ |
80,407 |
|
|
$ |
168,231 |
|
|
$ |
157,194 |
|
Corporate Office Properties Trust |
||||||||
Summary Financial Data |
||||||||
(unaudited) |
||||||||
(in thousands) |
||||||||
|
||||||||
|
|
June 30,
|
|
December 31,
|
||||
Reconciliation of total assets to adjusted book |
|
|
|
|
||||
Total assets |
|
$ |
4,246,346 |
|
|
$ |
4,257,275 |
|
Accumulated depreciation |
|
|
1,334,066 |
|
|
|
1,267,434 |
|
Accumulated depreciation included in assets held for sale |
|
|
— |
|
|
|
6,014 |
|
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs |
|
|
226,555 |
|
|
|
222,779 |
|
COPT’s share of liabilities of unconsolidated real estate JVs |
|
|
60,724 |
|
|
|
52,404 |
|
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs |
|
|
7,800 |
|
|
|
6,078 |
|
Less: Property - operating lease liabilities |
|
|
(33,923 |
) |
|
|
(28,759 |
) |
Less: Property - finance lease liabilities |
|
|
(426 |
) |
|
|
— |
|
Less: Cash and cash equivalents |
|
|
(14,273 |
) |
|
|
(12,337 |
) |
Less: COPT’s share of cash of unconsolidated real estate JVs |
|
|
(974 |
) |
|
|
(456 |
) |
Adjusted book |
|
$ |
5,825,895 |
|
|
$ |
5,770,432 |
|
|
|
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 |
|
$ |
2,176,174 |
|
|
$ |
2,231,794 |
|
|
$ |
2,177,811 |
|
Net discounts and deferred financing costs |
|
|
21,342 |
|
|
|
23,160 |
|
|
|
23,857 |
|
COPT’s share of unconsolidated JV gross debt |
|
|
52,364 |
|
|
|
52,100 |
|
|
|
26,250 |
|
Gross debt |
|
|
2,249,880 |
|
|
|
2,307,054 |
|
|
|
2,227,918 |
|
Less: Cash and cash equivalents |
|
|
(14,273 |
) |
|
|
(12,337 |
) |
|
|
(20,735 |
) |
Less: COPT’s share of cash of unconsolidated real estate JVs |
|
|
(974 |
) |
|
|
(456 |
) |
|
|
(457 |
) |
Net debt |
|
|
2,234,633 |
|
|
|
2,294,261 |
|
|
|
2,206,726 |
|
Costs incurred on fully-leased development properties |
|
|
(189,407 |
) |
|
|
(95,972 |
) |
|
|
(223,485 |
) |
Net debt adjusted for fully-leased development |
|
$ |
2,045,226 |
|
|
$ |
2,198,289 |
|
|
$ |
1,983,241 |
|
|
|
|
|
|
|
|
||||||
Net debt |
|
$ |
2,234,633 |
|
|
$ |
2,294,261 |
|
|
$ |
2,206,726 |
|
Pro forma debt adjustments from subsequent event transaction proceeds |
|
|
N/A |
|
|
|
(189,000 |
) |
|
|
N/A |
|
Pro forma net debt |
|
|
2,234,633 |
|
|
|
2,105,261 |
|
|
|
2,206,726 |
|
Costs incurred on fully-leased development properties |
|
|
(189,407 |
) |
|
|
(95,972 |
) |
|
|
(223,485 |
) |
Pro forma net debt adjusted for fully-leased development |
|
$ |
2,045,226 |
|
|
$ |
2,009,289 |
|
|
$ |
1,983,241 |
|
