Corporate Office Properties Trust Reports Strong Second Quarter 2005 Results.COLUMBIA Columbia, cities, United States Columbia (kəlŭm`bēə). 1 City (1990 pop. 75,883), Howard co., central Md., between Washington, D.C., and Baltimore. , Md. -- Corporate Office Properties Trust Corporate Office Properties Trust Inc. (COPT) (NYSE: OFC) is a publicly-traded real estate investment trust (REIT) corporation that specializes in office development, and describes itself as "a fully integrated, self-managed real estate investment trust that focuses on the (NYSE NYSE See: New York Stock Exchange :OFC OFC Office OFC Officer OFC Of Course OFC Oxygen Free Copper OFC Oceania Football Confederation (soccer) OFC Optical Fiber Cable OFC Optical Fiber Communications OFC Optical Fiber Conference ) announced today financial and operating results for the quarter ended June June: see month. 30, 2005. Highlights --Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share ("EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") of $.14 for the second quarter 2005 compared to $.13 per diluted share for the second quarter 2004. --FFO per diluted share of $.47 or $21.8 million for second quarter 2005 compared to $.50 or $21.4 million for second quarter 2004, representing a decrease of 6% per share. The decrease in FFO FFO See: Funds from operations includes the effect of a $3.5 million decrease in net revenues from lease terminations. --AFFO diluted increased 21.7% to $17.0 million for second quarter 2005 as compared to $14.0 million for second quarter 2004. --FFO payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. was 53.1% and AFFO AFFO Adjusted Funds From Operation payout ratio was 68.2% for second quarter 2005. --$49.2 million in acquisitions for 222,000 square feet plus 36.7 acres of land. --92.9% occupied oc·cu·py tr.v. oc·cu·pied, oc·cu·py·ing, oc·cu·pies 1. To fill up (time or space): a lecture that occupied three hours. 2. To dwell or reside in. 3. and 93.8% leased as of June 30, 2005. --1.2 million square feet in 9 buildings under construction, 342,000 square feet in 3 buildings under development and 469,000 square feet in 2 buildings under redevelopment. Subsequent Event - Entry into New Market --Closed on a $10.0 million land acquisition which includes a 100% leased, 50,000 square foot build to suit opportunity in Colorado Springs, Colorado The City of Colorado Springs is the second most populous city (after Denver) in the state of Colorado and the 48th most populous city in the United States.[4] The city is the county seat of El Paso County. . This acquisition represents the continuation continuation - continuation passing style of the Company's core tenant expansion strategy and is the second submarket sub·mar·ket n. A geographic, economic, or specialized subdivision of a market. adj. Being below what is usual in a particular market: submarket wages; submarket interest rates. expansion this year outside the Greater Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C. region. "We are very pleased with our quarterly results, and continue to make good progress with our construction pipeline, acquisition and disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of activity, as well as our core tenant expansion strategy. With our expansion into San Antonio San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. and Colorado Springs Colorado Springs, city (1990 pop. 281,140), seat of El Paso co., central Colo., on Monument and Fountain creeks, at the foot of Pikes Peak; inc. 1886. It is a year-round resort and a booming military, technological, and commercial city. this year, along with our construction projects coming on-line, we are poised for accelerating growth in 2006," stated Randall Randall may refer to the following: In places:
Financial Results EPS for the quarter ended June 30, 2005 totaled $.14 per diluted share, or $5.5 million of net income available to common shareholders, as compared to $.13 per diluted share, or $4.4 million for the quarter ended June 30, 2004. Revenues from real estate operations for the quarter ended June 30, 2005 were $60.2 million, as compared to revenue for the quarter ended June 30, 2004 of $53.1 million. Diluted FFO for the quarter ended June 30, 2005 totaled $21.8 million, or $.47 per diluted share, as compared to $21.4 million, or $.50 per diluted share, for the quarter ended June 30, 2004, representing a 6.0% decrease on a per share basis. The decrease in FFO includes the effect of a $3.5 million decrease in net revenues from lease terminations. FFO Payout ratio was 53.1% for second quarter 2005 compared to 46.4% for the comparable 2004 period. Adjusted funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("AFFO") diluted increased 21.7% to $17.0 million for second quarter 2005 as compared to $14.0 million for second quarter 2004. The Company's AFFO payout ratio was 68.2% for second quarter 2005 compared to 71.2% for second quarter 2004. As of June 30, 2005, the Company had a total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. of $2.7 billion, with $1.2 billion in debt outstanding, equating e·quate v. e·quat·ed, e·quat·ing, e·quates v.tr. 1. To make equal or equivalent. 2. To reduce to a standard or an average; equalize. 3. to a 43.5% debt-to-total market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. ratio. The Company's total quarterly weighted average interest rate was 5.7% and 67.7% of total debt is subject to fixed interest rates. For the second quarter 2005, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become Interest coverage ratio was 2.91x and EBITDA Fixed Charge coverage was 2.28x. Operating Results At June 30, 2005, the Company's portfolio of 147 office properties totaling 12.2 million square feet was 92.9% occupied and 93.8% leased. During the quarter, 208,400 square feet was renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. , equating to a 64.0% renewal rate, at an average committed capital cost of $4.44 per square foot. Total straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. rent increased 5.5%, and total cash rent decreased .3% for 320,311 square feet of renewed and retenanted space. The average committed capital cost for renewed and retenanted space was $9.28 per square foot. Same property cash NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics decreased by 6.1% or $2.2 million for the quarter compared to the quarter ended June 30, 2004. This decrease reflects the impact of abnormally ab·nor·mal adj. Not typical, usual, or regular; not normal; deviant. [Alteration (influenced by ab-1) of obsolete anormal, from Medieval Latin high lease termination fees termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. that were recognized in the second quarter of 2004. For second quarter 2005, lower termination fees were offset somewhat by a $3.1 million increase in rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. revenues. Same property rental revenues included in cash NOI, excluding the effects of lease terminations, increased $1.5 million for the Northern Virginia Northern Virginia (NoVA) consists of Arlington, Fairfax, Loudoun, and Prince William counties and the independent cities of Alexandria, Falls Church, Fairfax, Manassas, and Manassas Park. portfolio and $1.8 million for the B/W B/W Black and White B/W Between B/W be with B/W Bundled With B/W Backed With (recording industry) B/W backwash B/W B-Wing (Star Wars) B/W Back of Walk Corridor portfolio, and decreased $578,000 for the New Jersey portfolio as compared to second quarter of 2004. Development and Construction Activity The Company commenced development on a 56,000 square foot office building located in the Dahlgren Dahlgren may refer to:
In addition, the Company also has 9 buildings under construction for a total of 1.2 million square feet that is 45.9% leased. Five of the buildings will become operational starting third quarter 2005 through first quarter 2006. Land Control For the quarter ending June 30, 2005, the Company announced: --The signing of a contribution agreement that will become the basis for a joint venture with a limited partnership for the purpose of developing up to 1.8 million square feet of office space in 13 buildings on 63.0 acres of land. The Company will make an initial investment of $2.2 million and will develop, lease and manage the office buildings. The site is located in a planned mixed-use mixed-use adj. Containing or zoned for commercial and residential facilities or development: a 40-story mixed-use tower; a mixed-use parcel of land. community to be known as Arundel Preserve Arundel Preserve is a real estate development in Hanover, Maryland, that is being developed by Somerset Construction Co. of Bethesda, Corporate Office Properties Trust of Columbia, Bozzuto Development Co. of Greenbelt, and Toll Brothers Inc. of Horsham, Pa. in Hanover, Maryland Hanover, Maryland, is a locality in northwestern Anne Arundel County, Maryland in the United States, located south of Baltimore near the Howard County line. It is located approximately at the intersection of Maryland State Highway 100 and the Baltimore-Washington Parkway. , and fronts on the Baltimore/Washington Parkway (I-295), adjacent to the Arundel Mills Arundel Mills is a mall located in Hanover, Maryland (south of Baltimore, near BWI Airport) and is now owned by Simon Property Group. The mall is located at the intersection of Maryland Route 100 and the Baltimore-Washington Parkway (Maryland Route 295) in northwestern Anne Mall and midway Midway, island group (2 sq mi/5.2 sq km), central Pacific, c.1,150 mi (1,850 km) NW of Honolulu, comprising Sand and Eastern islands with the surrounding atoll. Discovered by Americans in 1859, Midway was annexed in 1867. A cable station was opened in 1903. between the Company's Airport Square and National Business Park projects. --The acquisition of a 9.7 acre parcel of land that has approvals in place to build approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 215,000 square feet of space. This parcel of land is located adjacent to the Rockville Rockville, city (1990 pop. 44,835), seat of Montgomery co., W central Md., a NW suburb of Washington, D.C.; settled c.1760s, inc. as a city 1860. It has several scientific research and technology laboratories that focus on the aerospace, electronics, nuclear energy, Corporate Center discussed below. --The closing on 27.0 acres of land for $5.9 million, which can accommodate 350,000 developable square feet, located in San Antonio, Texas “San Antonio” redirects here. For other uses, see San Antonio (disambiguation). San Antonio is the second most populous city in Texas, the third most populous metropolitan area in Texas, and is the seventh most populous city in the United States. As of the 2006 U.S. . This land is adjacent to the buildings acquired in March 2005 at 8611 Military Drive in San Antonio, Texas. Acquisition Activity The Company acquired an office complex known as Rockville Corporate Center, located at 15 West Gude GUDE General Utility, Deck and Engine Drive and 45 West Gude Drive in Rockville, Maryland Rockville is the county seat of Montgomery County, Maryland, United States. According to the 2006 census update, the city had a total population of 59,114, making it the second largest city in Maryland. . The acquisition comprises two four-story Class A office buildings for a total of 221,702 square feet and the 9.7 acre parcel of land (mentioned above) for a total cost of $43.3 million. The acquisition of Rockville Corporate Center represents the third acquisition in Montgomery County, Maryland Montgomery County of the U.S. state of Maryland is situated just north of Washington, D.C. and Southwest of Baltimore. It is one of the most affluent counties in the nation[1], and has the highest percentage (29. , bringing the Company's portfolio in that county to 586,686 square feet. Disposition Activity The Company executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. a contract to sell 3 properties within the New Jersey portfolio for $22.8 million with an anticipated closing date in the third quarter of 2005. Financing and Capital Transactions The Company completed the following transactions during the quarter: --Executed a $73.4 million notional amount The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional. forward starting swap at a fixed rate of 5.02%, which commences in July July: see month. 2005 and expires in July 2015. --Closed on a $44.0 million credit facility to fund the construction of two buildings at The National Business Park. --Increased the unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. Revolving Line of Credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. from $300.0 million to $400.0 million, with the expansion capability to increase to $600.0 million, and extended the maturity date to March 9, 2008, with a one year extension option. Subsequent Events Since June 30, 2005, the Company has: --Acquired for $10.0 million a 64 acre parcel of land known as Patriot Park and the development rights to build a two story, 50,000 square foot Class A office building on approximately 5 of the 64 acres within the park, all located in Colorado Springs, Colorado. The proposed building is 100% preleased to a defense contractor Noun 1. defense contractor - a contractor concerned with the development and manufacture of systems of defense armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region"; on a long term lease. The remaining 59 acres can be developed with 650,000 square feet of office space. The business park is located at the north entrance to Peterson Air Force Base Peterson Air Force Base (Peterson AFB) is a base of the United States Air Force located at Colorado Springs in El Paso County, Colorado, United States. Peterson AFB is home to US Northern Command, NORAD, Air Force Space Command, Army Space Command, the 21st Space Wing (host unit) . --Executed a ten year lease for 61,038 square feet with Applied Signal Technology, Inc. at 306 Carina Carina (kərē`nə) [Lat.,=the keel], southern constellation, representing the keel of the ancient constellation Argo Navis, or Ship of the Argonauts. Carina contains Canopus, the second brightest star in the sky. Road (306 NBP NBP Narodowy Bank Polski (Polish: National Bank of Poland) NBP Name Binding Protocol NBP National Braille Press NBP National Bank of Pakistan NBP National Biosolids Partnership NBP Nathaniel B. ). Earnings Guidance The Company is updating its 2005 FFO guidance to a range of $1.81 to $1.85 per diluted share from $1.78 to $1.85 per diluted share and updating its EPS guidance to a range of $.47 to $.51 per share for 2005 from $.49 to $.56. Conference Call The Company will hold an investor/analyst conference call: Conference Call and Webcast Date: Thursday, July 28, 2005 Time: 4:00 p.m. ET Dial In Number: (800) 262-1292 Confirmation Code for the call: 1944873 A replay of this call will be available beginning Thursday Thursday: see week. , July 28, 2005 at 7:00 p.m. ET through Thursday, August 11, 2005 at midnight ET. To access the replay, please call 888-203-1112 and use confirmation code 1944873. The conference call will also be available via live webcast in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's website at www.copt.com. A replay of the conference call will be immediately available via webcast in the Investor Relations section of the Company's website. Definitions Please refer to our Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. or our website (www.copt.com) for definitions of certain terms used in this press release. Reconciliations of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and non-GAAP measurements are included in the attached tables. Company Information Corporate Office Properties Trust (COPT) is a fully integrated, self-managed real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) that focuses on the ownership, management, leasing, acquisition and development of suburban office properties primarily in select Mid-Atlantic Adj. 1. mid-Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" middle Atlantic submarkets. The Company is among the largest owners of suburban office properties in the Greater Washington, DC region. The Company currently owns 147 office properties totaling 12.2 million rentable square feet. The Company has implemented a core customer expansion strategy that is built around meeting, through acquisitions and development, the multi-location requirements of the Company's existing strategic tenants. The Company's property management services team provides comprehensive property and asset management to company owned properties and select third party clients. The Company's development and construction services team provides a wide range of development and construction management services for company owned properties, as well as land planning, design/build services, consulting, and merchant development to select third party clients. The Company's shares are traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol OFC. More information on Corporate Office Properties Trust can be found on the Company's website at www.copt.com. Forward-Looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. can be identified by the use of words such as "may", "will", "should", "expect", "estimate" or other comparable terminology The terminology used in the computer and telecommunications field adds tremendous confusion not only for the lay person, but for the technicians themselves. What many do not realize is that terms are made up by anybody and everybody in a nonchalant, casual manner without any regard or . 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. Accordingly, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements. Important factors that may affect these expectations, estimates, and projections include, but are not limited to: --the Company's ability to borrow Borrow To obtain or receive money on loan with the promise or understanding that it will be repaid. on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms; --general economic and business conditions, which will, among other things, affect office property demand and rents, tenant creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. , interest rates and financing availability; --adverse changes in the real estate markets including, among other things, increased competition with other companies; --risk of real estate acquisition and development, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy or pay rent or that development or operating costs operating costs npl → gastos mpl operacionales may be greater than anticipated; --risks of investing through joint venture structures, including risks that the Company's joint venture partners may not fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. their financial obligations as investors or may take actions that are inconsistent Reciprocally contradictory or repugnant. Things are said to be inconsistent when they are contrary to each other to the extent that one implies the negation of the other. with the Company's objectives; --governmental actions and initiatives; and --environmental requirements. The Company undertakes no obligation to update or supplement any forward-looking statements. For further information, please refer to the Company's filings with the Securities and Exchange Commission, particularly the section entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Risk Factors" in Item 1 of the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2004. Financial Tables Attached
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Three months ended
June 30,
---------------------
2005 2004
---------- ----------
Revenues
Real estate revenues $60,186 $53,091
Service operations revenues 18,464 6,070
---------- ----------
Total revenues 78,650 59,161
---------- ----------
Expenses
Property operating 17,574 14,365
Depreciation and other amortization associated
with real estate operations 15,068 15,705
Service operations expenses 18,178 5,832
General and administrative expenses 3,166 2,487
---------- ----------
Total operating expenses 53,986 38,389
---------- ----------
Operating income 24,664 20,772
Interest expense (13,728) (10,346)
Amortization of deferred financing costs (471) (500)
---------- ----------
Income from continuing operations before gain on
sales of real estate, income taxes and minority
interests 10,465 9,926
Gain on sales of real estate 210 24
Income tax expense (213) (30)
---------- ----------
Income from continuing operations before
minority interests 10,462 9,920
Minority interests in income from continuing
operations (1,457) (1,211)
---------- ----------
Income from continuing operations 9,005 8,709
Income from discontinued operations, net of
minority interests 115 134
---------- ----------
Net income 9,120 8,843
Preferred share dividends (3,654) (4,435)
---------- ----------
Net income available to common shareholders $5,466 $4,408
========== ==========
Earnings per share "EPS" computation
Numerator: $5,466 $4,408
========== ==========
Denominator:
Weighted average common shares - basic 36,692 32,743
Assumed conversion of dilutive options 1,528 1,639
---------- ----------
Weighted average common shares - diluted 38,220 34,382
========== ==========
EPS
Basic $0.15 $0.13
========== ==========
Diluted $0.14 $0.13
========== ==========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Three months ended
June 30,
---------------------
2005 2004
---------- ----------
Net income $9,120 $8,843
Add: Real estate-related depreciation and
amortization 15,087 15,785
Less: Depreciation and amortization allocable to
minority interests in other consolidated
entities (30) -
Less: Gain on sales of real estate, excluding
development portion (24) (24)
---------- ----------
Funds from operations ("FFO") 24,153 24,604
Add: Minority interests-common units in the
Operating Partnership 1,335 1,241
Less: Preferred share dividends (3,654) (4,435)
---------- ----------
Funds from Operations - basic and diluted
("Diluted FFO") 21,834 21,410
Less: Straight-line rent adjustments (1,369) (2,184)
Less: Recurring capital expenditures (3,293) (4,997)
Less: Amortization of deferred market rental
revenue (191) (273)
---------- ----------
Adjusted Funds from Operations - diluted
("Diluted AFFO") $16,981 $13,956
========== ==========
Weighted average shares
Weighted average common shares 36,692 32,743
Conversion of weighted average common units 8,676 8,765
---------- ----------
Weighted average common shares/units - basic
FFO per share 45,368 41,508
Assumed conversion of share options 1,528 1,639
---------- ----------
Weighted average common shares/units - diluted
FFO per share 46,896 43,147
========== ==========
Diluted FFO per common share $0.47 $0.50
========== ==========
Dividends/distributions per common share/unit $0.255 $0.235
========== ==========
Earnings payout ratio 171.6% 178.7%
========== ==========
Diluted FFO payout ratio 53.1% 46.4%
========== ==========
Diluted AFFO payout ratio 68.2% 71.2%
========== ==========
EBITDA interest coverage ratio 2.91 3.52
========== ==========
EBITDA fixed charge coverage ratio 2.28 2.48
========== ==========
Reconciliation of denominators for diluted EPS
and diluted FFO per share
Denominator for diluted EPS 38,220 34,382
Weighted average common units 8,676 8,765
---------- ----------
Denominator for diluted FFO per share 46,896 43,147
========== ==========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Six months ended
June 30,
---------------------
2005 2004
---------- ----------
Revenues
Real estate revenues $119,891 $101,247
Service operations revenues 35,561 13,722
---------- ----------
Total revenues 155,452 114,969
---------- ----------
Expenses
Property operating 36,139 29,073
Depreciation and other amortization associated
with real estate operations 29,455 25,893
Service operations expenses 34,366 12,742
General and administrative expenses 6,442 4,773
---------- ----------
Total operating expenses 106,402 72,481
---------- ----------
Operating income 49,050 42,488
Interest expense (26,911) (20,449)
Amortization of deferred financing costs (867) (1,359)
---------- ----------
Income from continuing operations before gain
(loss) on sales of real estate, equity in loss
of unconsolidated entities, income taxes and
minority interests 21,272 20,680
Gain (loss) on sales of real estate 234 (198)
Equity in loss of unconsolidated entities - (88)
Income tax expense (670) (230)
---------- ----------
Income from continuing operations before
minority interests 20,836 20,164
Minority interests in income from continuing
operations (2,883) (2,579)
---------- ----------
Income from continuing operations 17,953 17,585
Income from discontinued operations, net of
minority interests 207 251
---------- ----------
Net income 18,160 17,836
Preferred share dividends (7,308) (8,891)
---------- ----------
Net income available to common shareholders $10,852 $8,945
========== ==========
Earnings per share "EPS" computation
Numerator:
Net income available to common shareholders $10,852 $8,945
Dividends on convertible preferred shares - 21
---------- ----------
Numerator for diluted EPS $10,852 $8,966
========== ==========
Denominator:
Weighted average common shares - basic 36,624 31,278
Assumed conversion of dilutive options 1,534 1,691
Assumed conversion of preferred shares - 270
---------- ----------
Weighted average common shares - diluted 38,158 33,239
========== ==========
EPS
Basic $0.30 $0.29
========== ==========
Diluted $0.28 $0.27
========== ==========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Six months ended
June 30,
---------------------
2005 2004
---------- ----------
Net income $18,160 $17,836
Add: Real estate-related depreciation and
amortization 29,592 26,046
Add: Depreciation and amortization on
unconsolidated real estate entities - 106
Less: Depreciation and amortization allocable to
minority interests in other consolidated
entities (62) -
Less: Gain on sales of real estate, excluding
development portion (48) (47)
---------- ----------
Funds from operations ("FFO") 47,642 43,941
Add: Minority interests-common units in the
Operating Partnership 2,643 2,646
Less: Preferred share dividends (7,308) (8,891)
---------- ----------
Funds from Operations - basic ("Basic FFO") 42,977 37,696
Add: Convertible preferred share dividends - 21
---------- ----------
Funds from Operations - diluted ("Diluted FFO") 42,977 37,717
Less: Straight-line rent adjustments (2,952) (2,950)
Less: Recurring capital expenditures (8,027) (8,020)
Less: Amortization of deferred market rental
revenue (261) (582)
---------- ----------
Adjusted Funds from Operations - diluted
("Diluted AFFO") $31,737 $26,165
========== ==========
Weighted average shares
Weighted average common shares 36,624 31,278
Conversion of weighted average common units 8,681 8,814
---------- ----------
Weighted average common shares/units - basic
FFO per share 45,305 40,092
Assumed conversion of share options 1,534 1,691
Assumed conversion of weighted average
convertible preferred shares - 270
---------- ----------
Weighted average common shares/units - diluted
FFO per share 46,839 42,053
========== ==========
Diluted FFO per common share $0.92 $0.90
========== ==========
Dividends/distributions per common share/unit $0.51 $0.47
========== ==========
Earnings payout ratio 172.5% 168.3%
========== ==========
Diluted FFO payout ratio 53.8% 50.9%
========== ==========
Diluted AFFO payout ratio 72.8% 73.4%
========== ==========
Reconciliation of denominators for diluted EPS
and diluted FFO per share
Denominator for diluted EPS 38,158 33,239
Weighted average common units 8,681 8,814
---------- ----------
Denominator for diluted FFO per share 46,839 42,053
========== ==========
Corporate Office Properties Trust
Summary Financial Data
(Unaudited)
(Dollars and shares in thousands, except per share data)
June 30, December 31,
2005 2004
------------ ------------
Balance Sheet Data (in thousands) (as of
period end):
Investment in real estate, net of
accumulated depreciation $1,690,846 $1,544,501
Total assets 1,890,448 1,732,026
Mortgage and other loans payable 1,177,779 1,022,688
Total liabilities 1,276,322 1,111,224
Minority interests 97,100 98,878
Beneficiaries' equity 517,026 521,924
Debt to Total Assets 62.3% 59.0%
Debt to Undepreciated Book Value of Real
Estate Assets 61.3% 58.3%
Debt to Total Market Capitalization 43.5% 40.4%
Property Data, including joint ventures
(as of period ended):
Number of operating properties owned 147 145
Total net rentable square feet owned (in
thousands) 12,210 11,978
Occupancy 92.9% 94.0%
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
Reconciliation of tenant
improvements and incentives,
capital improvements and leasing
costs for operating properties to
recurring capital expenditures
Total tenant improvements and
incentives on operating
properties $7,659 $4,420 $20,822 $6,688
Total capital improvements on
operating properties 1,973 1,723 4,078 2,559
Total leasing costs on operating
properties 967 5,793 1,635 6,359
Less: Nonrecurring tenant
improvements and incentives on
operating properties (5,883) (1,655) (15,434) (1,767)
Less: Nonrecurring capital
improvements on operating
properties (891) (841) (2,521) (1,346)
Less: Nonrecurring leasing costs
incurred on operating properties (532) (4,443) (553) (4,473)
-------- -------- -------- --------
Recurring capital expenditures $3,293 $4,997 $8,027 $8,020
======== ======== ======== ========
Corporate Office Properties Trust
Summary Financial Data
(Unaudited)
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
Reconciliation of dividends for
Earnings Payout Ratio to
dividends and distributions for
FFO & AFFO Payout Ratio
Common share dividends for
earnings payout ratio $9,381 $7,878 $18,720 $15,056
Common unit distributions 2,205 2,057 4,384 4,131
Convertible preferred share
dividends - - - 21
-------- -------- -------- --------
Dividends and distributions for
FFO & AFFO payout ratio $11,586 $9,935 $23,104 $19,208
======== ======== ======== ========
Reconciliation of GAAP net income
to earnings before interest,
income taxes, depreciation and
amortization ("EBITDA")
Net income $9,120 $8,843
Interest expense on continuing
operations 13,728 10,346
Interest expense on discontinued
operations 188 168
Income tax expense 213 30
Real estate-related depreciation
and amortization 15,087 15,785
Amortization of deferred
financing costs 471 500
Other depreciation and
amortization 171 99
Minority interests 1,485 1,249
-------- --------
EBITDA $40,463 $37,020
======== ========
Reconciliation of interest
expense from continuing
operations to the denominators
for interest coverage-EBITDA and
fixed charge coverage-EBITDA
Interest expense from continuing
operations $13,728 $10,346
Interest expense from
discontinued operations 188 168
-------- --------
Denominator for interest
coverage-EBITDA 13,916 10,514
Preferred share dividends 3,654 4,435
Preferred unit distributions 165 -
-------- --------
Denominator for fixed charge
coverage-EBITDA $17,735 $14,949
======== ========
Reconciliation of same property
net operating income to same
property cash net operating
income
Same property net operating
income $34,955 $38,689
Less: Straight-line rent
adjustments (604) (2,034)
Less: Amortization of deferred
market rental revenue (181) (247)
-------- --------
Same property cash net operating
income $34,170 $36,408
======== ========
Corporate Office Properties Trust
Summary Financial Data
(Unaudited)
(Amounts in thousands, except per share data)
June 30, December 31,
2005 2004
------------ ------------
Reconciliation of denominator for debt to
total assets to denominator for debt to
undepreciated book value of real estate
assets
Denominator for debt to total assets $1,890,448 $1,732,026
Assets other than assets included in
investment in real estate (199,602) (187,525)
Accumulated depreciation on real estate
assets 165,101 141,716
Intangible assets on real estate
acquisitions, net 66,354 67,560
------------ ------------
Denominator for debt to undepreciated book
value of real estate assets $1,922,301 $1,753,777
============ ============
Twelve Months Ending
December 31, 2005
-------------------------
Reconciliation of projected EPS-diluted to
projected diluted FFO per share Low High
------------ ------------
Reconciliation of numerators
--------------------------------------------
Numerator for projected EPS-diluted $18,300 $19,800
Real estate-related depreciation and
amortization 62,609 62,609
Minority interests-common units 4,526 4,898
------------ ------------
Numerator for projected diluted FFO per
share $85,435 $87,307
============ ============
Reconciliation of denominators
--------------------------------------------
Denominator for projected EPS-diluted 38,550 38,550
Weighted average common units 8,721 8,721
------------ ------------
Denominator for projected diluted FFO per
share 47,271 47,271
============ ============
EPS - diluted $0.47 $0.51
============ ============
FFO per share - diluted $1.81 $1.85
============ ============
Top Twenty Office Tenants as of June 30, 2005
(Dollars and square feet in thousands)
Percentage of
Total Total
Number of Occupied Occupied
Tenant Leases Square Feet Square Feet
--------------------------- ------------ ------------ --------------
United States of America (3) 30 1,353,636 11.9%
Computer Sciences
Corporation (4) 5 485,527 4.3%
Booz Allen Hamilton, Inc. 9 471,067 4.2%
General Dynamics
Corporation 12 448,696 4.0%
Northrop Grumman
Corporation 10 403,701 3.6%
The Titan Corporation (4) 5 232,136 2.0%
Unisys (5) 3 741,284 6.5%
AT&T Corporation (4) 8 316,148 2.8%
The Aerospace Corporation 2 221,785 2.0%
Wachovia Bank 3 176,470 1.6%
VeriSign, Inc. 2 162,841 1.4%
The Boeing Company (4) 8 162,699 1.4%
Ciena Corporation 3 221,609 2.0%
Commonwealth of
Pennsylvania (4) 7 209,162 1.8%
Magellan Health Services,
Inc. 2 142,199 1.3%
PricewaterhouseCoopers 1 97,638 0.9%
Johns Hopkins University (4) 7 106,473 0.9%
Merck & Co., Inc. (Unisys) (5) 1 219,065 1.9%
Carefirst, Inc. and
Subsidiaries (4) 3 94,223 0.8%
BAE Systems 7 199,212 1.8%
Subtotal Top 20 Office
Tenants 128 6,465,571 57.0%
All remaining tenants 512 4,879,317 43.0%
----------------------------------------
Total/Weighted Average 640 11,344,888 100.0%
========================================
Total Percentage Weighted
Annualized of Total Average
Rental Annualized Remaining
Revenue (1) Rental Lease Term
Tenant (6) Revenue (2)
--------------------------- ------------ ------------ --------------
United States of America (3) $30,056 12.9% 4.7
Computer Sciences
Corporation (4) 11,392 4.9% 5.5
Booz Allen Hamilton, Inc. 11,391 4.9% 7.1
General Dynamics
Corporation 9,016 3.9% 4.3
Northrop Grumman
Corporation 8,466 3.6% 2.8
The Titan Corporation (4) 8,457 3.6% 8.2
Unisys (5) 7,901 3.4% 4.0
AT&T Corporation (4) 6,738 2.9% 3.3
The Aerospace Corporation 5,779 2.5% 9.4
Wachovia Bank 5,324 2.3% 13.4
VeriSign, Inc. 4,596 2.0% 9.1
The Boeing Company (4) 4,108 1.8% 3.6
Ciena Corporation 3,333 1.4% 2.9
Commonwealth of
Pennsylvania (4) 3,063 1.3% 4.0
Magellan Health Services,
Inc. 2,867 1.2% 6.1
PricewaterhouseCoopers 2,720 1.2% 0.7
Johns Hopkins University (4) 2,573 1.1% 2.2
Merck & Co., Inc. (Unisys) (5) 2,372 1.0% 4.0
Carefirst, Inc. and
Subsidiaries (4) 2,277 1.0% 2.5
BAE Systems 2,229 1.0% 1.5
Subtotal Top 20 Office
Tenants 134,659 57.6% 5.3
All remaining tenants 99,119 42.4% 4.1
-------------------------
Total/Weighted Average $233,778 100.0% 4.8
=========================
(1) Total Annualized Rental Revenue is the monthly contractual base
rent as of June 30, 2005 multiplied by 12 plus the estimated
annualized expense reimbursements under existing office leases.
(2) The weighting of the lease term was computed using Total Rental
Revenue.
(3) Many of our government leases are subject to early termination
provisions which are customary to government leases. The weighted
average remaining lease term was computed assuming no exercise of
such early termination rights.
(4) Includes affiliated organizations or agencies.
(5) Merck & Co., Inc. subleases 219,065 rentable square feet from
Unisys' 960,349 leased rentable square feet.
(6) Order of tenants is based on Annualized Rent.
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