Corporate Office Properties Trust Reports Strong Third 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 September September: see month. 30, 2005. Highlights --50.0% increase in Earnings per 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. ") 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. to $.18 for the third quarter of 2005 from $.12 per diluted share for the third quarter of 2004. Net Income Available to Common Shareholders diluted of $6,936,000 for third quarter 2005 increased from $4,153,000 for the comparable 2004 period. Included in the third quarter 2004 net income available to common shareholders was recognition of an accounting charge of $1,813,000 reflecting the issuance costs of the Series B preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. July July: see month. 15, 2004. Without this accounting charge, net income available to common shareholders - diluted, as adjusted, would have been $.17 per share. --20.5% increase in 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. ("FFO FFO See: Funds from operations ") per diluted share to $.47 for the third quarter 2005 from $.39 per diluted share for third quarter 2004. Without the third quarter 2004 Series B preferred share accounting charge, FFO per diluted share would have increased 9.3%, from $.43 per diluted share. --35.1% increase in Adjusted Funds from Operations ("AFFO AFFO Adjusted Funds From Operation ") to $15.9 million for third quarter 2005 as compared to $11.8 million for third 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 60.6% and AFFO payout ratio was 84.4% for third quarter 2005. --94.6% 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 95.8% leased for the Company's wholly owned portfolio as of September 30, 2005. --$77.5 million in acquisitions for nine office buildings totaling 418,726 square feet plus 200 acres of land, including 132 acres of the land in which the Company owns a 50% undivided interest undivided interest n. title to real property held by two or more persons without specifying the interests of each party by percentage or description of a portion of the real estate. . --1.1 million square feet in 9 buildings under construction that are currently 51% leased. --9.8% increase in quarterly common dividend from $.255 to $.28 per share. --9.0% increase for same property cash net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (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 ), compared to the same quarter 2004. --$75.3 million of equity raised through a 2.3 million common share offering. "We have increased our 2005 FFO guidance and are providing our initial 2006 FFO guidance, that reflects a 10% FFO per diluted share growth for next year based on the upper end of the range," stated Randall Randall may refer to the following: In places:
In a fire insurance policy, for example, the term occupancy , dispositions, acquisitions, FFO growth and expansion into new tenant driven locations. Our 9% growth in same property NOI for this quarter is indicative indicative: see mood. of the strength of our markets, which should provide the basis for continued growth over the next few years," he added. Financial Results --EPS for the quarter ended September 30, 2005 totaled $.18 per diluted share, or $6,936,000 of Net Income Available to Common Shareholders, as compared to $.12 per diluted share, or $4,153,000 for the quarter ended September 30, 2004, representing an increase of 50.0% per share. Included in the third quarter 2004 net income available to common shareholders was recognition of an accounting charge of $1,813,000 reflecting the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of issuance costs of the Series B preferred shares redeemed July 15, 2004. Without this accounting charge, net income available to common shareholders - diluted, as adjusted, would have been $.17 per share. Revenues from real estate operations for the quarter ended September 30, 2005 were $62,996,000, as compared to $52,276,000 for the quarter ended September 30, 2004. --Diluted FFO for the quarter ended September 30, 2005 totaled $22,127,000, or $.47 per diluted share, as compared to $17,368,000, or $.39 per diluted share, for the quarter ended September 30, 2004, representing an increase of 20.5% per share. Included in the third quarter 2004 FFO was the Series B preferred share accounting charge. Without this accounting charge, FFO per diluted share would have increased 9.3%, from $.43 per diluted share. FFO Payout ratio was 60.6% for third quarter 2005 compared to 65.9% for the comparable 2004 period. --Adjusted Funds From Operations ("AFFO") diluted totaled $15,892,000 for third quarter 2005 as compared to $11,759,000 for third quarter 2004, representing an increase of 35.1%. The Company's AFFO payout ratio was 84.4% for third quarter 2005 compared to 97.3% for third quarter 2004. As of September 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 $3.0 billion, with $1.1 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 37.6% 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 5.8%, and 69.7% of total debt was subject to fixed interest rates. For the third 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 3.17x and EBITDA fixed charge coverage was 2.51x. Operating Results At September 30, 2005, the Company's wholly owned portfolio of 136 office properties totaling 11.7 million square feet, was 94.6% occupied and 95.8% leased. The Company's entire portfolio including the unconsolidated joint ventures, was 93.8% occupied and 95.0% leased. During the quarter, 165,311 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 64.8% renewal rate, at an average capital cost of $9.22 per square foot. For renewed and retenanted space totaling 453,716 square feet, total rent on a cash basis decreased 22.5% and total rent on a straight line basis decreased 14.3%. The average capital cost for renewed and retenanted space was $9.04 per square foot. Same property cash NOI increased 9.0% for the quarter, compared to the quarter ended September 30, 2004. The increase in cash NOI for the same property portfolio resulted primarily from improved occupancy and higher 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. rates in our Baltimore Baltimore, city (1990 pop. 736,014), N central Md., surrounded by but politically independent of Baltimore co., on the Patapsco River estuary, an arm of Chesapeake Bay; inc. 1745. 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. Corridor and our 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. portfolios. The same property portfolio consists of 111 properties representing 84.4% of the total square footage as of September 30, 2005. Significant leases signed during the quarter include 201,200 square feet with a large credit worthy Worthy can refer to: People
Development and Construction Activity At quarter end, the Company had under development three buildings - 320 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. , 302 NBP and 16444 Commerce Drive for a total of 342,000 square feet. In addition, the Company had nine buildings under construction totaling 1.1 million square feet that are 51% leased and a two building complex under redevelopment for 470,000 square feet that is 100% leased. During the quarter, the Company placed into service 191 NBP, a 104,000 square foot office building which is 100% leased to Northrop Grumman Northrop Grumman Corporation (NYSE: NOC) is an aerospace and defense conglomerate that is the result of the 1994 purchase of Grumman by Northrop. The company is the third largest defense contractor for the U.S. Corporation for a seven year term. 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 ten year lease for 61,038 square feet with Applied Signal Technology, Inc. at 306 NBP, which is under construction, and a 53,000 square foot lease at 6711 Columbia Gateway Drive for the Company's new corporate headquarters. Land Control At quarter end, the Company had under control 555 acres of land that can support 7.8 million square feet of office space. A majority of the land is located in the Baltimore Washington Corridor, Northern Virginia 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. . During the quarter, the Company acquired 200 acres of land, including 132 acres of the land located in Colorado Springs in which the Company owns a 50% undivided interest. These land acquisitions are as follows: --64 acre parcel of land known as Patriot Park for $10.0 million along with the development rights to build a two story, 50,000 square foot Class A office building on approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5 of the 64 acres within the park, all located 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. . 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) , --4 acres of land located in Columbia, Maryland Columbia is a census-designated place and planned community in Howard County, Maryland, United States. It is a suburb of Baltimore, and, to a lesser degree, Washington, DC. It began with the idea that a city could enhance its residents' quality of life. for $1.5 million, and --50% undivided interest in 132 acres of land known as the InterQuest Office Park for $10.6 million that can support approximately 935,000 square feet. The InterQuest Office Park is located along I-25 at the northern portion of the Colorado Springs market, near the entrance to the United States Air Force Academy United States Air Force Academy, at Colorado Springs, Colo.; for training young men and women to be officers in the U.S. air force; authorized in 1954 by Congress. . Acquisition Activity During the quarter ending September 30, 2005, the Company acquired nine office buildings comprising 418,726 square feet for a total cost of $55.3 million that were 94% leased at closing: --26,500 square foot office building for $2.3 million in Columbia, Maryland, --189,000 square feet in five one story office buildings known as Gateway Crossing 95 for $26.0 million located in the Columbia Gateway Business Park in Columbia, Maryland, --136,000 square feet located in two office buildings to be known as Patriot Park I & II for $18.0 million located in Colorado Springs. The buildings are 93% leased primarily to defense contractors serving Peterson Air Force Base, and --67,500 square foot office building known as Newport Centre The Newport Centre is the biggest leisure centre in the city of Newport in the United Kingdom. With leisure and entertainment on throughout the day. The Newport Centre is located in the city centre adjacent to the Kingsway Shopping Centre. One for $9.0 million. The building is located near the Colorado Springs Airport Colorado Springs Airport (IATA: COS, ICAO: KCOS), also known as City of Colorado Springs Municipal Airport, is a public airport located six miles (10 km) southeast of the central business district (CBD) of Colorado Springs, a city in El Paso County, and Peterson Air Force Base, and is 100% leased to the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Government and a defense contractor. 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 During the quarter the Company disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of the following assets: --33,000 square feet in a recently developed office building located in Columbia, Maryland for $4.8 million, --153,000 square feet in 3 buildings within the New Jersey portfolio for $22.5 million, and --672,000 square feet within 16 office buildings located in Harrisburg, Pennsylvania This article is about the capital city of the Commonwealth of Pennsylvania. For other places named Harrisburg, see Harrisburg (disambiguation). Harrisburg is the capital of the Commonwealth of Pennsylvania, a state of the United States of America. , representing 100% of the Company's holdings in that market. The Company sold 80% of its ownership interest in the portfolio which was valued at $73.0 million. Financing and Capital Transactions The Company executed the following transactions during the quarter: --$36.0 million bridge loan that the Company repaid in October October: see month. 2005, --$19.5 million credit facility to fund the construction of 6711 Columbia Gateway Drive in Columbia, Maryland, --9.8% increase in quarterly common dividend from $.255 to $.28 per share, and --2,300,000 common shares issued, generating proceeds of $75.3 million before expenses. Subsequent Events Since September 30, 2005, the Company has: --Placed into service 318 NBP, 126,000 square feet, 100% leased, --Placed into service 8611 Military Drive, 470,000 square feet, 100% leased, --Executed a 32,000 square foot lease at 306 NBP, --Closed a $103.0 million interest only, ten year loan at a fixed rate of 5.53%. In connection with this loan closing, the Company terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: its $73.4 million forward starting swap, --Acquired a 118,000 square foot office building on a 21.4 acre site for $17.0 million. The site can support approximately 80,000 square feet of new office space development. The property is located in Frederick, Maryland Frederick is the county seat of Frederick County, Maryland. As of the 2006 census estimates, the city has a total population of 58,882 [2], making it the third-largest city in Maryland. , close to the northwest For names and places containing the slightly longer word 'northwestern' (or variants), see . Northwest or north west is the ordinal direction halfway between north and west on a compass. It is the opposite of southeast. end of the I-270 Corridor. This acquisition marks the Company's entrance into this targeted 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. , and --Executed a long term lease for 47,000 square feet at 15 West Gude GUDE General Utility, Deck and Engine 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. . Earnings Guidance The Company has revised the EPS guidance from $.47 - $.51 to $.58 - $.60 per diluted share for 2005. The previous 2005 FFO guidance of $1.81 - $1.85 has been revised to $1.84 - $1.86 per diluted share. The Company's 2006 EPS guidance is $.47 - $.55 per diluted share. The 2006 FFO guidance is $1.97 - $2.05 per diluted share. The Company will discuss the assumptions for the 2006 guidance during the Earnings Call. Conference Call The Company will hold an investor/analyst conference call: Conference Call and Webcast Date: October 27, 2005 Time: 4:00 p.m. ET Dial In Number: (800) 406-5345 Confirmation Code for the call: 1460093 A replay of the conference call will begin on Thursday, October 27, 2004 at 7:30 p.m. ET and will be available through Thursday, November 10, 2005, midnight ET. The telephone number for the replay is (888) 203-1112. When prompted, enter the confirmation code shown above. The live webcast may be accessed under the Investor Relations section of the Company's website at www.copt.com. Definitions Please refer to our Form 8K 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 158 office properties totaling 13.3 million rentable square feet, which includes 18 properties totaling 885,000 square feet held through joint ventures. 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 Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the 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 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; --our ability to satisfy and operate effectively under federal income tax rules relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc real estate investment trusts and partnerships; --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
September 30,
------------------
2005 2004
--------- --------
Revenues
Real estate revenues $ 62,996 $52,276
Service operations revenues 29,784 7,466
--------- --------
Total revenues 92,780 59,742
--------- --------
Expenses
Property operating 19,032 15,789
Depreciation and other amortization associated
with real estate operations 18,004 11,619
Service operations expenses 29,326 6,978
General and administrative expenses 3,318 2,698
--------- --------
Total operating expenses 69,680 37,084
--------- --------
Operating income 23,100 22,658
Interest expense (14,370) (10,668)
Amortization of deferred financing costs (641) (577)
--------- --------
Income from continuing operations before gain on
sales of real estate, income taxes and minority
interests 8,089 11,413
Gain on sales of real estate 105 24
Income tax expense (294) (145)
--------- --------
Income from continuing operations before minority
interests 7,900 11,292
Minority interests in income from continuing
operations (967) (1,589)
--------- --------
Income from continuing operations 6,933 9,703
Income from discontinued operations, net of
minority interests 3,656 47
--------- --------
Net income 10,589 9,750
Preferred share dividends (3,653) (3,784)
Issuance costs associated with redeemed preferred
shares - (1,813)
--------- --------
Net income available to common shareholders $ 6,936 $ 4,153
========= ========
Earnings per share "EPS" computation
Numerator: $ 6,936 $ 4,153
========= ========
Denominator:
Weighted average common shares - basic 36,913 33,797
Assumed conversion of dilutive options 1,667 1,655
--------- --------
Weighted average common shares - diluted 38,580 35,452
========= ========
EPS
Basic $ 0.19 $ 0.12
========= ========
Diluted $ 0.18 $ 0.12
========= ========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Three months ended
September 30,
------------------
2005 2004
--------- --------
Net income $ 10,589 $ 9,750
Add: Real estate-related depreciation and
amortization 17,848 11,700
Less: Depreciation and amortization allocable to
minority interests in other consolidated entities (23) (56)
Less: Gain on sales of real estate, excluding
development portion (4,360) (24)
Less: Issuance costs associated with redeemed
preferred shares - (1,813)
--------- --------
Funds from operations ("FFO") 24,054 19,557
Add: Minority interests-common units in the
Operating Partnership 1,726 1,595
Less: Preferred share dividends (3,653) (3,784)
--------- --------
Funds from Operations - basic and diluted ("Diluted
FFO") 22,127 17,368
Less: Straight-line rent adjustments (1,519) (2,519)
Less: Recurring capital expenditures (4,945) (4,679)
Add (less): Amortization of deferred market rental
revenue 229 (224)
Add: Issuance costs associated with redeemed
preferred shares - 1,813
--------- --------
Adjusted Funds from Operations - diluted ("Diluted
AFFO") $ 15,892 $11,759
========= ========
Weighted average shares
Weighted average common shares 36,913 33,797
Conversion of weighted average common units 8,758 8,690
--------- --------
Weighted average common shares/units - basic FFO
per share 45,671 42,487
Assumed conversion of share options 1,667 1,655
--------- --------
Weighted average common shares/units - diluted
FFO per share 47,338 44,142
========= ========
Diluted FFO per common share $ 0.47 $ 0.39
========= ========
Dividends/distributions per common share/unit $ 0.280 $ 0.255
========= ========
Earnings payout ratio 158.1% 222.4%
========= ========
Diluted FFO payout ratio 60.6% 65.9%
========= ========
Diluted AFFO payout ratio 84.4% 97.3%
========= ========
EBITDA interest coverage ratio 3.17 3.20
========= ========
EBITDA fixed charge coverage ratio 2.51 2.37
========= ========
Reconciliation of denominators for diluted EPS and
diluted FFO per share
Denominator for diluted EPS 38,580 35,452
Weighted average common units 8,758 8,690
--------- --------
Denominator for diluted FFO per share 47,338 44,142
========= ========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data)
Nine months ended
September 30,
-------------------
2005 2004
--------- ---------
Revenues
Real estate revenues $182,887 $153,523
Service operations revenues 65,345 21,188
--------- ---------
Total revenues 248,232 174,711
--------- ---------
Expenses
Property operating 55,171 44,862
Depreciation and other amortization associated
with real estate operations 47,459 37,512
Service operations expenses 63,692 19,720
General and administrative expenses 9,760 7,471
--------- ---------
Total operating expenses 176,082 109,565
--------- ---------
Operating income 72,150 65,146
Interest expense (41,281) (31,117)
Amortization of deferred financing costs (1,508) (1,936)
--------- ---------
Income from continuing operations before gain
(loss) on sales of real estate, equity in loss of
unconsolidated entities, income taxes and
minority interests 29,361 32,093
Gain (loss) on sales of real estate 339 (174)
Equity in loss of unconsolidated entities - (88)
Income tax expense (964) (375)
--------- ---------
Income from continuing operations before minority
interests 28,736 31,456
Minority interests in income from continuing
operations (3,850) (4,168)
--------- ---------
Income from continuing operations 24,886 27,288
Income from discontinued operations, net of
minority interests 3,863 298
--------- ---------
Net income 28,749 27,586
Preferred share dividends (10,961) (12,675)
Issuance costs associated with redeemed preferred
shares - (1,813)
--------- ---------
Net income available to common shareholders $ 17,788 $ 13,098
========= =========
Earnings per share "EPS" computation
Numerator:
Net income available to common shareholders $ 17,788 $ 13,098
Dividends on convertible preferred shares - 21
--------- ---------
Numerator for diluted EPS $ 17,788 $ 13,119
========= =========
Denominator:
Weighted average common shares - basic 36,721 32,124
Assumed conversion of dilutive options 1,595 1,680
Assumed conversion of preferred shares - 179
--------- ---------
Weighted average common shares - diluted 38,316 33,983
========= =========
EPS
Basic $ 0.48 $ 0.41
========= =========
Diluted $ 0.46 $ 0.39
========= =========
Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Amounts in thousands, except per share data and ratios)
Nine months ended
September 30,
-----------------
2005 2004
-------- --------
Net income $28,749 $27,586
Add: Real estate-related depreciation and
amortization 47,440 37,746
Add: Depreciation and amortization on unconsolidated
real estate entities - 106
Less: Depreciation and amortization allocable to
minority interests in other consolidated entities (85) (56)
Less: Gain on sales of real estate, excluding
development portion (4,408) (71)
Less: Issuance costs associated with redeemed
preferred shares - (1,813)
-------- --------
Funds from operations ("FFO") 71,696 63,498
Add: Minority interests-common units in the
Operating Partnership 4,369 4,241
Less: Preferred share dividends (10,961) (12,675)
-------- --------
Funds from Operations - basic ("Basic FFO") 65,104 55,064
Add: Convertible preferred share dividends - 21
-------- --------
Funds from Operations - diluted ("Diluted FFO") 65,104 55,085
Less: Straight-line rent adjustments (4,471) (5,469)
Less: Recurring capital expenditures (12,972) (12,699)
Less: Amortization of deferred market rental revenue (32) (806)
Add: Issuance costs associated with redeemed
preferred shares - 1,813
-------- --------
Adjusted Funds from Operations - diluted ("Diluted
AFFO") $47,629 $37,924
======== ========
Weighted average shares
Weighted average common shares 36,721 32,124
Conversion of weighted average common units 8,707 8,773
-------- --------
Weighted average common shares/units - basic FFO
per share 45,428 40,897
Assumed conversion of share options 1,595 1,680
Assumed conversion of weighted average convertible
preferred shares - 179
-------- --------
Weighted average common shares/units - diluted FFO
per share 47,023 42,756
======== ========
Diluted FFO per common share $ 1.38 $ 1.29
======== ========
Dividends/distributions per common share/unit $ 0.790 $ 0.725
======== ========
Earnings payout ratio 166.9% 185.5%
======== ========
Diluted FFO payout ratio 56.1% 55.6%
======== ========
Diluted AFFO payout ratio 76.7% 80.8%
======== ========
Reconciliation of denominators for diluted EPS and
diluted FFO per share
Denominator for diluted EPS 38,316 33,983
Weighted average common units 8,707 8,773
-------- --------
Denominator for diluted FFO per share 47,023 42,756
======== ========
Corporate Office Properties Trust
Summary Financial Data
(Unaudited)
(Dollars and shares in thousands, except per share data)
September December
30, 31,
2005 2004
----------- -----------
Balance Sheet Data (in
thousands) (as of period
end):
Investment in real estate,
net of accumulated
depreciation $1,696,605 $1,544,501
Total assets 1,901,696 1,732,026
Mortgage and other loans
payable 1,124,299 1,022,688
Total liabilities 1,210,649 1,111,224
Minority interests 108,530 98,878
Beneficiaries' equity 582,517 521,924
Debt to Total Assets 59.1% 59.0%
Debt to Undepreciated Book
Value of Real Estate Assets 58.3% 58.3%
Debt to Total Market
Capitalization 37.6% 40.4%
Property Data (wholly owned
properties)
(as of period ended):
Number of operating
properties owned 136
Total net rentable square
feet owned (in thousands) 11,692
Occupancy 94.6%
Three Months Ended Nine Months Ended
September 30, September 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 $ 3,484 $ 3,924 $24,306 $10,612
Total capital improvements
on operating properties 2,760 3,669 6,838 6,228
Total leasing costs on
operating properties 3,017 2,598 4,652 8,957
Less: Nonrecurring tenant
improvements and incentives
on operating properties (1,199) (1,454) (16,633) (3,221)
Less: Nonrecurring capital
improvements on operating
properties (1,047) (2,920) (3,568) (4,266)
Less: Nonrecurring leasing
costs incurred on operating
properties (2,070) (1,138) (2,623) (5,611)
----------- ----------- -------- --------
Recurring capital
expenditures $ 4,945 $ 4,679 $12,972 $12,699
=========== =========== ======== ========
Corporate Office Properties Trust
Summary Financial Data
(Unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 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 $ 10,966 $ 9,235 $29,686 $24,291
Common unit distributions 2,452 2,202 6,836 6,333
Convertible preferred share
dividends - - - 21
--------- -------- -------- --------
Dividends and distributions for
FFO & AFFO payout ratio $ 13,418 $11,437 $36,522 $30,645
========= ======== ======== ========
Reconciliation of GAAP net income
to earnings before interest,
income taxes, depreciation and
amortization ("EBITDA")
Net income $ 10,589 $ 9,750
Interest expense on continuing
operations 14,370 10,668
Interest expense on discontinued
operations 126 171
Income tax expense 294 145
Real estate-related depreciation
and amortization 17,848 11,700
Amortization of deferred
financing costs 641 577
Other depreciation and
amortization 178 101
Minority interests 1,872 1,601
--------- --------
EBITDA $ 45,918 $34,713
========= ========
Reconciliation of interest
expense from continuing
operations to the denominators
for interest coverage-EBITDA and
fixed charge coverage-EBITDA
Interest expense from continuing
operations $ 14,370 $10,668
Interest expense from
discontinued operations 126 171
--------- --------
Denominator for interest
coverage-EBITDA 14,496 10,839
Preferred share dividends 3,653 3,784
Preferred unit distributions 165 14
--------- --------
Denominator for fixed charge
coverage-EBITDA $ 18,314 $14,637
========= ========
Reconciliation of same property
net operating income to same
property cash net operating
income
Same property net operating
income $ 34,855 $34,395
Less: Straight-line rent
adjustments (603) (2,471)
Less: Amortization of deferred
market rental revenue 294 (224)
--------- --------
Same property cash net operating
income $ 34,546 $31,700
========= ========
Corporate Office Properties Trust
Summary Financial Data
(Unaudited)
(Amounts in thousands, except per share data)
September December
30, 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 $ 1,901,696 $1,732,026
Assets other than assets
included in investment
in real estate (205,091) (187,525)
Accumulated depreciation
on real estate assets 163,424 141,716
Intangible assets on
real estate
acquisitions, net 67,686 67,560
------------ -----------
Denominator for debt to
undepreciated book
value of real estate
assets $ 1,927,715 $1,753,777
============ ===========
Three months Nine months
ended ended
September September
30, 30,
2004 2004
------------ -----------
Reconciliation of
numerators for diluted
EPS and diluted FFO as
reported to numerators
for diluted EPS and
diluted FFO excluding
issuance costs
associated with
redeemed preferred
shares
Numerator for diluted
EPS, as reported $ 4,153 $ 13,119
Add: Issuance costs
associated with
redeemed preferred
shares 1,813 1,813
------------ -----------
Numerator for diluted
EPS, as adjusted $ 5,966 $ 14,932
============ ===========
Numerator for diluted
FFO, as reported $ 17,368 $ 55,085
Add: Issuance costs
associated with
redeemed preferred
shares 1,813 1,813
------------ -----------
Numerator for diluted
FFO, as adjusted $ 19,181 $ 56,898
============ ===========
Twelve Months Ending Twelve Months Ending
December 31, 2005 December 31, 2006
------------------------ --------------------
Reconciliation of
projected EPS-diluted
to projected diluted
FFO per share Low High Low High
------------ ----------- ---------- ---------
Reconciliation of
numerators
------------------------
Numerator for projected
EPS-diluted $ 22,450 $ 23,250 $ 20,450 $ 23,850
Gain on sales of real
estate, excluding
development portion (4,432) (4,432) - -
Real estate-related
depreciation and
amortization 64,096 64,096 77,262 77,262
Minority interests-
common units 5,543 5,740 4,547 5,303
------------ ----------- ---------- ---------
Numerator for projected
diluted FFO per share $ 87,657 $ 88,654 $ 102,259 $106,415
============ =========== ========== =========
Reconciliation of
denominators
------------------------
Denominator for
projected EPS-diluted 38,978 38,978 43,212 43,212
Weighted average common
units 8,722 8,722 8,765 8,765
------------ ----------- ---------- ---------
Denominator for
projected diluted FFO
per share 47,700 47,700 51,977 51,977
============ =========== ========== =========
EPS - diluted $ 0.58 $ 0.60 $ 0.47 $ 0.55
============ =========== ========== =========
FFO per share - diluted $ 1.84 $ 1.86 $ 1.97 $ 2.05
============ =========== ========== =========
Top Twenty Office Tenants of Wholly Owned Properties as of
September 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) 37 1,412,699 12.8%
Booz Allen Hamilton, Inc. 11 534,787 4.8%
Northrop Grumman Corporation 12 524,884 4.7%
Computer Sciences Corporation (4) 4 454,902 4.1%
L-3 Communications Titan
Corporation (4) 5 239,153 2.2%
Unisys (5) 3 741,284 6.7%
General Dynamics Corporation 9 278,239 2.5%
AT&T Corporation (4) 7 262,302 2.4%
The Aerospace Corporation 2 221,785 2.0%
Wachovia Bank 3 176,470 1.6%
The Boeing Company (4) 5 162,279 1.5%
Ciena Corporation 3 221,609 2.0%
VeriSign, Inc. 1 99,121 0.9%
Magellan Health Services, Inc. 2 142,199 1.3%
PricewaterhouseCoopers 1 97,638 0.9%
Johns Hopkins University (4) 7 106,473 1.0%
Merck & Co., Inc. (Unisys) (5) 1 219,065 2.0%
Wyle Laboratories, Inc. 4 174,792 1.6%
Carefirst, Inc. and
Subsidiaries (4) 3 94,223 0.9%
BAE Systems PLC 7 199,212 1.8%
Subtotal Top 20 Office Tenants 127 6,363,116 57.5%
All remaining tenants 442 4,700,128 42.5%
------------------------------------
Total/Weighted Average 569 11,063,244 100.0%
====================================
Total Percentage Weighted
Annualized of Total Average
Rental Annualized Remaining
Revenue Rental Lease Term
Tenant (1) (6) Revenue (2)
------------------------------- ---------- ----------- -------------
United States of America (3) $31,887 13.9% 4.5
Booz Allen Hamilton, Inc. 12,981 5.7% 7.3
Northrop Grumman Corporation 11,530 5.0% 3.4
Computer Sciences Corporation (4) 10,701 4.7% 5.7
L-3 Communications Titan
Corporation (4) 8,699 3.8% 7.8
Unisys (5) 8,060 3.5% 3.8
General Dynamics Corporation 6,765 3.0% 3.3
AT&T Corporation (4) 6,012 2.6% 3.3
The Aerospace Corporation 5,779 2.5% 9.2
Wachovia Bank 5,324 2.3% 13.2
The Boeing Company (4) 4,168 1.8% 3.7
Ciena Corporation 3,333 1.5% 2.6
VeriSign, Inc. 3,272 1.4% 8.8
Magellan Health Services, Inc. 2,867 1.3% 5.8
PricewaterhouseCoopers 2,720 1.2% 0.4
Johns Hopkins University (4) 2,586 1.1% 1.9
Merck & Co., Inc. (Unisys) (5) 2,419 1.1% 3.8
Wyle Laboratories, Inc. 2,348 1.0% 6.8
Carefirst, Inc. and
Subsidiaries (4) 2,277 1.0% 2.3
BAE Systems PLC 2,260 1.0% 1.3
Subtotal Top 20 Office Tenants 135,987 59.3% 5.2
All remaining tenants 93,292 40.7% 4.3
----------------------
Total/Weighted Average $229,279 100.0% 4.9
======================
(1) Total Annualized Rental Revenue is the monthly contractual base
rent as of September 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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