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COPT Reports 2Q 2022 Results

Raises Midpoint of Full-Year Guidance for FFOPS, As Adjusted for Comparability by 1-Cent to $2.35, Implying 2.6% Growth

Reports EPS of $0.29 in 2Q22;

FFO per Share, as Adjusted for Comparability, of $0.59 at High-End of Guidance

Increased Midpoint of Full-Year Same-Property Occupancy to 92.5%;

Maintains Full-Year Guidance for Change in Same-Property Cash NOI at (2%)-0%;

2.4% Decrease in Same-Property Cash NOI During Quarter, In-Line with Expectations

Core Portfolio 91.8% Occupied & 93.7% Leased

80,000 SF of 94% Leased Developments Placed into Service in 2Q22

1.9 Million SF of Active Developments are 91% Leased

Solid Leasing

Total Leasing of 558,000 SF in 2Q22 and 1.4 Million SF Year-to-Date

Tenant Retention of 58% in 2Q22 and 62% Year-to-Date;

Increased Midpoint of Year-End Tenant Retention Rate to 75%

Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the second quarter ended June 30, 2022.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Our Defense/IT investment strategy concentrating on priority missions at U.S. defense installations continues to produce strong, reliable results that are not correlated to traditional office fundamentals. Second quarter results were slightly favorable to our plan, positioning the Company to achieve or exceed our full-year operating, leasing, and FFOPS objectives. Second quarter FFOPS exceeded the midpoint of guidance by $0.01, and we are elevating full-year guidance by $0.01 at the midpoint and narrowing the range. Same-property cash NOI was slightly better than expectations, declining 2.4% as a result of prior quarter non-renewals. Leasing volume met our expectations and sets the stage for a very strong remainder of the year. We pre-leased another full building build-to-suit in The National Business Park for a Fortune 100 defense contractor, our second in the past year. The 120,000 square feet of vacancy leasing we achieved was concentrated in Defense/IT Locations and equaled our 5-year average for the second quarter. The 58% tenant retention rate in the quarter was expected and reflected some proactive portfolio management in Huntsville, transitioning space from an existing tenant to a new contractor to support another new development in Redstone Gateway. We expect full-year retention to exceed our initial guidance, and we are elevating our target range.”

He continued, “During the quarter, we placed 80,000 square feet into service, bringing our year-to-date deliveries to 363,000 square feet that are 99% leased. We further expanded our active development pipeline to 1.9 million square feet that are 91% leased and we expect to place another 900,000 square feet of fully leased projects into service by year end. Lastly, the midpoint of our elevated full-year guidance implies 2.6% growth in diluted FFO per share, as adjusted for comparability, reduced by roughly 2% from the dilutive sale of DC-6 during the first quarter.”

Financial Highlights

2nd Quarter Financial Results:

  • Diluted earnings per share (“EPS”) was $0.29 for the quarter ended June 30, 2022 compared to $0.38 for the second quarter of 2021.
  • Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.59 for the second quarter of 2022 compared to $0.35 for the second quarter of 2021.
  • FFOPS, as adjusted for comparability, was $0.59 for the second quarter of 2022 compared to $0.58 for the second quarter of 2021.

Operating Performance Highlights

Operating Portfolio Summary:

  • At June 30, 2022, the Company’s 21.9 million square foot core portfolio was 91.8% occupied and 93.7% leased.
  • During the quarter, the Company placed into service 80,000 square feet of developments that were 94% leased.

Same-Property Performance:

  • At June 30, 2022, COPT’s 20.3 million square foot same-property portfolio was 91.6% occupied and 93.6% leased.
  • For the quarter ended June 30, 2022, the Company’s same-property cash NOI decreased 2.4% compared to the second quarter of 2021.

Leasing:

  • Total Square Feet Leased: For the quarter ended June 30, 2022, the Company leased 558,000 square feet, including 228,000 square feet of renewals, 120,000 square feet of new leases on vacant space, and 211,000 square feet in development projects. For the six months ended June 30, 2022, the Company executed 1.4 million square feet of total leasing, including 676,000 square feet of renewals, 277,000 square feet of vacancy leasing, and 476,000 square feet in development projects.
  • Tenant Retention Rates: During the quarter and six months ended June 30, 2022, the Company renewed 58% and 62%, respectively, of expiring square feet.
  • Rent Spreads & Average Escalations on Renewing Leases: For the quarter and six months ended June 30, 2022, straight-line rents on renewals increased 7.8% and 1.2%, respectively, and cash rents on renewed space decreased 0.8% and 4.1%, respectively. For the same time periods, annual escalations on renewing leases averaged 1.9% and 2.3%, respectively.
  • Lease Terms: In the second quarter of 2022, lease terms averaged 4.3 years on renewing leases, 6.4 years on vacancy leasing, and 11.1 years on development leasing. For the first six months, lease terms averaged 3.6 years on renewing leases, 6.4 years on vacancy leasing, and 13.3 years on development leasing.

Investment Activity Highlights

  • Development Pipeline: The Company’s development pipeline consists of 12 properties and an expansion of one fully-operational property totaling 1.9 million square feet that were 91% leased at June 30, 2022. These projects represent a total estimated investment of $646.3 million, of which $274.9 million has been spent.

Balance Sheet and Capital Transaction Highlights

  • For the quarter ended June 30, 2022, the Company’s adjusted EBITDA fixed charge coverage ratio was 5.3x.
  • At June 30, 2022, the Company’s net debt to in-place adjusted EBITDA ratio was 6.4x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 5.8x.
  • At June 30, 2022, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 2.75% with a weighted average maturity of 6.7 years; additionally, 96.3% of the Company’s debt was subject to fixed interest rates.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its second quarter 2022 conference call; the presentation can be viewed and downloaded from the ‘Financial Info – Financial Results’ section of COPT’s Investors website: https://investors.copt.com/financial-information/financial-results

2022 Guidance

Management is updating its full-year guidance for diluted EPS and diluted FFOPS, per Nareit and as adjusted for comparability, from the prior range of $1.16-$1.22, and $2.31-$2.37, respectively, to new ranges of $1.33-$1.37, and $2.33-$2.37, respectively. Management is establishing third quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.27-$0.29 and $0.57-$0.59, respectively. Reconciliations of projected diluted EPS to projected diluted FFOPS, in accordance with Nareit and as adjusted for comparability are as follows:

 
Reconciliation of Diluted EPS to Diluted FFOPS, per Nareit and

Quarter ending

 

Year ending

As Adjusted for Comparability

September 30, 2022

 

December 31, 2022

Low

 

High

 

Low

 

High

 
Diluted EPS

$

0.27

$

0.29

$

1.33

 

$

1.37

 

Real estate-related depreciation and amortization

 

0.30

 

0.30

 

1.25

 

 

1.25

 

Gain on sales of real estate

 

-

 

-

 

(0.25

)

 

(0.25

)

Diluted FFOPS, Nareit definition and as adjusted for comparability

$

0.57

$

0.59

$

2.33

 

$

2.37

 

 

Conference Call Information

Management will discuss second quarter 2022 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date:

Friday, July 29, 2022

Time:

12:00 p.m. Eastern Time

Participants must register for the conference call at the link below to receive the dial-in number and personal pin. Registering only takes a few moments and provides direct access to the conference call without waiting for an operator. You may register at any time, including up to and after the call start time:

https://register.vevent.com/register/BIc8c0e17ac73c4a0fa291f2b763956f45

The conference call will also be available via live webcast in the ‘News & Events – IR Calendar’ section of COPT’s Investors website: https://investors.copt.com/news-events/ir-calendar

Replay Information

A replay of the conference call will be immediately available via webcast only on COPT’s Investors website.

Definitions

For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.

About COPT

COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what the Company believes are growing, durable, priority missions (“Defense/IT Locations”). The Company also owns a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office Properties”). As of June 30, 2022, the Company derived 90% of its core portfolio annualized rental revenue from Defense/IT Locations and 10% from its Regional Office Properties. As of the same date and including 19 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 186 properties encompassed 21.9 million square feet and was 93.7% leased.

Forward-Looking Information

This press release may contain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company’s current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Although the Company believes that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements and the Company undertakes no obligation to update or supplement any forward-looking statements.

The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Source: Corporate Office Properties Trust

 

Corporate Office Properties Trust

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,

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

Revenues from real estate operations

$

143,246

 

 

$

137,219

 

 

$

285,526

 

 

$

275,049

 

Construction contract and other service revenues

 

42,557

 

 

 

19,988

 

 

 

95,757

 

 

 

36,546

 

Total revenues

 

185,803

 

 

 

157,207

 

 

 

381,283

 

 

 

311,595

 

Operating expenses

 

 

 

 

 

 

 

Property operating expenses

 

54,116

 

 

 

50,914

 

 

 

111,297

 

 

 

104,190

 

Depreciation and amortization associated with real estate operations

 

34,812

 

 

 

34,732

 

 

 

69,076

 

 

 

69,232

 

Construction contract and other service expenses

 

41,304

 

 

 

19,082

 

 

 

92,954

 

 

 

34,875

 

General and administrative expenses

 

6,467

 

 

 

7,293

 

 

 

13,137

 

 

 

13,355

 

Leasing expenses

 

1,888

 

 

 

1,929

 

 

 

3,762

 

 

 

4,273

 

Business development expenses and land carry costs

 

701

 

 

 

1,372

 

 

 

1,484

 

 

 

2,466

 

Total operating expenses

 

139,288

 

 

 

115,322

 

 

 

291,710

 

 

 

228,391

 

Interest expense

 

(14,808

)

 

 

(15,942

)

 

 

(29,232

)

 

 

(33,461

)

Interest and other income

 

1,818

 

 

 

2,228

 

 

 

3,711

 

 

 

4,093

 

Credit loss (expense) recoveries

 

(225

)

 

 

(193

)

 

 

91

 

 

 

714

 

Gain on sales of real estate

 

(19

)

 

 

40,233

 

 

 

(4

)

 

 

39,743

 

Loss on early extinguishment of debt

 

 

 

 

(25,228

)

 

 

(342

)

 

 

(58,394

)

Income from continuing operations before equity in income of unconsolidated entities and income taxes

 

33,281

 

 

 

42,983

 

 

 

63,797

 

 

 

35,899

 

Equity in income of unconsolidated entities

 

318

 

 

 

260

 

 

 

1,206

 

 

 

482

 

Income tax expense

 

(4

)

 

 

(24

)

 

 

(157

)

 

 

(56

)

Income from continuing operations

 

33,595

 

 

 

43,219

 

 

 

64,846

 

 

 

36,325

 

Discontinued operations

 

 

 

 

679

 

 

 

29,573

 

 

 

1,494

 

Net Income

 

33,595

 

 

 

43,898

 

 

 

94,419

 

 

 

37,819

 

Net income attributable to noncontrolling interests:

 

 

 

 

 

 

 

Common units in the Operating Partnership (“OP”)

 

(496

)

 

 

(559

)

 

 

(1,352

)

 

 

(474

)

Other consolidated entities

 

(789

)

 

 

(938

)

 

 

(1,438

)

 

 

(1,613

)

Net income attributable to COPT common shareholders

$

32,310

 

 

$

42,401

 

 

$

91,629

 

 

$

35,732

 

 

 

 

 

 

 

 

 

Earnings per share (“EPS”) computation:

 

 

 

 

 

 

 

Numerator for diluted EPS:

 

 

 

 

 

 

 

Net income attributable to COPT common shareholders

$

32,310

 

 

$

42,401

 

 

$

91,629

 

 

$

35,732

 

Amount allocable to share-based compensation awards

 

(75

)

 

 

(125

)

 

 

(259

)

 

 

(235

)

Redeemable noncontrolling interests

 

(30

)

 

 

(20

)

 

 

(69

)

 

 

7

 

Numerator for diluted EPS

$

32,205

 

 

$

42,256

 

 

$

91,301

 

 

$

35,504

 

Denominator:

 

 

 

 

 

 

 

Weighted average common shares - basic

 

112,082

 

 

 

111,974

 

 

 

112,052

 

 

 

111,931

 

Dilutive effect of share-based compensation awards

 

429

 

 

 

297

 

 

 

427

 

 

 

280

 

Dilutive effect of redeemable noncontrolling interests

 

126

 

 

 

133

 

 

 

129

 

 

 

125

 

Weighted average common shares - diluted

 

112,637

 

 

 

112,404

 

 

 

112,608

 

 

 

112,336

 

Diluted EPS

$

0.29

 

 

$

0.38

 

 

$

0.81

 

 

$

0.32

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

 

 

For the Three Months

Ended June 30,

 

For the Six Months

Ended June 30,

 

2022

 

2021

 

2022

 

2021

Net income

$

33,595

 

 

$

43,898

 

 

$

94,419

 

 

$

37,819

 

Real estate-related depreciation and amortization

 

34,812

 

 

 

37,555

 

 

 

69,076

 

 

 

74,876

 

Gain on sales of real estate from continuing and discontinued operations

 

19

 

 

 

(40,233

)

 

 

(28,560

)

 

 

(39,743

)

Depreciation and amortization on unconsolidated real estate JVs

 

525

 

 

 

476

 

 

 

1,051

 

 

 

930

 

Funds from operations (“FFO”)

 

68,951

 

 

 

41,696

 

 

 

135,986

 

 

 

73,882

 

FFO allocable to other noncontrolling interests

 

(1,178

)

 

 

(1,302

)

 

 

(2,220

)

 

 

(2,329

)

Basic FFO allocable to share-based compensation awards

 

(357

)

 

 

(193

)

 

 

(719

)

 

 

(353

)

Basic FFO available to common share and common unit holders (“Basic FFO”)

 

67,416

 

 

 

40,201

 

 

 

133,047

 

 

 

71,200

 

Redeemable noncontrolling interests

 

4

 

 

 

11

 

 

 

(2

)

 

 

70

 

Diluted FFO adjustments allocable to share-based compensation awards

 

27

 

 

 

 

 

 

54

 

 

 

 

Diluted FFO available to common share and common unit holders (“Diluted FFO”)

 

67,447

 

 

 

40,212

 

 

 

133,099

 

 

 

71,270

 

Loss on early extinguishment of debt

 

 

 

 

25,228

 

 

 

342

 

 

 

58,394

 

Demolition costs on redevelopment and nonrecurring improvements

 

 

 

 

302

 

 

 

 

 

 

302

 

Executive transition costs

 

137

 

 

 

 

 

 

137

 

 

 

 

Diluted FFO comparability adjustments allocable to share-based compensation awards

 

 

 

 

(137

)

 

 

(2

)

 

 

(304

)

Diluted FFO available to common share and common unit holders, as adjusted for comparability

 

67,584

 

 

 

65,605

 

 

 

133,576

 

 

 

129,662

 

Straight line rent adjustments and lease incentive amortization

 

(3,198

)

 

 

(1,288

)

 

 

(6,387

)

 

 

(4,645

)

Amortization of intangibles and other assets included in net operating income

 

49

 

 

 

41

 

 

 

(323

)

 

 

81

 

Share-based compensation, net of amounts capitalized

 

2,154

 

 

 

2,009

 

 

 

4,265

 

 

 

3,913

 

Amortization of deferred financing costs

 

541

 

 

 

811

 

 

 

1,138

 

 

 

1,604

 

Amortization of net debt discounts, net of amounts capitalized

 

608

 

 

 

520

 

 

 

1,213

 

 

 

1,062

 

Replacement capital expenditures

 

(17,717

)

 

 

(13,095

)

 

 

(35,075

)

 

 

(25,325

)

Other

 

406

 

 

 

178

 

 

 

445

 

 

 

419

 

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)

$

50,427

 

 

$

54,781

 

 

$

98,852

 

 

$

106,771

 

Diluted FFO per share

$

0.59

 

 

$

0.35

 

 

$

1.17

 

 

$

0.63

 

Diluted FFO per share, as adjusted for comparability

$

0.59

 

 

$

0.58

 

 

$

1.17

 

 

$

1.14

 

Dividends/distributions per common share/unit

$

0.275

 

 

$

0.275

 

 

$

0.550

 

 

$

0.550

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars and shares in thousands, except per share data)

 

 

June 30,

2022

 

December 31,

2021

Balance Sheet Data

 

 

 

Properties, net of accumulated depreciation

$

3,639,751

 

 

$

3,532,944

 

Total assets

 

4,185,193

 

 

 

4,262,452

 

Debt, per balance sheet

 

2,177,811

 

 

 

2,272,304

 

Total liabilities

 

2,462,490

 

 

 

2,578,479

 

Redeemable noncontrolling interests

 

26,752

 

 

 

26,898

 

Equity

 

1,695,951

 

 

 

1,657,075

 

Net debt to adjusted book

 

39.4

%

 

 

40.5

%

 

 

 

 

Core Portfolio Data (as of period end) (1)

 

 

 

Number of operating properties

 

186

 

 

 

184

 

Total operational square feet (in thousands)

 

21,932

 

 

 

21,553

 

% Occupied

 

91.8

%

 

 

92.6

%

% Leased

 

93.7

%

 

 

94.4

%

 

 

For the Three Months

Ended June 30,

 

For the Six Months

Ended June 30,

2022

 

2021

 

2022

 

2021

Payout ratios

 

 

 

 

 

 

 

Diluted FFO

46.3

%

 

77.5

%

 

47.0

%

 

87.4

%

Diluted FFO, as adjusted for comparability

46.3

%

 

47.5

%

 

46.8

%

 

48.1

%

Diluted AFFO

62.0

%

 

56.9

%

 

63.2

%

 

58.4

%

Adjusted EBITDA fixed charge coverage ratio

5.3x

 

4.9x

 

5.3x

 

4.6x

Net debt to in-place adjusted EBITDA ratio (2)

6.4x

 

6.3x

 

N/A

 

N/A

Net debt adj. for fully-leased development to in-place adj. EBITDA ratio (3)

5.8x

 

5.8x

 

N/A

 

N/A

 

 

 

 

 

 

 

 

Reconciliation of denominators for per share measures

 

 

 

 

 

 

Denominator for diluted EPS

112,637

 

 

112,404

 

 

112,608

 

 

112,336

 

Weighted average common units

1,476

 

 

1,262

 

 

1,430

 

 

1,254

 

Denominator for diluted FFO per share and as adjusted for comparability

114,113

 

 

113,666

 

 

114,038

 

 

113,590

 

(1)

 

Represents Defense/IT Locations and Regional Office properties.

(2)

 

Represents net debt as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

(3)

 

Represents net debt less costs incurred on properties under development that were 100% leased as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

 

 

For the Three Months

Ended June 30,

 

For the Six Months

Ended June 30,

 

2022

 

2021

 

2022

 

2021

Reconciliation of common share dividends to dividends and distributions for payout ratios

 

 

 

 

 

 

 

Common share dividends - unrestricted shares and deferred shares

$

30,842

 

 

$

30,811

 

 

$

61,679

 

 

$

61,616

 

Common unit distributions - unrestricted units

 

407

 

 

 

347

 

 

 

811

 

 

 

694

 

Common unit distributions - dilutive restricted units

 

12

 

 

 

 

 

 

25

 

 

 

 

Dividends and distributions for payout ratios

$

31,261

 

 

$

31,158

 

 

$

62,515

 

 

$

62,310

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income to earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”), adjusted EBITDA and in-place adjusted EBITDA

 

 

 

 

 

 

 

Net income

$

33,595

 

 

$

43,898

 

 

$

94,419

 

 

$

37,819

 

Interest expense

 

14,808

 

 

 

15,942

 

 

 

29,232

 

 

 

33,461

 

Income tax expense

 

4

 

 

 

24

 

 

 

157

 

 

 

56

 

Real estate-related depreciation and amortization

 

34,812

 

 

 

37,555

 

 

 

69,076

 

 

 

74,876

 

Other depreciation and amortization

 

552

 

 

 

1,045

 

 

 

1,159

 

 

 

1,600

 

Gain on sales of real estate

 

19

 

 

 

(40,233

)

 

 

(28,560

)

 

 

(39,743

)

Adjustments from unconsolidated real estate JVs

 

760

 

 

 

711

 

 

 

1,518

 

 

 

1,404

 

EBITDAre

 

84,550

 

 

 

58,942

 

 

 

167,001

 

 

 

109,473

 

Loss on early extinguishment of debt

 

 

 

 

25,228

 

 

 

342

 

 

 

58,394

 

Net gain on other investments

 

1

 

 

 

(63

)

 

 

(564

)

 

 

(63

)

Credit loss expense (recoveries)

 

225

 

 

 

193

 

 

 

(91

)

 

 

(714

)

Business development expenses

 

385

 

 

 

584

 

 

 

711

 

 

 

1,132

 

Demolition costs on redevelopment and nonrecurring improvements

 

 

 

 

302

 

 

 

 

 

 

302

 

Executive transition costs

 

137

 

 

 

 

 

 

137

 

 

 

 

Adjusted EBITDA

 

85,298

 

 

 

85,186

 

 

$

167,536

 

 

$

168,524

 

Pro forma net operating income adjustment for property changes within period

 

127

 

 

 

(379

)

 

 

 

 

Change in collectability of deferred rental revenue

 

231

 

 

 

 

 

 

 

 

In-place adjusted EBITDA

$

85,656

 

 

$

84,807

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA

 

 

 

 

 

 

 

Interest expense

$

14,808

 

 

$

15,942

 

 

$

29,232

 

 

$

33,461

 

Less: Amortization of deferred financing costs

 

(541

)

 

 

(811

)

 

 

(1,138

)

 

 

(1,604

)

Less: Amortization of net debt discounts, net of amounts capitalized

 

(608

)

 

 

(520

)

 

 

(1,213

)

 

 

(1,062

)

COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs and amortization of net debt premium

 

233

 

 

 

236

 

 

 

464

 

 

 

470

 

Scheduled principal amortization

 

844

 

 

 

959

 

 

 

1,618

 

 

 

1,921

 

Capitalized interest

 

1,376

 

 

 

1,707

 

 

 

2,905

 

 

 

3,512

 

Denominator for fixed charge coverage-Adjusted EBITDA

$

16,112

 

 

$

17,513

 

 

$

31,868

 

 

$

36,698

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

 

 

For the Three Months

Ended June 30,

 

For the Six Months

Ended June 30,

 

2022

 

2021

 

2022

 

2021

Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures

 

 

 

 

 

 

 

Tenant improvements and incentives

$

10,655

 

 

$

8,303

 

 

$

20,665

 

 

$

15,442

 

Building improvements

 

6,751

 

 

 

6,771

 

 

 

13,583

 

 

 

10,399

 

Leasing costs

 

1,748

 

 

 

2,805

 

 

 

4,018

 

 

 

3,934

 

Net additions to (exclusions from) tenant improvements and incentives

 

474

 

 

 

(988

)

 

 

2,282

 

 

 

1,912

 

Excluded building improvements and leasing costs

 

(1,911

)

 

 

(3,796

)

 

 

(5,473

)

 

 

(6,362

)

Replacement capital expenditures

$

17,717

 

 

$

13,095

 

 

$

35,075

 

 

$

25,325

 

 

 

 

 

 

 

 

 

Same Properties cash NOI

$

81,641

 

 

$

83,648

 

 

$

161,208

 

 

$

162,298

 

Straight line rent adjustments and lease incentive amortization

 

(1,385

)

 

 

(1,045

)

 

 

(2,888

)

 

 

679

 

Amortization of acquired above- and below-market rents

 

97

 

 

 

98

 

 

 

616

 

 

 

197

 

Lease termination fees, net

 

399

 

 

 

1,094

 

 

 

620

 

 

 

2,456

 

Tenant funded landlord assets and lease incentives

 

1,265

 

 

 

535

 

 

 

2,728

 

 

 

763

 

Cash NOI adjustments in unconsolidated real estate JVs

 

77

 

 

 

96

 

 

 

160

 

 

 

197

 

Same Properties NOI

$

82,094

 

 

$

84,426

 

 

$

162,444

 

 

$

166,590

 

 

 

 

June 30,

2022

 

December 31,

2021

Reconciliation of total assets to adjusted book

 

 

 

 

Total assets

 

$

4,185,193

 

 

$

4,262,452

 

Accumulated depreciation

 

 

1,213,711

 

 

 

1,152,523

 

Accumulated depreciation included in assets held for sale

 

 

 

 

 

82,385

 

Accumulated amortization of intangibles on property acquisitions and deferred leasing costs

 

 

218,560

 

 

 

215,925

 

Accumulated amortization of intangibles on property acquisitions and deferred leasing costs included in assets held for sale

 

 

 

 

 

4,547

 

COPT’s share of liabilities of unconsolidated real estate JVs

 

 

27,296

 

 

 

27,312

 

COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs

 

 

4,911

 

 

 

3,744

 

Less: Property - operating lease liabilities

 

 

(29,412

)

 

 

(29,342

)

Less: Cash and cash equivalents

 

 

(20,735

)

 

 

(13,262

)

Less: COPT’s share of cash of unconsolidated real estate JVs

 

 

(457

)

 

 

(434

)

Adjusted book

 

$

5,599,067

 

 

$

5,705,850

 

 

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

 

 

 

June 30,

2022

 

December 31,

2021

 

June 30,

2021

Reconciliation of debt to net debt, net debt adjusted for fully-leased development and pro forma net debt adjusted for fully-leased development

 

 

 

 

 

 

Debt, per balance sheet

 

$

2,177,811

 

 

$

2,272,304

 

 

$

2,109,640

 

Net discounts and deferred financing costs

 

 

23,857

 

 

 

25,982

 

 

 

21,435

 

COPT’s share of unconsolidated JV gross debt

 

 

26,250

 

 

 

26,250

 

 

 

26,250

 

Gross debt

 

$

2,227,918

 

 

$

2,324,536

 

 

$

2,157,325

 

Less: Cash and cash equivalents

 

 

(20,735

)

 

 

(13,262

)

 

 

(17,182

)

Less: COPT’s share of cash of unconsolidated real estate JVs

 

 

(457

)

 

 

(434

)

 

 

(373

)

Net debt

 

$

2,206,726

 

 

$

2,310,840

 

 

$

2,139,770

 

Costs incurred on fully-leased development properties

 

 

(223,485

)

 

 

(162,884

)

 

 

(171,453

)

Net debt adjusted for fully-leased development

 

$

1,983,241

 

 

$

2,147,956

 

 

$

1,968,317

 

 

 

 

 

 

 

 

Net debt

 

$

2,206,726

 

 

$

2,310,840

 

 

$

2,139,770

 

Debt pay down from Wholesale Data Center sale proceeds

 

 

N/A

 

 

 

(216,000

)

 

 

N/A

 

Pro forma net debt

 

$

2,206,726

 

 

$

2,094,840

 

 

$

2,139,770

 

Costs incurred on fully-leased development properties

 

 

(223,485

)

 

 

(162,884

)

 

 

(171,453

)

Pro forma net debt adjusted for fully-leased development

 

$

1,983,241

 

 

$

1,931,956

 

 

$

1,968,317

 

 

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