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COPT 4Q and Full Year 2021 Results Exceed Guidance

Reported EPS of $0.12 in 4Q21 and $0.68 for Full Year

4Q & FY FFO per Share, as Adjusted for Comparability, of $0.58 & $2.29, Respectively, Exceeded Previously Elevated Guidance

1.2% Increase in Same-Property Cash NOI During 2021 also Exceeded Guidance

Core Portfolio 92.6% Occupied & 94.4% Leased at Year End

Active Development Pipeline Stands at 1.7 Million SF, 96% Leased

Strong Leasing Achievement

Total Leasing of 1.2 Million SF in the Quarter and 3.9 Million SF for the Year Included 196,000 SF and 616,000 SF of Vacancy Leasing, Respectively

Strong Tenant Retention of 73% in the Quarter and 74% for the Year

1.2 Million SF of Development Leasing During 2021 Exceeded Management Goal by 18%

Post Year-End Sale of DC-6 Raised $222.5 Million to Fund Value-Accretive Development

Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the fourth quarter and full year ended December 31, 2021.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Our unique investment strategy of allocating capital to Defense/IT Locations that support priority missions at U.S. defense installations continues to produce strong results that are not correlated to traditional office fundamentals and distinguishes us from other office REITs. The 8% growth in FFO per share, as adjusted for comparability we generated in 2021 exceeded our previously elevated guidance and was driven by solid same-property cash NOI growth of 1.2% and strong lease achievement that included 616,000 square feet of vacancy leasing. Demand for our Defense/IT Locations drove 1.2 million square feet of development leasing, exceeding our goal by 18%. Our 1.7 million square foot pipeline of active development projects that are 96% leased will drive earnings growth this year and beyond.” He continued, “Our balance sheet is strong and inflation-protected. Since the third quarter 2020, we refinanced and issued $1.8 billion of new debt, equating to 150% of our then-existing senior notes, locking-in low rates for long durations. Additionally, the equity we harvested from the sale of DC-6 on January 25, 2022, strengthened our balance sheet and provided us with capital to fund our highly leased development pipeline and the next wave of value accretive development projects with the U.S. Government and defense contractors who support the priority missions our Defense/IT Locations serve.”

Financial Highlights

4th Quarter Financial Results:

  • Diluted earnings per share (“EPS”) was $0.12 for the quarter ended December 31, 2021 compared to $0.73 for the fourth quarter of 2020.
  • Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.21 for the fourth quarter of 2021 compared to $0.53 for fourth quarter 2020.
  • FFOPS, as adjusted for comparability, was $0.58 for the fourth quarter of 2021 compared to $0.56 for the fourth quarter of 2020.

Full Year 2021 Financial Results:

  • EPS for the year ended December 31, 2021 was $0.68 as compared to 2020 EPS of $0.87.
  • Per Nareit’s definition, FFOPS for 2021 was $1.40 as compared to $1.50 for 2020.
  • FFOPS, as adjusted for comparability, for 2021 was $2.29 as compared to $2.12 for 2020.

Operating Performance Highlights

Operating Portfolio Summary:

  • At December 31, 2021, the Company’s core portfolio of 184 operating office and data center shell properties was 92.6% occupied and 94.4% leased.
  • During the quarter and the year, the Company placed into service 57,000 and 766,000 square feet of developments that were 18% and 84% leased, respectively.

Same-Property Performance:

  • At December 31, 2021, COPT’s same-property portfolio of 159 buildings was 91.3% occupied and 93.4% leased. Same-property occupancy at year end was in-line with Company guidance.
  • For the quarter and year ended December 31, 2021, the Company’s same-property cash NOI increased 0.5% and 1.2%, respectively, over the prior year’s comparable periods. For the full year, same-property cash NOI exceeded the high end of the Company’s guidance by 20 basis points.

Leasing:

  • Total Square Feet Leased: For the quarter ended December 31, 2021, the Company leased 1.2 million square feet, including 701,000 square feet of renewals, 196,000 square feet of new leases on vacant space, and 263,000 square feet in development projects.



    For the year ended December 31, 2021, the Company executed 3.9 million square feet of leasing, including 2.1 million square feet of renewals, 616,000 square feet of vacancy leasing, and 1.2 million square feet in development projects. Development leasing achievement for the year exceeded the Company’s 1 million square foot goal.
  • Tenant Retention Rates: During the quarter and year ended December 31, 2021, the Company renewed 73.4% and 74.2%, respectively, of expiring square feet, which was in-line with previously elevated guidance for the year.
  • Rent Spreads & Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2021, straight-line rents on renewals increased 2.9% and 5.2%, respectively, and cash rents on renewed space decreased 5.8% and 2.2%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.3%.
  • Lease Terms: In the fourth quarter of 2021, lease terms averaged 8.5 years on renewing leases, 7.5 years on new leasing of vacant space, and 11.0 years on development leasing. For the year, lease terms averaged 5.4 years on renewing leases, 8.2 years on vacancy leasing, and 13.4 years on development leasing.

Investment Activity Highlights

  • Development Pipeline: The Company’s development pipeline consists of 11 properties totaling 1.7 million square feet that were 96% leased at December 31, 2021. These projects represent a total estimated investment of $542.4 million, of which $209.9 million has been spent.

Balance Sheet and Capital Transaction Highlights

  • In November, the Company issued $400 million of 2.9% senior unsecured notes due 2033. The Company used net proceeds from this issuance to redeem its 5.0% senior unsecured notes due 2025 and retire a $49.4 million mortgage loan.
  • In December, the Company sold 2500 Riva Road in Annapolis, MD, a property that was removed from service in 2019, for $30 million. The Company used proceeds from the sale to pay down borrowings under its line of credit and recognized a gain on sale of $26 million.
  • On January 25, 2022, the Company sold 100% of COPT DC-6 (“DC-6”), the only asset in the Company’s Wholesale Data Center reporting segment for $222.5 million. There was no debt on the asset.
  • At December 31, 2021, the Company’s net debt to in-place adjusted EBITDA ratio was 6.7x, and was 6.3x as adjusted to reflect the effects of the DC-6 sale. Also at December 31, 2021, the Company’s net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 6.2x, and was 5.8x as adjusted to reflect the effects of the DC-6 sale.
  • At December 31, 2021, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 2.69% with a weighted average maturity of 6.8 years; additionally, 94.5% of the Company’s debt was subject to fixed interest rates.
  • For the quarter and year ended December 31, 2021, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.9x and 4.7x, respectively.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its fourth quarter and full year 2021 conference call; the presentation can be viewed and downloaded from the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

2022 Guidance

The Company details its initial full year and first quarter guidance, with supporting assumptions, in a separate press release issued concurrently with this press release; that release can be found in the ‘News, Presentations & Event Calendar’ section of COPT’s Investors website: https://investors.copt.com/News/news-releases/default.aspx

Conference Call Information

Management will discuss fourth quarter and full year 2021 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date:       Friday, February 11, 2022
Time:       12:00 p.m. Eastern Time
Telephone Number: (within the U.S.)       855-463-9057
Telephone Number: (outside the U.S.)       661-378-9894
Passcode:      

5193227

The conference call will also be available via live webcast in the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

Replay Information

A replay of the conference call will be immediately available via webcast on the Investors website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Friday, February 11, through 3:00 p.m. Eastern Time on Friday, February 25. To access the replay within the United States, please call 855-859-2056; to access it from outside the United States, please call 404-537-3406. In either case, use passcode 5193227.

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 (such properties, “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 December 31, 2021, the Company derived 88% of its core portfolio annualized rental revenue from Defense/IT Locations and 12% from its Regional Office Properties. As of the same date and including 19 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 184 office and data center shell properties encompassed 21.6 million square feet and was 94.4% leased; the Company also owned one wholesale data center that it sold on January 25, 2022.

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, 2020.

Category: Quarterly Results

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 December 31,

 

For the Years

Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

Revenues

 

 

 

 

 

 

 

 

Revenues from real estate operations

 

$    142,648

 

$    132,207

 

$    556,570

 

$    511,714

Construction contract and other service revenues

 

        43,284

 

        24,400

 

      107,876

 

        70,640

Total revenues

 

      185,932

 

      156,607

 

      664,446

 

      582,354

Operating expenses

 

 

 

 

 

 

 

 

Property operating expenses

 

        56,459

 

        48,870

 

      213,377

 

      190,796

Depreciation and amortization associated with real estate operations

 

        34,504

 

        33,814

 

      137,543

 

      126,503

Construction contract and other service expenses

 

        42,089

 

        23,563

 

      104,053

 

        67,615

Impairment losses

 

               —

 

               —

 

               —

 

          1,530

General and administrative expenses

 

          6,589

 

          7,897

 

        27,213

 

        25,269

Leasing expenses

 

          2,568

 

          1,993

 

          8,914

 

          7,732

Business development expenses and land carry costs

 

          1,088

 

             999

 

          4,647

 

          4,473

Total operating expenses

 

      143,297

 

      117,136

 

      495,747

 

      423,918

Interest expense

 

       (16,217)

 

       (17,148)

 

       (65,398)

 

       (67,937)

Interest and other income

 

          1,968

 

          3,341

 

          7,879

 

          8,574

Credit loss recoveries

 

               88

 

             772

 

          1,128

 

             933

Gain on sales of real estate

 

        25,879

 

        30,204

 

        65,590

 

        30,209

Gain on sale of investment in unconsolidated real estate joint venture

 

               —

 

        29,416

 

               —

 

        29,416

Loss on early extinguishment of debt

 

       (41,073)

 

         (4,069)

 

     (100,626)

 

         (7,306)

Loss on interest rate derivatives

 

               —

 

               —

 

               —

 

       (53,196)

Income from continuing operations before equity in income of

unconsolidated entities and income taxes

 

        13,280

 

        81,987

 

        77,272

 

        99,129

Equity in income of unconsolidated entities

 

             314

 

             453

 

          1,093

 

          1,825

Income tax expense

 

              (42)

 

            (258)

 

            (145)

 

            (353)

Income from continuing operations

 

        13,552

 

        82,182

 

        78,220

 

      100,601

Discontinued operations

 

          1,413

 

          1,367

 

          3,358

 

          2,277

Net Income

 

        14,965

 

        83,549

 

        81,578

 

      102,878

Net income attributable to noncontrolling interests:

 

 

 

 

 

 

 

 

Common units in the Operating Partnership (“OP”)

 

            (181)

 

            (995)

 

         (1,012)

 

         (1,180)

Preferred units in the OP

 

               —

 

              (69)

 

               —

 

            (300)

Other consolidated entities

 

         (1,076)

 

            (817)

 

         (4,025)

 

         (4,024)

Net income attributable to COPT common shareholders

 

$      13,708

 

$      81,668

 

$      76,541

 

$      97,374

 

 

 

 

 

 

 

 

 

Earnings per share (“EPS”) computation:

 

 

 

 

 

 

 

 

Numerator for diluted EPS:

 

 

 

 

 

 

 

 

Net income attributable to COPT common shareholders

 

$      13,708

 

$      81,668

 

$      76,541

 

$      97,374

Amount allocable to share-based compensation awards

 

            (116)

 

            (280)

 

            (417)

 

            (404)

Redeemable noncontrolling interests

 

              (46)

 

               44

 

            (128)

 

               —

Distributions on dilutive convertible preferred units

 

               —

 

               69

 

               —

 

               —

Numerator for diluted EPS

 

$      13,546

 

$      81,501

 

$      75,996

 

$      96,970

Denominator:

 

 

 

 

 

 

 

 

Weighted average common shares - basic

 

      111,990 

 

      111,817 

 

      111,960 

 

      111,788 

Dilutive effect of share-based compensation awards

 

             386

 

             320

 

             330

 

             288

Dilutive effect of redeemable noncontrolling interests

 

             124

 

             117

 

             128

 

               —

Dilutive convertible preferred units

 

               —

 

             155

 

               —

 

               —

Weighted average common shares - diluted

 

      112,500

 

      112,409

 

      112,418

 

      112,076

Diluted EPS

 

$          0.12

 

$          0.73

 

$          0.68

 

$          0.87

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

   

 

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

Net income

 

$      14,965

 

$      83,549

 

$      81,578

 

$    102,878

Real estate-related depreciation and amortization

 

        36,346

 

        36,653

 

      147,833

 

      138,193

Impairment losses on real estate

 

               —

 

               —

 

               —

 

          1,530

Gain on sales of real estate from continuing and discontinued operations

 

       (25,879)

 

       (30,204)

 

       (65,590)

 

       (30,209)

Gain on sale of investment in unconsolidated real estate joint venture

 

               —

 

       (29,416)

 

               —

 

       (29,416)

Depreciation and amortization on unconsolidated real estate JVs

 

             526

 

             874

 

          1,981

 

          3,329

Funds from operations (“FFO”)

 

        25,958

 

        61,456

 

      165,802

 

      186,305

FFO allocable to other noncontrolling interests

 

         (1,458)

 

         (1,091)

 

         (5,483)

 

       (15,705)

Basic FFO allocable to share-based compensation awards

 

            (149)

 

            (272)

 

            (777)

 

            (719)

Noncontrolling interests - preferred units in the OP

 

               —

 

              (69)

 

               —

 

            (300)

Basic FFO available to common share and common unit holders

(“Basic FFO”)

 

        24,351

 

        60,024

 

      159,542

 

      169,581

Dilutive preferred units in the OP

 

               —

 

               69

 

               —

 

               —

Redeemable noncontrolling interests

 

              (13)

 

               44

 

              (11)

 

             147

Diluted FFO adjustments allocable to share-based compensation awards

 

                 6

 

               —

 

               32

 

               —

Diluted FFO available to common share and common unit holders

(“Diluted FFO”)

 

        24,344

 

        60,137

 

      159,563

 

      169,728

Loss on early extinguishment of debt

 

        41,073

 

          4,069

 

      100,626

 

          7,306

Loss on interest rate derivatives

 

               —

 

               —

 

               —

 

        53,196

Loss on interest rate derivatives included in interest expense

 

             221

 

               —

 

             221

 

               —

Demolition costs on redevelopment and nonrecurring improvements

 

                (8)

 

               —

 

             423

 

               63

Dilutive preferred units in the OP

 

               —

 

               —

 

               —

 

             300

FFO allocation to other noncontrolling interests resulting from capital event

 

               —

 

               —

 

               —

 

        11,090

Diluted FFO comparability adjustments allocable to share-based

compensation awards

 

            (172)

 

              (18)

 

            (507)

 

            (327)

Diluted FFO available to common share and common unit holders, as

adjusted for comparability

 

        65,458

 

        64,188

 

      260,326

 

      241,356

Straight line rent adjustments and lease incentive amortization

 

         (3,835)

 

          3,438

 

       (10,286)

 

          4,100

Amortization of intangibles and other assets included in net operating income

 

               40

 

               24

 

             162

 

            (162)

Share-based compensation, net of amounts capitalized

 

          2,018

 

          1,751

 

          7,979

 

          6,505

Amortization of deferred financing costs

 

             640

 

             664

 

          2,980

 

          2,539

Amortization of net debt discounts, net of amounts capitalized

 

             615

 

             504

 

          2,244

 

          1,733

Replacement capital expenditures

 

       (32,317)

 

       (13,973)

 

       (70,973)

 

       (60,944)

Other diluted AFFO adjustments associated with real estate JVs

 

             204

 

             196

 

             824

 

             190

Diluted adjusted funds from operations available to common share and

common unit holders (“Diluted AFFO”)

 

$      32,823

 

$      56,792

 

$    193,256

 

$    195,317

Diluted FFO per share

 

$          0.21

 

$          0.53

 

$          1.40

 

$          1.50

Diluted FFO per share, as adjusted for comparability

 

$          0.58

 

$          0.56

 

$          2.29

 

$          2.12

Dividends/distributions per common share/unit

 

$        0.275

 

$        0.275

 

$          1.10

 

$          1.10

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

   

 

 

December 31,

2021

 

December 31,

2020

Balance Sheet Data

 

 

 

 

Properties, net of accumulated depreciation

 

$  3,532,944   

 

$  3,362,285   

Total assets

 

    4,262,452   

 

    4,077,023   

Debt, per balance sheet

 

    2,272,304   

 

    2,086,918   

Total liabilities

 

    2,578,479   

 

    2,357,881   

Redeemable noncontrolling interests

 

         26,898   

 

         25,430   

Equity

 

    1,657,075   

 

    1,693,712   

Net debt to adjusted book

 

40.5%

 

39.1%

 

 

 

 

 

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

 

 

 

 

Number of operating properties

 

              184   

 

              179   

Total operational square feet (in thousands)

 

         21,553   

 

         20,802   

% Occupied

 

92.6%

 

94.3%

% Leased

 

94.4%

 

95.0%

 

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

 

2021

 

2020

 

2021

 

2020

Payout ratios

 

 

 

 

 

 

 

 

Diluted FFO

 

128.0%

 

51.8%

 

78.1%

 

73.3%

Diluted FFO, as adjusted for comparability

 

47.6%

 

48.6%

 

47.9%

 

51.7%

Diluted AFFO

 

95.0%

 

54.9%

 

64.5%

 

63.8%

Adjusted EBITDA fixed charge coverage ratio

 

           4.9x  

 

           4.1x  

 

           4.7x  

 

           3.9x  

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

 

           6.7x  

 

           6.2x  

 

N/A

 

N/A

Pro forma net debt to in-place adjusted EBITDA ratio (2)(3)

 

           6.3x  

 

N/A

 

N/A

 

N/A

Net debt adj. for fully-leased development to in-place adj. EBITDA ratio (4)

 

           6.2x  

 

           5.9x  

 

N/A

 

N/A

Pro forma net debt adj. for fully-leased development to in-place adj.

EDITDA ratio (3)(4)

 

           5.8x  

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

Reconciliation of denominators for per share measures

 

 

 

 

 

 

Denominator for diluted EPS

 

   112,500    

 

   112,409    

 

   112,418    

 

   112,076    

Weighted average common units

 

       1,259   

 

       1,239   

 

       1,257   

 

       1,236   

Redeemable noncontrolling interests

 

            —   

 

            —   

 

            —   

 

          123   

Denominator for diluted FFO per share

 

   113,759    

 

   113,648    

 

   113,675    

 

   113,435    

Dilutive convertible preferred units

 

            —   

 

            —   

 

            —   

 

          171   

Denominator for diluted FFO per share, as adjusted for comparability

 

   113,759    

 

   113,648    

 

   113,675    

 

   113,606    

(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)

  Includes adjustments associated with the sale on 1/25/22 of the Company’s wholesale data center and use of resulting proceeds to repay debt.

(4)

  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 December 31,

 

For the Years

Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

Reconciliation of common share dividends to dividends and

distributions for payout ratios

 

 

 

 

 

 

 

 

Common share dividends - unrestricted shares and deferred shares

 

$      30,814

 

$      30,764

 

$    123,243

 

$    123,042

Common unit distributions - unrestricted units

 

             346

 

             341

 

          1,387

 

          1,362

Common unit distributions - dilutive restricted units

 

                 7

 

               —

 

               25

 

               —

Distributions on dilutive preferred units

 

               —

 

               69

 

               —

 

               —

Dividends and distributions for diluted FFO payout ratio

 

        31,167

 

        31,174

 

      124,655

 

      124,404

Distributions on dilutive preferred units

 

               —

 

               —

 

               —

 

             300

Dividends and distributions for other payout ratios

 

$      31,167

 

$      31,174

 

$    124,655

 

$    124,704

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income (loss) to earnings before

interest, income taxes, depreciation and amortization for real

estate (“EBITDAre”), adjusted EBITDA, in-place adjusted

EBITDA and pro forma in-place adjusted EBITDA

 

 

 

 

 

 

 

 

Net income

 

$      14,965

 

$      83,549

 

$      81,578

 

$    102,878

Interest expense

 

        16,217

 

        17,148

 

        65,398

 

        67,937

Income tax expense

 

               42

 

             258

 

             145

 

             353

Real estate-related depreciation and amortization

 

        36,346

 

        36,653

 

      147,833

 

      138,193

Other depreciation and amortization

 

             622

 

             513

 

          2,811

 

          1,837

Impairment losses on real estate

 

               —

 

               —

 

               —

 

          1,530

Gain on sales of real estate

 

       (25,879)

 

       (30,204)

 

       (65,590)

 

       (30,209)

Gain on sale of investment in unconsolidated real estate joint venture

 

               —

 

       (29,416)

 

               —

 

       (29,416)

Adjustments from unconsolidated real estate JVs

 

             763

 

          1,306

 

          2,930

 

          5,120

EBITDAre

 

        43,076

 

        79,807

 

      235,105

 

      258,223

Loss on early extinguishment of debt

 

        41,073

 

          4,069

 

      100,626

 

          7,306

Loss on interest rate derivatives

 

               —

 

               —

 

               —

 

        53,196

Net gain on other investments

 

               —

 

         (1,218)

 

              (63)

 

            (966)

Credit loss recoveries

 

              (88)

 

            (772)

 

         (1,128)

 

            (933)

Business development expenses

 

             628

 

             412

 

          2,233

 

          2,042

Demolition costs on redevelopment and nonrecurring improvements

 

                (8)

 

               —

 

             423

 

               63

Adjusted EBITDA

 

        84,681

 

        82,298

 

$    337,196

 

$    318,931

Pro forma net operating income adjustment for property changes within period

 

               —

 

          1,459

 

 

 

 

Change in collectability of deferred rental revenue

 

               —

 

             678

 

 

 

 

Other

 

          1,578

 

               —

 

 

 

 

In-place adjusted EBITDA

 

        86,259

 

        84,435

 

 

 

 

Pro forma NOI adjustment for sale of Wholesale Data Center

 

         (3,074)

 

N/A

 

 

 

 

Pro forma in-place adjusted EBITDA

 

$      83,185

 

$      84,435

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of interest expense to the denominators for fixed

charge coverage-Adjusted EBITDA

 

 

 

 

 

 

 

 

Interest expense

 

$      16,217

 

$      17,148

 

$      65,398

 

$      67,937

Less: Amortization of deferred financing costs

 

            (640)

 

            (664)

 

         (2,980)

 

         (2,539)

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

 

            (615)

 

            (504)

 

         (2,244)

 

         (1,733)

Less: Loss on interest rate derivatives included in interest expense

 

            (221)

 

               —

 

            (221)

 

               —

COPT’s share of interest expense of unconsolidated real estate JVs,

excluding deferred financing costs

 

             237

 

             422

 

             943

 

          1,749

Scheduled principal amortization

 

             950

 

          1,048

 

          3,860

 

          4,125

Capitalized interest

 

          1,192

 

          2,620

 

          6,467

 

        12,060

Preferred unit distributions

 

               —

 

               69

 

               —

 

             300

Denominator for fixed charge coverage-Adjusted EBITDA

 

$      17,120

 

$      20,139

 

$      71,223

 

$      81,899

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

   

 

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

Reconciliations of tenant improvements and incentives, building

improvements and leasing costs for operating properties to

replacement capital expenditures

 

 

 

 

 

 

 

 

Tenant improvements and incentives

 

$      19,724

 

$        9,165

 

$      43,820

 

$      36,342

Building improvements

 

        17,778

 

          7,523

 

        35,970

 

        34,060

Leasing costs

 

          5,863

 

          1,514

 

        12,736

 

          8,432

Net (exclusions from) additions to tenant improvements and incentives

 

         (5,093)

 

            (370)

 

         (4,704)

 

          1,042

Excluded building improvements and leasing costs

 

         (5,955)

 

         (3,859)

 

       (16,849)

 

       (18,932)

Replacement capital expenditures

 

$      32,317

 

$      13,973

 

$      70,973

 

$      60,944

 

 

 

 

 

 

 

 

 

Same Properties cash NOI

 

$      76,866

 

$      76,515

 

$    304,178

 

$    300,539

Straight line rent adjustments and lease incentive amortization

 

         (2,604)

 

         (1,416)

 

         (6,534)

 

         (2,998)

Amortization of acquired above- and below-market rents

 

             100

 

               99

 

             396

 

             390

Amortization of intangibles and other assets to property operating expenses

 

               —

 

               —

 

               —

 

              (69)

Lease termination fees, net

 

            (893)

 

             141

 

          2,416

 

             834

Tenant funded landlord assets and lease incentives

 

             187

 

             249

 

             997

 

             939

Cash NOI adjustments in unconsolidated real estate JV

 

               35

 

               45

 

             154

 

             195

Same Properties NOI

 

$      73,691

 

$      75,633

 

$    301,607

 

$    299,830

 

 

December 31,

2021

 

December 31,

2020

Reconciliation of total assets to adjusted book

 

 

 

 

Total assets

 

$      4,262,452

 

$      4,077,023

Accumulated depreciation

 

        1,152,523

 

        1,052,007

Accumulated depreciation included in assets held for sale

 

             82,385

 

             72,246

Accumulated amortization of intangibles on property acquisitions and deferred leasing costs

 

           215,925

 

           212,700

Accumulated amortization of intangibles on property acquisitions and deferred leasing costs

included in assets held for sale

 

               4,547

 

               4,424

COPT’s share of liabilities of unconsolidated real estate JVs

 

             27,312

 

             26,710

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

 

               3,744

 

               1,489

Less: Property - operating lease liabilities

 

           (29,342)

 

           (30,746)

Less: Property - finance lease liabilities

 

                    —

 

                  (28)

Less: Cash and cash equivalents

 

           (13,262)

 

           (18,369)

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

 

                (434)

 

                (152)

Adjusted book

 

$      5,705,850

 

$      5,397,304

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

   

 

 

December 31,

2021

 

December 31,

2020

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

 

$      2,272,304

 

$      2,086,918

Net discounts and deferred financing costs

 

             25,982

 

             14,547

COPT’s share of unconsolidated JV gross debt

 

             26,250

 

             26,250

Gross debt

 

$      2,324,536

 

$      2,127,715

Less: Cash and cash equivalents

 

           (13,262)

 

           (18,369)

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

 

                (434)

 

                (152)

Net debt

 

$      2,310,840

 

$      2,109,194

Costs incurred on fully-leased development properties

 

         (162,884)

 

         (114,532)

Net debt adjusted for fully-leased development

 

$      2,147,956

 

$      1,994,662

 

 

 

 

 

Net debt

 

$      2,310,840

 

$      2,109,194

Debt pay down from Wholesale Data Center sale proceeds

 

         (216,000)

 

N/A

Pro forma net debt

 

$      2,094,840

 

$      2,109,194

Costs incurred on fully-leased development properties

 

         (162,884)

 

         (114,532)

Pro forma net debt adjusted for fully-leased development

 

$      1,931,956

 

$      1,994,662

 

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