Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries COPT Reports Full Year 2022 Results By: Corporate Office Properties Trust via Business Wire February 09, 2023 at 16:17 PM EST EPS of $1.53 for Full Year; FFO per Share, as Adjusted for Comparability, of $2.36 Core Portfolio 93% Occupied and 95% Leased Placed 1.3 million SF of Developments into Service that were 99% Leased 1.5 million SF of Active Developments 89% Leased Outstanding Leasing Achievement Total Leasing of 3.0 million SF Highest Annual Vacancy Leasing Achieved in 12 Years at 801,000 SF Tenant Retention of 72% Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the fourth quarter and full year ended December 31, 2022. Management Comments Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Our Defense/IT investment strategy, which has concentrated our portfolio near priority U.S. defense installations, continues to produce strong results, and has proved resilient in the face of macro-economic headwinds impacting the office sector. The 3% growth in FFO per share, as adjusted for comparability generated in 2022, exceeded our initial guidance by $0.02 per share. We executed 801,000 square feet of vacancy leasing, the highest level in 12 years. We are off to a great start in terms of development leasing, having executed over 460,000 square feet already in 2023, consisting of two data center shell build-to-suits in Northern Virginia, and one build-to-suit building at Redstone Gateway. The outlook for defense spending remains favorable. The FY23 defense base budget that passed in December represents a 7.5% year-over-year increase, and is 15% higher than that of FY21, which drove leasing results in 2022. Given the timing of the appropriation, we expect this increase to fuel demand for space in our portfolio throughout 2024.” He continued, “From a financing standpoint, we recently closed on two new 90%/10% JVs, which will fund the equity component of our expected development needs in 2023, assuring sufficient capital to fund development on a leverage neutral basis for the foreseeable future. Our balance sheet remains strong, evidenced by our solid debt service coverage ratios, with no large debt maturities until 2026.” Financial Highlights 4th Quarter Financial Results: Diluted earnings per share (“EPS”) was $0.45 for the quarter ended December 31, 2022 compared to $0.12 for the quarter ended December 31, 2021. Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.60 for the quarter ended December 31, 2022 compared to $0.21 for the quarter ended December 31, 2021. FFOPS, as adjusted for comparability, was $0.60 for the quarter ended December 31, 2022 compared to $0.58 for the quarter ended December 31, 2021. Full Year 2022 Financial Results: EPS for the year ended December 31, 2022 was $1.53 as compared to $0.68 for 2021. Per Nareit’s definition, FFOPS for 2022 was $2.35 as compared to $1.40 for 2021. FFOPS, as adjusted for comparability, for 2022 was $2.36 as compared to $2.29 for 2021. Operating Performance Highlights Operating Portfolio Summary: At December 31, 2022, the Company’s 22.8 million square foot core portfolio was 92.8% occupied and 95.3% leased. During the quarter and the year, the Company placed into service 917,000 and 1.3 million square feet, respectively, of developments that were 99% leased at January 31, 2023. Same-Property Performance: At December 31, 2022, the Company’s 20.0 million square foot same-property portfolio was 92.4% occupied and 95.0% leased. The Company’s same-property cash NOI decreased 0.5% and 0.9%, year-over-year for the three months and year ended December 31, 2022, respectively, compared to the same periods in 2021. Leasing: Total Square Feet Leased: For the quarter ended December 31, 2022, the Company leased 692,000 square feet, including 519,000 square feet of renewals and 173,000 square feet of vacancy leasing. For the year ended December 31, 2022, the Company executed 3.0 million square feet of total leasing, including 1.7 million square feet of renewals, 801,000 square feet of vacancy leasing, and 476,000 square feet in development projects. Tenant Retention Rates: During the quarter and year ended December 31, 2022, the Company renewed 72.2% and 72.1%, respectively, of expiring square feet. Rent Spreads & Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2022, straight-line rents on renewals increased 3.6% and 3.1%, respectively, and cash rents on renewed space increased 0.1% and decreased 2.0%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.6% and 2.5%, respectively. Lease Terms: In the quarter ended December 31, 2022, lease terms averaged 3.5 years on renewing leases and 9.8 years on vacancy leasing. For the year, lease terms averaged 3.6 years on renewing leases, 7.3 years on vacancy leasing, and 13.3 years on development leasing. Investment Activity Highlights Development Pipeline: The Company’s development pipeline consists of 10 properties totaling 1.5 million square feet that were 89% leased at January 31, 2023. These projects represent a total estimated investment of $487.5 million, of which $127.5 million has been spent. Balance Sheet and Capital Transaction Highlights On October 26, 2022, the Company entered into a credit agreement with a group of lenders for an aggregate of $725.0 million of available borrowings including: an unsecured revolving credit facility with a lender commitment of $600.0 million that replaced its existing Revolving Credit Facility; and a $125.0 million unsecured term loan, the proceeds of which were used to pay off the remaining $100.0 million outstanding under an existing unsecured term loan and pay down a portion of its Revolving Credit Facility. On December 14, 2022, the Company sold two data center shells to a new, 90%/10% joint venture with entities affiliated with Blackstone, generating approximately $60 million of proceeds. On January 10, 2023, the Company sold an additional three data center shells to a new, 90%/10% joint venture with entities affiliated with Blackstone, generating approximately $190 million of proceeds. For the quarter ended December 31, 2022, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.7x. At December 31, 2022, the Company’s net debt to in-place adjusted EBITDA ratio was 6.3x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 6.1x. At December 31, 2022, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.15% with a weighted average maturity of 6.6 years; additionally, 85.1% 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 fourth quarter and full year 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 2023 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 & Events – Press Releases’ section of COPT’s Investors website: https://investors.copt.com/news-events/press-releases Conference Call Information Management will discuss fourth quarter and full year 2022 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below: Conference Call Date: Friday, February 10, 2023 Time: 12:00 p.m. Eastern Time Participants must register for the conference call at the link below to receive the dial-in number and personal pin. Registering only takes a few moments and provides direct access to the conference call without waiting for an operator. You may register at any time, including up to and after the call start time: https://register.vevent.com/register/BIc8139cc8ddaa47a4b273039144a05aea The conference call will also be available via live webcast in the ‘News & Events – IR Calendar’ section of COPT’s Investors website: https://investors.copt.com/news-events/ir-calendar Replay Information A replay of the conference call will be immediately available via webcast only on COPT’s Investors website. Definitions For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables. About COPT COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what the Company believes are growing, durable, priority missions (“Defense/IT Locations”). The Company also owns a portfolio of office properties located in select urban submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office Properties”). As of December 31, 2022, the Company derived 91% of its core portfolio annualized rental revenue from Defense/IT Locations and 9% from its Regional Office Properties. As of the same date and including 21 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 192 properties encompassed 22.8 million square feet and was 95.3% 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 December 31, For the Years Ended December 31, 2022 2021 2022 2021 Revenues Lease revenue $ 150,022 $ 141,892 $ 580,169 $ 553,668 Other property revenue 1,163 756 4,229 2,902 Construction contract and other service revenues 24,062 43,284 154,632 107,876 Total revenues 175,247 185,932 739,030 664,446 Operating expenses Property operating expenses 58,470 56,459 227,430 213,377 Depreciation and amortization associated with real estate operations 36,907 34,504 141,230 137,543 Construction contract and other service expenses 23,454 42,089 149,963 104,053 General and administrative expenses 7,766 6,589 27,461 27,213 Leasing expenses 2,235 2,568 8,337 8,914 Business development expenses and land carry costs 1,157 1,088 3,193 4,647 Total operating expenses 129,989 143,297 557,614 495,747 Interest expense (16,819 ) (16,217 ) (61,174 ) (65,398 ) Interest and other income 3,340 1,968 9,341 7,879 Credit loss recoveries (expense) 1,331 88 (271 ) 1,128 Gain on sales of real estate 19,238 25,879 19,250 65,590 Loss on early extinguishment of debt (267 ) (41,073 ) (609 ) (100,626 ) Income from continuing operations before equity in income of unconsolidated entities and income taxes 52,081 13,280 147,953 77,272 Equity in income of unconsolidated entities 229 314 1,743 1,093 Income tax expense (223 ) (42 ) (447 ) (145 ) Income from continuing operations 52,087 13,552 149,249 78,220 Discontinued operations — 1,413 29,573 3,358 Net Income 52,087 14,965 178,822 81,578 Net income attributable to noncontrolling interests: Common units in the Operating Partnership (“OP”) (775 ) (181 ) (2,603 ) (1,012 ) Other consolidated entities (833 ) (1,076 ) (3,190 ) (4,025 ) Net income attributable to COPT common shareholders $ 50,479 $ 13,708 $ 173,029 $ 76,541 Earnings per share (“EPS”) computation: Numerator for diluted EPS: Net income attributable to COPT common shareholders $ 50,479 $ 13,708 $ 173,029 $ 76,541 Amount allocable to share-based compensation awards (129 ) (116 ) (463 ) (417 ) Redeemable noncontrolling interests (60 ) (46 ) (169 ) (128 ) Numerator for diluted EPS $ 50,290 $ 13,546 $ 172,397 $ 75,996 Denominator: Weighted average common shares - basic 112,096 111,990 112,073 111,960 Dilutive effect of share-based compensation awards 435 386 431 330 Dilutive effect of redeemable noncontrolling interests 102 124 116 128 Weighted average common shares - diluted 112,633 112,500 112,620 112,418 Diluted EPS $ 0.45 $ 0.12 $ 1.53 $ 0.68 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, 2022 2021 2022 2021 Net income $ 52,087 $ 14,965 $ 178,822 $ 81,578 Real estate-related depreciation and amortization 36,907 36,346 141,230 147,833 Gain on sales of real estate from continuing and discontinued operations (19,238 ) (25,879 ) (47,814 ) (65,590 ) Depreciation and amortization on unconsolidated real estate JVs 526 526 2,101 1,981 Funds from operations (“FFO”) 70,282 25,958 274,339 165,802 FFO allocable to other noncontrolling interests (1,227 ) (1,458 ) (4,795 ) (5,483 ) Basic FFO allocable to share-based compensation awards (360 ) (149 ) (1,433 ) (777 ) Basic FFO available to common share and common unit holders (“Basic FFO”) 68,695 24,351 268,111 159,542 Redeemable noncontrolling interests (27 ) (13 ) (34 ) (11 ) Diluted FFO adjustments allocable to share-based compensation awards 28 6 109 32 Diluted FFO available to common share and common unit holders (“Diluted FFO”) 68,696 24,344 268,186 159,563 Loss on early extinguishment of debt 267 41,073 609 100,626 Gain on early extinguishment of debt on unconsolidated real estate JVs (168 ) — (168 ) — Loss on interest rate derivatives included in interest expense — 221 — 221 Demolition costs on redevelopment and nonrecurring improvements — (8 ) — 423 Executive transition costs — — 343 — Diluted FFO comparability adjustments allocable to share-based compensation awards (1 ) (172 ) (5 ) (507 ) Diluted FFO available to common share and common unit holders, as adjusted for comparability 68,794 65,458 268,965 260,326 Straight line rent adjustments and lease incentive amortization (3,043 ) (3,835 ) (8,825 ) (10,286 ) Amortization of intangibles and other assets included in net operating income (“NOI”) 15 40 (258 ) 162 Share-based compensation, net of amounts capitalized 2,247 2,018 8,700 7,979 Amortization of deferred financing costs 619 640 2,297 2,980 Amortization of net debt discounts, net of amounts capitalized 615 615 2,440 2,244 Replacement capital expenditures (43,283 ) (32,317 ) (95,886 ) (70,973 ) Other 158 204 980 824 Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) $ 26,122 $ 32,823 $ 178,413 $ 193,256 Diluted FFO per share $ 0.60 $ 0.21 $ 2.35 $ 1.40 Diluted FFO per share, as adjusted for comparability $ 0.60 $ 0.58 $ 2.36 $ 2.29 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, 2022 December 31, 2021 Balance Sheet Data Properties, net of accumulated depreciation $ 3,556,398 $ 3,532,944 Total assets $ 4,257,275 $ 4,262,452 Debt per balance sheet $ 2,231,794 $ 2,272,304 Total liabilities $ 2,509,527 $ 2,578,479 Redeemable noncontrolling interests $ 26,293 $ 26,898 Total equity $ 1,721,455 $ 1,657,075 Debt to assets 52.4 % 53.3 % Net debt to adjusted book 39.8 % 40.5 % Core Portfolio Data (as of period end) Number of operating properties 192 184 Total operational square feet (in thousands) 22,849 21,553 % Occupied 92.8 % 92.6 % % Leased 95.3 % 94.4 % For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 GAAP Payout ratio: Net income 60.3% 209.1% 70.2% 153.4% Debt ratios: Net income to interest expense ratio 3.1x 0.9x 2.9x 1.2x Debt to net income ratio 10.7x 38.0x N/A N/A Non-GAAP Payout ratios: Diluted FFO 45.5% 128.0% 46.6% 78.1% Diluted FFO, as adjusted for comparability 45.4% 47.6% 46.5% 47.9% Diluted AFFO 119.7% 95.0% 70.1% 64.5% Debt ratios: Adjusted EBITDA fixed charge coverage ratio 4.7x 4.9x 5.1x 4.7x Net debt to in-place adjusted EBITDA ratio 6.3x 6.7x N/A N/A Pro forma net debt to in-place adjusted EBITDA ratio (1) 6.0x 6.3x N/A N/A Net debt adj. for fully-leased development to in-place adj. EBITDA ratio 6.1x 6.2x N/A N/A Pro forma net debt adj. for fully-leased development to in-place adj. EDITDA ratio (1) 5.7x 5.8x N/A N/A Reconciliation of denominators for per share measures Denominator for diluted EPS 112,633 112,500 112,620 112,418 Weighted average common units 1,476 1,259 1,454 1,257 Denominator for diluted FFO per share and as adjusted for comparability 114,109 113,759 114,074 113,675 (1) Includes adjustments associated with the following transactions: 12/31/22 includes the sale on 1/10/23 of a 90% interest in three data center shell properties; and 12/31/21 includes the sale on 1/25/22 of its wholesale data center. Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 Numerators for Payout Ratios GAAP: Common share dividends - unrestricted shares and deferred shares $ 30,844 $ 30,814 $ 123,367 $ 123,243 Common share dividends - restricted shares and deferred shares 70 80 307 324 Common unit distributions - unrestricted units 406 346 1,623 1,387 Common unit distributions - restricted units 64 53 260 208 Total dividends and distributions for GAAP payout ratio $ 31,384 $ 31,293 $ 125,557 $ 125,162 Non-GAAP: Common share dividends - unrestricted shares and deferred shares $ 30,844 $ 30,814 $ 123,367 $ 123,243 Common unit distributions - unrestricted units 406 346 1,623 1,387 Common unit distributions - dilutive restricted units 13 7 51 25 Dividends and distributions for non-GAAP payout ratios $ 31,263 $ 31,167 $ 125,041 $ 124,655 Reconciliation of net income 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 $ 52,087 $ 14,965 $ 178,822 $ 81,578 Interest expense 16,819 16,217 61,174 65,398 Income tax expense 223 42 447 145 Real estate-related depreciation and amortization from continuing and discontinued operations 36,907 36,346 141,230 147,833 Other depreciation and amortization 602 622 2,363 2,811 Gain on sales of real estate from continuing and discontinued operations (19,238 ) (25,879 ) (47,814 ) (65,590 ) Adjustments from unconsolidated real estate JVs 1,033 763 3,313 2,930 EBITDAre 88,433 43,076 339,535 235,105 Loss on early extinguishment of debt 267 41,073 609 100,626 Gain on early extinguishment of debt on unconsolidated real estate JVs (168 ) — (168 ) — Net gain on other investments (595 ) — (1,159 ) (63 ) Credit loss (recoveries) expense (1,331 ) (88 ) 271 (1,128 ) Business development expenses 794 628 1,891 2,233 Demolition costs on redevelopment and nonrecurring improvements — (8 ) — 423 Executive transition costs 387 — 730 — Adjusted EBITDA 87,787 84,681 $ 341,709 $ 337,196 Pro forma NOI adjustment for property changes within period 2,704 — Other — 1,578 In-place adjusted EBITDA 90,491 86,259 Pro forma NOI adjustment from subsequent event transactions (2,903 ) (3,074 ) Pro forma in-place adjusted EBITDA $ 87,588 $ 83,185 Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures Tenant improvements and incentives $ 33,439 $ 19,724 $ 62,952 $ 43,820 Building improvements 8,468 17,778 29,528 35,970 Leasing costs 4,389 5,863 11,480 12,736 Net (exclusions from) additions to tenant improvements and incentives (75 ) (5,093 ) 2,150 (4,704 ) Excluded building improvements and leasing costs (2,938 ) (5,955 ) (10,224 ) (16,849 ) Replacement capital expenditures $ 43,283 $ 32,317 $ 95,886 $ 70,973 Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA Interest expense $ 16,819 $ 16,217 $ 61,174 $ 65,398 Less: Amortization of deferred financing costs (619 ) (640 ) (2,297 ) (2,980 ) Less: Amortization of net debt discounts, net of amounts capitalized (615 ) (615 ) (2,440 ) (2,244 ) Less: Loss on interest rate derivatives included in interest expense — (221 ) — (221 ) COPT’s share of interest expense of unconsolidated real estate JVs, excluding amortizations of deferred financing costs and net debt premium and loss on interest rate derivatives 423 237 1,123 943 Scheduled principal amortization 864 950 3,333 3,860 Capitalized interest 1,835 1,192 6,709 6,467 Denominator for fixed charge coverage-Adjusted EBITDA $ 18,707 $ 17,120 $ 67,602 $ 71,223 Reconciliation of net income to NOI from real estate operations, same properties NOI from real estate operations and same properties cash NOI from real estate operations Net income $ 52,087 $ 14,965 $ 178,822 $ 81,578 Construction contract and other service revenues (24,062 ) (43,284 ) (154,632 ) (107,876 ) Depreciation and other amortization associated with real estate operations 36,907 34,504 141,230 137,543 Construction contract and other service expenses 23,454 42,089 149,963 104,053 General and administrative expenses 7,766 6,589 27,461 27,213 Leasing expenses 2,235 2,568 8,337 8,914 Business development expenses and land carry costs 1,157 1,088 3,193 4,647 Interest expense 16,819 16,217 61,174 65,398 Interest and other income (3,340 ) (1,968 ) (9,341 ) (7,879 ) Credit loss (recoveries) expense (1,331 ) (88 ) 271 (1,128 ) Gain on sales of real estate from continuing operations (19,238 ) (25,879 ) (19,250 ) (65,590 ) Loss on early extinguishment of debt 267 41,073 609 100,626 Equity in income of unconsolidated entities (229 ) (314 ) (1,743 ) (1,093 ) Unconsolidated real estate JVs NOI allocable to COPT included in equity in income of unconsolidated entities 1,095 1,079 4,327 4,029 Income tax expense 223 42 447 145 Discontinued operations — (1,413 ) (29,573 ) (3,358 ) Revenues from real estate operations from discontinued operations — 8,235 1,980 30,490 Property operating expenses from discontinued operations — (4,980 ) (971 ) (16,842 ) NOI from real estate operations 93,810 90,523 362,304 360,870 Non-Same Properties NOI from real estate operations (11,845 ) (9,475 ) (38,298 ) (31,598 ) Same Properties NOI from real estate operations 81,965 81,048 324,006 329,272 Straight line rent adjustments and lease incentive amortization 2,556 2,715 8,602 3,854 Amortization of acquired above- and below-market rents (131 ) (100 ) (844 ) (396 ) Lease termination fees, net (1,026 ) 893 (2,237 ) (2,416 ) Tenant funded landlord assets and lease incentives (895 ) (1,649 ) (5,596 ) (3,469 ) Cash NOI adjustments in unconsolidated real estate JVs (68 ) (87 ) (301 ) (375 ) Same Properties Cash NOI from real estate operations $ 82,401 $ 82,820 $ 323,630 $ 326,470 Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) December 31, 2022 December 31, 2021 Reconciliation of total assets to adjusted book Total assets $ 4,257,275 $ 4,262,452 Accumulated depreciation 1,267,434 1,152,523 Accumulated depreciation included in assets held for sale 6,014 82,385 Accumulated amortization of intangibles on property acquisitions and deferred leasing costs 222,779 215,925 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 52,404 27,312 COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs 6,078 3,744 Less: Property - operating lease liabilities (28,759 ) (29,342 ) Less: Cash and cash equivalents (12,337 ) (13,262 ) Less: COPT’s share of cash of unconsolidated real estate JVs (456 ) (434 ) Adjusted book $ 5,770,432 $ 5,705,850 December 31, 2022 December 31, 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 $ 2,231,794 $ 2,272,304 Net discounts and deferred financing costs 23,160 25,982 COPT’s share of unconsolidated JV gross debt 52,100 26,250 Gross debt $ 2,307,054 $ 2,324,536 Less: Cash and cash equivalents (12,337 ) (13,262 ) Less: COPT’s share of cash of unconsolidated real estate JVs (456 ) (434 ) Net debt $ 2,294,261 $ 2,310,840 Costs incurred on fully-leased development properties (95,972 ) (162,884 ) Net debt adjusted for fully-leased development $ 2,198,289 $ 2,147,956 Net debt $ 2,294,261 $ 2,310,840 Pro forma debt adjustments from subsequent event transaction proceeds (189,000 ) (216,000 ) Pro forma net debt $ 2,105,261 $ 2,094,840 Costs incurred on fully-leased development properties (95,972 ) (162,884 ) Pro forma net debt adjusted for fully-leased development $ 2,009,289 $ 1,931,956 View source version on businesswire.com: https://www.businesswire.com/news/home/20230209005713/en/Contacts IR Contacts: Venkat Kommineni, CFA 443-285-5587 venkat.kommineni@copt.com Michelle Layne 443-285-5452 michelle.layne@copt.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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COPT Reports Full Year 2022 Results By: Corporate Office Properties Trust via Business Wire February 09, 2023 at 16:17 PM EST EPS of $1.53 for Full Year; FFO per Share, as Adjusted for Comparability, of $2.36 Core Portfolio 93% Occupied and 95% Leased Placed 1.3 million SF of Developments into Service that were 99% Leased 1.5 million SF of Active Developments 89% Leased Outstanding Leasing Achievement Total Leasing of 3.0 million SF Highest Annual Vacancy Leasing Achieved in 12 Years at 801,000 SF Tenant Retention of 72% Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the fourth quarter and full year ended December 31, 2022. Management Comments Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Our Defense/IT investment strategy, which has concentrated our portfolio near priority U.S. defense installations, continues to produce strong results, and has proved resilient in the face of macro-economic headwinds impacting the office sector. The 3% growth in FFO per share, as adjusted for comparability generated in 2022, exceeded our initial guidance by $0.02 per share. We executed 801,000 square feet of vacancy leasing, the highest level in 12 years. We are off to a great start in terms of development leasing, having executed over 460,000 square feet already in 2023, consisting of two data center shell build-to-suits in Northern Virginia, and one build-to-suit building at Redstone Gateway. The outlook for defense spending remains favorable. The FY23 defense base budget that passed in December represents a 7.5% year-over-year increase, and is 15% higher than that of FY21, which drove leasing results in 2022. Given the timing of the appropriation, we expect this increase to fuel demand for space in our portfolio throughout 2024.” He continued, “From a financing standpoint, we recently closed on two new 90%/10% JVs, which will fund the equity component of our expected development needs in 2023, assuring sufficient capital to fund development on a leverage neutral basis for the foreseeable future. Our balance sheet remains strong, evidenced by our solid debt service coverage ratios, with no large debt maturities until 2026.” Financial Highlights 4th Quarter Financial Results: Diluted earnings per share (“EPS”) was $0.45 for the quarter ended December 31, 2022 compared to $0.12 for the quarter ended December 31, 2021. Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.60 for the quarter ended December 31, 2022 compared to $0.21 for the quarter ended December 31, 2021. FFOPS, as adjusted for comparability, was $0.60 for the quarter ended December 31, 2022 compared to $0.58 for the quarter ended December 31, 2021. Full Year 2022 Financial Results: EPS for the year ended December 31, 2022 was $1.53 as compared to $0.68 for 2021. Per Nareit’s definition, FFOPS for 2022 was $2.35 as compared to $1.40 for 2021. FFOPS, as adjusted for comparability, for 2022 was $2.36 as compared to $2.29 for 2021. Operating Performance Highlights Operating Portfolio Summary: At December 31, 2022, the Company’s 22.8 million square foot core portfolio was 92.8% occupied and 95.3% leased. During the quarter and the year, the Company placed into service 917,000 and 1.3 million square feet, respectively, of developments that were 99% leased at January 31, 2023. Same-Property Performance: At December 31, 2022, the Company’s 20.0 million square foot same-property portfolio was 92.4% occupied and 95.0% leased. The Company’s same-property cash NOI decreased 0.5% and 0.9%, year-over-year for the three months and year ended December 31, 2022, respectively, compared to the same periods in 2021. Leasing: Total Square Feet Leased: For the quarter ended December 31, 2022, the Company leased 692,000 square feet, including 519,000 square feet of renewals and 173,000 square feet of vacancy leasing. For the year ended December 31, 2022, the Company executed 3.0 million square feet of total leasing, including 1.7 million square feet of renewals, 801,000 square feet of vacancy leasing, and 476,000 square feet in development projects. Tenant Retention Rates: During the quarter and year ended December 31, 2022, the Company renewed 72.2% and 72.1%, respectively, of expiring square feet. Rent Spreads & Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2022, straight-line rents on renewals increased 3.6% and 3.1%, respectively, and cash rents on renewed space increased 0.1% and decreased 2.0%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.6% and 2.5%, respectively. Lease Terms: In the quarter ended December 31, 2022, lease terms averaged 3.5 years on renewing leases and 9.8 years on vacancy leasing. For the year, lease terms averaged 3.6 years on renewing leases, 7.3 years on vacancy leasing, and 13.3 years on development leasing. Investment Activity Highlights Development Pipeline: The Company’s development pipeline consists of 10 properties totaling 1.5 million square feet that were 89% leased at January 31, 2023. These projects represent a total estimated investment of $487.5 million, of which $127.5 million has been spent. Balance Sheet and Capital Transaction Highlights On October 26, 2022, the Company entered into a credit agreement with a group of lenders for an aggregate of $725.0 million of available borrowings including: an unsecured revolving credit facility with a lender commitment of $600.0 million that replaced its existing Revolving Credit Facility; and a $125.0 million unsecured term loan, the proceeds of which were used to pay off the remaining $100.0 million outstanding under an existing unsecured term loan and pay down a portion of its Revolving Credit Facility. On December 14, 2022, the Company sold two data center shells to a new, 90%/10% joint venture with entities affiliated with Blackstone, generating approximately $60 million of proceeds. On January 10, 2023, the Company sold an additional three data center shells to a new, 90%/10% joint venture with entities affiliated with Blackstone, generating approximately $190 million of proceeds. For the quarter ended December 31, 2022, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.7x. At December 31, 2022, the Company’s net debt to in-place adjusted EBITDA ratio was 6.3x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 6.1x. At December 31, 2022, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.15% with a weighted average maturity of 6.6 years; additionally, 85.1% 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 fourth quarter and full year 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 2023 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 & Events – Press Releases’ section of COPT’s Investors website: https://investors.copt.com/news-events/press-releases Conference Call Information Management will discuss fourth quarter and full year 2022 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below: Conference Call Date: Friday, February 10, 2023 Time: 12:00 p.m. Eastern Time Participants must register for the conference call at the link below to receive the dial-in number and personal pin. Registering only takes a few moments and provides direct access to the conference call without waiting for an operator. You may register at any time, including up to and after the call start time: https://register.vevent.com/register/BIc8139cc8ddaa47a4b273039144a05aea The conference call will also be available via live webcast in the ‘News & Events – IR Calendar’ section of COPT’s Investors website: https://investors.copt.com/news-events/ir-calendar Replay Information A replay of the conference call will be immediately available via webcast only on COPT’s Investors website. Definitions For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables. About COPT COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what the Company believes are growing, durable, priority missions (“Defense/IT Locations”). The Company also owns a portfolio of office properties located in select urban submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office Properties”). As of December 31, 2022, the Company derived 91% of its core portfolio annualized rental revenue from Defense/IT Locations and 9% from its Regional Office Properties. As of the same date and including 21 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 192 properties encompassed 22.8 million square feet and was 95.3% 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 December 31, For the Years Ended December 31, 2022 2021 2022 2021 Revenues Lease revenue $ 150,022 $ 141,892 $ 580,169 $ 553,668 Other property revenue 1,163 756 4,229 2,902 Construction contract and other service revenues 24,062 43,284 154,632 107,876 Total revenues 175,247 185,932 739,030 664,446 Operating expenses Property operating expenses 58,470 56,459 227,430 213,377 Depreciation and amortization associated with real estate operations 36,907 34,504 141,230 137,543 Construction contract and other service expenses 23,454 42,089 149,963 104,053 General and administrative expenses 7,766 6,589 27,461 27,213 Leasing expenses 2,235 2,568 8,337 8,914 Business development expenses and land carry costs 1,157 1,088 3,193 4,647 Total operating expenses 129,989 143,297 557,614 495,747 Interest expense (16,819 ) (16,217 ) (61,174 ) (65,398 ) Interest and other income 3,340 1,968 9,341 7,879 Credit loss recoveries (expense) 1,331 88 (271 ) 1,128 Gain on sales of real estate 19,238 25,879 19,250 65,590 Loss on early extinguishment of debt (267 ) (41,073 ) (609 ) (100,626 ) Income from continuing operations before equity in income of unconsolidated entities and income taxes 52,081 13,280 147,953 77,272 Equity in income of unconsolidated entities 229 314 1,743 1,093 Income tax expense (223 ) (42 ) (447 ) (145 ) Income from continuing operations 52,087 13,552 149,249 78,220 Discontinued operations — 1,413 29,573 3,358 Net Income 52,087 14,965 178,822 81,578 Net income attributable to noncontrolling interests: Common units in the Operating Partnership (“OP”) (775 ) (181 ) (2,603 ) (1,012 ) Other consolidated entities (833 ) (1,076 ) (3,190 ) (4,025 ) Net income attributable to COPT common shareholders $ 50,479 $ 13,708 $ 173,029 $ 76,541 Earnings per share (“EPS”) computation: Numerator for diluted EPS: Net income attributable to COPT common shareholders $ 50,479 $ 13,708 $ 173,029 $ 76,541 Amount allocable to share-based compensation awards (129 ) (116 ) (463 ) (417 ) Redeemable noncontrolling interests (60 ) (46 ) (169 ) (128 ) Numerator for diluted EPS $ 50,290 $ 13,546 $ 172,397 $ 75,996 Denominator: Weighted average common shares - basic 112,096 111,990 112,073 111,960 Dilutive effect of share-based compensation awards 435 386 431 330 Dilutive effect of redeemable noncontrolling interests 102 124 116 128 Weighted average common shares - diluted 112,633 112,500 112,620 112,418 Diluted EPS $ 0.45 $ 0.12 $ 1.53 $ 0.68 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, 2022 2021 2022 2021 Net income $ 52,087 $ 14,965 $ 178,822 $ 81,578 Real estate-related depreciation and amortization 36,907 36,346 141,230 147,833 Gain on sales of real estate from continuing and discontinued operations (19,238 ) (25,879 ) (47,814 ) (65,590 ) Depreciation and amortization on unconsolidated real estate JVs 526 526 2,101 1,981 Funds from operations (“FFO”) 70,282 25,958 274,339 165,802 FFO allocable to other noncontrolling interests (1,227 ) (1,458 ) (4,795 ) (5,483 ) Basic FFO allocable to share-based compensation awards (360 ) (149 ) (1,433 ) (777 ) Basic FFO available to common share and common unit holders (“Basic FFO”) 68,695 24,351 268,111 159,542 Redeemable noncontrolling interests (27 ) (13 ) (34 ) (11 ) Diluted FFO adjustments allocable to share-based compensation awards 28 6 109 32 Diluted FFO available to common share and common unit holders (“Diluted FFO”) 68,696 24,344 268,186 159,563 Loss on early extinguishment of debt 267 41,073 609 100,626 Gain on early extinguishment of debt on unconsolidated real estate JVs (168 ) — (168 ) — Loss on interest rate derivatives included in interest expense — 221 — 221 Demolition costs on redevelopment and nonrecurring improvements — (8 ) — 423 Executive transition costs — — 343 — Diluted FFO comparability adjustments allocable to share-based compensation awards (1 ) (172 ) (5 ) (507 ) Diluted FFO available to common share and common unit holders, as adjusted for comparability 68,794 65,458 268,965 260,326 Straight line rent adjustments and lease incentive amortization (3,043 ) (3,835 ) (8,825 ) (10,286 ) Amortization of intangibles and other assets included in net operating income (“NOI”) 15 40 (258 ) 162 Share-based compensation, net of amounts capitalized 2,247 2,018 8,700 7,979 Amortization of deferred financing costs 619 640 2,297 2,980 Amortization of net debt discounts, net of amounts capitalized 615 615 2,440 2,244 Replacement capital expenditures (43,283 ) (32,317 ) (95,886 ) (70,973 ) Other 158 204 980 824 Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) $ 26,122 $ 32,823 $ 178,413 $ 193,256 Diluted FFO per share $ 0.60 $ 0.21 $ 2.35 $ 1.40 Diluted FFO per share, as adjusted for comparability $ 0.60 $ 0.58 $ 2.36 $ 2.29 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, 2022 December 31, 2021 Balance Sheet Data Properties, net of accumulated depreciation $ 3,556,398 $ 3,532,944 Total assets $ 4,257,275 $ 4,262,452 Debt per balance sheet $ 2,231,794 $ 2,272,304 Total liabilities $ 2,509,527 $ 2,578,479 Redeemable noncontrolling interests $ 26,293 $ 26,898 Total equity $ 1,721,455 $ 1,657,075 Debt to assets 52.4 % 53.3 % Net debt to adjusted book 39.8 % 40.5 % Core Portfolio Data (as of period end) Number of operating properties 192 184 Total operational square feet (in thousands) 22,849 21,553 % Occupied 92.8 % 92.6 % % Leased 95.3 % 94.4 % For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 GAAP Payout ratio: Net income 60.3% 209.1% 70.2% 153.4% Debt ratios: Net income to interest expense ratio 3.1x 0.9x 2.9x 1.2x Debt to net income ratio 10.7x 38.0x N/A N/A Non-GAAP Payout ratios: Diluted FFO 45.5% 128.0% 46.6% 78.1% Diluted FFO, as adjusted for comparability 45.4% 47.6% 46.5% 47.9% Diluted AFFO 119.7% 95.0% 70.1% 64.5% Debt ratios: Adjusted EBITDA fixed charge coverage ratio 4.7x 4.9x 5.1x 4.7x Net debt to in-place adjusted EBITDA ratio 6.3x 6.7x N/A N/A Pro forma net debt to in-place adjusted EBITDA ratio (1) 6.0x 6.3x N/A N/A Net debt adj. for fully-leased development to in-place adj. EBITDA ratio 6.1x 6.2x N/A N/A Pro forma net debt adj. for fully-leased development to in-place adj. EDITDA ratio (1) 5.7x 5.8x N/A N/A Reconciliation of denominators for per share measures Denominator for diluted EPS 112,633 112,500 112,620 112,418 Weighted average common units 1,476 1,259 1,454 1,257 Denominator for diluted FFO per share and as adjusted for comparability 114,109 113,759 114,074 113,675 (1) Includes adjustments associated with the following transactions: 12/31/22 includes the sale on 1/10/23 of a 90% interest in three data center shell properties; and 12/31/21 includes the sale on 1/25/22 of its wholesale data center. Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 Numerators for Payout Ratios GAAP: Common share dividends - unrestricted shares and deferred shares $ 30,844 $ 30,814 $ 123,367 $ 123,243 Common share dividends - restricted shares and deferred shares 70 80 307 324 Common unit distributions - unrestricted units 406 346 1,623 1,387 Common unit distributions - restricted units 64 53 260 208 Total dividends and distributions for GAAP payout ratio $ 31,384 $ 31,293 $ 125,557 $ 125,162 Non-GAAP: Common share dividends - unrestricted shares and deferred shares $ 30,844 $ 30,814 $ 123,367 $ 123,243 Common unit distributions - unrestricted units 406 346 1,623 1,387 Common unit distributions - dilutive restricted units 13 7 51 25 Dividends and distributions for non-GAAP payout ratios $ 31,263 $ 31,167 $ 125,041 $ 124,655 Reconciliation of net income 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 $ 52,087 $ 14,965 $ 178,822 $ 81,578 Interest expense 16,819 16,217 61,174 65,398 Income tax expense 223 42 447 145 Real estate-related depreciation and amortization from continuing and discontinued operations 36,907 36,346 141,230 147,833 Other depreciation and amortization 602 622 2,363 2,811 Gain on sales of real estate from continuing and discontinued operations (19,238 ) (25,879 ) (47,814 ) (65,590 ) Adjustments from unconsolidated real estate JVs 1,033 763 3,313 2,930 EBITDAre 88,433 43,076 339,535 235,105 Loss on early extinguishment of debt 267 41,073 609 100,626 Gain on early extinguishment of debt on unconsolidated real estate JVs (168 ) — (168 ) — Net gain on other investments (595 ) — (1,159 ) (63 ) Credit loss (recoveries) expense (1,331 ) (88 ) 271 (1,128 ) Business development expenses 794 628 1,891 2,233 Demolition costs on redevelopment and nonrecurring improvements — (8 ) — 423 Executive transition costs 387 — 730 — Adjusted EBITDA 87,787 84,681 $ 341,709 $ 337,196 Pro forma NOI adjustment for property changes within period 2,704 — Other — 1,578 In-place adjusted EBITDA 90,491 86,259 Pro forma NOI adjustment from subsequent event transactions (2,903 ) (3,074 ) Pro forma in-place adjusted EBITDA $ 87,588 $ 83,185 Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures Tenant improvements and incentives $ 33,439 $ 19,724 $ 62,952 $ 43,820 Building improvements 8,468 17,778 29,528 35,970 Leasing costs 4,389 5,863 11,480 12,736 Net (exclusions from) additions to tenant improvements and incentives (75 ) (5,093 ) 2,150 (4,704 ) Excluded building improvements and leasing costs (2,938 ) (5,955 ) (10,224 ) (16,849 ) Replacement capital expenditures $ 43,283 $ 32,317 $ 95,886 $ 70,973 Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA Interest expense $ 16,819 $ 16,217 $ 61,174 $ 65,398 Less: Amortization of deferred financing costs (619 ) (640 ) (2,297 ) (2,980 ) Less: Amortization of net debt discounts, net of amounts capitalized (615 ) (615 ) (2,440 ) (2,244 ) Less: Loss on interest rate derivatives included in interest expense — (221 ) — (221 ) COPT’s share of interest expense of unconsolidated real estate JVs, excluding amortizations of deferred financing costs and net debt premium and loss on interest rate derivatives 423 237 1,123 943 Scheduled principal amortization 864 950 3,333 3,860 Capitalized interest 1,835 1,192 6,709 6,467 Denominator for fixed charge coverage-Adjusted EBITDA $ 18,707 $ 17,120 $ 67,602 $ 71,223 Reconciliation of net income to NOI from real estate operations, same properties NOI from real estate operations and same properties cash NOI from real estate operations Net income $ 52,087 $ 14,965 $ 178,822 $ 81,578 Construction contract and other service revenues (24,062 ) (43,284 ) (154,632 ) (107,876 ) Depreciation and other amortization associated with real estate operations 36,907 34,504 141,230 137,543 Construction contract and other service expenses 23,454 42,089 149,963 104,053 General and administrative expenses 7,766 6,589 27,461 27,213 Leasing expenses 2,235 2,568 8,337 8,914 Business development expenses and land carry costs 1,157 1,088 3,193 4,647 Interest expense 16,819 16,217 61,174 65,398 Interest and other income (3,340 ) (1,968 ) (9,341 ) (7,879 ) Credit loss (recoveries) expense (1,331 ) (88 ) 271 (1,128 ) Gain on sales of real estate from continuing operations (19,238 ) (25,879 ) (19,250 ) (65,590 ) Loss on early extinguishment of debt 267 41,073 609 100,626 Equity in income of unconsolidated entities (229 ) (314 ) (1,743 ) (1,093 ) Unconsolidated real estate JVs NOI allocable to COPT included in equity in income of unconsolidated entities 1,095 1,079 4,327 4,029 Income tax expense 223 42 447 145 Discontinued operations — (1,413 ) (29,573 ) (3,358 ) Revenues from real estate operations from discontinued operations — 8,235 1,980 30,490 Property operating expenses from discontinued operations — (4,980 ) (971 ) (16,842 ) NOI from real estate operations 93,810 90,523 362,304 360,870 Non-Same Properties NOI from real estate operations (11,845 ) (9,475 ) (38,298 ) (31,598 ) Same Properties NOI from real estate operations 81,965 81,048 324,006 329,272 Straight line rent adjustments and lease incentive amortization 2,556 2,715 8,602 3,854 Amortization of acquired above- and below-market rents (131 ) (100 ) (844 ) (396 ) Lease termination fees, net (1,026 ) 893 (2,237 ) (2,416 ) Tenant funded landlord assets and lease incentives (895 ) (1,649 ) (5,596 ) (3,469 ) Cash NOI adjustments in unconsolidated real estate JVs (68 ) (87 ) (301 ) (375 ) Same Properties Cash NOI from real estate operations $ 82,401 $ 82,820 $ 323,630 $ 326,470 Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) December 31, 2022 December 31, 2021 Reconciliation of total assets to adjusted book Total assets $ 4,257,275 $ 4,262,452 Accumulated depreciation 1,267,434 1,152,523 Accumulated depreciation included in assets held for sale 6,014 82,385 Accumulated amortization of intangibles on property acquisitions and deferred leasing costs 222,779 215,925 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 52,404 27,312 COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs 6,078 3,744 Less: Property - operating lease liabilities (28,759 ) (29,342 ) Less: Cash and cash equivalents (12,337 ) (13,262 ) Less: COPT’s share of cash of unconsolidated real estate JVs (456 ) (434 ) Adjusted book $ 5,770,432 $ 5,705,850 December 31, 2022 December 31, 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 $ 2,231,794 $ 2,272,304 Net discounts and deferred financing costs 23,160 25,982 COPT’s share of unconsolidated JV gross debt 52,100 26,250 Gross debt $ 2,307,054 $ 2,324,536 Less: Cash and cash equivalents (12,337 ) (13,262 ) Less: COPT’s share of cash of unconsolidated real estate JVs (456 ) (434 ) Net debt $ 2,294,261 $ 2,310,840 Costs incurred on fully-leased development properties (95,972 ) (162,884 ) Net debt adjusted for fully-leased development $ 2,198,289 $ 2,147,956 Net debt $ 2,294,261 $ 2,310,840 Pro forma debt adjustments from subsequent event transaction proceeds (189,000 ) (216,000 ) Pro forma net debt $ 2,105,261 $ 2,094,840 Costs incurred on fully-leased development properties (95,972 ) (162,884 ) Pro forma net debt adjusted for fully-leased development $ 2,009,289 $ 1,931,956 View source version on businesswire.com: https://www.businesswire.com/news/home/20230209005713/en/Contacts IR Contacts: Venkat Kommineni, CFA 443-285-5587 venkat.kommineni@copt.com Michelle Layne 443-285-5452 michelle.layne@copt.com
EPS of $1.53 for Full Year; FFO per Share, as Adjusted for Comparability, of $2.36 Core Portfolio 93% Occupied and 95% Leased Placed 1.3 million SF of Developments into Service that were 99% Leased 1.5 million SF of Active Developments 89% Leased Outstanding Leasing Achievement Total Leasing of 3.0 million SF Highest Annual Vacancy Leasing Achieved in 12 Years at 801,000 SF Tenant Retention of 72%
Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the fourth quarter and full year ended December 31, 2022. Management Comments Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Our Defense/IT investment strategy, which has concentrated our portfolio near priority U.S. defense installations, continues to produce strong results, and has proved resilient in the face of macro-economic headwinds impacting the office sector. The 3% growth in FFO per share, as adjusted for comparability generated in 2022, exceeded our initial guidance by $0.02 per share. We executed 801,000 square feet of vacancy leasing, the highest level in 12 years. We are off to a great start in terms of development leasing, having executed over 460,000 square feet already in 2023, consisting of two data center shell build-to-suits in Northern Virginia, and one build-to-suit building at Redstone Gateway. The outlook for defense spending remains favorable. The FY23 defense base budget that passed in December represents a 7.5% year-over-year increase, and is 15% higher than that of FY21, which drove leasing results in 2022. Given the timing of the appropriation, we expect this increase to fuel demand for space in our portfolio throughout 2024.” He continued, “From a financing standpoint, we recently closed on two new 90%/10% JVs, which will fund the equity component of our expected development needs in 2023, assuring sufficient capital to fund development on a leverage neutral basis for the foreseeable future. Our balance sheet remains strong, evidenced by our solid debt service coverage ratios, with no large debt maturities until 2026.” Financial Highlights 4th Quarter Financial Results: Diluted earnings per share (“EPS”) was $0.45 for the quarter ended December 31, 2022 compared to $0.12 for the quarter ended December 31, 2021. Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.60 for the quarter ended December 31, 2022 compared to $0.21 for the quarter ended December 31, 2021. FFOPS, as adjusted for comparability, was $0.60 for the quarter ended December 31, 2022 compared to $0.58 for the quarter ended December 31, 2021. Full Year 2022 Financial Results: EPS for the year ended December 31, 2022 was $1.53 as compared to $0.68 for 2021. Per Nareit’s definition, FFOPS for 2022 was $2.35 as compared to $1.40 for 2021. FFOPS, as adjusted for comparability, for 2022 was $2.36 as compared to $2.29 for 2021. Operating Performance Highlights Operating Portfolio Summary: At December 31, 2022, the Company’s 22.8 million square foot core portfolio was 92.8% occupied and 95.3% leased. During the quarter and the year, the Company placed into service 917,000 and 1.3 million square feet, respectively, of developments that were 99% leased at January 31, 2023. Same-Property Performance: At December 31, 2022, the Company’s 20.0 million square foot same-property portfolio was 92.4% occupied and 95.0% leased. The Company’s same-property cash NOI decreased 0.5% and 0.9%, year-over-year for the three months and year ended December 31, 2022, respectively, compared to the same periods in 2021. Leasing: Total Square Feet Leased: For the quarter ended December 31, 2022, the Company leased 692,000 square feet, including 519,000 square feet of renewals and 173,000 square feet of vacancy leasing. For the year ended December 31, 2022, the Company executed 3.0 million square feet of total leasing, including 1.7 million square feet of renewals, 801,000 square feet of vacancy leasing, and 476,000 square feet in development projects. Tenant Retention Rates: During the quarter and year ended December 31, 2022, the Company renewed 72.2% and 72.1%, respectively, of expiring square feet. Rent Spreads & Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2022, straight-line rents on renewals increased 3.6% and 3.1%, respectively, and cash rents on renewed space increased 0.1% and decreased 2.0%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.6% and 2.5%, respectively. Lease Terms: In the quarter ended December 31, 2022, lease terms averaged 3.5 years on renewing leases and 9.8 years on vacancy leasing. For the year, lease terms averaged 3.6 years on renewing leases, 7.3 years on vacancy leasing, and 13.3 years on development leasing. Investment Activity Highlights Development Pipeline: The Company’s development pipeline consists of 10 properties totaling 1.5 million square feet that were 89% leased at January 31, 2023. These projects represent a total estimated investment of $487.5 million, of which $127.5 million has been spent. Balance Sheet and Capital Transaction Highlights On October 26, 2022, the Company entered into a credit agreement with a group of lenders for an aggregate of $725.0 million of available borrowings including: an unsecured revolving credit facility with a lender commitment of $600.0 million that replaced its existing Revolving Credit Facility; and a $125.0 million unsecured term loan, the proceeds of which were used to pay off the remaining $100.0 million outstanding under an existing unsecured term loan and pay down a portion of its Revolving Credit Facility. On December 14, 2022, the Company sold two data center shells to a new, 90%/10% joint venture with entities affiliated with Blackstone, generating approximately $60 million of proceeds. On January 10, 2023, the Company sold an additional three data center shells to a new, 90%/10% joint venture with entities affiliated with Blackstone, generating approximately $190 million of proceeds. For the quarter ended December 31, 2022, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.7x. At December 31, 2022, the Company’s net debt to in-place adjusted EBITDA ratio was 6.3x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 6.1x. At December 31, 2022, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.15% with a weighted average maturity of 6.6 years; additionally, 85.1% 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 fourth quarter and full year 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 2023 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 & Events – Press Releases’ section of COPT’s Investors website: https://investors.copt.com/news-events/press-releases Conference Call Information Management will discuss fourth quarter and full year 2022 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below: Conference Call Date: Friday, February 10, 2023 Time: 12:00 p.m. Eastern Time Participants must register for the conference call at the link below to receive the dial-in number and personal pin. Registering only takes a few moments and provides direct access to the conference call without waiting for an operator. You may register at any time, including up to and after the call start time: https://register.vevent.com/register/BIc8139cc8ddaa47a4b273039144a05aea The conference call will also be available via live webcast in the ‘News & Events – IR Calendar’ section of COPT’s Investors website: https://investors.copt.com/news-events/ir-calendar Replay Information A replay of the conference call will be immediately available via webcast only on COPT’s Investors website. Definitions For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables. About COPT COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what the Company believes are growing, durable, priority missions (“Defense/IT Locations”). The Company also owns a portfolio of office properties located in select urban submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office Properties”). As of December 31, 2022, the Company derived 91% of its core portfolio annualized rental revenue from Defense/IT Locations and 9% from its Regional Office Properties. As of the same date and including 21 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 192 properties encompassed 22.8 million square feet and was 95.3% 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 December 31, For the Years Ended December 31, 2022 2021 2022 2021 Revenues Lease revenue $ 150,022 $ 141,892 $ 580,169 $ 553,668 Other property revenue 1,163 756 4,229 2,902 Construction contract and other service revenues 24,062 43,284 154,632 107,876 Total revenues 175,247 185,932 739,030 664,446 Operating expenses Property operating expenses 58,470 56,459 227,430 213,377 Depreciation and amortization associated with real estate operations 36,907 34,504 141,230 137,543 Construction contract and other service expenses 23,454 42,089 149,963 104,053 General and administrative expenses 7,766 6,589 27,461 27,213 Leasing expenses 2,235 2,568 8,337 8,914 Business development expenses and land carry costs 1,157 1,088 3,193 4,647 Total operating expenses 129,989 143,297 557,614 495,747 Interest expense (16,819 ) (16,217 ) (61,174 ) (65,398 ) Interest and other income 3,340 1,968 9,341 7,879 Credit loss recoveries (expense) 1,331 88 (271 ) 1,128 Gain on sales of real estate 19,238 25,879 19,250 65,590 Loss on early extinguishment of debt (267 ) (41,073 ) (609 ) (100,626 ) Income from continuing operations before equity in income of unconsolidated entities and income taxes 52,081 13,280 147,953 77,272 Equity in income of unconsolidated entities 229 314 1,743 1,093 Income tax expense (223 ) (42 ) (447 ) (145 ) Income from continuing operations 52,087 13,552 149,249 78,220 Discontinued operations — 1,413 29,573 3,358 Net Income 52,087 14,965 178,822 81,578 Net income attributable to noncontrolling interests: Common units in the Operating Partnership (“OP”) (775 ) (181 ) (2,603 ) (1,012 ) Other consolidated entities (833 ) (1,076 ) (3,190 ) (4,025 ) Net income attributable to COPT common shareholders $ 50,479 $ 13,708 $ 173,029 $ 76,541 Earnings per share (“EPS”) computation: Numerator for diluted EPS: Net income attributable to COPT common shareholders $ 50,479 $ 13,708 $ 173,029 $ 76,541 Amount allocable to share-based compensation awards (129 ) (116 ) (463 ) (417 ) Redeemable noncontrolling interests (60 ) (46 ) (169 ) (128 ) Numerator for diluted EPS $ 50,290 $ 13,546 $ 172,397 $ 75,996 Denominator: Weighted average common shares - basic 112,096 111,990 112,073 111,960 Dilutive effect of share-based compensation awards 435 386 431 330 Dilutive effect of redeemable noncontrolling interests 102 124 116 128 Weighted average common shares - diluted 112,633 112,500 112,620 112,418 Diluted EPS $ 0.45 $ 0.12 $ 1.53 $ 0.68 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, 2022 2021 2022 2021 Net income $ 52,087 $ 14,965 $ 178,822 $ 81,578 Real estate-related depreciation and amortization 36,907 36,346 141,230 147,833 Gain on sales of real estate from continuing and discontinued operations (19,238 ) (25,879 ) (47,814 ) (65,590 ) Depreciation and amortization on unconsolidated real estate JVs 526 526 2,101 1,981 Funds from operations (“FFO”) 70,282 25,958 274,339 165,802 FFO allocable to other noncontrolling interests (1,227 ) (1,458 ) (4,795 ) (5,483 ) Basic FFO allocable to share-based compensation awards (360 ) (149 ) (1,433 ) (777 ) Basic FFO available to common share and common unit holders (“Basic FFO”) 68,695 24,351 268,111 159,542 Redeemable noncontrolling interests (27 ) (13 ) (34 ) (11 ) Diluted FFO adjustments allocable to share-based compensation awards 28 6 109 32 Diluted FFO available to common share and common unit holders (“Diluted FFO”) 68,696 24,344 268,186 159,563 Loss on early extinguishment of debt 267 41,073 609 100,626 Gain on early extinguishment of debt on unconsolidated real estate JVs (168 ) — (168 ) — Loss on interest rate derivatives included in interest expense — 221 — 221 Demolition costs on redevelopment and nonrecurring improvements — (8 ) — 423 Executive transition costs — — 343 — Diluted FFO comparability adjustments allocable to share-based compensation awards (1 ) (172 ) (5 ) (507 ) Diluted FFO available to common share and common unit holders, as adjusted for comparability 68,794 65,458 268,965 260,326 Straight line rent adjustments and lease incentive amortization (3,043 ) (3,835 ) (8,825 ) (10,286 ) Amortization of intangibles and other assets included in net operating income (“NOI”) 15 40 (258 ) 162 Share-based compensation, net of amounts capitalized 2,247 2,018 8,700 7,979 Amortization of deferred financing costs 619 640 2,297 2,980 Amortization of net debt discounts, net of amounts capitalized 615 615 2,440 2,244 Replacement capital expenditures (43,283 ) (32,317 ) (95,886 ) (70,973 ) Other 158 204 980 824 Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) $ 26,122 $ 32,823 $ 178,413 $ 193,256 Diluted FFO per share $ 0.60 $ 0.21 $ 2.35 $ 1.40 Diluted FFO per share, as adjusted for comparability $ 0.60 $ 0.58 $ 2.36 $ 2.29 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, 2022 December 31, 2021 Balance Sheet Data Properties, net of accumulated depreciation $ 3,556,398 $ 3,532,944 Total assets $ 4,257,275 $ 4,262,452 Debt per balance sheet $ 2,231,794 $ 2,272,304 Total liabilities $ 2,509,527 $ 2,578,479 Redeemable noncontrolling interests $ 26,293 $ 26,898 Total equity $ 1,721,455 $ 1,657,075 Debt to assets 52.4 % 53.3 % Net debt to adjusted book 39.8 % 40.5 % Core Portfolio Data (as of period end) Number of operating properties 192 184 Total operational square feet (in thousands) 22,849 21,553 % Occupied 92.8 % 92.6 % % Leased 95.3 % 94.4 % For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 GAAP Payout ratio: Net income 60.3% 209.1% 70.2% 153.4% Debt ratios: Net income to interest expense ratio 3.1x 0.9x 2.9x 1.2x Debt to net income ratio 10.7x 38.0x N/A N/A Non-GAAP Payout ratios: Diluted FFO 45.5% 128.0% 46.6% 78.1% Diluted FFO, as adjusted for comparability 45.4% 47.6% 46.5% 47.9% Diluted AFFO 119.7% 95.0% 70.1% 64.5% Debt ratios: Adjusted EBITDA fixed charge coverage ratio 4.7x 4.9x 5.1x 4.7x Net debt to in-place adjusted EBITDA ratio 6.3x 6.7x N/A N/A Pro forma net debt to in-place adjusted EBITDA ratio (1) 6.0x 6.3x N/A N/A Net debt adj. for fully-leased development to in-place adj. EBITDA ratio 6.1x 6.2x N/A N/A Pro forma net debt adj. for fully-leased development to in-place adj. EDITDA ratio (1) 5.7x 5.8x N/A N/A Reconciliation of denominators for per share measures Denominator for diluted EPS 112,633 112,500 112,620 112,418 Weighted average common units 1,476 1,259 1,454 1,257 Denominator for diluted FFO per share and as adjusted for comparability 114,109 113,759 114,074 113,675 (1) Includes adjustments associated with the following transactions: 12/31/22 includes the sale on 1/10/23 of a 90% interest in three data center shell properties; and 12/31/21 includes the sale on 1/25/22 of its wholesale data center. Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 Numerators for Payout Ratios GAAP: Common share dividends - unrestricted shares and deferred shares $ 30,844 $ 30,814 $ 123,367 $ 123,243 Common share dividends - restricted shares and deferred shares 70 80 307 324 Common unit distributions - unrestricted units 406 346 1,623 1,387 Common unit distributions - restricted units 64 53 260 208 Total dividends and distributions for GAAP payout ratio $ 31,384 $ 31,293 $ 125,557 $ 125,162 Non-GAAP: Common share dividends - unrestricted shares and deferred shares $ 30,844 $ 30,814 $ 123,367 $ 123,243 Common unit distributions - unrestricted units 406 346 1,623 1,387 Common unit distributions - dilutive restricted units 13 7 51 25 Dividends and distributions for non-GAAP payout ratios $ 31,263 $ 31,167 $ 125,041 $ 124,655 Reconciliation of net income 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 $ 52,087 $ 14,965 $ 178,822 $ 81,578 Interest expense 16,819 16,217 61,174 65,398 Income tax expense 223 42 447 145 Real estate-related depreciation and amortization from continuing and discontinued operations 36,907 36,346 141,230 147,833 Other depreciation and amortization 602 622 2,363 2,811 Gain on sales of real estate from continuing and discontinued operations (19,238 ) (25,879 ) (47,814 ) (65,590 ) Adjustments from unconsolidated real estate JVs 1,033 763 3,313 2,930 EBITDAre 88,433 43,076 339,535 235,105 Loss on early extinguishment of debt 267 41,073 609 100,626 Gain on early extinguishment of debt on unconsolidated real estate JVs (168 ) — (168 ) — Net gain on other investments (595 ) — (1,159 ) (63 ) Credit loss (recoveries) expense (1,331 ) (88 ) 271 (1,128 ) Business development expenses 794 628 1,891 2,233 Demolition costs on redevelopment and nonrecurring improvements — (8 ) — 423 Executive transition costs 387 — 730 — Adjusted EBITDA 87,787 84,681 $ 341,709 $ 337,196 Pro forma NOI adjustment for property changes within period 2,704 — Other — 1,578 In-place adjusted EBITDA 90,491 86,259 Pro forma NOI adjustment from subsequent event transactions (2,903 ) (3,074 ) Pro forma in-place adjusted EBITDA $ 87,588 $ 83,185 Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures Tenant improvements and incentives $ 33,439 $ 19,724 $ 62,952 $ 43,820 Building improvements 8,468 17,778 29,528 35,970 Leasing costs 4,389 5,863 11,480 12,736 Net (exclusions from) additions to tenant improvements and incentives (75 ) (5,093 ) 2,150 (4,704 ) Excluded building improvements and leasing costs (2,938 ) (5,955 ) (10,224 ) (16,849 ) Replacement capital expenditures $ 43,283 $ 32,317 $ 95,886 $ 70,973 Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) For the Three Months Ended December 31, For the Years Ended December 31, 2022 2021 2022 2021 Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA Interest expense $ 16,819 $ 16,217 $ 61,174 $ 65,398 Less: Amortization of deferred financing costs (619 ) (640 ) (2,297 ) (2,980 ) Less: Amortization of net debt discounts, net of amounts capitalized (615 ) (615 ) (2,440 ) (2,244 ) Less: Loss on interest rate derivatives included in interest expense — (221 ) — (221 ) COPT’s share of interest expense of unconsolidated real estate JVs, excluding amortizations of deferred financing costs and net debt premium and loss on interest rate derivatives 423 237 1,123 943 Scheduled principal amortization 864 950 3,333 3,860 Capitalized interest 1,835 1,192 6,709 6,467 Denominator for fixed charge coverage-Adjusted EBITDA $ 18,707 $ 17,120 $ 67,602 $ 71,223 Reconciliation of net income to NOI from real estate operations, same properties NOI from real estate operations and same properties cash NOI from real estate operations Net income $ 52,087 $ 14,965 $ 178,822 $ 81,578 Construction contract and other service revenues (24,062 ) (43,284 ) (154,632 ) (107,876 ) Depreciation and other amortization associated with real estate operations 36,907 34,504 141,230 137,543 Construction contract and other service expenses 23,454 42,089 149,963 104,053 General and administrative expenses 7,766 6,589 27,461 27,213 Leasing expenses 2,235 2,568 8,337 8,914 Business development expenses and land carry costs 1,157 1,088 3,193 4,647 Interest expense 16,819 16,217 61,174 65,398 Interest and other income (3,340 ) (1,968 ) (9,341 ) (7,879 ) Credit loss (recoveries) expense (1,331 ) (88 ) 271 (1,128 ) Gain on sales of real estate from continuing operations (19,238 ) (25,879 ) (19,250 ) (65,590 ) Loss on early extinguishment of debt 267 41,073 609 100,626 Equity in income of unconsolidated entities (229 ) (314 ) (1,743 ) (1,093 ) Unconsolidated real estate JVs NOI allocable to COPT included in equity in income of unconsolidated entities 1,095 1,079 4,327 4,029 Income tax expense 223 42 447 145 Discontinued operations — (1,413 ) (29,573 ) (3,358 ) Revenues from real estate operations from discontinued operations — 8,235 1,980 30,490 Property operating expenses from discontinued operations — (4,980 ) (971 ) (16,842 ) NOI from real estate operations 93,810 90,523 362,304 360,870 Non-Same Properties NOI from real estate operations (11,845 ) (9,475 ) (38,298 ) (31,598 ) Same Properties NOI from real estate operations 81,965 81,048 324,006 329,272 Straight line rent adjustments and lease incentive amortization 2,556 2,715 8,602 3,854 Amortization of acquired above- and below-market rents (131 ) (100 ) (844 ) (396 ) Lease termination fees, net (1,026 ) 893 (2,237 ) (2,416 ) Tenant funded landlord assets and lease incentives (895 ) (1,649 ) (5,596 ) (3,469 ) Cash NOI adjustments in unconsolidated real estate JVs (68 ) (87 ) (301 ) (375 ) Same Properties Cash NOI from real estate operations $ 82,401 $ 82,820 $ 323,630 $ 326,470 Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) December 31, 2022 December 31, 2021 Reconciliation of total assets to adjusted book Total assets $ 4,257,275 $ 4,262,452 Accumulated depreciation 1,267,434 1,152,523 Accumulated depreciation included in assets held for sale 6,014 82,385 Accumulated amortization of intangibles on property acquisitions and deferred leasing costs 222,779 215,925 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 52,404 27,312 COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs 6,078 3,744 Less: Property - operating lease liabilities (28,759 ) (29,342 ) Less: Cash and cash equivalents (12,337 ) (13,262 ) Less: COPT’s share of cash of unconsolidated real estate JVs (456 ) (434 ) Adjusted book $ 5,770,432 $ 5,705,850 December 31, 2022 December 31, 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 $ 2,231,794 $ 2,272,304 Net discounts and deferred financing costs 23,160 25,982 COPT’s share of unconsolidated JV gross debt 52,100 26,250 Gross debt $ 2,307,054 $ 2,324,536 Less: Cash and cash equivalents (12,337 ) (13,262 ) Less: COPT’s share of cash of unconsolidated real estate JVs (456 ) (434 ) Net debt $ 2,294,261 $ 2,310,840 Costs incurred on fully-leased development properties (95,972 ) (162,884 ) Net debt adjusted for fully-leased development $ 2,198,289 $ 2,147,956 Net debt $ 2,294,261 $ 2,310,840 Pro forma debt adjustments from subsequent event transaction proceeds (189,000 ) (216,000 ) Pro forma net debt $ 2,105,261 $ 2,094,840 Costs incurred on fully-leased development properties (95,972 ) (162,884 ) Pro forma net debt adjusted for fully-leased development $ 2,009,289 $ 1,931,956 View source version on businesswire.com: https://www.businesswire.com/news/home/20230209005713/en/
IR Contacts: Venkat Kommineni, CFA 443-285-5587 venkat.kommineni@copt.com Michelle Layne 443-285-5452 michelle.layne@copt.com