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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Corporate Office Properties Trust | NYSE:OFC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 24.94 | 0 | 01:00:00 |
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☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended
|
June 30, 2020
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
|
|
to
|
|
Corporate Office Properties Trust
|
|
Maryland
|
|
23-2947217
|
|
|
(State or other jurisdiction of
|
|
(IRS Employer
|
|
|
incorporation or organization)
|
|
Identification No.)
|
|
|
|
|
|
Corporate Office Properties, L.P.
|
|
Delaware
|
|
23-2930022
|
|
|
(State or other jurisdiction of
|
|
(IRS Employer
|
|
|
incorporation or organization)
|
|
Identification No.)
|
6711 Columbia Gateway Drive
|
,
|
Suite 300
|
,
|
Columbia
|
,
|
MD
|
21046
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Shares of beneficial interest, $0.01 par value
|
OFC
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
Emerging growth company
|
☐
|
Large accelerated filer
|
☐
|
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☒
|
|
Smaller reporting company
|
☐
|
|
Emerging growth company
|
☐
|
|
|
|
|
|
•
|
combined reports better reflect how management, investors and the analyst community view the business as a single operating unit;
|
•
|
combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;
|
•
|
combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and
|
•
|
combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.
|
•
|
consolidated financial statements;
|
•
|
the following notes to the consolidated financial statements:
|
•
|
Note 3, Fair Value Measurements of COPT and subsidiaries and COPLP and subsidiaries;
|
•
|
Note 8, Prepaid Expenses and Other Assets, Net of COPT and subsidiaries and COPLP and subsidiaries; and
|
•
|
Note 16, Earnings per Share of COPT and subsidiaries and Earnings per Unit of COPLP and subsidiaries;
|
•
|
“Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of COPT”; and
|
•
|
“Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of COPLP.”
|
|
PAGE
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June 30,
2020 |
|
December 31,
2019 |
||||
Assets
|
|
|
|
|
|
||
Properties, net:
|
|
|
|
|
|
||
Operating properties, net
|
$
|
2,888,817
|
|
|
$
|
2,772,647
|
|
Projects in development or held for future development
|
624,282
|
|
|
568,239
|
|
||
Total properties, net
|
3,513,099
|
|
|
3,340,886
|
|
||
Property - operating right-of-use assets
|
31,009
|
|
|
27,864
|
|
||
Property - finance right-of-use assets
|
40,441
|
|
|
40,458
|
|
||
Cash and cash equivalents
|
21,596
|
|
|
14,733
|
|
||
Investment in unconsolidated real estate joint ventures
|
50,457
|
|
|
51,949
|
|
||
Accounts receivable, net
|
30,404
|
|
|
35,444
|
|
||
Deferred rent receivable
|
90,493
|
|
|
87,736
|
|
||
Intangible assets on real estate acquisitions, net
|
24,768
|
|
|
27,392
|
|
||
Deferred leasing costs (net of accumulated amortization of $34,878 and $33,782, respectively)
|
58,666
|
|
|
58,392
|
|
||
Investing receivables (net of allowance for credit losses of $3,976 at June 30, 2020)
|
72,333
|
|
|
73,523
|
|
||
Prepaid expenses and other assets, net
|
78,059
|
|
|
96,076
|
|
||
Total assets
|
$
|
4,011,325
|
|
|
$
|
3,854,453
|
|
Liabilities and equity
|
|
|
|
|
|
||
Liabilities:
|
|
|
|
|
|
||
Debt, net
|
$
|
2,012,019
|
|
|
$
|
1,831,139
|
|
Accounts payable and accrued expenses
|
149,836
|
|
|
148,746
|
|
||
Rents received in advance and security deposits
|
30,459
|
|
|
33,620
|
|
||
Dividends and distributions payable
|
31,302
|
|
|
31,263
|
|
||
Deferred revenue associated with operating leases
|
8,821
|
|
|
7,361
|
|
||
Property - operating lease liabilities
|
20,796
|
|
|
17,317
|
|
||
Interest rate derivatives
|
65,612
|
|
|
25,682
|
|
||
Other liabilities
|
12,408
|
|
|
10,649
|
|
||
Total liabilities
|
2,331,253
|
|
|
2,105,777
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
|
|
||
Redeemable noncontrolling interests
|
23,148
|
|
|
29,431
|
|
||
Equity:
|
|
|
|
|
|
||
Corporate Office Properties Trust’s shareholders’ equity:
|
|
|
|
|
|
||
Common Shares of beneficial interest ($0.01 par value; 150,000,000 shares authorized; shares issued and outstanding of 112,183,192 at June 30, 2020 and 112,068,705 at December 31, 2019)
|
1,122
|
|
|
1,121
|
|
||
Additional paid-in capital
|
2,477,977
|
|
|
2,481,558
|
|
||
Cumulative distributions in excess of net income
|
(797,959
|
)
|
|
(778,275
|
)
|
||
Accumulated other comprehensive loss
|
(64,513
|
)
|
|
(25,444
|
)
|
||
Total Corporate Office Properties Trust’s shareholders’ equity
|
1,616,627
|
|
|
1,678,960
|
|
||
Noncontrolling interests in subsidiaries:
|
|
|
|
|
|
||
Common units in COPLP
|
19,611
|
|
|
19,597
|
|
||
Preferred units in COPLP
|
8,800
|
|
|
8,800
|
|
||
Other consolidated entities
|
11,886
|
|
|
11,888
|
|
||
Noncontrolling interests in subsidiaries
|
40,297
|
|
|
40,285
|
|
||
Total equity
|
1,656,924
|
|
|
1,719,245
|
|
||
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
4,011,325
|
|
|
$
|
3,854,453
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Lease revenue
|
$
|
132,147
|
|
|
$
|
131,415
|
|
|
$
|
263,159
|
|
|
$
|
262,318
|
|
Other property revenue
|
391
|
|
|
1,356
|
|
|
1,495
|
|
|
2,443
|
|
||||
Construction contract and other service revenues
|
12,236
|
|
|
42,299
|
|
|
25,917
|
|
|
59,249
|
|
||||
Total revenues
|
144,774
|
|
|
175,070
|
|
|
290,571
|
|
|
324,010
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses
|
50,204
|
|
|
47,886
|
|
|
100,203
|
|
|
97,331
|
|
||||
Depreciation and amortization associated with real estate operations
|
33,612
|
|
|
34,802
|
|
|
66,208
|
|
|
69,598
|
|
||||
Construction contract and other service expenses
|
11,711
|
|
|
41,002
|
|
|
24,832
|
|
|
57,328
|
|
||||
General, administrative and leasing expenses
|
8,158
|
|
|
9,386
|
|
|
15,644
|
|
|
18,137
|
|
||||
Business development expenses and land carry costs
|
1,262
|
|
|
870
|
|
|
2,380
|
|
|
1,983
|
|
||||
Total operating expenses
|
104,947
|
|
|
133,946
|
|
|
209,267
|
|
|
244,377
|
|
||||
Interest expense
|
(16,797
|
)
|
|
(18,475
|
)
|
|
(33,637
|
)
|
|
(37,149
|
)
|
||||
Interest and other income
|
2,282
|
|
|
1,849
|
|
|
3,487
|
|
|
4,135
|
|
||||
Credit loss expense
|
(615
|
)
|
|
—
|
|
|
(1,304
|
)
|
|
—
|
|
||||
Gain on sales of real estate
|
—
|
|
|
84,469
|
|
|
5
|
|
|
84,469
|
|
||||
Income before equity in income of unconsolidated entities and income taxes
|
24,697
|
|
|
108,967
|
|
|
49,855
|
|
|
131,088
|
|
||||
Equity in income of unconsolidated entities
|
454
|
|
|
420
|
|
|
895
|
|
|
811
|
|
||||
Income tax (expense) benefit
|
(30
|
)
|
|
176
|
|
|
(79
|
)
|
|
(18
|
)
|
||||
Net income
|
25,121
|
|
|
109,563
|
|
|
50,671
|
|
|
131,881
|
|
||||
Net income attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common units in COPLP
|
(284
|
)
|
|
(1,339
|
)
|
|
(571
|
)
|
|
(1,596
|
)
|
||||
Preferred units in COPLP
|
(77
|
)
|
|
(165
|
)
|
|
(154
|
)
|
|
(330
|
)
|
||||
Other consolidated entities
|
(1,263
|
)
|
|
(1,268
|
)
|
|
(2,395
|
)
|
|
(2,305
|
)
|
||||
Net income attributable to COPT common shareholders
|
$
|
23,497
|
|
|
$
|
106,791
|
|
|
$
|
47,551
|
|
|
$
|
127,650
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share: (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to COPT common shareholders - basic
|
$
|
0.21
|
|
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
Net income attributable to COPT common shareholders - diluted
|
$
|
0.21
|
|
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net income
|
$
|
25,121
|
|
|
$
|
109,563
|
|
|
$
|
50,671
|
|
|
$
|
131,881
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized loss on interest rate derivatives
|
(3,315
|
)
|
|
(13,545
|
)
|
|
(41,020
|
)
|
|
(22,390
|
)
|
||||
Loss (gain) on interest rate derivatives recognized in interest expense
|
935
|
|
|
(557
|
)
|
|
1,066
|
|
|
(1,127
|
)
|
||||
Total other comprehensive loss
|
(2,380
|
)
|
|
(14,102
|
)
|
|
(39,954
|
)
|
|
(23,517
|
)
|
||||
Comprehensive income
|
22,741
|
|
|
95,461
|
|
|
10,717
|
|
|
108,364
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
(1,556
|
)
|
|
(2,597
|
)
|
|
(2,235
|
)
|
|
(3,941
|
)
|
||||
Comprehensive income attributable to COPT
|
$
|
21,185
|
|
|
$
|
92,864
|
|
|
$
|
8,482
|
|
|
$
|
104,423
|
|
|
|
Common
Shares
|
|
Additional
Paid-in
Capital
|
|
Cumulative
Distributions in
Excess of Net
Income
|
|
Accumulated
Other
Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
|
||||||||||||
For the Three Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at March 31, 2019 (111,939,790 common shares outstanding)
|
|
$
|
1,119
|
|
|
$
|
2,475,497
|
|
|
$
|
(856,703
|
)
|
|
$
|
(9,538
|
)
|
|
$
|
45,803
|
|
|
$
|
1,656,178
|
|
Redemption of common units
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Share-based compensation (10,097 shares issued, net of redemptions)
|
|
—
|
|
|
1,487
|
|
|
—
|
|
|
—
|
|
|
346
|
|
|
1,833
|
|
||||||
Redemption of vested equity awards
|
|
—
|
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP
|
|
—
|
|
|
488
|
|
|
—
|
|
|
—
|
|
|
(488
|
)
|
|
—
|
|
||||||
Comprehensive income
|
|
—
|
|
|
—
|
|
|
106,791
|
|
|
(13,927
|
)
|
|
1,728
|
|
|
94,592
|
|
||||||
Dividends
|
|
—
|
|
|
—
|
|
|
(30,755
|
)
|
|
—
|
|
|
—
|
|
|
(30,755
|
)
|
||||||
Distributions to owners of common and preferred units in COPLP
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(553
|
)
|
|
(553
|
)
|
||||||
Distributions to noncontrolling interests in other consolidated entities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Adjustment to arrive at fair value of redeemable noncontrolling interests
|
|
—
|
|
|
(2,076
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,076
|
)
|
||||||
Balance at June 30, 2019 (111,949,887 common shares outstanding)
|
|
$
|
1,119
|
|
|
$
|
2,475,293
|
|
|
$
|
(780,667
|
)
|
|
$
|
(23,465
|
)
|
|
$
|
46,831
|
|
|
$
|
1,719,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
For the Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at March 31, 2020 (112,169,463 common shares outstanding)
|
|
$
|
1,122
|
|
|
$
|
2,476,677
|
|
|
$
|
(790,600
|
)
|
|
$
|
(62,201
|
)
|
|
$
|
40,188
|
|
|
$
|
1,665,186
|
|
Share-based compensation (13,729 shares issued, net of redemptions)
|
|
—
|
|
|
1,188
|
|
|
—
|
|
|
—
|
|
|
548
|
|
|
1,736
|
|
||||||
Redemption of vested equity awards
|
|
—
|
|
|
(80
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP
|
|
—
|
|
|
428
|
|
|
—
|
|
|
—
|
|
|
(428
|
)
|
|
—
|
|
||||||
Comprehensive income
|
|
—
|
|
|
—
|
|
|
23,497
|
|
|
(2,312
|
)
|
|
439
|
|
|
21,624
|
|
||||||
Dividends
|
|
—
|
|
|
—
|
|
|
(30,856
|
)
|
|
—
|
|
|
—
|
|
|
(30,856
|
)
|
||||||
Distributions to owners of common and preferred units in COPLP
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(442
|
)
|
|
(442
|
)
|
||||||
Distributions to noncontrolling interests in other consolidated entities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
||||||
Adjustment to arrive at fair value of redeemable noncontrolling interests
|
|
—
|
|
|
(236
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(236
|
)
|
||||||
Balance at June 30, 2020 (112,183,192 common shares outstanding)
|
|
$
|
1,122
|
|
|
$
|
2,477,977
|
|
|
$
|
(797,959
|
)
|
|
$
|
(64,513
|
)
|
|
$
|
40,297
|
|
|
$
|
1,656,924
|
|
|
Common
Shares
|
|
Additional
Paid-in
Capital
|
|
Cumulative
Distributions in
Excess of Net
Income
|
|
Accumulated
Other
Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
|
||||||||||||
For the Six Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2018 (110,241,868 common shares outstanding)
|
$
|
1,102
|
|
|
$
|
2,431,355
|
|
|
$
|
(846,808
|
)
|
|
$
|
(238
|
)
|
|
$
|
41,637
|
|
|
$
|
1,627,048
|
|
Conversion of common units to common shares (5,500 shares)
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
|
—
|
|
||||||
Redemption of common units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Common shares issued under forward equity sale agreements (1,614,087 shares)
|
16
|
|
|
46,438
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,454
|
|
||||||
Share-based compensation (88,432 shares issued, net of redemptions)
|
1
|
|
|
3,049
|
|
|
—
|
|
|
—
|
|
|
585
|
|
|
3,635
|
|
||||||
Redemption of vested equity awards
|
—
|
|
|
(1,920
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,920
|
)
|
||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP
|
—
|
|
|
(834
|
)
|
|
—
|
|
|
—
|
|
|
834
|
|
|
—
|
|
||||||
Comprehensive income
|
—
|
|
|
—
|
|
|
127,650
|
|
|
(23,227
|
)
|
|
2,397
|
|
|
106,820
|
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
(61,509
|
)
|
|
—
|
|
|
—
|
|
|
(61,509
|
)
|
||||||
Distributions to owners of common and preferred units in COPLP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,103
|
)
|
|
(1,103
|
)
|
||||||
Contributions from noncontrolling interests in other consolidated entities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,570
|
|
|
2,570
|
|
||||||
Distributions to noncontrolling interests in other consolidated entities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
||||||
Adjustment to arrive at fair value of redeemable noncontrolling interests
|
—
|
|
|
(2,875
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,875
|
)
|
||||||
Balance at June 30, 2019 (111,949,887 common shares outstanding)
|
$
|
1,119
|
|
|
$
|
2,475,293
|
|
|
$
|
(780,667
|
)
|
|
$
|
(23,465
|
)
|
|
$
|
46,831
|
|
|
$
|
1,719,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
For the Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2019 (112,068,705 common shares outstanding)
|
$
|
1,121
|
|
|
$
|
2,481,558
|
|
|
$
|
(778,275
|
)
|
|
$
|
(25,444
|
)
|
|
$
|
40,285
|
|
|
$
|
1,719,245
|
|
Cumulative effect of accounting change for adoption of credit loss guidance
|
—
|
|
|
—
|
|
|
(5,541
|
)
|
|
—
|
|
|
—
|
|
|
(5,541
|
)
|
||||||
Balance at December 31, 2019, as adjusted
|
1,121
|
|
|
2,481,558
|
|
|
(783,816
|
)
|
|
(25,444
|
)
|
|
40,285
|
|
|
1,713,704
|
|
||||||
Conversion of common units to common shares (12,009 shares)
|
—
|
|
|
182
|
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
|
—
|
|
||||||
Share-based compensation (102,478 shares issued, net of redemptions)
|
1
|
|
|
2,171
|
|
|
—
|
|
|
—
|
|
|
774
|
|
|
2,946
|
|
||||||
Redemption of vested equity awards
|
—
|
|
|
(1,572
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,572
|
)
|
||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||||
Comprehensive income
|
—
|
|
|
—
|
|
|
47,551
|
|
|
(39,069
|
)
|
|
160
|
|
|
8,642
|
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
(61,694
|
)
|
|
—
|
|
|
—
|
|
|
(61,694
|
)
|
||||||
Distributions to owners of common and preferred units in COPLP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(862
|
)
|
|
(862
|
)
|
||||||
Contributions from noncontrolling interests in other consolidated entities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
112
|
|
||||||
Distributions to noncontrolling interests in other consolidated entities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
||||||
Adjustment to arrive at fair value of redeemable noncontrolling interests
|
—
|
|
|
(4,337
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,337
|
)
|
||||||
Balance at June 30, 2020 (112,183,192 common shares outstanding)
|
$
|
1,122
|
|
|
$
|
2,477,977
|
|
|
$
|
(797,959
|
)
|
|
$
|
(64,513
|
)
|
|
$
|
40,297
|
|
|
$
|
1,656,924
|
|
|
For the Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities
|
|
|
|
|
|
||
Revenues from real estate operations received
|
$
|
265,833
|
|
|
$
|
257,832
|
|
Construction contract and other service revenues received
|
42,149
|
|
|
21,449
|
|
||
Property operating expenses paid
|
(86,934
|
)
|
|
(83,305
|
)
|
||
Construction contract and other service expenses paid
|
(32,107
|
)
|
|
(31,157
|
)
|
||
General, administrative, leasing, business development and land carry costs paid
|
(16,969
|
)
|
|
(16,541
|
)
|
||
Interest expense paid
|
(31,581
|
)
|
|
(34,896
|
)
|
||
Lease incentives paid
|
(5,611
|
)
|
|
(3,228
|
)
|
||
Other
|
1,757
|
|
|
1,661
|
|
||
Net cash provided by operating activities
|
136,537
|
|
|
111,815
|
|
||
Cash flows from investing activities
|
|
|
|
|
|
||
Development and redevelopment of properties
|
(185,357
|
)
|
|
(219,633
|
)
|
||
Tenant improvements on operating properties
|
(16,489
|
)
|
|
(7,585
|
)
|
||
Other capital improvements on operating properties
|
(11,576
|
)
|
|
(8,920
|
)
|
||
Proceeds from property dispositions
|
|
|
|
||||
Distribution from unconsolidated real estate joint venture following contribution of properties
|
—
|
|
|
129,783
|
|
||
Sale of properties
|
—
|
|
|
107,517
|
|
||
Investing receivables funded
|
—
|
|
|
(11,104
|
)
|
||
Leasing costs paid
|
(8,424
|
)
|
|
(7,632
|
)
|
||
Other
|
(5,442
|
)
|
|
3,944
|
|
||
Net cash used in investing activities
|
(227,288
|
)
|
|
(13,630
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
|
||
Proceeds from debt
|
|
|
|
||||
Revolving Credit Facility
|
251,000
|
|
|
258,000
|
|
||
Other debt proceeds
|
189,359
|
|
|
10,606
|
|
||
Repayments of debt
|
|
|
|
||||
Revolving Credit Facility
|
(259,000
|
)
|
|
(308,000
|
)
|
||
Scheduled principal amortization
|
(2,044
|
)
|
|
(2,193
|
)
|
||
Deferred financing costs paid
|
(1,261
|
)
|
|
—
|
|
||
Net proceeds from issuance of common shares
|
—
|
|
|
46,415
|
|
||
Common share dividends paid
|
(61,667
|
)
|
|
(61,040
|
)
|
||
Distributions paid to noncontrolling interests in COPLP
|
(863
|
)
|
|
(1,115
|
)
|
||
Distributions paid to redeemable noncontrolling interests
|
(12,662
|
)
|
|
(687
|
)
|
||
Redemption of vested equity awards
|
(1,572
|
)
|
|
(1,920
|
)
|
||
Other
|
(2,803
|
)
|
|
533
|
|
||
Net cash provided by (used in) financing activities
|
98,487
|
|
|
(59,401
|
)
|
||
Net increase in cash and cash equivalents and restricted cash
|
7,736
|
|
|
38,784
|
|
||
Cash and cash equivalents and restricted cash
|
|
|
|
|
|
||
Beginning of period
|
18,130
|
|
|
11,950
|
|
||
End of period
|
$
|
25,866
|
|
|
$
|
50,734
|
|
|
For the Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Reconciliation of net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
50,671
|
|
|
$
|
131,881
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and other amortization
|
67,075
|
|
|
70,527
|
|
||
Amortization of deferred financing costs and net debt discounts
|
1,993
|
|
|
1,801
|
|
||
Increase in deferred rent receivable
|
(1,070
|
)
|
|
(2,419
|
)
|
||
Gain on sales of real estate
|
(5
|
)
|
|
(84,469
|
)
|
||
Share-based compensation
|
3,027
|
|
|
3,283
|
|
||
Other
|
(1,263
|
)
|
|
(2,996
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|||
Decrease (increase) in accounts receivable
|
5,039
|
|
|
(31,846
|
)
|
||
Decrease (increase) in prepaid expenses and other assets, net
|
23,202
|
|
|
(852
|
)
|
||
(Decrease) increase in accounts payable, accrued expenses and other liabilities
|
(8,971
|
)
|
|
29,507
|
|
||
Decrease in rents received in advance and security deposits
|
(3,161
|
)
|
|
(2,602
|
)
|
||
Net cash provided by operating activities
|
$
|
136,537
|
|
|
$
|
111,815
|
|
Reconciliation of cash and cash equivalents and restricted cash:
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
$
|
14,733
|
|
|
$
|
8,066
|
|
Restricted cash at beginning of period
|
3,397
|
|
|
3,884
|
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
$
|
18,130
|
|
|
$
|
11,950
|
|
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
21,596
|
|
|
$
|
46,282
|
|
Restricted cash at end of period
|
4,270
|
|
|
4,452
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
$
|
25,866
|
|
|
$
|
50,734
|
|
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
||
Increase in accrued capital improvements, leasing and other investing activity costs
|
$
|
12,940
|
|
|
$
|
29,862
|
|
Finance right-of-use asset contributed by noncontrolling interest in joint venture
|
$
|
—
|
|
|
$
|
2,570
|
|
Operating right-of-use assets obtained in exchange for operating lease liabilities
|
$
|
3,381
|
|
|
$
|
255
|
|
Non-cash changes from property dispositions:
|
|
|
|
||||
Contribution of properties to unconsolidated real estate joint venture
|
$
|
—
|
|
|
$
|
99,288
|
|
Investment in unconsolidated real estate joint venture retained in disposition
|
$
|
—
|
|
|
$
|
26,500
|
|
Decrease in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests
|
$
|
(39,953
|
)
|
|
$
|
(23,585
|
)
|
Dividends/distributions payable
|
$
|
31,302
|
|
|
$
|
31,346
|
|
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares
|
$
|
182
|
|
|
$
|
80
|
|
Adjustments to noncontrolling interests resulting from changes in COPLP ownership
|
$
|
25
|
|
|
$
|
834
|
|
Increase in redeemable noncontrolling interests and decrease in equity to carry redeemable noncontrolling interests at fair value
|
$
|
4,337
|
|
|
$
|
2,875
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
Assets
|
|
|
|
|
|
||
Properties, net:
|
|
|
|
|
|
||
Operating properties, net
|
$
|
2,888,817
|
|
|
$
|
2,772,647
|
|
Projects in development or held for future development
|
624,282
|
|
|
568,239
|
|
||
Total properties, net
|
3,513,099
|
|
|
3,340,886
|
|
||
Property - operating right-of-use assets
|
31,009
|
|
|
27,864
|
|
||
Property - finance right-of-use assets
|
40,441
|
|
|
40,458
|
|
||
Cash and cash equivalents
|
21,596
|
|
|
14,733
|
|
||
Investment in unconsolidated real estate joint ventures
|
50,457
|
|
|
51,949
|
|
||
Accounts receivable, net
|
30,404
|
|
|
35,444
|
|
||
Deferred rent receivable
|
90,493
|
|
|
87,736
|
|
||
Intangible assets on real estate acquisitions, net
|
24,768
|
|
|
27,392
|
|
||
Deferred leasing costs (net of accumulated amortization of $34,878 and $33,782, respectively)
|
58,666
|
|
|
58,392
|
|
||
Investing receivables (net of allowance for credit losses of $3,976 at June 30, 2020)
|
72,333
|
|
|
73,523
|
|
||
Prepaid expenses and other assets, net
|
75,527
|
|
|
93,016
|
|
||
Total assets
|
$
|
4,008,793
|
|
|
$
|
3,851,393
|
|
Liabilities and equity
|
|
|
|
|
|
||
Liabilities:
|
|
|
|
|
|
||
Debt, net
|
$
|
2,012,019
|
|
|
$
|
1,831,139
|
|
Accounts payable and accrued expenses
|
149,836
|
|
|
148,746
|
|
||
Rents received in advance and security deposits
|
30,459
|
|
|
33,620
|
|
||
Distributions payable
|
31,302
|
|
|
31,263
|
|
||
Deferred revenue associated with operating leases
|
8,821
|
|
|
7,361
|
|
||
Property - operating lease liabilities
|
20,796
|
|
|
17,317
|
|
||
Interest rate derivatives
|
65,612
|
|
|
25,682
|
|
||
Other liabilities
|
9,876
|
|
|
7,589
|
|
||
Total liabilities
|
2,328,721
|
|
|
2,102,717
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
|
|
||
Redeemable noncontrolling interests
|
23,148
|
|
|
29,431
|
|
||
Equity:
|
|
|
|
|
|
||
Corporate Office Properties, L.P.’s equity:
|
|
|
|
|
|
||
Preferred units held by limited partner, 352,000 preferred units outstanding at June 30, 2020 and December 31, 2019
|
8,800
|
|
|
8,800
|
|
||
Common units, 112,183,192 and 112,068,705 held by the general partner and 1,628,421 and 1,482,425 held by limited partners at June 30, 2020 and December 31, 2019, respectively
|
1,701,375
|
|
|
1,724,159
|
|
||
Accumulated other comprehensive loss
|
(65,183
|
)
|
|
(25,648
|
)
|
||
Total Corporate Office Properties, L.P.’s equity
|
1,644,992
|
|
|
1,707,311
|
|
||
Noncontrolling interests in subsidiaries
|
11,932
|
|
|
11,934
|
|
||
Total equity
|
1,656,924
|
|
|
1,719,245
|
|
||
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
4,008,793
|
|
|
$
|
3,851,393
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Lease revenue
|
$
|
132,147
|
|
|
$
|
131,415
|
|
|
$
|
263,159
|
|
|
$
|
262,318
|
|
Other property revenue
|
391
|
|
|
1,356
|
|
|
1,495
|
|
|
2,443
|
|
||||
Construction contract and other service revenues
|
12,236
|
|
|
42,299
|
|
|
25,917
|
|
|
59,249
|
|
||||
Total revenues
|
144,774
|
|
|
175,070
|
|
|
290,571
|
|
|
324,010
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses
|
50,204
|
|
|
47,886
|
|
|
100,203
|
|
|
97,331
|
|
||||
Depreciation and amortization associated with real estate operations
|
33,612
|
|
|
34,802
|
|
|
66,208
|
|
|
69,598
|
|
||||
Construction contract and other service expenses
|
11,711
|
|
|
41,002
|
|
|
24,832
|
|
|
57,328
|
|
||||
General, administrative and leasing expenses
|
8,158
|
|
|
9,386
|
|
|
15,644
|
|
|
18,137
|
|
||||
Business development expenses and land carry costs
|
1,262
|
|
|
870
|
|
|
2,380
|
|
|
1,983
|
|
||||
Total operating expenses
|
104,947
|
|
|
133,946
|
|
|
209,267
|
|
|
244,377
|
|
||||
Interest expense
|
(16,797
|
)
|
|
(18,475
|
)
|
|
(33,637
|
)
|
|
(37,149
|
)
|
||||
Interest and other income
|
2,282
|
|
|
1,849
|
|
|
3,487
|
|
|
4,135
|
|
||||
Credit loss expense
|
(615
|
)
|
|
—
|
|
|
(1,304
|
)
|
|
—
|
|
||||
Gain on sales of real estate
|
—
|
|
|
84,469
|
|
|
5
|
|
|
84,469
|
|
||||
Income before equity in income of unconsolidated entities and income taxes
|
24,697
|
|
|
108,967
|
|
|
49,855
|
|
|
131,088
|
|
||||
Equity in income of unconsolidated entities
|
454
|
|
|
420
|
|
|
895
|
|
|
811
|
|
||||
Income tax (expense) benefit
|
(30
|
)
|
|
176
|
|
|
(79
|
)
|
|
(18
|
)
|
||||
Net income
|
25,121
|
|
|
109,563
|
|
|
50,671
|
|
|
131,881
|
|
||||
Net income attributable to noncontrolling interests in consolidated entities
|
(1,263
|
)
|
|
(1,268
|
)
|
|
(2,395
|
)
|
|
(2,305
|
)
|
||||
Net income attributable to COPLP
|
23,858
|
|
|
108,295
|
|
|
48,276
|
|
|
129,576
|
|
||||
Preferred unit distributions
|
(77
|
)
|
|
(165
|
)
|
|
(154
|
)
|
|
(330
|
)
|
||||
Net income attributable to COPLP common unitholders
|
$
|
23,781
|
|
|
$
|
108,130
|
|
|
$
|
48,122
|
|
|
$
|
129,246
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common unit: (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to COPLP common unitholders - basic
|
$
|
0.21
|
|
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
Net income attributable to COPLP common unitholders - diluted
|
$
|
0.21
|
|
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net income
|
$
|
25,121
|
|
|
$
|
109,563
|
|
|
$
|
50,671
|
|
|
$
|
131,881
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||
Unrealized loss on interest rate derivatives
|
(3,315
|
)
|
|
(13,545
|
)
|
|
(41,020
|
)
|
|
(22,390
|
)
|
||||
Loss (gain) on interest rate derivatives recognized in interest expense
|
935
|
|
|
(557
|
)
|
|
1,066
|
|
|
(1,127
|
)
|
||||
Total other comprehensive loss
|
(2,380
|
)
|
|
(14,102
|
)
|
|
(39,954
|
)
|
|
(23,517
|
)
|
||||
Comprehensive income
|
22,741
|
|
|
95,461
|
|
|
10,717
|
|
|
108,364
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
(1,223
|
)
|
|
(1,268
|
)
|
|
(1,976
|
)
|
|
(2,305
|
)
|
||||
Comprehensive income attributable to COPLP
|
$
|
21,518
|
|
|
$
|
94,193
|
|
|
$
|
8,741
|
|
|
$
|
106,059
|
|
|
Limited Partner Preferred Units
|
|
Common Units
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interests in Subsidiaries
|
|
|
||||||||||||||||
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
|
|
Total Equity
|
||||||||||||||
For the Three Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at March 31, 2019
|
352,000
|
|
|
$
|
8,800
|
|
|
113,515,814
|
|
|
$
|
1,640,272
|
|
|
$
|
(9,536
|
)
|
|
$
|
16,642
|
|
|
$
|
1,656,178
|
|
Redemption of common units
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Share-based compensation (units net of redemption)
|
—
|
|
|
—
|
|
|
16,961
|
|
|
1,833
|
|
|
—
|
|
|
—
|
|
|
1,833
|
|
|||||
Redemptions of vested equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|||||
Comprehensive income
|
—
|
|
|
165
|
|
|
—
|
|
|
108,130
|
|
|
(14,102
|
)
|
|
399
|
|
|
94,592
|
|
|||||
Distributions to owners of common and preferred units
|
—
|
|
|
(165
|
)
|
|
—
|
|
|
(31,143
|
)
|
|
—
|
|
|
—
|
|
|
(31,308
|
)
|
|||||
Distributions to noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||||
Adjustment to arrive at fair value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,076
|
)
|
|
—
|
|
|
—
|
|
|
(2,076
|
)
|
|||||
Balance at June 30, 2019
|
352,000
|
|
|
$
|
8,800
|
|
|
113,532,731
|
|
|
$
|
1,716,912
|
|
|
$
|
(23,638
|
)
|
|
$
|
17,037
|
|
|
$
|
1,719,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
For the Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at March 31, 2020
|
352,000
|
|
|
$
|
8,800
|
|
|
113,789,912
|
|
|
$
|
1,707,395
|
|
|
$
|
(62,843
|
)
|
|
$
|
11,834
|
|
|
$
|
1,665,186
|
|
Share-based compensation (units net of redemption)
|
—
|
|
|
—
|
|
|
21,701
|
|
|
1,736
|
|
|
—
|
|
|
—
|
|
|
1,736
|
|
|||||
Redemptions of vested equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
|||||
Comprehensive loss
|
—
|
|
|
77
|
|
|
—
|
|
|
23,781
|
|
|
(2,340
|
)
|
|
106
|
|
|
21,624
|
|
|||||
Distributions to owners of common and preferred units
|
—
|
|
|
(77
|
)
|
|
—
|
|
|
(31,221
|
)
|
|
—
|
|
|
—
|
|
|
(31,298
|
)
|
|||||
Distributions to noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
|||||
Adjustment to arrive at fair value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(236
|
)
|
|
—
|
|
|
—
|
|
|
(236
|
)
|
|||||
Balance at June 30, 2020
|
352,000
|
|
|
$
|
8,800
|
|
|
113,811,613
|
|
|
$
|
1,701,375
|
|
|
$
|
(65,183
|
)
|
|
$
|
11,932
|
|
|
$
|
1,656,924
|
|
|
Limited Partner Preferred Units
|
|
Common Units
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interests in Subsidiaries
|
|
|
||||||||||||||||
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
|
|
Total Equity
|
||||||||||||||
For the Six Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2018
|
352,000
|
|
|
$
|
8,800
|
|
|
111,574,754
|
|
|
$
|
1,604,655
|
|
|
$
|
(121
|
)
|
|
$
|
13,714
|
|
|
$
|
1,627,048
|
|
Redemption of common units
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Issuance of common units resulting from common shares issued under COPT forward equity sale agreements
|
—
|
|
|
—
|
|
|
1,614,087
|
|
|
46,454
|
|
|
—
|
|
|
—
|
|
|
46,454
|
|
|||||
Share-based compensation (units net of redemption)
|
—
|
|
|
—
|
|
|
343,934
|
|
|
3,635
|
|
|
—
|
|
|
—
|
|
|
3,635
|
|
|||||
Redemptions of vested equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,920
|
)
|
|
—
|
|
|
—
|
|
|
(1,920
|
)
|
|||||
Comprehensive income
|
—
|
|
|
330
|
|
|
—
|
|
|
129,246
|
|
|
(23,517
|
)
|
|
761
|
|
|
106,820
|
|
|||||
Distributions to owners of common and preferred units
|
—
|
|
|
(330
|
)
|
|
—
|
|
|
(62,282
|
)
|
|
—
|
|
|
—
|
|
|
(62,612
|
)
|
|||||
Contributions from noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,570
|
|
|
2,570
|
|
|||||
Distributions to noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
|||||
Adjustment to arrive at fair value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,875
|
)
|
|
—
|
|
|
—
|
|
|
(2,875
|
)
|
|||||
Balance at June 30, 2019
|
352,000
|
|
|
$
|
8,800
|
|
|
113,532,731
|
|
|
$
|
1,716,912
|
|
|
$
|
(23,638
|
)
|
|
$
|
17,037
|
|
|
$
|
1,719,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
For the Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2019
|
352,000
|
|
|
$
|
8,800
|
|
|
113,551,130
|
|
|
$
|
1,724,159
|
|
|
$
|
(25,648
|
)
|
|
$
|
11,934
|
|
|
$
|
1,719,245
|
|
Cumulative effect of accounting change for adoption of credit loss guidance
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,541
|
)
|
|
—
|
|
|
—
|
|
|
(5,541
|
)
|
|||||
Balance at December 31, 2019, as adjusted
|
352,000
|
|
|
8,800
|
|
|
113,551,130
|
|
|
1,718,618
|
|
|
(25,648
|
)
|
|
11,934
|
|
|
1,713,704
|
|
|||||
Share-based compensation (units net of redemption)
|
—
|
|
|
—
|
|
|
260,483
|
|
|
2,946
|
|
|
—
|
|
|
—
|
|
|
2,946
|
|
|||||
Redemptions of vested equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,572
|
)
|
|
—
|
|
|
—
|
|
|
(1,572
|
)
|
|||||
Comprehensive income
|
—
|
|
|
154
|
|
|
—
|
|
|
48,122
|
|
|
(39,535
|
)
|
|
(99
|
)
|
|
8,642
|
|
|||||
Distributions to owners of common and preferred units
|
—
|
|
|
(154
|
)
|
|
—
|
|
|
(62,402
|
)
|
|
—
|
|
|
—
|
|
|
(62,556
|
)
|
|||||
Contributions from noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
112
|
|
|||||
Distributions to noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
|||||
Adjustment to arrive at fair value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,337
|
)
|
|
—
|
|
|
—
|
|
|
(4,337
|
)
|
|||||
Balance at June 30, 2020
|
352,000
|
|
|
$
|
8,800
|
|
|
113,811,613
|
|
|
$
|
1,701,375
|
|
|
$
|
(65,183
|
)
|
|
$
|
11,932
|
|
|
$
|
1,656,924
|
|
|
For the Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities
|
|
|
|
|
|
||
Revenues from real estate operations received
|
$
|
265,833
|
|
|
$
|
257,832
|
|
Construction contract and other service revenues received
|
42,149
|
|
|
21,449
|
|
||
Property operating expenses paid
|
(86,934
|
)
|
|
(83,305
|
)
|
||
Construction contract and other service expenses paid
|
(32,107
|
)
|
|
(31,157
|
)
|
||
General, administrative, leasing, business development and land carry costs paid
|
(16,969
|
)
|
|
(16,541
|
)
|
||
Interest expense paid
|
(31,581
|
)
|
|
(34,896
|
)
|
||
Lease incentives paid
|
(5,611
|
)
|
|
(3,228
|
)
|
||
Other
|
1,757
|
|
|
1,661
|
|
||
Net cash provided by operating activities
|
136,537
|
|
|
111,815
|
|
||
Cash flows from investing activities
|
|
|
|
|
|
||
Development and redevelopment of properties
|
(185,357
|
)
|
|
(219,633
|
)
|
||
Tenant improvements on operating properties
|
(16,489
|
)
|
|
(7,585
|
)
|
||
Other capital improvements on operating properties
|
(11,576
|
)
|
|
(8,920
|
)
|
||
Proceeds from property dispositions
|
|
|
|
||||
Distribution from unconsolidated real estate joint venture following contribution of properties
|
—
|
|
|
129,783
|
|
||
Sale of properties
|
—
|
|
|
107,517
|
|
||
Investing receivables funded
|
—
|
|
|
(11,104
|
)
|
||
Leasing costs paid
|
(8,424
|
)
|
|
(7,632
|
)
|
||
Other
|
(5,442
|
)
|
|
3,944
|
|
||
Net cash used in investing activities
|
(227,288
|
)
|
|
(13,630
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
|
||
Proceeds from debt
|
|
|
|
||||
Revolving Credit Facility
|
251,000
|
|
|
258,000
|
|
||
Other debt proceeds
|
189,359
|
|
|
10,606
|
|
||
Repayments of debt
|
|
|
|
||||
Revolving Credit Facility
|
(259,000
|
)
|
|
(308,000
|
)
|
||
Scheduled principal amortization
|
(2,044
|
)
|
|
(2,193
|
)
|
||
Deferred financing costs paid
|
(1,261
|
)
|
|
—
|
|
||
Net proceeds from issuance of common units
|
—
|
|
|
46,415
|
|
||
Common unit distributions paid
|
(62,376
|
)
|
|
(61,825
|
)
|
||
Distributions paid to redeemable noncontrolling interests
|
(12,662
|
)
|
|
(687
|
)
|
||
Redemption of vested equity awards
|
(1,572
|
)
|
|
(1,920
|
)
|
||
Other
|
(2,957
|
)
|
|
203
|
|
||
Net cash provided by (used in) financing activities
|
98,487
|
|
|
(59,401
|
)
|
||
Net increase in cash and cash equivalents and restricted cash
|
7,736
|
|
|
38,784
|
|
||
Cash and cash equivalents and restricted cash
|
|
|
|
|
|
||
Beginning of period
|
18,130
|
|
|
11,950
|
|
||
End of period
|
$
|
25,866
|
|
|
$
|
50,734
|
|
|
For the Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Reconciliation of net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
50,671
|
|
|
$
|
131,881
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and other amortization
|
67,075
|
|
|
70,527
|
|
||
Amortization of deferred financing costs and net debt discounts
|
1,993
|
|
|
1,801
|
|
||
Increase in deferred rent receivable
|
(1,070
|
)
|
|
(2,419
|
)
|
||
Gain on sales of real estate
|
(5
|
)
|
|
(84,469
|
)
|
||
Share-based compensation
|
3,027
|
|
|
3,283
|
|
||
Other
|
(1,263
|
)
|
|
(2,996
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|||
Decrease (increase) in accounts receivable
|
5,039
|
|
|
(31,846
|
)
|
||
Decrease (increase) in prepaid expenses and other assets, net
|
22,674
|
|
|
(483
|
)
|
||
(Decrease) increase in accounts payable, accrued expenses and other liabilities
|
(8,443
|
)
|
|
29,138
|
|
||
Decrease in rents received in advance and security deposits
|
(3,161
|
)
|
|
(2,602
|
)
|
||
Net cash provided by operating activities
|
$
|
136,537
|
|
|
$
|
111,815
|
|
Reconciliation of cash and cash equivalents and restricted cash:
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
$
|
14,733
|
|
|
$
|
8,066
|
|
Restricted cash at beginning of period
|
3,397
|
|
|
3,884
|
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
$
|
18,130
|
|
|
$
|
11,950
|
|
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
21,596
|
|
|
$
|
46,282
|
|
Restricted cash at end of period
|
4,270
|
|
|
4,452
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
$
|
25,866
|
|
|
$
|
50,734
|
|
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
||
Increase in accrued capital improvements, leasing and other investing activity costs
|
$
|
12,940
|
|
|
$
|
29,862
|
|
Finance right-of-use asset contributed by noncontrolling interest in joint venture
|
$
|
—
|
|
|
$
|
2,570
|
|
Operating right-of-use assets obtained in exchange for operating lease liabilities
|
$
|
3,381
|
|
|
$
|
255
|
|
Non-cash changes from property dispositions:
|
|
|
|
||||
Contribution of properties to unconsolidated real estate joint venture
|
$
|
—
|
|
|
$
|
99,288
|
|
Investment in unconsolidated real estate joint venture retained in disposition
|
$
|
—
|
|
|
$
|
26,500
|
|
Decrease in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests
|
$
|
(39,953
|
)
|
|
$
|
(23,585
|
)
|
Distributions payable
|
$
|
31,302
|
|
|
$
|
31,346
|
|
Increase in redeemable noncontrolling interests and decrease in equity to carry redeemable noncontrolling interests at fair value
|
$
|
4,337
|
|
|
$
|
2,875
|
|
•
|
174 properties totaling 19.8 million square feet comprised of 15.6 million square feet in 150 office properties and 4.2 million square feet in 24 single-tenant data center shell properties (“data center shells”). We owned 15 of these data center shells through unconsolidated real estate joint ventures;
|
•
|
a wholesale data center with a critical load of 19.25 megawatts;
|
•
|
11 properties under development (nine office properties and two data center shells), including one partially-operational property, and expansions of three fully-operational properties that we estimate will total approximately 1.9 million square feet upon completion; and
|
•
|
approximately 900 acres of land controlled for future development that we believe could be developed into approximately 11.5 million square feet and 43 acres of other land.
|
•
|
investing receivables, as disclosed in Note 7;
|
•
|
tenant notes receivable;
|
•
|
other assets comprised of non-lease revenue related accounts receivable (primarily from construction contract services) and contract assets from unbilled construction contract revenue; and
|
•
|
off-balance sheet credit exposures.
|
|
For the Six Months Ended June 30, 2020
|
||||||||||||||||||
|
Investing Receivables
|
|
Tenant Notes
Receivable (1)
|
|
Other Assets (2)
|
|
Off-Balance Sheet Credit Exposures (3)
|
|
Total
|
||||||||||
December 31, 2019
|
$
|
—
|
|
|
$
|
97
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
97
|
|
Cumulative effect of change for adoption of credit loss guidance
|
3,732
|
|
|
325
|
|
|
144
|
|
|
1,340
|
|
|
5,541
|
|
|||||
Credit loss expense
|
244
|
|
|
719
|
|
|
25
|
|
|
316
|
|
|
1,304
|
|
|||||
June 30, 2020
|
$
|
3,976
|
|
|
$
|
1,141
|
|
|
$
|
169
|
|
|
$
|
1,656
|
|
|
$
|
6,942
|
|
(1)
|
Included in the line entitled “accounts receivable, net” on our consolidated balance sheets.
|
|
Origination Year
|
|
|
||||||||||||||||||||||||
|
2015 and Earlier
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Total
|
||||||||||||||
Investing receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Credit risk classification:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment grade
|
$
|
61,329
|
|
|
$
|
—
|
|
|
$
|
887
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62,216
|
|
Non-investment grade
|
3,020
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,073
|
|
|
—
|
|
|
14,093
|
|
|||||||
Total
|
$
|
64,349
|
|
|
$
|
—
|
|
|
$
|
887
|
|
|
$
|
—
|
|
|
$
|
11,073
|
|
|
$
|
—
|
|
|
$
|
76,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Tenant notes receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Credit risk classification:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment grade
|
$
|
—
|
|
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
1,069
|
|
|
$
|
95
|
|
|
$
|
—
|
|
|
$
|
1,232
|
|
Non-investment grade
|
97
|
|
|
202
|
|
|
—
|
|
|
178
|
|
|
2,067
|
|
|
1,600
|
|
|
4,144
|
|
|||||||
Total
|
$
|
97
|
|
|
$
|
270
|
|
|
$
|
—
|
|
|
$
|
1,247
|
|
|
$
|
2,162
|
|
|
$
|
1,600
|
|
|
$
|
5,376
|
|
Description
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities in deferred compensation plan (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mutual funds
|
|
$
|
2,512
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,512
|
|
Other
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Mutual funds (1)
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Total assets
|
|
$
|
2,539
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,539
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation plan liability (2)
|
|
$
|
—
|
|
|
$
|
2,532
|
|
|
$
|
—
|
|
|
$
|
2,532
|
|
Interest rate derivatives
|
|
—
|
|
|
65,612
|
|
|
—
|
|
|
65,612
|
|
||||
Total liabilities
|
|
$
|
—
|
|
|
$
|
68,144
|
|
|
$
|
—
|
|
|
$
|
68,144
|
|
Description
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs(Level 2) |
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mutual funds (1)
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate derivatives
|
|
$
|
—
|
|
|
$
|
65,612
|
|
|
$
|
—
|
|
|
$
|
65,612
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
Land
|
$
|
502,609
|
|
|
$
|
472,976
|
|
Buildings and improvements
|
3,451,302
|
|
|
3,306,791
|
|
||
Less: Accumulated depreciation
|
(1,065,094
|
)
|
|
(1,007,120
|
)
|
||
Operating properties, net
|
$
|
2,888,817
|
|
|
$
|
2,772,647
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
Lease revenue
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Fixed
|
|
$
|
103,993
|
|
|
$
|
104,193
|
|
|
$
|
208,102
|
|
|
$
|
208,837
|
|
Variable
|
|
28,154
|
|
|
27,222
|
|
|
55,057
|
|
|
53,481
|
|
||||
|
|
$
|
132,147
|
|
|
$
|
131,415
|
|
|
$
|
263,159
|
|
|
$
|
262,318
|
|
Year Ending December 31,
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
2020 (1)
|
|
$
|
203,627
|
|
|
$
|
388,310
|
|
2021
|
|
372,518
|
|
|
336,482
|
|
||
2022
|
|
335,187
|
|
|
299,356
|
|
||
2023
|
|
281,094
|
|
|
245,661
|
|
||
2024
|
|
231,731
|
|
|
195,246
|
|
||
Thereafter
|
|
634,608
|
|
|
474,741
|
|
||
|
|
$
|
2,058,765
|
|
|
$
|
1,939,796
|
|
•
|
$37.8 million for land on which we are developing an office property in Washington, DC through our Stevens Investors, LLC joint venture, virtually all of the rent on which was previously paid. This lease has a 96-year remaining term, and we possess a bargain purchase option that we expect to exercise in 2021;
|
•
|
$10.2 million for land underlying operating office properties in Washington, DC under two leases with remaining terms of approximately 80 years;
|
•
|
$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 29 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;
|
•
|
$6.6 million for land in a research park in College Park, Maryland under four leases through our M Square Associates, LLC joint venture, all of the rent on which was previously paid. These leases had remaining terms ranging from 63 to 74 years;
|
•
|
$8.1 million for land in a business park in Huntsville, Alabama under 11 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 43 to 50 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance; and
|
•
|
$2.3 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 48 years, all of the rent on which was previously paid.
|
Leases
|
|
Balance Sheet Location
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Right-of-use assets
|
|
|
|
|
|
|
||||
Operating leases - Property
|
|
Property - operating right-of-use assets
|
|
$
|
31,009
|
|
|
$
|
27,864
|
|
Finance leases - Property
|
|
Property - finance right-of-use assets
|
|
40,441
|
|
|
40,458
|
|
||
Total right-of-use assets
|
|
|
|
$
|
71,450
|
|
|
$
|
68,322
|
|
Leases
|
|
Balance Sheet Location
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Lease liabilities
|
|
|
|
|
|
|
||||
Operating leases - Property
|
|
Property - operating lease liabilities
|
|
$
|
20,796
|
|
|
$
|
17,317
|
|
Finance leases - Property
|
|
Other liabilities
|
|
688
|
|
|
702
|
|
||
Total lease liabilities
|
|
|
|
$
|
21,484
|
|
|
$
|
18,019
|
|
Weighted average remaining lease term
|
|
|
|
Operating leases
|
|
65 years
|
|
Finance leases
|
|
< 1 year
|
|
Weighted average discount rate
|
|
|
|
Operating leases
|
|
7.22
|
%
|
Finance leases
|
|
3.62
|
%
|
|
|
Statement of Operations Location
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
Lease cost
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|||||||||
Operating lease cost
|
|
|
|
|
|
|
|
|
|
|
||||||||
Property leases
|
|
Property operating expenses
|
|
$
|
445
|
|
|
$
|
413
|
|
|
$
|
876
|
|
|
$
|
826
|
|
Finance lease cost
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of property right-of-use assets
|
|
Property operating expenses
|
|
9
|
|
|
12
|
|
|
18
|
|
|
12
|
|
||||
|
|
|
|
$
|
454
|
|
|
$
|
425
|
|
|
$
|
894
|
|
|
$
|
838
|
|
|
|
For the Six Months Ended June 30,
|
||||||
Supplemental cash flow information
|
|
2020
|
|
2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
||||
Operating cash flows for operating leases
|
|
$
|
541
|
|
|
$
|
550
|
|
Financing cash flows for financing leases
|
|
$
|
14
|
|
|
$
|
4
|
|
|
|
As of June 30, 2020
|
|
As of December 31, 2019
|
||||||||||||||||||||
Year Ending December 31,
|
|
Operating leases
|
|
Finance leases
|
|
Total
|
|
Operating leases
|
|
Finance leases
|
|
Total
|
||||||||||||
2020 (1)
|
|
$
|
636
|
|
|
$
|
660
|
|
|
$
|
1,296
|
|
|
$
|
1,092
|
|
|
$
|
674
|
|
|
$
|
1,766
|
|
2021
|
|
1,328
|
|
|
14
|
|
|
1,342
|
|
|
1,138
|
|
|
14
|
|
|
1,152
|
|
||||||
2022
|
|
1,352
|
|
|
14
|
|
|
1,366
|
|
|
1,162
|
|
|
14
|
|
|
1,176
|
|
||||||
2023
|
|
1,358
|
|
|
—
|
|
|
1,358
|
|
|
1,167
|
|
|
—
|
|
|
1,167
|
|
||||||
2024
|
|
1,363
|
|
|
—
|
|
|
1,363
|
|
|
1,173
|
|
|
—
|
|
|
1,173
|
|
||||||
Thereafter
|
|
113,780
|
|
|
—
|
|
|
113,780
|
|
|
100,609
|
|
|
—
|
|
|
100,609
|
|
||||||
Total lease payments
|
|
119,817
|
|
|
688
|
|
|
120,505
|
|
|
106,341
|
|
|
702
|
|
|
107,043
|
|
||||||
Less: Amount representing interest
|
|
(99,021
|
)
|
|
—
|
|
|
(99,021
|
)
|
|
(89,024
|
)
|
|
—
|
|
|
(89,024
|
)
|
||||||
Lease liability
|
|
$
|
20,796
|
|
|
$
|
688
|
|
|
$
|
21,484
|
|
|
$
|
17,317
|
|
|
$
|
702
|
|
|
$
|
18,019
|
|
|
|
|
|
|
|
|
|
June 30, 2020 (1)
|
||||||||||
|
|
Date Acquired
|
|
Nominal Ownership %
|
|
|
|
Total Assets
|
|
Encumbered Assets
|
|
Total Liabilities
|
||||||
Entity
|
|
|
|
Location
|
|
|
|
|||||||||||
LW Redstone Company, LLC
|
|
3/23/2010
|
|
85%
|
|
Huntsville, Alabama
|
|
$
|
335,040
|
|
|
$
|
111,380
|
|
|
$
|
107,223
|
|
M Square Associates, LLC
|
|
6/26/2007
|
|
50%
|
|
College Park, Maryland
|
|
92,946
|
|
|
62,725
|
|
|
56,153
|
|
|||
Stevens Investors, LLC
|
|
8/11/2015
|
|
95%
|
|
Washington, DC
|
|
141,952
|
|
|
141,234
|
|
|
69,982
|
|
|||
|
|
|
|
|
|
|
|
$
|
569,938
|
|
|
$
|
315,339
|
|
|
$
|
233,358
|
|
(1)
|
Excludes amounts eliminated in consolidation.
|
|
|
Date Acquired
|
|
Nominal Ownership %
|
|
Number of Properties
|
|
Carrying Value of Investment (1)
|
|||||||
Entity
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||
GI-COPT DC Partnership LLC
|
|
7/21/2016
|
|
50%
|
|
6
|
|
|
$
|
36,720
|
|
|
$
|
37,816
|
|
BREIT COPT DC JV LLC
|
|
6/20/2019
|
|
10%
|
|
9
|
|
|
13,737
|
|
|
14,133
|
|
||
|
|
|
|
|
|
15
|
|
|
$
|
50,457
|
|
|
$
|
51,949
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
Notes receivable from the City of Huntsville
|
$
|
62,216
|
|
|
$
|
59,427
|
|
Other investing loans receivable
|
14,093
|
|
|
14,096
|
|
||
Amortized cost basis
|
76,309
|
|
|
73,523
|
|
||
Allowance for credit losses
|
(3,976
|
)
|
|
—
|
|
||
Investing receivables, net
|
$
|
72,333
|
|
|
$
|
73,523
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
Lease incentives, net
|
$
|
29,092
|
|
|
$
|
28,433
|
|
Furniture, fixtures and equipment, net
|
9,015
|
|
|
7,823
|
|
||
Non-real estate equity investments
|
6,726
|
|
|
6,705
|
|
||
Prepaid expenses
|
6,600
|
|
|
18,835
|
|
||
Construction contract costs in excess of billings, net
|
5,508
|
|
|
17,223
|
|
||
Restricted cash
|
4,270
|
|
|
3,397
|
|
||
Deferred financing costs, net (1)
|
3,069
|
|
|
3,633
|
|
||
Deferred tax asset, net (2)
|
2,249
|
|
|
2,328
|
|
||
Other assets
|
8,998
|
|
|
4,639
|
|
||
Total for COPLP and subsidiaries
|
75,527
|
|
|
93,016
|
|
||
Marketable securities in deferred compensation plan
|
2,532
|
|
|
3,060
|
|
||
Total for COPT and subsidiaries
|
$
|
78,059
|
|
|
$
|
96,076
|
|
|
|
Carrying Value (1) as of
|
|
|
|
|
||||||
|
|
June 30,
2020 |
|
December 31,
2019 |
|
June 30, 2020
|
||||||
|
|
|
|
Stated Interest Rates
|
|
Scheduled Maturity
|
||||||
Mortgage and Other Secured Debt:
|
|
|
|
|
|
|
|
|
|
|
||
Fixed rate mortgage debt (2)
|
|
$
|
141,729
|
|
|
$
|
143,430
|
|
|
3.82% - 4.62% (3)
|
|
2023-2026
|
Variable rate secured debt (4)
|
|
108,392
|
|
|
68,055
|
|
|
LIBOR + 1.45% to 2.35% (5)
|
|
2020-2026
|
||
Total mortgage and other secured debt
|
|
250,121
|
|
|
211,485
|
|
|
|
|
|
||
Revolving Credit Facility (6)
|
|
169,000
|
|
|
177,000
|
|
|
LIBOR + 0.775% to 1.45% (7)
|
|
March 2023 (6)
|
||
Term Loan Facility (8)
|
|
398,058
|
|
|
248,706
|
|
|
LIBOR + 1.00% to 1.65% (9)
|
|
2022
|
||
Unsecured Senior Notes
|
|
|
|
|
|
|
|
|
||||
3.60%, $350,000 aggregate principal
|
|
348,658
|
|
|
348,431
|
|
|
3.60% (10)
|
|
May 2023
|
||
5.25%, $250,000 aggregate principal
|
|
247,920
|
|
|
247,652
|
|
|
5.25% (11)
|
|
February 2024
|
||
3.70%, $300,000 aggregate principal
|
|
299,585
|
|
|
299,324
|
|
|
3.70% (12)
|
|
June 2021
|
||
5.00%, $300,000 aggregate principal
|
|
297,707
|
|
|
297,503
|
|
|
5.00% (13)
|
|
July 2025
|
||
Unsecured note payable
|
|
970
|
|
|
1,038
|
|
|
0% (14)
|
|
May 2026
|
||
Total debt, net
|
|
$
|
2,012,019
|
|
|
$
|
1,831,139
|
|
|
|
|
|
(1)
|
The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $6.0 million as of June 30, 2020 and $5.8 million as of December 31, 2019.
|
(2)
|
Certain of the fixed rate mortgages carry interest rates that, upon assumption, were above or below market rates and therefore were recorded at their fair value based on applicable effective interest rates. The carrying values of these loans reflect net unamortized premiums totaling $186,000 as of June 30, 2020 and $217,000 as of December 31, 2019.
|
(3)
|
The weighted average interest rate on our fixed rate mortgage debt was 4.16% as of June 30, 2020.
|
(4)
|
Includes a construction loan with $47.6 million in remaining borrowing capacity as of June 30, 2020.
|
(5)
|
The weighted average interest rate on our variable rate secured debt was 2.22% as of June 30, 2020.
|
(6)
|
The facility matures in March 2023, with the ability for us to further extend such maturity by two six-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.075% of the total availability under the facility for each extension period. In connection with this facility, we also have the ability to borrow up to $500.0 million under new term loans from the facility’s lender group provided that there is no default under the facility and subject to the approval of the lenders.
|
(7)
|
The weighted average interest rate on the Revolving Credit Facility was 1.20% as of June 30, 2020.
|
(9)
|
The interest rate on this loan was 1.17% as of June 30, 2020.
|
(10)
|
The carrying value of these notes reflects an unamortized discount totaling $939,000 as of June 30, 2020 and $1.1 million as of December 31, 2019. The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%.
|
(11)
|
The carrying value of these notes reflects an unamortized discount totaling $1.9 million as of June 30, 2020 and $2.1 million as of December 31, 2019. The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%.
|
(12)
|
The carrying value of these notes reflects an unamortized discount totaling $324,000 as of June 30, 2020 and $534,000 as of December 31, 2019. The effective interest rate under the notes, including amortization of the issuance costs, was 3.85%.
|
(14)
|
This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates. The carrying value of this note reflects an unamortized discount totaling $191,000 as of June 30, 2020 and $223,000 as of December 31, 2019.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Fixed-rate debt
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unsecured Senior Notes
|
$
|
1,193,870
|
|
|
$
|
1,224,800
|
|
|
$
|
1,192,910
|
|
|
$
|
1,227,441
|
|
Other fixed-rate debt
|
142,699
|
|
|
145,473
|
|
|
144,468
|
|
|
149,907
|
|
||||
Variable-rate debt
|
675,450
|
|
|
666,040
|
|
|
493,761
|
|
|
495,962
|
|
||||
|
$
|
2,012,019
|
|
|
$
|
2,036,313
|
|
|
$
|
1,831,139
|
|
|
$
|
1,873,310
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
||||||||
Notional Amount
|
|
Fixed Rate
|
|
Floating Rate Index
|
|
Effective Date
|
|
Expiration Date
|
|
June 30,
2020 |
|
December 31,
2019 |
||||||
$
|
12,234
|
|
(1)
|
1.390%
|
|
One-Month LIBOR
|
|
10/13/2015
|
|
10/1/2020
|
|
$
|
(38
|
)
|
|
$
|
23
|
|
100,000
|
|
|
1.901%
|
|
One-Month LIBOR
|
|
9/1/2016
|
|
12/1/2022
|
|
(4,326
|
)
|
|
(1,028
|
)
|
|||
100,000
|
|
|
1.905%
|
|
One-Month LIBOR
|
|
9/1/2016
|
|
12/1/2022
|
|
(4,336
|
)
|
|
(1,037
|
)
|
|||
50,000
|
|
|
1.908%
|
|
One-Month LIBOR
|
|
9/1/2016
|
|
12/1/2022
|
|
(2,171
|
)
|
|
(524
|
)
|
|||
11,200
|
|
(2)
|
1.678%
|
|
One-Month LIBOR
|
|
8/1/2019
|
|
8/1/2026
|
|
(858
|
)
|
|
(20
|
)
|
|||
150,000
|
|
|
0.498%
|
|
One-Month LIBOR
|
|
4/1/2020
|
|
12/31/2020
|
|
(248
|
)
|
|
—
|
|
|||
23,000
|
|
(3)
|
0.573%
|
|
One-Month LIBOR
|
|
4/1/2020
|
|
3/26/2025
|
|
(378
|
)
|
|
—
|
|
|||
75,000
|
|
|
3.176%
|
|
Three-Month LIBOR
|
|
6/30/2020
|
|
6/30/2030
|
|
(18,779
|
)
|
|
(8,640
|
)
|
|||
75,000
|
|
|
3.192%
|
|
Three-Month LIBOR
|
|
6/30/2020
|
|
6/30/2030
|
|
(18,897
|
)
|
|
(8,749
|
)
|
|||
75,000
|
|
|
2.744%
|
|
Three-Month LIBOR
|
|
6/30/2020
|
|
6/30/2030
|
|
(15,581
|
)
|
|
(5,684
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
$
|
(65,612
|
)
|
|
$
|
(25,659
|
)
|
(1)
|
The notional amount of this instrument is scheduled to amortize to $12.1 million.
|
(2)
|
The notional amount of this instrument is scheduled to amortize to $10.0 million.
|
(3)
|
The notional amount of this instrument is scheduled to amortize to $22.1 million.
|
|
|
|
|
Fair Value at
|
||||||
Derivatives
|
|
Balance Sheet Location
|
|
June 30,
2020 |
|
December 31, 2019
|
||||
Interest rate swaps designated as cash flow hedges
|
|
Prepaid expenses and other assets, net
|
|
$
|
—
|
|
|
$
|
23
|
|
Interest rate swaps designated as cash flow hedges
|
|
Interest rate derivatives (liabilities)
|
|
$
|
(65,612
|
)
|
|
$
|
(25,682
|
)
|
|
|
Amount of Loss Recognized in AOCL on Derivatives
|
|
Amount of (Loss) Gain Reclassified from AOCL into Interest Expense on Statement of Operations
|
||||||||||||||||||||||||||||
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||||||||||||||
Derivatives in Hedging Relationships
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||
Interest rate derivatives
|
|
$
|
(3,315
|
)
|
|
$
|
(13,545
|
)
|
|
$
|
(41,020
|
)
|
|
$
|
(22,390
|
)
|
|
$
|
(935
|
)
|
|
$
|
557
|
|
|
$
|
(1,066
|
)
|
|
$
|
1,127
|
|
|
|
For the Six Months Ended June 30,
|
||||||
|
|
2020
|
|
2019
|
||||
Beginning balance
|
|
$
|
29,431
|
|
|
$
|
26,260
|
|
Distributions to noncontrolling interests
|
|
(12,695
|
)
|
|
(876
|
)
|
||
Net income attributable to noncontrolling interests
|
|
2,075
|
|
|
1,544
|
|
||
Adjustment to arrive at fair value of interests
|
|
4,337
|
|
|
2,875
|
|
||
Ending balance
|
|
$
|
23,148
|
|
|
$
|
29,803
|
|
|
Operating Property Segments
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
Defense/Information Technology Locations
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
|
Fort Meade/BW Corridor
|
|
Northern Virginia Defense/IT
|
|
Lackland Air Force Base
|
|
Navy Support Locations
|
|
Redstone Arsenal
|
|
Data Center Shells
|
|
Total Defense/IT Locations
|
|
Regional Office
|
|
Wholesale
Data Center |
|
Other
|
|
Total
|
||||||||||||||||||||||
Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenues from real estate operations
|
$
|
62,698
|
|
|
$
|
14,447
|
|
|
$
|
13,257
|
|
|
$
|
8,119
|
|
|
$
|
4,647
|
|
|
$
|
7,076
|
|
|
$
|
110,244
|
|
|
$
|
15,162
|
|
|
$
|
6,455
|
|
|
$
|
677
|
|
|
$
|
132,538
|
|
Property operating expenses
|
(20,859
|
)
|
|
(5,335
|
)
|
|
(7,785
|
)
|
|
(3,171
|
)
|
|
(1,612
|
)
|
|
(789
|
)
|
|
(39,551
|
)
|
|
(6,888
|
)
|
|
(3,463
|
)
|
|
(302
|
)
|
|
(50,204
|
)
|
|||||||||||
UJV NOI allocable to COPT
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,725
|
|
|
1,725
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,725
|
|
|||||||||||
NOI from real estate operations
|
$
|
41,839
|
|
|
$
|
9,112
|
|
|
$
|
5,472
|
|
|
$
|
4,948
|
|
|
$
|
3,035
|
|
|
$
|
8,012
|
|
|
$
|
72,418
|
|
|
$
|
8,274
|
|
|
$
|
2,992
|
|
|
$
|
375
|
|
|
$
|
84,059
|
|
Additions to long-lived assets
|
$
|
6,958
|
|
|
$
|
3,204
|
|
|
$
|
—
|
|
|
$
|
2,110
|
|
|
$
|
146
|
|
|
$
|
—
|
|
|
$
|
12,418
|
|
|
$
|
4,445
|
|
|
$
|
7,904
|
|
|
$
|
103
|
|
|
$
|
24,870
|
|
Transfers from non-operating properties
|
$
|
3,975
|
|
|
$
|
524
|
|
|
$
|
145
|
|
|
$
|
—
|
|
|
$
|
29,171
|
|
|
$
|
49,964
|
|
|
$
|
83,779
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
83,779
|
|
Three Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues from real estate operations
|
$
|
61,659
|
|
|
$
|
13,912
|
|
|
$
|
12,104
|
|
|
$
|
8,185
|
|
|
$
|
3,968
|
|
|
$
|
8,624
|
|
|
$
|
108,452
|
|
|
$
|
15,018
|
|
|
$
|
8,560
|
|
|
$
|
741
|
|
|
$
|
132,771
|
|
Property operating expenses
|
(19,344
|
)
|
|
(4,694
|
)
|
|
(6,648
|
)
|
|
(3,286
|
)
|
|
(1,599
|
)
|
|
(759
|
)
|
|
(36,330
|
)
|
|
(7,590
|
)
|
|
(3,618
|
)
|
|
(348
|
)
|
|
(47,886
|
)
|
|||||||||||
UJV NOI allocable to COPT
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,251
|
|
|
1,251
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,251
|
|
|||||||||||
NOI from real estate operations
|
$
|
42,315
|
|
|
$
|
9,218
|
|
|
$
|
5,456
|
|
|
$
|
4,899
|
|
|
$
|
2,369
|
|
|
$
|
9,116
|
|
|
$
|
73,373
|
|
|
$
|
7,428
|
|
|
$
|
4,942
|
|
|
$
|
393
|
|
|
$
|
86,136
|
|
Additions to long-lived assets
|
$
|
7,499
|
|
|
$
|
1,703
|
|
|
$
|
—
|
|
|
$
|
928
|
|
|
$
|
536
|
|
|
$
|
—
|
|
|
$
|
10,666
|
|
|
$
|
4,870
|
|
|
$
|
95
|
|
|
$
|
34
|
|
|
$
|
15,665
|
|
Transfers from non-operating properties
|
$
|
1,338
|
|
|
$
|
20
|
|
|
$
|
1,833
|
|
|
$
|
—
|
|
|
$
|
5,576
|
|
|
$
|
92,844
|
|
|
$
|
101,611
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
101,611
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenues from real estate operations
|
$
|
127,136
|
|
|
$
|
28,125
|
|
|
$
|
25,333
|
|
|
$
|
16,460
|
|
|
$
|
9,323
|
|
|
$
|
12,653
|
|
|
$
|
219,030
|
|
|
$
|
30,622
|
|
|
$
|
13,627
|
|
|
$
|
1,375
|
|
|
$
|
264,654
|
|
Property operating expenses
|
(42,081
|
)
|
|
(10,520
|
)
|
|
(14,580
|
)
|
|
(6,456
|
)
|
|
(3,459
|
)
|
|
(1,446
|
)
|
|
(78,542
|
)
|
|
(14,425
|
)
|
|
(6,696
|
)
|
|
(540
|
)
|
|
(100,203
|
)
|
|||||||||||
UJV NOI allocable to COPT
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,438
|
|
|
3,438
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,438
|
|
|||||||||||
NOI from real estate operations
|
$
|
85,055
|
|
|
$
|
17,605
|
|
|
$
|
10,753
|
|
|
$
|
10,004
|
|
|
$
|
5,864
|
|
|
$
|
14,645
|
|
|
$
|
143,926
|
|
|
$
|
16,197
|
|
|
$
|
6,931
|
|
|
$
|
835
|
|
|
$
|
167,889
|
|
Additions to long-lived assets
|
$
|
14,633
|
|
|
$
|
5,895
|
|
|
$
|
—
|
|
|
$
|
3,868
|
|
|
$
|
316
|
|
|
$
|
—
|
|
|
$
|
24,712
|
|
|
$
|
7,802
|
|
|
$
|
8,782
|
|
|
$
|
168
|
|
|
$
|
41,464
|
|
Transfers from non-operating properties
|
$
|
4,513
|
|
|
$
|
780
|
|
|
$
|
160
|
|
|
$
|
—
|
|
|
$
|
30,307
|
|
|
$
|
106,196
|
|
|
$
|
141,956
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
141,956
|
|
Segment assets at June 30, 2020
|
$
|
1,271,790
|
|
|
$
|
394,363
|
|
|
$
|
144,253
|
|
|
$
|
181,744
|
|
|
$
|
167,161
|
|
|
$
|
382,749
|
|
|
$
|
2,542,060
|
|
|
$
|
389,058
|
|
|
$
|
205,711
|
|
|
$
|
3,710
|
|
|
$
|
3,140,539
|
|
Six Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenues from real estate operations
|
$
|
124,342
|
|
|
$
|
28,743
|
|
|
$
|
23,665
|
|
|
$
|
16,340
|
|
|
$
|
7,907
|
|
|
$
|
15,978
|
|
|
$
|
216,975
|
|
|
$
|
29,851
|
|
|
$
|
16,431
|
|
|
$
|
1,504
|
|
|
$
|
264,761
|
|
Property operating expenses
|
(41,679
|
)
|
|
(9,986
|
)
|
|
(12,607
|
)
|
|
(6,690
|
)
|
|
(3,138
|
)
|
|
(1,112
|
)
|
|
(75,212
|
)
|
|
(15,006
|
)
|
|
(6,456
|
)
|
|
(657
|
)
|
|
(97,331
|
)
|
|||||||||||
UJV NOI allocable to COPT
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,470
|
|
|
2,470
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,470
|
|
|||||||||||
NOI from real estate operations
|
$
|
82,663
|
|
|
$
|
18,757
|
|
|
$
|
11,058
|
|
|
$
|
9,650
|
|
|
$
|
4,769
|
|
|
$
|
17,336
|
|
|
$
|
144,233
|
|
|
$
|
14,845
|
|
|
$
|
9,975
|
|
|
$
|
847
|
|
|
$
|
169,900
|
|
Additions to long-lived assets
|
$
|
11,434
|
|
|
$
|
3,150
|
|
|
$
|
—
|
|
|
$
|
5,945
|
|
|
$
|
836
|
|
|
$
|
—
|
|
|
$
|
21,365
|
|
|
$
|
8,859
|
|
|
$
|
251
|
|
|
$
|
44
|
|
|
$
|
30,519
|
|
Transfers from non-operating properties
|
$
|
6,378
|
|
|
$
|
4,529
|
|
|
$
|
8,336
|
|
|
$
|
—
|
|
|
$
|
9,211
|
|
|
$
|
112,632
|
|
|
$
|
141,086
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
141,086
|
|
Segment assets at June 30, 2019
|
$
|
1,274,336
|
|
|
$
|
398,586
|
|
|
$
|
146,475
|
|
|
$
|
187,172
|
|
|
$
|
115,222
|
|
|
$
|
307,676
|
|
|
$
|
2,429,467
|
|
|
$
|
393,110
|
|
|
$
|
209,787
|
|
|
$
|
3,776
|
|
|
$
|
3,036,140
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Segment revenues from real estate operations
|
$
|
132,538
|
|
|
$
|
132,771
|
|
|
$
|
264,654
|
|
|
$
|
264,761
|
|
Construction contract and other service revenues
|
12,236
|
|
|
42,299
|
|
|
25,917
|
|
|
59,249
|
|
||||
Total revenues
|
$
|
144,774
|
|
|
$
|
175,070
|
|
|
$
|
290,571
|
|
|
$
|
324,010
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
UJV NOI allocable to COPT
|
$
|
1,725
|
|
|
$
|
1,251
|
|
|
$
|
3,438
|
|
|
$
|
2,470
|
|
Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense
|
(1,270
|
)
|
|
(830
|
)
|
|
(2,540
|
)
|
|
(1,657
|
)
|
||||
Add: Equity in loss of unconsolidated non-real estate entities
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
||||
Equity in income of unconsolidated entities
|
$
|
454
|
|
|
$
|
420
|
|
|
$
|
895
|
|
|
$
|
811
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Construction contract and other service revenues
|
$
|
12,236
|
|
|
$
|
42,299
|
|
|
$
|
25,917
|
|
|
$
|
59,249
|
|
Construction contract and other service expenses
|
(11,711
|
)
|
|
(41,002
|
)
|
|
(24,832
|
)
|
|
(57,328
|
)
|
||||
NOI from service operations
|
$
|
525
|
|
|
$
|
1,297
|
|
|
$
|
1,085
|
|
|
$
|
1,921
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
NOI from real estate operations
|
$
|
84,059
|
|
|
$
|
86,136
|
|
|
$
|
167,889
|
|
|
$
|
169,900
|
|
NOI from service operations
|
525
|
|
|
1,297
|
|
|
1,085
|
|
|
1,921
|
|
||||
Interest and other income
|
2,282
|
|
|
1,849
|
|
|
3,487
|
|
|
4,135
|
|
||||
Credit loss expense
|
(615
|
)
|
|
—
|
|
|
(1,304
|
)
|
|
—
|
|
||||
Gain on sales of real estate
|
—
|
|
|
84,469
|
|
|
5
|
|
|
84,469
|
|
||||
Equity in income of unconsolidated entities
|
454
|
|
|
420
|
|
|
895
|
|
|
811
|
|
||||
Income tax (expense) benefit
|
(30
|
)
|
|
176
|
|
|
(79
|
)
|
|
(18
|
)
|
||||
Depreciation and other amortization associated with real estate operations
|
(33,612
|
)
|
|
(34,802
|
)
|
|
(66,208
|
)
|
|
(69,598
|
)
|
||||
General, administrative and leasing expenses
|
(8,158
|
)
|
|
(9,386
|
)
|
|
(15,644
|
)
|
|
(18,137
|
)
|
||||
Business development expenses and land carry costs
|
(1,262
|
)
|
|
(870
|
)
|
|
(2,380
|
)
|
|
(1,983
|
)
|
||||
Interest expense
|
(16,797
|
)
|
|
(18,475
|
)
|
|
(33,637
|
)
|
|
(37,149
|
)
|
||||
Less: UJV NOI allocable to COPT included in equity in income of unconsolidated entities
|
(1,725
|
)
|
|
(1,251
|
)
|
|
(3,438
|
)
|
|
(2,470
|
)
|
||||
Net income
|
$
|
25,121
|
|
|
$
|
109,563
|
|
|
$
|
50,671
|
|
|
$
|
131,881
|
|
|
June 30,
2020 |
|
June 30,
2019 |
||||
Segment assets
|
$
|
3,140,539
|
|
|
$
|
3,036,140
|
|
Operating properties lease liabilities included in segment assets
|
19,073
|
|
|
16,502
|
|
||
Non-operating property assets
|
679,207
|
|
|
523,801
|
|
||
Other assets
|
172,506
|
|
|
227,026
|
|
||
Total COPT consolidated assets
|
$
|
4,011,325
|
|
|
$
|
3,803,469
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Construction contract revenue:
|
|
|
|
|
|
|
|
||||||||
Guaranteed maximum price
|
$
|
5,432
|
|
|
$
|
25,792
|
|
|
$
|
10,476
|
|
|
$
|
38,148
|
|
Firm fixed price
|
2,984
|
|
|
1,335
|
|
|
8,056
|
|
|
3,660
|
|
||||
Cost-plus fee
|
3,563
|
|
|
14,969
|
|
|
6,872
|
|
|
17,029
|
|
||||
Other
|
257
|
|
|
203
|
|
|
513
|
|
|
412
|
|
||||
|
$
|
12,236
|
|
|
$
|
42,299
|
|
|
$
|
25,917
|
|
|
$
|
59,249
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Construction contract revenue:
|
|
|
|
|
|
|
|
||||||||
Construction
|
$
|
10,851
|
|
|
$
|
42,010
|
|
|
$
|
23,734
|
|
|
$
|
58,499
|
|
Design
|
1,128
|
|
|
86
|
|
|
1,670
|
|
|
338
|
|
||||
Other
|
257
|
|
|
203
|
|
|
513
|
|
|
412
|
|
||||
|
$
|
12,236
|
|
|
$
|
42,299
|
|
|
$
|
25,917
|
|
|
$
|
59,249
|
|
|
For the Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Beginning balance
|
$
|
12,378
|
|
|
$
|
6,701
|
|
Ending balance
|
$
|
8,898
|
|
|
$
|
34,837
|
|
|
For the Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Beginning balance
|
$
|
17,223
|
|
|
$
|
3,189
|
|
Ending balance
|
$
|
5,508
|
|
|
$
|
12,629
|
|
|
For the Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Beginning balance
|
$
|
1,184
|
|
|
$
|
568
|
|
Ending balance
|
$
|
2,435
|
|
|
$
|
156
|
|
Portion of beginning balance recognized in revenue during:
|
|
|
|
||||
Three months ended June 30
|
$
|
92
|
|
|
$
|
6
|
|
Six months ended June 30
|
$
|
738
|
|
|
$
|
445
|
|
Percentile Rank
|
|
Earned Awards Payout %
|
75th or greater
|
|
100% of PB-PIUs granted
|
50th (target)
|
|
50% of PB-PIUs granted
|
25th
|
|
25% of PB-PIUs granted
|
Below 25th
|
|
0% of PB-PIUs granted
|
•
|
the denominator is increased to include: (1) the weighted average number of potential additional common shares that would have been outstanding if securities that are convertible into common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to COPT’s forward equity sale agreements, redeemable noncontrolling interests and our share-based compensation using the treasury stock or if-converted methods; and
|
•
|
the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common shares that we add to the denominator.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
||||||
Net income attributable to COPT
|
$
|
23,497
|
|
|
$
|
106,791
|
|
|
$
|
47,551
|
|
|
$
|
127,650
|
|
Income attributable to share-based compensation awards
|
(115
|
)
|
|
(364
|
)
|
|
(220
|
)
|
|
(413
|
)
|
||||
Numerator for basic EPS on net income attributable to COPT common shareholders
|
23,382
|
|
|
106,427
|
|
|
47,331
|
|
|
127,237
|
|
||||
Preferred unit distributions
|
—
|
|
|
165
|
|
|
—
|
|
|
—
|
|
||||
Redeemable noncontrolling interests
|
—
|
|
|
902
|
|
|
—
|
|
|
66
|
|
||||
Common units in the Operating Partnership
|
—
|
|
|
—
|
|
|
—
|
|
|
1,515
|
|
||||
Income attributable to share-based compensation awards
|
6
|
|
|
18
|
|
|
14
|
|
|
22
|
|
||||
Numerator for diluted EPS on net income attributable to COPT common shareholders
|
$
|
23,388
|
|
|
$
|
107,512
|
|
|
$
|
47,345
|
|
|
$
|
128,840
|
|
Denominator (all weighted averages):
|
|
|
|
|
|
|
|
|
|
||||||
Denominator for basic EPS (common shares)
|
111,800
|
|
|
111,557
|
|
|
111,762
|
|
|
110,759
|
|
||||
Dilutive convertible preferred units
|
—
|
|
|
176
|
|
|
—
|
|
|
—
|
|
||||
Dilutive effect of common units
|
—
|
|
|
—
|
|
|
—
|
|
|
1,329
|
|
||||
Dilutive effect of redeemable noncontrolling interests
|
—
|
|
|
1,062
|
|
|
—
|
|
|
130
|
|
||||
Dilutive effect of share-based compensation awards
|
321
|
|
|
310
|
|
|
280
|
|
|
289
|
|
||||
Denominator for diluted EPS (common shares)
|
112,121
|
|
|
113,105
|
|
|
112,042
|
|
|
112,507
|
|
||||
Basic EPS
|
$
|
0.21
|
|
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
Diluted EPS
|
$
|
0.21
|
|
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
|
Weighted Average Shares Excluded from Denominator
|
||||||||||
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Conversion of common units
|
1,237
|
|
|
1,327
|
|
|
1,232
|
|
|
—
|
|
Conversion of redeemable noncontrolling interests
|
878
|
|
|
—
|
|
|
944
|
|
|
907
|
|
Conversion of Series I preferred units
|
176
|
|
|
—
|
|
|
176
|
|
|
176
|
|
•
|
weighted average shares related to COPT’s forward equity sale agreements for the six months ended June 30, 2019 of 758,000;
|
•
|
weighted average restricted shares and deferred share awards for the three months ended June 30, 2020 and 2019 of 429,000 and 425,000, respectively, and for the six months ended June 30, 2020 and 2019 of 434,000 and 444,000, respectively;
|
•
|
weighted average options for the three and six months ended June 30, 2019 of 17,000 and 23,000, respectively; and
|
•
|
weighted average unvested TB-PIUs for the three months ended June 30, 2020 and 2019 of 90,000 and 59,000, respectively, and for the six months ended June 30, 2020 and 2019 of 82,000 and 39,000, respectively.
|
•
|
the denominator is increased to include: (1) the weighted average number of potential additional common units that would have been outstanding if securities that are convertible into our common units were converted; and (2) the effect of dilutive
|
•
|
the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common units that we add to the denominator.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
||||||
Net income attributable to COPLP
|
$
|
23,858
|
|
|
$
|
108,295
|
|
|
$
|
48,276
|
|
|
$
|
129,576
|
|
Preferred unit distributions
|
(77
|
)
|
|
(165
|
)
|
|
(154
|
)
|
|
(330
|
)
|
||||
Income attributable to share-based compensation awards
|
(133
|
)
|
|
(438
|
)
|
|
(254
|
)
|
|
(494
|
)
|
||||
Numerator for basic EPU on net income attributable to COPLP common unitholders
|
23,648
|
|
|
107,692
|
|
|
47,868
|
|
|
128,752
|
|
||||
Redeemable noncontrolling interests
|
—
|
|
|
902
|
|
|
—
|
|
|
66
|
|
||||
Income attributable to share-based compensation awards
|
—
|
|
|
18
|
|
|
—
|
|
|
22
|
|
||||
Dilutive effective of preferred units
|
—
|
|
|
165
|
|
|
—
|
|
|
—
|
|
||||
Numerator for diluted EPU on net income attributable to COPLP common unitholders
|
$
|
23,648
|
|
|
$
|
108,777
|
|
|
$
|
47,868
|
|
|
$
|
128,840
|
|
Denominator (all weighted averages):
|
|
|
|
|
|
|
|
|
|
||||||
Denominator for basic EPU (common units)
|
113,037
|
|
|
112,884
|
|
|
112,994
|
|
|
112,088
|
|
||||
Dilutive convertible preferred units
|
—
|
|
|
176
|
|
|
—
|
|
|
—
|
|
||||
Dilutive effect of redeemable noncontrolling interests
|
—
|
|
|
1,062
|
|
|
—
|
|
|
130
|
|
||||
Dilutive effect of share-based compensation awards
|
321
|
|
|
310
|
|
|
280
|
|
|
289
|
|
||||
Denominator for diluted EPU (common units)
|
113,358
|
|
|
114,432
|
|
|
113,274
|
|
|
112,507
|
|
||||
Basic EPU
|
$
|
0.21
|
|
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
Diluted EPU
|
$
|
0.21
|
|
|
$
|
0.95
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
|
Weighted Average Shares Excluded from Denominator
|
||||||||||
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Conversion of redeemable noncontrolling interests
|
878
|
|
|
—
|
|
|
944
|
|
|
907
|
|
Conversion of Series I preferred units
|
176
|
|
|
—
|
|
|
176
|
|
|
176
|
|
•
|
weighted average shares related to COPT’s forward equity sale agreements for the six months ended June 30, 2019 of 758,000;
|
•
|
weighted average restricted units and deferred share awards for the three months ended June 30, 2020 and 2019 of 429,000 and 425,000, respectively, and for the six months ended June 30, 2020 and 2019 of 434,000 and 444,000, respectively;
|
•
|
weighted average options for the three and six months ended June 30, 2019 of 17,000 and 23,000, respectively; and
|
•
|
weighted average unvested TB-PIUs for the three months ended June 30, 2020 and 2019 of 90,000 and 59,000, respectively, and for the six months ended June 30, 2020 and 2019 of 82,000 and 39,000, respectively.
|
•
|
disruption of our tenants’ operations, which could adversely affect their ability, or willingness, to sustain their businesses and/or fulfill their lease obligations;
|
•
|
our ability to maintain occupancy in our properties and obtain new leases for unoccupied and new development space at favorable terms or at all;
|
•
|
shortages in supply of products or services from our and our tenants’ vendors that are needed for us and our tenants to operate effectively, and which could lead to increased costs for such products and services;
|
•
|
access to debt and equity capital on attractive terms or at all. Severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our or our tenants’ ability to access capital necessary to fund operations, refinance debt or fund planned investments on a timely basis, and may adversely affect the valuation of financial assets and liabilities;
|
•
|
our and our tenants’ ability to continue or complete planned development, including the potential for delays in the supply of materials or labor necessary for development; and
|
•
|
an increase in the pace of businesses implementing remote work arrangements over the long-term, which would adversely effect demand for office space.
|
•
|
finished the period with our office and data center shell portfolio 93.4% occupied and 94.5% leased;
|
•
|
placed into service 642,000 square feet in four newly-developed properties (including two data center shell properties and two office properties in our Redstone Arsenal sub-segment) and one redeveloped property that were 98.6% leased as of June 30, 2020; and
|
•
|
amended an existing term loan facility to increase the loan amount by $150.0 million and reduce the LIBOR interest rate spread on the facility. We used the resulting loan proceeds to repay borrowings under our Revolving Credit Facility that funded development costs.
|
•
|
how we expect to generate cash for short and long-term capital needs; and
|
•
|
our commitments and contingencies.
|
•
|
general economic and business conditions, which will, among other things, affect office property and data center demand and rents, tenant creditworthiness, interest rates, financing availability and property values;
|
•
|
adverse changes in the real estate markets, including, among other things, increased competition with other companies;
|
•
|
risks and uncertainties regarding the impact of the COVID-19 pandemic, and similar pandemics, along with restrictive measures instituted to prevent spread, on our business, the real estate industry and national, regional and local economic conditions;
|
•
|
governmental actions and initiatives, including risks associated with the impact of a prolonged government shutdown or budgetary reductions or impasses, such as a reduction in rental revenues, non-renewal of leases and/or reduced or delayed demand for additional space by our strategic customers;
|
•
|
our ability to borrow on favorable terms;
|
•
|
risks of real estate acquisition and development activities, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development or operating costs may be greater than anticipated;
|
•
|
risks of investing through joint venture structures, including risks that our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our objectives;
|
•
|
changes in our plans for properties or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of significant impairment losses;
|
•
|
our ability to satisfy and operate effectively under Federal income tax rules relating to real estate investment trusts and partnerships;
|
•
|
possible adverse changes in tax laws;
|
•
|
the dilutive effects of issuing additional common shares;
|
•
|
our ability to achieve projected results;
|
•
|
security breaches relating to cyber attacks, cyber intrusions or other factors; and
|
•
|
environmental requirements.
|
•
|
for the operations of our properties;
|
◦
|
we consulted with medical experts in developing an approach to safely operate our properties during the pandemic;
|
◦
|
we used manufacturer recommended OEM heating and air conditioning filters to ensure appropriate outside air distribution;
|
◦
|
we proactively engaged our tenants to help them through unknowns as pandemic concerns heightened and restrictive measures were being instituted, and maintained that engagement to ensure communication regarding steps we were taking in our business operations, any changes in tenant operations (such as office closures or revised work schedules) and the existence of any actual or presumed COVID-19 cases in properties;
|
◦
|
our on-site property operations staff were required to use personal protective equipment, such as masks, gloves and hand sanitizer, and implement other procedural changes to enhance separation and minimize spread;
|
◦
|
we instituted enhanced cleaning measures, particularly for high touch areas and flat surfaces, and conducted special deep cleanings in properties potentially affected by actual or presumed COVID-19 cases;
|
◦
|
we provided signage promoting proper social distancing practices and hand sanitizer stations for property common area lobbies; and
|
◦
|
for properties not being used by tenants due to office closures or work from home arrangements, we locked down public (non-tenant) access to the properties for security purposes and instituted other measures aimed at managing costs;
|
•
|
for our employees:
|
◦
|
our staff deemed to be essential, including our executives, select other members of our leadership team and most of our property management team, have continued to report to their normal work locations; and
|
◦
|
most of our other staff worked from home from mid-March until the end of May, when they began reporting to their normal work locations on a weekly rotational basis; and
|
•
|
for our leasing activities:
|
◦
|
we continued active engagement for lease transactions already in progress;
|
◦
|
during periods of time in which we were unable to physically show space to prospective tenants (from mid-March until late May to mid-June), we showed space to new prospective tenants using a combination of virtual technology and pre-recorded video tours; and
|
◦
|
we implemented new advertising strategies to promote space availability.
|
•
|
same property NOI from real estate operations decreased 0.2% for the three months ended June 30, 2020 relative to the comparable 2019 period and increased 1.2% for the six months ended June 30, 2020 relative to the comparable 2019 period. These changes included the effect of a $1.6 million increase in provisions for collectability losses, most of which
|
•
|
other lease revenue collections were not significantly affected by the pandemic. However, we have agreed to deferred payment arrangements for $2.8 million in lease receivables to be repaid in most cases by 2021 with primarily Regional Office tenants and tenants serving as amenities to Defense/IT Location properties whose operations were significantly disrupted;
|
•
|
office and data center shell portfolio was 93.4% occupied (compared to 92.9% at year end) and 94.5% leased (compared to 94.4% at year end) and our Same Properties portfolio was 92.3% occupied (compared to 91.8% at year end) and 93.5% leased (unchanged from year end). These percentages reflect decreases of 0.3% to 0.4% since March 31, 2020 attributable primarily to a tenant whose planned vacancy was known prior to the pandemic;
|
•
|
operating expenses were not significantly affected by the pandemic. While there were some additional expenses resulting from additional cleaning related costs, personal protective equipment supplies and social distancing measures, those expenses were offset by expense savings from reduced property usage by tenants; and
|
•
|
leadership team concluded that the economic disruption resulting from COVID-19 constituted a significant adverse change in the business climate that could affect the value of our Regional Office properties, which are dependent on commercial office tenants and could suffer increased vacancy as a result. Accordingly, we concluded that these circumstances constituted an indicator of impairment. We performed recovery analyses for each Regional Office property’s asset group and concluded that the carrying value of each asset group was recoverable from the respective estimated undiscounted future cash flows. As a result, no impairment loss was recognized.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Occupancy rates at period end
|
|
|
|
|
|
||
Total
|
93.4
|
%
|
|
92.9
|
%
|
||
Defense/IT Locations:
|
|
|
|
||||
Fort Meade/BW Corridor
|
90.9
|
%
|
|
92.4
|
%
|
||
Northern Virginia Defense/IT
|
87.0
|
%
|
|
82.4
|
%
|
||
Lackland Air Force Base
|
100.0
|
%
|
|
100.0
|
%
|
||
Navy Support Locations
|
93.9
|
%
|
|
92.5
|
%
|
||
Redstone Arsenal
|
99.7
|
%
|
|
99.3
|
%
|
||
Data Center Shells
|
100.0
|
%
|
|
100.0
|
%
|
||
Total Defense/IT Locations
|
93.8
|
%
|
|
93.7
|
%
|
||
Regional Office
|
92.0
|
%
|
|
88.1
|
%
|
||
Other
|
68.4
|
%
|
|
73.0
|
%
|
||
Average contractual annual rental rate per square foot at period end (1)
|
$
|
31.15
|
|
|
$
|
31.28
|
|
(1)
|
Includes estimated expense reimbursements.
|
|
Rentable
Square Feet
|
|
Occupied
Square Feet
|
||
|
(in thousands)
|
||||
December 31, 2019
|
19,173
|
|
|
17,816
|
|
Vacated upon lease expiration (1)
|
—
|
|
|
(264
|
)
|
Occupancy for new leases (2)
|
—
|
|
|
310
|
|
Developed or redeveloped
|
642
|
|
|
620
|
|
Other changes
|
(34
|
)
|
|
(3
|
)
|
June 30, 2020
|
19,781
|
|
|
18,479
|
|
(1)
|
Includes lease terminations and space reductions occurring in connection with lease renewals.
|
(2)
|
Excludes occupancy of vacant square feet acquired or developed.
|
•
|
office and data center shell properties:
|
•
|
stably owned and 100% operational throughout the current and prior year reporting periods. We define these as changes from “Same Properties”;
|
•
|
developed or redeveloped and placed into service that were not 100% operational throughout the current and prior year reporting periods; and
|
•
|
disposed; and
|
•
|
our wholesale data center.
|
|
For the Three Months Ended June 30,
|
||||||||||
|
2020
|
|
2019
|
|
Variance
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||
Revenues from real estate operations
|
$
|
132,538
|
|
|
$
|
132,771
|
|
|
$
|
(233
|
)
|
Construction contract and other service revenues
|
12,236
|
|
|
42,299
|
|
|
(30,063
|
)
|
|||
Total revenues
|
144,774
|
|
|
175,070
|
|
|
(30,296
|
)
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|
|||
Property operating expenses
|
50,204
|
|
|
47,886
|
|
|
2,318
|
|
|||
Depreciation and amortization associated with real estate operations
|
33,612
|
|
|
34,802
|
|
|
(1,190
|
)
|
|||
Construction contract and other service expenses
|
11,711
|
|
|
41,002
|
|
|
(29,291
|
)
|
|||
General, administrative and leasing expenses
|
8,158
|
|
|
9,386
|
|
|
(1,228
|
)
|
|||
Business development expenses and land carry costs
|
1,262
|
|
|
870
|
|
|
392
|
|
|||
Total operating expenses
|
104,947
|
|
|
133,946
|
|
|
(28,999
|
)
|
|||
Interest expense
|
(16,797
|
)
|
|
(18,475
|
)
|
|
1,678
|
|
|||
Interest and other income
|
2,282
|
|
|
1,849
|
|
|
433
|
|
|||
Credit loss expense
|
(615
|
)
|
|
—
|
|
|
(615
|
)
|
|||
Gain on sales of real estate
|
—
|
|
|
84,469
|
|
|
(84,469
|
)
|
|||
Equity in income of unconsolidated entities
|
454
|
|
|
420
|
|
|
34
|
|
|||
Income tax (expense) benefit
|
(30
|
)
|
|
176
|
|
|
(206
|
)
|
|||
Net income
|
$
|
25,121
|
|
|
$
|
109,563
|
|
|
$
|
(84,442
|
)
|
|
For the Three Months Ended June 30,
|
||||||||||
|
2020
|
|
2019
|
|
Variance
|
||||||
|
(Dollars in thousands, except per square foot data)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Same Properties revenues
|
|
|
|
|
|
||||||
Lease revenue, excluding lease termination revenue and provision for collectability losses
|
$
|
119,808
|
|
|
$
|
115,363
|
|
|
$
|
4,445
|
|
Lease termination revenue
|
358
|
|
|
285
|
|
|
73
|
|
|||
Provision for collectability losses included in lease revenue
|
(1,592
|
)
|
|
(24
|
)
|
|
(1,568
|
)
|
|||
Other property revenue
|
337
|
|
|
1,303
|
|
|
(966
|
)
|
|||
Same Properties total revenues
|
118,911
|
|
|
116,927
|
|
|
1,984
|
|
|||
Developed and redeveloped properties placed in service
|
7,189
|
|
|
1,929
|
|
|
5,260
|
|
|||
Wholesale data center
|
6,455
|
|
|
8,560
|
|
|
(2,105
|
)
|
|||
Dispositions
|
(17
|
)
|
|
4,673
|
|
|
(4,690
|
)
|
|||
Other
|
—
|
|
|
682
|
|
|
(682
|
)
|
|||
|
132,538
|
|
|
132,771
|
|
|
(233
|
)
|
|||
Property operating expenses
|
|
|
|
|
|
||||||
Same Properties
|
(45,487
|
)
|
|
(43,338
|
)
|
|
(2,149
|
)
|
|||
Developed and redeveloped properties placed in service
|
(1,255
|
)
|
|
(346
|
)
|
|
(909
|
)
|
|||
Wholesale data center
|
(3,463
|
)
|
|
(3,618
|
)
|
|
155
|
|
|||
Dispositions
|
4
|
|
|
(562
|
)
|
|
566
|
|
|||
Other
|
(3
|
)
|
|
(22
|
)
|
|
19
|
|
|||
|
(50,204
|
)
|
|
(47,886
|
)
|
|
(2,318
|
)
|
|||
|
|
|
|
|
|
||||||
UJV NOI allocable to COPT
|
|
|
|
|
|
||||||
Same Properties
|
1,220
|
|
|
1,205
|
|
|
15
|
|
|||
Retained interests in UJV formed in 2019
|
505
|
|
|
46
|
|
|
459
|
|
|||
|
1,725
|
|
|
1,251
|
|
|
474
|
|
|||
|
|
|
|
|
|
||||||
NOI from real estate operations
|
|
|
|
|
|
||||||
Same Properties
|
74,644
|
|
|
74,794
|
|
|
(150
|
)
|
|||
Developed and redeveloped properties placed in service
|
5,934
|
|
|
1,583
|
|
|
4,351
|
|
|||
Wholesale data center
|
2,992
|
|
|
4,942
|
|
|
(1,950
|
)
|
|||
Dispositions, net of retained interests in UJV formed in 2019
|
492
|
|
|
4,157
|
|
|
(3,665
|
)
|
|||
Other
|
(3
|
)
|
|
660
|
|
|
(663
|
)
|
|||
|
$
|
84,059
|
|
|
$
|
86,136
|
|
|
$
|
(2,077
|
)
|
|
|
|
|
|
|
||||||
Same Properties NOI from real estate operations by segment
|
|
|
|
|
|
||||||
Defense/IT Locations
|
$
|
65,995
|
|
|
$
|
66,980
|
|
|
$
|
(985
|
)
|
Regional Office
|
8,274
|
|
|
7,430
|
|
|
844
|
|
|||
Other
|
375
|
|
|
384
|
|
|
(9
|
)
|
|||
|
$
|
74,644
|
|
|
$
|
74,794
|
|
|
$
|
(150
|
)
|
|
|
|
|
|
|
||||||
Same Properties rent statistics
|
|
|
|
|
|
||||||
Average occupancy rate
|
92.4
|
%
|
|
91.6
|
%
|
|
0.8
|
%
|
|||
Average straight-line rent per occupied square foot (1)
|
$
|
6.47
|
|
|
$
|
6.55
|
|
|
$
|
(0.08
|
)
|
(1)
|
Includes minimum base rents, net of abatements, and lease incentives on a straight-line basis for the periods set forth above.
|
|
|
For the Three Months Ended June 30,
|
||||||||||
|
|
2020
|
|
2019
|
|
Variance
|
||||||
|
|
(in thousands)
|
||||||||||
Construction contract and other service revenues
|
|
$
|
12,236
|
|
|
$
|
42,299
|
|
|
$
|
(30,063
|
)
|
Construction contract and other service expenses
|
|
(11,711
|
)
|
|
(41,002
|
)
|
|
29,291
|
|
|||
NOI from service operations
|
|
$
|
525
|
|
|
$
|
1,297
|
|
|
$
|
(772
|
)
|
|
For the Six Months Ended June 30,
|
||||||||||
|
2020
|
|
2019
|
|
Variance
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||
Revenues from real estate operations
|
$
|
264,654
|
|
|
$
|
264,761
|
|
|
$
|
(107
|
)
|
Construction contract and other service revenues
|
25,917
|
|
|
59,249
|
|
|
(33,332
|
)
|
|||
Total revenues
|
290,571
|
|
|
324,010
|
|
|
(33,439
|
)
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|
|||
Property operating expenses
|
100,203
|
|
|
97,331
|
|
|
2,872
|
|
|||
Depreciation and amortization associated with real estate operations
|
66,208
|
|
|
69,598
|
|
|
(3,390
|
)
|
|||
Construction contract and other service expenses
|
24,832
|
|
|
57,328
|
|
|
(32,496
|
)
|
|||
General, administrative and leasing expenses
|
15,644
|
|
|
18,137
|
|
|
(2,493
|
)
|
|||
Business development expenses and land carry costs
|
2,380
|
|
|
1,983
|
|
|
397
|
|
|||
Total operating expenses
|
209,267
|
|
|
244,377
|
|
|
(35,110
|
)
|
|||
Interest expense
|
(33,637
|
)
|
|
(37,149
|
)
|
|
3,512
|
|
|||
Interest and other income
|
3,487
|
|
|
4,135
|
|
|
(648
|
)
|
|||
Credit loss expense
|
(1,304
|
)
|
|
—
|
|
|
(1,304
|
)
|
|||
Gain on sales of real estate
|
5
|
|
|
84,469
|
|
|
(84,464
|
)
|
|||
Equity in income of unconsolidated entities
|
895
|
|
|
811
|
|
|
84
|
|
|||
Income tax expense
|
(79
|
)
|
|
(18
|
)
|
|
(61
|
)
|
|||
Net income
|
$
|
50,671
|
|
|
$
|
131,881
|
|
|
$
|
(81,210
|
)
|
|
For the Six Months Ended June 30,
|
||||||||||
|
2020
|
|
2019
|
|
Variance
|
||||||
|
(Dollars in thousands, except per square foot data)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Same Properties revenues
|
|
|
|
|
|
||||||
Lease revenue, excluding lease termination revenue and provision for collectability losses
|
$
|
238,175
|
|
|
$
|
231,822
|
|
|
$
|
6,353
|
|
Lease termination revenue
|
443
|
|
|
806
|
|
|
(363
|
)
|
|||
Provision for collectability losses included in lease revenue
|
(1,700
|
)
|
|
(93
|
)
|
|
(1,607
|
)
|
|||
Other property revenue
|
1,381
|
|
|
2,345
|
|
|
(964
|
)
|
|||
Same Properties total revenues
|
238,299
|
|
|
234,880
|
|
|
3,419
|
|
|||
Constructed and redeveloped properties placed in service
|
12,741
|
|
|
2,831
|
|
|
9,910
|
|
|||
Wholesale data center
|
13,627
|
|
|
16,431
|
|
|
(2,804
|
)
|
|||
Dispositions
|
(17
|
)
|
|
9,048
|
|
|
(9,065
|
)
|
|||
Other
|
4
|
|
|
1,571
|
|
|
(1,567
|
)
|
|||
|
264,654
|
|
|
264,761
|
|
|
(107
|
)
|
|||
Property operating expenses
|
|
|
|
|
|
||||||
Same Properties
|
(91,132
|
)
|
|
(89,503
|
)
|
|
(1,629
|
)
|
|||
Constructed and redeveloped properties placed in service
|
(2,370
|
)
|
|
(660
|
)
|
|
(1,710
|
)
|
|||
Wholesale data center
|
(6,696
|
)
|
|
(6,456
|
)
|
|
(240
|
)
|
|||
Dispositions
|
4
|
|
|
(700
|
)
|
|
704
|
|
|||
Other
|
(9
|
)
|
|
(12
|
)
|
|
3
|
|
|||
|
(100,203
|
)
|
|
(97,331
|
)
|
|
(2,872
|
)
|
|||
|
|
|
|
|
|
||||||
UJV NOI allocable to COPT
|
|
|
|
|
|
||||||
Same Properties
|
2,427
|
|
|
2,424
|
|
|
3
|
|
|||
Retained interests in UJV formed in 2019
|
1,011
|
|
|
46
|
|
|
965
|
|
|||
|
3,438
|
|
|
2,470
|
|
|
968
|
|
|||
NOI from real estate operations
|
|
|
|
|
|
||||||
Same Properties
|
149,594
|
|
|
147,801
|
|
|
1,793
|
|
|||
Constructed and redeveloped properties placed in service
|
10,371
|
|
|
2,171
|
|
|
8,200
|
|
|||
Wholesale data center
|
6,931
|
|
|
9,975
|
|
|
(3,044
|
)
|
|||
Dispositions, net of retained interests in UJV formed in 2019
|
998
|
|
|
8,394
|
|
|
(7,396
|
)
|
|||
Other
|
(5
|
)
|
|
1,559
|
|
|
(1,564
|
)
|
|||
|
$
|
167,889
|
|
|
$
|
169,900
|
|
|
$
|
(2,011
|
)
|
|
|
|
|
|
|
||||||
Same Properties NOI from real estate operations by segment
|
|
|
|
|
|
||||||
Defense/IT Locations
|
$
|
132,561
|
|
|
$
|
132,159
|
|
|
$
|
402
|
|
Regional Office
|
16,197
|
|
|
14,847
|
|
|
1,350
|
|
|||
Other
|
836
|
|
|
795
|
|
|
41
|
|
|||
|
$
|
149,594
|
|
|
$
|
147,801
|
|
|
$
|
1,793
|
|
|
|
|
|
|
|
||||||
Same Properties rent statistics
|
|
|
|
|
|
||||||
Average occupancy rate
|
92.3
|
%
|
|
91.6
|
%
|
|
0.7
|
%
|
|||
Average straight-line rent per occupied square foot (1)
|
$
|
13.02
|
|
|
$
|
13.10
|
|
|
$
|
(0.08
|
)
|
(1)
|
Includes minimum base rents, net of abatements, and lease incentives on a straight-line basis for the periods set forth above.
|
|
|
For the Six Months Ended June 30,
|
||||||||||
|
|
2020
|
|
2019
|
|
Variance
|
||||||
|
|
(in thousands)
|
||||||||||
Construction contract and other service revenues
|
|
$
|
25,917
|
|
|
$
|
59,249
|
|
|
$
|
(33,332
|
)
|
Construction contract and other service expenses
|
|
(24,832
|
)
|
|
(57,328
|
)
|
|
32,496
|
|
|||
NOI from service operations
|
|
$
|
1,085
|
|
|
$
|
1,921
|
|
|
$
|
(836
|
)
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars and shares in thousands,
except per share data)
|
||||||||||||||
Net income
|
$
|
25,121
|
|
|
$
|
109,563
|
|
|
$
|
50,671
|
|
|
$
|
131,881
|
|
Real estate-related depreciation and amortization
|
33,612
|
|
|
34,802
|
|
|
66,208
|
|
|
69,598
|
|
||||
Depreciation and amortization on UJV allocable to COPT
|
818
|
|
|
566
|
|
|
1,636
|
|
|
1,132
|
|
||||
Gain on sales of real estate
|
—
|
|
|
(84,469
|
)
|
|
(5
|
)
|
|
(84,469
|
)
|
||||
FFO
|
59,551
|
|
|
60,462
|
|
|
118,510
|
|
|
118,142
|
|
||||
Noncontrolling interests-preferred units in the Operating Partnership
|
(77
|
)
|
|
(165
|
)
|
|
(154
|
)
|
|
(330
|
)
|
||||
FFO allocable to other noncontrolling interests
|
(1,525
|
)
|
|
(1,188
|
)
|
|
(13,540
|
)
|
|
(2,159
|
)
|
||||
Basic FFO allocable to share-based compensation awards
|
(254
|
)
|
|
(229
|
)
|
|
(447
|
)
|
|
(414
|
)
|
||||
Basic FFO available to common share and common unit holders
|
57,695
|
|
|
58,880
|
|
|
104,369
|
|
|
115,239
|
|
||||
Dilutive preferred units in the Operating Partnership
|
77
|
|
|
—
|
|
|
154
|
|
|
—
|
|
||||
Redeemable noncontrolling interests
|
37
|
|
|
33
|
|
|
69
|
|
|
942
|
|
||||
Diluted FFO available to common share and common unit holders
|
57,809
|
|
|
58,913
|
|
|
104,592
|
|
|
116,181
|
|
||||
Executive transition costs
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Demolition costs on redevelopment and nonrecurring improvements
|
9
|
|
|
—
|
|
|
52
|
|
|
44
|
|
||||
Non-comparable professional and legal expenses
|
—
|
|
|
311
|
|
|
—
|
|
|
311
|
|
||||
FFO allocation to other noncontrolling interests resulting from capital event
|
—
|
|
|
—
|
|
|
11,090
|
|
|
—
|
|
||||
Diluted FFO comparability adjustments allocable to share-based compensation awards
|
(1
|
)
|
|
(2
|
)
|
|
(51
|
)
|
|
(2
|
)
|
||||
Diluted FFO available to common share and common unit holders, as adjusted for comparability
|
$
|
57,817
|
|
|
$
|
59,222
|
|
|
$
|
115,683
|
|
|
$
|
116,538
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares
|
111,800
|
|
|
111,557
|
|
|
111,762
|
|
|
110,759
|
|
||||
Conversion of weighted average common units
|
1,237
|
|
|
1,327
|
|
|
1,232
|
|
|
1,329
|
|
||||
Weighted average common shares/units - Basic FFO per share
|
113,037
|
|
|
112,884
|
|
|
112,994
|
|
|
112,088
|
|
||||
Dilutive effect of share-based compensation awards
|
321
|
|
|
310
|
|
|
280
|
|
|
289
|
|
||||
Dilutive convertible preferred units
|
176
|
|
|
—
|
|
|
176
|
|
|
—
|
|
||||
Redeemable noncontrolling interests
|
157
|
|
|
136
|
|
|
133
|
|
|
1,037
|
|
||||
Weighted average common shares/units - Diluted FFO per share and as adjusted for comparability
|
113,691
|
|
|
113,330
|
|
|
113,583
|
|
|
113,414
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted FFO per share
|
$
|
0.51
|
|
|
$
|
0.52
|
|
|
$
|
0.92
|
|
|
$
|
1.02
|
|
Diluted FFO per share, as adjusted for comparability
|
$
|
0.51
|
|
|
$
|
0.52
|
|
|
$
|
1.02
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator for diluted EPS
|
112,121
|
|
|
113,105
|
|
|
112,042
|
|
|
112,507
|
|
||||
Weighted average common units
|
1,237
|
|
|
1,327
|
|
|
1,232
|
|
|
—
|
|
||||
Redeemable noncontrolling interests
|
157
|
|
|
(926
|
)
|
|
133
|
|
|
907
|
|
||||
Dilutive convertible preferred units
|
176
|
|
|
(176
|
)
|
|
176
|
|
|
—
|
|
||||
Denominator for diluted FFO per share and as adjusted for comparability
|
113,691
|
|
|
113,330
|
|
|
113,583
|
|
|
113,414
|
|
Development and redevelopment
|
$
|
197,037
|
|
Tenant improvements on operating properties (1)
|
17,153
|
|
|
Capital improvements on operating properties
|
16,137
|
|
|
|
$
|
230,327
|
|
•
|
net proceeds from debt borrowings of $179.3 million; offset in part by
|
•
|
dividends and/or distributions to equity holders of $62.5 million.
|
•
|
dividends and/or distributions to equity holders of $62.2 million; and
|
•
|
net debt repayments of $41.6 million; offset in part by
|
•
|
net proceeds from the issuance of common shares (or units) of $46.4 million.
|
|
For the Periods Ending December 31,
|
|
|
||||||||||||||||||||||||
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Contractual obligations (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Debt (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balloon payments due upon maturity
|
$
|
12,133
|
|
|
$
|
300,000
|
|
|
$
|
464,406
|
|
|
$
|
582,577
|
|
|
$
|
277,649
|
|
|
$
|
367,723
|
|
|
$
|
2,004,488
|
|
Scheduled principal payments (3)
|
1,979
|
|
|
3,955
|
|
|
4,498
|
|
|
3,553
|
|
|
2,334
|
|
|
2,294
|
|
|
18,613
|
|
|||||||
Interest on debt (3)(4)
|
33,498
|
|
|
60,193
|
|
|
54,656
|
|
|
36,980
|
|
|
18,631
|
|
|
9,848
|
|
|
213,806
|
|
|||||||
Development and redevelopment obligations (5)(6)
|
174,511
|
|
|
28,897
|
|
|
2,354
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
205,762
|
|
|||||||
Third-party construction cost obligations (6)(7)
|
5,998
|
|
|
5,261
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,259
|
|
|||||||
Tenant and other building improvements (3)(6)
|
20,957
|
|
|
28,752
|
|
|
9,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,256
|
|
|||||||
Property finance leases (principal and interest) (3)
|
660
|
|
|
14
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
688
|
|
|||||||
Property operating leases (3)
|
636
|
|
|
1,328
|
|
|
1,352
|
|
|
1,358
|
|
|
1,363
|
|
|
113,780
|
|
|
119,817
|
|
|||||||
Total contractual cash obligations
|
$
|
250,372
|
|
|
$
|
428,400
|
|
|
$
|
536,827
|
|
|
$
|
624,468
|
|
|
$
|
299,977
|
|
|
$
|
493,645
|
|
|
$
|
2,633,689
|
|
(1)
|
The contractual obligations set forth in this table exclude contracts for property operations and certain other contracts entered into in the normal course of business. Also excluded are accruals and payables incurred and interest rate derivative liabilities, which are reflected in our reported liabilities (although debt and lease liabilities are included on the table).
|
(2)
|
Represents scheduled principal amortization payments and maturities only and therefore excludes net debt discounts and deferred financing costs of $11.1 million. As of June 30, 2020, maturities included $300 million in 2021 that we expect to refinance; maturities also included $169.0 million in 2023 that may be extended to 2024, subject to certain conditions.
|
(3)
|
We expect to pay these items using cash flow from operations.
|
(4)
|
Represents interest costs for our outstanding debt as of June 30, 2020 for the terms of such debt. For variable rate debt, the amounts reflected above used June 30, 2020 interest rates on variable rate debt in computing interest costs for the terms of such debt. We expect to pay these items using cash flow from operations.
|
(5)
|
Represents contractual obligations pertaining to new development and redevelopment activities.
|
(6)
|
Due to the long-term nature of certain development and construction contracts and leases included in these lines, the amounts reported in the table represent our estimate of the timing for the related obligations being payable.
|
(7)
|
Represents contractual obligations pertaining to projects for which we are acting as construction manager on behalf of unrelated parties who are our clients. We expect to be reimbursed in full for these costs by our clients.
|
|
For the Periods Ending December 31,
|
|
|
||||||||||||||||||||||||
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed rate debt (1)
|
$
|
1,878
|
|
|
$
|
303,875
|
|
|
$
|
4,033
|
|
|
$
|
416,590
|
|
|
$
|
279,443
|
|
|
$
|
337,442
|
|
|
$
|
1,343,261
|
|
Weighted average interest rate
|
3.96
|
%
|
|
3.70
|
%
|
|
3.98
|
%
|
|
3.70
|
%
|
|
5.16
|
%
|
|
4.87
|
%
|
|
4.30
|
%
|
|||||||
Variable rate debt (2)
|
$
|
12,234
|
|
|
$
|
80
|
|
|
$
|
464,871
|
|
|
$
|
169,540
|
|
|
$
|
540
|
|
|
$
|
32,575
|
|
|
$
|
679,840
|
|
Weighted average interest rate (3)
|
2.02
|
%
|
|
1.62
|
%
|
|
1.36
|
%
|
|
1.21
|
%
|
|
1.68
|
%
|
|
1.69
|
%
|
|
1.35
|
%
|
(1)
|
Represents principal maturities only and therefore excludes net discounts and deferred financing costs of $11.1 million.
|
(2)
|
As of June 30, 2020, maturities included $169.0 million in 2023 that may be extended to 2024, subject to certain conditions.
|
(3)
|
The amounts reflected above used interest rates as of June 30, 2020 for variable rate debt.
|
•
|
disruption of our tenants’ operations, which could adversely affect their ability, or willingness, to sustain their businesses and/or fulfill their lease obligations;
|
•
|
our ability to maintain occupancy in our properties and obtain new leases for unoccupied and new development space at favorable terms or at all;
|
•
|
shortages in supply of products or services from our and our tenants’ vendors that are needed for us and our tenants to operate effectively, and which could lead to increased costs for such products and services;
|
•
|
access to debt and equity capital on attractive terms or at all. Severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our or our tenants’ ability to access capital necessary to fund operations, refinance debt or fund planned investments on a timely basis, and may adversely affect the valuation of financial assets and liabilities;
|
•
|
our and our tenants’ ability to continue or complete planned development, including the potential for delays in the supply of materials or labor necessary for development; and
|
•
|
an increase in the pace of businesses implementing remote work arrangements over the long-term, which would adversely effect demand for office space.
|
(a)
|
Not applicable
|
EXHIBIT
NO.
|
|
DESCRIPTION
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS
|
|
XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document (filed herewith).
|
|
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document (filed herewith).
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
|
|
|
|
101.LAB
|
|
Inline XBRL Extension Labels Linkbase (filed herewith).
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
CORPORATE OFFICE PROPERTIES TRUST
|
|
CORPORATE OFFICE PROPERTIES, L.P.
|
|
|
|
By: Corporate Office Properties Trust,
|
|
|
|
its General Partner
|
|
|
|
|
|
/s/ Stephen E. Budorick
|
|
/s/ Stephen E. Budorick
|
|
Stephen E. Budorick
|
|
Stephen E. Budorick
|
|
President and Chief Executive Officer
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
/s/ Anthony Mifsud
|
|
/s/ Anthony Mifsud
|
|
Anthony Mifsud
|
|
Anthony Mifsud
|
|
Executive Vice President and Chief Financial Officer
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
Dated:
|
July 31, 2020
|
Dated:
|
July 31, 2020
|
1 Year Corporate Office Propert... Chart |
1 Month Corporate Office Propert... Chart |
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