Business Wire | Feb 4, 2021 04:16PM EST

COPT Reports Fourth Quarter and Full Year 2020 Results

Feb. 04, 2021

COLUMBIA, Md.--(BUSINESS WIRE)--Feb. 04, 2021--Corporate Office Properties Trust ("COPT" or the "Company") (NYSE: OFC) announced financial and operating results for the fourth quarter and full year ended December 31, 2020.

Management Comments

Stephen E. Budorick, COPT's President & Chief Executive Officer, commented, "Notwithstanding the challenges presented by the COVID-19 pandemic, 2020 was a very strong year for our Company. Our operations were minimally impacted by the pandemic shutdowns, as demonstrated by our 99.7% rent collection rate, the record 1.8 million square feet of fully leased developments we placed in service, and the one million square feet of new development leasing we completed during the year. Additionally, fourth quarter and full-year FFO per share, as adjusted for comparability, outperformed the high ends of guidance by 2-cents due to non-recurring items in the quarter."

He continued, "During 2021, we expect incremental NOI from developments placed in service to drive solid FFO per share growth. The $2.19 midpoint of our 2021 initial guidance is a penny higher than the midpoint implied by the growth guideposts we provided last October and reflects the on-going strength of our operations."

Financial Highlights

4th Quarter Financial Results:

* Diluted earnings per share ("EPS") was $0.73 for the quarter ended December 31, 2020 as compared to $0.38 for the fourth quarter of 2019.

* Diluted funds from operations per share ("FFOPS"), as calculated in accordance with Nareit's definition, was $0.53 for the fourth quarter of 2020 as compared to $0.49 for fourth quarter 2019 results.

* FFOPS, as adjusted for comparability, was $0.56 in the fourth quarter of 2020 as compared to $0.50 for the fourth quarter of 2019.

Full Year 2020 Financial Results:

* EPS for the year ended December 31, 2020 was $0.87 as compared to 2019 EPS of $1.71.

* Per Nareit's definition, FFOPS for 2020 was $1.50 as compared to $2.02 for 2019.

* FFOPS, as adjusted for comparability, for 2020 was $2.12 as compared to $2.03 for 2019.

Operating Performance Highlights

Operating Portfolio Summary:

* At December 31, 2020, the Company's core portfolio of 179 operating office and data center shell properties was 94.3% occupied and 95.0% leased.

* During the quarter and the year, the Company placed into service 582,000 and 1.8 million square feet that were 100% and 99% leased, respectively.

Same-Property Performance:

* At December 31, 2020, COPT's same-property portfolio of 144 buildings was 92.1% occupied and 93.1% leased.

* For the quarter and year ended December 31, 2020, the Company's same-property cash NOI was flat and increased 1.6%, respectively, over the prior year's comparable periods.

Leasing:

* Total Square Feet Leased: For the quarter ended December 31, 2020, the Company leased 869,000 total square feet, including 232,000 square feet of renewals, 495,000 square feet in development projects, and 142,000 square feet of new leases on vacant space. For the year ended December 31, 2020, the Company executed 3.6 million square feet of total leasing, including 2.2 million square feet of renewals, 1.0 million square feet of development leasing, and 416,000 square feet of vacancy leasing.

* Renewal Rates: During the quarter and year ended December 31, 2020, the Company respectively renewed 59.0% and 80.6% of total expiring square feet.

* Cash Rent Spreads & Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2020, cash rents on renewed space decreased 2.6% and 2.1%, respectively. For the same respective periods, annual escalations on renewing leases averaged 2.5% and 2.4%.

* Lease Terms: In the fourth quarter, lease terms averaged 3.8 years on renewing leases, 15.0 years on development leasing, and 5.3 years on new leasing of vacant space. For the year, lease terms averaged 4.2 years on renewing leases, 14.6 years on development leasing, and 6.2 years on vacancy leasing.

Investment Activity Highlights

* Development Pipeline: As of December 31, 2020, the Company's development pipeline consisted of 11 properties totaling 1.5 million square feet that were 84% leased. These projects have a total estimated cost of $613.0 million, of which $324.4 million had been incurred.

Balance Sheet and Capital Transaction Highlights

* During the fourth quarter, the Company formed a new joint venture with funds affiliated with Blackstone Real Estate ("B RE-COPT JV") and sold a 90% interest in two wholly-owned data center shell properties; in a second transaction, COPT sold a 40% interest in six data center shells properties already owned in a 50-50 joint venture. From these two transactions, COPT received approximately $165 million of equity value and recognized gains on the sales totaling $59.4 million.

* In October, the Company redeemed the remaining $177.1 million of its 3.70% Senior Notes due in 2021 for $180.9 million plus accrued interest, and recognized a loss on early extinguishment of debt of $4.1 million.

* Additionally, in December, the Company redeemed all $8.8 million of Series I Preferred Convertible Units and, as a result, had zero preferred equity outstanding at the end of 2020.

* As of December 31, 2020, the Company's net debt to adjusted book ratio was 39.1% and its net debt to in-place adjusted EBITDA ratio was 6.2x. For the quarter and year ended December 31, 2020, the Company's adjusted EBITDA fixed charge coverage ratio was 4.1x.

* As of December 31, 2020, and including the effect of interest rate swaps, the Company's weighted average effective interest rate on its consolidated debt portfolio was 3.4% with a weighted average maturity of 3.3 years; additionally, 82.1% of the Company's debt was subject to fixed interest rates.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management's prepared remarks for its fourth quarter and year end 2020 conference call, the details of which are provided below. The accompanying slide presentation can be viewed on and downloaded from the 'Latest Updates' section of COPT's Investors website: https://investors.copt.com/

2021 Guidance

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

Conference Call Information

Management will discuss fourth quarter and year end 2020 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date: Friday, February 5, 2021

Time: 12:00 p.m. Eastern Time

Telephone Number: (within the U.S.) 855-463-9057

Telephone Number: (outside the U.S.) 661-378-9894

Passcode: 1548922

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

Replay Information

A replay of the conference call will be immediately available via webcast on the Investors website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Friday, February 5, through 3:00 p.m. Eastern Time on Friday, February 19. To access the replay within the United States, please call 855-859-2056; to access it from outside the United States, please call 404-537-3406. In either case, use passcode 1548922.

Definitions

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

About COPT

COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology ("IT") related activities servicing what it believes are growing, durable, priority missions ("Defense/IT Locations"). The Company also owns a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics ("Regional Office Properties"). As of December 31, 2020, the Company derived 87% of its core portfolio annualized rental revenue from Defense/IT Locations and 13% from its Regional Office Properties. As of the same date and including 17 properties owned through unconsolidated joint ventures, COPT's core portfolio of 179 office and data center shell properties encompassed 20.8 million square feet and was 95.0% leased; the Company also owned one wholesale data center with a critical load of 19.25 megawatts that was 86.7% leased.

Forward-Looking Information

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

The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q.

Category: Quarterly Results

Source: Corporate Office Properties Trust

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

For the Three Months For the Years Ended Ended December 31, December 31,

2020 2019 2020 2019

Revenues

Revenues from real $ 139,628 $ 131,968 $ 538,725 $ 527,463 estate operations

Construction contractand other service 24,400 25,817 70,640 113,763 revenues

Total revenues 164,028 157,785 609,365 641,226

Operating expenses

Property operating 52,085 51,098 203,840 198,143 expenses

Depreciation andamortization associated 36,653 32,779 138,193 137,069 with real estate operations

Construction contractand other service 23,563 24,832 67,615 109,962 expenses

Impairment losses - 2 1,530 329

General and 7,897 7,043 25,269 27,517 administrative expenses

Leasing expenses 1,993 2,293 7,732 7,885

Business developmentexpenses and land carry 999 1,292 4,473 4,239 costs

Total operating 123,190 119,339 448,652 485,144 expenses

Interest expense (17,148 ) (16,777 ) (67,937 ) (71,052 )

Interest and other 3,341 1,917 8,574 7,894 income

Credit loss recoveries 772 - 933 -

Gain on sales of real 30,204 20,761 30,209 105,230 estate

Gain on sale ofinvestment in 29,416 - 29,416 - unconsolidated real estate joint venture

Loss on early (4,069 ) - (7,306 ) - extinguishment of debt

Loss on interest rate - - (53,196 ) - derivatives

Income before equity inincome of 83,354 44,347 101,406 198,154 unconsolidated entities and income taxes

Equity in income of 453 426 1,825 1,633 unconsolidated entities

Income tax (expense) (258 ) 104 (353 ) 217 benefit

Net income 83,549 44,877 102,878 200,004

Net income attributableto noncontrolling interests:

Common units in theOperating Partnership (995 ) (500 ) (1,180 ) (2,363 )("OP")

Preferred units in the (69 ) (77 ) (300 ) (564 )OP

Other consolidated (817 ) (1,515 ) (4,024 ) (5,385 )entities

Net income attributableto COPT common $ 81,668 $ 42,785 $ 97,374 $ 191,692 shareholders



Earnings per share ("EPS") computation:

Numerator for diluted EPS:

Net income attributableto COPT common $ 81,668 $ 42,785 $ 97,374 $ 191,692 shareholders

Amount allocable toshare-based (280 ) (154 ) (404 ) (623 )compensation awards

Redeemablenoncontrolling 44 33 - 132 interests

Distributions ondilutive convertible 69 - - - preferred units

Numerator for diluted $ 81,501 $ 42,664 $ 96,970 $ 191,201 EPS

Denominator:

Weighted average common 111,817 111,670 111,788 111,196 shares - basic

Dilutive effect ofshare-based 320 293 288 308 compensation awards

Dilutive effect ofredeemable 117 108 - 119 noncontrolling interests

Dilutive convertible 155 - - - preferred units

Weighted average common 112,409 112,071 112,076 111,623 shares - diluted

Diluted EPS $ 0.73 $ 0.38 $ 0.87 $ 1.71

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

For the Three Months Ended December 31,

For the Years Ended December 31,

2020

2019

2020

2019

Net income

$

83,549

$

44,877

$

102,878

$

200,004

Real estate-related depreciation and amortization

36,653

32,779

138,193

137,069

Impairment losses on real estate

-

2

1,530

329

Gain on sales of real estate

(30,204

)

(20,761

)

(30,209

)

(105,230

)

Gain on sale of investment in unconsolidated real estate joint venture

(29,416

)

-

(29,416

)

-

Depreciation and amortization on unconsolidated real estate JVs

874

781

3,329

2,703

Funds from operations ("FFO")

61,456

57,678

186,305

234,875

Noncontrolling interests - preferred units in the OP

(69

)

(77

)

(300

)

(564

)

FFO allocable to other noncontrolling interests

(1,091

)

(1,436

)

(15,705

)

(5,024

)

Basic FFO allocable to share-based compensation awards

(272

)

(243

)

(719

)

(905

)

Basic FFO available to common share and common unit holders ("Basic FFO")

60,024

55,922

169,581

228,382

Dilutive preferred units in the OP

69

77

-

-

Redeemable noncontrolling interests

44

33

147

132

Diluted FFO available to common share and common unit holders ("Diluted FFO")

60,137

56,032

169,728

228,514

Loss on early extinguishment of debt

4,069

-

7,306

-

Loss on interest rate derivatives

-

-

53,196

-

Demolition costs on redevelopment and nonrecurring improvements

-

104

63

148

Executive transition costs

-

-

-

4

Non-comparable professional and legal expenses

-

195

-

681

Dilutive preferred units in the OP

-

-

300

-

FFO allocation to other noncontrolling interests resulting from capital event

-

-

11,090

-

Diluted FFO comparability adjustments allocable to share-based compensation awards

(18

)

(1

)

(327

)

(3

)

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

64,188

56,330

241,356

229,344

Straight line rent adjustments and lease incentive amortization

3,438

1,386

4,100

255

Amortization of intangibles included in net operating income

24

(174

)

(162

)

(221

)

Share-based compensation, net of amounts capitalized

1,751

1,735

6,505

6,728

Amortization of deferred financing costs

664

541

2,539

2,136

Amortization of net debt discounts, net of amounts capitalized

504

382

1,733

1,503

Accum. other comprehensive loss on derivatives amortized to expense

-

-

-

79

Replacement capital expenditures

(13,973

)

(19,862

)

(60,944

)

(63,789

)

Other diluted AFFO adjustments associated with real estate JVs

196

(68

)

190

212

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

$

56,792

$

40,270

$

195,317

$

176,247

Diluted FFO per share

$

0.53

$

0.49

$

1.50

$

2.02

Diluted FFO per share, as adjusted for comparability

$

0.56

$

0.50

$

2.12

$

2.03

Dividends/distributions per common share/unit

$

0.275

$

0.275

$

1.100

$

1.100

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

For the Three Months For the Years Ended Ended December 31, December 31,

2020 2019 2020 2019

Net income $ 83,549 $ 44,877 $ 102,878 $ 200,004

Real estate-relateddepreciation and 36,653 32,779 138,193 137,069 amortization

Impairment losses on real - 2 1,530 329 estate

Gain on sales of real (30,204 ) (20,761 ) (30,209 ) (105,230 )estate

Gain on sale ofinvestment in (29,416 ) - (29,416 ) - unconsolidated real estate joint venture

Depreciation andamortization on 874 781 3,329 2,703 unconsolidated real estate JVs

Funds from operations 61,456 57,678 186,305 234,875 ("FFO")

Noncontrolling interests- preferred units in the (69 ) (77 ) (300 ) (564 )OP

FFO allocable to other (1,091 ) (1,436 ) (15,705 ) (5,024 )noncontrolling interests

Basic FFO allocable toshare-based compensation (272 ) (243 ) (719 ) (905 )awards

Basic FFO available tocommon share and common 60,024 55,922 169,581 228,382 unit holders ("Basic FFO")

Dilutive preferred units 69 77 - - in the OP

Redeemable noncontrolling 44 33 147 132 interests

Diluted FFO available tocommon share and common 60,137 56,032 169,728 228,514 unit holders ("Diluted FFO")

Loss on early 4,069 - 7,306 - extinguishment of debt

Loss on interest rate - - 53,196 - derivatives

Demolition costs onredevelopment and - 104 63 148 nonrecurring improvements

Executive transition - - - 4 costs

Non-comparableprofessional and legal - 195 - 681 expenses

Dilutive preferred units - - 300 - in the OP

FFO allocation to othernoncontrolling interests - - 11,090 - resulting from capital event

Diluted FFO comparabilityadjustments allocable to (18 ) (1 ) (327 ) (3 )share-based compensation awards

Diluted FFO available tocommon share and common 64,188 56,330 241,356 229,344 unit holders, as adjusted for comparability

Straight line rentadjustments and lease 3,438 1,386 4,100 255 incentive amortization

Amortization ofintangibles included in 24 (174 ) (162 ) (221 )net operating income

Share-based compensation,net of amounts 1,751 1,735 6,505 6,728 capitalized

Amortization of deferred 664 541 2,539 2,136 financing costs

Amortization of net debtdiscounts, net of amounts 504 382 1,733 1,503 capitalized

Accum. othercomprehensive loss on - - - 79 derivatives amortized to expense

Replacement capital (13,973 ) (19,862 ) (60,944 ) (63,789 )expenditures

Other diluted AFFOadjustments associated 196 (68 ) 190 212 with real estate JVs

Diluted adjusted fundsfrom operations availableto common share and $ 56,792 $ 40,270 $ 195,317 $ 176,247 common unit holders("Diluted AFFO")

Diluted FFO per share $ 0.53 $ 0.49 $ 1.50 $ 2.02

Diluted FFO per share, asadjusted for $ 0.56 $ 0.50 $ 2.12 $ 2.03 comparability

Dividends/distributions $ 0.275 $ 0.275 $ 1.100 $ 1.100 per common share/unit

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

December 31,2020

December 31,2019

Balance Sheet Data

Properties, net of accumulated depreciation

$

3,562,549

$

3,340,886

Total assets

4,077,023

3,854,453

Debt, per balance sheet

2,086,918

1,831,139

Total liabilities

2,357,881

2,105,777

Redeemable noncontrolling interests

25,430

29,431

Equity

1,693,712

1,719,245

Net debt to adjusted book

39.1

%

36.8

%

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

Number of operating properties

179

168

Total operational square feet (in thousands)

20,802

19,016

% Occupied

94.3

%

93.1

%

% Leased

95.0

%

94.6

%

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

December 31, December 31, 2020 2019

Balance Sheet Data

Properties, net of accumulated depreciation $ 3,562,549 $ 3,340,886

Total assets 4,077,023 3,854,453

Debt, per balance sheet 2,086,918 1,831,139

Total liabilities 2,357,881 2,105,777

Redeemable noncontrolling interests 25,430 29,431

Equity 1,693,712 1,719,245

Net debt to adjusted book 39.1 % 36.8 %



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

Number of operating properties 179 168

Total operational square feet (in thousands) 20,802 19,016

% Occupied 94.3 % 93.1 %

% Leased 95.0 % 94.6 %

For the Three Months Ended December 31,

For the Years Ended December 31,

2020

2019

2020

2019

Payout ratios

Diluted FFO

51.8

%

55.6

%

73.3

%

54.4

%

Diluted FFO, as adjusted for comparability

48.6

%

55.3

%

51.7

%

54.2

%

Diluted AFFO

54.9

%

77.3

%

63.8

%

70.5

%

Adjusted EBITDA fixed charge coverage ratio

4.1

x

3.7

x

3.9

x

3.7

x

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

6.2

x

6.1

x

N/A

N/A

Reconciliation of denominators for per share measures

Denominator for diluted EPS

112,409

112,071

112,076

111,623

Weighted average common units

1,239

1,228

1,236

1,299

Redeemable noncontrolling interests

-

-

123

-

Dilutive convertible preferred units

-

176

-

-

Denominator for diluted FFO per share

113,648

113,475

113,435

112,922

Dilutive convertible preferred units

-

-

171

-

Denominator for diluted FFO per share, as adjusted for comparability

113,648

113,475

113,606

112,922

For the Three Months For the Years Ended Ended December 31, December 31,

2020 2019 2020 2019

Payout ratios

Diluted FFO 51.8 % 55.6 % 73.3 % 54.4 %

Diluted FFO, as adjusted for 48.6 % 55.3 % 51.7 % 54.2 %comparability

Diluted AFFO 54.9 % 77.3 % 63.8 % 70.5 %

Adjusted EBITDA fixed charge 4.1 x 3.7 x 3.9 x 3.7 xcoverage ratio

Net debt plus preferred equityto in-place adjusted EBITDA 6.2 x 6.1 x N/A N/A ratio (2)



Reconciliation of denominators for per share measures

Denominator for diluted EPS 112,409 112,071 112,076 111,623

Weighted average common units 1,239 1,228 1,236 1,299

Redeemable noncontrolling - - 123 - interests

Dilutive convertible preferred - 176 - - units

Denominator for diluted FFO per 113,648 113,475 113,435 112,922 share

Dilutive convertible preferred - - 171 - units

Denominator for diluted FFO pershare, as adjusted for 113,648 113,475 113,606 112,922 comparability

(1)Represents Defense/IT Locations and Regional Office properties.

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

(1) Represents Defense/IT Locations and Regional Office properties.

Represents net debt plus the total liquidation preference of preferred(2) equity as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months Ended December 31,

For the Years Ended December 31,

2020

2019

2020

2019

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

Common share dividends - unrestricted shares and deferred shares

$

30,764

$

30,724

$

123,042

$

122,823

Common unit distributions - unrestricted units

341

337

1,362

1,405

Distributions on dilutive preferred units

69

77

-

-

Dividends and distributions for diluted FFO payout ratio

31,174

31,138

124,404

124,228

Distributions on dilutive preferred units

-

-

300

-

Dividends and distributions for other payout ratios

$

31,174

$

31,138

$

124,704

$

124,228

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

Net income

$

83,549

$

44,877

$

102,878

$

200,004

Interest expense

17,148

16,777

67,937

71,052

Income tax expense (benefit)

258

(104

)

353

(217

)

Real estate-related depreciation and amortization

36,653

32,779

138,193

137,069

Other depreciation and amortization

513

438

1,837

1,834

Impairment losses on real estate

-

2

1,530

329

Gain on sales of real estate

(30,204

)

(20,761

)

(30,209

)

(105,230

)

Gain on sale of investment in unconsolidated real estate joint venture

(29,416

)

-

(29,416

)

-

Adjustments from unconsolidated real estate JVs

1,306

1,206

5,120

4,065

EBITDAre

79,807

75,214

258,223

308,906

Loss on early extinguishment of debt

4,069

-

7,306

-

Loss on interest rate derivatives

-

-

53,196

-

Net gain on other investments

(1,218

)

(1

)

(966

)

(401

)

Credit loss recoveries

(772

)

-

(933

)

-

Business development expenses

412

512

2,042

1,939

Non-comparable professional and legal expenses

-

195

-

681

Demolition costs on redevelopment and nonrecurring improvements

-

104

63

148

Executive transition costs

-

-

-

4

Adjusted EBITDA

82,298

76,024

$

318,931

$

311,277

Proforma net operating income adjustment for property changes within period

1,459

463

Change in collectability of deferred rental revenue

678

928

In-place adjusted EBITDA

$

84,435

$

77,415

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

Interest expense

$

17,148

$

16,777

$

67,937

$

71,052

Less: Amortization of deferred financing costs

(664

)

(541

)

(2,539

)

(2,136

)

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

(504

)

(382

)

(1,733

)

(1,503

)

Less: Accum. other comprehensive loss on derivatives amortized to expense

-

-

-

(79

)

COPT's share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs

422

416

1,749

1,332

Scheduled principal amortization

1,048

1,010

4,125

4,310

Capitalized interest

2,620

3,467

12,060

10,786

Preferred unit distributions

69

77

300

564

Denominator for fixed charge coverage-Adjusted EBITDA

$

20,139

$

20,824

$

81,899

$

84,326

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months For the Years Ended December 31, Ended December 31,

2020 2019 2020 2019

Reconciliation of commonshare dividends todividends and distributions for payoutratios

Common share dividends -unrestricted shares and $ 30,764 $ 30,724 $ 123,042 $ 122,823 deferred shares

Common unit distributions 341 337 1,362 1,405 - unrestricted units

Distributions on dilutive 69 77 - - preferred units

Dividends anddistributions for diluted 31,174 31,138 124,404 124,228 FFO payout ratio

Distributions on dilutive - - 300 - preferred units

Dividends anddistributions for other $ 31,174 $ 31,138 $ 124,704 $ 124,228 payout ratios



Reconciliation of GAAPnet income to earningsbefore interest, incometaxes, depreciation and amortization for real estate ("EBITDAre"),adjusted EBITDA andin-place adjusted EBITDA

Net income $ 83,549 $ 44,877 $ 102,878 $ 200,004

Interest expense 17,148 16,777 67,937 71,052

Income tax expense 258 (104 ) 353 (217 )(benefit)

Real estate-relateddepreciation and 36,653 32,779 138,193 137,069 amortization

Other depreciation and 513 438 1,837 1,834 amortization

Impairment losses on real - 2 1,530 329 estate

Gain on sales of real (30,204 ) (20,761 ) (30,209 ) (105,230 )estate

Gain on sale ofinvestment in (29,416 ) - (29,416 ) - unconsolidated real estate joint venture

Adjustments fromunconsolidated real 1,306 1,206 5,120 4,065 estate JVs

EBITDAre 79,807 75,214 258,223 308,906

Loss on early 4,069 - 7,306 - extinguishment of debt

Loss on interest rate - - 53,196 - derivatives

Net gain on other (1,218 ) (1 ) (966 ) (401 )investments

Credit loss recoveries (772 ) - (933 ) -

Business development 412 512 2,042 1,939 expenses

Non-comparableprofessional and legal - 195 - 681 expenses

Demolition costs onredevelopment and - 104 63 148 nonrecurring improvements

Executive transition - - - 4 costs

Adjusted EBITDA 82,298 76,024 $ 318,931 $ 311,277

Proforma net operatingincome adjustment for 1,459 463 property changes within period

Change in collectabilityof deferred rental 678 928 revenue

In-place adjusted EBITDA $ 84,435 $ 77,415



Reconciliation ofinterest expense to thedenominators for fixed charge coverage-AdjustedEBITDA

Interest expense $ 17,148 $ 16,777 $ 67,937 $ 71,052

Less: Amortization of (664 ) (541 ) (2,539 ) (2,136 )deferred financing costs

Less: Amortization of netdebt discounts, net of (504 ) (382 ) (1,733 ) (1,503 )amounts capitalized

Less: Accum. othercomprehensive loss on - - - (79 )derivatives amortized to expense

COPT's share of interestexpense of unconsolidatedreal estate JVs, 422 416 1,749 1,332 excluding deferredfinancing costs

Scheduled principal 1,048 1,010 4,125 4,310 amortization

Capitalized interest 2,620 3,467 12,060 10,786

Preferred unit 69 77 300 564 distributions

Denominator for fixedcharge coverage-Adjusted $ 20,139 $ 20,824 $ 81,899 $ 84,326 EBITDA

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months Ended December 31,

For the Years Ended December 31,

2020

2019

2020

2019

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

Tenant improvements and incentives

$

9,165

$

11,447

$

36,342

$

38,047

Building improvements

7,523

8,826

34,060

26,598

Leasing costs

1,514

2,998

8,432

11,663

Net (exclusions from) additions to tenant improvements and incentives

(370

)

(426

)

1,042

(2,292

)

Excluded building improvements and leasing costs

(3,859

)

(2,983

)

(18,932

)

(10,227

)

Replacement capital expenditures

$

13,973

$

19,862

$

60,944

$

63,789

Same Properties cash NOI

$

74,240

$

74,223

$

292,083

$

287,589

Straight line rent adjustments and lease incentive amortization

(1,831

)

(2,681

)

(5,372

)

(3,584

)

Amortization of acquired above- and below-market rents

99

197

390

312

Amortization of intangibles and other assets to property operating expenses

-

(23

)

(69

)

(92

)

Lease termination fees, gross

399

417

1,451

2,046

Tenant funded landlord assets and lease incentives

248

754

812

2,206

Same Properties NOI

$

73,155

$

72,887

$

289,295

$

288,477

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months For the Years Ended December 31, Ended December 31,

2020 2019 2020 2019

Reconciliations of tenantimprovements andincentives, buildingimprovements and leasing costs for operatingproperties to replacementcapital expenditures

Tenant improvements and $ 9,165 $ 11,447 $ 36,342 $ 38,047 incentives

Building improvements 7,523 8,826 34,060 26,598

Leasing costs 1,514 2,998 8,432 11,663

Net (exclusions from)additions to tenant (370 ) (426 ) 1,042 (2,292 )improvements and incentives

Excluded buildingimprovements and leasing (3,859 ) (2,983 ) (18,932 ) (10,227 )costs

Replacement capital $ 13,973 $ 19,862 $ 60,944 $ 63,789 expenditures



Same Properties cash NOI $ 74,240 $ 74,223 $ 292,083 $ 287,589

Straight line rentadjustments and lease (1,831 ) (2,681 ) (5,372 ) (3,584 )incentive amortization

Amortization of acquiredabove- and below-market 99 197 390 312 rents

Amortization ofintangibles and other - (23 ) (69 ) (92 )assets to property operating expenses

Lease termination fees, 399 417 1,451 2,046 gross

Tenant funded landlordassets and lease 248 754 812 2,206 incentives

Same Properties NOI $ 73,155 $ 72,887 $ 289,295 $ 288,477

December 31,2020

December 31,2019

Reconciliation of total assets to adjusted book

Total assets

$

4,077,023

$

3,854,453

Accumulated depreciation

1,124,253

1,007,120

Accumulated amortization of real estate intangibles and deferred leasing costs

217,124

212,547

COPT's share of liabilities of unconsolidated real estate JVs

26,710

50,734

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

1,489

8,164

Less: Property - operating lease liabilities

(30,746

)

(17,317

)

Less: Property - finance lease liabilities

(28

)

(702

)

Less: Cash and cash equivalents

(18,369

)

(14,733

)

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

(152

)

(498

)

Adjusted book

$

5,397,304

$

5,099,768

Reconciliation of debt outstanding to net debt and net debt plus preferred equity

Debt outstanding (excluding net debt discounts and deferred financing costs)

$

2,127,715

1,893,057

Less: Cash and cash equivalents

(18,369

)

(14,733

)

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

(152

)

(498

)

Net debt

$

2,109,194

$

1,877,826

Preferred equity

-

8,800

Net debt plus preferred equity

$

2,109,194

$

1,886,626

View source version on businesswire.com: https://www.businesswire.com/news/home/20210204006020/en/

CONTACT: IR Contacts: Stephanie Krewson-Kelly 443-285-5453 stephanie.kelly@copt.com

CONTACT: Michelle Layne 443-285-5452 michelle.layne@copt.com