ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | March 31, 2017 |
o | 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) |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o | |||
(Do not check if a smaller reporting company) |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o | |||
(Do not check if a smaller reporting company) |
• | combined reports better reflect how management 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; and |
• | Note 14, 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 | ||
March 31, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,670,157 | $ | 2,671,831 | |||
Projects in development or held for future development | 422,857 | 401,531 | |||||
Total properties, net | 3,093,014 | 3,073,362 | |||||
Assets held for sale, net | 41,391 | 94,654 | |||||
Cash and cash equivalents | 226,470 | 209,863 | |||||
Restricted cash and marketable securities | 6,439 | 8,193 | |||||
Investment in unconsolidated real estate joint venture | 25,417 | 25,548 | |||||
Accounts receivable (net of allowance for doubtful accounts of $446 and $603, respectively) | 29,431 | 34,438 | |||||
Deferred rent receivable (net of allowance of $125 and $373, respectively) | 89,410 | 90,219 | |||||
Intangible assets on real estate acquisitions, net | 73,748 | 78,351 | |||||
Deferred leasing costs (net of accumulated amortization of $68,280 and $65,988, respectively) | 40,753 | 41,214 | |||||
Investing receivables | 53,570 | 52,279 | |||||
Prepaid expenses and other assets, net | 59,723 | 72,764 | |||||
Total assets | $ | 3,739,366 | $ | 3,780,885 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 1,903,657 | $ | 1,904,001 | |||
Accounts payable and accrued expenses | 83,107 | 108,682 | |||||
Rents received in advance and security deposits | 28,393 | 29,798 | |||||
Dividends and distributions payable | 31,131 | 31,335 | |||||
Deferred revenue associated with operating leases | 11,750 | 12,666 | |||||
Redeemable preferred shares of beneficial interest ($0.01 par value; shares issued and outstanding of 531,667 at December 31, 2016) | — | 26,583 | |||||
Other liabilities | 55,784 | 50,177 | |||||
Total liabilities | 2,113,822 | 2,163,242 | |||||
Commitments and contingencies (Note 15) | |||||||
Redeemable noncontrolling interests | 23,676 | 22,979 | |||||
Equity: | |||||||
Corporate Office Properties Trust’s shareholders’ equity: | |||||||
Preferred Shares of beneficial interest at liquidation preference ($0.01 par value; 25,000,000 shares authorized, shares issued and outstanding of 6,900,000 at March 31, 2017 and December 31, 2016) | 172,500 | 172,500 | |||||
Common Shares of beneficial interest ($0.01 par value; 125,000,000 shares authorized, shares issued and outstanding of 99,390,234 at March 31, 2017 and 98,498,651 at December 31, 2016) | 994 | 985 | |||||
Additional paid-in capital | 2,136,369 | 2,116,581 | |||||
Cumulative distributions in excess of net income | (774,445 | ) | (765,276 | ) | |||
Accumulated other comprehensive loss | (370 | ) | (1,731 | ) | |||
Total Corporate Office Properties Trust’s shareholders’ equity | 1,535,048 | 1,523,059 | |||||
Noncontrolling interests in subsidiaries: | |||||||
Common units in COPLP | 46,683 | 49,228 | |||||
Preferred units in COPLP | 8,800 | 8,800 | |||||
Other consolidated entities | 11,337 | 13,577 | |||||
Noncontrolling interests in subsidiaries | 66,820 | 71,605 | |||||
Total equity | 1,601,868 | 1,594,664 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,739,366 | $ | 3,780,885 |
For the Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Revenues | ||||||||
Rental revenue | $ | 100,615 | $ | 105,382 | ||||
Tenant recoveries and other real estate operations revenue | 26,152 | 27,705 | ||||||
Construction contract and other service revenues | 13,034 | 11,220 | ||||||
Total revenues | 139,801 | 144,307 | ||||||
Expenses | ||||||||
Property operating expenses | 48,519 | 51,875 | ||||||
Depreciation and amortization associated with real estate operations | 33,059 | 34,527 | ||||||
Construction contract and other service expenses | 12,486 | 10,694 | ||||||
Impairment losses | — | 2,446 | ||||||
General, administrative and leasing expenses | 8,611 | 11,883 | ||||||
Business development expenses and land carry costs | 1,693 | 2,418 | ||||||
Total operating expenses | 104,368 | 113,843 | ||||||
Operating income | 35,433 | 30,464 | ||||||
Interest expense | (18,994 | ) | (23,559 | ) | ||||
Interest and other income | 1,726 | 1,156 | ||||||
Gain on early extinguishment of debt | — | 17 | ||||||
Income before equity in income of unconsolidated entities and income taxes | 18,165 | 8,078 | ||||||
Equity in income of unconsolidated entities | 725 | 10 | ||||||
Income tax (expense) benefit | (40 | ) | 8 | |||||
Income before gain on sales of real estate | 18,850 | 8,096 | ||||||
Gain on sales of real estate | 4,238 | — | ||||||
Net income | 23,088 | 8,096 | ||||||
Net income attributable to noncontrolling interests: | ||||||||
Common units in COPLP | (634 | ) | (127 | ) | ||||
Preferred units in COPLP | (165 | ) | (165 | ) | ||||
Other consolidated entities | (934 | ) | (978 | ) | ||||
Net income attributable to COPT | 21,355 | 6,826 | ||||||
Preferred share dividends | (3,180 | ) | (3,552 | ) | ||||
Net income attributable to COPT common shareholders | $ | 18,175 | $ | 3,274 | ||||
Earnings per common share: | ||||||||
Net income attributable to COPT common shareholders - basic | $ | 0.18 | $ | 0.03 | ||||
Net income attributable to COPT common shareholders - diluted | $ | 0.18 | $ | 0.03 | ||||
Dividends declared per common share | $ | 0.275 | $ | 0.275 |
For the Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Net income | $ | 23,088 | $ | 8,096 | ||||
Other comprehensive income (loss) | ||||||||
Unrealized gain (loss) on interest rate derivatives | 224 | (11,284 | ) | |||||
Loss on interest rate derivatives included in interest expense | 1,184 | 870 | ||||||
Other comprehensive income (loss) | 1,408 | (10,414 | ) | |||||
Comprehensive income (loss) | 24,496 | (2,318 | ) | |||||
Comprehensive income attributable to noncontrolling interests | (1,780 | ) | (880 | ) | ||||
Comprehensive income (loss) attributable to COPT | $ | 22,716 | $ | (3,198 | ) |
Preferred Shares | Common Shares | Additional Paid-in Capital | Cumulative Distributions in Excess of Net Income | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total | |||||||||||||||||||||
Balance at December 31, 2015 (94,531,512 common shares outstanding) | $ | 199,083 | $ | 945 | $ | 2,004,507 | $ | (657,172 | ) | $ | (2,838 | ) | $ | 72,039 | $ | 1,616,564 | |||||||||||
Costs associated with common shares issued to the public | — | — | (5 | ) | — | — | — | (5 | ) | ||||||||||||||||||
Share-based compensation (129,869 shares issued, net of redemptions) | — | 2 | 2,423 | — | — | — | 2,425 | ||||||||||||||||||||
Redemption of vested equity awards | — | — | (1,154 | ) | — | — | — | (1,154 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | 54 | — | — | (54 | ) | — | |||||||||||||||||||
Comprehensive loss | — | — | — | 6,826 | (10,024 | ) | 320 | (2,878 | ) | ||||||||||||||||||
Dividends | — | — | — | (29,589 | ) | — | — | (29,589 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (1,176 | ) | (1,176 | ) | ||||||||||||||||||
Distributions to noncontrolling interests in other consolidated entities | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interests | — | — | (302 | ) | — | — | — | (302 | ) | ||||||||||||||||||
Balance at March 31, 2016 (94,661,381 common shares outstanding) | $ | 199,083 | $ | 947 | $ | 2,005,523 | $ | (679,935 | ) | $ | (12,862 | ) | $ | 71,125 | $ | 1,583,881 | |||||||||||
Balance at December 31, 2016 (98,498,651 common shares outstanding) | $ | 172,500 | $ | 985 | $ | 2,116,581 | $ | (765,276 | ) | $ | (1,731 | ) | $ | 71,605 | $ | 1,594,664 | |||||||||||
Conversion of common units to common shares (185,000 shares) | — | 2 | 2,535 | — | — | (2,537 | ) | — | |||||||||||||||||||
Common shares issued under at-the-market program (546,782 shares) | — | 5 | 18,217 | — | — | — | 18,222 | ||||||||||||||||||||
Share-based compensation (159,801 shares issued, net of redemptions) | — | 2 | 1,580 | — | — | — | 1,582 | ||||||||||||||||||||
Redemption of vested equity awards | — | — | (1,753 | ) | — | — | — | (1,753 | ) | ||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | — | — | (246 | ) | — | — | 246 | — | |||||||||||||||||||
Comprehensive income | — | — | — | 21,355 | 1,361 | 1,213 | 23,929 | ||||||||||||||||||||
Dividends | — | — | — | (30,524 | ) | — | — | (30,524 | ) | ||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | — | — | — | — | — | (1,101 | ) | (1,101 | ) | ||||||||||||||||||
Distributions to noncontrolling interests in other consolidated entities | — | — | — | — | — | (2,606 | ) | (2,606 | ) | ||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interests | — | — | (545 | ) | — | — | — | (545 | ) | ||||||||||||||||||
Balance at March 31, 2017 (99,390,234 common shares outstanding) | $ | 172,500 | $ | 994 | $ | 2,136,369 | $ | (774,445 | ) | $ | (370 | ) | $ | 66,820 | $ | 1,601,868 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 133,895 | $ | 130,474 | |||
Construction contract and other service revenues received | 23,527 | 7,747 | |||||
Property operating expenses paid | (41,192 | ) | (46,084 | ) | |||
Construction contract and other service expenses paid | (14,790 | ) | (10,765 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (14,275 | ) | (12,175 | ) | |||
Interest expense paid | (19,549 | ) | (21,386 | ) | |||
Lease incentives | (7,729 | ) | (415 | ) | |||
Other | 750 | 43 | |||||
Net cash provided by operating activities | 60,637 | 47,439 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (35,795 | ) | (45,146 | ) | |||
Tenant improvements on operating properties | (6,916 | ) | (6,388 | ) | |||
Other capital improvements on operating properties | (5,203 | ) | (9,505 | ) | |||
Proceeds from dispositions of properties | 52,596 | 5,452 | |||||
Leasing costs paid | (2,042 | ) | (1,593 | ) | |||
Other | (717 | ) | 1,121 | ||||
Net cash provided by (used in) investing activities | 1,923 | (56,059 | ) | ||||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | — | 88,500 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | — | (25,000 | ) | ||||
Scheduled principal amortization | (958 | ) | (1,800 | ) | |||
Other debt repayments | (50 | ) | (50 | ) | |||
Net proceeds from issuance of common shares | 18,237 | (5 | ) | ||||
Redemption of preferred shares | (26,583 | ) | — | ||||
Common share dividends paid | (27,100 | ) | (26,002 | ) | |||
Preferred share dividends paid | (3,581 | ) | (3,552 | ) | |||
Distributions paid to noncontrolling interests in COPLP | (1,156 | ) | (1,171 | ) | |||
Distributions paid to redeemable noncontrolling interests | (407 | ) | (13,848 | ) | |||
Redemption of vested equity awards | (1,753 | ) | (1,154 | ) | |||
Other | (2,602 | ) | (5,119 | ) | |||
Net cash (used in) provided by financing activities | (45,953 | ) | 10,799 | ||||
Net increase in cash and cash equivalents | 16,607 | 2,179 | |||||
Cash and cash equivalents | |||||||
Beginning of period | 209,863 | 60,310 | |||||
End of period | $ | 226,470 | $ | 62,489 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 23,088 | $ | 8,096 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 33,570 | 35,129 | |||||
Impairment losses | — | 2,446 | |||||
(Gain) loss on interest rate derivatives | (454 | ) | 1,551 | ||||
Amortization of deferred financing costs and net debt discounts | 1,348 | 1,495 | |||||
Increase in deferred rent receivable | (191 | ) | (1,456 | ) | |||
Gain on sales of real estate | (4,238 | ) | — | ||||
Share-based compensation | 1,488 | 2,108 | |||||
Other | (1,341 | ) | (802 | ) | |||
Operating changes in assets and liabilities: | |||||||
Decrease in accounts receivable | 5,007 | 409 | |||||
Decrease in restricted cash and marketable securities | 2,043 | 15 | |||||
Decrease in prepaid expenses and other assets, net | 13,991 | 5,941 | |||||
Decrease in accounts payable, accrued expenses and other liabilities | (12,269 | ) | (3,802 | ) | |||
Decrease in rents received in advance and security deposits | (1,405 | ) | (3,691 | ) | |||
Net cash provided by operating activities | $ | 60,637 | $ | 47,439 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (6,661 | ) | $ | (9,420 | ) | |
Increase in property and redeemable noncontrolling interests in connection with property contributed in a joint venture | $ | — | $ | 22,600 | |||
Decrease in redeemable noncontrolling interests and increase in other liabilities in connection with distribution payable to redeemable noncontrolling interest | $ | 8 | $ | 6,675 | |||
Increase (decrease) in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests | $ | 1,408 | $ | (10,414 | ) | ||
Dividends/distribution payable | $ | 31,131 | $ | 30,217 | |||
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares | $ | 2,537 | $ | — | |||
Adjustments to noncontrolling interests resulting from changes in COPLP ownership | $ | 246 | $ | (54 | ) | ||
Increase in redeemable noncontrolling interest and decrease in equity to carry redeemable noncontrolling interest at fair value | $ | 545 | $ | 302 |
March 31, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Properties, net: | |||||||
Operating properties, net | $ | 2,670,157 | $ | 2,671,831 | |||
Projects in development or held for future development | 422,857 | 401,531 | |||||
Total properties, net | 3,093,014 | 3,073,362 | |||||
Assets held for sale, net | 41,391 | 94,654 | |||||
Cash and cash equivalents | 226,470 | 209,863 | |||||
Restricted cash and marketable securities | 2,288 | 2,756 | |||||
Investment in unconsolidated real estate joint venture | 25,417 | 25,548 | |||||
Accounts receivable (net of allowance for doubtful accounts of $446 and $603, respectively) | 29,431 | 34,438 | |||||
Deferred rent receivable (net of allowance of $125 and $373, respectively) | 89,410 | 90,219 | |||||
Intangible assets on real estate acquisitions, net | 73,748 | 78,351 | |||||
Deferred leasing costs (net of accumulated amortization of $68,280 and $65,988, respectively) | 40,753 | 41,214 | |||||
Investing receivables | 53,570 | 52,279 | |||||
Prepaid expenses and other assets, net | 59,723 | 72,764 | |||||
Total assets | $ | 3,735,215 | $ | 3,775,448 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Debt, net | $ | 1,903,657 | $ | 1,904,001 | |||
Accounts payable and accrued expenses | 83,107 | 108,682 | |||||
Rents received in advance and security deposits | 28,393 | 29,798 | |||||
Distributions payable | 31,131 | 31,335 | |||||
Deferred revenue associated with operating leases | 11,750 | 12,666 | |||||
Redeemable preferred units of general partner, 531,667 units outstanding at December 31, 2016 | — | 26,583 | |||||
Other liabilities | 51,633 | 44,740 | |||||
Total liabilities | 2,109,671 | 2,157,805 | |||||
Commitments and contingencies (Note 15) | |||||||
Redeemable noncontrolling interests | 23,676 | 22,979 | |||||
Equity: | |||||||
Corporate Office Properties, L.P.’s equity: | |||||||
Preferred units | |||||||
General partner, preferred units outstanding of 6,900,000 at March 31, 2017 and December 31, 2016 | 172,500 | 172,500 | |||||
Limited partner, 352,000 preferred units outstanding at March 31, 2017 and December 31, 2016 | 8,800 | 8,800 | |||||
Common units, 99,390,234 and 98,498,651 held by the general partner and 3,405,391 and 3,590,391 held by limited partners at March 31, 2017 and December 31, 2016, respectively | 1,409,632 | 1,401,597 | |||||
Accumulated other comprehensive loss | (446 | ) | (1,854 | ) | |||
Total Corporate Office Properties, L.P.’s equity | 1,590,486 | 1,581,043 | |||||
Noncontrolling interests in subsidiaries | 11,382 | 13,621 | |||||
Total equity | 1,601,868 | 1,594,664 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 3,735,215 | $ | 3,775,448 |
For the Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Revenues | ||||||||
Rental revenue | $ | 100,615 | $ | 105,382 | ||||
Tenant recoveries and other real estate operations revenue | 26,152 | 27,705 | ||||||
Construction contract and other service revenues | 13,034 | 11,220 | ||||||
Total revenues | 139,801 | 144,307 | ||||||
Expenses | ||||||||
Property operating expenses | 48,519 | 51,875 | ||||||
Depreciation and amortization associated with real estate operations | 33,059 | 34,527 | ||||||
Construction contract and other service expenses | 12,486 | 10,694 | ||||||
Impairment losses | — | 2,446 | ||||||
General, administrative and leasing expenses | 8,611 | 11,883 | ||||||
Business development expenses and land carry costs | 1,693 | 2,418 | ||||||
Total operating expenses | 104,368 | 113,843 | ||||||
Operating income | 35,433 | 30,464 | ||||||
Interest expense | (18,994 | ) | (23,559 | ) | ||||
Interest and other income | 1,726 | 1,156 | ||||||
Gain on early extinguishment of debt | — | 17 | ||||||
Income before equity in income of unconsolidated entities and income taxes | 18,165 | 8,078 | ||||||
Equity in income of unconsolidated entities | 725 | 10 | ||||||
Income tax (expense) benefit | (40 | ) | 8 | |||||
Income before gain on sales of real estate | 18,850 | 8,096 | ||||||
Gain on sales of real estate | 4,238 | — | ||||||
Net income | 23,088 | 8,096 | ||||||
Net income attributable to noncontrolling interests in consolidated entities | (934 | ) | (979 | ) | ||||
Net income attributable to COPLP | 22,154 | 7,117 | ||||||
Preferred unit distributions | (3,345 | ) | (3,717 | ) | ||||
Net income attributable to COPLP common unitholders | $ | 18,809 | $ | 3,400 | ||||
Earnings per common unit: | ||||||||
Net income attributable to COPLP common unitholders - basic | $ | 0.18 | $ | 0.03 | ||||
Net income attributable to COPLP common unitholders - diluted | $ | 0.18 | $ | 0.03 | ||||
Distributions declared per common unit | $ | 0.275 | $ | 0.275 |
For the Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Net income | $ | 23,088 | $ | 8,096 | ||||
Other comprehensive income (loss) | ||||||||
Unrealized gain (loss) on interest rate derivatives | 224 | (11,284 | ) | |||||
Loss on interest rate derivatives included in interest expense | 1,184 | 870 | ||||||
Other comprehensive income (loss) | 1,408 | (10,414 | ) | |||||
Comprehensive income (loss) | 24,496 | (2,318 | ) | |||||
Comprehensive income attributable to noncontrolling interests | (934 | ) | (979 | ) | ||||
Comprehensive income (loss) attributable to COPLP | $ | 23,562 | $ | (3,297 | ) |
Limited Partner Preferred Units | General Partner Preferred Units | Common Units | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests in Subsidiaries | ||||||||||||||||||||||||||||
Units | Amount | Units | Amount | Units | Amount | Total Equity | ||||||||||||||||||||||||||
Balance at December 31, 2015 | 352,000 | $ | 8,800 | 7,431,667 | $ | 199,083 | 98,208,903 | $ | 1,400,745 | $ | (2,985 | ) | $ | 10,921 | $ | 1,616,564 | ||||||||||||||||
Costs associated with common shares issued to the public | — | — | — | — | — | (5 | ) | — | — | (5 | ) | |||||||||||||||||||||
Share-based compensation (units net of redemption) | — | — | — | — | 129,869 | 2,425 | — | — | 2,425 | |||||||||||||||||||||||
Redemptions of vested equity awards | — | — | — | — | — | (1,154 | ) | — | — | (1,154 | ) | |||||||||||||||||||||
Comprehensive loss | — | 165 | — | 3,552 | — | 3,400 | (10,414 | ) | 419 | (2,878 | ) | |||||||||||||||||||||
Distributions to owners of common and preferred units | — | (165 | ) | — | (3,552 | ) | — | (27,048 | ) | — | — | (30,765 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (4 | ) | (4 | ) | |||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | (302 | ) | — | — | (302 | ) | |||||||||||||||||||||
Balance at March 31, 2016 | 352,000 | $ | 8,800 | 7,431,667 | $ | 199,083 | 98,338,772 | $ | 1,378,061 | $ | (13,399 | ) | $ | 11,336 | $ | 1,583,881 | ||||||||||||||||
Balance at December 31, 2016 | 352,000 | $ | 8,800 | 6,900,000 | $ | 172,500 | 102,089,042 | $ | 1,401,597 | $ | (1,854 | ) | $ | 13,621 | $ | 1,594,664 | ||||||||||||||||
Issuance of common units resulting from common shares issued under COPT at-the-market program | — | — | — | — | 546,782 | 18,222 | — | — | 18,222 | |||||||||||||||||||||||
Share-based compensation (units net of redemption) | — | — | — | — | 159,801 | 1,582 | — | — | 1,582 | |||||||||||||||||||||||
Redemptions of vested equity awards | — | — | — | — | — | (1,753 | ) | — | — | (1,753 | ) | |||||||||||||||||||||
Comprehensive income | — | 165 | — | 3,180 | — | 18,809 | 1,408 | 367 | 23,929 | |||||||||||||||||||||||
Distributions to owners of common and preferred units | — | (165 | ) | — | (3,180 | ) | — | (28,280 | ) | — | — | (31,625 | ) | |||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | — | — | — | — | — | — | — | (2,606 | ) | (2,606 | ) | |||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interest | — | — | — | — | — | (545 | ) | — | — | (545 | ) | |||||||||||||||||||||
Balance at March 31, 2017 | 352,000 | $ | 8,800 | 6,900,000 | $ | 172,500 | 102,795,625 | $ | 1,409,632 | $ | (446 | ) | $ | 11,382 | $ | 1,601,868 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Revenues from real estate operations received | $ | 133,895 | $ | 130,474 | |||
Construction contract and other service revenues received | 23,527 | 7,747 | |||||
Property operating expenses paid | (41,192 | ) | (46,084 | ) | |||
Construction contract and other service expenses paid | (14,790 | ) | (10,765 | ) | |||
General, administrative, leasing, business development and land carry costs paid | (14,275 | ) | (12,175 | ) | |||
Interest expense paid | (19,549 | ) | (21,386 | ) | |||
Lease incentives | (7,729 | ) | (415 | ) | |||
Other | 750 | 43 | |||||
Net cash provided by operating activities | 60,637 | 47,439 | |||||
Cash flows from investing activities | |||||||
Construction, development and redevelopment | (35,795 | ) | (45,146 | ) | |||
Tenant improvements on operating properties | (6,916 | ) | (6,388 | ) | |||
Other capital improvements on operating properties | (5,203 | ) | (9,505 | ) | |||
Proceeds from dispositions of properties | 52,596 | 5,452 | |||||
Leasing costs paid | (2,042 | ) | (1,593 | ) | |||
Other | (717 | ) | 1,121 | ||||
Net cash provided by (used in) investing activities | 1,923 | (56,059 | ) | ||||
Cash flows from financing activities | |||||||
Proceeds from debt | |||||||
Revolving Credit Facility | — | 88,500 | |||||
Repayments of debt | |||||||
Revolving Credit Facility | — | (25,000 | ) | ||||
Scheduled principal amortization | (958 | ) | (1,800 | ) | |||
Other debt repayments | (50 | ) | (50 | ) | |||
Net proceeds from issuance of common units | 18,237 | (5 | ) | ||||
Redemption of preferred units | (26,583 | ) | — | ||||
Common unit distributions paid | (28,091 | ) | (27,008 | ) | |||
Preferred unit distributions paid | (3,746 | ) | (3,717 | ) | |||
Redemption of vested equity awards | (1,753 | ) | (1,154 | ) | |||
Distributions paid to redeemable noncontrolling interests | (407 | ) | (13,848 | ) | |||
Other | (2,602 | ) | (5,119 | ) | |||
Net cash (used in) provided by financing activities | (45,953 | ) | 10,799 | ||||
Net increase in cash and cash equivalents | 16,607 | 2,179 | |||||
Cash and cash equivalents | |||||||
Beginning of period | 209,863 | 60,310 | |||||
End of period | $ | 226,470 | $ | 62,489 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Net income | $ | 23,088 | $ | 8,096 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 33,570 | 35,129 | |||||
Impairment losses | — | 2,446 | |||||
(Gain) loss on interest rate derivatives | (454 | ) | 1,551 | ||||
Amortization of deferred financing costs and net debt discounts | 1,348 | 1,495 | |||||
Increase in deferred rent receivable | (191 | ) | (1,456 | ) | |||
Gain on sales of real estate | (4,238 | ) | — | ||||
Share-based compensation | 1,488 | 2,108 | |||||
Other | (1,341 | ) | (802 | ) | |||
Operating changes in assets and liabilities: | |||||||
Decrease in accounts receivable | 5,007 | 409 | |||||
Decrease (increase) in restricted cash and marketable securities | 757 | (77 | ) | ||||
Decrease in prepaid expenses and other assets, net | 13,991 | 5,941 | |||||
Decrease in accounts payable, accrued expenses and other liabilities | (10,983 | ) | (3,710 | ) | |||
Decrease in rents received in advance and security deposits | (1,405 | ) | (3,691 | ) | |||
Net cash provided by operating activities | $ | 60,637 | $ | 47,439 | |||
Supplemental schedule of non-cash investing and financing activities: | |||||||
Decrease in accrued capital improvements, leasing and other investing activity costs | $ | (6,661 | ) | $ | (9,420 | ) | |
Increase in property and redeemable noncontrolling interests in connection with property contributed in a joint venture | $ | — | $ | 22,600 | |||
Decrease in redeemable noncontrolling interests and increase in other liabilities in connection with distribution payable to redeemable noncontrolling interest | $ | 8 | $ | 6,675 | |||
Increase (decrease) in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests | $ | 1,408 | $ | (10,414 | ) | ||
Distributions payable | $ | 31,131 | $ | 30,217 | |||
Increase in redeemable noncontrolling interest and decrease in equity to carry redeemable noncontrolling interest at fair value | $ | 545 | $ | 302 |
• | 164 operating office properties totaling 17.1 million square feet, including 13 triple-net leased, single-tenant data center properties. We owned six of these properties through an unconsolidated real estate joint venture; |
• | nine office properties under construction or redevelopment that we estimate will total approximately 1.3 million square feet upon completion, including two partially operational properties and two properties completed but held for future lease to the United States Government; |
• | 987 acres of land we controlled for future development that we believe could be developed into approximately 12.2 million square feet and an additional 194 acres of other land; and |
• | a wholesale data center with a critical load of 19.25 megawatts. |
• | Construction contract revenue: We reviewed our historical construction management arrangements and related contracts. Based on this review, we believe that we will account for these arrangements using the percentage of completion method, which is the method we have used in most cases historically. We do not currently believe that the resulting effect of the change will be material. |
• | Sales of real estate: The new guidance requires recognition of a sale of real estate and resulting gain or loss when control transfers and the buyer has the ability to direct use of, or obtain substantially all of the remaining benefit from, the asset (which generally will occur on the closing date); the factor of continuing involvement is no longer a specific consideration for the timing of recognition. The new guidance eliminates the need to consider adequacy of buyer investment, which was replaced by additional judgments regarding collectability and intent and/or ability to pay. The new guidance also requires an entity to derecognize nonfinancial assets and in substance non financial assets once it transfers control of such assets. When an entity transfers its controlling interest in a nonfinancial asset, but retains a noncontrolling ownership interest, the entity is required to measure any non-controlling interest it receives or retains at fair value and recognize a full gain or loss on the transaction; as a result, sales and partial sales of real estate assets will now be subject to the same derecognition |
• | Real estate revenue associated with executory costs and other non-lease components: Once the new guidance setting forth principles for the recognition, measurement, presentation and disclosure of leases (discussed below) goes into effect, we believe that the new revenue standard may apply to executory costs and other components of revenue due under leases that are deemed to be non-lease components (such as common area maintenance and provision of utilities), even when the revenue for such activities is not separately stipulated in the lease. In that case, then revenue from these items previously recognized on a straight-line basis under current lease guidance would be recognized under the new revenue guidance as the related services are delivered. As a result, while the total revenue recognized over time would not differ under the new guidance, the recognition pattern would be different. We are in the process of evaluating the significance of the difference in the recognition pattern that would result from this change. |
• | Real estate leases in which we are the lessor: |
◦ | Balance sheet reporting: We believe that we will apply an approach under the new guidance that is similar to the current accounting for operating leases, in which we will continue to recognize the underlying leased asset as property on our balance sheet. |
◦ | Deferral of compensation-related lease costs: Under the new lease guidance, lessors may only capitalize their incremental direct costs of leasing. As a result, we believe that we will no longer be able to defer the recognition of compensation-related costs in connection with new or extended tenant leases (refer to amounts reported in our 2016 Annual Report on Form 10-K for amounts deferred in 2014, 2015 and 2016). |
◦ | Lease revenue reporting: As discussed in further detail above in connection with the new revenue guidance, we believe that the new revenue standard may apply to executory costs and other components of revenue deemed to be non-lease components (such as common area maintenance and provision of utilities), even when the revenue for such activities is not separately stipulated in the lease. In that case, we would need to separate the lease components of revenue due under leases from the non-lease components. Under the new guidance, we would continue to recognize the lease components of lease revenue on a straight-line basis over our respective lease terms as we do under prior guidance. However, we would recognize the non-lease components under the new revenue guidance as the related services are delivered. As discussed above, we are in the process of evaluating the significance of the difference in the recognition pattern that would result from this change. |
• | Leases in which we are the lessee: |
◦ | Our most significant leases as lessee are ground leases we have for certain properties; as of March 31, 2017, our future minimum rental payments under these leases totaled $90.7 million, with various expiration dates extending to the year 2100. While we are still in the process of evaluating these leases under the new guidance, we believe that we will be required to recognize a right-of-use asset and a lease liability for the present value of these minimum lease payments. We believe that these leases most likely will be classified as finance leases under the new guidance; as a result, the interest component of each lease payment would be recorded as interest expense and the right-of-use asset would be amortized into expense using the straight-line method over the life of the lease. |
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 | $ | 4,075 | $ | — | $ | — | $ | 4,075 | ||||||||
Other | 76 | — | — | 76 | ||||||||||||
Interest rate derivatives (2) | — | 1,183 | — | 1,183 | ||||||||||||
Total assets | $ | 4,151 | $ | 1,183 | $ | — | $ | 5,334 | ||||||||
Liabilities: | ||||||||||||||||
Deferred compensation plan liability (3) | $ | — | $ | 4,151 | $ | — | $ | 4,151 | ||||||||
Interest rate derivatives (3) | — | 735 | — | 735 | ||||||||||||
Total liabilities | $ | — | $ | 4,886 | $ | — | $ | 4,886 |
Description | Quoted Prices in Active Markets for Identical Assets(Level 1) | Significant Other Observable Inputs(Level 2) | Significant Unobservable Inputs(Level 3) | Total | ||||||||||||
Assets: | ||||||||||||||||
Interest rate derivatives (1) | $ | — | $ | 1,183 | $ | — | $ | 1,183 | ||||||||
Liabilities: | ||||||||||||||||
Interest rate derivatives (2) | $ | — | $ | 735 | $ | — | $ | 735 |
Fair Values as of March 31, 2017 | |||||||||||||||||
Quoted Prices in | Significant | ||||||||||||||||
Active Markets for | Significant Other | Unobservable | |||||||||||||||
Identical Assets | Observable Inputs | Inputs | |||||||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
Assets: | |||||||||||||||||
Assets held for sale, net | $ | — | $ | — | $ | 40,086 | $ | 40,086 |
Valuation Technique | Fair Values on Measurement Date | Unobservable Input | Range (Weighted Average) | |||||
Discounted cash flow | $ | 37,604 | Discount rate | 9.3% - 11.3% (10.1%) | ||||
Terminal capitalization rate | 8.3% - 11.4% (8.6%) | |||||||
Yield analyses | $ | 2,482 | Investor yield requirement | 9.0% (1) |
March 31, 2017 | December 31, 2016 | ||||||
Land | $ | 430,364 | $ | 433,311 | |||
Buildings and improvements | 2,972,164 | 2,944,905 | |||||
Less: Accumulated depreciation | (732,371 | ) | (706,385 | ) | |||
Operating properties, net | $ | 2,670,157 | $ | 2,671,831 |
March 31, 2017 | December 31, 2016 | ||||||
Land | $ | 195,727 | $ | 195,521 | |||
Development in progress, excluding land | 227,130 | 206,010 | |||||
Projects in development or held for future development | $ | 422,857 | $ | 401,531 |
• | as of March 31, 2017: six operating properties in White Marsh, Maryland (included in our Regional Office segment); one operating property in our Fort Meade/BW Corridor sub-segment; and land in White Marsh; and |
• | as of December 31, 2016: eight operating properties in White Marsh (included primarily in our Regional Office segment); one operating property in our Northern Virginia Defense/IT sub-segment; and land in White Marsh and Northern Virginia. |
March 31, 2017 | December 31, 2016 | ||||||
Properties, net | $ | 38,018 | $ | 85,402 | |||
Deferred rent receivable | 1,546 | 4,241 | |||||
Intangible assets on real estate acquisitions, net | 338 | 338 | |||||
Deferred leasing costs, net | 1,109 | 3,636 | |||||
Lease incentives, net | 380 | 1,037 | |||||
Assets held for sale, net | $ | 41,391 | $ | 94,654 |
Nominal | ||||||||||||||||||
Ownership | March 31, 2017 (1) | |||||||||||||||||
Date | % as of | Total | Encumbered | Total | ||||||||||||||
Acquired | 3/31/2017 | Nature of Activity | Assets | Assets | Liabilities | |||||||||||||
LW Redstone Company, LLC | 3/23/2010 | 85% | Development and operation of real estate (2) | $ | 157,293 | $ | 78,251 | $ | 50,804 | |||||||||
M Square Associates, LLC | 6/26/2007 | 50% | Development and operation of real estate (3) | 65,158 | 46,124 | 45,712 | ||||||||||||
Stevens Investors, LLC | 8/11/2015 | 95% | Development of real estate (4) | 42,176 | — | 7,252 | ||||||||||||
$ | 264,627 | $ | 124,375 | $ | 103,768 |
March 31, 2017 | December 31, 2016 | ||||||
Notes receivable from the City of Huntsville | $ | 50,570 | $ | 49,258 | |||
Other investing loans receivable | 3,000 | 3,021 | |||||
$ | 53,570 | $ | 52,279 |
March 31, 2017 | December 31, 2016 | ||||||
Lease incentives, net | $ | 17,516 | $ | 18,276 | |||
Prepaid expenses | 17,332 | 24,432 | |||||
Furniture, fixtures and equipment, net | 4,989 | 5,204 | |||||
Construction contract costs incurred in excess of billings | 4,451 | 10,350 | |||||
Deferred tax asset, net (1) | 2,980 | 3,036 | |||||
Deferred financing costs, net (2) | 2,444 | 3,128 | |||||
Non-real estate equity method investments | 2,353 | 2,355 | |||||
Other assets | 7,658 | 5,983 | |||||
Prepaid expenses and other assets, net | $ | 59,723 | $ | 72,764 |
Carrying Value (1) as of | ||||||||||||
March 31, 2017 | December 31, 2016 | Stated Interest Rates as of | Scheduled Maturity as of | |||||||||
March 31, 2017 | March 31, 2017 | |||||||||||
Mortgage and Other Secured Debt: | ||||||||||||
Fixed rate mortgage debt (2) | $ | 153,294 | $ | 154,143 | 3.82% - 7.87% (3) | 2019-2026 | ||||||
Variable rate secured debt | 13,365 | 13,448 | LIBOR + 1.85% (4) | October 2020 | ||||||||
Total mortgage and other secured debt | 166,659 | 167,591 | ||||||||||
Revolving Credit Facility | — | — | LIBOR + 0.875% to 1.60% | May 2019 | ||||||||
Term Loan Facilities (5) | 547,682 | 547,494 | LIBOR + 0.90% to 2.40% (6) | 2020-2022 | ||||||||
Unsecured Senior Notes | ||||||||||||
3.600%, $350,000 aggregate principal | 347,233 | 347,128 | 3.60% (7) | May 2023 | ||||||||
5.250%, $250,000 aggregate principal | 246,291 | 246,176 | 5.25% (8) | February 2024 | ||||||||
3.700%, $300,000 aggregate principal | 297,961 | 297,843 | 3.70% (9) | June 2021 | ||||||||
5.000%, $300,000 aggregate principal | 296,457 | 296,368 | 5.00% (10) | July 2025 | ||||||||
Unsecured notes payable | 1,374 | 1,401 | 0% (11) | 2026 | ||||||||
Total debt, net | $ | 1,903,657 | $ | 1,904,001 |
(1) | The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $5.7 million as of March 31, 2017 and $6.1 million as of December 31, 2016. |
(2) | Certain fixed rate mortgages carry interest rates that were above or below market rates upon assumption 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 $403,000 as of March 31, 2017 and $422,000 as of December 31, 2016. |
(3) | The weighted average interest rate on our fixed rate mortgage debt was 4.19% as of March 31, 2017. |
(4) | The interest rate on our variable rate secured debt as of March 31, 2017 was 2.63%. |
(5) | As of March 31, 2017, we have the ability to borrow an additional $350.0 million in the aggregate under these term loan facilities, provided that there is no default under the facilities and subject to the approval of the lenders. |
(6) | The weighted average interest rate on these loans was 2.37% as of March 31, 2017. |
(7) | The carrying value of these notes reflects an unamortized discount totaling $1.9 million as of March 31, 2017 and $2.0 million as of December 31, 2016. The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%. |
(8) | The carrying value of these notes reflects an unamortized discount totaling $3.3 million as of March 31, 2017 and $3.4 million as of December 31, 2016. The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%. |
(9) | The carrying value of these notes reflects an unamortized discount totaling $1.6 million as of March 31, 2017 and $1.7 million as of December 31, 2016. The effective interest rate under the notes, including amortization of the issuance costs, was 3.85%. |
(11) | These notes carry interest rates that were below market rates upon assumption and therefore were recorded at their fair value based on applicable effective interest rates. The carrying value of these notes reflects an unamortized discount totaling $438,000 as of March 31, 2017 and $460,000 as of December 31, 2016. |
March 31, 2017 | December 31, 2016 | ||||||||||||||
Carrying | Estimated | Carrying | Estimated | ||||||||||||
Amount | Fair Value | Amount | Fair Value | ||||||||||||
Fixed-rate debt | |||||||||||||||
Unsecured Senior Notes | $ | 1,187,942 | $ | 1,223,753 | $ | 1,187,515 | $ | 1,220,282 | |||||||
Other fixed-rate debt | 154,668 | 156,098 | 155,544 | 156,887 | |||||||||||
Variable-rate debt | 561,047 | 556,844 | 560,942 | 558,437 | |||||||||||
$ | 1,903,657 | $ | 1,936,695 | $ | 1,904,001 | $ | 1,935,606 |
Fair Value at | ||||||||||||||||||
Notional Amount | Fixed Rate | Floating Rate Index | Effective Date | Expiration Date | March 31, 2017 | December 31, 2016 | ||||||||||||
$ | 100,000 | 1.6730% | One-Month LIBOR | 9/1/2015 | 8/1/2019 | $ | (301 | ) | $ | (701 | ) | |||||||
100,000 | 1.7300% | One-Month LIBOR | 9/1/2015 | 8/1/2019 | (434 | ) | (848 | ) | ||||||||||
13,494 | (1) | 1.3900% | One-Month LIBOR | 10/13/2015 | 10/1/2020 | 147 | 100 | |||||||||||
100,000 | 1.9013% | One-Month LIBOR | 9/1/2016 | 12/1/2022 | 409 | (23 | ) | |||||||||||
100,000 | 1.9050% | One-Month LIBOR | 9/1/2016 | 12/1/2022 | 427 | 48 | ||||||||||||
50,000 | 1.9079% | One-Month LIBOR | 9/1/2016 | 12/1/2022 | 200 | 10 | ||||||||||||
$ | 448 | $ | (1,414 | ) |
Fair Value at | ||||||||||
Derivatives | Balance Sheet Location | March 31, 2017 | December 31, 2016 | |||||||
Interest rate swaps designated as cash flow hedges | Prepaid expenses and other assets | $ | 1,183 | $ | 158 | |||||
Interest rate swaps designated as cash flow hedges | Other liabilities | (735 | ) | (1,572 | ) |
For the Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Amount of gain (loss) recognized in accumulated other comprehensive loss (“AOCL”) (effective portion) | $ | 224 | $ | (11,284 | ) | |||
Amount of losses reclassified from AOCL into interest expense (effective portion) | (1,184 | ) | (870 | ) | ||||
Amount of gain (loss) recognized in interest expense (ineffective portion) | 454 | (1,551 | ) |
For the Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Beginning balance | $ | 22,979 | $ | 19,218 | ||||
Contributions from noncontrolling interests | — | 22,779 | ||||||
Distributions to noncontrolling interests | (415 | ) | (20,526 | ) | ||||
Net income attributable to noncontrolling interests | 567 | 560 | ||||||
Adjustment to arrive at fair value of interests | 545 | 302 | ||||||
Ending balance | $ | 23,676 | $ | 22,333 |
Operating Office 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 | Operating Wholesale Data Center | Other | Total | |||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||
Revenues from real estate operations | $ | 60,855 | $ | 11,707 | $ | 11,634 | $ | 7,010 | $ | 3,460 | $ | 5,522 | $ | 100,188 | $ | 18,276 | $ | 6,770 | $ | 1,533 | $ | 126,767 | |||||||||||||||||||||
Property operating expenses | (20,520 | ) | (4,452 | ) | (6,802 | ) | (3,209 | ) | (1,371 | ) | (659 | ) | (37,013 | ) | (7,486 | ) | (3,365 | ) | (655 | ) | (48,519 | ) | |||||||||||||||||||||
UJV NOI allocable to COPT | — | — | — | — | — | 1,298 | 1,298 | — | — | — | 1,298 | ||||||||||||||||||||||||||||||||
NOI from real estate operations | $ | 40,335 | $ | 7,255 | $ | 4,832 | $ | 3,801 | $ | 2,089 | $ | 6,161 | $ | 64,473 | $ | 10,790 | $ | 3,405 | $ | 878 | $ | 79,546 | |||||||||||||||||||||
Additions to long-lived assets | $ | 3,422 | $ | 2,468 | $ | — | $ | 2,168 | $ | 132 | $ | — | $ | 8,190 | $ | 7,120 | $ | 1,574 | $ | 156 | $ | 17,040 | |||||||||||||||||||||
Transfers from non-operating properties | $ | 13,416 | $ | 222 | $ | — | $ | — | $ | (4 | ) | $ | (1,015 | ) | $ | 12,619 | $ | — | $ | 8 | $ | 18 | $ | 12,645 | |||||||||||||||||||
Segment assets at March 31, 2017 | $ | 1,258,437 | $ | 361,449 | $ | 131,194 | $ | 195,892 | $ | 109,171 | $ | 206,489 | $ | 2,262,632 | $ | 439,079 | $ | 229,630 | $ | 21,011 | $ | 2,952,352 | |||||||||||||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||
Revenues from real estate operations | $ | 62,509 | $ | 12,116 | $ | 10,225 | $ | 6,934 | $ | 3,116 | $ | 6,330 | $ | 101,230 | $ | 23,502 | $ | 6,493 | $ | 1,862 | $ | 133,087 | |||||||||||||||||||||
Property operating expenses | (23,246 | ) | (4,541 | ) | (5,420 | ) | (3,524 | ) | (978 | ) | (810 | ) | (38,519 | ) | (9,831 | ) | (2,661 | ) | (864 | ) | (51,875 | ) | |||||||||||||||||||||
NOI from real estate operations | $ | 39,263 | $ | 7,575 | $ | 4,805 | $ | 3,410 | $ | 2,138 | $ | 5,520 | $ | 62,711 | $ | 13,671 | $ | 3,832 | $ | 998 | $ | 81,212 | |||||||||||||||||||||
Additions to long-lived assets | $ | 6,519 | $ | 3,078 | $ | — | $ | 1,270 | $ | 618 | $ | — | $ | 11,485 | $ | 2,759 | $ | — | $ | 157 | $ | 14,401 | |||||||||||||||||||||
Transfers from non-operating properties | $ | 35,751 | $ | (94 | ) | $ | 6 | $ | — | $ | 211 | $ | 26,097 | $ | 61,971 | $ | 82 | $ | 51 | $ | (11 | ) | $ | 62,093 | |||||||||||||||||||
Segment assets at March 31, 2016 | $ | 1,319,444 | $ | 407,199 | $ | 133,757 | $ | 195,306 | $ | 107,693 | $ | 227,808 | $ | 2,391,207 | $ | 603,662 | $ | 240,484 | $ | 70,039 | $ | 3,305,392 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Segment revenues from real estate operations | $ | 126,767 | $ | 133,087 | |||
Construction contract and other service revenues | 13,034 | 11,220 | |||||
Total revenues | $ | 139,801 | $ | 144,307 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
UJV NOI allocable to COPT | $ | 1,298 | $ | — | |||
Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense | (572 | ) | — | ||||
Add: Equity in (loss) income of unconsolidated non-real estate entities | (1 | ) | 10 | ||||
Equity in income of unconsolidated entities | $ | 725 | $ | 10 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Construction contract and other service revenues | $ | 13,034 | $ | 11,220 | |||
Construction contract and other service expenses | (12,486 | ) | (10,694 | ) | |||
NOI from service operations | $ | 548 | $ | 526 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
NOI from real estate operations | $ | 79,546 | $ | 81,212 | |||
NOI from service operations | 548 | 526 | |||||
Interest and other income | 1,726 | 1,156 | |||||
Equity in income of unconsolidated entities | 725 | 10 | |||||
Income tax (expense) benefit | (40 | ) | 8 | ||||
Depreciation and other amortization associated with real estate operations | (33,059 | ) | (34,527 | ) | |||
Impairment losses | — | (2,446 | ) | ||||
General, administrative and leasing expenses | (8,611 | ) | (11,883 | ) | |||
Business development expenses and land carry costs | (1,693 | ) | (2,418 | ) | |||
Interest expense | (18,994 | ) | (23,559 | ) | |||
Less: UJV NOI allocable to COPT included in equity in income of unconsolidated entities | (1,298 | ) | — | ||||
Gain on early extinguishment of debt | — | 17 | |||||
Income before gain on sales of real estate | $ | 18,850 | $ | 8,096 |
March 31, 2017 | March 31, 2016 | ||||||
Segment assets | $ | 2,952,352 | $ | 3,305,392 | |||
Non-operating property assets | 429,690 | 444,334 | |||||
Other assets | 357,324 | 188,182 | |||||
Total COPT consolidated assets | $ | 3,739,366 | $ | 3,937,908 |
Percentile Rank | Earned PSUs Payout % | |
75th or greater | 200% of PSUs granted | |
50th or greater | 100% of PSUs granted | |
25th | 50% of PSUs granted | |
Below 25th | 0% of PSUs granted |
• | the number of earned PSUs in settlement of the award plan; plus |
• | the aggregate dividends that would have been paid with respect to the common shares issued in settlement of the earned PSUs through the date of settlement had such shares been issued on the grant date, divided by the share price on such settlement date, as defined under the terms of the agreement. |
• | 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 COPT common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to 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 added to the denominator. |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Numerator: | |||||||
Net income attributable to COPT | $ | 21,355 | $ | 6,826 | |||
Preferred share dividends | (3,180 | ) | (3,552 | ) | |||
Income attributable to share-based compensation awards | (125 | ) | (118 | ) | |||
Numerator for basic and diluted EPS on net income attributable to COPT common shareholders | $ | 18,050 | $ | 3,156 | |||
Denominator (all weighted averages): | |||||||
Denominator for basic EPS (common shares) | 98,411 | 94,203 | |||||
Dilutive effect of share-based compensation awards | 155 | 95 | |||||
Denominator for diluted EPS (common shares) | 98,566 | 94,298 | |||||
Basic EPS: | |||||||
Net income attributable to COPT common shareholders | $ | 0.18 | $ | 0.03 | |||
Diluted EPS: | |||||||
Net income attributable to COPT common shareholders | $ | 0.18 | $ | 0.03 |
Weighted Average Shares Excluded from Denominator | |||||
For the Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Conversion of common units | 3,446 | 3,677 | |||
Conversion of Series I Preferred Units | 176 | 176 | |||
Conversion of Series K Preferred Shares | — | 434 |
• | weighted average restricted shares and deferred share awards for the three months ended March 31, 2017 and 2016 of 392,000 and 405,000, respectively; and |
• | weighted average options for the three months ended March 31, 2017 and 2016 of 140,000 and 379,000, 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 potential common units outstanding during the period attributable to 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 units that we added to the denominator. |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Numerator: | |||||||
Net income attributable to COPLP common unitholders | $ | 22,154 | $ | 7,117 | |||
Preferred unit distributions | (3,345 | ) | (3,717 | ) | |||
Income attributable to share-based compensation awards | (125 | ) | (118 | ) | |||
Numerator for basic and diluted EPU on net income attributable to COPLP common unitholders | $ | 18,684 | $ | 3,282 | |||
Denominator (all weighted averages): | |||||||
Denominator for basic EPU (common units) | 101,857 | 97,880 | |||||
Dilutive effect of share-based compensation awards | 155 | 95 | |||||
Denominator for diluted EPU (common units) | 102,012 | 97,975 | |||||
Basic EPU: | |||||||
Net income attributable to COPLP common unitholders | $ | 0.18 | $ | 0.03 | |||
Diluted EPU: | |||||||
Net income attributable to COPLP common unitholders | $ | 0.18 | $ | 0.03 |
Weighted Average Units Excluded from Denominator | |||||
For the Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Conversion of Series I preferred units | 176 | 176 | |||
Conversion of Series K preferred units | — | 434 |
• | weighted average restricted units and deferred share awards for the three months ended March 31, 2017 and 2016 of 392,000 and 405,000, respectively; and |
• | weighted average options for the three months ended March 31, 2017 and 2016 of 140,000 and 379,000, respectively. |
Year Ending December 31, | ||||
2017 (1) | $ | 985 | ||
2018 | 1,290 | |||
2019 | 1,269 | |||
2020 | 1,261 | |||
2021 | 1,260 | |||
Thereafter | 85,762 | |||
$ | 91,827 |
• | new development and redevelopment obligations of $128.0 million; |
• | capital expenditures for operating properties of $51.8 million; |
• | third party construction and development of $6.7 million; and |
• | other obligations of $1.4 million. |
• | we finished the period with occupancy of our portfolio of operating office properties at 92.4%, including six properties owned through an unconsolidated real estate joint venture; |
• | we placed into service an aggregate of 86,000 square feet in newly redeveloped properties that were 61.0% leased as of March 31, 2017; |
• | we sold an operating property totaling 190,000 square feet that was 87.2% occupied for $39.0 million and other land for $14.3 million; |
• | COPT used available cash to redeem all of the outstanding shares of its Series K Preferred Shares effective January 21, 2017 at a price of $50.00 per share, or $26.6 million in the aggregate, plus accrued and unpaid dividends thereon through the date of redemption. Concurrently with this redemption, COPLP redeemed its Series K Preferred Units on the same terms; and |
• | COPT issued 546,782 common shares at a weighted average price of $33.89 per share under its ATM stock offering program. Net proceeds from the shares issued totaled $18.3 million. The net proceeds were used primarily to fund our cash reserves. |
• | 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; |
• | 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 a curtailment of 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; |
• | the dilutive effects of issuing additional common shares; |
• | our ability to achieve projected results; and |
• | environmental requirements. |
March 31, 2017 | December 31, 2016 | ||||||
Occupancy rates at period end | |||||||
Total | 92.4 | % | 92.1 | % | |||
Defense/IT Locations: | |||||||
Fort Meade/BW Corridor | 94.1 | % | 94.3 | % | |||
Northern Virginia Defense/IT | 85.8 | % | 85.0 | % | |||
Lackland Air Force Base | 100.0 | % | 100.0 | % | |||
Navy Support Locations | 78.1 | % | 72.7 | % | |||
Redstone Arsenal | 100.0 | % | 96.4 | % | |||
Data Center Shells | 100.0 | % | 100.0 | % | |||
Total Defense/IT Locations | 93.3 | % | 92.6 | % | |||
Regional Office | 93.3 | % | 95.2 | % | |||
Other | 52.9 | % | 52.9 | % | |||
Average contractual annual rental rate per square foot at period end (1) | $ | 30.20 | $ | 30.16 |
(1) | Includes estimated expense reimbursements. Amounts reported include the portion of properties owned through an unconsolidated real estate joint venture that was allocable to our ownership interest. |
Rentable Square Feet | Occupied Square Feet | ||||
(in thousands) | |||||
December 31, 2016 | 17,190 | 15,831 | |||
Square feet vacated | — | (161 | ) | ||
Occupancy of previously vacated space in connection with new leases (1) | — | 214 | |||
Square feet constructed or redeveloped | 86 | 72 | |||
Dispositions | (190 | ) | (166 | ) | |
Other changes | (4 | ) | (2 | ) | |
March 31, 2017 | 17,082 | 15,788 |
(1) | Excludes occupancy of vacant square feet acquired or developed. |
• | office properties continually owned and 100% operational throughout the current and prior year reporting periods, excluding properties held for sale. We define these as changes from “Same Office Properties”; |
• | constructed or redeveloped office properties placed into service that were not 100% operational throughout the current and prior year reporting periods; |
• | our wholesale data center; |
• | properties held for sale as of March 31, 2017; and |
• | property dispositions. |
For the Three Months Ended March 31, | |||||||||||
2017 | 2016 | Variance | |||||||||
(in thousands) | |||||||||||
Revenues | |||||||||||
Revenues from real estate operations | $ | 126,767 | $ | 133,087 | $ | (6,320 | ) | ||||
Construction contract and other service revenues | 13,034 | 11,220 | 1,814 | ||||||||
Total revenues | 139,801 | 144,307 | (4,506 | ) | |||||||
Expenses | |||||||||||
Property operating expenses | 48,519 | 51,875 | (3,356 | ) | |||||||
Depreciation and amortization associated with real estate operations | 33,059 | 34,527 | (1,468 | ) | |||||||
Construction contract and other service expenses | 12,486 | 10,694 | 1,792 | ||||||||
Impairment losses | — | 2,446 | (2,446 | ) | |||||||
General, administrative and leasing expenses | 8,611 | 11,883 | (3,272 | ) | |||||||
Business development expenses and land carry costs | 1,693 | 2,418 | (725 | ) | |||||||
Total operating expenses | 104,368 | 113,843 | (9,475 | ) | |||||||
Operating income | 35,433 | 30,464 | 4,969 | ||||||||
Interest expense | (18,994 | ) | (23,559 | ) | 4,565 | ||||||
Interest and other income | 1,726 | 1,156 | 570 | ||||||||
Gain on early extinguishment of debt | — | 17 | (17 | ) | |||||||
Equity in income of unconsolidated entities | 725 | 10 | 715 | ||||||||
Income tax (expense) benefit | (40 | ) | 8 | (48 | ) | ||||||
Income before gain on sales of real estate | 18,850 | 8,096 | 10,754 | ||||||||
Gain on sales of real estate | 4,238 | — | 4,238 | ||||||||
Net income | $ | 23,088 | $ | 8,096 | $ | 14,992 |
For the Three Months Ended March 31, | |||||||||||
2017 | 2016 | Variance | |||||||||
(Dollars in thousands, except per square foot data) | |||||||||||
Revenues | |||||||||||
Same Office Properties revenues | |||||||||||
Rental revenue, excluding lease termination revenue | $ | 89,115 | $ | 86,149 | $ | 2,966 | |||||
Lease termination revenue | 706 | 953 | (247 | ) | |||||||
Tenant recoveries and other real estate operations revenue | 23,962 | 24,015 | (53 | ) | |||||||
Same Office Properties total revenues | 113,783 | 111,117 | 2,666 | ||||||||
Constructed and redeveloped properties placed in service | 3,531 | 802 | 2,729 | ||||||||
Wholesale data center | 6,770 | 6,493 | 277 | ||||||||
Properties held for sale | 1,787 | 2,038 | (251 | ) | |||||||
Dispositions | 715 | 12,518 | (11,803 | ) | |||||||
Other | 181 | 119 | 62 | ||||||||
126,767 | 133,087 | (6,320 | ) | ||||||||
Property operating expenses | |||||||||||
Same Office Properties | (42,659 | ) | (43,382 | ) | 723 | ||||||
Constructed and redeveloped properties placed in service | (1,273 | ) | (199 | ) | (1,074 | ) | |||||
Wholesale data center | (3,365 | ) | (2,661 | ) | (704 | ) | |||||
Properties held for sale | (568 | ) | (893 | ) | 325 | ||||||
Dispositions | (239 | ) | (4,611 | ) | 4,372 | ||||||
Other | (415 | ) | (129 | ) | (286 | ) | |||||
(48,519 | ) | (51,875 | ) | 3,356 | |||||||
UJV NOI allocable to COPT | 1,298 | — | 1,008 | ||||||||
NOI from real estate operations | |||||||||||
Same Office Properties | 71,124 | 67,735 | 3,389 | ||||||||
Constructed and redeveloped properties placed in service | 2,258 | 603 | 1,655 | ||||||||
Wholesale data center | 3,405 | 3,832 | (427 | ) | |||||||
Properties held for sale | 1,219 | 1,145 | 74 | ||||||||
Dispositions | 476 | 7,907 | (7,431 | ) | |||||||
Other | 1,064 | (10 | ) | 1,074 | |||||||
$ | 79,546 | $ | 81,212 | $ | (1,666 | ) | |||||
Same Office Properties rent statistics | |||||||||||
Average occupancy rate | 92.2 | % | 91.3 | % | 0.9 | % | |||||
Average straight-line rent per occupied square foot (1) | $ | 6.50 | $ | 6.35 | $ | 0.15 |
(1) | Includes minimum base rents, net of abatements, and lease incentives on a straight-line basis for the three-month periods set forth above. |
For the Three Months Ended March 31, | ||||||||||||
2017 | 2016 | Variance | ||||||||||
(in thousands) | ||||||||||||
Construction contract and other service revenues | $ | 13,034 | $ | 11,220 | $ | 1,814 | ||||||
Construction contract and other service expenses | 12,486 | 10,694 | 1,792 | |||||||||
NOI from service operations | $ | 548 | $ | 526 | $ | 22 |
For the Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(Dollars and shares in thousands, except per share data) | |||||||
Net income | $ | 23,088 | $ | 8,096 | |||
Add Real estate-related depreciation and amortization | 33,059 | 34,527 | |||||
Add: Depreciation and amortization on UJV allocable to COPT | 311 | — | |||||
Add: Impairment losses on previously depreciated operating properties | — | 847 | |||||
Add: Gain on sales of previously depreciated operating properties | (19 | ) | — | ||||
FFO | 56,439 | 43,470 | |||||
Less: Preferred share dividends | (3,180 | ) | (3,552 | ) | |||
Less: Noncontrolling interests-preferred units in the Operating Partnership | (165 | ) | (165 | ) | |||
Less: FFO allocable to other noncontrolling interests | (978 | ) | (1,027 | ) | |||
Basic and diluted FFO allocable to share-based compensation awards | (216 | ) | (166 | ) | |||
Basic and diluted FFO available to common share and common unit holders | $ | 51,900 | $ | 38,560 | |||
Gain on sales of non-operating properties | (4,219 | ) | — | ||||
Impairment losses on non-operating properties | — | 1,599 | |||||
(Gain) loss on interest rate derivatives | (453 | ) | 1,551 | ||||
Gain on early extinguishment of debt | — | (17 | ) | ||||
Executive transition costs | 699 | 4,137 | |||||
Demolition costs on redevelopment properties | 222 | 208 | |||||
Diluted FFO comparability adjustments allocable to share-based compensation awards | 14 | (31 | ) | ||||
Diluted FFO available to common share and common unit holders, as adjusted for comparability | $ | 48,163 | $ | 46,007 | |||
Weighted average common shares | 98,411 | 94,203 | |||||
Conversion of weighted average common units | 3,446 | 3,677 | |||||
Weighted average common shares/units - Basic FFO | 101,857 | 97,880 | |||||
Dilutive effect of share-based compensation awards | 155 | 95 | |||||
Weighted average common shares/units - Diluted FFO | 102,012 | 97,975 | |||||
Diluted FFO per share | $ | 0.51 | $ | 0.39 | |||
Diluted FFO per share, as adjusted for comparability | $ | 0.47 | $ | 0.47 | |||
Denominator for diluted EPS | 98,566 | 94,298 | |||||
Weighted average common units | 3,446 | 3,677 | |||||
Denominator for diluted FFO per share measures | 102,012 | 97,975 |
Construction, development and redevelopment | $ | 33,434 | |||
Tenant improvements on operating properties | 4,804 | (1) | |||
Capital improvements on operating properties | 3,213 | ||||
$ | 41,451 |
• | dividends and/or distributions to equity holders of $31.8 million; and |
• | redemption of preferred shares (or units) of $26.6 million; offset in part by |
• | net proceeds from the issuance of common shares (or units) of $18.2 million. |
• | net proceeds from debt borrowings of $61.7 million; offset in part by |
• | dividends and/or distributions to equity holders of $30.7 million; and |
• | distributions to redeemable noncontrolling interests of $13.8 million related primarily to distributions to our partner in Stevens Investors, LLC, as discussed in our 2016 Annual Report on Form 10-K. |
For the Periods Ending December 31, | |||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | |||||||||||||||||||||
Contractual obligations (1) | |||||||||||||||||||||||||||
Debt (2) | |||||||||||||||||||||||||||
Balloon payments due upon maturity | $ | — | $ | — | $ | — | $ | 312,132 | $ | 300,000 | $ | 1,276,829 | $ | 1,888,961 | |||||||||||||
Scheduled principal payments | 3,053 | 4,241 | 4,387 | 4,024 | 3,875 | 10,680 | 30,260 | ||||||||||||||||||||
Interest on debt (3) | 53,921 | 71,668 | 71,484 | 66,898 | 57,705 | 116,244 | 437,920 | ||||||||||||||||||||
New development and redevelopment obligations (4)(5) | 112,745 | 12,604 | 2,615 | — | — | — | 127,964 | ||||||||||||||||||||
Third-party construction and development obligations (5)(6) | 6,723 | — | — | — | — | — | 6,723 | ||||||||||||||||||||
Capital expenditures for operating properties (5)(7) | 22,187 | 20,825 | 8,779 | — | — | — | 51,791 | ||||||||||||||||||||
Operating leases (8) | 985 | 1,290 | 1,269 | 1,261 | 1,260 | 85,762 | 91,827 | ||||||||||||||||||||
Other obligations (8) | 486 | 380 | 342 | 153 | 39 | 9 | 1,409 | ||||||||||||||||||||
Total contractual cash obligations | $ | 200,100 | $ | 111,008 | $ | 88,876 | $ | 384,468 | $ | 362,879 | $ | 1,489,524 | $ | 2,636,855 |
(1) | The contractual obligations set forth in this table exclude property operations contracts that may be terminated with notice of one month or less and also exclude accruals and payables incurred and therefore reflected in our reported liabilities. |
(2) | Represents scheduled principal amortization payments and maturities only and therefore excludes net debt discounts and deferred financing costs of $15.6 million. |
(3) | Represents interest costs for our outstanding debt as of March 31, 2017 for the terms of such debt. For variable rate debt, the amounts reflected above used March 31, 2017 interest rates on variable rate debt in computing interest costs for the terms of such debt. |
(4) | Represents contractual obligations pertaining to new development and redevelopment activities. |
(5) | Due to the long-term nature of certain construction and development 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. |
(6) | 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. |
(7) | Represents contractual obligations pertaining to capital expenditures for our operating properties. We expect to finance these costs primarily using cash flow from operations. |
(8) | We expect to pay these items using cash flow from operations. |
For the Periods Ending December 31, | |||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | |||||||||||||||||||||
Debt: | |||||||||||||||||||||||||||
Fixed rate debt (1) | $ | 2,776 | $ | 3,858 | $ | 3,991 | $ | 3,718 | $ | 303,875 | $ | 1,037,509 | $ | 1,355,727 | |||||||||||||
Weighted average interest rate | 4.35 | % | 4.37 | % | 4.36 | % | 3.96 | % | 3.70 | % | 4.47 | % | 4.30 | % | |||||||||||||
Variable rate debt | $ | 277 | $ | 383 | $ | 396 | $ | 312,438 | $ | — | $ | 250,000 | $ | 563,494 | |||||||||||||
Weighted average interest rate (2) | 2.63 | % | 2.63 | % | 2.63 | % | 2.21 | % | — | % | 2.59 | % | 2.38 | % |
(1) | Represents principal maturities only and therefore excludes net discounts and deferred financing costs of $15.6 million. |
(2) | The amounts reflected above used interest rates as of March 31, 2017 for variable rate debt. |
(a) | During the three months ended March 31, 2017, 185,000 of COPLP’s common units were exchanged for 185,000 COPT common shares in accordance with COPLP’s Second Amended and Restated Limited Partnership Agreement, as amended. The issuance of these common shares was effected in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. |
EXHIBIT NO. | DESCRIPTION | |
12.1 | COPT’s Statement regarding Computation of Earnings to Combined Fixed Charges and Preferred Share Dividends (filed herewith). | |
12.2 | COPLP’s Statement regarding Computation of Consolidated Ratio of Earnings to Fixed Charges (filed herewith). | |
31.1 | Certification of the Chief Executive Officer of Corporate Office Properties Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith). | |
31.2 | Certification of the Chief Financial Officer of Corporate Office Properties Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith). | |
31.3 | Certification of the Chief Executive Officer of Corporate Office Properties, L.P. required by Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith). | |
31.4 | Certification of the Chief Financial Officer of Corporate Office Properties, L.P. required by Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith). | |
32.1 | Certification of the Chief Executive Officer of Corporate Office Properties Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) (Furnished herewith). | |
32.2 | Certification of the Chief Financial Officer of Corporate Office Properties Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended). (Furnished herewith). | |
32.3 | Certification of the Chief Executive Officer of Corporate Office Properties, L.P. required by Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) (Furnished herewith). | |
32.4 | Certification of the Chief Financial Officer of Corporate Office Properties, L.P. required by Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended). (Furnished herewith). | |
101.INS | XBRL Instance Document (filed herewith). | |
101.SCH | XBRL Taxonomy Extension Schema Document (filed herewith). | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith). | |
101.LAB | XBRL Extension Labels Linkbase (filed herewith). | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith). | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document (filed herewith). |
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: | April 28, 2017 | Dated: | April 28, 2017 |
Three Months Ended March 31, 2017 | ||||
Earnings: | ||||
Income before equity in income of unconsolidated entities and income taxes | $ | 18,165 | ||
Gain on sales of real estate | 4,238 | |||
Combined fixed charges and preferred share dividends (from below) | 24,042 | |||
Amortization of capitalized interest | 645 | |||
Distributed income of equity investees | 379 | |||
Subtract: | ||||
Capitalized interest (from below) | (1,531 | ) | ||
Preferred share dividends included in fixed charges | (3,180 | ) | ||
Preferred unit distributions included in fixed charges | (165 | ) | ||
Preferred distributions of other consolidated entities | (4 | ) | ||
Total earnings | $ | 42,589 | ||
Combined Fixed Charges and Preferred Share Dividends: | ||||
Combined fixed charges and preferred share dividends: | ||||
Interest expense | $ | 18,994 | ||
Capitalized interest (internal and external) | 1,531 | |||
Interest included in rental expense | 168 | |||
Preferred share dividends | 3,180 | |||
Preferred unit distributions | 165 | |||
Preferred distributions of other consolidated entities | 4 | |||
Total combined fixed charges and preferred share dividends | $ | 24,042 | ||
Ratio of earnings to combined fixed charges and preferred share dividends | 1.77 | |||
Three Months Ended March 31, 2017 | ||||
Earnings: | ||||
Income before equity in income of unconsolidated entities and income taxes | $ | 18,165 | ||
Gain on sales of real estate | 4,238 | |||
Fixed charges (from below) | 20,697 | |||
Amortization of capitalized interest | 645 | |||
Distributed income of equity investees | 379 | |||
Subtract: | ||||
Capitalized interest (from below) | (1,531 | ) | ||
Preferred distributions of other consolidated entities | (4 | ) | ||
Total earnings | $ | 42,589 | ||
Fixed charges: | ||||
Interest expense | $ | 18,994 | ||
Capitalized interest (internal and external) | 1,531 | |||
Interest included in rental expense | 168 | |||
Preferred distributions of other consolidated entities | 4 | |||
Total fixed charges | $ | 20,697 | ||
Ratio of earnings to fixed charges | 2.06 | |||
Date: | April 28, 2017 | /s/ Stephen E. Budorick | |
Stephen E. Budorick | |||
President and Chief Executive Officer |
Date: | April 28, 2017 | /s/ Anthony Mifsud | |
Anthony Mifsud | |||
Chief Financial Officer |
Date: | April 28, 2017 | /s/ Stephen E. Budorick | |
Stephen E. Budorick | |||
President and Chief Executive Officer | |||
Date: | April 28, 2017 | /s/ Anthony Mifsud | |
Anthony Mifsud | |||
Chief Financial Officer |
/s/ Stephen E. Budorick | |
Stephen E. Budorick | |
President and Chief Executive Officer | |
Date: | April 28, 2017 |
/s/ Anthony Mifsud | |
Anthony Mifsud | |
Chief Financial Officer | |
Date: | April 28, 2017 |
/s/ Stephen E. Budorick | |
Stephen E. Budorick | |
President and Chief Executive Officer | |
Date: | April 28, 2017 |
/s/ Anthony Mifsud | |
Anthony Mifsud | |
Chief Financial Officer | |
Date: | April 28, 2017 |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2017 |
Apr. 21, 2017 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | CORPORATE OFFICE PROPERTIES TRUST | |
Entity Central Index Key | 0000860546 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 99,433,410 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Corporate Office Properties, L.P. | ||
Entity Information [Line Items] | ||
Entity Registrant Name | CORPORATE OFFICE PROPERTIES, L.P. | |
Entity Central Index Key | 0001577966 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 |
Consolidated Statements of Equity (Parenthetical) - shares |
3 Months Ended | |||
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Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Balance (in units/ shares) | 99,390,234 | 94,661,381 | 98,498,651 | 94,531,512 |
Conversion of common units to common shares (in units/ shares) | 185,000 | |||
Share-based compensation issuance, net of redemptions (in units/shares) | 159,801 | 129,869 | ||
Common Shares | ||||
Issuance of common units resulting from common shares issued under at-the-market program (in units) | 546,782 |
Organization |
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Mar. 31, 2017 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Organization | Organization Corporate Office Properties Trust (“COPT”) and subsidiaries (collectively, the “Company”) is a fully-integrated and self-managed real estate investment trust (“REIT”). Corporate Office Properties, L.P. (“COPLP”) and subsidiaries (collectively, the “Operating Partnership”) is the entity through which COPT, the sole general partner of COPLP, conducts almost all of its operations and owns almost all of its assets. Unless otherwise expressly stated or the context otherwise requires, “we”, “us” and “our” as used herein refer to each of the Company and the Operating Partnership. We own, manage, lease, develop and selectively acquire office and data center properties. The majority of our 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 we believe are growing, durable priority missions (“Defense/IT Locations”). We also own a portfolio of office properties located in select urban/urban-like submarkets within our regional footprint with durable Class-A office fundamentals and characteristics, as well as other properties supporting general commercial office tenants (“Regional Office”). As of March 31, 2017, our properties included the following:
COPLP owns real estate both directly and through subsidiary partnerships and limited liability companies (“LLCs”). In addition to owning real estate, COPLP also owns subsidiaries that provide real estate services such as property management and construction and development services primarily for our properties but also for third parties. Some of these services are performed by a taxable REIT subsidiary (“TRS”). Equity interests in COPLP are in the form of common and preferred units. As of March 31, 2017, COPT owned 96.7% of the outstanding COPLP common units (“common units”) and 95.1% of the outstanding COPLP preferred units (“preferred units”); the remaining common and preferred units in COPLP were owned by third parties. Common units in COPLP not owned by COPT carry certain redemption rights. The number of common units in COPLP owned by COPT is equivalent to the number of outstanding common shares of beneficial interest (“common shares”) of COPT, and the entitlement of all COPLP common units to quarterly distributions and payments in liquidation is substantially the same as those of COPT common shareholders. Similarly, in the case of each series of preferred units in COPLP held by COPT, there is a series of preferred shares of beneficial interest (“preferred shares”) in COPT that is equivalent in number and carries substantially the same terms as such series of COPLP preferred units. COPT’s common shares are publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “OFC”. Because COPLP is managed by COPT, and COPT conducts substantially all of its operations through COPLP, we refer to COPT’s executive officers as COPLP’s executive officers, and although, as a partnership, COPLP does not have a board of trustees, we refer to COPT’s Board of Trustees as COPLP’s Board of Trustees. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The COPT consolidated financial statements include the accounts of COPT, the Operating Partnership, their subsidiaries and other entities in which COPT has a majority voting interest and control. The COPLP consolidated financial statements include the accounts of COPLP, its subsidiaries and other entities in which COPLP has a majority voting interest and control. We also consolidate certain entities when control of such entities can be achieved through means other than voting rights (“variable interest entities” or “VIEs”) if we are deemed to be the primary beneficiary of such entities. We eliminate all intercompany balances and transactions in consolidation. We use the equity method of accounting when we own an interest in an entity and can exert significant influence over but cannot control the entity’s operations. We discontinue equity method accounting if our investment in an entity (and net advances) is reduced to zero unless we have guaranteed obligations of the entity or are otherwise committed to provide further financial support for the entity. We use the cost method of accounting when we own an interest in an entity and cannot exert significant influence over its operations. These interim financial statements should be read together with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2016 included in our 2016 Annual Report on Form 10-K. The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly state our financial position and results of operations. All adjustments are of a normal recurring nature. The consolidated financial statements have been prepared using the accounting policies described in our 2016 Annual Report on Form 10-K. Reclassification We reclassified certain amounts from prior periods to conform to the current period presentation of our consolidated financial statements with no effect on previously reported net income or equity. Recent Accounting Pronouncements We adopted guidance issued by the Financial Accounting Standards Board (“FASB”) effective January 1, 2017 intended to simplify various aspects related to the accounting and presentation for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the consolidated statement of cash flows. In connection with our adoption of this policy, we made an entity-wide accounting policy election to continue to account for potential future award forfeitures by estimating the number of awards that are expected to vest. Our adoption of this guidance did not have a material impact on our consolidated financial statements. We adopted guidance issued by the FASB prospectively effective January 1, 2017 that clarifies the definition of a business used by entities in determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. Under the new guidance it is expected that the majority of our future operating property acquisitions will be accounted for as asset acquisitions, whereas under the previous guidance our recent acquisitions were accounted for as business combinations; we believe that the primary effect of this change will be that transaction costs associated with future acquisitions will be capitalized rather than expensed as incurred. This guidance had no effect on our consolidated financial statements upon adoption. In May 2014, the FASB issued guidance regarding the recognition of revenue from contracts with customers. Under this guidance, an entity will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Also in connection with this guidance, in February 2017, the FASB issued additional guidance that clarifies the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets. While we are still completing our assessment of the impact of the guidance, below is a summary of the anticipated primary effects on our accounting and reporting.
We are required to adopt this guidance for our annual and interim periods beginning January 1, 2018 using one of two methods: retrospective restatement for each reporting period presented at the time of adoption, or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. We have not decided which method of adoption we will use. In February 2016, the FASB issued guidance that sets forth principles for the recognition, measurement, presentation and disclosure of leases. This guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. The resulting classification determines whether the lease expense is recognized based on an effective interest method or straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The guidance requires lessors of real estate to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. While we are still completing our assessment of the impact of this guidance, below is a summary of the anticipated primary effects of this guidance on our accounting and reporting.
This guidance is effective for reporting periods beginning January 1, 2019, with modified retrospective restatement for each reporting period presented at the time of adoption. Early adoption is also permitted for this guidance. In June 2016, the FASB issued guidance that changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current incurred loss model with an expected loss approach, resulting in a more timely recognition of such losses. The guidance will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures (e.g. loan commitments). Under the new guidance, an entity will recognize its estimate of expected credit losses as an allowance, as the guidance requires that financial assets be measured on an amortized cost basis and to be presented at the net amount expected to be collected. The guidance is effective for us beginning January 1, 2020, with early adoption permitted after December 2018. We are currently assessing the financial impact of this guidance on our consolidated financial statements. In August 2016, the FASB issued guidance that clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows with the objective of reducing the existing diversity in practice related to eight specific cash flow issues. The areas addressed in the new guidance relate to debt prepayment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned and bank-owned life insurance policies, distributions received from equity method investments, beneficial interest in securitization transactions and separately identifiable cash flows and application of the predominance principle. The guidance is effective for us beginning January 1, 2018, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In November 2016, the FASB issued guidance that requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents and amounts described as restricted cash or restricted cash equivalents. Under the new guidance, amounts described as restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. The guidance is effective for us beginning January 1, 2018, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Recurring Fair Value Measurements COPT has a non-qualified elective deferred compensation plan for Trustees and certain members of our management team that permits participants to defer up to 100% of their compensation on a pre-tax basis and receive a tax-deferred return on such deferrals. The assets held in the plan (comprised primarily of mutual funds and equity securities) and the corresponding liability to the participants are measured at fair value on a recurring basis on COPT’s consolidated balance sheet using quoted market prices, as are other marketable securities that we hold. The balance of the plan, which was fully funded, totaled $4.2 million as of March 31, 2017, and is included in the accompanying COPT consolidated balance sheets in the line entitled restricted cash and marketable securities. The offsetting liability associated with the plan is adjusted to fair value at the end of each accounting period based on the fair value of the plan assets and reported in other liabilities on COPT’s consolidated balance sheets. The assets of the plan and other marketable securities that we hold are classified in Level 1 of the fair value hierarchy. The liability associated with the plan is classified in Level 2 of the fair value hierarchy. The fair values of our interest rate derivatives are determined using widely accepted valuation techniques, including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While we determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our interest rate derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of March 31, 2017, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivatives and determined that these adjustments are not significant. As a result, we determined that our interest rate derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The carrying values of cash and cash equivalents, restricted cash, accounts receivable, other assets (excluding investing receivables) and accounts payable and accrued expenses are reasonable estimates of their fair values because of the short maturities of these instruments. As discussed in Note 6, we estimated the fair values of our investing receivables based on the discounted estimated future cash flows of the loans (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans with similar maturities and credit quality, and the estimated cash payments include scheduled principal and interest payments. For our disclosure of debt fair values in Note 8, we estimated the fair value of our unsecured senior notes based on quoted market rates for publicly-traded debt (categorized within Level 2 of the fair value hierarchy) and estimated the fair value of our other debt based on the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans, or groups of loans, with similar maturities and credit quality, and the estimated future payments include scheduled principal and interest payments. Fair value estimates are made as of a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment. Settlement at such fair value amounts may not be possible and may not be a prudent management decision. For additional fair value information, please refer to Note 6 for investing receivables, Note 8 for debt and Note 9 for interest rate derivatives. COPT and Subsidiaries The table below sets forth financial assets and liabilities of COPT and its subsidiaries that are accounted for at fair value on a recurring basis as of March 31, 2017 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):
(1) Included in the line entitled “restricted cash and marketable securities” on COPT’s consolidated balance sheet. (2) Included in the line entitled “prepaid expenses and other assets” on COPT’s consolidated balance sheet. (3) Included in the line entitled “other liabilities” on COPT’s consolidated balance sheet. COPLP and Subsidiaries The table below sets forth financial assets and liabilities of COPLP and its subsidiaries that are accounted for at fair value on a recurring basis as of March 31, 2017 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):
(1) Included in the line entitled “prepaid expenses and other assets” on COPLP’s consolidated balance sheet. (2) Included in the line entitled “other liabilities” on COPLP’s consolidated balance sheet. Nonrecurring Fair Value Measurements As part of our closing process for the first quarter of 2017, we conducted our quarterly review of our portfolio for indicators of impairment and found there to be no impairment losses for the quarter. Changes in the expected future cash flows due to changes in our plans for specific properties (especially our expected holding period) could result in the recognition of impairment losses. In addition, because properties held for sale are carried at the lower of carrying value or estimated fair values less costs to sell, declines in their estimated fair values due to market conditions and other factors could result in the recognition of impairment losses. The table below sets forth the fair value hierarchy of the valuation technique we used to determine nonrecurring fair value measurements of properties held for sale as of March 31, 2017 (dollars in thousands):
The table below sets forth quantitative information about significant unobservable inputs used for the Level 3 fair value measurements reported above as of March 31, 2017 (dollars in thousands):
(1) Only one fair value applied for this unobservable input. |
Properties, Net |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Properties, Net | Properties, Net Operating properties, net consisted of the following (in thousands):
Projects in development or held for future development consisted of the following (in thousands):
Our properties held for sale included:
The table below sets forth the components of assets held for sale on our consolidated balance sheet for these properties (in thousands):
2017 Dispositions On February 15, 2017, we completed the disposition of 3120 Fairview Park Drive, an operating property totaling 190,000 square feet in Falls Church, Virginia (in our Northern Virginia Defense/IT sub-segment), for $39.0 million, with no gain recognized. We also sold land in the three months ended March 31, 2017 for $14.3 million and recognized a gain on sale of $4.2 million. 2017 Construction Activities During the three months ended March 31, 2017, we placed into service 86,000 square feet in three redeveloped properties (including a partially operational property). As of March 31, 2017, we had eight office properties under construction, or for which we were contractually committed to construct, that we estimate will total 1.3 million square feet upon completion (including two properties completed but held for future lease to the United States Government) and one office property under redevelopment that we estimate will total 14,000 square feet upon completion. |
Real Estate Joint Ventures |
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Real Estate Joint Ventures | Real Estate Joint Ventures Consolidated Joint Ventures The table below sets forth information pertaining to our investments in consolidated real estate joint ventures as of March 31, 2017 (dollars in thousands):
(1) Excludes amounts eliminated in consolidation. (2) This joint venture’s properties are in Huntsville, Alabama. (3) This joint venture’s properties are in College Park, Maryland. (4) This joint venture’s property is in Washington, DC. Our partner in this joint venture is entitled to receive an additional distribution from the joint venture of $6.7 million to be funded by us (expected by 2018) that was reported in other liabilities on our consolidated balance sheet as of March 31, 2017. Unconsolidated Joint Venture As of March 31, 2017, we owned a 50% interest in GI-COPT DC Partnership LLC (“GI-COPT”), a joint venture owning six triple-net leased, single-tenant data center properties in Virginia, that we account for using the equity method of accounting. As of March 31, 2017, we had an investment balance in GI-COPT of $25.4 million. Our balance was $17.8 million lower than our share of the joint venture’s equity due to a difference between our cost basis and our share of the underlying equity in the net assets upon formation of the joint venture; we are amortizing this basis difference into equity in income from unconsolidated entities over the lives of the underlying assets. |
Investing Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Investing Receivables | Investing Receivables Investing receivables, including accrued interest thereon, consisted of the following (in thousands):
Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture (see Note 5) and carry an interest rate of 9.95%. We did not have an allowance for credit losses in connection with our investing receivables as of March 31, 2017 or December 31, 2016. The fair value of these receivables approximated their carrying amounts as of March 31, 2017 and December 31, 2016. |
Prepaid Expenses and Other Assets, Net |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expense and Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Assets, Net | Prepaid Expenses and Other Assets, Net Prepaid expenses and other assets, net consisted of the following (in thousands):
(1) Includes a valuation allowance of $2.1 million. (2) Represents deferred costs, net of accumulated amortization, attributable to our Revolving Credit Facility and interest rate derivatives. |
Debt, Net |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt, Net | Debt, Net Our debt consisted of the following (dollars in thousands):
(10) The carrying value of these notes reflects an unamortized discount totaling $2.9 million as of March 31, 2017 and $3.0 million as of December 31, 2016. The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.
All debt is owed by the Operating Partnership. While COPT is not directly obligated by any debt, it has guaranteed the Operating Partnership’s Revolving Credit Facility, Term Loan Facilities and Unsecured Senior Notes. Certain of our debt instruments require that we comply with a number of restrictive financial covenants. As of March 31, 2017, we were within the compliance requirements of these financial covenants. We capitalized interest costs of $1.5 million in the three months ended March 31, 2017 and $1.8 million in the three months ended March 31, 2016. The following table sets forth information pertaining to the fair value of our debt (in thousands):
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Interest Rate Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Rate Derivatives | Interest Rate Derivatives The following table sets forth the key terms and fair values of our interest rate swap derivatives (dollars in thousands):
(1) The notional amount of this instrument is scheduled to amortize to $12.1 million. Each of the interest rate swaps set forth in the table above was designated as a cash flow hedge of interest rate risk. The table below sets forth the fair value of our interest rate derivatives as well as their classification on our consolidated balance sheets (in thousands):
The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands):
Over the next 12 months, we estimate that approximately $2.6 million of losses will be reclassified from AOCL as an increase to interest expense. We have agreements with each of our interest rate derivative counterparties that contain provisions under which, if we default or are capable of being declared in default on defined levels of our indebtedness, we could also be declared in default on our derivative obligations. Failure to comply with the loan covenant provisions could result in our being declared in default on any derivative instrument obligations covered by the agreements. As of March 31, 2017, the fair value of interest rate derivatives in a liability position related to these agreements was $735,000, excluding the effects of accrued interest and credit valuation adjustments. As of March 31, 2017, we had not posted any collateral related to these agreements. We are not in default with any of these provisions. If we breached any of these provisions, we could be required to settle our obligations under the agreements at their termination value of $892,000. |
Redeemable Noncontrolling Interests |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interests | Redeemable Noncontrolling Interests Our partners in two real estate joint ventures, LW Redstone Company, LLC and Stevens Investors, LLC (discussed further in Note 5), have the right to require us to acquire their respective interests at fair value; accordingly, we classify the fair value of our partners’ interests as redeemable noncontrolling interests in the mezzanine section of our consolidated balance sheet. We determine the fair value of the interests based on unobservable inputs after considering the assumptions that market participants would make in pricing the interest. We apply a discount rate to the estimated future cash flows allocable to our partners from the properties underlying the respective joint ventures. Estimated cash flows used in such analyses are based on our plans for the properties and our views of market and economic conditions, and consider items such as current and future rental rates, occupancies for the properties and comparable properties and estimated operating and capital expenditures. The table below sets forth the activity for these redeemable noncontrolling interests (in thousands):
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Equity |
3 Months Ended |
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Mar. 31, 2017 | |
Equity [Abstract] | |
Equity | Equity COPT redeemed all of the outstanding shares of its Series K Cumulative Redeemable Preferred Shares (the “Series K Preferred Shares”) effective January 21, 2017 at a price of $50.00 per share, or $26.6 million in the aggregate, plus accrued and unpaid dividends thereon through the date of redemption. Concurrently with this redemption, COPLP redeemed its Series K Preferred Units on the same terms. Since we made an irrevocable notification to holders of the Series K Preferred Shares in December 2016 of our intention to redeem such shares, we presented the liquidation preference of the shares/units as a liability on the consolidated balance sheets of COPT and COPLP as of December 31, 2016; we also recognized a $17,000 decrease to net income available to common shareholders/unitholders in the three months ended December 31, 2016 pertaining to the original issuance costs incurred on the shares/units. During the three months ended March 31, 2017, COPT issued 546,782 common shares at a weighted average price of $33.89 per share under its existing at-the-market (“ATM”) stock offering program. Net proceeds from the shares issued totaled $18.3 million, after payment of $278,000 in commissions to sales agents. COPT contributed the net proceeds from these issuances to COPLP in exchange for an equal number of units in COPLP. COPT’s remaining capacity under this ATM program is an aggregate gross sales price of $71.5 million in common share sales. During the three months ended March 31, 2017, certain COPLP limited partners converted 185,000 common units in COPLP for an equal number of common shares in COPT. See Note 13 for disclosure of COPT common share and COPLP common unit activity pertaining to our share-based compensation plans. |
Information by Business Segment |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information by Business Segment | Information by Business Segment We have the following reportable segments: Defense/IT Locations; Regional Office; our operating wholesale data center; and other. We also report on Defense/IT Locations sub-segments, which include the following: Fort George G. Meade and the Baltimore/Washington Corridor (referred to herein as “Fort Meade/BW Corridor”); Northern Virginia Defense/IT Locations; Lackland Air Force Base (in San Antonio); locations serving the U.S. Navy (“Navy Support Locations”), which included properties proximate to the Washington Navy Yard, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; Redstone Arsenal (in Huntsville); and data center shells (properties leased to tenants to be operated as data centers in which the tenants generally fund the costs for the power, fiber connectivity and data center infrastructure). We measure the performance of our segments through the measure we define as net operating income from real estate operations (“NOI from real estate operations”), which includes: real estate revenues and property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate joint ventures (“UJVs”) that is allocable to COPT’s ownership interest (“UJV NOI allocable to COPT”). Amounts reported for segment assets represent long-lived assets associated with consolidated operating properties (including the carrying value of properties, intangible assets, deferred leasing costs, deferred rents receivable and lease incentives) and the carrying value of investments in UJVs owning operating properties. Amounts reported as additions to long-lived assets represent additions to existing consolidated operating properties, excluding transfers from non-operating properties, which we report separately. The table below reports segment financial information for our reportable segments (in thousands):
The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):
The following table reconciles UJV NOI allocable to COPT to equity in income of unconsolidated entities as reported on our consolidated statements of operations (in thousands):
As previously discussed, we provide real estate services such as property management and construction and development services primarily for our properties but also for third parties. The primary manner in which we evaluate the operating performance of our service activities is through a measure we define as net operating income from service operations (“NOI from service operations”), which is based on the net of revenues and expenses from these activities. Construction contract and other service revenues and expenses consist primarily of subcontracted costs that are reimbursed to us by the customer along with a management fee. The operating margins from these activities are small relative to the revenue. We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations. The table below sets forth the computation of our NOI from service operations (in thousands):
The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to income from before gain on sales of real estate as reported on our consolidated statements of operations (in thousands):
The following table reconciles our segment assets to the consolidated total assets of COPT and subsidiaries (in thousands):
The accounting policies of the segments are the same as those used to prepare our consolidated financial statements, except that discontinued operations and UJV NOI allocable to COPT are not presented separately for segment purposes. In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization, impairment losses, gain on early extinguishment of debt, gain on sales of real estate and equity in (loss) income of unconsolidated entities not included in NOI to our real estate segments since they are not included in the measure of segment profit reviewed by management. We also did not allocate general, administrative and leasing expenses, business development expenses and land carry costs, interest and other income, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments. |
Share-Based Compensation and Other Compensation Matters |
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||
Share-Based Compensation and Other Compensation Matters | Share-Based Compensation and Other Compensation Matters Performance Share Units (“PSUs”) On January 1, 2017, our Board of Trustees granted 36,525 PSUs with an aggregate grant date fair value of $1.4 million to executives. The PSUs have a performance period beginning on January 1, 2017 and concluding on the earlier of December 31, 2019 or the date of: (1) termination by us without cause, death or disability of the executive or constructive discharge of the executive (collectively, “qualified termination”); or (2) a sale event. The number of PSUs earned (“earned PSUs”) at the end of the performance period will be determined based on the percentile rank of COPT’s total shareholder return relative to a peer group of companies, as set forth in the following schedule:
If the percentile rank exceeds the 25th percentile and is between two of the percentile ranks set forth in the table above, then the percentage of the earned PSUs will be interpolated between the ranges set forth in the table above to reflect any performance between the listed percentiles. At the end of the performance period, we, in settlement of the award, will issue a number of fully-vested COPT common shares equal to the sum of:
If a performance period ends due to a sale event or qualified termination, the number of earned PSUs is prorated based on the portion of the three-year performance period that has elapsed. If employment is terminated by the employee or by us for cause, all PSUs are forfeited. PSUs do not carry voting rights. We computed a grant date fair value of $38.43 per PSU using a Monte Carlo model, which included assumptions of, among other things, the following: baseline common share value of $31.22; expected volatility for COPT common shares of 19.0%; and a risk-free interest rate of 1.47%. We are recognizing the grant date fair value in connection with these PSU awards over the period commencing on January 1, 2017 and ending on December 31, 2019. We issued 9,763 common shares on February 7, 2017 to Mr. Stephen E. Budorick, our Chief Executive Officer, in settlement of PSUs issued in 2014, representing 100% of the target award for those PSUs. Restricted Shares During the three months ended March 31, 2017, certain employees were granted a total of 208,953 restricted common shares with an aggregate grant date fair value of $7.1 million (weighted average of $34.02 per share). Restricted shares granted to employees vest based on increments and over periods of time set forth under the terms of the respective awards provided that the employees remain employed by us. During the three months ended March 31, 2017, forfeiture restrictions lapsed on 139,201 previously issued common shares; these shares had a weighted average grant date fair value of $26.21 per share, and the aggregate intrinsic value of the shares on the vesting dates was $4.7 million. |
Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share (“EPS”) and Earnings Per Unit (“EPU”) | Earnings Per Share (“EPS”) and Earnings Per Unit (“EPU”) COPT and Subsidiaries EPS We present both basic and diluted EPS. We compute basic EPS by dividing net income available to common shareholders allocable to unrestricted common shares under the two-class method by the weighted average number of unrestricted common shares outstanding during the period. Our computation of diluted EPS is similar except that:
Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):
Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):
The following share-based compensation securities were excluded from the computation of diluted EPS because their effects were antidilutive:
COPLP and Subsidiaries EPU We present both basic and diluted EPU. We compute basic EPU by dividing net income available to common unitholders allocable to unrestricted common units under the two-class method by the weighted average number of unrestricted common units outstanding during the period. Our computation of diluted EPU is similar except that:
Summaries of the numerator and denominator for purposes of basic and diluted EPU calculations are set forth below (in thousands, except per unit data):
Our diluted EPU computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPU for the respective periods (in thousands):
The following share-based compensation securities were excluded from the computation of diluted EPU because their effects were antidilutive:
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Litigation In the normal course of business, we are involved in legal actions arising from our ownership and administration of properties. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management does not anticipate that any liabilities that may result from such proceedings will have a materially adverse effect on our financial position, operations or liquidity. Our assessment of the potential outcomes of these matters involves significant judgment and is subject to change based on future developments. Environmental We are subject to various Federal, state and local environmental regulations related to our property ownership and operation. We have performed environmental assessments of our properties, the results of which have not revealed any environmental liability that we believe would have a materially adverse effect on our financial position, operations or liquidity. Tax Incremental Financing Obligation In August 2010, Anne Arundel County, Maryland issued $30 million in tax incremental financing bonds to third-party investors in order to finance public improvements needed in connection with our project known as National Business Park North. The real estate taxes on increases in assessed value of a development district encompassing National Business Park North are to be transferred to a special fund pledged to the repayment of the bonds. We recognized a $1.5 million liability through March 31, 2017 representing our estimated obligation to fund through a special tax any future shortfalls between debt service on the bonds and real estate taxes available to repay the bonds. Operating Leases We are obligated as lessee under operating leases (mostly ground leases) with various expiration dates extending to the year 2100. Future minimum rental payments due under the terms of these operating leases as of March 31, 2017 follow (in thousands):
(1) Represents the nine months ending December 31, 2017. Contractual Obligations We had amounts remaining to be incurred under various contractual obligations as of March 31, 2017 that included the following:
Environmental Indemnity Agreement In connection with a lease and subsequent sale in 2008 and 2010 of three properties in Dayton, New Jersey, we agreed to provide certain environmental indemnifications limited to $19 million in the aggregate. We have insurance coverage in place to mitigate much of any potential future losses that may result from these indemnification agreements. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The COPT consolidated financial statements include the accounts of COPT, the Operating Partnership, their subsidiaries and other entities in which COPT has a majority voting interest and control. The COPLP consolidated financial statements include the accounts of COPLP, its subsidiaries and other entities in which COPLP has a majority voting interest and control. We also consolidate certain entities when control of such entities can be achieved through means other than voting rights (“variable interest entities” or “VIEs”) if we are deemed to be the primary beneficiary of such entities. We eliminate all intercompany balances and transactions in consolidation. We use the equity method of accounting when we own an interest in an entity and can exert significant influence over but cannot control the entity’s operations. We discontinue equity method accounting if our investment in an entity (and net advances) is reduced to zero unless we have guaranteed obligations of the entity or are otherwise committed to provide further financial support for the entity. We use the cost method of accounting when we own an interest in an entity and cannot exert significant influence over its operations. These interim financial statements should be read together with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2016 included in our 2016 Annual Report on Form 10-K. The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly state our financial position and results of operations. All adjustments are of a normal recurring nature. The consolidated financial statements have been prepared using the accounting policies described in our 2016 Annual Report on Form 10-K. |
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Reclassification, Policy [Policy Text Block] | Reclassification We reclassified certain amounts from prior periods to conform to the current period presentation of our consolidated financial statements with no effect on previously reported net income or equity. |
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Recent Accounting Pronouncement | Recent Accounting Pronouncements We adopted guidance issued by the Financial Accounting Standards Board (“FASB”) effective January 1, 2017 intended to simplify various aspects related to the accounting and presentation for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the consolidated statement of cash flows. In connection with our adoption of this policy, we made an entity-wide accounting policy election to continue to account for potential future award forfeitures by estimating the number of awards that are expected to vest. Our adoption of this guidance did not have a material impact on our consolidated financial statements. We adopted guidance issued by the FASB prospectively effective January 1, 2017 that clarifies the definition of a business used by entities in determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. Under the new guidance it is expected that the majority of our future operating property acquisitions will be accounted for as asset acquisitions, whereas under the previous guidance our recent acquisitions were accounted for as business combinations; we believe that the primary effect of this change will be that transaction costs associated with future acquisitions will be capitalized rather than expensed as incurred. This guidance had no effect on our consolidated financial statements upon adoption. In May 2014, the FASB issued guidance regarding the recognition of revenue from contracts with customers. Under this guidance, an entity will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Also in connection with this guidance, in February 2017, the FASB issued additional guidance that clarifies the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets. While we are still completing our assessment of the impact of the guidance, below is a summary of the anticipated primary effects on our accounting and reporting.
We are required to adopt this guidance for our annual and interim periods beginning January 1, 2018 using one of two methods: retrospective restatement for each reporting period presented at the time of adoption, or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. We have not decided which method of adoption we will use. In February 2016, the FASB issued guidance that sets forth principles for the recognition, measurement, presentation and disclosure of leases. This guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. The resulting classification determines whether the lease expense is recognized based on an effective interest method or straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The guidance requires lessors of real estate to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. While we are still completing our assessment of the impact of this guidance, below is a summary of the anticipated primary effects of this guidance on our accounting and reporting.
This guidance is effective for reporting periods beginning January 1, 2019, with modified retrospective restatement for each reporting period presented at the time of adoption. Early adoption is also permitted for this guidance. In June 2016, the FASB issued guidance that changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current incurred loss model with an expected loss approach, resulting in a more timely recognition of such losses. The guidance will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures (e.g. loan commitments). Under the new guidance, an entity will recognize its estimate of expected credit losses as an allowance, as the guidance requires that financial assets be measured on an amortized cost basis and to be presented at the net amount expected to be collected. The guidance is effective for us beginning January 1, 2020, with early adoption permitted after December 2018. We are currently assessing the financial impact of this guidance on our consolidated financial statements. In August 2016, the FASB issued guidance that clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows with the objective of reducing the existing diversity in practice related to eight specific cash flow issues. The areas addressed in the new guidance relate to debt prepayment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned and bank-owned life insurance policies, distributions received from equity method investments, beneficial interest in securitization transactions and separately identifiable cash flows and application of the predominance principle. The guidance is effective for us beginning January 1, 2018, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In November 2016, the FASB issued guidance that requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents and amounts described as restricted cash or restricted cash equivalents. Under the new guidance, amounts described as restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. The guidance is effective for us beginning January 1, 2018, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value assets and liabilities measured on recurring basis | The table below sets forth financial assets and liabilities of COPLP and its subsidiaries that are accounted for at fair value on a recurring basis as of March 31, 2017 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):
(1) Included in the line entitled “prepaid expenses and other assets” on COPLP’s consolidated balance sheet. (2) Included in the line entitled “other liabilities” on COPLP’s consolidated balance sheet. The table below sets forth financial assets and liabilities of COPT and its subsidiaries that are accounted for at fair value on a recurring basis as of March 31, 2017 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):
(1) Included in the line entitled “restricted cash and marketable securities” on COPT’s consolidated balance sheet. (2) Included in the line entitled “prepaid expenses and other assets” on COPT’s consolidated balance sheet. (3) Included in the line entitled “other liabilities” on COPT’s consolidated balance sheet. |
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Schedule of fair value hierarchy of impaired properties and other assets associated with such properties | The table below sets forth the fair value hierarchy of the valuation technique we used to determine nonrecurring fair value measurements of properties held for sale as of March 31, 2017 (dollars in thousands):
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Schedule of quantitative information about significant unobservable inputs used for Level 3 fair value measurements | The table below sets forth quantitative information about significant unobservable inputs used for the Level 3 fair value measurements reported above as of March 31, 2017 (dollars in thousands):
(1) Only one fair value applied for this unobservable input. |
Properties, Net (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of operating properties, net | Operating properties, net consisted of the following (in thousands):
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Schedule of projects in development or held for future development | Projects in development or held for future development consisted of the following (in thousands):
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Components of assets held for sale | The table below sets forth the components of assets held for sale on our consolidated balance sheet for these properties (in thousands):
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Real Estate Joint Ventures (Tables) |
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Schedule of information related to investments in consolidated real estate joint ventures | The table below sets forth information pertaining to our investments in consolidated real estate joint ventures as of March 31, 2017 (dollars in thousands):
(1) Excludes amounts eliminated in consolidation. (2) This joint venture’s properties are in Huntsville, Alabama. (3) This joint venture’s properties are in College Park, Maryland. (4) This joint venture’s property is in Washington, DC. Our partner in this joint venture is entitled to receive an additional distribution from the joint venture of $6.7 million to be funded by us (expected by 2018) that was reported in other liabilities on our consolidated balance sheet as of March 31, 2017. |
Investing Receivables (Tables) |
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Schedule of investing receivables | Investing receivables, including accrued interest thereon, consisted of the following (in thousands):
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Schedule of prepaid expenses and other assets | Prepaid expenses and other assets, net consisted of the following (in thousands):
(1) Includes a valuation allowance of $2.1 million. (2) Represents deferred costs, net of accumulated amortization, attributable to our Revolving Credit Facility and interest rate derivatives. |
Debt, Net (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | Our debt consisted of the following (dollars in thousands):
(10) The carrying value of these notes reflects an unamortized discount totaling $2.9 million as of March 31, 2017 and $3.0 million as of December 31, 2016. The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.
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Schedule of the fair value of debt | The following table sets forth information pertaining to the fair value of our debt (in thousands):
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Interest Rate Derivatives (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of key terms and fair values of interest rate swap derivatives | The following table sets forth the key terms and fair values of our interest rate swap derivatives (dollars in thousands):
(1) The notional amount of this instrument is scheduled to amortize to $12.1 million. |
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Schedule of fair value and balance sheet classification of interest rate derivatives | The table below sets forth the fair value of our interest rate derivatives as well as their classification on our consolidated balance sheets (in thousands):
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Schedule of effect of interest rate derivatives on consolidated statements of operations and comprehensive income | The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands):
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Redeemable Noncontrolling Interests (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of activity for redeemable noncontrolling interest | The table below sets forth the activity for these redeemable noncontrolling interests (in thousands):
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Information by Business Segment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment financial information for real estate operations | The table below reports segment financial information for our reportable segments (in thousands):
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Schedule of reconciliation of segment revenues to total revenues | The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):
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Schedule of reconciliation of unconsolidated joint venture net operating income to equity in income of unconsolidated entities | The following table reconciles UJV NOI allocable to COPT to equity in income of unconsolidated entities as reported on our consolidated statements of operations (in thousands):
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Schedule of computation of net operating income from service operations | The table below sets forth the computation of our NOI from service operations (in thousands):
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Schedule of reconciliation of net operating income from real estate operations and service operations to (loss) income from continuing operations | The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to income from before gain on sales of real estate as reported on our consolidated statements of operations (in thousands):
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Schedule of reconciliation of segment assets to total assets | The following table reconciles our segment assets to the consolidated total assets of COPT and subsidiaries (in thousands):
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Share-Based Compensation and Other Compensation Matters (Tables) |
3 Months Ended | |||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||
Schedule of payouts for defined performance under performance-based awards of share-based compensation | The number of PSUs earned (“earned PSUs”) at the end of the performance period will be determined based on the percentile rank of COPT’s total shareholder return relative to a peer group of companies, as set forth in the following schedule:
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Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of calculation of numerator and denominator in basic and diluted earnings per share | Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):
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Schedule of securities excluded from computation of diluted earnings per share | Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):
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Corporate Office Properties, L.P. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of calculation of numerator and denominator in basic and diluted earnings per share | Summaries of the numerator and denominator for purposes of basic and diluted EPU calculations are set forth below (in thousands, except per unit data):
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Schedule of securities excluded from computation of diluted earnings per share | Our diluted EPU computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPU for the respective periods (in thousands):
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Future minimum rental payments for operating leases | Future minimum rental payments due under the terms of these operating leases as of March 31, 2017 follow (in thousands):
(1) Represents the nine months ending December 31, 2017. |
Organization (Details 2) - Corporate Office Properties, L.P. |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Common Units | |
Forms of ownership in Operating Partnership and ownership percentage by the entity | |
Percentage ownership in operating partnership | 96.70% |
Preferred Units | |
Forms of ownership in Operating Partnership and ownership percentage by the entity | |
Percentage ownership in operating partnership | 95.10% |
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Mar. 31, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Minimum rental payments due | $ 91,827 | |
Ground Leases | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Minimum rental payments due | $ 90,700 | |
Accounting Standards Update 2014-09 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effect of change on net income | $ 18,000 |
Fair Value Measurements (Details) - Deferred compensation plan - Management $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Assets and liabilities measured at fair value on a recurring basis | |
Maximum percentage of participants' compensation which is deferrable (as a percent) | 100.00% |
Balance of the plan which was fully funded | $ 4.2 |
Fair Value Measurements (Details 3) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Assets and liabilities measured at fair value on a non-recurring basis | |||
Assets held for sale, net | $ 41,391 | $ 94,654 | |
Impairment losses | 0 | $ 2,446 | |
Assets held for sale, net | |||
Assets and liabilities measured at fair value on a non-recurring basis | |||
Assets held for sale, net | $ 41,391 | $ 94,654 |
Properties, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Investments in real estate | ||
Operating properties, net | $ 2,670,157 | $ 2,671,831 |
Operating Properties | ||
Investments in real estate | ||
Less: accumulated depreciation | (732,371) | (706,385) |
Operating properties, net | 2,670,157 | 2,671,831 |
Operating Properties | Land | ||
Investments in real estate | ||
Gross | 430,364 | 433,311 |
Operating Properties | Buildings and improvements | ||
Investments in real estate | ||
Gross | $ 2,972,164 | $ 2,944,905 |
Properties, Net (Details 2) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Properties | ||
Projects in development or held for future development | $ 422,857 | $ 401,531 |
Projects in development or held for future development | Land in development or held for future development | ||
Properties | ||
Projects in development or held for future development | 195,727 | 195,521 |
Projects in development or held for future development | Construction in progress, excluding land | ||
Properties | ||
Projects in development or held for future development | $ 227,130 | $ 206,010 |
Investing Receivables (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Investing receivables | $ 53,570 | $ 52,279 |
Notes Receivable from City of Huntsville | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Investing receivables | $ 50,570 | 49,258 |
Notes Receivable from City of Huntsville | LW Redstone Company, LLC | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Stated interest rate (as a percent) | 9.95% | |
Other investing loans receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Investing receivables | $ 3,000 | $ 3,021 |
Prepaid Expenses and Other Assets, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Prepaid Expense and Other Assets [Abstract] | ||
Lease incentives, net | $ 17,516 | $ 18,276 |
Prepaid expenses | 17,332 | 24,432 |
Furniture, fixtures and equipment, net | 4,989 | 5,204 |
Construction contract costs incurred in excess of billings | 4,451 | 10,350 |
Deferred tax asset, net | 2,980 | 3,036 |
Deferred financing costs, net | 2,444 | 3,128 |
Non-real estate equity method investments | 2,353 | 2,355 |
Other assets | 7,658 | 5,983 |
Prepaid expenses and other assets, net | 59,723 | 72,764 |
Taxable REIT Subsidiary | ||
Mortgage and Other Investing Receivables [Line Items] | ||
Deferred tax assets, valuation allowance | $ 2,100 | $ 2,100 |
Redeemable Noncontrolling Interests (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
joint_venture
|
Mar. 31, 2016
USD ($)
|
|
Noncontrolling Interest [Abstract] | ||
Number of joint ventures with redeemable noncontrolling interests | joint_venture | 2 | |
Redeemable Noncontrolling Interest [Roll Forward] | ||
Beginning balance | $ 22,979 | $ 19,218 |
Contributions from noncontrolling interests | 0 | 22,779 |
Distributions to noncontrolling interests | (415) | (20,526) |
Net income attributable to noncontrolling interests | 567 | 560 |
Adjustment to arrive at fair value of interests | 545 | 302 |
Ending balance | $ 23,676 | $ 22,333 |
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jan. 21, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Class of Stock [Line Items] | |||
Conversion of common units to common shares (in units/ shares) | 185,000 | ||
Common Stock Issued to Public Under At-the-Market Program | |||
Class of Stock [Line Items] | |||
Shares issued to the public | 546,782 | ||
Issuance of stock, weighted average price per share (in dollars per share) | $ 33.89 | ||
Net proceeds from shares issued | $ 18,300 | ||
Payments of stock issuance costs | 278 | ||
At-market stock, offering program established, remaining capacity | $ 71,500 | ||
Redeemable Convertible Preferred Stock | |||
Class of Stock [Line Items] | |||
Preferred stock, redemption price per share (in dollars per share) | $ 50.00 | ||
Stock redeemed or called during period value | $ 26,600 | ||
Issuance costs associated with redeemed preferred shares | $ 17 |
Information by Business Segment (Details 2) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Reconciliation of segment revenues to total revenues | ||
Segment revenues from real estate operations | $ 126,767 | $ 133,087 |
Construction contract and other service revenues | 13,034 | 11,220 |
Total revenues | 139,801 | 144,307 |
Reconciliation of UJV NOI allocable to COPT to Equity Income in Unconsolidated Entities | ||
UJV NOI allocable to COPT | 1,298 | 0 |
Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense | (572) | 0 |
Add: Equity in (loss) income of unconsolidated non-real estate entities | (1) | 10 |
Equity in income of unconsolidated entities | 725 | 10 |
Computation of net operating income from service operations | ||
Construction contract and other service revenues | 13,034 | 11,220 |
Construction contract and other service expenses | (12,486) | (10,694) |
NOI from service operations | $ 548 | $ 526 |
Information by Business Segment (Details 3) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Reconciliation of NOI from real estate operations and NOI from service operations to (loss) income from continuing operations | ||
NOI from real estate operations | $ 79,546 | $ 81,212 |
NOI from service operations | 548 | 526 |
Interest and other income | 1,726 | 1,156 |
Equity in income of unconsolidated entities | 725 | 10 |
Income tax (expense) benefit | (40) | 8 |
Depreciation and other amortization associated with real estate operations | (33,059) | (34,527) |
Impairment losses | 0 | (2,446) |
General, administrative and leasing expenses | (8,611) | (11,883) |
Business development expenses and land carry costs | (1,693) | (2,418) |
Interest expense | (18,994) | (23,559) |
Less: UJV NOI allocable to COPT included in equity in income of unconsolidated entities | (1,298) | 0 |
Gain on early extinguishment of debt | 0 | 17 |
Income before gain on sales of real estate | $ 18,850 | $ 8,096 |
Information by Business Segment (Details 4) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|---|
Reconciliation of segment assets to total assets | |||
Assets | $ 3,739,366 | $ 3,780,885 | $ 3,937,908 |
Segment assets | |||
Reconciliation of segment assets to total assets | |||
Assets | 2,952,352 | 3,305,392 | |
Non-operating property assets | |||
Reconciliation of segment assets to total assets | |||
Assets | 429,690 | 444,334 | |
Other assets | |||
Reconciliation of segment assets to total assets | |||
Assets | $ 357,324 | $ 188,182 |
Commitments and Contingencies - Future Minimum Payments (Details) $ in Thousands |
Mar. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2017 | $ 985 |
2018 | 1,290 |
2019 | 1,269 |
2020 | 1,261 |
2021 | 1,260 |
Thereafter | 85,762 |
Total | $ 91,827 |
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