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COPT Updates Guidance For Loss On Early Debt Retirement, Planned Redemption Of Preferred Shares

Corporate Office Properties Trust (COPT or the Company) (NYSE: OFC) announced today that during the quarter ending March 31, 2013, the Company has repaid $53.7 million principal amount of indebtedness for an aggregate repayment of $56.4 million. As a result of these repayments, the Company will recognize a loss of $5.3 million, which includes unamortized loan issuance costs and which will be reflected in the Company’s operating results for the three months ending March 31, 2013, and the year ending December 31, 2013. The Company also announced that it plans to redeem its outstanding 7.625% Series J Cumulative Redeemable Preferred Shares (NYSE: OFCPrJ) during the quarter ending June 30, 2013, and in connection therewith will reduce net earnings available to common shareholders by $2.9 million for the original issuance costs of the redeemed preferred shares in the three months ending June 30, 2013, and the year ending December 31, 2013.

2013 FFO Guidance

Management is updating its previously issued guidance for 2013 diluted funds from operations per share (FFOPS) and diluted earnings per share (EPS) to reflect the $0.06 per share loss on the early retirement of indebtedness and the $0.03 per share loss on the original issuance costs of the redeemed preferred shares. Management is establishing guidance for FFOPS, as adjusted for comparability, for the full year 2013 of $1.83 to $1.93, which is equal to its previous guidance for 2013 FFOPS. Incorporating the losses on early debt retirement and original issuance costs, the Company now expects full year 2013 FFOPS of between $1.74 and $1.84, and first quarter 2013 FFOPS of between $0.38 and $0.40. A reconciliation of projected FFOPS, as adjusted for comparability, to projected FFOPS and projected EPS for the quarter ending March 31, 2013 and the year ending December 31, 2013, is provided as follows:
   
Quarter Ending Year Ending
March 31, 2013 December 31, 2013
 
FFO, as adjusted for comparability $ 0.44 $ 0.46 $ 1.83 $ 1.93
Losses on the early extinguishment of debt (0.06 ) (0.06 ) (0.06 ) (0.06 )
Original issuance costs of redeemed preferred shares   -     -     (0.03 )   (0.03 )
 
FFOPS, NAREIT definition 0.38 0.40 1.74 1.84
 
Real estate depreciation and amortization (0.35 ) (0.37 ) (1.41 ) (1.48 )
Minority interest in non-FFO items and other 0.01 0.02 0.04 0.08
       
 
EPS $ 0.04   $ 0.05   $ 0.37   $ 0.44  
 

Company Information

COPT is an office REIT that focuses primarily on serving the specialized requirements of U.S. Government agencies and defense contractors, most of whom are engaged in defense information technology and national security-related activities. The Company generally acquires, develops, manages and leases office and data center properties concentrated in large office parks primarily located near knowledge-based government demand drivers and/or in targeted markets or submarkets in the Greater Washington, DC/Baltimore region. As of December 31, 2012, the Company’s consolidated portfolio consisted of 208 office properties totaling 18.8 million rentable square feet. COPT is an S&P MidCap 400 company.

Forward-Looking Information

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

Important factors that may affect these expectations, estimates, and projections include, but are not limited to:
  • 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 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 the Company's strategic customers;
  • the Company’s 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;
  • the Company’s ability to sell properties included in its Strategic Reallocation Plan;
  • risks of investing through joint venture structures, including risks that the Company’s joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with the Company’s objectives;
  • changes in the Company’s 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;
  • the Company’s ability to satisfy and operate effectively under Federal income tax rules relating to real estate investment trusts and partnerships;
  • the Company's ability to achieve projected results;
  • the dilutive effects of issuing additional common shares; and
  • environmental requirements.

The Company undertakes no obligation to update or supplement any forward-looking statements. For further information, please refer to the Company’s filings with the Securities and Exchange Commission, particularly the section entitled “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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