Press Release: COPT Reports Fourth Quarter and Full Year 2020 Results

Conference Call Date: Friday, February 5, 2021 Time: 12:00 p.m. Eastern Time Telephone Number: (within the U.S.) 855-463-9057 Telephone Number: (outside the U.S.) 661-378-9894 Passcode: 1548922-- During the fourth quarter, the Company formed a new joint venture with funds affiliated with Blackstone Real Estate ("B RE-COPT JV") and sold a 90% interest in two wholly-owned data center shell properties; in a second transaction, COPT sold a 40% interest in six data center shells properties already owned in a 50-50 joint venture. From these two transactions, COPT received approximately $165 million of equity value and recognized gains on the sales totaling $59.4 million. -- In October, the Company redeemed the remaining $177.1 million of its 3.70% Senior Notes due in 2021 for $180.9 million plus accrued interest, and recognized a loss on early extinguishment of debt of $4.1 million. -- Additionally, in December, the Company redeemed all $8.8 million of Series I Preferred Convertible Units and, as a result, had zero preferred equity outstanding at the end of 2020. -- As of December 31, 2020, the Company's net debt to adjusted book ratio was 39.1% and its net debt to in-place adjusted EBITDA ratio was 6.2x. For the quarter and year ended December 31, 2020, the Company's adjusted EBITDA fixed charge coverage ratio was 4.1x. -- As of December 31, 2020, and including the effect of interest rate swaps, the Company's weighted average effective interest rate on its consolidated debt portfolio was 3.4% with a weighted average maturity of 3.3 years; additionally, 82.1% of the Company's debt was subject to fixed interest rates.-- Development Pipeline: As of December 31, 2020, the Company's development pipeline consisted of 11 properties totaling 1.5 million square feet that were 84% leased. These projects have a total estimated cost of $613.0 million, of which $324.4 million had been incurred.-- Total Square Feet Leased: For the quarter ended December 31, 2020, the Company leased 869,000 total square feet, including 232,000 square feet of renewals, 495,000 square feet in development projects, and 142,000 square feet of new leases on vacant space. For the year ended December 31, 2020, the Company executed 3.6 million square feet of total leasing, including 2.2 million square feet of renewals, 1.0 million square feet of development leasing, and 416,000 square feet of vacancy leasing. -- Renewal Rates: During the quarter and year ended December 31, 2020, the Company respectively renewed 59.0% and 80.6% of total expiring square feet. -- Cash Rent Spreads & Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2020, cash rents on renewed space decreased 2.6% and 2.1%, respectively. For the same respective periods, annual escalations on renewing leases averaged 2.5% and 2.4%. -- Lease Terms: In the fourth quarter, lease terms averaged 3.8 years on renewing leases, 15.0 years on development leasing, and 5.3 years on new leasing of vacant space. For the year, lease terms averaged 4.2 years on renewing leases, 14.6 years on development leasing, and 6.2 years on vacancy leasing.-- At December 31, 2020, COPT's same-property portfolio of 144 buildings was 92.1% occupied and 93.1% leased. -- For the quarter and year ended December 31, 2020, the Company's same-property cash NOI was flat and increased 1.6%, respectively, over the prior year's comparable periods.-- At December 31, 2020, the Company's core portfolio of 179 operating office and data center shell properties was 94.3% occupied and 95.0% leased. -- During the quarter and the year, the Company placed into service 582,000 and 1.8 million square feet that were 100% and 99% leased, respectively.-- EPS for the year ended December 31, 2020 was $0.87 as compared to 2019 EPS of $1.71. -- Per Nareit's definition, FFOPS for 2020 was $1.50 as compared to $2.02 for 2019. -- FFOPS, as adjusted for comparability, for 2020 was $2.12 as compared to $2.03 for 2019.-- Diluted earnings per share ("EPS") was $0.73 for the quarter ended December 31, 2020 as compared to $0.38 for the fourth quarter of 2019. -- Diluted funds from operations per share ("FFOPS"), as calculated in accordance with Nareit's definition, was $0.53 for the fourth quarter of 2020 as compared to $0.49 for fourth quarter 2019 results. -- FFOPS, as adjusted for comparability, was $0.56 in the fourth quarter of 2020 as compared to $0.50 for the fourth quarter of 2019.COLUMBIA, Md.--(BUSINESS WIRE)--February 04, 2021--

COPT Reports Fourth Quarter and Full Year 2020 Results

EPS of $0.87 for 2020 Exceeded High End of Guidance by 8-Cents;

FFO per Share, as Adjusted for Comparability, of $2.12 Represented 4.4% Growth over 2019 Results & Exceeded High End of Guidance by 2-Cents

Same-Property Cash NOI Increased 1.6% During the Year

Core Portfolio 94.3% Occupied & 95.0% Leased

Record 1.8 Million SF of 99% Leased Developments Placed into Service During 2020

1.5 Million SF of Active Developments are 84% Leased

Operations Minimally Affected by COVID-19 Shutdowns

Monthly Rent Collections During Pandemic Shutdowns Totaled 99.7%

Rent Relief Totaled 1% of Annualized Rental Revenues

Solid Annual Leasing Activity

Total Leasing of 3.6 Million SF for the Year included 1 Million SF of Development Leasing and 416,000 SF of Vacancy Leasing

Record Tenant Retention of 81% for the Year

GAAP Rents on Renewals Increased 6.5% & Cash Rents Rolled Down 2.1%

Corporate Office Properties Trust ("COPT" or the "Company") (NYSE: OFC) announced financial and operating results for the fourth quarter and full year ended December 31, 2020.

Management Comments

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

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

Financial Highlights

4(th) Quarter Financial Results:

Full Year 2020 Financial Results:

Operating Performance Highlights

Operating Portfolio Summary:

Same-Property Performance:

Leasing:

Investment Activity Highlights

Balance Sheet and Capital Transaction Highlights

Associated Supplemental Presentation

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

2021 Guidance

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

Conference Call Information

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

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

Replay Information

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

Definitions

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

About COPT

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February 04, 2021 16:16 ET (21:16 GMT)