Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 20, 2018 | |
Entity Information [Line Items] | ||
Entity Registrant Name | CORPORATE OFFICE PROPERTIES TRUST | |
Entity Central Index Key | 860,546 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 103,263,449 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Corporate Office Properties, L.P. | ||
Entity Information [Line Items] | ||
Entity Registrant Name | CORPORATE OFFICE PROPERTIES, L.P. | |
Entity Central Index Key | 1,577,966 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Properties, net: | ||
Operating properties, net | $ 2,760,632 | $ 2,737,611 |
Projects in development or held for future development | 422,905 | 403,494 |
Total properties, net | 3,183,537 | 3,141,105 |
Assets held for sale, net | 42,226 | 42,226 |
Cash and cash equivalents | 8,472 | 12,261 |
Investment in unconsolidated real estate joint venture | 40,806 | 41,787 |
Accounts receivable (net of allowance for doubtful accounts of $811 and $607, respectively) | 23,656 | 31,802 |
Deferred rent receivable (net of allowance of $423 and $364, respectively) | 89,606 | 86,710 |
Intangible assets on real estate acquisitions, net | 50,586 | 59,092 |
Deferred leasing costs (net of accumulated amortization of $29,546 and $29,560, respectively) | 48,183 | 48,322 |
Investing receivables | 54,427 | 57,493 |
Prepaid expenses and other assets, net | 70,863 | 74,407 |
Total assets | 3,612,362 | 3,595,205 |
Liabilities: | ||
Debt, net | 1,871,445 | 1,828,333 |
Accounts payable and accrued expenses | 88,885 | 108,137 |
Rents received in advance and security deposits | 24,905 | 25,648 |
Dividends and distributions payable | 29,449 | 28,921 |
Deferred revenue associated with operating leases | 10,783 | 11,682 |
Deferred property sale | 43,377 | 43,377 |
Capital lease obligation | 640 | 15,853 |
Other liabilities | 9,849 | 41,822 |
Total liabilities | 2,079,333 | 2,103,773 |
Commitments and contingencies (Note 16) | ||
Redeemable noncontrolling interests | 24,544 | 23,125 |
Corporate Office Properties Trust’s shareholders’ equity: | ||
Common Shares of beneficial interest | 1,033 | 1,013 |
Additional paid-in capital | 2,254,430 | 2,201,047 |
Cumulative distributions in excess of net income | (822,270) | (802,085) |
Accumulated other comprehensive income | 9,012 | 2,167 |
Total Corporate Office Properties Trust’s shareholders’ equity | 1,442,205 | 1,402,142 |
Noncontrolling interests in subsidiaries: | ||
Common units in COPLP | 44,651 | 45,097 |
Preferred units in COPLP | 8,800 | 8,800 |
Other consolidated entities | 12,829 | 12,268 |
Noncontrolling interests in subsidiaries | 66,280 | 66,165 |
Total equity | 1,508,485 | 1,468,307 |
Total liabilities, redeemable noncontrolling interests and equity | 3,612,362 | 3,595,205 |
Corporate Office Properties, L.P. | ||
Properties, net: | ||
Operating properties, net | 2,760,632 | 2,737,611 |
Projects in development or held for future development | 422,905 | 403,494 |
Total properties, net | 3,183,537 | 3,141,105 |
Assets held for sale, net | 42,226 | 42,226 |
Cash and cash equivalents | 8,472 | 12,261 |
Investment in unconsolidated real estate joint venture | 40,806 | 41,787 |
Accounts receivable (net of allowance for doubtful accounts of $811 and $607, respectively) | 23,656 | 31,802 |
Deferred rent receivable (net of allowance of $423 and $364, respectively) | 89,606 | 86,710 |
Intangible assets on real estate acquisitions, net | 50,586 | 59,092 |
Deferred leasing costs (net of accumulated amortization of $29,546 and $29,560, respectively) | 48,183 | 48,322 |
Investing receivables | 54,427 | 57,493 |
Prepaid expenses and other assets, net | 66,669 | 69,791 |
Total assets | 3,608,168 | 3,590,589 |
Liabilities: | ||
Debt, net | 1,871,445 | 1,828,333 |
Accounts payable and accrued expenses | 88,885 | 108,137 |
Rents received in advance and security deposits | 24,905 | 25,648 |
Dividends and distributions payable | 29,449 | 28,921 |
Deferred revenue associated with operating leases | 10,783 | 11,682 |
Deferred property sale | 43,377 | 43,377 |
Capital lease obligation | 640 | 15,853 |
Other liabilities | 5,655 | 37,206 |
Total liabilities | 2,075,139 | 2,099,157 |
Commitments and contingencies (Note 16) | ||
Redeemable noncontrolling interests | 24,544 | 23,125 |
Corporate Office Properties Trust’s shareholders’ equity: | ||
Common Shares of beneficial interest | 1,477,575 | 1,445,022 |
Accumulated other comprehensive income | 9,235 | 2,173 |
Total Corporate Office Properties Trust’s shareholders’ equity | 1,495,610 | 1,455,995 |
Noncontrolling interests in subsidiaries: | ||
Noncontrolling interests in subsidiaries | 12,875 | 12,312 |
Total equity | 1,508,485 | 1,468,307 |
Total liabilities, redeemable noncontrolling interests and equity | 3,608,168 | 3,590,589 |
Limited Partner | Corporate Office Properties, L.P. | ||
Corporate Office Properties Trust’s shareholders’ equity: | ||
Preferred units held by limited partner, 352,000 preferred units outstanding at June 30, 2018 and December 31, 2017 | $ 8,800 | $ 8,800 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Allowance for doubtful accounts - AR | $ 811 | $ 607 |
Deferred rent receivable | 423 | 364 |
Deferred leasing costs, accumulated amortization | $ 29,546 | $ 29,560 |
Common Shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Shares of beneficial interest, shares authorized | 150,000,000 | 150,000,000 |
Common Shares of beneficial interest, shares issued | 103,260,495 | 101,292,299 |
Common Shares of beneficial interest, shares outstanding | 103,260,495 | 101,292,299 |
Corporate Office Properties, L.P. | ||
Allowance for doubtful accounts - AR | $ 811 | $ 607 |
Deferred rent receivable | 423 | 364 |
Deferred leasing costs, accumulated amortization | $ 29,546 | $ 29,560 |
Corporate Office Properties, L.P. | General Partner | ||
Common Shares of beneficial interest, shares outstanding | 103,260,495 | 101,292,299 |
Corporate Office Properties, L.P. | Limited Partner | ||
Common Shares of beneficial interest, shares outstanding | 3,197,061 | 3,250,878 |
Preferred Units, Outstanding | 352,000 | 352,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues | ||||
Rental revenue | $ 101,121 | $ 101,347 | $ 201,955 | $ 201,962 |
Tenant recoveries and other real estate operations revenue | 28,041 | 26,950 | 55,485 | 53,102 |
Construction contract and other service revenues | 17,581 | 23,138 | 44,779 | 36,172 |
Total revenues | 146,743 | 151,435 | 302,219 | 291,236 |
Expenses | ||||
Property operating expenses | 49,446 | 48,628 | 100,397 | 97,147 |
Depreciation and amortization associated with real estate operations | 33,190 | 32,793 | 66,702 | 65,852 |
Construction contract and other service expenses | 16,941 | 22,315 | 43,157 | 34,801 |
Impairment losses | 0 | 1,625 | 0 | 1,625 |
General, administrative and leasing expenses | 7,628 | 7,859 | 14,920 | 16,470 |
Business development expenses and land carry costs | 1,234 | 1,597 | 2,848 | 3,290 |
Total operating expenses | 108,439 | 114,817 | 228,024 | 219,185 |
Operating income | 38,304 | 36,618 | 74,195 | 72,051 |
Interest expense | (18,945) | (19,163) | (37,729) | (38,157) |
Interest and other income | 1,439 | 1,583 | 2,798 | 3,309 |
Loss on early extinguishment of debt | 0 | (513) | 0 | (513) |
Income before equity in income of unconsolidated entities and income taxes | 20,798 | 18,525 | 39,264 | 36,690 |
Equity in income of unconsolidated entities | 373 | 370 | 746 | 747 |
Income tax expense | (63) | (48) | (118) | (88) |
Income before gain on sales of real estate | 21,108 | 18,847 | 39,892 | 37,349 |
Gain on sales of real estate | (23) | 12 | (27) | 4,250 |
Net income | 21,085 | 18,859 | 39,865 | 41,599 |
Net income attributable to noncontrolling interests: | ||||
Common units in COPLP | (608) | (261) | (1,152) | (883) |
Preferred units in COPLP | (165) | (165) | (330) | (330) |
Other consolidated entities | (878) | (907) | (1,799) | (1,841) |
Net income attributable to COPT | 19,434 | 17,526 | 36,584 | 38,545 |
'Preferred share/unit dividends/distributions | 0 | (3,039) | 0 | (6,219) |
Issuance costs associated with redeemed preferred shares/units | 0 | (6,847) | 0 | (6,847) |
Net income attributable to COPT common shareholders | $ 19,434 | $ 7,640 | $ 36,584 | $ 25,479 |
Earnings per common share: | ||||
Net income attributable to COPT common shareholders - basic (in dollars per share/unit) | $ 0.19 | $ 0.08 | $ 0.36 | $ 0.26 |
Net income attributable to COPT common shareholders - diluted (in dollars per share/unit) | 0.19 | 0.08 | 0.36 | 0.26 |
Dividends declared per common share/unit (in dollars per share) | $ 0.2750 | $ 0.275 | $ 0.55 | $ 0.55 |
Corporate Office Properties, L.P. | ||||
Revenues | ||||
Rental revenue | $ 101,121 | $ 101,347 | $ 201,955 | $ 201,962 |
Tenant recoveries and other real estate operations revenue | 28,041 | 26,950 | 55,485 | 53,102 |
Construction contract and other service revenues | 17,581 | 23,138 | 44,779 | 36,172 |
Total revenues | 146,743 | 151,435 | 302,219 | 291,236 |
Expenses | ||||
Property operating expenses | 49,446 | 48,628 | 100,397 | 97,147 |
Depreciation and amortization associated with real estate operations | 33,190 | 32,793 | 66,702 | 65,852 |
Construction contract and other service expenses | 16,941 | 22,315 | 43,157 | 34,801 |
Impairment losses | 0 | 1,625 | 0 | 1,625 |
General, administrative and leasing expenses | 7,628 | 7,859 | 14,920 | 16,470 |
Business development expenses and land carry costs | 1,234 | 1,597 | 2,848 | 3,290 |
Total operating expenses | 108,439 | 114,817 | 228,024 | 219,185 |
Operating income | 38,304 | 36,618 | 74,195 | 72,051 |
Interest expense | (18,945) | (19,163) | (37,729) | (38,157) |
Interest and other income | 1,439 | 1,583 | 2,798 | 3,309 |
Loss on early extinguishment of debt | 0 | (513) | 0 | (513) |
Income before equity in income of unconsolidated entities and income taxes | 20,798 | 18,525 | 39,264 | 36,690 |
Equity in income of unconsolidated entities | 373 | 370 | 746 | 747 |
Income tax expense | (63) | (48) | (118) | (88) |
Income before gain on sales of real estate | 21,108 | 18,847 | 39,892 | 37,349 |
Gain on sales of real estate | (23) | 12 | (27) | 4,250 |
Net income | 21,085 | 18,859 | 39,865 | 41,599 |
Net income attributable to noncontrolling interests: | ||||
Net income attributable to noncontrolling interests in consolidated entities | (878) | (907) | (1,799) | (1,841) |
Net income attributable to COPT | 20,207 | 17,952 | 38,066 | 39,758 |
'Preferred share/unit dividends/distributions | (165) | (3,204) | (330) | (6,549) |
Issuance costs associated with redeemed preferred shares/units | 0 | (6,847) | 0 | (6,847) |
Net income attributable to COPT common shareholders | $ 20,042 | $ 7,901 | $ 37,736 | $ 26,362 |
Earnings per common share: | ||||
Net income attributable to COPT common shareholders - basic (in dollars per share/unit) | $ 0.19 | $ 0.08 | $ 0.36 | $ 0.26 |
Net income attributable to COPT common shareholders - diluted (in dollars per share/unit) | 0.19 | 0.08 | 0.36 | 0.26 |
Dividends declared per common share/unit (in dollars per share) | $ 0.275 | $ 0.275 | $ 0.55 | $ 0.55 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net income | $ 21,085 | $ 18,859 | $ 39,865 | $ 41,599 |
Other comprehensive income | ||||
Unrealized gain (loss) on interest rate derivatives | 1,912 | (1,800) | 6,588 | (1,576) |
(Gain) loss on interest rate derivatives recognized in interest expense | (47) | 941 | 198 | 2,125 |
Equity in other comprehensive income of equity method investee | 0 | 39 | 0 | 39 |
Other comprehensive income (loss) | 1,865 | (820) | 6,786 | 588 |
Comprehensive income | 22,950 | 18,039 | 46,651 | 42,187 |
Comprehensive income attributable to noncontrolling interests | (1,708) | (1,306) | (3,498) | (3,074) |
Comprehensive income attributable to COPT | 21,242 | 16,733 | 43,153 | 39,113 |
Corporate Office Properties, L.P. | ||||
Net income | 21,085 | 18,859 | 39,865 | 41,599 |
Other comprehensive income | ||||
Unrealized gain (loss) on interest rate derivatives | 1,912 | (1,800) | 6,588 | (1,576) |
(Gain) loss on interest rate derivatives recognized in interest expense | (47) | 941 | 198 | 2,125 |
Equity in other comprehensive income of equity method investee | 0 | 39 | 0 | 39 |
Other comprehensive income (loss) | 1,865 | (820) | 6,786 | 588 |
Comprehensive income | 22,950 | 18,039 | 46,651 | 42,187 |
Comprehensive income attributable to noncontrolling interests | (878) | (907) | (1,799) | (1,841) |
Comprehensive income attributable to COPT | $ 22,072 | $ 17,132 | $ 44,852 | $ 40,346 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock Issued to Public Under At-the-Market Program | Forward Equity Sale Agreement | Preferred Shares | Common Shares | Common SharesCommon Stock Issued to Public Under At-the-Market Program | Common SharesForward Equity Sale Agreement | Additional Paid-in Capital | Additional Paid-in CapitalCommon Stock Issued to Public Under At-the-Market Program | Additional Paid-in CapitalForward Equity Sale Agreement | Cumulative Distributions in Excess of Net Income | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Corporate Office Properties, L.P. | Corporate Office Properties, L.P.Common Stock Issued to Public Under At-the-Market Program | Corporate Office Properties, L.P.Forward Equity Sale Agreement | Corporate Office Properties, L.P.Common Shares | Corporate Office Properties, L.P.Common SharesCommon Stock Issued to Public Under At-the-Market Program | Corporate Office Properties, L.P.Common SharesForward Equity Sale Agreement | Corporate Office Properties, L.P.Accumulated Other Comprehensive Income (Loss) | Corporate Office Properties, L.P.Noncontrolling Interests | Corporate Office Properties, L.P.Limited Partner | Corporate Office Properties, L.P.Limited PartnerPreferred Shares | Corporate Office Properties, L.P.General Partner | Corporate Office Properties, L.P.General PartnerPreferred Shares |
Balance (COPT: 98,498,651 and 101,292,299 shares as of December 31, 2016 and 2017, respectively) at Dec. 31, 2016 | $ 1,612,777 | $ 172,500 | $ 985 | $ 2,116,581 | $ (747,825) | $ (1,731) | $ 72,267 | $ 1,612,777 | $ 1,419,710 | $ (1,854) | $ 13,621 | $ 8,800 | $ 172,500 | ||||||||||||
Balance (preferred units) at Dec. 31, 2016 | 352,000 | 6,900,000 | |||||||||||||||||||||||
Balance (in units/shares) at Dec. 31, 2016 | 98,498,651 | 102,089,042 | |||||||||||||||||||||||
Increase (Decrease) in Shareholders' Equity | |||||||||||||||||||||||||
Redemption of preferred units resulting from redemption of preferred shares (in units) | (6,900,000) | ||||||||||||||||||||||||
Redemption of preferred shares (6,900,000 shares) | $ (172,500) | (172,500) | 6,847 | (6,847) | (172,500) | $ (172,500) | |||||||||||||||||||
Conversion of common units to common shares (COPT: 187,000 and 53,817 shares for the six months ended June 30, 2017 and 2018, respectively) | $ 0 | 2 | 2,562 | (2,564) | |||||||||||||||||||||
Common shares issued during the period | $ 19,668 | $ 6 | $ 19,662 | $ 19,668 | $ 19,668 | ||||||||||||||||||||
Common shares issued during the period (in shares) | 591,042 | ||||||||||||||||||||||||
Issuance of common units resulting from exercise of share options (in units) | 5,000 | 5,000 | |||||||||||||||||||||||
Issuance of common units resulting from exercise of share options (COPT: 5,000 shares for the six months ended June 30, 2017) | $ 150 | 0 | 150 | 150 | $ 150 | ||||||||||||||||||||
Share-based compensation issuance, net of redemptions (in units/shares) | 189,948 | 189,948 | |||||||||||||||||||||||
Share-based compensation issuance, net of redemptions (COPT: 189,948 and 137,379 shares issued, net of redemptions for the six months ended June 30, 2017 and 2018, respectively) | $ 3,047 | 2 | 3,045 | 3,047 | $ 3,047 | ||||||||||||||||||||
Redemption of vested equity awards | (1,813) | (1,813) | (1,813) | (1,813) | |||||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | 0 | (514) | 514 | ||||||||||||||||||||||
Comprehensive income | 41,047 | 38,545 | 568 | 1,934 | 41,047 | 33,209 | 588 | 701 | $ 330 | 6,219 | |||||||||||||||
Dividends / Distributions to owners of common and preferred units | (60,922) | (60,922) | (63,124) | (56,575) | $ (330) | $ (6,219) | |||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | (2,202) | (2,202) | |||||||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | (2,610) | (2,610) | (2,610) | (2,610) | |||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interests | $ (401) | (401) | (401) | $ (401) | |||||||||||||||||||||
Balance (in units/shares) at Jun. 30, 2017 | 99,471,641 | 102,875,032 | |||||||||||||||||||||||
Balance (preferred units) at Jun. 30, 2017 | 352,000 | 0 | |||||||||||||||||||||||
Balance (COPT: 99,471,641 shares and 103,260,495 shares as of June 30, 2017 and 2018, respectively) at Jun. 30, 2017 | $ 1,436,241 | 0 | 995 | 2,146,119 | (777,049) | (1,163) | 67,339 | 1,436,241 | $ 1,416,995 | (1,266) | 11,712 | $ 8,800 | $ 0 | ||||||||||||
Increase (Decrease) in Shareholders' Equity | |||||||||||||||||||||||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | (276) | 276 | (276) | 276 | |||||||||||||||||||||
Balance, as adjusted | 1,468,307 | 0 | 1,013 | 2,201,047 | (802,361) | 2,443 | 66,165 | 1,468,307 | 1,444,746 | 2,449 | 12,312 | 8,800 | 0 | ||||||||||||
Balance (COPT: 98,498,651 and 101,292,299 shares as of December 31, 2016 and 2017, respectively) at Dec. 31, 2017 | $ 1,468,307 | 0 | 1,013 | 2,201,047 | (802,085) | 2,167 | 66,165 | 1,468,307 | $ 1,445,022 | 2,173 | 12,312 | $ 8,800 | $ 0 | ||||||||||||
Balance (preferred units) at Dec. 31, 2017 | 352,000 | 352,000 | 0 | ||||||||||||||||||||||
Balance (in units/shares) at Dec. 31, 2017 | 101,292,299 | 104,543,177 | 3,250,878 | 101,292,299 | |||||||||||||||||||||
Increase (Decrease) in Shareholders' Equity | |||||||||||||||||||||||||
Conversion of common units to common shares (COPT: 187,000 and 53,817 shares for the six months ended June 30, 2017 and 2018, respectively) | $ 0 | 1 | 760 | (761) | |||||||||||||||||||||
Common shares issued during the period | $ 52,227 | $ 18 | $ 52,209 | $ 52,227 | $ 52,227 | ||||||||||||||||||||
Common shares issued during the period (in shares) | 1,777,000 | 1,777,000 | |||||||||||||||||||||||
Share-based compensation issuance, net of redemptions (in units/shares) | 137,379 | 137,379 | |||||||||||||||||||||||
Share-based compensation issuance, net of redemptions (COPT: 189,948 and 137,379 shares issued, net of redemptions for the six months ended June 30, 2017 and 2018, respectively) | $ 3,400 | 1 | 3,399 | 3,400 | $ 3,400 | ||||||||||||||||||||
Redemption of vested equity awards | (1,525) | (1,525) | (1,525) | (1,525) | |||||||||||||||||||||
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP | 0 | (702) | 702 | ||||||||||||||||||||||
Comprehensive income | 45,422 | 36,584 | 6,569 | 2,269 | 45,422 | 37,736 | 6,786 | 570 | $ 330 | $ 0 | |||||||||||||||
Dividends / Distributions to owners of common and preferred units | (56,493) | (56,493) | (58,581) | (58,251) | $ (330) | $ 0 | |||||||||||||||||||
Distributions to owners of common and preferred units in COPLP | (2,088) | (2,088) | |||||||||||||||||||||||
Distributions to noncontrolling interests in subsidiaries | (7) | (7) | (7) | (7) | |||||||||||||||||||||
Adjustment to arrive at fair value of redeemable noncontrolling interests | $ (758) | (758) | (758) | $ (758) | |||||||||||||||||||||
Balance (in units/shares) at Jun. 30, 2018 | 103,260,495 | 106,457,556 | 3,197,061 | 103,260,495 | |||||||||||||||||||||
Balance (preferred units) at Jun. 30, 2018 | 352,000 | 352,000 | 0 | ||||||||||||||||||||||
Balance (COPT: 99,471,641 shares and 103,260,495 shares as of June 30, 2017 and 2018, respectively) at Jun. 30, 2018 | $ 1,508,485 | $ 0 | $ 1,033 | $ 2,254,430 | $ (822,270) | $ 9,012 | $ 66,280 | $ 1,508,485 | $ 1,477,575 | $ 9,235 | $ 12,875 | $ 8,800 | $ 0 |
Consolidated Statements of Equ7
Consolidated Statements of Equity (Parenthetical) - shares | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Balance (in units/ shares) | 103,260,495 | 99,471,641 | 101,292,299 | 98,498,651 |
Conversion of common units to common shares (in units/shares) | 53,817 | 187,000 | ||
Issuance of common units resulting from exercise of share options (in shares or units) | 5,000 | |||
Share-based compensation issuance, net of redemptions (in units/shares) | 137,379 | 189,948 | ||
Forward Equity Sale Agreement | ||||
Common shares issued during the period (in shares) | 1,777,000 | |||
Common Shares | Common Stock Issued to Public Under At-the-Market Program | ||||
Common shares issued during the period (in shares) | 591,042 | |||
Preferred Shares | ||||
Redemption of preferred shares (in shares/units) | 6,900,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities | ||
Revenues from real estate operations received | $ 262,602 | $ 254,392 |
Construction contract and other service revenues received | 18,411 | 39,917 |
Property operating expenses paid | (83,642) | (79,683) |
Construction contract and other service expenses paid | (62,624) | (31,996) |
General, administrative, leasing, business development and land carry costs paid | (15,148) | (20,315) |
Interest expense paid | (36,155) | (36,351) |
Lease incentives paid | (4,825) | (9,375) |
Other | 2,093 | 940 |
Net cash provided by operating activities | 80,712 | 117,529 |
Cash flows from investing activities | ||
Construction, development and redevelopment | (67,749) | (85,926) |
Tenant improvements on operating properties | (18,352) | (13,711) |
Other capital improvements on operating properties | (8,584) | (11,780) |
Proceeds from dispositions of properties | 0 | 54,798 |
Leasing costs paid | (3,838) | (3,904) |
Other | 1,715 | 1,746 |
Net cash used in investing activities | (96,808) | (58,777) |
Proceeds from debt | ||
Revolving Credit Facility | 153,000 | 213,000 |
Repayments of debt | ||
Revolving Credit Facility | (109,000) | (19,000) |
Scheduled principal amortization | (2,101) | (2,013) |
Other debt repayments | 0 | (200,000) |
Payments on capital lease obligation | (15,379) | 0 |
Net proceeds from issuance of common shares/units | 52,277 | 19,835 |
Redemption of preferred shares/units | 0 | (199,083) |
Common share/unit dividends/distributions paid | (55,950) | (54,439) |
Preferred share/unit dividends/distributions paid | 0 | (9,305) |
Distributions paid to noncontrolling interests in COPLP | (2,110) | (2,274) |
Redemption of vested equity awards | (1,525) | (1,813) |
Other | (5,370) | (2,952) |
Net cash provided by (used in) financing activities | 13,842 | (258,044) |
Net decrease in cash and cash equivalents and restricted cash | (2,254) | (199,292) |
Cash and cash equivalents and restricted cash | ||
Beginning of period | 14,831 | 212,619 |
End of period | 12,577 | 13,327 |
Reconciliation of net income to net cash provided by operating activities: | ||
Net income | 39,865 | 41,599 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 67,684 | 66,948 |
Impairment losses | 0 | 1,618 |
Amortization of deferred financing costs and net debt discounts | 1,648 | 2,613 |
(Increase) decrease in deferred rent receivable | (3,470) | 669 |
Gain on sales of real estate | 27 | (4,250) |
Share-based compensation | 3,132 | 2,820 |
Other | (777) | (1,861) |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | 8,050 | (8,304) |
Decrease in prepaid expenses and other assets, net | 14,718 | 22,418 |
Decrease in accounts payable, accrued expenses and other liabilities | (49,422) | (2,387) |
Decrease in rents received in advance and security deposits | (743) | (4,354) |
Net cash provided by operating activities | 80,712 | 117,529 |
Reconciliation of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents and restricted cash | 14,831 | 212,619 |
Supplemental schedule of non-cash investing and financing activities: | ||
Increase (decrease) in accrued capital improvements, leasing and other investing activity costs | 2,909 | (4,927) |
Increase in property in connection with capital lease obligation | 0 | 16,127 |
Increase in fair value of derivatives applied to accumulated other comprehensive income and noncontrolling interests | 6,719 | 513 |
Equity in other comprehensive income of an equity method investee | 0 | 39 |
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares | 761 | 2,564 |
Adjustments to noncontrolling interests resulting from changes in COPLP ownership | 702 | 514 |
Increase in redeemable noncontrolling interests and decrease in equity to carry redeemable noncontrolling interests at fair value | 758 | 401 |
Corporate Office Properties, L.P. | ||
Cash flows from operating activities | ||
Revenues from real estate operations received | 262,602 | 254,392 |
Construction contract and other service revenues received | 18,411 | 39,917 |
Property operating expenses paid | (83,642) | (79,683) |
Construction contract and other service expenses paid | (62,624) | (31,996) |
General, administrative, leasing, business development and land carry costs paid | (15,148) | (20,315) |
Interest expense paid | (36,155) | (36,351) |
Lease incentives paid | (4,825) | (9,375) |
Other | 2,093 | 940 |
Net cash provided by operating activities | 80,712 | 117,529 |
Cash flows from investing activities | ||
Construction, development and redevelopment | (67,749) | (85,926) |
Tenant improvements on operating properties | (18,352) | (13,711) |
Other capital improvements on operating properties | (8,584) | (11,780) |
Proceeds from dispositions of properties | 0 | 54,798 |
Leasing costs paid | (3,838) | (3,904) |
Other | 1,715 | 1,746 |
Net cash used in investing activities | (96,808) | (58,777) |
Proceeds from debt | ||
Revolving Credit Facility | 153,000 | 213,000 |
Repayments of debt | ||
Revolving Credit Facility | (109,000) | (19,000) |
Scheduled principal amortization | (2,101) | (2,013) |
Other debt repayments | 0 | (200,000) |
Payments on capital lease obligation | (15,379) | 0 |
Net proceeds from issuance of common shares/units | 52,277 | 19,835 |
Redemption of preferred shares/units | 0 | (199,083) |
Common share/unit dividends/distributions paid | (57,730) | (56,383) |
Preferred share/unit dividends/distributions paid | (330) | (9,635) |
Redemption of vested equity awards | (1,525) | (1,813) |
Other | (5,370) | (2,952) |
Net cash provided by (used in) financing activities | 13,842 | (258,044) |
Net decrease in cash and cash equivalents and restricted cash | (2,254) | (199,292) |
Cash and cash equivalents and restricted cash | ||
Beginning of period | 14,831 | 212,619 |
End of period | 12,577 | 13,327 |
Reconciliation of net income to net cash provided by operating activities: | ||
Net income | 39,865 | 41,599 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 67,684 | 66,948 |
Impairment losses | 0 | 1,618 |
Amortization of deferred financing costs and net debt discounts | 1,648 | 2,613 |
(Increase) decrease in deferred rent receivable | (3,470) | 669 |
Gain on sales of real estate | 27 | (4,250) |
Share-based compensation | 3,132 | 2,820 |
Other | (777) | (1,861) |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | 8,050 | (8,304) |
Decrease in prepaid expenses and other assets, net | 14,296 | 21,126 |
Decrease in accounts payable, accrued expenses and other liabilities | (49,000) | (1,095) |
Decrease in rents received in advance and security deposits | (743) | (4,354) |
Net cash provided by operating activities | 80,712 | 117,529 |
Reconciliation of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents and restricted cash | 14,831 | 212,619 |
Supplemental schedule of non-cash investing and financing activities: | ||
Increase (decrease) in accrued capital improvements, leasing and other investing activity costs | 2,909 | (4,927) |
Increase in property in connection with capital lease obligation | 0 | 16,127 |
Increase in fair value of derivatives applied to accumulated other comprehensive income and noncontrolling interests | 6,719 | 513 |
Equity in other comprehensive income of an equity method investee | 0 | 39 |
Increase in redeemable noncontrolling interests and decrease in equity to carry redeemable noncontrolling interests at fair value | $ 758 | $ 401 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2018 | |
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 in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office”). As of June 30, 2018 , our properties included the following: • 159 properties totaling 17.7 million square feet comprised of 143 office properties and 16 single-tenant data center shell properties (“data center shells”). We owned six of these data center shells through an unconsolidated real estate joint venture; • a wholesale data center with a critical load of 19.25 megawatts; • nine properties under construction or redevelopment ( five office properties and four data center shells) that we estimate will total approximately 1.0 million square feet upon completion, including one partially-operational property; and • approximately 1,000 acres of land controlled for future development that we believe could be developed into approximately 12.3 million square feet and 150 acres of other land. COPLP owns real estate 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 June 30, 2018 , COPT owned 97.0% of the outstanding COPLP common units (“common units”); the remaining common units and all of the outstanding COPLP preferred units (“preferred units”) were owned by third parties. Common units not owned by COPT carry certain redemption rights. The number of common units owned by COPT is equivalent to the number of outstanding common shares of beneficial interest (“common shares”) of COPT, and the entitlement of all common units to quarterly distributions and payments in liquidation is substantially the same as those of COPT common shareholders. Similarly, in the case of any series of preferred units 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; similarly, although 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 Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
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, 2017 included in our 2017 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 2017 Annual Report on Form 10-K as updated for our adoption of recent accounting pronouncements discussed below. 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, including restricted cash and marketable securities that were reclassified to the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets after having been reported on a separate line in our Quarterly Reports on Form 10-Q filed in prior years and previous Annual Reports on Form 10-K. Recent Accounting Pronouncements We adopted guidance issued by the Financial Accounting Standards Board (“FASB”) effective January 1, 2018 regarding the recognition of revenue from contracts with customers (“Topic 606”). Under this guidance, an entity recognizes 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. We determined that Topic 606 is applicable to our construction contract and other service revenues, which includes predominantly construction and design projects performed primarily for tenants of our properties. We used the modified retrospective method for contracts that were not completed as of January 1, 2018. Under this method, the cumulative effect of initially applying the guidance is recognized as an adjustment to the opening balance of retained earnings as of the date of initial application. Our adoption of Topic 606 effective January 1, 2018 did not affect our consolidated financial statements other than additional disclosure provided in accordance with the guidance. We did not elect to use any of the practical expedients provided for under the guidance. As discussed further below, once the new guidance setting forth principles for the recognition, measurement, presentation and disclosure of leases goes into effect on January 1, 2019, Topic 606 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). We adopted guidance issued by the FASB effective January 1, 2018 that requires entities to measure equity investments at fair value through net income, except for those that result in consolidation or are accounted for under the equity method of accounting. For equity investments without readily determinable fair values, the guidance permits the application of a measurement alternative using the cost of the investment, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer. Our adoption of this guidance had no effect on our consolidated financial statements. We adopted guidance issued by the FASB retrospectively effective January 1, 2018 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. Our adoption of this guidance had no effect on our consolidated financial statements. We adopted guidance issued by the FASB retrospectively effective January 1, 2018 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. As a result of our adoption of this guidance, the change in restricted cash is no longer reported as either operating or investing activities on our statements of cash flows. Our restricted cash primarily consists of cash escrowed under mortgage debt for capital improvements and real estate taxes and certain tenant security deposits. Our adoption of this guidance had the following effects on our consolidated statements of cash flows for the six months ended June 30, 2017 (in thousands): As Previously Reported Impact of Adoption As Net cash provided by operating activities $ 117,737 $ (208 ) $ 117,529 Net cash used in investing activities $ (58,950 ) $ 173 $ (58,777 ) Net decrease in cash and cash equivalents and restricted cash $ (199,257 ) $ (35 ) $ (199,292 ) Beginning of period cash and cash equivalents and restricted cash $ 209,863 $ 2,756 $ 212,619 End of period cash and cash equivalents and restricted cash $ 10,606 $ 2,721 $ 13,327 We adopted guidance issued by the FASB that clarifies the scope of provisions and accounting for nonfinancial asset derecognition, including partial sales of real estate assets, effective January 1, 2018 using the full retrospective method. 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 nonfinancial 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 are now subject to the same derecognition model as all other nonfinancial assets. We had a transaction in July 2016 accounted for as a partial sale under the previous guidance that meets the criteria for immediate full gain recognition under the new guidance; as a result, we retrospectively recognized an additional $18 million in income in 2016 that was being amortized into income in subsequent periods under the previous guidance. The recognition pattern for our other sales of real estate were not changed by this new guidance. The full retrospective method requires adjustment of each reporting period presented at the time of adoption. The tables below set forth the impact of the adoption of this guidance for amounts previously reported on the consolidated financial statements of COPT and subsidiaries (in thousands): As of December 31, 2017 As of June 30, 2017 As of December 31, 2016 Consolidated Balance Sheets As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Investment in unconsolidated real estate joint venture $ 25,066 $ 16,721 $ 41,787 $ 25,335 $ 17,417 $ 42,752 $ 25,548 $ 18,113 $ 43,661 Cumulative distributions in excess of net income $ (818,190 ) $ 16,105 $ (802,085 ) $ (793,828 ) $ 16,779 $ (777,049 ) $ (765,276 ) $ 17,451 $ (747,825 ) Noncontrolling interests in subsidiaries $ 65,549 $ 616 $ 66,165 $ 66,701 $ 638 $ 67,339 $ 71,605 $ 662 $ 72,267 For the Three Months Ended June 30, 2017 For the Six Months Ended June 30, 2017 Consolidated Statements of Operations and Comprehensive Income As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Equity in income of unconsolidated entities $ 718 $ (348 ) $ 370 $ 1,443 $ (696 ) $ 747 Income before gain on sales of real estate $ 19,195 $ (348 ) $ 18,847 $ 38,045 $ (696 ) $ 37,349 Net income $ 19,207 $ (348 ) $ 18,859 $ 42,295 $ (696 ) $ 41,599 Net income attributable to noncontrolling interests - Common units in COPLP $ (273 ) $ 12 $ (261 ) $ (907 ) $ 24 $ (883 ) Net income attributable to COPT $ 17,862 $ (336 ) $ 17,526 $ 39,217 $ (672 ) $ 38,545 Net income attributable to COPT common shareholders $ 7,976 $ (336 ) $ 7,640 $ 26,151 $ (672 ) $ 25,479 Comprehensive income $ 18,387 $ (348 ) $ 18,039 $ 42,883 $ (696 ) $ 42,187 Comprehensive income attributable to COPT $ 17,069 $ (336 ) $ 16,733 $ 39,785 $ (672 ) $ 39,113 The tables below set forth the impact of the adoption of this guidance for amounts previously reported on the consolidated financial statements of COPLP and subsidiaries (in thousands): As of December 31, 2017 As of June 30, 2017 As of December 31, 2016 Consolidated Balance Sheets As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Investment in unconsolid. real estate joint venture $ 25,066 $ 16,721 $ 41,787 $ 25,335 $ 17,417 $ 42,752 $ 25,548 $ 18,113 $ 43,661 Common units $ 1,428,301 $ 16,721 $ 1,445,022 $ 1,399,578 $ 17,417 $ 1,416,995 $ 1,401,597 $ 18,113 $ 1,419,710 For the Three Months Ended June 30, 2017 For the Six Months Ended June 30, 2017 Consolidated Statements of Operations and Comprehensive Income As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Equity in income of unconsolidated entities $ 718 $ (348 ) $ 370 $ 1,443 $ (696 ) $ 747 Income before gain on sales of real estate $ 19,195 $ (348 ) $ 18,847 $ 38,045 $ (696 ) $ 37,349 Net income $ 19,207 $ (348 ) $ 18,859 $ 42,295 $ (696 ) $ 41,599 Net income attributable to COPLP $ 18,300 $ (348 ) $ 17,952 $ 40,454 $ (696 ) $ 39,758 Net income attributable to COPLP common unitholders $ 8,249 $ (348 ) $ 7,901 $ 27,058 $ (696 ) $ 26,362 Comprehensive income $ 18,387 $ (348 ) $ 18,039 $ 42,883 $ (696 ) $ 42,187 Comprehensive income attributable to COPLP $ 17,480 $ (348 ) $ 17,132 $ 41,042 $ (696 ) $ 40,346 Adoption of this guidance had no impact to cash provided by or used in operating, financing or investing activities on our consolidated statements of cash flows for the six months ended June 30, 2017. We early adopted guidance issued by the FASB effective January 1, 2018 that makes targeted improvements to hedge accounting. This new guidance simplifies the application of hedge accounting and better aligns financial reporting for hedging activities with companies’ economic objectives in undertaking those activities. Under the new guidance, all changes in the fair value of highly effective cash flow hedges will be recorded in other comprehensive income instead of income. The new guidance also eases the administrative burden of hedge documentation requirements and assessing hedge effectiveness. We adopted this guidance using the modified retrospective transition method under which we eliminated $276,000 in previously-recorded cumulative hedge ineffectiveness as of January 1, 2018 by means of a cumulative-effect adjustment to our beginning balance of accumulated other comprehensive income (“AOCI”), with a corresponding adjustment to the beginning balance of: cumulative distributions in excess of net income for COPT and subsidiaries; and common units for COPLP and subsidiaries. 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. This guidance is effective for reporting periods beginning January 1, 2019 using a modified retrospective transition approach at the time of adoption. Early adoption is also permitted for this guidance. In addition, the guidance permits lessees and lessors to elect to apply a package of practical expedients that allow them not to reassess upon adoption: the lease classification for any expired or existing leases; their deferred recognition of incremental direct costs of leasing for any expired or existing leases; and whether any expired or existing contracts are, or contain, 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. • 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 non-incremental lease costs: Under the new lease guidance, we will no longer be able to defer the recognition of non-incremental costs in connection with new or extended tenant leases (refer to amounts reported in our 2017 Annual Report on Form 10-K for amounts deferred in 2017, 2016 and 2015). Upon adoption of the new guidance, we would expense previously deferred non-incremental lease costs for existing leases unless we elect the package of practical expedients, in which case such costs would remain deferred and amortized over the remaining lease terms. ◦ Lease revenue reporting: Under the issued and approved guidance, we believed that the new revenue standard would apply to executory costs and other components of revenue deemed to be non-lease components (such as common area maintenance and provision of utilities), in which case we would need: to separate the lease components of revenue due under leases from the non-lease components; and recognize revenue on the non-lease components as the related services are delivered, which could result in a change to our revenue recognition pattern. However, in March 2018, the FASB tentatively approved a practical expedient to provide lessors with an option to not separate lease components of revenue from non-lease components if: the timing and pattern of transfer of these components is the same as the related lease; and the lease would continue to be classified as an operating lease. • Leases in which we are the lessee: ◦ Our most significant leases as lessee are ground leases; as of June 30, 2018 , our future minimum rental payments under these leases totaled $89.4 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 right-of-use assets and lease liabilities for the present value of these minimum lease payments. We also believe that these types of leases most likely would be classified as finance leases under the new guidance, which would result in the interest component of each lease payment being recorded as interest expense and the right-of-use asset being amortized into expense using the straight-line method over the life of the lease; however, we expect to elect to apply the package of practical expedients under which we would continue to account for our existing ground leases as operating leases upon adoption of the 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. |
Revenue Recognition on Construc
Revenue Recognition on Construction Contract and Other Service Revenues | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition on Construction Contract and Other Service Revenues | Revenue Recognition on Construction Contract and Other Service Revenues We enter into construction contracts to complete various design and construction services primarily for our United States Government tenants. The revenues and expenses from these services consist primarily of subcontracted costs that are reimbursed to us by our customers along with a fee. These services are an ancillary component of our overall operations, with small operating margins relative to the revenue. We review each contract to determine the performance obligations and allocate the transaction price. We recognize revenue under these contracts as services are performed in an amount that reflects the consideration we expect to receive in exchange for those services. Our performance obligations are satisfied over time as work progresses. Revenue recognition is determined using the input method based on costs incurred as of point in time relative to the total estimated costs at completion to measure progress toward satisfying our performance obligations. We believe incurred costs of work performed best depicts the transfer of control of the services being transferred to the customer. In determining whether the performance obligations of each construction contract should be accounted for separately versus together, we consider numerous factors that may require significant judgment, including: whether the components contracted are substantially the same with the same pattern of transfer; whether the customer could contract with another party to perform construction based on our design project; and whether the customer can elect not to move forward after the design phase of the contract. Most of our contracts have a single performance obligation as the promise to transfer the services is not separately identifiable from other obligations in the contracts and, therefore, are not distinct. Some contracts have multiple performance obligations, most commonly due to having distinct project phases for design and construction for which our customer is making decisions and managing separately. In these cases, we allocate the transaction price between these performance obligations based on the amounts separately set forth in the contracts for such obligations. Contract modifications, such as change orders, are routine for our construction contracts and are generally determined to be additions to the existing performance obligations because they would have been part of the initial performance obligations if they were identified at the initial contract date. We have three main types of compensation arrangements for our construction contracts: guaranteed maximum price (“GMP”); firm fixed price (“FFP”); and cost-plus fee. • GMP contracts provide for revenue equal to costs incurred plus a fee equal to a percentage of such costs, up to a maximum contract amount. We generally enter into GMP contracts for projects that are significant in nature based on the size of the project and total fees, and for which the full scope of the project has not been determined as of the contract date. GMP contracts are lower risk to us than FFP contracts since the costs and revenue move proportionately to one another; • FFP contracts provide for revenue equal to a fixed fee. These contracts are typically lower in value and scope relative to GMP contracts, and are generally entered into when the scope of the project is well defined. Typically, we assume more risk with FFP contracts than GMP contracts since the revenue is fixed and we could realize losses or less than expected profits if we incur more costs than originally estimated. However, these types of contracts offer the opportunity for additional profits when we complete the work for less than originally estimated. Determining the estimated total costs for contracts under an FFP compensation arrangement may require significant judgment and has a direct effect on our revenue recognition pattern; • Cost-plus fee contracts provide for revenue equal to costs incurred plus a fee equal to a percentage of such costs but, unlike GMP contracts, do not have a maximum contract amount. We do not frequently enter into cost-plus fee contracts. Similar to GMP contracts, cost-plus fee contracts are low risk to us since the costs and revenue move proportionately to one another. Construction contract cost estimates are based on various assumptions, such as performance of subcontractors and cost and availability of materials, to project the outcome of future events over the course of the project. We review and update these estimates regularly as a significant change could affect the profitability of our construction contracts. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method as the modification does not create a new performance obligation. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the quarter it is identified. We disaggregate our construction contract and other service revenues by compensation arrangement and by service type as we believe it best depicts the nature, timing and uncertainty of our revenue. The table below reports construction contract and other service revenues by compensation arrangement (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Construction contract revenues: GMP $ 9,539 $ 18,317 $ 30,025 $ 24,906 FFP 6,288 4,587 12,723 10,785 Cost-plus fee 1,496 — 1,554 17 Other 258 234 477 464 $ 17,581 $ 23,138 $ 44,779 $ 36,172 The table below reports construction contract and other service revenues by service type (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Construction contract revenues: Construction $ 16,668 $ 21,078 $ 42,583 $ 31,169 Design 655 1,826 1,719 4,539 Other 258 234 477 464 $ 17,581 $ 23,138 $ 44,779 $ 36,172 We recognized revenue from performance obligations satisfied (or partially satisfied) in previous periods of $10,000 and $401,000 in the three months ended June 30, 2018 and 2017 , respectively; and $319,000 and $547,000 in the six months ended June 30, 2018 and 2017 , respectively. Our timing of revenue recognition for construction contracts generally differs from the timing of invoicing to customers. We recognize such revenue as we satisfy our performance obligations. Payment terms and conditions vary by contract type. Under most of our contracts, we bill customers monthly, as work progresses, in accordance with the contract terms, with payment due in 30 days , although customers occasionally pay in advance of services being provided. We have determined that our contracts generally do not include a significant financing component. The primary purpose of the timing of our invoicing is for convenience, not to receive financing from our customers or to provide customers with financing. Additionally, the timing of transfer of the services is often at the discretion of the customer. We recognized no impairment losses on construction contracts receivable or unbilled construction revenue in the periods set forth herein. Accounts receivable related to our construction contract services is included in accounts receivable, net on our consolidated balance sheets. The beginning and ending balances of accounts receivable related to our construction contracts were as follows (in thousands): For the Six Months Ended June 30, 2018 2017 Beginning balance $ 4,577 $ 4,131 Ending balance $ 4,805 $ 11,946 Under most of our contracts, we bill customers one month subsequent to revenue recognition, resulting in contract assets representing unbilled construction revenue. Contract assets, which we refer to herein as construction costs in excess of billings, are included in prepaid expenses and other assets, net reported on our consolidated balance sheets. The beginning and ending balances of our contract assets were as follows (in thousands): For the Six Months Ended June 30, 2018 2017 Beginning balance $ 4,884 $ 10,350 Ending balance $ 4,158 $ 3,620 Our contract liabilities consist of advance payments from our customers or billings in excess of construction contract revenue recognized. Contract liabilities are included in other liabilities reported on our consolidated balance sheets. Changes in contract liabilities were as follows (in thousands): For the Six Months Ended June 30, 2018 2017 Beginning balance $ 27,402 $ 32,650 Ending balance $ 515 $ 40,209 Portion of beginning balance recognized in revenue during: Three months ended June 30 $ 7,999 $ 16,762 Six months ended June 30 $ 27,296 $ 20,961 The change in the contract liabilities balance reported above for the six months ended June 30, 2018 was due primarily to our satisfaction of performance obligations during the period on a contract on which we previously received advance payments from a customer. Revenue allocated to the remaining performance obligations under existing contracts as of June 30, 2018 that will be recognized as revenue in future periods was $16.1 million , virtually all of which we expect to recognize during the remainder of 2018. We have no deferred incremental costs incurred to obtain or fulfill our construction contracts or other service revenues. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
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 sheets 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 June 30, 2018 , and is included in the line entitled “prepaid expenses and other assets, net” on COPT’s consolidated balance sheets. 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 are classified in Level 1 of the fair value hierarchy, while the offsetting liability 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 June 30, 2018 , 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 7, 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 9, 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 7 for investing receivables, Note 9 for debt and Note 10 for interest rate derivatives. COPT and Subsidiaries The table below sets forth financial assets and liabilities of COPT and subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2018 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands): Description Quoted Prices in Significant Other Significant Total Assets: Marketable securities in deferred compensation plan (1) Mutual funds $ 4,146 $ — $ — $ 4,146 Other 48 — — 48 Interest rate derivatives (1) — 9,792 — 9,792 Total assets $ 4,194 $ 9,792 $ — $ 13,986 Liabilities: Deferred compensation plan liability (2) $ — $ 4,194 $ — $ 4,194 (1) Included in the line entitled “prepaid expenses and other assets, net” on COPT’s consolidated balance sheet. (2) 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 subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2018 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands): Description Quoted Prices in Significant Other Significant Total Assets: Interest rate derivatives (1) $ — $ 9,792 $ — $ 9,792 (1) Included in the line entitled “prepaid expenses and other assets, net” on COPLP ’ s consolidated balance sheet. |
Properties, Net
Properties, Net | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate [Abstract] | |
Properties, Net | Properties, Net Operating properties, net consisted of the following (in thousands): June 30, December 31, Land $ 469,494 $ 455,680 Buildings and improvements 3,130,616 3,068,124 Less: Accumulated depreciation (839,478 ) (786,193 ) Operating properties, net $ 2,760,632 $ 2,737,611 Projects in development or held for future development consisted of the following (in thousands): June 30, December 31, Land $ 232,758 $ 240,825 Development in progress, excluding land 190,147 162,669 Projects in development or held for future development $ 422,905 $ 403,494 Our property held for sale is 11751 Meadowville Lane, a property in our Data Center Shells sub-segment, the sale of which was not recognized for accounting purposes. We provided a financial guaranty to the buyer under which we provided an indemnification for up to $20 million in losses it could incur related to a potential defined capital event occurring on the property by June 30, 2019. We account for this transaction as a financing arrangement. Accordingly, we did not recognize the sale of this property for accounting purposes (and will not until the guaranty expires) and we reported the sales proceeds as a liability on the consolidated balance sheets as of June 30, 2018 and December 31, 2017 in the line entitled “deferred property sale.” We do not expect to incur any losses under this financial guaranty. The table below sets forth the components of this property’s assets as of June 30, 2018 and December 31, 2017 (in thousands): Properties, net $ 38,670 Deferred rent receivable 3,237 Deferred leasing costs, net 319 Assets held for sale, net $ 42,226 2018 Construction Activities During the six months ended June 30, 2018 , we placed into service 223,000 square feet in two newly-constructed properties and 13,000 square feet in one redeveloped property. As of June 30, 2018 , we had seven properties under construction, or which we were contractually committed to construct, that we estimate will total 880,000 square feet upon completion and two properties under redevelopment (including one partially-operational property) that we estimate will total 128,000 square feet upon completion. |
Real Estate Joint Ventures
Real Estate Joint Ventures | 6 Months Ended |
Jun. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
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 June 30, 2018 (dollars in thousands): Nominal Ownership June 30, 2018 (1) Date % as of Total Encumbered Total Acquired 6/30/2018 Nature of Activity Assets Assets Liabilities LW Redstone Company, LLC 3/23/2010 85% Development and operation of real estate (2) $ 159,805 $ 74,012 $ 51,157 M Square Associates, LLC 6/26/2007 50% Development and operation of real estate (3) 73,395 44,457 46,323 Stevens Investors, LLC 8/11/2015 95% Development of real estate (4) 75,813 — 4,887 $ 309,013 $ 118,469 $ 102,367 (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. Unconsolidated Joint Venture As of June 30, 2018 , 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 shell properties in Virginia, that we account for using the equity method of accounting. As of June 30, 2018 , we had an investment balance in GI-COPT of $40.8 million . |
Investing Receivables
Investing Receivables | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Investing Receivables | Investing Receivables Investing receivables, including accrued interest thereon, consisted of the following (in thousands): June 30, December 31, Notes receivable from the City of Huntsville $ 51,386 $ 54,472 Other investing loans receivable 3,041 3,021 $ 54,427 $ 57,493 Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture (see Note 6) 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 June 30, 2018 or December 31, 2017 . The fair value of these receivables approximated their carrying amounts as of June 30, 2018 and December 31, 2017 . |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets, Net | 6 Months Ended |
Jun. 30, 2018 | |
Prepaid Expense and Other Assets [Abstract] | |
Prepaid Expenses and Other Assets, Net | Prepaid Expenses and Other Assets, Net Prepaid expenses and other assets, net of COPT and subsidiaries consisted of the following (in thousands): June 30, December 31, Lease incentives, net $ 18,376 $ 19,011 Prepaid expenses 12,173 24,670 Interest rate derivatives 9,792 3,073 Furniture, fixtures and equipment, net 6,407 5,256 Non-real estate equity investments 5,076 5,056 Marketable securities in deferred compensation plan 4,194 4,616 Construction contract costs incurred in excess of billings 4,158 4,884 Restricted cash 4,105 2,570 Deferred tax asset, net (1) 1,774 1,892 Other assets 4,808 3,379 Prepaid expenses and other assets, net $ 70,863 $ 74,407 (1) Includes a valuation allowance of $1.4 million . |
Debt, Net
Debt, Net | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt, Net | Debt, Net Our debt consisted of the following (dollars in thousands): Carrying Value (1) as of June 30, December 31, Stated Interest Rates as of Scheduled Maturity as of June 30, 2018 June 30, 2018 Mortgage and Other Secured Debt: Fixed rate mortgage debt (2) $ 148,950 $ 150,723 3.82% - 7.87% (3) 2019-2026 Variable rate secured debt 12,943 13,115 LIBOR + 1.85% (4) October 2020 Total mortgage and other secured debt 161,893 163,838 Revolving Credit Facility 170,000 126,000 LIBOR + 0.875% to 1.60% (5) May 2019 (6) Term Loan Facilities (7) 348,185 347,959 LIBOR + 0.90% to 1.85% (8) 2020-2022 Unsecured Senior Notes 3.600%, $350,000 aggregate principal 347,767 347,551 3.60% (9) May 2023 5.250%, $250,000 aggregate principal 246,887 246,645 5.25% (10) February 2024 3.700%, $300,000 aggregate principal 298,567 298,322 3.70% (11) June 2021 5.000%, $300,000 aggregate principal 296,918 296,731 5.00% (12) July 2025 Unsecured note payable 1,228 1,287 0% (13) May 2026 Total debt, net $ 1,871,445 $ 1,828,333 (1) The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $4.5 million as of June 30, 2018 and $5.0 million as of December 31, 2017 . (2) Certain of the fixed rate mortgages carry interest rates that, upon assumption, were above or below market rates and therefore were recorded at their fair value based on applicable effective interest rates. The carrying values of these loans reflect net unamortized premiums totaling $315,000 as of June 30, 2018 and $349,000 as of December 31, 2017 . (3) The weighted average interest rate on our fixed rate mortgage debt was 4.18% as of June 30, 2018 . (4) The interest rate on our variable rate secured debt was 3.83% as of June 30, 2018 . (5) The weighted average interest rate on the Revolving Credit Facility was 3.19% as of June 30, 2018 . (6) The facility matures in May 2019, with the ability for us to further extend such maturity by two six -month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.075% of the total availability under the facility for each extension period. (7) As of June 30, 2018 , 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. (8) The weighted average interest rate on these loans was 3.35% as of June 30, 2018 . (9) The carrying value of these notes reflects an unamortized discount totaling $1.5 million as of June 30, 2018 and $1.7 million as of December 31, 2017 . The effective interest rate under the notes, including amortization of the issuance costs, was 3.70% . (10) The carrying value of these notes reflects an unamortized discount totaling $2.8 million as of June 30, 2018 and $3.0 million as of December 31, 2017 . The effective interest rate under the notes, including amortization of the issuance costs, was 5.49% . (11) The carrying value of these notes reflects an unamortized discount totaling $1.1 million as of June 30, 2018 and $1.3 million as of December 31, 2017 . The effective interest rate under the notes, including amortization of the issuance costs, was 3.85% . (12) The carrying value of these notes reflects an unamortized discount totaling $2.6 million as of June 30, 2018 and $2.7 million as of December 31, 2017 . The effective interest rate under the notes, including amortization of the issuance costs, was 5.15% . (13) This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates. The carrying value of this note reflects an unamortized discount totaling $333,000 as of June 30, 2018 and $373,000 as of December 31, 2017 . 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 June 30, 2018 , we were within the compliance requirements of these financial covenants. We capitalized interest costs of $1.4 million in the three months ended June 30, 2018 , $1.6 million in the three months ended June 30, 2017 , $2.8 million in the six months ended June 30, 2018 and $3.1 million in the six months ended June 30, 2017 . The following table sets forth information pertaining to the fair value of our debt (in thousands): June 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Amount Value Amount Value Fixed-rate debt Unsecured Senior Notes $ 1,190,139 $ 1,220,040 $ 1,189,249 $ 1,229,398 Other fixed-rate debt 150,178 148,257 152,010 152,485 Variable-rate debt 531,128 530,968 487,074 485,694 $ 1,871,445 $ 1,899,265 $ 1,828,333 $ 1,867,577 |
Interest Rate Derivatives
Interest Rate Derivatives | 6 Months Ended |
Jun. 30, 2018 | |
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, each of which was designated as a cash flow hedge of interest rate risk (dollars in thousands): Fair Value at Notional Amount Fixed Rate Floating Rate Index Effective Date Expiration Date June 30, December 31, $ 100,000 1.7300% One-Month LIBOR 9/1/2015 8/1/2019 $ 745 $ 252 13,026 (1) 1.3900% One-Month LIBOR 10/13/2015 10/1/2020 343 213 100,000 1.9013% One-Month LIBOR 9/1/2016 12/1/2022 3,481 1,046 100,000 1.9050% One-Month LIBOR 9/1/2016 12/1/2022 3,494 1,051 50,000 1.9079% One-Month LIBOR 9/1/2016 12/1/2022 1,729 511 $ 9,792 $ 3,073 (1) The notional amount of this instrument is scheduled to amortize to $12.1 million . 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): Fair Value at Derivatives Balance Sheet Location June 30, December 31, 2017 Interest rate swaps designated as cash flow hedges Prepaid expenses and other assets, net $ 9,792 $ 3,073 The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands): Amount of Gain (Loss) Recognized in AOCI on Derivatives Amount of Gain (Loss) Reclassified from AOCI into Interest Expense on Statement of Operations For the Three Months Ended June 30, For the Six Months Ended June 30, For the Three Months Ended June 30, For the Six Months Ended June 30, Derivatives in Hedging Relationships 2018 2017 2018 2017 2018 2017 2018 2017 Interest rate derivatives $ 1,912 $ (1,800 ) $ 6,588 $ (1,576 ) $ 47 $ (941 ) $ (198 ) $ (2,125 ) Over the next 12 months, we estimate that approximately $1.9 million of gains will be reclassified from AOCI as a decrease 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. We are not in default with any of these provisions. As of June 30, 2018 , we did not have any derivatives in liability positions. As of June 30, 2018 , we had not posted any collateral related to these agreements. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interests | 6 Months Ended |
Jun. 30, 2018 | |
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 6), 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 sheets. 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, occupancy projections and estimated operating and development expenditures. The table below sets forth the activity for these redeemable noncontrolling interests (in thousands): For the Six Months Ended June 30, 2018 2017 Beginning balance $ 23,125 $ 22,979 Contributions from noncontrolling interests 143 — Distributions to noncontrolling interests (711 ) (789 ) Net income attributable to noncontrolling interests 1,229 1,140 Adjustment to arrive at fair value of interests 758 401 Ending balance $ 24,544 $ 23,731 |
Equity
Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Equity | Equity During the six months ended June 30, 2018 , COPT issued 1.8 million common shares under its forward equity sale agreements for net proceeds of $52.3 million . 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 the forward equity sale agreements was 5.7 million common shares as of June 30, 2018 . During the six months ended June 30, 2018 , certain COPLP limited partners converted 53,817 common units in COPLP for an equal number of common shares in COPT. As of June 30, 2018 , COPT had remaining capacity under its at-the-market stock offering program equal to an aggregate gross sales price of $70.0 million in common share sales. See Note 14 for disclosure of COPT common share and COPLP common unit activity pertaining to our share-based compensation plans. |
Information by Business Segment
Information by Business Segment | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Information by Business Segment | Information by Business Segment We have the following reportable segments: Defense/IT Locations; Regional Office; 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). As of June 30, 2018 and December 31, 2017 , our Regional Office segment included properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics; during 2017, this segment also included suburban properties that did not meet these characteristics (that were since disposed). 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): Operating Property Segments Defense/Information Technology Locations Fort Meade/BW Corridor Northern Virginia Defense/IT Lackland Air Force Base Navy Support Locations Redstone Arsenal Data Center Shells Total Defense/IT Locations Regional Office Wholesale Other Total Three Months Ended June 30, 2018 Revenues from real estate operations $ 61,993 $ 13,118 $ 12,382 $ 8,127 $ 3,652 $ 5,955 $ 105,227 $ 15,296 $ 8,105 $ 534 $ 129,162 Property operating expenses (20,099 ) (4,909 ) (7,494 ) (3,431 ) (1,509 ) (799 ) (38,241 ) (7,169 ) (4,150 ) 114 (49,446 ) UJV NOI allocable to COPT — — — — — 1,202 1,202 — — — 1,202 NOI from real estate operations $ 41,894 $ 8,209 $ 4,888 $ 4,696 $ 2,143 $ 6,358 $ 68,188 $ 8,127 $ 3,955 $ 648 $ 80,918 Additions to long-lived assets $ 8,151 $ 1,186 $ — $ 1,450 $ 351 $ — $ 11,138 $ 5,361 $ 81 $ 188 $ 16,768 Transfers from non-operating properties $ 3,035 $ 352 $ — $ 3 $ 26 $ 29,675 $ 33,091 $ — $ 1,133 $ — $ 34,224 Three Months Ended June 30, 2017 Revenues from real estate operations $ 61,284 $ 11,095 $ 13,029 $ 7,449 $ 3,624 $ 5,800 $ 102,281 $ 17,462 $ 7,033 $ 1,521 $ 128,297 Property operating expenses (20,129 ) (4,219 ) (8,130 ) (3,025 ) (1,491 ) (577 ) (37,571 ) (7,082 ) (3,501 ) (474 ) (48,628 ) UJV NOI allocable to COPT — — — — — 1,198 1,198 — — — 1,198 NOI from real estate operations $ 41,155 $ 6,876 $ 4,899 $ 4,424 $ 2,133 $ 6,421 $ 65,908 $ 10,380 $ 3,532 $ 1,047 $ 80,867 Additions to long-lived assets $ 5,853 $ 977 $ 16 $ 2,231 $ 84 $ — $ 9,161 $ 4,018 $ 2,005 $ (29 ) $ 15,155 Transfers from non-operating properties $ 18,159 $ 218 $ — $ 466 $ 1,709 $ 26,215 $ 46,767 $ (25 ) $ — $ — $ 46,742 Six Months Ended June 30, 2018 Revenues from real estate operations $ 124,775 $ 25,679 $ 23,825 $ 15,997 $ 7,285 $ 11,786 $ 209,347 $ 30,580 $ 16,182 $ 1,331 $ 257,440 Property operating expenses (41,703 ) (9,632 ) (14,092 ) (6,735 ) (2,949 ) (1,593 ) (76,704 ) (15,047 ) (8,408 ) (238 ) (100,397 ) UJV NOI allocable to COPT — — — — — 2,401 2,401 — — — 2,401 NOI from real estate operations $ 83,072 $ 16,047 $ 9,733 $ 9,262 $ 4,336 $ 12,594 $ 135,044 $ 15,533 $ 7,774 $ 1,093 $ 159,444 Additions to long-lived assets $ 15,272 $ 3,126 $ — $ 2,558 $ 430 $ — $ 21,386 $ 9,245 $ 117 $ 315 $ 31,063 Transfers from non-operating properties $ 20,221 $ 693 $ — $ — $ 470 $ 30,789 $ 52,173 $ — $ 2,145 $ — $ 54,318 Segment assets at June 30, 2018 $ 1,269,525 $ 396,139 $ 126,956 $ 190,537 $ 106,374 $ 330,622 $ 2,420,153 $ 396,847 $ 221,239 $ 4,213 $ 3,042,452 Six Months Ended June 30, 2017 Revenues from real estate operations $ 122,139 $ 22,802 $ 24,663 $ 14,459 $ 7,084 $ 11,322 $ 202,469 $ 35,738 $ 13,803 $ 3,054 $ 255,064 Property operating expenses (40,649 ) (8,671 ) (14,932 ) (6,234 ) (2,862 ) (1,236 ) (74,584 ) (14,568 ) (6,866 ) (1,129 ) (97,147 ) UJV NOI allocable to COPT — — — — — 2,400 2,400 — — — 2,400 NOI from real estate operations $ 81,490 $ 14,131 $ 9,731 $ 8,225 $ 4,222 $ 12,486 $ 130,285 $ 21,170 $ 6,937 $ 1,925 $ 160,317 Additions to long-lived assets $ 9,275 $ 3,445 $ 16 $ 4,399 $ 216 $ — $ 17,351 $ 11,138 $ 3,579 $ 127 $ 32,195 Transfers from non-operating properties $ 31,575 $ 440 $ — $ 466 $ 1,705 $ 25,200 $ 59,386 $ (25 ) $ 8 $ 18 $ 59,387 Segment assets at June 30, 2017 $ 1,267,635 $ 357,747 $ 130,431 $ 195,732 $ 109,586 $ 247,974 $ 2,309,105 $ 435,399 $ 229,224 $ 19,350 $ 2,993,078 The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Segment revenues from real estate operations $ 129,162 $ 128,297 $ 257,440 $ 255,064 Construction contract and other service revenues 17,581 23,138 44,779 36,172 Total revenues $ 146,743 $ 151,435 $ 302,219 $ 291,236 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): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 UJV NOI allocable to COPT $ 1,202 $ 1,198 $ 2,401 $ 2,400 Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense (828 ) (827 ) (1,652 ) (1,651 ) Add: Equity in loss of unconsolidated non-real estate entities (1 ) (1 ) (3 ) (2 ) Equity in income of unconsolidated entities $ 373 $ 370 $ 746 $ 747 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): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Construction contract and other service revenues $ 17,581 $ 23,138 $ 44,779 $ 36,172 Construction contract and other service expenses (16,941 ) (22,315 ) (43,157 ) (34,801 ) NOI from service operations $ 640 $ 823 $ 1,622 $ 1,371 The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to income before gain on sales of real estate as reported on our consolidated statements of operations (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 NOI from real estate operations $ 80,918 $ 80,867 $ 159,444 $ 160,317 NOI from service operations 640 823 1,622 1,371 Interest and other income 1,439 1,583 2,798 3,309 Equity in income of unconsolidated entities 373 370 746 747 Income tax expense (63 ) (48 ) (118 ) (88 ) Depreciation and other amortization associated with real estate operations (33,190 ) (32,793 ) (66,702 ) (65,852 ) Impairment losses — (1,625 ) — (1,625 ) General, administrative and leasing expenses (7,628 ) (7,859 ) (14,920 ) (16,470 ) Business development expenses and land carry costs (1,234 ) (1,597 ) (2,848 ) (3,290 ) Interest expense (18,945 ) (19,163 ) (37,729 ) (38,157 ) Less: UJV NOI allocable to COPT included in equity in income of unconsolidated entities (1,202 ) (1,198 ) (2,401 ) (2,400 ) Loss on early extinguishment of debt — (513 ) — (513 ) Income before gain on sales of real estate $ 21,108 $ 18,847 $ 39,892 $ 37,349 The following table reconciles our segment assets to the consolidated total assets of COPT and subsidiaries (in thousands): June 30, June 30, Segment assets $ 3,042,452 $ 2,993,078 Non-operating property assets 431,661 452,824 Other assets 138,249 146,402 Total COPT consolidated assets $ 3,612,362 $ 3,592,304 The accounting policies of the segments are the same as those used to prepare our consolidated financial statements, except that 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, loss on early extinguishment of debt, gain on sales of real estate and equity in 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
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation Performance Share Awards (“PSUs”) On January 1, 2018 , our Board of Trustees granted 59,110 PSUs with an aggregate grant date fair value of $1.9 million to our three executives. The PSUs have a performance period beginning on January 1, 2018 and concluding on the earlier of December 31, 2020 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: Percentile Rank Earned PSUs Payout % 75th or greater 200% of PSUs granted 50th 100% of PSUs granted 25th 50% of PSUs granted Below 25th 0% of PSUs granted 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 number of earned PSUs in settlement of the award plan; and • pay cash equal to 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. 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 $31.97 per PSU using a Monte Carlo model. Significant assumptions for that model included the following: baseline common share value of $29.20 ; expected volatility for COPT common shares of 17.0% ; and a risk-free interest rate of 2.04% . We issued 13,328 common shares on February 22, 2018 to executives in settlement of PSUs issued in 2015, representing 75% of the target award for those PSUs. Restricted Shares During the six months ended June 30, 2018 , certain employees and non-employee members of our Board of Trustees were granted a total of 196,366 restricted common shares with an aggregate grant date fair value of $5.0 million (weighted average of $25.38 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 employee remains employed by us. Restricted shares granted to non-employee Trustees vest on the first anniversary of the grant date, provided that the Trustee remains in his or her position. During the six months ended June 30, 2018 , forfeiture restrictions lapsed on 161,322 previously issued common shares; these shares had a weighted average grant date fair value of $29.72 per share, and the aggregate intrinsic value of the shares on the vesting dates was $4.1 million . Deferred Share Awards During the six months ended June 30, 2018 , non-employee members of our Board of Trustees were granted a total of 13,832 deferred share awards with an aggregate grant date fair value of $388,000 ( $28.08 per share). Deferred share awards vest on the first anniversary of the grant date, provided that the Trustee remains in his or her position. We settle deferred share awards by issuing an equivalent number of common shares upon vesting of the awards or a later date elected by the Trustee (generally upon cessation of being a Trustee). During the six months ended June 30, 2018 , we issued 5,515 common shares in settlement of deferred share awards; these shares had a grant date fair value of $29.32 per share, and the aggregate intrinsic value of the shares on the settlement date was $154,000 . |
Earnings Per Share ("EPS") and
Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") | 6 Months Ended |
Jun. 30, 2018 | |
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: • 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 COPT’s forward equity sale agreements and our share-based compensation using the treasury stock or if-converted methods; and • the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common shares that we added to the denominator. Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Net income attributable to COPT $ 19,434 $ 17,526 $ 36,584 $ 38,545 Preferred share dividends — (3,039 ) — (6,219 ) Issuance costs associated with redeemed preferred shares — (6,847 ) — (6,847 ) Income attributable to share-based compensation awards (117 ) (117 ) (234 ) (242 ) Numerator for basic and diluted EPS on net income attributable to COPT common shareholders $ 19,317 $ 7,523 $ 36,350 $ 25,237 Denominator (all weighted averages): Denominator for basic EPS (common shares) 101,789 99,036 101,397 98,725 Dilutive effect of share-based compensation awards 119 160 131 158 Denominator for diluted EPS (common shares) 101,908 99,196 101,528 98,883 Basic EPS $ 0.19 $ 0.08 $ 0.36 $ 0.26 Diluted EPS $ 0.19 $ 0.08 $ 0.36 $ 0.26 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): Weighted Average Shares Excluded from Denominator For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Conversion of common units 3,197 3,405 3,208 3,425 Conversion of Series I preferred units 176 176 176 176 The following securities were also excluded from the computation of diluted EPS because their effects were not dilutive: • weighted average shares related to COPT’s forward equity sale agreements for the three and six months ended June 30, 2018 of 6.8 million and 7.1 million , respectively; • weighted average restricted shares and deferred share awards for the three months ended June 30, 2018 and 2017 of 458,000 and 455,000 , respectively, and for the six months ended June 30, 2018 and 2017 of 451,000 and 424,000 , respectively; and • weighted average options for the three months ended June 30, 2018 and 2017 of 47,000 and 61,000 , respectively, and for the six months ended June 30, 2018 and 2017 of 53,000 and 100,000 , respectively. 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: • 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 COPT’s forward equity sale agreements and our share-based compensation using the treasury stock or if-converted methods; and • the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common units that we added to the denominator. Summaries of the numerator and denominator for purposes of basic and diluted EPU calculations are set forth below (in thousands, except per unit data): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Net income attributable to COPLP $ 20,207 $ 17,952 $ 38,066 $ 39,758 Preferred unit distributions (165 ) (3,204 ) (330 ) (6,549 ) Issuance costs associated with redeemed preferred units — (6,847 ) — (6,847 ) Income attributable to share-based compensation awards (117 ) (117 ) (234 ) (242 ) Numerator for basic and diluted EPU on net income attributable to COPLP common unitholders $ 19,925 $ 7,784 $ 37,502 $ 26,120 Denominator (all weighted averages): Denominator for basic EPU (common units) 104,986 102,441 104,605 102,150 Dilutive effect of share-based compensation awards 119 160 131 158 Denominator for diluted EPU (common units) 105,105 102,601 104,736 102,308 Basic EPU $ 0.19 $ 0.08 $ 0.36 $ 0.26 Diluted EPU $ 0.19 $ 0.08 $ 0.36 $ 0.26 Our diluted EPU computations do not include the effect of 176,000 common units resulting from an assumed conversion of the Series I preferred units since such a conversion would increase diluted EPU for the three and six months ended June 30, 2018 and 2017 . The following securities were also excluded from the computation of diluted EPU because their effects were not dilutive: • weighted average units related to COPT’s forward equity sale agreements for the three and six months ended June 30, 2018 of 6.8 million and 7.1 million , respectively; • weighted average restricted units and deferred share awards for the three months ended June 30, 2018 and 2017 of 458,000 and 455,000 , respectively, and for the six months ended June 30, 2018 and 2017 of 451,000 and 424,000 , respectively; and • weighted average options for the three months ended June 30, 2018 and 2017 of 47,000 and 61,000 , respectively, and for the six months ended June 30, 2018 and 2017 of 53,000 and 100,000 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation and Claims In the normal course of business, we are subject to legal actions and other claims. We record losses for specific legal proceedings and claims when we determine that a loss is probable and the amount of loss can be reasonably estimated. Management believes that it is reasonably possible that we could incur losses pursuant to such claims but do not believe such losses would materially affect our financial position, liquidity or results of operations. 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. 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. 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. While we are obligated to fund, through a special tax, any future shortfalls between debt service of the bonds and real estate taxes available to repay the bonds, as of June 30, 2018 , we do not expect any such future fundings will be required. 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 June 30, 2018 follow (in thousands): Year Ending December 31, 2018 (1) $ 644 2019 1,277 2020 1,270 2021 1,274 2022 1,158 Thereafter 84,611 $ 90,234 (1) Represents the six months ending December 31, 2018 . Capital Lease On May 25, 2017, we entered into a ground lease on land under development in Washington, DC through our Stevens Investors, LLC joint venture. The lease has a 99 -year term, and we possess an option to purchase the property for one dollar (estimated to occur in 2020). Upon inception of the lease, we recorded a $16.1 million capital lease liability on our consolidated balance sheets based on the present value of the future minimum rental payments and have since paid down most of this liability. The remaining capital lease obligation as of June 30, 2018 was comprised of the following (in thousands): Minimum rental payments due in 2020 $ 660 Less: Amount representing interest (20 ) Capital lease obligation $ 640 Contractual Obligations We had amounts remaining to be incurred under various contractual obligations as of June 30, 2018 that included the following (excluding amounts incurred and therefore reflected as liabilities reported on our consolidated balance sheets): • new development and redevelopment obligations of $89.4 million ; • capital expenditures for operating properties of $41.5 million ; • third party construction of $4.5 million ; and • other obligations of $2.4 million . |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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, 2017 included in our 2017 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 2017 Annual Report on Form 10-K as updated for our adoption of recent accounting pronouncements discussed below. |
Reclassification | 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, including restricted cash and marketable securities that were reclassified to the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets after having been reported on a separate line in our Quarterly Reports on Form 10-Q filed in prior years and previous Annual Reports on Form 10-K. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements We adopted guidance issued by the Financial Accounting Standards Board (“FASB”) effective January 1, 2018 regarding the recognition of revenue from contracts with customers (“Topic 606”). Under this guidance, an entity recognizes 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. We determined that Topic 606 is applicable to our construction contract and other service revenues, which includes predominantly construction and design projects performed primarily for tenants of our properties. We used the modified retrospective method for contracts that were not completed as of January 1, 2018. Under this method, the cumulative effect of initially applying the guidance is recognized as an adjustment to the opening balance of retained earnings as of the date of initial application. Our adoption of Topic 606 effective January 1, 2018 did not affect our consolidated financial statements other than additional disclosure provided in accordance with the guidance. We did not elect to use any of the practical expedients provided for under the guidance. As discussed further below, once the new guidance setting forth principles for the recognition, measurement, presentation and disclosure of leases goes into effect on January 1, 2019, Topic 606 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). We adopted guidance issued by the FASB effective January 1, 2018 that requires entities to measure equity investments at fair value through net income, except for those that result in consolidation or are accounted for under the equity method of accounting. For equity investments without readily determinable fair values, the guidance permits the application of a measurement alternative using the cost of the investment, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer. Our adoption of this guidance had no effect on our consolidated financial statements. We adopted guidance issued by the FASB retrospectively effective January 1, 2018 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. Our adoption of this guidance had no effect on our consolidated financial statements. We adopted guidance issued by the FASB retrospectively effective January 1, 2018 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. As a result of our adoption of this guidance, the change in restricted cash is no longer reported as either operating or investing activities on our statements of cash flows. Our restricted cash primarily consists of cash escrowed under mortgage debt for capital improvements and real estate taxes and certain tenant security deposits. Our adoption of this guidance had the following effects on our consolidated statements of cash flows for the six months ended June 30, 2017 (in thousands): As Previously Reported Impact of Adoption As Net cash provided by operating activities $ 117,737 $ (208 ) $ 117,529 Net cash used in investing activities $ (58,950 ) $ 173 $ (58,777 ) Net decrease in cash and cash equivalents and restricted cash $ (199,257 ) $ (35 ) $ (199,292 ) Beginning of period cash and cash equivalents and restricted cash $ 209,863 $ 2,756 $ 212,619 End of period cash and cash equivalents and restricted cash $ 10,606 $ 2,721 $ 13,327 We adopted guidance issued by the FASB that clarifies the scope of provisions and accounting for nonfinancial asset derecognition, including partial sales of real estate assets, effective January 1, 2018 using the full retrospective method. 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 nonfinancial 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 are now subject to the same derecognition model as all other nonfinancial assets. We had a transaction in July 2016 accounted for as a partial sale under the previous guidance that meets the criteria for immediate full gain recognition under the new guidance; as a result, we retrospectively recognized an additional $18 million in income in 2016 that was being amortized into income in subsequent periods under the previous guidance. The recognition pattern for our other sales of real estate were not changed by this new guidance. The full retrospective method requires adjustment of each reporting period presented at the time of adoption. The tables below set forth the impact of the adoption of this guidance for amounts previously reported on the consolidated financial statements of COPT and subsidiaries (in thousands): As of December 31, 2017 As of June 30, 2017 As of December 31, 2016 Consolidated Balance Sheets As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Investment in unconsolidated real estate joint venture $ 25,066 $ 16,721 $ 41,787 $ 25,335 $ 17,417 $ 42,752 $ 25,548 $ 18,113 $ 43,661 Cumulative distributions in excess of net income $ (818,190 ) $ 16,105 $ (802,085 ) $ (793,828 ) $ 16,779 $ (777,049 ) $ (765,276 ) $ 17,451 $ (747,825 ) Noncontrolling interests in subsidiaries $ 65,549 $ 616 $ 66,165 $ 66,701 $ 638 $ 67,339 $ 71,605 $ 662 $ 72,267 For the Three Months Ended June 30, 2017 For the Six Months Ended June 30, 2017 Consolidated Statements of Operations and Comprehensive Income As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Equity in income of unconsolidated entities $ 718 $ (348 ) $ 370 $ 1,443 $ (696 ) $ 747 Income before gain on sales of real estate $ 19,195 $ (348 ) $ 18,847 $ 38,045 $ (696 ) $ 37,349 Net income $ 19,207 $ (348 ) $ 18,859 $ 42,295 $ (696 ) $ 41,599 Net income attributable to noncontrolling interests - Common units in COPLP $ (273 ) $ 12 $ (261 ) $ (907 ) $ 24 $ (883 ) Net income attributable to COPT $ 17,862 $ (336 ) $ 17,526 $ 39,217 $ (672 ) $ 38,545 Net income attributable to COPT common shareholders $ 7,976 $ (336 ) $ 7,640 $ 26,151 $ (672 ) $ 25,479 Comprehensive income $ 18,387 $ (348 ) $ 18,039 $ 42,883 $ (696 ) $ 42,187 Comprehensive income attributable to COPT $ 17,069 $ (336 ) $ 16,733 $ 39,785 $ (672 ) $ 39,113 The tables below set forth the impact of the adoption of this guidance for amounts previously reported on the consolidated financial statements of COPLP and subsidiaries (in thousands): As of December 31, 2017 As of June 30, 2017 As of December 31, 2016 Consolidated Balance Sheets As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Investment in unconsolid. real estate joint venture $ 25,066 $ 16,721 $ 41,787 $ 25,335 $ 17,417 $ 42,752 $ 25,548 $ 18,113 $ 43,661 Common units $ 1,428,301 $ 16,721 $ 1,445,022 $ 1,399,578 $ 17,417 $ 1,416,995 $ 1,401,597 $ 18,113 $ 1,419,710 For the Three Months Ended June 30, 2017 For the Six Months Ended June 30, 2017 Consolidated Statements of Operations and Comprehensive Income As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Equity in income of unconsolidated entities $ 718 $ (348 ) $ 370 $ 1,443 $ (696 ) $ 747 Income before gain on sales of real estate $ 19,195 $ (348 ) $ 18,847 $ 38,045 $ (696 ) $ 37,349 Net income $ 19,207 $ (348 ) $ 18,859 $ 42,295 $ (696 ) $ 41,599 Net income attributable to COPLP $ 18,300 $ (348 ) $ 17,952 $ 40,454 $ (696 ) $ 39,758 Net income attributable to COPLP common unitholders $ 8,249 $ (348 ) $ 7,901 $ 27,058 $ (696 ) $ 26,362 Comprehensive income $ 18,387 $ (348 ) $ 18,039 $ 42,883 $ (696 ) $ 42,187 Comprehensive income attributable to COPLP $ 17,480 $ (348 ) $ 17,132 $ 41,042 $ (696 ) $ 40,346 Adoption of this guidance had no impact to cash provided by or used in operating, financing or investing activities on our consolidated statements of cash flows for the six months ended June 30, 2017. We early adopted guidance issued by the FASB effective January 1, 2018 that makes targeted improvements to hedge accounting. This new guidance simplifies the application of hedge accounting and better aligns financial reporting for hedging activities with companies’ economic objectives in undertaking those activities. Under the new guidance, all changes in the fair value of highly effective cash flow hedges will be recorded in other comprehensive income instead of income. The new guidance also eases the administrative burden of hedge documentation requirements and assessing hedge effectiveness. We adopted this guidance using the modified retrospective transition method under which we eliminated $276,000 in previously-recorded cumulative hedge ineffectiveness as of January 1, 2018 by means of a cumulative-effect adjustment to our beginning balance of accumulated other comprehensive income (“AOCI”), with a corresponding adjustment to the beginning balance of: cumulative distributions in excess of net income for COPT and subsidiaries; and common units for COPLP and subsidiaries. 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. This guidance is effective for reporting periods beginning January 1, 2019 using a modified retrospective transition approach at the time of adoption. Early adoption is also permitted for this guidance. In addition, the guidance permits lessees and lessors to elect to apply a package of practical expedients that allow them not to reassess upon adoption: the lease classification for any expired or existing leases; their deferred recognition of incremental direct costs of leasing for any expired or existing leases; and whether any expired or existing contracts are, or contain, 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. • 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 non-incremental lease costs: Under the new lease guidance, we will no longer be able to defer the recognition of non-incremental costs in connection with new or extended tenant leases (refer to amounts reported in our 2017 Annual Report on Form 10-K for amounts deferred in 2017, 2016 and 2015). Upon adoption of the new guidance, we would expense previously deferred non-incremental lease costs for existing leases unless we elect the package of practical expedients, in which case such costs would remain deferred and amortized over the remaining lease terms. ◦ Lease revenue reporting: Under the issued and approved guidance, we believed that the new revenue standard would apply to executory costs and other components of revenue deemed to be non-lease components (such as common area maintenance and provision of utilities), in which case we would need: to separate the lease components of revenue due under leases from the non-lease components; and recognize revenue on the non-lease components as the related services are delivered, which could result in a change to our revenue recognition pattern. However, in March 2018, the FASB tentatively approved a practical expedient to provide lessors with an option to not separate lease components of revenue from non-lease components if: the timing and pattern of transfer of these components is the same as the related lease; and the lease would continue to be classified as an operating lease. • Leases in which we are the lessee: ◦ Our most significant leases as lessee are ground leases; as of June 30, 2018 , our future minimum rental payments under these leases totaled $89.4 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 right-of-use assets and lease liabilities for the present value of these minimum lease payments. We also believe that these types of leases most likely would be classified as finance leases under the new guidance, which would result in the interest component of each lease payment being recorded as interest expense and the right-of-use asset being amortized into expense using the straight-line method over the life of the lease; however, we expect to elect to apply the package of practical expedients under which we would continue to account for our existing ground leases as operating leases upon adoption of the 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. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Our adoption of this guidance had the following effects on our consolidated statements of cash flows for the six months ended June 30, 2017 (in thousands): As Previously Reported Impact of Adoption As Net cash provided by operating activities $ 117,737 $ (208 ) $ 117,529 Net cash used in investing activities $ (58,950 ) $ 173 $ (58,777 ) Net decrease in cash and cash equivalents and restricted cash $ (199,257 ) $ (35 ) $ (199,292 ) Beginning of period cash and cash equivalents and restricted cash $ 209,863 $ 2,756 $ 212,619 End of period cash and cash equivalents and restricted cash $ 10,606 $ 2,721 $ 13,327 The tables below set forth the impact of the adoption of this guidance for amounts previously reported on the consolidated financial statements of COPT and subsidiaries (in thousands): As of December 31, 2017 As of June 30, 2017 As of December 31, 2016 Consolidated Balance Sheets As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Investment in unconsolidated real estate joint venture $ 25,066 $ 16,721 $ 41,787 $ 25,335 $ 17,417 $ 42,752 $ 25,548 $ 18,113 $ 43,661 Cumulative distributions in excess of net income $ (818,190 ) $ 16,105 $ (802,085 ) $ (793,828 ) $ 16,779 $ (777,049 ) $ (765,276 ) $ 17,451 $ (747,825 ) Noncontrolling interests in subsidiaries $ 65,549 $ 616 $ 66,165 $ 66,701 $ 638 $ 67,339 $ 71,605 $ 662 $ 72,267 For the Three Months Ended June 30, 2017 For the Six Months Ended June 30, 2017 Consolidated Statements of Operations and Comprehensive Income As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Equity in income of unconsolidated entities $ 718 $ (348 ) $ 370 $ 1,443 $ (696 ) $ 747 Income before gain on sales of real estate $ 19,195 $ (348 ) $ 18,847 $ 38,045 $ (696 ) $ 37,349 Net income $ 19,207 $ (348 ) $ 18,859 $ 42,295 $ (696 ) $ 41,599 Net income attributable to noncontrolling interests - Common units in COPLP $ (273 ) $ 12 $ (261 ) $ (907 ) $ 24 $ (883 ) Net income attributable to COPT $ 17,862 $ (336 ) $ 17,526 $ 39,217 $ (672 ) $ 38,545 Net income attributable to COPT common shareholders $ 7,976 $ (336 ) $ 7,640 $ 26,151 $ (672 ) $ 25,479 Comprehensive income $ 18,387 $ (348 ) $ 18,039 $ 42,883 $ (696 ) $ 42,187 Comprehensive income attributable to COPT $ 17,069 $ (336 ) $ 16,733 $ 39,785 $ (672 ) $ 39,113 The tables below set forth the impact of the adoption of this guidance for amounts previously reported on the consolidated financial statements of COPLP and subsidiaries (in thousands): As of December 31, 2017 As of June 30, 2017 As of December 31, 2016 Consolidated Balance Sheets As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Investment in unconsolid. real estate joint venture $ 25,066 $ 16,721 $ 41,787 $ 25,335 $ 17,417 $ 42,752 $ 25,548 $ 18,113 $ 43,661 Common units $ 1,428,301 $ 16,721 $ 1,445,022 $ 1,399,578 $ 17,417 $ 1,416,995 $ 1,401,597 $ 18,113 $ 1,419,710 For the Three Months Ended June 30, 2017 For the Six Months Ended June 30, 2017 Consolidated Statements of Operations and Comprehensive Income As Previously Reported Impact of Adoption As As Previously Reported Impact of Adoption As Equity in income of unconsolidated entities $ 718 $ (348 ) $ 370 $ 1,443 $ (696 ) $ 747 Income before gain on sales of real estate $ 19,195 $ (348 ) $ 18,847 $ 38,045 $ (696 ) $ 37,349 Net income $ 19,207 $ (348 ) $ 18,859 $ 42,295 $ (696 ) $ 41,599 Net income attributable to COPLP $ 18,300 $ (348 ) $ 17,952 $ 40,454 $ (696 ) $ 39,758 Net income attributable to COPLP common unitholders $ 8,249 $ (348 ) $ 7,901 $ 27,058 $ (696 ) $ 26,362 Comprehensive income $ 18,387 $ (348 ) $ 18,039 $ 42,883 $ (696 ) $ 42,187 Comprehensive income attributable to COPLP $ 17,480 $ (348 ) $ 17,132 $ 41,042 $ (696 ) $ 40,346 |
Revenue Recognition on Constr27
Revenue Recognition on Construction Contract and Other Service Revenues (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The table below reports construction contract and other service revenues by compensation arrangement (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Construction contract revenues: GMP $ 9,539 $ 18,317 $ 30,025 $ 24,906 FFP 6,288 4,587 12,723 10,785 Cost-plus fee 1,496 — 1,554 17 Other 258 234 477 464 $ 17,581 $ 23,138 $ 44,779 $ 36,172 The table below reports construction contract and other service revenues by service type (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Construction contract revenues: Construction $ 16,668 $ 21,078 $ 42,583 $ 31,169 Design 655 1,826 1,719 4,539 Other 258 234 477 464 $ 17,581 $ 23,138 $ 44,779 $ 36,172 |
Schedule of Accounts Receivable | The beginning and ending balances of accounts receivable related to our construction contracts were as follows (in thousands): For the Six Months Ended June 30, 2018 2017 Beginning balance $ 4,577 $ 4,131 Ending balance $ 4,805 $ 11,946 |
Contract with Customer, Asset and Liability | Changes in contract liabilities were as follows (in thousands): For the Six Months Ended June 30, 2018 2017 Beginning balance $ 27,402 $ 32,650 Ending balance $ 515 $ 40,209 Portion of beginning balance recognized in revenue during: Three months ended June 30 $ 7,999 $ 16,762 Six months ended June 30 $ 27,296 $ 20,961 The beginning and ending balances of our contract assets were as follows (in thousands): For the Six Months Ended June 30, 2018 2017 Beginning balance $ 4,884 $ 10,350 Ending balance $ 4,158 $ 3,620 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2018 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands): Description Quoted Prices in Significant Other Significant Total Assets: Interest rate derivatives (1) $ — $ 9,792 $ — $ 9,792 (1) Included in the line entitled “prepaid expenses and other assets, net” on COPLP ’ s consolidated balance sheet. The table below sets forth financial assets and liabilities of COPT and subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2018 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands): Description Quoted Prices in Significant Other Significant Total Assets: Marketable securities in deferred compensation plan (1) Mutual funds $ 4,146 $ — $ — $ 4,146 Other 48 — — 48 Interest rate derivatives (1) — 9,792 — 9,792 Total assets $ 4,194 $ 9,792 $ — $ 13,986 Liabilities: Deferred compensation plan liability (2) $ — $ 4,194 $ — $ 4,194 (1) Included in the line entitled “prepaid expenses and other assets, net” on COPT’s consolidated balance sheet. (2) Included in the line entitled “other liabilities” on COPT’s consolidated balance sheet. |
Properties, Net (Tables)
Properties, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate [Abstract] | |
Schedule of operating properties, net | Operating properties, net consisted of the following (in thousands): June 30, December 31, Land $ 469,494 $ 455,680 Buildings and improvements 3,130,616 3,068,124 Less: Accumulated depreciation (839,478 ) (786,193 ) Operating properties, net $ 2,760,632 $ 2,737,611 |
Schedule of projects in development or held for future development | Projects in development or held for future development consisted of the following (in thousands): June 30, December 31, Land $ 232,758 $ 240,825 Development in progress, excluding land 190,147 162,669 Projects in development or held for future development $ 422,905 $ 403,494 |
Components of assets held for sale | The table below sets forth the components of this property’s assets as of June 30, 2018 and December 31, 2017 (in thousands): Properties, net $ 38,670 Deferred rent receivable 3,237 Deferred leasing costs, net 319 Assets held for sale, net $ 42,226 |
Real Estate Joint Ventures (Tab
Real Estate Joint Ventures (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
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 June 30, 2018 (dollars in thousands): Nominal Ownership June 30, 2018 (1) Date % as of Total Encumbered Total Acquired 6/30/2018 Nature of Activity Assets Assets Liabilities LW Redstone Company, LLC 3/23/2010 85% Development and operation of real estate (2) $ 159,805 $ 74,012 $ 51,157 M Square Associates, LLC 6/26/2007 50% Development and operation of real estate (3) 73,395 44,457 46,323 Stevens Investors, LLC 8/11/2015 95% Development of real estate (4) 75,813 — 4,887 $ 309,013 $ 118,469 $ 102,367 (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. |
Investing Receivables (Tables)
Investing Receivables (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Schedule of investing receivables | Investing receivables, including accrued interest thereon, consisted of the following (in thousands): June 30, December 31, Notes receivable from the City of Huntsville $ 51,386 $ 54,472 Other investing loans receivable 3,041 3,021 $ 54,427 $ 57,493 |
Prepaid Expenses and Other As32
Prepaid Expenses and Other Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Prepaid Expense and Other Assets [Abstract] | |
Schedule of prepaid expenses and other assets | Prepaid expenses and other assets, net of COPT and subsidiaries consisted of the following (in thousands): June 30, December 31, Lease incentives, net $ 18,376 $ 19,011 Prepaid expenses 12,173 24,670 Interest rate derivatives 9,792 3,073 Furniture, fixtures and equipment, net 6,407 5,256 Non-real estate equity investments 5,076 5,056 Marketable securities in deferred compensation plan 4,194 4,616 Construction contract costs incurred in excess of billings 4,158 4,884 Restricted cash 4,105 2,570 Deferred tax asset, net (1) 1,774 1,892 Other assets 4,808 3,379 Prepaid expenses and other assets, net $ 70,863 $ 74,407 (1) Includes a valuation allowance of $1.4 million . |
Debt, Net (Tables)
Debt, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Our debt consisted of the following (dollars in thousands): Carrying Value (1) as of June 30, December 31, Stated Interest Rates as of Scheduled Maturity as of June 30, 2018 June 30, 2018 Mortgage and Other Secured Debt: Fixed rate mortgage debt (2) $ 148,950 $ 150,723 3.82% - 7.87% (3) 2019-2026 Variable rate secured debt 12,943 13,115 LIBOR + 1.85% (4) October 2020 Total mortgage and other secured debt 161,893 163,838 Revolving Credit Facility 170,000 126,000 LIBOR + 0.875% to 1.60% (5) May 2019 (6) Term Loan Facilities (7) 348,185 347,959 LIBOR + 0.90% to 1.85% (8) 2020-2022 Unsecured Senior Notes 3.600%, $350,000 aggregate principal 347,767 347,551 3.60% (9) May 2023 5.250%, $250,000 aggregate principal 246,887 246,645 5.25% (10) February 2024 3.700%, $300,000 aggregate principal 298,567 298,322 3.70% (11) June 2021 5.000%, $300,000 aggregate principal 296,918 296,731 5.00% (12) July 2025 Unsecured note payable 1,228 1,287 0% (13) May 2026 Total debt, net $ 1,871,445 $ 1,828,333 (1) The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $4.5 million as of June 30, 2018 and $5.0 million as of December 31, 2017 . (2) Certain of the fixed rate mortgages carry interest rates that, upon assumption, were above or below market rates and therefore were recorded at their fair value based on applicable effective interest rates. The carrying values of these loans reflect net unamortized premiums totaling $315,000 as of June 30, 2018 and $349,000 as of December 31, 2017 . (3) The weighted average interest rate on our fixed rate mortgage debt was 4.18% as of June 30, 2018 . (4) The interest rate on our variable rate secured debt was 3.83% as of June 30, 2018 . (5) The weighted average interest rate on the Revolving Credit Facility was 3.19% as of June 30, 2018 . (6) The facility matures in May 2019, with the ability for us to further extend such maturity by two six -month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.075% of the total availability under the facility for each extension period. (7) As of June 30, 2018 , 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. (8) The weighted average interest rate on these loans was 3.35% as of June 30, 2018 . (9) The carrying value of these notes reflects an unamortized discount totaling $1.5 million as of June 30, 2018 and $1.7 million as of December 31, 2017 . The effective interest rate under the notes, including amortization of the issuance costs, was 3.70% . (10) The carrying value of these notes reflects an unamortized discount totaling $2.8 million as of June 30, 2018 and $3.0 million as of December 31, 2017 . The effective interest rate under the notes, including amortization of the issuance costs, was 5.49% . (11) The carrying value of these notes reflects an unamortized discount totaling $1.1 million as of June 30, 2018 and $1.3 million as of December 31, 2017 . The effective interest rate under the notes, including amortization of the issuance costs, was 3.85% . (12) The carrying value of these notes reflects an unamortized discount totaling $2.6 million as of June 30, 2018 and $2.7 million as of December 31, 2017 . The effective interest rate under the notes, including amortization of the issuance costs, was 5.15% . (13) This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates. The carrying value of this note reflects an unamortized discount totaling $333,000 as of June 30, 2018 and $373,000 as of December 31, 2017 . |
Schedule of the fair value of debt | The following table sets forth information pertaining to the fair value of our debt (in thousands): June 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Amount Value Amount Value Fixed-rate debt Unsecured Senior Notes $ 1,190,139 $ 1,220,040 $ 1,189,249 $ 1,229,398 Other fixed-rate debt 150,178 148,257 152,010 152,485 Variable-rate debt 531,128 530,968 487,074 485,694 $ 1,871,445 $ 1,899,265 $ 1,828,333 $ 1,867,577 |
Interest Rate Derivatives (Tabl
Interest Rate Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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, each of which was designated as a cash flow hedge of interest rate risk (dollars in thousands): Fair Value at Notional Amount Fixed Rate Floating Rate Index Effective Date Expiration Date June 30, December 31, $ 100,000 1.7300% One-Month LIBOR 9/1/2015 8/1/2019 $ 745 $ 252 13,026 (1) 1.3900% One-Month LIBOR 10/13/2015 10/1/2020 343 213 100,000 1.9013% One-Month LIBOR 9/1/2016 12/1/2022 3,481 1,046 100,000 1.9050% One-Month LIBOR 9/1/2016 12/1/2022 3,494 1,051 50,000 1.9079% One-Month LIBOR 9/1/2016 12/1/2022 1,729 511 $ 9,792 $ 3,073 (1) The notional amount of this instrument is scheduled to amortize to $12.1 million . |
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): Fair Value at Derivatives Balance Sheet Location June 30, December 31, 2017 Interest rate swaps designated as cash flow hedges Prepaid expenses and other assets, net $ 9,792 $ 3,073 |
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): Amount of Gain (Loss) Recognized in AOCI on Derivatives Amount of Gain (Loss) Reclassified from AOCI into Interest Expense on Statement of Operations For the Three Months Ended June 30, For the Six Months Ended June 30, For the Three Months Ended June 30, For the Six Months Ended June 30, Derivatives in Hedging Relationships 2018 2017 2018 2017 2018 2017 2018 2017 Interest rate derivatives $ 1,912 $ (1,800 ) $ 6,588 $ (1,576 ) $ 47 $ (941 ) $ (198 ) $ (2,125 ) |
Redeemable Noncontrolling Int35
Redeemable Noncontrolling Interests (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Schedule of activity for redeemable noncontrolling interest | The table below sets forth the activity for these redeemable noncontrolling interests (in thousands): For the Six Months Ended June 30, 2018 2017 Beginning balance $ 23,125 $ 22,979 Contributions from noncontrolling interests 143 — Distributions to noncontrolling interests (711 ) (789 ) Net income attributable to noncontrolling interests 1,229 1,140 Adjustment to arrive at fair value of interests 758 401 Ending balance $ 24,544 $ 23,731 |
Information by Business Segme36
Information by Business Segment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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): Operating Property Segments Defense/Information Technology Locations Fort Meade/BW Corridor Northern Virginia Defense/IT Lackland Air Force Base Navy Support Locations Redstone Arsenal Data Center Shells Total Defense/IT Locations Regional Office Wholesale Other Total Three Months Ended June 30, 2018 Revenues from real estate operations $ 61,993 $ 13,118 $ 12,382 $ 8,127 $ 3,652 $ 5,955 $ 105,227 $ 15,296 $ 8,105 $ 534 $ 129,162 Property operating expenses (20,099 ) (4,909 ) (7,494 ) (3,431 ) (1,509 ) (799 ) (38,241 ) (7,169 ) (4,150 ) 114 (49,446 ) UJV NOI allocable to COPT — — — — — 1,202 1,202 — — — 1,202 NOI from real estate operations $ 41,894 $ 8,209 $ 4,888 $ 4,696 $ 2,143 $ 6,358 $ 68,188 $ 8,127 $ 3,955 $ 648 $ 80,918 Additions to long-lived assets $ 8,151 $ 1,186 $ — $ 1,450 $ 351 $ — $ 11,138 $ 5,361 $ 81 $ 188 $ 16,768 Transfers from non-operating properties $ 3,035 $ 352 $ — $ 3 $ 26 $ 29,675 $ 33,091 $ — $ 1,133 $ — $ 34,224 Three Months Ended June 30, 2017 Revenues from real estate operations $ 61,284 $ 11,095 $ 13,029 $ 7,449 $ 3,624 $ 5,800 $ 102,281 $ 17,462 $ 7,033 $ 1,521 $ 128,297 Property operating expenses (20,129 ) (4,219 ) (8,130 ) (3,025 ) (1,491 ) (577 ) (37,571 ) (7,082 ) (3,501 ) (474 ) (48,628 ) UJV NOI allocable to COPT — — — — — 1,198 1,198 — — — 1,198 NOI from real estate operations $ 41,155 $ 6,876 $ 4,899 $ 4,424 $ 2,133 $ 6,421 $ 65,908 $ 10,380 $ 3,532 $ 1,047 $ 80,867 Additions to long-lived assets $ 5,853 $ 977 $ 16 $ 2,231 $ 84 $ — $ 9,161 $ 4,018 $ 2,005 $ (29 ) $ 15,155 Transfers from non-operating properties $ 18,159 $ 218 $ — $ 466 $ 1,709 $ 26,215 $ 46,767 $ (25 ) $ — $ — $ 46,742 Six Months Ended June 30, 2018 Revenues from real estate operations $ 124,775 $ 25,679 $ 23,825 $ 15,997 $ 7,285 $ 11,786 $ 209,347 $ 30,580 $ 16,182 $ 1,331 $ 257,440 Property operating expenses (41,703 ) (9,632 ) (14,092 ) (6,735 ) (2,949 ) (1,593 ) (76,704 ) (15,047 ) (8,408 ) (238 ) (100,397 ) UJV NOI allocable to COPT — — — — — 2,401 2,401 — — — 2,401 NOI from real estate operations $ 83,072 $ 16,047 $ 9,733 $ 9,262 $ 4,336 $ 12,594 $ 135,044 $ 15,533 $ 7,774 $ 1,093 $ 159,444 Additions to long-lived assets $ 15,272 $ 3,126 $ — $ 2,558 $ 430 $ — $ 21,386 $ 9,245 $ 117 $ 315 $ 31,063 Transfers from non-operating properties $ 20,221 $ 693 $ — $ — $ 470 $ 30,789 $ 52,173 $ — $ 2,145 $ — $ 54,318 Segment assets at June 30, 2018 $ 1,269,525 $ 396,139 $ 126,956 $ 190,537 $ 106,374 $ 330,622 $ 2,420,153 $ 396,847 $ 221,239 $ 4,213 $ 3,042,452 Six Months Ended June 30, 2017 Revenues from real estate operations $ 122,139 $ 22,802 $ 24,663 $ 14,459 $ 7,084 $ 11,322 $ 202,469 $ 35,738 $ 13,803 $ 3,054 $ 255,064 Property operating expenses (40,649 ) (8,671 ) (14,932 ) (6,234 ) (2,862 ) (1,236 ) (74,584 ) (14,568 ) (6,866 ) (1,129 ) (97,147 ) UJV NOI allocable to COPT — — — — — 2,400 2,400 — — — 2,400 NOI from real estate operations $ 81,490 $ 14,131 $ 9,731 $ 8,225 $ 4,222 $ 12,486 $ 130,285 $ 21,170 $ 6,937 $ 1,925 $ 160,317 Additions to long-lived assets $ 9,275 $ 3,445 $ 16 $ 4,399 $ 216 $ — $ 17,351 $ 11,138 $ 3,579 $ 127 $ 32,195 Transfers from non-operating properties $ 31,575 $ 440 $ — $ 466 $ 1,705 $ 25,200 $ 59,386 $ (25 ) $ 8 $ 18 $ 59,387 Segment assets at June 30, 2017 $ 1,267,635 $ 357,747 $ 130,431 $ 195,732 $ 109,586 $ 247,974 $ 2,309,105 $ 435,399 $ 229,224 $ 19,350 $ 2,993,078 |
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): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Segment revenues from real estate operations $ 129,162 $ 128,297 $ 257,440 $ 255,064 Construction contract and other service revenues 17,581 23,138 44,779 36,172 Total revenues $ 146,743 $ 151,435 $ 302,219 $ 291,236 |
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): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 UJV NOI allocable to COPT $ 1,202 $ 1,198 $ 2,401 $ 2,400 Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense (828 ) (827 ) (1,652 ) (1,651 ) Add: Equity in loss of unconsolidated non-real estate entities (1 ) (1 ) (3 ) (2 ) Equity in income of unconsolidated entities $ 373 $ 370 $ 746 $ 747 |
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): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Construction contract and other service revenues $ 17,581 $ 23,138 $ 44,779 $ 36,172 Construction contract and other service expenses (16,941 ) (22,315 ) (43,157 ) (34,801 ) NOI from service operations $ 640 $ 823 $ 1,622 $ 1,371 |
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 before gain on sales of real estate as reported on our consolidated statements of operations (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 NOI from real estate operations $ 80,918 $ 80,867 $ 159,444 $ 160,317 NOI from service operations 640 823 1,622 1,371 Interest and other income 1,439 1,583 2,798 3,309 Equity in income of unconsolidated entities 373 370 746 747 Income tax expense (63 ) (48 ) (118 ) (88 ) Depreciation and other amortization associated with real estate operations (33,190 ) (32,793 ) (66,702 ) (65,852 ) Impairment losses — (1,625 ) — (1,625 ) General, administrative and leasing expenses (7,628 ) (7,859 ) (14,920 ) (16,470 ) Business development expenses and land carry costs (1,234 ) (1,597 ) (2,848 ) (3,290 ) Interest expense (18,945 ) (19,163 ) (37,729 ) (38,157 ) Less: UJV NOI allocable to COPT included in equity in income of unconsolidated entities (1,202 ) (1,198 ) (2,401 ) (2,400 ) Loss on early extinguishment of debt — (513 ) — (513 ) Income before gain on sales of real estate $ 21,108 $ 18,847 $ 39,892 $ 37,349 |
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): June 30, June 30, Segment assets $ 3,042,452 $ 2,993,078 Non-operating property assets 431,661 452,824 Other assets 138,249 146,402 Total COPT consolidated assets $ 3,612,362 $ 3,592,304 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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: Percentile Rank Earned PSUs Payout % 75th or greater 200% of PSUs granted 50th 100% of PSUs granted 25th 50% of PSUs granted Below 25th 0% of PSUs granted |
Earnings Per Share ("EPS") an38
Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Net income attributable to COPT $ 19,434 $ 17,526 $ 36,584 $ 38,545 Preferred share dividends — (3,039 ) — (6,219 ) Issuance costs associated with redeemed preferred shares — (6,847 ) — (6,847 ) Income attributable to share-based compensation awards (117 ) (117 ) (234 ) (242 ) Numerator for basic and diluted EPS on net income attributable to COPT common shareholders $ 19,317 $ 7,523 $ 36,350 $ 25,237 Denominator (all weighted averages): Denominator for basic EPS (common shares) 101,789 99,036 101,397 98,725 Dilutive effect of share-based compensation awards 119 160 131 158 Denominator for diluted EPS (common shares) 101,908 99,196 101,528 98,883 Basic EPS $ 0.19 $ 0.08 $ 0.36 $ 0.26 Diluted EPS $ 0.19 $ 0.08 $ 0.36 $ 0.26 |
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): Weighted Average Shares Excluded from Denominator For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Conversion of common units 3,197 3,405 3,208 3,425 Conversion of Series I preferred units 176 176 176 176 |
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): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Net income attributable to COPLP $ 20,207 $ 17,952 $ 38,066 $ 39,758 Preferred unit distributions (165 ) (3,204 ) (330 ) (6,549 ) Issuance costs associated with redeemed preferred units — (6,847 ) — (6,847 ) Income attributable to share-based compensation awards (117 ) (117 ) (234 ) (242 ) Numerator for basic and diluted EPU on net income attributable to COPLP common unitholders $ 19,925 $ 7,784 $ 37,502 $ 26,120 Denominator (all weighted averages): Denominator for basic EPU (common units) 104,986 102,441 104,605 102,150 Dilutive effect of share-based compensation awards 119 160 131 158 Denominator for diluted EPU (common units) 105,105 102,601 104,736 102,308 Basic EPU $ 0.19 $ 0.08 $ 0.36 $ 0.26 Diluted EPU $ 0.19 $ 0.08 $ 0.36 $ 0.26 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 follow (in thousands): Year Ending December 31, 2018 (1) $ 644 2019 1,277 2020 1,270 2021 1,274 2022 1,158 Thereafter 84,611 $ 90,234 (1) Represents the six months ending December 31, 2018 . |
Future minimum lease payments for capital leases | The remaining capital lease obligation as of June 30, 2018 was comprised of the following (in thousands): Minimum rental payments due in 2020 $ 660 Less: Amount representing interest (20 ) Capital lease obligation $ 640 |
Organization (Details)
Organization (Details) - Jun. 30, 2018 ft² in Millions | a | MW | ft² | Property |
Operating Properties | ||||
Investments in real estate | ||||
Number of real estate properties | 159 | |||
Area of real estate property (in square feet or acres) | ft² | 17.7 | |||
Operating Properties | Office Properties | ||||
Investments in real estate | ||||
Number of real estate properties | 143 | |||
Operating Properties | Single-tenant data centers | ||||
Investments in real estate | ||||
Number of real estate properties | 16 | |||
Properties under, or contractually committed for, construction or approved for redevelopment | ||||
Investments in real estate | ||||
Number of real estate properties | 9 | |||
Area of real estate property (in square feet or acres) | ft² | 1 | |||
Properties under, or contractually committed for, construction or approved for redevelopment | Office Properties | ||||
Investments in real estate | ||||
Number of real estate properties | 5 | |||
Properties under, or contractually committed for, construction or approved for redevelopment | Single-tenant data centers | ||||
Investments in real estate | ||||
Number of real estate properties | 4 | |||
Properties under, or contractually committed for, construction or approved for redevelopment | Partially operational properties | ||||
Investments in real estate | ||||
Number of real estate properties | 1 | |||
Land controlled for future development | ||||
Investments in real estate | ||||
Area of real estate property (in square feet or acres) | 1,000 | 12.3 | ||
Other Land | ||||
Investments in real estate | ||||
Area of real estate property (in square feet or acres) | a | 150 | |||
Operating wholesale data centers | ||||
Investments in real estate | ||||
Critical load (in megawatts) | MW | 19.25 | |||
GI-COPT | Operating Properties | Single-tenant data centers | ||||
Investments in real estate | ||||
Number of real estate properties | 6 |
Organization (Details 2)
Organization (Details 2) | 6 Months Ended |
Jun. 30, 2018 | |
Corporate Office Properties, L.P. | Common Units | |
Forms of ownership in Operating Partnership and ownership percentage by the entity | |
Percentage ownership in operating partnership | 97.00% |
Summary of Significant Accoun42
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Minimum rental payments due | $ 90,234 | |||
Ground Leases | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Minimum rental payments due | $ 89,400 | |||
Accounting Standards Update 2017-05 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Effect of change on net income | $ 18,000 | |||
Accumulated Other Comprehensive Income (Loss) | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | $ 276 | |||
Accumulated Other Comprehensive Income (Loss) | Accounting Standards Update 2017-12 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | $ 276 | |||
Accumulated Other Comprehensive Income (Loss) | Corporate Office Properties, L.P. | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | 276 | |||
Accumulated Other Comprehensive Income (Loss) | Corporate Office Properties, L.P. | Accounting Standards Update 2017-12 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | 276 | |||
Cumulative Distributions in Excess of Net Income | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | (276) | |||
Cumulative Distributions in Excess of Net Income | Accounting Standards Update 2017-12 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | (276) | |||
Common Shares | Corporate Office Properties, L.P. | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | $ (276) | |||
Common Shares | Corporate Office Properties, L.P. | Accounting Standards Update 2017-12 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change for adoption of hedge accounting guidance | $ (276) |
Summary of Significant Accoun43
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | $ 80,712 | $ 117,529 |
Net cash used in investing activities | (96,808) | (58,777) |
Net decrease in cash and cash equivalents and restricted cash | (2,254) | (199,292) |
Beginning of period | 14,831 | 212,619 |
End of period | $ 12,577 | 13,327 |
Accounting Standards Update 2016-18 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | (208) | |
Net cash used in investing activities | 173 | |
Net decrease in cash and cash equivalents and restricted cash | (35) | |
Beginning of period | 2,756 | |
End of period | 2,721 | |
As Previously Reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | 117,737 | |
Net cash used in investing activities | (58,950) | |
Net decrease in cash and cash equivalents and restricted cash | (199,257) | |
Beginning of period | 209,863 | |
End of period | $ 10,606 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Investment in unconsolidated real estate joint venture | $ 40,806 | $ 42,752 | $ 40,806 | $ 42,752 | $ 41,787 | $ 43,661 |
Cumulative distributions in excess of net income | (822,270) | (777,049) | (822,270) | (777,049) | (802,085) | (747,825) |
Noncontrolling interests in subsidiaries | 66,280 | 67,339 | 66,280 | 67,339 | 66,165 | 72,267 |
Common units | 1,033 | 1,033 | 1,013 | |||
Equity in income of unconsolidated entities | 373 | 370 | 746 | 747 | ||
Income before gain on sales of real estate | 21,108 | 18,847 | 39,892 | 37,349 | ||
Net income | 21,085 | 18,859 | 39,865 | 41,599 | ||
Net income attributable to noncontrolling interests - Common units in COPLP | (608) | (261) | (1,152) | (883) | ||
Net income attributable to COPT/COPLP | 19,434 | 17,526 | 36,584 | 38,545 | ||
Net income attributable to COPT/COPLP common share/unit holders | 19,434 | 7,640 | 36,584 | 25,479 | ||
Comprehensive income | 22,950 | 18,039 | 46,651 | 42,187 | ||
Comprehensive income attributable to COPT/ COPLP | 21,242 | 16,733 | 43,153 | 39,113 | ||
Corporate Office Properties, L.P. | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Investment in unconsolidated real estate joint venture | 40,806 | 42,752 | 40,806 | 42,752 | 41,787 | 43,661 |
Noncontrolling interests in subsidiaries | 12,875 | 12,875 | 12,312 | |||
Common units | 1,477,575 | 1,416,995 | 1,477,575 | 1,416,995 | 1,445,022 | 1,419,710 |
Equity in income of unconsolidated entities | 373 | 370 | 746 | 747 | ||
Income before gain on sales of real estate | 21,108 | 18,847 | 39,892 | 37,349 | ||
Net income | 21,085 | 18,859 | 39,865 | 41,599 | ||
Net income attributable to COPT/COPLP | 20,207 | 17,952 | 38,066 | 39,758 | ||
Net income attributable to COPT/COPLP common share/unit holders | 20,042 | 7,901 | 37,736 | 26,362 | ||
Comprehensive income | 22,950 | 18,039 | 46,651 | 42,187 | ||
Comprehensive income attributable to COPT/ COPLP | $ 22,072 | 17,132 | $ 44,852 | 40,346 | ||
As Previously Reported | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Investment in unconsolidated real estate joint venture | 25,335 | 25,335 | 25,066 | 25,548 | ||
Cumulative distributions in excess of net income | (793,828) | (793,828) | (818,190) | (765,276) | ||
Noncontrolling interests in subsidiaries | 66,701 | 66,701 | 65,549 | 71,605 | ||
Equity in income of unconsolidated entities | 718 | 1,443 | ||||
Income before gain on sales of real estate | 19,195 | 38,045 | ||||
Net income | 19,207 | 42,295 | ||||
Net income attributable to noncontrolling interests - Common units in COPLP | (273) | (907) | ||||
Net income attributable to COPT/COPLP | 17,862 | 39,217 | ||||
Net income attributable to COPT/COPLP common share/unit holders | 7,976 | 26,151 | ||||
Comprehensive income | 18,387 | 42,883 | ||||
Comprehensive income attributable to COPT/ COPLP | 17,069 | 39,785 | ||||
As Previously Reported | Corporate Office Properties, L.P. | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Investment in unconsolidated real estate joint venture | 25,335 | 25,335 | 25,066 | 25,548 | ||
Common units | 1,399,578 | 1,399,578 | 1,428,301 | 1,401,597 | ||
Equity in income of unconsolidated entities | 718 | 1,443 | ||||
Income before gain on sales of real estate | 19,195 | 38,045 | ||||
Net income | 19,207 | 42,295 | ||||
Net income attributable to COPT/COPLP | 18,300 | 40,454 | ||||
Net income attributable to COPT/COPLP common share/unit holders | 8,249 | 27,058 | ||||
Comprehensive income | 18,387 | 42,883 | ||||
Comprehensive income attributable to COPT/ COPLP | 17,480 | 41,042 | ||||
Accounting Standards Update 2017-05 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Investment in unconsolidated real estate joint venture | 17,417 | 17,417 | 16,721 | 18,113 | ||
Cumulative distributions in excess of net income | 16,779 | 16,779 | 16,105 | 17,451 | ||
Noncontrolling interests in subsidiaries | 638 | 638 | 616 | 662 | ||
Equity in income of unconsolidated entities | (348) | (696) | ||||
Income before gain on sales of real estate | (348) | (696) | ||||
Net income | (348) | (696) | ||||
Net income attributable to noncontrolling interests - Common units in COPLP | 12 | 24 | ||||
Net income attributable to COPT/COPLP | (336) | (672) | ||||
Net income attributable to COPT/COPLP common share/unit holders | (336) | (672) | ||||
Comprehensive income | (348) | (696) | ||||
Comprehensive income attributable to COPT/ COPLP | (336) | (672) | ||||
Accounting Standards Update 2017-05 | Corporate Office Properties, L.P. | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Investment in unconsolidated real estate joint venture | 17,417 | 17,417 | 16,721 | 18,113 | ||
Common units | 17,417 | 17,417 | $ 16,721 | $ 18,113 | ||
Equity in income of unconsolidated entities | (348) | (696) | ||||
Income before gain on sales of real estate | (348) | (696) | ||||
Net income | (348) | (696) | ||||
Net income attributable to COPT/COPLP | (348) | (696) | ||||
Net income attributable to COPT/COPLP common share/unit holders | (348) | (696) | ||||
Comprehensive income | (348) | (696) | ||||
Comprehensive income attributable to COPT/ COPLP | $ (348) | $ (696) |
Revenue Recognition on Constr45
Revenue Recognition on Construction Contract and Other Service Revenues (Details) - Construction Contract Revenue $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($)compensation_arrangement | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)compensation_arrangement | Jun. 30, 2017USD ($) | |
Disaggregation of Revenue [Line Items] | ||||
Number of compensation arrangement types | compensation_arrangement | 3 | 3 | ||
Performance obligations satisfied or already satisfied | $ 10 | $ 401 | $ 319 | $ 547 |
Customers payment period | 30 days | |||
Remaining performance obligations | $ 16,100 | $ 16,100 |
Revenue Recognition on Constr46
Revenue Recognition on Construction Contract and Other Service Revenues (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Construction contract and other service revenues | $ 17,581 | $ 23,138 | $ 44,779 | $ 36,172 |
Construction | ||||
Disaggregation of Revenue [Line Items] | ||||
Construction contract and other service revenues | 16,668 | 21,078 | 42,583 | 31,169 |
Design | ||||
Disaggregation of Revenue [Line Items] | ||||
Construction contract and other service revenues | 655 | 1,826 | 1,719 | 4,539 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Construction contract and other service revenues | 258 | 234 | 477 | 464 |
GMP | ||||
Disaggregation of Revenue [Line Items] | ||||
Construction contract and other service revenues | 9,539 | 18,317 | 30,025 | 24,906 |
FFP | ||||
Disaggregation of Revenue [Line Items] | ||||
Construction contract and other service revenues | 6,288 | 4,587 | 12,723 | 10,785 |
Cost-plus fee | ||||
Disaggregation of Revenue [Line Items] | ||||
Construction contract and other service revenues | 1,496 | 0 | 1,554 | 17 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Construction contract and other service revenues | $ 258 | $ 234 | $ 477 | $ 464 |
Revenue Recognition on Constr47
Revenue Recognition on Construction Contract and Other Service Revenues (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in Accounts Receivable | ||||||
Beginning balance | $ 23,656 | $ 23,656 | $ 31,802 | |||
Ending balance | 23,656 | 23,656 | 31,802 | |||
Construction Contract Revenue | ||||||
Change in Accounts Receivable | ||||||
Beginning balance | 4,805 | $ 11,946 | 4,805 | $ 11,946 | 4,577 | $ 4,131 |
Ending balance | 4,805 | 11,946 | 4,805 | 11,946 | 4,577 | 4,131 |
Change in Contract with Customer, Asset | ||||||
Beginning balance | 4,158 | 3,620 | 4,158 | 3,620 | 4,884 | 10,350 |
Ending balance | 4,158 | 3,620 | 4,158 | 3,620 | 4,884 | 10,350 |
Change in Contract with Customer, Liability | ||||||
Beginning balance | 515 | 40,209 | 515 | 40,209 | 27,402 | 32,650 |
Ending balance | 515 | 40,209 | 515 | 40,209 | $ 27,402 | $ 32,650 |
Revenue recognized included in beginning balance | $ 7,999 | $ 16,762 | $ 27,296 | $ 20,961 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Assets and liabilities measured at fair value | ||
Marketable securities in deferred compensation plan | $ 4,194 | $ 4,616 |
Deferred compensation plan | Trustees and Management | ||
Assets and liabilities measured at fair value | ||
Maximum percentage of participants' compensation which is deferrable (as a percent) | 100.00% | |
Marketable securities in deferred compensation plan | $ 4,200 |
Fair Value Measurements (Deta49
Fair Value Measurements (Details 2) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Marketable securities in deferred compensation plan | $ 4,194 | $ 4,616 |
Fair value measurement on a recurring basis | ||
Assets: | ||
Interest rate derivatives | 9,792 | |
Total assets | 13,986 | |
Liabilities: | ||
Deferred compensation plan liability | 4,194 | |
Fair value measurement on a recurring basis | Mutual funds | ||
Assets: | ||
Marketable securities in deferred compensation plan | 4,146 | |
Fair value measurement on a recurring basis | Other | ||
Assets: | ||
Marketable securities in deferred compensation plan | 48 | |
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Total assets | 4,194 | |
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds | ||
Assets: | ||
Marketable securities in deferred compensation plan | 4,146 | |
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other | ||
Assets: | ||
Marketable securities in deferred compensation plan | 48 | |
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Interest rate derivatives | 9,792 | |
Total assets | 9,792 | |
Liabilities: | ||
Deferred compensation plan liability | 4,194 | |
Fair value measurement on a recurring basis | Corporate Office Properties, L.P. | ||
Assets: | ||
Interest rate derivatives | 9,792 | |
Fair value measurement on a recurring basis | Corporate Office Properties, L.P. | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Interest rate derivatives | $ 9,792 |
Properties, Net (Details)
Properties, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Investments in real estate | ||
Operating properties, net | $ 2,760,632 | $ 2,737,611 |
Operating Properties | ||
Investments in real estate | ||
Less: accumulated depreciation | (839,478) | (786,193) |
Operating properties, net | 2,760,632 | 2,737,611 |
Operating Properties | Land | ||
Investments in real estate | ||
Gross | 469,494 | 455,680 |
Operating Properties | Buildings and improvements | ||
Investments in real estate | ||
Gross | $ 3,130,616 | $ 3,068,124 |
Properties, Net (Details 2)
Properties, Net (Details 2) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Properties | ||
Projects in development or held for future development | $ 422,905 | $ 403,494 |
Projects in development or held for future development | ||
Properties | ||
Projects in development or held for future development | 422,905 | 403,494 |
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 | 232,758 | 240,825 |
Projects in development or held for future development | Development in progress, excluding land | ||
Properties | ||
Projects in development or held for future development | $ 190,147 | $ 162,669 |
Properties, Net (Details 3)
Properties, Net (Details 3) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Assets held for sale, net | $ 42,226 | $ 42,226 |
Assets held for sale, net | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Properties, net | 38,670 | 38,670 |
Deferred rent receivable | 3,237 | 3,237 |
Deferred leasing costs, net | 319 | 319 |
Assets held for sale, net | 42,226 | $ 42,226 |
11751 Meadowville Lane | Operating Properties | Defense/Information Technology Locations | Data Center Shells | Assets held for sale, net | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Indemnification amount | $ 20,000 |
Properties, Net (Details 4)
Properties, Net (Details 4) ft² in Thousands | Jun. 30, 2018ft²Property |
Newly constructed properties placed in service | |
Construction, Redevelopment and Dispositions | |
Square footage of real estate properties (in square feet) | ft² | 223 |
Number of real estate properties | 2 |
Newly redeveloped properties placed in service | |
Construction, Redevelopment and Dispositions | |
Square footage of real estate properties (in square feet) | ft² | 13 |
Number of real estate properties | 1 |
Properties under construction or contractually committed for construction | |
Construction, Redevelopment and Dispositions | |
Square footage of real estate properties (in square feet) | ft² | 880 |
Number of real estate properties | 7 |
Properties under construction or contractually committed, partially operational property | |
Construction, Redevelopment and Dispositions | |
Number of real estate properties | 1 |
Properties under or approved for redevelopment | |
Construction, Redevelopment and Dispositions | |
Square footage of real estate properties (in square feet) | ft² | 128 |
Number of real estate properties | 2 |
Real Estate Joint Ventures (Det
Real Estate Joint Ventures (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($)Property | |
GI-COPT | |
Investments in consolidated real estate joint ventures | |
Real estate equity method investments | $ 40,800 |
Consolidated real estate joint ventures | |
Investments in consolidated real estate joint ventures | |
Total Assets | 309,013 |
Encumbered Assets | 118,469 |
Total Liabilities | $ 102,367 |
Variable Interest Entity, Primary Beneficiary | LW Redstone Company, LLC | |
Investments in consolidated real estate joint ventures | |
Ownership (as a percent) | 85.00% |
Total Assets | $ 159,805 |
Encumbered Assets | 74,012 |
Total Liabilities | $ 51,157 |
Variable Interest Entity, Primary Beneficiary | M Square Associates, LLC | |
Investments in consolidated real estate joint ventures | |
Ownership (as a percent) | 50.00% |
Total Assets | $ 73,395 |
Encumbered Assets | 44,457 |
Total Liabilities | $ 46,323 |
Variable Interest Entity, Primary Beneficiary | Stevens Investors, LLC | |
Investments in consolidated real estate joint ventures | |
Ownership (as a percent) | 95.00% |
Total Assets | $ 75,813 |
Encumbered Assets | 0 |
Total Liabilities | $ 4,887 |
Single-tenant data centers | Operating office properties | GI-COPT | |
Investments in consolidated real estate joint ventures | |
Ownership percentage (percent) | 50.00% |
Number of real estate properties | Property | 6 |
Investing Receivables (Details)
Investing Receivables (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Investing receivables | $ 54,427 | $ 57,493 |
Notes Receivable from City of Huntsville | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Investing receivables | $ 51,386 | 54,472 |
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 | $ 3,041 | $ 3,021 |
Prepaid Expenses and Other As56
Prepaid Expenses and Other Assets, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Prepaid Expense and Other Assets [Abstract] | ||||
Lease incentives, net | $ 18,376 | $ 19,011 | ||
Prepaid expenses | 12,173 | 24,670 | ||
Interest rate derivatives | 9,792 | 3,073 | ||
Furniture, fixtures and equipment, net | 6,407 | 5,256 | ||
Non-real estate equity investments | 5,076 | 5,056 | ||
Marketable securities in deferred compensation plan | 4,194 | 4,616 | ||
Construction contract costs incurred in excess of billings | 4,158 | 4,884 | ||
Restricted cash | 4,105 | 2,570 | $ 2,721 | $ 2,756 |
Deferred tax asset, net | 1,774 | 1,892 | ||
Other assets | 4,808 | 3,379 | ||
Prepaid expenses and other assets, net | 70,863 | 74,407 | ||
Taxable REIT Subsidiary | ||||
Mortgage and Other Investing Receivables [Line Items] | ||||
Deferred tax assets, valuation allowance | $ 1,400 | $ 1,400 |
Debt, Net (Details)
Debt, Net (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)extension | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)extension | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Debt | |||||
Carrying Value | $ 1,871,445,000 | $ 1,871,445,000 | $ 1,828,333,000 | ||
Interest costs capitalized | 1,400,000 | $ 1,600,000 | 2,800,000 | $ 3,100,000 | |
Secured Debt | |||||
Debt | |||||
Carrying Value | $ 161,893,000 | $ 161,893,000 | 163,838,000 | ||
Line of Credit | Revolving Credit Facility | |||||
Debt | |||||
Number of extensions | extension | 2 | 2 | |||
Extension option period (in years) | 6 months | ||||
Line of credit facility, extension fee percentage | 0.075% | ||||
Loans payable | |||||
Debt | |||||
Deferred financing costs, net | $ 4,500,000 | $ 4,500,000 | 5,000,000 | ||
Fixed rate debt | Secured Debt | |||||
Debt | |||||
Carrying Value | 148,950,000 | 148,950,000 | 150,723,000 | ||
Unamortized premium included in carrying value | $ 315,000 | $ 315,000 | 349,000 | ||
Weighted average interest rate (as a percent) | 4.18% | 4.18% | |||
Fixed rate debt | Secured Debt | Minimum | |||||
Debt | |||||
Stated interest rate (as a percent) | 3.82% | 3.82% | |||
Fixed rate debt | Secured Debt | Maximum | |||||
Debt | |||||
Stated interest rate (as a percent) | 7.87% | 7.87% | |||
Variable-rate debt | Secured Debt | |||||
Debt | |||||
Carrying Value | $ 12,943,000 | $ 12,943,000 | 13,115,000 | ||
Stated interest rate (as a percent) | 3.83% | 3.83% | |||
Variable-rate debt | Secured Debt | London Interbank Offered Rate (LIBOR) | |||||
Debt | |||||
Variable rate, spread (as a percent) | 1.85% | ||||
Revolving Credit Facility | |||||
Debt | |||||
Carrying Value | $ 170,000,000 | $ 170,000,000 | 126,000,000 | ||
Weighted average interest rate (as a percent) | 3.19% | 3.19% | |||
Revolving Credit Facility | Minimum | London Interbank Offered Rate (LIBOR) | |||||
Debt | |||||
Variable rate, spread (as a percent) | 0.875% | ||||
Revolving Credit Facility | Maximum | London Interbank Offered Rate (LIBOR) | |||||
Debt | |||||
Variable rate, spread (as a percent) | 1.60% | ||||
Term Loan Facilities | |||||
Debt | |||||
Carrying Value | $ 348,185,000 | $ 348,185,000 | 347,959,000 | ||
Weighted average interest rate (as a percent) | 3.35% | 3.35% | |||
Aggregate additional borrowing capacity available | $ 350,000,000 | $ 350,000,000 | |||
Term Loan Facilities | Minimum | London Interbank Offered Rate (LIBOR) | |||||
Debt | |||||
Variable rate, spread (as a percent) | 0.90% | ||||
Term Loan Facilities | Maximum | London Interbank Offered Rate (LIBOR) | |||||
Debt | |||||
Variable rate, spread (as a percent) | 1.85% | ||||
3.60% Senior Notes | Unsecured senior notes | |||||
Debt | |||||
Carrying Value | 347,767,000 | $ 347,767,000 | 347,551,000 | ||
Debt instrument, face amount | $ 350,000,000 | $ 350,000,000 | |||
Stated interest rate (as a percent) | 3.60% | 3.60% | |||
Unamortized discount included in carrying value | $ 1,500,000 | $ 1,500,000 | 1,700,000 | ||
Interest rate on debt (as a percent) | 3.70% | 3.70% | |||
5.250% Senior Notes | Unsecured senior notes | |||||
Debt | |||||
Carrying Value | $ 246,887,000 | $ 246,887,000 | 246,645,000 | ||
Debt instrument, face amount | $ 250,000,000 | $ 250,000,000 | |||
Stated interest rate (as a percent) | 5.25% | 5.25% | |||
Unamortized discount included in carrying value | $ 2,800,000 | $ 2,800,000 | 3,000,000 | ||
Interest rate on debt (as a percent) | 5.49% | 5.49% | |||
3.70% Senior Notes | Unsecured senior notes | |||||
Debt | |||||
Carrying Value | $ 298,567,000 | $ 298,567,000 | 298,322,000 | ||
Debt instrument, face amount | $ 300,000,000 | $ 300,000,000 | |||
Stated interest rate (as a percent) | 3.70% | 3.70% | |||
Unamortized discount included in carrying value | $ 1,100,000 | $ 1,100,000 | 1,300,000 | ||
Interest rate on debt (as a percent) | 3.85% | 3.85% | |||
5.000% Senior Notes | Unsecured senior notes | |||||
Debt | |||||
Carrying Value | $ 296,918,000 | $ 296,918,000 | 296,731,000 | ||
Debt instrument, face amount | $ 300,000,000 | $ 300,000,000 | |||
Stated interest rate (as a percent) | 5.00% | 5.00% | |||
Unamortized discount included in carrying value | $ 2,600,000 | $ 2,600,000 | 2,700,000 | ||
Interest rate on debt (as a percent) | 5.15% | 5.15% | |||
Unsecured notes payable | |||||
Debt | |||||
Carrying Value | $ 1,228,000 | $ 1,228,000 | 1,287,000 | ||
Stated interest rate (as a percent) | 0.00% | 0.00% | |||
Unamortized discount included in carrying value | $ 333,000 | $ 333,000 | $ 373,000 |
Debt, Net (Details 2)
Debt, Net (Details 2) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Carrying amount and estimated fair value of debt | ||
Long-term debt | $ 1,871,445 | $ 1,828,333 |
Carrying Amount | Unsecured senior notes | ||
Carrying amount and estimated fair value of debt | ||
Long-term debt | 1,190,139 | 1,189,249 |
Carrying Amount | Other fixed-rate debt | ||
Carrying amount and estimated fair value of debt | ||
Long-term debt | 150,178 | 152,010 |
Carrying Amount | Variable-rate debt | ||
Carrying amount and estimated fair value of debt | ||
Long-term debt | 531,128 | 487,074 |
Estimated Fair Value | ||
Carrying amount and estimated fair value of debt | ||
Long-term debt | 1,899,265 | 1,867,577 |
Estimated Fair Value | Unsecured senior notes | ||
Carrying amount and estimated fair value of debt | ||
Long-term debt | 1,220,040 | 1,229,398 |
Estimated Fair Value | Other fixed-rate debt | ||
Carrying amount and estimated fair value of debt | ||
Long-term debt | 148,257 | 152,485 |
Estimated Fair Value | Variable-rate debt | ||
Carrying amount and estimated fair value of debt | ||
Long-term debt | $ 530,968 | $ 485,694 |
Interest Rate Derivatives (Deta
Interest Rate Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Fair value of interest rate derivatives and balance sheet classification | |||||
Interest rate swaps designated as cash flow hedges | $ 9,792 | $ 9,792 | $ 3,073 | ||
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income | |||||
Amount of Gain (Loss) Recognized in AOCI on Derivatives | 1,912 | $ (1,800) | 6,588 | $ (1,576) | |
Interest rate swaps | Interest Expense | |||||
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income | |||||
Amount of Gain (Loss) Reclassified from AOCI into Interest Expense on Statement of Operations | 47 | $ (941) | (198) | $ (2,125) | |
Interest rate swaps | Prepaid expenses and other current assets | |||||
Fair value of interest rate derivatives and balance sheet classification | |||||
Interest rate swaps designated as cash flow hedges | 9,792 | 9,792 | 3,073 | ||
Designated | |||||
Fair values of interest rate swap derivatives | |||||
Fair value of interest rate swaps | 9,792 | 9,792 | 3,073 | ||
Designated | Interest rate swaps | |||||
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income | |||||
Approximate loss amount to be reclassified from AOCI to interest expense over the next 12 months | (1,900) | (1,900) | |||
Designated | Interest rate swap, effective date September 1, 2015, swap two | |||||
Fair values of interest rate swap derivatives | |||||
Notional Amount | $ 100,000 | $ 100,000 | |||
Fixed rate (as a percent) | 1.73% | 1.73% | |||
Fair value of interest rate swaps | $ 745 | $ 745 | 252 | ||
Designated | Interest rate swap, effective October 13, 2015 | |||||
Fair values of interest rate swap derivatives | |||||
Notional Amount | $ 13,026 | $ 13,026 | |||
Fixed rate (as a percent) | 1.39% | 1.39% | |||
Fair value of interest rate swaps | $ 343 | $ 343 | 213 | ||
Notional amount of interest rate derivatives after scheduled amortization | 12,100 | 12,100 | |||
Designated | Interest rate swap, effective September 1, 2016, swap one | |||||
Fair values of interest rate swap derivatives | |||||
Notional Amount | $ 100,000 | $ 100,000 | |||
Fixed rate (as a percent) | 1.9013% | 1.9013% | |||
Fair value of interest rate swaps | $ 3,481 | $ 3,481 | 1,046 | ||
Designated | Interest rate swap, effective September 1, 2016, swap two | |||||
Fair values of interest rate swap derivatives | |||||
Notional Amount | $ 100,000 | $ 100,000 | |||
Fixed rate (as a percent) | 1.905% | 1.905% | |||
Fair value of interest rate swaps | $ 3,494 | $ 3,494 | 1,051 | ||
Designated | Interest rate swap, effective September 1, 2016, swap three | |||||
Fair values of interest rate swap derivatives | |||||
Notional Amount | $ 50,000 | $ 50,000 | |||
Fixed rate (as a percent) | 1.9079% | 1.9079% | |||
Fair value of interest rate swaps | $ 1,729 | $ 1,729 | $ 511 |
Redeemable Noncontrolling Int60
Redeemable Noncontrolling Interests (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018USD ($)joint_venture | Jun. 30, 2017USD ($) | |
Noncontrolling Interest [Abstract] | ||
Number of joint ventures with redeemable noncontrolling interests | joint_venture | 2 | |
Redeemable Noncontrolling Interest [Roll Forward] | ||
Beginning balance | $ 23,125 | $ 22,979 |
Contributions from noncontrolling interests | 143 | 0 |
Distributions to noncontrolling interests | (711) | (789) |
Net income attributable to noncontrolling interests | 1,229 | 1,140 |
Adjustment to arrive at fair value of interests | 758 | 401 |
Ending balance | $ 24,544 | $ 23,731 |
Equity (Details)
Equity (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Class of Stock [Line Items] | ||
Conversion of common units to common shares (in units/shares) | 53,817 | 187,000 |
Forward Equity Sale Agreement | ||
Class of Stock [Line Items] | ||
Proceeds from common shares issued under forward equity sale agreements | $ 52.3 | |
Forward Equity Sale Agreement | Common Shares | ||
Class of Stock [Line Items] | ||
Number of shares issued | 1,800,000 | |
Remaining capacity under forward equity sale agreements | 5,700,000 | |
Common Stock Issued to Public Under At-the-Market Program | Common Shares | ||
Class of Stock [Line Items] | ||
At-market stock, offering program established, remaining capacity | $ 70 |
Information by Business Segme62
Information by Business Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Segment financial information for real estate operations | |||||
Revenues from real estate operations | $ 129,162 | $ 128,297 | $ 257,440 | $ 255,064 | |
Property operating expenses | (49,446) | (48,628) | (100,397) | (97,147) | |
UJV NOI allocable to COPT | 1,202 | 1,198 | 2,401 | 2,400 | |
NOI from real estate operations | 80,918 | 80,867 | 159,444 | 160,317 | |
Additions to long-lived assets | 16,768 | 15,155 | 31,063 | 32,195 | |
Transfers from non-operating properties | 34,224 | 46,742 | 54,318 | 59,387 | |
Segment assets | 3,612,362 | 3,592,304 | 3,612,362 | 3,592,304 | $ 3,595,205 |
Defense/Information Technology Locations | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 105,227 | 102,281 | 209,347 | 202,469 | |
Property operating expenses | (38,241) | (37,571) | (76,704) | (74,584) | |
UJV NOI allocable to COPT | 1,202 | 1,198 | 2,401 | 2,400 | |
NOI from real estate operations | 68,188 | 65,908 | 135,044 | 130,285 | |
Additions to long-lived assets | 11,138 | 9,161 | 21,386 | 17,351 | |
Transfers from non-operating properties | 33,091 | 46,767 | 52,173 | 59,386 | |
Defense/Information Technology Locations | Fort Meade/BW Corridor | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 61,993 | 61,284 | 124,775 | 122,139 | |
Property operating expenses | (20,099) | (20,129) | (41,703) | (40,649) | |
UJV NOI allocable to COPT | 0 | 0 | 0 | 0 | |
NOI from real estate operations | 41,894 | 41,155 | 83,072 | 81,490 | |
Additions to long-lived assets | 8,151 | 5,853 | 15,272 | 9,275 | |
Transfers from non-operating properties | 3,035 | 18,159 | 20,221 | 31,575 | |
Defense/Information Technology Locations | Northern Virginia Defense/IT | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 13,118 | 11,095 | 25,679 | 22,802 | |
Property operating expenses | (4,909) | (4,219) | (9,632) | (8,671) | |
UJV NOI allocable to COPT | 0 | 0 | 0 | 0 | |
NOI from real estate operations | 8,209 | 6,876 | 16,047 | 14,131 | |
Additions to long-lived assets | 1,186 | 977 | 3,126 | 3,445 | |
Transfers from non-operating properties | 352 | 218 | 693 | 440 | |
Defense/Information Technology Locations | Lackland Air Force Base | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 12,382 | 13,029 | 23,825 | 24,663 | |
Property operating expenses | (7,494) | (8,130) | (14,092) | (14,932) | |
UJV NOI allocable to COPT | 0 | 0 | 0 | 0 | |
NOI from real estate operations | 4,888 | 4,899 | 9,733 | 9,731 | |
Additions to long-lived assets | 0 | 16 | 0 | 16 | |
Transfers from non-operating properties | 0 | 0 | 0 | 0 | |
Defense/Information Technology Locations | Navy Support Locations | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 8,127 | 7,449 | 15,997 | 14,459 | |
Property operating expenses | (3,431) | (3,025) | (6,735) | (6,234) | |
UJV NOI allocable to COPT | 0 | 0 | 0 | 0 | |
NOI from real estate operations | 4,696 | 4,424 | 9,262 | 8,225 | |
Additions to long-lived assets | 1,450 | 2,231 | 2,558 | 4,399 | |
Transfers from non-operating properties | 3 | 466 | 0 | 466 | |
Defense/Information Technology Locations | Redstone Arsenal | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 3,652 | 3,624 | 7,285 | 7,084 | |
Property operating expenses | (1,509) | (1,491) | (2,949) | (2,862) | |
UJV NOI allocable to COPT | 0 | 0 | 0 | 0 | |
NOI from real estate operations | 2,143 | 2,133 | 4,336 | 4,222 | |
Additions to long-lived assets | 351 | 84 | 430 | 216 | |
Transfers from non-operating properties | 26 | 1,709 | 470 | 1,705 | |
Defense/Information Technology Locations | Data Center Shells | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 5,955 | 5,800 | 11,786 | 11,322 | |
Property operating expenses | (799) | (577) | (1,593) | (1,236) | |
UJV NOI allocable to COPT | 1,202 | 1,198 | 2,401 | 2,400 | |
NOI from real estate operations | 6,358 | 6,421 | 12,594 | 12,486 | |
Additions to long-lived assets | 0 | 0 | 0 | 0 | |
Transfers from non-operating properties | 29,675 | 26,215 | 30,789 | 25,200 | |
Regional Office | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 15,296 | 17,462 | 30,580 | 35,738 | |
Property operating expenses | (7,169) | (7,082) | (15,047) | (14,568) | |
UJV NOI allocable to COPT | 0 | 0 | 0 | 0 | |
NOI from real estate operations | 8,127 | 10,380 | 15,533 | 21,170 | |
Additions to long-lived assets | 5,361 | 4,018 | 9,245 | 11,138 | |
Transfers from non-operating properties | 0 | (25) | 0 | (25) | |
Operating wholesale data centers | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 8,105 | 7,033 | 16,182 | 13,803 | |
Property operating expenses | (4,150) | (3,501) | (8,408) | (6,866) | |
UJV NOI allocable to COPT | 0 | 0 | 0 | 0 | |
NOI from real estate operations | 3,955 | 3,532 | 7,774 | 6,937 | |
Additions to long-lived assets | 81 | 2,005 | 117 | 3,579 | |
Transfers from non-operating properties | 1,133 | 0 | 2,145 | 8 | |
Other Segments | |||||
Segment financial information for real estate operations | |||||
Revenues from real estate operations | 534 | 1,521 | 1,331 | 3,054 | |
Property operating expenses | 114 | (474) | (238) | (1,129) | |
UJV NOI allocable to COPT | 0 | 0 | 0 | 0 | |
NOI from real estate operations | 648 | 1,047 | 1,093 | 1,925 | |
Additions to long-lived assets | 188 | (29) | 315 | 127 | |
Transfers from non-operating properties | 0 | 0 | 0 | 18 | |
Segment assets | |||||
Segment financial information for real estate operations | |||||
Segment assets | 3,042,452 | 2,993,078 | 3,042,452 | 2,993,078 | |
Segment assets | Defense/Information Technology Locations | |||||
Segment financial information for real estate operations | |||||
Segment assets | 2,420,153 | 2,309,105 | 2,420,153 | 2,309,105 | |
Segment assets | Defense/Information Technology Locations | Fort Meade/BW Corridor | |||||
Segment financial information for real estate operations | |||||
Segment assets | 1,269,525 | 1,267,635 | 1,269,525 | 1,267,635 | |
Segment assets | Defense/Information Technology Locations | Northern Virginia Defense/IT | |||||
Segment financial information for real estate operations | |||||
Segment assets | 396,139 | 357,747 | 396,139 | 357,747 | |
Segment assets | Defense/Information Technology Locations | Lackland Air Force Base | |||||
Segment financial information for real estate operations | |||||
Segment assets | 126,956 | 130,431 | 126,956 | 130,431 | |
Segment assets | Defense/Information Technology Locations | Navy Support Locations | |||||
Segment financial information for real estate operations | |||||
Segment assets | 190,537 | 195,732 | 190,537 | 195,732 | |
Segment assets | Defense/Information Technology Locations | Redstone Arsenal | |||||
Segment financial information for real estate operations | |||||
Segment assets | 106,374 | 109,586 | 106,374 | 109,586 | |
Segment assets | Defense/Information Technology Locations | Data Center Shells | |||||
Segment financial information for real estate operations | |||||
Segment assets | 330,622 | 247,974 | 330,622 | 247,974 | |
Segment assets | Regional Office | |||||
Segment financial information for real estate operations | |||||
Segment assets | 396,847 | 435,399 | 396,847 | 435,399 | |
Segment assets | Operating wholesale data centers | |||||
Segment financial information for real estate operations | |||||
Segment assets | 221,239 | 229,224 | 221,239 | 229,224 | |
Segment assets | Other Segments | |||||
Segment financial information for real estate operations | |||||
Segment assets | $ 4,213 | $ 19,350 | $ 4,213 | $ 19,350 |
Information by Business Segme63
Information by Business Segment (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Reconciliation of segment revenues to total revenues | ||||
Segment revenues from real estate operations | $ 129,162 | $ 128,297 | $ 257,440 | $ 255,064 |
Construction contract and other service revenues | 17,581 | 23,138 | 44,779 | 36,172 |
Total revenues | 146,743 | 151,435 | 302,219 | 291,236 |
Reconciliation of UJV NOI allocable to COPT to Equity Income in Unconsolidated Entities | ||||
UJV NOI allocable to COPT | 1,202 | 1,198 | 2,401 | 2,400 |
Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense | (828) | (827) | (1,652) | (1,651) |
Add: Equity in loss of unconsolidated non-real estate entities | (1) | (1) | (3) | (2) |
Equity in income of unconsolidated entities | 373 | 370 | 746 | 747 |
Computation of net operating income from service operations | ||||
Construction contract and other service revenues | 17,581 | 23,138 | 44,779 | 36,172 |
Construction contract and other service expenses | (16,941) | (22,315) | (43,157) | (34,801) |
NOI from service operations | $ 640 | $ 823 | $ 1,622 | $ 1,371 |
Information by Business Segme64
Information by Business Segment (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Reconciliation of NOI from real estate operations and NOI from service operations to (loss) income from continuing operations | ||||
NOI from real estate operations | $ 80,918 | $ 80,867 | $ 159,444 | $ 160,317 |
NOI from service operations | 640 | 823 | 1,622 | 1,371 |
Interest and other income | 1,439 | 1,583 | 2,798 | 3,309 |
Equity in income of unconsolidated entities | 373 | 370 | 746 | 747 |
Income tax expense | (63) | (48) | (118) | (88) |
Depreciation and other amortization associated with real estate operations | (33,190) | (32,793) | (66,702) | (65,852) |
Impairment losses | 0 | (1,625) | 0 | (1,625) |
General, administrative and leasing expenses | (7,628) | (7,859) | (14,920) | (16,470) |
Business development expenses and land carry costs | (1,234) | (1,597) | (2,848) | (3,290) |
Interest expense | (18,945) | (19,163) | (37,729) | (38,157) |
Less: UJV NOI allocable to COPT included in equity in income of unconsolidated entities | (1,202) | (1,198) | (2,401) | (2,400) |
Loss on early extinguishment of debt | 0 | (513) | 0 | (513) |
Income before gain on sales of real estate | $ 21,108 | $ 18,847 | $ 39,892 | $ 37,349 |
Information by Business Segme65
Information by Business Segment (Details 4) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Reconciliation of segment assets to total assets | |||
Assets | $ 3,612,362 | $ 3,595,205 | $ 3,592,304 |
Segment assets | |||
Reconciliation of segment assets to total assets | |||
Assets | 3,042,452 | 2,993,078 | |
Non-operating property assets | |||
Reconciliation of segment assets to total assets | |||
Assets | 431,661 | 452,824 | |
Other assets | |||
Reconciliation of segment assets to total assets | |||
Assets | $ 138,249 | $ 146,402 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) $ / shares in Units, $ in Thousands | Feb. 22, 2018shares | Jan. 01, 2018USD ($)employeePercentile_Rank$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares |
Restricted shares | |||
Share-Based Compensation | |||
Stock awards granted (in shares or units) | shares | 196,366 | ||
Aggregate grant date fair value | $ | $ 5,000 | ||
Assumptions used to value stock awards | |||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 25.38 | ||
Other Share-based Compensation Additional Disclosures | |||
Shares vested (in shares) | shares | 161,322 | ||
Weighted average fair value of shares vested (in dollars per share) | $ / shares | $ 29.72 | ||
Aggregate intrinsic value of awards upon vesting | $ | $ 4,100 | ||
Deferred share awards | |||
Share-Based Compensation | |||
Stock awards granted (in shares or units) | shares | 13,832 | ||
Aggregate grant date fair value | $ | $ 388 | ||
Assumptions used to value stock awards | |||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 28.08 | ||
Other Share-based Compensation Additional Disclosures | |||
Shares vested (in shares) | shares | 5,515 | ||
Weighted average fair value of shares vested (in dollars per share) | $ / shares | $ 29.32 | ||
Aggregate intrinsic value of awards upon vesting | $ | $ 154 | ||
2018 PSU Grants | Performance share units | |||
Share-Based Compensation | |||
Stock awards granted (in shares or units) | shares | 59,110 | ||
Aggregate grant date fair value | $ | $ 1,900 | ||
Potential earned PSUs payout for defined levels of performance under awards | |||
Earned PSUs payout (as a percent of PSUs granted) on 75th or greater percentile rank | 200.00% | ||
Earned PSUs payout (as a percent of PSUs granted) on 50th percentile rank | 100.00% | ||
Earned PSUs payout (as a percent of PSUs granted) on 25th percentile rank | 50.00% | ||
Performance share units granted on percentile rank below 25th (as a percent) | 0.00% | ||
The number of percentile ranks to fall between to earn interpolated PSUs between such percentile ranks, conditioned on the percentile rank exceeding 25% | Percentile_Rank | 2 | ||
Assumptions used to value stock awards | |||
Performance period of the award | 3 years | ||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 31.97 | ||
Baseline value per common share (in dollars per share) | $ / shares | $ 29.20 | ||
Expected volatility of common shares (as a percent) | 17.00% | ||
Risk-free interest rate (as a percent) | 2.04% | ||
2018 PSU Grants | Performance share units | Executives | |||
Share-Based Compensation | |||
Number of employees affected | employee | 3 | ||
2015 PSU Grants | Performance share units | Executives | |||
Other Share-based Compensation Additional Disclosures | |||
Shares issued (in shares) | shares | 13,328 | ||
Percentage of target | 75.00% |
Earnings Per Share ("EPS") an67
Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator: | ||||
Net income attributable to COPT/COPLP | $ 19,434 | $ 17,526 | $ 36,584 | $ 38,545 |
'Preferred share/unit dividends/distributions | 0 | (3,039) | 0 | (6,219) |
Issuance costs associated with redeemed preferred shares/units | 0 | (6,847) | 0 | (6,847) |
Income attributable to share-based compensation awards | (117) | (117) | (234) | (242) |
Numerator for basic and diluted EPS on net income attributable to COPT/COPLP common share/unit holders | $ 19,317 | $ 7,523 | $ 36,350 | $ 25,237 |
Denominator (all weighted averages): | ||||
Denominator for basic EPS/EPU (common shares/units) | 101,789 | 99,036 | 101,397 | 98,725 |
Dilutive effect of share-based compensation awards (shares) | 119 | 160 | 131 | 158 |
Denominator for diluted EPS/EPU (common shares/units) | 101,908 | 99,196 | 101,528 | 98,883 |
Basic EPS: | ||||
Net income attributable to COPT/COPLP common shareholders - basic (in dollars per share/unit) | $ 0.19 | $ 0.08 | $ 0.36 | $ 0.26 |
Diluted EPS: | ||||
Net income attributable to COPT/COPLP common shareholders - diluted (in dollars per share/unit) | $ 0.19 | $ 0.08 | $ 0.36 | $ 0.26 |
Corporate Office Properties, L.P. | ||||
Numerator: | ||||
Net income attributable to COPT/COPLP | $ 20,207 | $ 17,952 | $ 38,066 | $ 39,758 |
'Preferred share/unit dividends/distributions | (165) | (3,204) | (330) | (6,549) |
Issuance costs associated with redeemed preferred shares/units | 0 | (6,847) | 0 | (6,847) |
Income attributable to share-based compensation awards | (117) | (117) | (234) | (242) |
Numerator for basic and diluted EPS on net income attributable to COPT/COPLP common share/unit holders | $ 19,925 | $ 7,784 | $ 37,502 | $ 26,120 |
Denominator (all weighted averages): | ||||
Denominator for basic EPS/EPU (common shares/units) | 104,986 | 102,441 | 104,605 | 102,150 |
Dilutive effect of share-based compensation awards (shares) | 119 | 160 | 131 | 158 |
Denominator for diluted EPS/EPU (common shares/units) | 105,105 | 102,601 | 104,736 | 102,308 |
Basic EPS: | ||||
Net income attributable to COPT/COPLP common shareholders - basic (in dollars per share/unit) | $ 0.19 | $ 0.08 | $ 0.36 | $ 0.26 |
Diluted EPS: | ||||
Net income attributable to COPT/COPLP common shareholders - diluted (in dollars per share/unit) | $ 0.19 | $ 0.08 | $ 0.36 | $ 0.26 |
Earnings Per Share ("EPS") an68
Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") (Details 2) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Conversion of common units | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 3,197 | 3,405 | 3,208 | 3,425 |
Conversion of Series I preferred units | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 176 | 176 | 176 | 176 |
Forward Equity Sale Agreement | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 6,800 | 7,100 | ||
Weighted average restricted stock and deferred shares | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 458 | 455 | 451 | 424 |
Weighted average options | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 47 | 61 | 53 | 100 |
Corporate Office Properties, L.P. | Conversion of Series I preferred units | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 176 | 176 | 176 | 176 |
Corporate Office Properties, L.P. | Forward Equity Sale Agreement | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 6,800 | 7,100 | ||
Corporate Office Properties, L.P. | Weighted average restricted stock and deferred shares | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 458 | 455 | 451 | 424 |
Corporate Office Properties, L.P. | Weighted average options | ||||
Antidilutive securities | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 47 | 61 | 53 | 100 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | May 25, 2017USD ($) | Jun. 30, 2018USD ($)Property | Dec. 31, 2017USD ($) | Aug. 31, 2010USD ($) |
Capital Leases | ||||
Capital lease term | 99 years | |||
Purchase option | $ 1 | |||
Capital lease obligation | $ 16,100,000 | $ 640,000 | $ 15,853,000 | |
Environmental Indemnity Agreement | ||||
Number of properties which were provided environmental indemnifications | Property | 3 | |||
Maximum additional costs agreed to be paid by the entity under environmental indemnification agreement | $ 19,000,000 | |||
New Development and Redevelopment Obligations | ||||
Capital Leases | ||||
Purchase obligations | 89,400,000 | |||
Capital Expenditures For Operating Properties | ||||
Capital Leases | ||||
Purchase obligations | 41,500,000 | |||
Third Party Construction | ||||
Capital Leases | ||||
Purchase obligations | 4,500,000 | |||
Other Obligations | ||||
Capital Leases | ||||
Purchase obligations | $ 2,400,000 | |||
Specialty Tax Guarantee | Anne Arundel County, Maryland | Tax Incremental Financing Bond | ||||
Loss Contingencies [Line Items] | ||||
Loan amount | $ 30,000,000 |
Commitments and Contingencies70
Commitments and Contingencies - Operating Leases Future Minimum Payments (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 644 |
2,019 | 1,277 |
2,020 | 1,270 |
2,021 | 1,274 |
2,022 | 1,158 |
Thereafter | 84,611 |
Total | $ 90,234 |
Commitments and Contingencies71
Commitments and Contingencies - Capital Leases Future Minimum Payments (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum rental payments due in 2020 | $ 660 |
Less: Amount representing interest | (20) |
Capital lease obligation | $ 640 |
Uncategorized Items - ofc-20180
Label | Element | Value |
Subsidiaries [Member] | ||
Restricted Cash | us-gaap_RestrictedCash | $ 2,756,000 |
Restricted Cash | us-gaap_RestrictedCash | 2,721,000 |
Restricted Cash | us-gaap_RestrictedCash | 2,570,000 |
Restricted Cash | us-gaap_RestrictedCash | $ 4,105,000 |