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QuickLinks-- Click here to rapidly navigate through this documentUNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,
Washington, D.C. 20549FORM 10-K
(Mark one) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,
19992001or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from
______________to______________Commission file number 0-20047
CORPORATE OFFICE PROPERTIES TRUST (ExactCorporate Office Properties Trust
(Exact name of registrant as specified in its charter)MARYLAND 23-2947217 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 8815 CENTRE PARK DRIVE, SUITE 400 21045 COLUMBIA, MD (Address of principal executive offices) (Zip Code)
Maryland
(State or other jurisdiction of
incorporation or organization)23-2947217
(IRS Employer
Identification No.)
8815 Centre Park Drive, Suite 400
Columbia, MD
(Address of principal executive offices)
21045
(Zip Code)Registrant's telephone number, including area code:(410) 730-9092
----------------------------------------Securities registered pursuant to Section 12(b) of the Act:
(Title of Each Class) (Name of Exchange on Which Registered) COMMON SHARE OF BENEFICIAL INTEREST, NEW YORK STOCK EXCHANGE $0.01 PAR VALUE SERIES B CUMULATIVE REDEEMABLE PREFERRED SHARE OF BENEFICIAL INTEREST NEW YORK STOCK EXCHANGE $0.01 PAR VALUE
(Title of Each Class) (Name of Exchange on Which Registered) Common Shares of beneficial interest, $0.01 par value New York Stock Exchange
Series B Cumulative Redeemable Preferred Shares
of beneficial interest, $0.01 par value
New York Stock Exchange
Series E Cumulative Redeemable Preferred Shares
of beneficial interest, $0.01 par value
New York Stock Exchange
Series F Cumulative Redeemable Preferred Shares
of beneficial interest, $0.01 par value
New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:
NONENoneIndicate by check mark whether the registrant (1)
registranthas filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] NoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(Section(§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[ ][X]The aggregate market value of the voting stock held by non-affiliates of the registrant was
$74,850,000approximately $283.0 million based on the closing price ofsuchthe Common Shares of beneficial interest on the New York Stock Exchange on March14, 2000.19, 2002; for purposes of calculating this amount only, affiliates are defined as Trustees, executive owners and beneficial owners of more than 5% of the Registrant's outstanding Common Shares of beneficial interest. At March14, 2000 17,658,54619, 2002, 22,756,851 shares of the Registrant's Common Shares ofBeneficial Interest,beneficial interest, $0.01 par value, were outstanding.Portions of the annual shareholder report for the year ended December 31,
19992001 are incorporated by reference into Parts I and II of this report and portions of the proxy statement of the Registrant for its20002002 Annual Meeting of Shareholders to be filed within 120 days after the end of the fiscal year covered by this Form 10-K are incorporated by reference into Part III of this Form 10-K.================================================================================
PART I ITEM 1. BUSINESS.....................................................................................3BUSINESS 3 ITEM 2. PROPERTIES...................................................................................9PROPERTIES 14 ITEM 3. LEGAL PROCEEDINGS...........................................................................13PROCEEDINGS20 ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................13HOLDERS20
PART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.......................14MATTERS21 ITEM 6. SELECTED FINANCIAL DATA TABLE...............................................................1421 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...............................................................................14OPERATIONS21 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..................................14RISK21 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................................................14DATA21 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE........................................................................14DISCLOSURE21
PART IIIITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT...........................................14REGISTRANT21 ITEM 11. EXECUTIVE COMPENSATION......................................................................14COMPENSATION21 ITEM 12. SECURITY OWNERSHIP ANDOF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT.............................14MANAGEMENT21 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................................14TRANSACTIONS21
PART IVITEM 1414.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.............................148-K21 This Form 10-K contains "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995, that are based on our current expectations, estimates and projections about future events and financial trends affecting the financial condition of
theour business. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are not guarantees of future performance, events or results and involve potential risks and uncertainties. Accordingly, actual results may differmaterially.materially from those addressed in the forward-looking statements. We undertake no obligation to publicly updateanyforward-looking statements, whether as a result of new information, future events or otherwise.Important
factsfactors that may affect these expectations, estimates or projections include, but are not limited to: our ability to borrow on favorable terms; general economic and business conditions, which will, among other things, affect office property demand and rents, tenant creditworthiness, interest rates and financing availability; adverse changes in the real estate markets including, among other things, increased competition with other companies; risks of real estate acquisition and development; governmental actions and initiatives and environmental requirements.2For further information on factors that could impact the company and the statements contained herein, you should refer to the "Risk Factors" section. OUR COMPANY
Corporate Office Properties Trust ("COPT") isGeneral. We are a
fully integratedfully-integrated and self-managed real estate investment trust ("REIT"). We focusthat focuses principally on the ownership, management, leasing, acquisition and development of suburban officebuildingsproperties located in select submarkets in the Mid-Atlantic region of the United States. As of December 31,1999,2001, we:- -
- •
- owned
77 suburban98 office properties in Maryland, Pennsylvania,andNew Jersey and Virginia containing approximately5.97.8 million rentable square feet- -(including two properties ownedtwo retail properties containing approximately 191,000 rentable square feet, - -through joint ventures) plus developable land;- •
- achieved a
97.5%96% occupancy rate on ourproperties, - -properties; and- •
- had construction underway on
fivesix new buildings totalingapproximately 407,000532,000 square feet that were49%54.9% pre-leasedand redevelopment underway on a 57,000 square foot existing building that was 100% pre-leased, and - - owned options to purchase 72 acres(excluding the construction activities ofland contiguous to certain of our office properties from related parties.two joint ventures).We conduct almost all of our operations through our
Operating Partnership,operating partnership, Corporate Office Properties, L.P. (the "Operating Partnerhship"), a Delaware limited partnership, for which we are the managing general partner. Our Operating Partnership owns real estate both directly and through subsidiaries. The Operating Partnership also owns Corporate Office Management, Inc. ("COMI") (together with its subsidiaries defined as the "Service Companies"). COMI has three subsidiaries: Corporate Realty Management, LLC ("CRM"), Corporate Development Services, LLC ("CDS") and Martin G. Knott and Associates, LLC ("MGK"). CRM manages our properties and also provides corporate facilities management for select third parties. CDS provides construction and development services predominantly to us. MGK provides heating and air conditioning installation, maintenance and repair services. COMI owns 100% of CRM and CDS and 80% of MGK.Interests in our Operating Partnership are in the form of Common and Preferred Units. As of December 31,
1999,2001, we owned approximately60%66% of the outstanding Common Units and approximately70%81% of the outstanding Preferred Units. The remaining Common and Preferred Units in our Operating Partnership were owned by third parties, which included certain of our officers andtrustees. The Operating Partnership also owns the principal economic interest and, collectively with our Chief Executive Officer and Chief Operating Officer, 49.5% of the voting stock of Corporate Office Management, Inc. ("COMI"). COMI provides us with asset management and managerial, financial and legal support. COMI also has three subsidiaries: Corporate Realty Management, LLC ("CRM"), Corporate Development Services, LLC ("CDS") and Martin G. Knott and Associates, LLC ("MGK"). CRM manages approximately 16.6 million square feet for us and for third parties as of December 31, 1999 and also provides corporate facilities management. CDS provides construction and development services predominantly to us. MGK provides heating and air conditioning maintenance and repair services. COMI owns 75% of CRM, 100% of CDS and 80% of MGK.Trustees.We believe that we are organized and have operated in a manner that permits us to satisfy the requirements for taxation as a REIT under the Internal Revenue Code of 1986, as amended, and we intend to continue to operate in such a manner. If we qualify for taxation as a REIT, we generally will not be subject to
federalFederal income tax on our taxable income that is distributed to our shareholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distribute to its shareholders at least95%90% of its annual taxable income (excluding net capital gains).Our executive offices are located at 8815 Centre Park Drive, Suite 400, Columbia,
MDMaryland 21045 and our telephone number is (410) 730-9092.3
SIGNIFICANT 1999 DEVELOPMENTSSignificant 2001 Developments
During
1999,2001, we acquired2914 suburban office properties. A summary of these acquisitions follows (dollars in thousands):
Number Date of of Total Rentable Initial Project Name Location Acquisition Buildings Square Feet Cost - --------------------------------- -------------------- ----------- ----------- -------------- --------Airport Square XXI Linthicum, MD 2/23/99 1 67,913 $ 6,751 Parkway Crossing Properties Hanover, MD 4/16/99 2 99,026 9,524 Commons Corporate Center (1) Hanover, MD 4/28/99 8 250,413 25,442 Princeton Executive Center Monmouth Junction, NJ 6/24/99 1 61,300 6,020 Gateway Central (2) Harrisburg, PA 8/12/99 3 55,726 5,960 Gateway International (3) Linthicum, MD 11/18/99 2 198,438 24,316 Corporate Gateway Center (4) Harrisburg, PA 12/3/99 9 417,138 40,082 Timonium Business Park Timonium, MD 12/21/99 2 233,623 30,001 Brown's Wharf (5) Baltimore, MD 12/21/99 1 103,670 10,607
Project Name Location Date of
AcquisitionNumber of
BuildingsTotal
Rentable
Square FeetInitial Cost State Farm Properties(1) Columbia, MD 5/14/01 3 141,530 $ 15,502 Airport Square Partners Properties(2) Linthicum, MD 7/2/01 5 314,594 33,858 Airport Square I Linthicum, MD 8/3/01 1 97,161 11,479 Gateway 63 Properties Columbia, MD 8/30/01 4 187,132 23,866 Washington Technology Park(3) Chantilly, VA 11/30/01 1 470,406 58,968
- (1)
Does not include $400 allocated to projects under construction and $50 relating to- Includes a 30,855 square foot office building undergoing redevelopment.
- (2)
- On March 7, 2001, we acquired a 40% interest in Airport Square Partners, LLC. On March 21, 2001, this joint venture acquired five office buildings for $33,617. We accounted for this investment using the equity method of accounting until July 2, 2001, when we acquired the remaining 60% interest in Airport Square Partners, LLC. The amount reported on the table above is the recorded cost of the five office buildings upon completion of these transactions.
- (3)
- Includes a contiguous 17 acre land
under a ground lease. (2) Acquired 89% ownership interest from an officer and Trustee of ours. (3) Does not include $1,973 allocated to projects under construction. (4) Acquired 49% interest on September 15, 1999. Acquired remaining 51% interest on December 3, 1999. (5) The Brown's Wharf property was sold on 6/24/99 and then contributed into the Operating Partnership by the purchaser on 12/21/99 (see Note 4 to the consolidated financial statements as of andparcel forthe year ended December 31, 1999 included in Exhibit 13.1 to this Form 10-K and incorporated by reference).future development.During
1999,2001, we also acquiredsixthree parcels of land that are contiguous to certain of our operatingproperties and a 57,000 square foot warehouse facility located in South Brunswick, New Jersey that we are redeveloping into office space.properties.During
1999,2001, we completed the construction oftwoone officebuildingsbuilding totaling202,21978,460 squarefeet. The office buildings arefeet located inAnnapolis Junction, Maryland andColumbia, Maryland. Costs incurred onthese propertiesthis building through December 31,19992001 totaled$23.2$13.5 million.We also completed an expansion project that increased the rentable square footage of one of our properties by 6,350 square feet.As of December 31,19992001, we had construction underway onfivesix new buildings andredevelopment underway on an existing building.investments in joint ventures constructing two additional new buildings.We sold
nine propertiesone property during19992001 for$53.5$11.5 million, generating net proceeds after property level debt repayments and transaction costsand operating revenue and cost pro rationsof$31.2$3.8 million.A summary of these sales follows (dollarsThis building was located inthousands):
Property Date of Total Rentable Sales Project Name Location Type (1) Sale Square Feet Price - --------------------- ------------------ -------- ------- -------------- ---------Cranberry Square Westminster, MD R 1/22/99 139,988 $ 18,900 Delafield Retail Delafield, WI R 2/26/99 52,800 3,303 Indianapolis Retail Indianapolis, IN R 3/09/99 67,541 5,735 Plymouth Retail Plymouth, MN R 3/09/99 67,510 5,465 Glendale Retail Glendale, WI R 5/04/99 36,248 1,900 Peru Retail Peru, IL R 6/16/99 60,232 3,750 Browns Wharf (2) Baltimore, MD O 6/24/99 103,670 10,575 Oconomowoc Retail Oconomowoc, WI R 6/25/99 39,272 2,575 Brandon One Riveria Beach, MD O 12/30/99 38,513 1,260(1) "R" indicates retail property; "O" indicates office property. (2) The Brown's Wharf property was sold on 6/24/99 and then contributed into the Operating Partnership by the purchaser on 12/21/99 (see Note 4 to the consolidated financial statements as of and for the year ended December 31, 1999 included in Exhibit 13.1 to this Form 10-K and incorporated by reference). 4Cranbury, New Jersey. A summary of our significant financing activities during
19992001 follows:- -
- •
- we raised approximately $11.9 million from the sale of 544,000 4.00% Series D Cumulative Convertible Redeemable Preferred Shares of beneficial interest (the "Series D Preferred Shares") to a private investor in January 2001;
- •
- we raised approximately $26.9 million from the sale of 1,150,000 10.25% Series E Cumulative Redeemable Preferred Shares of beneficial interest (the "Series E Preferred Shares") through an underwritten public offering in April 2001;
- •
- we raised approximately $33.6 million from the sale of 1,425,000 9.875% Series F Cumulative Redeemable Preferred Shares of beneficial interest (the "Series F Preferred Shares") through an underwritten public offering in September 2001;
- •
- we received $244.1 million in borrowings from new mortgage loans, including six fixed-rate, long-term mortgage loans totaling approximately $129.4 million that bear interest at a weighted average interest rate of 7.4% and have a weighted average term of 7.1 years; and
- •
- we increased our existing secured credit facility (the "Revolving Credit Facility") to $125.0 million and extended its maturity three years through March 2004.
4
Subsequent Event
In March 2002, we completed the sale of
1,250,000 Series B Cumulative Redeemable Preferred10,961,000 of our Common Shares of beneficial interest (the "Common Shares") to the public at a price of$25.00$12.04 pershare, - - we issued 974,662 Series C Preferred Units inshare; Constellation Real Estate, Inc. ("Constellation") was the owner of 8,876,172 of these shares and 2,084,828 of these shares were new issues. With the completion of this transaction, Constellation, which had owned 42% of our Common Shares, is no longer a shareholder. We contributed the net proceeds from the newly-issued shares to our Operating Partnershipvalued at $25.00 per share, - - we issued 577,251in exchange for 2,084,828 CommonUnits in ourUnits. The Operating Partnership- -used most of the proceeds to pay down our Revolving Credit Facility.In March 2002, we
received $165.2also further increased our Revolving Credit Facility from $125.0 millionfrom new borrowing arrangements,to $150.0 million.Corporate Objectives and
- - we obtained a $50.0 million line of credit with Prudential Securities Credit Corporation bearing an interest rate of LIBOR plus 1.5% on outstanding borrowings (no borrowings were made under this loan during 1999). SUBSEQUENT EVENT On February 10, 2000, we entered into a $6.9 million construction loan facility with Summit Bank to finance the redevelopment of a 57,000 square foot warehouse facility into office space. This loan bears interest at LIBOR plus 1.75%. The loan matures on February 28, 2001 and may be extended for a two-year period, subject to certain conditions. OUR OPERATING STRATEGYStrategiesOur primary
businessobjectives are to achieve sustainable long-term growth in funds from operations per share and to maximize long-term shareholder value. We seek to achieve these objectivesby implementing our focused operating and growth strategies. Key elements of this strategy include: SUBURBAN OFFICE FOCUS. We focusthrough focusing on the ownership, management, leasing, acquisition and development of suburban office properties.We believe office buildings currently offer the strongest fundamentalsImportant elements ofany real estate property type, and suburban office properties offer us very attractive investment opportunities. The three key factors driving the strong fundamentals of suburban office propertiesour strategy are(i) increasing rental rates, (ii) low vacancy rates, and (iii) a limited supply of new office product. Additionally, we believe that many companies are relocating to, and expanding in, suburban locations because of total lower costs, proximity to residential housing and better quality of life. GEOGRAPHIC AND SUBMARKET FOCUS.set forth below:Geographic Focus. We focus on operating in select, demographically strong and growing
markets,submarkets, primarily within the Mid-Atlantic region. By concentrating our operations in this regionof the United States, whereand other selected regions, we believe that wecan achievehave achieved the critical mass necessary to maximize management efficiencies, operating synergiestenant servicesand competitive advantages through our acquisition, property management and development programs. By focusing withinspecific submarketsselected regions where our management has extensive experience and market knowledge, we believe that we can achievesubmarketregional prominence that will lead to better operating results.OFFICE PARK FOCUS.Office Park Focus. We focus on owning and operating properties located in established suburban corporate office parks. We believe the suburban office park environment generally attracts longer-term tenants, including high-quality corporations seeking to attract and retain quality work forces, because these parks are typically situated along major transportation routes with easy access to support services, amenities and residential communities.
CORPORATE TENANTS. We focus on leasing to large, high-quality corporations with significant space requirements.Corporate Tenants. To enhance the stability of our cash flow, we typically structure our leases with terms ranging from three to ten years. We focus on leasing to large, high-quality corporations with significant space requirements. We believe this strategy enables us to establish long-term relationships with quality tenants and, coupled with our geographic and submarket focus, enhances our ability to become the low-cost provider and the landlord of choice in our targeted markets.
ACQUISITION STRATEGIES.Acquisition Strategies. We actively pursue the acquisition of suburban office properties through
oura three-part acquisition strategy. This strategy includes targeting: (i) entity acquisitions of significant portfolios along with their management to establish prominent ownership positions in newsubmarketsneighboring regions and enhance our managementinfrastructure and local expertise,infrastructure; (ii) portfolio purchases to enhance our existing submarket positions as well as enter selective new5submarkets,neighboring regions; and (iii) opportunistic acquisitions of individual properties in our existingsubmarkets.regions. We seek to make acquisitions at attractive yields and below replacement costs. We alsolook atseek to increase cash flow and enhance the underlying value of each acquisitionfor opportunities to repositionthrough repositioning the properties andachieve rental increases through re-leasing activities. PROPERTY DEVELOPMENT STRATEGIES.capitalizing on existing below market leases and expansion opportunities.Property Development Strategies. We balance our acquisition program through selective development and expansion of suburban office properties
whenas market conditions and leasing opportunities support favorable risk-adjusted returns. We pursue development opportunities principally in response to the needs of existing and prospective new tenants. We develop sites that are in close proximity to our existing properties. We believe developing such sites enhances our ability to effectively meet tenant needs and efficiently provide critical tenant services.THIRD PARTY MANAGEMENT. In addition5
Tenant Services. We seek to
operatingcapitalize on our geographic focus andleasingcritical mass of properties in ourportfolio, we provide, through CRM, property management and a full-range of fee-basedcore regions by providing high level, comprehensive services toa wide variety of institutional owners.our tenants. We conduct our tenant services activities through our subsidiary, COMI. We believethis activity provides us withthat providing such services is anadditional sourceintegral part ofstable income and gives us competitive advantages. These advantages include enhanced tenant satisfaction and property performance and lead to potential tenant expansions, acquisitions and build-to-suit development opportunities. Additionally, we believe CRM's established infrastructure has the capacity to support a larger asset base and will enhanceour ability toexpand our portfolio in existing and new submarkets without significantly increasing our overhead. TENANT SERVICES. Our investment through COMI in CRM, CDS and MGK has played a vital role in maintaining ourachieve consistently high levels of tenant satisfaction and retention.We believe that further expanding our tenant service capabilities will continue to contribute positively to the operations of our properties and become an additional source of revenue and earnings. During 2000, CRM acquired 100% of the interests in Corporate Realty Advisors, an entity that provides lease audit services. Other services we expect to begin providing in 2000 include energy management and concierge services. INTERNAL GROWTH STRATEGIES.Internal Growth Strategies. We aggressively manage our portfolio to maximize the operating performance of each property through: (i) proactive property management and leasing, (ii) achieving operating efficiencies through increasing economies of scale, (iii) renewing tenant leases and re-tenanting at increased rents where market conditions permit, and (iv) expanding our
third party property management business and othertenant and real estate service capabilities. These strategies are designed to promote tenant satisfaction, resulting in higher tenant retention and the attraction of new tenants.FINANCING POLICYFinancing Policy
We pursue a capitalization strategy aimed at maintaining a flexible capital structure in order to facilitate consistent growth and performance through all real estate and economic market conditions. Key components of our policy include:
DEBT STRATEGY.Debt Strategy. We primarily utilize property-level mortgage debt as opposed to corporate unsecured debt. We believe the commercial mortgage debt market is a more mature and generally a more stable market for real estate companies, which provides us with greater access to capital on a more consistent basis and, generally, on more favorable terms. Additionally, we seek to utilize long-term,
fixed ratefixed-rate debt, which we believe enhances the stability of our cash flow. On a consolidated basis, we seek to maintain a minimum debt service coverage ratio of1.6 to 1.0,1.6x, which we believe is generally consistent with the current minimum investment grade requirement for mortgages securing commercial real estate. We believe this ratio is appropriate for a seasoned portfolio of suburban officeproperties. EQUITY STRATEGY.buildings. However, despite our current intention to maintain this policy, we are not obligated to do so and we may change this policy without shareholder consent.Equity Strategy. We seek to maximize the benefits of our Operating
PartnershipPartnership's organizational structure by emphasizing the issuance of units in our Operating Partnershipunitsas an equity source to finance our property acquisition program. This strategy provides prospective property sellers the ability to defer taxable gains by receiving our units in lieu of cash and reduces the need for us to access the equity and debt markets.MORTGAGE LOANS PAYABLEMortgage Loans Payable
For information relating to future maturities of our mortgage loans payable, you should refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note
78 to the Consolidated Financial Statements included in Exhibit 13.1 to this Form 10-K which is incorporated herein by reference.6INDUSTRY SEGMENTSIndustry Segments
We operate in one industry segment: suburban office real estate. Our suburban office real estate operations have five
segments:geographical segments all located in the Mid-Atlantic region of the United States: Baltimore/Washington Corridor,office,Greater Philadelphia,office,Northern/Central New Jersey,office,Greater Harrisburgofficeandretail.Northern Virginia. For information relating to these segments, you should refer to Note1314 of our Consolidated Financial Statements included in Exhibit 13.1 to this Form 10-K which is incorporated herein by reference.EMPLOYEESEmployees
We
together with COMI and its subsidiaries,employed149157 persons as of December 31,1999. COMPETITION2001. We believe that our relations with employees are good.6
Competition
The commercial real estate market is highly competitive. Numerous commercial properties compete for tenants with our properties and our competitors are building additional properties in the markets in which our properties are located. Some of these competing properties may be newer or have more desirable locations than our properties. If the market does not absorb newly constructed space, market vacancies will increase and market rents may decline. As a result, we may have difficulty leasing space at our properties and may be forced to lower the rents we charge on leases to compete effectively.
We also compete for the purchase of commercial property with many entities, including other publicly-traded commercial REITs. Many of our competitors have substantially greater financial resources than ours. In addition, our competitors may be willing to accept lower returns on their investments. If our competitors prevent us from buying
the amount ofproperties that we have targeted for acquisition, we may not be able to meet our property acquisition and development goals.MAJOR TENANTSRISK FACTORS
Set forth below are certain risks relating to our business and the ownership of our securities. The risks described below are not all the risks that we face. You should consider all of the information in this Form 10-K and its Exhibits, including Exhibit 13.1 which sets forth portions of the Annual Report of Corporate Office Properties Trust as of and for the year ended December 31, 2001.
We may suffer adverse consequences as a result of our reliance on rental revenues for our income. We earn income from renting our properties. Our operating costs do not necessarily fluctuate in relation to changes in our rental revenue. This means our costs will not necessarily decline even if our revenues do. Also, our operating costs may increase while our revenues do not.
For new tenants or upon lease expiration for existing tenants, we generally must make improvements and pay other tenant-related costs for which we may not receive increased rents. We also make building-related capital improvements for which tenants may not reimburse us.
If our properties do not generate income sufficient to meet our operating expenses and capital costs, we may have to borrow additional amounts to cover these costs. In such circumstances, we would likely have lower profits or possibly incur losses. We may also find in such circumstances that we are unable to borrow to cover such costs. Moreover, there may be less or no cash available for distributions to our shareholders.
Adverse developments concerning some of our key tenants could have a negative impact on our revenue. As of December 31,
1999,2001, ten tenants accounted for45.0%41.8% of our total annualizedoffice rents. Tworental revenue. Three of these tenants accounted for approximately23.3%24.2% of our total annualizedoffice rents.rental revenue. Our largest tenant is the United States Federal government, two agencies of which lease space in1314 of our office properties. These leases represented approximately15.5%12.1% of our total annualizedoffice rentsrental revenue as of December 31,1999.2001. Generally, these government leases provide for one-year terms or provide for early termination rights. The government may terminate its leases if, among other reasons, the Congress of the United States fails to provide funding. The Congress of the United States has appropriated funds for these leases through September 2002. Our second largest tenant, AT&T Local Services, which combined with its affiliates represented 6.4% of2000.our total annualized rental revenue as of December 31, 2001, occupies space in five of our properties. Thesecondthird largest tenant, Unisys Corporation, represented7.8%5.7% of our total annualizedoffice rentsrental revenue as of December 31,1999 and 16.9% of our 1999 net operating income since Unisys pays all of its property operating expenses directly. Unisys occupies2001, occupying space in three of ourofficeproperties. Ifeither the Federal government or Unisys failsany of our three largest tenants fail to make rental payments to us, or if the Federal government elects to terminate several of its leases and the space cannot be re-leased on satisfactory terms, our financial performance and ability to make expected distributions to shareholders would be materially adversely affected.GEOGRAPHICAL CONCENTRATION7
We rely on the ability of our tenants to pay rent, and would be harmed by their inability to do so. Our performance depends on the ability of our tenants to fulfill their lease obligations by paying their rental payments in a timely manner. As previously discussed, we also rely on a few major tenants for a large percentage of our total rental revenue. If one of our major tenants or a number of our smaller tenants were to experience financial difficulties, including bankruptcy, insolvency or general downturn of business, our financial performance and ability to make expected distributions to shareholders could be materially adversely affected.
Our properties are geographically concentrated in the Mid-Atlantic region, particularly in the Baltimore/Washington Corridor, and we may therefore suffer economic harm as a result of adverse conditions in that region. All of our
officeproperties are located in the Mid-Atlantic region of the United States, and56.4%as ofour total revenues for the year endedDecember 31,1999 was earned from2001, ourofficeproperties located in the Baltimore/WashingtonCorridor.Corridor accounted for 65.1% of our annualized rental revenue. Consequently, we do not have a broadgeographicalgeographic distribution of our properties. As a result, a decline in the real estate market or economic conditions generally in the Mid-Atlantic region, and particularly in the Baltimore/Washington Corridor, could have amaterialmaterially adverseaffecteffect on ouroperations. DEVELOPMENT AND CONSTRUCTION ACTIVITIESoperations and financial position.We would suffer economic harm if we are unable to renew our leases on favorable terms. When leases expire for our properties, our tenants may not renew or may renew on terms less favorable to us than the terms of the original lease. As of December 31, 2001, our percentage of total annualized rental revenue subject to scheduled lease expirations for the next five calendar years were:
2002 13.6 % 2003 10.9 % 2004 12.6 % 2005 11.2 % 2006 9.4 % Our government leases generally provide for early termination rights; the percentages reported above assume no exercise of such early termination rights.
If a tenant leaves, we can expect to incur a vacancy for some period of time as well as higher capital costs than if a tenant renews. In either case, our financial performance and ability to make expected distributions to our shareholders could be adversely affected.
We may not be able to compete successfully with other entities that operate in our industry. The commercial real estate market is highly competitive. Numerous commercial properties compete for tenants with our properties, and our competitors are building additional properties in the markets in which our properties are located. Some of these competing properties may be newer or have more desirable locations than our properties. If the market does not absorb newly constructed space, market vacancies will increase and market rents may decline. As a result, we may have difficulty leasing space at our properties and we may be forced to lower the rents we charge on new leases to compete effectively, which would adversely affect our financial performance.
Our business strategy includes the acquisition of properties, which may be hindered by various circumstances. We compete for the purchase of commercial property with many entities, including other publicly traded commercial REITs. Many of our competitors have substantially greater financial resources than ours. In addition, our competitors may be willing to accept lower returns on their investments. If our competitors prevent us from buying the properties that we have targeted for acquisition, we may not be able to meet our property acquisition and development goals. We may incur costs on unsuccessful acquisitions that we will not be able to recover. The operating performance of our property acquisitions may also fall short of our expectations, which could adversely affect our financial performance.
8
We may be unable to execute on our plans to develop and construct additional properties. Although the majority of our investments are in currently leased properties,
to a lesser extentwe also develop and construct properties, including some which are not fully pre-leased. When we develop and construct properties, we run the risks thatdevelopmentactual costs will exceed our budgets, that we will experience constructionandor development delays and thatprojectprojected leasing will notoccur. 7ENVIRONMENTAL MATTERSoccur, all of which could adversely affect our financial performance and ability to make expected distributions to our shareholders. In addition, we generally do not obtain construction financing commitments until the development stage of a project is complete and construction is about to commence. We may find that we are unable to obtain financing needed to continue with the construction activities for such projects.We may suffer economic harm as a result of the actions of our joint venture partners. We invest in certain entities where we are not the exclusive investor or principal decision maker. Aside from our inability to unilaterally control the operations of these joint ventures, our investments entail the additional risks that: (i) the other parties to these investments may not fulfill their financial obligations as investors; and (ii) the other parties to these investments may take actions that are inconsistent with our objectives.
We are subject to possible environmental liabilities. We are subject to various Federal, state and local environmental laws. These laws can impose liability on property owners or operators for the costs of removal or remediation of
certainhazardous substances released on a property, even if the property owner was not responsible for the release of the hazardous substances. Costs resulting from environmental liability could be substantial. The presence of hazardous substances on our properties may also adversely affect occupancy and our ability to sell or borrow against those properties. In addition to the costs of government claims under environmental laws, private plaintiffs may bring claims for personal injury or similar reasons. Various laws also impose liability for the costs of removal or remediation of hazardous substances at the disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances at such a facility is potentially liable under such laws. These laws often impose liability whether or not the facility is or ever was owned or operated by such person.8ITEMReal estate investments are illiquid, and we may not be able to sell our properties on a timely basis when we determine it is appropriate to do so. Equity real estate investments like our properties are relatively difficult to sell and convert to cash quickly, especially if market conditions are depressed. Such illiquidity will tend to limit our ability to vary our portfolio of properties promptly in response to changes in economic or other conditions. The Internal Revenue Code imposes certain penalties on a REIT that sells property held for less than four years. In addition, for certain of our properties that we acquired by issuing units in our Operating Partnership, we are restricted from entering into transactions (such as the sale or refinancing of the acquired property) that will result in a taxable gain to the sellers without the consent of the sellers. Due to all of these factors, we may be unable to sell a property at an advantageous time.
We are subject to other possible liabilities that would adversely affect our financial position and cash flows. Our properties may be subject to other risks related to current or future laws including laws benefiting disabled persons, and other state or local zoning, construction or other regulations. These laws may require significant property modifications in the future for which we may not have budgeted and could result in fines being levied against us. In addition, although we believe that we adequately insure our properties, we are subject to the risk that our insurance may not cover all of the costs to restore a property that is damaged by a fire or other catastrophic events, including acts of war. The occurrence of any of these events could adversely impact our financial position, cash flows and ability to make distributions to our shareholders.
As a result of the September 11, 2001 terrorist attacks, we may be subject to increased costs of insurance and limitations on coverage. Our portfolio of properties is insured for losses under our property, casualty and umbrella insurance policies through September 2002. Due largely to the terrorist
9
attacks on September 11, 2001, the insurance industry is reportedly changing its risk assessment approach and cost structure. In addition, the fact that agencies of the United States government are tenants in a number of our buildings increases the risk profile of those buildings and other buildings that we own near those buildings. These changes in the insurance industry may increase the cost of insuring our properties, may decrease the scope of insurance coverage and may adversely affect our operating results.
We may suffer adverse effects as a result of the indebtedness that we carry and the terms and covenants that relate to this debt. Our strategy is to operate with higher debt levels than most other REITs. However, these high debt levels could make it difficult to obtain additional financing when required and could also make us more vulnerable to an economic downturn. Most of our properties have been mortgaged to collateralize indebtedness. In addition, we will rely on borrowings to fund some or all of the costs of new property acquisitions, construction and development activities and other items. Our organizational documents do not limit the amount of indebtedness that we may incur.
As of December 31, 2001, our total outstanding debt was $573.3 million. We compute our total market capitalization based on the sum of the following:
- •
- total debt;
- •
- value of our outstanding Common Shares (based on our Common Shares closing market price);
- •
- value of common units in our Operating Partnership not owned by us (based on our Common Shares closing market price);
- •
- liquidation value of our outstanding preferred shares; and
- •
- liquidation value of preferred units in our Operating Partnership not owned by us.
Our total market capitalization was $1,067 million and our debt to total market capitalization ratio was 53.7% at December 31, 2001.
Payments of principal and interest on our debt may leave us with insufficient cash to operate our properties or pay distributions to our shareholders required to maintain our qualification as a REIT. We are also subject to the risks that:
- •
- we may not be able to refinance our existing indebtedness, or refinance on terms as favorable as the terms of our existing indebtedness;
- •
- certain debt agreements of our Operating Partnership could restrict the ability of our Operating Partnership to make cash distributions to us, which could result in reduced distributions to our shareholders or the need to incur additional debt to fund these distributions; and
- •
- if we are unable to pay our debt service on time or are unable to comply with restrictive financial covenants appearing in certain of our mortgage loans, our lenders could foreclose on our properties securing such debt and in some cases other properties and assets which we own.
A number of our loans are cross-collateralized, which means that separate groups of properties from our portfolio secure each of these loans. More importantly, almost all of our loans are cross-defaulted, which means that failure to pay interest or principal on any of our loans will create a default on certain of our other loans. Any foreclosure of our properties would result in loss of income and asset value which would negatively affect our financial condition and results of operations. In addition, if we are in default and the value of the properties securing a loan is less than the loan balance, the lender may require payment from our other assets.
If short term interest rates were to rise, our debt service payments would increase, which would lower our net income and could decrease our distributions to our shareholders. As of December 31, 2001, we had one interest rate swap agreement with Deutsche Banc Alex. Brown and one interest rate
10
cap agreement with Bear Stearns Capital Markets, Inc. to reduce the impact of interest rate changes. Decreases in interest rates would result in increased interest payments due under the interest rate swap agreement and could result in the Company's management recognizing a loss and remitting a payment to unwind the agreement. As of December 31, 2001, approximately 43.0% of our total debt had adjustable interest rates, without including effects of the outstanding interest rate swap and interest rate cap agreements; this percentage would decrease to 25.6% when including the effect of the outstanding interest rate swap agreement.
We must refinance our mortgage debt in the future. As of December 31, 2001, our scheduled debt payments over the next five calendar years, including maturities, are as follows:
2002 $ 79,486 (1) 2003 68,691 (2) 2004 141,992 2005 22,650 2006 66,129
- (1)
- Includes $13.5 million in maturities in July 2002 that may be extended for one-year terms, subject to certain conditions. Also includes a $10.4 million maturity in December 2002 that may be extended for a one-year period, subject to certain conditions.
- (2)
- Includes a $10.9 million maturity in April 2003 that may be extended for a one-year term, subject to certain conditions. Also includes a $36.0 million maturity in November that may be extended for a one-year term, subject to certain conditions.
Our operations likely will not generate enough cash flow to repay some or all of this debt without additional borrowings or new equity investment. If we cannot refinance our debt, extend the debt due dates, or raise additional equity prior to the date when our debt matures, we would default on our existing debt, which could have a material adverse effect on our business.
We may be unable to continue to make shareholder distributions at expected levels.
We intend to make regular quarterly cash distributions to our shareholders. However, distribution levels depend on a number of factors, some of which are beyond our control.
Our loan agreements contain provisions that could restrict future distributions. Our ability to sustain our current distribution level also will be dependent, in part, on other matters including:
- •
- continued property occupancy and profitability of tenants;
- •
- the amount of future capital expenditures and expenses relating to our properties;
- •
- the level of leasing activity and future rental rates;
- •
- the strength of the commercial real estate market;
- •
- competition;
- •
- the costs of compliance with environmental and other laws;
- •
- our corporate overhead levels;
- •
- the amount of uninsured losses; and
- •
- our decisions whether to reinvest rather than distribute available cash.
In addition, we can make distributions to the holders of our common shares only after we make preferential distributions relating to holders of our 10% Series B Cumulative Redeemable Preferred
11
Shares of beneficial interest (the "Series B Preferred Shares"), Series D Preferred Shares, Series E Preferred Shares and Series F Preferred Shares. We also would have to make prior distributions to third party holders of the Series C Preferred Units in our Operating Partnership.
Our ownership limits are important factors. Our Declaration of Trust limits ownership of our Common Shares by any single shareholder to 9.8% of the number of the outstanding Common Shares or 9.8% of the value of the outstanding Common Shares. We call these restrictions the "Ownership Limit." Our Declaration of Trust allows our Board of Trustees to exempt shareholders from the Ownership Limit, and our Board of Trustees previously has exempted Constellation and the foreign trust owning all of our Series D Preferred Shares from the Ownership Limit.
Our Declaration of Trust includes other provisions that may prevent or delay a change of control. Subject to the requirements of the New York Stock Exchange, our Board of Trustees has the authority without shareholder approval to issue additional securities on terms that could delay or prevent a change in control. In addition, our Board of Trustees has the authority to reclassify any of our unissued Common Shares into preferred shares. Our Board of Trustees may issue preferred shares with such preferences, rights, powers and restrictions as our Board of Trustees may determine, which could also delay or prevent a change in control.
Our Board of Trustees is divided into three classes of Trustees, which could delay a change of control. Our Declaration of Trust divides our Board of Trustees into three classes. The term of one class of the trustees will expire each year, at which time a successor class is elected for a three-year term. Such staggered three-year terms make it more difficult for a third party to acquire control of us.
The Maryland business statutes also impose potential restrictions on a change of control of our company. Various Maryland laws may have the effect of discouraging offers to acquire us, even if the acquisition would be advantageous to shareholders. Our Bylaws exempt us from such laws, but our Board of Trustees can change our Bylaws at any time to make these provisions applicable to us.
Our failure to qualify as a REIT would have adverse tax consequences. We believe that since 1992 we have qualified for taxation as a REIT for Federal income tax purposes. We plan to continue to meet the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. The determination that we are a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control. For example, to qualify as a REIT, at least 95% of our gross income must come from certain sources that are itemized in the REIT tax laws. We are also required to distribute to shareholders at least 90% of our REIT taxable income, excluding capital gains. The fact that we hold most of our assets through our Operating Partnership and its subsidiaries further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize our REIT status. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts might issue new rulings that make it more difficult, or impossible for us to remain qualified as a REIT.
If we fail to qualify as a REIT, we would be subject to Federal income tax at regular corporate rates. Also, unless the IRS granted us relief under certain statutory provisions, we would remain disqualified as a REIT for four years following the year we first fail to qualify. If we fail to qualify as a REIT, we would have to pay significant income taxes and would therefore have less money available for investments or for distributions to our shareholders. This would likely have a significant adverse effect on the value of our securities and would impair our ability to raise capital. In addition, we would no longer be required to make any distributions to our shareholders.
We have certain distribution requirements that reduce cash available for other business purposes. As a REIT, we must distribute 90% of our annual taxable income, which limits the amount of cash we have available for other business purposes, including amounts to fund our growth. Also, it is possible
12
that because of the differences between the time we actually receive revenue or pay expenses and the period we report those items for distribution purposes, we may have to borrow funds on a short-term basis to meet the 90% distribution requirement.
A number of factors could cause our security prices to decline. As is the case with any publicly-traded securities, certain factors outside of our control could influence the value of our Common and preferred shares. These conditions include, but are not limited to: market perception of REITs in general; market perception of office REITs; market perception of REITs relative to other investment opportunities; the level of institutional investor interest in our company; general economic and business conditions; interest rates; and market perception of our financial condition, performance, dividends and growth potential.
The average daily trading volume of our Common Shares during 2001 was approximately 24,000 shares and the average trading volume of our publicly-traded preferred shares is generally insignificant. As a result, relatively small volumes of transactions could have a pronounced affect on the market price of such shares.
We are dependent on external sources of capital for future growth. As a REIT, we must distribute 90% of our annual taxable income. Due to these requirements, we will not be able to fund our acquisitions, construction and development activities using cash flow from operations. Our ability to fund these activities is dependent on our ability to access capital funded by third parties. Such capital could be in the form of new loans, equity issuances of Common Shares, preferred shares, common and preferred units in our Operating Partnership or joint venture funding. Such capital may not be available on favorable terms or at all. Moreover, additional debt financing may substantially increase our leverage and additional equity offerings may result in substantial dilution of our shareholders' interests. Our inability to obtain capital when needed could have a material adverse effect on our ability to expand our business.
Certain of our officers and trustees have potential conflicts of interest. Certain of our officers and members of our Board of Trustees own partnership units in our Operating Partnership. These individuals may have personal interests that conflict with the interests of our shareholders. For example, if our Operating Partnership sells or refinances certain of the properties that these officers or trustees contributed to the Operating Partnership, they could suffer adverse tax consequences. Their personal interest could conflict with our interests if such a sale or refinancing would be advantageous to us. We have certain policies in place that are designed to minimize conflicts of interest. We cannot assure you, however, that these policies will be successful in eliminating the influence of such conflicts, and if they are not successful, decisions could be made that might fail to reflect fully the interests of all of our shareholders.
We are dependent on our key personnel, and the loss of any key personnel could have an adverse effect on our operations. We are dependent on the efforts of our trustees and executive officers, including Jay Shidler, our Chairman of the Board of Trustees, Clay Hamlin, our Chief Executive Officer, and Rand Griffin, our President. The loss of any of their services could have an adverse effect on our operations. Although certain of our officers have entered into employment agreements with us, we cannot assure you that they will remain employed with us.
We may change our policies without shareholder approval, which could adversely affect our financial condition, results of operations, market price of our Common Shares or ability to pay distributions. Our Board of Trustees determines all of our policies, including our investment, financing and distribution policies. Although our Board of Trustees has no current plans to do so, it may amend or revise these policies at any time without a vote of our shareholders. Policy changes could adversely affect our financial condition, results of operations, the market price of the Common Shares or our ability to pay dividends or distributions.
13
The following table provides certain information
aboutregarding ouroffice propertiesportfolio as of December 31,1999:
Total Rental Percentage Percentage Revenue per Year Occupied Total of Total Occupied Built/ Rentable as of Rental Rental Square Feet Major Tenants Property Location Renovated Square Feet 12/31/99(1) Revenue(2) Revenue (3) (4) (10% or more Rentable Sq. Ft.) - ------------------------------------------------------------------------------------------------------------------------------------BALTIMORE/WASHINGTON CORRIDOR: ANNAPOLIS JUNCTION, MD 2730 Hercules Road 1990 240,336 100.00% $4,604,196 4.98% $19.16 U.S. Department of Defense (100%) 134 National Business Pkwy 1999 93,482 100.00% 1,834,249 1.98% 19.62 Booz Allen Hamilton (74%) Ameritrade Holding Corporation (26%) 133 National Business Pkwy 1997 88,666 100.00% 1,737,667 1.87% 19.60 e.spire Communications (67%) Applied Signal Technology (33%) 141 National Business Pkwy 1990 86,964 98.42% 1,508,830 1.63% 17.63 ITT Industries (46%) J.G. Van Dyke & Associates (20%) Harris Data Services Corp (14%) 135 National Business Pkwy 1998 86,863 95.41% 1,566,286 1.69% 18.90 Credit Management Solutions (82%) 131 National Business Pkwy 1990 68,906 98.26% 1,275,170 1.38% 18.83 TASC (36%) e.spire Communications (35%) U.S. Department of Defense (15%) Intel Corporation (12%) LINTHICUM, MD 1306 Concourse Drive 1990 113,831 97.46% 2,218,864 2.39% 20.00 PricewaterhouseCoopers (33%) AT&T Local Services (26%) Quest Communications (13%) 900 Elkridge Landing Road 1982 97,139 100.00% 1,682,665 1.81% 17.32 First Annapolis Consulting (51%) Booz Allen Hamilton (38%) 1199 Winterson Road 1988 96,636 100.00% 1,534,245 1.65% 15.88 U.S. Department of Defense (100%) 1302 Concourse Drive 1996 84,607 86.41% 1,422,386 1.53% 19.46 AETNA US Healthcare (20%) Lucent Technologies (19%) 881 Elkridge Landing Road 1986 73,572 100.00% 866,280 0.93% 11.77 U.S. Department of Defense (100%) 1099 Winterson Road 1988 70,569 100.00% 1,139,244 1.23% 16.14 Preferred Health Network (63%) 1190 Winterson Road 1987 68,567 100.00% 1,148,775 1.24% 16.75 Chesapeake Appraisal (58%) U.S. Department of Defense (15%) Motorola (14%) 849 International Drive 1988 67,976 98.41% 1,158,983 1.25% 17.33 EMC Corporation (13%) Coca Cola Bottling (11%) U.S. Department of Defense (11%) 1201 Winterson Road 1985 67,903 100.00% 684,107 0.74% 10.07 Ciena Corporation (100%) 911 Elkridge Landing Road 1985 67,806 100.00% 1,104,649 1.19% 16.29 U.S. Department of Defense (79%) Nationwide Mutual Insurance (21%) 930 International Drive 1986 57,140 100.00% 626,072 0.68% 10.96 Ciena Corporation (100%) 900 International Drive 1986 57,140 100.00% 632,398 0.68% 11.07 Ciena Corporation (100%) 921 Elkridge Landing Road 1983 54,057 100.00% 861,935 0.93% 15.94 Aerotek (100%) 939 Elkridge Landing Road 1983 51,953 100.00% 796,952 0.86% 15.34 Agency Holding (68%) U.S. Department of Defense (24%) 800 International Drive 1988 50,612 100.00% 736,150 0.79% 14.54 Ciena Corporation (100%) COLUMBIA, MD 7200 Riverwood Drive 1986 160,000 100.00% 2,770,640 2.99% 17.32 U.S. Department of Defense (100%) 6940 Columbia Gateway Drive 1999 108,737 60.51% 1,428,314 1.54% 21.71 Magellan Behavioral Health (26%) Remedy Corporation (14%) Reliance Insurance (13%) 6950 Columbia Gateway Drive 1998 107,778 100.00% 2,214,159 2.39% 20.54 Magellan Behavioral Health (100%) 6740 Alexander Bell Drive 1989/1992 59,569 100.00% 1,355,651 1.46% 22.76 Johns Hopkins University (70%) Amtel Corporation (16%) Sky Alland Research (13%) 8815 Centre Park Drive 1987 53,635 100.00% 1,079,595 1.16% 20.13 Corporate Office Management (25%)9
Total Rental Percentage Percentage Revenue per Year Occupied Total of Total Occupied Built/ Rentable as of Rental Rental Square Feet Major Tenants Property Location Renovated Square Feet 12/31/99(1) Revenue(2) Revenue (3) (4) (10% or more Rentable Sq. Ft.) - ------------------------------------------------------------------------------------------------------------------------------------Lipman, Frizzel & Mitchell (16%) Reap/REMAX (16%) Corporate Realty Management, LLC(13%) H.C. Copeland Associates (10%) 6716 Alexander Bell Drive 1989/1992 51,980 91.18% 827,504 0.89% 17.46 Sun Microsystems (87%) 6760 Alexander Bell Drive 1989/1992 37,248 100.00% 713,441 0.77% 19.15 Cadence Design Systems (65%) HANOVER, MD 7467 Ridge Road 1990 73,773 100.00% 1,532,909 1.65% 20.78 Travelers Casualty and Surety (55%) 7318 Parkway Drive 1984 59,204 100.00% 632,627 0.68% 10.69 U.S. Department of Defense (100%) 1340 Ashton Road 1989 46,400 100.00% 595,351 0.64% 12.83 Lockheed Martin Corporation (100%) 7321 Parkway Drive 1984 39,822 100.00% 657,063 0.71% 16.50 U.S. Department of Defense (100%) 1334 Ashton Road 1989 37,565 96.77% 557,687 0.60% 15.34 Science Applications International Corp. (60%) Merrill Corporation (37%) 1331 Ashton Road 1989 29,936 100.00% 388,490 0.42% 12.98 Booz Allen Hamilton (71%) Aerosol Monitoring (29%) 1350 Dorsey Road 1989 20,021 90.16% 253,713 0.27% 14.06 Aerotek (23%) Noodles (14%) Hunan Pagoda (12%) Electronic System (11%) 1344 Ashton Road 1989 16,865 100.00% 334,004 0.36% 19.80 Titan Systems (28%) Student Travel Services (23%) AMP Corporation (16%) Jani - King of Baltimore (14%) Citizens National Bank (12%) 1341 Ashton Road 1989 15,825 70.87% 114,484 0.12% 10.21 Supertots Childcare (71%) 1343 Ashton Road 1989 9,962 100.00% 120,753 0.13% 12.12 Nauticus Corporation (100%) Pepsi-Cola Bottling (17%) LAUREL, MD 14502 Greenview Drive 1988 71,873 100.00% 1,239,028 1.34% 17.24 Sky Alland Research (26%) Greenman-Pedersen (15%) 14504 Greenview Drive 1985 69,194 88.39% 1,058,220 1.14% 17.30 Great West Life & Annuity (17%) Laurel Consulting Group (16%) Moore USA (11%) TIMONIUM, MD 375 W. Padonia Road 1986 100,804 100.00% 1,579,559 1.70% 15.67 Deutsche Bank Alex. Brown (84%) 9690 Deerco Road 1988 132,819 91.10% 2,483,260 2.68% 20.52 Fireman's Fund Insurance (22%) AirTouch Paging of Virginia (12%) OXON HILL, MD 6009-6011 Oxon Hill Road 1990 181,236 100.00% 3,497,148 3.78% 19.30 U.S. Department of Treasury (47%) Constellation Real Estate (22%) BALTIMORE, MD 1615 - 1629 Thames Street 1989 103,670 100.00% 1,655,549 1.79% 15.97 Johns Hopkins University (37%) --------- --------- ----------- ------- ------- Lista's (14%) Total Baltimore/Washington Corridor 3,332,641 97.08% $56,229,252 60.64% $17.38 --------- --------- ----------- ------- ------- Greater Philadelphia: BLUE BELL, PA 753 Jolly Road 1960/92-94 419,472 100.00% $3,572,761 3.85% $ 8.52 Unisys (100%) 785 Jolly Road 1970/1996 219,065 100.00% 2,618,611 2.82% 11.95 Unisys with 100% sublease to Merck 760 Jolly Road 1974/1994 208,854 100.00% 2,150,891 2.32% 10.30 Unisys (100%) 751 Jolly Road 1960/92-94 112,958 100.00% 962,095 1.04% 8.52 Unisys (100%) --------- --------- ----------- ------- ------- Total Greater Philadelphia 960,349 100.00% $9,304,358 10.03% $ 9.69 --------- --------- ----------- ------- -------10
Total Rental Percentage Percentage Revenue per Year Occupied Total of Total Occupied Built/ Rentable as of Rental Rental Square Feet Major Tenants Property Location Renovated Square Feet 12/31/99(1) Revenue(2) Revenue (3) (4) (10% or more Rentable Sq. Ft.) - ------------------------------------------------------------------------------------------------------------------------------------GREATER HARRISBURG: HARRISBURG, PA 2605 Interstate Drive 1990 84,268 100.00% $1,200,468 1.30% $14.25 Commonwealth of Pennsylvania (56%) Health Central (32%) 6345 Flank Drive 1989 69,443 100.00% 905,718 0.99% 13.04 Allstate Insurance (30%) First Health Services (24%) LWN Enterprises (15%) Coventry Health Care (13%) 6340 Flank Drive 1988 68,200 100.00% 690,578 0.74% 10.13 Lancaster Lebanon (73%) Merkert Enterprises (27%) 2601 Market Place 1989 67,753 100.00% 1,190,262 1.28% 17.57 Penn State Geisinger Systems (36%) Ernst & Young LLP (26%) Texas Eastern Pipeline Company (26%) 5035 Ritter Road 1988 56,556 100.00% 710,352 0.77% 12.56 Commonwealth of Pennsylvania (82%) 6400 Flank Drive 1992 52,439 100.00% 743,503 0.80% 14.18 PA Coalition Against Violence (51%) REM Organization (27%) Mellon Bank (16%) 6360 Flank Drive 1988 46,500 100.00% 634,091 0.68% 13.64 Ikon Office Solutions (20%) Health Spectrum Medical (15%) Sentage / Muth & Mumma (15%) Computer Applications (15%) First Industrial Realty Trust (12%) 6385 Flank Drive 1995 32,800 100.00% 421,094 0.45% 12.84 Cowles Enthusiast Media (34%) Orion Capital Companies (26%) Pitney Bowes (21%) Orion Consulting (11%) 5070 Ritter Road - Building A 1989 32,000 100.00% 466,700 0.50% 14.58 Maryland Casualty Company (100%) 6405 Flank Drive 1991 32,000 100.00% 433,156 0.47% 13.54 Cowles Enthusiast Media (100%) 6380 Flank Drive 1991 32,000 87.50% 388,691 0.42% 13.88 McCormick, Taylor & Associates (21%) Myers & Stauffer (17%) Critical Care System (13%) SV Research (12%) 5070 Ritter Road - Coram (10%) Building B 1989 28,000 81.09% 258,284 0.28% 11.38 Vale National Training Center (63%) Pennsylvania Trauma System Foundation (18%) 95 Shannon Road 1999 21,976 100.00% 282,071 0.30% 12.84 New World Pasta (100%) 75 Shannon Road 1999 20,887 81.45% 222,609 0.24% 13.09 McCormick, Taylor & Associates (81%) 85 Shannon Road 1999 12,863 100.00% 165,102 0.18% 12.84 New World Pasta (100%) --------- --------- ----------- ------- ------- Total Greater Harrisburg 657,685 98.00% $8,712,679 9.40% $13.52 --------- --------- ----------- ------- ------- Northern/Central New Jersey: SOUTH BRUNSICK, NJ 431 Ridge Road 1958/1998 170,000 100.00% $3,369,678 3.64% $19.82 IBM with 84% sublease to AT&T Local 429 Ridge Road 1966/1996 142,385 100.00% 2,762,313 2.98% 19.40 AT&T Local Services (100%) 437 Ridge Road 1962/1996 30,000 100.00% 559,344 0.60% 18.64 IBM with 100% sublease to AT&T Local (100%) CRANBURY, NJ 19 Commerce 1989 65,277 100.00% 1,304,572 1.41% 19.99 The Associated Press (100%) 104 Interchange Plaza 1990 47,142 100.00% 1,046,886 1.13% 22.21 Turner Construction Company (24%) Utica Mutual Insurance Company (15%) Laborer's International Union (13%) Lanier Worldwide (12%) Somerset Real Estate Management (10%) 101 Interchange Plaza 1985 44,185 87.47% 874,400 0.94% 22.63 Ford Motor Credit Company (21%) Arquest (16%) Middlesex County Improvement Authority112001:
Total Rental Percentage Percentage Revenue per Year Occupied Total of Total Occupied Built/ Rentable as of Rental Rental Square Feet Major Tenants Property Location Renovated Square Feet 12/31/99(1) Revenue(2) Revenue (3) (4) (10% or more Rentable Sq. Ft.) - ------------------------------------------------------------------------------------------------------------------------------------(13%) Trans Union Corporation (11%) 47 Commerce 1992/1998 41,398 100.00% 483,603 0.52% 11.68 Somfy Systems (100%) 3 Centre Drive 1987 20,436 100.00% 372,219 0.40% 18.21 Matrix Development Group (100%) 7 Centre Drive 1989 19,466 100.00% 401,020 0.43% 20.60 Paradise Software (22%) System Freight (17%) Compugen (12%) 8 Centre Drive 1986 16,199 100.00% 348,249 0.38% 21.50 AON Risk Services (100%) 2 Centre Drive 1989 16,132 100.00% 418,438 0.45% 25.94 Summit Bancorp (100%) FAIRFIELD, NJ 695 Route 46 1990 158,348 83.59% 2,528,021 2.73% 19.10 Pearson (22%) United Healthcare Services (15%) The Museum Company (12%) Dean Witter Reynolds (12%) 710 Route 46 1985 101,791 94.28% 1,745,021 1.88% 18.18 Midsco (19%) Radian International, LLC (12%) Continental Casualty (12%) Lincoln Financial Group (11%) MONMOUTH, NJ 4301 Route 1 1986 61,300 100.00% 1,176,212 1.27% 19.19 Guest Supply (38%) ---------- --------- ----------- ------- ------- eCOM Server (16%) Ikon Office Solutions (16%) Total Northern/Central New Jersey 934,059 96.00% $17,389,976 18.76% $19.39 ---------- --------- ----------- ------- ------- TOTAL OFFICE PROPERTIES 5,884,734 97.49% $91,636,265 98.83% $15.97 ---------- --------- ----------- ------- -------
Property and Location Submarket Year
Built/
RenovatedRentable
Square FeetOccupancy(1) Total
Rental
Revenue(2)Total Rental
Revenue per
Occupied Square
Foot(2)(3)Major Tenants
(10% or more of
Rentable Square Feet)Baltimore/Washington Corridor:(4) 2730 Hercules Road
Annapolis Junction, MDBWI Airport 1990 240,336 100.0 % $ 5,106,330 $ 21.25 U.S. Department of Defense (100%) 132 National Business Parkway
Annapolis Junction, MDBWI Airport 2000 118,456 100.0 2,492,159 21.04 Ameritrade Holding Corp. (53%);
Computer Sciences Corp. (47%)2721 Technology Drive
Annapolis Junction, MDBWI Airport 2000 117,890 100.0 2,763,515 23.44 General Dynamics Govt. Corp. (78%);
First Service Networks, Inc. (22%)1306 Concourse Drive
Linthicum, MDBWI Airport 1990 114,046 97.5 2,372,718 21.34 PricewaterhouseCoopers (33%);
Qwest Communications (21%);
AT&T Local Services (13%)870-880 Elkridge Landing Road
Linthicum, MDBWI Airport 1981 97,161 100.0 1,638,933 16.87 Arbros Communications, Inc. (94%) 900 Elkridge Landing Road
Linthicum, MDBWI Airport 1982 97,139 100.0 1,804,660 18.58 First Annapolis Consulting (51%);
Booz Allen & Hamilton (38%)1199 Winterson Road
Linthicum, MDBWI Airport 1988 96,636 0.0 — — 920 Elkridge Landing Road
Linthicum, MDBWI Airport 1982 96,566 100.0 1,346,798 13.95 Ciena Corporation (100%) 134 National Business Parkway
Annapolis Junction, MDBWI Airport 1999 93,482 100.0 1,963,139 21.00 Booz Allen & Hamilton (74%);
Panacya, Inc. (26%)2701 Technology Drive(5)
Annapolis Junction, MDBWI Airport 2001 91,643 100.0 2,275,644 24.83 Northrop Grumman Systems (67%);
Titan Systems Corporation (33%)133 National Business Parkway
Annapolis Junction, MDBWI Airport 1997 88,666 100.0 556,341 6.27 Mentor Technologies (67%)(6);
Applied Signal Technology, Inc. (33%)141 National Business Parkway(7)
Annapolis Junction, MDBWI Airport 1990 86,964 100.0 1,604,458 18.45 ITT Industries (46%);
Getronics Govt. Solutions (20%);
Harris Data Services Corp. (14%)135 National Business Parkway
Annapolis Junction, MDBWI Airport 1998 86,863 100.0 1,782,097 20.52 First American Credit Management Solutions (82%) 1302 Concourse Drive
Linthicum, MDBWI Airport 1996 84,607 98.0 1,819,520 21.96 Lucent Technologies (31%);
Aetna US Healthcare (23%);
American Express Travel Related Services, Inc. (13%)7467 Ridge Road
Hanover, MDBWI Airport 1990 73,756 100.0 1,489,957 20.20 Travelers Casualty & Surety (49%);
Pro Object (32%)881 Elkridge Landing Road
Linthicum, MDBWI Airport 1986 73,572 100.0 1,214,479 16.51 U.S. Department of Defense (100%) 7240 Parkway Drive
Hanover, MDBWI Airport 1985 73,500 73.8 1,037,063 19.11 Deloitte & Touche USA, LLP (21%);
International Paper (12%)1099 Winterson Road
Linthicum, MDBWI Airport 1988 70,938 90.9 1,159,543 17.99 Preferred Health Network (62%) 14
131 National Business Parkway
Annapolis Junction, MDBWI Airport 1990 68,906 100.0 1,405,760 20.40 e.spire Communications (48%);
Conquest Info. Technologies, Inc. (23%);
U.S. Department of Defense (15%);
Intel Corporation (12%)1190 Winterson Road
Linthicum, MDBWI Airport 1987 68,567 100.0 1,405,732 20.50 Commercial Credit Corp. (65%);
U.S. Department of Defense (15%);
Motorola, Inc. (14%)849 International Drive
Linthicum, MDBWI Airport 1988 68,397 87.1 1,182,311 19.85 Raytheon E-Systems, Inc. (11%);
U.S. Department of Defense (11%);
Dames & Moore (10%)911 Elkridge Landing Road
Linthicum, MDBWI Airport 1985 68,296 100.0 1,184,567 17.34 U.S. Department of Defense (100%) 1201 Winterson Road
Linthicum, MDBWI Airport 1985 67,903 100.0 750,307 11.05 Ciena Corporation (100%) 999 Corporate Boulevard
Linthicum, MDBWI Airport 2000 67,351 100.0 1,529,722 22.71 RAG American Coal Holding (71%);
Ciena Corporation (29%)7318 Parkway Drive
Hanover, MDBWI Airport 1984 59,204 100.0 806,103 13.62 U.S. Department of Defense (100%) 900 International Drive
Linthicum, MDBWI Airport 1986 57,140 100.0 657,928 11.51 Ciena Corporation (100%) 930 International Drive
Linthicum, MDBWI Airport 1986 57,140 100.0 624,336 10.93 Ciena Corporation (100%) 901 Elkridge Landing Road
Linthicum, MDBWI Airport 1984 56,847 75.6 639,659 14.89 State of Maryland (59%);
Institute for Operations Research and Management Sciences (13%)891 Elkridge Landing Road
Linthicum, MDBWI Airport 1984 56,489 86.4 883,119 18.10 Medaphis Services Corp. (52%);
Metropolitan Life Ins. Co. (26%)921 Elkridge Landing Road
Linthicum, MDBWI Airport 1983 54,057 100.0 878,591 16.25 Aerotek, Inc. (100%) 939 Elkridge Landing Road
Linthicum, MDBWI Airport 1983 53,031 100.0 889,376 16.77 First Service Networks, Inc. (36%);
Agency Holding Company (34%);
U.S. Department of Defense (23%)938 Elkridge Landing Road
Linthicum, MDBWI Airport 1984 52,988 100.0 913,248 17.23 U.S. Department of Defense (100%) 940 Elkridge Landing Road
Linthicum, MDBWI Airport 1984 51,704 100.0 777,432 15.04 Cadmus Journal Services (100%) 800 International Drive
Linthicum, MDBWI Airport 1988 50,979 100.0 915,687 17.96 Raytheon E-Systems, Inc. (100%) 1340 Ashton Road
Hanover, MDBWI Airport 1989 46,400 100.0 651,514 14.04 Lockheed Martin Corp. (100%) 7321 Parkway Drive
Hanover, MDBWI Airport 1984 39,822 100.0 699,063 17.55 U.S. Department of Defense (100%) 1334 Ashton Road
Hanover, MDBWI Airport 1989 37,565 96.8 671,047 18.46 Science Applications Int'l. (60%);
Parsons Transportation Group (37%)1331 Ashton Road
Hanover, MDBWI Airport 1989 29,936 100.0 438,916 14.66 Booz Allen & Hamilton (71%);
Aerosol Monitoring (29%)1350 Dorsey Road
Hanover, MDBWI Airport 1989 19,992 95.1 307,776 16.19 Aerotek, Inc. (23%);
Noodles, Inc. (14%);
Hunan Pagoda (12%);
Johnson Controls, Inc. (11%);
Corestaff Support Services, Inc. (10%)15
1344 Ashton Road
Hanover, MDBWI Airport 1989 16,865 100.0 401,245 23.79 Titan Systems (28%);
Student Travel Services (23%);
AMP Corporation (16%);
Dialysis Corp. of America (14%);
Citizens National Bank (12%)1341 Ashton Road
Hanover, MDBWI Airport 1989 15,841 100.0 261,950 16.54 Supertots Childcare, Inc. (71%);
The Devereux Foundation (29%)1343 Ashton Road
Hanover, MDBWI Airport 1989 9,962 100.0 131,885 13.24 Nauticus Corporation (100%) 1615-1629 Thames Street
Baltimore, MDDowntown
Baltimore City1989 103,683 98.7 1,868,236 18.25 Johns Hopkins University (39%);
Community of Science (18%);
Listas (14%)7200 Riverwood
Columbia, MDHoward County
Perimeter1986 160,000 100.0 2,950,549 18.44 U.S. Department of Defense (100%) 9140 Rt. 108
Columbia, MDHoward County
Perimeter1974/1985 150,000 100.0 1,870,364 12.47 Bookham Technology, Inc. (100%) 6940 Columbia Gateway Drive
Columbia, MDHoward County
Perimeter1999 108,737 89.9 2,214,119 22.66 Magellan Behavioral Health, Inc. (39%);
Response Services Center (26%);
Peregrine Remedy, Inc. (14%)6950 Columbia Gateway Drive
Columbia, MDHoward County
Perimeter1998 107,778 100.0 2,328,130 21.60 Magellan Behavioral Health, Inc. (100%) 7067 Columbia Gateway Drive
Columbia, MDHoward County
Perimeter2001 82,953 100.0 1,708,437 20.60 Community First Financial (50%);
Corvis Corporation (50%)6750 Alexander Bell Drive
Columbia, MDHoward County
Perimeter2001 78,460 87.0 1,694,637 24.83 Sun Microsystems, Inc. (45%);
The Coca-Cola Company (35%)6700 Alexander Bell Drive
Columbia, MDHoward County
Perimeter1988 75,635 100.0 1,516,188 20.05 General Physics Corp. (43%);
Arbitron, Inc. (26%);
HR Tech, LLC (16%)6740 Alexander Bell Drive
Columbia, MDHoward County
Perimeter1992 61,957 88.0 1,349,047 24.74 Johns Hopkins University (68%);
Advanced Career Technologies, Inc. (20%)8815 Centre Park Drive
Columbia, MDHoward County
Perimeter1987 53,782 100.0 1,296,977 24.12 COMI (25%);
Lipman, Frizzell and Mitchell (16%);
Reap, Inc./REMAX (16%);
CRM (13%);
Citistreet Associates, LLC (10%)6716 Alexander Bell Drive
Columbia, MDHoward County
Perimeter1990 52,002 100.0 1,090,737 20.97 Sun Microsystems, Inc. (49%);
Rational Software Corp. (15%);
Tuchenhagen North America, LLC (11%);
Lurgi Lentjes North America, Inc. (10%)7700 Montpelier Road(8)
Laurel, MDHoward County
Perimeter2001 43,785 100.0 723,766 16.53 Johns Hopkins University (100%) 7065 Columbia Gateway Drive
Columbia, MDHoward County
Perimeter2000 38,560 100.0 612,718 15.89 Corvis Operations, Inc. (100%) 6760 Alexander Bell Drive
Columbia, MDHoward County
Perimeter1991 37,248 100.0 744,065 19.98 Tality, LP (65%) 7063 Columbia Gateway Drive
Columbia, MDHoward County
Perimeter2000 36,936 100.0 575,832 15.59 Corvis Operations, Inc. (100%) 16
6708 Alexander Bell Drive
Columbia, MDHoward County
Perimeter1988 35,040 100.0 594,716 16.97 State Farm Mutual Auto Ins. Co. (100%) 7061 Columbia Gateway Drive
Columbia, MDHoward County
Perimeter2000 29,604 100.0 652,787 22.05 Manekin, LLC (83%);
Visualtek Solutions, Inc. (17%)14502 Greenview Drive
Laurel, MDLaurel 1988 71,873 100.0 1,396,093 19.42 iSky (20%);
Greenman-Pedersen, Inc. (18%);
LCC Telecom Management (11%)14504 Greenview Drive
Laurel, MDLaurel 1985 69,194 90.3 1,189,499 19.03 Great West Life & Annuity (17%);
Moore USA (11%);
Light Wave Communications (10%)6009-6011 Oxon Hill Road
Oxon Hill, MDSouthern Prince
George's
County1990 181,768 100.0 3,564,092 19.61 U.S. Dept. of Treasury (69%);
NRL Federal Credit Union (10%)9690 Deereco Road
Timonium, MDSuburban North
Baltimore
County1988 133,737 92.1 2,696,730 21.89 Fireman's Fund Insurance (24%);
GoPin, Inc. (10%)375 W. Padonia Road
Timonium, MDSuburban North
Baltimore
County1986 100,804 100.0 1,628,281 16.15 Deutsche Bank Alex. Brown (84%);
Riparius Corporation (13%)Subtotal/Average 4,791,139 95.7 % $ 85,700,628 $ 18.69 Blue Bell/Philadelphia: 753 Jolly Road
Blue Bell, PABlue Bell 1960/92-94 419,472 100.0 % $ 3,718,006 $ 8.86 Unisys (100%) 785 Jolly Road
Blue Bell, PABlue Bell 1970/1996 219,065 100.0 2,236,636 10.21 Unisys with 100% sublease to Merck 760 Jolly Road
Blue Bell, PABlue Bell 1974/1994 208,854 100.0 2,724,401 13.04 Unisys (100%) 751 Jolly Road
Blue Bell, PABlue Bell 1966/1991 112,958 100.0 1,001,207 8.86 Unisys (100%) Subtotal/Average 960,349 100.0 % $ 9,680,250 $ 10.08 Greater Harrisburg: 2605 Interstate Drive
Harrisburg, PAEast Shore 1990 81,187 93.5 % $ 1,222,673 $ 16.11 Commonwealth of Penna. (88%) 6345 Flank Drive
Harrisburg, PAEast Shore 1989 69,443 100.0 1,081,704 15.58 Allstate Insurance (30%);
First Health Services (24%);
Coventry Health Care (18%);
LWN Enterprises (15%)6340 Flank Drive
Harrisburg, PAEast Shore 1988 68,200 72.9 522,460 10.51 Lancaster Lebanon (73%) 2601 Market Place
Harrisburg, PAEast Shore 1989 67,743 74.0 885,763 17.67 Duke Energy Operating Co. (26%);
Ernst & Young, LLP (26%);
Penn State Geisinger Systems (11%);
Groundwater Sciences Corp. (11%)6400 Flank Drive
Harrisburg, PAEast Shore 1992 52,439 100.0 757,843 14.45 Pennsylvania Coalition Against Domestic Violence (51%);
The REM Organization (27%);
Liberty Business Information (16%)17
6360 Flank Drive
Harrisburg, PAEast Shore 1988 46,500 97.7 633,268 13.94 Ikon Office Solutions, Inc. (22%);
Computer Applications (20%);
Sentage/Muth & Mumma (15%);
Health Spectrum Medical (15%)6385 Flank Drive
Harrisburg, PAEast Shore 1995 32,800 89.6 437,038 14.88 Cowles Enthusiast Media (34%);
Coventry Mgmt. Services (26%);
Pitney Bowes, Inc. (11%);
Orion Consulting, Inc. (11%)6405 Flank Drive
Harrisburg, PAEast Shore 1991 32,000 100.0 459,951 14.37 Cowles Enthusiast Media (100%) 6380 Flank Drive
Harrisburg, PAEast Shore 1991 32,000 80.0 324,053 12.66 Myers & Stauffer (17%);
Verizon Network Integration Corp. (14%);
Lorom America, Inc. (14%);
Lancaster Lebanon, Int. (13%);
Critical Care Systems, Inc. (13%);
U-Conn Technology USA (10%)95 Shannon Road
Harrisburg, PAEast Shore 1999 21,976 100.0 349,176 15.89 New World Pasta (100%) 75 Shannon Road
Harrisburg, PAEast Shore 1999 20,887 100.0 351,938 16.85 McCormick, Taylor & Assoc. (100%) 6375 Flank Drive
Harrisburg, PAEast Shore 2000 19,783 100.0 325,875 16.47 Orion Capital Companies (71%);
McCormick, Taylor & Assoc. (29%)85 Shannon Road
Harrisburg, PAEast Shore 1999 12,863 100.0 204,380 15.89 New World Pasta (100%) 5035 Ritter Road
Mechanicsburg, PAWest Shore 1988 56,556 100.0 770,397 13.62 Commonwealth of Penna. (83%) 5070 Ritter Road—Building A
Mechanicsburg, PAWest Shore 1989 32,309 77.5 406,536 16.23 Maryland Casualty Co. (62%);
Commonwealth of Penna. (15%)5070 Ritter Road—Building B
Mechanicsburg, PAWest Shore 1989 28,000 100.0 353,890 12.64 Vale National Training Center (63%);
Pennsylvania Trauma Systems Foundation (18%);
Paytime, Inc. (13%)Subtotal/Average 674,686 91.2 % $ 9,086,945 $ 14.77 Northern/Central New Jersey: 431 Ridge Road
Dayton, NJExit 8A—
Cranbury1958/1998 170,000 100.0 % $ 3,601,040 $ 21.18 AT&T Local Services (100%) 429 Ridge Road
Dayton, NJExit 8A—
Cranbury1966/1996 142,385 100.0 2,763,333 19.41 AT&T Local Services (100%) 68 Culver Road
Dayton, NJExit 8A—
Cranbury2000 57,280 100.0 1,221,782 21.33 AT&T Local Services (100%) 437 Ridge Road
Dayton, NJExit 8A—
Cranbury1962/1996 30,000 100.0 564,120 18.80 AT&T Local Services (100%) 104 Interchange Plaza
Cranbury, NJExit 8A—
Cranbury1990 47,677 100.0 1,094,494 22.96 Turner Construction Co. (35%);
Utica Mutual Insurance Co. (15%);
Laborer's International Union (13%);
Lanier Worldwide (12%)18
101 Interchange Plaza
Cranbury, NJExit 8A—
Cranbury1985 43,621 100.0 988,309 22.66 Ford Motor Credit Co. (21%);
CSX Transportation, Inc. (18%);
Arquest, Inc. (16%);
Middlesex County Improve. Auth. (13%);
Trans Union Corporation (11%)47 Commerce
Cranbury, NJExit 8A—
Cranbury1992/1998 41,398 100.0 526,593 12.72 Somfy Systems, Inc. (100%) 7 Centre Drive
Jamesburg, NJExit 8A—
Cranbury1989 19,466 100.0 435,736 22.38 Compugen, Inc. (29%);
Systems Freight (22%)8 Centre Drive
Jamesburg, NJExit 8A—
Cranbury1986 16,199 100.0 361,216 22.30 Sonova Networks Corp. (55%);
Medical World Communications (45%)2 Centre Drive
Jamesburg, NJExit 8A—
Cranbury1989 16,132 100.0 402,411 24.94 Fleet National Bank (100%) 4301 Route 1
Monmouth Junction, NJMonmouth
Junction1986 61,300 100.0 1,238,541 20.20 Guest Supply, Inc. (47%);
eCOM Server (16%);
Ikon Office Solutions (14%);
Foster & Adoptive Family Svcs. (10%)695 Rt. 46
Fairfield, NJWayne 1990 157,394 95.7 3,187,121 21.16 ADT Security Services, Inc. (26%);
The Museum Company (16%);
Chase Manhattan (15%);
Dean Witter Reynolds (13%)710 Rt. 46
Fairfield, NJWayne 1985 101,120 69.1 1,452,883 20.79 Ericsson, Inc. (13%) Subtotal/Average 903,972 95.8 % $ 17,837,579 $ 20.60 Northern Virginia: 15000 Conference Center Drive
Chantilly, VADulles South 1989 470,406 99.6 % $ 9,427,404 $ 20.13 Dyncorp Information Systems, LLC (52%);
General Dynamics Govt. Corp. (13%);
Genuity, Inc. (13%)Subtotal/Average 470,406 99.6 % $ 9,427,404 $ 20.13 Total/Average 7,800,552 96.1 % $ 131,732,806 $ 17.58
- (1)
- This percentage is based upon all
occupied spacesigned leases and tenants occupancy as of December 31,1999.2001.- (2)
- Total rental revenue is the monthly contractual base rent as of December 31,
19992001 multiplied by 12, plus the estimated annualized expense reimbursements under existing leases.- (3)
This percentage represents the individual property's rental revenue to our total rental revenue as of December 31, 1999. (4)- This total rent per occupied square foot is the property's total rental revenue divided by that property's occupied square feet as of December 31,
1999.2001.- (4)
- The
following table provides certain information about our retailBaltimore/Washington Corridor encompasses mostly Anne Arundel and Howard Counties. Included in this region are six propertiesaslocated outside ofDecember 31, 1999:
Total Rental Year Rentable Percentage Percentage of Revenue per Built/ Square Occupied as Total Rental Total Rental Occupied Major Tenants Property Location Renovated Feet of 12/31/99(1) Revenue(2) Revenue (3) Square Feet (4) (10% or more Rentable Sq. Ft.) - ------------------------------------------------------------------------------------------------------------------------------------EASTON, MD 322 Marlboro Street 1977/1997 145,203 95.69% $771,626 0.83% $5.55 Acme Markets (34%) Peebles (24%) MINOT, ND 2100 S. Broadway 1993 46,134 100.00% 312,211 0.34% 6.77 Nash-Finch Company (100%) --------- ------- ----------- ------- ------- TOTAL RETAIL PROPERTIES 191,337 96.73% $1,083,837 1.17% $5.86 --------- ------- ----------- ------- ------- GRAND TOTAL 6,076,071 $92,720,102 100.00% ========= =========== =======(1)these counties, including three properties in suburban Washington, D.C., two properties in Timonium, Maryland, and one property in Baltimore, Maryland.- (5)
- Prior to February 25, 2002, we held a 50% interest in the joint venture that owns this property. On that date, we purchased the remaining 50% joint venture interest for $5,400 and now directly own this property. Another 26,357 rentable square feet will be delivered upon completion of tenant improvements.
- (6)
- This
percentage is based upon all leases signed and tenants occupying as of December 31, 1999. (2) Totaltenant declared bankruptcy in November 2001. We have not included any rental revenueisfor this tenant since we did not receive any payments from this tenant in December 2001, and we anticipate termination of the lease.- (7)
- A tenant occupying 2,175 rentable square feet in this property remits only eleven months of rental revenue annually under the terms of its lease. Accordingly, the monthly contractual base rent as of December 31,
19992001 for this tenant was multiplied by12 pluseleven.- (8)
- We hold an 80% interest in the
estimated annualized expense reimbursements under existing leases. (3) This percentage represents the individual property's rental revenue to our total rental revenue as of December 31, 1999. (4) This total rent per occupied square foot is the property's total rental revenue divided byjoint venture thatproperty's occupied square feet as of December 31, 1999. 12owns this property. 19
Lease Expirations
The following table provides a summary schedule of the lease expirations for leases in place as of December 31,
1999,2001, assuming that none of the tenants exercise renewal options (dollars in thousands, except per square foot amounts):OFFICE AND RETAIL LEASE EXPIRATION ANALYSIS BY YEAR
Percentage Total Rental Square (1) of Total Revenue of Number Footage Percentage of Total Rental Rental Expiring Leases Year of of Leases of Leases Total Occupied Revenue of Revenue per Occupied Expiration (2) Expiring Expiring Square Feet Expiring Leases Expiring Square Foot - --------------------------------------------------------------------------------------------------------------------------2000 106 772,476 13.0% $13,576 14.64% $17.57 2001 70 589,401 10.0% 8,687 9.37% 14.74 2002 76 888,996 15.0% 14,292 15.41% 16.08 2003 69 763,862 12.9% 13,490 14.55% 17.66 2004 53 577,316 9.7% 10,374 11.19% 17.97 2005 10 154,483 2.6% 2,640 2.85% 17.09 2006 6 199,118 3.4% 3,122 3.37% 15.68 2007 6 171,499 2.9% 2,516 2.71% 14.67 2008 11 569,186 9.6% 10,633 11.47% 18.68 2009 11 1,189,625 20.1% 13,078 14.10% 10.99 2010 0 -- 0.0% -- 0.00% 0.00 2011 0 -- 0.0% -- 0.00% 0.00 2012 0 -- 0.0% -- 0.00% 0.00 2013 0 -- 0.0% -- 0.00% 0.00 2014 1 46,134 0.8% 312 0.34% 6.77 ------- --------- -------- -------- -------- Total/Weighted Avg. 419 5,922,096 100.0% $92,720 100.00% $16.14 ======= ========= ======== ======== ========
Year of Lease
Expiration(1)Number
of
Leases
ExpiringSquare Footage of Leases Expiring Percentage of Total Occupied Square Feet Total Rental Revenue of Expiring Leases(2)
(In Thousands)Percentage of Total Rental Revenue Expiring(2) Total Rental Revenue of Expiring Leases Per Occupied Square Foot(2) 2002 98 994,175 13.3 % $ 17,978 13.6 % $ 18.08 2003 95 833,099 11.1 14,319 10.9 17.19 2004 71 828,934 11.1 16,569 12.6 19.99 2005 63 744,854 9.9 14,779 11.2 19.84 2006 54 652,783 8.7 12,366 9.4 18.94 2007 16 454,641 6.1 7,530 5.7 16.56 2008 11 767,559 10.2 14,557 11.1 18.97 2009 13 1,222,057 16.3 14,736 11.2 12.06 2010 12 710,381 9.5 14,509 11.0 20.42 2011 4 165,443 2.2 3,211 2.4 19.41 2012 1 71,514 1.0 1,147 0.9 16.05 Other(3) 8 48,694 0.6 32 0.0 0.64 Total/Weighted Avg. 446 7,494,134 100.0 % $ 131,733 100.0 % $ 18.11
- (1)
Total rental revenue is the monthly contractual base rent as of December 31, 1999 multiplied by 12 plus the estimated annualized expense reimbursements under existing leases. (2)- Many of our government leases are subject to certain early termination provisions
whichthat are customary to government leases. The year of lease expiration was computed assuming noexercise ofsuch earlyterminations. ITEMtermination rights.- (2)
- Total rental revenue is the monthly contractual base rent as of December 31, 2001 multiplied by 12, plus the estimated annualized expense reimbursements under existing leases.
- (3)
- Other consists of amenities, including cafeterias, concierge offices and property management space.
Item 3.LEGAL PROCEEDINGSLegal ProceedingsWe are not currently involved in any material litigation nor, to our knowledge, is any material litigation currently threatened against the Company (other than routine litigation arising in the ordinary course of business, substantially all of which is expected to be covered by liability insurance).
ITEM
Item 4.SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submittedSubmission of Matters to avoteVote ofour security holders during the fourth quarter of 1999. 13Security Holders Not applicable.
20
Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERSMarket for Registrant's Common Equity and Related Shareholder MattersInformation for this item is incorporated herein by reference to the section of Exhibit 13.1 entitled "Market for Registrant's Common Equity and Related Shareholder Matters".
On December 21, 1999, we issued 974,662 Series C Preferred Units in our Operating Partnership in connection with a property acquisition. The issuance of these units is exempt from registration under Section 4 (2) of the Securities Act of 1933, as amended. These units are convertible, subject to certain restrictions, commencing December 21, 2000 into Common Units in the Operating Partnership on the basis of 2.381 Common Units for each Series C Preferred Unit, plus any accrued return. The Common Units would then be exchangeable for Common Shares, subject to certain conditions. ITEM
Item 6.SELECTED FINANCIAL DATASelected Financial DataInformation for this item is incorporated herein by reference to the section of Exhibit 13.1 to this Form 10-K entitled "Selected Financial Data".
ITEM
Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement's Discussion and Analysis of Financial Condition and Results of OperationsInformation for this item is incorporated herein by reference to the section of Exhibit 13.1 to this Form 10-K entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations".
ITEM
Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKQuantitative and Qualitative Disclosures about Market RiskInformation for this section is incorporated herein by reference to the section of Exhibit 13.1 to this Form 10-K entitled "Quantitative and Qualitative Disclosures about Market Risk".
ITEM
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAFinancial Statements and Supplementary DataInformation for this section is incorporated herein by reference to the
Sectionsection of Exhibit 13.1 to this Form 10-K beginning with the Consolidated Balance Sheets and continuing through the Report of Independent Accountants.
Item 9. Changes in and Disagreements with Accountants onPage 13. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREAccounting and Financial DisclosureNone.
Item 10, 11, 12 & 13.
TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT, EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSTrustees and Executive Officers of the Registrant, Executive Compensation, Security Ownership of Certain Beneficial Owners and Management and Certain Relationships and Related TransactionsFor the information required by Item 10, Item 11, Item 12 and Item 13, you should refer to our definitive proxy statement relating to the
20002002 Annual Meeting of our Shareholders to be filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal year covered by this Form 10-K.Item 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORMExhibits, Financial Statement Schedules and Reports on Form 8-K
- (a)
- The following documents are filed as exhibits to this Form 10-K:
14- 1.
FINANCIAL STATEMENTS.- Financial Statements. Audited consolidated balance sheets as of December 31,
19992001 and1998,2000, and the related consolidated statements of operations, of shareholders' equity, and of cash flows for each of the three years in the period ended December 31,19992001 are included in Exhibit 13.1 to this Form 10-K and are incorporated by reference.- 2.
FINANCIAL STATEMENT SCHEDULE.- Financial Statement Schedule. Audited Schedule
III -III—Real Estate and Accumulated Depreciation is included in Exhibit 13.2 to this Form 10-K and is incorporated by reference.21
- (b)
- We filed
nothe following CurrentReportsReport on Form 8-K in the last quarter of the year ended December 31,1999.2001:
We filed a Form 8-K dated October 24, 2001 that included information reported under Item 7 and Item 9 filed in connection with our release of earnings on October 24, 2001. We also through this filing made available certain additional information pertaining to our properties and operations as of and for the period ended September 30, 2001.
- (c)
EXHIBITS.- Exhibits. Refer to the Exhibit Index that follows.
EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------2.1 Agreement and Plan of Merger, dated January 31, 1998, among the Registrant, the Maryland Company and the Company (filed with the Trust's Registration Statement on Form S-4 (Commission File No. 333-45649) and incorporated herein by reference). 2.2 Assignment of Partnership Interests, dated April 30, 1998, between Airport Square Limited Partnership, Airport Square Corporation, Camp Meade Corporation and COPT Airport Square One LLC and COPT Airport Square Two LLC. (filed with the Company's Current Report on Form 8-K on May 14, 1998 and incorporated herein by reference). 2.3 Assignment of Purchase and Sale Agreement, dated April 30, 1998, between Aetna Life Insurance Company and the Operating Partnership. (filed with the Company's Current Report on Form 8-K on May 14, 1998 and incorporated herein by reference). 2.4 Assignment of Loan Purchase and Sale Agreement, dated April 30, 1998, between Constellation Real Estate, Inc. and the Operating Partnership. (filed with the Company's Current Report on Form 8-K on May 14, 1998 and incorporated herein by reference). 2.5 Purchase and Sale Agreement, dated April 1, 1998, between Aetna Life Insurance Company and Airport Square Limited Partnership (filed with the Company's Current Report on Form 8-K on May 14, 1998 and incorporated herein by reference). 2.6.1 Loan Purchase and Sale Agreement, dated March 13, 1998, between Aetna Life Insurance Company and Constellation Real Estate, Inc. (filed with the Company's Current Report on Form 8-K on May 14, 1998 and incorporated herein by reference). 2.6.2 Amendment to Loan Purchase and Sale Agreement, dated April 16, 1998, between Aetna Life Insurance Company and Constellation Real Estate, Inc. (filed with the Company's Current Report on Form 8-K on May 14, 1998 and incorporated herein by reference). 2.7.1 Purchase and Sale Agreement, dated March 4, 1998, between 695 Rt. 46 Realty, LLC, 710 Rt. 46 Realty, LLC and COPT Acquisitions, Inc. (filed with the Company's Current Report on Form 8-K on June 10, 1998 and incorporated herein by reference). 2.7.2 Letter Amendment to Purchase and Sale Agreement, dated March 26, 1998, between 695 Rt. 46 Realty, LLC, 710 Rt. 46 Realty, LLC and COPT Acquisitions, Inc. (filed with the Company's Current Report on Form 8-K on June 10, 1998 and incorporated herein by reference). 2.8.1 Contribution Agreement between the Company and the Operating Partnership and certain Constellation affiliates (filed as Exhibit A of the Company's Schedule 14A Information on15
EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------June 26, 1998 and incorporated herein by reference). 2.8.2 First Amendment to Contribution Agreement, dated July 16, 1998, between Constellation Properties, Inc. and certain entities controlled by Constellation Properties, Inc. (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 2.8.3 Second Amendment to Contribution Agreement, dated September 28, 1998, between Constellation Properties, Inc. and certain entities controlled by Constellation Properties, Inc. (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 2.9 Service Company Asset Contribution Agreement between the Company and the Operating Partnership and certain Constellation affiliates (filed as Exhibit B of the Company's Schedule 14A Information on June 26, 1998 and incorporated herein by reference). 2.10.1 Option Agreement, dated May 14, 1998, between the Operating Partnership and NBP-III, LLC (a Constellation affiliate) (filed as Exhibit C of the Company's Schedule 14A Information on June 26, 1998 and incorporated herein by reference). 2.10.2 First Amendment to Option Agreement, dated June 22, 1998, between the Operating Partnership and NBP-III, LLC (a Constellation affiliate) (filed as Exhibit E of the Company's Schedule 14A Information on June 26, 1998 and incorporated herein by reference). 2.11.1 Option Agreement, dated May 14, 1998, between the Operating Partnership and Constellation Gatespring II, LLC (a Constellation affiliate) (filed as Exhibit D of the Company's Schedule 14A Information on June 26, 1998 and incorporated herein by reference). 2.11.2 First Amendment to Option Agreement, dated June 22, 1998, between the Operating Partnership and Constellation Gatespring II, LLC (a Constellation affiliate) (filed as Exhibit F of the Company's Schedule 14A Information on June 26, 1998 and incorporated herein by reference). 2.12 Option Agreement, dated September 28, 1998, between Jolly Acres Limited Partnership, Arbitrage Land Limited Partnership and the Operating Partnership (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 2.13 Right of First Refusal Agreement, dated September 28, 1998, between Constellation Properties, Inc. and the Operating Partnership (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 2.14 Right of First Refusal Agreement, dated September 28, 1998, between 257 Oxon, LLC and the Operating Partnership (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 2.15 Contribution Agreement, dated September 30, 1998, between COPT Acquisitions, Inc. and M.O.R. XXIX Associates Limited Partnership (filed with the Company's Current Report on Form 8-K on October 28, 1998 and incorporated herein by reference).16
EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------2.16 Purchase and Sale Agreement, dated September 30, 1998, between New England Life Pension Properties II: A Real Estate Limited Partnership and COPT Acquisitions, Inc. (filed with the Company's Current Report on Form 8-K on October 28, 1998 and incorporated herein by reference). 2.17.1 Sale-Purchase Agreement, dated August 20, 1998 between South Middlesex Industrial Park Associates, L.P. and SM Monroe Associates and COPT Acquisitions, Inc. (filed with the Company's Current Report on Form 8-K on October 28, 1998 and incorporated herein by reference). 2.17.2 First Amendment to Sale-Purchase Agreement, dated October 30, 1998, between South Middlesex Industrial Park Associates, L.P. and SM Monroe Associates, L.P. and COPT Acquisitions, Inc. (filed with the Company's Current Report on Form 8-K on November 16, 1998 and incorporated herein by reference). 2.18 Contribution Agreement, dated December 31, 1998, between the Operating Partnership and M.O.R. 44 Gateway Associates L.P., RA & DM, Inc. and M.R.U. L.P. (filed with the Company's Current Report on Form 8-K on January 14, 1999 and incorporated herein by reference). 2.19.1 Purchase and Sale Agreement, dated December 31, 1998, between Metropolitan Life Insurance Company and Corporate Office Acquisitions, Inc. (filed with the Company's Current Report on Form 8-K on January 14, 1999 and incorporated herein by reference). 2.19.2 Amendment to Purchase and Sale Agreement, dated December 31, 1998, between Metropolitan Life Insurance Company, DPA/Gateway L.P., Corporate Office Acquisitions, Inc., COPT Gateway, LLC and the Operating Partnership (filed with the Company's Current Report on Form 8-K on January 14, 1999 and incorporated herein by reference). 2.20 Contribution Agreement, dated February 24, 1999, between the Operating Partnership and John Parsinen, John D. Parsinen, Jr., Enterprise Nautical, Inc. and Vernon Beck (filed with the Company's Quarterly Report on Form 10-Q on May 14, 1999 and incorporated herein by reference). 2.21 Agreement to Sell Partnership Interests, dated August 12, 1999, between Gateway Shannon Development Corporation, Clay W. Hamlin, III and COPT Acquisitions, Inc. (filed with the Company's Quarterly Report on Form 10-Q on November 8, 1999 and incorporated herein by reference). 2.22 Agreement of Purchase and Sale, dated July 21, 1999, between First Industrial Financing Partnership, L.P. and COPT Acquisitions, Inc. (filed with the Company's Quarterly Report on Form 10-Q on November 8, 1999 and incorporated herein by reference). 2.23 Contribution Agreement, dated December 21, 1999, between United Properties Group, Incorporated and COPT Acquisitions, Inc. 3.13.1.1 Amended and Restated Declaration of Trust of Registrant (filed with the Registrant's Registration Statement on Form S-4 (Commission File No. 333-45649) and incorporated herein by reference). 3.1.2 Articles of Amended and Restated Declaration of Trust (filed herewith). 3.2 Bylaws of Registrant (filed with the Registrant's Registration Statement on Form S-4 17
EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------(Commission File No. 333-45649) and incorporated herein by reference). 4.13.3 Form of certificate for the Registrant's Common Shares of Beneficial Interest, $0.01 par value per share (filed with the Registrant's Registration Statement on Form S-4 (Commission File No. 333-45649) and incorporated herein by reference). 4.23.4 Amended and Restated Registration Rights Agreement, dated March 16, 1998, for the benefit of certain shareholders of the Company (filed with the Company's Quarterly Report on Form 10-Q on August 12, 1998 and incorporated herein by reference). 4.33.5 Articles Supplementary of Corporate Office Properties Trust Series A Convertible Preferred Shares, dated September 28, 1998 (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 4.4.1 Second Amended and Restated Limited Partnership Agreement of the Operating Partnership, dated December 7, 1999. 4.4.2 First Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership, dated December 21, 1999. 4.53.6 Articles Supplementary of Corporate Office Properties Trust Series B Convertible Preferred Shares, dated July 2, 1999 (filed with the Company's Current Report on Form 8-K on July 7, 1999 and incorporated herein by reference). 10.1 Employment Agreement, dated December 16, 1999, between Corporate Office Management, Inc., COPT and Clay W. Hamlin, III. 10.2 Employment Agreement, dated December 16, 1999, between Corporate Office Management, Inc., COPT and Randall M. Griffin. 10.3 Employment Agreement, dated December 16, 1999, between Corporate Office Management, Inc., COPT and Roger A. Waesche, Jr. 10.4 Employment Agreement, dated December 16, 1999, between Corporate Development Services, LLC, COPT and Dwight Taylor. 10.5 Employment Agreement, dated December 16, 1999, between Corporate Realty Management, LLC, COPT and Michael D. Kaiser. 10.6 Restricted Share Agreement, dated December 16, 1999, between3.7 Articles Supplementary of Corporate Office Properties Trust Series D Cumulative Convertible Redeemable Preferred Shares, dated January 25, 2001 (filed with the Company's Annual Report on Form 10-K on March 22, 2001 and Randall M. Griffin. 10.7 Restricted Shareincorporated herein by reference).3.8 Registration Rights Agreement, dated December 16, 1999, betweenJanuary 25, 2001, for the benefit of Barony Trust Limited (filed with the Company's Annual Report on Form 10-K on March 22, 2001 and incorporated herein by reference).3.9 Articles Supplementary of Corporate Office Properties Trust Series E Cumulative Redeemable Preferred Shares, dated April 3, 2001 (filed with the Registrant's Current Report on Form 8-K on April 4, 2001 and Roger A. Waesche, Jr. 10.8 Restricted Share Agreement, dated December 16, 1999, betweenincorporated herein by reference).3.10 Articles Supplementary of Corporate Office Properties Trust Series F Cumulative Redeemable Preferred Shares, dated September 13, 2001 (filed with the Registrant's Current Report on Form 8-K on September 14, 2001 and Dwight Taylor. 10.9 Restricted Shareincorporated herein by reference).10.1.1 Second Amended and Restated Limited Partnership Agreement of the Operating Partnership, dated December 7, 1999 (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 10.1.2 First Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership, dated December 21, 1999 between Corporate Office Properties Trust(filed with the Company's Annual Report on Form 10-K on March 16, 2000 andMichael D. Kaiser.18
EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------10.10 Management agreement between Registrantincorporated herein by reference).10.1.3 Second Amendment to Second Amended and Glacier Realty, LLCRestated Limited Partnership Agreement of the Operating Partnership, dated December 21, 1999 (filed with the Company's Post Effective Amendment No. 2 to Form S-3 dated November 1, 2000 (Registration Statement No. 333-71807) and incorporated herein by reference).22
10.1.4 Third Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership, dated September 29, 2000 (filed with the Company's Post Effective Amendment No. 2 to Form S-3 dated November 1, 2000 (Registration Statement No. 333-71807) and incorporated herein by reference). 10.1.5 Sixth Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership, dated April 3, 2001 (filed with the Company's Current Report on Form 8-K on October 29, 1997,dated March 30, 2001 and incorporated herein by reference).10.11 Senior Secured Credit10.1.6 Eighth Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership, dated October 13, 1997,September 14, 2001 (filed with the Company's Current Report on Form 8-Kon October 29, 1997,dated September 6, 2001 and incorporated herein by reference).10.12.110.2 Stock Option Plan for Directors (filed with Royale Investments, Inc.'s Form 10-KSB for the year ended December 31, 1993 (Commission File No. 0-20047) and incorporated herein by reference). 10.3.1* Corporate Office Properties Trust 1998 Long Term Incentive Plan (filed with the Registrant's Registration Statement on Form S-4 (Commission File No. 333-45649) and incorporated herein by reference). 10.12.210.3.2* Amendment No. 1 to Corporate Office Properties Trust 1998 Long Term Incentive Plan (filed with the Company's Quarterly Report on Form 10-Q on August 13, 1999 and incorporated herein by reference). 10.13 Stock Option10.3.3* Amendment No. 2 to Corporate Office Properties Trust 1998 Long Term Incentive Plan for Directors(filedwith Royale Investments,herewith).10.4* Employment Agreement, dated December 16, 1999, between Corporate Office Management, Inc. 's Form 10-KSB for the year ended December 31, 1993 (Commission File No. 0-20047), COPT andincorporated herein 10.14 Lease Agreement between Blue Bell Investment Company, L.P. and Unisys Corporation dated March 12, 1997 with respect to lot AClay W. Hamlin, III (filed with theRegistrant's Registration StatementCompany's Annual Report on FormS-4 (Commission File No. 333-45649)10-K on March 16, 2000 and incorporated herein by reference).10.15 Lease10.5* Employment Agreement, dated December 16, 1999, between Blue Bell Investment Company, L.P.Corporate Office Management, Inc., COPT andUnisys Corporation, dated March 12, 1997, with respect to lot BRandall M. Griffin (filed with theRegistrant's Registration StatementCompany's Annual Report on FormS-4 (Commission File No. 333-45649)10-K on March 16, 2000 and incorporated herein by reference).10.16 Lease10.6* Employment Agreement, dated December 16, 1999, between Blue Bell Investment Company, L.P.Corporate Office Management, Inc., COPT andUnisys Corporation, dated March 12, 1997, with respect to lot CRoger A. Waesche, Jr. (filed with theRegistrant's Registration StatementCompany's Annual Report on FormS-4 (Commission File No. 333-45649)10-K on March 16, 2000 and incorporated herein by reference).10.1710.7* Employment Agreement, dated December 16, 1999, between Corporate Development Services, LLC, COPT and Dwight Taylor (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 10.8* Employment Agreement, dated December 16, 1999, between Corporate Realty Management, LLC, COPT and Michael D. Kaiser (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 10.9* Restricted Share Agreement, dated December 16, 1999, between Corporate Office Properties Trust and Randall M. Griffin (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 10.10* Restricted Share Agreement, dated December 16, 1999, between Corporate Office Properties Trust and Roger A. Waesche, Jr. (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 10.11* Restricted Share Agreement, dated December 16, 1999, between Corporate Office Properties Trust and Dwight Taylor (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 10.12* Restricted Share Agreement, dated December 16, 1999, between Corporate Office Properties Trust and Michael D. Kaiser (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 23
10.13* Restricted Share Agreement, dated July 2, 2001, between Corporate Office Properties Trust and Roger A. Waesche, Jr. (filed herewith). 10.14.1 Senior Secured Revolving Credit Agreement, dated May 28, 1998, between the Company, the Operating Partnership, Any Mortgaged Property Subsidiary and Bankers Trust Company (filed with the Company's Current Report on Form 8-K on June 10, 1998 and incorporated herein by reference). 10.18 Consulting Services10.14.2 First Amended and Restated Senior Secured Revolving Credit Agreement, dated Aprilas of March 28,1998,2001, between the Company, the Operating Partnership, Any Mortgaged Property Subsidiary andNet Lease Finance Corp., doing business as Corporate Office ServicesBankers Trust Company (filed with the Company's Current Report on Form 8-K onOctober 13, 1998September 7, 2001 and incorporated herein by reference).10.19 Project Consulting10.14.3 Second Amended and ManagementRestated Senior Secured Revolving Credit Agreement, datedSeptember 28, 1998,as of March 8, 2002, betweenConstellation Properties, Inc.the Company, the Operating Partnership, Any Mortgaged Property Subsidiary andCOMIBankers Trust Company (filedwith the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference)herewith).10.2010.15 Promissory Note, dated October 22, 1998, between Teachers Insurance and Annuity Association of America and the Operating Partnership (filed with the Company's Quarterly Report on Form 10-Q on November 13, 1998 and incorporated herein by reference). 19
EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------10.2110.16 Indemnity Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated October 22, 1998, by affiliates of the Operating Partnership for the benefit of Teachers Insurance and Annuity Association of America (filed with the Company's Quarterly Report on Form 10-Q on November 13, 1998 and incorporated herein by reference). 10.22 Agreement for Services, dated September 28, 1998, between the Company and Corporate Office Management, Inc. (filed with the Company's Quarterly Report on Form 10-Q on May 14, 1999 and incorporated herein by reference). 10.23.1 Lease Agreement, dated September 28,1998, between St. Barnabas Limited Partnership and Constellation Properties, Inc. (filed with the Company's Quarterly Report on Form 10-Q on May 14, 1999 and incorporated herein by reference). 10.23.2 First Amendment to Lease, dated December 31, 1998, between St. Barnabas, LLC and Constellation Properties, Inc. (filed with the Company's Quarterly Report on Form 10-Q on May 14, 1999 and incorporated herein by reference). 10.24.1 Lease Agreement, dated August 3, 1998, between Constellation Real Estate, Inc. and Constellation Properties, Inc. (filed with the Company's Quarterly Report on Form 10-Q on May 14, 1999 and incorporated herein by reference). 10.24.2 First Amendment to Lease, dated December 30, 1998, between Three Centre Park, LLC and Constellation Properties, Inc. (filed with the Company's Quarterly Report on Form 10-Q on May 14, 1999 and incorporated herein by reference). 10.25.1 Lease Agreement, dated April 27, 1993, between Constellation Properties, Inc. and Baltimore Gas and Electric Company (filed with the Company's Quarterly Report on Form 10-Q on May 14, 1999 and incorporated herein by reference). 10.25.2 First Amendment to Lease, dated December 9, 1998, between COPT Brandon, LLC and Baltimore Gas and Electric Company (filed with the Company's Quarterly Report on Form 10-Q on May 14, 1999 and incorporated herein by reference). 10.26 Underwriting Agreement, dated June 29, 1999, between Corporate Office Properties Trust and the underwriters of the Series B Preferred Shares (filed with the Company's Current Report on Form 8-K on July 7, 1999 and incorporated herein by reference). 10.27 Contribution Rights Agreement, dated June 23, 1999, between the Operating Partnership and United Properties Group, Incorporated (filed with the Company's Quarterly Report on Form 10-Q on August 13, 1999 and incorporated herein by reference). 10.2810.17 Promissory Note, dated September 30, 1999, between Teachers Insurance and Annuity Association of America and the Operating Partnership (filed with the Company's Quarterly Report on Form 10-Q on November 8, 1999 and incorporated herein by reference). 10.2910.18 Indemnity Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated September 30, 1999, by affiliates of the Operating Partnership for the benefit of Teachers Insurance and Annuity Association of America (filed with the Company's Quarterly Report on Form 10-Q on November 8, 1999 and incorporated herein by reference). 20
EXHIBIT NO. DESCRIPTION ------------- ----------------------------------------------------------10.30 Revolving Credit10.19 Letter Agreement for Interest Rate Swap Transaction, dated December 29, 1999,26, 2000, between Corporate Office Properties, L.P. andPrudential Securities Credit Corp. 10.31Deutsche Bank AG (filed with the Company's Annual Report on Form 10-K on March 22, 2001 and incorporated herein by reference).10.20.1 Contribution Agreement between the Company and the Operating Partnership and certain Constellation affiliates (filed as Exhibit A of the Company's Schedule 14A Information on June 26, 1998 and incorporated herein by reference). 10.20.2 First Amendment to Contribution Agreement, dated July 16, 1998, between Constellation Properties, Inc. and certain entities controlled by Constellation Properties, Inc. (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 10.20.3 Second Amendment to Contribution Agreement, dated September 28, 1998, between Constellation Properties, Inc. and certain entities controlled by Constellation Properties, Inc. (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 10.21 Service Company Asset Contribution Agreement between the Company and the Operating Partnership and certain Constellation affiliates (filed as Exhibit B of the Company's Schedule 14A Information on June 26, 1998 and incorporated herein by reference). 10.22.1 Contribution Rights Agreement, dated June 23, 1999, between the Operating Partnership and United Properties Group, Incorporated (filed with the Company's Quarterly Report on Form 10-Q on August 13, 1999 and incorporated herein by reference). 24
10.22.2 Contribution Agreement, dated December 21, 1999, between United Properties Group, Incorporated and COPT Acquisitions, Inc. (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 10.23.1 Contract of Sale, dated August 9, 1999, between Jolly Acres Limited Partnership and the Operating Partnership (filed with the Company's Annual Report on Form 10-K on March 22, 2001 and incorporated herein by reference). 10.23.2 Amendment to Contract of Sale, dated April 28, 2000, between Jolly Acres Limited Partnership and the Operating Partnership (filed with the Company's Annual Report on Form 10-K on March 22, 2001 and incorporated herein by reference). 10.24 Agreement to Sell Partnership Interests, dated August 12, 1999, between Gateway Shannon Development Corporation, Clay W. Hamlin, III and COPT Acquisitions, Inc. (filed with the Company's Quarterly Report on Form 10-Q on November 8, 1999 and incorporated herein by reference). 10.25 Contract of Sale, dated March 14, 2000, between Arbitrage Land Limited Partnership, Jolly Acres Limited Partnership and the Operating Partnership (filed with the Company's Annual Report on Form 10-K on March 22, 2001 and incorporated herein by reference). 10.26.1 Lease Agreement, dated August 3, 1998, between Constellation Real Estate, Inc. and Constellation Properties, Inc. (filed with the Company's Annual Report on Form 10-K on March 30, 1999 and incorporated herein by reference). 10.26.2 First Amendment to Lease, dated December 30, 1998, between Three Centre Park, LLC and Constellation Properties, Inc. (filed with the Company's Annual Report on Form 10-K on March 30, 1999 and incorporated herein by reference). 10.27 Lease Agreement between Blue Bell Investment Company, L.P. and Unisys Corporation dated March 12, 1997 with respect to lot A (filed with the Registrant's Registration Statement on Form S-4 (Commission File No. 333-45649) and incorporated herein by reference). 10.28 Lease Agreement between Blue Bell Investment Company, L.P. and Unisys Corporation, dated March 12, 1997, with respect to lot B (filed with the Registrant's Registration Statement on Form S-4 (Commission File No. 333-45649) and incorporated herein by reference). 10.29 Lease Agreement between Blue Bell Investment Company, L.P. and Unisys Corporation, dated March 12, 1997, with respect to lot C (filed with the Registrant's Registration Statement on Form S-4 (Commission File No. 333-45649) and incorporated herein by reference). 10.30 Option agreement, dated March 1998, between Corporate Office Properties, L.P. and Blue Bell Land, L.P. 10.32(filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference).10.31 Option agreement, dated March 1998, between Corporate Office Properties, L.P. and Comcourt Land, L.P. (filed with the Company's Annual Report on Form 10-K on March 16, 2000 and incorporated herein by reference). 10.32 Option Agreement, dated September 28, 1998, between Jolly Acres Limited Partnership, Arbitrage Land Limited Partnership and the Operating Partnership (filed with the Company's Current Report on Form 8-K on October 13, 1998 and incorporated herein by reference). 13.1 Portions of the Annual Report of Corporate Office Properties Trust as of and for the year ended December 31, 1999.2001 (filed herewith).13.2 Schedule III -III—Real Estate and Accumulated Depreciation as of December 31,1999.2001 (filed herewith).21.1 Subsidiaries of Registrant.Registrant (filed herewith).25
23.1 Consent of Independent Accountants. 27 Financial Data Schedule.Accountants (filed herewith).
- *
- Indicates a compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.
26
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CORPORATE OFFICE PROPERTIES TRUST Date: March 16, 2000 By: /s/ Randall M. Griffin ------------------------------------------ Randall M. Griffin President and Chief Operating Officer Date: March 16, 2000 By: /s/ Roger A. Waesche, Jr. ------------------------------------------ Roger A. Waesche, Jr. Senior Vice President and Chief Financial Officer 21
CORPORATE OFFICE PROPERTIES TRUST
Date: March 22, 2002
By:
/s/ RANDALL M. GRIFFIN
Randall M. Griffin
President and Chief Operating Officer
Date: March 22, 2002
By:
/s/ ROGER A. WAESCHE, JR.
Roger A. Waesche, Jr.
Vice President and Chief Financial OfficerPursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signatures Title Date ---------- ----- ----/s//s/ JAY H. SHIDLER
(Jay H.ShidlerShidler)Chairman of the Board March 16, 2000 ------------------------------- (Jay H. Shidler)and Trustee/s/March 22, 2002
/s/ CLAY W. HAMLIN, III
(Clay W. Hamlin,IIIIII)
Chief Executive Officer and Trustee
March16, 2000 ------------------------------- (Clay W. Hamlin, III) Trustee /s/22, 2002
/s/ RANDALL M. GRIFFIN
(Randall M.GriffinGriffin)
President and Chief Operating Officer
March16, 2000 ------------------------------- (Randall M. Griffin) Officer /s/22, 2002
/s/ ROGER A. WAESCHE, JR.
(Roger A. Waesche, Jr.)
Senior Vice President and ChiefMarch 16, 2000 ------------------------------- (Roger A. Waesche)Financial Officer/s/
March 22, 2002
/s/ BETSY Z. COHEN
(Betsy Z.CohenCohen)
Trustee
March16, 2000 ------------------------------- (Betzy Z. Cohen) /s/22, 2002
/s/ KENNETH D. WETHE
(Kenneth D.WetheWethe)
Trustee
March16, 2000 ------------------------------- (Kenneth D. Wethe) /s/22, 2002
/s/ ROBERT L. DENTON
(Robert L.DentonDenton)
Trustee
March16, 2000 ------------------------------- (Robert L. Denton) /s/ William H. Walton Trustee March 16, 2000 ------------------------------- (William H. Walton) /s/22, 2002
(Kenneth S. Sweet, Jr.)
Trustee
March16, 2000 ------------------------------- (Kenneth S. Sweet, Jr.) /s/22, 2002
/s/ STEVEN D. KESLER
(Steven D.KeslerKesler)
Trustee
March16, 2000 ------------------------------- (Steven D. Kesler) /s/ Edward A. Crooke22, 2002
/s/ THOMAS F. BRADY
(Thomas F. Brady)
Trustee
March16, 2000 ------------------------------- (Edward A. Crooke)22, 200222