Corporate Office Properties Trust (“COPT” or the “Company”)
(NYSE: OFC) announced today that its operating partnership,
Corporate Office Properties, L.P. (the “Operating Partnership”),
has priced the previously announced offering of $300 million
aggregate principal amount of its 5.25% Exchangeable Senior Notes
due 2028 (the “Notes”) in a private placement (the “Offering”) to
persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). The Operating Partnership also granted the
initial purchasers of the Notes an option to purchase, during a
13-day period beginning on, and including, the first date on which
the Notes are issued, up to an additional $45 million aggregate
principal amount of Notes. The sale of the Notes to the initial
purchasers is expected to settle on September 12, 2023, subject to
customary closing conditions, and is expected to result in $292.5
million in net proceeds to the Operating Partnership after
deducting the initial purchasers’ discount but before deducting
estimated offering expenses payable by the Operating Partnership
(assuming no exercise of the initial purchasers’ option to purchase
additional Notes).
The Notes will be the Operating Partnership's senior unsecured
obligations and will pay interest semi-annually in arrears on March
15 and September 15 of each year, beginning on March 15, 2024, at a
rate of 5.25% per year. The Notes will mature on September 15,
2028, unless earlier exchanged, redeemed, or repurchased. The
Company will fully and unconditionally guarantee the Notes on a
senior unsecured basis.
The Notes will be exchangeable at an initial exchange rate of
33.3739 of the Company’s common shares of beneficial interest, par
value $0.01 per share (the “Common Shares”), per $1,000 principal
amount of Notes (equivalent to an initial exchange price of
approximately $29.96 per Common Share and an initial exchange
premium of approximately 22.5% based on the closing price of $24.46
per Common Share on September 7, 2023). The exchange rate is
subject to adjustment upon the occurrence of certain events, but
will not be adjusted for any accrued and unpaid interest. The Notes
will be exchangeable for cash up to the aggregate principal amount
of the Notes to be exchanged and, in respect of the remainder of
the exchange obligation, if any, in excess thereof, cash, Common
Shares or a combination thereof, at the election of the Operating
Partnership.
Prior to the close of business on the business day immediately
preceding June 15, 2028, the Notes are exchangeable at the option
of holders only upon certain circumstances and during certain
periods. On or after June 15, 2028, the Notes will be exchangeable
at the option of the holders at any time prior to the close of
business on the business day immediately preceding the maturity
date.
If a fundamental change (as defined in the indenture that will
govern the Notes) occurs, subject to certain conditions and a
limited exception, holders of the Notes may require the Operating
Partnership to repurchase for cash all or any portion of their
Notes at a repurchase price equal to 100% of the principal amount
of the Notes to be repurchased, plus accrued and unpaid interest
to, but excluding, the fundamental change repurchase date (as
defined in the indenture that will govern the Notes). In addition,
if certain corporate events occur or if the Operating Partnership
calls any Notes for redemption, the Operating Partnership may be
required, in certain circumstances, to increase the exchange rate
for any Notes in connection with any such corporate event or
exchange their Notes called for redemption by a specified number of
Common Shares.
The Operating Partnership may redeem for cash all or any portion
of the Notes, if the Company’s board of trustees (or a committee
thereof) determines such redemption is necessary to preserve the
Company’s status as a real estate investment trust (“REIT”) for
U.S. federal income tax purposes. On any business day on or after
September 21, 2026 and prior to the 51st scheduled trading day
immediately preceding the maturity date, the Operating Partnership
may redeem the Notes, at its option, in whole or in part, if the
last reported sale price of the Common Shares has been at least
130% of the exchange price then in effect for at least 20 trading
days (whether or not consecutive) during any 30 consecutive trading
day period ending on, and including, the trading day immediately
preceding the date on which the Operating Partnership provides
notice of redemption. The redemption price will be equal to 100% of
the principal amount of the Notes to be redeemed, plus accrued and
unpaid interest, if any, to, but excluding, the redemption
date.
The Operating Partnership and/or the Company intend to use the
net proceeds from the Offering for general corporate purposes,
including the redemption or repayment of indebtedness (which may
include the pay down of borrowings under the Operating
Partnership’s Revolving Credit Facility) and the pre-funding of
future development investment. Pending such use, the net proceeds
may be invested in short-term, investment grade, interest-bearing
securities, certificates of deposit or indirect or guaranteed
obligations of the United States.
The Notes and the related guarantee are being offered and sold
only to persons reasonably believed to be qualified institutional
buyers (as defined in Rule 144A under the Securities Act). The
Notes, the guarantee, and the Common Shares, if any, deliverable
upon exchange of the Notes have not been registered under the
Securities Act or the securities laws of any other jurisdiction,
and unless so registered, may not be offered or sold in the United
States except pursuant to an applicable exemption from such
registration requirements. The Company has agreed to file a
registration statement, or one or more prospectus supplements to an
effective shelf registration statement, covering resales of the
Common Shares deliverable upon exchange of the Notes with the
Securities and Exchange Commission.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any offer or
sale of, the Notes in any jurisdiction in which the offer,
solicitation or sale of the Notes would be unlawful prior to the
registration or qualification thereof under the securities laws of
any such state or jurisdiction.
About COPT
COPT is a REIT that owns, manages, leases, develops and
selectively acquires office and data center properties. The
majority of its portfolio is in locations that support the United
States Government and its contractors, most of whom are engaged in
national security, defense and information technology (“IT”)
related activities servicing what the Company believes are growing,
durable, priority missions (“Defense/IT Locations”). The Company
also owns a portfolio of office properties located in select urban
submarkets in the Greater Washington, DC/Baltimore region with
durable Class-A office fundamentals and characteristics (“Regional
Office Properties”). As of June 30, 2023, the Company derived 90%
of its core portfolio annualized rental revenue from Defense/IT
Locations and 10% from its Regional Office Properties. As of the
same date and including 24 properties owned through unconsolidated
joint ventures, COPT’s core portfolio of 192 properties encompassed
22.9 million square feet and was 95% leased.
Forward-Looking
Information
This press release may contain “forward-looking” statements, as
defined in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, that are based on the
Company’s current expectations, estimates and projections about
future events and financial trends affecting the Company.
Forward-looking statements can be identified by the use of words
such as “may,” “will,” “should,” “could,” “believe,” “anticipate,”
“expect,” “estimate,” “plan” or other comparable terminology.
Forward-looking statements are inherently subject to risks and
uncertainties, many of which the Company cannot predict with
accuracy and some of which the Company might not even anticipate.
Although the Company believes that the expectations, estimates and
projections reflected in such forward-looking statements are based
on reasonable assumptions at the time made, the Company can give no
assurance that these expectations, estimates and projections will
be achieved. Future events and actual results may differ materially
from those discussed in the forward-looking statements and the
Company undertakes no obligation to update or supplement any
forward-looking statements.
The areas of risk that may affect these expectations, estimates
and projections include, but are not limited to, those risks
described in Item 1A of the Company’s Annual Report on Form 10-K
for the year ended December 31, 2022.
Source: Corporate Office Properties Trust
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230907494627/en/
IR Contacts: Venkat Kommineni, CFA 443-285-5587
venkat.kommineni@copt.com Michelle Layne 443-285-5452
michelle.layne@copt.com
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