April The Government/ Defense Information Technology Office REIT

Transcription

1 April 2010 The Government/ Defense Information Technology Office REIT

2 Disclosure This presentation contains forward looking information based upon the Company s current best judgement and expectations. Actual results could vary from those presented herein. The risks and uncertainties associated with the forward looking information include the strength of the commercial office real estate market in which the Company operates, competitive market conditions, general economic growth, interest rates and capital market conditions. The Company undertakes no obligations to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise. For further information, please refer to the Company s filings with the Securities and Exchange Commission. Defined terms for Non GAAP measures used throughout may be found in the Disclosure. In addition, a Reconciliation of Non GAAP measures to the most comparable GAAP measures is included in the Disclosure. 2

3 COPT Overview Class A office (269 Properties, 20.2 mm SF) 1 Greater Washington, DC region (65% of wholly owned properties) 2 #2 equity REIT for total shareholder return (10 years) 63% Diluted FFO payout ratio 3 Core customer focus 56% of total revenues from real estate operations from assets containing US government, Defense Information Technology Contractors and Data sector tenants and 81% from super core and core 4 Winner of the 2008 National Commercial Real Estate Customer Service Award for Excellence for Category I properties, the largest of the categories winner for the 5th year in a row A leader in developing green buildings since 2003 Expansion/growth within existing markets through acquisition and development and outside existing markets by pursuing core tenant driven opportunities 1. Data as of December 31, 2009, includes 20 properties totaling 1.1 million square feet held through joint ventures. 2. Measured using square feet. 3. Data for year ended December 31, Data as of December 31,

4 Performance 4

5 Total Shareholder Return 1 800% 700% 600% 500% 400% 300% 200% 100% 0% -100% 693% 1 year 3 years 5 years 10 years COPT RMS S&P Dow Jones 1. Data as of December 31, 2009, compiled by NAREIT and MSCI. 5

6 Dividend Growth $2.00 $1.50 $1.00 $0.50 $ %

7 Peer Group FFO Comparison Diluted FF0 Per Share Growth 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% % 10% 6% 5% 5% 5% 5% 2% -5% -5% Median for Office Peer Group OFC Data provided by Stifel Nicolaus. 2. Based on diluted FFO per share for 2005, 2006, 2007, 2008 and 2009 of $1.86, $1.96*, $2.17, $2.38* and $2.49* per share, respectively (*2006 has been adjusted for one time charges due to preferred share redemptions, 2008 has been adjusted for $.14 gain on the repurchase of exchangeable senior notes and 2009 has been adjusted for operating property acquisition costs which under prior accounting rules would have been capitalized; the Company s diluted FFO per share was $1.89 for 2006, $2.52 for 2008 and $2.46 for 2009). 7

8 Corporate Strategy Relationship driven versus market driven locations Value creation versus transaction driven asset management strategy Specialized product and expertise versus commodity office space Own large office parks adjacent to government demand drivers or in growth corridors 8

9 COPT Value Creation Strategy * 56% & 65% of total Revenues from real estate operations from assets containing US Government, Defense Information Technology Contractors and Data sector tenants 9

10 CEL & Associates, Inc. Survey Winner for the 2008 National Commercial Real Estate Customer Service Award for Excellence (also known as the A List Award) 5 th year in a row for Category I properties (companies owning over 100 properties), the largest of the categories 154 buildings A List Award CEL & Associates, Inc. is the nation s largest surveyor of tenant satisfaction within the real estate industry 10

11 Green Building Development COPT LEED Projects: 53 LEED Projects 7 Certified Gold 9 Certified Silver 1 Certified 36 Registered 20 LEED Accredited or Certified COPT Employees Committed to building Green buildings since 2003 COPT Awards for Green Development: NAIOP National Green Development Award 2005 NAIOP Maryland Chapter Environmentally Friendly Green Development Award 2006 USGBC Baltimore Chapter Green Leadership Award Sustainable operating practices 11

12 2010 Earnings Guidance The Company recently revised its initial 2010 FFO guidance from $2.35 $2.53 to $2.31 $2.49 per diluted share, excluding operating property acquisition costs. The revision was primarily due to higher than anticipated snow removal costs. Key Assumptions: Occupancy for our same office portfolio is expected to be slightly lower in the first quarter and to end the year at approximately 92% Same Office NOI is projected to range from 3% to flat, however it may fluctuate in certain quarters Development projects opening during 2010 are projected to contribute $4 million of NOI growth and 2010 deliveries are expected to come on line in the second half of the year A modest level of acquisitions are assumed and a weighted average new investment level of approximately $135 million for the year Other income, primarily third party development fees and gains on sales of non operating assets, including opportunistic investments, are assumed to contribute between $3.5 and $15 million Lease termination fees are projected to be in the range of $4 to $5 million with less in the first quarter of the year G&A expenses are projected to average $6.2 million per quarter in the middle of the range of guidance Approximately 20% to 25% of our outstanding debt will be floating on average, although it may fluctuate in certain quarters 12

13 Competitive Strengths 13

14 Competitive Strengths Strong capital position (low near term debt maturities, development funding in place) Strength of tenant base/focus on tenant relationships and niche Unique skill set to design secure, technically complex office and data facilities Strong market dynamics low vacancy rate, high job growth Dominant owner in a particular park or submarket Strong occupancy high tenant retention Emphasis on tenant service (Winner of CEL survey) Strategy for land control Green building strategy 14

15 Capital Structure 15

16 Minimal Debt Maturities in 2010 Debt Maturing in 2010: Permanent Debt $8MM 10/10 $52,000 $44MM 12/10 16

17 Financing Activity Fall 2007 increased unsecured revolver to $600 million and revised the covenants to provide more capacity May 2008 closed on a $225 million construction revolver that will fund the Company s wholly owned construction and development pipeline Issued 3.7 million common shares in September 2008 and 3.0 million common shares in April 2009, generating proceeds of approximately $139 million and $72 million respectively 2009 Financings: $50 million, five year term loan, closed June 2009 $23.4 million, JV construction loan, closed May 2009 $90 million, five year term loan, closed July 2009 $185 million, seven year term loan, closed September

18 Key Financial Ratios Year Ended December 31, 2009 EBITDA Interest Coverage 3.2x EBITDA Fixed Charge Coverage 2.6x Dividend Payout Ratios Diluted FFO Diluted AFFO 63% 81% 18

19 Capitalization December 31, 2009 ($ in millions) 1 Total Equity Capital $2,548 55% Total Debt Capital (Fixed Rate 2 Debt 75% ) $2,054 45% Total Market Capitalization $4, % Equity Capital: Preferred Shares and Units (Liquidation Value) Common Shares and Units ($ /Share) Management/Insiders (8% of stock/units) Public (92% of stock/units) $225 9% $186 $2,137 7% 84% Total Equity Capital $2, % 1. Based on closing price of $36.63 as of December 31, Includes effective interest rate protection agreements. 19

20 Top 20 Tenants 1 55% of Total Revenue Tenant 2 % of Portfolio Annualized Revenue Average Remaining Term 3 United States of America 18.6% 6.0 Northrop Grumman Corporation 7.9% 7.1 Booz Allen Hamilton, Inc. 5.1% 5.5 Computer Sciences Corporation 2.9% 1.6 General Dynamics Corporation 1.9% 1.0 L 3 Communications Holdings, Inc. 1.8% 4.2 Wells Fargo & Company 1.8% 8.4 The Aerospace Corporation 1.8% 5.1 ITT Corporation 1.7% 4.8 CareFirst, Inc. 1.6% 6.7 Comcast Corporation 1.4% 3.7 Integral Systems, Inc. 1.4% 10.1 AT&T Corporation 1.4% 3.5 The Boeing Company 1.1% 3.7 Unisys Corporation 1.1% 9.5 Ciena Corporation 1.0% 3.4 The Johns Hopkins Institutions 0.8% 5.6 BAE Systems PLC 0.8% 6.8 Merck & Co., Inc. 0.7% 2.9 Lockheed Martin Corporation 0.6% 2.6 Total / Weighted Average 55.4% 5.5 years 1. This list represents our top twenty tenants as of December 31, 2009, exclusive of owner occupied leases, based on annualized revenue for wholly owned properties only. 2. Includes affiliated organizations or agencies of tenants, where applicable. 3. The weighting of the lease term was computed using Total Rental Revenue. 20

21 Over 60% of Top 50 Defense Contractors are COPT Tenants 1. Lockheed Martin 18. Verizon 35. ASRC Federal Holding Co. 2. The Boeing Co. 19. United Technologies Corp. 36. ManTech International Corp. 3. Northrop Grumman Corp. 20. Jacobs Engineering Group 37. General Electric Co. 4. Raytheon 21. Battelle Memorial Institute 38. AT&T, Inc. 5. SAIC 22. DRS Technologies, Inc. 39. Hewlett Packard Co. 6. General Dynamics Corp. 23. Accenture Ltd. 40. Combat Support Associates 7. KBR, Inc. 24. QinetiQ North America 41. Perot Systems Corp. 8. L 3 Communications Corp. 25. Sprint Nextel Corp. 42. Arinc, Inc. 9. Computer Sciences Corp. 26. Unisys Corp. 43. Thales North America, Inc. 10. EDS Corp. 27. Honeywell International, Inc. 44. SI International Inc. 11. Booz Allen Hamilton, Inc. 28. Deloitte & Touche 45. GTSI Corp. 12. BAE Systems 29. Bechtel Group, Inc. 46. VSE Corp. 13. Harris Corp. 30. Rockwell Collins, Inc. 47. Apptis, Inc. 14. ITT Corporation 31. Alion Science and Technology Corp. 48. Stanley, Inc. 15. Dell, Inc. 32. SRA International, Inc. 49. Softmart, Inc. 16. IBM Corporation 33. Wyle Laboratories, Inc. 17. CACI International 34. URS Corp. 50. Rolls Royce North America Note: All highlighted companies are COPT tenants. Source: Ranked according to aggregate value of contracts recorded in

22 Greater Washington, DC Focus Region Submarket SF (000s) Our SF (000s) Our Market Share Submarket Vacancy- Direct Our Vacancy B/W Corridor 22,527 8, % 15.2%* 7.5% Dulles South Northern Virginia 12,623 1, % 20.5% 3.4% Herndon Northern Virginia 11, % 15.6% 5.4% Suburban MD 30, % 15.4% 8.1% Suburban Baltimore Note: numbers don t include White Marsh 12,837 2, % 12.9%* 11.2% Colorado Springs 20,994 1, % 18.4% 13.9% Data as of December 31, 2009, compiled by CB Richard Ellis, Newmark Knight Frank, Turner Commercial and Company data. Suburban Maryland contains the submarkets of Gaithersburg, North Rockville, North Silver Spring, and Frederick. The Suburban Baltimore region contains the submarkets of Hunt Valley, Timonium/Towson, West, & East. Colorado Springs contains the Northeast/Northwest submarkets. *Vacancy with sublease 22

23 Premier Office Parks Fort Ritchie 591 Acres, 1.7M SF dev potential North Gate Business Park 56 Acres, 851,000 SF dev potential White Marsh 34 bldgs, 1.5 M SF M Square 2 bldgs, 242,000 SF One Dulles Tower & Dulles Tech Center 3 bldgs, 571,000 SF Westfields Corporate Center 9 bldgs, 1.5 M SF Columbia Gateway 28 bldgs, 2.4 M SF Airport Square 24 bldgs, 1.8 M SF Arundel Preserve 1 bldg, 144,000 SF The National Business Park 22 bldgs, 2.5 M SF Dahlgren Technology Center 6 bldgs, 205,000 SF Patuxent River Office Portfolio 12 bldgs, 617,000 SF Data as of December 31,

24 High Occupancy Rate Occupancy/Leasing Rate at Year End (Wholly Owned) 100% 91% 93% 94% 95% 94% 95% 93% 96% 93% 93% 93% 94% 91% 91% 75% 50% 25% 0% Occupancy Leased 24

25 Asset Growth Drivers 25

26 External Growth Drivers Acquisitions Academy Ridge Nursery Road Canton Crossing Development BRAC Locations Aberdeen Proving Ground/North Gate Fort Meade/The National Business Park Patuxent River/St. Mary s County Fort Detrick (Frederick, MD) Development Tenant Centric Expansion Strategy San Antonio Colorado Springs Development Joint Ventures Arundel Preserve M Square 26

27 Acquisitions 100% leased, long term to Northrop Grumman 0.9 acre adjacent land parcel that can support a retail or bank pad 1550 West Nursery Road Linthicum, MD 162,000 SF 27

28 Acquisitions 474,000 SF office tower, parking lot, utility distribution center, 4 waterfront lots and riparian rights Waterfront lots are approved for 500,000 SF of office, 150,000 SF of retail, a 450 room hotel and a marina The office tower is 90% leased with CareFirst as the largest tenant at 34% Canton Crossing Baltimore, MD 28

29 Acquisitions Canton Crossing Site Plan Baltimore, MD 29

30 Under Construction by Demand Driver 1 Defense Info. Tech. 736,169 Government 375,139 Demand Driver Square Feet % Government 375,139 34% Defense Info. Tech 736,169 66% Total 1,111, % 1. Shown by square footage. 30

31 Construction Summary Actual or Total Percentage Anticipated Rentable Leased Anticipated Construction Anticipated Square as of Total Completion Operational Property and Location Submarket Feet 2/5/2010 Cost Date Date Under Construction 324 Sentinel Way (324 NBP) Annapolis Junction, Maryland BWI Airport 125, % 28,254 1Q 10 3Q Potranco Road San Antonio, Texas San Antonio Northwest 125, % 24,104 2Q 10 3Q Potranco Road San Antonio, Texas San Antonio Northwest 125, % 24,104 2Q 10 3Q 10 Subtotal Government 375, % $ 76,461 % of Total Drivers 34% New Allegiance Drive (Epic One) Colorado Springs, Colorado I-25 North Corridor 145,723 41% 31,715 2Q 09 2Q Sentinel Drive (300 NBP) Annapolis Junction, Maryland BWI Airport 192,754 57% 52,577 2Q 09 2Q Space Center Drive (Patriot Park 7) Colorado Springs, Colorado Colorado Springs East 89,773 2% 17,482 2Q 09 2Q Research Boulevard Aberdeen, Maryland Harford County 78,220 69% 18,151 2Q 10 2Q Sentinel Drive (308 NBP) Annapolis Junction, Maryland BWI Airport 150,843 0% 32,193 3Q 10 3Q Research Boulevard Aberdeen, Maryland Harford County 78,856 0% 16,643 4Q 10 4Q 11 Subtotal Defense Information Technology 736,169 31% $ 168,761 % of Total Drivers 66% Total Under Construction 1,111,308 54% $ 245,222 Data as of December 31, Includes joint ventures. 31

32 Development by Demand Driver 1 Defense Info. Tech. 630,585 Government 125,044 Demand Driver Square Feet % Government 125,044 17% Defense Info. Tech 630,585 83% Total 755, % 1. Shown by square footage. 32

33 Development Summary Actual or Total Anticipated Rentable Anticipated Construction Anticipated Square Total Completion Operational Property and Location Submarket Feet Cost Date Date Redevelopment 7468 Candlewood Road Hanover, Maryland BWI Airport 356,000 $ 40,500 3Q 10 3Q 11 Subtotal Baltimore/Washington Corridor 356,000 $ 40, Jolly Road (Lakeside I) Blue Bell, PA Greater Philadelphia 208,854 33,085 3Q 10 3Q 11 Subtotal Greater Philadelphia 208,854 $ 33,085 Total Redevelopment 564,854 $ 73,585 Under Development 316 Sentinel Way (316 NBP) Annapolis Junction, Maryland BWI Airport 125,044 28,124 1Q 11 1Q 12 Subtotal Government 125,044 $ 28,124 % of Total Drivers 17% North Gate Business Park (Lot D) Aberdeen, Maryland Harford County 127,530 26,800 2Q 11 2Q 12 North Gate Business Park (Lot I) Aberdeen, Maryland Harford County 127,530 26,800 3Q 11 3Q 12 Sentry Gateway (Building 100) San Antonio, Texas San Antonio Northwest 94,550 14,952 1Q 11 1Q Potranco Road San Antonio, Texas San Antonio Northwest 125,000 23,900 2Q 11 4Q National Business Parkway Annapolis Junction, Maryland BWI Airport 110,000 26,730 2Q 11 2Q 12 Expedition Drive Lexington Park, Maryland St. Mary's County 45,975 10,800 2Q 11 4Q 11 Subtotal Defense Information Technology 630,585 $ 129,982 % of Total Drivers 83% Total Under Development 755,629 $ 158,106 Data as of December 31, Includes joint ventures. 33

34 BRAC Overview Pentagon recommended and Congress approved, closing approximately 180 military installations, eliminating +/ 30,000 jobs, saving $50 billion over 20 years MD stands to gain at least 22,000 direct jobs, 64,000 overall jobs MD rates 2 nd in job gains COPT owns office parks adjacent to bases that will add jobs Aberdeen Proving Ground (Aberdeen, MD): 8,200 on site; 16,000 off site* Fort Meade (The National Business Park): 12,000 on site; 24,000 off site* Patuxent River Naval Air Station (St. Mary s County portfolio) Fort Detrick (Frederick, MD): 1,500 on site; 3,000 off site* Northern VA (Crystal City, Arlington, Rosslyn) is expected to lose more than 20,000 employees moving to or adjacent to military bases Need for buildings to meet DoD s security guidelines (COPT is designing and constructing buildings that meet these guidelines) Need for redundant locations Need to move away from DC locations Fort Ritchie could also gain jobs Move in Schedules: April 1, 2011 C4ISR at Aberdeen Proving Ground April 1, 2011 DISA at Fort Meade 34

35 Harford/APG Site North Gate COPT to develop: 851,000 SF 56 acres of land North Gate of APG Under Construction 210 Research Blvd. 79,000 SF 209 Research Blvd. 78,000 SF Under Development Lot C 79,000 SF Lot D 128,000 SF Lot I 128,000 SF 35

36 Harford/APG Site Preliminary Site Plan 36

37 National Business Park Development 300 NBP Current Operating Portfolio 21 office buildings, 2,458,000 SF 97.8% leased Under Construction 324 NBP 125,000 SF 300 NBP 193,000 SF 308 NBP 151,000 SF Under Development 430 NBP 110,000 SF 316 NBP 125,000 SF Land Owned 189 acres 1.6 million SF Arundel Preserve Route 175 Data as of December 31,

38 NBP Phase III 38

39 Arundel Preserve NBP PHASE III 7740 Milestone Parkway - 144,000 SF 39

40 Tenant Centric Expansion San Antonio, Texas Under Construction: 8000 Potranco Road 125,000 SF 100% leased 8030 Potranco Road 125,000 SF 100% leased Under Development: Sentry Gateway, Building ,000 SF 8100 Potranco Road 125,000 SF

41 COPT s Data Center Expertise COPT works with federal and state clients to design, construct and manage facilities that meet their specialized requirements. COPT provides cleared development, design and construction management property and facility management staff and technical expertise to develop, design, build and maintain facilities. Data Center: Chester, VA Lebanon, VA (2 nd Northrop Grumman IT/VITA building) 193,000 SF 103,000 SF Other Federal Govt. & Defense 854,000 SF contractor clients (8 buildings) Multiple other buildings SF: 350,000 SF 1,500,000 SF Expertise in significant power/cooling requirements Northrop Grumman IT/VITA data center Meadowville Lane Chester, VA - 193,000 SF Northrop Grumman IT/VITA data center Technology Park Drive Lebanon, VA - 103,000 SF 41

42 Summary Secure 4.3% Dividend Yield Conservative Diluted FFO Payout Ratio (63%) for the year ended December 31, 2009 Consistent Growth 206% Growth in Dividends/Share (December 31, 1997 December 31, 2009) 5.4% Dividend increase from prior quarter in September 2009 Excellent Returns 25% Total Return % Total Return for 5 years 2 693% Total Return for 10 years 1 For more information about COPT, please visit 1. Based on closing price of $36.10 as of February 16, 2010 and a $1.57 dividend ($.3925 annualized). 2. Data of as December 31, 2009, compiled by NAREIT. 42

43 Disclosure (Dollars and shares in thousands, except per share data) Year Ending Years Ended December 31, December 31, Low High Reconciliation of diluted FFO per share components to diluted earnings per share ("EPS") components Estimated (1) Numerator for diluted EPS $ 24,416 $ 28,618 $ 15,616 $ 37,135 $ 39,217 $ 30,190 $ 39,940 Add: Income allocable to noncontrolling interests-common units in the Operating Partnership 5,889 7,097 3,203 6,519 4,495 2,810 3,700 Add: Real estate-related depreciation and amortization (2) 62,850 78, , , , , ,500 Add: Depreciation and amortization on unconsolidated real estate entities Add: Numerator for diluted EPS allocable to restricted shares , Less: Depreciation and amortization allocable to noncontrolling interests in other consolidated entities (114) (163) (188) (270) (493) - - Less: Basic and diluted FFO allocable to restricted shares (311) (733) (876) (1,310) (1,629) (600) (640) Less: Gain on sales of operating properties, net of income taxes (4,422) (17,644) (3,827) (2,630) Numerator for diluted FFO per share $ 88,490 $ 97,165 $ 121,371 $ 143,592 $ 152,626 $ 147,900 $ 159,500 Denominator for diluted EPS 38,997 43,031 47,518 48,820 56,407 58,974 58,974 Weighted average common units 8,702 8,511 8,296 8,107 5,717 5,066 5,066 Denominator for diluted FFO per share 47,699 51,542 55,814 56,927 62,124 64,040 64,040 Diluted EPS $ 0.63 $ 0.67 $ 0.33 $ 0.76 $ 0.70 $ 0.51 $ 0.68 Diluted FFO per share $ 1.86 $ 1.89 $ 2.17 $ 2.52 $ 2.46 $ 2.31 $ 2.49 Numerator for diluted FFO per share $ 152,626 Straight-line rent adjustments (3,847) Recurring capital expenditures (31,738) Amortization of deferred market rental revenue (2,126) Amortization of discount on Exchangeable Senior Notes, net of amounts capitalized 2,955 AFFO derived from the numerator for diluted FFO per share $ 117,870 Diluted FFO per share as adjusted for operating property acquisition costs, gain on early extinguishment of debt and redemption of preferred shares Numerator for diluted FFO per share $ 97,165 $ 143,592 $ 152,626 Gain on early extinguishment of debt - (8,101) - Noncontrolling interests' share of gain on early extinguishment of debt Operating property acquisition costs - - 1,967 Issuance costs associated with redeemed preferred shares 3, Numerator for diluted FFO per share as adjusted $ 101,061 $ 135,566 $ 154,593 Denominator for diluted FFO per share as adjusted 51,542 56,927 62,124 Diluted FFO per share as adjusted $ 1.96 $ 2.38 $ 2.49 Reconciliation of EBITDA to net income Net income $ 61,299 Interest expense (3) 82,420 Income tax expense (4) 196 Depreciation and amortization 111,811 EBITDA $ 255,726 Denominator for interest coverage and fixed charge coverage Interest expense (3) $ 82,420 Less: Amortization of deferred financing costs (4,214) Denominator for interest coverage 78,206 Preferred share dividends 16,102 Preferred distributions 660 Denominator for fixed charge coverage $ 94,968 (1) These estimates are based on Company guidance previously provided. (2) The estimate of 2010 real estate-related depreciation and amortization excludes any impact of potential write-offs resulting from lease terminations. (3) Includes interest from continuing operations and discontinued operations. (4) Includes income taxes from continuing operations, discontinued operations and gains on sales of real estate. 43

44 Disclosure (Dollars and shares in thousands, except per share data) Three Months Three Months Ended Ended September 30, September 30, Reconciliation of GAAP net income to earnings before interest, Dividends and distributions for Diluted FFO & AFFO Payout Ratios income taxes, depreciation and amortization ("EBITDA") Common share dividends $ 22,851 Net income $ 15,536 Common unit distributions 1,995 Interest expense on continuing operations 20,986 Dividends and distributions for Diluted FFO & AFFO Payout Ratios $ 24,846 Income tax expense 47 Real estate-related depreciation and amortization 26,712 Depreciation of furniture, fixtures and equipment 458 EBITDA $ 63,739 Reconciliation of tenant improvements and incentives, capital improvements and Reconciliation of interest expense from continuing operations leasing costs for operating properties to recurring capital expenditures to the denominators for EBITDA interest coverage Total tenant improvements and incentives on operating properties $ 3,553 and EBITDA fixed charge coverage Total capital improvements on operating properties 2,927 Interest expense from continuing operations $ 20,986 Total leasing costs incurred on operating properties 1,855 Less amortization of deferred financing costs (1,056) Less: Nonrecurring tenant improvements and incentives on operating properties (711) Denominator for EBITDA interest coverage 19,930 Less: Nonrecurring capital improvements on operating properties (58) Preferred share dividends 4,025 Less: Nonrecurring leasing costs incurred on operating properties - Preferred unit distributions 165 Add: Recurring improvements on operating properties held through joint ventures 6 Denominator for EBITDA fixed charge coverage $ 24,120 Recurring capital expenditures $ 7,572 44