COPT(CDP) - 2018 Q4 - Annual Report

Ownership and Structure - As of December 31, 2018, the Company owned 98.8% of the outstanding common units of COPLP, with common units equivalent to the number of outstanding common shares of COPT[16]. - The Company intends to distribute at least 90% of its annual taxable income to maintain its REIT status[18]. Revenue and Property Portfolio - The Defense/IT Locations properties accounted for 87.9% of the annualized rental revenue, with 154 out of 163 properties in this category[24]. - The Company owned seven Regional Office properties as of December 31, 2018, representing 11.5% of the annualized rental revenue of the office and data center shell portfolio[29]. - As of December 31, 2018, Defense/IT Locations comprised 154 properties, representing 88.0% of the office and data center shell portfolio's square feet in operations[36]. Growth and Development Strategy - The Company plans to grow its operating portfolio primarily through property development opportunities aligned with its Defense/IT Locations strategy[32]. - The Company has significant land holdings to support growth and act as a barrier against competitive supply[32]. - The Company completed seven years of programmatic property sales in 2017 to improve strategic focus and enhance its balance sheet[30]. Financial Performance and Debt - The fair value of the company's debt was $1.9 billion as of December 31, 2018[257]. - Fixed-rate debt totaled $1.35 billion, with a weighted average interest rate of 4.30%[256]. - Variable-rate debt amounted to $489.4 million, with a weighted average interest rate of 3.60%[256]. - If interest rates had been 1% lower, the fair value of fixed-rate debt would have increased by approximately $56 million as of December 31, 2018[257]. - Interest expense would have increased by $1.7 million in 2018 if the applicable LIBOR rate was 1% higher[258]. Market Position and Competition - The company competes with other publicly-traded commercial office REITs for capital, which could affect its ability to raise necessary funds[41]. - The commercial real estate market is highly competitive, impacting the company's ability to lease existing vacant space[39]. - The company has a significant presence in key Defense/IT locations, including Fort Meade/BW Corridor and Northern Virginia[35]. Employee and Governance - The company had a total of 378 employees as of December 31, 2018, with no collective bargaining agreements in place[38]. - The Company has earned a "Green Star" score on the GRESB survey for four consecutive years, indicating high performance in environmental, social, and governance metrics[31]. - The Company aims to maintain an investment grade rating to facilitate access to unsecured, primarily fixed-rate debt from public markets and banks[33]. Data Center Development - From 2013 to 2018, the Company placed into service 17 data center shells totaling 2.8 million square feet, with an additional four under construction totaling 731,000 square feet as of December 31, 2018[25].