Exhibit 99.1

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Corporate Office Properties Trust
Summary Description

The Company: Corporate Office Properties Trust (the “Company” or “COPT”) is a self-managed real estate investment trust (“REIT”). COPT is listed on the New York Stock Exchange under the symbol “OFC” and is an S&P MidCap 400 Company. We own, manage, lease, develop and selectively acquire office and data center properties. The majority of our portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what we believe are growing, durable, priority missions; we refer to these properties as Defense/IT Locations. We also own a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics; these properties are included in a segment referred to as Regional Office Properties. As of June 30, 2020, we derived 88% of our core portfolio annualized rental revenue from Defense/IT Locations and 12% from Regional Office Properties. As of June 30, 2020, our core portfolio of 172 office and data center shell properties, including 15 owned through unconsolidated joint ventures, encompassed 19.6 million square feet and was 94.7% leased. As of the same date, we also owned a wholesale data center with a critical load of 19.25 megawatts that was 90.6% leased.
Management:
Investor Relations:
Stephen E. Budorick, President & CEO
Stephanie Krewson-Kelly, VP of IR
Anthony Mifsud, EVP & CFO
443-285-5453, stephanie.kelly@copt.com
 
Michelle Layne, Manager of IR
 
443-285-5452, michelle.layne@copt.com
 
Corporate Credit Rating: Fitch: BBB- Stable; Moody’s: Baa3 Stable; and S&P: BBB- Stable

Disclosure Statement: This supplemental package contains forward-looking statements within the meaning of the Federal securities laws. 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 we cannot predict with accuracy and some of which we might not even anticipate.  Although we believe that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, we 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 we undertake 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 our Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. 

1


Corporate Office Properties Trust
Equity Research Coverage
 
Firm
 
Senior Analyst
 
Phone
 
Email
Bank of America Securities
 
Jamie Feldman
 
646-855-5808
 
james.feldman@bofa.com
BTIG
 
Tom Catherwood
 
212-738-6410
 
tcatherwood@btig.com
Capital One Securities
 
Chris Lucas
 
571-633-8151
 
christopher.lucas@capitalone.com
Citigroup Global Markets
 
Manny Korchman
 
212-816-1382
 
emmanuel.korchman@citi.com
Evercore ISI
 
Steve Sakwa
 
212-446-9462
 
steve.sakwa@evercoreisi.com
Green Street Advisors
 
Daniel Ismail
 
949-640-8780
 
dismail@greenstreetadvisors.com
Jefferies & Co.
 
Jonathan Petersen
 
212-284-1705
 
jpetersen@jefferies.com
JP Morgan
 
Tony Paolone
 
212-622-6682
 
anthony.paolone@jpmorgan.com
KeyBanc Capital Markets
 
Craig Mailman
 
917-368-2316
 
cmailman@key.com
Mizuho Securities USA Inc.
 
Tayo Okusanya
 
646-949-9672
 
omotayo.okusanya@mizuhogroup.com
Raymond James
 
Bill Crow
 
727-567-2594
 
bill.crow@raymondjames.com
Robert W. Baird & Co., Inc.
 
Dave Rodgers
 
216-737-7341
 
drodgers@rwbaird.com
SMBC Nikko Securities America, Inc.
 
Rich Anderson
 
646-521-2351
 
randerson@smbcnikko-si.com
SunTrust Robinson Humphrey, Inc.
 
Michael Lewis
 
212-319-5659
 
michael.lewis@suntrust.com
Wells Fargo Securities
 
Blaine Heck
 
443-263-6529
 
blaine.heck@wellsfargo.com
 
With the exception of Green Street Advisors, the above-listed firms are those whose analysts publish research material on the Company and whose estimates of our FFO per share can be tracked through Thomson’s First Call Corporation. Any opinions, estimates, or forecasts the above analysts make regarding COPT’s future performance are their own and do not represent the views, estimates, or forecasts of COPT’s management.

2


Corporate Office Properties Trust
Selected Financial Summary Data
(in thousands, except per share data)
 
 
Page
 
Three Months Ended
 
Six Months Ended
SUMMARY OF RESULTS 
 
Refer.
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Net income
 
6
 
$
25,121

 
$
25,550

 
$
44,877

 
$
23,246

 
$
109,563

 
$
50,671

 
$
131,881

NOI from real estate operations
 
13
 
$
84,059

 
$
83,830

 
$
82,504

 
$
82,621

 
$
86,136

 
$
167,889

 
$
169,900

Same Properties NOI
 
16
 
$
74,644

 
$
74,950

 
$
75,241

 
$
74,949

 
$
74,794

 
$
149,594

 
$
147,801

Same Properties cash NOI
 
17
 
$
75,837

 
$
74,962

 
$
76,454

 
$
74,071

 
$
74,584

 
$
150,799

 
$
145,992

Adjusted EBITDA
 
10
 
$
78,582

 
$
77,989

 
$
76,024

 
$
77,523

 
$
80,280

 
$
156,571

 
$
157,730

Diluted AFFO avail. to common share and unit holders
 
9
 
$
46,690

 
$
41,495

 
$
40,270

 
$
42,794

 
$
46,961

 
$
88,185

 
$
94,137

Dividend per common share
 
N/A
 
$
0.275

 
$
0.275

 
$
0.275

 
$
0.275

 
$
0.275

 
$
0.550

 
$
0.550

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share - diluted:
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 
EPS
 
8
 
$
0.21

 
$
0.21

 
$
0.38

 
$
0.19

 
$
0.95

 
$
0.42

 
$
1.15

FFO - Nareit
 
8
 
$
0.51

 
$
0.41

 
$
0.49

 
$
0.51

 
$
0.52

 
$
0.92

 
$
1.02

FFO - as adjusted for comparability
 
8
 
$
0.51

 
$
0.51

 
$
0.50

 
$
0.51

 
$
0.52

 
$
1.02

 
$
1.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerators for diluted per share amounts:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS
 
6
 
$
23,388

 
$
23,957

 
$
42,664

 
$
21,139

 
$
107,512

 
$
47,345

 
$
128,840

Diluted FFO available to common share and unit holders
 
7
 
$
57,809

 
$
46,706

 
$
56,032

 
$
57,255

 
$
58,913

 
$
104,592

 
$
116,181

Diluted FFO available to common share and unit holders, as adjusted for comparability
 
7
 
$
57,817

 
$
57,866

 
$
56,330

 
$
57,430

 
$
59,222

 
$
115,683

 
$
116,538

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payout ratios:
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Diluted FFO
 
N/A
 
53.9
%
 
66.6
%
 
55.6
%
 
54.2
%
 
52.7
%
 
59.6
%
 
53.5
%
Diluted FFO - as adjusted for comparability
 
N/A
 
53.9
%
 
53.9
%
 
55.3
%
 
54.1
%
 
52.4
%
 
53.9
%
 
53.3
%
Diluted AFFO
 
N/A
 
66.8
%
 
75.1
%
 
77.3
%
 
72.6
%
 
66.1
%
 
70.7
%
 
66.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CAPITALIZATION
 
 
 
 

 
 

 
 
 
 

 
 

 
 

 
 
Total Market Capitalization
 
27
 
$
4,908,346

 
$
4,609,280

 
$
5,182,065

 
$
5,259,182

 
$
4,794,853

 
 
 
 
Total Equity Market Capitalization
 
27
 
$
2,885,245

 
$
2,520,400

 
$
3,339,258

 
$
3,384,363

 
$
2,997,549

 
 
 
 
Gross debt
 
28
 
$
2,073,351

 
$
2,139,130

 
$
1,893,057

 
$
1,920,179

 
$
1,827,304

 
 
 
 
Net debt to adjusted book
 
30
 
38.6
%
 
38.2
%
 
36.8
%
 
37.3
%
 
36.1
%
 
N/A

 
N/A

Net debt plus preferred equity to adjusted book
 
30
 
38.8
%
 
38.3
%
 
37.0
%
 
37.5
%
 
36.2
%
 
N/A

 
N/A

Adjusted EBITDA fixed charge coverage ratio
 
30
 
3.8
x
 
3.8
x
 
3.7
x
 
3.7
x
 
3.7
x
 
3.8
x
 
3.7
x
Net debt to in-place adjusted EBITDA ratio
 
30
 
6.4
x
 
6.3
x
 
6.1
x
 
6.1
x
 
5.7
x
 
N/A

 
N/A

Net debt plus pref. equity to in-place adj. EBITDA ratio
 
30
 
6.4
x
 
6.3
x
 
6.1
x
 
6.1
x
 
5.7
x
 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



3


Corporate Office Properties Trust
Selected Portfolio Data (1)
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
Operating Office and Data Center Shell Properties
 
 
 
 
 
 
 
 
 
# of Properties
 
 
 
 
 
 
 
 
 
Total Portfolio
174

 
171

 
170
 
169

 
169

Consolidated Portfolio
159

 
156

 
155
 
156

 
156

Core Portfolio
172

 
169

 
168
 
167

 
167

Same Properties
152

 
152

 
152
 
152

 
152

 
 
 
 
 
 
 
 
 
 
% Occupied
 
 
 
 
 
 
 
 
 
Total Portfolio
93.4
%
 
93.7
%
 
92.9
%
 
92.7
%
 
92.7
%
Consolidated Portfolio
92.5
%
 
92.8
%
 
91.9
%
 
91.7
%
 
91.8
%
Core Portfolio
93.6
%
 
94.0
%
 
93.1
%
 
92.8
%
 
92.9
%
Same Properties
92.3
%
 
92.7
%
 
91.8
%
 
91.6
%
 
91.7
%
 
 
 
 
 
 
 
 
 
 
% Leased
 
 
 
 
 
 
 
 
 
Total Portfolio
94.5
%
 
94.9
%
 
94.4
%
 
94.3
%
 
93.9
%
Consolidated Portfolio
93.7
%
 
94.2
%
 
93.6
%
 
93.6
%
 
93.1
%
Core Portfolio
94.7
%
 
95.2
%
 
94.6
%
 
94.5
%
 
94.1
%
Same Properties
93.5
%
 
94.1
%
 
93.5
%
 
93.5
%
 
93.0
%
 
 
 
 
 
 
 
 
 
 
Square Feet (in thousands)
 
 
 
 
 
 
 
 
 
Total Portfolio
19,781

 
19,378

 
19,173

 
18,956

 
18,945

Consolidated Portfolio
17,346

 
16,943

 
16,739

 
16,818

 
16,807

Core Portfolio
19,624

 
19,221

 
19,016

 
18,799

 
18,788

Same Properties
16,561

 
16,561

 
16,561

 
16,561

 
16,561

 
 
 
 
 
 
 
 
 
 
Wholesale Data Center
 
 
 
 
 
 
 
 
 
Megawatts Operational
19.25

 
19.25

 
19.25

 
19.25

 
19.25

% Leased
90.6
%
 
76.9
%
 
76.9
%
 
82.1
%
 
82.1
%

(1)
Total and core portfolio and same properties include properties owned through unconsolidated real estate joint ventures (see page 32).

4


Corporate Office Properties Trust
Consolidated Balance Sheets
(dollars in thousands)
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
Assets
 

 
 

 
 

 
 

 
 

Properties, net:
 

 
 

 
 

 
 

 
 

Operating properties, net
$
2,888,817

 
$
2,813,949

 
$
2,772,647

 
$
2,713,900

 
$
2,719,585

Development and redevelopment in progress, including land (1)
315,243

 
300,836

 
274,639

 
259,489

 
185,007

Land held (1)
309,039

 
304,843

 
293,600

 
285,434

 
289,780

Total properties, net
3,513,099

 
3,419,628

 
3,340,886

 
3,258,823

 
3,194,372

Property - operating right-of-use assets
31,009

 
27,793

 
27,864

 
27,325

 
27,434

Property - finance right-of-use assets
40,441

 
40,450

 
40,458

 
40,467

 
40,476

Assets held for sale, net

 

 

 
61,728

 
54,448

Cash and cash equivalents
21,596

 
159,061

 
14,733

 
34,005

 
46,282

Investment in unconsolidated real estate joint ventures
50,457

 
51,220

 
51,949

 
49,408

 
65,336

Accounts receivable, net
30,404

 
30,317

 
35,444

 
37,623

 
58,189

Deferred rent receivable
90,493

 
89,690

 
87,736

 
88,001

 
86,707

Intangible assets on real estate acquisitions, net
24,768

 
26,078

 
27,392

 
29,454

 
31,162

Deferred leasing costs, net
58,666

 
58,608

 
58,392

 
55,839

 
52,227

Investing receivables, net
72,333

 
71,197

 
73,523

 
72,114

 
70,656

Prepaid expenses and other assets, net
78,059

 
80,415

 
96,076

 
100,582

 
76,180

Total assets
$
4,011,325

 
$
4,054,457

 
$
3,854,453

 
$
3,855,369

 
$
3,803,469

Liabilities and equity
 

 
 

 
 

 
 

 
 

Liabilities:
 

 
 

 
 

 
 

 
 

Debt
$
2,012,019

 
$
2,076,839

 
$
1,831,139

 
$
1,862,301

 
$
1,784,362

Accounts payable and accrued expenses
149,836

 
128,441

 
148,746

 
141,242

 
152,196

Rents received in advance and security deposits
30,459

 
33,323

 
33,620

 
27,975

 
27,477

Dividends and distributions payable
31,302

 
31,301

 
31,263

 
31,345

 
31,346

Deferred revenue associated with operating leases
8,821

 
6,972

 
7,361

 
7,665

 
8,161

Property - operating lease liabilities
20,796

 
17,365

 
17,317

 
16,686

 
16,640

Interest rate derivatives
65,612

 
63,232

 
25,682

 
34,825

 
23,547

Other liabilities
12,408

 
8,886

 
10,649

 
8,706

 
10,826

Total liabilities
2,331,253

 
2,366,359

 
2,105,777

 
2,130,745

 
2,054,555

Redeemable noncontrolling interests
23,148

 
22,912

 
29,431

 
28,677

 
29,803

Equity:
 

 
 

 
 

 
 
 
 
COPT’s shareholders’ equity:
 

 
 

 
 

 
 
 
 
Common shares
1,122

 
1,122

 
1,121

 
1,121

 
1,119

Additional paid-in capital
2,477,977

 
2,476,677

 
2,481,558

 
2,480,083

 
2,475,293

Cumulative distributions in excess of net income
(797,959
)
 
(790,600
)
 
(778,275
)
 
(790,235
)
 
(780,667
)
Accumulated other comprehensive loss
(64,513
)
 
(62,201
)
 
(25,444
)
 
(34,580
)
 
(23,465
)
Total COPT’s shareholders’ equity
1,616,627

 
1,624,998

 
1,678,960

 
1,656,389

 
1,672,280

Noncontrolling interests in subsidiaries:
 

 
 

 
 

 
 

 
 

Common units in the Operating Partnership
19,611

 
19,600

 
19,597

 
19,365

 
21,039

Preferred units in the Operating Partnership
8,800

 
8,800

 
8,800

 
8,800

 
8,800

Other consolidated entities
11,886

 
11,788

 
11,888

 
11,393

 
16,992

Total noncontrolling interests in subsidiaries
40,297

 
40,188

 
40,285

 
39,558

 
46,831

Total equity
1,656,924

 
1,665,186

 
1,719,245

 
1,695,947

 
1,719,111

Total liabilities, redeemable noncontrolling interests and equity
$
4,011,325

 
$
4,054,457

 
$
3,854,453

 
$
3,855,369

 
$
3,803,469

(1)
Refer to pages 24 and 26 for detail.


5


Corporate Office Properties Trust
Consolidated Statements of Operations
(in thousands, except per share data)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Revenues
 

 
 

 
 

 
 

 
 

 
 
 
 
Lease revenue
$
132,147

 
$
131,012

 
$
130,693

 
$
129,461

 
$
131,415

 
$
263,159

 
$
262,318

Other property revenue
391

 
1,104

 
1,275

 
1,273

 
1,356

 
1,495

 
2,443

Construction contract and other service revenues
12,236

 
13,681

 
25,817

 
28,697

 
42,299

 
25,917

 
59,249

Total revenues
144,774

 
145,797

 
157,785

 
159,431

 
175,070

 
290,571

 
324,010

Operating expenses
 

 
 

 
 

 
 

 
 

 
 
 
 
Property operating expenses
50,204

 
49,999

 
51,098

 
49,714

 
47,886

 
100,203

 
97,331

Depreciation and amortization associated with real estate operations
33,612

 
32,596

 
32,779

 
34,692

 
34,802

 
66,208

 
69,598

Construction contract and other service expenses
11,711

 
13,121

 
24,832

 
27,802

 
41,002

 
24,832

 
57,328

Impairment losses

 

 
2

 
327

 

 

 

General and administrative expenses
6,511

 
5,303

 
7,043

 
6,105

 
7,650

 
11,814

 
14,369

Leasing expenses
1,647

 
2,183

 
2,293

 
1,824

 
1,736

 
3,830

 
3,768

Business development expenses and land carry costs
1,262

 
1,118

 
1,292

 
964

 
870

 
2,380

 
1,983

Total operating expenses
104,947

 
104,320

 
119,339

 
121,428

 
133,946

 
209,267

 
244,377

Interest expense
(16,797
)
 
(16,840
)
 
(16,777
)
 
(17,126
)
 
(18,475
)
 
(33,637
)
 
(37,149
)
Interest and other income
2,282

 
1,205

 
1,917

 
1,842

 
1,849

 
3,487

 
4,135

Credit loss expense (1)
(615
)
 
(689
)
 

 

 

 
(1,304
)
 

Gain on sales of real estate

 
5

 
20,761

 

 
84,469

 
5

 
84,469

Income before equity in income of unconsolidated entities and income taxes
24,697

 
25,158

 
44,347

 
22,719

 
108,967

 
49,855

 
131,088

Equity in income of unconsolidated entities
454

 
441

 
426

 
396

 
420

 
895

 
811

Income tax (expense) benefit
(30
)
 
(49
)
 
104

 
131

 
176

 
(79
)
 
(18
)
Net income
25,121

 
25,550

 
44,877

 
23,246

 
109,563

 
50,671

 
131,881

Net income attributable to noncontrolling interests:
 

 
 

 
 

 
 

 
 

 
 
 
 
Common units in the Operating Partnership
(284
)
 
(287
)
 
(500
)
 
(267
)
 
(1,339
)
 
(571
)
 
(1,596
)
Preferred units in the Operating Partnership
(77
)
 
(77
)
 
(77
)
 
(157
)
 
(165
)
 
(154
)
 
(330
)
Other consolidated entities
(1,263
)
 
(1,132
)
 
(1,515
)
 
(1,565
)
 
(1,268
)
 
(2,395
)
 
(2,305
)
Net income attributable to COPT common shareholders
$
23,497

 
$
24,054

 
$
42,785

 
$
21,257

 
$
106,791

 
$
47,551

 
$
127,650

Distributions on dilutive convertible preferred units

 

 

 

 
165

 

 

Redeemable noncontrolling interests

 

 
33

 

 
902

 

 
66

Common units in the Operating Partnership

 

 

 

 

 

 
1,515

Amount allocable to share-based compensation awards
(109
)
 
(97
)
 
(154
)
 
(118
)
 
(346
)
 
(206
)
 
(391
)
Numerator for diluted EPS
$
23,388

 
$
23,957

 
$
42,664

 
$
21,139

 
$
107,512

 
$
47,345

 
$
128,840


(1) Excludes credit losses on lease revenue, which are included in lease revenue.



6


Corporate Office Properties Trust
Funds from Operations
(in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Net income
$
25,121

 
$
25,550

 
$
44,877

 
$
23,246

 
$
109,563

 
$
50,671

 
$
131,881

Real estate-related depreciation and amortization
33,612

 
32,596

 
32,779

 
34,692

 
34,802

 
66,208

 
69,598

Impairment losses on real estate

 

 
2

 
327

 

 

 

Gain on sales of real estate

 
(5
)
 
(20,761
)
 

 
(84,469
)
 
(5
)
 
(84,469
)
Depreciation and amortization on unconsolidated real estate JVs (1)
818

 
818

 
781

 
790

 
566

 
1,636

 
1,132

FFO - per Nareit (2)(3)
59,551

 
58,959

 
57,678

 
59,055

 
60,462

 
118,510

 
118,142

Noncontrolling interests - preferred units in the Operating Partnership
(77
)
 
(77
)
 
(77
)
 
(157
)
 
(165
)
 
(154
)
 
(330
)
FFO allocable to other noncontrolling interests (4)(5)
(1,525
)
 
(12,015
)
 
(1,436
)
 
(1,429
)
 
(1,188
)
 
(13,540
)
 
(2,159
)
Basic FFO allocable to share-based compensation awards
(254
)
 
(193
)
 
(243
)
 
(248
)
 
(229
)
 
(447
)
 
(414
)
Basic FFO available to common share and common unit holders (3)
57,695

 
46,674

 
55,922

 
57,221

 
58,880

 
104,369

 
115,239

Dilutive preferred units in the Operating Partnership
77

 

 
77

 

 

 
154

 

Redeemable noncontrolling interests
37

 
32

 
33

 
34

 
33

 
69

 
942

Diluted FFO available to common share and common unit holders - per Nareit (3)
57,809

 
46,706

 
56,032

 
57,255

 
58,913

 
104,592

 
116,181

Demolition costs on redevelopment and nonrecurring improvements
9

 
43

 
104

 

 

 
52

 
44

Executive transition costs

 

 

 

 

 

 
4

Non-comparable professional and legal expenses

 

 
195

 
175

 
311

 

 
311

Dilutive preferred units in the Operating Partnership

 
77

 

 

 

 

 

FFO allocation to other noncontrolling interests resulting from capital event (4)(5)

 
11,090

 

 

 

 
11,090

 

Diluted FFO comparability adjustments allocable to share-based compensation awards
(1
)
 
(50
)
 
(1
)
 

 
(2
)
 
(51
)
 
(2
)
Diluted FFO available to common share and common unit holders, as adjusted for comparability (3)
$
57,817

 
$
57,866

 
$
56,330

 
$
57,430

 
$
59,222

 
$
115,683

 
$
116,538


(1)
FFO adjustment pertaining to COPT’s share of unconsolidated real estate joint ventures reported on page 32.
(2)
See reconciliation on page 33 for components of FFO per Nareit.
(3)
Refer to the section entitled “Definitions” for a definition of this measure.
(4)
Pertains to noncontrolling interests in consolidated real estate joint ventures reported on page 31.
(5)
FFO allocations to other noncontrolling interests for the quarter ended 3/31/20 included an additional allocation resulting from a special distribution of loan proceeds to our partner in a JV resulting from the JV closing on a loan coupled with an amendment to the JV agreement that changed the allocation of cash flows between us and our partner; this additional allocation was excluded from diluted FFO available to common share and common unit holders, as adjusted for comparability.

7



Corporate Office Properties Trust
Diluted Share and Unit Computations
(in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
EPS Denominator:
 

 
 

 
 

 
 

 
 

 
 
 
 
Weighted average common shares - basic
111,800

 
111,724

 
111,670

 
111,582

 
111,557

 
111,762

 
110,759

Dilutive effect of share-based compensation awards
321

 
239

 
293

 
361

 
310

 
280

 
289

Dilutive effect of redeemable noncontrolling interests

 

 
108

 

 
1,062

 

 
130

Dilutive convertible preferred units

 

 

 

 
176

 

 

Common units in the Operating Partnership

 

 

 

 

 

 
1,329

Weighted average common shares - diluted
112,121

 
111,963

 
112,071

 
111,943

 
113,105

 
112,042

 
112,507

Diluted EPS
$
0.21

 
$
0.21

 
$
0.38

 
$
0.19

 
$
0.95

 
$
0.42

 
$
1.15

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares for period ended:
 

 
 

 
 

 
 

 
 

 
 

 
 

Common shares
111,800

 
111,724

 
111,670

 
111,582

 
111,557

 
111,762

 
110,759

Dilutive effect of share-based compensation awards
321

 
239

 
293

 
361

 
310

 
280

 
289

Common units
1,237

 
1,226

 
1,228

 
1,312

 
1,327

 
1,232

 
1,329

Redeemable noncontrolling interests
157

 
110

 
108

 
109

 
136

 
133

 
1,037

Dilutive convertible preferred units
176

 

 
176

 

 

 
176

 

Denominator for diluted FFO per share
113,691

 
113,299

 
113,475

 
113,364

 
113,330

 
113,583

 
113,414

Dilutive convertible preferred units

 
176

 

 

 

 

 

Denominator for diluted FFO per share, as adjusted for comparability
113,691

 
113,475

 
113,475

 
113,364

 
113,330

 
113,583

 
113,414

Weighted average common units
(1,237
)
 
(1,226
)
 
(1,228
)
 
(1,312
)
 
(1,327
)
 
(1,232
)
 

Redeemable noncontrolling interests
(157
)
 
(110
)
 

 
(109
)
 
926

 
(133
)
 
(907
)
Dilutive convertible preferred units
(176
)
 
(176
)
 
(176
)
 

 
176

 
(176
)
 

Denominator for diluted EPS
112,121

 
111,963

 
112,071

 
111,943

 
113,105

 
112,042

 
112,507

Diluted FFO per share - Nareit
$
0.51

 
$
0.41

 
$
0.49

 
$
0.51

 
$
0.52

 
$
0.92

 
$
1.02

Diluted FFO per share - as adjusted for comparability
$
0.51

 
$
0.51

 
$
0.50

 
$
0.51

 
$
0.52

 
$
1.02

 
$
1.03






8


Corporate Office Properties Trust
Adjusted Funds from Operations
(in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Diluted FFO available to common share and common unit holders, as adjusted for comparability
$
57,817

 
$
57,866

 
$
56,330

 
$
57,430

 
$
59,222

 
$
115,683

 
$
116,538

Straight line rent adjustments and lease incentive amortization
2,523

 
(852
)
 
1,386

 
(515
)
 
1,051

 
1,671

 
(616
)
Amortization of intangibles included in NOI
(73
)
 
(74
)
 
(174
)
 
(59
)
 
(50
)
 
(147
)
 
12

Share-based compensation, net of amounts capitalized
1,638

 
1,389

 
1,735

 
1,697

 
1,623

 
3,027

 
3,296

Amortization of deferred financing costs
642

 
575

 
541

 
538

 
529

 
1,217

 
1,057

Amortization of net debt discounts, net of amounts capitalized
390

 
386

 
382

 
377

 
374

 
776

 
744

Accum. other comprehensive loss on derivatives amortized to expense

 

 

 
12

 
33

 

 
67

Replacement capital expenditures (1)
(16,132
)
 
(17,754
)
 
(19,862
)
 
(16,752
)
 
(16,002
)
 
(33,886
)
 
(27,175
)
Other diluted AFFO adjustments associated with real estate JVs (2)
(115
)
 
(41
)
 
(68
)
 
66

 
181

 
(156
)
 
214

Diluted AFFO available to common share and common unit holders (“diluted AFFO”)
$
46,690

 
$
41,495

 
$
40,270

 
$
42,794

 
$
46,961

 
$
88,185

 
$
94,137

Replacement capital expenditures (1)
 

 
 

 
 

 
 

 
 

 
 
 
 
Tenant improvements and incentives
$
8,870

 
$
11,357

 
$
11,447

 
$
10,880

 
$
8,568

 
$
20,227

 
$
15,720

Building improvements
13,662

 
2,475

 
8,826

 
8,908

 
4,333

 
16,137

 
8,864

Leasing costs
2,222

 
2,762

 
2,998

 
2,722

 
2,761

 
4,984

 
5,943

Net additions to (exclusions from) tenant improvements and incentives
329

 
2,026

 
(426
)
 
(2,156
)
 
1,759

 
2,355

 
290

Excluded building improvements and leasing costs
(8,951
)
 
(866
)
 
(2,983
)
 
(3,602
)
 
(1,419
)
 
(9,817
)
 
(3,642
)
Replacement capital expenditures
$
16,132

 
$
17,754

 
$
19,862

 
$
16,752

 
$
16,002

 
$
33,886

 
$
27,175


(1)
Refer to the section entitled “Definitions” for a definition of this measure.
(2)
AFFO adjustments pertaining to noncontrolling interests on consolidated joint ventures reported on page 31 and COPT’s share of unconsolidated real estate joint ventures reported on page 32.

9


Corporate Office Properties Trust
EBITDAre and Adjusted EBITDA
(in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Net income
$
25,121

 
$
25,550

 
$
44,877

 
$
23,246

 
$
109,563

 
$
50,671

 
$
131,881

Interest expense
16,797

 
16,840

 
16,777

 
17,126

 
18,475

 
33,637

 
37,149

Income tax expense (benefit)
30

 
49

 
(104
)
 
(131
)
 
(176
)
 
79

 
18

Depreciation of furniture, fixtures and equipment
448

 
419

 
438

 
467

 
496

 
867

 
929

Real estate-related depreciation and amortization
33,612

 
32,596

 
32,779

 
34,692

 
34,802

 
66,208

 
69,598

Impairment losses on real estate

 

 
2

 
327

 

 

 

Gain on sales of real estate

 
(5
)
 
(20,761
)
 

 
(84,469
)
 
(5
)
 
(84,469
)
Adjustments from unconsolidated real estate JVs (1)
1,270

 
1,270

 
1,206

 
1,202

 
830

 
2,540

 
1,657

EBITDAre
77,278

 
76,719

 
75,214

 
76,929

 
79,521

 
$
153,997

 
$
156,763

Net loss (gain) on other investments
2

 

 
(1
)
 

 
(12
)
 
2

 
(400
)
Credit loss expense
615

 
689

 

 

 

 
1,304

 

Business development expenses
678

 
538

 
512

 
419

 
460

 
1,216

 
1,008

Non-comparable professional and legal expenses

 

 
195

 
175

 
311

 

 
311

Demolition costs on redevelopment and nonrecurring improvements
9

 
43

 
104

 

 

 
52

 
44

Executive transition costs

 

 

 

 

 

 
4

Adjusted EBITDA
78,582

 
77,989

 
76,024

 
77,523

 
80,280

 
$
156,571

 
$
157,730

Proforma NOI adjustment for property changes within period
959

 
734

 
463

 

 
(1,981
)
 
 
 
 
Change in collectability of deferred rental revenue
1,007

 

 
928

 

 

 
 
 
 
In-place adjusted EBITDA
$
80,548

 
$
78,723

 
$
77,415

 
$
77,523

 
$
78,299

 
 
 
 

(1)
Includes COPT’s share of adjusted EBITDA adjustments in unconsolidated real estate joint ventures (see page 32).

10



Corporate Office Properties Trust
Office and Data Center Shell Properties by Segment (1) - 6/30/20
(square feet in thousands)
 
 
# of
Properties
 
Operational
Square Feet
 
% Occupied
 
% Leased
Core Portfolio: (2)
 
 
 
 
 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
Fort Meade/Baltimore Washington (“BW”) Corridor:
 
 

 
 

 
 

 
 

National Business Park
 
31

 
3,818

 
90.5
%
 
92.4
%
Howard County
 
35

 
2,867

 
89.4
%
 
91.4
%
Other
 
22

 
1,624

 
94.5
%
 
94.5
%
Total Fort Meade/BW Corridor
 
88

 
8,309

 
90.9
%
 
92.5
%
Northern Virginia (“NoVA”) Defense/IT
 
13

 
1,992

 
87.0
%
 
88.5
%
Lackland AFB (San Antonio, Texas)
 
7

 
953

 
100.0
%
 
100.0
%
Navy Support
 
21

 
1,241

 
93.9
%
 
97.5
%
Redstone Arsenal (Huntsville, Alabama)
 
12

 
980

 
99.7
%
 
100.0
%
Data Center Shells:
 
 
 
 
 
 
 
 
Consolidated Properties
 
9

 
1,755

 
100.0
%
 
100.0
%
Unconsolidated JV Properties (3)
 
15

 
2,435

 
100.0
%
 
100.0
%
Total Defense/IT Locations
 
165

 
17,665

 
93.8
%
 
95.0
%
Regional Office
 
7

 
1,959

 
92.0
%
 
92.4
%
Core Portfolio
 
172

 
19,624

 
93.6
%
 
94.7
%
Other Properties
 
2

 
157

 
68.4
%
 
68.4
%
Total Portfolio
 
174

 
19,781

 
93.4
%
 
94.5
%
Consolidated Portfolio
 
159

 
17,346

 
92.5
%
 
93.7
%

(1)
This presentation sets forth core portfolio data by segment followed by data for the remainder of the portfolio.
(2)
Represents Defense/IT Locations and Regional Office properties.
(3)
See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.




11


Corporate Office Properties Trust
NOI from Real Estate Operations and Occupancy by Property Grouping - 6/30/20
(dollars and square feet in thousands)
 
 
As of Period End
 
 
 
 
 
 
# of Office and Data Center Shell
Properties
 
Operational Square Feet
 
% Occupied (1)
 
% Leased (1)
 
Annualized
Rental Revenue (2)
 
% of Total
Annualized
Rental Revenue (2)
 
NOI from Real Estate Operations
Property Grouping
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
Core Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Properties: (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
 
144

 
15,440

 
92.0%
 
93.4%
 
$
482,505

 
92.3
%
 
$
73,049

 
$
146,422

Unconsolidated real estate JV (4)
 
6

 
964

 
100.0%
 
100.0%
 
5,832

 
1.1
%
 
1,220

 
2,427

Total Same Properties in Core Portfolio
 
150

 
16,404

 
92.5%
 
93.7%
 
488,337

 
93.4
%
 
74,269

 
148,849

Properties Placed in Service (5)
 
13

 
1,749

 
98.8%
 
99.4%
 
29,481

 
5.6
%
 
5,934

 
10,371

Properties contributed to uncons. real estate JV (4)(6)
 
9

 
1,471

 
100.0%
 
100.0%
 
2,116

 
0.4
%
 
492

 
998

Wholesale Data Center and Other
 
N/A

 
N/A

 
N/A
 
N/A
 
N/A

 
N/A

 
2,989

 
6,926

Total Core Portfolio
 
172

 
19,624

 
93.6%
 
94.7%
 
519,934

 
99.5
%
 
83,684

 
167,144

Other Properties (Same Properties)
 
2

 
157

 
68.4%
 
68.4%
 
2,639

 
0.5
%
 
375

 
745

Total Portfolio
 
174

 
19,781

 
93.4%
 
94.5%
 
$
522,573

 
100.0
%
 
$
84,059

 
$
167,889

Consolidated Portfolio
 
159

 
17,346

 
92.5%
 
93.7%
 
$
514,625

 
98.5
%
 
$
82,334

 
$
164,451

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of Period End
 
 
 
 
 
 
# of Office and Data Center Shell
Properties
 
Operational Square Feet
 
% Occupied (1)
 
% Leased (1)
 
Annualized
Rental Revenue (2)
 
% of Core
Annualized
Rental Revenue (2)
 
NOI from Real Estate Operations
Property Grouping
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
Core Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
 
150

 
15,230

 
92.8%
 
94.2%
 
$
450,775

 
86.7
%
 
$
70,693

 
$
140,488

Unconsolidated real estate JVs (4)
 
15

 
2,435

 
100.0%
 
100.0%
 
7,948

 
1.5
%
 
1,725

 
3,438

Total Defense/IT Locations
 
165

 
17,665

 
93.8%
 
95.0%
 
458,723

 
88.2
%
 
72,418

 
143,926

Regional Office
 
7

 
1,959

 
92.0%
 
92.4%
 
61,211

 
11.8
%
 
8,274

 
16,197

Wholesale Data Center and Other
 
N/A

 
N/A

 
N/A
 
N/A
 
N/A

 
N/A

 
2,992

 
7,021

Total Core Portfolio
 
172

 
19,624

 
93.6%
 
94.7%
 
$
519,934


100.0
%
 
$
83,684

 
$
167,144

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Percentages calculated based on operational square feet.
(2)
Excludes Annualized Rental Revenue from our wholesale data center, DC-6, of $20.6 million as of 6/30/20. With regard to properties owned through unconsolidated real estate joint ventures, we include the portion of Annualized Rental Revenue allocable to COPT’s ownership interest.
(3)
Includes office and data center shell properties stably owned and 100% operational since at least 1/1/19.
(4)
See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.
(5)
Newly developed or redeveloped properties placed in service that were not fully operational by 1/1/19.
(6)
Includes nine data center shell properties in which we sold a 90% interest and retained a 10% interest through a newly-formed unconsolidated real estate joint venture in 2019.

12


Corporate Office Properties Trust
Consolidated Real Estate Revenues and NOI by Segment
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Consolidated real estate revenues
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
62,698

 
$
64,438

 
$
65,003

 
$
63,436

 
$
61,659

 
$
127,136

 
$
124,342

NoVA Defense/IT
14,447

 
13,678

 
13,448

 
13,551

 
13,912

 
28,125

 
28,743

Lackland Air Force Base
13,257

 
12,076

 
14,772

 
12,703

 
12,104

 
25,333

 
23,665

Navy Support
8,119

 
8,341

 
8,136

 
8,183

 
8,185

 
16,460

 
16,340

Redstone Arsenal
4,647

 
4,676

 
4,515

 
4,171

 
3,968

 
9,323

 
7,907

Data Center Shells-Consolidated
7,076

 
5,577

 
4,680

 
5,913

 
8,624

 
12,653

 
15,978

Total Defense/IT Locations
110,244

 
108,786

 
110,554

 
107,957

 
108,452

 
219,030

 
216,975

Regional Office
15,162

 
15,460

 
14,252

 
15,508

 
15,018

 
30,622

 
29,851

Wholesale Data Center
6,455

 
7,172

 
6,409

 
6,565

 
8,560

 
13,627

 
16,431

Other
677

 
698

 
753

 
704

 
741

 
1,375

 
1,504

Consolidated real estate revenues
$
132,538

 
$
132,116

 
$
131,968

 
$
130,734

 
$
132,771

 
$
264,654

 
$
264,761

 
 
 
 
NOI
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
41,839

 
$
43,216

 
$
44,610

 
$
42,693

 
$
42,315

 
$
85,055

 
$
82,663

NoVA Defense/IT
9,112

 
8,493

 
8,620

 
8,586

 
9,218

 
17,605

 
18,757

Lackland Air Force Base
5,472

 
5,281

 
5,486

 
5,554

 
5,456

 
10,753

 
11,058

Navy Support
4,948

 
5,056

 
4,828

 
4,602

 
4,899

 
10,004

 
9,650

Redstone Arsenal
3,035

 
2,829

 
2,744

 
2,454

 
2,369

 
5,864

 
4,769

Data Center Shells:
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
6,287

 
4,920

 
4,348

 
5,395

 
7,865

 
11,207

 
14,866

COPT’s share of unconsolidated real estate JVs (1)
1,725

 
1,713

 
1,634

 
1,601

 
1,251

 
3,438

 
2,470

Total Defense/IT Locations
72,418

 
71,508

 
72,270

 
70,885

 
73,373

 
143,926

 
144,233

Regional Office
8,274

 
7,923

 
6,919

 
8,165

 
7,428

 
16,197

 
14,845

Wholesale Data Center
2,992

 
3,939

 
3,026

 
3,191

 
4,942

 
6,931

 
9,975

Other
375

 
460

 
289

 
380

 
393

 
835

 
847

NOI from real estate operations
$
84,059

 
$
83,830

 
$
82,504

 
$
82,621

 
$
86,136

 
$
167,889

 
$
169,900


(1)     See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.

13


Corporate Office Properties Trust
Cash NOI by Segment
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Cash NOI
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
41,968

 
$
42,170

 
$
43,939

 
$
42,604

 
$
42,180

 
$
84,138

 
$
82,436

NoVA Defense/IT
9,610

 
9,118

 
8,963

 
8,064

 
8,771

 
18,728

 
17,528

Lackland Air Force Base
5,903

 
5,701

 
5,906

 
5,839

 
5,731

 
11,604

 
11,114

Navy Support
5,248

 
5,146

 
4,987

 
4,808

 
5,113

 
10,394

 
9,898

Redstone Arsenal
2,580

 
2,494

 
2,377

 
2,220

 
2,302

 
5,074

 
4,632

Data Center Shells:
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
5,505

 
4,316

 
3,762

 
4,857

 
7,247

 
9,821

 
13,709

COPT’s share of unconsolidated real estate JVs (1)
1,641

 
1,633

 
1,553

 
1,513

 
1,202

 
3,274

 
2,362

Total Defense/IT Locations
72,455

 
70,578

 
71,487

 
69,905

 
72,546

 
143,033

 
141,679

Regional Office
8,078

 
7,479

 
7,606

 
7,356

 
7,367

 
15,557

 
14,357

Wholesale Data Center
3,005

 
3,848

 
3,162

 
3,231

 
3,945

 
6,853

 
8,643

Other
358

 
457

 
292

 
380

 
465

 
815

 
990

Cash NOI from real estate operations
83,896

 
82,362

 
82,547

 
80,872

 
84,323

 
166,258

 
165,669

Straight line rent adjustments and lease incentive amortization
(2,537
)
 
842

 
(1,488
)
 
235

 
(1,274
)
 
(1,695
)
 
231

Amortization of acquired above- and below-market rents
97

 
96

 
197

 
82

 
73

 
193

 
33

Amortization of below-market cost arrangements
(22
)
 
(23
)
 
(23
)
 
(23
)
 
(23
)
 
(45
)
 
(46
)
Lease termination fees, gross
376

 
104

 
436

 
841

 
2,458

 
480

 
2,979

Tenant funded landlord assets and lease incentives
2,164

 
369

 
754

 
526

 
530

 
2,533

 
926

Cash NOI adjustments in unconsolidated real estate JVs
85

 
80

 
81

 
88

 
49

 
165

 
108

NOI from real estate operations
$
84,059

 
$
83,830

 
$
82,504

 
$
82,621

 
$
86,136

 
$
167,889

 
$
169,900


(1)
See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.

14


Corporate Office Properties Trust
Same Properties (1) Average Occupancy Rates by Segment 
(square feet in thousands)
 
# of Properties
 
Operational Square Feet
 
Three Months Ended
 
Six Months Ended
 
 
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Core Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
86

 
8,131

 
91.2
%
 
92.2
%
 
92.1
%
 
91.5
%
 
90.6
%
 
91.7
%
 
90.4
%
NoVA Defense/IT
13

 
1,992

 
87.0
%
 
83.9
%
 
82.4
%
 
83.9
%
 
88.5
%
 
85.4
%
 
89.9
%
Lackland Air Force Base
7

 
953

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Navy Support
21

 
1,241

 
94.0
%
 
93.6
%
 
92.4
%
 
90.9
%
 
90.8
%
 
93.8
%
 
90.1
%
Redstone Arsenal
7

 
651

 
99.6
%
 
99.4
%
 
99.2
%
 
99.2
%
 
98.4
%
 
99.5
%
 
98.4
%
Data Center Shells (2)
9

 
1,477

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Total Defense/IT Locations
143

 
14,445

 
92.7
%
 
92.8
%
 
92.5
%
 
92.2
%
 
92.2
%
 
92.7
%
 
92.3
%
Regional Office
7

 
1,959

 
92.0
%
 
90.6
%
 
88.0
%
 
88.6
%
 
88.9
%
 
91.3
%
 
88.5
%
Core Portfolio Same Properties
150

 
16,404

 
92.6
%
 
92.5
%
 
91.9
%
 
91.7
%
 
91.8
%
 
92.6
%
 
91.8
%
Other Same Properties
2

 
157

 
65.8
%
 
67.4
%
 
72.4
%
 
72.1
%
 
72.7
%
 
66.6
%
 
73.2
%
Total Same Properties
152

 
16,561

 
92.4
%
 
92.3
%
 
91.7
%
 
91.6
%
 
91.6
%
 
92.3
%
 
91.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Same Properties (1) Period End Occupancy Rates by Segment 
(square feet in thousands)
 
# of Properties
 
Operational Square Feet
 
Three Months Ended
 
 
 
 
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
 
 
 
Core Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
86

 
8,131

 
91.0
%
 
92.3
%
 
92.3
%
 
91.9
%
 
90.7
%
 
 
 
 
NoVA Defense/IT
13

 
1,992

 
87.0
%
 
85.5
%
 
82.4
%
 
82.3
%
 
87.6
%
 
 
 
 
Lackland Air Force Base
7

 
953

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
Navy Support
21

 
1,241

 
93.9
%
 
94.0
%
 
92.5
%
 
91.7
%
 
90.9
%
 
 
 
 
Redstone Arsenal
7

 
651

 
99.6
%
 
99.6
%
 
99.2
%
 
99.2
%
 
98.6
%
 
 
 
 
Data Center Shells (2)
9

 
1,477

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
Total Defense/IT Locations
143

 
14,445

 
92.6
%
 
93.1
%
 
92.5
%
 
92.2
%
 
92.2
%
 
 
 
 
Regional Office
7

 
1,959

 
92.0
%
 
91.4
%
 
88.1
%
 
88.6
%
 
89.3
%
 
 
 
 
Core Portfolio Same Properties
150

 
16,404

 
92.5
%
 
92.9
%
 
92.0
%
 
91.8
%
 
91.9
%
 
 
 
 
Other Same Properties
2

 
157

 
68.4
%
 
64.6
%
 
73.0
%
 
72.1
%
 
72.1
%
 
 
 
 
Total Same Properties
152

 
16,561

 
92.3
%
 
92.7
%
 
91.8
%
 
91.6
%
 
91.7
%
 
 
 
 

(1)
Includes office and data center shell properties stably owned and 100% operational since at least 1/1/19.
(2)
Properties owned through an unconsolidated real estate joint venture. See page 32 for additional disclosure.

15


Corporate Office Properties Trust
Same Properties Real Estate Revenues and NOI by Segment
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Same Properties real estate revenues
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
61,507

 
$
63,216

 
$
63,974

 
$
62,809

 
$
61,044

 
$
124,723

 
$
123,031

NoVA Defense/IT
14,447

 
13,678

 
13,448

 
13,551

 
13,912

 
28,125

 
28,743

Lackland Air Force Base
13,257

 
12,076

 
14,773

 
12,702

 
12,104

 
25,333

 
23,665

Navy Support
8,119

 
8,341

 
8,135

 
8,183

 
8,185

 
16,460

 
16,340

Redstone Arsenal
3,534

 
3,808

 
3,895

 
3,868

 
3,793

 
7,342

 
7,578

Data Center Shells-Consolidated
2,208

 
2,111

 
1,943

 
2,045

 
2,130

 
4,319

 
4,171

Total Defense/IT Locations
103,072

 
103,230

 
106,168

 
103,158

 
101,168

 
206,302

 
203,528

Regional Office
15,162

 
15,460

 
14,251

 
15,509

 
15,018

 
30,622

 
29,851

Other Properties
677

 
698

 
753

 
704

 
741

 
1,375

 
1,501

Same Properties real estate revenues
$
118,911

 
$
119,388

 
$
121,172

 
$
119,371

 
$
116,927

 
$
238,299

 
$
234,880

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Properties NOI
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
41,030

 
$
42,403

 
$
43,745

 
$
42,317

 
$
41,938

 
$
83,433

 
$
81,817

NoVA Defense/IT
9,112

 
8,494

 
8,619

 
8,586

 
9,219

 
17,606

 
18,758

Lackland Air Force Base
5,472

 
5,281

 
5,487

 
5,554

 
5,456

 
10,753

 
11,058

Navy Support
4,949

 
5,056

 
4,828

 
4,602

 
4,899

 
10,005

 
9,650

Redstone Arsenal
2,219

 
2,232

 
2,295

 
2,236

 
2,264

 
4,451

 
4,585

Data Center Shells:
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
1,993

 
1,893

 
1,810

 
1,896

 
1,999

 
3,886

 
3,867

COPT’s share of unconsolidated real estate JV (1)
1,220

 
1,207

 
1,214

 
1,214

 
1,205

 
2,427

 
2,424

Total Defense/IT Locations
65,995

 
66,566

 
67,998

 
66,405

 
66,980

 
132,561

 
132,159

Regional Office
8,274

 
7,923

 
6,918

 
8,163

 
7,430

 
16,197

 
14,847

Other Properties
375

 
461

 
325

 
381

 
384

 
836

 
795

Same Properties NOI
$
74,644

 
$
74,950

 
$
75,241

 
$
74,949

 
$
74,794

 
$
149,594

 
$
147,801


(1)
See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.

16


Corporate Office Properties Trust
Same Properties Cash NOI by Segment
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Same Properties cash NOI
 

 
 

 
 

 
 

 
 

 
 
 
 
Defense/IT Locations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Meade/BW Corridor
$
41,283

 
$
41,848

 
$
43,546

 
$
42,456

 
$
41,836

 
$
83,131

 
$
81,632

NoVA Defense/IT
9,610

 
9,118

 
8,963

 
8,064

 
8,771

 
18,728

 
17,528

Lackland Air Force Base
5,904

 
5,701

 
5,907

 
5,839

 
5,731

 
11,605

 
11,114

Navy Support
5,248

 
5,146

 
4,987

 
4,808

 
5,113

 
10,394

 
9,898

Redstone Arsenal
2,350

 
2,310

 
2,311

 
2,291

 
2,359

 
4,660

 
4,750

Data Center Shells:
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated properties
1,821

 
1,724

 
1,627

 
1,706

 
1,790

 
3,545

 
3,453

COPT’s share of unconsolidated real estate JV (1)
1,185

 
1,179

 
1,180

 
1,171

 
1,160

 
2,364

 
2,320

Total Defense/IT Locations
67,401

 
67,026

 
68,521

 
66,335

 
66,760

 
134,427

 
130,695

Regional Office
8,078

 
7,479

 
7,606

 
7,355

 
7,368

 
15,557

 
14,358

Other Properties
358

 
457

 
327

 
381

 
456

 
815

 
939

Same Properties cash NOI
75,837

 
74,962

 
76,454

 
74,071

 
74,584

 
150,799

 
145,992

Straight line rent adjustments and lease incentive amortization
(1,513
)
 
(567
)
 
(2,592
)
 
(572
)
 
(701
)
 
(2,080
)
 
(15
)
Amortization of acquired above- and below-market rents
97

 
96

 
197

 
82

 
73

 
193

 
33

Amortization of below-market cost arrangements
(23
)
 
(23
)
 
(23
)
 
(23
)
 
(23
)
 
(46
)
 
(46
)
Lease termination fees, gross
358

 
85

 
417

 
823

 
285

 
443

 
806

Tenant funded landlord assets and lease incentives
(147
)
 
369

 
754

 
526

 
530

 
222

 
926

Cash NOI adjustments in unconsolidated real estate JV (1)
35

 
28

 
34

 
42

 
46

 
63

 
105

Same Properties NOI
$
74,644

 
$
74,950

 
$
75,241

 
$
74,949

 
$
74,794

 
$
149,594

 
$
147,801

Percentage change in total Same Properties cash NOI (2)
1.7
%
 
 
 
 
 
 
 
 
 
3.3
%
 
 
Percentage change in Defense/IT Locations Same Properties cash NOI (2)
1.0
%
 
 
 
 
 
 
 
 
 
2.9
%
 
 

(1)
See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.
(2)
Represents the change between the current period and the same period in the prior year.

17


Corporate Office Properties Trust
Leasing - Office and Data Center Shell Portfolio (1)
Quarter Ended 6/30/20
(square feet in thousands)
 
Defense/IT Locations
 
 
 
 
 
 
 
Ft Meade/BW Corridor
 
NoVA Defense/IT
 
 
Navy Support
 
Redstone Arsenal
 
Data Center Shells
 
Total Defense/IT Locations
 
Regional Office
 
Other
 
 Total
Renewed Space
 

 
 

 
 
 
 
 

 
 
 
 
 
 

 
 
 
 

Leased Square Feet
139

 
88

 
 
37

 
21

 
297

 
581

 
26

 
6

 
613

Expiring Square Feet
304

 
88

 
 
50

 
21

 
297

 
760

 
45

 
6

 
811

Vacating Square Feet
165

 

 
 
14

 

 

 
179

 
19

 

 
198

Retention Rate (% based upon square feet)
45.8
 %
 
100.0
%
 
 
72.9
 %
 
100.0
%
 
100.0
%
 
76.5
 %
 
57.0
 %
 
100.0
 %
 
75.6
 %
Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
1.64

 
$
6.67

 
 
$
2.53

 
$
11.03

 
$

 
$
1.95

 
$
5.99

 
$
0.51

 
$
2.11

Weighted Average Lease Term in Years
5.1

 
7.3

 
 
3.8

 
1.0

 
5.0

 
5.2

 
7.5

 
3.5

 
5.2

Average Rent Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Average Rent
$
30.81

 
$
30.42

 
 
$
25.47

 
$
23.89

 
$
14.19

 
$
21.68

 
$
38.30

 
$
24.74

 
$
22.41

Expiring Average Rent
$
31.22

 
$
28.55

 
 
$
23.28

 
$
21.84

 
$
12.38

 
$
20.36

 
$
34.33

 
$
27.39

 
$
21.02

Change in Average Rent
(1.3
)%
 
6.5
%
 
 
9.4
 %
 
9.4
%
 
14.6
%
 
6.5
 %
 
11.6
 %
 
(9.7
)%
 
6.6
 %
Cash Rent Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Cash Rent
$
30.97

 
$
29.65

 
 
$
24.57

 
$
23.89

 
$
13.66

 
$
21.27

 
$
37.47

 
$
23.61

 
$
21.98

Expiring Cash Rent
$
34.13

 
$
29.64

 
 
$
24.94

 
$
23.39

 
$
13.42

 
$
21.91

 
$
38.69

 
$
29.72

 
$
22.69

Change in Cash Rent
(9.3
)%
 
%
 
 
(1.5
)%
 
2.1
%
 
1.8
%
 
(2.9
)%
 
(3.1
)%
 
(20.6
)%
 
(3.2
)%
Average Escalations Per Year
2.5
 %
 
2.5
%
 
 
2.9
 %
 
%
 
2.3
%
 
2.4
 %
 
2.6
 %
 
3.1
 %
 
2.4
 %
New Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Development and Redevelopment Space
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Square Feet
11

 

 
 

 
218

 
42

 
271

 
5

 

 
276

Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
7.98

 
$

 
 
$

 
$
4.57

 
$

 
$
3.99

 
$
23.77

 
$

 
$
4.35

Weighted Average Lease Term in Years
10.7

 

 
 

 
17.4

 
13.3

 
16.5

 
6.5

 

 
16.3

Average Rent Per Square Foot
$
32.03

 
$

 
 
$

 
$
20.81

 
$
37.92

 
$
23.93

 
$
76.61

 
$

 
$
24.90

Cash Rent Per Square Foot
$
30.00

 
$

 
 
$

 
$
20.22

 
$
34.18

 
$
22.80

 
$
80.20

 
$

 
$
23.85

Vacant Space (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Square Feet
35

 

 
 
18

 
3

 

 
56

 
8

 
6

 
70

Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
3.33

 
$

 
 
$
7.92

 
$
2.88

 
$

 
$
4.80

 
$
1.98

 
$
3.06

 
$
4.33

Weighted Average Lease Term in Years
5.3

 

 
 
5.4

 
5.2

 

 
5.3

 
2.0

 
5.3

 
4.9

Average Rent Per Square Foot
$
37.54

 
$

 
 
$
36.16

 
$
20.96

 
$

 
$
36.26

 
$
32.99

 
$
22.15

 
$
34.65

Cash Rent Per Square Foot
$
36.05

 
$

 
 
$
36.10

 
$
19.22

 
$

 
$
35.22

 
$
32.50

 
$
21.50

 
$
33.71

Total Square Feet Leased
185

 
88

 
 
55

 
241

 
340

 
908

 
39

 
12

 
959

Average Escalations Per Year
2.5
 %
 
2.5
%
 
 
2.8
 %
 
0.7
%
 
2.1
%
 
1.5
 %
 
2.6
 %
 
3.3
 %
 
1.6
 %
Average Escalations Excl. Data Center Shells
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.4
 %
(1)
Activity is exclusive of owner occupied space, leases with less than a one-year term and expirations associated with space removed from service. Weighted average lease term is based on the lease term defined in the lease assuming no exercise of early termination rights. Committed costs for leasing are reported above in the period of lease execution. Actual capital expenditures for leasing are reported on page 9 in the period such costs are incurred.
(2)
Committed costs include tenant improvements and leasing commissions and exclude free rent concessions.
(3)
Vacant space includes acquired first generation space, vacated second generation space and leases executed on developed and redeveloped space previously placed in service.

18


Corporate Office Properties Trust
Leasing - Office and Data Center Shell Portfolio (1)
Six Months Ended 6/30/20
(square feet in thousands)
 
Defense/IT Locations
 
 
 
 
 
 
 
Ft Meade/BW Corridor
 
NoVA Defense/IT
 
 
Navy Support
 
Redstone Arsenal
 
Data Center Shells
 
Total Defense/IT Locations
 
Regional Office
 
Other
 
Total
Renewed Space
 

 
 

 
 
 
 
 

 
 
 
 
 
 

 
 
 
 

Leased Square Feet
497

 
120

 
 
121

 
21

 
297

 
1,056

 
39

 
6

 
1,101

Expiring Square Feet
701

 
122

 
 
140

 
21

 
297

 
1,280

 
60

 
19

 
1,359

Vacating Square Feet
204

 
1

 
 
18

 

 

 
224

 
21

 
13

 
258

Retention Rate (% based upon square feet)
70.9
 %
 
98.9
 %
 
 
86.8
 %
 
100.0
%
 
100.0
%
 
82.5
 %
 
65.0
 %
 
31.7
 %
 
81.0
 %
Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
2.18

 
$
5.77

 
 
$
4.28

 
$
11.03

 
$

 
$
2.39

 
$
6.23

 
$
0.51

 
$
2.51

Weighted Average Lease Term in Years
5.3

 
6.8

 
 
3.0

 
1.0

 
5.0

 
5.0

 
6.4

 
3.5

 
5.1

Average Rent Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Average Rent
$
33.29

 
$
29.79

 
 
$
23.30

 
$
23.89

 
$
14.19

 
$
26.18

 
$
39.87

 
$
24.74

 
$
26.66

Expiring Average Rent
$
30.87

 
$
27.74

 
 
$
21.71

 
$
21.84

 
$
12.38

 
$
24.08

 
$
34.85

 
$
27.39

 
$
24.48

Change in Average Rent
7.8
 %
 
7.4
 %
 
 
7.3
 %
 
9.4
%
 
14.6
%
 
8.7
 %
 
14.4
 %
 
(9.7
)%
 
8.9
 %
Cash Rent Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal Cash Rent
$
33.36

 
$
29.00

 
 
$
22.81

 
$
23.89

 
$
13.66

 
$
25.93

 
$
39.09

 
$
23.61

 
$
26.38

Expiring Cash Rent
$
34.50

 
$
29.16

 
 
$
22.98

 
$
23.39

 
$
13.42

 
$
26.42

 
$
39.89

 
$
29.72

 
$
26.91

Change in Cash Rent
(3.3
)%
 
(0.6
)%
 
 
(0.7
)%
 
2.1
%
 
1.8
%
 
(1.9
)%
 
(2.0
)%
 
(20.6
)%
 
(2.0
)%
Average Escalations Per Year
2.4
 %
 
2.5
 %
 
 
2.8
 %
 
%
 
2.3
%
 
2.4
 %
 
2.6
 %
 
3.1
 %
 
2.4
 %
New Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Development and Redevelopment Space
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Square Feet
11

 

 
 

 
218

 
42

 
271

 
5

 

 
276

Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
7.98

 
$

 
 
$

 
$
4.57

 
$

 
$
3.99

 
$
23.77

 
$

 
$
4.35

Weighted Average Lease Term in Years
10.7

 

 
 

 
17.4

 
13.3

 
16.5

 
6.5

 

 
16.3

Average Rent Per Square Foot
$
32.03

 
$

 
 
$

 
$
20.81

 
$
37.92

 
$
23.93

 
$
76.61

 
$

 
$
24.90

Cash Rent Per Square Foot
$
30.00

 
$

 
 
$

 
$
20.22

 
$
34.18

 
$
22.80

 
$
80.20

 
$

 
$
23.85

Vacant Space (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Square Feet
96

 
17

 
 
45

 
3

 

 
160

 
46

 
6

 
213

Statistics for Completed Leasing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Annum Average Committed Cost per Square Foot (2)
$
8.03

 
$
9.34

 
 
$
5.09

 
$
2.88

 
$

 
$
7.25

 
$
8.20

 
$
3.06

 
$
7.34

Weighted Average Lease Term in Years
7.2

 
8.8

 
 
5.6

 
5.2

 

 
6.9

 
6.1

 
5.3

 
6.7

Average Rent Per Square Foot
$
36.20

 
$
32.42

 
 
$
28.32

 
$
20.96

 
$

 
$
33.33

 
$
30.92

 
$
22.15

 
$
32.49

Cash Rent Per Square Foot
$
33.99

 
$
30.61

 
 
$
28.30

 
$
19.22

 
$

 
$
31.79

 
$
30.15

 
$
21.50

 
$
31.14

Total Square Feet Leased
604

 
137

 
 
166

 
241

 
340

 
1,488

 
90

 
12

 
1,590

Average Escalations Per Year
2.4
 %
 
2.6
 %
 
 
2.8
 %
 
0.7
%
 
2.1
%
 
1.8
 %
 
2.7
 %
 
3.3
 %
 
1.8
 %
Average Escalations Excl. Data Center Shells
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.8
 %
(1)
Activity is exclusive of owner occupied space, leases with less than a one-year term and expirations associated with space removed from service. Weighted average lease term is based on the lease term defined in the lease assuming no exercise of early termination rights. Committed costs for leasing are reported above in the period of lease execution. Actual capital expenditures for leasing are reported on page 9 in the period such costs are incurred.
(2)
Committed costs include tenant improvements and leasing commissions and exclude free rent concession.
(3)
Vacant space includes acquired first generation space, vacated second generation space and leases executed on developed and redeveloped space previously placed in service.

19


Corporate Office Properties Trust
Lease Expiration Analysis as of 6/30/20 (1)
(dollars and square feet in thousands, except per square foot amounts)

Office and Data Center Shells
Segment of Lease and Year of Expiration (2)
 
Square Footage of Leases Expiring
 
Annualized Rental
Revenue of Expiring Leases (3)
 
% of Core/Total
Annualized 
Rental
Revenue
Expiring (3)(4)
 
Annualized Rental
Revenue of
Expiring Leases per
Occupied Sq. Foot (3)
 
 
 
 
 
 
 
 
 
Core Portfolio
 
 
 
 
 
 
 
 
Ft Meade/BW Corridor
 
267

 
$
9,218

 
1.8
%
 
$
34.59

NoVA Defense/IT
 
9

 
276

 
0.1
%
 
31.45

Lackland Air Force Base
 
250

 
11,834

 
2.3
%
 
47.34

Navy Support
 
23

 
531

 
0.1
%
 
21.01

Redstone Arsenal
 
11

 
265

 
0.1
%
 
23.78

Regional Office
 
30

 
914

 
0.2
%
 
30.57

2020
 
590

 
23,039

 
4.4
%
 
38.94

Ft Meade/BW Corridor
 
1,061

 
36,544

 
7.0
%
 
34.45

NoVA Defense/IT
 
100

 
2,992

 
0.6
%
 
29.89

Navy Support
 
340

 
9,829

 
1.9
%
 
28.92

Redstone Arsenal
 
397

 
9,102

 
1.8
%
 
22.93

Regional Office
 
69

 
2,354

 
0.5
%
 
34.10

2021
 
1,967

 
60,821

 
11.8
%
 
30.92

Ft Meade/BW Corridor
 
826

 
27,637

 
5.3
%
 
33.44

NoVA Defense/IT
 
148

 
5,097

 
1.0
%
 
34.45

Navy Support
 
157

 
4,234

 
0.8
%
 
26.89

Redstone Arsenal
 
29

 
680

 
0.1
%
 
23.25

Regional Office
 
492

 
17,243

 
3.3
%
 
34.94

2022
 
1,652

 
54,891

 
10.6
%
 
33.17

Ft Meade/BW Corridor
 
1,374

 
49,482

 
9.5
%
 
35.98

NoVA Defense/IT
 
143

 
4,790

 
0.9
%
 
33.41

Navy Support
 
200

 
5,723

 
1.1
%
 
28.59

Redstone Arsenal
 
7

 
169

 
%
 
24.21

Regional Office
 
143

 
4,279

 
0.8
%
 
29.87

2023
 
1,867

 
64,443

 
12.4
%
 
34.48

Ft Meade/BW Corridor
 
1,149

 
41,511

 
8.0
%
 
36.09

NoVA Defense/IT
 
459

 
15,399

 
3.0
%
 
33.57

Navy Support
 
216

 
4,455

 
0.9
%
 
20.67

Redstone Arsenal
 
58

 
1,410

 
0.3
%
 
24.17

Data Center Shells-Unconsolidated JV Properties
 
546

 
3,246

 
0.6
%
 
11.89

Regional Office
 
89

 
2,681

 
0.5
%
 
29.91

2024
 
2,517

 
68,703

 
13.2
%
 
30.60

Thereafter
 
 
 
 
 
 
 
 
Consolidated Properties
 
7,889

 
243,335

 
46.9
%
 
30.47

Unconsolidated JV Properties
 
1,889

 
4,702

 
0.9
%
 
13.21

Core Portfolio
 
18,371

 
$
519,934

 
100.0
%
 
$
31.20


20


Segment of Lease and Year of Expiration (2)
 
Square Footage of Leases Expiring
 
Annualized Rental
Revenue of Expiring Leases (3)
 
% of Core/Total
Annualized 
Rental
Revenue
Expiring (3)(4)
 
Annualized Rental
Revenue of
Expiring Leases per
Occupied Sq. Foot (3)
 
 
 
 
 
 
 
 
 
Core Portfolio
 
18,371

 
$
519,934

 
99.5
%
 
$
31.20

Other Properties
 
108

 
2,639

 
0.5
%
 
24.52

Total Portfolio
 
18,479

 
$
522,573

 
100.0
%
 
$
31.15

Consolidated Portfolio
 
16,044

 
$
514,625

 
 
 
 
Unconsolidated JV Properties
 
2,435

 
$
7,948

 
 
 
 
 
 
 
 
 
 
 
 
 

Note: As of 6/30/20, the weighted average lease term was 5.3 years for the core and total portfolio and 5.1 years for the consolidated portfolio.

Wholesale Data Center
Year of Expiration
 
Critical Load (MW)
 
Annualized Rental
Revenue of
Expiring Leases (3)
2020
 
12.00

 
$
15,545

2021
 
0.31

 
764

2022
 
1.11

 
2,166

2023
 
0.92

 
1,671

2024
 

 
10

Thereafter
 
0.20

 
434

 
 
14.54

 
$
20,590


(1)
This expiration analysis reflects occupied space of our total portfolio (including consolidated and unconsolidated properties) and includes the effect of early renewals completed on existing leases but excludes the effect of new tenant leases on square feet yet to commence as of 6/30/20 of 216,000 for the core portfolio. With regard to properties owned through unconsolidated real estate joint ventures, the amounts reported above reflect 100% of the properties’ square footage but only reflect the portion of Annualized Rental Revenue that was allocable to COPT’s ownership interest.
(2)
A number of our leases are subject to certain early termination provisions.  The year of lease expiration is based on the lease term determined in accordance with GAAP.
(3)
Total Annualized Rental Revenue is the monthly contractual base rent as of 6/30/20 (ignoring free rent then in effect) multiplied by 12 plus the estimated annualized expense reimbursements under existing leases. The amounts reported above for Annualized Rental Revenue include the portion of properties owned through unconsolidated real estate joint ventures that was allocable to COPT’s ownership interest.
(4)
Amounts reported represent the percentage of our core portfolio for components of such portfolio while other amounts represent the percentage of our total portfolio.

21


Corporate Office Properties Trust
2020 Core Portfolio Quarterly Lease Expiration Analysis as of 6/30/20 (1)
(dollars and square feet in thousands, except per square foot amounts)
Segment of Lease and Quarter of Expiration (2)
 
Square Footage of Leases Expiring
 
Annualized Rental
Revenue of Expiring Leases (3)
 
% of Core Annualized 
Rental Revenue Expiring (3)(4)
 
Annualized Rental Revenue of Expiring Leases per Occupied Sq. Foot
Ft Meade/BW Corridor
 
184

 
$
6,125

 
1.2
%
 
$
33.33

Navy Support
 
16

 
255

 
%
 
15.62

Regional Office
 
17

 
484

 
0.1
%
 
29.00

Q3 2020
 
217

 
6,864

 
1.3
%
 
31.37

Ft Meade/BW Corridor
 
83

 
3,095

 
0.6
%
 
37.37
NoVA Defense/IT
 
9

 
276

 
0.1
%
 
31.45

Lackland Air Force Base
 
250

 
11,834

 
2.3
%
 
47.34

Navy Support
 
7

 
276

 
0.1
%
 
40.02

Redstone Arsenal
 
11

 
265

 
0.1
%
 
23.78

Regional Office
 
13

 
429

 
0.1
%
 
32.56

Q4 2020
 
373

 
16,175

 
3.3
%
 
43.39

 
 
 
 
 
 
 
 
 
 
 
590

 
$
23,039

 
4.4
%
 
$
38.94

 
 
 
 
 
 
 
 
 

(1)
This expiration analysis reflects occupied space of our total portfolio (including consolidated and unconsolidated properties) and includes the effect of early renewals completed on existing leases but excludes the effect of new tenant leases on square feet yet to commence as of 6/30/20.
(2)
A number of our leases are subject to certain early termination provisions.  The period of lease expiration is based on the lease term determined in accordance with GAAP.
(3)
Total Annualized Rental Revenue is the monthly contractual base rent as of 6/30/20 (ignoring free rent then in effect) multiplied by 12 plus the estimated annualized expense reimbursements under existing leases.
(4)
Amounts reported represent the percentage of our core portfolio.

22


Corporate Office Properties Trust
Top 20 Tenants as of 6/30/20 (1)
(dollars and square feet in thousands)
Tenant
 
 
Total
Annualized
Rental Revenue (2)
 
%
of Total
Annualized 
Rental Revenue (2)
 
Occupied Square Feet in Office and Data Center Shells
 
Weighted
Average
Remaining Lease Term in Office and Data Center Shells (3)
United States Government
(4)
 
$
186,346

 
34.3
%
 
4,480

 
4.4

Fortune 500 Company
 
 
48,743

 
9.0
%
 
4,190

 
9.2

General Dynamics Corporation
 
 
27,084

 
5.0
%
 
752

 
3.5

The Boeing Company
 
 
17,449

 
3.2
%
 
614

 
1.4

CACI International Inc
 
 
13,216

 
2.4
%
 
339

 
4.8

Northrop Grumman Corporation
 
 
12,639

 
2.3
%
 
417

 
3.5

Booz Allen Hamilton, Inc.
 
 
11,281

 
2.1
%
 
297

 
1.3

CareFirst Inc.
 
 
11,121

 
2.0
%
 
312

 
2.6

Wells Fargo & Company
 
 
6,909

 
1.3
%
 
172

 
8.2

AT&T Corporation
 
 
6,781

 
1.2
%
 
321

 
9.3

Miles and Stockbridge, PC
 
 
5,941

 
1.1
%
 
160

 
7.2

Raytheon Technologies Corporation
 
 
5,650

 
1.0
%
 
157

 
2.1

Science Applications International Corp.
 
 
5,230

 
1.0
%
 
136

 
1.9

Jacobs Engineering Group Inc.
 
 
5,180

 
1.0
%
 
165

 
5.6

Transamerica Life Insurance Company
 
 
5,123

 
0.9
%
 
140

 
1.5

Mantech International Corp.
 
 
4,751

 
0.9
%
 
165

 
4.2

Peraton Inc.
 
 
4,589

 
0.8
%
 
134

 
6.6

University of Maryland
 
 
4,041

 
0.7
%
 
131

 
4.9

The MITRE Corporation
 
 
3,889

 
0.7
%
 
118

 
4.6

Pandora A/S
 
 
3,810

 
0.7
%
 
144

 
5.7

Subtotal Top 20 Tenants
 
 
389,773

 
71.6
%
 
13,344

 
5.8

All remaining tenants
 
 
153,390

 
28.4
%
 
5,135

 
4.2

Total/Weighted Average
 
 
$
543,163

 
100.0
%
 
18,479

 
5.3


(1)
Includes Annualized Rental Revenue (“ARR”) in our portfolio of operating office and data center shells and our wholesale data center. For properties owned through unconsolidated real estate joint ventures, includes COPT’s share of those properties’ ARR of $7.9 million (see page 32 for additional information).
(2)
Total ARR is the monthly contractual base rent as of 6/30/20, multiplied by 12, plus the estimated annualized expense reimbursements under existing leases. With regard to properties owned through unconsolidated real estate joint ventures, the amounts reported above reflect 100% of the properties’ square footage but only reflect the portion of ARR that was allocable to COPT’s ownership interest.
(3)
Weighted average remaining lease term is based on the lease term determined in accordance with GAAP for our office and data center shell properties (i.e., excluding the effect of our wholesale data center leases). The weighting of the lease term was computed based on occupied square feet.
(4)
Substantially all of our government leases are subject to early termination provisions which are customary in government leases. As of 6/30/20, $6.1 million in ARR (or 3.3% of our ARR from the United States Government and 1.1% of our total ARR) was through the General Services Administration (GSA).



23



Corporate Office Properties Trust
Summary of Development Projects as of 6/30/20 (1)
(dollars and square feet in thousands) 
 
 
 
 
Total Rentable Square Feet
% Leased as of 7/7/20
as of 6/30/20 (2)
Actual or Anticipated Shell Completion Date
 Anticipated Operational Date (3)
 
Anticipated Total Cost
Cost to Date
Cost to Date Placed in Service
 
 
Property and Segment
Location
 
Fort Meade/BW Corridor:
 
 
 
 
 
 
 
 
 
 
4600 River Road
College Park, Maryland
 
102

27%
$
30,735

$
17,344

$

3Q 20
3Q 21
 
 
 
 
 
 
 
 
 
 
 
 
Redstone Arsenal:
 
 
 
 
 
 
 
 
100 Secured Gateway (4)
Huntsville, Alabama
 
250

84%
72,404

52,974

10,550

2Q 20
2Q 21
 
7600 Advanced Gateway
Huntsville, Alabama
 
126

100%
14,883

11,993


3Q 20
3Q 20
 
8600 Advanced Gateway
Huntsville, Alabama
 
105

100%
28,857

12,227


4Q 20
4Q 20
 
8000 Rideout Road
Huntsville, Alabama
 
100

0%
26,078

9,129


4Q 20
4Q 21
 
6000 Redstone Gateway
Huntsville, Alabama
 
40

79%
10,523

3,072


4Q 20
4Q 21
 
7100 Redstone Gateway
Huntsville, Alabama
 
46

100%
10,668

1,644


1Q 21
1Q 21
 
Subtotal / Average
 
 
667

78%
163,413

91,039

10,550

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data Center Shells:
 
 
 
 
 
 
 
 
 
 
P2 B
Northern Virginia
 
274

100%
64,636

56,623


3Q 20
3Q 20
 
Southpoint Annex (5)
Northern Virginia
 
14

100%
6,022

1,512


3Q 20
3Q 20
 
Oak Grove Annex (5)
Northern Virginia
 
14

100%
7,617

2,049


4Q 20
4Q 20
 
Paragon Annex (5)
Northern Virginia
 
14

100%
5,466

1,396


4Q 20
4Q 20
 
P2 C
Northern Virginia
 
230

100%
51,120

32,016


1Q 21
1Q 21
 
Subtotal / Average
 
 
546

100%
134,861

93,596


 
 
 
 
 
 
 
 
 
 
 
 
 
 
NoVA Defense/IT:
 
 
 
 
 
 
 
 
 
 
NoVA Office C
Chantilly, Virginia
 
348

100%
106,219

35,891

2,794

2Q 22
2Q 22
 
 
 
 
 
 
 
 
 
 
 
 
Regional Office:
 
 
 
 
 
 
 
 
 
 
2100 L Street
Washington, DC
 
190

56%
177,000

141,234


2Q 20
2Q 21
 
Total Under Development
 
 
1,853

84%
$
612,228

$
379,104

$
13,344

 
 

(1)
Includes properties under, or contractually committed for, development as of 6/30/20.
(2)
Cost includes land, development, leasing costs and allocated portion of structured parking and other shared infrastructure, if applicable.
(3)
Anticipated operational date is the earlier of the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.
(4)
Although classified as under development, 40,000 square feet were operational as of 6/30/20.
(5)
Represent expansions of existing properties.


24


Corporate Office Properties Trust
Development and Redevelopment Placed in Service as of 6/30/20
(square feet in thousands)
 
 
 
Total Property
 
Square Feet Placed in Service
Space Placed in Service % Leased as of 6/30/20
 
Property Segment
% Leased as of 6/30/20
Rentable Square Feet
 
Prior Year
2020
Property and Location
1st Quarter
2nd Quarter
Total 2020
P2 A
Northern Virginia
Data Center Shells
100%
230

 

230


230

100%
Oak Grove A
Northern Virginia
Data Center Shells
100%
216

 


216

216

100%
7500 Advanced Gateway
Huntsville, Alabama
Redstone Arsenal
100%
135

 


135

135

100%
6950 Columbia Gateway
Columbia, Maryland
Ft Meade/BW Corridor
91%
106

 
85


21

21

91%
100 Secured Gateway
Huntsville, Alabama
Redstone Arsenal
84%
250

 


40

40

100%
Total Development/Redevelopment Placed in Service
95%
937

 
85

230

412

642

99%




25


Corporate Office Properties Trust
Summary of Land Owned/Controlled as of 6/30/20 (1)
(square feet in thousands)
Location
Acres
 
Estimated Developable Square Feet
 
Carrying Amount
Land owned/controlled for future development
 
 
 
 
 
Defense/IT Locations:
 

 
 

 
 
Fort Meade/BW Corridor:
 
 
 
 
 
National Business Park
196

 
2,106

 
 
Howard County
19

 
290

 
 
Other
126

 
1,338

 
 
Total Fort Meade/BW Corridor
341

 
3,734

 
 
NoVA Defense/IT
52

 
1,618

 
 
Lackland AFB
49

 
785

 
 
Navy Support
44

 
109

 
 
Redstone Arsenal (2)
361

 
3,127

 
 
Data Center Shells
53

 
1,180

 
 
Total Defense/IT Locations
900

 
10,553

 
 
Regional Office
10

 
900

 
 
Total land owned/controlled for future development
910

 
11,453

 
$
305,702

 
 
 
 
 
 
Other land owned/controlled
43

 
638

 
3,413

Land held, net
953

 
12,091

 
$
309,115


(1)
This land inventory schedule includes properties under ground lease to us and excludes all properties listed as development or redevelopment as detailed on page 24. The costs associated with the land included on this summary are reported on our consolidated balance sheet in the line entitled “land held.”
(2)
This land is controlled under a long-term master lease agreement to LW Redstone Company, LLC, a consolidated joint venture (see page 31). As this land is developed in the future, the joint venture will execute site-specific leases under the master lease agreement. Rental payments will commence under the site-specific leases as cash rents under tenant leases commence at the respective properties.


26


Corporate Office Properties Trust
Capitalization Overview
(dollars, shares and units in thousands)


 
 
Wtd. Avg. Maturity (Years)
 
Stated Rate
 
Effective Rate
(1)(2)
 
Gross Debt Balance at
 
 
 
 
 
6/30/20
Debt
 
 
 
 
 
 
Secured debt
 
3.5

 
3.31
%
 
3.45
%
 
$
252,940

Unsecured debt
 
2.9

 
3.31
%
 
3.69
%
 
1,770,161

Total Consolidated Debt
3.0

 
3.31
%
 
3.66
%
 
$
2,023,101

 
 
 
 
 
 
 
 
 
Fixed rate debt (2)
 
3.2

 
4.30
%
 
3.93
%
 
$
1,789,695

Variable rate debt
 
2.6

 
1.35
%
 
1.57
%
 
233,406

Total Consolidated Debt
 
 
 
 
 
 
 
$
2,023,101

 
 
 
 
 
 
 
 
 
Preferred Equity
 
 
 
 
 
 
 
 
3.5% Series I Convertible Preferred Units (3)
 
 
 
 
 
$
8,800

 
 
 
 
 
 
 
 
 
Common Equity
 
 
 
 
 
 
 
 
Common Shares
 
 
 
 
 
 
 
112,183

Common Units (4)
 
 
 
 
 
 
 
1,331

Total Common Shares and Units
 
 
 
 
 
113,514

 
 
 
 
 
 
 
 
 
Closing Common Share Price on 6/30/20
 
 
 
$
25.34

Common Equity Market Capitalization
 
 
 
$
2,876,445

 
 
 
 
 
Total Equity Market Capitalization
 
 
 
$
2,885,245

 
 
 
 
 
Total Market Capitalization
 
 
 
$
4,908,346

 
 
 
 
 
(1) Excludes the effect of deferred financing cost amortization.
(2) Includes the effect of interest rate swaps with notional amounts of $446.4 million that hedge the risk of changes in interest rates on variable rate debt.
(3) 352,000 units outstanding with a liquidation preference of $25 per unit, convertible into 176,000 common units and redeemable by COPLP with six months notice.
(4) Excludes unvested share-based compensation awards subject to market conditions.

 
 
Investment Grade Ratings & Outlook
 
Latest Affirmation
 
Fitch
 
BBB-
Stable
 
10/7/19
 
Moodys
 
Baa3
Stable
 
6/10/20
 
Standard & Poors
BBB-
Stable
 
5/19/20
chart-221173a99408583eb85.jpgchart-2e06f654ebc4545e8bfa03.jpg

27


Corporate Office Properties Trust
Summary of Outstanding Debt as of 6/30/20
(dollars in thousands)
Unsecured Debt
Stated Rate
 
Amount Outstanding
Maturity Date
 
 
Secured Debt
Stated Rate
 
Amount Outstanding
Balloon Payment Due Upon Maturity
Maturity Date
 
Revolving Credit Facility
L + 1.10%

 
$
169,000

Mar-23
(1)(2)
 
7740 Milestone Parkway
3.96
%
 
$
17,129

$
15,902

Feb-23
 
Senior Unsecured Notes
 
 
 
 
 
 
100 & 30 Light Street
4.32
%
 
50,998

47,676

Jun-23
 
3.70% due 2021
3.70
%
 
$
300,000

Jun-21
 
 
LW Redstone:
 
 
 
 
 
 
3.60% due 2023
3.60
%
 
350,000

May-23
 
 
7200 & 7400 Redstone Gateway (3)
L + 1.85%

 
12,234

12,132

Oct-20
 
5.25% due 2024
5.25
%
 
250,000

Feb-24
 
 
1000, 1200 & 1100 Redstone
 
 
 
 
 
 
5.00% due 2025
5.00
%
 
300,000

Jul-25
 
 
Gateway (3)
4.47
%
(4)
32,334

27,649

Jun-24
 
Subtotal - Senior Unsecured Notes
4.32
%
 
$
1,200,000

 
 
 
4000 & 4100 Market Street and
 
 
 
 
 
 
 
 
 
 
 
 
 
8800 Redstone Gateway (2)(3)
L + 1.55%

 
23,000

22,100

Mar-25
(5)
Unsecured Bank Term Loans
 
 
 
 
 
 
M Square:
 
 
 
 
 
 
2022 Maturity
L + 1.00%

 
$
400,000

Dec-22
(2)
 
5825 & 5850 University Research
 
 
 
 
 
 
Other Unsecured Debt
0.00
%
 
1,161

May-26
 
 
Court (3)
3.82
%
 
41,639

35,603

Jun-26
 
Total Unsecured Debt
3.31
%
 
$
1,770,161

 
 
 
5801 University Research Court (2)(3)
L + 1.45%

 
11,200

10,020

Aug-26
 
 
 
 
 
 
 
 
2100 L Street (2)(3)
L + 2.35%

 
64,406

64,406

Sept-22
(6)
Debt Summary
 
 
 
 
 
 
Total Secured Debt
3.31
%
 
$
252,940

 
 
 
Total Unsecured Debt
3.31
%
 
$
1,770,161

 
 
 
 
 
 
 
 
 
 
Total Secured Debt
3.31
%
 
252,940

 
 
 
 
 
 
 
 
 
 
Consolidated Debt
3.31
%
 
$
2,023,101

 
 
 
 
 
 
 
 
 
 
Net discounts and deferred
financing costs
 
 
(11,082
)
 
 
 
 
 
 
 
 
 
 
Debt, per balance sheet
 
 
$
2,012,019

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Debt
 
 
$
2,023,101

 
 
 
 
 
 
 
 
 
 
COPT’s share of unconsolid. JV gross debt (7)
 
50,250

 
 
 
 
 
 
 
 
 
 
Gross debt
 
 
$
2,073,351

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The Company’s $800 million Revolving Credit Facility matures in March 2023 and may be extended for two six-month periods, at our option.
(2)
Pre-payable anytime without penalty.
(3)
These properties are owned through consolidated joint ventures.
(4)
Represents the weighted average rate of three loans on the properties.
(5)
The loan maturity may be extended for two one-year periods, provided certain conditions are met.
(6)
The loan maturity may be extended by one year, provided certain conditions are met.
(7)
See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.

28


Corporate Office Properties Trust
Summary of Outstanding Debt as of 6/30/20 (continued)

chart-214d64a8f5705938bf0a03.jpg
chart-6ed0a7c16f465618856a03.jpgchart-f06f49cf17bc51349d3a03.jpg
(1) Revolving Credit Facility maturity of $169.0 million scheduled for 2023 is presented assuming our exercise of two six-month extension options.
(2) Includes the effect of $446.4 million in interest rate swaps that hedge the risk of changes in interest rates on variable rate debt.

29


Corporate Office Properties Trust
Debt Analysis
(dollars and square feet in thousands)
 
 
 
 
 
As of and for Three Months Ended
 
 
 
As of and for Three Months Ended
Senior Note Covenants (1)
 
Required
 
6/30/20
 
Line of Credit & Term Loan Covenants (1)
Required
 
6/30/20
Total Debt / Total Assets
 
< 60%
 
39.4%
 
Total Debt / Total Assets
< 60%
 
36.1%
Secured Debt / Total Assets
 
< 40%
 
5.3%
 
Secured Debt / Total Assets
< 40%
 
4.9%
Debt Service Coverage
 
> 1.5x
 
4.4x
 
Adjusted EBITDA / Fixed Charges
> 1.5x
 
3.9x
Unencumbered Assets / Unsecured Debt
 
> 150%
 
259.1%
 
Unsecured Debt / Unencumbered Assets
< 60%
 
35.3%
 
 
 
 
 
 
 
Unencumbered Adjusted NOI / Unsecured Interest Expense
> 1.75x
 
4.3x
 
 
 
 
 
 
 
 
 
 
 
 
Debt Ratios
 
Page Refer.
 
 
 
Unencumbered Portfolio Analysis
 
 
 
Gross debt
 
 
28
 
$
2,073,351

 
# of unencumbered properties
146

Adjusted book
 
35
 
$
5,309,778

 
% of total portfolio
84
%
Net debt / adjusted book ratio
 
 
 
38.6
%

Unencumbered square feet in-service
 
15,686

Net debt plus pref. equity / adj. book ratio
 
 
 
38.8
%
 
% of total portfolio
 
79
%
Net debt
 
 
35
 
$
2,051,128

 
NOI from unencumbered real estate operations
 
$
75,228

Net debt plus preferred equity
 
 
35
 
$
2,059,928

 
% of total NOI from real estate operations
 
89
%
In-place adjusted EBITDA
 
10
 
$
80,548

 
Adjusted EBITDA from unencumbered real estate operations
 
$
69,932

Net debt / in-place adjusted EBITDA ratio
6.4
x
 
% of total adjusted EBITDA from real estate operations
 
89
%
Net debt plus pref. equity / in-place adj. EBITDA ratio
6.4
x
 
Unencumbered adjusted book
 
$
4,664,000

Denominator for debt service coverage
 
34
 
$
17,230

 
% of total adjusted book
 
88
%
Denominator for fixed charge coverage
 
34
 
$
20,481

 
 
 


Adjusted EBITDA
 
10
 
$
78,582

 
 
 
 
Adjusted EBITDA debt service coverage ratio
 
 
4.6
x
 
 
 
 
Adjusted EBITDA fixed charge coverage ratio
 
 
3.8
x
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The covenants are calculated as defined in the applicable agreements, and the calculations differ between those agreements.


30


Corporate Office Properties Trust
Consolidated Real Estate Joint Ventures as of 6/30/20
(dollars and square feet in thousands)

Operating Properties
Operational
Square Feet
% Occupied
% Leased
NOI for the Three Months Ended 6/30/20 (1)
NOI for the Six Months Ended 6/30/20 (1)
Total Assets (2)
Venture Level Debt
% COPT Owned
Suburban Maryland:
 

 
 
 
 
 

 

 
M Square Associates, LLC (3 properties)
313

99.2%
99.2%
$
1,579

$
2,937

$
67,803

$
52,839

50%
Huntsville, Alabama:
 
 
 
 
 
 
 
 
LW Redstone Company, LLC (11 properties)
843

100.0%
100.0%
2,675

5,156

206,122

67,568

85%
Total/Average
1,156

99.8%
99.8%
$
4,254

$
8,093

$
273,925

$
120,407

 
 
        
Non-operating Properties
Estimated Developable Square Feet
 
 
Total Assets (2)
Venture Level Debt
% COPT Owned
Suburban Maryland:
 

 
 
 

 

 
M Square Research Park
450

 
 
$
25,143

$

50%
Huntsville, Alabama:
 

 
 
 

 

 
Redstone Gateway (3)
3,754

 
 
128,918


85%
Washington, DC:
 
 
 
 
 
 
Stevens Place
190

 
 
141,952

64,406

95%
Total
4,394

 
 
$
296,013

$
64,406

 
 
(1)
Represents NOI of the joint venture operating properties before allocation to joint venture partners.
(2)
Total assets includes the assets of the consolidated joint venture plus any outside investment basis.
(3)
Total assets include $62.2 million in amortized cost basis pertaining to amounts due from the City of Huntsville (including accrued interest) in connection with infrastructure costs funded by the joint venture.

31


Corporate Office Properties Trust
Unconsolidated Real Estate Joint Ventures as of 6/30/20
(dollars and square feet in thousands) 
 
Joint venture information
DC Shell JV formed in 2016
 
DC Shell JV formed in 2019
 
 
 
 
 
 
 
 
 
 
 
 
COPT ownership %
50
%
 
10
%
 
 
 
 
 
 
 
 
 
 
 
 
COPT’s investment
$
36,720

 
$
13,737

 
 
 
 
 
 
 
 
 
 
 
 
# of Properties
6

 
9

 
 
 
 
 
 
 
 
 
 
 
 
Square Feet
964

 
1,471

 
 
 
 
 
 
 
 
 
 
 
 
% Occupied
100
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
COPT’s share of annualized rental revenue
$
5,832

 
$
2,116

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet information
DC Shell JV formed in 2016
 
DC Shell JV formed in 2019
 
Total
 
COPT’s Share (1)
 
 
 
 
 
 
 
 
Operating properties, net
$
119,688

 
$
312,344

 
$
432,032

 
$
91,078

 
 
 
 
 
 
 
 
Total assets
$
133,864

 
$
345,087

 
$
478,951

 
$
101,441

 
 
 
 
 
 
 
 
Debt
$
59,717

 
$
200,821

 
$
260,538

 
$
49,941

 
 
 
 
 
 
 
 
Total liabilities
$
60,424

 
$
207,717

 
$
268,141

 
$
50,984

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended 6/30/20
 
Six Months Ended 6/30/20
Operating information
DC Shell JV formed in 2016
 
DC Shell JV formed in 2019
 
Total
 
COPT’s Share (1)
 
DC Shell JV formed in 2016
 
DC Shell JV formed in 2019
 
Total
 
COPT’s Share (1)
Revenue
$
3,007

 
$
5,768

 
$
8,775

 
$
2,081

 
$
5,948

 
$
11,487

 
$
17,435

 
$
4,123

Operating expenses
(567
)
 
(713
)
 
(1,280
)
 
(356
)
 
(1,094
)
 
(1,374
)
 
(2,468
)
 
(685
)
NOI and EBITDA
2,440

 
5,055

 
7,495

 
1,725

 
4,854

 
10,113

 
14,967

 
3,438

Interest expense
(532
)
 
(1,862
)
 
(2,394
)
 
(452
)
 
(1,063
)
 
(3,724
)
 
(4,787
)
 
(904
)
Depreciation and amortization
(1,132
)
 
(2,519
)
 
(3,651
)
 
(818
)
 
(2,265
)
 
(5,038
)
 
(7,303
)
 
(1,636
)
Net income
$
776

 
$
674

 
$
1,450

 
$
455

 
$
1,526

 
$
1,351

 
$
2,877

 
$
898

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI (per above)
$
2,440

 
$
5,055

 
$
7,495

 
$
1,725

 
$
4,854

 
$
10,113

 
$
14,967

 
$
3,438

Straight line rent adjustments
(70
)
 
(351
)
 
(421
)
 
(70
)
 
(125
)
 
(737
)
 
(862
)
 
(136
)
Amortization of acquired above- and below-market rents

 
(142
)
 
(142
)
 
(14
)
 

 
(283
)
 
(283
)
 
(28
)
Cash NOI
$
2,370

 
$
4,562

 
$
6,932

 
$
1,641

 
$
4,729

 
$
9,093

 
$
13,822

 
$
3,274

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) Represents the portion allocable to our ownership interest.


32



Corporate Office Properties Trust
Supplementary Reconciliations of Non-GAAP Measures
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
NOI from real estate operations (1)
 

 
 

 
 

 
 

 
 

 
 
 
 
Real estate revenues
$
132,538

 
$
132,116

 
$
131,968

 
$
130,734

 
$
132,771

 
$
264,654

 
$
264,761

Property operating expenses
(50,204
)
 
(49,999
)
 
(51,098
)
 
(49,714
)
 
(47,886
)
 
(100,203
)
 
(97,331
)
COPT’s share of NOI in unconsolidated real estate JVs (2)
1,725

 
1,713

 
1,634

 
1,601

 
1,251

 
3,438

 
2,470

NOI from real estate operations
84,059

 
83,830

 
82,504

 
82,621

 
86,136

 
167,889

 
169,900

General and administrative expenses
(6,511
)
 
(5,303
)
 
(7,043
)
 
(6,105
)
 
(7,650
)
 
(11,814
)
 
(14,369
)
Leasing expenses
(1,647
)
 
(2,183
)
 
(2,293
)
 
(1,824
)
 
(1,736
)
 
(3,830
)
 
(3,768
)
Business development expenses and land carry costs
(1,262
)
 
(1,118
)
 
(1,292
)
 
(964
)
 
(870
)
 
(2,380
)
 
(1,983
)
NOI from construction contracts and other service operations
525

 
560

 
985

 
895

 
1,297

 
1,085

 
1,921

Equity in loss of unconsolidated non-real estate entities
(1
)
 
(2
)
 
(2
)
 
(3
)
 
(1
)
 
(3
)
 
(2
)
Interest and other income
2,282

 
1,205

 
1,917

 
1,842

 
1,849

 
3,487

 
4,135

Credit loss expense (3)
(615
)
 
(689
)
 

 

 

 
(1,304
)
 

Interest expense
(16,797
)
 
(16,840
)
 
(16,777
)
 
(17,126
)
 
(18,475
)
 
(33,637
)
 
(37,149
)
COPT’s share of interest expense of unconsolidated real estate JVs (2)
(452
)
 
(452
)
 
(425
)
 
(412
)
 
(264
)
 
(904
)
 
(525
)
Income tax (expense) benefit
(30
)
 
(49
)
 
104

 
131

 
176

 
(79
)
 
(18
)
FFO - per Nareit (1)
$
59,551

 
$
58,959

 
$
57,678

 
$
59,055

 
$
60,462

 
$
118,510

 
$
118,142

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed contractual payments
$
103,993

 
$
104,109

 
$
101,116

 
$
102,389

 
$
104,193

 
$
208,102

 
$
208,837

Variable lease payments
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease termination fees
376

 
104

 
436

 
841

 
2,458

 
480

 
2,979

Other variable lease payments (4)
27,778

 
26,799

 
29,141

 
26,231

 
24,764

 
54,577

 
50,502

Lease revenue
132,147

 
131,012

 
130,693

 
129,461

 
131,415

 
263,159

 
262,318

Other property revenue
391

 
1,104

 
1,275

 
1,273

 
1,356

 
1,495

 
2,443

Real estate revenues
$
132,538

 
$
132,116

 
$
131,968

 
$
130,734

 
$
132,771

 
$
264,654

 
$
264,761

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for credit losses (recoveries) on billed lease revenue
$
591

 
$
(355
)
 
$
579

 
$
39

 
$
(2
)
 
$
236

 
$
68

(1)
Refer to section entitled “Definitions” for a definition of this measure.
(2)
See page 32 for a schedule of the related components.
(3) Excludes credit losses on lease revenue, which are included in lease revenue.
(4)
Represents primarily lease revenue associated with property operating expense reimbursements from tenants.

33


Corporate Office Properties Trust
Supplementary Reconciliations of Non-GAAP Measures (continued)
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
6/30/20
 
6/30/19
Total interest expense
$
16,797

 
$
16,840

 
$
16,777

 
$
17,126

 
$
18,475

 
$
33,637

 
$
37,149

Less: Amortization of deferred financing costs
(642
)
 
(575
)
 
(541
)
 
(538
)
 
(529
)
 
(1,217
)
 
(1,057
)
Less: Amortization of net debt discounts, net of amounts capitalized
(390
)
 
(386
)
 
(382
)
 
(377
)
 
(374
)
 
(776
)
 
(744
)
Less: Accum. other comprehensive loss on derivatives amortized to expense

 

 

 
(12
)
 
(33
)
 

 
(67
)
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs
442

 
441

 
416

 
403

 
258

 
883

 
513

Denominator for interest coverage
16,207

 
16,320

 
16,270

 
16,602

 
17,797

 
32,527

 
35,794

Scheduled principal amortization
1,023

 
1,021

 
1,010

 
1,107

 
1,095

 
2,044

 
2,193

Denominator for debt service coverage
17,230

 
17,341

 
17,280

 
17,709

 
18,892

 
34,571

 
37,987

Capitalized interest
3,174

 
3,358

 
3,467

 
2,927

 
2,388

 
6,532

 
4,392

Preferred unit distributions
77

 
77

 
77

 
157

 
165

 
154

 
330

Denominator for fixed charge coverage
$
20,481

 
$
20,776

 
$
20,824

 
$
20,793

 
$
21,445

 
$
41,257

 
$
42,709

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred unit distributions
$
77

 
$
77

 
$
77

 
$
157

 
$
165

 
$
154

 
$
330

Common share dividends - unrestricted shares and deferred shares
30,761

 
30,754

 
30,724

 
30,721

 
30,693

 
61,515

 
61,378

Common share dividends - restricted shares and deferred shares
94

 
84

 
102

 
103

 
63

 
178

 
131

Common unit distributions - unrestricted units
341

 
339

 
337

 
338

 
365

 
680

 
730

Common unit distributions - restricted units
25

 
25

 
22

 
22

 
23

 
50

 
43

Total dividends/distributions
$
31,298

 
$
31,279

 
$
31,262

 
$
31,341

 
$
31,309

 
$
62,577

 
$
62,612

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common share dividends - unrestricted shares and deferred shares
$
30,761

 
$
30,754

 
$
30,724

 
$
30,721

 
$
30,693

 
$
61,515

 
$
61,378

Common unit distributions - unrestricted units
341

 
339

 
337

 
338

 
365

 
680

 
730

Distributions on dilutive preferred units
77

 

 
77

 

 

 
154

 

Dividends and distributions for diluted FFO payout ratio
31,179

 
31,093

 
31,138

 
31,059

 
31,058

 
62,349

 
62,108

Distributions on dilutive preferred units

 
77

 

 

 

 

 

Dividends and distributions for other payout ratios
$
31,179

 
$
31,170

 
$
31,138

 
$
31,059

 
$
31,058

 
$
62,349

 
$
62,108

 
 
 
 
 
 
 
 
 
 
 
 
 
 

34


Corporate Office Properties Trust
Supplementary Reconciliations of Non-GAAP Measures (continued)
(dollars in thousands)
 
Three Months Ended
 
 
 
 
 
6/30/20
 
3/31/20
 
12/31/19
 
9/30/19
 
6/30/19
 
 
 
 
Total assets
$
4,011,325

 
$
4,054,457

 
$
3,854,453

 
$
3,855,369

 
$
3,803,469

 
 
 
 
Accumulated depreciation
1,065,094

 
1,035,703

 
1,007,120

 
979,353

 
949,111

 
 
 
 
Accumulated depreciation included in assets held for sale

 

 

 
1,397

 
1,397

 
 
 
 
Accumulated amort. of real estate intangibles and deferred leasing costs
216,267

 
214,693

 
212,547

 
212,222

 
210,183

 
 
 
 
Accumulated amortization of real estate intangibles and deferred leasing costs included in assets held for sale

 

 

 
4

 
4

 
 
 
 
COPT’s share of liabilities of unconsolidated real estate JVs
50,984

 
50,966

 
50,734

 
46,061

 
30,588

 
 
 
 
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs
9,815

 
8,990

 
8,164

 
7,376

 
6,578

 
 
 
 
Less: Property - operating lease liabilities
(20,796
)
 
(17,365
)
 
(17,317
)
 
(16,686
)
 
(16,640
)
 
 
 
 
Less: Property - finance lease liabilities
(688
)
 
(702
)
 
(702
)
 
(702
)
 
(712
)
 
 
 
 
Less: Cash and cash equivalents
(21,596
)
 
(159,061
)
 
(14,733
)
 
(34,005
)
 
(46,282
)
 
 
 
 
Less: COPT’s share of cash of unconsolidated real estate JVs
(627
)
 
(593
)
 
(498
)
 
(505
)
 
(406
)
 
 
 
 
Adjusted book
$
5,309,778

 
$
5,187,088

 
$
5,099,768

 
$
5,049,884

 
$
4,937,290

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross debt (page 28)
$
2,073,351

 
$
2,139,130

 
$
1,893,057

 
$
1,920,179

 
$
1,827,304

 


 


Less: Cash and cash equivalents
(21,596
)
 
(159,061
)
 
(14,733
)
 
(34,005
)
 
(46,282
)
 


 


Less: COPT’s share of cash of unconsolidated real estate JVs
(627
)
 
(593
)
 
(498
)
 
(505
)
 
(406
)
 
 
 
 
Net debt
$
2,051,128

 
$
1,979,476

 
$
1,877,826

 
$
1,885,669

 
$
1,780,616

 


 


Preferred equity
8,800

 
8,800

 
8,800

 
8,800

 
8,800

 
 
 
 
Net debt plus preferred equity
$
2,059,928

 
$
1,988,276

 
$
1,886,626

 
$
1,894,469

 
$
1,789,416

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



35



Corporate Office Properties Trust
Definitions

Non-GAAP Measures

We believe that the measures defined below that are not determined in accordance with generally accepted accounting principles (“GAAP”) are helpful to investors in measuring our performance and comparing it to that of other real estate investment trusts (“REITs”).  Since these measures exclude certain items includable in their respective most comparable GAAP measures, reliance on the measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are weighed in balance with other GAAP and non-GAAP measures.  These measures should not be used as an alternative to the respective most comparable GAAP measures when evaluating our financial performance or to cash flow from operating, investing and financing activities when evaluating our liquidity or ability to make cash distributions or pay debt service.
 
Adjusted book
Defined as total assets presented on our consolidated balance sheet, net of lease liabilities associated with property right-of-use assets, and excluding the effect of cash and cash equivalents, accumulated depreciation on real estate properties, accumulated amortization of intangible assets on real estate acquisitions, accumulated amortization of deferred leasing costs, disposed properties included in assets held for sale, unconsolidated real estate joint ventures (“JVs”) cash and cash equivalents, liabilities and accumulated depreciation and amortization (of real estate intangibles and deferred leasing costs) allocable to our ownership interest in the JVs and the effect of properties serving as collateral for debt in default that we extinguished (or intend to extinguish) via conveyance of such properties.

Adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) 
Adjusted EBITDA is net income adjusted for the effects of interest expense, depreciation and amortization, gain on sales and impairment losses of real estate, gain or loss on early extinguishment of debt, net gain or loss on other investments, credit loss expense, operating property acquisition costs, income taxes, business development expenses, demolition costs on redevelopment and nonrecurring improvements, executive transition costs and certain other expenses that we believe are not closely correlated with our operating performance.  Adjusted EBITDA also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JV. While EBITDA (earnings before interest, taxes, depreciation and amortization) is a universally-defined supplemental measure, Adjusted EBITDA incorporates additional adjustments for gains and losses from investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. We believe that adjusted EBITDA is a useful supplemental measure for assessing our un-levered performance.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.
 
Amortization of acquisition intangibles included in NOI 
Represents the amortization of intangible asset and liability categories that is included in net operating income, including amortization of above- or below-market leases and above- or below-market cost arrangements.

Basic FFO available to common share and common unit holders (“Basic FFO”) 
This measure is FFO adjusted to subtract (1) preferred share dividends, (2) income attributable to noncontrolling interests through ownership of preferred units in Corporate Office Properties, L.P. (the “Operating Partnership”) or interests in other consolidated entities not owned by us, (3) depreciation and amortization allocable to noncontrolling interests in other consolidated entities, (4) Basic FFO allocable to share-based compensation awards and (5) issuance costs associated with redeemed preferred shares.  With these adjustments, Basic FFO represents FFO available to common shareholders and holders of common units in the Operating Partnership (“common units”).  Common units are substantially similar to our common shares of beneficial interest (“common shares”) and are exchangeable into common shares, subject to certain conditions.  We believe that Basic FFO is useful to investors due to the close correlation of common units to common shares.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.


36



Corporate Office Properties Trust
Definitions

Cash net operating income (“Cash NOI”) 
Defined as NOI from real estate operations adjusted to eliminate the effects of: straight-line rental adjustments, amortization of tenant incentives, amortization of acquisition intangibles included in FFO and NOI (including above- and below-market leases and above- or below-market cost arrangements), lease termination fees from tenants to terminate their lease obligations prior to the end of the agreed upon lease terms and rental revenue recognized under GAAP resulting from landlord assets and lease incentives funded by tenants.  Cash NOI also includes adjustments to NOI from real estate operations for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. Under GAAP, rental revenue is recognized evenly over the term of tenant leases (through straight-line rental adjustments and amortization of tenant incentives), which, given the long term nature of our leases, does not align with the economics of when tenant payments are due to us under the arrangements.  Also under GAAP, when a property is acquired, we allocate the acquisition to certain intangible components, which are then amortized into NOI over their estimated lives, even though the resulting revenue adjustments are not reflective of our lease economics.  In addition, revenue from lease termination fees and tenant-funded landlord improvements, absent an adjustment from us, would result in large one-time lump sum amounts in Cash NOI that we do not believe are reflective of a property’s long-term value.  We believe that Cash NOI is a useful supplemental measure of operating performance for a REIT’s operating real estate because it makes adjustments to NOI for the above stated items to be more reflective of the economics of when tenant payments are due to us under our leases and the value of our properties.  As is the case with NOI, the measure is useful in our opinion in evaluating and comparing the performance of geographic segments, Same Properties groupings and individual properties.  We believe that NOI from real estate operations, our segment performance measure, is the most directly comparable GAAP measure to this non-GAAP measure.

COPT’s share of NOI from unconsolidated real estate JVs
Represents the net of revenues and property operating expenses of real estate operations owned through unconsolidated JVs that are allocable to COPT’s ownership interest. This measure is included in the computation of NOI, our segment performance measure, as discussed below.

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) 
Defined as Diluted FFO, as adjusted for comparability, adjusted for the following: (1) the elimination of the effect of (a) noncash rental revenues and property operating expenses (comprised of straight-line rental adjustments, which includes the amortization of recurring tenant incentives, and amortization of acquisition intangibles included in FFO and NOI, both of which are described under “Cash NOI” above), (b) share-based compensation, net of amounts capitalized, (c) amortization of deferred financing costs, (d) amortization of debt discounts and premiums and (e) amortization of settlements of debt hedges; and (2) replacement capital expenditures (defined below).  Diluted AFFO also includes adjustments to Diluted FFO, as adjusted for comparability for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that Diluted AFFO is a useful supplemental measure of operating performance for a REIT because it incorporates adjustments for: certain revenue and expenses that are not associated with cash to or from us during the period; and certain capital expenditures for operating properties incurred during the period that do require cash outlays.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Diluted FFO available to common share and common unit holders (“Diluted FFO”) 
Diluted FFO is Basic FFO adjusted to add back any changes in Basic FFO that would result from the assumed conversion of securities that are convertible or exchangeable into common shares.  The computation of Diluted FFO assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase Diluted FFO per share in a given period.  We believe that Diluted FFO is useful to investors because it is the numerator used to compute Diluted FFO per share, discussed below.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

37



Corporate Office Properties Trust
Definitions

 
Diluted FFO available to common share and common unit holders, as adjusted for comparability (“Diluted FFO, as adjusted for comparability”)
Defined as Diluted FFO or FFO adjusted to exclude: operating property acquisition costs; gain or loss on early extinguishment of debt; FFO associated with properties that secured non-recourse debt on which we defaulted and, subsequently, extinguished via conveyance of such properties (including property NOI, interest expense and gains on debt extinguishment); loss on interest rate derivatives; demolition costs on redevelopment and nonrecurring improvements; executive transition costs, accounting charges for original issuance costs associated with redeemed preferred shares; allocations of FFO to holders of noncontrolling interests resulting from capital events; and certain other expenses that we believe are not closely correlated with our operating performance.  Diluted FFO, as adjusted for comparability also includes adjustments to Diluted FFO for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe this to be a useful supplemental measure alongside Diluted FFO as it excludes gains and losses from certain investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. The adjustment for FFO associated with properties securing non-recourse debt on which we defaulted pertains to the periods subsequent to our default on the loan’s payment terms, which was the result of our decision to not support payments on the loan since the estimated fair value of the properties was less than the loan balance. While we continued as the legal owner of the properties during this period, all cash flows produced by them went directly to the lender and we did not fund any debt service shortfalls, which included incremental additional interest under the default rate. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.
 
Diluted FFO per share 
Diluted FFO per share is (1) Diluted FFO divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged.  The computation of Diluted FFO per share assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase Diluted FFO per share in a given period.  We believe that Diluted FFO per share is useful to investors because it provides investors with a further context for evaluating our FFO results in the same manner that investors use earnings per share (“EPS”) in evaluating net income available to common shareholders.  We believe that diluted EPS is the most directly comparable GAAP measure to this non-GAAP measure.
 
Diluted FFO per share, as adjusted for comparability 
Defined as (1) Diluted FFO available to common share and common unit holders, as adjusted for comparability divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged.  The computation of this measure assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase the per share measure in a given period.  We believe this to be a useful supplemental measure alongside Diluted FFO per share as it excludes gains and losses from investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. We believe that diluted EPS is the most directly comparable GAAP measure to this non-GAAP measure.
 
Earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”) 
Defined as net income adjusted for the effects of interest expense, depreciation and amortization, gains on sales and impairment losses of real estate and income taxes. EBITDAre also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. While EBITDA (earnings before interest, taxes, depreciation and amortization) is a universally-defined supplemental measure, EBITDAre incorporates additional adjustments for gains and losses from investing activities related to our investments in operating properties. We believe that EBITDAre is a useful supplemental measure for assessing our un-levered performance. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.


38



Corporate Office Properties Trust
Definitions

Funds from operations (“FFO” or “FFO per Nareit”)
Defined as net income computed using GAAP, excluding gains on sales and impairment losses of real estate (net of associated income tax) and real estate-related depreciation and amortization. FFO also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that we use the National Association of Real Estate Investment Trust’s (“Nareit”) definition of FFO, although others may interpret the definition differently and, accordingly, our presentation of FFO may differ from those of other REITs.  We believe that FFO is useful to management and investors as a supplemental measure of operating performance because, by excluding gains on sales and impairment losses of real estate (net of associated income tax) and real estate-related depreciation and amortization, FFO can help one compare our operating performance between periods.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Gross debt
Defined as total consolidated outstanding debt, which is debt reported per our balance sheet adjusted to exclude net discounts and premiums and deferred financing costs, as further adjusted to include outstanding debt of unconsolidated real estate JVs that were allocable to our ownership interest in the JVs.

In-place adjusted EBITDA
Defined as Adjusted EBITDA, as further adjusted for: (1) the removal of NOI pertaining to properties in the quarterly periods in which such properties were disposed or removed from service; (2) the addition of pro forma adjustments to NOI for (a) properties acquired or placed in service subsequent to the commencement of a quarter made in order to reflect a full quarter of ownership/operations and (b) significant mid-quarter occupancy changes associated with properties recently placed in service with no occupancy; and (3) certain adjustments to deferred rental revenue associated with changes in our assessment of collectability that we believe are not closely correlated with our operating performance. The measure also includes adjustments to Adjusted EBITDA for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that in-place adjusted EBITDA is a useful supplemental measure of performance for assessing our un-levered performance, as further adjusted for changes in operating properties subsequent to the commencement of a quarter.  We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Net debt
Defined as Gross debt (total outstanding debt reported per our balance sheet as adjusted to exclude net discounts and premiums and deferred financing costs), as adjusted to subtract cash and cash equivalents as of the end of the period and debt in default that was extinguished via conveyance of properties. The measure also includes adjustments to Gross debt for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs.

Net debt plus preferred equity
Defined as Net debt plus the total liquidation preference of our outstanding preferred equity.

Net debt to Adjusted book and Net debt plus preferred equity to Adjusted book
These measures divide either Net debt or Net debt plus preferred equity (defined above) by Adjusted book (defined above).

Net debt to in-place adjusted EBITDA ratio and Net debt plus preferred equity to in-place adjusted EBITDA ratio
Defined as Net debt or Net debt plus preferred equity (as defined above) divided by in-place adjusted EBITDA (defined above) for the three month period that is annualized by multiplying by four.


39



Corporate Office Properties Trust
Definitions

Net operating income from real estate operations (“NOI”)
NOI, which is our segment performance measure, includes: consolidated real estate revenues; consolidated property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate JVs that are allocable to COPT’s ownership interest in the JVs. We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core real estate operations that is unaffected by depreciation, amortization, financing and general, administrative and leasing expenses; we believe this measure is particularly useful in evaluating the performance of geographic segments, Same Properties groupings and individual properties. 

NOI debt service coverage ratio and Adjusted EBITDA debt service coverage ratio 
These measures divide either NOI from real estate operations or Adjusted EBITDA by the sum of interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains or losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties) and scheduled principal amortization on mortgage loans.
 
NOI fixed charge coverage ratio and Adjusted EBITDA fixed charge coverage ratio 
These measures divide either NOI from real estate operations or Adjusted EBITDA by the sum of (1) interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains or losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties), (2) scheduled principal amortization on mortgage loans, (3) capitalized interest, (4) dividends on preferred shares and (5) distributions on preferred units in the Operating Partnership not owned by us.
 
NOI interest coverage ratio and Adjusted EBITDA interest coverage ratio 
These measures divide either NOI from real estate operations or Adjusted EBITDA by interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains on losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties).

Payout ratios based on: Diluted FFO; Diluted FFO, as adjusted for comparability; and Diluted AFFO 
These payout ratios are defined as (1) the sum of dividends on unrestricted common shares and distributions to holders of interests in the Operating Partnership (excluding unvested share-based compensation awards) and dividends on convertible preferred shares when such distributions and dividends are included in Diluted FFO divided by (2) the respective non-GAAP measures on which the payout ratios are based.

Replacement capital expenditures 
Replacement capital expenditures are defined as tenant improvements and incentives, building improvements and leasing costs incurred during the period for operating properties that are not (1) items contemplated prior to the acquisition of a property, (2) improvements associated with the expansion of a building or its improvements, (3) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class B office), (4) capital improvements that represent the addition of something new to the property rather than the replacement of something (for example, the addition of a new heating and air conditioning unit that is not replacing one that was previously there) or (5) replacements of significant components of a building after the building has reached the end of its original useful life. Replacement capital expenditures excludes expenditures of operating properties included in disposition plans during the period that were already sold or are held for future disposition. For cash tenant incentives not due to the tenant for a period exceeding three months past the date on which such incentives were incurred, we recognize such incentives as replacement capital expenditures in the periods such incentives are due to the tenant. Replacement capital expenditures, which is included in the computation of Diluted AFFO, is intended to represent non-transformative capital expenditures of existing properties held for long-term investment. We believe that the excluded expenditures are more closely associated with our investing activities than the performance of our operating portfolio.


40



Corporate Office Properties Trust
Definitions

Same Properties NOI and Same Properties cash NOI
Defined as NOI, or Cash NOI, from real estate operations of Same Properties.  We believe that these are important supplemental measures of operating performance of Same Properties for the same reasons discussed above for NOI from real estate operations and Cash NOI.

Other Definitions
 
Acquisition Costs — Transaction costs expensed in connection with executed or anticipated acquisitions of operating properties.
 
Annualized Rental Revenue — The monthly contractual base rent as of the reporting date multiplied by 12, plus the estimated annualized expense reimbursements under existing leases for occupied space. With regard to properties owned through unconsolidated real estate JVs, we include the portion of Annualized Rental Revenue allocable to COPT’s ownership interest.

Average escalations — Leasing statistic used to report average increase in rental rates over lease terms for leases with a term of greater than one-year.
 
Development Properties — Properties under, or contractually committed for, development.

Core Portfolio — Represents Defense/IT Locations and Regional Office properties.

Defense/IT Locations — Represents properties in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and IT related activities servicing what we believe are growing, durable, priority missions.

First Generation Space — Newly-developed or redeveloped space that has never been occupied.
 
Operational Space — The portion of a property in operations (excludes portion under development or redevelopment).

Redevelopment Properties — Properties previously in operations on which activities to substantially renovate such properties were underway or approved.

Regional Office Properties — Includes office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics.

Same Properties — Operating office and data center shell properties stably owned and 100% operational since at least 1/1/19.
 
Second Generation Space — Space leased that has been previously occupied.
 
Total Portfolio — Operating properties, including ones owned through unconsolidated real estate JVs.

41


logo2dtd021015a01a16.jpg
6711 Columbia Gateway Drive, Suite 300
Columbia, Maryland 21046
Telephone 443-285-5400
Facsimile 443-285-7650
www.copt.com
NYSE: OFC
 
 
 
NEWS RELEASE
 
 
 
FOR IMMEDIATE RELEASE
IR Contacts:
 
 
Stephanie Krewson-Kelly
Michelle Layne
 
443-285-5453
443-285-5452
 
stephanie.kelly@copt.com
michelle.layne@copt.com

COPT Reports Strong Second Quarter 2020 Results
__________________________________________________________

2Q20 Results Outperform Expectations

FFO per share of $0.51 in 2Q Exceeded High-End of Guidance by $0.01

Solid Same-Property Cash NOI Growth of 1.7% in 2Q Outperformed Guidance

Core Portfolio 93.6% Occupied & 94.7% Leased

412,000 SF of 97.5% Leased Developments Placed in Service during 2Q; 642,000 SF of 99% Leased Developments Placed in Service During First Half of 2020
__________________________________________________________

Solid Leasing Volumes

Total Leasing in 2Q of 959,000 SF included 276,000 SF of Development Leasing and
70,000 SF of Vacancy Leasing

Continued Strong Tenant Retention of 76% in 2Q; 81% for First Half of 2020

1.9 Million SF Under Development are 84% Leased

Executed a New, 3.1MW Lease with Defense Contractor at DC-6
__________________________________________________________

COVID-19 Impact on Operations Continues to be Minimal

Maintaining Mid-Point of Full-Year Guidance for FFO per Share, As Adjusted for Comparability, of $2.07

Monthly Rent Collections, Net of Rent Accommodations, Continue to Exceed 99%
__________________________________________________________

COLUMBIA, MD (BUSINESS WIRE) July 30, 2020 - Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the second quarter ended June 30, 2020.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “The Company delivered strong second quarter results, with FFO per share exceeding the high-end of our guidance range by 1-cent. Cost savings and the timing of repair and maintenance costs more than offset the reserves we took on tenants impacted by the shutdowns and drove same-property cash NOI growth of 1.7%.” He continued, “Our operations and ability to execute development and renewal leasing continue to be minimally impacted by the pandemic due to the high concentration of U.S. Government national security activity in our portfolio.  Accordingly, we affirm the $2.07 mid-point of our updated 2020 guidance for FFO per share, as adjusted for comparability.”

i



Financial Highlights

2nd Quarter Financial Results:
Diluted earnings per share (“EPS”) was $0.21 for the quarter ended June 30, 2020 as compared to $0.95 for the second quarter of 2019.

Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition and as adjusted for comparability, was $0.51 for the second quarter of 2020 as compared to $0.52 for second quarter 2019 results.

Operating Performance Highlights

Operating Portfolio Summary:
At June 30, 2020, the Company’s core portfolio of 172 operating office and data center shell properties was 93.6% occupied and 94.7% leased.

During the quarter, the Company placed into service 412,000 square feet that were 97.5% leased.

Same-Property Performance:
At June 30, 2020, COPT’s same-property portfolio of 152 buildings was 92.3% occupied and 93.5% leased.

For the quarter and six months ended June 30, 2020, the Company’s same-property cash NOI increased 1.7% and 3.3%, respectively, over the prior year’s comparable periods.

Leasing:
Total Square Feet Leased: For the quarter ended June 30, 2020, the Company leased 959,000 total square feet, including 613,000 square feet of renewals, 70,000 square feet of new leases on vacant space, and 276,000 square feet in development projects. For the six months ended June 30, 2020, the Company executed 1.6 million square feet of total leasing.

Renewal Rates: During the quarter and six months ended June 30, 2020, the Company respectively renewed 75.6% and 81.0% of total expiring square feet.

Cash Rent Spreads & Average Escalations on Renewing Leases: For the quarter and six months ended June 30, 2020, cash rents on renewed space decreased 3.2% and 2.0%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.4%.

Lease Terms: In the second quarter, lease terms averaged 5.2 years on renewing leases, 4.9 years on new leasing of vacant space, and 16.3 years on development leasing. For the first six months, lease terms averaged 5.1 years on renewing leases, 6.7 years on vacancy leasing, and 16.3 years on development leasing.

DC-6: At the Company’s wholesale data center, COPT executed a new, 3.1 megawatt lease with a defense contractor in April, increasing DC-6 to 90.6% leased.

Investment Activity Highlights

Development & Redevelopment Projects:
Development Pipeline: At July 7, 2020, the Company’s development pipeline consisted of 11 properties and expansions in three fully-operational properties totaling 1.9 million square feet that were 84% leased. These projects have a total estimated cost of $612.2 million, of which $379.1 million had been incurred as of June 30, 2020.

Balance Sheet and Capital Transaction Highlights

As of June 30, 2020, the Company’s net debt plus preferred equity to adjusted book ratio was 38.8% and its net debt plus preferred equity to in-place adjusted EBITDA ratio was 6.4x. For the quarter ended June 30, 2020, the Company’s adjusted EBITDA fixed charge coverage ratio was 3.8x.

As of June 30, 2020, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.66% with a weighted average maturity of 3.0 years; additionally, 88.5% of the Company’s debt was subject to fixed interest rates.


ii


2020 Guidance
Management is increasing its prior full-year guidance ranges of $0.65-$0.69 for EPS to a new range of $0.76-$0.80. Management is maintaining its full-year guidance ranges for FFOPS per Nareit and FFOPS, as adjusted for comparability, at $1.95-$1.99 and $2.05-$2.09, respectively.

Management also is establishing guidance for EPS and FFOPS, per Nareit and as adjusted for comparability, for the third quarter ending September 30, 2020 at ranges of $0.16-$0.18 and $0.51-$0.53, respectively; and for the fourth quarter ending December 31, 2020, management is establishing guidance ranges for EPS and FFOPS, per Nareit and as adjusted for comparability, at $0.17-$0.19 and $0.52-$0.54, respectively. Reconciliations of projected diluted EPS to projected FFOPS are as follows:

Reconciliation of EPS to FFOPS, per Nareit and As Adjusted for Comparability
 
Quarter ending
 
Quarter ending
 
Year ending
 
September 30, 2020
 
December 31, 2020
 
December 31, 2020
 
 
Low
 
High
 
Low
 
High
 
Low
 
High
EPS
 
$
0.16

 
$
0.18

 
$
0.17

 
$
0.19

 
$
0.76

 
$
0.80

Real estate-related depreciation and amortization
 
0.35

 
0.35

 
0.35

 
0.35

 
1.29

 
1.29

FFO allocation to other noncontrolling interests resulting from capital event
 

 

 

 

 
(0.10
)
 
(0.10
)
FFOPS, Nareit definition
 
0.51

 
0.53

 
0.52

 
0.54

 
1.95

 
1.99

FFO allocation to other noncontrolling interests resulting from capital event
 

 

 

 

 
0.10

 
0.10

FFOPS, as adjusted for comparability
 
$
0.51

 
$
0.53

 
$
0.52

 
$
0.54

 
$
2.05

 
$
2.09

 
 
 
 
 
 
 
 
 
 
 
 
 

Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its second quarter 2020 conference call, the details of which are provided below. The accompanying slide presentation can be viewed on and downloaded from the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

Conference Call Information
Management will discuss second quarter 2020 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date:            Friday, July 31, 2020
Time:                  12:00 p.m. Eastern Time
Telephone Number: (within the U.S.)     855-463-9057
Telephone Number: (outside the U.S.)    661-378-9894
Passcode:                  4686936

The conference call will also be available via live webcast in the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

Replay Information
A replay of the conference call will be immediately available via webcast on the Investors website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Friday, July 31, through 3:00 p.m. Eastern Time on Friday, August 14. To access the replay within the United States, please call 855-859-2056; to access it from outside the United States, please call 404-537-3406. In either case, use passcode 4686936.

Definitions
For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.

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 it believes are growing, durable, priority missions (“Defense/IT Locations”). The Company also owns a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office Properties”). As of June 30, 2020, the Company derived 88% of its core portfolio annualized rental revenue from Defense/IT Locations and 12% from its Regional Office Properties. As of the same date and including 15 properties owned

iii


through unconsolidated joint ventures, COPT’s core portfolio of 172 office and data center shell properties encompassed 19.6 million square feet and was 94.7% leased; the Company also owned one wholesale data center with a critical load of 19.25 megawatts that was 90.6% 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, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.





iv



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(in thousands, except per share data)


 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Revenues
 

 
 

 
 
 
 
Revenues from real estate operations
$
132,538

 
$
132,771

 
$
264,654

 
$
264,761

Construction contract and other service revenues
12,236

 
42,299

 
25,917

 
59,249

Total revenues
144,774

 
175,070

 
290,571

 
324,010

Operating expenses
 

 
 

 
 
 
 
Property operating expenses
50,204

 
47,886

 
100,203

 
97,331

Depreciation and amortization associated with real estate operations
33,612

 
34,802

 
66,208

 
69,598

Construction contract and other service expenses
11,711

 
41,002

 
24,832

 
57,328

General and administrative expenses
6,511

 
7,650

 
11,814

 
14,369

Leasing expenses
1,647

 
1,736

 
3,830

 
3,768

Business development expenses and land carry costs
1,262

 
870

 
2,380

 
1,983

Total operating expenses
104,947

 
133,946

 
209,267

 
244,377

Interest expense
(16,797
)
 
(18,475
)
 
(33,637
)
 
(37,149
)
Interest and other income
2,282

 
1,849

 
3,487

 
4,135

Credit loss expense
(615
)
 

 
(1,304
)
 

Gain on sales of real estate

 
84,469

 
5

 
84,469

Income before equity in income of unconsolidated entities and income taxes
24,697

 
108,967

 
49,855

 
131,088

Equity in income of unconsolidated entities
454

 
420

 
895

 
811

Income tax (expense) benefit
(30
)
 
176

 
(79
)
 
(18
)
Net income
25,121

 
109,563

 
50,671

 
131,881

Net income attributable to noncontrolling interests:
 

 
 

 
 
 
 
Common units in the Operating Partnership (“OP”)
(284
)
 
(1,339
)
 
(571
)
 
(1,596
)
Preferred units in the OP
(77
)
 
(165
)
 
(154
)
 
(330
)
Other consolidated entities
(1,263
)
 
(1,268
)
 
(2,395
)
 
(2,305
)
Net income attributable to COPT common shareholders
$
23,497

 
$
106,791

 
$
47,551

 
$
127,650

 
 
 
 
 
 
 
 
Earnings per share (“EPS”) computation:
 

 
 

 
 
 
 
Numerator for diluted EPS:
 

 
 

 
 
 
 
Net income attributable to COPT common shareholders
$
23,497

 
$
106,791

 
$
47,551

 
$
127,650

Distributions on dilutive convertible preferred units

 
165

 

 

Redeemable noncontrolling interests

 
902

 

 
66

Common units in the OP

 

 

 
1,515

Amount allocable to share-based compensation awards
(109
)
 
(346
)
 
(206
)
 
(391
)
Numerator for diluted EPS
$
23,388

 
$
107,512

 
$
47,345

 
$
128,840

Denominator:
 

 
 

 
 
 
 
Weighted average common shares - basic
111,800

 
111,557

 
111,762

 
110,759

Dilutive convertible preferred units

 
176

 

 

Dilutive effect of redeemable noncontrolling interests

 
1,062

 

 
130

Common units in the OP

 

 

 
1,329

Dilutive effect of share-based compensation awards
321

 
310

 
280

 
289

Weighted average common shares - diluted
112,121

 
113,105

 
112,042

 
112,507

Diluted EPS
$
0.21

 
$
0.95

 
$
0.42

 
$
1.15


v



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(in thousands, except per share data)

 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Net income
$
25,121

 
$
109,563

 
$
50,671

 
$
131,881

Real estate-related depreciation and amortization
33,612

 
34,802

 
66,208

 
69,598

Gain on sales of real estate

 
(84,469
)
 
(5
)
 
(84,469
)
Depreciation and amortization on unconsolidated real estate JVs
818

 
566

 
1,636

 
1,132

Funds from operations (“FFO”)
59,551

 
60,462

 
118,510

 
118,142

Noncontrolling interests - preferred units in the OP
(77
)
 
(165
)
 
(154
)
 
(330
)
FFO allocable to other noncontrolling interests
(1,525
)
 
(1,188
)
 
(13,540
)
 
(2,159
)
Basic FFO allocable to share-based compensation awards
(254
)
 
(229
)
 
(447
)
 
(414
)
Basic FFO available to common share and common unit holders (“Basic FFO”)
57,695

 
58,880

 
104,369

 
115,239

Dilutive preferred units in the OP
77

 

 
154

 

Redeemable noncontrolling interests
37

 
33

 
69

 
942

Diluted FFO available to common share and common unit holders (“Diluted FFO”)
57,809

 
58,913

 
104,592

 
116,181

Demolition costs on redevelopment and nonrecurring improvements
9

 

 
52

 
44

Executive transition costs

 

 

 
4

Non-comparable professional and legal expenses

 
311

 

 
311

FFO allocation to other noncontrolling interests resulting from capital event

 

 
11,090

 

Diluted FFO comparability adjustments allocable to share-based compensation awards
(1
)
 
(2
)
 
(51
)
 
(2
)
Diluted FFO available to common share and common unit holders, as adjusted for comparability
57,817

 
59,222

 
115,683

 
116,538

Straight line rent adjustments and lease incentive amortization
2,523

 
1,051

 
1,671

 
(616
)
Amortization of intangibles included in net operating income
(73
)
 
(50
)
 
(147
)
 
12

Share-based compensation, net of amounts capitalized
1,638

 
1,623

 
3,027

 
3,296

Amortization of deferred financing costs
642

 
529

 
1,217

 
1,057

Amortization of net debt discounts, net of amounts capitalized
390

 
374

 
776

 
744

Accum. other comprehensive loss on derivatives amortized to expense

 
33

 

 
67

Replacement capital expenditures
(16,132
)
 
(16,002
)
 
(33,886
)
 
(27,175
)
Other diluted AFFO adjustments associated with real estate JVs
(115
)
 
181

 
(156
)
 
214

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)
$
46,690

 
$
46,961

 
$
88,185

 
$
94,137

Diluted FFO per share
$
0.51

 
$
0.52

 
$
0.92

 
$
1.02

Diluted FFO per share, as adjusted for comparability
$
0.51

 
$
0.52

 
$
1.02

 
$
1.03

Dividends/distributions per common share/unit
$
0.275

 
$
0.275

 
$
0.550

 
$
0.550



vi



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)

 
June 30,
2020
 
December 31,
2019
Balance Sheet Data
 

 
 

Properties, net of accumulated depreciation
$
3,513,099

 
$
3,340,886

Total assets
4,011,325

 
3,854,453

Debt, per balance sheet
2,012,019

 
1,831,139

Total liabilities
2,331,253

 
2,105,777

Redeemable noncontrolling interests
23,148

 
29,431

Equity
1,656,924

 
1,719,245

Net debt to adjusted book
38.6
%
 
36.8
%
 
 
 
 
Core Portfolio Data (as of period end) (1)
 

 
 

Number of operating properties
172

 
168

Total operational square feet (in thousands)
19,624

 
19,016

% Occupied
93.6
%
 
93.1
%
% Leased
94.7
%
 
94.6
%
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
2020
 
2019
 
2020
 
2019
Payout ratios
 

 
 

 
 

 
 

Diluted FFO
53.9
%
 
52.7
%
 
59.6
%
 
53.5
%
Diluted FFO, as adjusted for comparability
53.9
%
 
52.4
%
 
53.9
%
 
53.3
%
Diluted AFFO
66.8
%
 
66.1
%
 
70.7
%
 
66.0
%
Adjusted EBITDA fixed charge coverage ratio
3.8
x
 
3.7
x
 
3.8
x
 
3.7
x
Net debt to in-place adjusted EBITDA ratio (2)
6.4
x
 
5.7
x
 
N/A

 
N/A

Net debt plus preferred equity to in-place adjusted EBITDA ratio (3)
6.4
x
 
5.7
x
 
N/A

 
N/A

 
 
 
 
 
 
 
 
Reconciliation of denominators for per share measures
 
 

 
 
 
 
Denominator for diluted EPS
112,121

 
113,105

 
112,042

 
112,507

Weighted average common units
1,237

 
1,327

 
1,232

 

Redeemable noncontrolling interests
157

 
(926
)
 
133

 
907

Dilutive convertible preferred units
176

 
(176
)
 
176

 

Denominator for diluted FFO per share and as adjusted for comparability
113,691

 
113,330

 
113,583

 
113,414


(1)
Represents Defense/IT Locations and Regional Office properties.
(2)
Represents net debt as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).
(3)
Represents net debt plus the total liquidation preference of preferred equity as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).


vii



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)

 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Reconciliation of common share dividends to dividends and distributions for payout ratios
 

 
 

 
 
 
 
Common share dividends - unrestricted shares and deferred shares
$
30,761

 
$
30,693

 
$
61,515

 
$
61,378

Common unit distributions - unrestricted units
341

 
365

 
680

 
730

Distributions on dilutive preferred units
77

 

 
154

 

Dividends and distributions for payout ratios
$
31,179

 
$
31,058

 
$
62,349

 
$
62,108

 
 
 
 
 
 
 
 
Reconciliation of GAAP net income to earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”), adjusted EBITDA and in-place adjusted EBITDA
 

 
 

 
 

 
 

Net income
$
25,121

 
$
109,563

 
$
50,671

 
$
131,881

Interest expense
16,797

 
18,475

 
33,637

 
37,149

Income tax expense (benefit)
30

 
(176
)
 
79

 
18

Depreciation of furniture, fixtures and equipment
448

 
496

 
867

 
929

Real estate-related depreciation and amortization
33,612

 
34,802

 
66,208

 
69,598

Gain on sales of real estate

 
(84,469
)
 
(5
)
 
(84,469
)
Adjustments from unconsolidated real estate JVs
1,270

 
830

 
2,540

 
1,657

EBITDAre
77,278

 
79,521

 
153,997

 
156,763

Net loss (gain) on other investments
2

 
(12
)
 
2

 
(400
)
Credit loss expense
615

 

 
1,304

 

Business development expenses
678

 
460

 
1,216

 
1,008

Non-comparable professional and legal expenses

 
311

 

 
311

Demolition costs on redevelopment and nonrecurring improvements
9

 

 
52

 
44

Executive transition costs

 

 

 
4

Adjusted EBITDA
78,582

 
80,280

 
$
156,571

 
$
157,730

Proforma net operating income adjustment for property changes within period
959

 
(1,981
)
 
 
 
 
Change in collectability of deferred rental revenue
1,007

 

 
 
 
 
In-place adjusted EBITDA
$
80,548

 
$
78,299

 

 

 
 
 
 
 
 
 
 
Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA
 

 
 

 
 

 
 

Interest expense
$
16,797

 
$
18,475

 
$
33,637

 
$
37,149

Less: Amortization of deferred financing costs
(642
)
 
(529
)
 
(1,217
)
 
(1,057
)
Less: Amortization of net debt discounts, net of amounts capitalized
(390
)
 
(374
)
 
(776
)
 
(744
)
Less: Accum. other comprehensive loss on derivatives amortized to expense

 
(33
)
 

 
(67
)
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs
442

 
258

 
883

 
513

Scheduled principal amortization
1,023

 
1,095

 
2,044

 
2,193

Capitalized interest
3,174

 
2,388

 
6,532

 
4,392

Preferred unit distributions
77

 
165

 
154

 
330

Denominator for fixed charge coverage-Adjusted EBITDA
$
20,481

 
$
21,445

 
$
41,257

 
$
42,709


viii



Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)

 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures
 
 
 
 
 
 
 
Tenant improvements and incentives
$
8,870

 
$
8,568

 
$
20,227

 
$
15,720

Building improvements
13,662

 
4,333

 
16,137

 
8,864

Leasing costs
2,222

 
2,761

 
4,984

 
5,943

Net additions to tenant improvements and incentives
329

 
1,759

 
2,355

 
290

Excluded building improvements and leasing costs
(8,951
)
 
(1,419
)
 
(9,817
)
 
(3,642
)
Replacement capital expenditures
$
16,132

 
$
16,002

 
$
33,886

 
$
27,175

 
 
 
 
 
 
 
 
Same Properties cash NOI
$
75,837

 
$
74,584

 
$
150,799

 
$
145,992

Straight line rent adjustments and lease incentive amortization
(1,513
)
 
(701
)
 
(2,080
)
 
(15
)
Amortization of acquired above- and below-market rents
97

 
73

 
193

 
33

Amortization of below-market cost arrangements
(23
)
 
(23
)
 
(46
)
 
(46
)
Lease termination fees, gross
358

 
285

 
443

 
806

Tenant funded landlord assets and lease incentives
(147
)
 
530

 
222

 
926

Cash NOI adjustments in unconsolidated real estate JV
35

 
46

 
63

 
105

Same Properties NOI
$
74,644

 
$
74,794

 
$
149,594

 
$
147,801

 
June 30,
2020
 
December 31,
2019
Reconciliation of total assets to adjusted book
 

 
 

Total assets
$
4,011,325

 
$
3,854,453

Accumulated depreciation
1,065,094

 
1,007,120

Accumulated amortization of real estate intangibles and deferred leasing costs
216,267

 
212,547

COPT’s share of liabilities of unconsolidated real estate JVs
50,984

 
50,734

COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs
9,815

 
8,164

Less: Property - operating lease liabilities
(20,796
)
 
(17,317
)
Less: Property - finance lease liabilities
(688
)
 
(702
)
Less: Cash and cash equivalents
(21,596
)
 
(14,733
)
Less: COPT’s share of cash of unconsolidated real estate JVs
(627
)
 
(498
)
Adjusted book
$
5,309,778

 
$
5,099,768

 
 
 
 
Reconciliation of debt outstanding to net debt and net debt plus preferred equity
 
 
 
Debt outstanding (excluding net debt discounts and deferred financing costs)
$
2,073,351

 
$
1,893,057

Less: Cash and cash equivalents
(21,596
)
 
(14,733
)
Less: COPT’s share of cash of unconsolidated real estate JVs
(627
)
 
(498
)
Net debt
$
2,051,128

 
$
1,877,826

Preferred equity
8,800

 
8,800

Net debt plus preferred equity
$
2,059,928

 
$
1,886,626


ix