Exhibit 99.1

Item 6.                          Selected Financial Data

The following table sets forth summary financial data as of and for each of the years ended December 31, 2001 through 2005. The table illustrates the significant growth our Company experienced over the periods reported. Most of this growth, particularly pertaining to revenues, operating income and total assets, was attributable to our addition of properties through acquisition and development activities. We financed most of the acquisition and development activities by incurring debt and issuing preferred and common equity, as indicated by the growth in our interest expense, preferred share dividends and weighted average common shares outstanding. The growth in our general and administrative expenses reflects, in large part, the growth in management resources required to support the increased size of our portfolio. Since this information is only a summary, you should refer to our Consolidated Financial Statements and notes thereto and the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

Corporate Office Properties Trust and Subsidiaries
(Dollar and share information in thousands, except ratios and per share data)

 

2005

 

2004

 

2003

 

2002

 

2001

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

Revenues from real estate operations(1)

 

$

244,790

 

$

206,372

 

$

166,152

 

$

141,451

 

$

112,951

 

Construction contract and other service operations revenues

 

79,234

 

28,903

 

31,740

 

4,704

 

4,901

 

Total revenues

 

324,024

 

235,275

 

197,892

 

146,155

 

117,852

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Property operating(1)

 

73,213

 

59,836

 

48,364

 

40,914

 

32,579

 

Depreciation and other amortization associated with real estate operations(1)

 

61,572

 

49,761

 

35,068

 

28,884

 

18,629

 

Construction contract and other service operations expenses

 

77,287

 

26,996

 

30,933

 

5,008

 

5,391

 

General and administrative expenses

 

13,534

 

10,938

 

7,893

 

6,697

 

5,289

 

Total operating expenses

 

225,606

 

147,531

 

122,258

 

81,503

 

61,888

 

Operating income

 

98,418

 

87,744

 

75,634

 

64,652

 

55,964

 

Interest expense and amortization of deferred financing costs(1)

 

(57,537

)

(44,785

)

(41,781

)

(39,348

)

(32,064

)

Income from continuing operations before equity in loss of unconsolidated entities, income taxes and minority interests

 

40,881

 

42,959

 

33,853

 

25,304

 

23,900

 

Equity in loss of unconsolidated entities

 

(88

)

(88

)

(98

)

(402

)

(84

)

Income tax (expense) benefit

 

(668

)

(795

)

169

 

347

 

409

 

Income from continuing operations before minority interests

 

40,125

 

42,076

 

33,924

 

25,249

 

24,225

 

Minority interests in income from continuing operations(1)

 

(5,401

)

(5,664

)

(6,399

)

(6,167

)

(7,391

)

Income from continuing operations

 

34,724

 

36,412

 

27,525

 

19,082

 

16,834

 

Income from discontinued operations, net of minority interests(1)(2)

 

4,039

 

733

 

3,016

 

2,443

 

2,187

 

Gain (loss) on sales of real estate, net(1)(3)

 

268

 

(113

)

336

 

1,776

 

1,075

 

Cumulative effect of accounting change, net of minority interests(4)

 

 

 

 

 

(174

)

Net income

 

39,031

 

37,032

 

30,877

 

23,301

 

19,922

 

Preferred share dividends

 

(14,615

)

(16,329

)

(12,003

)

(10,134

)

(6,857

)

Repurchase of preferred units in excess of recorded book value(5)

 

 

 

(11,224

)

 

 

Issuance costs associated with redeemed preferred shares(6)

 

 

(1,813

)

 

 

 

Net income available to common shareholders

 

$

24,416

 

$

18,890

 

$

7,650

 

$

13,167

 

$

13,065

 

Basic earnings per common share

 

 

 

 

 

 

 

 

 

 

 

Income before discontinued operations and cumulative effect of accounting change

 

$

0.54

 

$

0.55

 

$

0.17

 

$

0.48

 

$

0.55

 

Net income available to common shareholders

 

$

0.65

 

$

0.57

 

$

0.29

 

$

0.59

 

$

0.65

 

Diluted earnings per common share

 

 

 

 

 

 

 

 

 

 

 

Income before discontinued operations and cumulative effect of accounting change

 

$

0.52

 

$

0.52

 

$

0.17

 

$

0.46

 

$

0.53

 

Net income available to common shareholders

 

$

0.63

 

$

0.54

 

$

0.27

 

$

0.56

 

$

0.63

 

Weighted average common shares outstanding—basic

 

37,371

 

33,173

 

26,659

 

22,472

 

20,099

 

Weighted average common shares outstanding—diluted

 

38,997

 

34,982

 

28,021

 

24,547

 

21,623

 

 

1




 

 

2005

 

2004

 

2003

 

2002

 

2001

 

Balance Sheet Data (as of year end):

 

 

 

 

 

 

 

 

 

 

 

Investment in real estate

 

$

1,887,867

 

$

1,544,501

 

$

1,189,258

 

$

1,042,955

 

$

923,700

 

Total assets

 

$

2,130,376

 

$

1,732,026

 

$

1,332,076

 

$

1,138,721

 

$

994,896

 

Mortgage and other loans payable

 

$

1,348,351

 

$

1,022,688

 

$

738,698

 

$

705,056

 

$

573,327

 

Total liabilities

 

$

1,442,036

 

$

1,111,224

 

$

801,899

 

$

749,338

 

$

626,193

 

Minority interests

 

$

105,827

 

$

98,878

 

$

79,796

 

$

100,886

 

$

104,782

 

Shareholders’ equity

 

$

582,513

 

$

521,924

 

$

450,381

 

$

288,497

 

$

263,921

 

Other Financial Data (for the year ended):

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

$

95,944

 

$

84,494

 

$

67,783

 

$

62,242

 

$

50,875

 

Investing activities

 

$

(419,093

)

$

(263,792

)

$

(172,949

)

$

(128,571

)

$

(155,741

)

Financing activities

 

$

320,112

 

$

183,638

 

$

108,656

 

$

65,680

 

$

106,525

 

Numerator for diluted EPS

 

$

24,416

 

$

18,911

 

$

7,650

 

$

13,711

 

$

13,573

 

Diluted funds from operations(7)

 

$

88,801

 

$

76,248

 

$

61,268

 

$

52,854

 

$

43,001

 

Diluted funds from operations per share(7)

 

$

1.86

 

$

1.74

 

$

1.56

 

$

1.44

 

$

1.28

 

Cash dividends declared per common share

 

$

1.07

 

$

0.98

 

$

0.91

 

$

0.86

 

$

0.82

 

Property Data (as of year end):

 

 

 

 

 

 

 

 

 

 

 

Number of properties owned(1)(8)

 

165

 

143

 

118

 

110

 

96

 

Total rentable square feet owned (in thousands)(1)(8)

 

13,708

 

11,765

 

9,876

 

8,942

 

7,666

 

 


(1)             Certain prior period amounts have been reclassified to conform with the current presentation. These reclassifications did not affect consolidated net income or shareholders’ equity.

(2)             Reflects income derived from one operating real estate property that we sold in 2003, three operating real estate properties that we sold in 2005 and four properties reclassified to discontinued operations during the six months ended June 30, 2006 (see Note 18 to our Consolidated Financial Statements).

(3)             Reflects gain (loss) from sales of properties and unconsolidated real estate joint ventures not associated with discontinued operations.

(4)             Reflects loss recognized upon our adoption of Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.”

(5)             Reflects a decrease to net income available to common shareholders representing the excess of the repurchase price of the Series C Preferred Units in our Operating Partnership over the sum of the recorded book value of the units and the accrued and unpaid return to the unitholder.

(6)             Reflects a decrease to net income available to common shareholders pertaining to the original issuance costs of the Series B Preferred Shares of beneficial interest that was recognized upon redemption of the shares.

(7)             For definitions of diluted funds from operations per share and diluted funds from operations and reconciliations of these measures to their comparable measures under generally accepted accounting principles, you should refer to the section entitled “Funds from Operations” within the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(8)             Amounts reported reflect only wholly owned properties.

2