Exhibit 99.1
 
 
Earnings Release & Supplemental Information — Unaudited
 
June 30, 2012
 
 
OVERVIEW:
Section I

 
INVESTING ACTIVITY:
Section IV

Earnings Release
i-viii

 
Dispositions and Acquisitions
22

Summary Description
1

 
Construction, Redevelopment, Wholesale Data Center, Land Held
 
Equity Research Coverage
2

 
& Pre-Construction Summary
23

Selected Financial Summary Data
3

 
Summary of Construction Projects
24

Selected Portfolio Data
4

 
Summary of Redevelopment Projects
25

 
 

 
Wholesale Data Center
26

FINANCIAL STATEMENTS:
Section II

 
Summary of Land Held and Pre-Construction
27

Quarterly Consolidated Balance Sheets
5

 
 
 

Consolidated Statements of FFO
6-7

 
CAPITALIZATION:
Section V

Consolidated Statements of Operations
8-9

 
Quarterly Common Equity Analysis
28

Consolidated Reconciliations of AFFO
10

 
Quarterly Preferred Equity and Total Market Capitalization Analysis
29

 
 

 
Dividend Analysis
30

PORTFOLIO INFORMATION:
Section III

 
Debt Analysis
31-32

Consolidated Office Properties by Region
11

 
Debt Maturity Schedule
33

NOI from Real Estate Operations and Occupancy by Property Grouping
12

 
Consolidated Joint Ventures
34

Real Estate Revenues & NOI from Real Estate Operations by Segment
13

 
Unconsolidated Joint Venture
35

Consolidated Office Occupancy Rates by Region by Quarter
14

 
 
 

Same Office Properties Average Occupancy Rates by Region
15

 
RECONCILIATIONS & DEFINITIONS:
Section VI

Same Office Property Real Estate Revenues & NOI by Region
16

 
Supplementary Reconciliations of Non-GAAP Measures
36-37

Unstabilized Office Properties
17

 
Definitions
38-42

Office Leasing for the Quarter Ended
18-19

 
 
 
Office Lease Expiration Analysis
20

 
 
 
Top 20 Office Tenants
21

 
 
 
 
Please refer to the section entitled “Definitions” for definitions of non-GAAP measures and other terms we use herein that may not be customary or commonly known.


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
Michelle Layne
 
VP, Investor Relations
Investor Relations Specialist
 
443-285-5453
443-285-5452
 
stephanie.krewson@copt.com
michelle.layne@copt.com
 
COPT REPORTS SECOND QUARTER 2012 RESULTS

COLUMBIA, MD July 26, 2012 - Corporate Office Properties Trust (COPT) (NYSE: OFC), an office real estate investment trust (REIT) that focuses primarily on serving the specialized requirements of U.S. Government and Defense Information Technology tenants, announced financial and operating results for the second quarter ended June 30, 2012.

"We have made significant progress toward achieving our portfolio-level, operational, and balance sheet objectives," stated Roger A. Waesche, Jr., President and Chief Executive Officer. "Year to date, we are ahead of plan on selling non-strategic properties, are on-plan with regard to leasing, and were pleased with the execution of our Series L Preferred stock offering in late June," he added.

Results:
Diluted earnings per share (EPS) was $0.09 for the quarter ended June 30, 2012 as compared to an EPS loss of ($0.42) in the second quarter of 2011. Diluted funds from operations per share (FFOPS), as adjusted for comparability, was $0.54 for the second quarter ended June 30, 2012, which represented a 5% decrease from the $0.57 reported for the second quarter of 2011. Adjustments for comparability encompass items such as acquisition costs, impairments and gains on non-operating properties, gains (losses) on early extinguishment of debt and derivative losses. Please refer to the reconciliation tables that appear later in this press release. Per NAREIT's definition, FFOPS for the second quarter of 2012 was $0.54 versus $0.44 reported in the second quarter of 2011.

Operating Performance:
Portfolio Summary - At June 30, 2012, the Company's consolidated portfolio of 228 operating office properties totaled 19.8 million square feet. The weighted average remaining lease term for the portfolio was 4.6 years and the average rental rate (including tenant reimbursements) was $27.13 per square foot. The Company's consolidated portfolio was 87% occupied and 89% leased as of June 30, 2012, up 40 basis points, respectively, from March 31, 2012 levels.

Same Office Performance - The Company's same office portfolio excludes properties identified for eventual disposal as part of the Company's Strategic Reallocation Plan. For the quarter ended June 30, 2012, COPT's same office portfolio represents 78% of the rentable square feet of the portfolio and consists of 164 properties. The Company's same office portfolio occupancy was 89.7% at the end of the second quarter of 2012, up 30 basis points from the end of the first quarter 2012.

Including and excluding gross lease termination fees, the Company's same office property cash NOI for the second quarter ended June 30, 2012 increased 5%, as compared to the second quarter ended 2011.

Leasing - COPT leased a total of 726,000 square feet during the quarter ended June 30, 2012, which included 94,000 square feet of development leasing. During this same period, the Company's renewal rate was 63.4%. For the quarter ended June 30, 2012, total rent on renewed space decreased 3.7% as measured from the straight-line rent in effect preceding the renewal date; on a cash basis, renewal rents decreased 8.1%.


i

Investment Activity:
Construction - At June 30, 2012, the Company had eight office properties totaling 988,000 square feet under construction for a total projected cost of $238.3 million, of which $156.2 million had been incurred. As of the same date, COPT had one property under redevelopment for an anticipated total cost of $21.4 million, of which $19.8 million had been spent.

Dispositions - In the second quarter of 2012, COPT sold three stabilized properties and adjacent land for $75.5 million. The stabilized buildings contained a total of 471,000 square feet and were 90% leased at the time of sale.

Capital Transactions:
In June, the Company issued $172.5 million dollars of Series L preferred shares with a 7.375% annual dividend. The Company used the proceeds to pay down its line of credit and, subsequent to the end of the quarter, announced its intent to redeem all $55 million of its outstanding Series G preferred shares, which pay an 8% annual dividend.

Balance Sheet and Financial Flexibility:
As of June 30, 2012, the Company had a total market capitalization of $4.4 billion, with $2.2 billion in debt outstanding, equating to a 50% debt-to-total market capitalization ratio. Also, the Company's weighted average interest rate was 4.3% for the quarter ended June 30, 2012 and 77% of the Company's debt was subject to fixed interest rates, including the effect of interest rate swaps.

For the second quarter 2012, the Company's adjusted EBITDA to interest expense coverage ratio was 3.15x, and the adjusted EBITDA fixed charge coverage ratio was 2.65x. Adjusting for construction in progress, the Company's adjusted debt-to-adjusted EBITDA ratio was 6.33x for the three months ended June 30, 2012.

2012 FFO Guidance:
Management is revising its previously issued guidance for 2012 FFOPS from $2.02 to $2.18 to $2.02 to $2.08, and is issuing third quarter 2012 FFOPS guidance of $0.47 to $0.50. A reconciliation of projected diluted EPS to projected FFOPS for the quarter ending September 30, 2012 and the year ending December 31, 2012 is provided, as follows:
 
Quarter Ending
 
Year Ending
 
September 30, 2012
 
December 31, 2012
 
Low
 
High
 
Low
 
High
FFOPS, as adjusted for comparability
$
0.47

 
$
0.50

 
$
2.02

 
$
2.08

Net gains on early extinguishment of debt
0.01

 
0.01

 
0.01

 
0.01

Issuance costs on redeemed preferred shares
(0.03
)
 
(0.03
)
 
(0.03
)
 
(0.03
)
FFOPS, NAREIT definition
0.45

 
0.48

 
2.00

 
2.06

Real estate depreciation and amortization
(0.42
)
 
(0.42
)
 
(1.67
)
 
(1.67
)
Impairments and exit costs on previously depreciated properties
(0.03
)
 
(0.03
)
 
(0.22
)
 
(0.22
)
Gains on sales of previously depreciated properties
0.21

 
0.21

 
0.26

 
0.26

EPS
$
0.21

 
$
0.24

 
$
0.37

 
$
0.43

 

ii

Conference Call Information:
Management will discuss second quarter 2012 earnings results, as well as its 2012 guidance, on its conference call today at 11:00 a.m. Eastern Time, details of which are listed below:

Conference Call Date:     Thursday, July 26, 2012

Time:     11:00 a.m. Eastern Time

Telephone Number:    (within the U.S.)    888-679-8033

Telephone Number: (outside the U.S.)    617-213-4846

Passcode:    56197159

Please use the following link to pre-register and view important information about this conference call. Pre-registering is not mandatory but is recommended as it will provide you immediate entry into the call and will facilitate the timely start of the conference. Pre-registration only takes a few moments and you may pre-register at anytime, including up to and after the call start time. To pre-register, please click on the below link:
https://www.theconferencingservice.com/prereg/key.process?key=PAVMDVEGC

You may also pre-register in the Investor Relations section of the Company's website at www.copt.com. Alternatively, you may be placed into the call by an operator by calling the number provided above at least 5 to 10 minutes before the start of the call. A replay of this call will be available beginning Thursday, July 26 at 3:00 p.m. Eastern Time through Thursday, August 9 at midnight Eastern Time. To access the replay within the United States, please call 888-286-8010 and use passcode 58125347. To access the replay outside the United States, please call 617-801-6888 and use passcode 58125347.

The conference calls will also be available via live webcast in the Investor Relations section of the Company's website at www.copt.com. A replay of the conference calls will be immediately available via webcast in the Investor Relations section of the Company's website.

Company Information:
COPT is an office REIT that focuses primarily on strategic customer relationships and specialized tenant requirements in the U.S. Government and Defense Information Technology sectors and Data Centers serving such sectors. The Company acquires, develops, manages and leases office and data center properties that are typically concentrated in large office parks primarily located adjacent to government demand drivers and/or in strong markets that we believe possess growth opportunities. As of June 30, 2012, the Company's consolidated portfolio consisted of 228 office properties totaling 19.8 million rentable square feet. The Company's portfolio primarily consists of technically sophisticated buildings in visually appealing settings that are environmentally sensitive, sustainable and meet unique customer requirements. COPT is an S&P MidCap 400 company and more information can be found at www.copt.com.

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. Accordingly, 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.

Important factors that may affect these expectations, estimates, and projections include, but are not limited to:
•
general economic and business conditions, which will, among other things, affect office property and data center demand and rents, tenant creditworthiness, interest rates, financing availability and property values;
•
adverse changes in the real estate markets including, among other things, increased competition with other companies;
•
governmental actions and initiatives, including risks associated with the impact of a government shutdown or budgetary

iii

reductions or impasses, such as a reduction in rental revenues, non-renewal of leases, and/or a curtailment of demand for additional space by strategic tenants;
•
the Company's ability to sell properties included in its Strategic Reallocation Plan;
•
the Company's ability to borrow on favorable terms;
•
risks of real estate acquisition and development activities, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development or operating costs may be greater than anticipated;
•
risks of investing through joint venture structures, including risks that the Company's joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with the Company's objectives;
•
changes in the Company's plans or views of market economic conditions or failure to obtain development rights, any of which could result in recognition of impairment losses;
•
the Company's ability to satisfy and operate effectively under Federal income tax rules relating to real estate investment trusts and partnerships;
•
the dilutive effect of issuing additional common shares; and
•
environmental requirements.

The Company undertakes no obligation to update or supplement any forward-looking statements. For further information, please refer to the Company's filings with the Securities and Exchange Commission, particularly the section entitled “Risk Factors” in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

Reconciliations:
Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the tables, below. Please refer to the information furnished with our Form 8-K on our website (www.copt.com) for definitions of these non-GAAP measures and other terms used in this press release.


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,
 
2012
 
2011
 
2012
 
2011
Revenues
 

 
 

 
 
 
 
Real estate revenues
$
116,391

 
$
109,019

 
$
232,467

 
$
219,537

Construction contract and other service revenues
16,995

 
28,097

 
38,529

 
49,125

Total revenues
133,386

 
137,116

 
270,996

 
268,662

Expenses
 

 
 

 
 
 
 
Property operating expenses
42,384

 
40,450

 
87,301

 
84,985

Depreciation and amortization associated with real estate operations
29,853

 
28,171

 
59,172

 
56,244

Construction contract and other service expenses
16,285

 
26,909

 
36,892

 
47,527

Impairment losses (recoveries)
—

 
20,183

 
(2,303
)
 
47,925

General and administrative expenses
7,742

 
6,320

 
14,759

 
13,097

Business development expenses and land carry costs
1,298

 
1,349

 
2,874

 
2,571

Total operating expenses
97,562

 
123,382

 
198,695

 
252,349

Operating income
35,824

 
13,734


72,301


16,313

Interest expense
(24,747
)
 
(25,595
)
 
(49,667
)
 
(51,263
)
Interest and other income
840

 
2,756

 
2,057

 
3,924

Loss on early extinguishment of debt
(169
)
 
(25
)
 
(169
)
 
(25
)
Income (loss) from continuing operations before equity in loss of unconsolidated entities and income taxes
11,748

 
(9,130
)
 
24,522

 
(31,051
)
Equity in loss of unconsolidated entities
(187
)
 
(94
)
 
(276
)
 
(64
)
Income tax (expense) benefit
(17
)
 
5,042

 
(4,190
)
 
5,586

Income (loss) from continuing operations
11,544

 
(4,182
)
 
20,056

 
(25,529
)
Discontinued operations
296

 
(21,852
)
 
(1,239
)
 
(21,772
)
Income (loss) before gain on sales of real estate
11,840

 
(26,034
)
 
18,817

 
(47,301
)
Gain on sales of real estate, net of income taxes
21

 
27

 
21

 
2,728

Net income (loss)
11,861

 
(26,007
)
 
18,838

 
(44,573
)
Net (income) loss attributable to noncontrolling interests
 

 
 

 
 
 
 
Common units in the Operating Partnership
(390
)
 
1,887

 
(549
)
 
3,366

Preferred units in the Operating Partnership
(165
)
 
(165
)
 
(330
)
 
(330
)
Other consolidated entities
(552
)
 
61

 
(528
)
 
(477
)
Net income (loss) attributable to COPT
10,754

 
(24,224
)
 
17,431

 
(42,014
)
Preferred share dividends
(4,167
)
 
(4,026
)
 
(8,192
)
 
(8,051
)
Net income (loss) attributable to COPT common shareholders
$
6,587

 
$
(28,250
)
 
$
9,239

 
$
(50,065
)
 
 
 
 
 
 
 
 
Earnings per share (“EPS”) computation:
 

 
 

 
 
 
 
Numerator for diluted EPS:
 

 
 

 
 
 
 
Net income (loss) attributable to common shareholders
$
6,587

 
$
(28,250
)
 
$
9,239

 
$
(50,065
)
Dilutive effect of common units in the Operating Partnership
—

 
(1,887
)
 
—

 
(3,366
)
Amount allocable to restricted shares
(105
)
 
(237
)
 
(246
)
 
(519
)
Numerator for diluted EPS
$
6,482

 
$
(30,374
)
 
$
8,993

 
$
(53,950
)
 
 
 
 
 
 
 
 
Denominator:
 

 
 

 
 
 
 
Weighted average common shares - basic
71,624

 
68,446

 
71,541

 
67,399

Dilutive effect of common units in the Operating Partnership
—

 
4,382

 
—

 
4,389

Dilutive effect of share-based compensation awards
25

 
—

 
35

 
—

Weighted average common shares - diluted
71,649

 
72,828

 
71,576

 
71,788

Diluted EPS
$
0.09

 
$
(0.42
)
 
$
0.13

 
$
(0.75
)

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,
 
2012
 
2011
 
2012
 
2011
Net income (loss)
$
11,861

 
$
(26,007
)
 
$
18,838

 
$
(44,573
)
Real estate-related depreciation and amortization
31,666

 
32,049

 
62,753

 
65,069

Impairment losses on previously depreciated operating properties
2,354

 
31,031

 
14,187

 
31,031

Depreciation and amortization on unconsolidated real estate entities
119

 
115

 
233

 
234

Gain on sales of previously depreciated operating properties, net of income taxes
115

 
(150
)
 
(4,023
)
 
(150
)
Funds from operations (“FFO”)
46,115

 
37,038

 
91,988

 
51,611

Noncontrolling interests - preferred units in the Operating Partnership
(165
)
 
(165
)
 
(330
)
 
(330
)
Noncontrolling interests - other consolidated entities
(552
)
 
61

 
(528
)
 
(477
)
Preferred share dividends
(4,167
)
 
(4,026
)
 
(8,192
)
 
(8,051
)
Depreciation and amortization allocable to noncontrolling interests in other consolidated entities
132

 
(225
)
 
(152
)
 
(290
)
Basic and diluted FFO allocable to restricted shares
(220
)
 
(237
)
 
(514
)
 
(519
)
Basic and diluted FFO available to common share and common unit holders (“Basic and diluted FFO”)
41,143

 
32,446

 
82,272

 
41,944

Operating property acquisition costs
7

 
52

 
7

 
75

Gain on sales of non-operating properties, net of income taxes
(33
)
 
(16
)
 
(33
)
 
(2,717
)
Impairment losses (recoveries) on other properties
—

 
13,574

 
(5,246
)
 
41,316

Income tax expense on impairment recoveries on other properties
—

 
(4,598
)
 
4,642

 
(4,598
)
Loss on early extinguishment of debt
171

 
25

 
171

 
25

Diluted FFO available to common share and common unit holders, as adjusted for comparability
41,288

 
41,483

 
81,813

 
76,045

Straight line rent adjustments
(1,857
)
 
(2,611
)
 
(4,036
)
 
(6,523
)
Amortization of acquisition intangibles included in net operating income
218

 
227

 
408

 
388

Share-based compensation, net of amounts capitalized
3,157

 
2,638

 
6,559

 
5,397

Amortization of deferred financing costs
1,597

 
1,702

 
3,169

 
3,461

Amortization of net debt discounts, net of amounts capitalized
682

 
1,464

 
1,345

 
2,862

Amortization of settled debt hedges
15

 
15

 
31

 
31

Recurring capital expenditures on properties not in disposition plans
(6,074
)
 
(10,274
)
 
(7,949
)
 
(18,250
)
Diluted adjusted funds from operations available to common share and common unit holders, excluding recurring capital expenditures on properties sold or in disposition plans
39,026

 
34,644

 
81,340

 
63,411

Recurring capital expenditures on properties sold or in disposition plans
(2,433
)
 
(4,639
)
 
(3,981
)
 
(11,007
)
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)
$
36,593

 
$
30,005

 
$
77,359

 
$
52,404

Diluted FFO per share
$
0.54

 
$
0.44

 
$
1.08

 
$
0.58

Diluted FFO per share, as adjusted for comparability
$
0.54

 
$
0.57

 
$
1.08

 
$
1.06

Dividends/distributions per common share/unit
$
0.2750

 
$
0.4125

 
$
0.5500

 
$
0.8250

Payout ratios
 

 
 

 
 

 
 

Diluted FFO
51.0
%
 
96.9
%
 
51.0
%
 
145.3
%
Diluted FFO, as adjusted for comparability
50.8
%
 
75.8
%
 
51.3
%
 
80.2
%
Diluted AFFO, excluding recurring capital expenditures on properties sold or in disposition plans
53.8
%
 
90.8
%
 
51.6
%
 
96.1
%
Adjusted EBITDA interest coverage ratio
3.15
x
 
3.09x

 
3.18x

 
3.00x

Adjusted EBITDA fixed charge coverage ratio
2.65x

 
2.62x

 
2.68x

 
2.55x

Debt to Adjusted EBITDA ratio (1)
7.66x

 
7.87x

 
7.47x

 
8.08x

Adjusted debt to Adjusted EBITDA ratio (2)
6.33x

 
6.39x

 
6.17x

 
6.57x

Reconciliation of denominators for diluted EPS and diluted FFO per share
 
 

 
 
 
 
Denominator for diluted EPS
71,649

 
72,828

 
71,576

 
71,788

Weighted average common units
4,255

 
—

 
4,267

 
—

Anti-dilutive EPS effect of share-based compensation awards
—

 
151

 
—

 
205

Denominator for diluted FFO per share
75,904

 
72,979

 
75,843

 
71,993

(1)    Represents debt as of period end divided by Adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).
(2)
Represents debt adjusted to subtract construction in progress as of period end divided by Adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).

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

 
June 30,
2012
 
December 31,
2011
Balance Sheet Data
 

 
 

Properties, net of accumulated depreciation
$
3,232,592

 
$
3,352,975

Total assets
3,715,075

 
3,867,524

Debt, net
2,191,851

 
2,426,303

Total liabilities
2,361,726

 
2,649,459

Equity
1,353,349

 
1,218,065

Debt to adjusted book
50.8
%
 
54.6
%
Debt to total market capitalization
50.0
%
 
56.8
%
 
 
 
 
Consolidated Property Data (as of period end)
 

 
 

Number of operating properties
228

 
238

Total net rentable square feet owned (in thousands)
19,787

 
20,514

Occupancy
87.4
%
 
86.2
%
 
 
 
 
Reconciliation of total assets to denominator for debt to adjusted book
 

 
 

Denominator for debt to total assets
$
3,715,075

 
$
3,867,524

Accumulated depreciation on real estate assets
562,345

 
559,679

Accumulated depreciation included in assets held for sale
34,234

 
17,922

Denominator for debt to adjusted book
$
4,311,654

 
$
4,445,125

 
Reconciliations of tenant improvements and incentives, capital improvements and leasing costs for operating properties to recurring capital expenditures
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
2012
 
2011
 
2012
 
2011
Properties not sold or in disposition plans
 

 
 

 
 
 
 
Tenant improvements and incentives on operating properties
$
2,663

 
$
7,752

 
$
3,329

 
$
15,187

Building improvements on operating properties
1,296

 
2,138

 
2,167

 
3,082

Leasing costs for operating properties
2,863

 
2,492

 
4,162

 
5,093

Less: Nonrecurring tenant improvements and incentives on operating properties
(97
)
 
(866
)
 
(658
)
 
(3,077
)
Less: Nonrecurring building improvements on operating properties
(572
)
 
(920
)
 
(979
)
 
(1,119
)
Less: Nonrecurring leasing costs for operating properties
(79
)
 
(347
)
 
(79
)
 
(963
)
Add: Recurring capital expenditures on operating properties held through joint ventures
—

 
25

 
7

 
47

Recurring capital expenditures on properties not sold or in disposition plans
$
6,074

 
$
10,274

 
$
7,949

 
$
18,250

 
 
 
 
 
 
 
 
Properties sold or in disposition plans
 

 
 

 
 
 
 
Tenant improvements and incentives on operating properties
$
1,827

 
$
3,364

 
$
2,757

 
$
9,199

Building improvements on operating properties
459

 
288

 
1,282

 
1,334

Leasing costs for operating properties
392

 
896

 
534

 
1,031

Less: Nonrecurring tenant improvements and incentives on operating properties
(7
)
 
(9
)
 
(165
)
 
(246
)
Less: Nonrecurring building improvements on operating properties
(229
)
 
100

 
(418
)
 
(311
)
Less: Nonrecurring leasing costs for operating properties
(9
)
 
—

 
(9
)
 
—

Recurring capital expenditures on properties sold or in disposition plans
$
2,433

 
$
4,639

 
$
3,981

 
$
11,007


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,
 
2012
 
2011
 
2012
 
2011
Reconciliation of common share dividends to dividends and distributions for payout ratios
 

 
 

 
 
 
 
Common share dividends
$
19,809

 
$
29,632

 
$
39,628

 
$
57,336

Common unit distributions
1,168

 
1,808

 
2,341

 
3,617

Dividends and distributions for payout ratios
$
20,977

 
$
31,440

 
$
41,969

 
$
60,953

Reconciliation of FFO to FFO, as adjusted for comparability
 

 
 

 
 

 
 

FFO
$
46,115

 
$
37,038

 
$
91,988

 
$
51,611

Gain on sales of non-operating properties, net of income taxes
(33
)
 
(16
)
 
(33
)
 
(2,717
)
Impairment losses (recoveries) on non-operating properties, net of associated tax
—

 
8,976

 
(604
)
 
36,718

Operating property acquisition costs
7

 
52

 
7

 
75

Loss on early extinguishment of debt
171

 
25

 
171

 
25

FFO, as adjusted for comparability
$
46,260

 
$
46,075

 
$
91,529

 
$
85,712

Reconciliation of GAAP net (loss) income to adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”)
 

 
 

 
 

 
 

Net income (loss)
$
11,861

 
$
(26,007
)
 
$
18,838

 
$
(44,573
)
Interest expense on continuing operations
24,747

 
25,595

 
49,667

 
51,263

Interest expense on discontinued operations
228

 
1,235

 
983

 
2,495

Income tax expense (benefit)
17

 
(5,042
)
 
4,190

 
(5,586
)
Real estate-related depreciation and amortization
31,666

 
32,049

 
62,753

 
65,069

Depreciation of furniture, fixtures and equipment
629

 
623

 
1,247

 
1,248

Impairment losses
2,354

 
44,605

 
8,941

 
72,347

Adjusted EBITDA
$
71,502

 
$
73,058

 
$
146,619

 
$
142,263

Reconciliation of interest expense from continuing operations to the denominators for interest coverage-Adjusted EBITDA and fixed charge coverage-Adjusted EBITDA
 

 
 

 
 

 
 

Interest expense from continuing operations
$
24,747

 
$
25,595

 
$
49,667

 
$
51,263

Interest expense from discontinued operations
228

 
1,235

 
983

 
2,495

Less: Amortization of deferred financing costs
(1,597
)
 
(1,702
)
 
(3,169
)
 
(3,461
)
Less: Amortization of net debt discount, net of amounts capitalized
(682
)
 
(1,464
)
 
(1,345
)
 
(2,862
)
Denominator for interest coverage-Adjusted EBITDA
22,696

 
23,664

 
46,136

 
47,435

Preferred share dividends
4,167

 
4,026

 
8,192

 
8,051

Preferred unit distributions
165

 
165

 
330

 
330

Denominator for fixed charge coverage-Adjusted EBITDA
$
27,028

 
$
27,855

 
$
54,658

 
$
55,816

Reconciliation of same office property net operating income to same office property cash net operating income and same office property cash net operating income, excluding gross lease termination fees
 

 
 

 
 

 
 

Same office property net operating income
$
64,424

 
$
62,303

 
$
127,352

 
$
122,309

Less: Straight-line rent adjustments
(942
)
 
(2,060
)
 
(2,821
)
 
(5,589
)
Less: Amortization of deferred market rental revenue
(97
)
 
(32
)
 
(196
)
 
(132
)
Add: Amortization of above-market cost arrangements
371

 
434

 
724

 
868

Same office property cash net operating income
63,756

 
60,645

 
125,059

 
117,456

Less: Lease termination fees, gross
(164
)
 
(175
)
 
(698
)
 
(313
)
Same office property cash net operating income, excluding gross lease termination fees
$
63,592

 
$
60,470

 
$
124,361

 
$
117,143

Reconciliation of debt, net to denominator for adjusted debt to Adjusted EBITDA ratio
 

 
 

 
 

 
 

Debt, net
$
2,191,851

 
$
2,299,416

 
 
 
 
Less: Construction in progress
(380,879
)
 
(407,674
)
 
 
 
 
Less: Construction in progress on assets held for sale
(1,220
)
 
(22,934
)
 
 
 
 
Denominator for adjusted debt to adjusted EBITDA ratio
$
1,809,752

 
$
1,868,808

 


 



viii


Corporate Office Properties Trust
Summary Description
 
The Company — Corporate Office Properties Trust (the “Company” or “COPT”) is a self-managed office real estate investment trust (“REIT”). As of June 30, 2012, COPT derived 60% of its annualized rental revenue from properties occupied primarily by tenants in the U.S. Government and/or defense information technology (“Defense IT”) sectors and 83% of the Company’s square footage was located in the Greater Washington/Baltimore region. At June 30, 2012, COPT’s operating portfolio of 228 office properties encompassed 19.8 million square feet and was 89.3% leased. As of the same date, COPT also owned one wholesale data center that was 17% leased.
 
Corporate Strategy — Through acquisitions and development activities, COPT has assembled a portfolio of Class A office parks located adjacent to knowledge-based defense installations (rather than weapons production-oriented bases) that are executing programs deemed critical to current and future national security efforts. COPT also owns dedicated data centers that serve the specialized requirements of our government and Defense IT tenants and a wholesale data center.
 
Management:
Investor Relations:
Roger A. Waesche, Jr., President & CEO
Stephanie M. Krewson, VP of IR
Stephen E. Budorick, EVP & COO
443-285-5453, stephanie.krewson@copt.com
Wayne H. Lingafelter, EVP, Development & Construction
Michelle Layne, IR Specialist
Stephen E. Riffee, EVP & CFO
443-285-5452, michelle.layne@copt.com
 
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.  Important factors that may affect these expectations, estimates and projections include, but are not limited to: general economic and business conditions, which will, among other things, affect office property and data center demand and rents, tenant creditworthiness, interest rates, financing availability and property values; adverse changes in the real estate markets, including, among other things, increased competition with other companies; governmental actions and initiatives, including risks associated with the impact of a government shutdown or budgetary reductions or impasses, such as a reduction in rental revenues, non-renewal of leases and/or a curtailment of demand for additional space by our strategic customers; our ability to sell properties included in our Strategic Reallocation Plan; our ability to borrow on favorable terms; risks of real estate acquisition or development activities, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development and operating costs may be greater than anticipated; risks of investing through joint venture structures, including risks that our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our objectives; changes in our plans for properties or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of impairment losses; our ability to satisfy and operate effectively under Federal income tax rules relating to real estate investment trusts and partnerships; the dilutive effects of issuing additional common shares; and environmental requirements.  We undertake no obligation to update or supplement any forward-looking statements.  For further information, please refer to our filings with the Securities and Exchange Commission, particularly the section entitled “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011.

1


Corporate Office Properties Trust
Equity Research Coverage
 
Firm
 
Senior Analyst
 
Phone
 
Email
 
 
 
 
 
 
 
Bank of America Merrill Lynch
 
Jamie Feldman
 
646-855-5808
 
james.feldman@baml.com
BMO Capital Markets
 
Richard Anderson
 
212-885-4180
 
richard.anderson@bmo.com
Citigroup Global Markets
 
Michael Bilerman
 
212-816-1383
 
michael.bilerman@citi.com
Cowen and Company
 
James Sullivan
 
646-562-1380
 
james.sullivan@cowen.com
Green Street Advisors
 
Michael Knott
 
949-640-8780
 
mknott@greenstreetadvisors.com
ISI Group
 
Steve Sakwa
 
212-446-9462
 
ssakwa@isigrp.com
Jefferies & Co.
 
Omotayo Okusanya
 
212-336-7076
 
tokusanya@jefferies.com
JP Morgan
 
Anthony Paolone
 
212-622-6682
 
anthony.paolone@jpmorgan.com
KeyBanc Capital Markets
 
Jordan Sadler
 
917-368-2280
 
jsadler@keybanccm.com
Macquarie Securities
 
Rob Stevenson
 
212-231-8068
 
rob.stevenson@macquarie.com
Raymond James
 
Bill Crow
 
727-567-2594
 
bill.crow@raymondjames.com
RBC Capital Markets
 
Michael Carroll
 
440-715-2649
 
michael.carroll@rbccm.com
Robert W. Baird & Co., Inc.
 
Dave Aubuchon
 
314-445-6520
 
DAubuchon@rwbaird.com
Stifel, Nicolaus & Company, Inc.
 
John Guinee
 
443-224-1307
 
jwguinee@stifel.com
Wells Fargo Securities
 
Brendan Maiorana
 
443-263-6516
 
brendan.maiorana@wachovia.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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
SUMMARY OF RESULTS 
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Same Office NOI
 
$
64,424

 
$
62,928

 
$
63,005

 
$
63,272

 
$
62,303

 
$
127,352

 
$
122,309

NOI from real estate operations
 
$
78,809

 
$
76,917

 
$
77,261

 
$
77,135

 
$
76,133

 
$
155,726

 
$
148,422

Adjusted EBITDA
 
$
71,502

 
$
75,117

 
$
75,173

 
$
69,288

 
$
73,058

 
$
146,619

 
$
142,263

Net income (loss) attributable to COPT common shareholders
 
$
6,587

 
$
2,652

 
$
(86,253
)
 
$
2,541

 
$
(28,250
)
 
$
9,239

 
$
(50,065
)
FFO - per NAREIT
 
$
46,115

 
$
45,873

 
$
(17,924
)
 
$
42,319

 
$
37,038

 
$
91,988

 
$
51,611

FFO - as adjusted for comparability
 
$
46,260

 
$
45,269

 
$
46,935

 
$
44,391

 
$
46,075

 
$
91,529

 
$
85,712

Basic and diluted FFO available to common share and common unit holders
 
$
41,143

 
$
41,129

 
$
(22,653
)
 
$
37,029

 
$
32,446

 
$
82,272

 
$
41,944

Diluted AFFO available to common share and common unit holders
 
$
36,593

 
$
40,766

 
$
24,846

 
$
33,300

 
$
30,005

 
$
77,359

 
$
52,404

Per share - diluted:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
EPS
 
$
0.09

 
$
0.04

 
$
(1.21
)
 
$
0.03

 
$
(0.42
)
 
$
0.13

 
$
(0.75
)
FFO - NAREIT
 
$
0.54

 
$
0.54

 
$
(0.30
)
 
$
0.49

 
$
0.44

 
$
1.08

 
$
0.58

FFO - as adjusted for comparability
 
$
0.54

 
$
0.53

 
$
0.56

 
$
0.52

 
$
0.57

 
$
1.08

 
$
1.06

Dividend per common share
 
$
0.2750

 
$
0.2750

 
$
0.4125

 
$
0.4125

 
$
0.4125

 
$
0.5500

 
$
0.8250

Payout ratios:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Diluted FFO
 
51.0
%
 
51.0
%
 
(138.9
)%
 
85.0
%
 
96.9
%
 
51.0
%
 
145.3
%
Diluted FFO - as adjusted for comparability
 
50.8
%
 
51.8
%
 
74.6
 %
 
80.5
%
 
75.8
%
 
51.3
%
 
80.2
%
Diluted AFFO, excluding recurring capital expenditures on properties in disposition plans
 
53.8
%
 
49.6
%
 
93.4
 %
 
87.0
%
 
90.8
%
 
51.6
%
 
96.1
%
CAPITALIZATION
 
 

 
 

 
 
 
 

 
 

 
 

 
 
Debt, net
 
$
2,191,851

 
$
2,418,078

 
$
2,426,303

 
$
2,420,073

 
$
2,299,416

 
 
 
 
Debt to Total Market Capitalization
 
50.0
%
 
54.8
%
 
56.8
 %
 
56.2
%
 
47.0
%
 
 
 
 
Debt to Adjusted Book
 
50.8
%
 
55.3
%
 
54.6
 %
 
53.5
%
 
52.2
%
 
 
 
 
Adjusted EBITDA fixed charge coverage ratio
 
2.6
x
 
2.7
x
 
2.8
x
 
2.6
x
 
2.6
x
 
2.7
x
 
2.5
x
Debt to Adjusted EBITDA ratio
 
7.7
x
 
8.0
x
 
8.1
x
 
8.7
x
 
7.9
x
 
7.5
x
 
8.1
x
Adjusted Debt to Adjusted EBITDA ratio
 
6.3
x
 
6.7
x
 
6.7
x
 
7.0
x
 
6.4
x
 
6.2
x
 
6.6
x
OTHER
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Revenue from early termination of leases
 
$
350

 
$
395

 
$
45

 
$
103

 
$
196

 
$
745

 
$
342

Capitalized interest costs
 
$
3,595

 
$
3,809

 
$
4,294

 
$
4,458

 
$
4,308

 
$
7,404

 
$
8,649


3

Corporate Office Properties Trust
Selected Portfolio Data
 
 
 
 
 
 
 
 
 
 
 
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
# of Operating Office Properties
 

 
 

 
 

 
 

 
 

 
Wholly-owned
224

 
227

 
234

 
246

 
249

 
+ Consolidated JV
4

 
4

 
4

 
4

 
4

 
Consolidated properties
228

 
231

 
238

 
250

 
253

 
% Occupied
 

 
 

 
 

 
 

 
 

 
Wholly-owned
87.6
%
 
87.6
%
 
86.9
%
 
88.0
%
 
87.3
%
 
+ Consolidated JV
78.1
%
 
60.0
%
 
56.6
%
 
60.0
%
 
58.9
%
 
Consolidated properties
87.4
%
 
87.0
%
 
86.2
%
 
87.4
%
 
86.6
%
 
% Leased
 

 
 

 
 

 
 

 
 

 
Wholly-owned
89.2
%
 
89.2
%
 
88.7
%
 
89.8
%
 
89.4
%
 
+ Consolidated JV
95.0
%
 
78.4
%
 
67.3
%
 
63.6
%
 
60.1
%
 
Consolidated properties
89.3
%
 
88.9
%
 
88.2
%
 
89.2
%
 
88.7
%
 
Square Feet of Office Properties (in thousands)
 

 
 

 
 

 
 

 
 

 
Wholly-owned
19,342

 
19,793

 
20,072

 
20,205

 
20,244

 
+ Consolidated JV Square Footage
445

 
444

 
442

 
442

 
442

 
Consolidated Square Footage
19,787

 
20,237

 
20,514

 
20,647

 
20,686

 





4

Corporate Office Properties Trust
Quarterly Consolidated Balance Sheets
(dollars in thousands)
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
Assets
 

 
 

 
 

 
 

 
 

Properties, net
 

 
 

 
 

 
 

 
 

Operating properties
$
3,191,481

 
$
3,274,565

 
$
3,273,735

 
$
3,325,609

 
$
3,269,049

Less: accumulated depreciation
(562,345
)
 
(570,242
)
 
(559,679
)
 
(553,306
)
 
(527,616
)
Projects in development or held for future development, including associated land costs (1)
603,456

 
633,968

 
638,919

 
696,914

 
656,321

Total properties, net
3,232,592

 
3,338,291

 
3,352,975

 
3,469,217

 
3,397,754

Assets held for sale
144,392

 
81,352

 
116,616

 
72,767

 
77,410

Cash and cash equivalents
4,702

 
7,987

 
5,559

 
11,504

 
11,703

Restricted cash and marketable securities
22,632

 
21,711

 
36,232

 
39,232

 
22,909

Accounts receivable, net
10,992

 
11,231

 
26,032

 
20,991

 
13,083

Deferred rent receivable
85,595

 
89,337

 
86,856

 
87,148

 
84,397

Intangible assets on real estate acquisitions, net
76,426

 
83,940

 
89,120

 
97,954

 
99,231

Deferred leasing and financing costs, net
63,861

 
66,987

 
66,515

 
70,791

 
60,164

Prepaid expenses and other assets
73,883

 
96,532

 
87,619

 
95,788

 
101,579

Total assets
$
3,715,075

 
$
3,797,368

 
$
3,867,524

 
$
3,965,392

 
$
3,868,230

Liabilities and equity
 

 
 

 
 

 
 

 
 

Liabilities:
 

 
 

 
 

 
 

 
 

Debt, net
$
2,191,851

 
$
2,418,078

 
$
2,426,303

 
$
2,420,073

 
$
2,299,416

Accounts payable and accrued expenses
84,733

 
93,156

 
96,425

 
114,834

 
115,154

Rents received in advance and security deposits
27,124

 
27,647

 
29,548

 
28,241

 
26,779

Dividends and distributions payable
24,695

 
24,544

 
35,038

 
35,029

 
35,021

Deferred revenue associated with operating leases
13,938

 
15,258

 
15,554

 
15,621

 
12,883

Distributions received in excess of investment in unconsolidated real estate joint venture
6,282

 
6,178

 
6,071

 
5,953

 
5,841

Interest rate derivatives
4,400

 
2,673

 
30,863

 
30,629

 
10,020

Other liabilities
8,703

 
9,038

 
9,657

 
7,389

 
9,744

Total liabilities
2,361,726

 
2,596,572

 
2,649,459

 
2,657,769

 
2,514,858

Commitments and contingencies
—

 
—

 
—

 
—

 
—

Equity:
 

 
 

 
 

 
 
 
 
COPT’s shareholders’ equity:
 

 
 

 
 

 
 
 
 
Preferred shares at liquidation preference
388,833

 
216,333

 
216,333

 
216,333

 
216,333

Common shares
721

 
720

 
720

 
720

 
719

Additional paid-in capital
1,450,923

 
1,454,199

 
1,452,393

 
1,447,598

 
1,441,284

Cumulative distributions in excess of net income
(562,678
)
 
(549,456
)
 
(532,288
)
 
(416,342
)
 
(389,195
)
Accumulated other comprehensive loss
(3,717
)
 
(2,201
)
 
(1,733
)
 
(28,618
)
 
(9,624
)
Total COPT’s shareholders’ equity
1,274,082

 
1,119,595

 
1,135,425

 
1,219,691

 
1,259,517

Noncontrolling interests in subsidiaries
 

 
 

 
 

 
 

 
 

Common units in the Operating Partnership
52,152

 
53,883

 
55,281

 
60,583

 
66,482

Preferred units in the Operating Partnership
8,800

 
8,800

 
8,800

 
8,800

 
8,800

Other consolidated entities
18,315

 
18,518

 
18,559

 
18,549

 
18,573

Total noncontrolling interests in subsidiaries
79,267

 
81,201

 
82,640

 
87,932

 
93,855

Total equity
1,353,349

 
1,200,796

 
1,218,065

 
1,307,623

 
1,353,372

Total liabilities and equity
$
3,715,075

 
$
3,797,368

 
$
3,867,524

 
$
3,965,392

 
$
3,868,230

(1) Please refer to pages 23-27 for detail.
 
 
 
 
 
 
 
 
 

5

Corporate Office Properties Trust
Consolidated Statements of FFO
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
NOI from real estate operations (1)
 

 
 

 
 

 
 

 
 

 
 
 
 
Real estate revenues
$
123,968

 
$
125,304

 
$
127,456

 
$
125,129

 
$
120,806

 
$
249,272

 
$
243,247

Real estate property operating expenses
(45,159
)
 
(48,387
)
 
(50,195
)
 
(47,994
)
 
(44,673
)
 
(93,546
)
 
(94,825
)
NOI from real estate operations (1)
78,809

 
76,917

 
77,261

 
77,135

 
76,133

 
155,726

 
148,422

General and administrative expenses
(7,742
)
 
(7,017
)
 
(6,592
)
 
(6,154
)
 
(6,320
)
 
(14,759
)
 
(13,097
)
Business development expenses and land carry costs
(1,304
)
 
(1,594
)
 
(1,819
)
 
(1,768
)
 
(1,369
)
 
(2,898
)
 
(2,610
)
NOI from construction contracts and other service operations
710

 
927

 
550

 
558

 
1,188

 
1,637

 
1,598

Impairment recoveries (losses) on non-operating properties
—

 
5,246

 
(39,193
)
 
—

 
(13,574
)
 
5,246

 
(41,316
)
Equity in (loss) income of unconsolidated entities
(187
)
 
(89
)
 
(108
)
 
(159
)
 
(94
)
 
(276
)
 
(64
)
Depreciation and amortization on unconsolidated real estate entities
119

 
114

 
142

 
116

 
115

 
233

 
234

Interest and other income (loss)
840

 
1,217

 
1,921

 
(242
)
 
2,756

 
2,057

 
3,924

Loss on early extinguishment of debt, continuing and discontinued operations
(171
)
 
—

 
(3
)
 
(1,995
)
 
(25
)
 
(171
)
 
(25
)
Loss on interest rate derivatives
—

 
—

 
(29,805
)
 
—

 
—

 
—

 
—

Gain on sales of non-operating properties, net of income taxes
33

 
—

 
—

 
—

 
16

 
33

 
2,717

Total interest expense
(24,975
)
 
(25,675
)
 
(24,914
)
 
(25,629
)
 
(26,830
)
 
(50,650
)
 
(53,758
)
Income tax (expense) benefit
(17
)
 
(4,173
)
 
4,636

 
457

 
5,042

 
(4,190
)
 
5,586

FFO - per NAREIT (1)
46,115

 
45,873

 
(17,924
)
 
42,319

 
37,038

 
91,988

 
51,611

Preferred share dividends
(4,167
)
 
(4,025
)
 
(4,026
)
 
(4,025
)
 
(4,026
)
 
(8,192
)
 
(8,051
)
Noncontrolling interests - preferred units in the Operating Partnership
(165
)
 
(165
)
 
(165
)
 
(165
)
 
(165
)
 
(330
)
 
(330
)
Noncontrolling interests - other consolidated entities
(552
)
 
24

 
—

 
(561
)
 
61

 
(528
)
 
(477
)
Depreciation and amortization allocable to noncontrolling interests in other consolidated entities
132

 
(284
)
 
(283
)
 
(276
)
 
(225
)
 
(152
)
 
(290
)
Basic and diluted FFO allocable to restricted shares
(220
)
 
(294
)
 
(255
)
 
(263
)
 
(237
)
 
(514
)
 
(519
)
Basic and diluted FFO available to common share and common unit holders (1)
41,143

 
41,129

 
(22,653
)
 
37,029

 
32,446

 
82,272

 
41,944

Operating property acquisition costs
7

 
—

 
4

 
77

 
52

 
7

 
75

Gain on sales of non-operating properties, net of income taxes
(33
)
 
—

 
—

 
—

 
(16
)
 
(33
)
 
(2,717
)
Impairment (recoveries) losses on non-operating properties, net of associated tax
—

 
(604
)
 
35,047

 
—

 
8,976

 
(604
)
 
36,718

Loss on interest rate derivatives
—

 
—

 
29,805

 
—

 
—

 
—

 
—

Loss on early extinguishment of debt, continuing and discontinued operations
171

 
—

 
3

 
1,995

 
25

 
171

 
25

Diluted FFO available to common share and common unit holders, as adjusted for comparability (1)
$
41,288

 
$
40,525

 
$
42,206

 
$
39,101

 
$
41,483

 
$
81,813

 
$
76,045

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Please refer to the section entitled “Definitions” for a definition of this measure.

6

Corporate Office Properties Trust
Consolidated Statements of FFO (continued)
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
06/30/12
 
03/31/12
 
12/31/11
 
09/30/11
 
06/30/11
 
06/30/12
 
06/30/11
Net income (loss)
$
11,861

 
$
6,977

 
$
(87,215
)
 
$
7,470

 
$
(26,007
)
 
$
18,838

 
$
(44,573
)
Real estate-related depreciation and amortization
31,666

 
31,087

 
33,030

 
36,032

 
32,049

 
62,753

 
65,069

Impairment losses on previously depreciated operating properties
2,354

 
11,833

 
39,481

 
—

 
31,031

 
14,187

 
31,031

Gain on sales of previously depreciated operating properties, net of income taxes
115

 
(4,138
)
 
(3,362
)
 
(1,299
)
 
(150
)
 
(4,023
)
 
(150
)
Depreciation and amortization on unconsolidated real estate entities
119

 
114

 
142

 
116

 
115

 
233

 
234

FFO - per NAREIT (1)
46,115

 
45,873

 
(17,924
)
 
42,319

 
37,038

 
91,988

 
51,611

Operating property acquisition costs
7

 
—

 
4

 
77

 
52

 
7

 
75

Gain on sales of non-operating properties, net of income taxes
(33
)
 
—

 
—

 
—

 
(16
)
 
(33
)
 
(2,717
)
Impairment (recoveries) losses on non-operating properties, net of associated tax
—

 
(604
)
 
35,047

 
—

 
8,976

 
(604
)
 
36,718

Loss on interest rate derivatives
—

 
—

 
29,805

 
—

 
—

 
—

 
—

Loss on early extinguishment of debt, continuing and discontinued operations
171

 
—

 
3

 
1,995

 
25

 
171

 
25

FFO - as adjusted for comparability (1)
$
46,260

 
$
45,269

 
$
46,935

 
$
44,391

 
$
46,075

 
$
91,529

 
$
85,712

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Shares for period ended:
 

 
 

 
 

 
 

 
 

 
 

 
 

Common Shares Outstanding
71,624

 
71,458

 
71,351

 
71,312

 
68,446

 
71,541

 
67,399

Dilutive effect of share-based compensation awards
25

 
44

 
29

 
52

 
151

 
35

 
205

Common Units
4,255

 
4,281

 
4,308

 
4,336

 
4,382

 
4,267

 
4,389

Denominator for FFO per share - diluted
75,904

 
75,783

 
75,688

 
75,700

 
72,979

 
75,843

 
71,993

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Denominator for diluted EPS
71,649

 
71,502

 
71,351

 
71,312

 
72,828

 
71,576

 
71,788

Anti-dilutive EPS effect of share-based compensation awards
—

 
—

 
29

 
52

 
151

 
—

 
205

Weighted average common units
4,255

 
4,281

 
4,308

 
4,336

 
—

 
4,267

 
—

Denominator for FFO per share - diluted
75,904

 
75,783

 
75,688

 
75,700

 
72,979

 
75,843

 
71,993

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Please refer to the section entitled “Definitions” for a definition of this measure.

7

Corporate Office Properties Trust
Consolidated Statements of Operations
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Revenues
 

 
 

 
 

 
 

 
 

 
 
 
 
Rental revenue
$
94,502

 
$
93,892

 
$
93,121

 
$
91,768

 
$
90,337

 
$
188,394

 
$
179,436

Tenant recoveries and other real estate operations revenue
21,889

 
22,184

 
23,466

 
21,422

 
18,682

 
44,073

 
40,101

Construction contract and other service revenues
16,995

 
21,534

 
16,491

 
18,729

 
28,097

 
38,529

 
49,125

Total revenues
133,386

 
137,610

 
133,078

 
131,919

 
137,116

 
270,996

 
268,662

Expenses
 

 
 

 
 

 
 

 
 

 
 
 
 
Property operating expenses
42,384

 
44,917

 
45,916

 
43,609

 
40,450

 
87,301

 
84,985

Depreciation and amortization associated with real estate operations
29,853

 
29,319

 
30,669

 
32,929

 
28,171

 
59,172

 
56,244

Construction contract and other service expenses
16,285

 
20,607

 
15,941

 
18,171

 
26,909

 
36,892

 
47,527

Impairment (recoveries) losses
—

 
(2,303
)
 
68,891

 
—

 
20,183

 
(2,303
)
 
47,925

General and administrative expenses
7,742

 
7,017

 
6,592

 
6,154

 
6,320

 
14,759

 
13,097

Business development expenses and land carry costs
1,298

 
1,576

 
1,800

 
1,751

 
1,349

 
2,874

 
2,571

Total operating expenses
97,562

 
101,133

 
169,809

 
102,614

 
123,382

 
198,695

 
252,349

Operating income (loss)
35,824

 
36,477

 
(36,731
)
 
29,305

 
13,734

 
72,301

 
16,313

Interest expense
(24,747
)
 
(24,920
)
 
(23,919
)
 
(24,478
)
 
(25,595
)
 
(49,667
)
 
(51,263
)
Interest and other income (loss)
840

 
1,217

 
1,921

 
(242
)
 
2,756

 
2,057

 
3,924

Loss on interest rate derivatives
—

 
—

 
(29,805
)
 
—

 
—

 
—

 
—

Loss on early extinguishment of debt
(169
)
 
—

 
(3
)
 
(1,611
)
 
(25
)
 
(169
)
 
(25
)
Income (loss) from continuing operations before equity in (loss) income of unconsolidated entities and income taxes
11,748

 
12,774

 
(88,537
)
 
2,974

 
(9,130
)
 
24,522

 
(31,051
)
Equity in loss of unconsolidated entities
(187
)
 
(89
)
 
(108
)
 
(159
)
 
(94
)
 
(276
)
 
(64
)
Income tax (expense) benefit
(17
)
 
(4,173
)
 
4,636

 
457

 
5,042

 
(4,190
)
 
5,586

Income (loss) from continuing operations
11,544

 
8,512

 
(84,009
)
 
3,272

 
(4,182
)
 
20,056

 
(25,529
)
Discontinued operations
296

 
(1,535
)
 
(3,210
)
 
4,198

 
(21,852
)
 
(1,239
)
 
(21,772
)
Income (loss) before gain on sales of real estate
11,840

 
6,977

 
(87,219
)
 
7,470

 
(26,034
)
 
18,817

 
(47,301
)
Gain on sales of real estate, net of income taxes
21

 
—

 
4

 
—

 
27

 
21

 
2,728

Net income (loss)
11,861

 
6,977

 
(87,215
)
 
7,470

 
(26,007
)
 
18,838

 
(44,573
)
Net (income) loss attributable to noncontrolling interests
 

 
 

 
 

 
 

 
 

 
 
 
 
Common units in the Operating Partnership
(390
)
 
(159
)
 
5,153

 
(178
)
 
1,887

 
(549
)
 
3,366

Preferred units in the Operating Partnership
(165
)
 
(165
)
 
(165
)
 
(165
)
 
(165
)
 
(330
)
 
(330
)
Other consolidated entities
(552
)
 
24

 
—

 
(561
)
 
61

 
(528
)
 
(477
)
Net income (loss) attributable to COPT
10,754

 
6,677

 
(82,227
)
 
6,566

 
(24,224
)
 
17,431

 
(42,014
)
Preferred share dividends
(4,167
)
 
(4,025
)
 
(4,026
)
 
(4,025
)
 
(4,026
)
 
(8,192
)
 
(8,051
)
Net income (loss) attributable to COPT common shareholders
$
6,587

 
$
2,652

 
$
(86,253
)
 
$
2,541

 
$
(28,250
)
 
$
9,239

 
$
(50,065
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 

8

Corporate Office Properties Trust
Consolidated Statements of Operations (continued)
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
For diluted EPS computations:
 

 
 

 
 

 
 

 
 

 
 
 
 
Numerator for diluted EPS
 

 
 

 
 

 
 

 
 

 
 
 
 
Net income (loss) attributable to common shareholders
$
6,587

 
$
2,652

 
$
(86,253
)
 
$
2,541

 
$
(28,250
)
 
$
9,239

 
$
(50,065
)
Dilutive effect of common units in the Operating Partnership
—

 
—

 
—

 
—

 
(1,887
)
 
—

 
(3,366
)
Amount allocable to restricted shares
(105
)
 
(141
)
 
(256
)
 
(262
)
 
(237
)
 
(246
)
 
(519
)
Numerator for diluted EPS
$
6,482

 
$
2,511

 
$
(86,509
)
 
$
2,279

 
$
(30,374
)
 
$
8,993

 
$
(53,950
)
Denominator:
 

 
 

 
 

 
 

 
 

 
 
 
 
Weighted average common shares - basic
71,624

 
71,458

 
71,351

 
71,312

 
68,446

 
71,541

 
67,399

Dilutive effect of common units in the Operating Partnership
—

 
—

 
—

 
—

 
4,382

 
—

 
4,389

Dilutive effect of share-based compensation awards
25

 
44

 
—

 
—

 
—

 
35

 
—

Weighted average common shares - diluted
71,649

 
71,502

 
71,351

 
71,312

 
72,828

 
71,576

 
71,788

Diluted EPS
$
0.09

 
$
0.04

 
$
(1.21
)
 
$
0.03

 
$
(0.42
)
 
$
0.13

 
$
(0.75
)

9

Corporate Office Properties Trust
Consolidated Reconciliations of AFFO
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Diluted FFO available to common share and common unit holders, as adjusted for comparability
$
41,288

 
$
40,525

 
$
42,206

 
$
39,101

 
$
41,483

 
$
81,813

 
$
76,045

Straight line rent adjustments
(1,857
)
 
(2,179
)
 
(2,144
)
 
(2
)
 
(2,611
)
 
(4,036
)
 
(6,523
)
Amortization of acquisition intangibles included in NOI
218

 
190

 
249

 
212

 
227

 
408

 
388

Share-based compensation, net of amounts capitalized
3,157

 
3,402

 
3,764

 
2,759

 
2,638

 
6,559

 
5,397

Amortization of deferred financing costs
1,597

 
1,572

 
1,506

 
1,629

 
1,702

 
3,169

 
3,461

Amortization of net debt discounts, net of amounts capitalized
682

 
663

 
634

 
1,184

 
1,464

 
1,345

 
2,862

Amortization of settled debt hedges
15

 
16

 
15

 
16

 
15

 
31

 
31

Recurring capital expenditures on properties not sold or in disposition plans
(6,074
)
 
(1,875
)
 
(12,550
)
 
(8,710
)
 
(10,274
)
 
(7,949
)
 
(18,250
)
Diluted AFFO, excluding recurring capital expenditures on properties in disposition plans
39,026

 
42,314

 
33,680

 
36,189

 
34,644

 
81,340

 
63,411

Recurring capital expenditures on properties sold or in disposition plans
(2,433
)
 
(1,548
)
 
(8,834
)
 
(2,889
)
 
(4,639
)
 
(3,981
)
 
(11,007
)
Diluted AFFO available to common share and common unit holders (“diluted AFFO”)
$
36,593

 
$
40,766

 
$
24,846

 
$
33,300

 
$
30,005

 
$
77,359

 
$
52,404

Recurring capital expenditures on properties not sold or in disposition plans
 

 
 

 
 

 
 

 
 

 
 
 
 
Tenant improvements and incentives on operating properties
$
2,663

 
$
666

 
$
10,036

 
$
5,533

 
$
7,752

 
$
3,329

 
$
15,187

Building improvements on operating properties
1,296

 
871

 
4,519

 
2,239

 
2,138

 
2,167

 
3,082

Leasing costs for operating properties
2,863

 
1,299

 
1,448

 
3,933

 
2,492

 
4,162

 
5,093

Less: Nonrecurring tenant improvements and incentives on operating properties
(97
)
 
(561
)
 
(1,371
)
 
(1,816
)
 
(866
)
 
(658
)
 
(3,077
)
Less: Nonrecurring building improvements on operating properties
(572
)
 
(407
)
 
(2,106
)
 
(1,069
)
 
(920
)
 
(979
)
 
(1,119
)
Less: Nonrecurring leasing costs for operating properties
(79
)
 
—

 
(5
)
 
(130
)
 
(347
)
 
(79
)
 
(963
)
Add: Recurring capital expenditures on operating properties held through joint ventures
—

 
7

 
29

 
20

 
25

 
7

 
47

Recurring capital expenditures on properties not sold or in disposition plans
$
6,074

 
$
1,875

 
$
12,550

 
$
8,710

 
$
10,274

 
$
7,949

 
$
18,250

Recurring capital expenditures on properties sold or in disposition plans
 

 
 

 
 

 
 

 
 

 
 
 
 
Tenant improvements and incentives on operating properties
$
1,827

 
$
930

 
$
7,648

 
$
1,549

 
$
3,364

 
$
2,757

 
$
9,199

Building improvements on operating properties
459

 
823

 
2,256

 
3,141

 
288

 
1,282

 
1,334

Leasing costs for operating properties
392

 
142

 
145

 
290

 
896

 
534

 
1,031

Less: Nonrecurring tenant improvements and incentives on operating properties
(7
)
 
(158
)
 
(244
)
 
(10
)
 
(9
)
 
(165
)
 
(246
)
Less: Nonrecurring building improvements on operating properties
(229
)
 
(189
)
 
(1,162
)
 
(1,977
)
 
100

 
(418
)
 
(311
)
Less: Nonrecurring leasing costs for operating properties
(9
)
 
—

 
191

 
(104
)
 
—

 
(9
)
 
—

Recurring capital expenditures on properties sold or in disposition plans
$
2,433

 
$
1,548

 
$
8,834

 
$
2,889

 
$
4,639

 
$
3,981

 
$
11,007


10


 Corporate Office Properties Trust
Consolidated Office Properties by Region - June 30, 2012
 
 
Operational
 
Under Construction/
Redevelopment
Property Region and Business Park/Submarket
 
# of
Properties
 
Total
Square Feet
 
Occupancy
%
 
Leased
 %
 
# of
Properties
 
Total
Square Feet
Baltimore/Washington Corridor:
 
 

 
 

 
 

 
 

 
 

 
 

National Business Park
 
26

 
3,078,743

 
95
%
 
98
%
 
3

 
282,079

Columbia Gateway
 
28

 
2,221,756

 
86
%
 
88
%
 
—

 
—

Airport Square/bwtech
 
26

 
1,941,304

 
83
%
 
84
%
 
—

 
—

Commons/Parkway
 
11

 
506,579

 
73
%
 
74
%
 
—

 
—

Other
 
20

 
1,115,112

 
88
%
 
96
%
 
1

 
89,268

Subtotal
 
111

 
8,863,494

 
88
%
 
91
%
 
4

 
371,347

Northern Virginia:
 
 

 
 

 
 

 
 

 
 

 
 

Westfields Corporate Center
 
9

 
1,435,677

 
85
%
 
89
%
 
—

 
—

Patriot Ridge
 
—

 
—

 
0
%
 
0
%
 
1

 
237,000

Herndon, Tysons Corner and Merrifield
 
8

 
1,500,745

 
88
%
 
89
%
 
—

 
—

Subtotal
 
17

 
2,936,422

 
87
%
 
89
%
 
1

 
237,000

San Antonio, Texas
 
 

 
 

 
 

 
 

 
 

 
 

Sentry Gateway
 
6

 
792,454

 
100
%
 
100
%
 
—

 
—

Other
 
2

 
122,975

 
74
%
 
74
%
 
—

 
—

Subtotal
 
8

 
915,429

 
96
%
 
96
%
 
—

 
—

Huntsville (1)
 
1

 
138,466

 
100
%
 
100
%
 
2

 
175,811

Washington, DC- Capital Riverfront (Maritime)
 
2

 
360,326

 
89
%
 
89
%
 
—

 
—

St. Mary’s & King George Counties
 
19

 
903,591

 
87
%
 
87
%
 
—

 
—

Greater Baltimore:
 
 

 
 

 
 

 
 

 
 

 
 

White Marsh and Rt 83 Corridor
 
36

 
2,127,002

 
86
%
 
86
%
 
—

 
—

Canton Crossing-Baltimore City
 
1

 
481,279

 
95
%
 
95
%
 
—

 
—

North Gate Business Park
 
2

 
156,765

 
68
%
 
69
%
 
1

 
128,119

Subtotal
 
39

 
2,765,046

 
86
%
 
87
%
 
1

 
128,119

Suburban Maryland
 
5

 
548,107

 
83
%
 
86
%
 
—

 
—

Colorado Springs
 
21

 
1,577,522

 
77
%
 
78
%
 
—

 
—

Greater Philadelphia, Pennsylvania
 
3

 
482,772

 
100
%
 
100
%
 
1

 
66,255

Other (1)
 
2

 
295,842

 
100
%
 
100
%
 
—

 
—

Total
 
228

 
19,787,017

 
87
%
 
89
%
 
9

 
978,532

 
(1) For purposes of this summary, Huntsville is reported as a separate region. Other presentations within this package include Huntsville in our “Other” region.

11

Corporate Office Properties Trust
NOI from Real Estate Operations and Occupancy by Property Grouping
(dollars and square feet in thousands)
 
 
As of 6/30/12
 
 
 
 
 
 
# of
Operating Properties
 
Operational Square Feet
 
 
 
 
 
Annualized
Rental Revenue
 
Percentage of Total
Annualized
Rental Revenue
 
NOI from Real
Estate Operations
for Three Months Ended
 
NOI from Real
Estate Operations
for Six Months Ended
Property Grouping
 
 
 
% Occupied (1)
 
% Leased (1)
 
 
 
6/30/12
 
6/30/12
Same Office Properties (2)
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Stabilized properties
 
161

 
14,939

 
90.7
%
 
91.8
%
 
$
383,528

 
81.8
%
 
$
63,547

 
$
126,027

Unstabilized properties (3)
 
3

 
446

 
57.8
%
 
75.3
%
 
8,101

 
1.7
%
 
877

 
1,325

Total Same Office Properties
 
164

 
15,385

 
89.7
%
 
91.3
%
 
391,629

 
83.5
%
 
64,424

 
127,352

Office Properties Placed in Service (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized properties
 
6

 
650

 
100.0
%
 
100.0
%
 
18,681

 
4.0
%
 
3,653

 
7,064

Unstabilized properties (3)
 
2

 
205

 
14.4
%
 
53.6
%
 
917

 
0.2
%
 
(9
)
 
7

Acquired Office Properties (5)
 
1

 
138

 
100.0
%
 
100.0
%
 
3,667

 
0.8
%
 
899

 
1,659

Subtotal
 
173

 
16,378

 
89.3
%
 
91.2
%
 
414,894

 
88.5
%
 
68,967

 
136,082

Strategic Reallocation Plan Properties (6)
 
55

 
3,409

 
78.1
%
 
80.2
%
 
54,030

 
11.5
%
 
8,347

 
17,000

Disposed Office Properties
 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
808

 
2,294

Other
 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
687

 
350

Total Portfolio
 
228

 
19,787

 
87.4
%
 
89.3
%
 
$
468,924

 
100.0
%
 
$
78,809

 
$
155,726

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic Tenant Properties
 
103

 
10,588

 
90.1
%
 
92.0
%
 
$
282,551

 
60.3
%
 
$
48,555

 
$
96,246

 
(1) Percentages calculated based on operational square feet.
(2) Properties owned and 100% operational since 1/1/11.
(3) Properties with first generation operational space less than 90% occupied at 6/30/12.
(4) Newly constructed or redeveloped properties placed in service that were not fully operational by 1/1/11.
(5) Acquired properties that were not owned and fully operational by 1/1/11.
(6) The carrying value of operating property assets in the Strategic Reallocation Plan totaled $364,026 at 6/30/12.



12

Corporate Office Properties Trust
Real Estate Revenues* by Segment
(dollars in thousands)
 
 
Three Months Ended
 
Six Months Ended
 
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
 
Office Properties:
 

 
 

 
 

 
 

 
 

 
 
 
 
 
Baltimore/Washington Corridor
$
55,677

 
$
56,250

 
$
57,195

 
$
54,744

 
$
52,860

 
111,927

 
106,112

 
Northern Virginia
19,051

 
18,560

 
18,855

 
18,640

 
18,445

 
37,611

 
36,719

 
San Antonio
7,830

 
7,608

 
7,613

 
7,701

 
7,089

 
15,438

 
14,752

 
Washington, DC - Capitol Riverfront
4,232

 
3,894

 
4,529

 
4,507

 
4,252

 
8,126

 
8,842

 
St. Mary’s and King George Counties
4,139

 
4,212

 
3,760

 
3,508

 
3,564

 
8,351

 
7,098

 
Greater Baltimore
14,664

 
15,372

 
17,017

 
18,193

 
17,846

 
30,036

 
35,458

 
Suburban Maryland
4,560

 
5,749

 
5,400

 
5,648

 
5,325

 
10,309

 
10,934

 
Colorado Springs
6,149

 
6,453

 
5,991

 
6,037

 
5,912

 
12,602

 
11,832

 
Greater Philadelphia
2,458

 
2,172

 
2,143

 
1,701

 
1,675

 
4,630

 
3,614

 
Other
3,770

 
3,618

 
3,668

 
3,167

 
2,562

 
7,388

 
5,400

 
Wholesale Data Center
1,438

 
1,416

 
1,285

 
1,283

 
1,276

 
2,854

 
2,486

 
Real estate revenues
$
123,968

 
$
125,304

 
$
127,456

 
$
125,129

 
$
120,806

 
$
249,272

 
$
243,247

 
NOI from Real Estate Operations* by Segment
(dollars in thousands)
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
 
Office Properties:
 

 
 

 
 

 
 

 
 

 
 
 
 
 
Baltimore/Washington Corridor
$
36,612

 
$
36,099

 
$
35,192

 
$
35,116

 
$
34,877

 
72,711

 
67,071

 
Northern Virginia
11,875

 
11,160

 
11,715

 
11,362

 
11,169

 
23,035

 
21,853

 
San Antonio
3,807

 
3,791

 
3,816

 
3,877

 
3,951

 
7,598

 
7,801

 
Washington, DC - Capitol Riverfront
2,516

 
1,984

 
2,733

 
2,699

 
2,595

 
4,500

 
5,558

 
St. Mary’s and King George Counties
3,000

 
2,954

 
2,578

 
2,365

 
2,603

 
5,954

 
5,123

 
Greater Baltimore
8,859

 
9,482

 
9,936

 
10,640

 
10,613

 
18,341

 
19,773

 
Suburban Maryland
2,678

 
3,228

 
2,902

 
3,673

 
3,147

 
5,906

 
6,095

 
Colorado Springs
3,955

 
4,068

 
3,383

 
3,572

 
3,932

 
8,023

 
7,509

 
Greater Philadelphia
1,726

 
1,557

 
1,655

 
1,284

 
1,330

 
3,283

 
2,851

 
Other
3,518

 
2,385

 
2,964

 
2,318

 
1,469

 
5,903

 
3,840

 
Wholesale Data Center
263

 
209

 
387

 
229

 
447

 
472

 
948

 
NOI from real estate operations
$
78,809

 
$
76,917

 
$
77,261

 
$
77,135

 
$
76,133

 
$
155,726

 
$
148,422


*Includes continuing and discontinued operations.


13

Corporate Office Properties Trust
Consolidated Office Occupancy Rates by Region by Quarter
 
Baltimore /
Washington
Corridor
 
Northern
Virginia
 
San
Antonio
 
Washington, DC-
Capitol Riverfront
 
St. Mary’s &
King George
Counties
 
Greater
Baltimore
 
Suburban
Maryland
 
Colorado
Springs
 
Greater
Philadelphia
 
Other
 
Total
June 30, 2012
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 

Number of Buildings
111

 
17

 
8

 
2

 
19

 
39

 
5

 
21

 
3

 
3

 
228

Rentable Square Feet
8,863,494

 
2,936,422

 
915,429

 
360,326

 
903,591

 
2,765,046

 
548,107

 
1,577,522

 
482,772

 
434,308

 
19,787,017

Occupied %
87.9
%
 
86.5
%
 
96.5
%
 
89.0
%
 
86.9
%
 
86.1
%
 
83.5
%
 
76.6
%
 
100.0
%
 
100.0
%
 
87.4
%
Leased %
90.9
%
 
89.2
%
 
96.5
%
 
89.0
%
 
86.9
%
 
86.8
%
 
86.1
%
 
77.7
%
 
100.0
%
 
100.0
%
 
89.3
%
March 31, 2012
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Number of Buildings
111

 
17

 
8

 
2

 
19

 
39

 
8

 
21

 
3

 
3

 
231

Rentable Square Feet
8,853,652

 
2,936,396

 
915,429

 
360,326

 
903,534

 
2,764,649

 
1,018,922

 
1,569,300

 
479,957

 
434,308

 
20,236,473

Occupied %
87.6
%
 
86.4
%
 
96.5
%
 
89.0
%
 
88.4
%
 
86.1
%
 
79.6
%
 
77.0
%
 
99.7
%
 
100.0
%
 
87.0
%
Leased %
90.2
%
 
87.2
%
 
96.5
%
 
89.0
%
 
88.4
%
 
87.1
%
 
86.2
%
 
79.3
%
 
99.7
%
 
100.0
%
 
88.9
%
December 31, 2011
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Number of Buildings
111

 
17

 
9

 
2

 
19

 
46

 
8

 
21

 
2

 
3

 
238

Rentable Square Feet
8,859,080

 
2,935,786

 
1,010,349

 
361,186

 
903,534

 
2,984,071

 
1,018,922

 
1,569,336

 
437,718

 
434,308

 
20,514,290

Occupied %
87.9
%
 
84.8
%
 
90.7
%
 
91.6
%
 
87.3
%
 
84.5
%
 
79.6
%
 
74.9
%
 
99.7
%
 
100.0
%
 
86.2
%
Leased %
90.0
%
 
87.3
%
 
90.7
%
 
93.3
%
 
88.0
%
 
86.4
%
 
84.2
%
 
76.9
%
 
99.7
%
 
100.0
%
 
88.2
%
September 30, 2011
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Number of Buildings
110

 
17

 
8

 
2

 
18

 
61

 
8

 
21

 
2

 
3

 
250

Rentable Square Feet
8,725,790

 
2,801,546

 
915,429

 
362,209

 
820,692

 
3,572,775

 
1,007,342

 
1,569,336

 
437,718

 
434,308

 
20,647,145

Occupied %
89.4
%
 
88.2
%
 
100.0
%
 
97.4
%
 
87.4
%
 
83.8
%
 
75.5
%
 
76.7
%
 
89.9
%
 
100.0
%
 
87.4
%
Leased %
90.1
%
 
90.2
%
 
100.0
%
 
97.4
%
 
87.8
%
 
86.1
%
 
86.8
%
 
77.3
%
 
99.7
%
 
100.0
%
 
89.2
%
June 30, 2011
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Number of Buildings
109

 
17

 
8

 
2

 
18

 
66

 
8

 
21

 
2

 
2

 
253

Rentable Square Feet
8,662,140

 
2,828,117

 
915,429

 
362,209

 
820,692

 
3,784,852

 
1,009,394

 
1,569,336

 
437,718

 
295,842

 
20,685,729

Occupied %
88.6
%
 
87.6
%
 
100.0
%
 
95.4
%
 
87.0
%
 
83.9
%
 
74.9
%
 
76.0
%
 
85.8
%
 
100.0
%
 
86.6
%
Leased %
90.4
%
 
89.3
%
 
100.0
%
 
98.3
%
 
87.4
%
 
85.1
%
 
84.7
%
 
76.7
%
 
99.7
%
 
100.0
%
 
88.7
%
 
Summary of Operating, Construction and Redevelopment Office Properties at June 30, 2012
 
Operating
Properties
 
Under
Construction
 
Under
Redevelopment
 
Partially
Operational
Properties (1)
 
Total
# of Properties
228

 
8

 
1

 
(2
)
 
235

Total Square Feet
19,787,017

 
987,810

 
113,293

 
(122,571
)
 
20,765,549

Leased Square Feet
17,677,543

 
 

 
 

 
 

 
 

% Leased
89.3
%
 
 

 
 

 
 

 
 

(1) Adjustment for partially operational properties included in both operating properties and under construction or redevelopment.

14

Corporate Office Properties Trust
Same Office Properties (1) Average Occupancy Rates by Region 
 
Number of Buildings
 
Rentable Square Feet
 
Three Months Ended
 
Six Months Ended
 
 
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Baltimore Washington Corridor
87

 
7,814,963

 
90.4
%
 
89.6
%
 
90.2
%
 
90.2
%
 
89.5
%
 
90.0
%
 
89.4
%
Northern Virginia
16

 
2,784,925

 
87.4
%
 
86.8
%
 
88.0
%
 
90.2
%
 
89.7
%
 
87.1
%
 
89.1
%
San Antonio
8

 
915,429

 
96.5
%
 
97.6
%
 
100.0
%
 
100.0
%
 
100.0
%
 
97.1
%
 
100.0
%
Washington, DC - Capitol Riverfront
2

 
360,326

 
89.0
%
 
88.3
%
 
95.5
%
 
98.0
%
 
95.4
%
 
88.6
%
 
96.4
%
St. Mary’s and King George Counties
12

 
585,756

 
94.1
%
 
94.9
%
 
95.6
%
 
96.9
%
 
97.7
%
 
94.5
%
 
97.7
%
Greater Baltimore
29

 
1,768,284

 
87.5
%
 
86.8
%
 
85.6
%
 
85.5
%
 
84.6
%
 
87.2
%
 
84.9
%
Suburban Maryland
2

 
242,070

 
92.5
%
 
90.0
%
 
90.0
%
 
89.2
%
 
87.6
%
 
91.2
%
 
87.6
%
Colorado Springs
5

 
398,044

 
74.5
%
 
74.7
%
 
79.0
%
 
84.6
%
 
86.3
%
 
74.6
%
 
86.5
%
Greater Philadelphia
1

 
219,065

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Other
2

 
295,842

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Total Office
164

 
15,384,704

 
89.9
%
 
89.4
%
 
90.2
%
 
90.8
%
 
90.3
%
 
89.7
%
 
90.2
%
Total Same Office Properties occupancy as of period end
 
 

 
89.7
%
 
89.4
%
 
89.6
%
 
91.0
%
 
90.4
%
 
89.7
%
 
90.4
%

(1)  Same office properties represent buildings owned and 100% operational since January 1, 2011, excluding properties held for future disposition.




15

Corporate Office Properties Trust
Same Office Property Real Estate Revenues by Region
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Office Properties:
 

 
 

 
 

 
 

 
 

 
 
 
 
Baltimore/Washington Corridor
$
51,110

 
$
51,560

 
$
52,622

 
$
50,722

 
$
48,807

 
102,670

 
98,589

Northern Virginia
18,440

 
17,996

 
18,471

 
18,246

 
18,082

 
36,436

 
35,965

San Antonio
7,830

 
7,614

 
7,610

 
7,698

 
7,089

 
15,444

 
14,752

Washington, DC - Capitol Riverfront
4,232

 
3,894

 
4,529

 
4,507

 
4,252

 
8,126

 
8,842

St. Mary’s and King George Counties
2,917

 
2,995

 
2,866

 
2,935

 
3,008

 
5,912

 
5,965

Greater Baltimore
9,735

 
10,083

 
9,941

 
9,599

 
9,572

 
19,818

 
19,071

Suburban Maryland
2,069

 
2,051

 
1,994

 
2,207

 
1,961

 
4,120

 
4,183

Colorado Springs
1,524

 
1,627

 
1,469

 
1,507

 
1,438

 
3,151

 
2,935

Greater Philadelphia
884

 
731

 
711

 
707

 
715

 
1,615

 
1,221

Other
2,434

 
2,403

 
2,449

 
2,377

 
2,151

 
4,837

 
4,587

Real estate revenues
$
101,175

 
$
100,954

 
$
102,662

 
$
100,505

 
$
97,075

 
$
202,129

 
$
196,110

 
Same Office Property NOI by Region
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Office Properties:
 

 
 

 
 

 
 

 
 

 
 
 
 
Baltimore/Washington Corridor
$
33,528

 
$
32,944

 
$
31,952

 
$
32,510

 
$
32,013

 
66,472

 
62,286

Northern Virginia
11,409

 
10,729

 
11,458

 
11,129

 
10,963

 
22,138

 
21,399

San Antonio
3,805

 
3,847

 
3,885

 
3,879

 
3,951

 
7,652

 
7,801

Washington, DC - Capitol Riverfront
2,516

 
1,984

 
2,733

 
2,699

 
2,595

 
4,500

 
5,558

St. Mary’s and King George Counties
2,147

 
2,107

 
2,016

 
2,051

 
2,256

 
4,254

 
4,427

Greater Baltimore
5,929

 
6,350

 
6,103

 
5,682

 
5,868

 
12,279

 
11,304

Suburban Maryland
1,350

 
1,276

 
1,218

 
1,819

 
1,250

 
2,626

 
2,676

Colorado Springs
875

 
881

 
731

 
741

 
807

 
1,756

 
1,590

Greater Philadelphia
689

 
649

 
675

 
669

 
680

 
1,338

 
1,137

Other
2,176

 
2,161

 
2,234

 
2,093

 
1,920

 
4,337

 
4,131

Same office property NOI
64,424

 
62,928

 
63,005

 
63,272

 
62,303

 
127,352

 
122,309

Add (less): Straight-line rent adjustments
(942
)
 
(1,879
)
 
(619
)
 
1,132

 
(2,060
)
 
(2,821
)
 
(5,589
)
Less: Amortization of deferred market rental revenue
(97
)
 
(99
)
 
(83
)
 
(73
)
 
(32
)
 
(196
)
 
(132
)
Add: Amortization of above-market cost arrangements
371

 
353

 
434

 
434

 
434

 
724

 
868

Same office property cash NOI
63,756

 
61,303

 
62,737

 
64,765

 
60,645

 
125,059

 
117,456

Less: Lease termination fees, gross
(164
)
 
(534
)
 
(48
)
 
(130
)
 
(175
)
 
(698
)
 
(313
)
Same office property cash NOI, excluding gross lease termination fees
$
63,592

 
$
60,769

 
$
62,689

 
$
64,635

 
$
60,470

 
$
124,361

 
$
117,143

 
Note:  Same office properties represent buildings owned and 100% operational since January 1, 2011, excluding properties held for future disposition.

16

Corporate Office Properties Trust
Unstabilized Office Properties (1) - June 30, 2012  
 
 
 
 
 
 
 
Property Grouping
Operational Square Feet
 
Occupancy %
 
Leased %
 
Same Office Properties (2) 
 

 
 
 
 
 
3120 Fairview Park Drive
180,854

 
38.2%
 
46.0%
 
7740 Milestone Parkway
146,666

 
58.3%
 
100.0%
 
5825 University Research Court
118,621

 
87.2%
 
89.5%
 
Total Unstabilized Same Office Properties
446,141

 
57.8%
 
75.3%
 
Office Properties Placed in Service (3) 
 

 
 
 
 
 
316 Sentinel Way
125,149

 
0.0%
 
63.1%
(4)
210 Research Boulevard
79,573

 
37.0%
 
38.6%
 
Total Unstabilized Office Properties Placed in Service
204,722

 
14.4%
 
53.6%
 
Total Unstabilized Office Properties, Excluding Properties in Strategic Reallocation Plan
650,863

 
44.2%
 
68.5%
 
Unstabilized Strategic Reallocation Plan Office Properties (3 Properties)
309,590

 
32.2%
 
34.7%
 
Total Unstabilized Office Properties
960,453

 
40.3%
 
57.6%
 
 
(1) Properties with first generation operational space less than 90% occupied at 6/30/12.
(2) Properties owned and 100% operational since 1/1/11.
(3) Newly constructed or redeveloped properties placed in service that were not fully operational by 1/1/11.
(4) Property was 100% leased at 7/12/12.



17

Corporate Office Properties Trust
Office Leasing (1)
Quarter Ended June 30, 2012
 
Baltimore/
Washington
Corridor
 
Northern
Virginia
 
San Antonio
 
Washington DC-Capital Riverfront
 
St. Mary’s & King George Counties
 
Greater
Baltimore
 
Suburban
Maryland
 
Colorado
Springs
 
Greater
Philadelphia
 
Total
Office
First Generation Space Leasing
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

 
 

Construction and Redevelopment Space
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

 
 

Leased Square Feet
70,859

 
—

 
—

 
—

 
—

 
1,311

 
2,710

 
12,258

 
6,567

 
93,705

Average Committed Cost Per Square Foot
$
63.83

 
$
—

 
$
—

 
$
—

 
$
—

 
$
73.04

 
$
55.16

 
$
52.66

 
$
62.35

 
$
62.14

Weighted Average Lease Term in years
9.3

 
—

 
—

 
—

 
—

 
5.2

 
8.6

 
6.6

 
7.1

 
8.7

Other First Generation Space
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Leased Square Feet
68,829

 
53,932

 
—

 
—

 
—

 
7,183

 
—

 
2,200

 
—

 
132,144

Average Committed Cost Per Square Foot
$
26.32

 
$
50.51

 
$
—

 
$
—

 
$
—

 
$
23.36

 
$
—

 
$
15.00

 
$
—

 
$
35.85

Weighted Average Lease Term in years
5.5

 
7.6

 
—

 
—

 
—

 
4.2

 
—

 
5.0

 
—

 
6.3

Total First Generation Space Leased
139,688

 
53,932

 
—

 
—

 
—

 
8,494

 
2,710

 
14,458

 
6,567

 
225,849

Second Generation Space Leasing
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Renewed Space
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Renewal Square Feet Leased
88,919

 
12,106

 
45,935

 
21,734

 
155,464

 
60,155

 
4,629

 
11,553

 
—

 
400,495

Expiring Square Feet
200,768

 
34,962

 
45,935

 
21,734

 
175,517

 
102,708

 
4,629

 
45,361

 
—

 
631,614

Vacated Square Feet
111,849

 
22,856

 
—

 
—

 
20,053

 
42,553

 
—

 
33,808

 
—

 
231,119

Retention Rate (% based upon square feet)
44.3
 %
 
34.6
 %
 
100.0
%
 
100.0
 %
 
88.6
 %
 
58.6
 %
 
100.0
 %
 
25.5
 %
 
0.0
%
 
63.4
 %
Renewed Space Data:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Average Committed Cost per Square Foot
$
8.85

 
$
4.14

 
$
15.70

 
$
10.94

 
$
5.27

 
$
3.60

 
$
—

 
$
23.39

 
$
—

 
$
7.74

Weighted Average Lease Term in years
3.3

 
3.8

 
5.3

 
4.9

 
2.8

 
4.5

 
5.0

 
4.9

 
—

 
3.7

Change in Total Rent - GAAP
(10.1
)%
 
(1.6
)%
 
9.3
%
 
(11.6
)%
 
2.9
 %
 
(10.7
)%
 
(10.7
)%
 
(0.1
)%
 
0.0
%
 
(3.7
)%
Change in Total Rent - Cash
(11.4
)%
 
(6.0
)%
 
3.8
%
 
(19.0
)%
 
(1.3
)%
 
(15.7
)%
 
(18.1
)%
 
(8.3
)%
 
0.0
%
 
(8.1
)%
Retenanted Space
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Leased Square Feet
32,228

 
5,806

 
—

 
—

 
6,656

 
21,090

 
15,273

 
18,520

 
—

 
99,573

Retenanted Space Data:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Average Committed Cost per Square Foot
$
14.34

 
$
48.63

 
$
—

 
$
—

 
$
3.56

 
$
5.39

 
$
—

 
$
30.79

 
$
—

 
$
14.58

Weighted Average Lease Term in years
4.5

 
5.2

 
—

 
—

 
3.4

 
2.8

 
5.3

 
5.4

 
—

 
4.4

Change in Total Rent - GAAP
(14.5
)%
 
(6.2
)%
 
0.0
%
 
0.0
 %
 
(4.7
)%
 
(14.1
)%
 
(25.9
)%
 
(18.0
)%
 
0.0
%
 
(15.3
)%
Change in Total Rent - Cash
(23.2
)%
 
(12.9
)%
 
0.0
%
 
0.0
 %
 
5.8
 %
 
(29.7
)%
 
(50.4
)%
 
(22.8
)%
 
0.0
%
 
(25.7
)%
Total Second Generation Space Leased
121,147

 
17,912

 
45,935

 
21,734

 
162,120

 
81,245

 
19,902

 
30,073

 
—

 
500,068

Total Second Generation Space Data:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Average Committed Cost per Square Foot
$
10.31

 
$
18.56

 
$
15.70

 
$
10.94

 
$
5.20

 
$
4.06

 
$
—

 
$
27.95

 
$
—

 
$
9.11

Weighted Average Lease Term in Years
3.6

 
4.3

 
5.3

 
4.9

 
2.9

 
4.0

 
5.2

 
5.2

 
—

 
3.8

Change in Total Rent - GAAP
(11.3
)%
 
(3.0
)%
 
9.3
%
 
(11.6
)%
 
2.6
 %
 
(11.5
)%
 
(22.8
)%
 
(12.0
)%
 
0.0
%
 
(6.1
)%
Change in Total Rent - Cash
(14.8
)%
 
(8.2
)%
 
3.8
%
 
(19.0
)%
 
(1.0
)%
 
(19.2
)%
 
(44.8
)%
 
(17.9
)%
 
0.0
%
 
(11.8
)%
Total Square Feet Leased
260,835

 
71,844

 
45,935

 
21,734

 
162,120

 
89,739

 
22,612

 
44,531

 
6,567

 
725,917

(1) This presentation reflects consolidated properties.
Notes:  No expiration, renewal or retenanting activity transpired in our Other region.
Activity is exclusive of owner occupied space and leases with less than a one-year term. Retention rate includes early renewals.


18

Corporate Office Properties Trust
Office Leasing (1)
Six Months Ended June 30, 2012
 
Baltimore/
Washington
Corridor
 
Northern
Virginia
 
San Antonio
 
Washington DC-Capital Riverfront
 
St. Mary’s & King George Counties
 
Greater
Baltimore
 
Suburban
Maryland
 
Colorado
Springs
 
Greater
Philadelphia
 
Total
Office
First Generation Space Leasing
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

 
 

Construction and Redevelopment Space
 

 
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

 
 

Leased Square Feet
131,868

 
—

 
—

 
—

 
—

 
3,174

 
2,710

 
30,418

 
11,371

 
179,541

Average Committed Cost Per Square Foot
$
58.70

 
$
—

 
$
—

 
$
—

 
$
—

 
$
30.17

 
$
55.16

 
$
49.53

 
$
59.58

 
$
56.65

Weighted Average Lease Term in years
8.2

 
—

 
—

 
—

 
—

 
5.1

 
8.6

 
2.7

 
6.3

 
7.1

Other First Generation Space
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Leased Square Feet
88,997

 
53,932

 
—

 
—

 
—

 
18,111

 
9,155

 
5,309

 
—

 
175,504

Average Committed Cost Per Square Foot
$
27.81

 
$
50.51

 
$
—

 
$
—

 
$
—

 
$
27.79

 
$
40.67

 
$
15.00

 
$
—

 
$
35.07

Weighted Average Lease Term in years
6.0

 
7.6

 
—

 
—

 
—

 
5.6

 
5.2

 
4.5

 
—

 
6.4

Total First Generation Space Leased
220,865

 
53,932

 
—

 
—

 
—

 
21,285

 
11,865

 
35,727

 
11,371

 
355,045

Second Generation Space Leasing
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Renewed Space
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Renewal Square Feet Leased
289,426

 
38,584

 
45,935

 
21,734

 
163,657

 
125,222

 
15,756

 
20,052

 
—

 
720,366

Expiring Square Feet
569,842

 
63,974

 
78,359

 
21,734

 
183,710

 
183,660

 
15,756

 
53,860

 
—

 
1,170,895

Vacated Square Feet
280,416

 
25,390

 
32,424

 
—

 
20,053

 
58,438

 
—

 
33,808

 
—

 
450,529

Retention Rate (% based upon square feet)
50.8
 %
 
60.3
 %
 
58.6
%
 
100.0
 %
 
89.1
 %
 
68.2
 %
 
100.0
 %
 
37.2
 %
 
0.0
%
 
61.5
 %
Renewed Space Data:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Average Committed Cost per Square Foot
$
8.19

 
$
8.70

 
$
15.70

 
$
10.94

 
$
5.09

 
$
5.51

 
$
2.41

 
$
16.05

 
$
—

 
$
7.70

Weighted Average Lease Term in years
3.7

 
4.3

 
5.3

 
4.9

 
2.8

 
4.3

 
6.5

 
4.4

 
—

 
3.9

Change in Total Rent - GAAP
(0.4
)%
 
(4.8
)%
 
9.3
%
 
(11.6
)%
 
3.4
 %
 
(5.0
)%
 
1.6
 %
 
(0.1
)%
 
0.0
%
 
(1.1
)%
Change in Total Rent - Cash
(7.2
)%
 
(12.7
)%
 
3.8
%
 
(19.0
)%
 
(1.4
)%
 
(14.5
)%
 
(5.9
)%
 
(6.1
)%
 
0.0
%
 
(8.0
)%
Retenanted Space
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Leased Square Feet
120,068

 
13,683

 
—

 
—

 
6,656

 
34,431

 
26,786

 
18,520

 
—

 
220,144

Retenanted Space Data:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Average Committed Cost per Square Foot
$
17.17

 
$
34.00

 
$
—

 
$
—

 
$
3.56

 
$
5.86

 
$
7.50

 
$
30.79

 
$
—

 
$
16.00

Weighted Average Lease Term in years
4.3

 
5.7

 
—

 
—

 
3.4

 
3.4

 
5.3

 
5.4

 
—

 
4.4

Change in Total Rent - GAAP
(0.8
)%
 
(3.4
)%
 
0.0
%
 
0.0
 %
 
(4.7
)%
 
(16.2
)%
 
(24.0
)%
 
(18.0
)%
 
0.0
%
 
(7.5
)%
Change in Total Rent - Cash
(11.2
)%
 
(8.5
)%
 
0.0
%
 
0.0
 %
 
5.8
 %
 
(26.4
)%
 
(41.8
)%
 
(22.8
)%
 
0.0
%
 
(17.3
)%
Total Second Generation Space Leased
409,494

 
52,267

 
45,935

 
21,734

 
170,313

 
159,653

 
42,542

 
38,572

 
—

 
940,510

Total Second Generation Space Data:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Average Committed Cost per Square Foot
$
10.82

 
$
15.32

 
$
15.70

 
$
10.94

 
$
5.03

 
$
5.58

 
$
5.62

 
$
23.13

 
$
—

 
$
9.65

Weighted Average Lease Term in Years
3.9

 
4.7

 
5.3

 
4.9

 
2.9

 
4.1

 
5.8

 
4.8

 
—

 
4.0

Change in Total Rent - GAAP
(0.5
)%
 
(4.4
)%
 
9.3
%
 
(11.6
)%
 
3.0
 %
 
(7.3
)%
 
(15.5
)%
 
(9.7
)%
 
0.0
%
 
(2.5
)%
Change in Total Rent - Cash
(8.3
)%
 
(11.6
)%
 
3.8
%
 
(19.0
)%
 
(1.1
)%
 
(17.1
)%
 
(30.7
)%
 
(15.1
)%
 
0.0
%
 
(10.1
)%
Total Square Feet Leased
630,359

 
106,199

 
45,935

 
21,734

 
170,313

 
180,938

 
54,407

 
74,299

 
11,371

 
1,295,555


(1) This presentation reflects consolidated properties.
Notes:  No expiration, renewal or retenanting activity transpired in our Other region.
Activity is exclusive of owner occupied space and leases with less than a one-year term. Retention rate includes early renewals.

19

Corporate Office Properties Trust
Office Lease Expiration Analysis as of 6/30/12 (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Office Portfolio
Strategic Tenant Properties Only
Year and Region of Lease (2)
 
Number of Leases Expiring
 
Square Footage of Leases Expiring
 
Annual Rental
Revenue of Expiring Leases (3) (000's)
 
Percentage
of Total Annualized 
Rental Revenue Expiring
 
Annual Rental Revenue of Expiring Leases per Occupied Square Foot
 
 
Number of Leases Expiring
 
Square Footage of Leases Expiring
 
Annual Rental
Revenue of Expiring Leases (3) (000's)
 
Percentage of Strategic TenantProperties Annualized Rental Revenue Expiring
 
Annual Rental Revenue of Expiring Leases per Occupied Square Foot
Baltimore/Washington Corridor
 
37

 
559,331

 
$
15,594

 
3.3
%
 
$
27.88

 
 
9

 
382,432

 
$
11,331

 
4.0
%
 
$
29.63

Northern Virginia
 
11

 
304,275

 
9,003

 
1.9
%
 
29.59

 
 
3

 
240,981

 
6,686

 
2.4
%
 
27.74

Washington, DC-Capitol Riverfront
 
2

 
7,779

 
350

 
0.1
%
 
44.99

 
 
2

 
7,779

 
350

 
0.1
%
 
44.99

St. Mary’s and King George Cos.
 
10

 
160,525

 
3,046

 
0.6
%
 
18.98

 
 
10

 
160,525

 
3,046

 
1.1
%
 
18.98

Greater Baltimore
 
11

 
146,611

 
2,953

 
0.6
%
 
20.14

 
 
—

 
—

 
—

 
0.0
%
 
—

Suburban Maryland
 
1

 
6,469

 
169

 
0.0
%
 
26.12

 
 
—

 
—

 
—

 
0.0
%
 
—

Colorado Springs
 
7

 
41,154

 
682

 
0.1
%
 
16.57

 
 
3

 
6,892

 
25

 
0.0
%
 
3.63

Other
 
0
 
23,299

 
617

 
0.1
%
 
26.48

 
 
—

 
—

 
—

 
0.0
%
 
—

2012
 
79
 
1,249,443

 
32,414

 
6.7
%
 
25.94

 
 
27

 
798,609

 
21,438

 
7.6
%
 
26.84

Baltimore/Washington Corridor
 
53

 
1,352,320

 
41,657

 
8.9
%
 
30.80

 
 
18

 
942,295

 
31,962

 
11.3
%
 
33.92

Northern Virginia
 
10

 
143,538

 
3,893

 
0.8
%
 
27.12

 
 
3

 
34,576

 
1,160

 
0.4
%
 
33.55

Washington, DC-Capitol Riverfront
 
4

 
111,822

 
4,769

 
1.0
%
 
42.65

 
 
4

 
111,822

 
4,769

 
1.7
%
 
42.65

St. Mary’s and King George Cos.
 
11

 
138,394

 
2,624

 
0.6
%
 
18.96

 
 
11

 
138,394

 
2,624

 
0.9
%
 
18.96

Greater Baltimore
 
18

 
116,310

 
2,664

 
0.6
%
 
22.90

 
 
—

 
—

 
—

 
0.0
%
 
—

Suburban Maryland
 
4

 
56,398

 
1,624

 
0.3
%
 
28.80

 
 
—

 
—

 
—

 
0.0
%
 
—

Colorado Springs
 
11

 
139,891

 
2,982

 
0.6
%
 
21.32

 
 
7

 
22,768

 
556

 
0.2
%
 
24.42

2013
 
111

 
2,058,673

 
60,213

 
12.8
%
 
29.25

 
 
43

 
1,249,855

 
41,071

 
14.5
%
 
32.86

Baltimore/Washington Corridor
 
52

 
896,967

 
24,791

 
5.3
%
 
27.64

 
 
15

 
603,058

 
17,736

 
6.3
%
 
29.41

Northern Virginia
 
10

 
474,721

 
14,934

 
3.2
%
 
31.46

 
 
6

 
258,433

 
8,163

 
2.9
%
 
31.59

Washington, DC-Capitol Riverfront
 
6

 
70,200

 
3,195

 
0.7
%
 
45.51

 
 
6

 
70,200

 
3,195

 
1.1
%
 
45.51

St. Mary’s and King George Cos.
 
12

 
84,068

 
1,668

 
0.4
%
 
19.84

 
 
12

 
84,068

 
1,668

 
0.6
%
 
19.84

Greater Baltimore
 
30

 
247,849

 
4,823

 
1.0
%
 
19.46

 
 
—

 
—

 
—

 
0.0
%
 
—

Suburban Maryland
 
4

 
29,389

 
955

 
0.2
%
 
32.50

 
 
—

 
—

 
—

 
0.0
%
 
—

Colorado Springs
 
10

 
167,375

 
3,380

 
0.7
%
 
20.19

 
 
5

 
52,528

 
1,217

 
0.4
%
 
23.17

Other
 
1

 
115,167

 
3,050

 
0.7
%
 
26.48

 
 
—

 
—

 
—

 
0.0
%
 
—

2014
 
125

 
2,085,736

 
56,796

 
12.2
%
 
27.23

 
 
44

 
1,068,287

 
31,979

 
11.3
%
 
29.93

2015
 
120

 
2,885,066

 
75,760

 
16.2
%
 
26.26

 
 
54

 
1,804,341

 
52,820

 
18.6
%
 
29.27

2016
 
89

 
1,771,118

 
46,165

 
9.9
%
 
26.07

 
 
29

 
874,632

 
24,230

 
8.6
%
 
27.70

Thereafter
 
236

 
7,235,641

 
197,576

 
42.2
%
 
27.31

 
 
78

 
3,743,241

 
111,013

 
39.4
%
 
29.66

Total / Average
 
760
 
17,285,677

 
$
468,924

 
100.0
%
 
$
27.13

 
 
275

 
9,538,965

 
$
282,551

 
100.0
%
 
$
29.62

Note:  As of June 30, 2012, the weighted average lease term is 4.6 years for both the entire portfolio and for the Strategic Tenant Properties.
(1)
This presentation reflects consolidated properties.  This expiration analysis 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 June 30, 2012 of 391,866 for the portfolio, including 202,279 for the Strategic Tenant Properties.
(2)
Many of our government leases are subject to certain early termination provisions which are customary to government leases.  The year of lease expiration was computed assuming no exercise of such early termination rights.
(3)
Total Annualized Rental Revenue is the monthly contractual base rent as of June 30, 2012 multiplied by 12 plus the estimated annualized expense reimbursements under existing leases.

20

Corporate Office Properties Trust
Top 20 Office Tenants as of 6/30/12
(Based on Annualized Rental Revenue of
office properties, dollars in thousands)
Tenant
 
Number of Leases
 
Total
Occupied Square Feet
 
Percentage of
Total
Occupied Square Feet
 
Total
Annualized
Rental Revenue (1)
 
Percentage
of Total
Annualized 
Rental Revenue
 
Weighted
Average
Remaining Lease Term (2)
United States of America
(3)
63

 
3,244,307

 
18.8
%
 
$
105,740

 
22.5
%
 
5.2

Northrop Grumman Corporation
 
14

 
1,158,426

 
6.7
%
 
31,137

 
6.6
%
 
6.5

Booz Allen Hamilton, Inc.
 
8

 
778,834

 
4.5
%
 
24,994

 
5.3
%
 
3.8

Computer Sciences Corporation
 
7

 
735,391

 
4.3
%
 
22,804

 
4.9
%
 
1.7

The MITRE Corporation
 
4

 
286,553

 
1.7
%
 
8,573

 
1.8
%
 
4.6

ITT Corporation
 
8

 
333,212

 
1.9
%
 
8,272

 
1.8
%
 
3.5

Wells Fargo & Company
 
5

 
209,793

 
1.2
%
 
7,996

 
1.7
%
 
6.0

The Aerospace Corporation
 
3

 
254,869

 
1.5
%
 
7,993

 
1.7
%
 
2.6

CareFirst, Inc.
 
2

 
222,607

 
1.3
%
 
7,194

 
1.5
%
 
9.3

Kratos Defense & Security Solutions, Inc.
 
5

 
251,792

 
1.5
%
 
6,983

 
1.5
%
 
7.6

General Dynamics Corporation
 
7

 
233,877

 
1.4
%
 
6,962

 
1.5
%
 
4.3

L-3 Communications Holdings, Inc.
 
3

 
214,236

 
1.2
%
 
6,315

 
1.3
%
 
2.4

The Boeing Company
 
6

 
199,785

 
1.2
%
 
6,189

 
1.3
%
 
3.3

AT&T Corporation
 
4

 
315,353

 
1.8
%
 
5,665

 
1.2
%
 
6.8

Raytheon Company
 
8

 
164,287

 
1.0
%
 
4,999

 
1.1
%
 
3.0

Ciena Corporation
 
4

 
236,678

 
1.4
%
 
4,678

 
1.0
%
 
1.3

Science Applications International Corp.
 
4

 
133,408

 
0.8
%
 
4,493

 
1.0
%
 
7.1

Comcast Corporation
 
5

 
230,780

 
1.3
%
 
4,110

 
0.9
%
 
8.3

The Johns Hopkins Institutions
 
5

 
141,122

 
0.8
%
 
3,788

 
0.8
%
 
4.3

Unisys Corporation
 
1

 
156,891

 
0.9
%
 
3,697

 
0.8
%
 
7.9

Subtotal Top 20 Office Tenants
 
166

 
9,502,201

 
55.0
%
 
282,582

 
60.3
%
 
4.9

All remaining tenants
 
594

 
7,783,476

 
45.0
%
 
186,342

 
39.7
%
 
4.2

Total/Weighted Average
 
760

 
17,285,677

 
100.0
%
 
$
468,924

 
100.0
%
 
4.6

 
(1)  Total Annualized Rental Revenue is the monthly contractual base rent as of June 30, 2012, multiplied by 12, plus the estimated annualized expense reimbursements under existing leases.
(2)  The weighting of the lease term was computed using Total Rental Revenue.
(3)  Substantially all of our government leases are subject to early termination provisions which are customary in government leases. The weighted average remaining lease term was computed assuming no exercise of such early termination rights.


21


Corporate Office Properties Trust
Dispositions and Acquisitions
Location
 
Property Region
 
Business Park/Submarket
 
Square Feet
 
Transaction
Date
 
Transaction Price
(in thousands)
Disposition Summary - Six Months Ended June 30, 2012
Operating Properties
 
 
 
 
 
 

 
 
 
 

White Marsh Professional Center
8615 Ridgely’s Choice and 8114 Sandpiper Circle
 
Greater Baltimore
 
White Marsh Portfolio
 
163,000

 
1/30/12
 
$
19,100

1101 Sentry Gateway
 
San Antonio
 
San Antonio
 
95,000

 
1/31/12
 
13,500

222 and 224 Schilling Circle
 
Greater Baltimore
 
Hunt Valley
 
56,000

 
2/10/12
 
4,400

Total Operating Properties
 
 
 
 
 
314,000

 
 
 
37,000

Non Operating Properties
 
 
 
 
 
N/A

 
Various
 
25,695

Subtotal - Quarter Ended 3/31/12
 
 
 
 
 
314,000

 
 
 
62,695

 
 
 
 
 
 
 
 
 
 
 
Operating Properties
 
 
 
 
 
 

 
 
 
 

15 and 45 West Gude Drive
 
Suburban Maryland
 
Rockville
 
231,000

 
5/2/12
 
53,070

11800 Tech Road
 
Suburban Maryland
 
Montgomery Industrial
 
240,000

 
6/14/12
 
21,300

Total Operating Properties
 
 
 
 
 
471,000

 
 
 
74,370

Non Operating Properties
 
 
 
 
 
N/A

 
5/2/12
 
1,100

Subtotal - Quarter Ended 6/30/12
 
 
 
 
 
471,000

 
 
 
75,470

 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
785,000

 
 
 
$
138,165

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


22

Corporate Office Properties Trust
Construction, Redevelopment, Wholesale Data Center, Land Held and Pre-Construction as of 6/30/12
(dollars in thousands)
 
Construction
Projects (1)
 
Redevelopment
Projects (2)
 
Wholesale Data
Center (3)
 
Land Held and
Pre-Construction (4)
 
Total
 
Rentable Square Feet
Baltimore/Washington Corridor
446,880

 
—

 
 N/A
 
3,995,000

 
4,441,880

Northern Virginia
237,000

 
—

 
 N/A
 
1,764,000

 
2,001,000

San Antonio
—

 
—

 
 N/A
 
1,157,600

 
1,157,600

Huntsville, Alabama
175,811

 
—

 
 N/A
 
4,422,000

 
4,597,811

St. Mary’s and King George Counties
—

 
—

 
 N/A
 
109,000

 
109,000

Greater Baltimore
128,119

 
—

 
 N/A
 
2,692,000

 
2,820,119

Suburban Maryland
—

 
—

 
 N/A
 
1,680,000

 
1,680,000

Colorado Springs
—

 
—

 
 N/A
 
2,570,000

 
2,570,000

Greater Philadelphia
—

 
113,293

 
 N/A
 
722,000

 
835,293

Other
—

 
—

 
 N/A
 
967,000

 
967,000

Total
987,810

 
113,293

 
N/A
 
20,078,600

 
21,179,703

 
Costs to date by region
Baltimore/Washington Corridor
$
66,880

 
$
—

 
$
—

 
$
102,614

 
$
169,494

Northern Virginia
53,558

 
—

 
—

 
63,371

 
116,929

San Antonio
—

 
—

 
—

 
23,432

 
23,432

Huntsville, Alabama
17,041

 
—

 
—

 
15,369

 
32,410

St. Mary’s and King George Counties
—

 
—

 
—

 
2,681

 
2,681

Greater Baltimore
18,743

 
—

 
—

 
92,262

 
111,005

Suburban Maryland
—

 
—

 
—

 
14,496

 
14,496

Colorado Springs
—

 
—

 
—

 
24,890

 
24,890

Greater Philadelphia
—

 
19,827

 
—

 
35,299

 
55,126

Wholesale Data Center
—

 
—

 
203,436

 
—

 
203,436

Other
—

 
—

 
—

 
7,553

 
7,553

Total
$
156,222

 
$
19,827

 
$
203,436

 
$
381,967

 
$
761,452

 
Costs to date, by Balance Sheet line item
Operating properties
$
17,246

 
$
12,250

 
$
103,039

 
$
19,393

 
$
151,928

Projects in development or held for future development, including associated land costs
136,615

 
6,208

 
100,397

 
360,236

 
603,456

Assets held for sale
—

 
—

 
—

 
2,312

 
2,312

Deferred leasing costs
2,361

 
1,369

 
—

 
26

 
3,756

Total
$
156,222

 
$
19,827

 
$
203,436

 
$
381,967

 
$
761,452

(1) Represents construction projects as listed on page 24.
(2) Represents redevelopment projects as listed on page 25.
(3) Represents our wholesale data center as listed on page 26.
(4) Represents our land held and pre-construction as listed on page 27.

23

Corporate Office Properties Trust
Summary of Construction Projects as of 6/30/12
(dollars in thousands) 
 
 
 
Park/Submarket
Total Rentable Square Feet
Percentage Leased as of
as of June 30, 2012 (1)
Actual or Anticipated Shell Completion Date
 Anticipated Operational Date (2)
 
Anticipated Total Cost
Cost to Date
Cost to Date Placed in Service
 
 
Property and Location
6/30/2012
 
Government Demand Drivers
 
 
 

 
 

 

 

 
 
 
7205 Riverwood Road
Columbia, Maryland
 
Howard Co. Perimeter
89,268

0%
$
22,621

$
15,201

$
—

1Q 12
1Q 13
 
Subtotal Government
 
 
89,268

0%
$
22,621

$
15,201

$
—

 
 
 
% of Total Demand Drivers
 
 
9
%
 
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense IT Demand Drivers
 
 
 

 
 

 

 

 
 
 
410 National Business Parkway Annapolis Junction, Maryland
 
BWI Airport
110,154

48%
$
25,310

$
18,117

$
—

4Q 11
4Q 12
 
420 National Business Parkway
    Annapolis Junction, Maryland
 
BWI Airport
137,322

0%
35,482

10,279

—

2Q 13
2Q 14
 
430 National Business Parkway  Annapolis Junction, Maryland
(3)
BWI Airport
110,136

86%
24,600

23,283

17,893

2Q 11
2Q 12
 
7770 Backlick Road (Patriot Ridge) Springfield, Virginia
 
Springfield
237,000

44%
74,000

53,558

—

3Q 12
3Q 13
 
206 Research Boulevard
Aberdeen, Maryland
 
Harford County
128,119

0%
26,583

18,743

—

3Q 11
3Q 12
 
1000 Redstone Gateway
Huntville, Alabama
 
Huntsville
114,377

0%
21,998

16,496

—

1Q 12
1Q 13
 
7200 Redstone Gateway
    Huntsville, Alabama
 
Huntsville
61,434

0%
7,669

545

—

4Q 12
4Q 13
 
Subtotal Defense IT Demand Drivers
 
 
898,542

28%
$
215,642

$
141,021

$
17,893

 
 
 
% of Total Demand Drivers
 
 
91
%
 
 

 

 

 
 
 
Total Under Construction
 
 
987,810

25%
$
238,263

$
156,222

$
17,893

 
 

(1)
Cost includes land, construction, leasing costs and allocated portion of structured parking and other shared infrastructure, if applicable.
(2)
Anticipated operational date is the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.
(3)
Although classified as “Under Construction,” 75,533 square feet are operational.
 
Demand Driver Categories (as classified by COPT management):
*
Defense IT:  Development opportunity created through our current and future relationships with defense information technology contractors and, possibly, minor Government tenancy.
*
Government:  Development opportunity created through our existing and future relationship with various agencies of the government of the United States of America.  Excludes Government tenancy included in Defense Information Technology.
*
Market Demand:  Development opportunity created through projected unfulfilled space requirements within a specific submarket; potential submarket demand exceeds existing supply.
*
Research Park:  Development opportunity created through specific research park relationship.

24

Corporate Office Properties Trust
Summary of Redevelopment Projects as of 6/30/12
(dollars in thousands) 
 
 
 
 
 
 
 
 
 
 
 
 
Park/Submarket
Total Rentable Square Feet
Percentage Leased as of
as of June 30, 2012 (1)
Actual or Anticipated Shell Completion Date
 Anticipated Operational Date (2)
 
 
Anticipated Total Cost
 Cost to Date
Cost to Date Placed in Service
 
 
Property and Location
 
6/30/2012
Market Demand Drivers
 
 
 

 
 

 

 

 
 
751 Arbor Way (Hillcrest I)
Blue Bell, Pennsylvania
(3)
Greater Philadelphia
113,293

47%
$
21,416

$
19,827

$
13,537

1Q 12
1Q 13
 
 
 
 
 
 
 
 
 
 
Total Under Redevelopment - All Market Demand
113,293

 
$
21,416

$
19,827

$
13,537

 
 
 
(1)
Cost includes construction, leasing costs and allocated portion of shared infrastructure.
(2)
Anticipated operational date is the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.
(3)
Although classified as “Under Redevelopment,” 47,038 square feet are operational.



25

Corporate Office Properties Trust
Wholesale Data Center as of 6/30/12
(dollars in thousands) 
 
Gross 
Building Area
 
Raised Floor Square Footage (1)
 
Initial Stabilization Critical Load (in MWs) (2)
 
Critical Load
Upon
Completion Leased
 
MW Operational
 
Anticipated Total Cost (3)
 
Cost to date
 
Cash NOI
 
Cash NOI
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
Property and Location
 
 
 
 
 
 
 
6/30/12
 
6/30/12
Power Loft @ Innovation
9651 Hornbaker Road
Manassas, Virginia
233,000
 
100,000
 
18
 
17%
 
33%
 
$
275,230

 
$
203,436

 
$
162

 
$
273



Lease Expiration Analysis
Year of Lease Expiration
Number of Leases Expiring
Raised Floor Square Footage
Critical Load Leased (MW)
Critical Load Used (MW)
Total
Annual Rental
Revenue of
Expiring Leases
2019
1
7,172

1.0
1.0
$
2,098

2020
1
19,023

2.0
2.0
3,854

 
 
 

3.0
3.0
$
5,952

 
(1)
Raised floor square footage is that portion of the gross building area where tenants locate their computer servers. Raised floor area is considered to be the net rentable square footage.
(2)
Critical load is the power available for exclusive use of tenants in the property (expressed in terms of megawatts (“MWs”)).
(3)
Anticipated total cost includes land, construction and leasing costs.


26

Corporate Office Properties Trust
Summary of Land Held and Pre-Construction as of 6/30/12 (1)
Location
Acres
 
Estimated Developable Square Feet
Baltimore/Washington Corridor
 

 
 

National Business Park
187

 
1,917,000

Columbia Gateway
22

 
520,000

Airport Square
6

 
89,000

Arundel Preserve
84

up to
1,382,000

Other
11

 
87,000

Subtotal
310

 
3,995,000

Northern Virginia
 

 
 

Westfields Corporate Center
23

 
400,000

Westfields Park Center
33

 
400,000

Woodland Park
5

 
225,000

Patriot Ridge
11

 
739,000

Subtotal
72

 
1,764,000

San Antonio, Texas
 

 
 

8100 Potranco Road
9

 
125,000

Northwest Crossroads
31

 
375,000

Sentry Gateway
38

 
657,600

Subtotal
78

 
1,157,600

Huntsville, Alabama
459

 
4,422,000

St. Mary’s & King George Counties
44

 
109,000

Greater Baltimore
187

 
2,692,000

Suburban Maryland (2)
162

 
1,680,000

Colorado Springs
175

 
2,570,000

Greater Philadelphia, Pennsylvania
8

 
722,000

Other (3)
808

 
967,000

Total land held and pre-construction
2,303

 
20,078,600

Total costs to date (4)
 

 
$
381,967

 
(1)
This land inventory schedule excludes all properties listed as construction or redevelopment as detailed on pages 24 and 25, and includes properties under ground lease to us.
(2)
Six acres with 170,000 developable square footage is under contract for sale.
(3)
591 acres with no developable square footage is under contract for sale.
(4)
Represents total costs to date, as reported on page 23.

27


Corporate Office Properties Trust
Quarterly Common Equity Analysis
(dollars and shares in thousands, except per share amounts)
SHAREHOLDER CLASSIFICATION
Common Shares
 
Common Units
 
As if Converted
Preferred
Shares/Units
 
Total
 
Diluted
Ownership % of Total
As of June 30, 2012:
Insiders
635,183

 
3,608,416

 
—

 
4,243,599

 
5.52
%
Non-insiders
71,449,749

 
638,822

 
610,014

 
72,698,585

 
94.48
%
 
72,084,932

 
4,247,238

 
610,014

 
76,942,184

 
100.00
%
 
COMMON EQUITY - End of Quarter
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
Unrestricted Common Shares
71,652

 
71,558

 
71,363

 
71,336

 
71,260

Restricted Common Shares
433

 
480

 
648

 
651

 
632

Common Shares
72,085

 
72,038

 
72,011

 
71,987

 
71,892

Common Units
4,247

 
4,267

 
4,302

 
4,319

 
4,382

Total
76,332

 
76,305

 
76,313

 
76,306

 
76,274

End of Quarter Common Share Price
$
23.51

 
$
23.21

 
$
21.26

 
$
21.78

 
$
31.11

Market Value of Common Shares/Units
$
1,794,565


$
1,771,045


$
1,622,417


$
1,661,948


$
2,372,863

Common Shares Trading Volume
 

 
 

 
 

 
 

 
 

Average Daily Volume (Shares)
588

 
809

 
842

 
951

 
779

Average Daily Volume
$
13,303

 
$
19,218

 
$
18,604

 
$
25,589

 
$
26,322

As a Percentage of Weighted Average Common Shares
0.8
%
 
1.1
%
 
1.2
%
 
1.3
%
 
1.1
%
Common Share Price Range
 

 
 

 
 

 
 

 
 

Quarterly High
$
24.05

 
$
25.48

 
$
25.96

 
$
32.07

 
$
36.79

Quarterly Low
$
21.13

 
$
20.58

 
$
19.35

 
$
21.75

 
$
30.63

Quarterly Average
$
22.64

 
$
23.76

 
$
22.11

 
$
26.90

 
$
33.81



28

Corporate Office Properties Trust
Quarterly Preferred Equity and Total Market Capitalization Analysis
(dollars and shares in thousands, except per share amounts)
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
PREFERRED EQUITY
 

 
 

 
 

 
 

 
 

Convertible Preferred Equity - End of Quarter
 

 
 

 
 

 
 

 
 

Convertible Series I Preferred Units Outstanding
352

 
352

 
352

 
352

 
352

Conversion Ratio
0.5000

 
0.5000

 
0.5000

 
0.5000

 
0.5000

Common Shares Issued Assuming Conversion
176

 
176

 
176

 
176

 
176

Convertible Series K Preferred Shares Outstanding
532

 
532

 
532

 
532

 
532

Conversion Ratio
0.8163

 
0.8163

 
0.8163

 
0.8163

 
0.8163

Common Shares Issued Assuming Conversion
434

 
434

 
434

 
434

 
434

Nonconvertible Preferred Equity - liquidation preference
 

 
 

 
 

 
 

 
 

Redeemable Series G Shares - 8.0%
$
55,000

 
$
55,000

 
$
55,000

 
$
55,000

 
$
55,000

Redeemable Series H Shares - 7.5%
50,000

 
50,000

 
50,000

 
50,000

 
50,000

Redeemable Series J Shares - 7.625%
84,750

 
84,750

 
84,750

 
84,750

 
84,750

Redeemable Series L Shares Outstanding - 7.375%
172,500

 
—

 
—

 
—

 
—

Total Nonconvertible Preferred Equity
362,250

 
189,750

 
189,750

 
189,750

 
189,750

Convertible Preferred Equity - liquidation preference
 

 
 

 
 

 
 

 
 

Convertible Series I Units - 7.5%
8,800

 
8,800

 
8,800

 
8,800

 
8,800

Convertible Preferred Equity - liquidation preference
 

 
 

 
 

 
 

 
 

Convertible Series K Shares - 5.6%
26,583

 
26,583

 
26,583

 
26,583

 
26,583

Total Convertible Preferred Equity
35,383

 
35,383

 
35,383

 
35,383

 
35,383

Total Liquidation Preference of Preferred Equity
$
397,633

 
$
225,133

 
$
225,133

 
$
225,133

 
$
225,133

CAPITALIZATION
 

 
 

 
 

 
 

 
 

Liquidation Value of Preferred Shares/Units
$
397,633

 
$
225,133

 
$
225,133

 
$
225,133

 
$
225,133

Market Value of Common Shares/Units
1,794,565

 
1,771,045

 
1,622,417

 
1,661,948

 
2,372,863

Total Equity Market Capitalization
2,192,198

 
1,996,178

 
1,847,550

 
1,887,081

 
2,597,996

Total Debt
2,191,851

 
2,418,078

 
2,426,303

 
2,420,073

 
2,299,416

Total Market Capitalization
$
4,384,049

 
$
4,414,256

 
$
4,273,853

 
$
4,307,154

 
$
4,897,412


29

Corporate Office Properties Trust
Dividend Analysis
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Common Share Dividends
 

 
 

 
 

 
 

 
 

 
 
 
 
Dividends per share/unit
$
0.2750

 
$
0.2750

 
$
0.4125

 
$
0.4125

 
$
0.4125

 
$
0.5500

 
$
0.8250

Dividend Yield at Quarter End
4.68
%

4.74
%

7.76
 %
 
7.58
%
 
5.30
%
 
4.68
%
 
5.30
%
Common Dividend Payout Ratios
 

 
 

 
 

 
 

 
 

 
 

 
 

Diluted FFO Payout
51.0
%
 
51.0
%
 
(138.9
)%
 
85.0
%
 
96.9
%
 
51.0
%
 
145.3
%
Diluted FFO Payout, as adjusted for comparability
50.8
%
 
51.8
%
 
74.6
 %
 
80.5
%
 
75.8
%
 
51.3
%
 
80.2
%
Diluted AFFO Payout
57.3
%
 
51.5
%
 
126.7
 %
 
94.5
%
 
104.8
%
 
54.3
%
 
116.3
%
Diluted AFFO Payout, excluding recurring capital expenditures on properties in disposition plans
53.8
%
 
49.6
%
 
93.4
 %
 
87.0
%
 
90.8
%
 
51.6
%
 
96.1
%
Dividend Coverage - Diluted FFO
1.96
x
 
1.96
x
 
(0.72
)x
 
1.18
x
 
1.03
x
 
1.96
x
 
0.69
x
Dividend Coverage - Diluted FFO, as adjusted for comparability
1.97
x
 
1.93
x
 
1.34
x
 
1.24
x
 
1.32
x
 
1.95
x
 
1.25
x
Dividend Coverage - Diluted AFFO
1.75
x
 
1.94
x
 
0.79
x
 
1.06
x
 
0.95
x
 
1.84
x
 
0.86
x
Series I Preferred Unit Distributions
 

 
 

 
 

 
 

 
 

 
 

 
 

Preferred Unit Distributions Per Unit
$
0.46875

 
$
0.46875

 
$
0.46875

 
$
0.46875

 
$
0.46875

 
 

 
 

Preferred Unit Distributions Yield
7.500
%
 
7.500
%
 
7.500
 %
 
7.500
%
 
7.500
%
 
 

 
 

Quarter End Recorded Book Value
$
25.00

 
$
25.00

 
$
25.00

 
$
25.00

 
$
25.00

 
 

 
 

Series G Preferred Share Dividends
 

 
 

 
 

 
 

 
 

 
 

 
 

Preferred Share Dividends Per Share
$
0.50000

 
$
0.50000

 
$
0.50000

 
$
0.50000

 
$
0.50000

 
 

 
 

Preferred Share Dividend Yield
8.000
%
 
8.000
%
 
8.000
 %
 
8.000
%
 
8.000
%
 
 

 
 

Quarter End Recorded Book Value
$
25.00

 
$
25.00

 
$
25.00

 
$
25.00

 
$
25.00

 
 

 
 

Series H Preferred Share Dividends
 

 
 

 
 

 
 

 
 

 
 

 
 

Preferred Share Dividends Per Share
$
0.46875

 
$
0.46875

 
$
0.46875

 
$
0.46875

 
$
0.46875

 
 

 
 

Preferred Share Dividend Yield
7.500
%
 
7.500
%
 
7.500
 %
 
7.500
%
 
7.500
%
 
 

 
 

Quarter End Recorded Book Value
$
25.00

 
$
25.00

 
$
25.00

 
$
25.00

 
$
25.00

 
 

 
 

Series J Preferred Share Dividends
 

 
 

 
 

 
 

 
 

 
 

 
 

Preferred Share Dividends Per Share
$
0.47656

 
$
0.47656

 
$
0.47656

 
$
0.47656

 
$
0.47656

 
 

 
 

Preferred Share Dividend Yield
7.625
%
 
7.625
%
 
7.625
 %
 
7.625
%
 
7.625
%
 
 

 
 

Quarter End Recorded Book Value
$
25.00

 
$
25.00

 
$
25.00

 
$
25.00

 
$
25.00

 
 

 
 

Series K Preferred Share Dividends
 

 
 

 
 

 
 

 
 

 
 

 
 

Preferred Share Dividends Per Share
$
0.70000

 
$
0.70000

 
$
0.70000

 
$
0.70000

 
$
0.70000

 
 

 
 

Preferred Share Dividend Yield
5.600
%
 
5.600
%
 
5.600
 %
 
5.600
%
 
5.600
%
 
 

 
 

Quarter End Recorded Book Value
$
50.00

 
$
50.00

 
$
50.00

 
$
50.00

 
$
50.00

 
 

 
 

Series L Preferred Share Dividends (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Share Dividends Per Share
$
0.0205

 
N/A

 
N/A

 
N/A

 
N/A

 
 
 
 
Preferred Share Dividend Yield
7.375
%
 
N/A

 
N/A

 
N/A

 
N/A

 
 
 
 
Quarter End Recorded Book Value
$
25.00

 
N/A

 
N/A

 
N/A

 
N/A

 
 
 
 

(1)
These shares were issued on June 27, 2012. The dividends reported represents the quarterly dividends prorated for the four days the shares were outstanding during the period.

30

Corporate Office Properties Trust
Debt Analysis
(dollars in thousands)
 
6/30/2012
 
 
 
 
 
 
 
 
 
 
 
Stated Rate
 
GAAP 
Effective Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
6/30/2012
 
3/31/2012
 
12/31/2011
 
9/30/2011
 
6/30/2011
Debt Outstanding
 
 
 
 
 

 
 

 
 

 
 

 
 

Fixed rate
 
 
 
 
 

 
 

 
 

 
 

 
 

Secured debt
6.01%
 
5.92%
 
$
1,009,164

 
$
1,049,204

 
$
1,052,421

 
$
1,055,540

 
$
1,063,369

Exchangeable Senior Notes
4.25%
 
6.05%
 
229,081

 
228,175

 
227,283

 
226,404

 
387,375

Other Unsecured Debt
0.00%
 
6.18%
 
5,106

 
5,078

 
5,050

 
5,022

 
4,995

Total fixed rate debt
5.64%
 
5.94%
 
1,243,351

 
1,282,457

 
1,284,754

 
1,286,966

 
1,455,739

Variable rate
 
 
 
 
 

 
 

 
 

 
 

 
 

Secured debt
2.49%
 
2.49%
 
$
38,844

 
$
39,027

 
$
39,213

 
$
39,397

 
$
309,923

Unsecured Revolving Credit Facility (1)
2.24%
 
2.24%
 
195,000

 
396,000

 
662,000

 
671,000

 
342,000

Construction Loans
2.72%
 
2.72%
 
64,656

 
50,594

 
40,336

 
22,710

 
191,754

Other Unsecured Debt
2.14%
 
2.14%
 
650,000

 
650,000

 
400,000

 
400,000

 
—

Total variable rate debt
2.21%
 
2.21%
 
$
948,500

 
$
1,135,621

 
$
1,141,549

 
$
1,133,107

 
$
843,677

Total debt outstanding
 
 
 
 
$
2,191,851

 
$
2,418,078

 
$
2,426,303

 
$
2,420,073

 
$
2,299,416

Variable Rate Loans Subject to Interest Rate Swaps (2)
 
 
 
 
$
438,844

 
$
659,027

 
$
659,213

 
$
409,397

 
$
409,576

% of Fixed Rate Loans (2)
 
 
 
 
77
%
 
80
%
 
80
%
 
70
%
 
81
%
% of Variable Rate Loans (2)
 
 
 
 
23
%
 
20
%
 
20
%
 
30
%
 
19
%
 
 
 
 
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
Recourse debt
 
 
 
 
$
1,157,860

 
$
1,350,311

 
$
1,359,343

 
$
1,355,846

 
$
972,126

Nonrecourse debt
 
 
 
 
1,033,991

 
1,067,767

 
1,066,960

 
1,064,227

 
1,327,290

Total debt outstanding
 
 
 
 
$
2,191,851

 
$
2,418,078

 
$
2,426,303

 
$
2,420,073

 
$
2,299,416

 
(1) As of June 30, 2012, our borrowing capacity under the facility was $1.0 billion, of which $786.0 million was available.
(2) Includes the effect of interest rate swaps in effect during certain of the periods set forth above that hedge the risk of changes in interest rates on certain of our one-month LIBOR-based variable rate debt.

31

Corporate Office Properties Trust
Debt Analysis  (continued)
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Average Stated Interest Rates
 

 
 

 
 

 
 

 
 

 
 
 
 
Fixed rate
 

 
 

 
 

 
 

 
 

 
 
 
 
Secured debt
6.04
%
 
6.05
%
 
6.01
%
 
6.01
%
 
5.98
%
 
6.04
%
 
5.97
%
Exchangeable Senior Notes
4.25
%
 
4.25
%
 
3.96
%
 
3.95
%
 
3.95
%
 
4.25
%
 
3.95
%
Other Unsecured Debt
0.00
%
 
0.00
%
 
0.00
%
 
0.00
%
 
0.00
%
 
0.00
%
 
0.00
%
Total fixed rate debt
5.67
%
 
5.68
%
 
5.66
%
 
5.45
%
 
5.42
%
 
5.68
%
 
5.43
%
Variable rate
 

 
 

 
 

 
 

 
 

 
 

 
 

Secured debt
2.52
%
 
2.55
%
 
2.50
%
 
4.15
%
 
4.22
%
 
2.53
%
 
4.22
%
Unsecured Revolving Credit Facility
2.26
%
 
2.27
%
 
2.28
%
 
1.61
%
 
1.11
%
 
2.27
%
 
1.11
%
Construction Loans
2.71
%
 
2.81
%
 
2.96
%
 
2.12
%
 
2.01
%
 
2.75
%
 
1.99
%
Other Unsecured Debt
2.17
%
 
2.19
%
 
2.16
%
 
2.13
%
 
0.00
%
 
2.18
%
 
0.00
%
Interest rate swaps (1)
0.73
%
 
0.87
%
 
1.06
%
 
1.11
%
 
1.08
%
 
0.82
%
 
1.06
%
Total variable rate debt (1)
2.57
%
 
2.76
%
 
2.60
%
 
2.76
%
 
2.93
%
 
2.67
%
 
2.96
%
Total debt outstanding
4.30
%
 
4.34
%
 
4.33
%
 
4.46
%
 
4.59
%
 
4.32
%
 
4.61
%
Debt ratios (coverage ratios excluding capitalized interest) — All coverage computations include the effect of discontinued operations
NOI interest coverage ratio
3.47x

 
3.28
x
 
3.39
x
 
3.38
x
 
3.22
x
 
3.38
x
 
3.13
x
Adjusted EBITDA interest coverage ratio
3.15x

 
3.20
x
 
3.30
x
 
3.04
x
 
3.09
x
 
3.18
x
 
3.00
x
NOI debt service coverage ratio
3.06x

 
2.89
x
 
2.99
x
 
2.96
x
 
2.79
x
 
2.97
x
 
2.71
x
Adjusted EBITDA debt service coverage ratio
2.77x

 
2.82
x
 
2.90
x
 
2.66
x
 
2.68
x
 
2.80
x
 
2.59
x
NOI fixed charge coverage ratio
2.92x

 
2.78
x
 
2.87
x
 
2.86
x
 
2.73
x
 
2.85
x
 
2.66
x
Adjusted EBITDA fixed charge coverage ratio
2.65x

 
2.72
x
 
2.79
x
 
2.57
x
 
2.62
x
 
2.68
x
 
2.55
x
Debt to Adjusted EBITDA ratio
7.66x

 
8.05
x
 
8.07
x
 
8.73
x
 
7.87
x
 
7.47
x
 
8.08
x
Adjusted debt to Adjusted EBITDA ratio
6.33x

 
6.69
x
 
6.67
x
 
7.03
x
 
6.39
x
 
6.17
x
 
6.57
x
 

(1) Includes the effect of interest rate swaps in effect during certain of the periods set forth above that hedge the risk of changes in interest rates on certain of our one-month LIBOR-based variable rate debt.

32

Corporate Office Properties Trust
Debt Maturity Schedule
(dollars in thousands) 
 
Fixed Rate Debt
 
Variable Rate Debt
 
 
 
Annual Amortization
of Monthly
Payments
 
Balloon
Payments Due
on Maturity
 
Stated Interest Rate 
of Amounts
Maturing
 
Annual Amortization
of Monthly
Payments
 
Balloon
Payments Due
on Maturity
 
Stated Interest Rate 
of Amounts
Maturing
 
Revolving
Credit
Facility
 
Total
Scheduled
Payments
July - September
$
2,972

 
$
—

 
N/A
 
$
173

 
$
—

 
N/A
 
$
—

 
$
3,145

October - December
2,849

 
14,537

 
6.25%
 
195

 
—

 
N/A
 
—

 
17,581

Total 2012
$
5,821

 
$
14,537

 
6.25%
 
$
368

 
$
—

 
N/A
 
$
—

 
$
20,726

2013
$
9,502

 
$
120,012

 
 
 
$
784

 
$
53,843

 
 
 
—

 
184,141

2014
6,284

 
151,681

(1)
 
 
815

 
—

 
 
 
195,000

(2)
353,780

2015
5,037

 
358,558

(3)
 
 
701

 
446,990

(4)
 
 
—

 
811,286

2016
4,037

 
274,605

 
 
 
—

 
—

 
 
 
—

 
278,642

Thereafter
3,258

 
300,621

 
 
 
—

 
250,000

 
 
 
—

 
553,879

 
$
33,939

 
$
1,220,014

 
 
 
$
2,668

 
$
750,833

 
 
 
$
195,000

 
$
2,202,454

 
 

 
 

 
 
 
 

 
 

 
 
 
Net discount
 
(10,603
)
 
 

 
 

 
 
 
 

 
 

 
 
 
Total Debt
 
$
2,191,851


Interest Rate Hedges at 6/30/12 (6)
 
Notional Amount
 
Fixed Rate
 
Floating Rate Index
 
Effective Date
 
Expiration Date
$
38,844

(5)
3.8300
%
 
One-Month LIBOR
 
11/2/2010
 
11/2/2015
100,000

 
0.6100
%
 
One-Month LIBOR
 
1/3/2012
 
9/1/2014
100,000

 
0.6123
%
 
One-Month LIBOR
 
1/3/2012
 
9/1/2014
100,000

 
0.8320
%
 
One-Month LIBOR
 
1/3/2012
 
9/1/2015
100,000

 
0.8320
%
 
One-Month LIBOR
 
1/3/2012
 
9/1/2015
$
438,844

 
 

 
 
 
 
 
 

Notes: 
(1)
We have $72.0 million of fixed debt maturing in 2034 that may be prepaid in 2014, subject to certain conditions. The above table includes $69.2 million in maturities on these loans in 2014.
(2)
Our Revolving Credit Facility matures in September 2014 and may be extended by one year at our option, subject to certain conditions.
(3)
4.25% Exchangeable Senior Notes totaling $240.0 million mature in April 2030 but are subject to a put by the holders in April 2015 and every five years thereafter.
(4)
Includes $400.0 million pertaining to a term credit agreement that matures in September 2015 and may be extended by one year at our option, subject to certain conditions.
(5)
The notional amount is scheduled to amortize to $36.2 million.
(6)
In July 2012, we entered into new interest rate swaps that effectively extended $200.0 million in swaps expiring on 9/1/14 to 9/1/16 and $200 million in swaps maturing on 9/1/15 to 8/1/19.

33

Corporate Office Properties Trust
Consolidated Joint Ventures as of 6/30/12
(dollars and square feet in thousands) 
Operating Properties
Operational
Square Feet
Occupancy
 
Total Assets (1)
Property Level Debt
% COPT Owned
Baltimore/Washington Corridor:
 

 
 
 

 

 
Arundel Preserve #5 (1 property)
147

58.3%
(2)
$
33,259

$
16,829

50%
Suburban Maryland:
 

 
 
 

 

 
MOR Forbes 2 LLC
56

63.6%
 
3,787

—

50%
M Square Associates, LLC (2 properties)
242

93.7%
 
53,117

38,844

50%
Total/Average
445

78.3%
 
$
90,163

$
55,673

 
NOI of Operating Properties for Three Months Ended 6/30/12 (3)
$
1,664

 
 
 

 

 
NOI of Operating Properties for Six Months Ended 6/30/12 (3)
$
2,982

 
 
 
 
 
 
Non-operational Properties
Estimated Developable Square Feet
 
Total Assets (1)
Property Level Debt
% COPT Owned
Baltimore/Washington Corridor:
 

 
 

 

 
Arundel Preserve
1,382

 
$
5,734

$
—

50%
Suburban Maryland:
 

 
 

 

 
Indian Head Technology Center
 

 
 

 

 
Business Park
967

 
6,537

—

75%
M Square Research Park
510

 
3,998

—

50%
Huntsville, Alabama:
 

 
 

 

 
Redstone Gateway
4,422

 
61,464

10,814

85%
Total
7,281

 
$
77,733

$
10,814

 
 
(1)  Total assets includes the total assets recorded on the books of the consolidated joint venture plus any outside investment basis related to the applicable joint venture and related joint ventures (formed and to be formed).
(2)  Property was 100% leased at 6/30/12.
(3)  Represents gross NOI of the joint venture operating properties before allocation to joint venture partners.


34

Corporate Office Properties Trust
Unconsolidated Joint Venture as of 6/30/12
(dollars and square feet in thousands) 
 
 
 
 
 
Property and Location
Operational
Square Feet
Occupancy
Greater Harrisburg:
 

 
Total/Average (16 properties)
671

69.8%
COPT Investment
$
(6,282
)
 
Total Assets
$
63,133

 
Property Level Debt
$
64,562

 
NOI of Operating Properties for Three Months Ended 6/30/12 (1)
$
1,101

 
NOI of Operating Properties for Six Months Ended 6/30/12 (1)
$
2,258

 
% COPT Owned
20
%
 
 
(1) Represents gross NOI of the joint venture operating properties before allocation to joint venture partners.




35


Corporate Office Properties Trust
Supplementary Reconciliations of Non-GAAP Measures
(in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Net income (loss)
$
11,861

 
$
6,977

 
$
(87,215
)
 
$
7,470

 
$
(26,007
)
 
$
18,838

 
$
(44,573
)
Interest expense on continuing and discontinued operations
24,975

 
25,675

 
24,914

 
25,629

 
26,830

 
50,650

 
53,758

Total income tax expense (benefit)
17

 
4,173

 
(4,636
)
 
(457
)
 
(5,042
)
 
4,190

 
(5,586
)
Depreciation of furniture, fixtures and equipment (FF&E)
629

 
618

 
601

 
614

 
623

 
1,247

 
1,248

Real estate-related depreciation and amortization
31,666

 
31,087

 
33,030

 
36,032

 
32,049

 
62,753

 
65,069

Impairment losses
2,354

 
6,587

 
78,674

 
—

 
44,605

 
8,941

 
72,347

Loss on interest rate derivatives
—

 
—

 
29,805

 
—

 
—

 
—

 
—

Adjusted EBITDA
$
71,502

 
$
75,117

 
$
75,173

 
$
69,288

 
$
73,058

 
$
146,619

 
$
142,263

Add back:
 

 
 

 
 

 
 

 
 

 
 

 
 

General and administrative
7,742

 
7,017

 
6,592

 
6,154

 
6,320

 
14,759

 
13,097

Business development expenses and land carry costs, including discontinued operations
1,304

 
1,594

 
1,819

 
1,768

 
1,369

 
2,898

 
2,610

Depreciation of FF&E
(629
)
 
(618
)
 
(601
)
 
(614
)
 
(623
)
 
(1,247
)
 
(1,248
)
Income from construction contracts and other service operations
(710
)
 
(927
)
 
(550
)
 
(558
)
 
(1,188
)
 
(1,637
)
 
(1,598
)
Interest and other (income) loss
(840
)
 
(1,217
)
 
(1,921
)
 
242

 
(2,756
)
 
(2,057
)
 
(3,924
)
Loss on early extinguishment of debt on continuing and discontinued operations
171

 
—

 
3

 
1,995

 
25

 
171

 
25

Gain on sales of operating properties
115

 
(4,138
)
 
(3,362
)
 
(1,299
)
 
(150
)
 
(4,023
)
 
(150
)
Non-operational property sales
(33
)
 
—

 
—

 
—

 
(16
)
 
(33
)
 
(2,717
)
Equity in loss (income) of unconsolidated entities
187

 
89

 
108

 
159

 
94

 
276

 
64

NOI from real estate operations
$
78,809

 
$
76,917

 
$
77,261

 
$
77,135

 
$
76,133

 
$
155,726

 
$
148,422

Discontinued Operations
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
7,577

 
$
9,228

 
$
10,869

 
$
11,939

 
$
11,787

 
$
16,805

 
$
23,710

Property operating expenses
(2,775
)
 
(3,470
)
 
(4,279
)
 
(4,385
)
 
(4,223
)
 
(6,245
)
 
(9,840
)
Depreciation and amortization
(1,813
)
 
(1,768
)
 
(2,361
)
 
(3,103
)
 
(3,878
)
 
(3,581
)
 
(8,825
)
Business development expenses and land carry costs
(6
)
 
(18
)
 
(19
)
 
(17
)
 
(20
)
 
(24
)
 
(39
)
Interest
(228
)
 
(755
)
 
(995
)
 
(1,151
)
 
(1,235
)
 
(983
)
 
(2,495
)
Loss on early extinguishment of debt
(2
)
 
—

 
—

 
(384
)
 
—

 
(2
)
 
—

Impairment losses
(2,354
)
 
(8,890
)
 
(9,783
)
 
—

 
(24,422
)
 
(11,244
)
 
(24,422
)
Gain on sales of depreciated real estate properties
(103
)
 
4,138

 
3,358

 
1,299

 
139

 
4,035

 
139

Discontinued operations
$
296

 
$
(1,535
)
 
$
(3,210
)
 
$
4,198

 
$
(21,852
)
 
$
(1,239
)
 
$
(21,772
)
GAAP revenues from real estate operations from continuing operations
$
116,391

 
$
116,076

 
$
116,587

 
$
113,190

 
$
109,019

 
$
232,467

 
$
219,537

Revenues from discontinued operations
7,577

 
9,228

 
10,869

 
11,939

 
11,787

 
16,805

 
23,710

Real estate revenues
$
123,968

 
$
125,304

 
$
127,456


$
125,129

 
$
120,806

 
$
249,272

 
$
243,247

GAAP property operating expenses from continuing operations
$
42,384

 
$
44,917

 
$
45,916

 
$
43,609

 
$
40,450

 
$
87,301

 
$
84,985

Property operating expenses from discontinued operations
2,775

 
3,470

 
4,279

 
4,385

 
4,223

 
6,245

 
9,840

Real estate property operating expenses
$
45,159

 
$
48,387

 
$
50,195

 
$
47,994

 
$
44,673

 
$
93,546

 
$
94,825

Depreciation and amortization associated with real estate operations from continuing operations
$
29,853

 
$
29,319

 
$
30,669

 
$
32,929

 
$
28,171

 
$
59,172

 
$
56,244

Depreciation and amortization from discontinued operations
1,813

 
1,768

 
2,361

 
3,103

 
3,878

 
3,581

 
8,825

Real estate-related depreciation and amortization
$
31,666

 
$
31,087

 
$
33,030

 
$
36,032

 
$
32,049

 
$
62,753

 
$
65,069

Gain on sales of real estate, net, per statements of operations
$
21

 
$
—

 
$
4

 
$
—

 
$
27

 
$
21

 
$
2,728

Add income taxes
—

 
—

 
—

 
—

 
—

 
—

 
—

Gain on sales of real estate from discontinued operations
(103
)
 
4,138

 
3,358

 
1,299

 
139

 
4,035

 
139

Gain on sales of real estate from continuing and discontinued operations
(82
)
 
4,138

 
3,362

 
1,299

 
166

 
4,056

 
2,867

Less: Gain on sales of non-operating properties
(33
)
 
—

 
—

 
—

 
(16
)
 
(33
)
 
(2,717
)
Gain on sales of operating properties
$
(115
)
 
$
4,138

 
$
3,362

 
$
1,299

 
$
150

 
$
4,023

 
$
150


36

Corporate Office Properties Trust
Supplementary Reconciliations of Non-GAAP Measures (continued)
(dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
6/30/12
 
3/31/12
 
12/31/11
 
9/30/11
 
6/30/11
 
6/30/12
 
6/30/11
Total Assets
$
3,715,075

 
$
3,797,368

 
$
3,867,524

 
$
3,965,392

 
$
3,868,230

 
$
3,715,075

 
$
3,868,230

Accumulated depreciation
562,345

 
570,242

 
559,679

 
553,306

 
527,616

 
562,345

 
527,616

Accumulated depreciation included in assets held for sale
34,234

 
5,840

 
17,922

 
6,791

 
6,791

 
34,234

 
6,791

Denominator for debt to adjusted book
$
4,311,654

 
$
4,373,450

 
$
4,445,125

 
$
4,525,489

 
$
4,402,637

 
$
4,311,654

 
$
4,402,637

Impairment losses, per statements of operations
$
—

 
$
(2,303
)
 
$
68,891

 
$
—

 
$
20,183

 
$
(2,303
)
 
$
47,925

Impairment losses on discontinued operations
2,354

 
8,890

 
9,783

 
—

 
24,422

 
11,244

 
24,422

Total impairment losses
2,354

 
6,587

 
78,674

 
—

 
44,605

 
8,941

 
72,347

Less: Impairment losses on previously depreciated operating properties
(2,354
)
 
(11,833
)
 
(39,481
)
 
—

 
(31,031
)
 
(14,187
)
 
(31,031
)
Impairment (recoveries) losses on non-operating properties
—

 
(5,246
)
 
39,193

 
—

 
13,574

 
(5,246
)
 
41,316

Less: Income tax expense (benefit) from impairments on non-operating properties
—

 
4,642

 
(4,146
)
 
—

 
(4,598
)
 
4,642

 
(4,598
)
Impairment (recoveries) losses on non-operating properties, net of related tax
$
—

 
$
(604
)
 
$
35,047

 
$
—

 
$
8,976

 
$
(604
)
 
$
36,718

Interest expense from continuing operations
$
24,747

 
$
24,920

 
$
23,919

 
$
24,478

 
$
25,595

 
$
49,667

 
$
51,263

Interest expense from discontinued operations
228

 
755

 
995

 
1,151

 
1,235

 
983

 
2,495

Total interest expense
24,975

 
25,675

 
24,914

 
25,629

 
26,830

 
50,650

 
53,758

Less: Amortization of deferred financing costs
(1,597
)
 
(1,572
)
 
(1,506
)
 
(1,629
)
 
(1,702
)
 
(3,169
)
 
(3,461
)
Less: Amortization of net debt discounts and premiums, net of amounts capitalized
(682
)
 
(663
)
 
(634
)
 
(1,184
)
 
(1,464
)
 
(1,345
)
 
(2,862
)
Denominator for interest coverage
22,696

 
23,440

 
22,774

 
22,816

 
23,664

 
46,136

 
47,435

Scheduled principal amortization
3,096

 
3,207

 
3,108

 
3,226

 
3,623

 
6,303

 
7,421

Denominator for debt service coverage
25,792

 
26,647

 
25,882

 
26,042

 
27,287

 
52,439

 
54,856

Scheduled principal amortization
(3,096
)
 
(3,207
)
 
(3,108
)
 
(3,226
)
 
(3,623
)
 
(6,303
)
 
(7,421
)
Preferred share dividends - redeemable non-convertible
4,167

 
4,025

 
4,026

 
4,025

 
4,026

 
8,192

 
8,051

Preferred unit distributions
165

 
165

 
165

 
165

 
165

 
330

 
330

Denominator for fixed charge coverage
$
27,028

 
$
27,630

 
$
26,965

 
$
27,006

 
$
27,855

 
$
54,658

 
$
55,816

Preferred share dividends
$
4,167

 
$
4,025

 
$
4,026

 
$
4,025

 
$
4,026

 
$
8,192

 
$
8,051

Preferred unit distributions
165

 
165

 
165

 
165

 
165

 
330

 
330

Common share dividends
19,809

 
19,819

 
29,693

 
29,688

 
29,632

 
39,628

 
57,336

Common unit distributions
1,168

 
1,173

 
1,775

 
1,781

 
1,808

 
2,341

 
3,617

Total dividends/distributions
$
25,309

 
$
25,182

 
$
35,659

 
$
35,659

 
$
35,631

 
$
50,491

 
$
69,334

Common share dividends
$
19,809

 
$
19,819

 
$
29,693

 
$
29,688

 
$
29,632

 
$
39,628

 
$
57,336

Common unit distributions
1,168

 
1,173

 
1,775

 
1,781

 
1,808

 
2,341

 
3,617

Dividends and distributions for payout ratios
$
20,977

 
$
20,992

 
$
31,468

 
$
31,469

 
$
31,440

 
$
41,969

 
$
60,953

Debt, net
$
2,191,851

 
$
2,418,078

 
$
2,426,303

 
$
2,420,073

 
$
2,299,416

 
$
2,191,851

 
$
2,299,416

Less: Construction in progress on assets held for sale
(1,220
)
 
(75
)
 
(12,277
)
 
(22,936
)
 
(22,934
)
 
(1,220
)
 
(22,934
)
Less: Construction in progress
(380,879
)
 
(408,883
)
 
(409,086
)
 
(447,969
)
 
(407,674
)
 
(380,879
)
 
(407,674
)
Adjusted debt for adjusted debt to adjusted EBITDA ratio
$
1,809,752

 
$
2,009,120

 
$
2,004,940

 
$
1,949,168

 
$
1,868,808

 
$
1,809,752

 
$
1,868,808


37


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 are not necessarily indications of our cash flow available to fund cash needs.  Additionally, they 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 Debt to Adjusted EBITDA ratio 
Defined as (1) debt adjusted to subtract construction in progress as of the end of the period divided by (2) Adjusted EBITDA for the three month period that is annualized by multiplying by four.
 
Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization (“Adjusted EBITDA”) 
Adjusted EBITDA is net (loss) income adjusted for the effects of interest expense, depreciation and amortization, impairment losses, loss on interest rate derivatives and income taxes.  We believe that adjusted EBITDA is a useful supplemental measure of performance for assessing our un-levered performance.  We believe that net (loss) income is the most directly comparable GAAP measure to adjusted EBITDA.
 
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 restricted shares 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 (loss) income is the most directly comparable GAAP measure to Basic FFO.
 
Cash net operating income (“Cash NOI”) 
Defined as NOI from real estate operations adjusted to eliminate the effects of noncash rental revenues and property operating expenses (comprised of straight-line rental adjustments, which includes the amortization of tenant incentives, and amortization of acquisition intangibles included in FFO and NOI).  Under GAAP, rental revenue is recognized evenly over the term of tenant leases.  Many leases provide for contractual rent increases and the effect of accounting under GAAP for such leases is to accelerate the recognition of lease revenue.  Since some leases provide for periods under the lease in which rental concessions are provided to tenants, the effect of accounting under GAAP is to allocate rental revenue to such periods.  Also under GAAP, when a property is acquired, we allocate the acquisition to certain intangible components (including above- and below-market leases and above- or below- market cost arrangements), which are then amortized into FFO and NOI over their estimated lives.  We believe that Cash NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it makes adjustments to NOI for the above stated items that are not associated with cash to us.  As is the case with NOI, the measure is useful in our opinion in evaluating and comparing the performance of geographic segments, same-office property groupings and individual properties.  We believe that net (loss) income is the most directly comparable GAAP measure to Cash NOI.

Cash NOI, excluding gross lease termination fees 
Defined as Cash NOI adjusted to eliminate the effects of lease termination fees paid by tenants to terminate their lease obligations prior to the end of the agreed lease terms. 

38


Corporate Office Properties Trust
Definitions

Lease termination fees are often recognized as revenue in large one-time lump sum amounts upon the termination of tenant leases.  We believe that Cash NOI adjusted for lease termination fees is a useful supplemental measure of operating performance in evaluating same-office property groupings because it provides a means of evaluating the effect that lease terminations had on the performance of the property groupings.  We believe that net (loss) income is the most directly comparable GAAP measure to Cash NOI, excluding gross lease termination fees.
 
Debt to Adjusted EBITDA ratio 
Defined as debt divided by Adjusted EBITDA for the three month period that is annualized by multiplying by four.
 
Debt to Adjusted Book 
Defined as the carrying value of our debt divided by total assets presented on our consolidated balance sheet excluding the effect of accumulated depreciation incurred to date on such properties.
 
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” below), (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) recurring capital expenditures.  Recurring capital expenditures are defined as tenant improvements and incentives, building improvements and leasing costs 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) or (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).  We believe that Diluted AFFO is an important supplemental measure of liquidity for an equity REIT because it provides management and investors with an indication of our ability to incur and service debt and to fund dividends and other cash needs.  We believe that the numerator to diluted EPS is the most directly comparable GAAP measure to Diluted AFFO.
 
Diluted AFFO, as adjusted for recurring capital expenditures of properties included in disposition plans 
Defined as Diluted AFFO adjusted to add back recurring capital expenditures of properties included in disposition plans during the period that were already sold or are held for future disposition.  We believe that this measure is a useful supplemental measure of liquidity because it provides management and investors with an additional indication of our ability to incur and service debt and to fund dividends and other cash needs without the effect of the recurring capital expenditures that we expect to recover through the proceeds from the property dispositions.  We believe that the numerator to diluted EPS is the most directly comparable GAAP measure to this 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 in the Operating Partnership 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 the numerator to diluted EPS is the most directly comparable GAAP measure to Diluted FFO.
 
Diluted FFO available to common share and common unit holders, as adjusted for comparability (“Diluted FFO, as adjusted for comparability”) and FFO, as adjusted for comparability 
Defined as Diluted FFO or FFO adjusted to exclude operating property acquisition costs, gains on sales of, and impairment losses on, properties other than previously depreciated operating properties, net of associated income tax, gain or loss on early extinguishment of debt, loss on interest rate derivatives and accounting charges for

39


Corporate Office Properties Trust
Definitions

original issuance costs associated with redeemed preferred shares.  We believe that the excluded items are not reflective of normal operations and, as a result, believe that a measure that excludes these items is a useful supplemental measure in evaluating operating performance.  We believe that the numerator to diluted EPS 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 in the Operating Partnership 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 (loss) income available to common shareholders.  We believe that diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share.
 
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 in the Operating Partnership 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.  As discussed above, we believe that the excluded items are not indicative of normal operations.  As such, we believe that a measure that excludes these items is a useful supplemental measure in evaluating our operating performance.  We believe that diluted EPS is the most directly comparable GAAP measure.
 
Dividend Coverage-Diluted FFO, Diluted FFO, as adjusted for comparability, and Dividend Coverage-Diluted AFFO 
These measures divide either Diluted FFO, Diluted FFO, as adjusted for comparability, or Diluted AFFO by the sum of (1) dividends on common shares and (2) distributions to holders of interests in the Operating Partnership and dividends on convertible preferred shares when such distributions and dividends are included in Diluted FFO.

Funds from operations (“FFO” or “FFO per NAREIT”) 
Defined as net (loss) income computed using GAAP, excluding gains on sales of, and impairment losses on, previously depreciated operating properties and real estate-related depreciation and amortization.  When multiple properties consisting of both operating and non-operating properties exist on a single tax parcel, we classify all of the gains on sales of, and impairment losses on, the tax parcel as all being for previously depreciated operating properties when most of the value of the parcel is associated with operating properties on the parcel. 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 related to sales of, and impairment losses on, previously depreciated operating properties and excluding real estate-related depreciation and amortization, FFO can help one compare our operating performance between periods.  We believe that net (loss) income is the most directly comparable GAAP measure to FFO.
 
Net operating income (“NOI”) from real estate operations 
NOI is real estate revenues from continuing and discontinued operations reduced by total property expenses associated with real estate operations, including discontinued operations; total property expenses, as used in this definition, do not include depreciation, amortization or interest expense associated with real estate operations.  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 and administrative expenses; we believe this measure is particularly useful in evaluating the

40


Corporate Office Properties Trust
Definitions

performance of geographic segments, same-office property groupings and individual properties.  We believe that net (loss) income is the most directly comparable GAAP measure to NOI.
 
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 on continuing and discontinued operations (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized) and scheduled principal amortization on mortgage loans for continuing and discontinued operations.
 
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 on continuing and discontinued operations (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized), (2) dividends on preferred shares and (3) 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 on continuing and discontinued operations (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized).
 
Payout ratios based on: (1) Diluted FFO; (2) Diluted FFO, as adjusted for comparability; (3) Diluted AFFO; and (4) Diluted AFFO, as adjusted for recurring capital expenditures of properties included in disposition plan 
These payout ratios are defined as (1) the sum of (a) dividends on common shares and (b) distributions to holders of interests in the Operating Partnership 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.

Recurring Capital Expenditures 
Definition is included above in the definition for Diluted AFFO.
 
Same Office Property NOI 
Defined as NOI from real estate operations of Same Office Properties.  We believe that Same Office Property NOI is an important supplemental measure of operating performance of Same Office Properties for the same reasons discussed above for NOI from real estate operations.
 
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 office leases.
 

41


Corporate Office Properties Trust
Definitions

Demand Drivers Categories — Demand opportunity created through:
•
Defense IT — current and future relationships with defense information technology contractors and, possibly, minor Government tenancy.
•
Government — existing and future relationship with various agencies of the government of the United States of America.  Excludes Government tenancy included in Defense Information IT.
•
Market — projected unfulfilled space requirements within a specific submarket; potential submarket demand exceeds existing supply.
•
Research Park — specific research park relationship.
 
First Generation Space — Newly constructed or redeveloped space that has never been occupied.
 
Greater Washington/Baltimore Region — Includes counties that comprise the Baltimore/Washington Corridor, Northern Virginia, Greater Baltimore, Suburban Maryland, St. Mary’s & King George Counties, and the Washington, DC-Capitol Riverfront.
 
Operational Space — The portion of a property in operations (excludes portion under construction or redevelopment).
 
Retenanted Space — Space leased to a new tenant after being occupied by a previous tenant.
 
Same Office Properties — Operating office properties owned and 100% operational since January 1, 2011, excluding properties held for future disposition.
 
Second Generation Space — Space leased that has been previously occupied.
 
Strategic Reallocation Plan — Plan approved by our Board of Trustees to dispose of properties that are no longer closely aligned with our strategy.
 
Strategic Tenant Properties — Properties occupied primarily by tenants in the United States Government and defense information technology sectors and data centers serving such sectors.
 
Under Construction — Properties on which vertical construction activities are underway.
 
Under Pre-Construction — Properties on which work associated with one or more of the following tasks is underway on a regular basis: pursuing entitlements, planning, design and engineering, bidding, permitting and premarketing/preleasing. Typically, these projects, as categorized in this Supplemental Information package, are targeted to begin construction in 12 months or less.
 
Under Redevelopment — Properties previously in operations on which activities to substantially renovate such properties are underway.
 
Unstabilized Properties — Properties with first generation operational space less than 90% occupied at period end.


42