Corporate Office Properties Trust Reports Fourth Quarter & Full Year 2010 Results

COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (COPT) (NYSE: OFC) today announced financial and operating results for the fourth quarter and full year ended December 31, 2010. Excluding costs associated with the purchase of operating properties, funds from operations (FFO) per diluted share for the fourth quarter and full year of 2010, respectively, were $0.70 and $2.36.

"The COPT team achieved 4.3 million square feet of leasing, the highest volume in the Company's history, despite the challenges presented by the broader economy. We believe that this leasing momentum will continue into 2011," stated Randall M. Griffin, Chief Executive Officer of Corporate Office Properties Trust. "In 2010, the COPT team further strengthened our portfolio's ability to serve the needs of our U.S. Government and Defense Information Technology tenants through strategic acquisitions, dispositions and development starts," he added.

2010 Full Year Highlights:

    --  Diluted earnings per share was $0.43 for the year ended December 31,
        2010 as compared to $0.70 for 2009, a decrease of 39%.
    --  FFO per diluted share for 2010, excluding operating property acquisition
        costs, was $2.36, a 5% decline over 2009 full year results. Including
        acquisition costs, FFO per diluted share was $2.30 for 2010 versus $2.46
        for 2009.
    --  Diluted adjusted funds from operations (Diluted AFFO) available to
        common share and common unit holders was $112.7 million for 2010 as
        compared to $119.8 million for 2009, a decrease of 6%. Diluted FFO
        payout ratio of 70%, excluding the effect of operating property
        acquisition costs, and a 94% Diluted AFFO payout ratio for the year.
    --  Same office property cash net operating income (NOI) decreased 1% for
        the year, excluding gross lease termination fees. Including gross lease
        termination fees, same office property cash NOI decreased 2% for the
        year.
    --  Leasing volume of 4.3 million square feet, a company record, and 1.1
        million square feet more than the previous best year in 2008.
    --  Renewed 2.5 million square feet, equating to a 68% renewal rate.
    --  Placed in service 816,000 square feet in nine development properties.
        These properties were 77% leased at year end. Started construction on
        732,000 square feet, all focused on the U.S. Government and Defense IT
        sectors.
    --  Acquired $317 million of strategic, high-quality assets ($202 million
        for office and $115 million for a wholesale data center).
    --  Increased quarterly common cash dividend 5.1% in September 2010.

Results:

For the fourth quarter ended December 31, 2010 - EPS was $0.18 for the quarter ended December 31, 2010 as compared to $0.08 for 2009, an increase of 125%. Excluding $470,000 (or $0.01 per diluted share) of acquisition costs, FFO for the fourth quarter ended December 31, 2010 totaled $52.7 million, or $0.70 per diluted share. Fourth quarter 2010 results represent a 27% increase on a per share basis from the $0.55 per diluted share, or $39.1 million of FFO for the fourth quarter of 2009. Including acquisition costs, FFO per diluted share for the fourth quarter of 2010 was $0.69 versus $0.52 reported in the fourth quarter of 2009.

For the year ended December 31, 2010 - EPS was $0.43 for the year ended December 31, 2010 as compared to $0.70 for 2009, a decrease of 39%. FFO, for the full year 2010, excluding $3.4 million (or $0.06 per diluted share) of acquisition costs, was $171.7 million, or $2.36 per diluted share. FFO per diluted share in 2010 represented a 5% decrease from the $2.49 per diluted share, or $173.3 million of FFO reported in 2009. Including acquisition costs, FFO per diluted share for 2010 was $2.30 as compared to $2.46 per diluted share for the full year 2009.

Operating Performance:

Portfolio Summary - At December 31, 2010, the Company's wholly-owned portfolio of 252 office properties totaled 20 million square feet. The weighted average remaining lease term for the portfolio was 4.9 years and the average rental rate (including tenant reimbursements) was $25.56 per square foot. The Company's wholly-owned portfolio was 88.2% occupied and 89.5% leased as of December 31, 2010.

Same Office Performance - The Company's same office portfolio for the year ended December 31, 2010 represents 85% of the rentable square feet of its consolidated portfolio and consists of 230 properties. For the year ended December 31, 2010, the Company's same office property cash NOI decreased 1%, excluding gross lease termination fees as compared to 2009. Including gross lease termination fees, same office property cash NOI decreased 2% for the year as compared to 2009.

Leasing - For the quarter ended December 31, 2010, 1.1 million square feet was renewed equating to an 84% renewal rate, at an average committed cost of $8.13 per square foot. Total rent on renewed space increased 3.3% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and decreased 4.6% on a cash basis. For renewed and retenanted space of 1.5 million square feet, total straight-line rent increased 3.7% and total rent on a cash basis decreased 4.5%. The average committed cost for renewed and retenanted space was $14.02 per square foot.

For the year, 2.5 million square feet was renewed equating to a 68% renewal rate, at an average capital cost of $7.84 per square foot. Total rent on renewed space increased 3.3% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and decreased 4.8% on a cash basis. For the year, 3.2 million square feet was renewed and retenanted. Total straight-line rent for renewed and retenanted space increased 2.3% and total rent on a cash basis decreased 5.6%. The average committed cost for renewed and retenanted space was $11.72 per square foot. The Company recognized lease termination fees of $3.4 million, net of write-offs of related straight-line rents and above- and below-market leases for the year ended December 31, 2010, as compared to $4.6 million for the year ended December 31, 2009.

Investment Activity:

Developments - At December 31, 2010, the Company had 3.2 million square feet under construction, development and redevelopment for a total projected cost of $698.5 million.

The Company controlled land at December 31, 2010 of 2,252 acres that can support up to 21.8 million square feet of development.

During the year, the Company entered two new submarkets by:

    --  Completing the formation of LW Redstone Company, LLC, a joint venture
        created to develop Redstone Gateway, a 468 acre land parcel adjacent to
        Redstone Arsenal in Huntsville, Alabama. The land is owned by the U.S.
        Government and is under a long term master lease to the joint venture
        through the Enhanced Use Lease program. The joint venture will work
        closely with Redstone Arsenal to create a business park that will total
        approximately 4.6 million square feet of office and retail space when
        completed, including 4.4 million square feet of Class A office space. In
        addition, the business park will include hotel and other amenities. The
        Company is the managing partner of the joint venture with a controlling
        interest and responsibility for development, leasing and management of
        the office space at Redstone Gateway. Development and construction of
        Redstone Gateway is expected to take place over a 15 to 20 year period.
    --  Acquiring 15 acres and the development potential of up to 978,000 square
        feet in the Northern Virginia submarket of Springfield. This project,
        known as Patriot Ridge, is adjacent to the new 2.4 million square foot
        National Geospatial Intelligence Agency (NGA) headquarters currently
        under construction at Fort Belvoir, the beneficiary of the largest BRAC
        gain of any military installation in the country.

Acquisitions - For 2010, the Company completed the following acquisitions totaling $317 million:

    --  152,000 square foot building for $40 million, located at 1550 Westbranch
        Drive in McLean, Virginia. The building is 100% leased to The MITRE
        Corporation.
    --  233,000 square foot wholesale data center known as Power Loft @
        Innovation in Manassas, Virginia for $115.5 million. The shell of the
        data center was completed in early 2010 and the property was 17% leased,
        long term, on the acquisition date to two tenants who have a combined
        initial critical load of 3 megawatts and further expansion rights of up
        to a combined 5 megawatts. The Company expects to eventually complete
        the remaining development with an initial stabilization at 18 megawatts
        with additional development costs estimated upon acquisition at $166
        million. Full critical load of the property is expected to be up to 30
        megawatts.
    --  362,000 square feet in two Class A office buildings known as Maritime
        Plaza I and II in the Capitol Riverfront submarket of Washington, DC for
        approximately $119 million. In connection with the acquisition, we
        assumed a $70.1 million mortgage loan with a fixed interest rate of
        5.35% that matures in March 2014. The buildings are subject to ground
        leases that expire in 2099 and 2100. The buildings are 100% leased with
        over 50% of the space leased to investment grade tenants in the
        Company's targeted niche, such as Computer Sciences Corporation, General
        Dynamics and SAIC.
    --  183,000 square foot, shell-complete, office building for $43 million,
        located at 3120 Fairview Park Drive in Falls Church, Virginia.

Dispositions - During the year, the Company sold two properties in Dayton, New Jersey totaling 201,000 square feet for $20.9 million and recognized a gain of $780,000. The Company also sold a contiguous land parcel for $3 million and recognized a gain of $2.5 million.

Financing and Capital Transactions:

The Company executed the following significant transactions during the year:

    --  On April 7, 2010, the Company issued $240 million aggregate principal
        amount of 4.25% Exchangeable Senior Notes due 2030. The notes have an
        exchange settlement feature that provides that the notes may, under
        certain circumstances, be exchangeable for cash and our common shares at
        an initial exchange rate (subject to adjustment) of 20.7658 shares for
        $1,000 principal amount of the notes (equivalent to an exchange price of
        $48.16 per common share, a 20% premium over the closing price on the
        NYSE on the transaction pricing date). On or after April 20, 2015, the
        Company may redeem the notes in cash, in whole or in part, on each of
        April 15, 2015, April 15, 2020 and April 15, 2025, or in the event of a
        "fundamental change," as defined under the terms of the notes. The
        Company used the proceeds for general corporate purposes, including
        repayment of borrowings under its unsecured revolving credit facility.
    --  On November 5, 2010, the Company issued 7.5 million common shares at a
        public offering price of $34.25 per share for net proceeds of $245.8
        million after underwriting discounts but before offering expenses. The
        Company used the proceeds to pay down the Company's unsecured revolving
        credit facility and for general corporate purposes.
    --  During 2010, the Company increased its revolving credit facility by $200
        million, from $600 million to $800 million.

Balance Sheet and Financial Flexibility:

As of December 31, 2010, the Company had a total market capitalization of $5 billion, with $2.3 billion in debt outstanding, equating to a 46% debt-to-total market capitalization ratio. Also, the Company's weighted average interest rate was 4.9% for the quarter ended December 31, 2010 and the Company had 78% of the total debt subject to fixed interest rates as of December 31, 2010.

For the year 2010, the Company's EBITDA to interest expense coverage ratio was 3.01x, and the EBITDA fixed charge coverage ratio was 2.54x. Accounting for construction in progress, the Company's adjusted debt to EBITDA ratio was 6.08x as of December 31, 2010.

Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the tables that follow the text of this press release.

Shareholder Return:

For 2010, the Company's total shareholder return was essentially flat, lagging the NAREIT office sector and the Morgan Stanley REIT Index (RMS). However, for the three years ended December 31, 2010, the Company achieved the second highest total return among all office REITs. Additionally, the Company's 456% total return for the last ten years ranks first among all office REITs and fourteenth among all equity REITs, based on numbers compiled by NAREIT as of December 31, 2010.

Conference Call:

The Company will hold an investor/analyst conference call:


Conference Call Date:                   Thursday, February 10, 2011

Time:                                   11:00 a.m. Eastern Time

Telephone Number: (within the U.S.)     888-679-8035

Telephone Number: (outside the U.S.)    617-213-4848

Passcode:                               74089715



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=PRQDHQKKG

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, February 10 at 2:00 p.m. Eastern Time through Thursday, February 24 at midnight Eastern Time. To access the replay within in the United States, please call 888-286-8010 and use passcode 71577427. To access the replay outside the United States, please call 617-801-6888 and use passcode 71577427.

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.

Definitions:

Please refer to our Form 8-K or our website (www.copt.com) for definitions of certain terms used in this press release. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.

Company Information:

Corporate Office Properties Trust (COPT) (NYSE: OFC) is a specialty office real estate investment trust (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 December 31, 2010, the Company owned 271 office properties totaling 21.1 million rentable square feet, which includes 20 properties totaling 1.1 million square feet held through joint ventures. 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 demand and rents, tenant
        creditworthiness, interest rates and financing availability;
    --  adverse changes in the real estate markets including, among other
        things, increased competition with other companies;
    --  the Company's ability to borrow on favorable terms;
    --  risk of real estate acquisition and development, 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 our plans 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;
    --  governmental actions and initiatives; 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, 2009.


Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Amounts in thousands, except per share data)

                             Three Months Ended        Year Ended

                             December 31,              December 31,

                             2010         2009         2010          2009

Revenues

Real estate revenues         $ 123,765    $ 108,737    $ 459,800     $ 423,984

Construction contract and      27,637       69,553       104,675       343,087
other service revenues

Total revenues                 151,402      178,290      564,475       767,071

Expenses

Property operating expenses    47,019       42,567       179,419       157,154

Depreciation and
amortization associated        35,347       27,261       123,236       108,529
with real estate operations

Construction contract and      27,154       68,230       102,302       336,519
other service expenses

General and administrative     6,103        5,965        24,008        23,240
expenses

Business development           691          2,149        4,197         3,699
expenses

Total operating expenses       116,314      146,172      433,162       629,141

Operating income               35,088       32,118       131,313       137,930

Interest expense               (26,878 )    (23,273 )    (101,865 )    (82,187 )

Interest and other income      7,626        215          9,568         5,164

Income from continuing
operations before equity in
income (loss) of               15,836       9,060        39,016        60,907
unconsolidated entities and
income taxes

Equity in income (loss) of     1,005        134          1,376         (941    )
unconsolidated entities

Income tax expense             (33     )    (27     )    (108     )    (196    )

Income from continuing         16,808       9,167        40,284        59,770
operations

Discontinued operations        (56     )    379          2,391         1,529

Income before gain on sales    16,752       9,546        42,675        61,299
of real estate

Gain on sales of real          -            -            2,829         -
estate, net of income taxes

Net income                     16,752       9,546        45,504        61,299

Less net income
attributable to
noncontrolling interests

Common units in the            (862    )    (463    )    (2,116   )    (4,495  )
Operating Partnership

Preferred units in the         (165    )    (165    )    (660     )    (660    )
Operating Partnership

Other consolidated entities    (201    )    170          32            185

Net income attributable to     15,524       9,088        42,760        56,329
COPT

Preferred share dividends      (4,026  )    (4,026  )    (16,102  )    (16,102 )

Net income attributable to   $ 11,498     $ 5,062      $ 26,658      $ 40,227
COPT common shareholders

Earnings per share "EPS"
computation:

Numerator for diluted EPS:

Net income attributable to   $ 11,498     $ 5,062      $ 26,658      $ 40,227
common shareholders

Amount allocable to            (264    )    (247    )    (1,071   )    (1,010  )
restricted shares

Numerator for diluted EPS      11,234       4,815        25,587        39,217

Denominator:

Weighted average common        63,404       57,604       59,611        55,930
shares - basic

Dilutive effect of
share-based compensation       236          413          333           477
awards

Weighted average common        63,640       58,017       59,944        56,407
shares - diluted

Diluted EPS                  $ 0.18       $ 0.08       $ 0.43        $ 0.70




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Amounts in thousands, except per share data and ratios)

                              Three Months Ended        Year Ended

                              December 31,              December 31,

                              2010         2009         2010         2009

Net income                    $ 16,752     $ 9,546      $ 45,504     $ 61,299

Add: Real estate-related
depreciation and                35,347       27,475       123,243      109,386
amortization

Add: Depreciation and
amortization on                 119          159          631          640
unconsolidated real estate
entities

Less: Gain on sales of
previously depreciated          4            -            (1,077  )    -
operating properties, net
of income taxes

Funds from operations           52,222       37,180       168,301      171,325
("FFO")

Less: Noncontrolling
interests - preferred units     (165    )    (165    )    (660    )    (660    )
in the Operating
Partnership

Less: Noncontrolling
interests - other               (201    )    170          32           185
consolidated entities

Less: Preferred share           (4,026  )    (4,026  )    (16,102 )    (16,102 )
dividends

Less: Depreciation and
amortization allocable to       (157    )    (242    )    (1,402  )    (493    )
noncontrolling interests in
other consolidated entities

Less: Basic and diluted FFO
allocable to restricted         (446    )    (331    )    (1,524  )    (1,629  )
shares

Basic and diluted FFO
available to common share       47,227       32,586       148,645      152,626
and common unit holders
("Basic and diluted FFO")

Less: Straight line rent        (2,047  )    1,676        (4,599  )    (3,847  )
adjustments

Less: Amortization of
acquisition intangibles         (231    )    (679    )    (691    )    (2,126  )
included in net operating
income

Less: Recurring capital         (15,960 )    (13,900 )    (39,407 )    (31,738 )
expenditures

Add: Amortization of
discount on Exchangeable        1,503        772          5,314        2,955
Senior Notes, net of
amounts capitalized

Operating property              470          1,967        3,424        1,967
acquisition costs

Diluted adjusted funds from
operations available to
common share and common       $ 30,962     $ 22,422     $ 112,686    $ 119,837
unit holders ("Diluted
AFFO")

Weighted average shares

Weighted average common         63,404       57,604       59,611       55,930
shares

Conversion of weighted          4,412        5,078        4,608        5,717
average common units

Weighted average common
shares/units - basic FFO        67,816       62,682       64,219       61,647
per share

Dilutive effect of
share-based compensation        236          413          333          477
awards

Weighted average common
shares/units - diluted FFO      68,052       63,095       64,552       62,124
per share

Diluted FFO per share         $ 0.69       $ 0.52       $ 2.30       $ 2.46

Diluted FFO per share,
excluding operating           $ 0.70       $ 0.55       $ 2.36       $ 2.49
property acquisition costs

Dividends/distributions per   $ 0.4125     $ 0.3925     $ 1.6100     $ 1.5300
common share/unit

Diluted FFO payout ratio,
excluding operating             61.7    %    72.0    %    69.6    %    61.8    %
property acquisition costs

Diluted AFFO payout ratio       95.0    %    110.9   %    93.9    %    79.7    %

EBITDA interest coverage      3.36x        2.85x        3.01x        3.40x
ratio

EBITDA fixed charge           2.86x        2.38x        2.54x        2.78x
coverage ratio

Debt to EBITDA ratio (1)      7.29x        8.41x

Adjusted debt to EBITDA       6.08x        7.30x
ratio (2)

Reconciliation of
denominators for diluted
EPS and diluted FFO per
share

Denominator for diluted EPS     63,640       58,017       59,944       56,407

Weighted average common         4,412        5,078        4,608        5,717
units

Denominator for diluted FFO     68,052       63,095       64,552       62,124
per share




(1)  Represents debt divided by EBITDA for the three month period multiplied by
     four.

(2)  Represents debt adjusted to subtract construction in progress as of period
     end divided by EBITDA for the three month period multiplied by four.




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars and shares in thousands, except per share data)

                            December 31,   December 31,

                            2010           2009

Balance Sheet Data (in
thousands) (as of period
end)

Properties, net of          $ 3,445,455    $ 3,029,900
accumulated depreciation

Total assets                  3,844,517      3,380,022

Debt, net                     2,323,681      2,053,841

Total liabilities             2,521,379      2,259,390

Beneficiaries' equity         1,323,138      1,120,632

Debt to total assets          60.4      %    60.8      %

Debt to undepreciated book
value of real estate          57.2      %    57.8      %
assets

Debt to total market          46.1      %    44.6      %
capitalization

Property Data (wholly
owned office properties)

(as of period end)

Number of operating           252            245
properties owned

Total net rentable square     19,990         19,086
feet owned (in thousands)

Occupancy                     88.2      %    90.8      %

Reconciliation of
denominator for debt to
total assets to

denominator for debt to
undepreciated book value
of

real estate assets

Denominator for debt to     $ 3,844,517    $ 3,380,022
total assets

Assets other than assets
included in properties,       (399,062  )    (350,122  )
net

Accumulated depreciation      503,032        422,612
on real estate assets

Intangible assets on real     113,735        100,671
estate acquisitions, net

Denominator for debt to
undepreciated book value    $ 4,062,222    $ 3,553,183
of real estate assets

                            Three Months Ended            Year Ended

                            December 31,                  December 31,

                            2010           2009           2010        2009

Reconciliation of tenant
improvements and
incentives, capital

improvements and leasing
costs for operating
properties to

recurring capital
expenditures

Total tenant improvements
and incentives on           $ 8,761        $ 2,359        $ 25,251    $ 13,931
operating properties

Total capital improvements    6,879          9,475          10,990      16,270
on operating properties

Total leasing costs on        4,573          2,801          9,265       7,232
operating properties

Less: Nonrecurring tenant
improvements and              (3,003    )    (851      )    (4,283 )    (3,631 )
incentives on operating
properties

Less: Nonrecurring capital
improvements on operating     (1,342    )    (117      )    (1,866 )    (1,457 )
properties

Less: Nonrecurring leasing
costs incurred on             10             (186      )    (59    )    (1,102 )
operating properties

Add: Recurring capital
expenditures on operating     82             419            109         495
properties held through
joint ventures

Recurring capital           $ 15,960       $ 13,900       $ 39,407    $ 31,738
expenditures




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

                          Three Months Ended            Year Ended

                          December 31,                  December 31,

                          2010           2009           2010         2009

Reconciliation of common
share dividends to
dividends and

distributions for payout
ratios

Common share dividends    $ 27,597       $ 22,884       $ 98,510     $ 87,596

Common unit                 1,816          1,988          7,266        7,962
distributions

Dividends and
distributions for payout  $ 29,413       $ 24,872       $ 105,776    $ 95,558
ratios

Reconciliation of
diluted FFO to diluted
FFO available to common
share and common

unit holders, excluding
operating property
acquisition costs

Diluted FFO               $ 47,227       $ 32,586       $ 148,645    $ 152,626

Operating property          470            1,967          3,424        1,967
acquisition costs

Diluted FFO available to
common share and common
unit holders, excluding   $ 47,697       $ 34,553       $ 152,069    $ 154,593
operating property
acquisition costs

Reconciliation of GAAP
net income to earnings
before interest,

income taxes,
depreciation and
amortization ("EBITDA")

Net income                $ 16,752       $ 9,546        $ 45,504     $ 61,299

Interest expense on         26,878         23,273         101,865      82,187
continuing operations

Interest expense on         -              59             263          233
discontinued operations

Income tax expense          33             27             119          196

Real estate-related
depreciation and            35,347         27,475         123,243      109,386
amortization

Depreciation of
furniture, fixtures and     642            676            2,576        2,425
equipment

EBITDA                    $ 79,652       $ 61,056       $ 273,570    $ 255,726

Reconciliation of
interest expense from
continuing operations

to the denominators for
interest coverage-EBITDA

and fixed charge
coverage-EBITDA

Interest expense from     $ 26,878       $ 23,273       $ 101,865    $ 82,187
continuing operations

Interest expense from       -              59             263          233
discontinued operations

Less: Amortization of       (1,696    )    (1,125    )    (5,871  )    (4,214  )
deferred financing costs

Less: Amortization of
discount on Exchangeable    (1,503    )    (772      )    (5,314  )    (2,955  )
Senior Notes, net of
amounts capitalized

Denominator for interest    23,679         21,435         90,943       75,251
coverage-EBITDA

Preferred share             4,026          4,026          16,102       16,102
dividends

Preferred unit              165            165            660          660
distributions

Denominator for fixed     $ 27,870       $ 25,626       $ 107,705    $ 92,013
charge coverage-EBITDA

Reconciliation of same
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  $ 63,734       $ 62,642       $ 249,104    $ 257,096
operating income

Less: Straight-line rent    (433      )    640            (137    )    (3,305  )
adjustments

Less: Amortization of
deferred market rental      (661      )    (623      )    (2,145  )    (1,983  )
revenue

Same office property
cash net operating        $ 62,640       $ 62,659       $ 246,822    $ 251,808
income

Less: Lease termination     (2,059    )    (347      )    (3,632  )    (5,531  )
fees, gross

Same office property
cash net operating        $ 60,581       $ 62,312       $ 243,190    $ 246,277
income, excluding gross
lease termination fees

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

Debt, net                 $ 2,323,681    $ 2,053,841

Less: Construction in       (386,195  )    (270,376  )
progress

Denominator for adjusted  $ 1,937,486    $ 1,783,465
debt to EBITDA ratio





Top Twenty Tenants of Wholly Owned Office Properties as of December 31, 2010 (1)

(Dollars in thousands)

                                        Percentage  Total       Percentage  Weighted
                                        of

                            Total       Total       Annualized  of Total    Average

                    Number  Occupied    Occupied    Rental      Annualized  Remaining
                    of                                          Rental

Tenant              Leases  Square      Square      Revenue     Revenue     Lease
                            Feet        Feet        (2) (3)                 Term (4)

United States   (5) 74      3,133,808   17.8%       $95,049     21.1%       6.2
of America

Northrop
Grumman         (6) 17      1,259,167   7.1%        32,857      7.3%        6.6
Corporation

Booz Allen          8       726,070     4.1%        21,311      4.7%        4.5
Hamilton, Inc.

Computer
Sciences        (6) 6       612,024     3.5%        18,788      4.2%        3.1
Corporation

ITT             (6) 9       333,169     1.9%        8,095       1.8%        4.1
Corporation

The MITRE           4       260,348     1.5%        8,044       1.8%        5.8
Corporation

The Aerospace   (6) 3       247,253     1.4%        7,763       1.7%        4.1
Corporation

CareFirst,          2       221,893     1.3%        7,661       1.7%        5.8
Inc.

Wells Fargo &   (6) 6       215,620     1.2%        7,484       1.7%        7.4
Company

L-3
Communications  (6) 4       256,120     1.5%        7,484       1.7%        3.3
Holdings, Inc.

Integral        (6) 4       241,627     1.4%        6,205       1.4%        9.1
Systems, Inc.

Comcast         (6) 7       308,332     1.7%        6,131       1.4%        2.8
Corporation

The Boeing      (6) 5       192,719     1.1%        5,875       1.3%        3.9
Company

AT&T            (6) 5       321,063     1.8%        5,490       1.2%        7.8
Corporation

Ciena               5       263,724     1.5%        4,956       1.1%        2.2
Corporation

General
Dynamics        (6) 5       174,719     1.0%        4,679       1.0%        2.7
Corporation

Unisys              1       156,695     0.9%        4,143       0.9%        9.4
Corporation

The Johns
Hopkins         (6) 5       140,837     0.8%        3,674       0.8%        5.9
Institutions

Merck & Co.,    (6) 2       225,894     1.3%        2,950       0.7%        1.6
Inc.

First Mariner   (6) 2       75,461      0.4%        2,929       0.7%        5.7
Bank

Subtotal Top
20 Office           174     9,366,543   53.1%       261,568     58.1%       5.5
Tenants

All remaining       709     8,260,979   46.9%       189,000     41.9%       3.9
tenants

Total/Weighted      883     17,627,522  100.0%      $450,568    100.0%      4.9
Average




     Table excludes owner occupied leasing activity which represents 170,855
(1)  square feet with total annualized rental revenue of $4.0 million, and a
     weighted average remaining lease term of 4.9 years as of December 31, 2010.

     Total Annualized Rental Revenue is the monthly contractual base rent as of
(2)  December 31, 2010, multiplied by 12, plus the estimated annualized expense
     reimbursements under existing office leases.

(3)  Order of tenants is based on Total Annualized Rental Revenue.

(4)  The weighting of the lease term was computed using Total Rental Revenue.

(5)  Many of our government leases are subject to early termination provisions
     which are customary to government leases.

     The weighted average remaining lease term was computed assuming no exercise
     of such early termination rights.

(6)  Includes affiliated organizations or agencies.




    Source: Corporate Office Properties Trust