Corporate Office Properties Trust Reports Strong 2008 Year End Results

COLUMBIA, Md.--(BUSINESS WIRE)-- Corporate Office Properties Trust (COPT) (NYSE:OFC) announced today financial and operating results for the full year and quarter ended December 31, 2008.

Shareholder Return

The Company's shareholders earned a total return of 2% for the year 2008, the highest among all publicly traded office REITs and the ninth highest among all equity REITs. For the past ten years, the Company's shareholders earned a total return of 648%, the highest ten year return among all equity REITs based on numbers compiled by NAREIT as of December 31, 2008.

2008 Highlights

    --  18% increase in Diluted Funds from Operations ("Diluted FFO") per share
        to $2.64 for the year ended 2008 from $2.24 for 2007. Included in the
        2008 Diluted FFO was a $10.4 million gain recognized for the repurchase
        of a $37.5 million aggregate principal amount of 3.5% Exchangeable
        Senior Notes. Excluding this gain, 2008 Diluted FFO per share would have
        been $2.46, representing a year over year increase of 10%.
    --  123% increase in diluted earnings per share ("Diluted EPS") to $.87 for
        the year ended 2008 as compared to $.39 per diluted share for the year
        ended 2007. Included in 2008 net income was a $10.4 million gain
        recognized for the repurchase of a $37.5 million aggregate principal
        amount of 3.5% Exchangeable Senior Notes. Excluding this gain, 2008 net
        income would have been $.69 per share, representing a year over year
        increase of 77%.

    --  23% increase in Adjusted Funds from Operations ("AFFO") diluted to
        $111.8 million for the year ended 2008 as compared to $90.8 million for
        the year ended 2007.
    --  55% Diluted FFO payout ratio and 74% Diluted AFFO payout ratio for the
        year.
    --  524,000 square feet in 9 development properties placed into service,
        with 2 of the properties containing an aggregate of 89,000 square feet
        placed into service during 2007. The space placed in service in these
        properties was 87.5% leased at December 31, 2008.
    --  642,000 square feet of space under construction and development leased.
    --  93.2% occupied and 93.7% leased for our wholly-owned portfolio as of
        December 31, 2008.
    --  $139.2 million of net proceeds raised through the issuance of 3.7
        million common shares at a public offering price of $39.00 per share.
    --  78% renewal rate on expiring leases for the year, 1.9 million square
        feet renewed with an average capital cost of $7.12 per square foot.
    --  4% increase in same office property cash NOI for the year, excluding the
        effect of a $2.3 million reduction in lease termination fees. Including
        the effect of lower lease termination fees, same office property cash
        NOI increased 3% for the year. The Company's same office portfolio for
        the year ended December 31, 2008 represents 80% of the rentable square
        feet of its consolidated portfolio and consists of 162 properties.
    --  10% increase of quarterly common dividend in September 2008.

"We had excellent FFO growth in 2008 and are well positioned for continued growth in 2009. We have conservatively planned for a recession in our guidance," stated Randall M. Griffin, President and Chief Executive Officer, Corporate Office Properties Trust. "The Company is fortunate to begin 2009 with strong financial flexibility, a healthy capital position and a development pipeline, totally concentrated in the U.S. Government and Defense Information Technology sector where we continue to see strong demand," he stated.

Financial Results

Revenues from real estate operations for the year ended December 31, 2008 were $399.6 million, as compared to the year ended December 31, 2007 of $365.9 million.

As of December 31, 2008, the Company had a total market capitalization of $3.9 billion, with $1.9 billion in debt outstanding, equating to a 48% debt-to-total market capitalization ratio.

As of December 31, 2008, the Company's weighted average interest rate was 5% and the Company had 74% of the total debt subject to fixed interest rates.

For the fourth quarter 2008, the Company's EBITDA to interest expense coverage ratio was 3.7x, and the EBITDA fixed charge coverage ratio was 3.1x.

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.

Operating Results

At December 31, 2008, the Company's wholly-owned portfolio of 238 office properties totaled 18.5 million square feet. The weighted average remaining lease term for the portfolio was 4.8 years and the average rental rate (including tenant reimbursements) was $22.40 per square foot.

For the year, 1.9 million square feet was renewed equating to a 78% renewal rate, at an average committed cost of $7.12 per square foot. Total rent on renewed space increased 16% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and increased 6% on a cash basis. For renewed and retenanted space of 2.3 million square feet, total straight-line rent increased 12% and total rent on a cash basis increased 3%. The average committed cost for renewed and retenanted space was $9.25 per square foot.

For the quarter ended December 31, 2008, 315,000 square feet was renewed equating to a 79% renewal rate, at an average committed cost of $10.38 per square foot. Total rent on renewed space increased 5% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and decreased 3% on a cash basis. For renewed and retenanted space of 347,000 square feet, total straight-line rent increased 5% and total rent on a cash basis decreased 3%. The average committed cost for renewed and retenanted space was $11.08 per square foot.

The Company recognized lease termination fees of $481,000, net of write-offs of related straight-line rents and write-off of previously unamortized deferred market revenue for the year ended December 31, 2008, as compared to $4.1 million for the year ended December 31, 2007, representing a decrease of 88%.

For the fourth quarter 2008, the Company recognized lease termination fees of $183,000, net of write-offs of related straight-line rents and accretion of intangible assets and liabilities, as compared to $578,000 in the fourth quarter 2007, representing a decrease of 68%.

During 2008, the Company signed leases for 375,000 square feet of space at the Unisys Campus in Blue Bell, Pennsylvania. Included in this total are the following:

    --  a new lease with Merck, Inc. to continue occupancy of the entire 219,000
        square foot property located at 785 Jolly Road.
    --  a renewal of Unisys Corporation for 156,000 square feet representing 75%
        of the property located at 760 Jolly Road.

Development Activity

At December 31, 2008, the Company had 2.3 million square feet under construction, development and redevelopment for a total projected cost of $464.9 million.

The Company's land inventory (wholly-owned and joint venture) at December 31, 2008 totaled 1,885 acres that can support 17.0 million square feet of development.

The Company completed the formation of M Square Associates, LLC, a joint venture in which the Company holds a 45% economic interest, located adjacent to the University of Maryland campus in College Park, Maryland. The venture will develop, ground lease and manage the office buildings totaling approximately 750,000 square feet, including 222,000 square feet under construction at December 31, 2008 that is 77% leased.

Acquisition Activity

During the year, the Company acquired 3 buildings totaling 247,000 square feet for $40.5 million.

Included in these totals, are the following assets:

    --  124,000 square foot property for $23.2 million, located in the Colorado
        Springs Airport Business Park, known as Cresterra, at 3535 Northrop
        Grumman Point in Colorado Springs, Colorado, 100% leased long term to
        Northrop Grumman Corporation.
    --  123,000 square feet in two properties for $17.3 million, located at 1560
        Cable Ranch Road, known collectively as 151 Technology Center in San
        Antonio, Texas, 100% leased long term to Sears, Air Force Federal Credit
        Union and AFNI.

Disposition Activity

During the year, the Company sold 223,000 square feet in 3 buildings for $25.3 million and realized gains of $2.6 million. The buildings were located in the Company's New Jersey and Baltimore County submarkets.

Financing and Capital Transactions

The Company executed the following transactions during the year:

    --  Closed on a $221.4 million loan requiring interest only payments for the
        term at variable rate of LIBOR plus 225 basis points. The loan has a
        four year term with an option to extend by an additional year.
    --  Closed on a $225.0 million construction loan facility that will be used
        to fund most of the Company's construction costs over the next several
        years. The facility has a three year term with a one year extension
        option, and requires interest only payments throughout the term.
    --  Repurchased a $37.5 million aggregate principal amount in the Company's
        3.5% Exchangeable Senior Notes for $26.7 million, recognizing a gain of
        $10.4 million during the fourth quarter 2008.

Subsequent Events

The Company executed the following transactions subsequent to quarter end:

    --  54,000 square feet of the 82,000 square foot property to be constructed
        at North Gate Business Park in Aberdeen, Maryland was leased long-term
        to The MITRE Corporation.
    --  67,000 square feet of the 175,000 square foot property located at 2900
        Towerview Road in Herndon, Virginia was leased long-term to Qwest
        Corporation, bringing the property to 100% leased.

Earnings Guidance

The Company revised its 2009 EPS guidance from a range of $.77 to $.85 (adjusted for the change in accounting for interest on convertible debt effective January 1, 2009) to a range of $.73 to $.83 per diluted share.

The Company revised its 2009 FFO per share guidance from a range of $2.52 to $2.60 to a range of $2.48 to $2.58, representing growth of 4% to 8% compared to 2008 diluted FFO per share, as adjusted, of $2.39 (which includes a reduction of $.07 per share for the change in accounting for interest on convertible debt effective January 1, 2009).

Conference Call

The Company will hold an investor/analyst conference call:


Conference Call (within the United States)

Date:              Thursday, February 12, 2009

Time:              11:00 a.m. Eastern Time

Telephone Number:  888-679-8018

Passcode:          33600894

Conference Call (outside the United States)

Date:              Thursday, February 12, 2009

Time:              11:00 a.m. Eastern Time

Telephone Number:  617-213-4845

Passcode:          33600894



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=P8Y7M99DB

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 12 at 3:00 p.m. Eastern Time through Thursday, February 26 at midnight Eastern Time. To access the replay within in the United States, please call 888-286-8010 and use passcode 41186431. To access the replay outside the United States, please call 617-801-6888 and use passcode 41186431.

The conference call 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 call 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 on strategic customer relationships and specialized tenant requirements in the U.S. Government, Defense Information Technology and Data sectors. The Company acquires, develops, manages and leases properties which are typically concentrated in large office parks primarily located adjacent to government demand drivers and/or in growth corridors. As of December 31, 2008, the Company owned 256 office and data properties totaling 19.2 million rentable square feet, which includes 18 properties totaling 769,000 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. More information on COPT 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", "expect", "estimate" 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:

    --  the Company's ability to borrow on favorable terms;
    --  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;
    --  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;
    --  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 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2007.


Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Amounts in thousands, except per share data)

                                                        Three Months Ended

                                                        December 31,

                                                          2008         2007

Revenues

Real estate revenues                                    $ 103,599    $ 94,352

Service operations revenues                               65,345       8,498

Total revenues                                            168,944      102,850

Expenses

Property operating expenses                               36,786       31,090

Depreciation and other amortization associated with       27,290       25,889
real estate operations

Service operations expenses                               64,052       8,330

General and administrative expenses                       7,257        5,758

Total operating expenses                                  135,385      71,067

Operating income                                          33,559       31,783

Interest expense                                          (20,512 )    (21,689 )

Interest and other income                                 1,146        215

Gain on sales of non-real estate investments              10,376       -

Income from continuing operations before equity in
income (loss) of unconsolidated entities, income taxes    24,569       10,309
and minority interests

Equity in income (loss) of unconsolidated entities        20           (27     )

Income tax expense                                        (99     )    (89     )

Income from continuing operations before minority         24,490       10,193
interests

Minority interests in income from continuing              (3,019  )    (1,049  )
operations

Income from continuing operations                         21,471       9,144

Income from discontinued operations, net                  -            424

Income before gain on sales of real estate                21,471       9,568

Gain on sales of real estate, net                         -            361

Net income                                                21,471       9,929

Preferred share dividends                                 (4,026  )    (4,025  )

Net income available to common shareholders             $ 17,445     $ 5,904

Earnings per share "EPS" computation

Numerator                                               $ 17,445     $ 5,904

Denominator:

Weighted average common shares - basic                    51,120       46,947

Dilutive effect of share-based compensation awards        640          914

Weighted average common shares - diluted                  51,760       47,861

EPS

Basic                                                   $ 0.34       $ 0.13

Diluted                                                 $ 0.34       $ 0.12




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

                                                         Three Months Ended

                                                         December 31,

                                                           2008        2007

Net income                                               $ 21,471    $ 9,929

Add: Real estate-related depreciation and amortization     27,290      26,607

Add: Depreciation and amortization on unconsolidated       159         163
real estate entities

Less: Depreciation and amortization allocable to           (72    )    (51    )
minority interests in other consolidated entities

Gain on sales of real estate, excluding development        -           (1,049 )
portion

Funds from operations ("FFO")                              48,848      35,599

Add: Minority interests-common units in the Operating      2,814       1,258
Partnership

Less: Preferred share dividends                            (4,026 )    (4,025 )

Basis and diluted funds from operations ("Basic and        47,636      32,832
Diluted FFO")

Less: Straight-line rent adjustments                       (1,927 )    (2,680 )

Less: Recurring capital expenditures                       (8,682 )    (6,504 )

Less: Amortization of deferred market rental revenue       (606   )    (416   )

Diluted adjusted funds from operations ("Diluted AFFO")  $ 36,421    $ 23,232

Weighted average shares

Weighted average common shares                             51,120      46,947

Conversion of weighted average common units                7,993       8,167

Weighted average common shares/units - basic FFO per       59,113      55,114
share

Dilutive effect of share-based compensation awards         640         914

Weighted average common shares/units - diluted FFO per     59,753      56,028
share

Diluted FFO per share                                    $ 0.80      $ 0.59

Dividends/distributions per common share/unit            $ 0.3725    $ 0.3400

Earnings payout ratio                                      110.5  %    272.6  %

Diluted FFO payout ratio                                   46.7   %    57.5   %

Diluted AFFO payout ratio                                  61.0   %    81.2   %

EBITDA interest coverage ratio                           3.74x       2.95x

EBITDA fixed charge coverage ratio                       3.08x       2.45x

Reconciliation of denominators for diluted EPS and
diluted FFO per share

Denominator for diluted EPS                                51,760      47,861

Weighted average common units                              7,993       8,167

Denominator for diluted FFO per share                      59,753      56,028




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Amounts in thousands, except per share data)

                                                     Year Ended

                                                     December 31,

                                                       2008         2007

Revenues

Real estate revenues                                 $ 399,633    $ 365,914

Service operations revenues                            188,385      41,225

Total revenues                                         588,018      407,139

Expenses

Property operating expenses                            141,139      123,258

Depreciation and other amortization associated with    102,720      104,700
real estate operations

Service operations expenses                            184,142      39,793

General and administrative expenses                    25,329       21,704

Total operating expenses                               453,330      289,455

Operating income                                       134,688      117,684

Interest expense                                       (83,646 )    (85,576 )

Interest and other income                              2,070        3,030

Gain on early extinguishment of debt                   10,376       -

Income from continuing operations before equity in
loss of unconsolidated entities, income taxes and      63,488       35,138
minority interests

Equity in loss of unconsolidated entities              (147    )    (224    )

Income tax expense                                     (201    )    (569    )

Income from continuing operations before minority      63,140       34,345
interests

Minority interests in income from continuing           (7,488  )    (3,331  )
operations

Income from continuing operations                      55,652       31,014

Income from discontinued operations, net               2,179        2,210

Income before gain on sales of real estate             57,831       33,224

Gain on sales of real estate, net                      837          1,560

Net income                                             58,668       34,784

Preferred share dividends                              (16,102 )    (16,068 )

Net income available to common shareholders          $ 42,566     $ 18,716

Earnings per share "EPS" computation

Numerator                                            $ 42,566     $ 18,716

Denominator:

Weighted average common shares - basic                 48,132       46,527

Dilutive effect of share-based compensation awards     733          1,103

Weighted average common shares - diluted               48,865       47,630

EPS

Basic                                                $ 0.88       $ 0.40

Diluted                                              $ 0.87       $ 0.39




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

                                                        Year Ended

                                                        December 31,

                                                          2008         2007

Net income                                              $ 58,668     $ 34,784

Add: Real estate-related depreciation and amortization    102,772      106,260

Add: Depreciation and amortization on unconsolidated      648          666
real estate entities

Less: Depreciation and amortization allocable to          (270    )    (188    )
minority interests in other consolidated entities

Gain on sales of real estate, excluding development       (2,630  )    (3,827  )
portion

FFO                                                       159,188      137,695

Add: Minority interests-common units in the Operating     7,315        3,682
Partnership

Less: Preferred share dividends                           (16,102 )    (16,068 )

Basic and Diluted FFO                                     150,401      125,309

Less: Straight-line rent adjustments                      (10,211 )    (11,722 )

Less: Recurring capital expenditures                      (26,293 )    (20,835 )

Less: Amortization of deferred market rental revenue      (2,064  )    (1,985  )

Diluted AFFO                                            $ 111,833    $ 90,767

Weighted average shares

Weighted average common shares                            48,132       46,527

Conversion of weighted average common units               8,107        8,296

Weighted average common shares/units - basic FFO per      56,239       54,823
share

Dilutive effect of share-based compensation awards        733          1,103

Weighted average common shares/units - diluted FFO per    56,972       55,926
share

Diluted FFO per share                                   $ 2.64       $ 2.24

Dividends/distributions per common share/unit           $ 1.425      $ 1.300

Earnings payout ratio                                     166.4   %    327.7   %

Diluted FFO payout ratio                                  54.8    %    57.5    %

Diluted AFFO payout ratio                                 73.6    %    79.3    %

EBITDA interest coverage ratio                          3.21x        2.82x

EBITDA fixed charge coverage ratio                      2.65x        2.35x

Reconciliation of denominators for diluted EPS and
diluted FFO per share

Denominator for diluted EPS                               48,865       47,630

Weighted average common units                             8,107        8,296

Denominator for diluted FFO per share                     56,972       55,926




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

                                                    December 31,   December 31,

                                                      2008           2007

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

Investment in real estate, net of accumulated       $ 2,776,889    $ 2,603,939
depreciation

Total assets                                          3,112,867      2,931,853

Debt                                                  1,866,623      1,825,842

Total liabilities                                     2,041,688      1,979,116

Minority interests                                    137,865        130,095

Beneficiaries' equity                                 933,314        822,642

Debt to total assets                                  60.0      %    62.3      %

Debt to undepreciated book value of real estate       58.1      %    60.8      %
assets

Debt to total market capitalization                   47.6      %    48.0      %

Property Data (wholly owned properties) (as of
period end)

Number of operating properties owned                  238            228

Total net rentable square feet owned (in              18,462         17,832
thousands)

Occupancy                                             93.2      %    92.6      %

Reconciliation of denominator for debt to total
assets to denominator for debt to undepreciated
book value of real estate assets

Denominator for debt to total assets                $ 3,112,867    $ 2,931,853

Assets other than assets included in investment in    (335,978  )    (327,914  )
real estate

Accumulated depreciation on real estate assets        343,110        288,747

Intangible assets on real estate acquisitions, net    91,848         108,661

Denominator for debt to undepreciated book value    $ 3,211,847    $ 3,001,347
of real estate assets




                                 Three Months Ended      Year Ended

                                 December 31,            December 31,

                                   2008        2007        2008        2007

Reconciliation of tenant
improvements and incentives,
capital improvements and
leasing costs for operating
properties to recurring capital
expenditures

Total tenant improvements and
incentives on operating          $ 5,472     $ 2,692     $ 20,355    $ 21,487
properties

Total capital improvements on      4,434       4,748       11,261      11,230
operating properties

Total leasing costs on             1,269       1,850       4,033       7,562
operating properties

Less: Nonrecurring tenant
improvements and incentives on     (1,615 )    (811   )    (5,692 )    (12,192 )
operating properties

Less: Nonrecurring capital
improvements on operating          (836   )    (1,442 )    (3,503 )    (4,494  )
properties

Less: Nonrecurring leasing
costs incurred on operating        (49    )    (575   )    (318   )    (2,856  )
properties

Add: Recurring improvements on
operating properties held          7           42          157         98
through joint ventures

Recurring capital expenditures   $ 8,682     $ 6,504     $ 26,293    $ 20,835




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)

                              Three Months Ended        Year Ended

                              December 31,              December 31,

                                2008         2007         2008         2007

Reconciliation of dividends
for earnings payout ratio to
dividends and distributions
for FFO & AFFO payout ratio

Common share dividends for    $ 19,283     $ 16,097     $ 70,836     $ 61,331
earnings payout ratio

Common unit distributions       2,946        2,777        11,510       10,682

Dividends and distributions   $ 22,229     $ 18,874     $ 82,346     $ 72,013
for FFO & AFFO payout ratio

Reconciliation of diluted
AFFO and numerators for
diluted EPS and diluted FFO,
as reported, to diluted AFFO
and numerators for diluted
EPS and diluted FFO
excluding gain on early
extinguishment of debt

Numerator for diluted EPS,    $ 17,445     $ 5,904      $ 42,566     $ 18,716
as reported

Less: Gain on early             (10,376 )    -            (10,376 )    -
extinguishment of debt

Add: Minority interests
share of gain on early          1,438        -            1,438        -
extinguishment of debt

Numerator for diluted EPS,    $ 8,507      $ 5,904      $ 33,628     $ 18,716
as adjusted

Diluted EPS, as adjusted for
gain on early extinguishment  $ 0.16       $ 0.12       $ 0.69       $ 0.39
of debt

Numerator for diluted FFO     $ 47,636     $ 32,832     $ 150,401    $ 125,309
per share, as reported

Less: Gain on early             (10,376 )    -            (10,376 )    -
extinguishment of debt

Numerator for diluted FFO     $ 37,260     $ 32,832     $ 140,025    $ 125,309
per share, as adjusted

Diluted FFO per share, as
adjusted for gain on early    $ 0.62       $ 0.59       $ 2.46       $ 2.24
extinguishment of debt

Diluted AFFO, as reported     $ 36,421     $ 23,232     $ 111,833    $ 90,767

Less: Gain on early             (10,376 )    -            (10,376 )    -
extinguishment of debt

Diluted AFFO, as adjusted     $ 26,045     $ 23,232     $ 101,457    $ 90,767

Reconciliation of GAAP net
income to earnings before
interest, income taxes,
depreciation and
amortization ("EBITDA")

Net income                    $ 21,471     $ 9,929      $ 58,668     $ 34,784

Interest expense on             20,512       21,689       83,646       85,576
continuing operations

Interest expense on             -            80           51           1,382
discontinued operations

Income tax expense              99           1,201        779          1,684

Real estate-related
depreciation and                27,290       26,607       102,772      106,260
amortization

Other depreciation and          393          358          1,570        1,365
amortization

Minority interests              3,019        1,391        8,147        4,220

EBITDA                        $ 72,784     $ 61,255     $ 255,633    $ 235,271

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

Interest expense from         $ 20,512     $ 21,689     $ 83,646     $ 85,576
continuing operations

Interest expense from           -            80           51           1,382
discontinued operations

Less amortization of            (1,073  )    (970   )     (3,955  )    (3,676  )
deferred financing costs

Denominator for interest        19,439       20,799       79,742       83,282
coverage-EBITDA

Preferred share dividends       4,026        4,025        16,102       16,068

Preferred unit distributions    165          165          660          660

Denominator for fixed charge  $ 23,630     $ 24,989     $ 96,504     $ 100,010
coverage-EBITDA

Reconciliation of same
property net operating
income to same property cash
net operating income and
same property cash net
operating income, adjusted
for lease termination fees

Same property net operating   $ 60,792     $ 60,641     $ 210,570    $ 207,792
income

Less: Straight-line rent        (1,057  )    (2,025 )     (4,452  )    (7,081  )
adjustments

Less: Amortization of
deferred market rental          (436    )    (342   )     (1,385  )    (1,902  )
revenue

Same property cash net        $ 59,299     $ 58,274     $ 204,733    $ 198,809
operating income

Less: Lease termination         (200    )    (688   )     (554    )    (2,891  )
fees, gross

Same property cash net
operating income, adjusted    $ 59,099     $ 57,586     $ 204,179    $ 195,918
for lease termination fees




Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Amounts in thousands, except per share data)

Reconciliation of projected EPS-diluted to projected
diluted FFO per share

                                                       Year Ending

                                                       December 31,

                                                       2009

                                                       Low        High

Reconciliation of numerators

Numerator for projected EPS-diluted                    $ 38,300   $ 43,475

Real estate-related depreciation and amortization (1)    105,600    105,600

Minority interests-common units                          6,100      6,925

Numerator for projected diluted FFO per share          $ 150,000  $ 156,000

Reconciliation of denominators

Denominator for projected EPS-diluted                    52,600     52,600

Weighted average common units                            7,900      7,900

Denominator for projected diluted FFO per share          60,500     60,500

Projected EPS - diluted                                $ 0.73     $ 0.83

Projected diluted FFO per share                        $ 2.48     $ 2.58




(1)  The estimate of real estate-related depreciation and amortization excludes
     any impact of potential write-offs resulting from lease terminations.





Top Twenty Office Tenants of Wholly Owned Properties as of December 31, 2008 (1)

(Dollars in thousands)

                                       Percentage  Total       Percentage  Weighted
                   Number  Total       of          Annualized  of Total    Average
Tenant             of      Occupied    Total       Rental      Annualized  Remaining
                   Leases  Square      Occupied    Revenue     Rental      Lease
                           Feet        Square      (2) (3)     Revenue     Term (4)
                                       Feet

United States  (5) 67      2,584,112   15.0%       $66,782     17.3%       6.3
of America

Northrop
Grumman        (6) 16      1,139,591   6.6%        28,375      7.4%        7.7
Corporation

Booz Allen         8       710,692     4.1%        19,985      5.2%        5.6
Hamilton, Inc.

Computer
Sciences       (6) 4       454,645     2.6%        11,875      3.1%        2.6
Corporation

L-3
Communications (6) 5       267,354     1.6%        9,730       2.5%        5.3
Holdings, Inc.

Unisys         (7) 5       760,145     4.4%        9,052       2.3%        4.7
Corporation

General
Dynamics       (6) 10      293,329     1.7%        7,753       2.0%        1.6
Corporation

The Aerospace      3       245,598     1.4%        7,301       1.9%        6.1
Corporation

ITT            (6) 9       290,312     1.7%        6,820       1.8%        5.5
Corporation

Wachovia       (6) 4       183,577     1.1%        6,622       1.7%        9.6
Corporation

Comcast        (6) 11      342,266     2.0%        6,514       1.7%        3.2
Corporation

AT&T           (6) 8       306,988     1.8%        5,692       1.5%        4.5
Corporation

The Boeing     (6) 4       143,480     0.8%        4,241       1.1%        4.7
Company

Ciena              4       229,848     1.3%        4,200       1.1%        3.3
Corporation

BAE Systems    (6) 7       212,339     1.2%        3,171       0.8%        3.9
PLC

The Johns
Hopkins        (6) 4       128,827     0.7%        3,011       0.8%        7.7
Institutions

Science
Applications   (6) 9       137,142     0.8%        2,957       0.8%        0.8
International
Corp.

Merck & Co.,   (6) 2       225,900     1.3%        2,719       0.7%        3.6
Inc. (Unisys)  (7)

Magellan
Health             2       113,727     0.7%        2,673       0.7%        2.6
Services, Inc.

AARP               1       104,695     0.6%        2,571       0.7%        12.9

Subtotal Top 20    183     8,874,567   51.6%       212,044     55.0%       5.7
Office Tenants

All remaining      778     8,333,261   48.4%       173,326     45.0%       3.7
tenants

Total/Weighted     961     17,207,828  100.0%      $385,370    100.0%      4.8
Average




     Table excludes owner occupied leasing activity which represents 149,601
(1)  square feet with a weighted average remaining lease term of 6.5 years as of
     December 31, 2008.

     Total Annualized Rental Revenue is the monthly contractual base rent as of
(2)  December 31, 2008, multiplied by 12, plus the estimated annualized expense
     reimbursements under existing office leases.

(3)  Order of tenants is based on Annualized Rent.

(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.

(7)  Merck & Co., Inc. subleases 219,065 rentable square feet from Unisys'
     960,349 leased rentable square feet in our Greater Philadelphia region.




    Source: Corporate Office Properties Trust (COPT)