Corporate Office Properties Trust Reports Strong Third Quarter 2008 Results

COLUMBIA, Md.--(BUSINESS WIRE)--

Corporate Office Properties Trust (COPT) (NYSE:OFC) announced today financial and operating results for the quarter ended September 30, 2008.

    Highlights

    --  10.3% increase to $.64 per share in Diluted Funds from
        Operations ("Diluted FFO") or $36.2 million for the third
        quarter 2008, from $.58 or $32.4 million for the third quarter
        2007.

    --  Diluted earnings per share ("Diluted EPS") of $.19 or $8.9
        million of net income available to common shareholders for the
        third quarter 2008 as compared to $.15 per diluted share or
        $7.4 million of net income available to common shareholders
        for the third quarter 2007.

    --  8.0% increase in Adjusted Funds from Operations ("AFFO")
        diluted to $25.8 million for the third quarter 2008 as
        compared to $23.9 million for the third quarter 2007. 11.7%
        increase in AFFO to $75.4 million for the nine months ended
        September 30, 2008 as compared to $67.5 million for the nine
        months ended September 30, 2007.

    --  93.2% occupied and 94.3% leased for our wholly-owned portfolio
        as of September 30, 2008.

    --  1.1 million square feet of overall leasing for the third
        quarter 2008, including renewal, retenanting and development
        space.

    --  79.6% renewal rate on expiring leases for the third quarter
        2008, with a 26.7% increase in total straight-line rent for
        renewed space.

    --  3.1% increase in same office property cash NOI for the
        quarter, excluding the effect of a $431,000 reduction in lease
        termination fees. Including the effect of lower lease
        termination fees, same office property cash NOI increased 2.4%
        for the quarter. The Company's same office portfolio for the
        quarter ended September 30, 2008 represents 89.9% of the
        rentable square feet of its consolidated portfolio and
        consists of 218 properties.

    --  9.6% increase in quarterly common dividend from $.34 to $.3725
        per share.

    --  3.7 million common shares issued at a public offering price of
        $39.00 per share. The net proceeds were used to pay down the
        Company's Revolving Credit Facility.

"We are pleased with our strong third quarter results which indicate that despite a deteriorating economy, we are well positioned for the balance of 2008 and into 2009 to deliver strong FFO growth," stated Randall M. Griffin, President and CEO, Corporate Office Properties Trust. "We have no remaining debt maturities for the balance of 2008 and have minimal debt maturities for 2009 and 2010. Our core business remains strong as demonstrated by our year to date renewal rate of 78%," he added.

Financial Results

Revenues from real estate operations for the quarter ended September 30, 2008 were $101.6 million, as compared to revenue for the quarter ended September 30, 2007 of $94.1 million.

Diluted FFO payout ratio year to date was 58.5% and 61.4% for the third quarter 2008 as compared to 58.3% for the third quarter 2007. Diluted AFFO payout ratio year to date was 79.7% and 86.1% for the third quarter 2008 as compared to 79.1% for the third quarter 2007.

As of September 30, 2008, the Company had a total market capitalization of $4.5 billion, with $1.9 billion in debt outstanding, equating to a 41.4% debt-to-total market capitalization ratio.

As of September 30, 2008, the Company's weighted average interest rate was 5.1% and the Company had 71.2% of the total debt subject to fixed interest rates.

For the third quarter 2008, the Company's EBITDA to interest expense coverage ratio was 3.04x and the EBITDA to fixed charge coverage ratio was 2.53x.

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 September 30, 2008, the Company's wholly-owned portfolio of 235 office properties totaled 18.3 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 $22.17 per square foot.

For the quarter ended September 30, 2008, 850,000 square feet was renewed equating to a 79.6% renewal rate, at an average committed cost of $8.24 per square foot. Total rent on renewed space increased 26.7% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and increased 13.1% on a cash basis. For renewed and retenanted space of 950,000 square feet, total straight-line rent increased 23.1% and total rent on a cash basis increased 9.8%. The average committed cost for renewed and retenanted space was $10.14 per square foot. For the nine months ended September 30, 2008, 1.6 million square feet was renewed equating to a 77.9% renewal rate, at an average committed cost of $6.49 per square foot.

The Company recognized total lease termination fees of $188,000, net of write-offs of related straight-line rents and accretion of intangible assets and liabilities for the quarter, as compared to $1.2 million in the third quarter of 2007.

During the quarter, the Company signed leases for 333,000 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 the entire 114,000 square
        foot property located at 751 Jolly Road.

    Development Activity

At quarter end, the Company had 2.7 million square feet under construction, development and redevelopment for a total projected cost of $526.3 million.

The Company's land inventory (wholly-owned and joint venture) at quarter end totaled 1,872 acres that can support 16.5 million square feet of development.

During the quarter, the Company placed 44,000 square feet of development projects into service.

The Company signed leases for 122,000 square feet of space under construction and development during the quarter. Included in this total are the following:

    --  39,000 square feet of the 156,000 square foot property located
        at 302 Sentinel Drive (302 NBP) in Annapolis Junction,
        Maryland, leased to a large credit worthy tenant.

    --  34,000 square feet of the 146,000 square foot property located
        at 10807 New Allegiance Drive (Epic One) in Colorado Springs,
        Colorado, leased to Lockheed Martin Corporation.

    --  28,000 square feet of the 106,000 square foot property located
        at 5520 Research Park Drive (UMBC) in Baltimore, Maryland,
        leased to RMF Engineering, Inc.

    --  21,000 square feet of the 116,000 square foot property located
        at 5825 University Research Court (M Square Research Park) in
        College Park, Maryland.

    Acquisition Activity

The Company acquired 138 acres during the quarter for $16.1 million. Included in this total, are the following:

    --  31 acre land parcel in San Antonio, Texas for $8.1 million
        that can support approximately 500,000 developable square
        feet.

    --  107 acre land parcel in close proximity to Fort Detrick in
        Frederick, Maryland for $8.0 million that can support
        approximately 1.0 million developable square feet.

    Financing and Capital Transactions

During the quarter, the Company completed the following transactions:

    --  Issued 3.7 million common shares at a public offering price of
        $39.00 per share for net proceeds after underwriting discounts
        but before offering expenses of $139.2 million. The net
        proceeds were used to pay down the Company's Revolving Credit
        Facility.

    --  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. The Company used $63.5 million of the
        proceeds to repay construction loan facilities due to mature
        in 2008, $11.8 million to repay borrowings under the Company's
        Construction Revolver, $142.0 million to repay borrowings
        under the Company's Revolving Credit Facility and the balance
        to fund transaction costs.

    --  The aggregate amount of maturing debt repaid by the Company
        totaled $187.6 million during the quarter, excluding scheduled
        principal amortization payments and repayments of our
        revolving credit facilities. The Company has no remaining debt
        scheduled to mature during 2008 and only $92.8 million of
        loans maturing in 2009.

    Subsequent Event

The Company placed into service 91,000 square feet in two properties located at 7700 Potranco Road in San Antonio, Texas, leased entirely to a large credit worthy tenant.

Earnings Guidance

The Company's 2008 EPS guidance has been revised from a range of $.62 to $.70 to a range of $.70 to $.73 per diluted share.

The Company's 2008 FFO guidance has been revised from a range of $2.42 to $2.48 to a range of $2.43 to $2.46 per diluted share, representing FFO growth of 8.5% to 9.8% compared to 2007 actual results.

Conference Call

The Company will hold an investor/analyst conference call:

Within the United States:
Conference Call and Webcast Date: Thursday, October 30, 2008
Time: 11:00 a.m. Eastern Time
Dial In Number: 888-713-4215
Passcode: 27345433

Outside the United States:
Conference Call and Webcast Date: Thursday, October 30, 2008
Time: 11:00 a.m. Eastern Time
Dial In Number: 617-213-4867
Passcode: 27345433

A replay of this call will be available beginning Thursday, October 30 at 1:00 p.m. Eastern Time through Thursday, November 13 at midnight Eastern Time. To access the replay, please call 888-286-8010 and use passcode 51167930.

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.

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: www.theconferencingservice.com/prereg/key.process?key=PG3YGJYDN

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.

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 September 30, 2008, the Company owned 254 office and data properties totaling 19.1 million rentable square feet, which includes 19 properties totaling 847,000 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
                                                      September 30,
                                                   -------------------
                                                     2008      2007
                                                   --------- ---------
Revenues
  Real estate revenues                             $101,644  $ 94,102
  Service operations revenues                        90,002    10,957
                                                   --------- ---------
    Total revenues                                  191,646   105,059
                                                   --------- ---------
Expenses
  Property operating expenses                        35,854    31,577
  Depreciation and other amortization associated
   with real estate operations                       25,583    26,025
  Service operations expenses                        87,657    10,313
  General and administrative expenses                 6,103     5,743
                                                   --------- ---------
    Total operating expenses                        155,197    73,658
                                                   --------- ---------
Operating income                                     36,449    31,401
Interest expense                                    (20,506)  (20,968)
Amortization of deferred financing costs             (1,169)     (901)
Gain on sales of non-real estate investments              1         -
                                                   --------- ---------
Income from continuing operations before equity in
 loss of unconsolidated entities, income taxes and
 minority interests                                  14,775     9,532
Equity in loss of unconsolidated entities               (57)      (46)
Income tax expense                                      (97)     (197)
                                                   --------- ---------
Income from continuing operations before minority
 interests                                           14,621     9,289
Minority interests in income from continuing
 operations                                          (1,668)     (942)
                                                   --------- ---------
Income from continuing operations                    12,953     8,347
(Loss) income from discontinued operations, net          (8)    2,046
                                                   --------- ---------
Income before gain on sales of real estate           12,945    10,393
Gain on sales of real estate, net                         4     1,038
                                                   --------- ---------
Net income                                           12,949    11,431
Preferred share dividends                            (4,025)   (4,025)
                                                   --------- ---------
Net income available to common shareholders        $  8,924  $  7,406
                                                   ========= =========

Earnings per share "EPS" computation
Numerator                                          $  8,924  $  7,406
                                                   ========= =========

Denominator:
Weighted average common shares - basic               47,273    46,781
Dilutive effect of share-based compensation awards      916     1,005
                                                   --------- ---------
Weighted average common shares - diluted             48,189    47,786
                                                   ========= =========

EPS
  Basic                                            $   0.19  $   0.16
                                                   ========= =========
  Diluted                                          $   0.19  $   0.15
                                                   ========= =========

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

                                                   Three Months Ended
                                                      September 30,
                                                   -------------------
                                                     2008      2007
                                                   --------- ---------

Net income                                         $ 12,949  $ 11,431
Add: Real estate-related depreciation and
 amortization                                        25,583    26,266
Add: Depreciation and amortization on
 unconsolidated real estate entities                    162       166
Less: Depreciation and amortization allocable to
 minority interests in other consolidated entities      (74)      (48)
Gain on sales of real estate, excluding
 development portion                                      -    (2,789)
                                                   --------- ---------
Funds from operations ("FFO")                        38,620    35,026
Add: Minority interests-common units in the
 Operating Partnership                                1,592     1,351
Less: Preferred share dividends                      (4,025)   (4,025)
                                                   --------- ---------
Funds from operations - basic and diluted ("Basic
 and Diluted FFO")                                   36,187    32,352
Less: Straight-line rent adjustments                 (2,850)   (3,247)
Less: Recurring capital expenditures                 (7,008)   (4,664)
Less: Amortization of deferred market rental
 revenue                                               (555)     (585)
                                                   --------- ---------
Adjusted funds from operations - diluted ("Diluted
 AFFO")                                            $ 25,774  $ 23,856
                                                   ========= =========

Weighted average shares
  Weighted average common shares                     47,273    46,781
  Conversion of weighted average common units         8,130     8,297
                                                   --------- ---------
  Weighted average common shares/units - basic FFO
   per share                                         55,403    55,078
  Dilutive effect of share-based compensation
   awards                                               916     1,005
                                                   --------- ---------
  Weighted average common shares/units - diluted
   FFO per share                                     56,319    56,083
                                                   ========= =========

Diluted FFO per common share                       $   0.64  $   0.58
                                                   ========= =========
Dividends/distributions per common share/unit      $ 0.3725  $ 0.3400
                                                   ========= =========
Earnings payout ratio                                 215.0%    217.3%
                                                   ========= =========
Diluted FFO payout ratio                               61.4%     58.3%
                                                   ========= =========
Diluted AFFO payout ratio                              86.1%     79.1%
                                                   ========= =========
EBITDA interest coverage ratio                         3.04x     2.92x
                                                   ========= =========
EBITDA fixed charge coverage ratio                     2.53x     2.44x
                                                   ========= =========

Reconciliation of denominators for diluted EPS and
 diluted FFO per share
Denominator for diluted EPS                          48,189    47,786
Weighted average common units                         8,130     8,297
                                                   --------- ---------
Denominator for diluted FFO per share                56,319    56,083
                                                   ========= =========

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

                                                   Nine Months Ended
                                                      September 30,
                                                   -------------------
                                                     2008      2007
                                                   --------- ---------
Revenues
  Real estate revenues                             $296,906  $273,344
  Service operations revenues                       123,040    32,727
                                                   --------- ---------
    Total revenues                                  419,946   306,071
                                                   --------- ---------
Expenses
  Property operating expenses                       104,353    92,168
  Depreciation and other amortization associated
   with real estate operations                       75,430    78,811
  Service operations expenses                       120,090    31,463
  General and administrative expenses                18,072    15,946
                                                   --------- ---------
    Total operating expenses                        317,945   218,388
                                                   --------- ---------
Operating income                                    102,001    87,683
Interest expense                                    (60,252)  (61,181)
Amortization of deferred financing costs             (2,882)   (2,706)
Gain on sales of non-real estate investments             52     1,033
                                                   --------- ---------
Income from continuing operations before equity in
 loss of unconsolidated entities, income taxes and
 minority interests                                  38,919    24,829
Equity in loss of unconsolidated entities              (167)     (197)
Income tax expense                                     (102)     (480)
                                                   --------- ---------
Income from continuing operations before minority
 interests                                           38,650    24,152
Minority interests in income from continuing
 operations                                          (4,469)   (2,282)
                                                   --------- ---------
Income from continuing operations                    34,181    21,870
Income from discontinued operations, net              2,179     1,786
                                                   --------- ---------
Income before gain on sales of real estate           36,360    23,656
Gain on sales of real estate, net                       837     1,199
                                                   --------- ---------
Net income                                           37,197    24,855
Preferred share dividends                           (12,076)  (12,043)
                                                   --------- ---------
Net income available to common shareholders        $ 25,121  $ 12,812
                                                   ========= =========

Earnings per share "EPS" computation
Numerator                                          $ 25,121  $ 12,812
                                                   ========= =========

Denominator:
Weighted average common shares - basic               47,128    46,386
Dilutive effect of share-based compensation awards      820     1,180
                                                   --------- ---------
Weighted average common shares - diluted             47,948    47,566
                                                   ========= =========

EPS
  Basic                                            $   0.53  $   0.28
                                                   ========= =========
  Diluted                                          $   0.52  $   0.27
                                                   ========= =========

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

                                                    Nine Months Ended
                                                      September 30,
                                                   -------------------
                                                     2008      2007
                                                   --------- ---------

Net income                                         $ 37,197  $ 24,855
Add: Real estate-related depreciation and
 amortization                                        75,482    79,653
Add: Depreciation and amortization on
 unconsolidated real estate entities                    489       503
Less: Depreciation and amortization allocable to
 minority interests in other consolidated entities     (198)     (137)
Gain on sales of real estate, excluding
 development portion                                 (2,630)   (2,778)
                                                   --------- ---------
Funds from operations ("FFO")                       110,340   102,096
Add: Minority interests-common units in the
 Operating Partnership                                4,501     2,424
Less: Preferred share dividends                     (12,076)  (12,043)
                                                   --------- ---------
Funds from Operations - basic and diluted ("Basic
 and Diluted FFO")                                  102,765    92,477
Less: Straight-line rent adjustments                 (8,284)   (9,042)
Less: Recurring capital expenditures                (17,611)  (14,331)
Less: Amortization of deferred market rental
 revenue                                             (1,458)   (1,569)
                                                   --------- ---------
Adjusted funds from operations - diluted ("Diluted
 AFFO")                                            $ 75,412  $ 67,535
                                                   ========= =========

Weighted average shares
  Weighted average common shares                     47,128    46,386
  Conversion of weighted average common units         8,145     8,339
                                                   --------- ---------
  Weighted average common shares/units - basic FFO
   per share                                         55,273    54,725
  Dilutive effect of share-based compensation
   awards                                               820     1,180
                                                   --------- ---------
  Weighted average common shares/units - diluted
   FFO per share                                     56,093    55,905
                                                   ========= =========

Diluted FFO per common share                       $   1.83  $   1.65
                                                   ========= =========
Dividends/distributions per common share/unit      $ 1.0525  $ 0.9600
                                                   ========= =========
Earnings payout ratio                                 205.2%    353.1%
                                                   ========= =========
Diluted FFO payout ratio                               58.5%     57.5%
                                                   ========= =========
Diluted AFFO payout ratio                              79.7%     78.7%
                                                   ========= =========


Reconciliation of denominators for diluted EPS and
 diluted FFO per share
Denominator for diluted EPS                          47,948    47,566
Weighted average common units                         8,145     8,339
                                                   --------- ---------
Denominator for diluted FFO per share                56,093    55,905
                                                   ========= =========

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

                            September    December
                                30,         31,
                               2008        2007
                            ----------- -----------
Balance Sheet Data (in
 thousands) (as of period
 end)
Investment in real estate,
 net of accumulated
 depreciation               $2,743,576  $2,603,939
Total assets                 3,099,728   2,931,853
Debt                         1,856,280   1,825,842
Total liabilities            2,025,661   1,979,116
Minority interests             141,526     130,095
Beneficiaries' equity          932,541     822,642

Debt to total assets              59.9%       62.3%
Debt to undepreciated book
 value of real estate
 assets                           58.3%       60.8%
Debt to total market
 capitalization                   41.4%       48.0%

Property Data (wholly owned
 properties)
(as of period end)
Number of operating
 properties owned                  235         228
Total net rentable square
 feet owned (in thousands)      18,283      17,832
Occupancy                         94.3%       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               $3,099,728  $2,931,853
Assets other than assets
 included in investment in
 real estate                  (356,152)   (327,914)
Accumulated depreciation on
 real estate assets            339,429     288,747
Intangible assets on real
 estate acquisitions, net       98,282     108,661
                            ----------- -----------
Denominator for debt to
 undepreciated book value
 of real estate assets      $3,181,287  $3,001,347
                            =========== ===========

                              Three Months Ended    Nine Months Ended
                                 September 30,        September 30,
                            ----------------------- ------------------
                               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 properties       $    6,305  $    4,605  $14,883  $ 18,795
Total capital improvements
 on operating properties         3,179       2,514    6,827     6,482
Total leasing costs on
 operating properties              999         719    2,764     5,712
Less: Nonrecurring tenant
 improvements and
 incentives on operating
 properties                     (1,995)     (1,887)  (4,077)  (11,381)
Less: Nonrecurring capital
 improvements on operating
 properties                     (1,299)     (1,198)  (2,667)   (3,052)
Less: Nonrecurring leasing
 costs incurred on
 operating properties             (217)        (89)    (269)   (2,281)
Add: Recurring improvements
 on operating properties
 held through joint
 ventures                           36           -      150        56
                            ----------- ----------- -------- ---------
Recurring capital
 expenditures               $    7,008  $    4,664  $17,611  $ 14,331
                            =========== =========== ======== =========

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

                                       Three Months     Nine Months
                                           Ended            Ended
                                       September 30,    September 30,
                                     ----------------- ---------------
                                       2008     2007    2008    2007
                                     -------- -------- ------- -------
Reconciliation of dividends for
 earnings payout ratio to dividends
 and distributions for FFO & AFFO
 payout ratio
Common share dividends for earnings
 payout ratio                        $19,183  $16,092  $51,553 $45,234
Common unit distributions              3,021    2,777    8,564   7,905
                                     -------- -------- ------- -------
Dividends and distributions for FFO
 & AFFO payout ratio                 $22,204  $18,869  $60,117 $53,139
                                     ======== ======== ======= =======

Reconciliation of GAAP net income to
 earnings before interest, income
 taxes, depreciation and
 amortization ("EBITDA")
Net income                           $12,949  $11,431
Interest expense on continuing
 operations                           20,506   20,968
Interest expense on discontinued
 operations                                -      177
Income tax expense                        97      197
Real estate-related depreciation and
 amortization                         25,583   26,266
Amortization of deferred financing
 costs-continuing operations           1,169      901
Other depreciation and amortization      401      339
Minority interests                     1,667    1,504
                                     -------- --------
EBITDA                               $62,372  $61,783
                                     ======== ========

Reconciliation of interest expense
 from continuing operations to the
 denominators for interest coverage-
 EBITDA and fixed charge coverage-
 EBITDA
Interest expense from continuing
 operations                          $20,506  $20,968
Interest expense from discontinued
 operations                                -      177
                                     -------- --------
Denominator for interest coverage-
 EBITDA                               20,506   21,145
Preferred share dividends              4,025    4,025
Preferred unit distributions             165      165
                                     -------- --------
Denominator for fixed charge
 coverage-EBITDA                     $24,696  $25,335
                                     ======== ========

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 income   $61,294  $60,879
Less: Straight-line rent adjustments  (2,001)  (2,816)
Less: Amortization of deferred
 market rental revenue                  (381)    (506)
                                     -------- --------
Same property cash net operating
 income                              $58,912  $57,557
Less: Lease termination fees, gross     (188)    (619)
                                     -------- --------
Same property cash net operating
 income, adjusted
   for lease termination fees        $58,724  $56,938
                                     ======== ========

                  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, 2008
                                                   -------------------
                                                      Low      High
                                                   --------- ---------
Reconciliation of numerators
--------------------------------------------------
Numerator for projected EPS-diluted                $ 34,311  $ 35,773
Less: Gain on sales of real estate, net of taxes,
 excluding development portion (1)                   (2,630)   (2,630)
Real estate-related depreciation and amortization
 (2)                                                101,429   101,429
Minority interests-common units                       6,007     6,263
                                                   --------- ---------
Numerator for projected diluted FFO per share      $139,117  $140,835
                                                   ========= =========

Reconciliation of denominators
--------------------------------------------------
Denominator for projected EPS-diluted                49,122    49,122
Weighted average common units                         8,128     8,128
                                                   --------- ---------
Denominator for projected diluted FFO per share      57,250    57,250
                                                   ========= =========

Projected EPS - diluted                            $   0.70  $   0.73
                                                   ========= =========
Projected diluted FFO per share                    $   2.43  $   2.46
                                                   ========= =========
(1) Reconciliation excludes any potential gains or losses from the
 future sale of previously depreciated operating properties.
(2) 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 September
                             30, 2008 (1)
                        (Dollars in thousands)


                                                       Percentage of
                                              Total        Total
                                 Number of  Occupied     Occupied
          Tenant                  Leases   Square Feet  Square Feet
--------------------------       --------- ----------- -------------

United States of America      (5)   66      2,496,636      14.7%
Northrop Grumman
 Corporation                  (6)   16      1,139,591      6.7%
Booz Allen Hamilton, Inc.            8       710,692       4.2%
Computer Sciences
 Corporation                  (6)    4       454,533       2.7%
L-3 Communications
 Holdings, Inc.               (6)    5       267,354       1.6%
Unisys Corporation            (7)    5       760,145       4.5%
General Dynamics
 Corporation                  (6)    9       288,600       1.7%
The Aerospace Corporation            3       245,598       1.4%
ITT Corporation               (6)   14       290,312       1.7%
Wachovia Corporation          (6)    4       183,577       1.1%
Comcast Corporation           (6)   11       342,266       2.0%
AT&T Corporation              (6)    8       306,988       1.8%
Ciena Corporation                    4       229,848       1.3%
The Boeing Company            (6)    4       143,480       0.8%
BAE Systems PLC               (6)    7       212,339       1.2%
Science Applications
 International Corp.          (6)    9       137,142       0.8%
The Johns Hopkins
 Institutions                 (6)    4       124,749       0.7%
Merck & Co., Inc. (Unisys)(6) (7)    2       227,273       1.3%
Magellan Health Services,
 Inc.                                2       113,727       0.7%
AARP                                 1       104,695       0.6%


Subtotal Top 20 Office
 Tenants                            186     8,779,545      51.5%
All remaining tenants               771     8,253,548      48.5%
                                 -------------------------------------
Total/Weighted Average              957    17,033,093     100.0%
                                 =====================================


                           Total         Percentage        Weighted
                         Annualized       of Total         Average
                           Rental     Annualized Rental   Remaining
    Tenant             Revenue (2)(3)      Revenue      Lease Term (4)
---------------       --------------- ----------------- --------------

United States
 of America        (5)    $60,530           16.0%            6.3
Northrop
 Grumman
 Corporation       (6)     28,457           7.5%             7.5
Booz Allen
 Hamilton, Inc.            19,932           5.3%             5.8
Computer
 Sciences
 Corporation       (6)     11,875           3.1%             2.8
L-3
 Communications
 Holdings, Inc.    (6)     9,590            2.5%             5.5
Unisys
 Corporation       (7)     9,048            2.4%             2.5
General
 Dynamics
 Corporation       (6)     7,668            2.0%             1.9
The Aerospace
 Corporation               7,268            1.9%             6.4
ITT Corporation    (6)     6,833            1.8%             5.6
Wachovia
 Corporation       (6)     6,613            1.8%             9.9
Comcast
 Corporation       (6)     6,509            1.7%             3.4
AT&T
 Corporation       (6)     5,692            1.5%             4.6
Ciena
 Corporation               4,200            1.1%             3.6
The Boeing
 Company           (6)     4,199            1.1%             2.9
BAE Systems PLC    (6)     3,164            0.8%             4.0
Science
 Applications
 International
 Corp.             (6)     2,957            0.8%             1.1
The Johns
 Hopkins
 Institutions      (6)     2,911            0.8%             7.8
Merck & Co.,
 Inc. (Unisys) (6) (7)     2,747            0.7%             3.5
Magellan Health
 Services, Inc.            2,673            0.7%             2.8
AARP                       2,571            0.7%             13.2


Subtotal Top 20
 Office Tenants           205,436           54.4%            5.6
All remaining
 tenants                  172,177           45.6%            3.8
                      ---------------------------------
Total/Weighted
 Average                  $377,613         100.0%            4.8
                      =================================
(1) Table excludes owner occupied leasing activity which represents
     150,373 square feet with a weighted average remaining lease term
     of 6.5 years as of September 30, 2008.
(2) Total Annualized Rental Revenue is the monthly contractual base
     rent as of September 30, 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