Corporate Office Properties Trust Reports 2007 Fourth Quarter and 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, 2007.

    2007 Highlights

    --  17.3% increase in Diluted Funds from Operations ("Diluted
        FFO") per share to $2.24 for the year ended 2007 from $1.91
        for 2006, including the effect of a $3.9 million accounting
        charge associated with the Series E and F preferred share
        redemptions in 2006. Excluding this accounting charge, 2006
        Diluted FFO per share would have been $1.99, as adjusted,
        representing a year over year increase of 12.6%.

    --  Earnings per diluted share ("Diluted EPS") of $.39 for the
        year ended 2007 as compared to $.69 per diluted share for the
        year ended 2006. Included in 2007 net income is a gain on
        sales of real estate net of minority interests and income
        taxes of approximately $4.8 million, as compared to $14.8
        million in 2006 net income. Also included in 2006 net income
        is an accounting charge of $3.9 million or $.09 per share
        reflecting the write-off of initial issuance costs of the
        Series E and F preferred share redemptions.

    --  21.5% increase in Adjusted Funds from Operations ("AFFO")
        diluted to $90.8 million for the year ended 2007 as compared
        to $74.7 million for the year ended 2006.

    --  57.5% Diluted FFO payout ratio, 79.3% Diluted AFFO payout
        ratio for the year.

    --  $378.6 million in acquisitions of 57 buildings totaling 2.4
        million square feet and 314 acres of land which can support
        2.7 million square feet of potential development.

    --  $17.8 million in dispositions of operating properties,
        representing 128,000 square feet and a gain of $3.9 million.

    --  617,000 square feet of development projects placed into
        service, which includes 68,000 square feet placed into service
        during 2006, that were 95.4% leased at December 31, 2007.

    --  92.6% occupied and 93.4% leased for our wholly-owned portfolio
        as of December 31, 2007.

    --  $194.0 million in equity raised through the issuance of 3.4
        million common shares/units at an average deemed value of
        $48.90 per share/unit, and $26.6 million net proceeds
        generated from the issuance of 5.6% Series K convertible
        preferred shares issued in connection with the Nottingham
        acquisition.

    --  69.1% renewal rate on expiring leases for the year, 1.7
        million square feet renewed with an average capital cost of
        $5.93 per square foot.

    --  10% increase of quarterly common dividend in September 2007.

    Fourth Quarter 2007 Highlights

    --  22.9% increase in Diluted FFO per share to $.59 for the fourth
        quarter 2007 from $.48 for the fourth quarter 2006, including
        the effect of a $2.1 million accounting charge associated with
        the Series F preferred share redemption in 2006. Excluding
        this accounting charge, fourth quarter 2006 Diluted FFO per
        share would have been $.52, as adjusted, representing a year
        over year increase of 13.5%.

    --  Diluted EPS of $.12 for the fourth quarter 2007 as compared to
        $.08 for the fourth quarter 2006. Included in fourth quarter
        2006 net income is an accounting charge of $2.1 million or
        $.05 per diluted share reflecting the write-off of initial
        issuance costs of the Series F preferred share redemption.

    --  31.3% increase in Diluted AFFO to $23.2 million for the fourth
        quarter 2007 as compared to $17.7 million for the fourth
        quarter 2006.

    --  57.5% Diluted FFO payout ratio, 81.2% Diluted AFFO payout
        ratio for the fourth quarter 2007.

    --  2.6 million square feet under construction, development and
        redevelopment for a total projected cost of $467.4 million at
        December 31, 2007.

    --  60.4% of leases expiring during the quarter were renewed, with
        a 16.0% increase in total straight line rent for renewed
        space.

    --  6.6% increase in same office property cash NOI, representing
        162 properties and 81.3% of the portfolio.

"We had excellent FFO growth in 2007 and are well positioned for strong growth in 2008. 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 2008 with strong financial flexibility, a healthy capital position and a development pipeline, heavily concentrated in the U.S. Government and Defense Information Technology sector," he stated.

Financial Results

Diluted FFO for the year ended December 31, 2007 totaled $125.3 million, or $2.24 per diluted share, as compared to $98.9 million, or $1.91 per diluted share, for the year ended December 31, 2006, representing a 17.3% increase on a per share basis. 2006 Diluted FFO included a $3.9 million accounting charge associated with the Series E and F preferred share redemptions. Excluding this accounting charge, 2006 Diluted FFO per share would have been $1.99, as adjusted, representing a year over year increase of 12.6%.

The Company's Diluted FFO for the quarter ended December 31, 2007 totaled $32.8 million, or $.59 per diluted share, as compared to $25.1 million, or $.48 per diluted share, for the quarter ended December 31, 2006, representing a 22.9% increase on a per share basis. Included in the fourth quarter 2006 FFO is a $2.1 million accounting charge associated with the Series F preferred share redemption. Excluding this accounting charge, fourth quarter 2006 Diluted FFO per share would have been $.52, as adjusted, representing a year over year increase of 13.5%.

EPS for the year ended December 31, 2007 totaled $.39 per diluted share, or $18.7 million of net income available for common shareholders, as compared to $.69 per diluted share, or $29.9 million for the year ended December 31, 2006. Included in 2007 net income is a gain on sales of real estate net of minority interests and income taxes of approximately $4.8 million, as compared to $14.8 million in 2006 net income. Also included in 2006 net income is an accounting charge of $3.9 million or $.09 per share reflecting the write-off of initial issuance costs of the Series E and F preferred share redemptions.

For the quarter ended December 31, 2007, EPS totaled $.12 per diluted, or $5.9 million of net income available to common shareholders, as compared to $.08 per diluted share and $3.7 million for the quarter ended December 31, 2006. Included in fourth quarter 2006 net income is an accounting charge of $2.1 million or $.05 per share reflecting the write-off of initial issuance costs of the Series F preferred share redemption.

Diluted FFO payout ratio was 57.5% for the year ended 2007 compared to 60.3% for the comparable 2006 period. The Company's diluted FFO payout ratio for the fourth quarter 2007 was 57.5%, as compared to 63.5% for the year ended 2006.

Diluted AFFO for the year ended December 31, 2007 totaled $90.8 million, as compared to $74.7 million for the year ended December 31, 2006, representing an increase of 21.5%. Diluted AFFO payout ratio was 79.3% for year ended 2007, compared to 79.9% for the year ended 2006.

Diluted AFFO for the quarter ended December 31, 2007 totaled $23.2 million, as compared to $17.7 million for the quarter ended December 31, 2006, representing a 31.3% increase. The Company's diluted AFFO payout ratio for the quarter ended December 31, 2007 was 81.2%, as compared to 89.9% for the year ended 2006. A reconciliation of non GAAP measures to the comparable GAAP measures are included in the tables that follow the text of this press release.

Revenues from real estate operations in continuing operations for the year ended December 31, 2007 were $368.9 million, as compared to the year ended December 31, 2006 of $293.6 million. As of December 31, 2007, the Company had a total market capitalization of $3.8 billion, with $1.8 billion in debt outstanding, equating to a 48.0% debt-to-total market capitalization ratio. The Company's weighted average interest rate for the quarter ended December 31, 2007, was 5.7%. As of December 31, 2007, 80.9% of total debt was subject to fixed interest rates. For the fourth quarter 2007, EBITDA interest coverage ratio was 2.95x, and the EBITDA fixed charge coverage ratio was 2.45x.

Operating Results

At December 31, 2007, the Company's wholly-owned portfolio of 228 office properties totaling 17.8 million square feet, was 92.6% occupied and 93.4% leased. The weighted average remaining lease term for the portfolio was 5.0 years and the average rental rate (including tenant reimbursements of operating costs) was $21.36 per square foot.

During 2007, the Company leased 2.6 million square feet including 2.2 million square feet of renewed and retenanted space, 238,000 square feet of previously unoccupied space and 104,000 square feet of new development space.

For the year, the Company renewed 1.7 million square feet or 69.1% of expiring leases (based on square footage), at an average capital cost of $5.93 per square foot. For the 2.2 million square feet renewed and retenanted during the year, total rent increased 7.3% on a straight-line basis, as measured from the GAAP straight-line rent in effect preceding the renewal date. Total rent increased 0.9% on a cash basis. The average capital cost for the renewed and retenanted space was $9.58 per square foot.

For the quarter ended December 2007, 301,000 square feet was renewed, equating to a 60.4% renewal rate, at an average capital cost of $3.98 per square foot. Total rent on renewed space increased 16.0% on a straight-line basis, as measured from the GAAP straight-line rent in effect preceding the renewal date. Total rent increased 7.4% on a cash basis. For renewed and retenanted space of 436,000 square feet, total straight-line rent increased 8.5% and total rent on a cash basis increased 0.2%. The average committed capital cost for renewed and retenanted space was $12.83 per square foot.

Same office property cash NOI increased 6.6% for fourth quarter 2007 as compared to the comparable 2006 period. The Company's same office portfolio consists of 162 buildings and represents 81.3% of its wholly owned portfolio as of December 31, 2007.

The Company recognized total lease termination fees of $4.1 million, net of write-offs of related straight-line rents and write-off of previously unamortized deferred market revenue for the year ended December 31, 2007, as compared to $5.7 million for the year ended December 21, 2006.

For the fourth quarter 2007, the Company recognized lease termination fees of $0.6 million, net of write-offs of related straight-line rents and accretion of intangible assets and liabilities, as compared to $3.4 million in the fourth quarter 2006.

Development Activity

At December 31, 2007, the Company's development pipeline consisted of:

    --  Ten buildings under construction totaling 846,000 square feet
        for a total projected cost of $162.2 million, that are 36.2%
        leased.

    --  Eleven buildings under development totaling 1.1 million square
        feet for a total projected cost of $232.9 million.

    --  Four projects under redevelopment totaling 625,000 square feet
        for a total projected cost of $72.3 million.

The Company's land inventory (wholly owned and joint venture) at December 31, 2007 totaled 1,704 acres that can support 14.9 million square feet of development.

During the quarter, the Company signed a 75,000 square foot long-term lease with ITT Corporation, Systems Division for 655 Space Center Drive, known as Patriot Park VI, in Colorado Springs, Colorado.

During the year, the Company placed six buildings into service, including one building which contained 68,000 square feet placed into service during 2006, for a total of 617,000 square feet, that were 95.4% leased.

The Company was selected in 2007 as master developer for the 272 acre Colorado Springs Airport Mixed-Use Business Park. The business park is strategically located at the entrance of the Colorado Springs Airport and adjacent to the Peterson Air Force Base. The park can support approximately 3.5 million square feet of development of which 1.3 million square feet would be office development.

Acquisition Activity

During the year, the Company acquired 57 buildings totaling 2.4 million square feet and 314 acres of land which can support 2.7 million square feet of potential development for $378.6 million.

    Included in these totals, are the following assets:

    --  56 operating properties containing 2.4 million square feet and
        187 acres of land, developable into approximately 2.0 million
        developable square feet for $362.5 million, plus approximately
        $1.4 million in transaction costs.

    --  56 acres of land for $10.0 million that can support 800,000
        square feet of office development. The site will be known as
        NorthGate Business Park and is strategically located at the
        north entrance to Aberdeen Proving Ground in Aberdeen,
        Maryland.

    Disposition Activity

During the year, the Company sold 128,000 square feet in four buildings for $17.8 million and realized a gain of $3.9 million. The buildings were located in the Company's New Jersey, White Marsh and BWI Airport submarkets. The Company also sold 16.5 acres of land for $8.7 million and realized a gain of $3.0 million (or an after-tax gain of $1.9 million). The land was located in White Marsh and Owings Mills, Maryland.

The Company also disposed of most of its investment in TractManager, Inc., as part of the TractManager, Inc. merger with Tudor Ventures and GE Healthcare Financial Services. The Company received $2.5 million and recognized a $1.0 million gain in connection with the disposition.

    Financing and Capital Transactions

    The Company executed the following transactions during the year:

    --  $194.0 million in equity raised through the issuance of 3.4
        million common shares/units at an average deemed value of
        $48.90 per share/unit, and $26.6 million net proceeds
        generated from the issuance of 5.6% Series K convertible
        preferred shares issued in connection with the Nottingham
        acquisition.

    --  Increased borrowing capacity under the Company's unsecured
        line of credit from $500.0 to $600.0 million and extended the
        maturity date to September 30, 2011 which is subject to a one
        year extension option. The Company achieved favorable interest
        rate pricing ranging from 75 basis points to 125 basis points
        over LIBOR, depending upon leverage ratio.

    --  Closed a $150.0 million, ten year, 5.65% fixed interest rate
        loan which requires interest only payments. The net proceeds
        were used to primarily retire $120.5 million of existing
        indebtedness.

    --  Increased quarterly dividend 10% from $.31 to $.34 per share.

    --  Executed a swap for an aggregate notional amount of $50.0
        million at a fixed one month LIBOR rate of 4.33%, which
        commenced October 23, 2007 and expires October 23, 2009.

    Subsequent Events

The Company executed the following transactions subsequent to year end:

    --  Disposed of a 142,000 square foot property located in Central
        New Jersey for $17.0 million. After this sale, the Company
        only owns 3 properties in Central New Jersey totaling 243,000
        square feet.

    --  Acquired a 45.0% interest in the M Square, LLC joint venture
        located adjacent to the University of Maryland campus in
        College Park, Maryland. The venture will develop, lease and
        manage the office buildings totaling approximately 750,000
        square feet. The venture has a 118,000 square foot building
        located at 5825 University Research Court under construction.

    --  Placed into service the entire 60,000 square foot property
        located at 1055 North Newport Road in Colorado Springs,
        Colorado which is 100.0% leased to SI International, Inc. for
        a ten year term.

    Earnings Guidance

The Company's 2008 EPS guidance has been revised from a range of $.58 to $.67 to a range of $.62 to $.69 per diluted share, including actual gains but excluding any potential gains or losses from the sale of previously depreciated operating properties.

The Company's 2008 FFO guidance has been revised from a range of $2.40 to $2.49 to a range of $2.41 to $2.49 per diluted share, representing FFO growth of 8% to 11% compared to 2007 actual results.

    Conference Call

    The Company will hold an investor/analyst conference call:

    Conference Call and Webcast Date: Thursday, February 14, 2008

    Time: 11:00 a.m. Eastern

    Dial In Number: 866-203-2528

    Confirmation Code for the call: 23558524

A replay of this call will be available beginning Thursday, February 14, 2008 at 1:00 p.m. Eastern through Thursday, February 28, 2008 at midnight Eastern. To access the replay, please call 888-286-8010 and use confirmation code 49624459.

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 8K or our website (www.copt.com) for definitions of certain terms used in this press release. Reconciliations of GAAP and non-GAAP measurements are included in the attached tables.

Company Information

Corporate Office Properties Trust (COPT) is a fully integrated, self-managed real estate investment trust (REIT) that focuses on the ownership, management, leasing, acquisition and development of suburban office properties located primarily in submarkets within the Greater Washington, DC region. As of December 31, 2007, the Company owned 246 office properties totaling 18.6 million rentable square feet, which includes 18 properties totaling 806,000 square feet held through joint ventures. The Company has implemented a core customer expansion strategy that is built around meeting, through acquisitions and development, the multi-location requirements of the Company's existing strategic tenants. The Company's property management services team provides comprehensive property and asset management to company owned properties and select third party clients. The Company's development and construction services team provides a wide range of development and construction management services for company owned properties, as well as land planning, design/build services, consulting, and merchant development to select third party clients. The Company's shares are traded on the New York Stock Exchange under the symbol OFC. More information on Corporate Office Properties Trust can be found on the Internet 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, 2006.

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

                                                   Three Months Ended
                                                      December 31,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------
Revenues
  Real estate revenues                             $ 94,794  $ 77,491
  Service operations revenues                         8,498    14,844
                                                   --------- ---------
    Total revenues                                  103,292    92,335
                                                   --------- ---------
Expenses
  Property operating expenses                        31,133    25,447
  Depreciation and other amortization associated
   with real estate operations                       26,312    19,916
  Service operations expenses                         8,330    14,220
  General and administrative expenses                 5,402     5,042
                                                   --------- ---------
    Total operating expenses                         71,177    64,625
                                                   --------- ---------
Operating income                                     32,115    27,710
Interest expense                                    (20,771)  (18,625)
Amortization of deferred financing costs               (970)     (949)
                                                   --------- ---------
Income from continuing operations before equity in
 loss of unconsolidated entities, income taxes and
 minority interests                                  10,374     8,136
Equity in loss of unconsolidated entities               (27)      (52)
Income tax expense                                      (89)     (264)
                                                   --------- ---------
Income from continuing operations before minority
 interests                                           10,258     7,820
Minority interests in income from continuing
 operations                                          (1,058)     (797)
                                                   --------- ---------
Income from continuing operations                     9,200     7,023
Income from discontinued operations, net                368     2,564
                                                   --------- ---------
Income before gain on sales of real estate            9,568     9,587
Gain on sales of real estate, net                       361         -
                                                   --------- ---------
Net income                                            9,929     9,587
Preferred share dividends                            (4,025)   (3,790)
Issuance costs associated with redeemed preferred
 shares                                                   -    (2,067)
                                                   --------- ---------
Net income available to common shareholders        $  5,904  $  3,730
                                                   ========= =========

Earnings per share "EPS" computation
Numerator:                                         $  5,904  $  3,730
                                                   ========= =========

Denominator:
Weighted average common shares - basic               46,947    42,439
Dilutive effect of share-based compensation awards      914     1,641
                                                   --------- ---------
Weighted average common shares - diluted             47,861    44,080
                                                   ========= =========

EPS
  Basic                                            $   0.13  $   0.09
                                                   ========= =========
  Diluted                                          $   0.12  $   0.08
                                                   ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
       (Amounts in thousands, except per share data and ratios)


                                                   Three Months Ended
                                                      December 31,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------

Net income                                         $  9,929  $  9,587
Add: Real estate-related depreciation and
 amortization                                        26,607    19,768
Add: Depreciation and amortization on
 unconsolidated real estate entities                    163       345
Less: Depreciation and amortization allocable to
 minority interests in other consolidated entities      (51)      (41)
(Less) add: (Gain) loss on sales of real estate,
 net of taxes, excluding development portion         (1,049)       71
                                                   --------- ---------
Funds from operations ("FFO")                        35,599    29,730
Add: Minority interests-common units in the
 Operating Partnership                                1,258     1,204
Less: Preferred share dividends                      (4,025)   (3,790)
Less: Issuance costs associated with redeemed
 preferred shares                                         -    (2,067)
                                                   --------- ---------
Funds from Operations - basic and diluted ("Basic
 and Diluted FFO")                                   32,832    25,077
Less: Straight-line rent adjustments                 (2,680)   (2,484)
Less: Recurring capital expenditures                 (6,504)   (6,387)
Less: Amortization of deferred market rental
 revenue                                               (416)     (578)
Add: Issuance costs associated with redeemed
 preferred shares                                         -     2,067
                                                   --------- ---------
Adjusted Funds from Operations - diluted ("Diluted
 AFFO")                                            $ 23,232  $ 17,695
                                                   ========= =========

Weighted average shares
  Weighted average common shares                     46,947    42,439
  Conversion of weighted average common units         8,167     8,495
                                                   --------- ---------
  Weighted average common shares/units - basic FFO
   per share                                         55,114    50,934
  Dilutive effect of share-based compensation
   awards                                               914     1,641
                                                   --------- ---------
  Weighted average common shares/units - diluted
   FFO per share                                     56,028    52,575
                                                   ========= =========

Diluted FFO per common share                       $   0.59  $   0.48
                                                   ========= =========
Dividends/distributions per common share/unit      $   0.34  $   0.31
                                                   ========= =========
Earnings payout ratio                                 272.6%    356.4%
                                                   ========= =========
Diluted FFO payout ratio                               57.5%     63.5%
                                                   ========= =========
Diluted AFFO payout ratio                              81.2%     89.9%
                                                   ========= =========
EBITDA interest coverage ratio                         2.95x     2.71x
                                                   ========= =========
EBITDA fixed charge coverage ratio                     2.45x     2.24x
                                                   ========= =========

Reconciliation of denominators for diluted EPS and
 diluted FFO per share
Denominator for diluted EPS                          47,861    44,080
Weighted average common units                         8,167     8,495
                                                   --------- ---------
Denominator for diluted FFO per share                56,028    52,575
                                                   ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
            (Amounts in thousands, except per share data)


                                                       Year Ended
                                                      December 31,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------
Revenues
  Real estate revenues                             $368,949  $293,578
  Service operations revenues                        41,225    60,084
                                                   --------- ---------
    Total revenues                                  410,174   353,662
                                                   --------- ---------
Expenses
  Property operating expenses                       123,282    92,907
  Depreciation and other amortization associated
   with real estate operations                      106,331    78,054
  Service operations expenses                        39,793    57,345
  General and administrative expenses                20,523    16,936
                                                   --------- ---------
    Total operating expenses                        289,929   245,242
                                                   --------- ---------
Operating income                                    120,245   108,420
Interest expense                                    (82,032)  (70,260)
Amortization of deferred financing costs             (3,676)   (2,847)
Gain on sale of non-real estate investment            1,033         -
                                                   --------- ---------
Income from continuing operations before equity in
 loss of unconsolidated entities, income taxes and
 minority interests                                  35,570    35,313
Equity in loss of unconsolidated entities              (224)      (92)
Income tax expense                                     (569)     (887)
                                                   --------- ---------
Income from continuing operations before minority
 interests                                           34,777    34,334
Minority interests in income from continuing
 operations                                          (3,398)   (3,826)
                                                   --------- ---------
Income from continuing operations                    31,379    30,508
Income from discontinued operations, net              1,845    17,987
                                                   --------- ---------
Income before gain on sales of real estate           33,224    48,495
Gain on sales of real estate, net                     1,560       732
                                                   --------- ---------
Net income                                           34,784    49,227
Preferred share dividends                           (16,068)  (15,404)
Issuance costs associated with redeemed preferred
 shares                                                   -    (3,896)
                                                   --------- ---------
Net income available to common shareholders        $ 18,716  $ 29,927
                                                   ========= =========

Earnings per share "EPS" computation
Numerator:                                         $ 18,716  $ 29,927
                                                   ========= =========

Denominator:
Weighted average common shares - basic               46,527    41,463
Dilutive effect of share-based compensation awards    1,103     1,799
                                                   --------- ---------
Weighted average common shares - diluted             47,630    43,262
                                                   ========= =========

EPS
  Basic                                            $   0.40  $   0.72
                                                   ========= =========
  Diluted                                          $   0.39  $   0.69
                                                   ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
       (Amounts in thousands, except per share data and ratios)

                                                       Year Ended
                                                      December 31,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------

Net income                                         $ 34,784  $ 49,227
Add: Real estate-related depreciation and
 amortization                                       106,260    78,631
Add: Depreciation and amortization on
 unconsolidated real estate entities                    666       910
Less: Depreciation and amortization allocable to
 minority interests in other consolidated entities     (188)     (163)
Less: Gain on sales of real estate, net of taxes,
 excluding development portion                       (3,827)  (17,644)
                                                   --------- ---------
Funds from operations ("FFO")                       137,695   110,961
Add: Minority interests-common units in the
 Operating Partnership                                3,682     7,276
Less: Preferred share dividends                     (16,068)  (15,404)
Less: Issuance costs associated with redeemed
 preferred shares                                         -    (3,896)
                                                   --------- ---------
Funds from Operations - basic and diluted ("Basic
 and Diluted FFO")                                  125,309    98,937
Less: Straight-line rent adjustments                (11,722)   (9,740)
Less: Recurring capital expenditures                (20,835)  (16,510)
Less: Amortization of deferred market rental
 revenue                                             (1,985)   (1,904)
Add: Issuance costs associated with redeemed
 preferred shares                                         -     3,896
                                                   --------- ---------
Adjusted Funds from Operations - diluted ("Diluted
 AFFO")                                            $ 90,767  $ 74,679
                                                   ========= =========

Weighted average shares
  Weighted average common shares                     46,527    41,463
  Conversion of weighted average common units         8,296     8,511
                                                   --------- ---------
  Weighted average common shares/units - basic FFO
   per share                                         54,823    49,974
  Dilutive effect of share-based compensation
   awards                                             1,103     1,799
                                                   --------- ---------
  Weighted average common shares/units - diluted
   FFO per share                                     55,926    51,773
                                                   ========= =========

Diluted FFO per common share                       $   2.24  $   1.91
                                                   ========= =========
Dividends/distributions per common share/unit      $   1.30  $   1.18
                                                   ========= =========
Earnings payout ratio                                 327.7%    166.0%
                                                   ========= =========
Diluted FFO payout ratio                               57.5%     60.3%
                                                   ========= =========
Diluted AFFO payout ratio                              79.3%     79.9%
                                                   ========= =========

Reconciliation of denominators for diluted EPS and
 diluted FFO per share
Denominator for diluted EPS                          47,630    43,262
Weighted average common units                         8,296     8,511
                                                   --------- ---------
Denominator for diluted FFO per share                55,926    51,773
                                                   ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
       (Dollars and shares in thousands, except per share data)

                         December 31, December 31,
                             2007         2006
                         ------------ ------------
Balance Sheet Data (in
 thousands) (as of
 period end):
Investment in real
 estate, net of
 accumulated
 depreciation             $2,603,472   $2,111,310
Total assets               2,931,853    2,419,601
Debt                       1,825,842    1,498,537
Total liabilities          1,979,116    1,629,111
Minority interests           130,095      116,187
Beneficiaries' equity        822,642      674,303

Debt to Total Assets            62.3%        61.9%
Debt to Undepreciated
 Book Value of Real
 Estate Assets                  60.9%        62.0%
Debt to Total Market
 Capitalization                 48.0%        34.9%

Property Data (wholly
 owned properties)(as of
 period end):
Number of operating
 properties owned                228          170
Total net rentable
 square feet owned (in
 thousands)                   17,832       15,050
Occupancy                       92.6%        92.8%

Reconciliation of
 denominator for debt to
 total assets to
 denominator for debt to
 undepreciated book
 value of real estate
 assets
Denominator for debt to
 total assets             $2,931,853   $2,419,601
Assets other than assets
 included in investment
 in real estate             (328,381)    (308,291)
Accumulated depreciation
 on real estate assets       288,387      219,574
Intangible assets on
 real estate
 acquisitions, net           108,661       87,325
                         ------------ ------------
Denominator for debt to
 undepreciated book
 value of real estate
 assets                   $3,000,520   $2,418,209
                         ============ ============

                            Three Months Ended         Year Ended
                               December 31,           December 31,
                         ------------------------- -------------------
                             2007         2006       2007      2006
                         ------------ ------------ --------- ---------
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               $    2,692   $    9,907  $ 21,487  $ 20,649
Total capital
 improvements on
 operating properties          4,748        3,844    11,230    11,779
Total leasing costs on
 operating properties          1,850        2,827     7,562     8,610
Less: Nonrecurring
 tenant improvements and
 incentives on operating
 properties                     (811)      (7,489)  (12,192)  (13,862)
Less: Nonrecurring
 capital improvements on
 operating properties         (1,442)      (1,364)   (4,494)   (5,418)
Less: Nonrecurring
 leasing costs incurred
 on operating properties        (575)      (2,171)   (2,856)   (6,388)
Add: Recurring
 improvements on
 operating properties
 held through joint
 ventures                         42          833        98     1,140
                         ------------ ------------ --------- ---------
Recurring capital
 expenditures             $    6,504   $    6,387  $ 20,835  $ 16,510
                         ============ ============ ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
                        (Dollars in thousands)

                                  Three Months Ended    Year Ended
                                     December 31,      December 31,
                                  ------------------ -----------------
                                    2007      2006     2007     2006
                                  --------- -------- -------- --------
Reconciliation of dividends for
 Earnings Payout Ratio to
 dividends and distributions for
 FFO & AFFO Payout Ratio
Common share dividends for
 earnings payout ratio             $16,097  $13,292  $ 61,331 $ 49,670
Common unit distributions            2,777    2,622    10,682    9,996
                                  --------- -------- -------- --------
Dividends and distributions for
 FFO & AFFO payout ratio           $18,874  $15,914  $ 72,013 $ 59,666
                                  ========= ======== ======== ========

Reconciliation of numerators for
 diluted EPS and diluted FFO as
 reported to numerators for
 diluted EPS and diluted FFO
 excluding issuance costs
 associated with redeemed
 preferred shares
Numerator for diluted EPS, as
 reported                          $ 5,904  $ 3,730  $ 18,716 $ 29,927
Add: Issuance costs associated
 with redeemed preferred shares          -    2,067         -    3,896
                                  --------- -------- -------- --------
Numerator for diluted EPS, as
 adjusted                          $ 5,904  $ 5,797  $ 18,716 $ 33,823
                                  ========= ======== ======== ========

Numerator for diluted FFO, as
 reported                          $32,832  $25,077  $125,309 $ 98,937
Add: Issuance costs associated
 with redeemed preferred shares          -    2,067         -    3,896
                                  --------- -------- -------- --------
Numerator for diluted FFO, as
 adjusted                          $32,832  $27,144  $125,309 $102,833
                                  ========= ======== ======== ========

Reconciliation of GAAP net income
 to earnings before interest,
 income taxes, depreciation and
 amortization ("EBITDA")
Net income                         $ 9,929  $ 9,587
Interest expense on continuing
 operations                         20,771   18,625
Interest expense on discontinued
 operations                             28      260
Income tax expense                   1,201      264
Real estate-related depreciation
 and amortization                   26,607   19,768
Amortization of deferred
 financing costs-continuing
 operations                            970      949
Other depreciation and
 amortization                          358      313
Minority interests                   1,391    1,329
                                  --------- --------
EBITDA                             $61,255  $51,095
                                  ========= ========

Reconciliation of interest
 expense from continuing
 operations to the denominators
 for interest coverage-EBITDA and
 fixed charge coverage-EBITDA
Interest expense from continuing
 operations                        $20,771  $18,625
Interest expense from
 discontinued operations                28      260
                                  --------- --------
Denominator for interest
 coverage-EBITDA                    20,799   18,885
Preferred share dividends            4,025    3,790
Preferred unit distributions           165      165
                                  --------- --------
Denominator for fixed charge
 coverage-EBITDA                   $24,989  $22,840
                                  ========= ========

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                            $52,504  $50,348
Less: Straight-line rent
 adjustments                        (1,596)  (2,493)
Less: Amortization of deferred
 market rental revenue                (417)    (490)
                                  --------- --------
Same property cash net operating
 income                             50,491   47,365
Less: Lease termination fees,
 gross                                (200)    (798)
                                  --------- --------
Same property cash net operating
 income, adjusted for lease
 termination fees                  $50,291   46,567
                                  --------- --------
                  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                $ 29,793  $ 33,520
Less: Gain on sales of real estate, net of taxes,
 excluding development portion (1)                   (1,258)   (1,258)
Real estate-related depreciation and amortization
 (2)                                                101,983   101,983
Minority interests-common units                       5,382     6,055
                                                   --------- ---------
Numerator for projected diluted FFO per share      $135,900  $140,300
                                                   ========= =========

Reconciliation of denominators
--------------------------------------------------
Denominator for projected EPS-diluted                48,257    48,257
Weighted average common units                         8,168     8,168
                                                   --------- ---------
Denominator for projected diluted FFO per share      56,425    56,425
                                                   ========= =========

Projected EPS - diluted                            $   0.62  $   0.69
                                                   ========= =========
Projected diluted FFO per share                    $   2.41  $   2.49
                                                   ========= =========
(1) Reconciliation excludes any potential gains or losses from the
 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 December
                             31, 2007 (1)
                        (Dollars in thousands)


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

United States of
 America                (5)           62      2,485,800          15.1%
Northrop Grumman
 Corporation            (6)           17      1,045,442           6.3%
Booz Allen Hamilton,
 Inc.                                  8        714,233           4.3%
Computer Sciences
 Corporation            (6)            4        454,645           2.8%
Unisys Corporation      (7)            4        760,145           4.6%
L-3 Communications
 Holdings, Inc.         (6)            3        211,493           1.3%
General Dynamics
 Corporation                           9        284,415           1.7%
The Aerospace
 Corporation                           2        231,785           1.4%
Wachovia Corporation    (6)            4        183,577           1.1%
Comcast Corporation                   11        342,266           2.1%
AT&T Corporation        (6)            9        337,052           2.0%
The Boeing Company      (6)            4        143,480           0.9%
ITT Corporation         (6)            7        168,853           1.0%
Ciena Corporation                      3        221,609           1.3%
Science Applications
 International Corp.                  12        170,839           1.0%
BAE Systems PLC         (6)            7        212,339           1.3%
The Johns Hopkins
 University                            4        129,735           0.8%
Merck & Co., Inc.
 (Unisys)               (7)            2        227,273           1.4%
Magellan Health
 Services, Inc.                        2        113,727           0.7%
Wyle Laboratories, Inc.                4        174,792           1.1%


Subtotal Top 20 Office
 Tenants                             178      8,613,500          52.2%
All remaining tenants                757      7,896,467          47.8%
                            ------------------------------------------
Total/Weighted Average               935     16,509,967         100.0%
                            ==========================================


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

United States of
 America               (5) $      57,395             16.3%         6.4
Northrop Grumman
 Corporation           (6)        26,199              7.4%         7.5
Booz Allen Hamilton,
 Inc.                             19,568              5.5%         6.5
Computer Sciences
 Corporation           (6)        11,446              3.2%         3.4
Unisys Corporation     (7)         8,843              2.5%         1.7
L-3 Communications
 Holdings, Inc.        (6)         8,613              2.4%         6.2
General Dynamics
 Corporation                       7,249              2.1%         2.2
The Aerospace
 Corporation                       6,867              1.9%         6.9
Wachovia Corporation   (6)         6,614              1.9%        10.6
Comcast Corporation                6,095              1.7%         4.1
AT&T Corporation       (6)         6,041              1.7%         4.8
The Boeing Company     (6)         4,085              1.2%         3.7
ITT Corporation        (6)         4,019              1.1%         4.8
Ciena Corporation                  3,675              1.0%         4.2
Science Applications
 International Corp.               3,243              0.9%         1.1
BAE Systems PLC        (6)         2,880              0.8%         3.0
The Johns Hopkins
 University                        2,863              0.8%         8.1
Merck & Co., Inc.
 (Unisys)              (7)         2,675              0.8%         1.5
Magellan Health
 Services, Inc.                    2,478              0.7%         3.6
Wyle Laboratories,
 Inc.                              2,475              0.7%         4.7


Subtotal Top 20 Office
 Tenants                         193,321             54.8%         5.7
All remaining tenants            159,288             45.2%         4.1
                          --------------------------------
Total/Weighted Average     $     352,609            100.0%         5.0
                          ================================
(1) Table excludes owner occupied leasing activity which represents
 145,701 square feet with a weighted average remaining lease term of
 7.3 years as of December 31, 2007.
(2) Total Annualized Rental Revenue is the monthly contractual base
 rent as of December 31, 2007, 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