Corporate Office Properties Trust Reports Strong Third Quarter 2007 Results

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

Corporate Office Properties Trust (COPT) (NYSE:OFC) announced today financial and operating results for the quarter ended September 30, 2007.

    Highlights

    --  Earnings per diluted share ("EPS") of $.15 for the third
        quarter of 2007 as compared to $.33 per diluted share for the
        third quarter of 2006. Included in third quarter 2007 net
        income is gain on sales of real estate net of minority
        interests of $3.4 million, as compared to $12.7 million
        included in third quarter 2006. Also included in 2006 net
        income is an accounting charge of $1.8 million or ($.04) per
        share reflecting the write-off of initial issuance costs of
        the Series E preferred shares redeemed July 15, 2006.

    --  26.1% increase in Funds from Operations ("FFO") per diluted
        share to $.58 or $32.4 million for third quarter 2007 compared
        to $.46 or $24.3 million for third quarter 2006. Included in
        the third quarter 2006 FFO was the accounting charge of $1.8
        million for the Series E preferred share redemption. Without
        this charge, FFO per diluted share for the third quarter 2006,
        as adjusted, would have been $.50 per share representing an
        increase of 16.0% for the third quarter 2007.

    --  24.4% increase in Adjusted Funds from Operations ("AFFO")
        diluted to $23.9 million for third quarter 2007 as compared to
        $19.2 million for third quarter 2006.

    --  58.3% Diluted FFO payout ratio, 79.1% Diluted AFFO payout
        ratio for the quarter.

    --  56 acres of land acquired for $10.0 million that can support
        800,000 square feet of development located at the north
        entrance of Aberdeen Proving Ground. The Company's land
        inventory totals 1,705 acres that can support 14.6 million
        square feet of development.

    --  $12.6 million of dispositions closed in third quarter 2007,
        including two buildings located in New Jersey, one non-core
        building located in the BWI Corridor and a land parcel located
        in White Marsh.

    --  92.8% occupied and 93.2% leased for the Company's wholly owned
        portfolio as of September 30, 2007.

    --  2.9 million square feet under construction, development and
        redevelopment for a total projected cost of $535.9 million.

    --  73.3% of leases expiring during the quarter were renewed, with
        a 7.8% increase in total straight line rent for renewed space.

    --  10% increase in quarterly common dividend from $.31 to $.34
        per share.

"We are pleased with our financial performance for the quarter which reflects additional development coming on-line," stated Randall M. Griffin, President and Chief Executive Officer for Corporate Office Properties Trust. "Our initial 2008 FFO guidance reflects continued strong FFO growth for next year as we complete more development and increase both fee income and our core operating NOI," he added.

Financial Results

EPS for the quarter ended September 30, 2007 totaled $.15 per diluted share, or $7.4 million of net income available for common shareholders, as compared to $.33 per diluted share, or $14.5 million for the quarter ended September 30, 2006. Included in third quarter 2007 net income is gain on sales of real estate net of minority interests of $3.4 million, as compared to $12.7 million included in third quarter 2006. Also included in 2006 net income is an accounting charge of $1.8 million or ($.04) per share reflecting the write-off of initial issuance costs of the Series E preferred shares redeemed July 15, 2006.

Diluted FFO for the quarter ended September 30, 2007 totaled $32.4 million, or $.58 per diluted share, as compared to $24.3 million, or $.46 per diluted share, for the quarter ended September 30, 2006, representing an increase of 26.1% per share. Included in the third quarter 2006 FFO was the accounting charge of $1.8 million for the Series E preferred share redemption. Without this charge, FFO per diluted share for the third quarter 2006, as adjusted, would have been $.50 per share representing an increase of 16.0% for the third quarter 2007.

Diluted AFFO for the quarter ended September 30, 2007 totaled $23.9 million as compared to $19.2 million for third quarter 2006, representing an increase of 24.4%. The Company's diluted AFFO payout ratio was 79.1% for third quarter 2007 compared to 83.0% for third quarter 2006.

As of September 30, 2007, the Company had a total market capitalization of $4.3 billion, with $1.8 billion in debt outstanding, equating to a 41.5% debt-to-total market capitalization ratio. The Company's total quarterly weighted average interest rate was 5.9%, and 79.7% of total debt was subject to fixed interest rates. For the third quarter 2007, EBITDA interest coverage ratio was 2.92x and EBITDA fixed charge coverage ratio was 2.44x.

Operating Results

At September 30, 2007, the Company's wholly owned portfolio of 229 office properties totaling 17.7 million square feet, was 92.8% occupied and 93.2% leased. The weighted average remaining lease term for the portfolio was 4.9 years and the average rental rate (including tenant reimbursements of operating costs) was $21.20 per square foot.

During the quarter, 312,000 square feet was renewed, equating to a 73.3% renewal rate, at an average capital cost of $5.58 per square foot. Total rent on renewed space increased 7.8% on a straight-line basis and 2.1% on a cash basis. For renewed and retenanted space of 401,000 square feet, total straight-line rent increased 7.5% and total cash rent increased 1.7%. The average committed capital cost for renewed and retenanted space was $8.21 per square foot.

Same office property cash NOI remained flat compared to the quarter ended September 30, 2006, despite a $1.3 million drop in same office termination fees as compared to the quarter ended September 30, 2006. Excluding the effect of termination fees, our same office property cash NOI would have increased 2.6%, or $1.2 million, as compared to the quarter ended September 30, 2006. The Company's same office portfolio consists of 160 properties and represents 79.8% of our wholly owned portfolio as of September 30, 2007.

The Company recognized total termination fees of $1.2 million, net of write-offs of related straight-line rents and the write-off of previously unamortized deferred market revenue, as compared to $1.3 million in the third quarter of 2006.

Development Activity

At quarter end September 30, the Company's development pipeline consisted of:

    --  Eight buildings under construction totaling 856,000 square
        feet for a total projected cost of $182.0 million, that are
        43.1% leased.

    --  Twelve buildings under development totaling 1.3 million square
        feet for a total projected cost of $261.7 million.

    --  Three projects under redevelopment totaling 740,000 square
        feet for a total projected cost of $92.2 million.

The Company's land inventory (wholly owned and joint venture) at quarter end totaled 1,705 acres that can support 14.6 million square feet of development.

During the quarter, the Company placed 106,000 square feet into service. As of September 30, 2007, the Company's development placed into service was 92.7% leased.

During the quarter, the Company was selected 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. The Company's multi-year phased development plan is to create a business park and regional gateway that provides a dynamic mix of office space, industrial/flex space, retail and hospitality services. The Company will lease the land on a long-term basis as each parcel commences development, will oversee the development, construction, leasing and management of the business park and will have a leasehold interest in the buildings.

    Acquisition Activity

    During the quarter, the Company acquired the following assets:

    --  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.

    --  A 50.0% joint venture interest in ArundelPreserve #5, LLC on
        July 2, 2007, which owns 23 acres of land in Hanover, Maryland
        that can support up to 455,000 square feet of office
        development. The first building of 152,000 square feet is
        under construction with a targeted operational date of second
        quarter 2009.

    Disposition Activity

    During the quarter, the Company disposed of the following assets:

    --  Two office buildings totaling 32,000 square feet within its
        Northern/Central New Jersey portfolio for $6.0 million. The
        Company recognized an aggregate gain of $1.9 million.

    --  40,000 square foot office building in the BWI Airport
        submarket for $5.0 million and recognized a gain of $868,000.

    --  3.5 acre parcel of land located in White Marsh, Maryland and
        recognized a gain of $1.1 million.

    Financing and Capital Transactions

During the quarter, the Company increased its quarterly common dividend 10%, from $.31 to $.34 per share.

    Subsequent Events

    Since September 30, 2007, the Company has:

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

    --  Placed into service the 103,000 square feet development
        property located at 201 Technology Park Drive in Lebanon,
        Virginia. This building is leased through 2022 to Northrop
        Grumman Corporation and will house both the Virginia
        Information Technologies Agency (VITA) and Northrop Grumman
        operations.

    --  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.

    Earnings Guidance

The Company has revised its 2007 EPS guidance from $.34 - $.39 to $.39 - $.41 per diluted share, excluding any potential gains or losses from future sales of previously depreciated operating properties. The Company has also updated its 2007 FFO guidance to a range of $2.23 - $2.25 per diluted share from $2.20 - $2.25 per diluted share.

The Company's 2008 EPS guidance is $.58 - $.67 per diluted share, excluding any potential gains or losses from the sale of previously depreciated operating properties. The 2008 FFO guidance is $2.40 - $2.49 per diluted share, representing FFO growth of 8.0% - 11.0%. The Company will discuss the assumptions for the 2008 guidance during the earnings conference call.

    Conference Call

    The Company will hold an investor/analyst conference call:

    Conference Call and Webcast Date: Tuesday, November 6, 2007

    Time: 11:00 a.m. Eastern Time

    Dial In Number: 800-638-5439

    Passcode: 23616751

A replay of this call will be available beginning Tuesday, November 6 at 2:00 p.m. Eastern Time through Tuesday, November 20, 2007 at midnight Eastern Time. To access the replay, please call 888-286-8010 and use passcode 27041914.

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 September 30, 2007, the Company owned 247 office properties totaling 18.5 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
                                                      September 30,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------
Revenues
  Real estate revenues                             $ 94,564  $ 76,869
  Service operations revenues                        10,957    14,791
                                                   --------- ---------
    Total revenues                                  105,521    91,660
                                                   --------- ---------
Expenses
  Property operating expenses                        31,642    24,983
  Depreciation and other amortization associated
   with real estate operations                       26,587    21,510
  Service operations expenses                        10,313    13,960
  General and administrative expenses                 5,423     4,226
                                                   --------- ---------
    Total operating expenses                         73,965    64,679
                                                   --------- ---------
Operating income                                     31,556    26,981
Interest expense                                    (21,000)  (17,678)
Amortization of deferred financing costs               (901)     (736)
                                                   --------- ---------
Income from continuing operations before equity in
 (loss) income of unconsolidated entities, income
 taxes and minority interests                         9,655     8,567
Equity in (loss) income of unconsolidated entities      (46)       15
Income tax expense                                     (197)     (202)
                                                   --------- ---------
Income from continuing operations before minority
 interests                                            9,412     8,380
Minority interests in income from continuing
 operations                                            (961)     (873)
                                                   --------- ---------
Income from continuing operations                     8,451     7,507
Income from discontinued operations, net of
 minority interests                                   1,942    12,483
                                                   --------- ---------
Income before gain on sales of real estate           10,393    19,990
Gain on sales of real estate, net                     1,038       597
                                                   --------- ---------
Net income                                           11,431    20,587
Preferred share dividends                            (4,025)   (4,307)
Issuance costs associated with redeemed preferred
 shares                                                   -    (1,829)
                                                   --------- ---------
Net income available to common shareholders        $  7,406  $ 14,451
                                                   ========= =========

Earnings per share "EPS" computation
Numerator                                          $  7,406  $ 14,451
                                                   ========= =========

Denominator:
Weighted average common shares - basic               46,781    42,197
Dilutive effect of share-based compensation awards    1,005     1,649
                                                   --------- ---------
Weighted average common shares - diluted             47,786    43,846
                                                   ========= =========

EPS
  Basic                                            $   0.16  $   0.34
                                                   ========= =========
  Diluted                                          $   0.15  $   0.33
                                                   ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
       (Amounts in thousands, except per share data and ratios)

                                                   Three Months Ended
                                                      September 30,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------

Net income                                         $ 11,431  $ 20,587
Add: Real estate-related depreciation and
 amortization                                        26,266    21,305
Add: Depreciation and amortization on
 unconsolidated real estate entities                    166       362
Less: Depreciation and amortization allocable to
 minority interests in other consolidated entities      (48)      (36)
Less: Gain on sales of real estate, excluding
 development portion                                 (2,789)  (15,262)
Less: Issuance costs associated with redeemable
 preferred shares                                         -    (1,829)
                                                   --------- ---------
Funds from operations ("FFO")                        35,026    25,127
Add: Minority interests-common units in the
 Operating Partnership                                1,351     3,509
Less: Preferred share dividends                      (4,025)   (4,307)
                                                   --------- ---------
Funds from Operations - basic and diluted ("Basic
 and Diluted FFO")                                   32,352    24,329
Less: Straight-line rent adjustments                 (3,247)   (2,819)
Less: Recurring capital expenditures                 (4,664)   (3,890)
Less: Amortization of deferred market rental
 revenue                                               (585)     (276)
Add: Issuance costs associated with redeemable
 preferred shares                                         -     1,829
                                                   --------- ---------
Adjusted Funds from Operations - diluted ("Diluted
 AFFO")                                            $ 23,856  $ 19,173
                                                   ========= =========

Weighted average shares
  Weighted average common shares                     46,781    42,197
  Conversion of weighted average common units         8,297     8,562
                                                   --------- ---------
  Weighted average common shares/units - basic FFO
   per share                                         55,078    50,759
  Dilutive effect of share-based compensation
   awards                                             1,005     1,649
                                                   --------- ---------
  Weighted average common shares/units - diluted
   FFO per share                                     56,083    52,408
                                                   ========= =========

Diluted FFO per common share                       $   0.58  $   0.46
                                                   ========= =========
Dividends/distributions per common share/unit      $   0.34  $   0.31
                                                   ========= =========
Earnings payout ratio                                 217.3%     91.8%
                                                   ========= =========
Diluted FFO payout ratio                               58.3%     65.4%
                                                   ========= =========
Diluted AFFO payout ratio                              79.1%     83.0%
                                                   ========= =========
EBITDA interest coverage ratio                         2.92x     3.60x
                                                   ========= =========
EBITDA fixed charge coverage ratio                     2.44x     2.89x
                                                   ========= =========

Reconciliation of denominators for diluted EPS and
 diluted FFO per share
Denominator for diluted EPS                          47,786    43,846
Weighted average common units                         8,297     8,562
                                                   --------- ---------
Denominator for diluted FFO per share                56,083    52,408
                                                   ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
            (Amounts in thousands, except per share data)

                                                    Nine Months Ended
                                                      September 30,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------
Revenues
  Real estate revenues                             $274,702  $216,087
  Service operations revenues                        32,727    45,240
                                                   --------- ---------
    Total revenues                                  307,429   261,327
                                                   --------- ---------
Expenses
  Property operating expenses                        92,222    67,460
  Depreciation and other amortization associated
   with real estate operations                       80,487    58,138
  Service operations expenses                        31,463    43,125
  General and administrative expenses                15,122    11,894
                                                   --------- ---------
    Total operating expenses                        219,294   180,617
                                                   --------- ---------
Operating income                                     88,135    80,710
Interest expense                                    (61,261)  (51,635)
Amortization of deferred financing costs             (2,706)   (1,898)
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                                  25,201    27,177
Equity in loss of unconsolidated entities              (197)      (40)
Income tax expense                                     (480)     (623)
                                                   --------- ---------
Income from continuing operations before minority
 interests                                           24,524    26,514
Minority interests in income from continuing
 operations                                          (2,341)   (3,029)
                                                   --------- ---------
Income from continuing operations                    22,183    23,485
Income from discontinued operations, net of
 minority interests                                   1,473    15,423
                                                   --------- ---------
Income before gain on sales of real estate           23,656    38,908
Gain on sales of real estate, net                     1,199       732
                                                   --------- ---------
Net income                                           24,855    39,640
Preferred share dividends                           (12,043)  (11,614)
Issuance costs associated with redeemed preferred
 shares                                                   -    (1,829)
                                                   --------- ---------
Net income available to common shareholders        $ 12,812  $ 26,197
                                                   ========= =========

Earnings per share "EPS" computation
Numerator                                          $ 12,812  $ 26,197
                                                   ========= =========

Denominator:
Weighted average common shares - basic               46,386    41,134
Dilutive effect of share-based compensation awards    1,180     1,785
                                                   --------- ---------
Weighted average common shares - diluted             47,566    42,919
                                                   ========= =========

EPS
  Basic                                            $   0.28  $   0.64
                                                   ========= =========
  Diluted                                          $   0.27  $   0.61
                                                   ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
       (Amounts in thousands, except per share data and ratios)

                                                    Nine Months Ended
                                                      September 30,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------

Net income                                         $ 24,855  $ 39,640
Add: Real estate-related depreciation and
 amortization                                        79,653    58,863
Add: Depreciation and amortization on
 unconsolidated real estate entities                    503       565
Less: Depreciation and amortization allocable to
 minority interests in other consolidated entities     (137)     (122)
Less: Gain on sales of real estate, excluding
 development portion                                 (2,778)  (17,715)
Less: Issuance costs associated with redeemable
 preferred shares                                         -    (1,829)
                                                   --------- ---------
Funds from operations ("FFO")                       102,096    79,402
Add: Minority interests-common units in the
 Operating Partnership                                2,424     6,072
Less: Preferred share dividends                     (12,043)  (11,614)
                                                   --------- ---------
Funds from Operations - basic and diluted ("Basic
 and Diluted FFO")                                   92,477    73,860
Less: Straight-line rent adjustments                 (9,042)   (7,256)
Less: Recurring capital expenditures                (14,331)  (10,123)
Less: Amortization of deferred market rental
 revenue                                             (1,569)   (1,326)
Add: Issuance costs associated with redeemable
 preferred shares                                         -     1,829
                                                   --------- ---------
Adjusted Funds from Operations - diluted ("Diluted
 AFFO")                                            $ 67,535  $ 56,984
                                                   ========= =========

Weighted average shares
  Weighted average common shares                     46,386    41,134
  Conversion of weighted average common units         8,339     8,516
                                                   --------- ---------
  Weighted average common shares/units - basic FFO
   per share                                         54,725    49,650
  Dilutive effect of share-based compensation
   awards                                             1,180     1,785
                                                   --------- ---------
  Weighted average common shares/units - diluted
   FFO per share                                     55,905    51,435
                                                   ========= =========

Diluted FFO per common share                       $   1.65  $   1.44
                                                   ========= =========
Dividends/distributions per common share/unit      $   0.96  $   0.87
                                                   ========= =========
Earnings payout ratio                                 353.1%    138.9%
                                                   ========= =========
Diluted FFO payout ratio                               57.5%     59.2%
                                                   ========= =========
Diluted AFFO payout ratio                              78.7%     76.8%
                                                   ========= =========

Reconciliation of denominators for diluted EPS and
 diluted FFO per share
Denominator for diluted EPS                          47,566    42,919
Weighted average common units                         8,339     8,516
                                                   --------- ---------
Denominator for diluted FFO per share                55,905    51,435
                                                   ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
       (Dollars and shares in thousands, except per share data)

                                            September 30, December 31,
                                                2007          2006
                                            ------------- ------------
Balance Sheet Data (in thousands) (as of
 period end):
Investment in real estate, net of
 accumulated depreciation                   $  2,584,945  $ 2,111,310
Total assets                                   2,916,023    2,419,601
Debt                                           1,799,912    1,498,537
Total liabilities                              1,951,648    1,629,111
Minority interests                               131,607      116,187
Beneficiaries' equity                            832,768      674,303

Debt to Total Assets                                61.7%        61.9%
Debt to Undepreciated Book Value of Real
 Estate Assets                                      60.6%        62.0%
Debt to Total Market Capitalization                 41.5%        34.9%

Property Data (wholly owned properties) (as
 of period end):
Number of operating properties owned                 229          170
Total net rentable square feet owned (in
 thousands)                                       17,722       15,050
Occupancy                                           92.8%        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        $  2,916,023  $ 2,419,601
Assets other than assets included in
 investment in real estate                      (331,078)    (308,291)
Accumulated depreciation on real estate
 assets                                          270,580      219,574
Intangible assets on real estate
 acquisitions, net                               116,368       87,325
                                            ------------- ------------
Denominator for debt to undepreciated book
 value of real estate assets                $  2,971,893  $ 2,418,209
                                            ============= ============
                              Three Months Ended    Nine Months Ended
                                 September 30,        September 30,
                             --------------------- -------------------
                                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                  $   4,605  $   4,552  $ 18,795  $ 10,742
Total capital improvements
 on operating properties         2,514      2,276     6,482     7,935
Total leasing costs on
 operating properties              719      3,416     5,712     5,783
Less: Nonrecurring tenant
 improvements and incentives
 on operating properties        (1,887)    (3,340)  (11,381)   (6,373)
Less: Nonrecurring capital
 improvements on operating
 properties                     (1,198)      (467)   (3,052)   (4,054)
Less: Nonrecurring leasing
 costs incurred on operating
 properties                        (89)    (2,783)   (2,281)   (4,217)
Add: Recurring improvements
 on operating properties
 held through joint ventures         -        236        56       307
                             ---------- ---------- --------- ---------
Recurring capital
 expenditures                $   4,664  $   3,890  $ 14,331  $ 10,123
                             ========== ========== ========= =========
                  Corporate Office Properties Trust
                        Summary Financial Data
                             (unaudited)
                        (Dollars in thousands)

                                Three Months Ended   Nine Months Ended
                                  September 30,        September 30,
                                  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            $16,092  $13,265     $45,234 $36,378
Common unit distributions           2,777    2,643       7,905   7,374
                                ---------- --------  --------- -------
Dividends and distributions for
 FFO & AFFO payout ratio          $18,869  $15,908     $53,139 $43,752
                                ========== ========  ========= =======

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                         $ 7,406  $14,451     $12,812 $26,197
Add: Issuance costs associated
 with redeemed preferred shares         -    1,829           -   1,829
                                ---------- --------  --------- -------
Numerator for diluted EPS, as
 adjusted                         $ 7,406  $16,280     $12,812 $28,026
                                ========== ========  ========= =======

Numerator for diluted FFO, as
 reported                         $32,352  $24,329     $92,477 $73,860
Add: Issuance costs associated
 with redeemed preferred shares         -    1,829           -   1,829
                                ---------- --------  -----------------
Numerator for diluted FFO, as
 adjusted                         $32,352  $26,158     $92,477 $75,689
                                ========== ========  =================

Reconciliation of GAAP net
 income to earnings before
 interest, income taxes,
 depreciation and amortization
 ("EBITDA")
Net income                        $11,431  $20,587
Interest expense on continuing
 operations                        21,000   17,678
Interest expense on
 discontinued operations              145      506
Income tax expense                    197      202
Real estate-related
 depreciation and amortization     26,266   21,305
Amortization of deferred
 financing costs-continuing
 operations                           901      736
Amortization of deferred
 financing costs-discontinued
 operations                             -      128
Other depreciation and
 amortization                         339      601
Minority interests                  1,504    3,636
                                ---------- --------
EBITDA                            $61,783  $65,379
                                ========== ========

Reconciliation of interest
 expense from continuing
 operations to the denominators
 for interest coverage-EBITDA
 and fixed charge coverage-
 EBITDA
Interest expense from
 continuing operations            $21,000  $17,678
Interest expense from
 discontinued operations              145      506
                                ---------- --------
Denominator for interest
 coverage-EBITDA                   21,145   18,184
Preferred share dividends           4,025    4,307
Preferred unit distributions          165      165
                                ---------- --------
Denominator for fixed charge
 coverage-EBITDA                  $25,335  $22,656
                                ========== ========

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                           $50,530  $50,793
Less: Straight-line rent
 adjustments                       (1,951)  (2,533)
Less: Amortization of deferred
 market rental revenue               (541)    (159)
                                ---------- --------
Same property cash net
 operating income                  48,038   48,101
Less: Lease termination fees,
 gross                               (610)  (1,883)
                                ---------- --------
Same property cash net
 operating income, adjusted for
 lease termination fees           $47,428  $46,218
                                ========== ========
                  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                      Low      High
                                                   --------- ---------
                                                       Year Ending
                                                    December 31, 2007
                                                   -------------------
Reconciliation of numerators
--------------------------------------------------
Numerator for projected EPS-diluted                $ 18,500  $ 19,500
Less: Gain on sales of real estate, excluding
 development portion (1)                             (2,778)   (2,778)
Real estate-related depreciation and amortization   105,415   105,415
Minority interests-common units                       3,419     3,604
                                                   --------- ---------
Numerator for projected diluted FFO per share      $124,556  $125,741
                                                   ========= =========

Reconciliation of denominators
--------------------------------------------------
Denominator for projected EPS-diluted                47,630    47,630
Weighted average common units                         8,297     8,297
                                                   --------- ---------
Denominator for projected diluted FFO per share      55,927    55,927
                                                   ========= =========

Projected EPS - diluted                            $   0.39  $   0.41
                                                   ========= =========
Projected diluted FFO per share                    $   2.23  $   2.25
                                                   ========= =========

(1) Reconciliation excludes any potential gains or losses from future
 sales of previously depreciated operating properties.

                                                       Year Ending
                                                    December 31, 2008
                                                   -------------------
Reconciliation of numerators (1)
--------------------------------------------------
Numerator for projected EPS-diluted                $ 28,174  $ 32,451
Real estate-related depreciation and amortization
 (2)                                                101,983   101,983
Minority interests-common units                       5,089     5,862
                                                   --------- ---------
Numerator for projected diluted FFO per share      $135,246  $140,296
                                                   ========= =========

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                            $   0.58  $   0.67
                                                   ========= =========
Projected diluted FFO per share                    $   2.40  $   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 September
                             30, 2007 (1)
                        (Dollars in thousands)


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

United States of America          (5)         59  2,338,501      14.2%
Northrop Grumman Corporation      (6)         16    942,600       5.7%
Booz Allen Hamilton, Inc.                      9    723,255       4.4%
Computer Sciences Corporation     (6)          4    454,645       2.8%
Unisys Corporation                (7)          4    760,145       4.6%
L-3 Communications Holdings,
 Inc.                             (6)          4    221,493       1.3%
General Dynamics Corporation                   9    284,415       1.7%
Wachovia Corporation              (6)          5    189,478       1.2%
The Aerospace Corporation                      2    221,785       1.3%
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%
Ciena Corporation                              3    221,609       1.3%
Science Applications
 International Corp.                          12    170,839       1.0%
Magellan Health Services, Inc.                 3    142,199       0.9%
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%
Wyle Laboratories, Inc.                        4    174,792       1.1%
AARP                                           1    104,695       0.6%


Subtotal Top 20 Office Tenants               172  8,342,596      50.7%
All remaining tenants                        766  8,103,712      49.3%
                                      --------------------------------
Total/Weighted Average                       938 16,446,308     100.0%
                                      ================================


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

United States of America          (5)    $53,843      15.4%        6.1
Northrop Grumman Corporation      (6)     23,085       6.6%        6.8
Booz Allen Hamilton, Inc.                 19,643       5.6%        6.7
Computer Sciences Corporation     (6)     11,446       3.3%        3.7
Unisys Corporation                (7)      8,843       2.5%        2.0
L-3 Communications Holdings,
 Inc.                             (6)      8,838       2.5%        6.2
General Dynamics Corporation               7,249       2.1%        2.5
Wachovia Corporation              (6)      6,744       1.9%       10.7
The Aerospace Corporation                  6,504       1.9%        7.2
Comcast Corporation                        6,091       1.8%        4.4
AT&T Corporation                  (6)      6,041       1.7%        5.1
The Boeing Company                (6)      4,085       1.2%        4.0
Ciena Corporation                          3,675       1.1%        4.4
Science Applications
 International Corp.                       3,238       0.9%        1.4
Magellan Health Services, Inc.             3,021       0.9%        3.2
BAE Systems PLC                   (6)      2,873       0.8%        3.3
The Johns Hopkins University               2,834       0.8%        8.4
Merck & Co., Inc. (Unisys)        (7)      2,670       0.8%        1.7
Wyle Laboratories, Inc.                    2,461       0.7%        5.0
AARP                                       2,454       0.7%       14.2


Subtotal Top 20 Office Tenants           185,638      53.2%        5.7
All remaining tenants                    163,099      46.8%        4.0
                                     ----------------------
Total/Weighted Average                  $348,737     100.0%        4.9
                                     ======================
(1) Table excludes owner occupied leasing activity which represents
     151,127 square feet with a weighted average remaining lease term
     of 7.1 years as of September 30, 2007.
(2) Total Annualized Rental Revenue is the monthly contractual base
     rent as of September 30, 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 (COPT)