copt09302019earnings8k.htm

Exhibit

Exhibit 99.1

Corporate Office Properties Trust

Summary Description

The Company: Corporate Office Properties Trust (the “Company” or “COPT”) is a self-managed real estate investment trust (“REIT”). COPT is listed on the New York Stock Exchange under the symbol “OFC” and is an S&P MidCap 400 Company. We own, manage, lease, develop and selectively acquire office and data center properties. The majority of our portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what we believe are growing, durable, priority missions; we refer to these properties as Defense/IT Locations. We also own a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics; these properties are included in a segment referred to as Regional Office Properties. As of September 30, 2019, we derived 88% of our core portfolio annualized rental revenue from Defense/IT Locations and 12% from Regional Office Properties. As of September 30, 2019, our core portfolio of 167 office and data center shell properties, including 13 owned through unconsolidated joint ventures, encompassed 18.8 million square feet and was 94.5% leased. As of the same date, we also owned a wholesale data center with a critical load of 19.25 megawatts that was 82.1% leased.



Management:	Investor Relations:
Stephen E. Budorick, President & CEO	Stephanie M. Krewson-Kelly, VP of IR
Paul R. Adkins, EVP & COO	443-285-5453, stephanie.kelly@copt.com
Anthony Mifsud, EVP & CFO	Michelle Layne, Manager of IR
	443-285-5452, michelle.layne@copt.com

Corporate Credit Rating: Fitch: BBB- Stable; Moody’s: Baa3 Stable; and S&P: BBB- Positive

Disclosure Statement: This supplemental package contains forward-looking statements within the meaning of the Federal securities laws. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, we 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 and we undertake no obligation to update or supplement any forward-looking statements. The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Corporate Office Properties Trust

Equity Research Coverage




Firm	Senior Analyst	Phone	Email
Bank of America Merrill Lynch	Jamie Feldman	646-855-5808	james.feldman@baml.com
BTIG	Tom Catherwood	212-738-6410	tcatherwood@btig.com
Capital One Securities	Chris Lucas	571-633-8151	christopher.lucas@capitalone.com
Citigroup Global Markets	Manny Korchman	212-816-1382	emmanuel.korchman@citi.com
Evercore ISI	Steve Sakwa	212-446-9462	steve.sakwa@evercoreisi.com
Green Street Advisors	Daniel Ismail	949-640-8780	dismail@greenst.com
Jefferies & Co.	Jonathan Petersen	212-284-1705	jpetersen@jefferies.com
JP Morgan	Tony Paolone	212-622-6682	anthony.paolone@jpmorgan.com
KeyBanc Capital Markets	Craig Mailman	917-368-2316	cmailman@key.com
Mizuho Securities USA Inc.	Haendel St. Juste	212-205-7860	haendel.st.juste@mizuhogroup.com
Raymond James	Bill Crow	727-567-2594	bill.crow@raymondjames.com
Robert W. Baird & Co., Inc.	Dave Rodgers	216-737-7341	drodgers@rwbaird.com
SMBC Nikko Securities America, Inc.	Rich Anderson	917-262-2795	randerson@smbcnikko-si.com
Stifel Financial Corp.	John Guinee	443-224-1307	jwguinee@stifel.com
SunTrust Robinson Humphrey, Inc.	Michael Lewis	212-319-5659	michael.lewis@suntrust.com
Wells Fargo Securities	Blaine Heck	443-263-6529	blaine.heck@wellsfargo.com

With the exception of Green Street Advisors, the above-listed firms are those whose analysts publish research material on the Company and whose estimates of our FFO per share can be tracked through Thomson’s First Call Corporation. Any opinions, estimates, or forecasts the above analysts make regarding COPT’s future performance are their own and do not represent the views, estimates, or forecasts of COPT’s management.

Corporate Office Properties Trust

Selected Financial Summary Data

(in thousands, except per share data)



	Page	Three Months Ended															Nine Months Ended
SUMMARY OF RESULTS	Refer.	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
Net income	6	$	23,246		$	109,563		$	22,318		$	18,456		$	20,322		$	155,127		$	60,187
NOI from real estate operations	13	$	82,621		$	86,136		$	83,764		$	80,738		$	80,854		$	252,521		$	240,298
Same Properties NOI	16	$	73,500		$	73,268		$	71,726		$	71,430		$	71,692		$	218,494		$	213,579
Same Properties cash NOI	17	$	72,792		$	73,436		$	70,886		$	71,011		$	72,406		$	217,114		$	210,468
Adjusted EBITDA	10	$	77,523		$	80,280		$	77,450		$	75,200		$	75,768		$	235,253		$	225,047
Diluted AFFO avail. to common share and unit holders	9	$	42,794		$	46,961		$	46,648		$	42,755		$	38,340		$	136,055		$	116,300
Dividend per common share	N/A	$	0.275		$	0.275		$	0.275		$	0.275		$	0.275		$	0.825		$	0.825

Per share - diluted:
EPS	8	$	0.19		$	0.95		$	0.19		$	0.16		$	0.18		$	1.33		$	0.54
FFO - Nareit	8	$	0.51		$	0.52		$	0.50		$	0.49		$	0.50		$	1.53		$	1.51
FFO - as adjusted for comparability	8	$	0.51		$	0.52		$	0.50		$	0.50		$	0.50		$	1.53		$	1.51

Numerators for diluted per share amounts:
Diluted EPS	6	$	21,139		$	107,512		$	20,773		$	16,906		$	18,583		$	148,538		$	54,933
Diluted FFO available to common share and unit holders	7	$	57,255		$	58,913		$	56,740		$	54,195		$	53,642		$	172,560		$	158,899
Diluted FFO available to common share and unit holders, as adjusted for comparability	7	$	57,430		$	59,222		$	56,788		$	54,974		$	53,938		$	173,092		$	159,617

Payout ratios:
Diluted FFO	N/A	54.2		%	52.7		%	54.7		%	56.4		%	56.3		%	54.0		%	55.5		%
Diluted FFO - as adjusted for comparability	N/A	54.1		%	52.4		%	54.7		%	55.6		%	56.0		%	53.8		%	55.3		%
Diluted AFFO	N/A	72.6		%	66.1		%	66.6		%	71.5		%	78.8		%	68.5		%	75.8		%

CAPITALIZATION
Total Market Capitalization	29	$	5,259,182		$	4,794,853		$	4,992,411		$	4,193,726		$	5,119,467
Total Equity Market Capitalization	29	$	3,384,363		$	2,997,549		$	3,102,491		$	2,355,222		$	3,296,155
Gross debt	30	$	1,920,179		$	1,827,304		$	1,919,920		$	1,868,504		$	1,853,312
Net debt to adjusted book	32	37.3		%	36.1		%	38.8		%	38.9		%	39.2		%	N/A			N/A
Net debt plus preferred equity to adjusted book	32	37.5		%	36.2		%	39.0		%	39.1		%	39.4		%	N/A			N/A
Adjusted EBITDA fixed charge coverage ratio	32	3.7		x	3.7		x	3.6		x	3.6		x	3.6		x	3.7		x	3.6		x
Net debt to in-place adjusted EBITDA ratio	32	6.1		x	5.7		x	6.2		x	6.0		x	6.1		x	N/A			N/A
Net debt plus pref. equity to in-place adj. EBITDA ratio	32	6.1		x	5.7		x	6.2		x	6.0		x	6.1		x	N/A			N/A

Corporate Office Properties Trust

Selected Portfolio Data (1)




	9/30/19		6/30/19		3/31/19		12/31/18		9/30/18
Operating Office and Data Center Shell Properties
# of Properties
Total Portfolio	169		169		165		163		161
Consolidated Portfolio	156		156		159		157		155
Core Portfolio	167		167		163		161		159
Same Properties	150		150		150		150		150

% Occupied
Total Portfolio	92.7	%	92.7	%	92.6	%	93.0	%	92.1	%
Consolidated Portfolio	91.7	%	91.8	%	92.2	%	92.6	%	91.7	%
Core Portfolio	92.8	%	92.9	%	92.8	%	93.1	%	92.2	%
Same Properties	91.9	%	92.0	%	92.2	%	92.8	%	92.0	%

% Leased
Total Portfolio	94.3	%	93.9	%	93.5	%	93.9	%	93.9	%
Consolidated Portfolio	93.6	%	93.1	%	93.1	%	93.5	%	93.5	%
Core Portfolio	94.5	%	94.1	%	93.7	%	94.0	%	94.0	%
Same Properties	93.8	%	93.3	%	93.1	%	93.7	%	93.7	%

Square Feet (in thousands)
Total Portfolio	18,956		18,945		18,338		18,094		17,867
Consolidated Portfolio	16,818		16,807		17,374		17,132		16,905
Core Portfolio	18,799		18,788		18,181		17,937		17,710
Same Properties	16,343		16,343		16,343		16,343		16,343

Wholesale Data Center
Megawatts Operational	19.25		19.25		19.25		19.25		19.25
% Leased	82.1	%	82.1	%	87.6	%	87.6	%	87.6	%


(1)	Total and core portfolio and same properties include properties owned through unconsolidated real estate joint ventures (see page 34).

Corporate Office Properties Trust

Consolidated Balance Sheets

(dollars in thousands)



	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18
Assets
Properties, net:
Operating properties, net	$	2,713,900		$	2,719,585		$	2,865,829		$	2,847,265		$	2,796,577
Construction and redevelopment in progress, including land (1)	259,489			185,007			146,514			139,304			149,042
Land held (1)	285,434			289,780			290,659			264,057			261,808
Total properties, net	3,258,823			3,194,372			3,303,002			3,250,626			3,207,427
Property - operating right-of-use assets (2)	27,325			27,434			27,569			—			—
Property - finance right-of-use assets (2)	40,467			40,476			40,488			—			—
Assets held for sale, net	61,728			54,448			—			—			42,226
Cash and cash equivalents	34,005			46,282			7,780			8,066			9,492
Investment in unconsolidated real estate joint ventures	49,408			65,336			39,359			39,845			40,318
Accounts receivable	37,623			58,189			25,261			26,277			19,245
Deferred rent receivable	88,001			86,707			91,304			89,350			89,171
Intangible assets on real estate acquisitions, net	29,454			31,162			33,172			43,470			47,065
Deferred leasing costs, net	55,839			52,227			51,736			50,191			49,510
Investing receivables	72,114			70,656			69,390			56,982			55,688
Prepaid expenses and other assets, net	100,582			76,180			86,798			91,198			90,224
Total assets	$	3,855,369		$	3,803,469		$	3,775,859		$	3,656,005		$	3,650,366
Liabilities and equity
Liabilities:
Debt	$	1,862,301		$	1,784,362		$	1,876,149		$	1,823,909		$	1,808,030
Accounts payable and accrued expenses	141,242			152,196			112,076			92,855			90,224
Rents received in advance and security deposits	27,975			27,477			25,635			30,079			23,159
Dividends and distributions payable	31,345			31,346			31,346			30,856			30,483
Deferred revenue associated with operating leases	7,665			8,161			8,415			9,125			10,006
Deferred property sale	—			—			—			—			43,377
Property - operating lease liabilities (2)	16,686			16,640			16,619			—			—
Interest rate derivatives	34,825			23,547			11,894			5,459			—
Other liabilities	8,706			10,826			10,162			10,414			9,927
Total liabilities	2,130,745			2,054,555			2,092,296			2,002,697			2,015,206
Redeemable noncontrolling interests	28,677			29,803			27,385			26,260			25,431
Equity:
COPT’s shareholders’ equity:
Common shares	1,121			1,119			1,119			1,102			1,088
Additional paid-in capital	2,480,083			2,475,293			2,475,497			2,431,355			2,390,484
Cumulative distributions in excess of net income	(790,235		)	(780,667		)	(856,703		)	(846,808		)	(833,508		)
Accumulated other comprehensive (loss) income	(34,580		)	(23,465		)	(9,538		)	(238		)	10,108
Total COPT’s shareholders’ equity	1,656,389			1,672,280			1,610,375			1,585,411			1,568,172
Noncontrolling interests in subsidiaries:
Common units in the Operating Partnership	19,365			21,039			20,167			19,168			19,525
Preferred units in the Operating Partnership	8,800			8,800			8,800			8,800			8,800
Other consolidated entities	11,393			16,992			16,836			13,669			13,232
Total noncontrolling interests in subsidiaries	39,558			46,831			45,803			41,637			41,557
Total equity	1,695,947			1,719,111			1,656,178			1,627,048			1,609,729
Total liabilities, redeemable noncontrolling interests and equity	$	3,855,369		$	3,803,469		$	3,775,859		$	3,656,005		$	3,650,366


(1)	Refer to pages 25, 26 and 28 for detail.


(2)	Applicable to periods subsequent to 12/31/18 in connection with our adoption of lease accounting guidance effective 1/1/19 without adjustments to prior reporting periods.

Corporate Office Properties Trust

Consolidated Statements of Operations

(in thousands, except per share data)



	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
Revenues
Lease revenue	$	129,461		$	131,415		$	130,903		$	129,596		$	127,691		$	391,779		$	382,731
Other property revenue	1,273			1,356			1,087			1,229			1,297			3,716			3,697
Construction contract and other service revenues	28,697			42,299			16,950			7,657			8,423			87,946			53,202
Total revenues	159,431			175,070			148,940			138,482			137,411			483,441			439,630
Operating expenses
Property operating expenses	49,714			47,886			49,445			51,298			49,340			147,045			149,737
Depreciation and amortization associated with real estate operations	34,692			34,802			34,796			36,219			34,195			104,290			100,897
Construction contract and other service expenses	27,802			41,002			16,326			7,111			8,058			85,130			51,215
Impairment losses	327			—			—			2,367			—			327			—
General and administrative expenses	6,105			7,650			6,719			5,105			5,796			20,474			17,724
Leasing expenses	1,824			1,736			2,032			1,976			1,103			5,592			4,095
Business development expenses and land carry costs	964			870			1,113			1,425			1,567			2,947			4,415
Total operating expenses	121,428			133,946			110,431			105,501			100,059			365,805			328,083
Interest expense	(17,126		)	(18,475		)	(18,674		)	(18,475		)	(19,181		)	(54,275		)	(56,910		)
Interest and other income	1,842			1,849			2,286			74			1,486			5,977			4,284
Gain on sales of real estate	—			84,469			—			2,367			—			84,469			(27		)
Loss on early extinguishment of debt	—			—			—			(258		)	—			—			—
Income before equity in income of unconsolidated entities and income taxes	22,719			108,967			22,121			16,689			19,657			153,807			58,894
Equity in income of unconsolidated entities	396			420			391			1,577			374			1,207			1,120
Income tax benefit (expense)	131			176			(194		)	190			291			113			173
Net income	23,246			109,563			22,318			18,456			20,322			155,127			60,187
Net income attributable to noncontrolling interests:
Common units in the Operating Partnership	(267		)	(1,339		)	(257		)	(210		)	(380		)	(1,863		)	(1,532		)
Preferred units in the Operating Partnership	(157		)	(165		)	(165		)	(165		)	(165		)	(487		)	(495		)
Other consolidated entities	(1,565		)	(1,268		)	(1,037		)	(1,061		)	(1,080		)	(3,870		)	(2,879		)
Net income attributable to COPT common shareholders	$	21,257		$	106,791		$	20,859		$	17,020		$	18,697		$	148,907		$	55,281
Distributions on dilutive convertible preferred units	—			165			—			—			—			—			—
Redeemable noncontrolling interests	—			902			—			—			—			100			—
Amount allocable to share-based compensation awards	(118		)	(346		)	(86		)	(114		)	(114		)	(469		)	(348		)
Numerator for diluted EPS	$	21,139		$	107,512		$	20,773		$	16,906		$	18,583		$	148,538		$	54,933

Corporate Office Properties Trust

Funds from Operations

(in thousands)



	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
Net income	$	23,246		$	109,563		$	22,318		$	18,456		$	20,322		$	155,127		$	60,187
Real estate-related depreciation and amortization	34,692			34,802			34,796			36,219			34,195			104,290			100,897
Impairment losses on real estate	327			—			—			2,367			—			327			—
Gain on sales of real estate	—			(84,469		)	—			(2,367		)	—			(84,469		)	27
Depreciation and amortization on unconsolidated real estate JVs (1)	790			566			566			565			564			1,922			1,691
FFO - per Nareit (2)(3)	59,055			60,462			57,680			55,240			55,081			177,197			162,802
Noncontrolling interests - preferred units in the Operating Partnership	(157		)	(165		)	(165		)	(165		)	(165		)	(487		)	(495		)
FFO allocable to other noncontrolling interests (4)	(1,429		)	(1,188		)	(971		)	(1,011		)	(1,060		)	(3,588		)	(2,757		)
Basic and diluted FFO allocable to share-based compensation awards	(248		)	(229		)	(185		)	(200		)	(214		)	(662		)	(651		)
Basic FFO available to common share and common unit holders (3)	57,221			58,880			56,359			53,864			53,642			172,460			158,899
Redeemable noncontrolling interests	34			33			381			331			—			100			—
Diluted FFO available to common share and common unit holders (3)	57,255			58,913			56,740			54,195			53,642			172,560			158,899
Loss on early extinguishment of debt	—			—			—			258			—			—			—
Demolition costs on redevelopment and nonrecurring improvements	—			—			44			163			251			44			299
Executive transition costs	—			—			4			371			46			4			422
Non-comparable professional and legal expenses	175			311			—			—			—			486			—
Diluted FFO comparability adjustments allocable to share-based compensation awards	—			(2		)	—			(13		)	(1		)	(2		)	(3		)
Diluted FFO avail. to common share and common unit holders, as adj. for comparability (3)	$	57,430		$	59,222		$	56,788		$	54,974		$	53,938		$	173,092		$	159,617


(1)	FFO adjustment pertaining to COPT’s share of unconsolidated real estate joint ventures reported on page 34.


(2)	See reconciliation on page 35 for components of FFO per Nareit.


(3)	Refer to the section entitled “Definitions” for a definition of this measure.


(4)	Pertains to noncontrolling interests in consolidated real estate joint ventures reported on page 33.

Corporate Office Properties Trust

Diluted Share and Unit Computations

(in thousands)



	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
EPS Denominator:
Weighted average common shares - basic	111,582			111,557			109,951			108,528			104,379			111,036			102,401
Dilutive effect of share-based compensation awards	361			310			267			45			231			313			165
Dilutive effect of forward equity sale agreements	—			—			—			—			178			—			60
Dilutive effect of redeemable noncontrolling interests	—			1,062			—			—			—			123			—
Dilutive convertible preferred units	—			176			—			—			—			—			—
Weighted average common shares - diluted	111,943			113,105			110,218			108,573			104,788			111,472			102,626
Diluted EPS	$	0.19		$	0.95		$	0.19		$	0.16		$	0.18		$	1.33		$	0.54

Weighted Average Shares for period ended:
Common Shares Outstanding	111,582			111,557			109,951			108,528			104,379			111,036			102,401
Dilutive effect of share-based compensation awards	361			310			302			45			231			313			165
Dilutive effect of forward equity sale agreements	—			—			—			—			178			—			60
Common units	1,312			1,327			1,331			1,345			2,135			1,323			2,847
Redeemable noncontrolling interests	109			136			1,013			1,126			—			123			—
Denominator for diluted FFO per share and as adjusted for comparability	113,364			113,330			112,597			111,044			106,923			112,795			105,473
Weighted average common units	(1,312		)	(1,327		)	(1,331		)	(1,345		)	(2,135		)	(1,323		)	(2,847		)
Redeemable noncontrolling interests	(109		)	926			(1,013		)	(1,126		)	—			—			—
Anti-dilutive EPS effect of share-based compensation awards	—			—			(35		)	—			—			—			—
Dilutive convertible preferred units	—			176			—			—			—			—			—
Denominator for diluted EPS	111,943			113,105			110,218			108,573			104,788			111,472			102,626
Diluted FFO per share - Nareit	$	0.51		$	0.52		$	0.50		$	0.49		$	0.50		$	1.53		$	1.51
Diluted FFO per share - as adjusted for comparability	$	0.51		$	0.52		$	0.50		$	0.50		$	0.50		$	1.53		$	1.51

Corporate Office Properties Trust

Adjusted Funds from Operations

(in thousands)



	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
Diluted FFO available to common share and common unit holders, as adjusted for comparability	$	57,430		$	59,222		$	56,788		$	54,974		$	53,938		$	173,092		$	159,617
Straight line rent adjustments and lease incentive amortization	(515		)	1,051			(1,667		)	(46		)	582			(1,131		)	(1,441		)
Amortization of intangibles included in NOI	(59		)	(50		)	62			153			153			(47		)	740
Share-based compensation, net of amounts capitalized	1,697			1,623			1,673			1,601			1,557			4,993			4,592
Amortization of deferred financing costs	538			529			528			550			468			1,595			1,404
Amortization of net debt discounts, net of amounts capitalized	377			374			370			365			362			1,121			1,074
Accum. other comprehensive loss on derivatives amortized to expense	12			33			34			34			33			79			101
Replacement capital expenditures (1)	(16,752		)	(16,002		)	(11,173		)	(14,848		)	(18,803		)	(43,927		)	(49,936		)
Other diluted AFFO adjustments associated with real estate JVs (2)	66			181			33			(28		)	50			280			149
Diluted AFFO available to common share and common unit holders (“diluted AFFO”)	$	42,794		$	46,961		$	46,648		$	42,755		$	38,340		$	136,055		$	116,300
Replacement capital expenditures (1)
Tenant improvements and incentives	$	10,880		$	8,568		$	7,152		$	7,876		$	12,894		$	26,600		$	29,626
Building improvements	8,908			4,333			4,531			9,306			5,975			17,772			13,671
Leasing costs	2,722			2,761			3,182			3,800			2,945			8,665			6,047
Net (exclusions from) additions to tenant improvements and incentives	(2,156		)	1,759			(1,469		)	(2,131		)	(896		)	(1,866		)	3,708
Excluded building improvements	(3,602		)	(1,419		)	(2,223		)	(3,984		)	(2,134		)	(7,244		)	(3,089		)
Excluded leasing costs	—			—			—			(19		)	19			—			(27		)
Replacement capital expenditures	$	16,752		$	16,002		$	11,173		$	14,848		$	18,803		$	43,927		$	49,936

(1) Refer to the section entitled “Definitions” for a definition of this measure.
(2) AFFO adjustments pertaining to noncontrolling interests on consolidated joint ventures reported on page 33 and COPT’s share of unconsolidated real estate joint ventures reported on page 34.

Corporate Office Properties Trust

EBITDAre and Adjusted EBITDA

(in thousands)



	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
Net income	$	23,246		$	109,563		$	22,318		$	18,456		$	20,322		$	155,127		$	60,187
Interest expense	17,126			18,475			18,674			18,475			19,181			54,275			56,910
Income tax (benefit) expense	(131		)	(176		)	194			(190		)	(291		)	(113		)	(173		)
Depreciation of furniture, fixtures and equipment	467			496			433			404			561			1,396			1,543
Real estate-related depreciation and amortization	34,692			34,802			34,796			36,219			34,195			104,290			100,897
Impairment losses on real estate	327			—			—			2,367			—			327			—
Gain on sales of real estate	—			(84,469		)	—			(2,367		)	—			(84,469		)	27
Adjustments from unconsolidated real estate JVs (1)	1,202			830			827			832			830			2,859			2,482
EBITDAre	76,929			79,521			77,242			74,196			74,798			$	233,692		$	221,873
Loss on early extinguishment of debt	—			—			—			258			—			—			—
Net gain on other investments	—			(12		)	(388		)	(449		)	—			(400		)	—
Business development expenses	419			460			548			661			673			1,427			2,453
Non-comparable professional and legal expenses	175			311			—			—			—			486			—
Demolition costs on redevelopment and nonrecurring improvements	—			—			44			163			251			44			299
Executive transition costs	—			—			4			371			46			4			422
Adjusted EBITDA	77,523			80,280			77,450			75,200			75,768			$	235,253		$	225,047
Proforma NOI adjustment for property changes within period	—			(1,981		)	252			2,052			166
In-place adjusted EBITDA	$	77,523		$	78,299		$	77,702		$	77,252		$	75,934

(1) Includes COPT’s share of adjusted EBITDA adjustments in unconsolidated real estate joint ventures (see page 34).

Corporate Office Properties Trust

Office and Data Center Shell Properties by Segment (1) - 9/30/19

(square feet in thousands)



	# of Properties	Operational Square Feet	% Occupied		% Leased
Core Portfolio: (2)
Defense/IT Locations:
Fort Meade/Baltimore Washington (“BW”) Corridor:
National Business Park	31	3,825	90.7	%	91.1	%
Howard County	35	2,774	92.8	%	95.4	%
Other	22	1,624	93.6	%	95.9	%
Total Fort Meade/BW Corridor	88	8,223	92.0	%	93.5	%
Northern Virginia (“NoVA”) Defense/IT	13	1,993	82.3	%	86.8	%
Lackland AFB (San Antonio, Texas)	7	953	100.0	%	100.0	%
Navy Support	21	1,242	91.7	%	93.9	%
Redstone Arsenal (Huntsville, Alabama)	9	722	99.2	%	99.6	%
Data Center Shells:
Consolidated Properties	9	1,547	100.0	%	100.0	%
Unconsolidated JV Properties (3)	13	2,138	100.0	%	100.0	%
Total Defense/IT Locations	160	16,818	93.3	%	94.8	%
Regional Office	7	1,981	88.6	%	92.0	%
Core Portfolio	167	18,799	92.8	%	94.5	%
Other Properties	2	157	72.1	%	72.1	%
Total Portfolio	169	18,956	92.7	%	94.3	%
Consolidated Portfolio	156	16,818	91.7	%	93.6	%


(1)	This presentation sets forth Core Portfolio data by segment followed by data for the remainder of the portfolio.


(2)	Represents Defense/IT Locations and Regional Office properties.


(3)	See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

NOI from Real Estate Operations and Occupancy by Property Grouping - 9/30/19

(dollars and square feet in thousands)



	As of Period End
	# of Office and Data Center Shell Properties	Operational Square Feet	% Occupied (1)	% Leased (1)	Annualized Rental Revenue (2)		% of Total Annualized Rental Revenue (2)		NOI from Real Estate Operations
Property Grouping	# of Office and Data Center Shell Properties	Operational Square Feet	% Occupied (1)	% Leased (1)	Annualized Rental Revenue (2)		% of Total Annualized Rental Revenue (2)		Three Months Ended		Nine Months Ended
Core Portfolio:
Same Properties: (3)
Consolidated properties	142	15,222	91.6%	93.7%	$	465,874	92.8	%	$	71,905	$	213,680
Unconsolidated real estate JV (4)	6	964	100.0%	100.0%	5,619		1.1	%	1,214		3,638
Total Same Properties in Core Portfolio	148	16,186	92.1%	94.1%	471,493		94.0	%	73,119		217,318
Properties Placed in Service (5)	12	1,439	94.9%	94.9%	25,884		5.2	%	5,531		13,973
Properties contributed to uncons. real estate JV (4)(6)	7	1,174	100.0%	100.0%	1,612		0.3	%	394		6,625
Wholesale Data Center and Other	N/A	N/A	N/A	N/A	N/A		N/A		3,196		13,429
Total Core Portfolio	167	18,799	92.8%	94.5%	498,989		99.4	%	82,240		251,345
Other Properties (Same Properties)	2	157	72.1%	72.1%	2,774		0.6	%	381		1,176
Total Portfolio	169	18,956	92.7%	94.3%	$	501,763	100.0	%	$	82,621	$	252,521
Consolidated Portfolio	156	16,818	91.7%	93.6%	$	494,532	98.6	%	$	81,020	$	248,450

	As of Period End
	# of Office and Data Center Shell Properties	Operational Square Feet	% Occupied (1)	% Leased (1)	Annualized Rental Revenue (2)		% of Core Annualized Rental Revenue (2)		NOI from Real Estate Operations
Property Grouping	# of Office and Data Center Shell Properties	Operational Square Feet	% Occupied (1)	% Leased (1)	Annualized Rental Revenue (2)		% of Core Annualized Rental Revenue (2)		Three Months Ended		Nine Months Ended
Core Portfolio:
Defense/IT Locations (6)(7):
Consolidated properties	147	14,680	92.4%	94.0%	$	434,164	87.0	%	$	69,284	$	211,047
Unconsolidated real estate JVs (4)	13	2,138	100.0%	100.0%	7,231		1.4	%	1,601		4,071
Total Defense/IT Locations	160	16,818	93.3%	94.8%	441,395		88.5	%	70,885		215,118
Regional Office	7	1,981	88.6%	92.0%	57,594		11.5	%	8,165		23,010
Wholesale Data Center and Other	N/A	N/A	N/A	N/A	N/A		N/A		3,190		13,217
Total Core Portfolio	167	18,799	92.8%	94.5%	$	498,989	100.0	%	$	82,240	$	251,345


(1)	Percentages calculated based on operational square feet.


(2)	Excludes Annualized Rental Revenue from our wholesale data center, DC-6, of $23.5 million as of 9/30/19. With regard to properties owned through unconsolidated real estate joint ventures, we include the portion of Annualized Rental Revenue allocable to COPT’s ownership interest.


(3)	Includes office and data center shell properties stably owned and 100% operational since at least 1/1/18.


(4)	See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.


(5)	Newly constructed or redeveloped properties placed in service that were not fully operational by 1/1/18.


(6)	Includes seven data center shell properties in which we sold a 90% interest and retained a 10% interest through a newly-formed unconsolidated real estate joint venture on 6/20/19.


(7)	For the seven data center shell properties in which we sold a 90% interest and retained a 10% interest through a newly-formed unconsolidated real estate joint venture on 6/20/19, the activity associated with these properties through 6/19/19 is included in consolidated properties and the activity thereafter is included in unconsolidated real estate JVs.

Corporate Office Properties Trust

Consolidated Real Estate Revenues and NOI by Segment

(dollars in thousands)



	Three Months Ended										Nine Months Ended
	9/30/19		6/30/19		3/31/19		12/31/18		9/30/18		9/30/19		9/30/18
Consolidated real estate revenues
Defense/IT Locations:
Fort Meade/BW Corridor	$	63,436	$	61,659	$	62,683	$	62,756	$	61,396	$	187,778	$	186,171
NoVA Defense/IT	13,551		13,912		14,831		13,879		13,960		42,294		39,639
Lackland Air Force Base	12,703		12,104		11,561		11,207		11,254		36,368		35,079
Navy Support	8,183		8,185		8,155		8,031		7,899		24,523		23,896
Redstone Arsenal	4,171		3,968		3,939		3,726		3,734		12,078		11,019
Data Center Shells-Consolidated	5,913		8,624		7,354		7,175		6,689		21,891		18,475
Total Defense/IT Locations	107,957		108,452		108,523		106,774		104,932		324,932		314,279
Regional Office	15,508		15,018		14,833		15,329		15,272		45,359		45,852
Wholesale Data Center	6,565		8,560		7,871		7,929		7,781		22,996		23,963
Other	704		741		763		793		1,003		2,208		2,334
Consolidated real estate revenues	$	130,734	$	132,771	$	131,990	$	130,825	$	128,988	$	395,495	$	386,428

NOI
Defense/IT Locations:
Fort Meade/BW Corridor	$	42,693	$	42,315	$	40,348	$	41,331	$	41,549	$	125,356	$	124,621
NoVA Defense/IT	8,586		9,218		9,539		8,699		8,442		27,343		24,489
Lackland Air Force Base	5,554		5,456		5,602		4,843		4,822		16,612		14,555
Navy Support	4,602		4,899		4,751		4,438		4,691		14,252		13,953
Redstone Arsenal	2,454		2,369		2,400		2,194		2,165		7,223		6,501
Data Center Shells:
Consolidated properties	5,395		7,865		7,001		6,117		6,115		20,261		16,308
COPT’s share of unconsolidated real estate JVs (1)	1,601		1,251		1,219		1,211		1,206		4,071		3,607
Total Defense/IT Locations	70,885		73,373		70,860		68,833		68,990		215,118		204,034
Regional Office	8,165		7,428		7,417		7,548		7,847		23,010		23,380
Wholesale Data Center	3,191		4,942		5,033		3,960		3,816		13,166		11,590
Other	380		393		454		397		201		1,227		1,294
NOI from real estate operations	$	82,621	$	86,136	$	83,764	$	80,738	$	80,854	$	252,521	$	240,298

(1) See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

Cash NOI by Segment

(dollars in thousands)



	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
Cash NOI
Defense/IT Locations:
Fort Meade/BW Corridor	$	42,604		$	42,180		$	40,256		$	41,027		$	41,398		$	125,040		$	122,948
NoVA Defense/IT	8,064			8,771			8,757			8,773			9,394			25,592			23,924
Lackland Air Force Base	5,839			5,731			5,383			5,157			5,012			16,953			15,103
Navy Support	4,808			5,113			4,785			4,508			4,925			14,706			14,435
Redstone Arsenal	2,220			2,302			2,330			2,219			2,221			6,852			6,588
Data Center Shells:
Consolidated properties	4,857			7,247			6,462			5,688			5,630			18,566			14,682
COPT’s share of unconsolidated real estate JVs (1)	1,513			1,202			1,160			1,154			1,144			3,875			3,410
Total Defense/IT Locations	69,905			72,546			69,133			68,526			69,724			211,584			201,090
Regional Office	7,356			7,367			6,990			6,990			7,108			21,713			21,467
Wholesale Data Center	3,231			3,945			4,698			3,601			3,391			11,874			10,244
Other	380			465			525			435			236			1,370			1,378
Cash NOI from real estate operations	80,872			84,323			81,346			79,552			80,459			246,541			234,179
Straight line rent adjustments and lease incentive amortization	235			(1,274		)	1,505			(40		)	(669		)	466			873
Amortization of acquired above- and below-market rents	82			73			(40		)	(97		)	(98		)	115			(574		)
Amortization of below-market cost arrangements	(23		)	(23		)	(23		)	(56		)	(55		)	(69		)	(166		)
Lease termination fees, gross	841			2,458			521			906			830			3,820			2,756
Tenant funded landlord assets and lease incentives	526			530			396			416			325			1,452			3,033
Cash NOI adjustments in unconsolidated real estate JVs	88			49			59			57			62			196			197
NOI from real estate operations	$	82,621		$	86,136		$	83,764		$	80,738		$	80,854		$	252,521		$	240,298


(1)	See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

Same Properties (1) Average Occupancy Rates by Segment

(square feet in thousands)



	# of Properties	Operational Square Feet	Three Months Ended										Nine Months Ended
	# of Properties	Operational Square Feet	9/30/19		6/30/19		3/31/19		12/31/18		9/30/18		9/30/19		9/30/18
Core Portfolio:
Defense/IT Locations:
Fort Meade/BW Corridor	84	7,950	92.3	%	91.3	%	91.2	%	92.3	%	92.1	%	91.6	%	92.1	%
NoVA Defense/IT	13	1,993	83.9	%	88.5	%	91.3	%	85.8	%	82.9	%	87.9	%	82.9	%
Lackland Air Force Base	7	953	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Navy Support	21	1,242	90.9	%	90.8	%	89.5	%	89.8	%	87.1	%	90.4	%	87.1	%
Redstone Arsenal	7	651	99.2	%	98.4	%	98.5	%	99.0	%	98.7	%	98.7	%	98.7	%
Data Center Shells:
Consolidated properties	3	452	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
COPT’s share of unconsolidated real estate JV (2)	6	964	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total Defense/IT Locations	141	14,205	92.6	%	92.6	%	92.9	%	92.7	%	92.0	%	92.7	%	92.0	%
Regional Office	7	1,981	88.6	%	88.9	%	88.1	%	89.3	%	88.3	%	88.5	%	88.3	%
Core Portfolio Same Properties	148	16,186	92.1	%	92.2	%	92.3	%	92.3	%	91.5	%	92.2	%	91.5	%
Other Same Properties	2	157	72.1	%	72.7	%	73.7	%	77.2	%	80.6	%	72.8	%	80.6	%
Total Same Properties	150	16,343	91.9	%	92.0	%	92.1	%	92.2	%	91.4	%	92.0	%	91.4	%

Same Properties (1) Period End Occupancy Rates by Segment (square feet in thousands)
	# of Properties	Operational Square Feet	Three Months Ended
	# of Properties	Operational Square Feet	9/30/19		6/30/19		3/31/19		12/31/18		9/30/18
Core Portfolio:
Defense/IT Locations:
Fort Meade/BW Corridor	84	7,950	92.6	%	91.4	%	91.1	%	92.1	%	92.8	%
NoVA Defense/IT	13	1,993	82.3	%	87.6	%	91.7	%	91.3	%	83.8	%
Lackland Air Force Base	7	953	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Navy Support	21	1,242	91.7	%	90.9	%	90.9	%	90.5	%	88.0	%
Redstone Arsenal	7	651	99.2	%	98.6	%	98.3	%	99.0	%	99.0	%
Data Center Shells:
Consolidated properties	3	452	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
COPT’s share of unconsolidated real estate JV (2)	6	964	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total Defense/IT Locations	141	14,205	92.6	%	92.6	%	93.0	%	93.5	%	92.6	%
Regional Office	7	1,981	88.6	%	89.3	%	88.3	%	89.2	%	89.0	%
Core Portfolio Same Properties	148	16,186	92.1	%	92.2	%	92.4	%	93.0	%	92.1	%
Other Same Properties	2	157	72.1	%	72.1	%	73.7	%	77.2	%	77.2	%
Total Same Properties	150	16,343	91.9	%	92.0	%	92.2	%	92.8	%	92.0	%


(1)	Includes office and data center shell properties stably owned and 100% operational since at least 1/1/18.


(2)	See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

Same Properties Real Estate Revenues and NOI by Segment

(dollars in thousands)



	Three Months Ended										Nine Months Ended
	9/30/19		6/30/19		3/31/19		12/31/18		9/30/18		9/30/19		9/30/18
Same Properties real estate revenues
Defense/IT Locations:
Fort Meade/BW Corridor	$	61,832	$	60,051	$	61,119	$	61,331	$	60,025	$	183,002	$	181,239
NoVA Defense/IT	13,551		13,912		14,831		13,879		13,960		42,294		39,629
Lackland Air Force Base	12,074		11,479		10,928		11,200		11,254		34,481		35,079
Navy Support	8,183		8,185		8,155		8,031		7,899		24,523		23,896
Redstone Arsenal	3,868		3,793		3,785		3,696		3,733		11,446		11,018
Data Center Shells	1,907		1,912		1,281		2,438		1,967		5,100		5,899
Total Defense/IT Locations	101,415		99,332		100,099		100,575		98,838		300,846		296,760
Regional Office	15,509		15,018		14,833		15,300		15,271		45,360		45,733
Other Properties	704		741		760		821		1,003		2,205		2,314
Same Properties real estate revenues	$	117,628	$	115,091	$	115,692	$	116,696	$	115,112	$	348,411	$	344,807

Same Properties NOI
Defense/IT Locations:
Fort Meade/BW Corridor	$	41,672	$	41,279	$	39,380	$	40,378	$	40,440	$	122,331	$	120,582
NoVA Defense/IT	8,586		9,219		9,539		8,699		8,442		27,344		24,470
Lackland Air Force Base	4,936		4,841		4,972		4,837		4,822		14,749		14,555
Navy Support	4,602		4,899		4,751		4,438		4,691		14,252		13,953
Redstone Arsenal	2,236		2,264		2,321		2,171		2,165		6,821		6,501
Data Center Shells:
Consolidated properties	1,710		1,747		1,716		1,741		1,739		5,173		5,272
COPT’s share of unconsolidated real estate JV (1)	1,214		1,205		1,219		1,211		1,206		3,638		3,607
Total Defense/IT Locations	64,956		65,454		63,898		63,475		63,505		194,308		188,940
Regional Office	8,163		7,430		7,417		7,500		7,846		23,010		23,284
Other Properties	381		384		411		455		341		1,176		1,355
Same Properties NOI	$	73,500	$	73,268	$	71,726	$	71,430	$	71,692	$	218,494	$	213,579

(1) See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

Same Properties Cash NOI by Segment

(dollars in thousands)



	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
Same Properties cash NOI
Defense/IT Locations:
Fort Meade/BW Corridor	$	41,841		$	41,393		$	39,419		$	40,126		$	40,609		$	122,653		$	119,466
NoVA Defense/IT	8,064			8,771			8,757			8,774			9,394			25,592			23,906
Lackland Air Force Base	5,266			5,161			5,293			5,157			5,012			15,720			15,103
Navy Support	4,808			5,113			4,785			4,508			4,924			14,706			14,435
Redstone Arsenal	2,291			2,359			2,391			2,224			2,221			7,041			6,587
Data Center Shells:
Consolidated properties	1,615			1,655			1,608			1,634			1,618			4,878			4,751
COPT’s share of unconsolidated real estate JV (1)	1,171			1,160			1,160			1,154			1,144			3,491			3,410
Total Defense/IT Locations	65,056			65,612			63,413			63,577			64,922			194,081			187,658
Regional Office	7,355			7,368			6,990			6,943			7,107			21,713			21,371
Other Properties	381			456			483			491			377			1,320			1,439
Same Properties cash NOI	72,792			73,436			70,886			71,011			72,406			217,114			210,468
Straight line rent adjustments and lease incentive amortization	(735		)	(1,071		)	(65		)	(800		)	(1,699		)	(1,871		)	(1,683		)
Amortization of acquired above- and below-market rents	82			73			(40		)	(97		)	(98		)	115			(574		)
Amortization of below-market cost arrangements	(23		)	(23		)	(23		)	(56		)	(56		)	(69		)	(166		)
Lease termination fees, gross	823			285			521			906			759			1,629			2,325
Tenant funded landlord assets and lease incentives	519			522			388			409			318			1,429			3,012
Cash NOI adjustments in unconsolidated real estate JV (1)	42			46			59			57			62			147			197
Same Properties NOI	$	73,500		$	73,268		$	71,726		$	71,430		$	71,692		$	218,494		$	213,579
Percentage change in total Same Properties cash NOI (2)	0.5		%													3.2		%
Percentage change in Defense/IT Locations Same Properties cash NOI (2)	0.2		%													3.4		%


(1)	See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.


(2)	Represents the change between the current period and the same period in the prior year.

Corporate Office Properties Trust

Leasing - Office and Data Center Shell Portfolio (1)

Quarter Ended 9/30/19

(square feet in thousands)



	Defense/IT Locations
	Ft Meade/BW Corridor			NoVA Defense/IT			Navy Support			Redstone Arsenal			Data Center Shells			Total Defense/IT Locations			Regional Office			Total
Renewed Space
Leased Square Feet	490			—			60			29			—			579			14			592
Expiring Square Feet	533			57			85			29			—			704			119			823
Vacating Square Feet	43			57			25			—			—			125			106			231
Retention Rate (% based upon square feet)	92.0		%	—		%	70.3		%	100.0		%	—		%	82.2		%	11.4		%	71.9		%
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	1.79		$	—		$	3.91		$	2.84		$	—		$	2.06		$	3.89		$	2.10
Weighted Average Lease Term in Years	3.9			—			2.5			3.0			—			3.7			4.5			3.8
Average Rent Per Square Foot
Renewal Average Rent	$	36.66		$	—		$	19.37		$	21.52		$	—		$	34.12		$	37.05		$	34.19
Expiring Average Rent	$	37.40		$	—		$	19.35		$	23.77		$	—		$	34.86		$	30.50		$	34.76
Change in Average Rent	(2.0		)%	—		%	0.1		%	(9.5		)%	—		%	(2.1		)%	21.5		%	(1.6		)%
Cash Rent Per Square Foot
Renewal Cash Rent	$	36.78		$	—		$	19.17		$	23.25		$	—		$	34.28		$	35.27		$	34.30
Expiring Cash Rent	$	39.31		$	—		$	20.49		$	24.92		$	—		$	36.65		$	35.56		$	36.62
Change in Cash Rent	(6.5		)%	—		%	(6.4		)%	(6.7		)%	—		%	(6.5		)%	(0.8		)%	(6.3		)%
Average Escalations Per Year	2.2		%	—		%	2.5		%	2.5		%	—		%	2.2		%	2.8		%	2.2		%
New Leases
Development and Redevelopment Space
Leased Square Feet	15			348			—			8			504			875			—			875
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	11.11		$	2.55		$	—		$	15.21		$	—		$	1.35		$	—		$	1.35
Weighted Average Lease Term in Years	6.6			12.0			—			5.3			15.0			13.6			—			13.6
Average Rent Per Square Foot	$	30.46		$	41.46		$	—		$	23.17		$	21.72		$	29.74		$	—		$	29.74
Cash Rent Per Square Foot	$	28.35		$	41.46		$	—		$	23.00		$	19.02		$	28.15		$	—		$	28.15
Vacant Space (3)
Leased Square Feet	118			92			21			3			—			233			18			251
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	4.02		$	9.22		$	6.13		$	25.62		$	—		$	6.51		$	11.01		$	6.84
Weighted Average Lease Term in Years	3.9			8.7			4.0			5.3			—			5.8			5.7			5.8
Average Rent Per Square Foot	$	29.59		$	31.95		$	25.37		$	24.64		$	—		$	30.09		$	31.72		$	30.21
Cash Rent Per Square Foot	$	31.44		$	30.71		$	25.37		$	24.50		$	—		$	30.53		$	30.23		$	30.51
Total Square Feet Leased	623			440			80			40			504			1,687			32			1,719
Average Escalations Per Year	2.3		%	0.2		%	2.6		%	2.6		%	2.3		%	1.6		%	2.8		%	1.6		%
Average Escalations Excl. Data Center Shells																						1.0		%


(1)	Activity is exclusive of owner occupied space and leases with less than a one-year term. Weighted average lease term is based on the lease term determined in accordance with GAAP. Committed costs for leasing are reported above in the period of lease execution. Actual capital expenditures for leasing are reported on page 9 in the period such costs are incurred.


(2)	Committed costs include tenant improvements and leasing commissions and exclude free rent concession.


(3)	Vacant space includes acquired first generation space, vacated second generation space and leases executed on developed and redeveloped space previously placed in service.

Corporate Office Properties Trust

Leasing - Office and Data Center Shell Portfolio (1)

Nine Months Ended 9/30/19

(square feet in thousands)



	Defense/IT Locations
	Ft Meade/BW Corridor			NoVA Defense/IT			Navy Support			Redstone Arsenal			Data Center Shells			Total Defense/IT Locations			Regional Office			Other			Total
Renewed Space
Leased Square Feet	913			11			281			276			—			1,481			41			20			1,542
Expiring Square Feet	1,096			160			326			276			—			1,858			161			26			2,044
Vacating Square Feet	183			149			45			—			—			377			120			6			502
Retention Rate (% based upon square feet)	83.3		%	7.1		%	86.3		%	100.0		%	—		%	79.7		%	25.7		%	78.4		%	75.4		%
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	2.46		$	1.31		$	4.46		$	0.84		$	—		$	2.53		$	2.65		$	1.60		$	2.52
Weighted Average Lease Term in Years	4.0			5.3			3.4			1.3			—			3.4			2.8			1.1			3.4
Average Rent Per Square Foot
Renewal Average Rent	$	34.93		$	31.58		$	30.44		$	22.03		$	—		$	31.65		$	37.76		$	24.92		$	31.73
Expiring Average Rent	$	35.51		$	35.00		$	30.94		$	21.79		$	—		$	32.09		$	34.19		$	23.55		$	32.03
Change in Average Rent	(1.6		)%	(9.8		)%	(1.6		)%	1.1		%	—		%	(1.4		)%	10.4		%	5.8		%	(1.0		)%
Cash Rent Per Square Foot
Renewal Cash Rent	$	34.85		$	32.29		$	30.72		$	22.18		$	—		$	31.69		$	36.73		$	24.90		$	31.74
Expiring Cash Rent	$	37.30		$	38.43		$	32.53		$	21.91		$	—		$	33.54		$	36.97		$	24.58		$	33.51
Change in Cash Rent	(6.6		)%	(16.0		)%	(5.6		)%	1.2		%	—		%	(5.5		)%	(0.6		)%	1.3		%	(5.3		)%
Average Escalations Per Year	2.4		%	2.5		%	2.6		%	2.6		%	—		%	2.4		%	2.9		%	3.0		%	2.4		%
New Leases
Development and Redevelopment Space
Leased Square Feet	119			348			—			435			1,164			2,066			—			—			2,066
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	10.42		$	2.55		$	—		$	5.45		$	—		$	2.18		$	—		$	—		$	2.18
Weighted Average Lease Term in Years	6.9			12.0			—			8.3			15.1			12.7			—			—			12.7
Average Rent Per Square Foot	$	28.18		$	41.46		$	—		$	18.51		$	21.64		$	24.70		$	—		$	—		$	24.70
Cash Rent Per Square Foot	$	27.17		$	41.46		$	—		$	17.80		$	18.94		$	22.97		$	—		$	—		$	22.97
Vacant Space (3)
Leased Square Feet	343			103			68			6			—			520			98			4			622
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	4.85		$	9.42		$	5.54		$	20.29		$	—		$	6.03		$	9.79		$	0.88		$	6.59
Weighted Average Lease Term in Years	4.6			8.6			4.7			5.6			—			5.4			9.1			2.0			6.0
Average Rent Per Square Foot	$	28.69		$	31.51		$	24.40		$	25.47		$	—		$	28.65		$	33.76		$	21.83		$	29.41
Cash Rent Per Square Foot	$	29.48		$	30.36		$	24.90		$	24.76		$	—		$	29.00		$	32.27		$	21.50		$	29.47
Total Square Feet Leased	1,375			462			349			717			1,164			4,067			140			24			4,230
Average Escalations Per Year	2.5		%	0.3		%	2.6		%	2.9		%	2.3		%	2.1		%	2.4		%	3.0		%	2.1		%
Average Escalations Excl. Data Center Shells																									1.9		%


(1)	Activity is exclusive of owner occupied space and leases with less than a one-year term. Weighted average lease term is based on the lease term determined in accordance with GAAP. Committed costs for leasing are reported above in the period of lease execution. Actual capital expenditures for leasing are reported on page 9 in the period such costs are incurred.


(2)	Committed costs include tenant improvements and leasing commissions and exclude free rent concession.


(3)	Vacant space includes acquired first generation space, vacated second generation space and leases executed on developed and redeveloped space previously placed in service.

Corporate Office Properties Trust

Lease Expiration Analysis as of 9/30/19 (1)

(dollars and square feet in thousands, except per square foot amounts)

Office and Data Center Shells



Segment of Lease and Year of Expiration (2)	Square Footage of Leases Expiring	Annualized Rental Revenue of Expiring Leases (3)		% of Core/Total Annualized Rental Revenue Expiring (3)(4)		Annualized Rental Revenue of Expiring Leases per Occupied Sq. Foot

Core Portfolio
Ft Meade/BW Corridor	253	$	7,506	1.5	%	$	29.26
Navy Support	13	251		0.1	%	19.13
Data Center Shells-Consolidated properties	155	2,729		0.5	%	17.60
Regional Office	38	998		0.2	%	26.55
2019	459	11,484		2.3	%	24.81
Ft Meade/BW Corridor	931	33,037		6.6	%	35.49
NoVA Defense/IT	166	4,938		1.0	%	29.74
Lackland Air Force Base	250	11,633		2.3	%	46.53
Navy Support	172	4,944		1.0	%	28.82
Redstone Arsenal	11	247		—	%	22.16
Regional Office	80	2,600		0.5	%	32.52
2020	1,610	57,399		11.4	%	35.66
Ft Meade/BW Corridor	1,030	35,867		7.2	%	34.82
NoVA Defense/IT	108	3,124		0.6	%	29.03
Navy Support	279	7,615		1.5	%	27.32
Redstone Arsenal	397	8,796		1.8	%	22.16
Regional Office	38	1,227		0.2	%	32.06
2021	1,852	56,629		11.3	%	30.58
Ft Meade/BW Corridor	794	27,088		5.4	%	34.13
NoVA Defense/IT	135	4,513		0.9	%	33.33
Navy Support	173	4,545		0.9	%	26.32
Redstone Arsenal	33	838		0.2	%	25.30
Regional Office	492	16,698		3.3	%	33.95
2022	1,627	53,682		10.8	%	33.00
Ft Meade/BW Corridor	1,343	46,032		9.2	%	34.28
NoVA Defense/IT	144	4,668		0.9	%	32.32
Navy Support	161	5,119		1.0	%	31.78
Redstone Arsenal	7	167		—	%	24.01
Regional Office	139	4,139		0.8	%	29.70
2023	1,794	60,125		12.0	%	33.50
Thereafter
Consolidated Properties	7,972	252,439		50.7	%	31.34
Unconsolidated JV Properties	2,138	7,231		1.4	%	12.80
Core Portfolio	17,452	$	498,989	100.0	%	$	29.59



Segment of Lease and Year of Expiration (2)	Square Footage of Leases Expiring	Annualized Rental Revenue of Expiring Leases (3)		% of Core/Total Annualized Rental Revenue Expiring (3)(4)		Annualized Rental Revenue of Expiring Leases per Occupied Sq. Foot

Core Portfolio	17,452	$	498,989	99.4	%	$	29.59
Other Properties	113	2,774		0.6	%	24.44
Total Portfolio	17,565	$	501,763	100.0	%	$	29.56
Consolidated Portfolio	15,427	$	494,532
Unconsolidated JV Properties	2,138	$	7,231

Note: As of 9/30/19, the weighted average lease term is 5.0 years for the Core Portfolio and Total Portfolio and 4.9 years for the Consolidated Portfolio.

Wholesale Data Center



Year of Expiration	Critical Load(MW)	Annualized Rental Revenue of Expiring Leases (3)
2019	1.00	$	1,732
2020	12.55	17,312
2021	0.15	368
2022	1.11	2,104
2023	1.00	1,691
Thereafter	—	243
	15.81	$	23,450

(1)

This expiration analysis reflects occupied space of our total portfolio (including consolidated and unconsolidated properties) and includes the effect of early renewals completed on existing leases but excludes the effect of new tenant leases on square feet yet to commence as of 9/30/19 of 310,000 for the Core Portfolio. With regard to properties owned through unconsolidated real estate joint ventures, the amounts reported above reflect 100% of the properties’ square footage but only reflect the portion of Annualized Rental Revenue that was allocable to COPT’s ownership interest.


(2)	A number of our leases are subject to certain early termination provisions. The year of lease expiration is based on the lease term determined in accordance with GAAP.

(3)

Total Annualized Rental Revenue is the monthly contractual base rent as of 9/30/19 (ignoring free rent then in effect) multiplied by 12 plus the estimated annualized expense reimbursements under existing leases. The amounts reported above for Annualized Rental Revenue include the portion of properties owned through unconsolidated real estate joint ventures that was allocable to COPT’s ownership interest.


(4)	Amounts reported represent the percentage of our Core Portfolio for components of such portfolio while other amounts represent the percentage of our total portfolio.

Corporate Office Properties Trust

2020 Core Portfolio Quarterly Lease Expiration Analysis as of 9/30/19 (1)

(dollars and square feet in thousands, except per square foot amounts)



Segment of Lease and Quarter of Expiration (2)	Square Footage of Leases Expiring	Annualized Rental Revenue of Expiring Leases (3)		% of Core Annualized Rental Revenue Expiring (3)(4)		Annualized Rental Revenue of Expiring Leases per Occupied Sq. Foot
Core Portfolio
Ft Meade/BW Corridor	191	$	8,111	1.6	%	$	42.36
Navy Support	17	528		0.1	%	30.52
Regional Office	3	88		—	%	26.86
Q1 2020	211	8,727		1.7	%	41.15
Ft Meade/BW Corridor	318	10,731		2.2	%	33.71
NoVA Defense/IT	56	1,699		0.3	%	30.14
Navy Support	20	566		0.1	%	28.64
Regional Office	29	924		0.2	%	32.21
Q2 2020	423	13,920		2.8	%	32.89
Ft Meade/BW Corridor	340	11,219		2.2	%	33.02
NoVA Defense/IT	13	400		0.1	%	31.26
Navy Support	88	2,457		0.5	%	28.06
Regional Office	20	568		0.1	%	28.56
Q3 2020	461	14,644		2.9	%	31.83
Ft Meade/BW Corridor	82	2,976		0.6	%	36.66
NoVA Defense/IT	97	2,839		0.6	%	29.31
Lackland Air Force Base	250	11,633		2.3	%	46.53
Navy Support	47	1,393		0.3	%	29.68
Redstone Arsenal	11	247		—	%	22.16
Regional Office	28	1,020		0.2	%	36.30
Q4 2020	515	20,108		4.0	%	39.10

	1,610	$	57,399	11.4	%	$	35.66


(1)	This expiration analysis reflects occupied space of our total portfolio (including consolidated and unconsolidated properties) and includes the effect of early renewals completed on existing leases but excludes the effect of new tenant leases on square feet yet to commence as of 9/30/19.


(2)	A number of our leases are subject to certain early termination provisions. The period of lease expiration is based on the lease term determined in accordance with GAAP.


(3)	Total Annualized Rental Revenue is the monthly contractual base rent as of 9/30/19 (ignoring free rent then in effect) multiplied by 12 plus the estimated annualized expense reimbursements under existing leases.


(4)	Amounts reported represent the percentage of our Core Portfolio.

Corporate Office Properties Trust

Top 20 Tenants as of 9/30/19 (1)

(dollars and square feet in thousands)



Tenant		Total Annualized Rental Revenue (2)		% of Total Annualized Rental Revenue (2)		Occupied Square Feet in Office and Data Center Shells	Weighted Average Remaining Lease Term in Office and Data Center Shells (3)
United States Government	(4)	$	180,185	34.3	%	4,388	4.9
VADATA, Inc.		41,905		8.0	%	3,530	8.4
General Dynamics Corporation		26,697		5.1	%	725	3.9
The Boeing Company		16,791		3.2	%	609	2.0
CACI International Inc		12,455		2.4	%	320	4.8
Northrop Grumman Corporation		11,617		2.2	%	422	2.2
Booz Allen Hamilton, Inc.		10,957		2.1	%	298	2.0
CareFirst Inc.		10,816		2.1	%	312	3.4
Wells Fargo & Company		6,712		1.3	%	176	9.0
AT&T Corporation		6,600		1.3	%	317	5.7
University of Maryland		6,349		1.2	%	215	5.4
Miles and Stockbridge, PC		5,702		1.1	%	160	8.0
Kratos Defense and Security Solutions		5,245		1.0	%	131	0.6
Science Applications International Corp.		5,098		1.0	%	136	2.5
The Raytheon Company		5,079		1.0	%	136	1.8
Jacobs Engineering Group Inc.		5,028		1.0	%	165	6.3
Transamerica Life Insurance Company		4,889		0.9	%	140	2.3
The MITRE Corporation		3,870		0.7	%	118	4.9
Mantech International Corp.		3,828		0.7	%	135	4.4
IBM Corporation		3,644		0.7	%	178	0.1
Subtotal Top 20 Tenants		373,467		71.1	%	12,611	5.4
All remaining tenants		151,746		28.9	%	4,954	4.1
Total/Weighted Average		$	525,213	100.0	%	17,565	5.0


(1)	Includes Annualized Rental Revenue (“ARR”) in our portfolio of operating office and data center shells and our wholesale data center. For properties owned through unconsolidated real estate joint ventures, includes COPT’s share of those properties’ ARR of $7.2 million (see page 34 for additional information).

(2)

Total ARR is the monthly contractual base rent as of 9/30/19, multiplied by 12, plus the estimated annualized expense reimbursements under existing leases. With regard to properties owned through unconsolidated real estate joint ventures, the amounts reported above reflect 100% of the properties’ square footage but only reflect the portion of ARR that was allocable to COPT’s ownership interest.


(3)	Weighted average remaining lease term is based on the lease term determined in accordance with GAAP for our office and data center shell properties (i.e., excluding the effect of our wholesale data center leases). The weighting of the lease term was computed based on occupied square feet.


(4)	Substantially all of our government leases are subject to early termination provisions which are customary in government leases. As of 9/30/19, $5.3 million in ARR (or 2.9% of our ARR from the United States Government and 1.0% of our total ARR) was through the General Services Administration (GSA).

Corporate Office Properties Trust

Property Dispositions

(dollars and square feet in thousands)

Property

Property Segment

Location

# of Properties

Operational Square Feet

Transaction

Date

% Occupied on Transaction Date

Transaction

Price

Quarter Ended 6/30/19

90% interest in DC 15, 16, 17, 18, 19, 20 and 23

Data Center Shells

Northern Virginia

1,174

6/20/19

100.0%

238,500

(1)


(1)	We sold a 90% interest in these properties based on an aggregate property value of $265.0 million and retained a 10% interest in the properties through a newly-formed joint venture. On 7/1/19, the joint venture obtained $153.6 million in non-recourse mortgage loans on the properties from which we received a distribution of additional net proceeds of $15.2 million.

Corporate Office Properties Trust

Summary of Construction Projects as of 9/30/19 (1)

(dollars and square feet in thousands)



		Total Rentable Square Feet	% Leased as of 10/9/19	as of 9/30/19 (2)						Actual or Anticipated Shell Completion Date	Anticipated Operational Date (3)
				Anticipated Total Cost		Cost to Date		Cost to Date Placed in Service

Property and Segment	Location
Fort Meade/BW Corridor:
4600 River Road	College Park, Maryland	102	0%	$	30,509	$	5,883	$	—	3Q 20	3Q 21

Redstone Arsenal:
4100 Market Street (4)	Huntsville, Alabama	36	100%	8,508		7,827		6,617		4Q 18	4Q 19
8800 Redstone Gateway	Huntsville, Alabama	76	100%	18,411		14,735		—		4Q 19	4Q 19
7500 Advanced Gateway	Huntsville, Alabama	113	100%	18,073		1,722		—		2Q 20	2Q 20
7600 Advanced Gateway	Huntsville, Alabama	126	100%	14,998		869		—		2Q 20	2Q 20
100 Secured Gateway	Huntsville, Alabama	250	16%	54,050		14,541		—		2Q 20	2Q 21
8600 Advanced Gateway	Huntsville, Alabama	100	80%	24,393		1,003		—		4Q 20	4Q 21
Subtotal / Average		701	67%	138,433		40,697		6,617

Data Center Shells:
Oak Grove B	Northern Virginia	216	100%	47,895		31,102		—		1Q 20	1Q 20
P2 A	Northern Virginia	230	100%	54,270		33,311		—		1Q 20	1Q 20
Oak Grove A	Northern Virginia	216	100%	48,295		17,638		—		2Q 20	2Q 20
P2 B	Northern Virginia	274	100%	64,636		26,944		—		3Q 20	3Q 20
P2 C	Northern Virginia	230	100%	51,120		17,948		—		1Q 21	1Q 21
Subtotal / Average		1,166	100%	266,216		126,943		—

NoVA Defense/IT:
NOVA Office C	Chantilly, Virginia	348	100%	106,219		19,534		—		2Q 22	2Q 22

Regional Office:
2100 L Street	Washington, DC	190	43%	174,000		111,467		—		1Q 20	1Q 21
Total Under Construction		2,507	82%	$	715,377	$	304,524	$	6,617


(1)	Includes properties under, or contractually committed for, construction as of 9/30/19.


(2)	Cost includes land, construction, leasing costs and allocated portion of structured parking and other shared infrastructure, if applicable.


(3)	Anticipated operational date is the earlier of the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.


(4)	Although classified as under construction, 28,000 square feet were operational as of 9/30/19.

Corporate Office Properties Trust

Summary of Redevelopment Projects as of 9/30/19

(dollars and square feet in thousands)




	Property Segment	Total Rentable Square Feet	% Leased as of 9/30/19	as of 9/30/19 (1)										Actual or Anticipated Completion Date	Anticipated Operational Date (2)
				Historical Basis, Net		Incremental Redevelopment Cost		Anticipated Total Cost		Cost to Date		Cost to Date Placed in Service

Property and Location
6950 Columbia Gateway Columbia, Maryland (3)	Ft Meade/BW Corridor	106	80%	$	10,000	$	15,907	$	25,907	$	22,448	$	11,312	2Q 19	2Q 20


(1)	Cost includes land, construction, leasing costs and allocated portion of shared infrastructure.


(2)	Anticipated operational date is the earlier of the estimated date when leases have commenced on 100% of a property’s space or one year from the cessation of major construction activities.


(3)	Although classified as under redevelopment, 10,000 square feet were operational as of 9/30/19.

Corporate Office Properties Trust

Construction and Redevelopment Placed in Service as of 9/30/19

(square feet in thousands)



		Total Property		Square Feet Placed in Service					Space Placed in Service % Leased as of 9/30/19
	Property Segment	% Leased as of 9/30/19	Rentable Square Feet	Prior Year	2019
Property and Location	Property Segment	% Leased as of 9/30/19	Rentable Square Feet	Prior Year	1st Quarter	2nd Quarter	3rd Quarter	Total 2019
5801 University Research Court College Park, Maryland	Ft Meade/BW Corridor	100%	71	60	11	—	—	11	100%
IN 1 Northern Virginia	Data Center Shells	100%	149	—	149	—	—	149	100%
4100 Market Street Huntsville, Alabama	Redstone Arsenal	100%	36	—	21	—	7	28	100%
MP 1 Northern Virginia	Data Center Shells	100%	216	—	—	216	—	216	100%
DC 23 Northern Virginia (1)	Data Center Shells	100%	149	—	—	149	—	149	100%
IN 2 Northern Virginia	Data Center Shells	100%	216	—	—	216	—	216	100%
4000 Market Street Huntsville, Alabama	Redstone Arsenal	100%	43	18	—	15	10	25	100%
6950 Columbia Gateway Columbia, Maryland	Ft Meade/BW Corridor	80%	106	—	—	10	—	10	100%
Total Construction/Redevelopment Placed in Service		98%	986	78	181	606	17	804	100%


(1)	Subsequent to being placed in service, we sold a 90% interest in this property by contributing it into a newly-formed, unconsolidated joint venture on 6/20/19.

Corporate Office Properties Trust

Summary of Land Owned/Controlled as of 9/30/19 (1)



Location	Acres	Estimated Developable Square Feet (in thousands)	Carrying Amount
Land owned/controlled for future development
Defense/IT Locations:
Fort Meade/BW Corridor:
National Business Park	196	2,106
Howard County	19	290
Other	126	1,338
Total Fort Meade/BW Corridor	341	3,734
NoVA Defense/IT	52	1,618
Lackland AFB	49	785
Navy Support	44	109
Redstone Arsenal (2)	375	3,367
Data Center Shells	30	676
Total Defense/IT Locations	891	10,289
Regional Office	10	900
Total land owned/controlled for future development	901	11,189	$	281,386

Other land owned/controlled	150	1,638	4,197
Land held, net	1,051	12,827	$	285,583


(1)	This land inventory schedule includes properties under ground lease to us and excludes all properties listed as construction or redevelopment as detailed on pages 25 and 26. The costs associated with the land included on this summary are reported on our consolidated balance sheet in the line entitled “land held.”


(2)	This land is controlled under a long-term master lease agreement to LW Redstone Company, LLC, a consolidated joint venture (see page 33). As this land is developed in the future, the joint venture will execute site-specific leases under the master lease agreement. Rental payments will commence under the site-specific leases as cash rents under tenant leases commence at the respective properties.

Corporate Office Properties Trust

Capitalization Overview

(dollars, shares and units in thousands)



	Wtd. Avg. Maturity (Years)		Stated Rate		Effective Rate (1)(2)		Gross Debt Balance at
	Wtd. Avg. Maturity (Years)		Stated Rate		Effective Rate (1)(2)		9/30/19
Debt
Secured debt	4.3		4.17	%	4.07	%	$	203,508
Unsecured debt	3.7		4.00	%	4.09	%	1,671,311
Total Consolidated Debt	3.8		4.02	%	4.09	%	$	1,874,819

Fixed rate debt (2)	3.9		4.30	%	4.22	%	$	1,619,749
Variable rate debt	3.3		3.32	%	3.25	%	255,070
Total Consolidated Debt							$	1,874,819

Preferred Equity		Redeemable
3.5% Series I Convertible Preferred Units (3)			Jan-20				$	8,800

Common Equity (4)
Common Shares							112,059
Common Units							1,291
Total Common Shares and Units							113,350

Closing Common Share Price on 9/30/19							$	29.78
Common Equity Market Capitalization							$	3,375,563

Total Equity Market Capitalization							$	3,384,363

Total Market Capitalization							$	5,259,182

(1) Excludes the effect of deferred financing cost amortization.
(2) Includes the effect of interest rate swaps with notional amounts of $273.7 million that hedge the risk of changes in interest rates on variable rate debt.
(3) 352,000 units outstanding with a liquidation preference of $25 per unit, and convertible into 176,000 common units. Effective 9/23/19, the priority annual cumulative return on these units was reduced from 7.5% to 3.5%.
(4) Excludes unvested share-based compensation awards subject to market conditions.



Investment Grade Ratings & Outlook			Latest Affirmation
Fitch	BBB-	Stable	10/7/19
Moody’s	Baa3	Stable	11/20/18
Standard & Poor’s	BBB-	Positive	6/21/19

Corporate Office Properties Trust

Summary of Outstanding Debt as of 9/30/19

(dollars in thousands)



Unsecured Debt	Stated Rate		Amount Outstanding			Maturity Date		Secured Debt	Stated Rate			Amount Outstanding		Balloon Payment Due Upon Maturity		Maturity Date
Revolving Credit Facility	L + 1.10%		$	220,000		Mar-23	(1)(2)	7200 & 7400 Redstone Gateway (3)	L + 1.85%			$	12,538	$	12,132	Oct-20
Senior Unsecured Notes								7740 Milestone Parkway	3.96	%		17,463		15,902		Feb-23
3.70% due 2021	3.70	%	$	300,000		Jun-21		100 & 30 Light Street	4.32	%		51,787		47,676		Jun-23
3.60% due 2023	3.60	%	350,000			May-23		1000, 1200 and 1100 Redstone
5.25% due 2024	5.25	%	250,000			Feb-24		Gateway (3)	4.47	%	(4)	33,142		27,649		Jun-24
5.00% due 2025	5.00	%	300,000			Jul-25		M-Square:
Subtotal - Senior Unsecured Notes	4.32	%	$	1,200,000				5825 & 5850 University Research
								Court (3)	3.82	%		42,309		35,603		Jun-26
Unsecured Bank Term Loans								5801 University Research Court (2)(3)	L+1.45%			11,200		10,020		Aug-26
2022 Maturity	L + 1.25%		$	250,000		Dec-22	(2)	2100 L Street (2)(3)	L + 2.35%			35,069		35,069		Sept-22	(5)
Other Unsecured Debt	0.00	%	1,311			May-26		Total Secured Debt	4.17	%		$	203,508
Total Unsecured Debt	4.00	%	$	1,671,311

Debt Summary
Total Unsecured Debt	4.00	%	$	1,671,311
Total Secured Debt	4.17	%	203,508
Consolidated Debt	4.02	%	$	1,874,819
Net discounts and deferred
financing costs			(12,518		)
Debt, per balance sheet			$	1,862,301

Consolidated Debt			$	1,874,819
COPT’s share of unconsolid. JV gross debt (6)			45,360
Gross debt			$	1,920,179


(1)	The Company’s $800 million Revolving Credit Facility matures in March 2023 and may be extended for two six-month periods, at our option.


(2)	Pre-payable anytime without penalty.


(3)	These properties are owned through consolidated joint ventures.


(4)	Represents the weighted average rate of three loans on the properties.


(5)	The loan maturity may be extended by one year, provided certain conditions are met.


(6)	See page 34 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

Summary of Outstanding Debt as of 9/30/19 (continued)

(1) Revolving Credit Facility maturity of $220.0 million scheduled for 2023 is presented assuming our exercise of two six-month extension options.

(2) Includes the effect of interest rate swaps in effect that hedge the risk of changes in interest rates on variable rate debt.

Corporate Office Properties Trust

Debt Analysis

(dollars and square feet in thousands)



		As of and for Three Months Ended					As of and for Three Months Ended
Senior Note Covenants (1)	Required	9/30/19			Line of Credit & Term Loan Covenants (1)	Required	9/30/19
Total Debt / Total Assets	< 60%	38.3%			Total Debt / Total Assets	< 60%	34.9%
Secured Debt / Total Assets	< 40%	4.4%			Secured Debt / Total Assets	< 40%	4.1%
Debt Service Coverage	> 1.5x	4.1x			Adjusted EBITDA / Fixed Charges	> 1.5x	3.7x
Unencumbered Assets / Unsecured Debt	> 150%	263.7%			Unsecured Debt / Unencumbered Assets	< 60%	34.3%
					Unencumbered Adjusted NOI / Unsecured Interest Expense	> 1.75x	4.1x

Debt Ratios	Source				Unencumbered Portfolio Analysis
Gross debt	p. 30	$	1,920,179		# of unencumbered properties		146
Adjusted book	p. 37	$	5,049,884		% of total portfolio		86		%
Net debt / adjusted book ratio		37.3		%	Unencumbered square feet in-service		15,315
Net debt plus pref. equity / adj. book ratio		37.5		%	% of total portfolio		81		%
Net debt	p. 37	$	1,885,669		NOI from unencumbered real estate operations		$	74,235
Net debt plus preferred equity	p. 37	$	1,894,469		% of total NOI from real estate operations		90		%
In-place adjusted EBITDA	p. 10	$	77,523		Adjusted EBITDA from unencumbered real estate operations		$	69,299
Net debt / in-place adjusted EBITDA ratio		6.1		x	% of total adjusted EBITDA from real estate operations		89		%
Net debt plus pref. equity / in-place adj. EBITDA ratio		6.1		x	Unencumbered adjusted book		$	4,483,856
Denominator for debt service coverage	p. 36	$	17,709		% of total adjusted book		89		%
Denominator for fixed charge coverage	p. 36	$	20,793
Adjusted EBITDA	p. 10	$	77,523
Adjusted EBITDA debt service coverage ratio		4.4		x
Adjusted EBITDA fixed charge coverage ratio		3.7		x

(1) The covenants are calculated as defined in the applicable agreements, and the calculations differ between those agreements.

Corporate Office Properties Trust

Consolidated Real Estate Joint Ventures as of 9/30/19

(dollars and square feet in thousands)



Operating Properties	Operational Square Feet	% Occupied	% Leased	NOI for the Three Months Ended 9/30/19 (1)		NOI for the Nine Months Ended 9/30/19 (1)		Total Assets (2)		Venture Level Debt		% COPT Owned
Suburban Maryland:
M Square Associates, LLC (3 properties)	313	97.2%	97.2%	$	1,669	$	4,918	$	71,059	$	53,509	50%
Huntsville, Alabama:
LW Redstone Company, LLC (8 properties)	585	99.5%	100.0%	2,046		5,922		102,148		45,680		85%
Total/Average	898	98.7%	99.0%	$	3,715	$	10,840	$	173,207	$	99,189



Non-operating Properties	Estimated Developable Square Feet	Total Assets (2)		Venture Level Debt		% COPT Owned
Suburban Maryland:
M Square Research Park	450	$	13,603	$	—	50%
Huntsville, Alabama:
Redstone Gateway (3)	4,040	117,766		—		85%
Washington, DC:
Stevens Place	190	111,994		35,070		95%
Total	4,680	$	243,363	$	35,070


(1)	Represents NOI of the joint venture operating properties before allocation to joint venture partners.


(2)	Total assets includes the assets of the consolidated joint venture plus any outside investment basis.


(3)	Total assets include $58.0 million due from the City of Huntsville (including accrued interest) in connection with infrastructure costs funded by the joint venture.

Corporate Office Properties Trust

Unconsolidated Real Estate Joint Ventures as of 9/30/19

(dollars and square feet in thousands)




Joint venture information	DC Shell JV formed 7/21/16			DC Shell JV formed 6/20/19
COPT ownership %	50		%	10		%
COPT’s investment	$	38,273		$	11,135
# of Properties	6			7
Square Feet	964			1,174
% Occupied	100		%	100		%
COPT’s share of annualized rental revenue	$	5,619		$	1,612

Balance sheet information	DC Shell JV formed 7/21/16			DC Shell JV formed 6/20/19			Total			COPT’s Share (1)
Operating properties, net	$	121,714		$	244,232		$	365,946		$	85,280
Total assets	$	136,758		$	270,909		$	407,667		$	95,470
Debt	$	59,682		$	152,336		$	212,018		$	45,075
Total liabilities	$	60,211		$	159,561		$	219,772		$	46,061

	Three Months Ended 9/30/19												Nine Months Ended 9/30/19
Operating information	DC Shell JV formed 7/21/16			DC Shell JV formed 6/20/19			Total			COPT’s Share (1)			DC Shell JV formed 7/21/16			DC Shell JV formed 6/20/19			Total			COPT’s Share (1)
Revenue	$	2,884		$	4,321		$	7,205		$	1,874		$	8,824		$	4,828		$	13,652		$	4,895
Operating expenses	(457		)	(443		)	(900		)	(273		)	(1,548		)	(495		)	(2,043		)	(824		)
NOI and EBITDA	2,427			3,878			6,305			1,601			7,276			4,333			11,609			4,071
Interest expense	(533		)	(1,461		)	(1,994		)	(412		)	(1,582		)	(1,461		)	(3,043		)	(937		)
Depreciation and amortization	(1,133		)	(2,238		)	(3,371		)	(790		)	(3,397		)	(2,238		)	(5,635		)	(1,922		)
Net income	$	761		$	179		$	940		$	399		$	2,297		$	634		$	2,931		$	1,212

NOI (per above)	$	2,427		$	3,878		$	6,305		$	1,601		$	7,276		$	4,333		$	11,609		$	4,071
Tenant funded landlord assets	—			—			—			—			(32		)	—			(32		)	(16		)
Straight line rent adjustments	(85		)	(300		)	(385		)	(72		)	(262		)	(337		)	(599		)	(164		)
Amortization of acquired above- and below-market rents	—			(157		)	(157		)	(16		)	—			(157		)	(157		)	(16		)
Cash NOI	$	2,342		$	3,421		$	5,763		$	1,513		$	6,982		$	3,839		$	10,821		$	3,875

(1) Represents the portion allocable to our ownership interest.

Corporate Office Properties Trust Supplementary Reconciliations of Non-GAAP Measures (dollars in thousands)

	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
NOI from real estate operations (1)
Real estate revenues (2)	$	130,734		$	132,771		$	131,990		$	130,825		$	128,988		$	395,495		$	386,428
Property operating expenses (2)	(49,714		)	(47,886		)	(49,445		)	(51,298		)	(49,340		)	(147,045		)	(149,737		)
COPT’s share of NOI in unconsolidated real estate JVs (3)	1,601			1,251			1,219			1,211			1,206			4,071			3,607
NOI from real estate operations	82,621			86,136			83,764			80,738			80,854			252,521			240,298
General and administrative expenses	(6,105		)	(7,650		)	(6,719		)	(5,105		)	(5,796		)	(20,474		)	(17,724		)
Leasing expenses	(1,824		)	(1,736		)	(2,032		)	(1,976		)	(1,103		)	(5,592		)	(4,095		)
Business development expenses and land carry costs	(964		)	(870		)	(1,113		)	(1,425		)	(1,567		)	(2,947		)	(4,415		)
NOI from construction contracts and other service operations	895			1,297			624			546			365			2,816			1,987
Equity in (loss) income of unconsolidated non-real estate entities	(3		)	(1		)	(1		)	1,198			(2		)	(5		)	(5		)
Interest and other income	1,842			1,849			2,286			74			1,486			5,977			4,284
Loss on early extinguishment of debt	—			—			—			(258		)	—			—			—
Interest expense	(17,126		)	(18,475		)	(18,674		)	(18,475		)	(19,181		)	(54,275		)	(56,910		)
COPT’s share of interest expense of unconsolidated real estate JVs (3)	(412		)	(264		)	(261		)	(267		)	(266		)	(937		)	(791		)
Income tax benefit (expense)	131			176			(194		)	190			291			113			173
FFO - per Nareit (1)	$	59,055		$	60,462		$	57,680		$	55,240		$	55,081		$	177,197		$	162,802

Real estate revenues
Lease revenue
Fixed contractual payments	$	102,389		$	104,193		$	104,644		$	102,900		$	101,577		$	311,226		$	302,040
Variable lease payments
Lease termination fees	841			2,458			521			906			830			3,820			2,756
Other variable lease payments (4)	26,231			24,764			25,738			25,790			25,284			76,733			77,935
Lease revenue	129,461			131,415			130,903			129,596			127,691			391,779			382,731
Other property revenue	1,273			1,356			1,087			1,229			1,297			3,716			3,697
Real estate revenues	$	130,734		$	132,771		$	131,990		$	130,825		$	128,988		$	395,495		$	386,428

Provision for credit losses (recoveries) (2)	$	39		$	(2	)	$	70		$	39		$	39		$	107		$	300


(1)	Refer to section entitled “Definitions” for a definition of this measure.


(2)	Provision for credit losses is included in real estate revenues in 2019 and property operating expenses in prior periods.


(3)	See page 34 for a schedule of the related components.


(4)	Represents primarily lease revenue associated with property operating expense reimbursements from tenants.

Corporate Office Properties Trust Supplementary Reconciliations of Non-GAAP Measures (continued) (dollars in thousands)

	Three Months Ended															Nine Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18			9/30/19			9/30/18
Total interest expense	$	17,126		$	18,475		$	18,674		$	18,475		$	19,181		$	54,275		$	56,910
Less: Amortization of deferred financing costs	(538		)	(529		)	(528		)	(550		)	(468		)	(1,595		)	(1,404		)
Less: Amortization of net debt discounts, net of amounts capitalized	(377		)	(374		)	(370		)	(365		)	(362		)	(1,121		)	(1,074		)
Less: Accum. other comprehensive loss on derivatives amortized to expense	(12		)	(33		)	(34		)	(34		)	(33		)	(79		)	(101		)
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs	403			258			255			260			261			916			774
Denominator for interest coverage	16,602			17,797			17,997			17,786			18,579			52,396			55,105
Scheduled principal amortization	1,107			1,095			1,098			1,079			1,060			3,300			3,161
Denominator for debt service coverage	17,709			18,892			19,095			18,865			19,639			55,696			58,266
Capitalized interest	2,927			2,388			2,004			1,748			1,410			7,319			4,181
Preferred unit distributions	157			165			165			165			165			487			495
Denominator for fixed charge coverage	$	20,793		$	21,445		$	21,264		$	20,778		$	21,214		$	63,502		$	62,942

Preferred unit distributions	$	157		$	165		$	165		$	165		$	165		$	487		$	495
Common share dividends - unrestricted shares and deferred shares	30,721			30,693			30,685			30,206			29,821			92,099			86,079
Common share dividends - restricted shares and deferred shares	103			63			68			114			114			234			348
Common unit distributions - unrestricted units	338			365			365			367			373			1,068			2,131
Common unit distributions - restricted units	22			23			20			—			—			65			—
Total dividends/distributions	$	31,341		$	31,309		$	31,303		$	30,852		$	30,473		$	93,953		$	89,053

Common share dividends - unrestricted shares and deferred shares	$	30,721		$	30,693		$	30,685		$	30,206		$	29,821		$	92,099		$	86,079
Common unit distributions - unrestricted units	338			365			365			367			373			1,068			2,131
Dividends and distributions for payout ratios	$	31,059		$	31,058		$	31,050		$	30,573		$	30,194		$	93,167		$	88,210

Corporate Office Properties Trust Supplementary Reconciliations of Non-GAAP Measures (continued) (dollars in thousands)

	Three Months Ended
	9/30/19			6/30/19			3/31/19			12/31/18			9/30/18
Total assets	$	3,855,369		$	3,803,469		$	3,775,859		$	3,656,005		$	3,650,366
Accumulated depreciation	979,353			949,111			927,266			897,903			867,659
Accumulated depreciation included in assets held for sale	1,397			1,397			—			—			—
Accumulated amort. of real estate intangibles and deferred leasing costs	212,222			210,183			208,973			204,882			200,229
Accumulated amortization of real estate intangibles and deferred leasing costs included in assets held for sale	4			4			—			—			—
COPT’s share of liabilities of unconsolidated real estate JVs	46,061			30,588			30,156			29,917			30,103
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs	7,376			6,578			6,012			5,446			4,881
Less: Property - operating lease liabilities	(16,686		)	(16,640		)	(16,619		)	—			—
Less: Property - finance lease liabilities	(702		)	(712		)	(716		)	(660		)	(660		)
Less: Disposed property included in assets held for sale	—			—			—			—			(42,226		)
Less: Cash and cash equivalents	(34,005		)	(46,282		)	(7,780		)	(8,066		)	(9,492		)
Less: COPT’s share of cash of unconsolidated real estate JVs	(505		)	(406		)	(377		)	(293		)	(444		)
Adjusted book	$	5,049,884		$	4,937,290		$	4,922,774		$	4,785,134		$	4,700,416

Gross debt (page 30)	$	1,920,179		$	1,827,304		$	1,919,920		$	1,868,504		$	1,853,312
Less: Cash and cash equivalents	(34,005		)	(46,282		)	(7,780		)	(8,066		)	(9,492		)
Less: COPT’s share of cash of unconsolidated real estate JVs	(505		)	(406		)	(377		)	(293		)	(444		)
Net debt	$	1,885,669		$	1,780,616		$	1,911,763		$	1,860,145		$	1,843,376
Preferred equity	8,800			8,800			8,800			8,800			8,800
Net debt plus preferred equity	$	1,894,469		$	1,789,416		$	1,920,563		$	1,868,945		$	1,852,176

Corporate Office Properties Trust

Definitions

Non-GAAP Measures

We believe that the measures defined below that are not determined in accordance with generally accepted accounting principles (“GAAP”) are helpful to investors in measuring our performance and comparing it to that of other real estate investment trusts (“REITs”). Since these measures exclude certain items includable in their respective most comparable GAAP measures, reliance on the measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are weighed in balance with other GAAP and non-GAAP measures. These measures should not be used as an alternative to the respective most comparable GAAP measures when evaluating our financial performance or to cash flow from operating, investing and financing activities when evaluating our liquidity or ability to make cash distributions or pay debt service.

Adjusted book

Defined as total assets presented on our consolidated balance sheet, net of lease liabilities associated with property right-of-use assets, and excluding the effect of cash and cash equivalents, accumulated depreciation on real estate properties, accumulated amortization of intangible assets on real estate acquisitions, accumulated amortization of deferred leasing costs, disposed properties included in assets held for sale, unconsolidated real estate joint ventures (“JVs”) cash and cash equivalents, liabilities and accumulated depreciation and amortization (of real estate intangibles and deferred leasing costs) allocable to our ownership interest in the JVs and the effect of properties serving as collateral for debt in default that we extinguished (or intend to extinguish) via conveyance of such properties.

Adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”)

Adjusted EBITDA is net income adjusted for the effects of interest expense, depreciation and amortization, impairment losses, gain on sales of real estate, gain or loss on early extinguishment of debt, net gain or loss on other investments, operating property acquisition costs, income taxes, business development expenses, demolition costs on redevelopment and nonrecurring improvements, executive transition costs and certain other expenses that we believe are not closely correlated with our operating performance. Adjusted EBITDA also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JV. While EBITDA (earnings before interest, taxes, depreciation and amortization) is a universally-defined supplemental measure, Adjusted EBITDA incorporates additional adjustments for gains and losses from investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. We believe that adjusted EBITDA is a useful supplemental measure for assessing our un-levered performance. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Amortization of acquisition intangibles included in NOI

Represents the amortization of intangible asset and liability categories that is included in net operating income, including amortization of above- or below-market leases and above- or below-market cost arrangements.

Basic FFO available to common share and common unit holders (“Basic FFO”)

This measure is FFO adjusted to subtract (1) preferred share dividends, (2) income attributable to noncontrolling interests through ownership of preferred units in Corporate Office Properties, L.P. (the “Operating Partnership”) or interests in other consolidated entities not owned by us, (3) depreciation and amortization allocable to noncontrolling interests in other consolidated entities, (4) Basic FFO allocable to share-based compensation awards and (5) issuance costs associated with redeemed preferred shares. With these adjustments, Basic FFO represents FFO available to common shareholders and holders of common units in the Operating Partnership (“common units”). Common units are substantially similar to our common shares of beneficial interest (“common shares”) and are exchangeable into common shares, subject to certain conditions. We believe that Basic FFO is useful to investors due to the close correlation of common units to common shares. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Corporate Office Properties Trust

Definitions

Cash net operating income (“Cash NOI”)

Defined as NOI from real estate operations adjusted to eliminate the effects of: straight-line rental adjustments, amortization of tenant incentives, amortization of acquisition intangibles included in FFO and NOI (including above- and below-market leases and above- or below-market cost arrangements), lease termination fees from tenants to terminate their lease obligations prior to the end of the agreed upon lease terms and rental revenue recognized under GAAP resulting from landlord assets and lease incentives funded by tenants. Cash NOI also includes adjustments to NOI from real estate operations for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. Under GAAP, rental revenue is recognized evenly over the term of tenant leases (through straight-line rental adjustments and amortization of tenant incentives), which, given the long term nature of our leases, does not align with the economics of when tenant payments are due to us under the arrangements. Also under GAAP, when a property is acquired, we allocate the acquisition to certain intangible components, which are then amortized into NOI over their estimated lives, even though the resulting revenue adjustments are not reflective of our lease economics. In addition, revenue from lease termination fees and tenant-funded landlord improvements, absent an adjustment from us, would result in large one-time lump sum amounts in Cash NOI that we do not believe are reflective of a property’s long-term value. We believe that Cash NOI is a useful supplemental measure of operating performance for a REIT’s operating real estate because it makes adjustments to NOI for the above stated items to be more reflective of the economics of when tenant payments are due to us under our leases and the value of our properties. As is the case with NOI, the measure is useful in our opinion in evaluating and comparing the performance of geographic segments, Same Properties groupings and individual properties. We believe that NOI from real estate operations, our segment performance measure, is the most directly comparable GAAP measure to this non-GAAP measure.

COPT’s share of NOI from unconsolidated real estate JVs

Represents the net of revenues and property operating expenses of real estate operations owned through unconsolidated JVs that are allocable to COPT’s ownership interest. This measure is included in the computation of NOI, our segment performance measure, as discussed below.

Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)

Defined as Diluted FFO, as adjusted for comparability, adjusted for the following: (1) the elimination of the effect of (a) noncash rental revenues and property operating expenses (comprised of straight-line rental adjustments, which includes the amortization of recurring tenant incentives, and amortization of acquisition intangibles included in FFO and NOI, both of which are described under “Cash NOI” above), (b) share-based compensation, net of amounts capitalized, (c) amortization of deferred financing costs, (d) amortization of debt discounts and premiums and (e) amortization of settlements of debt hedges; and (2) replacement capital expenditures (defined below). Diluted AFFO also includes adjustments to Diluted FFO, as adjusted for comparability for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that Diluted AFFO is a useful supplemental measure of operating performance for a REIT because it incorporates adjustments for: certain revenue and expenses that are not associated with cash to or from us during the period; and certain capital expenditures for operating properties incurred during the period that do require cash outlays. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Diluted FFO available to common share and common unit holders (“Diluted FFO”)

Diluted FFO is Basic FFO adjusted to add back any changes in Basic FFO that would result from the assumed conversion of securities that are convertible or exchangeable into common shares. The computation of Diluted FFO assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase Diluted FFO per share in a given period. We believe that Diluted FFO is useful to investors because it is the numerator used to compute Diluted FFO per share, discussed below. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Corporate Office Properties Trust

Definitions

Diluted FFO available to common share and common unit holders, as adjusted for comparability (“Diluted FFO, as adjusted for comparability”)

Defined as Diluted FFO or FFO adjusted to exclude: operating property acquisition costs; gain or loss on early extinguishment of debt; FFO associated with properties that secured non-recourse debt on which we defaulted and, subsequently, extinguished via conveyance of such properties (including property NOI, interest expense and gains on debt extinguishment); loss on interest rate derivatives; demolition costs on redevelopment and nonrecurring improvements; executive transition costs, accounting charges for original issuance costs associated with redeemed preferred shares and certain other expenses that we believe are not closely correlated with our operating performance. Diluted FFO, as adjusted for comparability also includes adjustments to Diluted FFO for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe this to be a useful supplemental measure alongside Diluted FFO as it excludes gains and losses from certain investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. The adjustment for FFO associated with properties securing non-recourse debt on which we defaulted pertains to the periods subsequent to our default on the loan’s payment terms, which was the result of our decision to not support payments on the loan since the estimated fair value of the properties was less than the loan balance. While we continued as the legal owner of the properties during this period, all cash flows produced by them went directly to the lender and we did not fund any debt service shortfalls, which included incremental additional interest under the default rate. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Diluted FFO per share

Diluted FFO per share is (1) Diluted FFO divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged. The computation of Diluted FFO per share assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase Diluted FFO per share in a given period. We believe that Diluted FFO per share is useful to investors because it provides investors with a further context for evaluating our FFO results in the same manner that investors use earnings per share (“EPS”) in evaluating net income available to common shareholders. We believe that diluted EPS is the most directly comparable GAAP measure to this non-GAAP measure.

Diluted FFO per share, as adjusted for comparability

Defined as (1) Diluted FFO available to common share and common unit holders, as adjusted for comparability divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged. The computation of this measure assumes the conversion of common units but does not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase the per share measure in a given period. We believe this to be a useful supplemental measure alongside Diluted FFO per share as it excludes gains and losses from investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. We believe that diluted EPS is the most directly comparable GAAP measure to this non-GAAP measure.

Earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”)

Defined as net income adjusted for the effects of interest expense, depreciation and amortization, gains on sales and impairment losses of real estate and income taxes. EBITDAre also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. While EBITDA (earnings before interest, taxes, depreciation and amortization) is a universally-defined supplemental measure, EBITDAre incorporates additional adjustments for gains and losses from investing activities related to our investments in operating properties. We believe that EBITDAre is a useful supplemental measure for assessing our un-levered performance. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Corporate Office Properties Trust

Definitions

Funds from operations (“FFO” or “FFO per Nareit”)

Defined as net income computed using GAAP, excluding gains on sales and impairment losses of real estate and real estate-related depreciation and amortization. FFO also includes adjustments to net income for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that we use the National Association of Real Estate Investment Trust’s (“Nareit”) definition of FFO, although others may interpret the definition differently and, accordingly, our presentation of FFO may differ from those of other REITs. We believe that FFO is useful to management and investors as a supplemental measure of operating performance because, by excluding gains related to sales of, and impairment losses on, real estate and excluding real estate-related depreciation and amortization, FFO can help one compare our operating performance between periods. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Gross debt

Defined as total consolidated outstanding debt, which is debt reported per our balance sheet adjusted to exclude net discounts and premiums and deferred financing costs, as further adjusted to include outstanding debt of unconsolidated real estate JVs that were allocable to our ownership interest in the JVs.

In-place adjusted EBITDA

Defined as Adjusted EBITDA, as further adjusted for: (1) the removal of NOI pertaining to properties in the quarterly periods in which such properties were disposed or removed from service; and (2) the addition of pro forma adjustments to NOI for (a) properties acquired or placed in service subsequent to the commencement of a quarter made in order to reflect a full quarter of ownership/operations and (b) significant mid-quarter occupancy changes associated with properties recently placed in service with no occupancy. The measure also includes adjustments to Adjusted EBITDA for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs. We believe that in-place adjusted EBITDA is a useful supplemental measure of performance for assessing our un-levered performance, as further adjusted for changes in operating properties subsequent to the commencement of a quarter. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.

Net debt

Defined as Gross debt (total outstanding debt reported per our balance sheet as adjusted to exclude net discounts and premiums and deferred financing costs), as adjusted to subtract cash and cash equivalents as of the end of the period and debt in default that was extinguished via conveyance of properties. The measure also includes adjustments to Gross debt for the effects of the items noted above pertaining to unconsolidated real estate JVs that were allocable to our ownership interest in the JVs.

Net debt plus preferred equity

Defined as Net debt plus the total liquidation preference of our outstanding preferred equity.

Net debt to Adjusted book and Net debt plus preferred equity to Adjusted book

These measures divide either Net debt or Net debt plus preferred equity (defined above) by Adjusted book (defined above).

Net debt to in-place adjusted EBITDA ratio and Net debt plus preferred equity to in-place adjusted EBITDA ratio

Defined as Net debt or Net debt plus preferred equity (as defined above) divided by in-place adjusted EBITDA (defined above) for the three month period that is annualized by multiplying by four.

Corporate Office Properties Trust

Definitions

Net operating income from real estate operations (“NOI”)

NOI, which is our segment performance measure, includes: consolidated real estate revenues; consolidated property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate JVs that are allocable to COPT’s ownership interest in the JVs. We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core real estate operations that is unaffected by depreciation, amortization, financing and general, administrative and leasing expenses; we believe this measure is particularly useful in evaluating the performance of geographic segments, Same Properties groupings and individual properties.

NOI debt service coverage ratio and Adjusted EBITDA debt service coverage ratio

These measures divide either NOI from real estate operations or Adjusted EBITDA by the sum of interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains or losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties) and scheduled principal amortization on mortgage loans.

NOI fixed charge coverage ratio and Adjusted EBITDA fixed charge coverage ratio

These measures divide either NOI from real estate operations or Adjusted EBITDA by the sum of (1) interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains or losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties), (2) scheduled principal amortization on mortgage loans, (3) capitalized interest, (4) dividends on preferred shares and (5) distributions on preferred units in the Operating Partnership not owned by us.

NOI interest coverage ratio and Adjusted EBITDA interest coverage ratio

These measures divide either NOI from real estate operations or Adjusted EBITDA by interest expense (excluding amortization of deferred financing costs and amortization of debt discounts and premiums, net of amounts capitalized, gains on losses on interest rate derivatives and interest expense on debt in default to be extinguished via conveyance of properties).

Payout ratios based on: Diluted FFO; Diluted FFO, as adjusted for comparability; and Diluted AFFO

These payout ratios are defined as (1) the sum of dividends on unrestricted common shares and distributions to holders of interests in the Operating Partnership (excluding unvested share-based compensation awards) and dividends on convertible preferred shares when such distributions and dividends are included in Diluted FFO divided by (2) the respective non-GAAP measures on which the payout ratios are based.

Replacement capital expenditures

Replacement capital expenditures are defined as tenant improvements and incentives, building improvements and leasing costs incurred during the period for operating properties that are not (1) items contemplated prior to the acquisition of a property, (2) improvements associated with the expansion of a building or its improvements, (3) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class B office), (4) capital improvements that represent the addition of something new to the property rather than the replacement of something (for example, the addition of a new heating and air conditioning unit that is not replacing one that was previously there) or (5) replacements of significant components of a building after the building has reached the end of its original useful life. Replacement capital expenditures excludes expenditures of operating properties included in disposition plans during the period that were already sold or are held for future disposition. For cash tenant incentives not due to the tenant for a period exceeding three months past the date on which such incentives were incurred, we recognize such incentives as replacement capital expenditures in the periods such incentives are due to the tenant. Replacement capital expenditures, which is included in the computation of Diluted AFFO, is intended to represent non-transformative capital expenditures of existing properties held for long-term investment. We believe that the excluded expenditures are more closely associated with our investing activities than the performance of our operating portfolio.

Corporate Office Properties Trust

Definitions

Same Properties NOI and Same Properties cash NOI

Defined as NOI, or Cash NOI, from real estate operations of Same Properties. We believe that these are important supplemental measures of operating performance of Same Properties for the same reasons discussed above for NOI from real estate operations and Cash NOI.

Other Definitions

Acquisition Costs — Transaction costs expensed in connection with executed or anticipated acquisitions of operating properties.

Annualized Rental Revenue — The monthly contractual base rent as of the reporting date multiplied by 12, plus the estimated annualized expense reimbursements under existing leases for occupied space. With regard to properties owned through unconsolidated real estate JVs, we include the portion of Annualized Rental Revenue allocable to COPT’s ownership interest.

Average escalations — Leasing statistic used to report average increase in rental rates over lease terms for leases with a term of greater than one-year.

Construction Properties — Properties under, or contractually committed for, construction.

Core Portfolio — Represents Defense/IT Locations and Regional Office properties.

Defense/IT Locations — Represents properties in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and IT related activities servicing what we believe are growing, durable, priority missions.

First Generation Space — Newly-constructed or redeveloped space that has never been occupied.

Operational Space — The portion of a property in operations (excludes portion under construction or redevelopment).

Redevelopment Properties — Properties previously in operations on which activities to substantially renovate such properties were underway or approved.

Regional Office Properties — Includes office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics.

Same Properties — Operating office and data center shell properties stably owned and 100% operational since at least 1/1/18.

Second Generation Space — Space leased that has been previously occupied.

Total Portfolio — Operating properties, including ones owned through unconsolidated real estate JVs.



	6711 Columbia Gateway Drive, Suite 300
	Columbia, Maryland 21046
	Telephone 443-285-5400
	Facsimile 443-285-7650
	www.copt.com
	NYSE: OFC

	NEWS RELEASE

FOR IMMEDIATE RELEASE	IR Contacts:
	Stephanie Krewson-Kelly	Michelle Layne
	443-285-5453	443-285-5452
	stephanie.kelly@copt.com	michelle.layne@copt.com

COPT Reports Third Quarter 2019 Results

__________________________________________________________

EPS of $0.19 Exceeded & FFO per Share of $0.51 Met High-End of Guidance

Achieved Same-Property Cash NOI Growth of 0.5% in 3Q19 and 3.2% in First Nine Months

Core Portfolio 92.8% Occupied & 94.5% Leased

804,000 SF of 100% Leased Developments Placed into Service through 9/30/19

2.6 Million SF Under Construction are 82% Leased; Should Drive Outsized FFO Growth in 2021

__________________________________________________________

Record Leasing Volumes

1.7 Million & 4.2 Million SF of Total Leasing Completed, Respectively, in 3Q19 & First Nine Months

Record U.S. Government Total Leasing Volume of 546,000 SF in First Nine Months

622,000 SF of Vacancy Leasing in First Nine Months Exceeds 2018’s Entire Annual Volume

164,000 SF of U.S. Government Leasing in Operating Portfolio Sets New Annual Record

Solid Tenant Retention of 72% in 3Q19 & 75% in First Nine Months

Development Leasing of 875,000 SF in 3Q19; Record 2.1 Million SF Year-to-Date

Raising 2019 Development Leasing Goal Further, to 2.2 Million SF

__________________________________________________________

Tightening Full-Year FFO per Share Guidance to $2.02-$2.04

Establishing 4Q19 FFO per Share Guidance of $0.49-$0.51

__________________________________________________________

COLUMBIA, MD October 28, 2019-Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the third quarter ended September 30, 2019.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Third quarter FFO per share met the high-end of our guidance, and the strengthening demand taking place throughout our Defense/IT locations continued to support record-levels of leasing, both for new developments and within our operating portfolio. Our 2.1 million square feet of development leasing through the third quarter is 68% greater than our prior full-year record set in 2012, and our 622,000 square feet of vacancy leasing this year is on-pace to set a new annual record.” He continued, “We expect to finish the year with strength, and for leasing momentum to carry into 2020.”

Financial Highlights

3^rd Quarter Financial Results:


•	Diluted earnings per share (“EPS”) was $0.19 for the quarter ended September 30, 2019 as compared to $0.18 for the third quarter of 2018.


•	Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition and as adjusted for comparability, was $0.51 for the third quarter of 2019 as compared to $0.50 for third quarter 2018 results.

Operating Performance Highlights

Operating Portfolio Summary:


•	At September 30, 2019, the Company’s core portfolio of 167 operating office and data center shell properties was 92.8% occupied and 94.5% leased.


•	During the quarter, the Company placed portions of two developments aggregating 17,000 square feet into service that were 100% leased. During the nine months ended September 30, 2019, the Company placed 804,000 square feet into service in properties that were 100% leased.

Same-Property Performance:


•	At September 30, 2019, COPT’s same-property portfolio of 150 buildings was 91.9% occupied and 93.8% leased.


•	For the quarter and nine months ended September 30, 2019, the Company’s same-property cash NOI increased 0.5% and 3.2%, respectively, over the prior year’s comparable periods.

Leasing:


•	Total Square Feet Leased-For the quarter ended September 30, 2019, the Company leased 1.7 million total square feet, including 592,000 square feet of renewals, 251,000 square feet of new leases on vacant space, and 875,000 square feet in development projects.

During the nine months ended September 30, 2019, the Company leased 4.2 million total square feet, including 1.5 million square feet of renewals, 622,000 square feet of new leases on vacant space, and 2.1 million square feet in development projects.


•	Renewal Rates-During the quarter and nine months ended September 30, 2019, the Company respectively renewed 71.9% and 75.4% of total expiring leases.


•	Cash Rent Spreads & Average Escalations on Renewing Leases-For the quarter and nine months ended September 30, 2019, cash rents on renewed space decreased 6.3% and 5.3%, respectively. For the same time periods, average annual escalations on renewing leases were 2.2% and 2.4%, respectively.


•	Lease Terms-In the third quarter, lease terms averaged 3.8 years on renewing leases, 5.8 years on new leasing of vacant space, and 13.6 years on development leasing. For the nine months, lease terms averaged 3.4 years on renewing leases, 6.0 years on new leasing of vacant space, and 12.7 years on development leasing.

Investment Activity Highlights

Development & Redevelopment Projects:


•	Construction Pipeline-At October 9, 2019, the Company’s construction pipeline consisted of 14 properties totaling 2.5 million square feet that were 82% leased. These projects have a total estimated cost of $715.4 million, of which $304.5 million has been incurred.


•	Redevelopment-At September 30, 2019, one project was under redevelopment totaling 106,000 square feet that was 80% leased. The Company has invested $22.4 million of the $25.9 million anticipated total cost.

Balance Sheet and Capital Transaction Highlights


•	As of September 30, 2019, the Company’s net debt plus preferred equity to adjusted book ratio was 37.5% and its net debt plus preferred equity to in-place adjusted EBITDA ratio was 6.1x. For the same period, the Company’s adjusted EBITDA fixed charge coverage ratio was 3.7x.


•	As of September 30, 2019, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate was 4.1%; additionally, 86.4% of the Company’s debt was subject to fixed interest rates and the consolidated debt portfolio had a weighted average maturity of 3.8 years.


•	During the third quarter, the Company’s joint venture with Blackstone Real Estate Income Trust, Inc. (“BREIT”) placed $154 million of mortgage debt on its seven data center shells. The mortgage debt matures in July 2029, is interest-only for the term, and bears interest at 3.64%. COPT received its 10% share of the mortgage proceeds.

2019 Guidance

Management is updating its previously issued guidance range of $1.52-$1.56 for full year EPS to a new range of $1.53-$1.55. The Company is tightening its previously issued guidance range for full year FFOPS, as adjusted for comparability, of $2.01-$2.05, to a new range of $2.02-$2.04.

Management also is establishing EPS and FFOPS, as adjusted for comparability, guidance for the fourth quarter ending December 31, 2019 at ranges of $0.30-$0.32 and $0.49-$0.51, respectively. Reconciliations of projected diluted EPS to projected FFOPS are as follows:



Reconciliation of EPS to FFOPS, per Nareit and As Adjusted for Comparability	Quarter ending						Year ending
	December 31, 2019						December 31, 2019
	Low			High			Low			High
EPS	$	0.30		$	0.32		$	1.53		$	1.55
Real estate depreciation and amortization	0.35			0.35			1.40			1.40
Gain on sales of real estate	(0.16		)	(0.16		)	(0.91		)	(0.91		)
FFOPS, Nareit definition and as adjusted for comparability	$	0.49		$	0.51		$	2.02		$	2.04

Updated Full-Year Guidance Assumptions-As a reminder, Management expects to complete the sale of two additional data center shells to the BREIT joint venture during 4Q19 to fund additional development. Management is updating the following assumptions for its full-year guidance:


•	Development Leasing Objective. Management is increasing its development leasing goal for the year, from the previously elevated target of 2.0 million square feet, to a new target of 2.2 million square feet.


•	Same-Property Cash NOI Growth. Management is increasing and tightening its previously increased guidance for full-year same-property cash NOI growth, from the prior range of 2.75%-3.25% to the new range of 3.25%-3.5%. The increase reflects expense management improvements at the property level.


•	Same-Property Year-End Occupancy. The Company is adjusting its expectation for same-property occupancy at year end from the prior range of 92%-93%, to 91.5%-92.0%. The decrease reflects expected occupancy dates on approximately 50,000 square feet of new tenancy slipping from late 4Q19 into 1Q20.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its third quarter 2019 conference call, the details of which are provided below. The accompanying slide presentation can be viewed on and downloaded from the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

iii

Conference Call Information

Management will discuss third quarter 2019 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date: Tuesday, October 29, 2019

Time: 12:00 p.m. Eastern Time

Telephone Number: (within the U.S.) 855-463-9057

Telephone Number: (outside the U.S.) 661-378-9894

Passcode: 3489935

The conference call will also be available via live webcast in the ‘Latest Updates’ section of COPT’s Investors website: https://investors.copt.com/

Replay Information

A replay of the conference call will be available immediately via webcast on COPT’s Investors website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Tuesday, October 29 through 2:00 p.m. Eastern Time on Tuesday, November 12. To access the replay within the United States, please call 855-859-2056; to access it from outside the United States, please call 404-537-3406. In either case, use passcode 3489935.

Definitions

For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues
Revenues from real estate operations	$	130,734		$	128,988		$	395,495		$	386,428
Construction contract and other service revenues	28,697			8,423			87,946			53,202
Total revenues	159,431			137,411			483,441			439,630
Operating expenses
Property operating expenses	49,714			49,340			147,045			149,737
Depreciation and amortization associated with real estate operations	34,692			34,195			104,290			100,897
Construction contract and other service expenses	27,802			8,058			85,130			51,215
Impairment losses	327			—			327			—
General and administrative expenses	6,105			5,796			20,474			17,724
Leasing expenses	1,824			1,103			5,592			4,095
Business development expenses and land carry costs	964			1,567			2,947			4,415
Total operating expenses	121,428			100,059			365,805			328,083
Interest expense	(17,126		)	(19,181		)	(54,275		)	(56,910		)
Interest and other income	1,842			1,486			5,977			4,284
Gain on sales of real estate	—			—			84,469			(27		)
Income before equity in income of unconsolidated entities and income taxes	22,719			19,657			153,807			58,894
Equity in income of unconsolidated entities	396			374			1,207			1,120
Income tax benefit	131			291			113			173
Net income	23,246			20,322			155,127			60,187
Net income attributable to noncontrolling interests:
Common units in the Operating Partnership (“OP”)	(267		)	(380		)	(1,863		)	(1,532		)
Preferred units in the OP	(157		)	(165		)	(487		)	(495		)
Other consolidated entities	(1,565		)	(1,080		)	(3,870		)	(2,879		)
Net income attributable to COPT common shareholders	$	21,257		$	18,697		$	148,907		$	55,281

Earnings per share (“EPS”) computation:
Numerator for diluted EPS:
Net income attributable to COPT common shareholders	$	21,257		$	18,697		$	148,907		$	55,281
Redeemable noncontrolling interests	—			—			100			—
Amount allocable to share-based compensation awards	(118		)	(114		)	(469		)	(348		)
Numerator for diluted EPS	$	21,139		$	18,583		$	148,538		$	54,933
Denominator:
Weighted average common shares - basic	111,582			104,379			111,036			102,401
Dilutive effect of share-based compensation awards	361			231			313			165
Dilutive effect of redeemable noncontrolling interests	—			—			123			—
Dilutive effect of forward equity sale agreements	—			178			—			60
Weighted average common shares - diluted	111,943			104,788			111,472			102,626
Diluted EPS	$	0.19		$	0.18		$	1.33		$	0.54



	September 30, 2019			December 31, 2018
Balance Sheet Data
Properties, net of accumulated depreciation	$	3,258,823		$	3,250,626
Total assets	3,855,369			3,656,005
Debt, per balance sheet	1,862,301			1,823,909
Total liabilities	2,130,745			2,002,697
Redeemable noncontrolling interest	28,677			26,260
Equity	1,695,947			1,627,048
Net debt to adjusted book	37.3		%	38.9		%

Core Portfolio Data (as of period end) (1)
Number of operating properties	167			161
Total net rentable square feet owned (in thousands)	18,799			17,937
% Occupied	92.8		%	93.1		%
% Leased	94.5		%	94.0		%


(2)	Represents net debt as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).


(3)	Represents net debt plus the total liquidation preference of preferred equity as of period end divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).



	September 30, 2019			December 31, 2018
Reconciliation of total assets to adjusted book
Total assets	$	3,855,369		$	3,656,005
Accumulated depreciation	979,353			897,903
Accumulated depreciation included in assets held for sale	1,397			—
Accumulated amortization of real estate intangibles and deferred leasing costs	212,222			204,882
Accumulated amortization of real estate intangibles and deferred leasing costs included in assets held for sale	4			—
COPT’s share of liabilities of unconsolidated real estate JVs	46,061			29,917
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs	7,376			5,446
Less: Property - operating lease liabilities	(16,686		)	—
Less: Property - finance lease liabilities	(702		)	(660		)
Less: Cash and cash equivalents	(34,005		)	(8,066		)
Less: COPT’s share of cash of unconsolidated real estate JVs	(505		)	(293		)
Adjusted book	$	5,049,884		$	4,785,134

Reconciliation of debt outstanding to net debt and net debt plus preferred equity
Debt outstanding (excluding net debt discounts and deferred financing costs)	$	1,920,179		$	1,868,504
Less: Cash and cash equivalents	(34,005		)	(8,066		)
Less: COPT’s share of cash of unconsolidated real estate JVs	(505		)	(293		)
Net debt	$	1,885,669		$	1,860,145
Preferred equity	8,800			8,800
Net debt plus preferred equity	$	1,894,469		$	1,868,945