copt06302020earnings8k.htm

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 June 30, 2020, we derived 88% of our core portfolio annualized rental revenue from Defense/IT Locations and 12% from Regional Office Properties. As of June 30, 2020, our core portfolio of 172 office and data center shell properties, including 15 owned through unconsolidated joint ventures, encompassed 19.6 million square feet and was 94.7% leased. As of the same date, we also owned a wholesale data center with a critical load of 19.25 megawatts that was 90.6% leased.



Management:	Investor Relations:
Stephen E. Budorick, President & CEO	Stephanie Krewson-Kelly, VP of IR
Anthony Mifsud, EVP & CFO	443-285-5453, stephanie.kelly@copt.com
	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- Stable

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, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Corporate Office Properties Trust

Equity Research Coverage




Firm	Senior Analyst	Phone	Email
Bank of America Securities	Jamie Feldman	646-855-5808	james.feldman@bofa.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@greenstreetadvisors.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.	Tayo Okusanya	646-949-9672	omotayo.okusanya@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	646-521-2351	randerson@smbcnikko-si.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															Six Months Ended
SUMMARY OF RESULTS	Refer.	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
Net income	6	$	25,121		$	25,550		$	44,877		$	23,246		$	109,563		$	50,671		$	131,881
NOI from real estate operations	13	$	84,059		$	83,830		$	82,504		$	82,621		$	86,136		$	167,889		$	169,900
Same Properties NOI	16	$	74,644		$	74,950		$	75,241		$	74,949		$	74,794		$	149,594		$	147,801
Same Properties cash NOI	17	$	75,837		$	74,962		$	76,454		$	74,071		$	74,584		$	150,799		$	145,992
Adjusted EBITDA	10	$	78,582		$	77,989		$	76,024		$	77,523		$	80,280		$	156,571		$	157,730
Diluted AFFO avail. to common share and unit holders	9	$	46,690		$	41,495		$	40,270		$	42,794		$	46,961		$	88,185		$	94,137
Dividend per common share	N/A	$	0.275		$	0.275		$	0.275		$	0.275		$	0.275		$	0.550		$	0.550

Per share - diluted:
EPS	8	$	0.21		$	0.21		$	0.38		$	0.19		$	0.95		$	0.42		$	1.15
FFO - Nareit	8	$	0.51		$	0.41		$	0.49		$	0.51		$	0.52		$	0.92		$	1.02
FFO - as adjusted for comparability	8	$	0.51		$	0.51		$	0.50		$	0.51		$	0.52		$	1.02		$	1.03

Numerators for diluted per share amounts:
Diluted EPS	6	$	23,388		$	23,957		$	42,664		$	21,139		$	107,512		$	47,345		$	128,840
Diluted FFO available to common share and unit holders	7	$	57,809		$	46,706		$	56,032		$	57,255		$	58,913		$	104,592		$	116,181
Diluted FFO available to common share and unit holders, as adjusted for comparability	7	$	57,817		$	57,866		$	56,330		$	57,430		$	59,222		$	115,683		$	116,538

Payout ratios:
Diluted FFO	N/A	53.9		%	66.6		%	55.6		%	54.2		%	52.7		%	59.6		%	53.5		%
Diluted FFO - as adjusted for comparability	N/A	53.9		%	53.9		%	55.3		%	54.1		%	52.4		%	53.9		%	53.3		%
Diluted AFFO	N/A	66.8		%	75.1		%	77.3		%	72.6		%	66.1		%	70.7		%	66.0		%

CAPITALIZATION
Total Market Capitalization	27	$	4,908,346		$	4,609,280		$	5,182,065		$	5,259,182		$	4,794,853
Total Equity Market Capitalization	27	$	2,885,245		$	2,520,400		$	3,339,258		$	3,384,363		$	2,997,549
Gross debt	28	$	2,073,351		$	2,139,130		$	1,893,057		$	1,920,179		$	1,827,304
Net debt to adjusted book	30	38.6		%	38.2		%	36.8		%	37.3		%	36.1		%	N/A			N/A
Net debt plus preferred equity to adjusted book	30	38.8		%	38.3		%	37.0		%	37.5		%	36.2		%	N/A			N/A
Adjusted EBITDA fixed charge coverage ratio	30	3.8		x	3.8		x	3.7		x	3.7		x	3.7		x	3.8		x	3.7		x
Net debt to in-place adjusted EBITDA ratio	30	6.4		x	6.3		x	6.1		x	6.1		x	5.7		x	N/A			N/A
Net debt plus pref. equity to in-place adj. EBITDA ratio	30	6.4		x	6.3		x	6.1		x	6.1		x	5.7		x	N/A			N/A

Corporate Office Properties Trust

Selected Portfolio Data (1)



	6/30/20		3/31/20		12/31/19		9/30/19		6/30/19
Operating Office and Data Center Shell Properties
# of Properties
Total Portfolio	174		171		170		169		169
Consolidated Portfolio	159		156		155		156		156
Core Portfolio	172		169		168		167		167
Same Properties	152		152		152		152		152

% Occupied
Total Portfolio	93.4	%	93.7	%	92.9	%	92.7	%	92.7	%
Consolidated Portfolio	92.5	%	92.8	%	91.9	%	91.7	%	91.8	%
Core Portfolio	93.6	%	94.0	%	93.1	%	92.8	%	92.9	%
Same Properties	92.3	%	92.7	%	91.8	%	91.6	%	91.7	%

% Leased
Total Portfolio	94.5	%	94.9	%	94.4	%	94.3	%	93.9	%
Consolidated Portfolio	93.7	%	94.2	%	93.6	%	93.6	%	93.1	%
Core Portfolio	94.7	%	95.2	%	94.6	%	94.5	%	94.1	%
Same Properties	93.5	%	94.1	%	93.5	%	93.5	%	93.0	%

Square Feet (in thousands)
Total Portfolio	19,781		19,378		19,173		18,956		18,945
Consolidated Portfolio	17,346		16,943		16,739		16,818		16,807
Core Portfolio	19,624		19,221		19,016		18,799		18,788
Same Properties	16,561		16,561		16,561		16,561		16,561

Wholesale Data Center
Megawatts Operational	19.25		19.25		19.25		19.25		19.25
% Leased	90.6	%	76.9	%	76.9	%	82.1	%	82.1	%


(1)	Total and core portfolio and same properties include properties owned through unconsolidated real estate joint ventures (see page 32).

Corporate Office Properties Trust

Consolidated Balance Sheets

(dollars in thousands)



	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19
Assets
Properties, net:
Operating properties, net	$	2,888,817		$	2,813,949		$	2,772,647		$	2,713,900		$	2,719,585
Development and redevelopment in progress, including land (1)	315,243			300,836			274,639			259,489			185,007
Land held (1)	309,039			304,843			293,600			285,434			289,780
Total properties, net	3,513,099			3,419,628			3,340,886			3,258,823			3,194,372
Property - operating right-of-use assets	31,009			27,793			27,864			27,325			27,434
Property - finance right-of-use assets	40,441			40,450			40,458			40,467			40,476
Assets held for sale, net	—			—			—			61,728			54,448
Cash and cash equivalents	21,596			159,061			14,733			34,005			46,282
Investment in unconsolidated real estate joint ventures	50,457			51,220			51,949			49,408			65,336
Accounts receivable, net	30,404			30,317			35,444			37,623			58,189
Deferred rent receivable	90,493			89,690			87,736			88,001			86,707
Intangible assets on real estate acquisitions, net	24,768			26,078			27,392			29,454			31,162
Deferred leasing costs, net	58,666			58,608			58,392			55,839			52,227
Investing receivables, net	72,333			71,197			73,523			72,114			70,656
Prepaid expenses and other assets, net	78,059			80,415			96,076			100,582			76,180
Total assets	$	4,011,325		$	4,054,457		$	3,854,453		$	3,855,369		$	3,803,469
Liabilities and equity
Liabilities:
Debt	$	2,012,019		$	2,076,839		$	1,831,139		$	1,862,301		$	1,784,362
Accounts payable and accrued expenses	149,836			128,441			148,746			141,242			152,196
Rents received in advance and security deposits	30,459			33,323			33,620			27,975			27,477
Dividends and distributions payable	31,302			31,301			31,263			31,345			31,346
Deferred revenue associated with operating leases	8,821			6,972			7,361			7,665			8,161
Property - operating lease liabilities	20,796			17,365			17,317			16,686			16,640
Interest rate derivatives	65,612			63,232			25,682			34,825			23,547
Other liabilities	12,408			8,886			10,649			8,706			10,826
Total liabilities	2,331,253			2,366,359			2,105,777			2,130,745			2,054,555
Redeemable noncontrolling interests	23,148			22,912			29,431			28,677			29,803
Equity:
COPT’s shareholders’ equity:
Common shares	1,122			1,122			1,121			1,121			1,119
Additional paid-in capital	2,477,977			2,476,677			2,481,558			2,480,083			2,475,293
Cumulative distributions in excess of net income	(797,959		)	(790,600		)	(778,275		)	(790,235		)	(780,667		)
Accumulated other comprehensive loss	(64,513		)	(62,201		)	(25,444		)	(34,580		)	(23,465		)
Total COPT’s shareholders’ equity	1,616,627			1,624,998			1,678,960			1,656,389			1,672,280
Noncontrolling interests in subsidiaries:
Common units in the Operating Partnership	19,611			19,600			19,597			19,365			21,039
Preferred units in the Operating Partnership	8,800			8,800			8,800			8,800			8,800
Other consolidated entities	11,886			11,788			11,888			11,393			16,992
Total noncontrolling interests in subsidiaries	40,297			40,188			40,285			39,558			46,831
Total equity	1,656,924			1,665,186			1,719,245			1,695,947			1,719,111
Total liabilities, redeemable noncontrolling interests and equity	$	4,011,325		$	4,054,457		$	3,854,453		$	3,855,369		$	3,803,469


(1)	Refer to pages 24 and 26 for detail.

Corporate Office Properties Trust

Consolidated Statements of Operations

(in thousands, except per share data)



	Three Months Ended															Six Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
Revenues
Lease revenue	$	132,147		$	131,012		$	130,693		$	129,461		$	131,415		$	263,159		$	262,318
Other property revenue	391			1,104			1,275			1,273			1,356			1,495			2,443
Construction contract and other service revenues	12,236			13,681			25,817			28,697			42,299			25,917			59,249
Total revenues	144,774			145,797			157,785			159,431			175,070			290,571			324,010
Operating expenses
Property operating expenses	50,204			49,999			51,098			49,714			47,886			100,203			97,331
Depreciation and amortization associated with real estate operations	33,612			32,596			32,779			34,692			34,802			66,208			69,598
Construction contract and other service expenses	11,711			13,121			24,832			27,802			41,002			24,832			57,328
Impairment losses	—			—			2			327			—			—			—
General and administrative expenses	6,511			5,303			7,043			6,105			7,650			11,814			14,369
Leasing expenses	1,647			2,183			2,293			1,824			1,736			3,830			3,768
Business development expenses and land carry costs	1,262			1,118			1,292			964			870			2,380			1,983
Total operating expenses	104,947			104,320			119,339			121,428			133,946			209,267			244,377
Interest expense	(16,797		)	(16,840		)	(16,777		)	(17,126		)	(18,475		)	(33,637		)	(37,149		)
Interest and other income	2,282			1,205			1,917			1,842			1,849			3,487			4,135
Credit loss expense (1)	(615		)	(689		)	—			—			—			(1,304		)	—
Gain on sales of real estate	—			5			20,761			—			84,469			5			84,469
Income before equity in income of unconsolidated entities and income taxes	24,697			25,158			44,347			22,719			108,967			49,855			131,088
Equity in income of unconsolidated entities	454			441			426			396			420			895			811
Income tax (expense) benefit	(30		)	(49		)	104			131			176			(79		)	(18		)
Net income	25,121			25,550			44,877			23,246			109,563			50,671			131,881
Net income attributable to noncontrolling interests:
Common units in the Operating Partnership	(284		)	(287		)	(500		)	(267		)	(1,339		)	(571		)	(1,596		)
Preferred units in the Operating Partnership	(77		)	(77		)	(77		)	(157		)	(165		)	(154		)	(330		)
Other consolidated entities	(1,263		)	(1,132		)	(1,515		)	(1,565		)	(1,268		)	(2,395		)	(2,305		)
Net income attributable to COPT common shareholders	$	23,497		$	24,054		$	42,785		$	21,257		$	106,791		$	47,551		$	127,650
Distributions on dilutive convertible preferred units	—			—			—			—			165			—			—
Redeemable noncontrolling interests	—			—			33			—			902			—			66
Common units in the Operating Partnership	—			—			—			—			—			—			1,515
Amount allocable to share-based compensation awards	(109		)	(97		)	(154		)	(118		)	(346		)	(206		)	(391		)
Numerator for diluted EPS	$	23,388		$	23,957		$	42,664		$	21,139		$	107,512		$	47,345		$	128,840

(1) Excludes credit losses on lease revenue, which are included in lease revenue.

Corporate Office Properties Trust

Funds from Operations

(in thousands)



	Three Months Ended															Six Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
Net income	$	25,121		$	25,550		$	44,877		$	23,246		$	109,563		$	50,671		$	131,881
Real estate-related depreciation and amortization	33,612			32,596			32,779			34,692			34,802			66,208			69,598
Impairment losses on real estate	—			—			2			327			—			—			—
Gain on sales of real estate	—			(5		)	(20,761		)	—			(84,469		)	(5		)	(84,469		)
Depreciation and amortization on unconsolidated real estate JVs (1)	818			818			781			790			566			1,636			1,132
FFO - per Nareit (2)(3)	59,551			58,959			57,678			59,055			60,462			118,510			118,142
Noncontrolling interests - preferred units in the Operating Partnership	(77		)	(77		)	(77		)	(157		)	(165		)	(154		)	(330		)
FFO allocable to other noncontrolling interests (4)(5)	(1,525		)	(12,015		)	(1,436		)	(1,429		)	(1,188		)	(13,540		)	(2,159		)
Basic FFO allocable to share-based compensation awards	(254		)	(193		)	(243		)	(248		)	(229		)	(447		)	(414		)
Basic FFO available to common share and common unit holders (3)	57,695			46,674			55,922			57,221			58,880			104,369			115,239
Dilutive preferred units in the Operating Partnership	77			—			77			—			—			154			—
Redeemable noncontrolling interests	37			32			33			34			33			69			942
Diluted FFO available to common share and common unit holders - per Nareit (3)	57,809			46,706			56,032			57,255			58,913			104,592			116,181
Demolition costs on redevelopment and nonrecurring improvements	9			43			104			—			—			52			44
Executive transition costs	—			—			—			—			—			—			4
Non-comparable professional and legal expenses	—			—			195			175			311			—			311
Dilutive preferred units in the Operating Partnership	—			77			—			—			—			—			—
FFO allocation to other noncontrolling interests resulting from capital event (4)(5)	—			11,090			—			—			—			11,090			—
Diluted FFO comparability adjustments allocable to share-based compensation awards	(1		)	(50		)	(1		)	—			(2		)	(51		)	(2		)
Diluted FFO available to common share and common unit holders, as adjusted for comparability (3)	$	57,817		$	57,866		$	56,330		$	57,430		$	59,222		$	115,683		$	116,538


(1)	FFO adjustment pertaining to COPT’s share of unconsolidated real estate joint ventures reported on page 32.


(2)	See reconciliation on page 33 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 31.

(5)

FFO allocations to other noncontrolling interests for the quarter ended 3/31/20 included an additional allocation resulting from a special distribution of loan proceeds to our partner in a JV resulting from the JV closing on a loan coupled with an amendment to the JV agreement that changed the allocation of cash flows between us and our partner; this additional allocation was excluded from diluted FFO available to common share and common unit holders, as adjusted for comparability.

Corporate Office Properties Trust

Diluted Share and Unit Computations

(in thousands)



	Three Months Ended															Six Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
EPS Denominator:
Weighted average common shares - basic	111,800			111,724			111,670			111,582			111,557			111,762			110,759
Dilutive effect of share-based compensation awards	321			239			293			361			310			280			289
Dilutive effect of redeemable noncontrolling interests	—			—			108			—			1,062			—			130
Dilutive convertible preferred units	—			—			—			—			176			—			—
Common units in the Operating Partnership	—			—			—			—			—			—			1,329
Weighted average common shares - diluted	112,121			111,963			112,071			111,943			113,105			112,042			112,507
Diluted EPS	$	0.21		$	0.21		$	0.38		$	0.19		$	0.95		$	0.42		$	1.15

Weighted Average Shares for period ended:
Common shares	111,800			111,724			111,670			111,582			111,557			111,762			110,759
Dilutive effect of share-based compensation awards	321			239			293			361			310			280			289
Common units	1,237			1,226			1,228			1,312			1,327			1,232			1,329
Redeemable noncontrolling interests	157			110			108			109			136			133			1,037
Dilutive convertible preferred units	176			—			176			—			—			176			—
Denominator for diluted FFO per share	113,691			113,299			113,475			113,364			113,330			113,583			113,414
Dilutive convertible preferred units	—			176			—			—			—			—			—
Denominator for diluted FFO per share, as adjusted for comparability	113,691			113,475			113,475			113,364			113,330			113,583			113,414
Weighted average common units	(1,237		)	(1,226		)	(1,228		)	(1,312		)	(1,327		)	(1,232		)	—
Redeemable noncontrolling interests	(157		)	(110		)	—			(109		)	926			(133		)	(907		)
Dilutive convertible preferred units	(176		)	(176		)	(176		)	—			176			(176		)	—
Denominator for diluted EPS	112,121			111,963			112,071			111,943			113,105			112,042			112,507
Diluted FFO per share - Nareit	$	0.51		$	0.41		$	0.49		$	0.51		$	0.52		$	0.92		$	1.02
Diluted FFO per share - as adjusted for comparability	$	0.51		$	0.51		$	0.50		$	0.51		$	0.52		$	1.02		$	1.03

Corporate Office Properties Trust

Adjusted Funds from Operations

(in thousands)



	Three Months Ended															Six Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
Diluted FFO available to common share and common unit holders, as adjusted for comparability	$	57,817		$	57,866		$	56,330		$	57,430		$	59,222		$	115,683		$	116,538
Straight line rent adjustments and lease incentive amortization	2,523			(852		)	1,386			(515		)	1,051			1,671			(616		)
Amortization of intangibles included in NOI	(73		)	(74		)	(174		)	(59		)	(50		)	(147		)	12
Share-based compensation, net of amounts capitalized	1,638			1,389			1,735			1,697			1,623			3,027			3,296
Amortization of deferred financing costs	642			575			541			538			529			1,217			1,057
Amortization of net debt discounts, net of amounts capitalized	390			386			382			377			374			776			744
Accum. other comprehensive loss on derivatives amortized to expense	—			—			—			12			33			—			67
Replacement capital expenditures (1)	(16,132		)	(17,754		)	(19,862		)	(16,752		)	(16,002		)	(33,886		)	(27,175		)
Other diluted AFFO adjustments associated with real estate JVs (2)	(115		)	(41		)	(68		)	66			181			(156		)	214
Diluted AFFO available to common share and common unit holders (“diluted AFFO”)	$	46,690		$	41,495		$	40,270		$	42,794		$	46,961		$	88,185		$	94,137
Replacement capital expenditures (1)
Tenant improvements and incentives	$	8,870		$	11,357		$	11,447		$	10,880		$	8,568		$	20,227		$	15,720
Building improvements	13,662			2,475			8,826			8,908			4,333			16,137			8,864
Leasing costs	2,222			2,762			2,998			2,722			2,761			4,984			5,943
Net additions to (exclusions from) tenant improvements and incentives	329			2,026			(426		)	(2,156		)	1,759			2,355			290
Excluded building improvements and leasing costs	(8,951		)	(866		)	(2,983		)	(3,602		)	(1,419		)	(9,817		)	(3,642		)
Replacement capital expenditures	$	16,132		$	17,754		$	19,862		$	16,752		$	16,002		$	33,886		$	27,175


(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 31 and COPT’s share of unconsolidated real estate joint ventures reported on page 32.

Corporate Office Properties Trust

EBITDAre and Adjusted EBITDA

(in thousands)



	Three Months Ended														Six Months Ended
	6/30/20		3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
Net income	$	25,121	$	25,550		$	44,877		$	23,246		$	109,563		$	50,671		$	131,881
Interest expense	16,797		16,840			16,777			17,126			18,475			33,637			37,149
Income tax expense (benefit)	30		49			(104		)	(131		)	(176		)	79			18
Depreciation of furniture, fixtures and equipment	448		419			438			467			496			867			929
Real estate-related depreciation and amortization	33,612		32,596			32,779			34,692			34,802			66,208			69,598
Impairment losses on real estate	—		—			2			327			—			—			—
Gain on sales of real estate	—		(5		)	(20,761		)	—			(84,469		)	(5		)	(84,469		)
Adjustments from unconsolidated real estate JVs (1)	1,270		1,270			1,206			1,202			830			2,540			1,657
EBITDAre	77,278		76,719			75,214			76,929			79,521			$	153,997		$	156,763
Net loss (gain) on other investments	2		—			(1		)	—			(12		)	2			(400		)
Credit loss expense	615		689			—			—			—			1,304			—
Business development expenses	678		538			512			419			460			1,216			1,008
Non-comparable professional and legal expenses	—		—			195			175			311			—			311
Demolition costs on redevelopment and nonrecurring improvements	9		43			104			—			—			52			44
Executive transition costs	—		—			—			—			—			—			4
Adjusted EBITDA	78,582		77,989			76,024			77,523			80,280			$	156,571		$	157,730
Proforma NOI adjustment for property changes within period	959		734			463			—			(1,981		)
Change in collectability of deferred rental revenue	1,007		—			928			—			—
In-place adjusted EBITDA	$	80,548	$	78,723		$	77,415		$	77,523		$	78,299


(1)	Includes COPT’s share of adjusted EBITDA adjustments in unconsolidated real estate joint ventures (see page 32).

Corporate Office Properties Trust

Office and Data Center Shell Properties by Segment (1) - 6/30/20

(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	3,818	90.5	%	92.4	%
Howard County	35	2,867	89.4	%	91.4	%
Other	22	1,624	94.5	%	94.5	%
Total Fort Meade/BW Corridor	88	8,309	90.9	%	92.5	%
Northern Virginia (“NoVA”) Defense/IT	13	1,992	87.0	%	88.5	%
Lackland AFB (San Antonio, Texas)	7	953	100.0	%	100.0	%
Navy Support	21	1,241	93.9	%	97.5	%
Redstone Arsenal (Huntsville, Alabama)	12	980	99.7	%	100.0	%
Data Center Shells:
Consolidated Properties	9	1,755	100.0	%	100.0	%
Unconsolidated JV Properties (3)	15	2,435	100.0	%	100.0	%
Total Defense/IT Locations	165	17,665	93.8	%	95.0	%
Regional Office	7	1,959	92.0	%	92.4	%
Core Portfolio	172	19,624	93.6	%	94.7	%
Other Properties	2	157	68.4	%	68.4	%
Total Portfolio	174	19,781	93.4	%	94.5	%
Consolidated Portfolio	159	17,346	92.5	%	93.7	%


(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 32 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

NOI from Real Estate Operations and Occupancy by Property Grouping - 6/30/20

(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		Six Months Ended
Core Portfolio:
Same Properties: (3)
Consolidated properties	144	15,440	92.0%	93.4%	$	482,505	92.3	%	$	73,049	$	146,422
Unconsolidated real estate JV (4)	6	964	100.0%	100.0%	5,832		1.1	%	1,220		2,427
Total Same Properties in Core Portfolio	150	16,404	92.5%	93.7%	488,337		93.4	%	74,269		148,849
Properties Placed in Service (5)	13	1,749	98.8%	99.4%	29,481		5.6	%	5,934		10,371
Properties contributed to uncons. real estate JV (4)(6)	9	1,471	100.0%	100.0%	2,116		0.4	%	492		998
Wholesale Data Center and Other	N/A	N/A	N/A	N/A	N/A		N/A		2,989		6,926
Total Core Portfolio	172	19,624	93.6%	94.7%	519,934		99.5	%	83,684		167,144
Other Properties (Same Properties)	2	157	68.4%	68.4%	2,639		0.5	%	375		745
Total Portfolio	174	19,781	93.4%	94.5%	$	522,573	100.0	%	$	84,059	$	167,889
Consolidated Portfolio	159	17,346	92.5%	93.7%	$	514,625	98.5	%	$	82,334	$	164,451

	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		Six Months Ended
Core Portfolio:
Defense/IT Locations:
Consolidated properties	150	15,230	92.8%	94.2%	$	450,775	86.7	%	$	70,693	$	140,488
Unconsolidated real estate JVs (4)	15	2,435	100.0%	100.0%	7,948		1.5	%	1,725		3,438
Total Defense/IT Locations	165	17,665	93.8%	95.0%	458,723		88.2	%	72,418		143,926
Regional Office	7	1,959	92.0%	92.4%	61,211		11.8	%	8,274		16,197
Wholesale Data Center and Other	N/A	N/A	N/A	N/A	N/A		N/A		2,992		7,021
Total Core Portfolio	172	19,624	93.6%	94.7%	$	519,934	100.0	%	$	83,684	$	167,144


(1)	Percentages calculated based on operational square feet.


(2)	Excludes Annualized Rental Revenue from our wholesale data center, DC-6, of $20.6 million as of 6/30/20. 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 1/1/19.


(4)	See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.


(5)	Newly developed or redeveloped properties placed in service that were not fully operational by 1/1/19.


(6)	Includes nine 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 in 2019.

Corporate Office Properties Trust

Consolidated Real Estate Revenues and NOI by Segment

(dollars in thousands)



	Three Months Ended										Six Months Ended
	6/30/20		3/31/20		12/31/19		9/30/19		6/30/19		6/30/20		6/30/19
Consolidated real estate revenues
Defense/IT Locations:
Fort Meade/BW Corridor	$	62,698	$	64,438	$	65,003	$	63,436	$	61,659	$	127,136	$	124,342
NoVA Defense/IT	14,447		13,678		13,448		13,551		13,912		28,125		28,743
Lackland Air Force Base	13,257		12,076		14,772		12,703		12,104		25,333		23,665
Navy Support	8,119		8,341		8,136		8,183		8,185		16,460		16,340
Redstone Arsenal	4,647		4,676		4,515		4,171		3,968		9,323		7,907
Data Center Shells-Consolidated	7,076		5,577		4,680		5,913		8,624		12,653		15,978
Total Defense/IT Locations	110,244		108,786		110,554		107,957		108,452		219,030		216,975
Regional Office	15,162		15,460		14,252		15,508		15,018		30,622		29,851
Wholesale Data Center	6,455		7,172		6,409		6,565		8,560		13,627		16,431
Other	677		698		753		704		741		1,375		1,504
Consolidated real estate revenues	$	132,538	$	132,116	$	131,968	$	130,734	$	132,771	$	264,654	$	264,761

NOI
Defense/IT Locations:
Fort Meade/BW Corridor	$	41,839	$	43,216	$	44,610	$	42,693	$	42,315	$	85,055	$	82,663
NoVA Defense/IT	9,112		8,493		8,620		8,586		9,218		17,605		18,757
Lackland Air Force Base	5,472		5,281		5,486		5,554		5,456		10,753		11,058
Navy Support	4,948		5,056		4,828		4,602		4,899		10,004		9,650
Redstone Arsenal	3,035		2,829		2,744		2,454		2,369		5,864		4,769
Data Center Shells:
Consolidated properties	6,287		4,920		4,348		5,395		7,865		11,207		14,866
COPT’s share of unconsolidated real estate JVs (1)	1,725		1,713		1,634		1,601		1,251		3,438		2,470
Total Defense/IT Locations	72,418		71,508		72,270		70,885		73,373		143,926		144,233
Regional Office	8,274		7,923		6,919		8,165		7,428		16,197		14,845
Wholesale Data Center	2,992		3,939		3,026		3,191		4,942		6,931		9,975
Other	375		460		289		380		393		835		847
NOI from real estate operations	$	84,059	$	83,830	$	82,504	$	82,621	$	86,136	$	167,889	$	169,900

(1) See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

Cash NOI by Segment

(dollars in thousands)



	Three Months Ended															Six Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
Cash NOI
Defense/IT Locations:
Fort Meade/BW Corridor	$	41,968		$	42,170		$	43,939		$	42,604		$	42,180		$	84,138		$	82,436
NoVA Defense/IT	9,610			9,118			8,963			8,064			8,771			18,728			17,528
Lackland Air Force Base	5,903			5,701			5,906			5,839			5,731			11,604			11,114
Navy Support	5,248			5,146			4,987			4,808			5,113			10,394			9,898
Redstone Arsenal	2,580			2,494			2,377			2,220			2,302			5,074			4,632
Data Center Shells:
Consolidated properties	5,505			4,316			3,762			4,857			7,247			9,821			13,709
COPT’s share of unconsolidated real estate JVs (1)	1,641			1,633			1,553			1,513			1,202			3,274			2,362
Total Defense/IT Locations	72,455			70,578			71,487			69,905			72,546			143,033			141,679
Regional Office	8,078			7,479			7,606			7,356			7,367			15,557			14,357
Wholesale Data Center	3,005			3,848			3,162			3,231			3,945			6,853			8,643
Other	358			457			292			380			465			815			990
Cash NOI from real estate operations	83,896			82,362			82,547			80,872			84,323			166,258			165,669
Straight line rent adjustments and lease incentive amortization	(2,537		)	842			(1,488		)	235			(1,274		)	(1,695		)	231
Amortization of acquired above- and below-market rents	97			96			197			82			73			193			33
Amortization of below-market cost arrangements	(22		)	(23		)	(23		)	(23		)	(23		)	(45		)	(46		)
Lease termination fees, gross	376			104			436			841			2,458			480			2,979
Tenant funded landlord assets and lease incentives	2,164			369			754			526			530			2,533			926
Cash NOI adjustments in unconsolidated real estate JVs	85			80			81			88			49			165			108
NOI from real estate operations	$	84,059		$	83,830		$	82,504		$	82,621		$	86,136		$	167,889		$	169,900


(1)	See page 32 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										Six Months Ended
	# of Properties	Operational Square Feet	6/30/20		3/31/20		12/31/19		9/30/19		6/30/19		6/30/20		6/30/19
Core Portfolio:
Defense/IT Locations:
Fort Meade/BW Corridor	86	8,131	91.2	%	92.2	%	92.1	%	91.5	%	90.6	%	91.7	%	90.4	%
NoVA Defense/IT	13	1,992	87.0	%	83.9	%	82.4	%	83.9	%	88.5	%	85.4	%	89.9	%
Lackland Air Force Base	7	953	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Navy Support	21	1,241	94.0	%	93.6	%	92.4	%	90.9	%	90.8	%	93.8	%	90.1	%
Redstone Arsenal	7	651	99.6	%	99.4	%	99.2	%	99.2	%	98.4	%	99.5	%	98.4	%
Data Center Shells (2)	9	1,477	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total Defense/IT Locations	143	14,445	92.7	%	92.8	%	92.5	%	92.2	%	92.2	%	92.7	%	92.3	%
Regional Office	7	1,959	92.0	%	90.6	%	88.0	%	88.6	%	88.9	%	91.3	%	88.5	%
Core Portfolio Same Properties	150	16,404	92.6	%	92.5	%	91.9	%	91.7	%	91.8	%	92.6	%	91.8	%
Other Same Properties	2	157	65.8	%	67.4	%	72.4	%	72.1	%	72.7	%	66.6	%	73.2	%
Total Same Properties	152	16,561	92.4	%	92.3	%	91.7	%	91.6	%	91.6	%	92.3	%	91.6	%

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	6/30/20		3/31/20		12/31/19		9/30/19		6/30/19
Core Portfolio:
Defense/IT Locations:
Fort Meade/BW Corridor	86	8,131	91.0	%	92.3	%	92.3	%	91.9	%	90.7	%
NoVA Defense/IT	13	1,992	87.0	%	85.5	%	82.4	%	82.3	%	87.6	%
Lackland Air Force Base	7	953	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Navy Support	21	1,241	93.9	%	94.0	%	92.5	%	91.7	%	90.9	%
Redstone Arsenal	7	651	99.6	%	99.6	%	99.2	%	99.2	%	98.6	%
Data Center Shells (2)	9	1,477	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total Defense/IT Locations	143	14,445	92.6	%	93.1	%	92.5	%	92.2	%	92.2	%
Regional Office	7	1,959	92.0	%	91.4	%	88.1	%	88.6	%	89.3	%
Core Portfolio Same Properties	150	16,404	92.5	%	92.9	%	92.0	%	91.8	%	91.9	%
Other Same Properties	2	157	68.4	%	64.6	%	73.0	%	72.1	%	72.1	%
Total Same Properties	152	16,561	92.3	%	92.7	%	91.8	%	91.6	%	91.7	%


(1)	Includes office and data center shell properties stably owned and 100% operational since at least 1/1/19.


(2)	Properties owned through an unconsolidated real estate joint venture. See page 32 for additional disclosure.

Corporate Office Properties Trust

Same Properties Real Estate Revenues and NOI by Segment

(dollars in thousands)



	Three Months Ended										Six Months Ended
	6/30/20		3/31/20		12/31/19		9/30/19		6/30/19		6/30/20		6/30/19
Same Properties real estate revenues
Defense/IT Locations:
Fort Meade/BW Corridor	$	61,507	$	63,216	$	63,974	$	62,809	$	61,044	$	124,723	$	123,031
NoVA Defense/IT	14,447		13,678		13,448		13,551		13,912		28,125		28,743
Lackland Air Force Base	13,257		12,076		14,773		12,702		12,104		25,333		23,665
Navy Support	8,119		8,341		8,135		8,183		8,185		16,460		16,340
Redstone Arsenal	3,534		3,808		3,895		3,868		3,793		7,342		7,578
Data Center Shells-Consolidated	2,208		2,111		1,943		2,045		2,130		4,319		4,171
Total Defense/IT Locations	103,072		103,230		106,168		103,158		101,168		206,302		203,528
Regional Office	15,162		15,460		14,251		15,509		15,018		30,622		29,851
Other Properties	677		698		753		704		741		1,375		1,501
Same Properties real estate revenues	$	118,911	$	119,388	$	121,172	$	119,371	$	116,927	$	238,299	$	234,880

Same Properties NOI
Defense/IT Locations:
Fort Meade/BW Corridor	$	41,030	$	42,403	$	43,745	$	42,317	$	41,938	$	83,433	$	81,817
NoVA Defense/IT	9,112		8,494		8,619		8,586		9,219		17,606		18,758
Lackland Air Force Base	5,472		5,281		5,487		5,554		5,456		10,753		11,058
Navy Support	4,949		5,056		4,828		4,602		4,899		10,005		9,650
Redstone Arsenal	2,219		2,232		2,295		2,236		2,264		4,451		4,585
Data Center Shells:
Consolidated properties	1,993		1,893		1,810		1,896		1,999		3,886		3,867
COPT’s share of unconsolidated real estate JV (1)	1,220		1,207		1,214		1,214		1,205		2,427		2,424
Total Defense/IT Locations	65,995		66,566		67,998		66,405		66,980		132,561		132,159
Regional Office	8,274		7,923		6,918		8,163		7,430		16,197		14,847
Other Properties	375		461		325		381		384		836		795
Same Properties NOI	$	74,644	$	74,950	$	75,241	$	74,949	$	74,794	$	149,594	$	147,801


(1)	See page 32 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															Six Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
Same Properties cash NOI
Defense/IT Locations:
Fort Meade/BW Corridor	$	41,283		$	41,848		$	43,546		$	42,456		$	41,836		$	83,131		$	81,632
NoVA Defense/IT	9,610			9,118			8,963			8,064			8,771			18,728			17,528
Lackland Air Force Base	5,904			5,701			5,907			5,839			5,731			11,605			11,114
Navy Support	5,248			5,146			4,987			4,808			5,113			10,394			9,898
Redstone Arsenal	2,350			2,310			2,311			2,291			2,359			4,660			4,750
Data Center Shells:
Consolidated properties	1,821			1,724			1,627			1,706			1,790			3,545			3,453
COPT’s share of unconsolidated real estate JV (1)	1,185			1,179			1,180			1,171			1,160			2,364			2,320
Total Defense/IT Locations	67,401			67,026			68,521			66,335			66,760			134,427			130,695
Regional Office	8,078			7,479			7,606			7,355			7,368			15,557			14,358
Other Properties	358			457			327			381			456			815			939
Same Properties cash NOI	75,837			74,962			76,454			74,071			74,584			150,799			145,992
Straight line rent adjustments and lease incentive amortization	(1,513		)	(567		)	(2,592		)	(572		)	(701		)	(2,080		)	(15		)
Amortization of acquired above- and below-market rents	97			96			197			82			73			193			33
Amortization of below-market cost arrangements	(23		)	(23		)	(23		)	(23		)	(23		)	(46		)	(46		)
Lease termination fees, gross	358			85			417			823			285			443			806
Tenant funded landlord assets and lease incentives	(147		)	369			754			526			530			222			926
Cash NOI adjustments in unconsolidated real estate JV (1)	35			28			34			42			46			63			105
Same Properties NOI	$	74,644		$	74,950		$	75,241		$	74,949		$	74,794		$	149,594		$	147,801
Percentage change in total Same Properties cash NOI (2)	1.7		%													3.3		%
Percentage change in Defense/IT Locations Same Properties cash NOI (2)	1.0		%													2.9		%


(1)	See page 32 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 6/30/20

(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	139			88			37			21			297			581			26			6			613
Expiring Square Feet	304			88			50			21			297			760			45			6			811
Vacating Square Feet	165			—			14			—			—			179			19			—			198
Retention Rate (% based upon square feet)	45.8		%	100.0		%	72.9		%	100.0		%	100.0		%	76.5		%	57.0		%	100.0		%	75.6		%
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	1.64		$	6.67		$	2.53		$	11.03		$	—		$	1.95		$	5.99		$	0.51		$	2.11
Weighted Average Lease Term in Years	5.1			7.3			3.8			1.0			5.0			5.2			7.5			3.5			5.2
Average Rent Per Square Foot
Renewal Average Rent	$	30.81		$	30.42		$	25.47		$	23.89		$	14.19		$	21.68		$	38.30		$	24.74		$	22.41
Expiring Average Rent	$	31.22		$	28.55		$	23.28		$	21.84		$	12.38		$	20.36		$	34.33		$	27.39		$	21.02
Change in Average Rent	(1.3		)%	6.5		%	9.4		%	9.4		%	14.6		%	6.5		%	11.6		%	(9.7		)%	6.6		%
Cash Rent Per Square Foot
Renewal Cash Rent	$	30.97		$	29.65		$	24.57		$	23.89		$	13.66		$	21.27		$	37.47		$	23.61		$	21.98
Expiring Cash Rent	$	34.13		$	29.64		$	24.94		$	23.39		$	13.42		$	21.91		$	38.69		$	29.72		$	22.69
Change in Cash Rent	(9.3		)%	—		%	(1.5		)%	2.1		%	1.8		%	(2.9		)%	(3.1		)%	(20.6		)%	(3.2		)%
Average Escalations Per Year	2.5		%	2.5		%	2.9		%	—		%	2.3		%	2.4		%	2.6		%	3.1		%	2.4		%
New Leases
Development and Redevelopment Space
Leased Square Feet	11			—			—			218			42			271			5			—			276
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	7.98		$	—		$	—		$	4.57		$	—		$	3.99		$	23.77		$	—		$	4.35
Weighted Average Lease Term in Years	10.7			—			—			17.4			13.3			16.5			6.5			—			16.3
Average Rent Per Square Foot	$	32.03		$	—		$	—		$	20.81		$	37.92		$	23.93		$	76.61		$	—		$	24.90
Cash Rent Per Square Foot	$	30.00		$	—		$	—		$	20.22		$	34.18		$	22.80		$	80.20		$	—		$	23.85
Vacant Space (3)
Leased Square Feet	35			—			18			3			—			56			8			6			70
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	3.33		$	—		$	7.92		$	2.88		$	—		$	4.80		$	1.98		$	3.06		$	4.33
Weighted Average Lease Term in Years	5.3			—			5.4			5.2			—			5.3			2.0			5.3			4.9
Average Rent Per Square Foot	$	37.54		$	—		$	36.16		$	20.96		$	—		$	36.26		$	32.99		$	22.15		$	34.65
Cash Rent Per Square Foot	$	36.05		$	—		$	36.10		$	19.22		$	—		$	35.22		$	32.50		$	21.50		$	33.71
Total Square Feet Leased	185			88			55			241			340			908			39			12			959
Average Escalations Per Year	2.5		%	2.5		%	2.8		%	0.7		%	2.1		%	1.5		%	2.6		%	3.3		%	1.6		%
Average Escalations Excl. Data Center Shells																									1.4		%

(1)

Activity is exclusive of owner occupied space, leases with less than a one-year term and expirations associated with space removed from service. Weighted average lease term is based on the lease term defined in the lease assuming no exercise of early termination rights. 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 concessions.


(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)

Six Months Ended 6/30/20

(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	497			120			121			21			297			1,056			39			6			1,101
Expiring Square Feet	701			122			140			21			297			1,280			60			19			1,359
Vacating Square Feet	204			1			18			—			—			224			21			13			258
Retention Rate (% based upon square feet)	70.9		%	98.9		%	86.8		%	100.0		%	100.0		%	82.5		%	65.0		%	31.7		%	81.0		%
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	2.18		$	5.77		$	4.28		$	11.03		$	—		$	2.39		$	6.23		$	0.51		$	2.51
Weighted Average Lease Term in Years	5.3			6.8			3.0			1.0			5.0			5.0			6.4			3.5			5.1
Average Rent Per Square Foot
Renewal Average Rent	$	33.29		$	29.79		$	23.30		$	23.89		$	14.19		$	26.18		$	39.87		$	24.74		$	26.66
Expiring Average Rent	$	30.87		$	27.74		$	21.71		$	21.84		$	12.38		$	24.08		$	34.85		$	27.39		$	24.48
Change in Average Rent	7.8		%	7.4		%	7.3		%	9.4		%	14.6		%	8.7		%	14.4		%	(9.7		)%	8.9		%
Cash Rent Per Square Foot
Renewal Cash Rent	$	33.36		$	29.00		$	22.81		$	23.89		$	13.66		$	25.93		$	39.09		$	23.61		$	26.38
Expiring Cash Rent	$	34.50		$	29.16		$	22.98		$	23.39		$	13.42		$	26.42		$	39.89		$	29.72		$	26.91
Change in Cash Rent	(3.3		)%	(0.6		)%	(0.7		)%	2.1		%	1.8		%	(1.9		)%	(2.0		)%	(20.6		)%	(2.0		)%
Average Escalations Per Year	2.4		%	2.5		%	2.8		%	—		%	2.3		%	2.4		%	2.6		%	3.1		%	2.4		%
New Leases
Development and Redevelopment Space
Leased Square Feet	11			—			—			218			42			271			5			—			276
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	7.98		$	—		$	—		$	4.57		$	—		$	3.99		$	23.77		$	—		$	4.35
Weighted Average Lease Term in Years	10.7			—			—			17.4			13.3			16.5			6.5			—			16.3
Average Rent Per Square Foot	$	32.03		$	—		$	—		$	20.81		$	37.92		$	23.93		$	76.61		$	—		$	24.90
Cash Rent Per Square Foot	$	30.00		$	—		$	—		$	20.22		$	34.18		$	22.80		$	80.20		$	—		$	23.85
Vacant Space (3)
Leased Square Feet	96			17			45			3			—			160			46			6			213
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot (2)	$	8.03		$	9.34		$	5.09		$	2.88		$	—		$	7.25		$	8.20		$	3.06		$	7.34
Weighted Average Lease Term in Years	7.2			8.8			5.6			5.2			—			6.9			6.1			5.3			6.7
Average Rent Per Square Foot	$	36.20		$	32.42		$	28.32		$	20.96		$	—		$	33.33		$	30.92		$	22.15		$	32.49
Cash Rent Per Square Foot	$	33.99		$	30.61		$	28.30		$	19.22		$	—		$	31.79		$	30.15		$	21.50		$	31.14
Total Square Feet Leased	604			137			166			241			340			1,488			90			12			1,590
Average Escalations Per Year	2.4		%	2.6		%	2.8		%	0.7		%	2.1		%	1.8		%	2.7		%	3.3		%	1.8		%
Average Escalations Excl. Data Center Shells																									1.8		%

(1)


(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 6/30/20 (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 (3)

Core Portfolio
Ft Meade/BW Corridor	267	$	9,218	1.8	%	$	34.59
NoVA Defense/IT	9	276		0.1	%	31.45
Lackland Air Force Base	250	11,834		2.3	%	47.34
Navy Support	23	531		0.1	%	21.01
Redstone Arsenal	11	265		0.1	%	23.78
Regional Office	30	914		0.2	%	30.57
2020	590	23,039		4.4	%	38.94
Ft Meade/BW Corridor	1,061	36,544		7.0	%	34.45
NoVA Defense/IT	100	2,992		0.6	%	29.89
Navy Support	340	9,829		1.9	%	28.92
Redstone Arsenal	397	9,102		1.8	%	22.93
Regional Office	69	2,354		0.5	%	34.10
2021	1,967	60,821		11.8	%	30.92
Ft Meade/BW Corridor	826	27,637		5.3	%	33.44
NoVA Defense/IT	148	5,097		1.0	%	34.45
Navy Support	157	4,234		0.8	%	26.89
Redstone Arsenal	29	680		0.1	%	23.25
Regional Office	492	17,243		3.3	%	34.94
2022	1,652	54,891		10.6	%	33.17
Ft Meade/BW Corridor	1,374	49,482		9.5	%	35.98
NoVA Defense/IT	143	4,790		0.9	%	33.41
Navy Support	200	5,723		1.1	%	28.59
Redstone Arsenal	7	169		—	%	24.21
Regional Office	143	4,279		0.8	%	29.87
2023	1,867	64,443		12.4	%	34.48
Ft Meade/BW Corridor	1,149	41,511		8.0	%	36.09
NoVA Defense/IT	459	15,399		3.0	%	33.57
Navy Support	216	4,455		0.9	%	20.67
Redstone Arsenal	58	1,410		0.3	%	24.17
Data Center Shells-Unconsolidated JV Properties	546	3,246		0.6	%	11.89
Regional Office	89	2,681		0.5	%	29.91
2024	2,517	68,703		13.2	%	30.60
Thereafter
Consolidated Properties	7,889	243,335		46.9	%	30.47
Unconsolidated JV Properties	1,889	4,702		0.9	%	13.21
Core Portfolio	18,371	$	519,934	100.0	%	$	31.20



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 (3)

Core Portfolio	18,371	$	519,934	99.5	%	$	31.20
Other Properties	108	2,639		0.5	%	24.52
Total Portfolio	18,479	$	522,573	100.0	%	$	31.15
Consolidated Portfolio	16,044	$	514,625
Unconsolidated JV Properties	2,435	$	7,948

Note: As of 6/30/20, the weighted average lease term was 5.3 years for the core and total portfolio and 5.1 years for the consolidated portfolio.

Wholesale Data Center



Year of Expiration	Critical Load (MW)	Annualized Rental Revenue of Expiring Leases (3)
2020	12.00	$	15,545
2021	0.31	764
2022	1.11	2,166
2023	0.92	1,671
2024	—	10
Thereafter	0.20	434
	14.54	$	20,590

(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 6/30/20 of 216,000 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 6/30/20 (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 6/30/20 (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
Ft Meade/BW Corridor	184	$	6,125	1.2	%	$	33.33
Navy Support	16	255		—	%	15.62
Regional Office	17	484		0.1	%	29.00
Q3 2020	217	6,864		1.3	%	31.37
Ft Meade/BW Corridor	83	3,095		0.6	%	37.37
NoVA Defense/IT	9	276		0.1	%	31.45
Lackland Air Force Base	250	11,834		2.3	%	47.34
Navy Support	7	276		0.1	%	40.02
Redstone Arsenal	11	265		0.1	%	23.78
Regional Office	13	429		0.1	%	32.56
Q4 2020	373	16,175		3.3	%	43.39

	590	$	23,039	4.4	%	$	38.94


(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 6/30/20.


(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 6/30/20 (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 6/30/20 (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)	$	186,346	34.3	%	4,480	4.4
Fortune 500 Company		48,743		9.0	%	4,190	9.2
General Dynamics Corporation		27,084		5.0	%	752	3.5
The Boeing Company		17,449		3.2	%	614	1.4
CACI International Inc		13,216		2.4	%	339	4.8
Northrop Grumman Corporation		12,639		2.3	%	417	3.5
Booz Allen Hamilton, Inc.		11,281		2.1	%	297	1.3
CareFirst Inc.		11,121		2.0	%	312	2.6
Wells Fargo & Company		6,909		1.3	%	172	8.2
AT&T Corporation		6,781		1.2	%	321	9.3
Miles and Stockbridge, PC		5,941		1.1	%	160	7.2
Raytheon Technologies Corporation		5,650		1.0	%	157	2.1
Science Applications International Corp.		5,230		1.0	%	136	1.9
Jacobs Engineering Group Inc.		5,180		1.0	%	165	5.6
Transamerica Life Insurance Company		5,123		0.9	%	140	1.5
Mantech International Corp.		4,751		0.9	%	165	4.2
Peraton Inc.		4,589		0.8	%	134	6.6
University of Maryland		4,041		0.7	%	131	4.9
The MITRE Corporation		3,889		0.7	%	118	4.6
Pandora A/S		3,810		0.7	%	144	5.7
Subtotal Top 20 Tenants		389,773		71.6	%	13,344	5.8
All remaining tenants		153,390		28.4	%	5,135	4.2
Total/Weighted Average		$	543,163	100.0	%	18,479	5.3


(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 $7.9 million (see page 32 for additional information).

(2)

Total ARR is the monthly contractual base rent as of 6/30/20, 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 6/30/20, $6.1 million in ARR (or 3.3% of our ARR from the United States Government and 1.1% of our total ARR) was through the General Services Administration (GSA).

Corporate Office Properties Trust

Summary of Development Projects as of 6/30/20 (1)

(dollars and square feet in thousands)



		Total Rentable Square Feet	% Leased as of 7/7/20	as of 6/30/20 (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	27%	$	30,735	$	17,344	$	—	3Q 20	3Q 21

Redstone Arsenal:
100 Secured Gateway (4)	Huntsville, Alabama	250	84%	72,404		52,974		10,550		2Q 20	2Q 21
7600 Advanced Gateway	Huntsville, Alabama	126	100%	14,883		11,993		—		3Q 20	3Q 20
8600 Advanced Gateway	Huntsville, Alabama	105	100%	28,857		12,227		—		4Q 20	4Q 20
8000 Rideout Road	Huntsville, Alabama	100	0%	26,078		9,129		—		4Q 20	4Q 21
6000 Redstone Gateway	Huntsville, Alabama	40	79%	10,523		3,072		—		4Q 20	4Q 21
7100 Redstone Gateway	Huntsville, Alabama	46	100%	10,668		1,644		—		1Q 21	1Q 21
Subtotal / Average		667	78%	163,413		91,039		10,550

Data Center Shells:
P2 B	Northern Virginia	274	100%	64,636		56,623		—		3Q 20	3Q 20
Southpoint Annex (5)	Northern Virginia	14	100%	6,022		1,512		—		3Q 20	3Q 20
Oak Grove Annex (5)	Northern Virginia	14	100%	7,617		2,049		—		4Q 20	4Q 20
Paragon Annex (5)	Northern Virginia	14	100%	5,466		1,396		—		4Q 20	4Q 20
P2 C	Northern Virginia	230	100%	51,120		32,016		—		1Q 21	1Q 21
Subtotal / Average		546	100%	134,861		93,596		—

NoVA Defense/IT:
NoVA Office C	Chantilly, Virginia	348	100%	106,219		35,891		2,794		2Q 22	2Q 22

Regional Office:
2100 L Street	Washington, DC	190	56%	177,000		141,234		—		2Q 20	2Q 21
Total Under Development		1,853	84%	$	612,228	$	379,104	$	13,344


(1)	Includes properties under, or contractually committed for, development as of 6/30/20.


(2)	Cost includes land, development, 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 development, 40,000 square feet were operational as of 6/30/20.


(5)	Represent expansions of existing properties.

Corporate Office Properties Trust

Development and Redevelopment Placed in Service as of 6/30/20

(square feet in thousands)



		Total Property		Square Feet Placed in Service				Space Placed in Service % Leased as of 6/30/20
	Property Segment	% Leased as of 6/30/20	Rentable Square Feet	Prior Year	2020
Property and Location	Property Segment	% Leased as of 6/30/20	Rentable Square Feet	Prior Year	1st Quarter	2nd Quarter	Total 2020
P2 A Northern Virginia	Data Center Shells	100%	230	—	230	—	230	100%
Oak Grove A Northern Virginia	Data Center Shells	100%	216	—	—	216	216	100%
7500 Advanced Gateway Huntsville, Alabama	Redstone Arsenal	100%	135	—	—	135	135	100%
6950 Columbia Gateway Columbia, Maryland	Ft Meade/BW Corridor	91%	106	85	—	21	21	91%
100 Secured Gateway Huntsville, Alabama	Redstone Arsenal	84%	250	—	—	40	40	100%
Total Development/Redevelopment Placed in Service		95%	937	85	230	412	642	99%

Corporate Office Properties Trust

Summary of Land Owned/Controlled as of 6/30/20 (1)

(square feet in thousands)



Location	Acres	Estimated Developable Square Feet	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)	361	3,127
Data Center Shells	53	1,180
Total Defense/IT Locations	900	10,553
Regional Office	10	900
Total land owned/controlled for future development	910	11,453	$	305,702

Other land owned/controlled	43	638	3,413
Land held, net	953	12,091	$	309,115


(1)	This land inventory schedule includes properties under ground lease to us and excludes all properties listed as development or redevelopment as detailed on page 24. 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 31). 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
						6/30/20
Debt
Secured debt	3.5	3.31	%	3.45	%	$	252,940
Unsecured debt	2.9	3.31	%	3.69	%	1,770,161
Total Consolidated Debt	3.0	3.31	%	3.66	%	$	2,023,101

Fixed rate debt (2)	3.2	4.30	%	3.93	%	$	1,789,695
Variable rate debt	2.6	1.35	%	1.57	%	233,406
Total Consolidated Debt						$	2,023,101

Preferred Equity
3.5% Series I Convertible Preferred Units (3)						$	8,800

Common Equity
Common Shares						112,183
Common Units (4)						1,331
Total Common Shares and Units						113,514

Closing Common Share Price on 6/30/20						$	25.34
Common Equity Market Capitalization						$	2,876,445

Total Equity Market Capitalization						$	2,885,245

Total Market Capitalization						$	4,908,346

(1) Excludes the effect of deferred financing cost amortization.
(2) Includes the effect of interest rate swaps with notional amounts of $446.4 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, convertible into 176,000 common units and redeemable by COPLP with six months notice.
(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	6/10/20
Standard & Poor’s	BBB-	Stable	5/19/20

Corporate Office Properties Trust

Summary of Outstanding Debt as of 6/30/20

(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%		$	169,000		Mar-23	(1)(2)	7740 Milestone Parkway	3.96	%		$	17,129	$	15,902	Feb-23
Senior Unsecured Notes								100 & 30 Light Street	4.32	%		50,998		47,676		Jun-23
3.70% due 2021	3.70	%	$	300,000		Jun-21		LW Redstone:
3.60% due 2023	3.60	%	350,000			May-23		7200 & 7400 Redstone Gateway (3)	L + 1.85%			12,234		12,132		Oct-20
5.25% due 2024	5.25	%	250,000			Feb-24		1000, 1200 & 1100 Redstone
5.00% due 2025	5.00	%	300,000			Jul-25		Gateway (3)	4.47	%	(4)	32,334		27,649		Jun-24
Subtotal - Senior Unsecured Notes	4.32	%	$	1,200,000				4000 & 4100 Market Street and
								8800 Redstone Gateway (2)(3)	L + 1.55%			23,000		22,100		Mar-25	(5)
Unsecured Bank Term Loans								M Square:
2022 Maturity	L + 1.00%		$	400,000		Dec-22	(2)	5825 & 5850 University Research
Other Unsecured Debt	0.00	%	1,161			May-26		Court (3)	3.82	%		41,639		35,603		Jun-26
Total Unsecured Debt	3.31	%	$	1,770,161				5801 University Research Court (2)(3)	L + 1.45%			11,200		10,020		Aug-26
								2100 L Street (2)(3)	L + 2.35%			64,406		64,406		Sept-22	(6)
Debt Summary								Total Secured Debt	3.31	%		$	252,940
Total Unsecured Debt	3.31	%	$	1,770,161
Total Secured Debt	3.31	%	252,940
Consolidated Debt	3.31	%	$	2,023,101
Net discounts and deferred financing costs			(11,082		)
Debt, per balance sheet			$	2,012,019

Consolidated Debt			$	2,023,101
COPT’s share of unconsolid. JV gross debt (7)			50,250
Gross debt			$	2,073,351


(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 for two one-year periods, provided certain conditions are met.


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


(7)	See page 32 for additional disclosure regarding our unconsolidated real estate joint ventures.

Corporate Office Properties Trust

Summary of Outstanding Debt as of 6/30/20 (continued)

(1) Revolving Credit Facility maturity of $169.0 million scheduled for 2023 is presented assuming our exercise of two six-month extension options.

(2) Includes the effect of $446.4 million in interest rate swaps 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	6/30/20			Line of Credit & Term Loan Covenants (1)	Required	6/30/20
Total Debt / Total Assets	< 60%	39.4%			Total Debt / Total Assets	< 60%	36.1%
Secured Debt / Total Assets	< 40%	5.3%			Secured Debt / Total Assets	< 40%	4.9%
Debt Service Coverage	> 1.5x	4.4x			Adjusted EBITDA / Fixed Charges	> 1.5x	3.9x
Unencumbered Assets / Unsecured Debt	> 150%	259.1%			Unsecured Debt / Unencumbered Assets	< 60%	35.3%
					Unencumbered Adjusted NOI / Unsecured Interest Expense	> 1.75x	4.3x

Debt Ratios	Page Refer.				Unencumbered Portfolio Analysis
Gross debt	28	$	2,073,351		# of unencumbered properties		146
Adjusted book	35	$	5,309,778		% of total portfolio		84		%
Net debt / adjusted book ratio		38.6		%	Unencumbered square feet in-service		15,686
Net debt plus pref. equity / adj. book ratio		38.8		%	% of total portfolio		79		%
Net debt	35	$	2,051,128		NOI from unencumbered real estate operations		$	75,228
Net debt plus preferred equity	35	$	2,059,928		% of total NOI from real estate operations		89		%
In-place adjusted EBITDA	10	$	80,548		Adjusted EBITDA from unencumbered real estate operations		$	69,932
Net debt / in-place adjusted EBITDA ratio		6.4		x	% of total adjusted EBITDA from real estate operations		89		%
Net debt plus pref. equity / in-place adj. EBITDA ratio		6.4		x	Unencumbered adjusted book		$	4,664,000
Denominator for debt service coverage	34	$	17,230		% of total adjusted book		88		%
Denominator for fixed charge coverage	34	$	20,481
Adjusted EBITDA	10	$	78,582
Adjusted EBITDA debt service coverage ratio		4.6		x
Adjusted EBITDA fixed charge coverage ratio		3.8		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 6/30/20

(dollars and square feet in thousands)



Operating Properties	Operational Square Feet	% Occupied	% Leased	NOI for the Three Months Ended 6/30/20 (1)		NOI for the Six Months Ended 6/30/20 (1)		Total Assets (2)		Venture Level Debt		% COPT Owned
Suburban Maryland:
M Square Associates, LLC (3 properties)	313	99.2%	99.2%	$	1,579	$	2,937	$	67,803	$	52,839	50%
Huntsville, Alabama:
LW Redstone Company, LLC (11 properties)	843	100.0%	100.0%	2,675		5,156		206,122		67,568		85%
Total/Average	1,156	99.8%	99.8%	$	4,254	$	8,093	$	273,925	$	120,407



Non-operating Properties	Estimated Developable Square Feet	Total Assets (2)		Venture Level Debt		% COPT Owned
Suburban Maryland:
M Square Research Park	450	$	25,143	$	—	50%
Huntsville, Alabama:
Redstone Gateway (3)	3,754	128,918		—		85%
Washington, DC:
Stevens Place	190	141,952		64,406		95%
Total	4,394	$	296,013	$	64,406


(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 $62.2 million in amortized cost basis pertaining to amounts 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 6/30/20

(dollars and square feet in thousands)



Joint venture information	DC Shell JV formed in 2016			DC Shell JV formed in 2019
COPT ownership %	50		%	10		%
COPT’s investment	$	36,720		$	13,737
# of Properties	6			9
Square Feet	964			1,471
% Occupied	100		%	100		%
COPT’s share of annualized rental revenue	$	5,832		$	2,116

Balance sheet information	DC Shell JV formed in 2016			DC Shell JV formed in 2019			Total			COPT’s Share (1)
Operating properties, net	$	119,688		$	312,344		$	432,032		$	91,078
Total assets	$	133,864		$	345,087		$	478,951		$	101,441
Debt	$	59,717		$	200,821		$	260,538		$	49,941
Total liabilities	$	60,424		$	207,717		$	268,141		$	50,984

	Three Months Ended 6/30/20												Six Months Ended 6/30/20
Operating information	DC Shell JV formed in 2016			DC Shell JV formed in 2019			Total			COPT’s Share (1)			DC Shell JV formed in 2016			DC Shell JV formed in 2019			Total			COPT’s Share (1)
Revenue	$	3,007		$	5,768		$	8,775		$	2,081		$	5,948		$	11,487		$	17,435		$	4,123
Operating expenses	(567		)	(713		)	(1,280		)	(356		)	(1,094		)	(1,374		)	(2,468		)	(685		)
NOI and EBITDA	2,440			5,055			7,495			1,725			4,854			10,113			14,967			3,438
Interest expense	(532		)	(1,862		)	(2,394		)	(452		)	(1,063		)	(3,724		)	(4,787		)	(904		)
Depreciation and amortization	(1,132		)	(2,519		)	(3,651		)	(818		)	(2,265		)	(5,038		)	(7,303		)	(1,636		)
Net income	$	776		$	674		$	1,450		$	455		$	1,526		$	1,351		$	2,877		$	898

NOI (per above)	$	2,440		$	5,055		$	7,495		$	1,725		$	4,854		$	10,113		$	14,967		$	3,438
Straight line rent adjustments	(70		)	(351		)	(421		)	(70		)	(125		)	(737		)	(862		)	(136		)
Amortization of acquired above- and below-market rents	—			(142		)	(142		)	(14		)	—			(283		)	(283		)	(28		)
Cash NOI	$	2,370		$	4,562		$	6,932		$	1,641		$	4,729		$	9,093		$	13,822		$	3,274

(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															Six Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
NOI from real estate operations (1)
Real estate revenues	$	132,538		$	132,116		$	131,968		$	130,734		$	132,771		$	264,654		$	264,761
Property operating expenses	(50,204		)	(49,999		)	(51,098		)	(49,714		)	(47,886		)	(100,203		)	(97,331		)
COPT’s share of NOI in unconsolidated real estate JVs (2)	1,725			1,713			1,634			1,601			1,251			3,438			2,470
NOI from real estate operations	84,059			83,830			82,504			82,621			86,136			167,889			169,900
General and administrative expenses	(6,511		)	(5,303		)	(7,043		)	(6,105		)	(7,650		)	(11,814		)	(14,369		)
Leasing expenses	(1,647		)	(2,183		)	(2,293		)	(1,824		)	(1,736		)	(3,830		)	(3,768		)
Business development expenses and land carry costs	(1,262		)	(1,118		)	(1,292		)	(964		)	(870		)	(2,380		)	(1,983		)
NOI from construction contracts and other service operations	525			560			985			895			1,297			1,085			1,921
Equity in loss of unconsolidated non-real estate entities	(1		)	(2		)	(2		)	(3		)	(1		)	(3		)	(2		)
Interest and other income	2,282			1,205			1,917			1,842			1,849			3,487			4,135
Credit loss expense (3)	(615		)	(689		)	—			—			—			(1,304		)	—
Interest expense	(16,797		)	(16,840		)	(16,777		)	(17,126		)	(18,475		)	(33,637		)	(37,149		)
COPT’s share of interest expense of unconsolidated real estate JVs (2)	(452		)	(452		)	(425		)	(412		)	(264		)	(904		)	(525		)
Income tax (expense) benefit	(30		)	(49		)	104			131			176			(79		)	(18		)
FFO - per Nareit (1)	$	59,551		$	58,959		$	57,678		$	59,055		$	60,462		$	118,510		$	118,142

Real estate revenues
Lease revenue
Fixed contractual payments	$	103,993		$	104,109		$	101,116		$	102,389		$	104,193		$	208,102		$	208,837
Variable lease payments
Lease termination fees	376			104			436			841			2,458			480			2,979
Other variable lease payments (4)	27,778			26,799			29,141			26,231			24,764			54,577			50,502
Lease revenue	132,147			131,012			130,693			129,461			131,415			263,159			262,318
Other property revenue	391			1,104			1,275			1,273			1,356			1,495			2,443
Real estate revenues	$	132,538		$	132,116		$	131,968		$	130,734		$	132,771		$	264,654		$	264,761

Provision for credit losses (recoveries) on billed lease revenue	$	591		$	(355	)	$	579		$	39		$	(2	)	$	236		$	68


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


(2)	See page 32 for a schedule of the related components.

(3) Excludes credit losses on lease revenue, which are included in lease revenue.


(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															Six Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19			6/30/20			6/30/19
Total interest expense	$	16,797		$	16,840		$	16,777		$	17,126		$	18,475		$	33,637		$	37,149
Less: Amortization of deferred financing costs	(642		)	(575		)	(541		)	(538		)	(529		)	(1,217		)	(1,057		)
Less: Amortization of net debt discounts, net of amounts capitalized	(390		)	(386		)	(382		)	(377		)	(374		)	(776		)	(744		)
Less: Accum. other comprehensive loss on derivatives amortized to expense	—			—			—			(12		)	(33		)	—			(67		)
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs	442			441			416			403			258			883			513
Denominator for interest coverage	16,207			16,320			16,270			16,602			17,797			32,527			35,794
Scheduled principal amortization	1,023			1,021			1,010			1,107			1,095			2,044			2,193
Denominator for debt service coverage	17,230			17,341			17,280			17,709			18,892			34,571			37,987
Capitalized interest	3,174			3,358			3,467			2,927			2,388			6,532			4,392
Preferred unit distributions	77			77			77			157			165			154			330
Denominator for fixed charge coverage	$	20,481		$	20,776		$	20,824		$	20,793		$	21,445		$	41,257		$	42,709

Preferred unit distributions	$	77		$	77		$	77		$	157		$	165		$	154		$	330
Common share dividends - unrestricted shares and deferred shares	30,761			30,754			30,724			30,721			30,693			61,515			61,378
Common share dividends - restricted shares and deferred shares	94			84			102			103			63			178			131
Common unit distributions - unrestricted units	341			339			337			338			365			680			730
Common unit distributions - restricted units	25			25			22			22			23			50			43
Total dividends/distributions	$	31,298		$	31,279		$	31,262		$	31,341		$	31,309		$	62,577		$	62,612

Common share dividends - unrestricted shares and deferred shares	$	30,761		$	30,754		$	30,724		$	30,721		$	30,693		$	61,515		$	61,378
Common unit distributions - unrestricted units	341			339			337			338			365			680			730
Distributions on dilutive preferred units	77			—			77			—			—			154			—
Dividends and distributions for diluted FFO payout ratio	31,179			31,093			31,138			31,059			31,058			62,349			62,108
Distributions on dilutive preferred units	—			77			—			—			—			—			—
Dividends and distributions for other payout ratios	$	31,179		$	31,170		$	31,138		$	31,059		$	31,058		$	62,349		$	62,108

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

	Three Months Ended
	6/30/20			3/31/20			12/31/19			9/30/19			6/30/19
Total assets	$	4,011,325		$	4,054,457		$	3,854,453		$	3,855,369		$	3,803,469
Accumulated depreciation	1,065,094			1,035,703			1,007,120			979,353			949,111
Accumulated depreciation included in assets held for sale	—			—			—			1,397			1,397
Accumulated amort. of real estate intangibles and deferred leasing costs	216,267			214,693			212,547			212,222			210,183
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	50,984			50,966			50,734			46,061			30,588
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs	9,815			8,990			8,164			7,376			6,578
Less: Property - operating lease liabilities	(20,796		)	(17,365		)	(17,317		)	(16,686		)	(16,640		)
Less: Property - finance lease liabilities	(688		)	(702		)	(702		)	(702		)	(712		)
Less: Cash and cash equivalents	(21,596		)	(159,061		)	(14,733		)	(34,005		)	(46,282		)
Less: COPT’s share of cash of unconsolidated real estate JVs	(627		)	(593		)	(498		)	(505		)	(406		)
Adjusted book	$	5,309,778		$	5,187,088		$	5,099,768		$	5,049,884		$	4,937,290

Gross debt (page 28)	$	2,073,351		$	2,139,130		$	1,893,057		$	1,920,179		$	1,827,304
Less: Cash and cash equivalents	(21,596		)	(159,061		)	(14,733		)	(34,005		)	(46,282		)
Less: COPT’s share of cash of unconsolidated real estate JVs	(627		)	(593		)	(498		)	(505		)	(406		)
Net debt	$	2,051,128		$	1,979,476		$	1,877,826		$	1,885,669		$	1,780,616
Preferred equity	8,800			8,800			8,800			8,800			8,800
Net debt plus preferred equity	$	2,059,928		$	1,988,276		$	1,886,626		$	1,894,469		$	1,789,416

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, gain on sales and impairment losses of real estate, gain or loss on early extinguishment of debt, net gain or loss on other investments, credit loss expense, 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; allocations of FFO to holders of noncontrolling interests resulting from capital events; 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 (net of associated income tax) 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 on sales and impairment losses of real estate (net of associated income tax) and 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; (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; and (3) certain adjustments to deferred rental revenue associated with changes in our assessment of collectability that we believe are not closely correlated with our operating performance. 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.

Development Properties — Properties under, or contractually committed for, development.

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-developed or redeveloped space that has never been occupied.

Operational Space — The portion of a property in operations (excludes portion under development 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 1/1/19.

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 Strong Second Quarter 2020 Results

__________________________________________________________

2Q20 Results Outperform Expectations

FFO per share of $0.51 in 2Q Exceeded High-End of Guidance by $0.01

Solid Same-Property Cash NOI Growth of 1.7% in 2Q Outperformed Guidance

Core Portfolio 93.6% Occupied & 94.7% Leased

412,000 SF of 97.5% Leased Developments Placed in Service during 2Q; 642,000 SF of 99% Leased Developments Placed in Service During First Half of 2020

__________________________________________________________

Solid Leasing Volumes

Total Leasing in 2Q of 959,000 SF included 276,000 SF of Development Leasing and

70,000 SF of Vacancy Leasing

Continued Strong Tenant Retention of 76% in 2Q; 81% for First Half of 2020

1.9 Million SF Under Development are 84% Leased

Executed a New, 3.1MW Lease with Defense Contractor at DC-6

__________________________________________________________

COVID-19 Impact on Operations Continues to be Minimal

Maintaining Mid-Point of Full-Year Guidance for FFO per Share, As Adjusted for Comparability, of $2.07

Monthly Rent Collections, Net of Rent Accommodations, Continue to Exceed 99%

__________________________________________________________

COLUMBIA, MD (BUSINESS WIRE) July 30, 2020 - Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced financial and operating results for the second quarter ended June 30, 2020.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “The Company delivered strong second quarter results, with FFO per share exceeding the high-end of our guidance range by 1-cent. Cost savings and the timing of repair and maintenance costs more than offset the reserves we took on tenants impacted by the shutdowns and drove same-property cash NOI growth of 1.7%.” He continued, “Our operations and ability to execute development and renewal leasing continue to be minimally impacted by the pandemic due to the high concentration of U.S. Government national security activity in our portfolio. Accordingly, we affirm the $2.07 mid-point of our updated 2020 guidance for FFO per share, as adjusted for comparability.”

Financial Highlights

2^nd Quarter Financial Results:


•	Diluted earnings per share (“EPS”) was $0.21 for the quarter ended June 30, 2020 as compared to $0.95 for the second quarter of 2019.


•	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 second quarter of 2020 as compared to $0.52 for second quarter 2019 results.

Operating Performance Highlights

Operating Portfolio Summary:


•	At June 30, 2020, the Company’s core portfolio of 172 operating office and data center shell properties was 93.6% occupied and 94.7% leased.


•	During the quarter, the Company placed into service 412,000 square feet that were 97.5% leased.

Same-Property Performance:


•	At June 30, 2020, COPT’s same-property portfolio of 152 buildings was 92.3% occupied and 93.5% leased.


•	For the quarter and six months ended June 30, 2020, the Company’s same-property cash NOI increased 1.7% and 3.3%, respectively, over the prior year’s comparable periods.

Leasing:


•	Total Square Feet Leased: For the quarter ended June 30, 2020, the Company leased 959,000 total square feet, including 613,000 square feet of renewals, 70,000 square feet of new leases on vacant space, and 276,000 square feet in development projects. For the six months ended June 30, 2020, the Company executed 1.6 million square feet of total leasing.


•	Renewal Rates: During the quarter and six months ended June 30, 2020, the Company respectively renewed 75.6% and 81.0% of total expiring square feet.


•	Cash Rent Spreads & Average Escalations on Renewing Leases: For the quarter and six months ended June 30, 2020, cash rents on renewed space decreased 3.2% and 2.0%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.4%.


•	Lease Terms: In the second quarter, lease terms averaged 5.2 years on renewing leases, 4.9 years on new leasing of vacant space, and 16.3 years on development leasing. For the first six months, lease terms averaged 5.1 years on renewing leases, 6.7 years on vacancy leasing, and 16.3 years on development leasing.


•	DC-6: At the Company’s wholesale data center, COPT executed a new, 3.1 megawatt lease with a defense contractor in April, increasing DC-6 to 90.6% leased.

Investment Activity Highlights

Development & Redevelopment Projects:


•	Development Pipeline: At July 7, 2020, the Company’s development pipeline consisted of 11 properties and expansions in three fully-operational properties totaling 1.9 million square feet that were 84% leased. These projects have a total estimated cost of $612.2 million, of which $379.1 million had been incurred as of June 30, 2020.

Balance Sheet and Capital Transaction Highlights


•	As of June 30, 2020, the Company’s net debt plus preferred equity to adjusted book ratio was 38.8% and its net debt plus preferred equity to in-place adjusted EBITDA ratio was 6.4x. For the quarter ended June 30, 2020, the Company’s adjusted EBITDA fixed charge coverage ratio was 3.8x.


•	As of June 30, 2020, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.66% with a weighted average maturity of 3.0 years; additionally, 88.5% of the Company’s debt was subject to fixed interest rates.

2020 Guidance

Management is increasing its prior full-year guidance ranges of $0.65-$0.69 for EPS to a new range of $0.76-$0.80. Management is maintaining its full-year guidance ranges for FFOPS per Nareit and FFOPS, as adjusted for comparability, at $1.95-$1.99 and $2.05-$2.09, respectively.

Management also is establishing guidance for EPS and FFOPS, per Nareit and as adjusted for comparability, for the third quarter ending September 30, 2020 at ranges of $0.16-$0.18 and $0.51-$0.53, respectively; and for the fourth quarter ending December 31, 2020, management is establishing guidance ranges for EPS and FFOPS, per Nareit and as adjusted for comparability, at $0.17-$0.19 and $0.52-$0.54, 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				Quarter ending				Year ending
	September 30, 2020				December 31, 2020				December 31, 2020
	Low		High		Low		High		Low			High
EPS	$	0.16	$	0.18	$	0.17	$	0.19	$	0.76		$	0.80
Real estate-related depreciation and amortization	0.35		0.35		0.35		0.35		1.29			1.29
FFO allocation to other noncontrolling interests resulting from capital event	—		—		—		—		(0.10		)	(0.10		)
FFOPS, Nareit definition	0.51		0.53		0.52		0.54		1.95			1.99
FFO allocation to other noncontrolling interests resulting from capital event	—		—		—		—		0.10			0.10
FFOPS, as adjusted for comparability	$	0.51	$	0.53	$	0.52	$	0.54	$	2.05		$	2.09

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its second quarter 2020 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/

Conference Call Information

Management will discuss second quarter 2020 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date: Friday, July 31, 2020

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: 4686936

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 immediately available via webcast on the Investors website. Additionally, a telephonic replay of this call will be available beginning at 3:00 p.m. Eastern Time on Friday, July 31, through 3:00 p.m. Eastern Time on Friday, August 14. 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 4686936.

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.

About COPT

COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its 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 it believes are growing, durable, priority missions (“Defense/IT Locations”). The Company also owns 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 (“Regional Office Properties”). As of June 30, 2020, the Company derived 88% of its core portfolio annualized rental revenue from Defense/IT Locations and 12% from its Regional Office Properties. As of the same date and including 15 properties owned

iii

through unconsolidated joint ventures, COPT’s core portfolio of 172 office and data center shell properties encompassed 19.6 million square feet and was 94.7% leased; the Company also owned one wholesale data center with a critical load of 19.25 megawatts that was 90.6% leased.

Forward-Looking Information

This press release may contain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company’s current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Although the Company believes that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements and the Company undertakes 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Revenues
Revenues from real estate operations	$	132,538		$	132,771		$	264,654		$	264,761
Construction contract and other service revenues	12,236			42,299			25,917			59,249
Total revenues	144,774			175,070			290,571			324,010
Operating expenses
Property operating expenses	50,204			47,886			100,203			97,331
Depreciation and amortization associated with real estate operations	33,612			34,802			66,208			69,598
Construction contract and other service expenses	11,711			41,002			24,832			57,328
General and administrative expenses	6,511			7,650			11,814			14,369
Leasing expenses	1,647			1,736			3,830			3,768
Business development expenses and land carry costs	1,262			870			2,380			1,983
Total operating expenses	104,947			133,946			209,267			244,377
Interest expense	(16,797		)	(18,475		)	(33,637		)	(37,149		)
Interest and other income	2,282			1,849			3,487			4,135
Credit loss expense	(615		)	—			(1,304		)	—
Gain on sales of real estate	—			84,469			5			84,469
Income before equity in income of unconsolidated entities and income taxes	24,697			108,967			49,855			131,088
Equity in income of unconsolidated entities	454			420			895			811
Income tax (expense) benefit	(30		)	176			(79		)	(18		)
Net income	25,121			109,563			50,671			131,881
Net income attributable to noncontrolling interests:
Common units in the Operating Partnership (“OP”)	(284		)	(1,339		)	(571		)	(1,596		)
Preferred units in the OP	(77		)	(165		)	(154		)	(330		)
Other consolidated entities	(1,263		)	(1,268		)	(2,395		)	(2,305		)
Net income attributable to COPT common shareholders	$	23,497		$	106,791		$	47,551		$	127,650

Earnings per share (“EPS”) computation:
Numerator for diluted EPS:
Net income attributable to COPT common shareholders	$	23,497		$	106,791		$	47,551		$	127,650
Distributions on dilutive convertible preferred units	—			165			—			—
Redeemable noncontrolling interests	—			902			—			66
Common units in the OP	—			—			—			1,515
Amount allocable to share-based compensation awards	(109		)	(346		)	(206		)	(391		)
Numerator for diluted EPS	$	23,388		$	107,512		$	47,345		$	128,840
Denominator:
Weighted average common shares - basic	111,800			111,557			111,762			110,759
Dilutive convertible preferred units	—			176			—			—
Dilutive effect of redeemable noncontrolling interests	—			1,062			—			130
Common units in the OP	—			—			—			1,329
Dilutive effect of share-based compensation awards	321			310			280			289
Weighted average common shares - diluted	112,121			113,105			112,042			112,507
Diluted EPS	$	0.21		$	0.95		$	0.42		$	1.15

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Net income	$	25,121		$	109,563		$	50,671		$	131,881
Real estate-related depreciation and amortization	33,612			34,802			66,208			69,598
Gain on sales of real estate	—			(84,469		)	(5		)	(84,469		)
Depreciation and amortization on unconsolidated real estate JVs	818			566			1,636			1,132
Funds from operations (“FFO”)	59,551			60,462			118,510			118,142
Noncontrolling interests - preferred units in the OP	(77		)	(165		)	(154		)	(330		)
FFO allocable to other noncontrolling interests	(1,525		)	(1,188		)	(13,540		)	(2,159		)
Basic FFO allocable to share-based compensation awards	(254		)	(229		)	(447		)	(414		)
Basic FFO available to common share and common unit holders (“Basic FFO”)	57,695			58,880			104,369			115,239
Dilutive preferred units in the OP	77			—			154			—
Redeemable noncontrolling interests	37			33			69			942
Diluted FFO available to common share and common unit holders (“Diluted FFO”)	57,809			58,913			104,592			116,181
Demolition costs on redevelopment and nonrecurring improvements	9			—			52			44
Executive transition costs	—			—			—			4
Non-comparable professional and legal expenses	—			311			—			311
FFO allocation to other noncontrolling interests resulting from capital event	—			—			11,090			—
Diluted FFO comparability adjustments allocable to share-based compensation awards	(1		)	(2		)	(51		)	(2		)
Diluted FFO available to common share and common unit holders, as adjusted for comparability	57,817			59,222			115,683			116,538
Straight line rent adjustments and lease incentive amortization	2,523			1,051			1,671			(616		)
Amortization of intangibles included in net operating income	(73		)	(50		)	(147		)	12
Share-based compensation, net of amounts capitalized	1,638			1,623			3,027			3,296
Amortization of deferred financing costs	642			529			1,217			1,057
Amortization of net debt discounts, net of amounts capitalized	390			374			776			744
Accum. other comprehensive loss on derivatives amortized to expense	—			33			—			67
Replacement capital expenditures	(16,132		)	(16,002		)	(33,886		)	(27,175		)
Other diluted AFFO adjustments associated with real estate JVs	(115		)	181			(156		)	214
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)	$	46,690		$	46,961		$	88,185		$	94,137
Diluted FFO per share	$	0.51		$	0.52		$	0.92		$	1.02
Diluted FFO per share, as adjusted for comparability	$	0.51		$	0.52		$	1.02		$	1.03
Dividends/distributions per common share/unit	$	0.275		$	0.275		$	0.550		$	0.550

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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



	June 30, 2020			December 31, 2019
Balance Sheet Data
Properties, net of accumulated depreciation	$	3,513,099		$	3,340,886
Total assets	4,011,325			3,854,453
Debt, per balance sheet	2,012,019			1,831,139
Total liabilities	2,331,253			2,105,777
Redeemable noncontrolling interests	23,148			29,431
Equity	1,656,924			1,719,245
Net debt to adjusted book	38.6		%	36.8		%

Core Portfolio Data (as of period end) (1)
Number of operating properties	172			168
Total operational square feet (in thousands)	19,624			19,016
% Occupied	93.6		%	93.1		%
% Leased	94.7		%	94.6		%



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
Payout ratios
Diluted FFO	53.9	%	52.7	%	59.6	%	53.5	%
Diluted FFO, as adjusted for comparability	53.9	%	52.4	%	53.9	%	53.3	%
Diluted AFFO	66.8	%	66.1	%	70.7	%	66.0	%
Adjusted EBITDA fixed charge coverage ratio	3.8	x	3.7	x	3.8	x	3.7	x
Net debt to in-place adjusted EBITDA ratio (2)	6.4	x	5.7	x	N/A		N/A
Net debt plus preferred equity to in-place adjusted EBITDA ratio (3)	6.4	x	5.7	x	N/A		N/A

Reconciliation of denominators for per share measures
Denominator for diluted EPS	112,121		113,105		112,042		112,507
Weighted average common units	1,237		1,327		1,232		—
Redeemable noncontrolling interests	157		(926	)	133		907
Dilutive convertible preferred units	176		(176	)	176		—
Denominator for diluted FFO per share and as adjusted for comparability	113,691		113,330		113,583		113,414


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


(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).

vii

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Reconciliation of common share dividends to dividends and distributions for payout ratios
Common share dividends - unrestricted shares and deferred shares	$	30,761		$	30,693		$	61,515		$	61,378
Common unit distributions - unrestricted units	341			365			680			730
Distributions on dilutive preferred units	77			—			154			—
Dividends and distributions for payout ratios	$	31,179		$	31,058		$	62,349		$	62,108

Reconciliation of GAAP net income to earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”), adjusted EBITDA and in-place adjusted EBITDA
Net income	$	25,121		$	109,563		$	50,671		$	131,881
Interest expense	16,797			18,475			33,637			37,149
Income tax expense (benefit)	30			(176		)	79			18
Depreciation of furniture, fixtures and equipment	448			496			867			929
Real estate-related depreciation and amortization	33,612			34,802			66,208			69,598
Gain on sales of real estate	—			(84,469		)	(5		)	(84,469		)
Adjustments from unconsolidated real estate JVs	1,270			830			2,540			1,657
EBITDAre	77,278			79,521			153,997			156,763
Net loss (gain) on other investments	2			(12		)	2			(400		)
Credit loss expense	615			—			1,304			—
Business development expenses	678			460			1,216			1,008
Non-comparable professional and legal expenses	—			311			—			311
Demolition costs on redevelopment and nonrecurring improvements	9			—			52			44
Executive transition costs	—			—			—			4
Adjusted EBITDA	78,582			80,280			$	156,571		$	157,730
Proforma net operating income adjustment for property changes within period	959			(1,981		)
Change in collectability of deferred rental revenue	1,007			—
In-place adjusted EBITDA	$	80,548		$	78,299

Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA
Interest expense	$	16,797		$	18,475		$	33,637		$	37,149
Less: Amortization of deferred financing costs	(642		)	(529		)	(1,217		)	(1,057		)
Less: Amortization of net debt discounts, net of amounts capitalized	(390		)	(374		)	(776		)	(744		)
Less: Accum. other comprehensive loss on derivatives amortized to expense	—			(33		)	—			(67		)
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs	442			258			883			513
Scheduled principal amortization	1,023			1,095			2,044			2,193
Capitalized interest	3,174			2,388			6,532			4,392
Preferred unit distributions	77			165			154			330
Denominator for fixed charge coverage-Adjusted EBITDA	$	20,481		$	21,445		$	41,257		$	42,709

viii

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(Dollars in thousands)



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures
Tenant improvements and incentives	$	8,870		$	8,568		$	20,227		$	15,720
Building improvements	13,662			4,333			16,137			8,864
Leasing costs	2,222			2,761			4,984			5,943
Net additions to tenant improvements and incentives	329			1,759			2,355			290
Excluded building improvements and leasing costs	(8,951		)	(1,419		)	(9,817		)	(3,642		)
Replacement capital expenditures	$	16,132		$	16,002		$	33,886		$	27,175

Same Properties cash NOI	$	75,837		$	74,584		$	150,799		$	145,992
Straight line rent adjustments and lease incentive amortization	(1,513		)	(701		)	(2,080		)	(15		)
Amortization of acquired above- and below-market rents	97			73			193			33
Amortization of below-market cost arrangements	(23		)	(23		)	(46		)	(46		)
Lease termination fees, gross	358			285			443			806
Tenant funded landlord assets and lease incentives	(147		)	530			222			926
Cash NOI adjustments in unconsolidated real estate JV	35			46			63			105
Same Properties NOI	$	74,644		$	74,794		$	149,594		$	147,801



	June 30, 2020			December 31, 2019
Reconciliation of total assets to adjusted book
Total assets	$	4,011,325		$	3,854,453
Accumulated depreciation	1,065,094			1,007,120
Accumulated amortization of real estate intangibles and deferred leasing costs	216,267			212,547
COPT’s share of liabilities of unconsolidated real estate JVs	50,984			50,734
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs	9,815			8,164
Less: Property - operating lease liabilities	(20,796		)	(17,317		)
Less: Property - finance lease liabilities	(688		)	(702		)
Less: Cash and cash equivalents	(21,596		)	(14,733		)
Less: COPT’s share of cash of unconsolidated real estate JVs	(627		)	(498		)
Adjusted book	$	5,309,778		$	5,099,768

Reconciliation of debt outstanding to net debt and net debt plus preferred equity
Debt outstanding (excluding net debt discounts and deferred financing costs)	$	2,073,351		$	1,893,057
Less: Cash and cash equivalents	(21,596		)	(14,733		)
Less: COPT’s share of cash of unconsolidated real estate JVs	(627		)	(498		)
Net debt	$	2,051,128		$	1,877,826
Preferred equity	8,800			8,800
Net debt plus preferred equity	$	2,059,928		$	1,886,626