Business Wire | Jul 29, 2021 04:16PM EDT

COPT Reports Second Quarter 2021 Results; Raises Midpoint of Full Year Guidance by 4-Cents, Implying 6.6% Growth in FFOPS, as Adjusted for Comparability

Jul. 29, 2021

COLUMBIA, Md.--(BUSINESS WIRE)--Jul. 29, 2021--Corporate Office Properties Trust ("COPT" or the "Company") (NYSE: OFC) announced results for the second quarter ended June 30, 2021.

Management Comments

Stephen E. Budorick, COPT's President & Chief Executive Officer, commented, "Our differentiated portfolio of office and data center properties that support priority missions at U.S. defense installations continues to produce strong results. Existing operations generated better than expected same-property results, vacancy leasing for Defense/IT Locations was solid, and development leasing was strong. Having completed 694,000 square feet of development leasing through July, we are confident we will achieve our one million square feet development leasing goal for the year. Additionally, we expect to deliver three major development projects early, thereby accelerating our lease commencements. Due to excellent execution on development projects and an improved outlook for same-property operations, we are increasing the midpoint of our full-year guidance for FFO per share, as adjusted for comparability, from $2.22 to $2.26. The midpoint of our updated full year guidance is seven-cents above our original midpoint and represents 6.6% growth over 2020 elevated results."

Financial Highlights

2nd Quarter Financial Results:

* Diluted earnings per share ("EPS") was $0.38 for the quarter ended June 30, 2021 compared to $0.21 for the second quarter of 2020.

* Diluted funds from operations per share ("FFOPS"), as calculated in accordance with Nareit's definition, was $0.35 for the second quarter of 2021 compared to $0.51 for second quarter 2020.

* FFOPS, as adjusted for comparability, was $0.58 for the second quarter of 2021 compared to $0.51 for the second quarter of 2020.

Operating Performance Highlights

Operating Portfolio Summary:

* At June 30, 2021, the Company's core portfolio of 181 operating office and data center shell properties was 93.7% occupied and 94.6% leased.

* During the quarter, the Company placed into service 197,000 square feet that were 60% leased.

Same-Property Performance:

* At June 30, 2021, COPT's same-property portfolio of 158 buildings was 92.6% occupied and 93.5% leased.

* For the quarter ended June 30, 2021, the Company's same-property cash NOI increased 2.4% over the prior year's comparable period.

Leasing:

* Total Square Feet Leased: For the quarter ended June 30, 2021, the Company leased 1.4 million total square feet, including 661,000 square feet of renewals, 630,000 square feet in development projects, and 111,000 square feet of new leases on vacant space. For the six months ended June 30, 2021, the Company executed 1.7 million square feet of total leasing, including 815,000 square feet of renewals, 641,000 square feet in development projects, and 205,000 square feet of vacancy leasing.

* Renewal Rates: During the quarter and six months ended June 30, 2021, the Company renewed 88.9% and 78.3%, respectively, of expiring square feet.

* Rent Spreads & Average Escalations on Renewing Leases: For the quarter and six months ended June 30, 2021, cash rents on renewed space increased 0.1% and decreased 0.2%, respectively. For the same time periods, annual escalations on renewing leases averaged 2.6%.

* Lease Terms: In the second quarter of 2021, lease terms averaged 4.6 years on renewing leases, 12.9 years on development leasing, and 7.3 years on new leasing of vacant space. For the first six months, lease terms averaged 4.3 years on renewing leases, 12.8 years on development leasing, and 7.8 years on vacancy leasing.

Investment Activity Highlights

* Development Pipeline: At June 30, 2021, the Company's development pipeline consisted of 13 properties totaling 1.9 million square feet that were 87% leased. These projects have a total estimated cost of $628.9 million, of which $239.7 million has been incurred.

* During the quarter, the Company also moved 6740 Alexander Bell Drive, a 57,000 square foot building in Columbia Gateway into redevelopment. COPT intends to invest $11.6 million to reposition the property.

Balance Sheet and Capital Transaction Highlights

* In April, the Company redeemed the remaining $166 million of its 3.6% senior notes due 2023 and $104 million of its 5.25% senior notes due 2024.

* In June, the Company sold two data center shells to a new, 90%/10% joint venture with Blackstone Real Estate, generating approximately $107 million of equity.

* At June 30, 2021, the Company's net debt to adjusted book ratio was 39.4% and its net debt to in-place adjusted EBITDA ratio was 6.3x. As of the same date, net debt adjusted for fully-leased development plus preferred equity to in-place adjusted EBITDA ratio was 5.8x. For the quarter ended June 30, 2021, the Company's adjusted EBITDA fixed charge coverage ratio was 4.9x.

* At June 30, 2021, and including the effect of interest rate swaps, the Company's weighted average effective interest rate on its consolidated debt portfolio was 2.99% with a weighted average maturity of 4.9 years; additionally, 80.9% of the Company's debt was subject to fixed interest rates.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management's prepared remarks for its second quarter 2021 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/

2021 Guidance

Management is increasing its full-year guidance for EPS and FFOPS, per Nareit and as adjusted for comparability from the prior ranges of $0.28-$0.34, $1.68-$1.74, and $2.19-$2.25, respectively, to new ranges of $0.72-$0.76, $1.73-$1.77, and $2.24-$2.28, respectively. Management is establishing guidance ranges for EPS and FFOPS (per Nareit and as adjusted for comparability) for third quarter at $0.19-$0.21 and $0.54-$0.56, respectively, and fourth quarter at $0.21-$0.23 and $0.56-$0.58, respectively. Reconciliations of projected EPS to projected FFOPS, in accordance with Nareit and as adjusted for comparability are as follows:

Table 1:Reconciliation of Quarter ending Quarter ending Year endingEPS to FFOPS, perNareitand As Adjusted September 30, December 31, December 31, 2021for Comparability 2021 2021 Low High Low High Low High $ $ $ $ $ 0.72 $ 0.76EPS 0.19 0.21 0.21 0.23

Realestate-related 0.35 0.35 0.35 0.35 1.36 1.36depreciation andamortizationGain on sales of - - - - (0.35) (0.35)real estateFFOPS, Nareit 0.54 0.56 0.56 0.58 1.73 1.77definitionLoss on early - - - - 0.51 0.51extinguishment of debt FFOPS, as adjusted $ $ $ $ $ 2.24 $ 2.28for comparability 0.54 0.56 0.56 0.58

Conference Call Information

Management will discuss second quarter 2021 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date: Friday, July 30, 2021Time: 12:00 p.m. Eastern TimeTelephone Number: (within the U.S.) 855-463-9057Telephone Number: (outside the U.S.) 661-378-9894Passcode: 8848821

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 30, through 3:00 p.m. Eastern Time on Friday, August 13. 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 8848821.

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, 2021, 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 19 properties owned through unconsolidated joint ventures, COPT's core portfolio of 181 office and data center shell properties encompassed 21.0 million square feet and was 94.6% leased; the Company also owned one wholesale data center with a critical load of 19.25 megawatts that was 86.7% 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, 2020.

Category: Quarterly Results

Source: Corporate Office Properties Trust

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

For the Three Months For the Six Months Ended Ended June 30, June 30,

2021 2020 2021 2020

Revenues

Revenues from real estate $ 144,423 $ 132,538 $ 289,587 $ 264,654 operations

Construction contract and 19,988 12,236 36,546 25,917 other service revenues

Total revenues 164,411 144,774 326,133 290,571

Operating expenses

Property operating 54,616 50,204 111,590 100,203 expenses

Depreciation andamortization associated 37,555 33,612 74,876 66,208 with real estateoperations

Construction contract and 19,082 11,711 34,875 24,832 other service expenses

General and 7,293 6,511 13,355 11,814 administrative expenses

Leasing expenses 1,929 1,647 4,273 3,830

Business developmentexpenses and land carry 1,372 1,262 2,466 2,380 costs

Total operating expenses 121,847 104,947 241,435 209,267

Interest expense (15,942) (16,797) (33,461) (33,637)

Interest and other income 2,228 2,282 4,093 3,487

Credit loss (expense) (193) (615) 714 (1,304) recoveries

Gain on sales of real 40,233 - 39,743 5 estate

Loss on early (25,228) - (58,394) - extinguishment of debt

Income before equity inincome of unconsolidated 43,662 24,697 37,393 49,855 entities and income taxes

Equity in income of 260 454 482 895 unconsolidated entities

Income tax expense (24) (30) (56) (79)

Net income 43,898 25,121 37,819 50,671

Net income attributableto noncontrolling interests:

Common units in theOperating Partnership (559) (284) (474) (571) ("OP")

Preferred units in the OP - (77) - (154)

Other consolidated (938) (1,263) (1,613) (2,395) entities

Net income attributableto COPT common $ 42,401 $ 23,497 $ 35,732 $ 47,551 shareholders



Earnings per share ("EPS") computation:

Numerator for diluted EPS:

Net income attributableto COPT common $ 42,401 $ 23,497 $ 35,732 $ 47,551 shareholders

Amount allocable toshare-based compensation (125) (109) (235) (206) awards

Redeemable noncontrolling (20) - 7 - interests

Numerator for diluted EPS $ 42,256 $ 23,388 $ 35,504 $ 47,345

Denominator:

Weighted average common 111,974 111,800 111,931 111,762 shares - basic

Dilutive effect ofshare-based compensation 297 321 280 280 awards

Dilutive effect ofredeemable noncontrolling 133 - 125 - interests

Weighted average common 112,404 112,121 112,336 112,042 shares - diluted

Diluted EPS $ 0.38 $ 0.21 $ 0.32 $ 0.42

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,

2021

2020

2021

2020

Net income

$

43,898

$

25,121

$

37,819

$

50,671

Real estate-related depreciation and amortization

37,555

33,612

74,876

66,208

Gain on sales of real estate

(40,233)

-

(39,743)

(5)

Depreciation and amortization on unconsolidated real estate JVs

476

818

930

1,636

Funds from operations ("FFO")

41,696

59,551

73,882

118,510

FFO allocable to other noncontrolling interests

(1,302)

(1,525)

(2,329)

(13,540)

Basic FFO allocable to share-based compensation awards

(193)

(254)

(353)

(447)

Noncontrolling interests - preferred units in the OP

-

(77)

-

(154)

Basic FFO available to common share and common unit holders ("Basic FFO")

40,201

57,695

71,200

104,369

Dilutive preferred units in the OP

-

77

-

154

Redeemable noncontrolling interests

11

37

70

69

Diluted FFO available to common share and common unit holders ("Diluted FFO")

40,212

57,809

71,270

104,592

Loss on early extinguishment of debt

25,228

-

58,394

-

Diluted FFO comparability adjustments allocable to share-based compensation awards

(137)

(1)

(304)

(51)

Demolition costs on redevelopment and nonrecurring improvements

302

9

302

52

FFO allocation to other noncontrolling interests resulting from capital event

-

-

-

11,090

Diluted FFO available to common share and common unit holders, as adjusted for comparability

65,605

57,817

129,662

115,683

Straight line rent adjustments and lease incentive amortization

(1,288)

2,523

(4,645)

1,671

Amortization of intangibles and other assets included in net operating income

41

(73)

81

(147)

Share-based compensation, net of amounts capitalized

2,009

1,638

3,913

3,027

Amortization of deferred financing costs

811

642

1,604

1,217

Amortization of net debt discounts, net of amounts capitalized

520

390

1,062

776

Replacement capital expenditures

(13,095)

(16,132)

(25,325)

(33,886)

Other diluted AFFO adjustments associated with real estate JVs

178

(115)

419

(156)

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

$

54,781

$

46,690

$

106,771

$

88,185

Diluted FFO per share

$

0.35

$

0.51

$

0.63

$

0.92

Diluted FFO per share, as adjusted for comparability

$

0.58

$

0.51

$

1.14

$

1.02

Dividends/distributions per common share/unit

$

0.275

$

0.275

$

0.550

$

0.550

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

For the Three Months For the Six Months Ended Ended June 30, June 30,

2021 2020 2021 2020

Net income $ 43,898 $ 25,121 $ 37,819 $ 50,671

Real estate-relateddepreciation and 37,555 33,612 74,876 66,208 amortization

Gain on sales of real estate (40,233) - (39,743) (5)

Depreciation andamortization on 476 818 930 1,636 unconsolidated real estateJVs

Funds from operations 41,696 59,551 73,882 118,510 ("FFO")

FFO allocable to other (1,302) (1,525) (2,329) (13,540) noncontrolling interests

Basic FFO allocable toshare-based compensation (193) (254) (353) (447) awards

Noncontrolling interests - - (77) - (154) preferred units in the OP

Basic FFO available tocommon share and common unit 40,201 57,695 71,200 104,369 holders ("Basic FFO")

Dilutive preferred units in - 77 - 154 the OP

Redeemable noncontrolling 11 37 70 69 interests

Diluted FFO available tocommon share and common unit 40,212 57,809 71,270 104,592 holders("Diluted FFO")

Loss on early extinguishment 25,228 - 58,394 - of debt

Diluted FFO comparabilityadjustments allocable to (137) (1) (304) (51) share-basedcompensation awards

Demolition costs onredevelopment and 302 9 302 52 nonrecurring improvements

FFO allocation to othernoncontrolling interests - - - 11,090 resulting from capital event

Diluted FFO available tocommon share and common unit 65,605 57,817 129,662 115,683 holders, asadjusted for comparability

Straight line rentadjustments and lease (1,288) 2,523 (4,645) 1,671 incentive amortization

Amortization of intangiblesand other assets included in 41 (73) 81 (147) net operating income

Share-based compensation, 2,009 1,638 3,913 3,027 net of amounts capitalized

Amortization of deferred 811 642 1,604 1,217 financing costs

Amortization of net debtdiscounts, net of amounts 520 390 1,062 776 capitalized

Replacement capital (13,095) (16,132) (25,325) (33,886) expenditures

Other diluted AFFOadjustments associated with 178 (115) 419 (156) real estate JVs

Diluted adjusted funds fromoperations available tocommon share and $ 54,781 $ 46,690 $ 106,771 $ 88,185 common unit holders("Diluted AFFO")

Diluted FFO per share $ 0.35 $ 0.51 $ 0.63 $ 0.92

Diluted FFO per share, as $ 0.58 $ 0.51 $ 1.14 $ 1.02 adjusted for comparability

Dividends/distributions per $ 0.275 $ 0.275 $ 0.550 $ 0.550 common share/unit

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

June 30,2021

December 31,2020

Balance Sheet Data

Properties, net of accumulated depreciation

$

3,530,717

$

3,562,549

Total assets

4,052,032

4,077,023

Debt, per balance sheet

2,109,640

2,086,918

Total liabilities

2,354,680

2,357,881

Redeemable noncontrolling interests

26,040

25,430

Equity

1,671,312

1,693,712

Net debt to adjusted book

39.4

%

39.1

%

Core Portfolio Data (as of period end) (1)

Number of operating properties

181

179

Total operational square feet (in thousands)

20,978

20,802

% Occupied

93.7

%

94.3

%

% Leased

94.6

%

95.0

%

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

June 30, December 31, 2021 2020

Balance Sheet Data

Properties, net of accumulated depreciation $ 3,530,717 $ 3,562,549

Total assets 4,052,032 4,077,023

Debt, per balance sheet 2,109,640 2,086,918

Total liabilities 2,354,680 2,357,881

Redeemable noncontrolling interests 26,040 25,430

Equity 1,671,312 1,693,712

Net debt to adjusted book 39.4 % 39.1 %



Core Portfolio Data (as of period end) (1)

Number of operating properties 181 179

Total operational square feet (in thousands) 20,978 20,802

% Occupied 93.7 % 94.3 %

% Leased 94.6 % 95.0 %

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2021

2020

2021

2020

Payout ratios

Diluted FFO

77.5

%

53.9

%

87.4

%

59.6

%

Diluted FFO, as adjusted for comparability

47.5

%

53.9

%

48.1

%

53.9

%

Diluted AFFO

56.9

%

66.8

%

58.4

%

70.7

%

Adjusted EBITDA fixed charge coverage ratio

4.9

x

3.8

x

4.6

x

3.8

x

Net debt plus preferred equity to in-place adjusted EBITDA ratio (2)

6.3

x

6.4

x

N/A

N/A

Net debt adj. for fully-leased development plus pref. equity to in-place adj. EBITDA ratio (3)

5.8

x

5.9

x

N/A

N/A

Reconciliation of denominators for per share measures

Denominator for diluted EPS

112,404

112,121

112,336

112,042

Weighted average common units

1,262

1,237

1,254

1,232

Redeemable noncontrolling interests

-

157

-

133

Dilutive convertible preferred units

-

176

-

176

Denominator for diluted FFO per share and as adjusted for comparability

113,666

113,691

113,590

113,583

For the Three Months For the Six Months Ended Ended June 30, June 30,

2021 2020 2021 2020

Payout ratios

Diluted FFO 77.5 % 53.9 % 87.4 % 59.6 %

Diluted FFO, as adjusted for 47.5 % 53.9 % 48.1 % 53.9 % comparability

Diluted AFFO 56.9 % 66.8 % 58.4 % 70.7 %

Adjusted EBITDA fixed charge 4.9 x 3.8 x 4.6 x 3.8 x coverage ratio

Net debt plus preferred equity to in-place adjusted EBITDA 6.3 x 6.4 x N/A N/A ratio (2)

Net debt adj. for fully-leased development plus pref. equity 5.8 x 5.9 x N/A N/A to in-place adj. EBITDA ratio (3)



Reconciliation of denominators for per share measures

Denominator for diluted EPS 112,404 112,121 112,336 112,042

Weighted average common units 1,262 1,237 1,254 1,232

Redeemable noncontrolling - 157 - 133 interests

Dilutive convertible preferred - 176 - 176 units

Denominator for diluted FFO per share and as adjusted for 113,666 113,691 113,590 113,583 comparability

(1)

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

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).(3)

Represents net debt less costs incurred on properties under development that were 100% leased as of period end plus the total liquidation preference of preferred equity divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).(1) Represents Defense/IT Locations and Regional Office properties.

(2) 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). Represents net debt less costs incurred on properties under development(3) that were 100% leased as of period end plus the total liquidation preference of preferred equity divided by in-place adjusted EBITDA for the period, as annualized (i.e. three month periods are multiplied by four).Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2021

2020

2021

2020

Reconciliation of common share dividends to dividends and distributions for payout ratios

Common share dividends - unrestricted shares and deferred shares

$

30,811

$

30,761

$

61,616

$

61,515

Common unit distributions - unrestricted units

347

341

694

680

Distributions on dilutive preferred units

-

77

-

154

Dividends and distributions for payout ratios

$

31,158

$

31,179

$

62,310

$

62,349

Reconciliation of GAAP net (loss) income to earnings before interest, income taxes, depreciation and amortization for real estate ("EBITDAre"), adjusted EBITDA and in-place adjusted EBITDA

Net income

$

43,898

$

25,121

$

37,819

$

50,671

Interest expense

15,942

16,797

33,461

33,637

Income tax expense

24

30

56

79

Real estate-related depreciation and amortization

37,555

33,612

74,876

66,208

Other depreciation and amortization

1,045

448

1,600

867

Gain on sales of real estate

(40,233)

-

(39,743)

(5)

Adjustments from unconsolidated real estate JVs

711

1,270

1,404

2,540

EBITDAre

58,942

77,278

109,473

153,997

Loss on early extinguishment of debt

25,228

-

58,394

-

Net (gain) loss on other investments

(63)

2

(63)

2

Credit loss expense (recoveries)

193

615

(714)

1,304

Business development expenses

584

678

1,132

1,216

Demolition costs on redevelopment and nonrecurring improvements

302

9

302

52

Adjusted EBITDA

85,186

78,582

$

168,524

$

156,571

Proforma net operating income adjustment for property changes within period

(379)

959

Change in collectability of deferred rental revenue

-

1,007

In-place adjusted EBITDA

$

84,807

$

80,548

Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA

Interest expense

$

15,942

$

16,797

$

33,461

$

33,637

Less: Amortization of deferred financing costs

(811)

(642)

(1,604)

(1,217)

Less: Amortization of net debt discounts, net of amounts capitalized

(520)

(390)

(1,062)

(776)

COPT's share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs

236

442

470

883

Scheduled principal amortization

959

1,023

1,921

2,044

Capitalized interest

1,707

3,174

3,512

6,532

Preferred unit distributions

-

77

-

154

Denominator for fixed charge coverage-Adjusted EBITDA

$

17,513

$

20,481

$

36,698

$

41,257

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months For the Six Months Ended Ended June 30, June 30,

2021 2020 2021 2020

Reconciliation of commonshare dividends todividends and distributions for payoutratios

Common share dividends -unrestricted shares and $ 30,811 $ 30,761 $ 61,616 $ 61,515 deferred shares

Common unit distributions - 347 341 694 680 unrestricted units

Distributions on dilutive - 77 - 154 preferred units

Dividends and distributions $ 31,158 $ 31,179 $ 62,310 $ 62,349 for payout ratios



Reconciliation of GAAP net(loss) income to earningsbeforeinterest, income taxes,depreciation and amortization for realestate("EBITDAre"), adjustedEBITDA and in-placeadjusted EBITDA

Net income $ 43,898 $ 25,121 $ 37,819 $ 50,671

Interest expense 15,942 16,797 33,461 33,637

Income tax expense 24 30 56 79

Real estate-relateddepreciation and 37,555 33,612 74,876 66,208 amortization

Other depreciation and 1,045 448 1,600 867 amortization

Gain on sales of real (40,233) - (39,743) (5) estate

Adjustments fromunconsolidated real estate 711 1,270 1,404 2,540 JVs

EBITDAre 58,942 77,278 109,473 153,997

Loss on early 25,228 - 58,394 - extinguishment of debt

Net (gain) loss on other (63) 2 (63) 2 investments

Credit loss expense 193 615 (714) 1,304 (recoveries)

Business development 584 678 1,132 1,216 expenses

Demolition costs onredevelopment and 302 9 302 52 nonrecurring improvements

Adjusted EBITDA 85,186 78,582 $ 168,524 $ 156,571

Proforma net operatingincome adjustment for (379) 959 property changes withinperiod

Change in collectability of - 1,007 deferred rental revenue

In-place adjusted EBITDA $ 84,807 $ 80,548



Reconciliation of interestexpense to the denominatorsfor fixed charge coverage-AdjustedEBITDA

Interest expense $ 15,942 $ 16,797 $ 33,461 $ 33,637

Less: Amortization of (811) (642) (1,604) (1,217) deferred financing costs

Less: Amortization of netdebt discounts, net of (520) (390) (1,062) (776) amounts capitalized

COPT's share of interestexpense of unconsolidatedreal estate JVs, 236 442 470 883 excluding deferredfinancing costs

Scheduled principal 959 1,023 1,921 2,044 amortization

Capitalized interest 1,707 3,174 3,512 6,532

Preferred unit - 77 - 154 distributions

Denominator for fixedcharge coverage-Adjusted $ 17,513 $ 20,481 $ 36,698 $ 41,257 EBITDA

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2021

2020

2021

2020

Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures

Tenant improvements and incentives

$

8,303

$

8,870

$

15,442

$

20,227

Building improvements

6,771

13,662

10,399

16,137

Leasing costs

2,805

2,222

3,934

4,984

Net additions to tenant improvements and incentives

(988)

329

1,912

2,355

Excluded building improvements and leasing costs

(3,796)

(8,951)

(6,362)

(9,817)

Replacement capital expenditures

$

13,095

$

16,132

$

25,325

$

33,886

Same Properties cash NOI

$

77,241

$

75,414

$

149,604

$

149,874

Straight line rent adjustments and lease incentive amortization

(2,272)

(1,131)

(2,231)

(1,115)

Amortization of acquired above- and below-market rents

98

97

197

193

Amortization of intangibles and other assets to property operating expenses

-

(23)

-

(46)

Lease termination fees, net

1,094

200

2,456

238

Tenant funded landlord assets and lease incentives

441

(20)

620

348

Cash NOI adjustments in unconsolidated real estate JV

40

49

82

102

Same Properties NOI

$

76,642

$

74,586

$

150,728

$

149,594

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months For the Six Months Ended Ended June 30, June 30,

2021 2020 2021 2020

Reconciliations of tenantimprovements andincentives, buildingimprovements and leasing costs for operatingproperties toreplacement capitalexpenditures

Tenant improvements and $ 8,303 $ 8,870 $ 15,442 $ 20,227 incentives

Building improvements 6,771 13,662 10,399 16,137

Leasing costs 2,805 2,222 3,934 4,984

Net additions to tenant (988) 329 1,912 2,355 improvements and incentives

Excluded buildingimprovements and leasing (3,796) (8,951) (6,362) (9,817) costs

Replacement capital $ 13,095 $ 16,132 $ 25,325 $ 33,886 expenditures



Same Properties cash NOI $ 77,241 $ 75,414 $ 149,604 $ 149,874

Straight line rentadjustments and lease (2,272) (1,131) (2,231) (1,115) incentive amortization

Amortization of acquiredabove- and below-market 98 97 197 193 rents

Amortization of intangiblesand other assets to - (23) - (46) property operating expenses

Lease termination fees, net 1,094 200 2,456 238

Tenant funded landlord 441 (20) 620 348 assets and lease incentives

Cash NOI adjustments inunconsolidated real estate 40 49 82 102 JV

Same Properties NOI $ 76,642 $ 74,586 $ 150,728 $ 149,594

June 30,2021

December 31,2020

Reconciliation of total assets to adjusted book

Total assets

$

4,052,032

$

4,077,023

Accumulated depreciation

1,182,432

1,124,253

Accumulated amortization of real estate intangibles and deferred leasing costs

219,666

217,124

COPT's share of liabilities of unconsolidated real estate JVs

27,529

26,710

COPT's share of accumulated depreciation and amortization of unconsolidated real estate JVs

2,578

1,489

Less: Property - operating lease liabilities

(29,909)

(30,746)

Less: Property - finance lease liabilities

(18)

(28)

Less: Cash and cash equivalents

(17,182)

(18,369)

Less: COPT's share of cash of unconsolidated real estate JVs

(373)

(152)

Adjusted book

$

5,436,755

$

5,397,304

June 30, December 31, 2021 2020

Reconciliation of total assets to adjusted book

Total assets $ 4,052,032 $ 4,077,023

Accumulated depreciation 1,182,432 1,124,253

Accumulated amortization of real estate 219,666 217,124 intangibles and deferred leasing costs

COPT's share of liabilities of unconsolidated 27,529 26,710 real estate JVs

COPT's share of accumulated depreciation and 2,578 1,489 amortization of unconsolidated real estate JVs

Less: Property - operating lease liabilities (29,909) (30,746)

Less: Property - finance lease liabilities (18) (28)

Less: Cash and cash equivalents (17,182) (18,369)

Less: COPT's share of cash of unconsolidated real (373) (152) estate JVs

Adjusted book $ 5,436,755 $ 5,397,304



June 30,2021

December 31,2020

June 30,2020

Reconciliation of debt outstanding to net debt and net debt adjusted for fully-leased development plus preferred equity

Debt outstanding (excluding net debt discounts and deferred financing costs)

$

2,157,325

$

2,127,715

$

2,073,351

Less: Cash and cash equivalents

(17,182)

(18,369)

(21,596)

Less: COPT's share of cash of unconsolidated real estate JVs

(373)

(152)

(627)

Net debt

$

2,139,770

$

2,109,194

$

2,051,128

Preferred equity

-

-

8,800

Net debt plus preferred equity

$

2,139,770

$

2,109,194

$

2,059,928

Costs incurred on fully-leased development properties

(171,453)

(114,532)

(152,557)

Net debt adjusted for fully-leased development plus preferred equity

$

1,968,317

$

1,994,662

$

1,907,371

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729006045/en/

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