Business Wire | Oct 28, 2021 04:16PM EDT

COPT Reports Third Quarter 2021 Results

Oct. 28, 2021

COLUMBIA, Md.--(BUSINESS WIRE)--Oct. 28, 2021--Corporate Office Properties Trust ("COPT" or the "Company") (NYSE: OFC) announced results for the third quarter ended September 30, 2021.

Management Comments

Stephen E. Budorick, COPT's President & Chief Executive Officer, commented, "Our portfolio of office and data center properties that support priority missions at U.S. defense installations continues to produce strong results, and distinguishes us from other office companies. Demand for our Defense/IT Locations has driven 1.2 million square feet of development leasing to-date, which exceeds our 2021 goal. Vacancy leasing in the third quarter was a very strong 215,000 square feet--our best quarterly volume since the third quarter of 2019--and brought our total for the nine months to 420,000 square feet. Importantly, tenants are committing to lease term lengths that are at or above pre-pandemic levels. Our Development Leasing Pipeline and Activity Ratio remain robust, which leads us to expect customers to continue making long-term commitments to our Defense/IT Locations. Based on our outperformance this quarter, we are increasing the midpoint of full-year guidance for FFO per share, as adjusted for comparability, to $2.27, which is 8-cents above our original midpoint and represents 7.1% growth over 2020's elevated results."

Financial Highlights

3rd Quarter Financial Results:

* Diluted earnings (loss) per share ("EPS") was $0.24 for the quarter ended September 30, 2021 compared to ($0.29) for the third quarter of 2020. * Diluted funds from operations per share ("FFOPS"), as calculated in accordance with Nareit's definition, was $0.56 for the third quarter of 2021 compared to $0.04 for third quarter 2020. * FFOPS, as adjusted for comparability, was $0.57 for the third quarter of 2021 compared to $0.54 for the third quarter of 2020.

Operating Performance Highlights

Operating Portfolio Summary:

* At September 30, 2021, the Company's core portfolio of 184 operating office and data center shell properties was 93.5% occupied and 94.8% leased. * During the quarter, the Company placed into service 466,000 square feet that were 100% leased.

Same-Property Performance:

* At September 30, 2021, COPT's same-property portfolio of 159 buildings was 92.2% occupied and 93.7% leased. * For the quarter ended September 30, 2021, the Company's same-property cash NOI increased 4.8% over the prior year's comparable period.

Leasing:

* Total Square Feet Leased: For the quarter ended September 30, 2021, the Company leased 1.0 million square feet, including 553,000 square feet of renewals, 274,000 square feet in development projects, and 215,000 square feet of new leases on vacant space. For the nine months ended September 30, 2021, the Company executed 2.7 million square feet of leasing, including 1.4 million square feet of renewals, 915,000 square feet in development projects, and 420,000 square feet of vacancy leasing. * Renewal Rates: During the quarter and nine months ended September 30, 2021, the Company renewed 75.7% and 74.6%, respectively, of expiring square feet. * Rent Spreads & Average Escalations on Renewing Leases: For the quarter and nine months ended September 30, 2021, cash rents on renewed space decreased 0.6% and 0.3%, respectively. For the same time periods, annual escalations on renewing leases averaged 1.7% and 2.4%, respectively. * Lease Terms: In the third quarter of 2021, lease terms averaged 3.1 years on renewing leases, 9.3 years on new leasing of vacant space, and 17.0 years on development leasing. For the first nine months, lease terms averaged 3.8 years on renewing leases, 8.6 years on vacancy leasing, and 14.1 years on development leasing. * Post-Quarter Development Leasing: In October, the Company completed two build-to-suit leases totaling 263,000 square feet with a defense contractor at Redstone Gateway. Details of those leases can be found in a separate press release issued this same date.

Investment Activity Highlights

* Development Pipeline: The Company's development pipeline consists of 13 properties totaling 1.8 million square feet that are 94% leased. These projects have a total estimated cost of $585.7 million, of which $188.2 million has been incurred.

Balance Sheet and Capital Transaction Highlights

* In August, the Company issued $400 million of 2.000% senior unsecured notes due 2029. The Company used net proceeds from this issuance to repay $100.0 million of its term loan facility due December 2022, retire the outstanding $89.0 million balance of a construction loan, and repay borrowings under its unsecured credit facility. * At September 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 to in-place adjusted EBITDA ratio was 5.9x. For the quarter ended September 30, 2021, the Company's adjusted EBITDA fixed charge coverage ratio was 4.8x. * At September 30, 2021, and including the effect of interest rate swaps, the Company's weighted average effective interest rate on its consolidated debt portfolio was 3.05% with a weighted average maturity of 5.7 years; additionally, 97.3% 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 third quarter 2021 conference call; the presentation can be viewed 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 $0.72-$0.76, $1.73-$1.77, and $2.24-$2.28, respectively, to new ranges of $0.76-$0.78, $1.74-$1.76, and $2.26-$2.28, respectively. To account for the expected timing of repair and maintenance projects, management is lowering its prior guidance ranges for EPS and FFOPS (per Nareit and as adjusted for comparability) for the fourth quarter from $0.21-$0.23 and $0.56-$0.58, respectively, to $0.20-$0.22 and $0.55-$0.57, respectively. Reconciliations of projected EPS to projected FFOPS, in accordance with Nareit and as adjusted for comparability are as follows:

Table 1: Reconciliation of EPS to FFOPS, per Quarter ending Year endingNareit andAs Adjusted for Comparability December 31, December 31, 2021 2021 Low High Low High EPS $ 0.20 $ 0.22 $ 0.76 $ 0.78

Real estate-related depreciation and 0.35 0.35 1.33 1.33amortizationGain on sales of real estate - - (0.35) (0.35)

FFOPS, Nareit definition 0.55 0.57 1.74 1.76

Loss on early extingusishment of debt - - 0.52 0.52

FFOPS, as adjusted for comparability $ 0.55 $ 0.57 $ 2.26 $ 2.28

Conference Call Information

Management will discuss third 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, October 29, 2021 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: 9759656

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, October 29, through 2:00 p.m. Eastern Time on Friday, November 12. To access the replay within the United States, please call 855-859-2056; to access it from outside the United States, please call 404-537-3406. In either case, use passcode 9759656.

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 September 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 184 office and data center shell properties encompassed 21.5 million square feet and was 94.8% leased; the Company also owned one wholesale data center with a capacity 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 Ended For the Nine Months September 30, Ended September 30,

2021 2020 2021 2020

Revenues

Revenues from real $ 146,590 $ 134,443 $ 436,177 $ 399,097 estate operations

Construction contractand other service 28,046 20,323 64,592 46,240 revenues

Total revenues 174,636 154,766 500,769 445,337

Operating expenses

Property operating 57,190 51,552 168,780 151,755 expenses

Depreciation andamortization associated 36,611 35,332 111,487 101,540 with real estateoperations

Construction contractand other service 27,089 19,220 61,964 44,052 expenses

Impairment losses - 1,530 - 1,530

General and 7,269 5,558 20,624 17,372 administrative expenses

Leasing expenses 2,073 1,909 6,346 5,739

Business developmentexpenses and land carry 1,093 1,094 3,559 3,474 costs

Total operating expenses 131,325 116,195 372,760 325,462

Interest expense (15,720) (17,152) (49,181) (50,789)

Interest and other 1,818 1,746 5,911 5,233 income

Credit loss recoveries 326 1,465 1,040 161

Gain on sales of real (32) - 39,711 5 estate

Loss on early (1,159) (3,237) (59,553) (3,237) extinguishment of debt

Loss on interest rate - (53,196) - (53,196) derivatives

Income (loss) beforeequity in income of 28,544 (31,803) 65,937 18,052 unconsolidated entitiesand income taxes

Equity in income of 297 477 779 1,372 unconsolidated entities

Income tax expense (47) (16) (103) (95)

Net income (loss) 28,794 (31,342) 66,613 19,329

Net (income) lossattributable to noncontrollinginterests:

Common units in theOperating Partnership (357) 386 (831) (185) ("OP")

Preferred units in the - (77) - (231) OP

Other consolidated (1,336) (812) (2,949) (3,207) entities

Net income (loss)attributable to COPT $ 27,101 $ (31,845) $ 62,833 $ 15,706 common shareholders



Earnings per share ("EPS") computation:

Numerator for diluted EPS:

Net income attributableto COPT common $ 27,101 $ (31,845) $ 62,833 $ 15,706 shareholders

Amount allocable toshare-based compensation (79) (145) (320) (359) awards

Redeemable (89) - (82) - noncontrolling interests

Numerator for diluted $ 26,933 $ (31,990) $ 62,431 $ 15,347 EPS

Denominator:

Weighted average common 111,985 111,811 111,949 111,778 shares - basic

Dilutive effect ofshare-based compensation 375 - 285 278 awards

Dilutive effect ofredeemable 138 - 130 - noncontrolling interests

Weighted average common 112,498 111,811 112,364 112,056 shares - diluted

Diluted EPS $ 0.24 $ (0.29) $ 0.56 $ 0.14

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

2021

2020

2021

2020

Net income (loss)

$

28,794

$

(31,342)

$

66,613

$

19,329

Real estate-related depreciation and amortization

36,611

35,332

111,487

101,540

Impairment losses on real estate

-

1,530

-

1,530

Gain on sales of real estate

32

-

(39,711)

(5)

Depreciation and amortization on unconsolidated real estate JVs

525

819

1,455

2,455

Funds from operations ("FFO")

65,962

6,339

139,844

124,849

FFO allocable to other noncontrolling interests

(1,696)

(1,074)

(4,025)

(14,614)

Basic FFO allocable to share-based compensation awards

(313)

(119)

(663)

(449)

Noncontrolling interests - preferred units in the OP

-

(77)

-

(231)

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

63,953

5,069

135,156

109,555

Redeemable noncontrolling interests

(68)

-

1

103

Diluted FFO adjustments allocable to share-based compensation awards

13

-

27

-

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

63,898

5,069

135,184

109,658

Loss on early extinguishment of debt

1,159

3,237

59,553

3,237

Loss on interest rate derivatives

-

53,196

-

53,196

Demolition costs on redevelopment and nonrecurring improvements

129

11

431

63

Dilutive preferred units in the OP

-

77

-

231

FFO allocation to other noncontrolling interests resulting from capital event

-

-

-

11,090

Diluted FFO comparability adjustments for redeemable noncontrolling interests

-

34

-

-

Diluted FFO comparability adjustments allocable to share-based compensation awards

(7)

(139)

(300)

(307)

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

65,179

61,485

194,868

177,168

Straight line rent adjustments and lease incentive amortization

(1,806)

(1,009)

(6,451)

662

Amortization of intangibles and other assets included in net operating income

41

(39)

122

(186)

Share-based compensation, net of amounts capitalized

2,048

1,727

5,961

4,754

Amortization of deferred financing costs

736

658

2,340

1,875

Amortization of net debt discounts, net of amounts capitalized

567

453

1,629

1,229

Replacement capital expenditures

(13,331)

(13,085)

(38,656)

(46,971)

Other diluted AFFO adjustments associated with real estate JVs

201

150

620

(6)

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

$

53,635

$

50,340

$

160,433

$

138,525

Diluted FFO per share

$

0.56

$

0.04

$

1.19

$

0.97

Diluted FFO per share, as adjusted for comparability

$

0.57

$

0.54

$

1.71

$

1.56

Dividends/distributions per common share/unit

$

0.275

$

0.275

$

0.825

$

0.825

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

For the Three Months For the Nine Months Ended September 30, Ended September 30,

2021 2020 2021 2020

Net income (loss) $ 28,794 $ (31,342) $ 66,613 $ 19,329

Real estate-relateddepreciation and 36,611 35,332 111,487 101,540 amortization

Impairment losses on real - 1,530 - 1,530 estate

Gain on sales of real 32 - (39,711) (5) estate

Depreciation andamortization on 525 819 1,455 2,455 unconsolidated realestate JVs

Funds from operations 65,962 6,339 139,844 124,849 ("FFO")

FFO allocable to other (1,696) (1,074) (4,025) (14,614) noncontrolling interests

Basic FFO allocable toshare-based compensation (313) (119) (663) (449) awards

Noncontrolling interests- preferred units in the - (77) - (231) OP

Basic FFO available tocommon share and common 63,953 5,069 135,156 109,555 unit holders ("BasicFFO")

Redeemable noncontrolling (68) - 1 103 interests

Diluted FFO adjustmentsallocable to share-based 13 - 27 - compensation awards

Diluted FFO available tocommon share and common 63,898 5,069 135,184 109,658 unit holders ("DilutedFFO")

Loss on early 1,159 3,237 59,553 3,237 extinguishment of debt

Loss on interest rate - 53,196 - 53,196 derivatives

Demolition costs onredevelopment and 129 11 431 63 nonrecurring improvements

Dilutive preferred units - 77 - 231 in the OP

FFO allocation to othernoncontrolling interests - - - 11,090 resulting from capitalevent

Diluted FFO comparabilityadjustments for - 34 - - redeemable noncontrollinginterests

Diluted FFO comparabilityadjustments allocable to (7) (139) (300) (307) share-based compensationawards

Diluted FFO available tocommon share and common 65,179 61,485 194,868 177,168 unit holders, as adjustedfor comparability

Straight line rentadjustments and lease (1,806) (1,009) (6,451) 662 incentive amortization

Amortization ofintangibles and other 41 (39) 122 (186) assets included in netoperating income

Share-based compensation,net of amounts 2,048 1,727 5,961 4,754 capitalized

Amortization of deferred 736 658 2,340 1,875 financing costs

Amortization of net debtdiscounts, net of amounts 567 453 1,629 1,229 capitalized

Replacement capital (13,331) (13,085) (38,656) (46,971) expenditures

Other diluted AFFOadjustments associated 201 150 620 (6) with real estate JVs

Diluted adjusted fundsfrom operations availableto common share and $ 53,635 $ 50,340 $ 160,433 $ 138,525 common unit holders("Diluted AFFO")

Diluted FFO per share $ 0.56 $ 0.04 $ 1.19 $ 0.97

Diluted FFO per share, asadjusted for $ 0.57 $ 0.54 $ 1.71 $ 1.56 comparability

Dividends/distributions $ 0.275 $ 0.275 $ 0.825 $ 0.825 per common share/unit

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

September 30,2021

December 31,2020

Balance Sheet Data

Properties, net of accumulated depreciation

$

3,607,122

$

3,562,549

Total assets

4,151,138

4,077,023

Debt, per balance sheet

2,159,732

2,086,918

Total liabilities

2,454,353

2,357,881

Redeemable noncontrolling interests

26,006

25,430

Equity

1,670,779

1,693,712

Net debt to adjusted book

39.4

%

39.1

%

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

Number of operating properties

184

179

Total operational square feet (in thousands)

21,503

20,802

% Occupied

93.5

%

94.3

%

% Leased

94.8

%

95.0

%

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

September 30, December 31, 2021 2020

Balance Sheet Data

Properties, net of accumulated depreciation $ 3,607,122 $ 3,562,549

Total assets 4,151,138 4,077,023

Debt, per balance sheet 2,159,732 2,086,918

Total liabilities 2,454,353 2,357,881

Redeemable noncontrolling interests 26,006 25,430

Equity 1,670,779 1,693,712

Net debt to adjusted book 39.4 % 39.1 %



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

Number of operating properties 184 179

Total operational square feet (in thousands) 21,503 20,802

% Occupied 93.5 % 94.3 %

% Leased 94.8 % 95.0 %

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

2021

2020

2021

2020

Payout ratios

Diluted FFO

48.8

%

613.6

%

69.2

%

85.1

%

Diluted FFO, as adjusted for comparability

47.8

%

50.7

%

48.0

%

52.8

%

Diluted AFFO

58.1

%

61.9

%

58.3

%

67.5

%

Adjusted EBITDA fixed charge coverage ratio

4.8

x

3.9

x

4.7

x

3.8

x

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

6.3

x

6.8

x

N/A

N/A

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

5.9

x

6.4

x

N/A

N/A

Reconciliation of denominators for per share measures

Denominator for diluted EPS

112,498

111,811

112,364

112,056

Weighted average common units

1,262

1,240

1,257

1,235

Anti-dilutive EPS effect of share-based compensation awards

-

274

26

-

Redeemable noncontrolling interests

-

-

-

125

Denominator for diluted FFO per share

113,760

113,325

113,647

113,416

Redeemable noncontrolling interests

-

109

-

-

Dilutive convertible preferred units

-

176

-

176

Denominator for diluted FFO per share, as adjusted for comparability

113,760

113,610

113,647

113,592

* Represents Defense/IT Locations and Regional Office properties. * 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 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). For the Three Months For the Nine Months Ended September 30, Ended September 30,

2021 2020 2021 2020

Payout ratios

Diluted FFO 48.8 % 613.6 % 69.2 % 85.1 %

Diluted FFO, as adjusted for 47.8 % 50.7 % 48.0 % 52.8 %comparability

Diluted AFFO 58.1 % 61.9 % 58.3 % 67.5 %

Adjusted EBITDA fixed charge 4.8 x 3.9 x 4.7 x 3.8 xcoverage ratio

Net debt plus preferred equity toin-place adjusted EBITDA ratio 6.3 x 6.8 x N/A N/A(2)

Net debt adj. for fully-leaseddevelopment plus pref. equity to 5.9 x 6.4 x N/A N/Ain-place adj. EBITDA ratio (3)



Reconciliation of denominators for per share measures

Denominator for diluted EPS 112,498 111,811 112,364 112,056

Weighted average common units 1,262 1,240 1,257 1,235

Anti-dilutive EPS effect of - 274 26 - share-based compensation awards

Redeemable noncontrolling - - - 125 interests

Denominator for diluted FFO per 113,760 113,325 113,647 113,416 share

Redeemable noncontrolling - 109 - - interests

Dilutive convertible preferred - 176 - 176 units

Denominator for diluted FFO pershare, as adjusted for 113,760 113,610 113,647 113,592 comparability

* Represents Defense/IT Locations and Regional Office properties. * 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 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 For the Nine Months Ended Ended September 30, September 30,

2021 2020 2021 2020

Reconciliation of commonshare dividends todividends and distributions for payoutratios

Common share dividends -unrestricted shares and $ 30,813 $ 30,763 $ 92,429 $ 92,278 deferred shares

Common unit distributions 347 341 1,041 1,021 - unrestricted units

Common unit distributions- dilutive restricted 6 - 19 - units

Dividends anddistributions for diluted 31,166 31,104 93,489 93,299 FFO payout ratio

Distributions on dilutive - 77 - 231 preferred units

Dividends anddistributions for other $ 31,166 $ 31,181 $ 93,489 $ 93,530 payout ratios



Reconciliation of GAAPnet income (loss) toearnings before interest,income taxes,depreciation and amortization for realestate ("EBITDAre"),adjusted EBITDA andin-place adjusted EBITDA

Net income (loss) $ 28,794 $ (31,342) $ 66,613 $ 19,329

Interest expense 15,720 17,152 49,181 50,789

Income tax expense 47 16 103 95

Real estate-relateddepreciation and 36,611 35,332 111,487 101,540 amortization

Other depreciation and 589 457 2,189 1,324 amortization

Impairment losses on real - 1,530 - 1,530 estate

Gain on sales of real 32 - (39,711) (5) estate

Adjustments fromunconsolidated real 763 1,274 2,167 3,814 estate JVs

EBITDAre 82,556 24,419 192,029 178,416

Loss on early 1,159 3,237 59,553 3,237 extinguishment of debt

Loss on interest rate - 53,196 - 53,196 derivatives

Net loss (gain) on other - 250 (63) 252 investments

Credit loss recoveries (326) (1,465) (1,040) (161)

Business development 473 414 1,605 1,630 expenses

Demolition costs onredevelopment and 129 11 431 63 nonrecurring improvements

Adjusted EBITDA 83,991 80,062 $ 252,515 $ 236,633

Proforma net operatingincome adjustment for 3,240 1,631 property changes withinperiod

Change in collectabilityof deferred rental - 224 revenue

In-place adjusted EBITDA $ 87,231 $ 81,917



Reconciliation ofinterest expense to thedenominators for fixed charge coverage-AdjustedEBITDA

Interest expense $ 15,720 $ 17,152 $ 49,181 $ 50,789

Less: Amortization of (736) (658) (2,340) (1,875) deferred financing costs

Less: Amortization of netdebt discounts, net of (567) (453) (1,629) (1,229) amounts capitalized

COPT's share of interestexpense of unconsolidatedreal estate JVs, 236 444 706 1,327 excluding deferredfinancing costs

Scheduled principal 989 1,033 2,910 3,077 amortization

Capitalized interest 1,763 2,908 5,275 9,440

Preferred unit - 77 - 231 distributions

Denominator for fixedcharge coverage-Adjusted $ 17,405 $ 20,503 $ 54,103 $ 61,760 EBITDA

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months Ended September 30,

For the Nine Months Ended September 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

$

8,654

$

6,950

$

24,096

$

27,177

Building improvements

7,793

10,400

18,192

26,537

Leasing costs

2,939

1,934

6,873

6,918

Net (exclusions from) additions to tenant improvements and incentives

(1,523)

(943)

389

1,412

Excluded building improvements and leasing costs

(4,532)

(5,256)

(10,894)

(15,073)

Replacement capital expenditures

$

13,331

$

13,085

$

38,656

$

46,971

Same Properties cash NOI

$

77,219

$

73,697

$

227,312

$

224,024

Straight line rent adjustments and lease incentive amortization

(1,671)

(571)

(3,930)

(1,582)

Amortization of acquired above- and below-market rents

99

98

296

291

Amortization of intangibles and other assets to property operating expenses

-

(23)

-

(69)

Lease termination fees, net

853

455

3,309

693

Tenant funded landlord assets and lease incentives

191

342

810

690

Cash NOI adjustments in unconsolidated real estate JV

37

48

119

150

Same Properties NOI

$

76,728

$

74,046

$

227,916

$

224,197

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months For the Nine Months Ended Ended September 30, September 30,

2021 2020 2021 2020

Reconciliations of tenantimprovements andincentives, buildingimprovements and leasing costs for operatingproperties to replacementcapital expenditures

Tenant improvements and $ 8,654 $ 6,950 $ 24,096 $ 27,177 incentives

Building improvements 7,793 10,400 18,192 26,537

Leasing costs 2,939 1,934 6,873 6,918

Net (exclusions from)additions to tenant (1,523) (943) 389 1,412 improvements and incentives

Excluded buildingimprovements and leasing (4,532) (5,256) (10,894) (15,073) costs

Replacement capital $ 13,331 $ 13,085 $ 38,656 $ 46,971 expenditures



Same Properties cash NOI $ 77,219 $ 73,697 $ 227,312 $ 224,024

Straight line rentadjustments and lease (1,671) (571) (3,930) (1,582) incentive amortization

Amortization of acquiredabove- and below-market 99 98 296 291 rents

Amortization of intangiblesand other assets to - (23) - (69) property operating expenses

Lease termination fees, net 853 455 3,309 693

Tenant funded landlord 191 342 810 690 assets and lease incentives

Cash NOI adjustments inunconsolidated real estate 37 48 119 150 JV

Same Properties NOI $ 76,728 $ 74,046 $ 227,916 $ 224,197

September 30,2021

December 31,2020

Reconciliation of total assets to adjusted book

Total assets

$

4,151,138

$

4,077,023

Accumulated depreciation

1,202,780

1,124,253

Accumulated depreciation included in assets held for sale

12,146

-

Accumulated amortization of real estate intangibles and deferred leasing costs

219,179

217,124

Accumulated amortization of real estate intangibles and deferred leasing costs included in assets held for sale

3,102

-

COPT's share of liabilities of unconsolidated real estate JVs

27,498

26,710

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

3,161

1,489

Less: Property - operating lease liabilities

(29,630)

(30,746)

Less: Property - finance lease liabilities

(14)

(28)

Less: Cash and cash equivalents

(14,570)

(18,369)

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

(530)

(152)

Adjusted book

$

5,574,260

$

5,397,304

September 30, December 31, 2021 2020

Reconciliation of total assets to adjusted book

Total assets $ 4,151,138 $ 4,077,023

Accumulated depreciation 1,202,780 1,124,253

Accumulated depreciation included in assets 12,146 - held for sale

Accumulated amortization of real estate 219,179 217,124 intangibles and deferred leasing costs

Accumulated amortization of real estateintangibles and deferred leasing costs included 3,102 - in assets held for sale

COPT's share of liabilities of unconsolidated 27,498 26,710 real estate JVs

COPT's share of accumulated depreciation and 3,161 1,489 amortization of unconsolidated real estate JVs

Less: Property - operating lease liabilities (29,630) (30,746)

Less: Property - finance lease liabilities (14) (28)

Less: Cash and cash equivalents (14,570) (18,369)

Less: COPT's share of cash of unconsolidated (530) (152) real estate JVs

Adjusted book $ 5,574,260 $ 5,397,304



September 30,2021

December 31,2020

September 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)

$

2,208,923

$

2,127,715

$

2,247,523

Less: Cash and cash equivalents

(14,570)

(18,369)

(11,458)

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

(530)

(152)

(538)

Net debt

$

2,193,823

$

2,109,194

$

2,235,527

Preferred equity

-

-

8,800

Net debt plus preferred equity

$

2,193,823

$

2,109,194

$

2,244,327

Costs incurred on fully-leased development properties

(119,981)

(114,532)

(149,201)

Net debt adjusted for fully-leased development plus preferred equity

$

2,073,842

$

1,994,662

$

2,095,126

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006142/en/

CONTACT: IR Contacts: Stephanie Krewson-Kelly 443-285-5453 stephanie.kelly@copt.com

CONTACT: Michelle Layne 443-285-5452 michelle.layne@copt.com