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8-K

Copt Defense Properties (CDP)

8-K 2022-04-28 For: 2022-04-28
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Added on April 07, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

____________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 28, 2022

____________________________________________

CORPORATE OFFICE PROPERTIES TRUST

(Exact name of registrant as specified in its charter)

Maryland 1-14023 23-2947217
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
6711 Columbia Gateway Drive, Suite 300, Columbia, MD 21046
--- ---
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:  (443) 285-5400

____________________________________________

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Shares of beneficial interest, $0.01 par value OFC New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.             Results of Operations and Financial Condition

On April 28, 2022, Corporate Office Properties Trust (the “Company”) issued a press release relating to its financial results for the three months ended March 31, 2022 and, in connection with this release, is making available certain supplemental information pertaining to its properties and operations as of and for the period ended March 31, 2022.  The earnings release and supplemental information are included as Exhibit 99.1 to this report and are incorporated herein by reference.

The information included herein, including the exhibits, shall not be deemed “filed” for any purpose, including the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or subject to liabilities of that Section.  The information included herein, including the exhibits, shall also not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act regardless of any general incorporation language in such filing.

Item 9.01.             Financial Statements and Exhibits

(d)     Exhibits.

Exhibit Number Exhibit Title
99.1 Corporate Office Properties Trust earnings release and supplemental information for the period ended March 31, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CORPORATE OFFICE PROPERTIES TRUST
/s/ Anthony Mifsud
Anthony Mifsud
Executive Vice President and Chief Financial Officer
Date: April 28, 2022

Document

Exhibit 99.1

a2022_q1xcover.jpg

Corporate Office Properties Trust

Supplemental Information & Earnings Release - Unaudited

For the Three Months Ended 3/31/22

Overview: Section I picture1.jpg
Summary Description 1
Equity Research Coverage 2
Selected Financial Summary Data 3
Selected Portfolio Data 4
Financial Statements: Section II
Consolidated Balance Sheets 5
Consolidated Statements of Operations 6
Funds from Operations 7
Diluted Share and Unit Computations 8
Adjusted Funds from Operations 9
EBITDAre and Adjusted EBITDA 10
Portfolio Information: Section III
Properties by Segment 11
NOI from Real Estate Operations and Occupancy by Property Grouping 12
Consolidated Real Estate Revenues and NOI by Segment 13
Cash NOI by Segment 14
Same Properties Average Occupancy Rates by Segment 15
Same Properties Period End Occupancy Rates by Segment 15
Same Properties Real Estate Revenues and NOI by Segment 16
Same Properties Cash NOI by Segment 17
Leasing 18
Lease Expiration Analysis 19
2022 Core Portfolio Quarterly Lease Expiration Analysis 21
Top 20 Tenants 22
Investing Activity: Section IV
Property Dispositions 23
Summary of Development Projects 24
Development Placed in Service 25
Summary of Land Owned/Controlled 26
Capitalization: Section V
Capitalization Overview 27
Summary of Outstanding Debt 28
Debt Analysis 30
Consolidated Real Estate Joint Ventures 31
Unconsolidated Real Estate Joint Ventures 32 Please refer to the section entitled “Definitions” for definitions of non-GAAP measures<br><br>and other terms we use herein that may not be customary or commonly known.
Reconciliations & Definitions Section VI
Supplementary Reconciliations of Non-GAAP Measures 33 picture2.jpg
Definitions 37
Earnings Release: i

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 March 31, 2022, we derived 90% of our core portfolio annualized rental revenue from Defense/IT Locations and 10% from Regional Office Properties. As of March 31, 2022, our core portfolio of 186 properties, including 19 owned through unconsolidated joint ventures, encompassed 21.8 million square feet and was 94.1% leased.

Management Investor Relations
Stephen E. Budorick, President + CEO Stephanie Krewson-Kelly, VP of IR
Todd Hartman, EVP + COO 443.285.5453 // stephanie.kelly@copt.com
Anthony Mifsud, EVP + CFO
Michelle Layne, Manager of IR
443.285.5452 // michelle.layne@copt.com

Corporate Credit Rating

Fitch: BBB- Stable // Moody’s: Baa3 Stable // 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, 2021.

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 Daniel Ismail 949-640-8780 dismail@greenstreet.com
Jefferies & Co. Peter Abramowitz 212-336-7241 pabramowitz@jefferies.com
JP Morgan Tony Paolone 212-622-6682 anthony.paolone@jpmorgan.com
KeyBanc Capital Markets Todd Thomas 917-368-2286 tthomas@key.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
Truist Securities Michael Lewis 212-319-5659 michael.r.lewis@truist.com
Wells Fargo Securities Blaine Heck 443-263-6529 blaine.heck@wellsfargo.com

With the exception of Green Street, 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 Refinitiv (formerly Thomson’s First Call). 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
SUMMARY OF RESULTS Refer. 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Net income (loss) 6 $ 60,824 $ 14,965 $ 28,794 $ 43,898 $ (6,079)
NOI from real estate operations 13 $ 87,188 $ 90,523 $ 90,460 $ 90,780 $ 89,107
Same Properties NOI 16 $ 80,350 $ 82,024 $ 84,595 $ 84,426 $ 82,164
Same Properties cash NOI 17 $ 79,567 $ 83,688 $ 83,927 $ 83,648 $ 78,650
Adjusted EBITDA 10 $ 82,238 $ 84,681 $ 83,991 $ 85,186 $ 83,338
Diluted AFFO avail. to common share and unit holders 9 $ 48,425 $ 32,823 $ 53,635 $ 54,781 $ 52,387
Dividend per common share N/A $ 0.275 $ 0.275 $ 0.275 $ 0.275 $ 0.275
Per share - diluted:
EPS 8 $ 0.52 $ 0.12 $ 0.24 $ 0.38 $ (0.06)
FFO - Nareit 8 $ 0.58 $ 0.21 $ 0.56 $ 0.35 $ 0.27
FFO - as adjusted for comparability 8 $ 0.58 $ 0.58 $ 0.57 $ 0.58 $ 0.56
Numerators for diluted per share amounts:
Diluted EPS 6 $ 59,099 $ 13,546 $ 26,933 $ 42,256 $ (6,839)
Diluted FFO available to common share and unit holders 7 $ 65,652 $ 24,344 $ 63,898 $ 40,212 $ 30,997
Diluted FFO available to common share and unit holders, as adjusted for comparability 7 $ 65,992 $ 65,458 $ 65,179 $ 65,605 $ 64,454
Payout ratios:
Diluted FFO N/A 47.6% 128.0% 48.8% 77.5% 100.5%
Diluted FFO - as adjusted for comparability N/A 47.4% 47.6% 47.8% 47.5% 48.3%
Diluted AFFO N/A 64.5% 95.0% 58.1% 56.9% 59.5%
CAPITALIZATION
Total Market Capitalization 27 $ 5,437,327 $ 5,479,985 $ 5,251,729 $ 5,315,385 $ 5,226,694
Total Equity Market Capitalization 27 $ 3,255,815 $ 3,181,699 $ 3,069,056 $ 3,184,310 $ 2,995,090
Gross debt 28 $ 2,207,762 $ 2,324,536 $ 2,208,923 $ 2,157,325 $ 2,257,854
Net debt to adjusted book 30 39.7% 40.5% 39.4% 39.4% 40.8%
Adjusted EBITDA fixed charge coverage ratio 30 5.2x 4.9x 4.8x 4.9x 4.3x
Net debt to in-place adj. EBITDA ratio 30 6.6x 6.7x 6.3x 6.3x 6.6x
Pro forma net debt to in-place adjusted EBITDA ratio (1) 30 N/A 6.3x N/A N/A N/A
Net debt adjusted for fully-leased development to in-place adj. EBITDA ratio 30 6.1x 6.2x 5.9x 5.8x 6.3x
Pro forma net debt adj. for fully-leased development to in-place adj. EBITDA ratio (1) 30 N/A 5.8x N/A N/A N/A

(1)Includes, for the 12/31/21 period, adjustments associated with the sale on 1/25/22 of our wholesale data center and use of resulting proceeds to repay debt.

Corporate Office Properties Trust

Selected Portfolio Data (1)

3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
# of Properties
Total Portfolio 188 186 186 184 182
Consolidated Portfolio 169 167 167 165 165
Core Portfolio 186 184 184 182 180
Same Properties 176 176 176 176 176
% Occupied
Total Portfolio 92.0 % 92.4 % 93.3 % 93.2 % 93.8 %
Consolidated Portfolio 90.7 % 91.1 % 92.2 % 92.0 % 92.9 %
Core Portfolio 92.2 % 92.6 % 93.5 % 93.4 % 94.0 %
Same Properties 92.0 % 92.6 % 93.3 % 93.3 % 93.6 %
% Leased
Total Portfolio 93.9 % 94.2 % 94.6 % 94.1 % 94.7 %
Consolidated Portfolio 92.8 % 93.2 % 93.7 % 93.0 % 93.9 %
Core Portfolio 94.1 % 94.4 % 94.8 % 94.3 % 94.9 %
Same Properties 93.9 % 94.4 % 94.7 % 94.2 % 94.5 %
Square Feet (in thousands)
Total Portfolio 22,006 21,710 21,660 21,198 21,006
Consolidated Portfolio 18,824 18,529 18,479 18,016 18,257
Core Portfolio 21,849 21,553 21,503 21,041 20,849
Same Properties 20,333 20,333 20,333 20,333 20,333

(1)Includes properties owned through unconsolidated real estate joint ventures (see page 32).

Corporate Office Properties Trust

Consolidated Balance Sheets

(in thousands)

3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Assets
Properties, net:
Operating properties, net $ 3,167,851 $ 3,090,510 $ 3,034,365 $ 2,904,129 $ 2,908,986
Development and redevelopment in progress, including land (1) 194,412 196,701 151,396 201,421 187,290
Land held (1) 218,018 245,733 227,887 230,114 285,266
Total properties, net 3,580,281 3,532,944 3,413,648 3,335,664 3,381,542
Property - operating right-of-use assets 38,566 38,361 38,854 39,333 39,810
Property - finance right-of-use assets 2,230 2,238 40,077 40,082 40,091
Assets held for sale, net — 192,699 197,285 196,210 199,028
Cash and cash equivalents 19,347 13,262 14,570 17,182 36,139
Investment in unconsolidated real estate joint ventures 39,440 39,889 40,304 40,586 28,934
Accounts receivable, net 42,596 40,752 33,110 39,951 44,916
Deferred rent receivable 114,952 108,926 102,479 99,006 97,222
Intangible assets on property acquisitions, net 13,410 14,567 15,711 16,877 18,048
Lease incentives, net 52,089 51,486 40,150 37,665 35,100
Deferred leasing costs, net 65,660 65,850 61,939 61,911 56,107
Investing receivables, net 82,417 82,226 75,947 73,073 71,831
Prepaid expenses and other assets, net 81,038 79,252 77,064 54,492 64,180
Total assets $ 4,132,026 $ 4,262,452 $ 4,151,138 $ 4,052,032 $ 4,112,948
Liabilities and equity
Liabilities:
Debt $ 2,156,784 $ 2,272,304 $ 2,159,732 $ 2,109,640 $ 2,207,903
Accounts payable and accrued expenses 144,974 186,202 176,636 127,027 96,465
Rents received in advance and security deposits 29,082 32,262 32,092 30,893 30,922
Dividends and distributions payable 31,402 31,299 31,306 31,302 31,305
Deferred revenue associated with operating leases 8,241 9,341 8,704 9,564 10,221
Property - operating lease liabilities 29,729 29,342 29,630 29,909 30,176
Interest rate derivatives 665 3,644 5,562 6,646 7,640
Other liabilities 13,793 14,085 10,691 9,699 15,599
Total liabilities 2,414,670 2,578,479 2,454,353 2,354,680 2,430,231
Redeemable noncontrolling interests 26,820 26,898 26,006 26,040 25,925
Equity:
COPT’s shareholders’ equity:
Common shares 1,124 1,123 1,123 1,123 1,123
Additional paid-in capital 2,479,119 2,481,539 2,480,412 2,478,416 2,476,807
Cumulative distributions in excess of net income (828,473) (856,863) (839,676) (835,894) (847,407)
Accumulated other comprehensive loss 164 (3,059) (5,347) (6,415) (7,391)
Total COPT’s shareholders’ equity 1,651,934 1,622,740 1,636,512 1,637,230 1,623,132
Noncontrolling interests in subsidiaries:
Common units in the Operating Partnership 25,285 21,363 21,568 21,604 21,345
Other consolidated entities 13,317 12,972 12,699 12,478 12,315
Total noncontrolling interests in subsidiaries 38,602 34,335 34,267 34,082 33,660
Total equity 1,690,536 1,657,075 1,670,779 1,671,312 1,656,792
Total liabilities, redeemable noncontrolling interests and equity $ 4,132,026 $ 4,262,452 $ 4,151,138 $ 4,052,032 $ 4,112,948

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

Corporate Office Properties Trust

Consolidated Statements of Operations

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Revenues
Lease revenue $ 141,389 $ 141,892 $ 138,032 $ 136,454 $ 137,290
Other property revenue 891 756 841 765 540
Construction contract and other service revenues 53,200 43,284 28,046 19,988 16,558
Total revenues 195,480 185,932 166,919 157,207 154,388
Operating expenses
Property operating expenses 57,181 56,459 52,728 50,914 53,276
Depreciation and amortization associated with real estate operations 34,264 34,504 33,807 34,732 34,500
Construction contract and other service expenses 51,650 42,089 27,089 19,082 15,793
General and administrative expenses 6,670 6,589 7,269 7,293 6,062
Leasing expenses 1,874 2,568 2,073 1,929 2,344
Business development expenses and land carry costs 783 1,088 1,093 1,372 1,094
Total operating expenses 152,422 143,297 124,059 115,322 113,069
Interest expense (14,424) (16,217) (15,720) (15,942) (17,519)
Interest and other income 1,893 1,968 1,818 2,228 1,865
Credit loss recoveries (expense) 316 88 326 (193) 907
Gain on sales of real estate 15 25,879 (32) 40,233 (490)
Loss on early extinguishment of debt (342) (41,073) (1,159) (25,228) (33,166)
Income (loss) from continuing operations before equity in income of unconsolidated entities and income taxes 30,516 13,280 28,093 42,983 (7,084)
Equity in income of unconsolidated entities 888 314 297 260 222
Income tax expense (153) (42) (47) (24) (32)
Income (loss) from continuing operations 31,251 13,552 28,343 43,219 (6,894)
Discontinued operations 29,573 1,413 451 679 815
Net income (loss) 60,824 14,965 28,794 43,898 (6,079)
Net (income) loss attributable to noncontrolling interests:
Common units in the Operating Partnership (856) (181) (357) (559) 85
Other consolidated entities (649) (1,076) (1,336) (938) (675)
Net income (loss) attributable to COPT common shareholders $ 59,319 $ 13,708 $ 27,101 $ 42,401 $ (6,669)
Amount allocable to share-based compensation awards (181) (116) (79) (125) (170)
Redeemable noncontrolling interests (39) (46) (89) (20) —
Numerator for diluted EPS $ 59,099 $ 13,546 $ 26,933 $ 42,256 $ (6,839)

Corporate Office Properties Trust

Funds from Operations

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Net income (loss) $ 60,824 $ 14,965 $ 28,794 $ 43,898 $ (6,079)
Real estate-related depreciation and amortization 34,264 36,346 36,611 37,555 37,321
Gain on sales of real estate (28,579) (25,879) 32 (40,233) 490
Depreciation and amortization on unconsolidated real estate JVs (1) 526 526 525 476 454
FFO - per Nareit (2)(3) 67,035 25,958 65,962 41,696 32,186
FFO allocable to other noncontrolling interests (4) (1,042) (1,458) (1,696) (1,302) (1,027)
Basic FFO allocable to share-based compensation awards (362) (149) (313) (193) (162)
Basic FFO available to common share and common unit holders (3) 65,631 24,351 63,953 40,201 30,997
Redeemable noncontrolling interests (6) (13) (68) 11 —
Diluted FFO adjustments allocable to share-based compensation awards 27 6 13 — —
Diluted FFO available to common share and common unit holders - per Nareit (3) 65,652 24,344 63,898 40,212 30,997
Loss on early extinguishment of debt 342 41,073 1,159 25,228 33,166
Loss on interest rate derivatives included in interest expense — 221 — — —
Demolition costs on redevelopment and nonrecurring improvements — (8) 129 302 —
Diluted FFO comparability adjustments for redeemable noncontrolling interests — — — — 458
Diluted FFO comparability adjustments allocable to share-based compensation awards (2) (172) (7) (137) (167)
Diluted FFO available to common share and common unit holders, as adjusted for comparability (3) $ 65,992 $ 65,458 $ 65,179 $ 65,605 $ 64,454

(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.

Corporate Office Properties Trust

Diluted Share and Unit Computations

(in thousands, except per share data)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
EPS Denominator:
Weighted average common shares - basic 112,020 111,990 111,985 111,974 111,888
Dilutive effect of share-based compensation awards 426 386 375 297 —
Dilutive effect of redeemable noncontrolling interests 132 124 138 133 —
Weighted average common shares - diluted 112,578 112,500 112,498 112,404 111,888
Diluted EPS $ 0.52 $ 0.12 $ 0.24 $ 0.38 $ (0.06)
Weighted Average Shares for period ended:
Common shares 112,020 111,990 111,985 111,974 111,888
Dilutive effect of share-based compensation awards 426 386 375 297 261
Common units 1,384 1,259 1,262 1,262 1,246
Redeemable noncontrolling interests 132 124 138 133 —
Denominator for diluted FFO per share 113,962 113,759 113,760 113,666 113,395
Redeemable noncontrolling interests — — — — 940
Denominator for diluted FFO per share, as adjusted for comparability 113,962 113,759 113,760 113,666 114,335
Weighted average common units (1,384) (1,259) (1,262) (1,262) (1,246)
Redeemable noncontrolling interests — — — — (940)
Anti-dilutive EPS effect of share-based compensation awards — — — — (261)
Denominator for diluted EPS 112,578 112,500 112,498 112,404 111,888
Diluted FFO per share - Nareit $ 0.58 $ 0.21 $ 0.56 $ 0.35 $ 0.27
Diluted FFO per share - as adjusted for comparability $ 0.58 $ 0.58 $ 0.57 $ 0.58 $ 0.56

Corporate Office Properties Trust

Adjusted Funds from Operations

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Diluted FFO available to common share and common unit holders, as adjusted for comparability $ 65,992 $ 65,458 $ 65,179 $ 65,605 $ 64,454
Straight line rent adjustments and lease incentive amortization (3,189) (3,835) (1,806) (1,288) (3,357)
Amortization of intangibles and other assets included in NOI (372) 40 41 41 40
Share-based compensation, net of amounts capitalized 2,111 2,018 2,048 2,009 1,904
Amortization of deferred financing costs 597 640 736 811 793
Amortization of net debt discounts, net of amounts capitalized 605 615 567 520 542
Replacement capital expenditures (1) (17,358) (32,317) (13,331) (13,095) (12,230)
Other 39 204 201 178 241
Diluted AFFO available to common share and common unit holders (“diluted AFFO”) $ 48,425 $ 32,823 $ 53,635 $ 54,781 $ 52,387
Replacement capital expenditures (1)
Tenant improvements and incentives $ 10,010 $ 19,724 $ 8,654 $ 8,303 $ 7,139
Building improvements 6,832 17,778 7,793 6,771 3,628
Leasing costs 2,270 5,863 2,939 2,805 1,129
Net additions to (exclusions from) tenant improvements and incentives 1,808 (5,093) (1,523) (988) 2,900
Excluded building improvements and leasing costs (3,562) (5,955) (4,532) (3,796) (2,566)
Replacement capital expenditures $ 17,358 $ 32,317 $ 13,331 $ 13,095 $ 12,230

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

Corporate Office Properties Trust

EBITDAre and Adjusted EBITDA

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Net income (loss) $ 60,824 $ 14,965 $ 28,794 $ 43,898 $ (6,079)
Interest expense 14,424 16,217 15,720 15,942 17,519
Income tax expense 153 42 47 24 32
Real estate-related depreciation and amortization 34,264 36,346 36,611 37,555 37,321
Other depreciation and amortization 607 622 589 1,045 555
Gain on sales of real estate (28,579) (25,879) 32 (40,233) 490
Adjustments from unconsolidated real estate JVs 758 763 763 711 693
EBITDAre 82,451 43,076 82,556 58,942 50,531
Loss on early extinguishment of debt 342 41,073 1,159 25,228 33,166
Net gain on other investments (565) — — (63) —
Credit loss (recoveries) expense (316) (88) (326) 193 (907)
Business development expenses 326 628 473 584 548
Demolition costs on redevelopment and nonrecurring improvements — (8) 129 302 —
Adjusted EBITDA 82,238 84,681 83,991 85,186 83,338
Pro forma NOI adjustment for property changes within period 579 — 3,240 (379) 166
Change in collectability of deferred rental revenue — — — — 124
Other — 1,578 — — —
In-place adjusted EBITDA 82,817 86,259 87,231 84,807 83,628
Pro forma NOI adjustment for sale of Wholesale Data Center N/A (3,074) N/A N/A N/A
Pro forma in-place adjusted EBITDA $ 82,817 $ 83,185 $ 87,231 $ 84,807 $ 83,628

Corporate Office Properties Trust

Properties by Segment (1) - 3/31/22

(square feet in thousands)

# of<br>Properties Operational<br>Square Feet % Occupied % Leased
Core Portfolio:
Defense/IT Locations:
Fort Meade/Baltimore Washington (“BW”) Corridor:
National Business Park 32 3,926 93.6% 93.8%
Howard County 35 2,862 85.3% 94.0%
Other 23 1,725 90.6% 92.6%
Total Fort Meade/BW Corridor 90 8,513 90.2% 93.6%
Northern Virginia (“NoVA”) Defense/IT (2) 16 2,501 88.6% 91.0%
Lackland AFB (San Antonio, Texas) 8 1,060 100.0% 100.0%
Navy Support 22 1,260 92.9% 93.6%
Redstone Arsenal (Huntsville, Alabama) 17 1,532 91.3% 92.6%
Data Center Shells:
Consolidated Properties 8 1,822 100.0% 100.0%
Unconsolidated JV Properties (3) 19 3,182 100.0% 100.0%
Total Defense/IT Locations 180 19,870 93.3% 95.2%
Regional Office (2) 6 1,979 81.8% 83.1%
Core Portfolio 186 21,849 92.2% 94.1%
Other Properties 2 157 66.2% 66.2%
Total Portfolio 188 22,006 92.0% 93.9%
Consolidated Portfolio 169 18,824 90.7% 92.8%

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

(2)Reflects our reclassification in the quarter ended 3/31/22 of two properties to our NoVA Defense/IT sub-segment from our Regional Office segment.

(3)See page 32 for additional disclosure regarding our unconsolidated real estate JVs.

chart-96962f758517459f861.jpgchart-5fbbd113137940eca13.jpg

Corporate Office Properties Trust

NOI from Real Estate Operations and Occupancy by Property Grouping - 3/31/22

(dollars and square feet in thousands)

As of Period End NOI from Real Estate Operations
# of <br>Properties Operational Square Feet % Occupied (1) % Leased (1) Annualized<br>Rental Revenue (2) % of Total <br>Annualized<br>Rental Revenue (2)
Property Grouping Three Months Ended
Core Portfolio:
Same Properties: (3)
Consolidated properties 157 17,426 91.0% 93.2% $ 525,956 91.4 % $ 79,119
Unconsolidated real estate JV 17 2,750 100.0% 100.0% 4,002 0.7 % 926
Total Same Properties in Core Portfolio 174 20,176 92.2% 94.1% 529,958 92.1 % 80,045
Properties Placed in Service (4) 10 1,241 89.1% 91.8% 39,742 6.9 % 5,462
Other unconsolidated JV properties (5) 2 432 100.0% 100.0% 647 0.1 % 156
Total Core Portfolio 186 21,849 92.2% 94.1% 570,347 99.1 % 85,663
Wholesale Data Center (6) N/A N/A N/A N/A N/A N/A 955
Other 2 157 66.2% 66.2% 5,190 0.9 % 570
Total Portfolio 188 22,006 92.0% 93.9% $ 575,537 100.0 % $ 87,188
Consolidated Portfolio 169 18,824 90.7% 92.8% $ 570,888 99.2 % $ 86,108
As of Period End NOI from Real Estate Operations
# of<br>Properties Operational Square Feet % Occupied (1) % Leased (1) Annualized<br>Rental Revenue (2) % of Core <br>Annualized<br>Rental Revenue (2)
Property Grouping Three Months Ended
Core Portfolio:
Defense/IT Locations:
Consolidated properties 161 16,688 92.0% 94.3% $ 507,509 89.0 % $ 77,431
Unconsolidated real estate JVs 19 3,182 100.0% 100.0% 4,649 0.8 % 1,080
Total Defense/IT Locations 180 19,870 93.3% 95.2% 512,158 89.8 % 78,511
Regional Office 6 1,979 81.8% 83.1% 58,189 10.2 % 7,152
Total Core Portfolio 186 21,849 92.2% 94.1% $ 570,347 100.0 % $ 85,663

(1)Percentages calculated based on operational square feet.

(2)With regard to properties owned through unconsolidated real estate joint ventures, we include the portion of Annualized Rental Revenue (“ARR”) allocable to COPT’s ownership interest.

(3)Includes properties stably owned and 100% operational since at least 1/1/21.

(4)Newly developed or redeveloped properties placed in service that were not fully operational by 1/1/21.

(5)Includes two data center shell properties in which we sold ownership interests and retained 10% interests through an unconsolidated real estate JV in 2021.

(6)We sold our Wholesale Data Center on 1/25/22.

Corporate Office Properties Trust

Consolidated Real Estate Revenues and NOI by Segment

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Consolidated real estate revenues
Defense/IT Locations:
Fort Meade/BW Corridor $ 67,214 $ 64,805 $ 66,029 $ 64,840 $ 66,446
NoVA Defense/IT (1) 18,576 17,965 16,077 15,626 16,185
Lackland Air Force Base 14,713 16,994 14,519 13,688 12,555
Navy Support 8,169 8,356 8,558 8,445 8,398
Redstone Arsenal 9,195 9,555 9,144 8,775 8,253
Data Center Shells-Consolidated 7,505 7,812 6,913 8,070 8,787
Total Defense/IT Locations 125,372 125,487 121,240 119,444 120,624
Regional Office (1) 15,082 15,410 16,024 15,970 15,703
Wholesale Data Center 1,980 8,235 7,717 7,204 7,334
Other 1,826 1,751 1,609 1,805 1,503
Consolidated real estate revenues $ 144,260 $ 150,883 $ 146,590 $ 144,423 $ 145,164
NOI
Defense/IT Locations:
Fort Meade/BW Corridor $ 41,430 $ 41,625 $ 43,073 $ 43,126 $ 41,775
NoVA Defense/IT (1) 11,707 11,763 9,747 9,709 9,849
Lackland Air Force Base 7,641 7,774 7,584 6,182 5,681
Navy Support 4,698 4,853 5,104 5,218 4,965
Redstone Arsenal 5,460 6,462 6,141 5,807 5,699
Data Center Shells:
Consolidated properties 6,495 6,242 6,256 7,293 7,705
COPT’s share of unconsolidated real estate JVs 1,080 1,079 1,060 973 917
Total Defense/IT Locations 78,511 79,798 78,965 78,308 76,591
Regional Office (1) 7,152 7,066 7,979 8,507 8,499
Wholesale Data Center 955 3,074 3,105 3,376 3,511
Other 570 585 411 589 506
NOI from real estate operations $ 87,188 $ 90,523 $ 90,460 $ 90,780 $ 89,107

(1)Includes our retrospective reclassification in the quarter ended 3/31/22 of two properties to our NoVA Defense/IT sub-segment from our Regional Office segment.

Corporate Office Properties Trust

Cash NOI by Segment

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Cash NOI
Defense/IT Locations:
Fort Meade/BW Corridor $ 41,271 $ 42,666 $ 42,301 $ 42,514 $ 39,666
NoVA Defense/IT 10,150 10,187 10,088 10,205 9,786
Lackland Air Force Base 7,711 7,793 6,637 6,122 5,999
Navy Support 4,846 4,981 5,381 5,394 4,965
Redstone Arsenal 4,593 5,162 5,262 4,890 4,706
Data Center Shells:
Consolidated properties 5,468 5,430 5,426 6,261 6,505
COPT’s share of unconsolidated real estate JVs 982 975 951 871 816
Total Defense/IT Locations 75,021 77,194 76,046 76,257 72,443
Regional Office 5,157 6,167 6,675 7,079 6,884
Wholesale Data Center 964 3,122 3,138 3,403 3,545
Other 599 658 447 659 578
Cash NOI from real estate operations 81,741 87,141 86,306 87,398 83,450
Straight line rent adjustments and lease incentive amortization 2,921 2,521 2,148 1,692 4,006
Amortization of acquired above- and below-market rents 519 100 99 98 99
Amortization of intangibles and other assets to property operating expenses (146) (139) (140) (139) (139)
Lease termination fees, net 221 (893) 853 1,094 1,362
Tenant funded landlord assets and lease incentives 1,834 1,689 1,085 535 228
Cash NOI adjustments in unconsolidated real estate JVs 98 104 109 102 101
NOI from real estate operations $ 87,188 $ 90,523 $ 90,460 $ 90,780 $ 89,107

Corporate Office Properties Trust

Same Properties (1) Average Occupancy Rates by Segment

(square feet in thousands)

# of Properties Operational Square Feet Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Core Portfolio:
Defense/IT Locations:
Fort Meade/BW Corridor 88 8,305 89.9 % 90.3 % 89.7 % 90.5 % 90.3 %
NoVA Defense/IT 15 2,153 86.8 % 86.5 % 85.7 % 87.2 % 87.6 %
Lackland Air Force Base 7 953 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Navy Support 21 1,242 92.9 % 95.1 % 96.7 % 96.9 % 96.8 %
Redstone Arsenal 14 1,424 91.0 % 96.4 % 99.5 % 99.6 % 99.6 %
Data Center Shells:
Consolidated properties 7 1,557 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Unconsolidated JV properties 17 2,750 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Total Defense/IT Locations 169 18,384 92.7 % 93.4 % 93.4 % 93.9 % 93.9 %
Regional Office 5 1,792 84.0 % 92.4 % 92.7 % 93.0 % 92.5 %
Core Portfolio Same Properties 174 20,176 91.9 % 93.3 % 93.3 % 93.9 % 93.8 %
Other Same Properties 2 157 66.2 % 66.2 % 66.2 % 67.0 % 68.4 %
Total Same Properties 176 20,333 91.7 % 93.1 % 93.1 % 93.7 % 93.6 %
Same Properties (1) Period End Occupancy Rates by Segment<br><br>(square feet in thousands)
# of Properties Operational Square Feet
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Core Portfolio:
Defense/IT Locations:
Fort Meade/BW Corridor 88 8,305 90.5 % 90.3 % 90.2 % 89.9 % 90.3 %
NoVA Defense/IT 15 2,153 86.8 % 86.4 % 85.5 % 86.5 % 87.4 %
Lackland Air Force Base 7 953 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Navy Support 21 1,242 92.8 % 93.9 % 96.5 % 96.9 % 96.9 %
Redstone Arsenal 14 1,424 91.7 % 90.7 % 99.3 % 99.6 % 99.6 %
Data Center Shells:
Consolidated properties 7 1,557 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Unconsolidated JV properties 17 2,750 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Total Defense/IT Locations 169 18,384 93.0 % 92.9 % 93.6 % 93.6 % 93.9 %
Regional Office 5 1,792 84.0 % 92.0 % 92.7 % 93.1 % 93.1 %
Core Portfolio Same Properties 174 20,176 92.2 % 92.8 % 93.5 % 93.5 % 93.8 %
Other Same Properties 2 157 66.2 % 66.2 % 66.2 % 66.2 % 68.4 %
Total Same Properties 176 20,333 92.0 % 92.6 % 93.3 % 93.3 % 93.6 %

(1)Includes properties stably owned and 100% operational since at least 1/1/21.

Corporate Office Properties Trust

Same Properties Real Estate Revenues and NOI by Segment

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Same Properties real estate revenues
Defense/IT Locations:
Fort Meade/BW Corridor $ 65,571 $ 63,196 $ 65,382 $ 64,397 $ 66,003
NoVA Defense/IT 16,481 15,870 16,052 15,627 16,101
Lackland Air Force Base 13,626 15,951 13,551 13,420 12,555
Navy Support 8,155 8,356 8,558 8,445 8,398
Redstone Arsenal 8,574 8,967 8,600 8,323 8,053
Data Center Shells-Consolidated 7,249 7,813 6,915 6,905 7,106
Total Defense/IT Locations 119,656 120,153 119,058 117,117 118,216
Regional Office 13,270 13,681 14,335 14,291 14,021
Other Properties 659 666 665 652 665
Same Properties real estate revenues $ 133,585 $ 134,500 $ 134,058 $ 132,060 $ 132,902
Same Properties NOI
Defense/IT Locations:
Fort Meade/BW Corridor $ 40,048 $ 40,161 $ 42,550 $ 42,828 $ 41,444
NoVA Defense/IT 9,972 10,078 9,725 9,708 9,764
Lackland Air Force Base 6,610 6,769 6,653 5,924 5,682
Navy Support 4,684 4,853 5,104 5,218 4,965
Redstone Arsenal 5,106 6,119 5,755 5,495 5,565
Data Center Shells:
Consolidated properties 6,240 6,245 6,256 6,263 6,322
COPT’s share of unconsolidated real estate JV 926 923 924 923 917
Total Defense/IT Locations 73,586 75,148 76,967 76,359 74,659
Regional Office 6,459 6,529 7,303 7,686 7,201
Other Properties 305 347 325 381 304
Same Properties NOI $ 80,350 $ 82,024 $ 84,595 $ 84,426 $ 82,164

Corporate Office Properties Trust

Same Properties Cash NOI by Segment

(dollars in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Same Properties cash NOI
Defense/IT Locations:
Fort Meade/BW Corridor $ 40,157 $ 41,943 $ 42,188 $ 42,422 $ 39,564
NoVA Defense/IT 10,511 10,596 10,090 10,205 9,701
Lackland Air Force Base 6,765 6,870 6,664 6,133 5,999
Navy Support 4,833 4,982 5,381 5,394 4,965
Redstone Arsenal 4,587 5,381 5,367 5,018 4,768
Data Center Shells:
Consolidated properties 5,469 5,433 5,426 5,323 5,249
COPT’s share of unconsolidated real estate JV 843 837 832 826 816
Total Defense/IT Locations 73,165 76,042 75,948 75,321 71,062
Regional Office 6,140 7,286 7,679 7,935 7,269
Other Properties 262 360 300 392 319
Same Properties cash NOI 79,567 83,688 83,927 83,648 78,650
Straight line rent adjustments and lease incentive amortization (1,503) (2,607) (1,432) (1,045) 1,724
Amortization of acquired above- and below-market rents 519 100 99 98 99
Lease termination fees, net 221 (893) 853 1,094 1,362
Tenant funded landlord assets and lease incentives 1,463 1,649 1,057 535 228
Cash NOI adjustments in unconsolidated real estate JV 83 87 91 96 101
Same Properties NOI $ 80,350 $ 82,024 $ 84,595 $ 84,426 $ 82,164
Percentage change in total Same Properties cash NOI (1) 1.2%
Percentage change in Defense/IT Locations Same Properties cash NOI (1) 3.0%

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

Corporate Office Properties Trust

Leasing (1)(2)

Quarter Ended 3/31/22

(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 328 — 95 23 — 447 — 2 448
Expiring Square Feet 417 2 105 33 — 557 141 2 700
Vacating Square Feet 88 2 10 11 — 111 141 — 252
Retention Rate (% based upon square feet) 78.8 % — % 90.9 % 68.5 % — % 80.2 % — % 100.0 % 64.0 %
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot $ 1.63 $ — $ 2.57 $ 6.24 $ — $ 2.07 $ — $ 0.82 $ 2.07
Weighted Average Lease Term in Years 3.5 — 2.5 3.1 — 3.3 — 3.0 3.3
Straight-line Rent Per Square Foot
Renewal Straight-line Rent $ 32.16 $ — $ 25.61 $ 27.57 $ — $ 30.52 $ — $ 27.44 $ 30.51
Expiring Straight-line Rent $ 33.12 $ — $ 25.20 $ 26.55 $ — $ 31.09 $ — $ 29.83 $ 31.09
Change in Straight-line Rent (2.9) % — % 1.6 % 3.8 % — % (1.8) % — % (8.0) % (1.9) %
Cash Rent Per Square Foot
Renewal Cash Rent $ 32.81 $ — $ 26.30 $ 27.41 $ — $ 31.14 $ — $ 26.50 $ 31.13
Expiring Cash Rent $ 35.24 $ — $ 26.56 $ 27.77 $ — $ 33.01 $ — $ 29.83 $ 33.00
Change in Cash Rent (6.9) % — % (1.0) % (1.3) % — % (5.7) % — % (11.2) % (5.7) %
Average Escalations Per Year 2.6 % — % 2.6 % 2.6 % — % 2.6 % — % 3.5 % 2.6 %
New Leases
Development and Redevelopment Space
Leased Square Feet — — — — 265 265 — — 265
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot $ — $ — $ — $ — $ — $ — $ — $ — $ —
Weighted Average Lease Term in Years — — — — 15.0 15.0 — — 15.0
Straight-line Rent Per Square Foot $ — $ — $ — $ — $ 29.01 $ 29.01 $ — $ — $ 29.01
Cash Rent Per Square Foot $ — $ — $ — $ — $ 25.49 $ 25.49 $ — $ — $ 25.49
Vacant Space
Leased Square Feet 94 40 9 9 — 151 6 — 157
Statistics for Completed Leasing:
Per Annum Average Committed Cost per Square Foot $ 10.31 $ 12.61 $ 8.41 $ 4.39 $ — $ 10.46 $ 7.03 $ — $ 10.32
Weighted Average Lease Term in Years 6.7 5.8 5.9 7.7 — 6.4 5.4 — 6.4
Straight-line Rent Per Square Foot $ 29.00 $ 33.16 $ 44.39 $ 20.93 $ — $ 30.49 $ 44.55 $ — $ 31.04
Cash Rent Per Square Foot $ 27.15 $ 32.00 $ 44.30 $ 21.42 $ — $ 29.05 $ 50.55 $ — $ 29.90
Total Square Feet Leased 423 40 104 32 265 863 6 2 871
Average Escalations Per Year 2.7 % 2.5 % 2.6 % 2.6 % 2.0 % 2.2 % 3.0 % 3.5 % 2.3 %
Average Escalations Excl. Data Center Shells 2.7 %

(1)Activity excludes 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)Refer to the section entitled “Definitions” for definitions of certain terms on this schedule.

Corporate Office Properties Trust

Lease Expiration Analysis as of 3/31/22 (1)

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

Segment of Lease and Year of Expiration (2) Square Footage of Leases Expiring Annualized Rental<br>Revenue of Expiring Leases (3) % of Core/Total<br>Annualized <br>Rental<br>Revenue<br>Expiring (3)(4) Annualized Rental<br>Revenue of<br>Expiring Leases per Occupied Sq. Foot (3)
Core Portfolio
Ft Meade/BW Corridor 673 $ 24,799 4.3 % $ 36.86
NoVA Defense/IT 53 1,689 0.3 % 31.81
Navy Support 92 3,024 0.5 % 32.98
Redstone Arsenal 98 2,381 0.4 % 21.48
Regional Office 126 4,405 0.8 % 34.74
2022 1,042 36,299 6.4 % 34.40
Ft Meade/BW Corridor 1,235 45,805 8.0 % 37.05
NoVA Defense/IT 160 5,094 0.9 % 31.74
Navy Support 321 8,131 1.4 % 25.35
Redstone Arsenal 211 4,918 0.9 % 23.26
Regional Office 142 3,274 0.6 % 22.99
2023 2,069 67,222 11.8 % 32.45
Ft Meade/BW Corridor 1,166 43,116 7.6 % 36.94
NoVA Defense/IT 487 17,486 3.1 % 35.88
Navy Support 318 8,014 1.4 % 25.18
Redstone Arsenal 43 1,066 0.2 % 25.01
Data Center Shells-Unconsolidated JV Properties 546 679 0.1 % 12.44
Regional Office 72 2,193 0.4 % 30.10
2024 2,632 72,554 12.7 % 33.86
Ft Meade/BW Corridor 1,826 64,111 11.2 % 35.05
NoVA Defense/IT 296 12,222 2.1 % 41.29
Lackland Air Force Base 703 39,605 6.9 % 56.36
Navy Support 128 3,173 0.6 % 24.84
Redstone Arsenal 264 5,825 1.0 % 21.99
Data Center Shells-Unconsolidated JV Properties 121 162 — % 13.38
Regional Office 95 3,699 0.6 % 39.03
2025 3,433 128,796 22.6 % 38.72
Ft Meade/BW Corridor 687 26,946 4.7 % 39.22
NoVA Defense/IT 38 1,136 0.2 % 30.29
Lackland Air Force Base 250 12,345 2.2 % 49.38
Navy Support 108 3,477 0.6 % 32.26
Redstone Arsenal 18 432 0.1 % 24.62
Data Center Shells-Unconsolidated JV Properties 446 756 0.1 % 16.96
Regional Office 231 7,841 1.4 % 33.93
2026 1,778 52,933 9.3 % 38.48
Thereafter
Consolidated Properties 7,127 209,491 36.8 % 28.64
Unconsolidated JV Properties 2,069 3,052 0.5 % 14.75
Core Portfolio 20,150 $ 570,347 100.0 % $ 32.64
Segment of Lease and Year of Expiration (2) Square Footage of Leases Expiring Annualized Rental<br>Revenue of Expiring Leases (3) % of Core/Total<br>Annualized <br>Rental<br>Revenue<br>Expiring (3)(4) Annualized Rental<br>Revenue of<br>Expiring Leases per Occupied Sq. Foot (3)
--- --- --- --- --- --- --- ---
Core Portfolio 20,150 $ 570,347 99.1 % $ 32.64
Other 104 5,190 0.9 % 23.80
Total Portfolio 20,254 $ 575,537 100.0 % $ 32.59
Consolidated Portfolio 17,072 $ 570,888
Unconsolidated JV Properties 3,182 $ 4,649

Note: As of 3/31/22, the weighted average lease term was 5.5 years for the core and total portfolio and 5.4 years for the consolidated portfolio.

(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 3/31/22 of 407,000 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 3/31/22 (ignoring free rent then in effect and rent associated with tenant funded landlord assets) 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

2022 Core Portfolio Quarterly Lease Expiration Analysis as of 3/31/22 (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<br>Revenue of Expiring Leases (3) % of Core Annualized <br>Rental Revenue Expiring (3) Annualized Rental Revenue of Expiring Leases per Occupied Sq. Foot
Core Portfolio
Ft Meade/BW Corridor 160 $ 5,312 0.9 % $ 33.24
NoVA Defense/IT 31 991 0.2 % 32.35
Navy Support 42 1,429 0.3 % 34.18
Redstone Arsenal 58 1,360 0.2 % 23.28
Regional Office 34 1,319 0.2 % 38.82
Q2 2022 325 10,411 1.8 % 32.07
Ft Meade/BW Corridor 224 8,333 1.5 % 37.07
NoVA Defense/IT 2 18 — % 9.82
Navy Support 21 842 0.1 % 40.32
Regional Office 17 585 0.1 % 32.95
Q3 2022 264 9,778 1.7 % 36.87
Ft Meade/BW Corridor 288 11,153 2.0 % 38.70
NoVA Defense/IT 21 680 0.1 % 32.97
Navy Support 29 754 0.1 % 25.97
Redstone Arsenal 40 1,022 0.2 % 25.68
Regional Office 75 2,501 0.4 % 33.31
Q4 2022 453 16,110 2.8 % 34.62
1,042 $ 36,299 6.4 % $ 34.40

(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 3/31/22.

(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 3/31/22 (ignoring free rent then in effect and rent associated with tenant funded landlord assets) multiplied by 12, plus the estimated annualized expense reimbursements under existing leases.

Corporate Office Properties Trust

Top 20 Tenants as of 3/31/22 (1)

(dollars and square feet in thousands)

Tenant Total<br>Annualized<br>Rental Revenue (2) %<br>of Total<br>Annualized <br>Rental Revenue (2) Occupied Square Feet Weighted Average Remaining Lease Term (3)
United States Government (4) $ 212,719 37.0 % 5,127 4.3
Fortune 100 Company 47,189 8.2 % 5,248 8.7
General Dynamics Corporation 30,743 5.3 % 752 3.0
The Boeing Company 15,341 2.7 % 500 2.0
CACI International Inc 14,008 2.4 % 354 3.0
Peraton Corp. 12,690 2.2 % 349 6.0
Booz Allen Hamilton, Inc. 10,943 1.9 % 293 3.3
CareFirst Inc. 10,314 1.8 % 312 10.0
Northrop Grumman Corporation 8,214 1.4 % 284 2.8
Raytheon Technologies Corporation 6,701 1.2 % 186 2.1
Wells Fargo & Company 6,652 1.2 % 159 6.5
Yulista Holding, LLC 6,633 1.2 % 368 7.7
AT&T Corporation 6,335 1.1 % 321 7.5
Miles and Stockbridge, PC 6,313 1.1 % 160 5.5
Morrison & Foerster, LLP 6,058 1.1 % 102 15.0
Mantech International Corp. 6,053 1.1 % 195 2.8
Jacobs Engineering Group Inc. 5,867 1.0 % 177 6.8
The MITRE Corporation 5,005 0.9 % 152 4.2
University System of Maryland 4,751 0.8 % 146 5.7
Fortune 100 Company 4,622 0.8 % — N/A
Subtotal Top 20 Tenants 427,151 74.4 % 15,185 6.0
All remaining tenants 148,386 25.6 % 5,069 3.8
Total / Weighted Average $ 575,537 100.0 % 20,254 5.5

(1)For properties owned through unconsolidated real estate joint ventures, includes COPT’s share of those properties’ ARR of $4.6 million (see page 32 for additional information).

(2)Total ARR is the monthly contractual base rent as of 3/31/22 (ignoring free rent then in effect and rent associated with tenant funded landlord assets), 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. The weighting of the lease term was computed based on occupied square feet (excluding leases not associated with square feet, such as ground leases).

(4)Substantially all of our government leases are subject to early termination provisions which are customary in government leases. As of 3/31/22, $5.4 million of our ARR was through the General Services Administration (GSA), representing 2.5% of our ARR from the United States Government and 0.9% of our total ARR.

Corporate Office Properties Trust

Property Dispositions

(dollars in thousands)

Property Property Segment Location # of Properties Operational Megawatts Transaction<br>Date % Occupied on Transaction Date Transaction<br>Value <br>(in millions)
9651 Hornbaker Road (DC-6) Wholesale Data Center Manassas, VA 1 19.25 1/25/22 86.7 % $ 223

Corporate Office Properties Trust

Summary of Development Projects as of 3/31/22 (1)

(dollars and square feet in thousands)

Total Rentable Square Feet % Leased as of 3/31/22 as of 3/31/22 (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:
560 National Business Parkway Annapolis Junction, Maryland 183 100% $ 66,325 $ 44,678 $ — 3Q 22 4Q 22
Navy Support:
Expedition VII (4) St. Mary’s County, Maryland 29 62% 9,524 8,981 6,376 1Q 22 1Q 23
Redstone Arsenal:
8000 Rideout Road (5) Huntsville, Alabama 100 88% 27,935 26,252 6,602 2Q 21 2Q 22
8300 Rideout Road Huntsville, Alabama 131 100% 51,100 24,468 — 4Q 22 4Q 22
8200 Rideout Road Huntsville, Alabama 131 100% 52,100 23,510 — 4Q 22 4Q 22
6200 Redstone Gateway Huntsville, Alabama 172 91% 54,354 22,169 — 1Q 23 1Q 23
7000 Redstone Gateway Huntsville, Alabama 46 46% 11,477 2,644 — 1Q 23 1Q 24
300 Secured Gateway Huntsville, Alabama 205 100% 68,262 5,337 — 1Q 24 1Q 24
Subtotal / Average 785 93% 265,228 104,380 6,602
Data Center Shells:
Oak Grove D Northern Virginia 265 100% 91,000 44,228 — 4Q 22 4Q 22
PS A Northern Virginia 227 100% 65,600 6,493 — 3Q 23 3Q 23
PS B Northern Virginia 193 100% 55,000 5,545 — 4Q 23 4Q 23
Subtotal / Average 685 100% 211,600 56,266 —
Total Under Development 1,682 96% $ 552,677 $ 214,305 $ 12,978

(1)Includes properties under, or contractually committed for, development as of 3/31/22.

(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, 18,000 square feet were operational as of 3/31/22.

(5)Although classified as under development, 20,000 square feet were operational as of 3/31/22.

Corporate Office Properties Trust

Development Placed in Service as of 3/31/22

(square feet in thousands)

Total Property Square Feet Placed in Service Total Space Placed in Service % Leased as of 3/31/22
Property Segment % Leased as of 3/31/22 Rentable Square Feet 2022
Property and Location 1st Quarter
Oak Grove C<br><br>Northern Virginia Data Center Shells 100% 265 265 100%
Expedition VII<br><br>St. Mary’s County, Maryland Navy Support 62% 29 18 100%
Total Development Placed in Service 96% 294 283 100%

Corporate Office Properties Trust

Summary of Land Owned/Controlled as of 3/31/22 (1)

(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 146 1,816
Howard County 19 290
Other 126 1,338
Total Fort Meade/BW Corridor 291 3,444
NoVA Defense/IT 29 1,171
Navy Support 38 64
Redstone Arsenal (2) 310 2,439
Data Center Shells 33 647
Total Defense/IT Locations 701 7,765
Regional Office 10 900
Total land owned/controlled for future development 711 8,665 $ 214,530
Other land owned/controlled 43 638 3,488
Land held, net 754 9,303 $ 218,018

(1)This land inventory schedule includes properties under ground lease to us and excludes all properties listed as development 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) (1) Stated Rate Effective Rate <br>(2)(3) Gross Debt Balance at 3/31/22
Debt
Secured debt 3.0 3.42 % 3.62 % $ 120,701
Unsecured debt 7.2 2.37 % 2.67 % 2,060,811
Total Consolidated Debt 6.9 2.43 % 2.72 % $ 2,181,512
Fixed rate debt (3) 7.8 2.58 % 2.76 % $ 2,121,512
Variable rate debt 1.7 1.46 % 1.38 % 60,000
Total Consolidated Debt $ 2,181,512
Common Equity
Common Shares 112,419
Common Units (4) 1,660
Total Common Shares and Units 114,079
Closing Common Share Price on 3/31/22 $ 28.54
Equity Market Capitalization $ 3,255,815
Total Market Capitalization $ 5,437,327

(1)Calculated assuming exercise of extension options on our Revolving Credit Facility.

(2)Excludes the effect of deferred financing cost amortization.

(3)Includes the effect of interest rate swaps with notional amounts of $234.1 million that hedge the risk of changes in interest rates on variable rate debt.

(4)Excludes unvested share-based compensation awards subject to market conditions.

Investment Grade Ratings & Outlook Latest Affirmation
Fitch BBB- Stable 10/8/21
Moody’s Baa3 Stable 3/3/21
Standard & Poor’s BBB- Stable 3/3/21

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Corporate Office Properties Trust

Summary of Outstanding Debt as of 3/31/22

(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% $ 160,000 Mar-23 (1)(2) 7740 Milestone Parkway 3.96% $ 16,309 $ 15,902 Feb-23
Senior Unsecured Notes LW Redstone:
2.25% due 2026 2.25% 400,000 Mar-26 1000, 1200 & 1100 Redstone
2.00% due 2029 2.00% 400,000 Jan-29 Gateway (3) 4.47% (4) 30,341 $ 27,649 Jun-24
2.75% due 2031 2.75% 600,000 Apr-31 4000 & 4100 Market Street and
2.90% due 2033 2.90% 400,000 Dec-33 8800 Redstone Gateway (2)(3) L + 1.55% 23,000 $ 22,100 Mar-25 (5)
Subtotal - Senior Unsecured Notes 2.51% $ 1,800,000 M Square:
5825 & 5850 University Research
Unsecured Bank Term Loans Court (3) 3.82% 39,991 $ 35,603 Jun-26
2022 Maturity L + 1.25% $ 100,000 Dec-22 (2) 5801 University Research Court (2)(3) L + 1.45% 11,060 $ 10,020 Aug-26
Other Unsecured Debt 0.00% 811 May-26 Total Secured Debt 3.42% $ 120,701
Total Unsecured Debt 2.37% $ 2,060,811
Debt Summary
Total Unsecured Debt 2.37% $ 2,060,811
Total Secured Debt 3.42% 120,701
Consolidated Debt 2.43% $ 2,181,512
Net discounts and deferred financing costs (24,728)
Debt, per balance sheet $ 2,156,784
Consolidated Debt $ 2,181,512
COPT’s share of unconsolidated JV gross debt 26,250
Gross debt $ 2,207,762

(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.

Corporate Office Properties Trust

Summary of Outstanding Debt as of 3/31/22 (continued)

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chart-bf52d12f0c8641d6b79.jpgchart-39936cc352b74fd4a52.jpg

(1)Revolving Credit Facility maturity of $160.0 million scheduled for 2023 is presented assuming our exercise of two six-month extension options.

(2)Includes the effect of $234.1 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 <br>3/31/22 As of and for Three Months Ended<br><br>3/31/22
Senior Note Covenants (1) Required Line of Credit & Term Loan Covenants (1) Required
Total Debt / Total Assets < 60% 40.2% Total Debt / Total Assets < 60% 38.6%
Secured Debt / Total Assets < 40% 2.2% Secured Debt / Total Assets < 40% 2.2%
Debt Service Coverage > 1.5x 5.5x Adjusted EBITDA / Fixed Charges > 1.5x 5.0x
Unencumbered Assets / Unsecured Debt > 150% 250.0% Unsecured Debt / Unencumbered Assets < 60% 38.7%
Unencumbered Adjusted NOI / Unsecured Interest Expense > 1.75x 5.4x
Debt Ratios (All coverage computations include discontinued operations) Page Refer. Unencumbered Portfolio Analysis
Gross debt 28 $ 2,207,762 # of unencumbered properties 163
Adjusted book 36 $ 5,514,446 % of total portfolio 87 %
Net debt to adjusted book ratio 39.7 % Unencumbered square feet in-service 18,580
Net debt 36 $ 2,187,957 % of total portfolio 84 %
Net debt adj. for fully-leased development 36 $ 2,033,698 NOI from unencumbered real estate operations $ 82,912
In-place adjusted EBITDA 10 $ 82,817 % of total NOI from real estate operations 95 %
Net debt to in-place adjusted EBITDA ratio 6.6 x Adjusted EBITDA from unencumbered real estate operations $ 78,528
Net debt adj. for fully-leased development to in-place adj. EBITDA ratio 6.1 x % of total adjusted EBITDA from real estate operations 95 %
Denominator for debt service coverage 35 $ 14,227 Unencumbered adjusted book $ 5,229,533
Denominator for fixed charge coverage 35 $ 15,756 % of total adjusted book 95 %
Adjusted EBITDA 10 $ 82,238
Adjusted EBITDA debt service coverage ratio 5.8 x
Adjusted EBITDA fixed charge coverage ratio 5.2 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 3/31/22

(dollars and square feet in thousands)

Operating Properties Operational <br>Square Feet % Occupied % Leased NOI for the Three Months Ended 3/31/22 (1) Total Assets (2) Venture Level Debt COPT Nominal Ownership %
Suburban Maryland:
M Square Associates, LLC (4 properties) 414 87.0% 93.3% $ 1,559 $ 98,025 $ 51,051 50%
Huntsville, Alabama:
LW Redstone Company, LLC (16 properties) 1,395 90.9% 91.9% 5,101 300,592 53,341 85% (3)
Washington, D.C.:
Stevens Place (1 property) 188 60.6% 60.6% 692 167,047 — 95%
Total / Average 1,997 87.2% 89.3% $ 7,352 $ 565,664 $ 104,392
Non-operating Properties Estimated Developable Square Feet Total Assets (2) Venture Level Debt COPT Nominal Ownership %
--- --- --- --- --- --- --- ---
Suburban Maryland:
M Square Research Park 348 $ 5,343 $ — 50%
Huntsville, Alabama:
Redstone Gateway (4) 3,204 211,781 — 85% (3)
Total 3,552 $ 217,124 $ —

(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)Our partner receives an annual priority return of 13.5% on its $9.0 million in contributed equity, plus certain fees for leasing and development, and we expect to receive all other distributions from the JV.

(4)Total assets include $79.1 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 (1)

(dollars and square feet in thousands)

Joint venture information As of 3/31/22
COPT ownership % 10 %
COPT’s investment $ 39,440
# of Properties 19
Square Feet 3,182
% Occupied 100 %
COPT’s share of ARR $ 4,649
As of 3/31/22
Balance sheet information Total COPT’s Share (2)
Operating properties, net $ 679,533 $ 67,953
Total assets $ 739,797 $ 73,979
Debt $ 261,728 $ 26,173
Total liabilities $ 273,673 $ 27,367
Three Months Ended 3/31/22
Operating information Total COPT’s Share (2)
Revenue $ 12,798 $ 1,280
Operating expenses (1,995) (200)
NOI and EBITDA 10,803 1,080
Interest expense (2,323) (232)
Depreciation and amortization (5,715) (526)
Net income $ 2,765 $ 322
NOI (per above) $ 10,803 $ 1,080
Straight line rent adjustments (502) (50)
Amortization of acquired above- and below-market rents (476) (48)
Cash NOI $ 9,825 $ 982

(1)Includes equity method investments in three joint ventures that own and operate data center shell properties.

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

Corporate Office Properties Trust

Supplementary Reconciliations of Non-GAAP Measures

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
NOI from real estate operations (1)
Real estate revenues $ 144,260 $ 150,883 $ 146,590 $ 144,423 $ 145,164
Property operating expenses (58,152) (61,439) (57,190) (54,616) (56,974)
COPT’s share of NOI in unconsolidated real estate JVs (2) 1,080 1,079 1,060 973 917
NOI from real estate operations 87,188 90,523 90,460 90,780 89,107
General and administrative expenses (6,670) (6,589) (7,269) (7,293) (6,062)
Leasing expenses (1,874) (2,568) (2,073) (1,929) (2,344)
Business development expenses and land carry costs (783) (1,088) (1,093) (1,372) (1,094)
NOI from construction contracts and other service operations 1,550 1,195 957 906 765
Equity in loss of unconsolidated non-real estate entities 566 (2) — (2) (2)
Interest and other income 1,893 1,968 1,818 2,228 1,865
Credit loss recoveries (expense) (3) 316 88 326 (193) 907
Interest expense (14,424) (16,217) (15,720) (15,942) (17,519)
Loss on early extinguishment of debt (342) (41,073) (1,159) (25,228) (33,166)
COPT’s share of interest expense of unconsolidated real estate JVs (2) (232) (237) (238) (235) (239)
Income tax expense (153) (42) (47) (24) (32)
FFO - per Nareit (1) $ 67,035 $ 25,958 $ 65,962 $ 41,696 $ 32,186
Real estate revenues
Lease revenue
Fixed contractual payments $ 112,620 $ 118,924 $ 114,309 $ 113,423 $ 112,425
Variable lease payments (4) 30,749 31,203 31,440 30,235 32,199
Lease revenue 143,369 150,127 145,749 143,658 144,624
Other property revenue 891 756 841 765 540
Real estate revenues $ 144,260 $ 150,883 $ 146,590 $ 144,423 $ 145,164
Provision for credit losses (recoveries) on billed lease revenue $ — $ (13) $ (1) $ (5) $ —

(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

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Discontinued operations
Revenues from real estate operations $ 1,980 $ 8,235 $ 7,717 $ 7,204 $ 7,334
Property operating expenses (971) (4,980) (4,462) (3,702) (3,698)
Depreciation and amortization associated with real estate operations — (1,842) (2,804) (2,823) (2,821)
Gain on sale of real estate 28,564 — — — —
Discontinued operations $ 29,573 $ 1,413 $ 451 $ 679 $ 815
GAAP revenues from real estate operations from continuing operations $ 142,280 $ 142,648 $ 138,873 $ 137,219 $ 137,830
Revenues from discontinued operations 1,980 8,235 7,717 7,204 7,334
Real estate revenues $ 144,260 $ 150,883 $ 146,590 $ 144,423 $ 145,164
GAAP property operating expenses from continuing operations $ 57,181 $ 56,459 $ 52,728 $ 50,914 $ 53,276
Property operating expenses from discontinued operations 971 4,980 4,462 3,702 3,698
Property operating expenses $ 58,152 $ 61,439 $ 57,190 $ 54,616 $ 56,974
Depreciation and amortization associated with real estate operations from continuing operations $ 34,264 $ 34,504 $ 33,807 $ 34,732 $ 34,500
Depreciation and amortization from discontinued operations — 1,842 2,804 2,823 2,821
Real estate-related depreciation and amortization $ 34,264 $ 36,346 $ 36,611 $ 37,555 $ 37,321
Gain on sales of real estate from continuing operations $ 15 $ 25,879 $ (32) $ 40,233 $ (490)
Gain on sales of real estate from discontinued operations 28,564 — — — —
Gain on sales of real estate $ 28,579 $ 25,879 $ (32) $ 40,233 $ (490)

Corporate Office Properties Trust

Supplementary Reconciliations of Non-GAAP Measures (continued)

(in thousands)

Three Months Ended
3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Total interest expense $ 14,424 $ 16,217 $ 15,720 $ 15,942 $ 17,519
Less: Amortization of deferred financing costs (597) (640) (736) (811) (793)
Less: Amortization of net debt discounts, net of amounts capitalized (605) (615) (567) (520) (542)
Less: Loss on interest rate derivatives included in interest expense — (221) — — —
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs and amortization of net debt premium 231 237 236 236 234
Denominator for interest coverage 13,453 14,978 14,653 14,847 16,418
Scheduled principal amortization 774 950 989 959 962
Denominator for debt service coverage 14,227 15,928 15,642 15,806 17,380
Capitalized interest 1,529 1,192 1,763 1,707 1,805
Denominator for fixed charge coverage $ 15,756 $ 17,120 $ 17,405 $ 17,513 $ 19,185
Common share dividends - unrestricted shares and deferred shares $ 30,837 $ 30,814 $ 30,813 $ 30,811 $ 30,805
Common share dividends - restricted shares and deferred shares 93 80 70 77 97
Common unit distributions - unrestricted units 404 346 347 347 347
Common unit distributions - restricted units 65 53 52 52 51
Total dividends/distributions $ 31,399 $ 31,293 $ 31,282 $ 31,287 $ 31,300
Common share dividends - unrestricted shares and deferred shares $ 30,837 $ 30,814 $ 30,813 $ 30,811 $ 30,805
Common unit distributions - unrestricted units 404 346 347 347 347
Common unit distributions - dilutive restricted units 13 7 6 — —
Dividends and distributions for payout ratios $ 31,254 $ 31,167 $ 31,166 $ 31,158 $ 31,152

Corporate Office Properties Trust

Supplementary Reconciliations of Non-GAAP Measures (continued)

(in thousands)

3/31/22 12/31/21 9/30/21 6/30/21 3/31/21
Total assets $ 4,132,026 $ 4,262,452 $ 4,151,138 $ 4,052,032 $ 4,112,948
Accumulated depreciation 1,182,652 1,152,523 1,122,211 1,104,625 1,082,034
Accumulated depreciation included in assets held for sale — 82,385 92,715 77,807 75,025
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs 217,607 215,925 214,631 215,160 213,346
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs included in assets held for sale — 4,547 7,650 4,506 4,465
COPT’s share of liabilities of unconsolidated real estate JVs 27,367 27,312 27,498 27,529 27,603
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs 4,328 3,744 3,161 2,578 2,043
Less: Property - operating lease liabilities (29,729) (29,342) (29,630) (29,909) (30,176)
Less: Property - finance lease liabilities — — (14) (18) (28)
Less: Cash and cash equivalents (19,347) (13,262) (14,570) (17,182) (36,139)
Less: COPT’s share of cash of unconsolidated real estate JVs (458) (434) (530) (373) (202)
Adjusted book $ 5,514,446 $ 5,705,850 $ 5,574,260 $ 5,436,755 $ 5,450,919
Gross debt (page 28) $ 2,207,762 $ 2,324,536 $ 2,208,923 $ 2,157,325 $ 2,257,854
Less: Cash and cash equivalents (19,347) (13,262) (14,570) (17,182) (36,139)
Less: COPT’s share of cash of unconsolidated real estate JVs (458) (434) (530) (373) (202)
Net debt 2,187,957 2,310,840 2,193,823 2,139,770 2,221,513
Costs incurred on fully-leased development properties (154,259) (162,884) (119,981) (171,453) (128,032)
Net debt adjusted for fully-leased development $ 2,033,698 $ 2,147,956 $ 2,073,842 $ 1,968,317 $ 2,093,481
Net debt $ 2,187,957 $ 2,310,840 $ 2,193,823 $ 2,139,770 $ 2,221,513
Pro forma debt pay down from Wholesale Data Center sale proceeds N/A (216,000) N/A N/A N/A
Pro forma net debt 2,187,957 2,094,840 2,193,823 2,139,770 2,221,513
Costs incurred on fully-leased development properties (154,259) (162,884) (119,981) (171,453) (128,032)
Pro forma net debt adjusted for fully-leased development $ 2,033,698 $ 1,931,956 $ 2,073,842 $ 1,968,317 $ 2,093,481

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 intangibles on property acquisitions 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 and investments in unconsolidated real estate JVs, gain or loss on early extinguishment of debt, loss on interest rate derivatives, net gain or loss on other investments, credit loss expense or recoveries, 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.

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 intangibles and other assets included in FFO and NOI, 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

Corporate Office Properties Trust

Definitions

evaluating and comparing the performance of reportable 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.

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.

Corporate Office Properties Trust

Definitions

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 investments in unconsolidated real estate JVs, 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.

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

Defined as net income computed using GAAP, excluding gains on sales and impairment losses of real estate and investments in unconsolidated real estate JVs (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, placed in service or expanded upon 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 and other adjustments included in the period 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 and for the items noted above that we believe are not closely correlated with our operating performance.  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 adjusted for fully-leased development

Defined as Net debt less costs incurred on properties under development that were 100% leased.

Net debt to Adjusted book

Defined as Net debt divided by Adjusted book (defined above).

Corporate Office Properties Trust

Definitions

Net debt to in-place adjusted EBITDA ratio and Net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio

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

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

NOI, which is our segment performance measure, includes: consolidated real estate revenues from continuing and discontinued operations; consolidated property operating expenses from continuing and discontinued operations; 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 reportable 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.

Pro forma net debt, pro forma net debt adjusted for fully-leased development, pro forma in-place adjusted EBITDA and associated ratios

In connection with the sale on 1/25/22 of our wholesale data center, these measures and the ratios in which they are used adjust for our NOI from the property and the debt pay down resulting from its sale as of, and for the three months ended, 12/31/21. We believe that these further adjusted versions of these measures/ratios are useful in presenting the effect of the sale on our financial condition.

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.

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.

Corporate Office Properties Trust

Definitions

Other Definitions

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

Annualized Rental Revenue (“ARR”) — The monthly contractual base rent as of the reporting date (ignoring free rent then in effect and rent associated with tenant funded landlord assets) 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.

Straight-line Rent — Includes annual minimum base rents, net of abatements and lease incentives and excluding rent associated with tenant funded landlord assets, on a straight-line basis over the term of the lease, and estimated annual expense reimbursements (as of lease commencement for new or renewed leases or as of lease expiration for expiring leases).

Cash Rent — Includes monthly contractual base rent (ignoring rent abatements and rent associated with tenant funded landlord assets) multiplied by 12, plus estimated annualized expense reimbursements (as of lease commencement for new or renewed leases or as of lease expiration for expiring leases).

Committed cost per square foot — Includes tenant improvement allowance (excluding tenant funded landlord assets), leasing commissions and estimated turn key costs and excludes lease incentives.

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.

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

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 properties stably owned and 100% operational since at least 1/1/21.

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

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

Vacant space leased — Includes acquired first generation space, vacated second generation space and leases executed on developed and redeveloped space previously placed in service.

logo2dtd021015a01a18.jpg 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 1Q 2022 Results Exceed Guidance

_______________________________________________________________

1Q22 EPS of $0.52 and FFO per Share

of $0.58 Exceeded High-End of Guidance

1.2% Increase in Same-Property Cash NOI During Quarter Outperformed

High-End of Guidance by 20 Basis Points;

Maintain Full-Year Guidance for Change in Same-Property Cash NOI at (2%)-0%

Core Portfolio 92.2% Occupied & 94.1% Leased

283,000 SF of 100% Leased Developments Placed into Service in 1Q22

1.7 Million SF of Active Developments are 96% Leased

_______________________________________________________________

Solid Leasing

Total Leasing of 871,000 SF in the Quarter Represents Strong Start to the Year

265,000 SF of Development Leasing in 1Q is On-Track to Meet 2022 Goal of Completing 700,000 SF Goal During the Year

157,000 SF of Vacancy Leasing Represents 157% of First Quarter 5-Year Average

64% Retention Rate In-Line with Expectations;

Full-Year Retention Guidance of 70-75% Unchanged

_______________________________________________________________

COLUMBIA, MD (BUSINESS WIRE) April 28, 2022 - Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC) announced results for the first quarter ended March 31, 2022.

Management Comments

Stephen E. Budorick, COPT’s President & Chief Executive Officer, commented, “Our strategy of prioritizing capital allocation and leasing efforts at our Defense/IT Locations that serve priority missions at U.S. defense installations continues to produce strong, reliable results that are not correlated to traditional office fundamentals. First quarter results represent a strong start to the year, and we remain on-track to achieve our full year operating, leasing, and FFO per share objectives. Same-property results modestly exceeded expectations, and leasing was strong in the operating and development portfolios. The 157,000 square feet of vacancy leasing we achieved exceeded our 5-year average for the quarter. Our 64% tenant retention rate in the quarter reflected the anticipated non-renewal by Transamerica at 100 Light Street, which was included in our full-year retention guidance of 70-to-75%. The 265,000 square foot data center shell lease we executed in the quarter represents nearly 40% of the 700,000 square feet of development leasing we expect to complete this year, and we anticipate a productive second quarter.” He

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continued, “During the quarter, we placed 283,000 square feet of fully-leased developments into service and, among the 1.7 million square feet of active developments currently underway, we expect to place nearly 800,000 square feet of fully-leased projects into service for the year. Lastly, the mid-point of our full-year guidance implies 2.2% growth in FFO per share, as adjusted for comparability, reduced by roughly 2% from the dilutive sale of DC-6 during the quarter.”

Financial Highlights

1st Quarter Financial Results:

•Diluted earnings per share (“EPS”) was $0.52 for the quarter ended March 31, 2022 compared to ($0.06) for the first quarter of 2021.

•Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition, was $0.58 for the first quarter of 2022 compared to $0.27 for first quarter 2021.

•FFOPS, as adjusted for comparability, was $0.58 for the first quarter of 2022 compared to $0.56 for the first quarter of 2021.

Operating Performance Highlights

Operating Portfolio Summary:

•At March 31, 2022, the Company’s 21.8 million square foot core portfolio was 92.2% occupied and 94.1% leased.

•During the quarter, the Company placed into service 283,000 square feet of developments that were 100% leased.

Same-Property Performance:

•At March 31, 2022, COPT’s 20.3 million square foot same-property portfolio was 92.0% occupied and 93.9% leased.

•For the quarter ended March 31, 2022, the Company’s same-property cash NOI increased 1.2%, over the prior year’s comparable period.

Leasing:

•Total Square Feet Leased: For the quarter ended March 31, 2022, the Company leased 871,000 square feet, including 448,000 square feet of renewals, 157,000 square feet of new leases on vacant space, and 265,000 square feet in development projects.

•Tenant Retention Rates: During the quarter ended March 31, 2022, the Company renewed 64% of expiring square feet. First quarter non-renewals included a 141,000 square foot lease expiration in the Company’s Regional Office portfolio. This non-renewal was included in management’s original full-year retention guidance of 70-75%.

•Rent Spreads & Average Escalations on Renewing Leases: For the quarter ended March 31, 2022, straight-line rents on renewals decreased 1.9%, and cash rents on renewed space decreased 5.7%. For the same time period, annual escalations on renewing leases averaged 2.6%.

•Lease Terms: In the first quarter of 2022, lease terms averaged 3.3 years on renewing leases, 6.4 years on new leasing of vacant space, and 15.0 years on development leasing.

Investment Activity Highlights

•Development Pipeline: The Company’s development pipeline consists of 11 properties totaling 1.7 million square feet that were 96% leased at March 31, 2022. These projects represent a total estimated investment of $552.7 million, of which $214.3 million has been spent.

•Dispositions: On January 25, 2022, the Company sold 100% of COPT DC-6 (“DC-6”), the only asset in the Company’s Wholesale Data Center reporting segment, for $223 million. There was no debt on the asset.

Balance Sheet and Capital Transaction Highlights

•In January and as referenced in the preceding paragraph, the Company sold its wholesale data center for $223 million and used the proceeds to repay unsecured variable rate debt.

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•For the quarter ended March 31, 2022, the Company’s adjusted EBITDA fixed charge coverage ratio was 5.2x.

•At March 31, 2022, the Company’s net debt to in-place adjusted EBITDA ratio was 6.6x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 6.1x.

•At March 31, 2022, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 2.72% with a weighted average maturity of 6.9 years; additionally, 97.2% of the Company’s debt was subject to fixed interest rates.

•On April 8, 2022, the Company filed a new universal shelf registration statement with the SEC to replace its expired registration. In conjunction with this filing, the Company will also file a new prospectus supplement in May to attach its $300 million at-the-market (“ATM”) stock offering program to the new shelf registration statement.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its first quarter 2022 conference call; the presentation can be viewed and downloaded from the ‘Financial Info – Financial Results’ section of COPT’s Investors website: https://investors.copt.com/financial-information/financial-results

2022 Guidance

Management is updating its full-year guidance for EPS and FFOPS, per Nareit and as adjusted for comparability, from the prior range of $1.12-$1.20, and $2.30-$2.38, respectively, to new ranges of $1.16-$1.22, and $2.31-$2.37, respectively. Management is establishing second quarter guidance for EPS and FFOPS per Nareit and as adjusted for comparability at $0.22-$0.24 and $0.57-$0.59, respectively. Reconciliations of projected EPS to projected FFOPS, in accordance with Nareit and as adjusted for comparability are as follows:

Reconciliation of EPS to FFOPS, per Nareit,<br>and As Adjusted for Comparability Quarter ending Year ending
June 30, 2022 December 31, 2022
Low High Low High
EPS $ 0.22 $ 0.24 $ 1.16 $ 1.22
Real estate-related depreciation and amortization 0.35 0.35 1.40 1.40
Gain on sales of real estate — — (0.25) (0.25)
FFOPS, Nareit definition and as adjusted for comparability $ 0.57 $ 0.59 $ 2.31 $ 2.37

Conference Call Information

Management will discuss first quarter 2022 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date:     Friday, April 29, 2022

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:     7286907

The conference call will also be available via live webcast in the ‘News & Events – IR Calendar’ section of COPT’s Investors website: https://investors.copt.com/news-events/ir-calendar

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, April 29, through 3:00 p.m. Eastern Time on Friday, May 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 7286907.

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.

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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 the Company 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 March 31, 2022, the Company derived 90% of its core portfolio annualized rental revenue from Defense/IT Locations and 10% from its Regional Office Properties. As of the same date and including 19 properties owned through unconsolidated joint ventures, COPT’s core portfolio of 186 properties encompassed 21.8 million square feet and was 94.1% 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, 2021.

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Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

For the Three Months Ended March 31,
2022 2021
Revenues
Revenues from real estate operations $ 142,280 $ 137,830
Construction contract and other service revenues 53,200 16,558
Total revenues 195,480 154,388
Operating expenses
Property operating expenses 57,181 53,276
Depreciation and amortization associated with real estate operations 34,264 34,500
Construction contract and other service expenses 51,650 15,793
General and administrative expenses 6,670 6,062
Leasing expenses 1,874 2,344
Business development expenses and land carry costs 783 1,094
Total operating expenses 152,422 113,069
Interest expense (14,424) (17,519)
Interest and other income 1,893 1,865
Credit loss recoveries 316 907
Gain on sales of real estate 15 (490)
Loss on early extinguishment of debt (342) (33,166)
Income (loss) from continuing operations before equity in income of unconsolidated entities and income taxes 30,516 (7,084)
Equity in income of unconsolidated entities 888 222
Income tax expense (153) (32)
Income (loss) from continuing operations 31,251 (6,894)
Discontinued operations 29,573 815
Net Income (loss) 60,824 (6,079)
Net (income) loss attributable to noncontrolling interests:
Common units in the Operating Partnership (“OP”) (856) 85
Other consolidated entities (649) (675)
Net income (loss) attributable to COPT common shareholders $ 59,319 $ (6,669)
Earnings per share (“EPS”) computation:
Numerator for diluted EPS:
Net income (loss) attributable to COPT common shareholders $ 59,319 $ (6,669)
Amount allocable to share-based compensation awards (181) (170)
Redeemable noncontrolling interests (39) —
Numerator for diluted EPS $ 59,099 $ (6,839)
Denominator:
Weighted average common shares - basic 112,020 111,888
Dilutive effect of share-based compensation awards 426 —
Dilutive effect of redeemable noncontrolling interests 132 —
Weighted average common shares - diluted 112,578 111,888
Diluted EPS $ 0.52 $ (0.06)

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Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands, except per share data)

For the Three Months Ended March 31,
2022 2021
Net income (loss) $ 60,824 $ (6,079)
Real estate-related depreciation and amortization 34,264 37,321
Gain on sales of real estate from continuing and discontinued operations (28,579) 490
Depreciation and amortization on unconsolidated real estate JVs 526 454
Funds from operations (“FFO”) 67,035 32,186
FFO allocable to other noncontrolling interests (1,042) (1,027)
Basic FFO allocable to share-based compensation awards (362) (162)
Basic FFO available to common share and common unit holders (“Basic FFO”) 65,631 30,997
Redeemable noncontrolling interests (6) —
Diluted FFO adjustments allocable to share-based compensation awards 27 —
Diluted FFO available to common share and common unit holders (“Diluted FFO”) 65,652 30,997
Loss on early extinguishment of debt 342 33,166
Diluted FFO comparability adjustments for redeemable noncontrolling interests — 458
Diluted FFO comparability adjustments allocable to share-based compensation awards (2) (167)
Diluted FFO available to common share and common unit holders, as adjusted for comparability 65,992 64,454
Straight line rent adjustments and lease incentive amortization (3,189) (3,357)
Amortization of intangibles and other assets included in net operating income (372) 40
Share-based compensation, net of amounts capitalized 2,111 1,904
Amortization of deferred financing costs 597 793
Amortization of net debt discounts, net of amounts capitalized 605 542
Replacement capital expenditures (17,358) (12,230)
Other diluted AFFO adjustments associated with real estate JVs 39 241
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) $ 48,425 $ 52,387
Diluted FFO per share $ 0.58 $ 0.27
Diluted FFO per share, as adjusted for comparability $ 0.58 $ 0.56
Dividends/distributions per common share/unit $ 0.275 $ 0.275

vi

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

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

March 31,<br>2022 December 31,<br>2021
Balance Sheet Data
Properties, net of accumulated depreciation $ 3,580,281 $ 3,532,944
Total assets 4,132,026 4,262,452
Debt, per balance sheet 2,156,784 2,272,304
Total liabilities 2,414,670 2,578,479
Redeemable noncontrolling interests 26,820 26,898
Equity 1,690,536 1,657,075
Net debt to adjusted book 39.7 % 40.5 %
Core Portfolio Data (as of period end) (1)
Number of operating properties 186 184
Total operational square feet (in thousands) 21,849 21,553
% Occupied 92.2 % 92.6 %
% Leased 94.1 % 94.4 % For the Three Months Ended March 31,
--- --- --- --- --- --- ---
2022 2021
Payout ratios
Diluted FFO 47.6 % 100.5 %
Diluted FFO, as adjusted for comparability 47.4 % 48.3 %
Diluted AFFO 64.5 % 59.5 %
Adjusted EBITDA fixed charge coverage ratio 5.2 x 4.3 x
Net debt to in-place adjusted EBITDA ratio (2) 6.6 x 6.6 x
Net debt adj. for fully-leased development to in-place adj. EBITDA ratio (3) 6.1 x 6.3 x
Reconciliation of denominators for per share measures
Denominator for diluted EPS 112,578 111,888
Weighted average common units 1,384 1,246
Anti-dilutive EPS effect of share-based compensation awards — 261
Denominator for diluted FFO per share 113,962 113,395
Redeemable noncontrolling interests — 940
Denominator for diluted FFO per share, as adjusted for comparability 113,962 114,335

(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 less costs incurred on properties under development that were 100% leased 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)

(in thousands)

For the Three Months Ended March 31,
2022 2021
Reconciliation of common share dividends to dividends and distributions for payout ratios
Common share dividends - unrestricted shares and deferred shares $ 30,837 $ 30,805
Common unit distributions - unrestricted units 404 347
Common unit distributions - dilutive restricted units 13 —
Dividends and distributions for payout ratios $ 31,254 $ 31,152
Reconciliation of GAAP net income (loss) to earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”), adjusted EBITDA and in-place adjusted EBITDA
Net income (loss) $ 60,824 $ (6,079)
Interest expense 14,424 17,519
Income tax expense 153 32
Real estate-related depreciation and amortization 34,264 37,321
Other depreciation and amortization 607 555
Gain on sales of real estate (28,579) 490
Adjustments from unconsolidated real estate JVs 758 693
EBITDAre 82,451 50,531
Loss on early extinguishment of debt 342 33,166
Net gain on other investments (565) —
Credit loss recoveries (316) (907)
Business development expenses 326 548
Adjusted EBITDA 82,238 83,338
Pro forma net operating income adjustment for property changes within period 579 166
Change in collectability of deferred rental revenue — 124
In-place adjusted EBITDA 82,817 83,628
Reconciliation of interest expense to the denominators for fixed charge coverage-Adjusted EBITDA
Interest expense $ 14,424 $ 17,519
Less: Amortization of deferred financing costs (597) (793)
Less: Amortization of net debt discounts, net of amounts capitalized (605) (542)
COPT’s share of interest expense of unconsolidated real estate JVs, excluding deferred financing costs 231 234
Scheduled principal amortization 774 962
Capitalized interest 1,529 1,805
Denominator for fixed charge coverage-Adjusted EBITDA $ 15,756 $ 19,185

viii

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

For the Three Months Ended March 31,
2022 2021
Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures
Tenant improvements and incentives $ 10,010 $ 7,139
Building improvements 6,832 3,628
Leasing costs 2,270 1,129
Net additions to tenant improvements and incentives 1,808 2,900
Excluded building improvements and leasing costs (3,562) (2,566)
Replacement capital expenditures $ 17,358 $ 12,230
Same Properties cash NOI $ 79,567 $ 78,650
Straight line rent adjustments and lease incentive amortization (1,503) 1,724
Amortization of acquired above- and below-market rents 519 99
Lease termination fees, net 221 1,362
Tenant funded landlord assets and lease incentives 1,463 228
Cash NOI adjustments in unconsolidated real estate JV 83 101
Same Properties NOI $ 80,350 $ 82,164
March 31,<br>2022 December 31,<br>2021
--- --- --- --- ---
Reconciliation of total assets to adjusted book
Total assets $ 4,132,026 $ 4,262,452
Accumulated depreciation 1,182,652 1,152,523
Accumulated depreciation included in assets held for sale — 82,385
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs 217,607 215,925
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs included in assets held for sale — 4,547
COPT’s share of liabilities of unconsolidated real estate JVs 27,367 27,312
COPT’s share of accumulated depreciation and amortization of unconsolidated real estate JVs 4,328 3,744
Less: Property - operating lease liabilities (29,729) (29,342)
Less: Cash and cash equivalents (19,347) (13,262)
Less: COPT’s share of cash of unconsolidated real estate JVs (458) (434)
Adjusted book $ 5,514,446 $ 5,705,850

ix

Corporate Office Properties Trust

Summary Financial Data

(unaudited)

(in thousands)

March 31,<br>2022 December 31,<br>2021 March 31,<br>2021
Reconciliation of debt to net debt, net debt adjusted for fully-leased development and pro forma net debt adjusted for fully-leased development
Debt, per balance sheet $ 2,156,784 $ 2,272,304 $ 2,207,903
Net discounts and deferred financing costs 24,728 25,982 23,701
COPT’s share of unconsolidated JV gross debt 26,250 26,250 26,250
Gross debt $ 2,207,762 $ 2,324,536 $ 2,257,854
Less: Cash and cash equivalents (19,347) (13,262) (36,139)
Less: COPT’s share of cash of unconsolidated real estate JVs (458) (434) (202)
Net debt $ 2,187,957 $ 2,310,840 $ 2,221,513
Costs incurred on fully-leased development properties (154,259) (162,884) (128,032)
Net debt adjusted for fully-leased development $ 2,033,698 $ 2,147,956 $ 2,093,481
Net debt $ 2,187,957 $ 2,310,840 $ 2,221,513
Debt pay down from Wholesale Data Center sale proceeds N/A (216,000) N/A
Pro forma net debt $ 2,187,957 $ 2,094,840 $ 2,221,513
Costs incurred on fully-leased development properties (154,259) (162,884) (128,032)
Pro forma net debt adjusted for fully-leased development $ 2,033,698 $ 1,931,956 $ 2,093,481

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