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COPT Reports 2013 Results; Affirms 2014 Guidance

  COPT Reports 2013 Results; Affirms 2014 Guidance

Business Wire

COLUMBIA, Md. -- February 7, 2014

Corporate Office Properties Trust (“COPT” or the “Company”) (NYSE: OFC)
announced financial and operating results for the fourth quarter and full year
ended December 31, 2013.

“Fourth quarter and full year results were in line with our expectations.
Importantly, we have completed the portfolio repositioning and balance sheet
improvements that diluted results in recent years,” stated Roger A. Waesche,
Jr., COPT’s President & Chief Executive Officer. “We expect 2014 to be the
inflection year for FFO, resulting from increases in same office occupancy and
significant increases in future NOI from our well-leased development
projects,” he added.

Results:

For the fourth quarter ended December 31, 2013 – Diluted earnings per share
(“EPS”) was $0.94 for the quarter ended December 31, 2013 as compared to $0.16
for the fourth quarter of 2012. Diluted funds from operations per share
(“FFOPS”), as adjusted for comparability, was $0.48 for the quarter ended
December 31, 2013 as compared to $0.51 for the fourth quarter of 2012.
Adjustments for comparability encompass items such as acquisition costs,
impairment losses and gains on non-operating properties (net of related tax
adjustments), gains (losses) on early extinguishment of debt, derivative
losses and write-offs of original issuance costs for redeemed preferred stock.
Please refer to the reconciliation tables that appear later in this press
release. Per NAREIT’s definition, FFOPS for the fourth quarter of 2013 was
$1.21 versus $0.49 for the fourth quarter of 2012.

For the year ended December 31, 2013 – EPS was $0.83 for the year ended
December 31, 2013 as compared to an EPS loss of ($0.03) for 2012. FFOPS for
the full year 2013, as adjusted for comparability, was $1.97 as compared to
$2.11 reported for 2012. Per NAREIT’s definition, FFOPS for 2013 was $2.40 as
compared to $2.13 for 2012.

Operating Performance:

Portfolio Summary – At December 31, 2013, the Company’s consolidated portfolio
of 183 operating office properties totaled 17.4 million square feet. The
Company’s consolidated portfolio was 90.3% leased and 89.1% occupied as of
December 31, 2013.

Same Office Performance – For the year ended December 31, 2013, COPT’s same
office portfolio represents 84% of the rentable square feet of the portfolio
and consists of 165 properties. For the quarter ended December 31, 2013, the
Company’s same office property cash NOI, excluding gross lease termination
fees, was flat as compared to the quarter ended December 31, 2012. For the
full year, same office property cash NOI, excluding gross lease termination
fees, increased 2.3%. The Company’s same office portfolio was 91.2% leased and
89.8% occupied as of December 31, 2013.

Leasing – COPT completed a total of 1.1 million and 3.8 million square feet of
leasing, respectively, for the quarter and year ended December 31, 2013.
During these same periods, the Company’s respective renewal rates were 74% and
70%. In the fourth quarter, lease terms on renewals averaged 5.9 years and for
development and other new leases averaged 9.8 years. Average lease terms on
renewals during the full year were 4.3 years and on development and other new
leases were 8.3 years. For the quarter and year ended December 31, 2013, total
rent on renewed space increased 4.6% as measured on a GAAP basis; on a cash
basis, renewal rates decreased 3.4% in the fourth quarter of 2013 and for the
year versus the comparable 2012 periods.

Investment Activity for the year ended December 31, 2013:

Construction – At December 31, 2013, the Company had seven properties totaling
1.0 million square feet under construction for a total projected cost of
$215.5 million, of which $124.2 million had been incurred which were 78%
leased. As of the same date, COPT had 376,000 square feet in three properties
under redevelopment for a total projected cost of $71.0 million, of which
$37.0 million has been incurred which were 71% leased.

Dispositions – In 2013, the Company disposed of 31 buildings aggregating 2.3
million square feet and land for $296.8 million. With the completion of these
transactions, the Company completed the operating property portion of its
Strategic Reallocation Plan and exited from Colorado Springs.

Balance Sheet and Capital Transactions:

As of December 31, 2013, the Company’s debt to adjusted book ratio was 43.6%
and, for the three months ended December 31, 2013, its adjusted EBITDA fixed
charge coverage ratio was 2.8x. Also, the Company’s weighted average interest
rate was 4.5% for the quarter ended December 31, 2013 and, including the
effect of interest rate swaps, 89% of the Company’s debt was subject to fixed
interest rates.

In 2013, the Company repurchased $239.4 million of principal amount of
Exchangeable Senior Notes for $255.1 million and recognized a loss on early
extinguishment of $25.9 million, including unamortized loan issuance costs.
Also in 2013, the Company completed a public offering of 4,485,000 common
shares, generating net proceeds of approximately $117.9 million. The Company
also redeemed all of its 3,390,000 outstanding 7.625% Series J Cumulative
Redeemable Preferred Shares, at a price of $25 per share.

In April, the Company announced that it received investment grade ratings with
stable outlooks from each of the three major U.S. ratings agencies. COPT
received a BBB- rating from Fitch Ratings, a Baa3 rating from Moody’s
Investors Service and a BBB- rating from Standard & Poor’s Ratings Services.
In May, the Company issued $350 million of 3.600% senior unsecured notes due
May 15, 2023 at a price equal to 99.816% of the principal amount, and in
September, the Company issued $250 million of 5.250% senior unsecured notes
due February 15, 2024 at a price equal to 98.783% of the principal amount.

In early July, the Company issued 1.5 million shares of common stock through
its at-the-market (“ATM”) stock offering program. The average price per share
was $26.05 and the net proceeds were $38.5 million. The Company also amended
the terms of its $800 million line of credit to extend the maturity date from
September 1, 2014, to July 14, 2017 plus a one-year extension option; and
lowered the interest rate spread over 30-day LIBOR to 130 basis points. In
addition, the Company amended the terms of its $300 million and $250 million
term loan agreements to grant additional extension options and lower the
interest spread over LIBOR.

2014 FFO Guidance:

Management is affirming its previously issued guidance for 2014 FFOPS, as
adjusted for comparability, of $1.84–$1.92 and providing its first quarter
2014 FFOPS guidance of $0.45–$0.47. A reconciliation of projected diluted EPS
to projected FFOPS for the quarter ending March 31, 2014 and the year ending
December 31, 2014 is provided, as follows:

                                                                
                                       Quarter Ending    Year Ending
                                       March 31, 2014    December 31, 2014
                                       Low      High     Low         High
                                                                     
EPS                                    $ 0.13   $ 0.15   $ 1.10      $ 1.18
Real estate depreciation and            0.32    0.32    1.30      1.30  
amortization
                                                                     
FFOPS, NAREIT definition                 0.45     0.47     2.40        2.48
                                                                     
Net operating income from properties     -        -        (0.02 )     (0.02 )
to be conveyed (a)
Interest expense on loan secured by      -        -        0.14        0.14
properties to be conveyed (a)
Net gains on early extinguishment of    -       -       (0.68 )    (0.68 )
debt (b)
                                                                     
FFOPS, as adjusted for comparability   $ 0.45   $ 0.47   $ 1.84     $ 1.92  
                                                                     

    
       The Company expects to transfer two operating properties in
       satisfaction of non-recourse secured indebtedness. These amounts
a.     represent the Company's forecast of net operating income generated by
       these assets and interest expense (accrued at the default rate) from
       April 1st through year-end, and assuming a transfer date of December
       31, 2014.
b.     Represents debt and accrued interest in excess of the book value of the
       assets to be conveyed.
       

Conference Call Information:

Management will discuss fourth quarter and full year 2013 earnings results, as
well as its 2014 guidance, on its conference call today at 12:00 p.m. Eastern
Time, details of which are listed below:

                                       
Conference Call Date:                      Friday, February 7, 2014
Time:                                      12:00 p.m. Eastern Time
Telephone Number: (within the U.S.)        888-679-8018
Telephone Number: (outside the U.S.)       617-213-4845
Passcode:                                  33175148
                                           

Please use the following link to pre-register and view important information
about this conference call. Pre-registering is not mandatory but is
recommended as it will provide you immediate entry into the call and will
facilitate the timely start of the conference. Pre-registration only takes a
few moments and you may pre-register at anytime, including up to and after the
call start time. To pre-register, please click on the below link:
https://www.theconferencingservice.com/prereg/key.process?key=PYUVAPM97

You may also pre-register in the Investor Relations section of the Company’s
website at www.copt.com. Alternatively, you may be placed into the call by an
operator by calling the number provided above at least 5 to 10 minutes before
the start of the call.

A replay of this call will be available beginning Friday, February 7 at 4:00
p.m. Eastern Time through Friday, February 21 at midnight Eastern Time. To
access the replay within the United States, please call 888-286-8010 and use
passcode 66260281. To access the replay outside the United States, please call
617-801-6888 and use passcode 66260281.

The conference call will also be available via live webcast in the Investor
Relations section of the Company’s website at www.copt.com. A replay of the
conference calls will be immediately available via webcast in the Investor
Relations section of the Company’s website.

Definitions:

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

Company Information

COPT is an office REIT that focuses primarily on serving the specialized
requirements of U.S. Government agencies and defense contractors, most of
which are engaged in defense information technology and national
security-related activities. As of December 31, 2013, COPT derived 70% of its
annualized revenue from its strategic tenant niche properties and 23% from its
regional office properties. The Company generally acquires, develops, manages
and leases office and data center properties concentrated in large office
parks primarily located near knowledge-based government demand drivers and/or
in targeted markets or submarkets in the Greater Washington, DC/Baltimore
region. As of December 31, 2013, the Company’s consolidated portfolio
consisted of 183 office properties totaling 17.4  million rentable square
feet. COPT is an S&P MidCap 400 company.

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. Accordingly, 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.

Important factors that may affect these expectations, estimates, and
projections include, but are not limited to:

  *general economic and business conditions, which will, among other things,
    affect office property and data center demand and rents, tenant
    creditworthiness, interest rates, financing availability and property
    values;
  *adverse changes in the real estate markets including, among other things,
    increased competition with other companies;
  *governmental actions and initiatives, including risks associated with the
    impact of a government shutdown or budgetary reductions or impasses, such
    as a reduction in rental revenues, non-renewal of leases, and/or a
    curtailment of demand for additional space by the Company's strategic
    customers;
  *the Company’s ability to borrow on favorable terms;
  *risks of real estate acquisition and development activities, including,
    among other things, risks that development projects may not be completed
    on schedule, that tenants may not take occupancy or pay rent or that
    development or operating costs may be greater than anticipated;
  *the Company’s ability to sell properties included in its Strategic
    Reallocation Plan;
  *risks of investing through joint venture structures, including risks that
    the Company’s joint venture partners may not fulfill their financial
    obligations as investors or may take actions that are inconsistent with
    the Company’s objectives;
  *changes in the Company’s plans for properties or views of market economic
    conditions or failure to obtain development rights, either of which could
    result in recognition of significant impairment losses;
  *the Company’s ability to satisfy and operate effectively under Federal
    income tax rules relating to real estate investment trusts and
    partnerships;
  *the Company's ability to achieve projected results;
  *the dilutive effects of issuing additional common shares; and
  *environmental requirements.

The Company undertakes no obligation to update or supplement any
forward-looking statements. For further information, please refer to the
Company’s filings with the Securities and Exchange Commission, particularly
the section entitled “Risk Factors” in Item 1A of the Company’s Annual Report
on Form 10-K for the year ended December 31, 2012.


Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(in thousands, except per share data)

                       For the Three Months Ended  For the Years Ended
                        December 31,                 December 31,
                        2013          2012          2013         2012
Revenues
Real estate revenues    $  118,487     $ 112,611     $ 460,997     $ 434,299
Construction contract
and other service       10,315        20,024       62,363       73,836    
revenues
Total revenues          128,802       132,635      523,360      508,135   
Expenses
Property operating      44,117         42,684        167,199       159,206
expenses
Depreciation and
amortization            30,326         27,225        113,214       107,998
associated with real
estate operations
Construction contract
and other service       9,710          19,274        58,875        70,576
expenses
Impairment losses       —              1,954         5,857         43,678
General and
administrative          6,523          5,740         23,736        26,271
expenses
Leasing expenses        1,916          1,363         7,133         5,629
Business development
expenses and land       1,367         1,205        5,436        5,711     
carry costs
Total operating         93,959        99,445       381,450      419,069   
expenses
Operating income        34,843         33,190        141,910       89,066
Interest expense        (21,276    )   (20,631   )   (82,010   )   (86,401   )
Interest and other      885            4,020         3,834         7,172
income
Loss on early
extinguishment of       (2         )   (6        )   (27,030   )   (943      )
debt
Income from
continuing operations
before equity in
income (loss) of        14,450         16,573        36,704        8,894
unconsolidated
entities and income
taxes
Equity in income
(loss) of               1,899          (24       )   2,110         (546      )
unconsolidated
entities
Income tax expense      (1,917     )   (54       )   (1,978    )   (381      )
Income from             14,432         16,495        36,836        7,967
continuing operations
Discontinued            71,907        2,515        55,692       12,353    
operations
Income before gain on   86,339         19,010        92,528        20,320
sales of real estate
Gain on sales of real
estate, net of income   6,333         —            9,016        21        
taxes
Net income              92,672         19,010        101,544       20,341
Net (income) loss
attributable to
noncontrolling
interests
Common units in the     (3,757     )   (651      )   (3,283    )   87
Operating Partnership
Preferred units in
the Operating           (165       )   (165      )   (660      )   (660      )
Partnership
Other consolidated      (1,734     )   345          (3,894    )   1,209     
entities
Net income              87,016         18,539        93,707        20,977
attributable to COPT
Preferred share         (4,490     )   (6,106    )   (19,971   )   (20,844   )
dividends
Issuance costs
associated with         —             —            (2,904    )   (1,827    )
redeemed preferred
shares
Net income (loss)
attributable to COPT    $  82,526     $ 12,433     $ 70,832     $ (1,694  )
common shareholders
                                                                   
Earnings per share
(“EPS”) computation:
Numerator for diluted
EPS:
Net income (loss)
attributable to         $  82,526      $ 12,433      $ 70,832      $ (1,694  )
common shareholders
Amount allocable to     (348       )   (112      )   (414      )   (469      )
restricted shares
Numerator for diluted   $  82,178     $ 12,321     $ 70,418     $ (2,163  )
EPS
                                                                   
Denominator:
Weighted average        87,010         79,004        85,167        73,454
common shares - basic
Dilutive effect of
share-based             42            67           57           —         
compensation awards
Weighted average
common shares -         87,052        79,071       85,224       73,454    
diluted
Diluted EPS             $  0.94       $ 0.16       $ 0.83       $ (0.03   )
                                                                             


Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(in thousands, except per share data)
                                                  
                           For the Three Months      For the Years Ended
                           Ended                     December 31,
                           December 31,
                           2013        2012         2013         2012
Net income                 $ 92,672     $ 19,010     $ 101,544     $ 20,341
Real estate-related
depreciation and           31,322       28,560       117,719       121,937
amortization
Impairment losses on
previously depreciated     921          247          32,047        70,263
operating properties
(Gain) loss on sales of
previously depreciated     (9,004   )   8            (9,004    )   (20,928   )
operating properties
Depreciation and
amortization on            —           —           —            346       
unconsolidated real
estate entities
Funds from operations      115,911      47,825       242,306       191,959
(“FFO”)
Noncontrolling interests
- preferred units in the   (165     )   (165     )   (660      )   (660      )
Operating Partnership
FFO allocable to other     (880     )   (738     )   (3,710    )   (1,989    )
noncontrolling interests
Preferred share            (4,490   )   (6,106   )   (19,971   )   (20,844   )
dividends
Issuance costs
associated with redeemed   —            —            (2,904    )   (1,827    )
preferred shares
Basic and diluted FFO
allocable to restricted    (462     )   (191     )   (912      )   (919      )
shares
Basic and diluted FFO
available to common
share and common unit      109,914      40,625       214,149       165,720
holders (“Basic and
diluted FFO”)
Operating property         —            —            —             229
acquisition costs
Gain on sales of
non-operating              —            —            (2,683    )   (33       )
properties, net of
income taxes
Impairment losses
(recoveries) on            —            1,893        —             (3,353    )
non-operating properties
Valuation allowance on
tax asset associated       1,855        —            1,855         —
with FFO comparability
adjustments
Income tax expense on
impairment recoveries on   —            —            —             673
non-operating properties
(Gain) loss on early       (67,808  )   6            (40,780   )   (793      )
extinguishment of debt
Issuance costs
associated with redeemed   —            —            2,904         1,827
preferred shares
Diluted FFO
comparability              168         —           168          —         
adjustments allocable to
restricted shares
Diluted FFO available to
common share and common
unit holders, as           44,129       42,524       175,613       164,270
adjusted for
comparability
Straight line rent         3,157        (3,385   )   (3,667    )   (10,016   )
adjustments
Amortization of
intangibles included in    224          221          803           880
net operating income
Share-based
compensation, net of       1,661        1,720        6,530         9,982
amounts capitalized
Amortization of deferred   1,159        1,547        5,451         6,243
financing costs
Amortization of net debt
discounts, net of          (48      )   693          1,015         2,721
amounts capitalized
Amortization of settled    15           16           61            62
debt hedges
Recurring capital          (21,935  )   (27,476  )   (43,633   )   (43,943   )
expenditures
Diluted adjusted funds
from operations
available to common        $ 28,362    $ 15,860    $ 142,173    $ 130,199 
share and common unit
holders (“Diluted AFFO”)
Diluted FFO per share      $ 1.21       $ 0.49       $ 2.40        $ 2.13
Diluted FFO per share,
as adjusted for            $ 0.48       $ 0.51       $ 1.97        $ 2.11
comparability
Dividends/distributions    $ 0.275      $ 0.275      $ 1.100       $ 1.100
per common share/unit
                                                                             


Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)

                                           December 31,    December 31,
                                            2013             2012
Balance Sheet Data
Properties, net of accumulated              $  3,214,301     $ 3,163,044
depreciation
Total assets                                3,629,952        3,653,759
Debt, net                                   1,927,703        2,019,168
Total liabilities                           2,114,945        2,206,962
Redeemable noncontrolling interest          19,448           10,298
Equity                                      1,495,559        1,436,499
Debt to adjusted book                       43.6         %   45.8            %
Debt to total market capitalization         44.3         %   45.0            %
                                                             
Consolidated Property Data (as of
period end)
Number of operating properties              183              208
Total net rentable square feet              17,370           18,831
owned (in thousands)
Occupancy %                                 89.1         %   87.8            %
Leased %                                    90.3         %   89.2            %
                                                             
                         For the Three Months      For the Years Ended
                          Ended December 31,         December 31,
                          2013         2012         2013         2012
Payout ratios
Diluted FFO               22.9      %   57.5     %   46.5      %   52.1      %
Diluted FFO, as
adjusted for              56.9      %   55.0     %   56.7      %   52.6      %
comparability
Diluted AFFO              88.6      %   147.4    %   70.0      %   66.3      %
Adjusted EBITDA           3.3       x   3.4      x   3.5       x   3.2       x
interest coverage ratio
Adjusted EBITDA fixed     2.8       x   2.6      x   2.8       x   2.6       x
charge coverage ratio
Adjusted debt to
in-place adjusted         6.8       x   7.2      x   N/A           N/A
EBITDA ratio (1)
                                                                   
Reconciliation of denominators for
diluted EPS and diluted FFO per share
Denominator for diluted   87,052        79,071       85,224        73,454
EPS
Weighted average common   3,978         4,171        3,869         4,235
units
Anti-dilutive EPS
effect of share-based     —            —           —            53        
compensation awards
Denominator for diluted   91,030       83,242      89,093       77,742    
FFO per share
                                                                   
Reconciliation of FFO
to FFO, as adjusted for
comparability
FFO, per NAREIT           $ 115,911     $ 47,825     $ 242,306     $ 191,959
Gain on sales of
non-operating             —             —            (2,683    )   (33       )
properties
Impairment losses
(recoveries) on
non-operating             —             1,893        —             (2,680    )
properties, net of
associated tax
Valuation allowance on
tax asset associated      1,855         —            1,855         —
with FFO comparability
adjustments
Operating property        —             —            —             229
acquisition costs
(Gain) loss on early
extinguishment of debt,   (67,808   )   6            (40,780   )   (793      )
continuing and
discontinued operations
Issuance costs
associated with           —            —           2,904        1,827     
redeemed preferred
shares
FFO, as adjusted for      $ 49,958     $ 49,724    $ 203,602    $ 190,509 
comparability
                                                                             

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


Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)
                                                  
                           For the Three Months      For the Years Ended
                           Ended December 31,        December 31,
                           2013        2012         2013         2012
Reconciliation of common
share dividends to
dividends and
distributions for payout
ratios
Common share dividends     $ 24,026     $ 22,255     $ 95,246      $ 81,720
Common unit                1,094       1,119       4,280        4,617     
distributions
Dividends and
distributions for payout   $ 25,120    $ 23,374    $ 99,526     $ 86,337  
ratios
                                                                   
Reconciliation of GAAP
net income to adjusted
earnings before
interest, income taxes,
depreciation and
amortization (“Adjusted
EBITDA”) and in-place
adjusted EBITDA
Net income                 $ 92,672     $ 19,010     $ 101,544     $ 20,341
Interest expense on        21,276       20,631       82,010        86,401
continuing operations
Interest expense on        1,905        2,151        8,221         10,397
discontinued operations
Income tax expense         1,917        54           1,978         381
Real estate-related
depreciation and           31,322       28,560       117,719       121,937
amortization
Depreciation of
furniture, fixtures and    495          610          2,054         2,481
equipment
Impairment losses          921          2,140        32,047        66,910
(Gain) loss on early
extinguishment of debt     (67,808  )   6            (40,780   )   (793      )
on continuing and
discontinued operations
(Gain) loss on sales of    (9,004   )   8            (9,004    )   (20,928   )
operating properties
Gain on sales of
non-operational            —            —            (2,683    )   (33       )
properties
Net loss (gain) on
investments in
unconsolidated entities    221          (2,992   )   206           (3,589    )
included in interest and
other income
Operating property         —           —           —            229       
acquisition costs
Adjusted EBITDA            $ 73,917     $ 70,178     $ 293,312    $ 283,734 
Less: Net operating
income from properties     (5,107   )   —        
in quarter of
disposition
In-place adjusted EBITDA   $ 68,810    $ 70,178 
                                                                   
Reconciliation of
interest expense from
continuing operations to
the denominators for
interest
coverage-Adjusted EBITDA
and fixed charge
coverage-Adjusted EBITDA
Interest expense from      $ 21,276     $ 20,631     $ 82,010      $ 86,401
continuing operations
Interest expense from      1,905        2,151        8,221         10,397
discontinued operations
Less: Amortization of      (1,159   )   (1,547   )   (5,451    )   (6,243    )
deferred financing costs
Less: Amortization of
net debt discount, net     48          (693     )   (1,015    )   (2,721    )
of amounts capitalized
Denominator for interest   22,070       20,542       83,765        87,834
coverage-Adjusted EBITDA
Preferred share            4,490        6,106        19,971        20,844
dividends
Preferred unit             165         165         660          660       
distributions
Denominator for fixed
charge coverage-Adjusted   $ 26,725    $ 26,813    $ 104,396    $ 109,338 
EBITDA
                                                                   
Reconciliations of
tenant improvements and
incentives, capital
improvements and leasing
costs for operating
properties to recurring
capital expenditures
Tenant improvements and
incentives on operating    $ 6,430      $ 10,713     $ 17,413      $ 21,816
properties
Building improvements on   12,898       18,049       21,893        24,862
operating properties
Leasing costs for          4,286        1,381        9,400         6,490
operating properties
Less: Nonrecurring
tenant improvements and    —            (283     )   (238      )   (4,793    )
incentives on operating
properties
Less: Nonrecurring
building improvements on   (1,381   )   (2,226   )   (4,494    )   (4,145    )
operating properties
Less: Nonrecurring
leasing costs for          (275     )   —            (311      )   (209      )
operating properties
Add: Recurring capital
expenditures on
operating properties       (23      )   (158     )   (30       )   (78       )
held through joint
ventures
Recurring capital          $ 21,935    $ 27,476    $ 43,633     $ 43,943  
expenditures
                                                                             


Corporate Office Properties Trust
Summary Financial Data
(unaudited)
(Dollars in thousands)

                          For the Three Months     For the Years Ended
                           Ended December 31,        December 31,
                           2013        2012         2013         2012
Reconciliation of same
office property net
operating income to same
office property cash net
operating income and
same office property
cash net operating
income, excluding gross
lease termination fees
Same office property net   $ 62,726     $ 62,676     $ 256,050     $ 252,438
operating income
Less: Straight-line rent   (755     )   (1,417   )   (3,904    )   (6,409    )
adjustments
Less: Amortization of
deferred market rental     —            (39      )   (43       )   (134      )
revenue
Add: Amortization of
above-market cost          319         371         1,277        1,466     
arrangements
Same office property
cash net operating         62,290       61,591       253,380       247,361
income
Less: Lease termination    (1,249   )   (524     )   (2,529    )   (2,031    )
fees, gross
Same office property
cash net operating         $ 61,041    $ 61,067    $ 250,851    $ 245,330 
income, excluding gross
lease termination fees
                                                                             

                                                              
                                                 December 31,    December 31,
                                                 2013            2012
Reconciliation of total assets to denominator
for debt to adjusted book
Total assets                                     $ 3,629,952     $ 3,653,759
Accumulated depreciation                         597,649         555,975
Accumulated depreciation included in assets      —               12,201
held for sale
Accumulated amortization of real estate          193,142         181,834
intangibles and deferred leasing costs
Accumulated amortization of real estate
intangibles and deferred leasing costs           —              9,199       
included in assets held for sale
Denominator for debt to adjusted book            $ 4,420,743    $ 4,412,968 
                                                                 
Reconciliation of debt to numerator for
adjusted debt to in-place adjusted EBITDA
ratio
Debt, net                                        $ 1,927,703     $ 2,019,168
Less: Cash and cash equivalents                  (54,373     )   (10,594     )
Numerator for adjusted debt to in-place          $ 1,873,330    $ 2,008,574 
adjusted EBITDA ratio
                                                                             

Contact:

Corporate Office Properties Trust
IR Contacts:
Stephanie Krewson, 443-285-5453
stephanie.krewson@copt.com
or
Michelle Layne, 443-285-5452
michelle.layne@copt.com
 
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