Corporate Office Properties Trust Reports Strong First Quarter 2009 Results

Business Wire, April 28, 2009

COLUMBIA, Md. -- Corporate Office Properties Trust (COPT) (NYSE:OFC) announced today financial and operating results for the quarter ended March 31, 2009.

Highlights

• 20% increase in diluted Funds from Operations (“FFO”) per share to $.67 or $44.8 million of FFO for the first quarter 2009 from $.56 per share or $35.9 million of FFO for the first quarter 2008. FFO for the first quarter 2009 included $3.1 million in lease termination fees compared to $56,000 for the first quarter 2008.
• 64% increase in diluted earnings per share (“Diluted EPS”) to $.23 or $12.1 million of net income available to common shareholders for the first quarter 2009 as compared to $.14 per diluted share or $6.7 million of net income available to common shareholders for the first quarter 2008.

• 38% increase in Diluted Adjusted Funds from Operations available to common share and common unit holders (“Diluted AFFO”) to $33.4 million for the first quarter 2009 as compared to $24.2 million for the first quarter 2008.
• 92.9% occupied and 93.9% leased for our wholly-owned portfolio as of March 31, 2009.
• 82% renewal rate on expiring leases for first quarter 2009, with a 6% increase in total straight-line rents for renewed space.
• 3% increase in same office property cash NOI for the quarter compared to the first quarter 2008, excluding gross lease termination fees. Including gross lease termination fees, same office property cash NOI increased 9% for the quarter compared to the first quarter 2008. The Company’s same office portfolio for the quarter ended March 31, 2009 represents 92% of the rentable square feet of its consolidated portfolio and consists of 223 properties.
• 4 new buildings placed under construction totaling 453,000 square feet located in San Antonio, Texas, The National Business Park in Annapolis Junction, Maryland and North Gate Business Park in Aberdeen, Maryland.

“The Company begins 2009 with a healthy capital position, low level of debt maturities and a development pipeline totally concentrated in the U.S. Government and Defense Information Technology sector, where we continue to see demand,” stated Randall M. Griffin, President and Chief Executive Officer, Corporate Office Properties Trust.

Financial Results

Revenues from real estate operations for the quarter ended March 31, 2009 were $106.8 million, as compared to the quarter ended March 31, 2008 of $97.0 million.

Diluted FFO payout ratio for the first quarter 2009 was 56% as compared to 61% for the first quarter 2008. Diluted AFFO payout ratio for the first quarter 2009 was 67% as compared to 78% for the first quarter 2008.

As of March 31, 2009, the Company had a total market capitalization of $3.6 billion, with $1.9 billion in debt outstanding, equating to a 52% debt-to-total market capitalization ratio.

As of March 31, 2009, the Company’s weighted average interest rate was 4.8% and the Company had 75% of the total debt subject to fixed interest rates.

For the first quarter 2009, the Company’s EBITDA to interest expense coverage ratio was 3.5x, and the EBITDA fixed charge coverage ratio was 2.9x.

Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the tables that follow the text of this press release.

Operating Results

At March 31, 2009, the Company’s wholly-owned portfolio of 240 office properties totaled 18.5 million square feet. The weighted average remaining lease term for the portfolio was 4.6 years and the average rental rate (including tenant reimbursements) was $22.89 per square foot.

For the quarter ended March 31, 2009, 323,000 square feet was renewed equating to an 82% renewal rate, at an average committed cost of $2.86 per square foot. Total rent on renewed space increased 6% on a straight-line basis, as measured from the straight-line rent in effect preceding the renewal date and increased 1% on a cash basis. For renewed and retenanted space of 391,000 square feet, total straight-line rent increased 4% and total rent on a cash basis decreased 2%. The average committed cost for renewed and retenanted space was $5.35 per square foot.

Development Activity

At March 31, 2009, the Company had 2.4 million square feet under construction, development and redevelopment for a total projected cost of $500.0 million.

The Company’s land inventory (wholly-owned and joint venture) at March 31, 2009 totaled 1,881 acres that can support 17.0 million square feet of development.

During the quarter, the Company placed into service 83,000 square feet located in two newly-constructed properties.