CORPORATE OFFICE
PROPERTIES TRUST
Strength & Reliability During
COVID-19 Crisis
April 15, 2020
2
Table of Contents
I. Overview………………………………………………………………..Page 4
II. Response to COVID-19................................................................Page 6
III. Leasing Update………..........................................………..….…...Page 9
IV. Development Pipeline…..………………………………….……….Page 14
V. Liquidity…………………………………………………………..…...Page 17
VI. Risks……………………………………………………………………Page 21
VII. Conclusion……………………………………………………….…...Page 23
VIII. Appendices…...………………………………………………………Page 25
A. Definitions & Glossary
B. Reconciliations
3
Safe HarborUnless otherwise noted, information in this presentation represents the Company’s consolidated portfolio as
of or for the quarter ended December 31, 2019.
This presentation 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.
These statements may include, without limitation, statements regarding: our belief that we are well-positioned
to maintain relative normal operations through the COVID-19 crisis; our expectations as to renewal leasing,
rent relief requests, development leasing and development projects; our liquidity situation; and our dividend.
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 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, 2019, as well as risks associated with the impact of the global outbreak of the coronavirus (COVID-19),
such as: potential adverse impacts on our tenants that may ultimately impact their ability to pay rent to us on
time or at all; steps that have been and may be taken by national, state and local governmental authorities,
including ongoing and potential future temporary closure requirements and uncertainty regarding the duration
of these requirements; potential challenges to our development operations caused by supply chain
disruptions; and potential impacts of the outbreak on our access to capital.
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I. Results for 4Q & FY 2018I. Overview
5
Overview
» Existing operations – all COPT buildings are open and operating
▪ Renewal leasing advancing as expected
▪ Rent relief requests as a percent of core portfolio annualized rental
revenue (“ARR”) are minimal
» Development leasing – modest processing delays, but still advancing
» Development projects – deliveries seeing no material delays
▪ Supply chain is predominantly based in North America
» Balance sheet – ample liquidity & access to equity via additional data
center shell joint ventures
» Dividend – well-covered
COPT’s Operations Not Materially Impacted by COVID-19*
*As of April 14, 2020
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I. Results for 4Q & FY 2018II. Response to COVID-19
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COPT: Open for Business
» At December 31, 2019, we derived 88% of our core portfolio ARR
from Defense/IT Locations, that support the U.S. Government and
its contractors, most of whom are engaged in national security and
defense/IT operations
» We derive 12% of core portfolio ARR from our Regional Office
properties, which include tenants in the financial services, health
care & public health sectors
» Accordingly, COPT’s properties are deemed to be 100% essential
and are fully operational (though with fewer cars in the parking lots)
8
Team Safety
» We implemented a defensive posture with employees
▪ Most HQ employees working from home
▪ Company’s existing remote-IT infrastructure is very robust and
performing well
» COPT’s property-level building technicians & maintenance
employees remain at properties
▪ Personal Protective Equipment (“PPE”)
▪ Social distancing
▪ More frequent cleaning
Protecting employees while remaining fully operational
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I. Results for 4Q & FY 2018III. Leasing Update
10
Leasing Update
» 2020 Large Leases = No Change
▪ 1 contractor & 1 USG lease renewed
in 1Q (281,000 SF)
▪ As expected, tenant at 6721
Columbia Gateway Drive did not
renew (131,000 SF)
▪ One floor already back-filled
» 2021 Large Leases = No Change
▪ 3-building Boeing campus at
Redstone Gateway expected to
renew
▪ Contractor at NBP also expected to
renew
Renewal Leasing: No change in outlook
2020
Large Leases
#
Leases SF
%
Renewal
Expected
▪ USG 3 375,000 100%
▪ Contractor(s) 2 288,000 49%
▪ Commercial -- -- --
5 663,000 80%
2021
Large Leases
#
Leases SF
%
Renewal
Expected
▪ USG -- -- --
▪ Contractor(s) 4 493,000 100%
▪ Commercial -- -- --
4 493,000 100%
» Renewal rate expectation of 70–75% in 2020 is unchanged
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Leasing Update
» To date, tenants representing <1% of our core portfolio
ARR have requested short-term rent relief related to
COVID-19
▪ Zero requests by U.S. Government tenants or major defense
contractors
▪ Most requests are from food and entertainment tenants that
amenitize our office parks
Tenant Rent Relief Requests are Low
*As of April 14, 2020
12
Leasing Update
» Development Leasing ─ on-track for 1 million SF in 2020
▪ Five deals expected to sign in March slipped into second quarter
▪ Discussions & negotiations commenced before COVID-19 continue
to advance, albeit more slowly
Development Leasing Largely Unchanged
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Leasing Update
» Vacancy Leasing ─ strong demand, temporary
disruption expected
▪ Solid 1Q20 volume achieved
» New showings generally shut down
▪ Risk of timing delays to 2Q20 volume
▪ Expect “flurry” of activity after shutdown
Vacancy Leasing: Timing Less Certain
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I. Results for 4Q & FY 2018IV. Development Pipeline
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Development Pipeline
» Construction activities are “essential”; work continues unabated
» COPT’s developments advancing with no COVID-19 delays yet
» Risk of delays in jurisdictional permitting & inspections
No delays to-date; few anticipated*
SF Shell Completion 2020 2021 2022 Total
%
Leased
▪ MD 102,000 -- -- 102,000 25%
▪ AL 756,000 -- -- 756,000 58%
▪ DC 190,000 -- -- 190,000 53%
▪ VA
▪ Data Shells
▪ USG
720,000
--
230,000
--
--
348,000
950,000
348,000
100%
100%
Total at 1/31/20 1,768,000 230,000 348,000 2,346,000 79%
*As of April 14, 2020
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Development Pipeline
» We source ~95% of materials from within the U.S.
and/or Canada/Mexico*
▪ Any materials sourced from China or Europe (~5%) can be
replaced with North America-sourced materials in the future
(likely at moderately higher cost)
» Delivery of some interior finish materials in the U.S.
were delayed by state-level factory shutdowns and/or
labor quarantines
▪ Issues resolved thus far; others may surface
COPT’s supply-chain essentially uninterrupted
*USG developments require us to procure following Federal Acquisition Regulations & Buy America Act.
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I. Results for 4Q & FY 2018V. Liquidity
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Capital Plan
» 2020 plan assumes we raise $70–$90 million of equity
» Intend to expand joint venture program
» Worst Case ─ If we raise no equity in 2020,our net debt
to in-place adjusted EBITDA increases by 0.2–0.3x at
year-end
COPT’s 2020 Plan requires little equity
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Balance Sheet
» 2019 AFFO less dividends paid
totaled $52 million of liquidity
▪ We expect 2020 AFFO less
dividends to be higher than 2019
as a result of developments
expected to be placed into service
» Placed $23 million mortgage loan
on three Redstone Gateway
developments in March
» Amended 2015 Term Loan in
early March:
▪ Expanded amount by $150 million
▪ Lowered overall rate by 25 bps
Ample liquidity to bridge an extended crisis
Sources
▪ 2019 AFFO - Dividend (a) $52
▪ March-2020 Redstone
mortgage23
▪ 2100 L construction loan 50
▪ Cash & Unsecured line of
credit (b)130–160
▪ Equity 70–90
$325–$375
Uses
▪ Development investment $325–$375
2020 Plan:
a. Does not include the benefit of additional cash flow from
developments expected to be placed in service during 2020.
b. At December 31, 2019, we had $623 million of availability on our
line of credit.
20
Dividend is Well-Covered
» Our $0.275/share quarterly dividend ($1.10/share
annualized) is well-covered by operations
» Our 2020 plan implies a dividend/AFFO payout ratio of
approximately 70%
» Attractive 4.1% yield*
* As of the closing price on April 14, 2020
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I. Results for 4Q & FY 2018VI. Risks
22
Risks
» The COVID-19 pandemic is not yet over, and
unforeseen changes in demand in our markets may
emerge
» Regional Office segment ─ no material changes in our
outlook;* however:
▪ These 7 buildings (12% of core portfolio ARR) are subject to
traditional office fundamentals and may experience negative
impacts on market demand due to COVID-19
* As of April 14, 2020
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I. Results for 4Q & FY 2018VII. Conclusion
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Conclusion
» COPT employees are physically & virtually on the job
» Development and renewal leasing showing no major
changes
» Tenant requests for rent relief are minor
» Development pipeline on-track to deliver essentially as
planned
» Ample liquidity to deliver 2.3 million SF development
pipeline
Our ability to execute 2020 Plan remains intact*
*As of April 14, 2020
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VIII. Appendices
A. Definitions & Glossary
B. Reconciliations
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A. Definitions & Glossary» Adjusted EBITDA – net income (loss) adjusted for the effects of interest expense, depreciation and amortization, gain
on sales and impairment losses of real estate, gain or loss on early extinguishment of debt, net gain (loss) on other
investments, operating property acquisition costs, gain (loss) on interest rate derivatives, income taxes, business
development expenses, demolition costs on redevelopment and nonrecurring improvements, executive transition costs,
certain other expenses that we believe are not closely correlated with our operating performance, and excluding the
effect of properties that served as collateral for debt in default that we extinguished via conveyance of such properties.
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.
» AFFO less dividends – Diluted AFFO less dividends included in the computation of the payout ratio based on Diluted
AFFO.
» Annualized Rental Revenue – the monthly contractual base rent as of the reporting date multiplied by 12, plus the
estimated annualized expense reimbursements under existing leases for occupied space. With regard to properties
owned through unconsolidated real estate joint ventures, we include the portion of Annualized Rental Revenue allocable
to COPT’s ownership interest.
» Basic FFO available to common share and common unit holders (“Basic FFO”) – FFO adjusted to subtract
(1) preferred share dividends, (2) income attributable to non-controlling 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 non-controlling 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”).
» Core Portfolio – Defense/IT Locations and Regional Office properties.
» Defense/IT Locations – properties 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.
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A. Definitions & Glossary» Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) –
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.
» Diluted FFO available to common share and common unit holders (“Diluted FFO”) – 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.
» Diluted FFO available to common share and common unit holders, as adjusted for comparability (“Diluted FFO,
as adjusted for comparability”) – 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; 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.
» EBITDA – see Adjusted EBITDA
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A. Definitions & Glossary» 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 or placed in service 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 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.
» Net debt – 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 to in-place adjusted EBITDA ratio and Net debt plus preferred equity to in-place adjusted EBITDA ratio
– Net debt (defined above) or Net debt plus preferred equity 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”) – Includes: consolidated real estate revenues; consolidated
property operating expenses; 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.
» 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.
» Regional Office Properties – office properties located in select urban/urban-like submarkets in the Greater Washington,
DC/Baltimore region with durable Class-A office fundamentals and characteristics.
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A. Definitions & Glossary» Replacement capital expenditures – 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.
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B. ReconciliationsReconciliation of AFFO less dividends
Year
(Dollars and shares in thousands, except per share data) Ended
12/31/2019
Net income 200,004$
Real estate-related depreciation and amortization 137,069
Impairment losses on real estate 329
Gain on sales of real estate (105,230)
Depreciation and amortization on unconsolidated real estate JVs 2,703
FFO - per Nareit 234,875
Noncontrolling interests - preferred units in the Operating Partnership (564)
FFO allocable to other noncontrolling interests (5,024)
Basis and diluted FFO allocable to share-based compensation awards (905)
Basic FFO available to common share and common unit holders 228,382
Redeemable noncontrolling interests 132 Diluted FFO available to common share and common unit holders 228,514
Demolition costs on redevelopment and nonrecurring improvements 148
Executive transition costs 4
Non-comparable professional and legal expenses 681
Diluted FFO comparability adjustments allocable to share-based compensation awards (3)
Diluted FFO available to common share and common unit holders, as adjusted for comparability 229,344
Straight line rent adjustments and lease incentive amortization 255
Amortization of intangibles included in NOI (221)
Share-based compensation, net of amounts capitalized 6,728
Amortization of deferred financing costs 2,136
Amortization of net debt discounts, net of amounts capitalized 1,503
Accum. other comprehensive loss on derivatives amortized to expense 79
Replacement capital expenditures (63,789)
Other diluted AFFO adjustments associated with real estate JVs 212
Diluted AFFO available to common share and common unit holders (“diluted AFFO”) 176,247
Common share dividends - unrestricted shares and deferred shares (122,823)
Common unit distributions - unrestricted units (1,405)
AFFO less dividends 52,019$
6711 Columbia Gateway Drive, Suite 300, Columbia, Maryland 21046
443.285.5400 / www.copt.com / NYSE: OFC
CORPORATE OFFICE
PROPERTIES TRUST