Corporate Office Properties Trust Lowers Q4 EPS Guidance to $(1.25)-(1.22)

Corporate Office Properties Trust (COPT)

, a specialty office real estate investment trust (REIT) that focuses primarily on serving the specialized requirements of U.S. Government and Defense Information Technology tenants, announced today that it is expanding the scope of its previously announced Strategic Reallocation Plan to include an additional $312 million of assets to be sold within the next three years, bringing the size of the SRP to $572 million. In addition, COPT also is revising its diluted earnings per share (

) and FFO per diluted share (FFOPS) guidance for the quarter ending December 31, 2011 to reflect non-cash impairment losses on assets associated with the SRP and a loss from derivatives that management has determined will expire unused. Management originally issued guidance for fourth quarter 2011 EPS of $0.10−$0.13 and FFOPS of $0.54−$0.57 during its regularly scheduled third quarter earnings call on October 27, 2011. Since October 27, 2011, management: Completed the sale of $52.2 million of assets pursuant to the SRP, bringing total sales under the SRP to $76.7 million and aggregating approximately 894,150 square feet. Fourth quarter 2011 sales volume is consistent with management's October 27, 2011 guidance and therefore has no incremental effect on its updated guidance. Identified additional properties for sale. On December 21, 2011, COPT's Board of Trustees approved a plan by management to increase the size of the SRP to include an additional $312 million of assets. In connection with assets now included in the SRP, the Company will recognize an additional non-cash impairment of $77 million, or ($1.03) per diluted share, in the quarter ending December 31, 2011. The Company will also recognize a tax benefit of $4 million, or $0.06 per diluted share, related to this impairment. Elected not to issue 10-year debt, as originally anticipated when the Company entered into two forward starting LIBOR swaps in April 2011 for an aggregate notional amount of $175 million. As a result, COPT has discontinued hedge accounting on the 10-year forward starting swaps and is reclassifying $28.5 million from accumulated other comprehensive loss to net earnings (loss) in the three months ending December 31, 2011. The one-time loss amounts to ($0.38) per diluted share for EPS and FFOPS purposes. Incorporating the SRP impairment and loss on derivatives, management now expects a fourth quarter 2011 EPS loss of ($1.25)−($1.22), and negative FFOPS of ($0.30)−($0.27). A reconciliation of fourth quarter projected EPS loss to FFOPS is provided, as follows: