Corporate Office Properties Trust (OFC) 8-K Earnings Release

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 (sometimes also referred to as “Mission-Centric”). 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 (sometimes also referred to as “Urban-Centric”). As of September 30, 2018, we derived 88% of our core portfolio annualized revenue from Defense/IT Locations and 12% from our Regional Office Properties. As of September 30, 2018, our core portfolio of 159 office and data center shell properties, including six owned through an unconsolidated joint venture, encompassed 17.7 million square feet and was 94.0% leased. As of the same date, we also owned a wholesale data center with a critical load of 19.25 megawatts in operations.



Management:	Investor Relations:
Stephen E. Budorick, President & CEO	Stephanie M. Krewson-Kelly, VP of IR
Paul R. Adkins, 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- Positive; Moody’s: Baa3 Positive; and 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. 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 prolonged 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 our strategic customers; our 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; risks of investing through joint venture structures, including risks that our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our objectives; changes in our plans for properties or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of impairment losses; our ability to satisfy and operate effectively under Federal income tax rules relating to real estate investment trusts and partnerships; the dilutive effects of issuing additional common shares; our ability to achieve projected results; and environmental requirements. We undertake no obligation to update or supplement any forward-looking statements. For further information, refer to our filings with the Securities and Exchange Commission, particularly the section entitled “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017.

Corporate Office Properties Trust

Equity Research Coverage




Firm	Senior Analyst	Phone	Email
Bank of America Merrill Lynch	Jamie Feldman	646-855-5808	james.feldman@baml.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 Advisors	Jed Reagan	949-640-8780	jreagan@greenstreetadvisors.com
Jefferies & Co.	Jonathan Petersen	212-284-1705	jpetersen@jefferies.com
JP Morgan	Tony Paolone	212-622-6682	anthony.paolone@jpmorgan.com
KeyBanc Capital Markets	Craig Mailman	917-368-2316	cmailman@key.com
Mizuho Securities USA Inc.	Richard Anderson	212-205-8445	richard.anderson@us.mizuho-sc.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
Stifel Financial Corp.	John Guinee	443-224-1307	jwguinee@stifel.com
SunTrust Robinson Humphrey, Inc.	Michael Lewis	212-319-5659	michael.lewis@suntrust.com
Wells Fargo Securities	Blaine Heck	443-263-6529	blaine.heck@wellsfargo.com

With the exception of Green Street Advisors, 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 Thomson’s First Call Corporation. 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															Nine Months Ended
SUMMARY OF RESULTS	Refer.	9/30/18			6/30/18			3/31/18			12/31/17			9/30/17			9/30/18			9/30/17
Net income	6	$	20,322		$	21,085		$	18,780		$	11,008		$	22,334		$	60,187		$	63,933
NOI from real estate operations	13	$	80,854		$	80,918		$	78,526		$	81,439		$	82,065		$	240,298		$	242,382
Same Properties NOI	16	$	71,619		$	71,937		$	69,840		$	72,246		$	71,640		$	213,396		$	215,438
Same Properties Cash NOI	17	$	71,813		$	71,809		$	68,905		$	71,711		$	71,616		$	212,527		$	212,759
Adjusted EBITDA	10	$	75,768		$	75,572		$	73,707		$	76,862		$	77,241		$	225,047		$	226,529
Diluted AFFO avail. to common share and unit holders	9	$	38,340		$	39,742		$	38,218		$	31,920		$	41,359		$	116,300		$	123,393
Dividend per common share	N/A	$	0.275		$	0.275		$	0.275		$	0.275		$	0.275		$	0.825		$	0.825

Per share - diluted:
EPS	8	$	0.18		$	0.19		$	0.17		$	0.10		$	0.21		$	0.54		$	0.46
FFO - NAREIT	8	$	0.50		$	0.51		$	0.49		$	0.47		$	0.54		$	1.51		$	1.47
FFO - as adjusted for comparability	8	$	0.50		$	0.51		$	0.50		$	0.53		$	0.53		$	1.51		$	1.50

Numerators for diluted per share amounts:
Diluted EPS	6	$	18,583		$	19,317		$	17,033		$	9,509		$	20,484		$	54,933		$	45,721
Diluted FFO available to common share and unit holders	7	$	53,642		$	53,720		$	51,537		$	48,824		$	55,871		$	158,899		$	150,346
Diluted FFO available to common share and unit holders, as adjusted for comparability	7	$	53,938		$	53,941		$	51,738		$	54,065		$	54,662		$	159,617		$	153,291

Payout ratios:
Diluted FFO	N/A	56.3		%	54.3		%	56.0		%	58.7		%	50.4		%	55.5		%	56.2		%
Diluted FFO - as adjusted for comparability	N/A	56.0		%	54.1		%	55.8		%	53.0		%	51.5		%	55.3		%	55.1		%
Diluted AFFO	N/A	78.8		%	73.4		%	75.5		%	89.7		%	68.1		%	75.8		%	68.5		%

CAPITALIZATION
Total Market Capitalization	28	$	5,119,467		$	4,979,083		$	4,598,028		$	4,903,623		$	5,272,960
Total Equity Market Capitalization	28	$	3,296,155		$	3,095,017		$	2,729,913		$	3,061,456		$	3,385,759
Gross debt	29	$	1,853,312		$	1,914,066		$	1,898,115		$	1,872,167		$	1,917,201
Net debt to adjusted book	31	39.2		%	41.1		%	41.2		%	40.8		%	41.7		%	N/A			N/A
Net debt plus preferred equity to adjusted book	31	39.4		%	41.3		%	41.3		%	41.0		%	41.9		%	N/A			N/A
Adjusted EBITDA fixed charge coverage ratio	31	3.6		x	3.6		x	3.5		x	3.7		x	3.6		x	3.6		x	3.3		x
Net debt to in-place adjusted EBITDA ratio	31	6.1		x	6.3		x	6.4		x	6.1		x	6.2		x	N/A			N/A
Net debt plus pref. equity to in-place adj. EBITDA ratio	31	6.1		x	6.3		x	6.4		x	6.1		x	6.2		x	N/A			N/A

OTHER
Revenue from early termination of leases	N/A	$	859		$	874		$	1,246		$	634		$	749		$	2,979		$	1,828
Capitalized interest costs	N/A	$	1,410		$	1,397		$	1,374		$	1,032		$	1,055		$	4,181		$	4,197

Corporate Office Properties Trust

Selected Portfolio Data (1)




	9/30/18		6/30/18		3/31/18 (2)		12/31/17		9/30/17
Operating Office and Data Center Shell Properties
# of Properties
Total Portfolio	161		159		159		159		159
Consolidated Portfolio	155		153		153		153		153
Core Portfolio	159		157		157		156		153
Same Properties	147		147		147		147		147

% Occupied
Total Portfolio	92.1	%	91.4	%	91.0	%	93.6	%	93.4	%
Consolidated Portfolio	91.7	%	90.9	%	90.5	%	93.2	%	93.0	%
Core Portfolio (2)	92.2	%	91.5	%	91.1	%	94.5	%	94.3	%
Same Properties	92.1	%	91.2	%	90.9	%	92.1	%	91.8	%

% Leased
Total Portfolio	93.9	%	93.3	%	91.8	%	94.2	%	94.2	%
Consolidated Portfolio	93.5	%	92.9	%	91.3	%	93.9	%	93.8	%
Core Portfolio (2)	94.0	%	93.4	%	91.9	%	95.1	%	95.1	%
Same Properties	93.8	%	93.3	%	91.7	%	92.8	%	92.7	%

Square Feet (in thousands)
Total Portfolio	17,867		17,655		17,613		17,345		17,376
Consolidated Portfolio	16,905		16,694		16,651		16,383		16,413
Core Portfolio	17,710		17,498		17,456		17,059		16,737
Same Properties	16,232		16,232		16,232		16,232		16,232

Wholesale Data Center (in megawatts (“MWs”))
MWs Operational	19.25		19.25		19.25		19.25		19.25
MWs Leased (3)	16.86		16.86		16.86		16.86		16.86


(1)	Our total portfolio, core portfolio and Same Properties reporting included six properties owned through an unconsolidated joint venture totaling 962,000 square feet that were 100% occupied and leased.

(2)

The data above reflects the effect of two properties reported as fully placed in service during the first quarter of 2018 that were previously reported as construction projects since they were held for future lease to the United States Government. If these two properties were reported as fully placed in service as of 12/31/17, our Core Portfolio would have been 92.8% occupied and 93.3% leased as of 12/31/17. Our Same Properties data is reported as if these two properties were fully placed in service as of 1/1/17.


(3)	Leased to tenants with further expansion rights of up to a combined 17.92 megawatts as of 9/30/18.

Corporate Office Properties Trust

Consolidated Balance Sheets

(dollars in thousands)



	9/30/18			6/30/18			3/31/18			12/31/17			9/30/17
Assets
Properties, net:
Operating properties, net	$	2,796,577		$	2,760,632		$	2,740,264		$	2,737,611		$	2,690,712
Construction and redevelopment in progress, including land (1)	149,042			91,630			61,844			50,316			70,202
Land held (1)	261,808			331,275			356,171			353,178			336,117
Total properties, net	3,207,427			3,183,537			3,158,279			3,141,105			3,097,031
Assets held for sale (2)	42,226			42,226			42,226			42,226			74,415
Cash and cash equivalents	9,492			8,472			8,888			12,261			10,858
Investment in unconsolidated real estate joint venture	40,318			40,806			41,311			41,787			42,263
Accounts receivable, net	19,245			23,656			23,982			31,802			27,624
Deferred rent receivable, net	89,171			89,606			87,985			86,710			84,743
Intangible assets on real estate acquisitions, net	47,065			50,586			54,600			59,092			64,055
Deferred leasing costs, net	49,510			48,183			47,886			48,322			47,033
Investing receivables	55,688			54,427			58,800			57,493			56,108
Interest rate derivatives	10,875			9,792			7,960			3,073			126
Prepaid expenses and other assets, net	79,349			61,071			64,321			71,334			72,585
Total assets	$	3,650,366		$	3,612,362		$	3,596,238		$	3,595,205		$	3,576,841
Liabilities and equity
Liabilities:
Debt	$	1,808,030		$	1,871,445		$	1,854,886		$	1,828,333		$	1,873,291
Accounts payable and accrued expenses	90,224			88,885			95,721			108,137			121,483
Rents received in advance and security deposits	23,159			24,905			26,569			25,648			26,223
Dividends and distributions payable	30,483			29,449			29,146			28,921			28,462
Deferred revenue associated with operating leases	10,006			10,783			11,246			11,682			12,047
Deferred property sale (2)	43,377			43,377			43,377			43,377			—
Capital lease obligation	660			640			11,778			15,853			16,347
Other liabilities	9,267			9,849			17,643			41,822			43,866
Total liabilities	2,015,206			2,079,333			2,090,366			2,103,773			2,121,719
Redeemable noncontrolling interests	25,431			24,544			23,848			23,125			23,269
Equity:
COPT’s shareholders’ equity:
Common shares	1,088			1,033			1,022			1,013			996
Additional paid-in capital	2,390,484			2,254,430			2,221,427			2,201,047			2,150,067
Cumulative distributions in excess of net income	(833,508		)	(822,270		)	(813,302		)	(802,085		)	(783,848		)
Accumulated other comprehensive income (loss)	10,108			9,012			7,204			2,167			(859		)
Total COPT’s shareholders’ equity	1,568,172			1,442,205			1,416,351			1,402,142			1,366,356
Noncontrolling interests in subsidiaries:
Common units in the Operating Partnership	19,525			44,651			44,327			45,097			44,716
Preferred units in the Operating Partnership	8,800			8,800			8,800			8,800			8,800
Other consolidated entities	13,232			12,829			12,546			12,268			11,981
Total noncontrolling interests in subsidiaries	41,557			66,280			65,673			66,165			65,497
Total equity	1,609,729			1,508,485			1,482,024			1,468,307			1,431,853
Total liabilities, redeemable noncontrolling interests and equity	$	3,650,366		$	3,612,362		$	3,596,238		$	3,595,205		$	3,576,841


(1)	Refer to pages 24, 25 and 27 for detail.


(2)	As of 12/31/17 and each subsequent reporting date, these lines represent the carrying amount and sale proceeds pertaining to a property sale not recognized for accounting purposes until 10/1/18.

Corporate Office Properties Trust

Consolidated Statements of Operations

(in thousands, except per share data)



	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			9/30/17			9/30/18			9/30/17
Revenues
Rental revenue	$	102,132		$	101,121		$	100,834		$	101,485		$	102,275		$	304,087		$	304,237
Tenant recoveries and other real estate operations revenue	26,856			28,041			27,444			26,200			24,956			82,341			78,058
Construction contract and other service revenues	8,423			17,581			27,198			36,882			29,786			53,202			65,958
Total revenues	137,411			146,743			155,476			164,567			157,017			439,630			448,253
Expenses
Property operating expenses	49,340			49,446			50,951			47,449			46,368			149,737			143,515
Depreciation and amortization associated with real estate operations	34,195			33,190			33,512			33,938			34,438			100,897			100,290
Construction contract and other service expenses	8,058			16,941			26,216			36,029			28,788			51,215			63,589
Impairment losses (recoveries)	—			—			—			13,659			(161		)	—			1,464
General and administrative expenses	5,796			6,067			5,861			5,552			5,692			17,724			18,456
Leasing expenses	1,103			1,561			1,431			1,447			1,676			4,095			5,382
Business development expenses and land carry costs	1,567			1,234			1,614			1,646			1,277			4,415			4,567
Total operating expenses	100,059			108,439			119,585			139,720			118,078			328,083			337,263
Operating income	37,352			38,304			35,891			24,847			38,939			111,547			110,990
Interest expense	(19,181		)	(18,945		)	(18,784		)	(19,211		)	(19,615		)	(56,910		)	(57,772		)
Interest and other income	1,486			1,439			1,359			1,501			1,508			4,284			4,817
Loss on early extinguishment of debt	—			—			—			—			—			—			(513		)
Income before equity in income of unconsolidated entities and income taxes	19,657			20,798			18,466			7,137			20,832			58,921			57,522
Equity in income of unconsolidated entities	374			373			373			372			371			1,120			1,118
Income tax benefit (expense)	291			(63		)	(55		)	(953		)	(57		)	173			(145		)
Income before gain on sales of real estate	20,322			21,108			18,784			6,556			21,146			60,214			58,495
Gain on sales of real estate	—			(23		)	(4		)	4,452			1,188			(27		)	5,438
Net income	20,322			21,085			18,780			11,008			22,334			60,187			63,933
Net income attributable to noncontrolling interests:
Common units in the Operating Partnership	(380		)	(608		)	(544		)	(314		)	(693		)	(1,532		)	(1,576		)
Preferred units in the Operating Partnership	(165		)	(165		)	(165		)	(165		)	(165		)	(495		)	(495		)
Other consolidated entities	(1,080		)	(878		)	(921		)	(908		)	(897		)	(2,879		)	(2,738		)
Net income attributable to COPT	18,697			19,434			17,150			9,621			20,579			55,281			59,124
Preferred share dividends	—			—			—			—			—			—			(6,219		)
Issuance costs associated with redeemed preferred shares	—			—			—			—			—			—			(6,847		)
Net income attributable to COPT common shareholders	$	18,697		$	19,434		$	17,150		$	9,621		$	20,579		$	55,281		$	46,058
Amount allocable to share-based compensation awards	(114		)	(117		)	(117		)	(112		)	(95		)	(348		)	(337		)
Numerator for diluted EPS	$	18,583		$	19,317		$	17,033		$	9,509		$	20,484		$	54,933		$	45,721

Corporate Office Properties Trust

Funds from Operations

(in thousands)



	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			9/30/17			9/30/18			9/30/17
Net income	$	20,322		$	21,085		$	18,780		$	11,008		$	22,334		$	60,187		$	63,933
Real estate-related depreciation and amortization	34,195			33,190			33,512			33,938			34,438			100,897			100,290
Impairment losses (recoveries) on previously depreciated operating properties	—			—			—			9,004			(159		)	—			1,451
Gain on sales of previously depreciated operating properties	—			23			4			(4,452		)	(8		)	27			(39		)
Depreciation and amortization on unconsolidated real estate JV (1)	564			564			563			563			563			1,691			1,689
FFO - per NAREIT (2)(3)	55,081			54,862			52,859			50,061			57,168			162,802			167,324
Preferred share dividends	—			—			—			—			—			—			(6,219		)
Issuance costs associated with redeemed preferred shares	—			—			—			—			—			—			(6,847		)
Noncontrolling interests - preferred units in the Operating Partnership	(165		)	(165		)	(165		)	(165		)	(165		)	(495		)	(495		)
FFO allocable to other noncontrolling interests (4)	(1,060		)	(753		)	(944		)	(874		)	(917		)	(2,757		)	(2,801		)
Basic and diluted FFO allocable to share-based compensation awards	(214		)	(224		)	(213		)	(198		)	(215		)	(651		)	(616		)
Basic and Diluted FFO available to common share and common unit holders (3)	53,642			53,720			51,537			48,824			55,871			158,899			150,346
Gain on sales of non-operating properties	—			—			—			—			(1,180		)	—			(5,399		)
Impairment losses (recoveries) on non-operating properties	—			—			—			4,655			(2		)	—			13
Income tax expense associated with FFO comparability adjustments	—			—			—			800			—			—			—
Gain on interest rate derivatives	—			—			—			(191		)	(34		)	—			(43		)
Loss on early extinguishment of debt	—			—			—			—			—			—			513
Issuance costs associated with redeemed preferred shares	—			—			—			—			—			—			6,847
Demolition costs on redevelopment and nonrecurring improvements	251			9			39			—			—			299			294
Executive transition costs	46			213			163			—			2			422			732
Diluted FFO comparability adjustments allocable to share-based compensation awards	(1		)	(1		)	(1		)	(23		)	5			(3		)	(12		)
Diluted FFO avail. to common share and common unit holders, as adj. for comparability (3)	$	53,938		$	53,941		$	51,738		$	54,065		$	54,662		$	159,617		$	153,291


(1)	FFO adjustment pertaining to COPT’s share of an unconsolidated real estate joint venture reported on page 33.


(2)	See reconciliation on page 34 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 32.

Corporate Office Properties Trust

Diluted Share and Unit Computations

(in thousands)



	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			9/30/17			9/30/18			9/30/17
EPS Denominator:
Weighted average common shares - basic	104,379			101,789			100,999			99,304			99,112			102,401			98,855
Dilutive effect of share-based compensation awards	231			119			144			68			146			165			154
Dilutive effect of forward equity sale agreements	178			—			—			215			—			60			—
Weighted average common shares - diluted	104,788			101,908			101,143			99,587			99,258			102,626			99,009
Diluted EPS	$	0.18		$	0.19		$	0.17		$	0.10		$	0.21		$	0.54		$	0.46

Weighted Average Shares for period ended:
Common Shares Outstanding	104,379			101,789			100,999			99,304			99,112			102,401			98,855
Dilutive effect of share-based compensation awards	231			119			144			68			146			165			154
Dilutive effect of forward equity sale agreements	178			—			—			215			—			60			—
Common Units	2,135			3,197			3,221			3,252			3,350			2,847			3,400
Denominator for diluted FFO per share and as adjusted for comparability	106,923			105,105			104,364			102,839			102,608			105,473			102,409
Weighted average common units	(2,135		)	(3,197		)	(3,221		)	(3,252		)	(3,350		)	(2,847		)	(3,400		)
Denominator for diluted EPS	104,788			101,908			101,143			99,587			99,258			102,626			99,009
Diluted FFO per share - NAREIT	$	0.50		$	0.51		$	0.49		$	0.47		$	0.54		$	1.51		$	1.47
Diluted FFO per share - as adjusted for comparability	$	0.50		$	0.51		$	0.50		$	0.53		$	0.53		$	1.51		$	1.50

Corporate Office Properties Trust

Adjusted Funds from Operations

(in thousands)




	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			9/30/17			9/30/18			9/30/17
Diluted FFO available to common share and common unit holders, as adjusted for comparability	$	53,938		$	53,941		$	51,738		$	54,065		$	54,662		$	159,617		$	153,291
Straight line rent adjustments and lease incentive amortization	582			(1,195		)	(828		)	(1,343		)	(561		)	(1,441		)	1,389
Amortization of intangibles included in NOI	153			231			356			342			318			740			1,002
Share-based compensation, net of amounts capitalized	1,557			1,550			1,485			1,523			1,272			4,592			3,830
Amortization of deferred financing costs	468			468			468			443			554			1,404			2,485
Amortization of net debt discounts, net of amounts capitalized	362			358			354			350			347			1,074			1,029
Accum. other comprehensive loss on derivatives amortized to expense	33			34			34			54			53			101			89
Replacement capital expenditures (1)	(18,803		)	(15,613		)	(15,520		)	(23,475		)	(15,233		)	(49,936		)	(39,551		)
Other diluted AFFO adjustments associated with real estate JVs (2)	50			(32		)	131			(39		)	(53		)	149			(171		)
Diluted AFFO available to common share and common unit holders (“diluted AFFO”)	$	38,340		$	39,742		$	38,218		$	31,920		$	41,359		$	116,300		$	123,393
Replacement capital expenditures (1)
Tenant improvements and incentives	$	12,894		$	8,117		$	8,615		$	14,804		$	11,342		$	29,626		$	22,230
Building improvements	5,975			5,775			1,921			9,241			3,865			13,671			13,067
Leasing costs	2,945			1,822			1,280			3,242			2,428			6,047			5,245
Net (exclusions from) additions to tenant improvements and incentives	(896		)	1,315			3,289			(2,929		)	(1,509		)	3,708			5,913
Excluded building improvements	(2,134		)	(1,370		)	415			(853		)	(893		)	(3,089		)	(6,904		)
Excluded leasing costs	19			(46		)	—			(30		)	—			(27		)	—
Replacement capital expenditures	$	18,803

Corporate Office Properties Trust (OFC) SEC Filing 8-K Material Event for the period ending Thursday, October 25, 2018

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