The Government/ Defense Information Technology Office REIT. January 2009

Transcription

1 The Government/ Defense Information Technology Office REIT January 2009

2 Disclosure This presentation contains forward-looking information based upon the Company s current best judgement and expectations. Actual results could vary from those presented herein. The risks and uncertainties associated with the forward-looking information include the strength of the commercial office real estate market in which the Company operates, competitive market conditions, general economic growth, interest rates and capital market conditions. The Company undertakes no obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information, please refer to the Company s filings with the Securities and Exchange Commission. Defined terms for Non-GAAP measures used throughout may be found in the Disclosure. In addition, a Reconciliation of Non-GAAP measures to the most comparable GAAP measures is included in the Disclosure. 1

3 Overview Presented to: Class A Office (254 Properties, 19.1 mm s.f.) 1 Greater Washington, DC Region (64% of Wholly Owned Properties) 2 (PHOTO) #1 Equity REIT for Total Shareholder Return (10 years); #1 Office REIT for Total Shareholder Return (2008) 61.4% FFO-Diluted and 215.0% Earnings Payout Ratios 3 Core Customer Focus 53% of total Revenues from real estate operations from assets containing US Government, Defense Information Technology Contractors and Data sector tenants 3 Winner of the 2007 National Commercial Real Estate Customer Service Award for Excellence for Category I properties, the largest of the categories Winner for the 4 th year in a row A leader in developing Green Buildings since 2003 Expansion/growth within existing markets through acquisition and development and outside existing markets by pursuing core tenant driven opportunities 1. Data as of September 30, 2008, includes 19 properties and 847,000 square feet held through joint ventures. 2. Measured using square feet. 2

4 PERFORMANCE 3

5 FFO Growth Per Share Dividend Growth % $1.60 $ % $ % $0.40 $0.00 Total Shareholder Return* 648% % 500% 400% 300% 200% COPT RMS S&P Dow Jones 100% 0% -100% 1 year 3 years 5 years 10 years *Data as of December 31, 2008, compiled by NAREIT. 4

6 Peer Group Earnings Comparison FFO-Diluted Per Share Growth 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% % 14.1% % 4.5% % 7.0% % 12.6% 3.3% 2008 Projected 10.0% HIGH 8.5% LOW $2.43-$ % 2009 Projected 8.1% HIGH 6.2% LOW $2.58-$2.66 Median for Office Peer Group OFC Based on actual FFO-Diluted for 2004, 2005, 2006 and 2007 and projected 2008 and Data provided by Stifel Nicolaus. 2. Based on FFO-Diluted for 2004, 2005, 2006 and 2007 of $1.78*, $1.86, $1.99* and $2.24 per share, respectively (*2004 and 2006 have been adjusted for one time charges due to preferred share redemptions; the Company s actual FFO-Diluted was $1.74 for 2004 and $1.91 for 2006) and the Company s guidance of $ for 2008 and $ for

7 COPT Value Creation Strategy * 53% & 65% of total Revenues from real estate operations from assets containing US Government, Defense Information Technology Contractors and Data sector tenants 6

8 Corporate Strategy Value creation versus transaction driven asset management strategy Specialized product and expertise versus commodity office space Relationship driven versus market driven locations 7

9 Green Building Development 33 COPT LEED Projects: 4 Certified Gold 4 Certified Silver 25 Registered 12 LEED Accredited COPT Employees Committed to building Green buildings since 2003 Sustainable operating practices Sustainable Building Features: Improved Indoor Air Quality Energy Efficiency Reduced Water Consumption Commissioning Collection Management (Recycling) Construction Waste Management & Erosion Control COPT Awards for Green Development: NAIOP National Green Development Award 2005 NAIOP Maryland Chapter Environmentally Friendly Green Development Award 2006 USGBC Baltimore Chapter Green Leadership Award

10 2009 Earnings Guidance Presented to: (PHOTO) The Company recently announced its initial 2009 FFO guidance on a comparable basis (before the impact of the accounting change for Exchangeable notes) of $ per diluted share this range represents a 6-8% increase over the 2008 guidance range. Key Assumptions: Occupancy for our same office portfolio plus developments placed into service during 2008 to end the year between 92%-93% Development projects opening during 2009 are assumed to generate $4 million of NOI Same Office NOI is projected to increase by 2% for the year Lease termination fees are projected to be $3-$4 million A modest level of acquisitions are assumed which are weighted towards the second half of the year Gains on sales of non-operating assets are projected to generate between $1-$3 million Net Service Income, primarily third party development fees, is projected to be $4 and $5 million G&A expenses are projected to average $6 million per quarter at the middle of the range of our guidance Approximately 20%-25% of our outstanding debt is expected to be floating throughout the year No new equity issuances are assumed during

11 COMPETITIVE STRENGTHS 10

12 Competitive Strengths Presented to: (PHOTO) Strength of tenant base/focus on tenant relationships and niche Unique skill set to design secure, technically complex office and data facilities Strong market dynamics low vacancy rate, high job growth Dominant owner in a particular park or submarket Strong occupancy high tenant retention Emphasis on tenant service (Winner of CEL survey) Strategy for land control Green building strategy 11

13 Greater Washington, DC Focus Region Submarket s.f. (000s) Our s.f. (000s) Our Market Share Submarket Vacancy- Direct Submarket Vacancy- With Sublease Our Vacancy B/W Corridor 21,385 7, % 13.3% 15.2% 7.6% Northern Virginia Dulles South 12,366 1, % 18.5% N/A 0.4% Herndon 11, % 16.0% N/A 0.1% Tysons Corner 25, % 9.9% N/A 2.1% Blue Bell- 5, % 16.0% % Philadelphia Central 22, % 13.3% 16.2% 0.0% New Jersey Suburban MD 30, % N/A 15.4% 2.8% Suburban Baltimore (Note: numbers don t include White Marsh) 12,619 1, % 10.4% 13.4% 14.8% Colorado Springs 14,607 1, % 11.6% N/A 4.7% Data as of September 30, 2008, compiled by CB Richard Ellis, Newmark Knight Frank, Turner Commercial and Company data. Suburban Maryland contains the submarkets of Gaithersburg, North Rockville, North Silver Spring, and Frederick. The Suburban Baltimore region contains the submarkets of Hunt Valley, Timonium/Towson, West, & East. Colorado Springs contains the Northeast/Northwest submarkets. 12

14 Fort Ritchie 591 Acres. Premiere Office Parks NorthGate Business Park 45 Acres White Marsh 1,548,000 s.f. Columbia Gateway 2,234,000 s.f. One Dulles Tower & Dulles Tech Center 571,000 s.f. Westfields Corporate Center 1,454,000 s.f. Airport Square 1,630,000 s.f. The National Business Park 2,415,000 s.f. M Square 49 Acres Patuxent River Office Portfolio 620,000 s.f. Dahlgren Technology Center 205,000 s.f. Data as of September 30,

15 High Occupancy Rate Occupancy/Leasing Rate At Year/Quarter End (Wholly Owned) 100% 96% 97% 93% 94% 91% 93% 94% 95% 94% 95% 93% 95% 93% 93% 93% 94% 93% 94% 93% 94% 75% 50% 25% 0% Q Q Q Occupancy Leased 14

16 1 Top 20 Tenants 54% of Total Revenue TENANT 2 % OF PORTFOLIO ANNUALIZED REVENUE AVG. REMAINING TERM United States of America 16.0% 6.3 Northrop Grumman Corporation 7.5% 7.5 Booz Allen Hamilton, Inc. 5.3% 5.8 Computer Sciences Corporation 3.1% 2.8 L-3 Communications Holdings, Inc. 2.5% 5.5 Unisys Corporation 2.4% 2.5 General Dynamics Corporation 2.0% 1.9 The Aerospace Corporation 1.9% 6.4 ITT Corporation 1.8% 5.6 Wachovia Corporation 1.8% 9.9 Comcast Corporation 1.7% 3.4 AT&T Corporation 1.5% 4.6 Ciena Corporation 1.1% 3.6 The Boeing Company 1.1% 2.9 BAE Systems PLC 0.8% 4.0 Science Applications International Corp. 0.8% 1.1 The Johns Hopkins Institutions 0.8% 7.8 Merck & Co., Inc. (Unisys) 0.7% 3.5 Magellan Health Services, Inc. 0.7% 2.8 AARP 0.7% 13.2 Total / Weighted Average 54.4% 5.6 Years 3 1. This list represents our top twenty tenants as of September 30, 2008, exclusive of owner occupied leases, based on annualized revenue for wholly owned properties only. 2. Includes affiliated organizations or agencies of tenants, where applicable. 3. The weighting of the lease term was computed using Total Rental Revenue. 15

17 ASSET GROWTH DRIVERS 16

18 External Growth Drivers Presented to: Tenant Centric Expansion Strategy (Acquisition and Development) (PHOTO) Colorado Springs San Antonio Fort Ritchie BRAC Locations (Development) Aberdeen Proving Ground National Business Park St. Mary s County Fort Detrick (Frederick, MD) Government, Defense IT and Data Centers Joint Ventures (Development) Arundel Preserve M Square 17

19 Tenant Centric Expansion Colorado Springs, CO InterQuest Office Park Colorado Springs Portfolio Operating Properties 17 buildings 1.2 million s.f. 95% leased NorthCreek Office Complex Patriot Park Peterson Air Force Base Newport Centre One Colorado Springs Airport Business Park Development/Construction Properties 4 construction 363,000 s.f. Land Control 194 acres 2.5 million s.f. Data as of September 30,

20 Tenant Centric Expansion Colorado Springs, CO Patriot Park Site Plan Patriot Park Colorado Springs, Colorado 71 acres Acquired July 2005, April 2006, July 2007 Patriot Park I & II Colorado Springs, Colorado 136,000 square feet Acquired September 2005 Under Construction Patriot Park 6 104,000 square feet (100% leased to ITT Corporation) Operating Future Patriot Park 7 90,000 square feet Under Construction 19

21 InterQuest Site Plan Tenant Centric Expansion Colorado Springs, CO Under Construction: Hybrid I (#13) 74,000 s.f. Hybrid II (#12) 54,000 s.f. Epic One (#11) 146,000 s.f. Land Owned: 113 acres, 1.6 million s.f. 20

22 Tenant Centric Expansion Colorado Springs, CO InterQuest InterQuest 3 & 4 113,000 s.f. Epic One 146,000 s.f. Hybrid I & II 128,000 s.f Federal Drive 75,000 s.f. 21

23 Cresterra - Colorado Springs Airport Business Park 3535 Northrop Grumman Point 124,000 s.f. 100% leased to Northrop Grumman Acquired COPT to develop up to: 3.5 million s.f. 272 acres of land Mixed-use community 22

24 Development Summary Actual or Total Anticipated Rentable Percentage Anticipated Construction Anticipated Demand Square Leased/ Total Completion Operational Property and Location Driver Feet Committed Cost Date Date Under Construction 7700 Potranco Road, Building C San Antonio, Texas Government 38, % $ 4,486 4Q 08 4Q Potranco Road, Building HI San Antonio, Texas Government 52, % 3,605 4Q 08 4Q University Research Court (M Square Bldg. 2) College Park, Maryland Government 123, % 23,510 4Q 09 1Q 10 Subtotal Government 214, % $ 31,601 % of Total Drivers 17% 6721 Columbia Gateway Drive Columbia, Maryland Defense Information Technology 131, % $ 34,490 4Q 08 2Q New Allegiance Drive (Epic One) Colorado Springs, Colorado Defense Information Technology 145,723 23% 30,870 2Q 09 2Q Sentinel Drive (300 NBP) Annapolis Junction, Maryland Defense Information Technology 185,719 0% 49,471 2Q 09 2Q Space Center Drive (Patriot Park 7) Colorado Springs, Colorado Defense Information Technology 89,773 0% 18,000 2Q 09 2Q 10 Subtotal Defense Information Technology 552,666 30% $ 132,831 % of Total Drivers 44% 7740 Milestone Parkway Hanover, Maryland Market Demand 148,130 0% $ 36,493 3Q 08 3Q Federal Drive (Hybrid I) Colorado Springs, Colorado Market Demand 73,940 0% 12,595 3Q 08 3Q Federal Drive (Hybrid II) Colorado Springs, Colorado Market Demand 53,745 81% 8,498 3Q 08 3Q 09 Subtotal Market Demand 275,815 16% $ 57,586 % of Total Drivers 22% 5825 University Research Court (M Square) College Park, Maryland Research Park 116,083 53% $ 21,845 1Q 08 1Q Research Park Drive (UMBC) Baltimore, Maryland Research Park 105,964 26% 21,960 3Q 08 3Q 09 Subtotal Research Park 222,047 40% $ 43,805 % of Total Drivers 18% Total Under Construction 1,264,599 41% $ 265,823 Data as of September 30, Includes joint ventures. 23

25 Under Construction by Demand Driver 1 Research Park, 222,047 Government, 214,071 Market Demand, 275,815 Defense Info. Tech., 552,666 Under Construction Demand Driver Square Feet % 7700 Potranco Road, Bldg. C Government 38, % 7700 Potranco Road, Bldg. HI Government 52, % 5850 University Research Ct. Government 123, % 6721 Columbia Gateway Dr. Defense Info. Tech. 131, % New Allegiance (Epic One) Defense Info. Tech. 145, % 300 Sentinel Drive (300 NBP) Defense Info. Tech. 185, % 565 Space Center Drive Defense Info. Tech. 89, % 7740 Milestone Parkway Market Demand 148, % 9945 Federal Drive (Hybrid I) Market Demand 73, % 9925 Federal Drive (Hybrid II) Market Demand 53, % 5825 University Research Ct. Research Park 116, % 5520 Research Park Drive Research Park 105, % Under Construction Demand Driver Square Feet % Out of Supply Government 214, % Government Defense Info. Tech. 552, % Tenant Centric Expansion Market Demand 275, % University Research Park Research Park 222, % Total 1,264, % 1. Shown by square footage. 24

26 Development Summary Actual or Total Anticipated Rentable Anticipated Construction Anticipated Demand Square Total Completion Operational Property and Location Driver Feet Cost Date Date Redevelopment 2900 Towerview Road Herndon, Virginia N/A 137,037 $ 18,408 4Q 07 4Q 08 Subtotal Northern Virginia 137,037 $ 18, Candlewood Road Hanover, Maryland N/A 356,000 $ 38,307 3Q 09 3Q 10 Subtotal Baltimore/Washington Corridor 356,000 $ 38,307 Total Redevelopment 493,037 $ 56,715 Under Development Riverwood I & II Columbia, Maryland Government 70,000 $ 15,200 2Q 10 3Q Sentinel Drive (324 NBP) Annapolis Junction, Maryland Government 121,250 30,000 4Q 09 3Q Potranco Road San Antonio, Texas Government 125,000 22,500 3Q 10 3Q Potranco Road San Antonio, Texas Government 125,000 22,500 3Q 10 3Q 11 Subtotal Government 441,250 $ 90,200 % of Total Drivers 45% 308 Sentinel Way (308 NBP) Annapolis Junction, Maryland Defense Information Technology 161,200 $ 38,000 1Q 10 4Q Thomas Johnson Drive, Bldg #2 Frederick, Maryland Defense Information Technology 85,000 16,000 2Q 10 2Q 11 Northgate Business Park (Lot A) Aberdeen, Maryland Defense Information Technology 80,000 16,500 4Q 09 4Q 10 Northgate Business Park (Lot C) Aberdeen, Maryland Defense Information Technology 85,000 16,600 2Q 10 2Q 11 Subtotal Defense Information Technology 411,200 $ 87,100 % of Total Drivers 42% 8130 Corporate Drive White Marsh, Maryland Market Demand 125,000 $ 26,500 1Q 10 1Q 11 Subtotal Market Demand 125,000 $ 26,500 % of Total Drivers 13% Total Under Development 977,450 $ 203,800 Data as of September 30, Includes joint ventures. 25

27 Pre-Start by Demand Driver 1 Market Demand, 125,000 Government, 441,250 Defense Info. Tech., 411,200 Pre Start Demand Driver Square Feet % Riverwood I&II Government 70, % 324 Sentinel Drive (324 NBP) Government 121, % 8000 Potranco Road Government 125, % 8030 Potranco Road Government 125, % 308 Sentinel Drive (308 NBP) Defense Info. Tech. 161, % 110 Thomas Johnson Dr. Defense Info. Tech. 85, % Northgate Bus. Park (Lot A) Defense Info. Tech. 80, % Northgate Bus. Park (Lot C) Defense Info. Tech. 85, % 8130 Corporate Drive Market Demand 125, % Demand Driver Square Feet % Government 441, % Defense Info. Tech. 411, % Market Demand 125, % Research Park % Total 977, % 1. Shown by square footage. 26

28 BRAC Overview Presented to: (PHOTO) Pentagon recommended and, Congress approved, closing approximately 180 military installations, eliminating +/- 30,000 jobs, saving $50 billion over 20 years MD stands to gain at least 22,000 direct jobs, 60,000 overall jobs MD rates 2nd in job gains COPT owns office parks adjacent to bases that will add jobs Aberdeen Proving Ground (Aberdeen, MD) Fort Meade (The National Business Park) Patuxent River Naval Air Station (St. Mary s County portfolio) Fort Detrick (Frederick, MD) Northern VA (Crystal City, Arlington, Rosslyn) is expected to lose more than 20,000 employees moving to or adjacent to military bases Need for buildings to meet DoD s security guidelines (Corporate Office Properties is designing and constructing buildings that meet these guidelines) Need for redundant locations Need to move away from DC locations Fort Ritchie could also gain jobs Groundbreakings occurred: March - C4ISR at Aberdeen Proving Ground April - DISA at Fort Meade 27

29 Harford/APG Site North Gate COPT to develop: 765,000 s.f. 56 acres of land North Gate of APG Under Development 80,000 s.f. building & 85,000 s.f. building 28

30 Harford/APG Site Preliminary Site Plan 29

31 National Business Park Development 300 NBP Current Operating Portfolio 19 office buildings, 2,405,000 s.f. 97.8% leased Arundel Preserve Route 175 Under Construction 300 NBP 186,000 s.f. Under Development 324 NBP 121,000 s.f. 308 NBP 161,000 s.f. Land Owned 220 acres 1,698,000 s.f. Data as of September 30,

32 NBP Phase III 31

33 Arundel Preserve NBP PHASE III 7740 Milestone Parkway 148,000 s.f. 32

34 M Square at University of Maryland (College Park) 5850 University Research Ct. 123,000 s.f. COPT to develop in JV with the University of Maryland, up to: 750,000 s.f. 8 buildings 65 acres of land Under Construction 116,000 s.f. building 53% leased 123,000 s.f. building 100% leased to large credit worthy tenant Under Construction 33

35 COPT s Data Center Development COPT works with federal and state clients to design, construct and manage facilities that meet their specialized requirements. COPT provides cleared development, design and construction management property and facility management staff and technical expertise to develop, design, build and maintain facilities. Northrop Grumman IT/VITA data center Meadowville Lane Chester, VA 193,000 square feet Data Center Square Feet Chester, VA 193,000 s.f. Lebanon, VA 103,000 s.f. (2 nd Northrop Grumman IT/VITA building) Other Federal Govt. & Defense contractor clients 854,000 s.f. (8 buildings) Multiple other buildings 350,000 s.f. 1,500,000 s.f. Expertise in significant power/cooling requirements Northrop Grumman IT/VITA data center Technology Park Drive Lebanon, VA 103,000 square feet 34

36 CAPITAL STRUCTURE 35

37 Capitalization September 30, 2008 ($ in millions) Total Equity Capital 1 $2,632 59% 2 Total Debt Capital (Fixed Rate Debt 74% ) 1,856 41% Total Market Capitalization $4, % Equity Capital Preferred Shares and Units (Liquidation Value) Common Shares and Units ($ /Share) Management/Insiders (13% of stock/units) Public (87% of stock/units) Total Market Equity $ ,083 $2,632 9% 12% 79% 100% 1. Based on closing price of $40.35 as of September 30, Includes interest rate protection agreements. 36

38 Financing Activity Presented to: Fall increased unsecured revolver to $600 million and revised the covenants (PHOTO) to provide more capacity May closed on a $225 million construction revolver that can be increased to $325 million that will fund the Company s wholly owned construction and development pipeline July closed on a $221 million permanent loan that will refinance the balance of the Company s permanent debt maturing in 2008, as well as pay down the Company s revolver September 2008 issued 3.7 million common shares, generating proceeds of approximately $139 million before offering expenses 37

39 Capital Financing Proceeds 221,000 Common Stock Offering 139,000 Payoff Balance of 2008 Maturities (189,000) Excess Cash to Paydown $600MM Revolver Balance 171,000 No remaining maturities for 2008 Debt Maturing in 2009: Permanent Debt - $30MM - 3/09 53,000 $23MM - 8/09 Construction Debt - $41MM - 6/09 41,000 Total Debt 94,000 Debt Maturing in 2010: Permanent Debt - $13MM - 2/10 65,000 $8MM - 10/10 $44MM - 12/ As of October 1, 2008, all 2008 maturities have been paid. 35

40 83% Increase In Dividends Per Share from $1.30 $1.20 $1.30 $1.43 $1.10 $1.18 $1.00 $1.07 $0.90 $0.80 $0.70 $0.78 $0.82 $0.86 $0.91 $0.98 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $ * Dividend increased in September 2008 (paid October 15, 2008) by 9.6% to $.3725 per share/unit. *Annualized 39

41 Strong Payout Ratios 100% 75% 79% 74% 81% 83% 79% 80% 79% 77% 75% 86% 50% 63% 58% 57% 56% 56% 60% 58% 59% 56% 61% 25% 0% Q Q Q FFO-Diluted AFFO-Diluted 40

42 Strong Payout Ratios 500% 450% 400% 350% 300% 250% 328% 328% 200% 150% 100% 50% 126% 150% 178% 167% 166% 219% 184% 215% 0% Q Q Q Earnings 41

43 Summary Presented to: 1 Secure 5.1% Dividend Yield Conservative FFO-Diluted Payout Ratio (61.4%) for Q (PHOTO) Consistent Growth 83% Growth in Dividends/Share (December 31, 2000 December 31, 2008) 9.6% Dividend Increase from prior quarter in September 2008 Excellent Returns 2% Total Return for % Total Return for 5 years 648% Total Return for 10 years 2 For more information about the Company, please visit our web site at a 1. Based on closing price of $27.92 as of January 6, Data as of December 31, 2008, compiled by NAREIT. 42

44 Disclosure Three Months Three Months Three Months Ended Ended Ended (Dollars and shares in thousands, except per share data) Years ended December 31, Years ended December 31, March 31, June 30, September 30, Low High Low High Estimated (1) Estimated (1) Net income available to common shareholders $ 43,294 $ 47,589 $ 34,311 $ 35,773 $ 18,716 $ 29,927 $ 24,416 $ 18,890 $ 7,650 $ 13,167 $ 13,065 $ 7,370 $ 8,827 $ 8,924 Convertible preferred share dividends Numerator for earnings per share (EPS)-diluted 43,294 47,589 34,311 35,773 18,716 29,927 24,416 18,911 7,650 13,711 13,573 7,370 8,827 8,924 Real estate-related depreciation and amortization (2) 105, , , , ,738 79,378 62,918 51,391 36,976 30,997 20,702 25,059 25,043 25,671 Restricted common share dividends Minority interests-preferred units ,049 2,287 2, Minority interests-common units 7,106 7,811 6,007 6,263 3,682 7,276 5,889 5,659 6,712 5,800 6,592 1,324 1,585 1,592 Convertible preferred share dividends (Gain) loss on sales of real estate, excluding development and redevelopment portion (3) - - (2,630) (2,630) (3,827) (17,644) (4,422) (95) (2,897) (268) (416) (1,380) (1,250) - Expense associated with dilutive options Repurchase of preferred units in excess of recorded book value , Cumulative effect of accounting change Numerator for FFO per share-diluted $ 156,000 $ 161,000 $ 139,117 $ 140,835 $ 125,309 $ 98,937 $ 88,801 $ 76,248 $ 61,268 $ 52,854 $ 43,001 $ 32,373 $ 34,205 $ 36,187 Denominator for EPS-diluted 52,400 52,400 49,122 49,122 47,630 43,262 38,997 34,982 28,021 24,547 21,623 47,766 47,998 48,189 Weighted average common units 8,100 8,100 8,128 8,128 8,296 8,511 8,702 8,726 8,932 9,282 9,437 8,154 8,151 8,130 Dilutive effect of share-based compensation awards Assumed conversion of convertible preferred units ,101 2,421 2, Assumed conversion of convertible preferred shares , Denominator for FFO per share-diluted 60,500 60,500 57,250 57,250 55,926 51,773 47,699 43,929 39,294 36,634 33,481 55,920 56,149 56,319 EPS-diluted $ 0.83 $ 0.91 $ 0.70 $ 0.73 $ 0.39 $ 0.69 $ 0.63 $ 0.54 $ 0.27 $ 0.56 $ 0.63 $ 0.15 $ 0.18 $ 0.19 FFO per share-diluted $ 2.58 $ 2.66 $ 2.43 $ 2.46 $ 2.24 $ 1.91 $ 1.86 $ 1.74 $ 1.56 $ 1.44 $ 1.28 $ 0.58 $ 0.61 $ 0.64 Numerator for FFO per share-diluted $ 125,309 $ 98,937 $ 88,801 $ 76,248 $ 61,268 $ 52,854 $ 43,001 $ 32,373 $ 34,205 $ 36,187 Straight-line rent adjustments (11,722) (9,740) (6,763) (8,364) (4,840) (2,389) (3,175) (2,656) (2,778) (2,850) Recurring capital expenditures (20,835) (16,510) (18,198) (17,394) (11,456) (6,640) (5,430) (4,782) (5,821) (7,008) Amortization of deferred market rental revenue (1,985) (1,904) (426) (931) (1,817) (2,342) - (445) (458) (555) Issuance costs associated with redeemed preferred shares - 3,896-1, AFFO derived from the numerator for FFO per share-diluted $ 90,767 $ 74,679 $ 63,414 $ 51,372 $ 43,155 $ 41,483 $ 34,396 $ 24,490 $ 25,148 $ 25,774 Change in EPS-diluted and projected FFO per share-diluted due to redemption of preferred shares Numerator for EPS-diluted $ 29,927 $ 18,911 Issuance costs associated with redeemed preferred shares 3,896 1,813 Numerator for EPS-diluted as adjusted $ 33,823 $ 20,724 Denominator for EPS-diluted as adjusted 43,262 34,982 EPS-diluted as adjusted $ 0.78 $ 0.59 Numerator for FFO per share-diluted $ 98,937 $ 76,248 Issuance costs associated with redeemed preferred shares 3,896 1,813 Numerator for FFO per share-diluted as adjusted $ 102,833 $ 78,061 Denominator for FFO per share-diluted as adjusted 51,773 43,929 FFO per share-diluted as adjusted $ 1.99 $ 1.78 (1) These estimates are based on Company guidance previously provided. (2) The estimates of 2008 and 2009 real estate-related depreciation and amortization exclude any impact of potential write-offs resulting from lease terminations. (3) The reconciliations of the 2008 and 2009 Estimated Numerators for FFO per share-diluted exclude any potential gains or losses from future sales of previously depreciated operating properties. 43

45 Disclosure (Dollars in thousands) Reconciliation of dividends for Earnings Payout Ratio to dividends and distributions for FFO & AFFO Payout Ratio Q Q Q Common share dividends for Earnings Payout Ratio $ 61,331 $ 49,670 $ 40,755 $ 33,579 $ 25,066 $ 19,732 $ 16,505 $ 16,173 $ 16,197 $ 19,183 Common unit distributions 10,682 9,996 9,222 8,512 8,115 7,921 7,733 2,771 2,772 3,021 Convertible preferred unit distributions ,049 2,287 2, Convertible preferred share dividends Common share dividends on restricted shares Dividends and distributions for FFO & AFFO Payout Ratio $ 72,013 $ 59,666 $ 49,977 $ 42,494 $ 34,774 $ 30,767 $ 27,034 $ 18,944 $ 18,969 $ 22,204 Reconciliation of tenant improvements and incentives, capital improvements and leasing costs for operating properties to recurring capital expenditures Q Q Q Total tenant improvements and incentives on operating properties $ 21,487 $ 20,649 $ 30,452 $ 14,067 $ 8,588 $ 4,213 $ 5,032 $ 3,847 $ 4,731 $ 6,305 Total capital improvements on operating properties 11,230 11,779 9,782 10,349 4,415 3,264 3,483 1,017 2,631 3,179 Total leasing costs incurred on operating properties 7,562 8,610 9,843 11,718 3,260 4,640 3,582 1, Less: Nonrecurring tenant improvements and incentives on operating properties (12,192) (13,862) (21,505) (3,993) (2,024) (773) (2,366) (795) (1,287) (1,995) Less: Nonrecurring capital improvements on operating properties (4,494) (5,418) (4,522) (7,100) (2,347) (1,727) (2,681) (502) (866) (1,299) Less: Nonrecurring leasing costs incurred on operating properties (2,856) (6,388) (6,040) (7,647) (484) (2,977) (1,627) (30) (22) (217) Add: Recurring improvements on operating properties held through joint ventures 98 1, Recurring capital expenditures $ 20,835 $ 16,510 $ 18,198 $ 17,394 $ 11,456 $ 6,640 $ 5,430 $ 4,782 $ 5,821 $ 7,008 44