10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-14023 (Corporate Office Properties Trust)

Commission file number 333-189188 (Corporate Office Properties, L.P.)

Corporate Office Properties Trust

Corporate Office Properties, L.P.

(Exact name of registrant as specified in its charter)

Corporate Office Properties Trust	Maryland	23-2947217
	(State or other jurisdiction of	(IRS Employer
	incorporation or organization)	Identification No.)
Corporate Office Properties, L.P.	Delaware	23-2930022
	(State or other jurisdiction of	(IRS Employer
	incorporation or organization)	Identification No.)

6711 Columbia Gateway Drive, Suite 300, Columbia, MD	21046
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (443) 285-5400

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Corporate Office Properties Trust ý Yes   o No

Corporate Office Properties, L.P. ý Yes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Corporate Office Properties Trust ý Yes   o No

Corporate Office Properties, L.P. ý Yes   o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Corporate Office Properties Trust

Large accelerated filer ý	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Corporate Office Properties, L.P.

Large accelerated filer o	Accelerated filer o	Non-accelerated filer ý	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Corporate Office Properties Trust o Yes   ý No

Corporate Office Properties, L.P. o Yes   ý No

As of July 22, 2016, 94,759,023 of Corporate Office Properties Trust’s Common Shares of Beneficial Interest, $0.01 par value, were issued and outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2016 of Corporate Office Properties Trust (“COPT”) and subsidiaries (collectively, the “Company”) and Corporate Office Properties, L.P. (“COPLP”) and subsidiaries (collectively, the “Operating Partnership”). Unless stated otherwise or the context otherwise requires, “we,” “our,” and “us” refer collectively to COPT, COPLP and their subsidiaries.

COPT is a real estate investment trust, or REIT, and the sole general partner of COPLP. As of June 30, 2016, COPT owned approximately 96.3% of the outstanding common units and approximately 95.5% of the outstanding preferred units in COPLP; the remaining common and preferred units in COPLP were owned by third parties. As the sole general partner of COPLP, COPT controls COPLP and can cause it to enter into major transactions including acquisitions, dispositions and refinancings and cause changes in its line of business, capital structure and distribution policies.

There are a few differences between the Company and the Operating Partnership which are reflected in this Form 10-Q. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. COPT is a real estate investment trust, whose only material asset is its ownership of partnership interests of COPLP. As a result, COPT does not conduct business itself, other than acting as the sole general partner of COPLP, issuing public equity from time to time and guaranteeing certain debt of COPLP. COPT itself is not directly obligated under any indebtedness but guarantees some of the debt of COPLP. COPLP owns substantially all of the assets of COPT either directly or through its subsidiaries, conducts almost all of the operations of the business and is structured as a limited partnership with no publicly traded equity. Except for net proceeds from public equity issuances by COPT, which are contributed to COPLP in exchange for partnership units, COPLP generates the capital required by COPT’s business through COPLP’s operations, by COPLP’s direct or indirect incurrence of indebtedness or through the issuance of partnership units.

Noncontrolling interests and shareholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of COPT and those of COPLP. The common limited partnership interests in COPLP not owned by COPT are accounted for as partners’ capital in COPLP’s consolidated financial statements and as noncontrolling interests in COPT’s consolidated financial statements. COPLP’s consolidated financial statements also reflect COPT’s noncontrolling interests in certain real estate partnerships, limited liability companies (“LLCs”), business trusts and corporations; the differences between shareholders’ equity, partners’ capital and noncontrolling interests result from the differences in the equity issued at the COPT and COPLP levels and in COPT’s noncontrolling interests in these real estate partnerships, LLCs, business trusts and corporations. The only other significant differences between the consolidated financial statements of COPT and those of COPLP are assets in connection with a non-qualified elective deferred compensation plan

(comprised primarily of mutual funds and equity securities) and the corresponding liability to the plan’s participants that are held directly by COPT.

We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:

• combined reports better reflect how management and the analyst community view the business as a single operating unit;

• combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

• combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and

• combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

• consolidated financial statements;

• the following notes to the consolidated financial statements:

• Note 3, Fair Value Measurements of COPT and subsidiaries and COPLP and subsidiaries; and

• Note 14, Earnings per Share of COPT and subsidiaries and Earnings per Unit of COPLP and subsidiaries;

• “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of COPT”; and

• “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of COPLP.”

This report also includes separate sections under Part I, Item 4. Controls and Procedures and separate Exhibit 31 and Exhibit 32 certifications for each of COPT and COPLP to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that COPT and COPLP are compliant with Rule 13a-15 and Rule 15d-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.

TABLE OF CONTENTS

FORM 10-Q

		PAGE
PART I: FINANCIAL INFORMATION
Item 1:	Financial Statements:
Consolidated Financial Statements of Corporate Office Properties Trust
	Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015 (unaudited)	3
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015 (unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2016 and 2015 (unaudited)	5
	Consolidated Statements of Equity for the Six Months Ended June 30, 2016 and 2015 (unaudited)	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015 (unaudited)	7
Consolidated Financial Statements of Corporate Office Properties, L.P.
	Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015 (unaudited)	9
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015 (unaudited)	10
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2016 and 2015 (unaudited)	11
	Consolidated Statements of Equity for the Six Months Ended June 30, 2016 and 2015 (unaudited)	12
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015 (unaudited)	13
Notes to Consolidated Financial Statements (unaudited)		15
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4:	Controls and Procedures	49
PART II: OTHER INFORMATION
Item 1:	Legal Proceedings	49
Item 1A:	Risk Factors	49
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3:	Defaults Upon Senior Securities	50
Item 4:	Mine Safety Disclosures	50
Item 5:	Other Information	50
Item 6:	Exhibits	51
SIGNATURES		52

2

PART I: FINANCIAL INFORMATION

ITEM 1. Financial Statements

Corporate Office Properties Trust and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)

	June 30, 2016			December 31, 2015
Assets
Properties, net:
Operating properties, net	$	2,782,330		$	2,920,529
Projects in development or held for future development	387,397			429,219
Total properties, net	3,169,727			3,349,748
Assets held for sale, net	300,584			96,782
Cash and cash equivalents	13,317			60,310
Restricted cash and marketable securities	8,302			7,716
Accounts receivable (net of allowance for doubtful accounts of $745 and $1,525, respectively)	32,505			29,167
Deferred rent receivable (net of allowance of $422 and $1,962, respectively)	92,316			105,484
Intangible assets on real estate acquisitions, net	88,788			98,338
Deferred leasing costs (net of accumulated amortization of $63,768 and $66,364, respectively)	42,632			53,868
Investing receivables	50,162			47,875
Prepaid expenses and other assets, net	43,359			60,024
Total assets	$	3,841,692		$	3,909,312
Liabilities and equity
Liabilities:
Debt, net	$	2,094,486		$	2,077,752
Accounts payable and accrued expenses	92,848			91,755
Rents received in advance and security deposits	32,035			37,148
Dividends and distributions payable	30,219			30,178
Deferred revenue associated with operating leases	17,560			19,758
Interest rate derivatives	20,245			3,160
Other liabilities	31,123			13,779
Total liabilities	2,318,516			2,273,530
Commitments and contingencies (Note 15)
Redeemable noncontrolling interests	22,473			19,218
Equity:
Corporate Office Properties Trust’s shareholders’ equity:
Preferred Shares of beneficial interest at liquidation preference ($0.01 par value; 25,000,000 shares authorized, shares issued and outstanding of 7,431,667 at June 30, 2016 and December 31, 2015)	199,083			199,083
Common Shares of beneficial interest ($0.01 par value; 125,000,000 shares authorized, shares issued and outstanding of 94,699,359 at June 30, 2016 and 94,531,512 at December 31, 2015)	947			945
Additional paid-in capital	2,007,328			2,004,507
Cumulative distributions in excess of net income	(756,940		)	(657,172		)
Accumulated other comprehensive loss	(17,712		)	(2,838		)
Total Corporate Office Properties Trust’s shareholders’ equity	1,432,706			1,544,525
Noncontrolling interests in subsidiaries:
Common units in COPLP	47,550			52,359
Preferred units in COPLP	8,800			8,800
Other consolidated entities	11,647			10,880
Noncontrolling interests in subsidiaries	67,997			72,039
Total equity	1,500,703			1,616,564
Total liabilities, redeemable noncontrolling interest and equity	$	3,841,692		$	3,909,312

See accompanying notes to consolidated financial statements.

3

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Revenues
Rental revenue	$	107,524		$	105,508		$	212,906		$	203,746
Tenant recoveries and other real estate operations revenue	26,400			22,683			54,105			47,155
Construction contract and other service revenues	12,003			42,172			23,223			80,496
Total revenues	145,927			170,363			290,234			331,397
Expenses
Property operating expenses	48,141			46,418			100,016			97,099
Depreciation and amortization associated with real estate operations	33,248			33,786			67,775			65,385
Construction contract and other service expenses	11,478			41,293			22,172			78,791
Impairment losses	69,692			1,238			72,138			1,238
General, administrative and leasing expenses	8,026			7,534			19,909			15,425
Business development expenses and land carry costs	2,363			2,623			4,781			5,413
Total operating expenses	172,948			132,892			286,791			263,351
Operating (loss) income	(27,021		)	37,471			3,443			68,046
Interest expense	(22,639		)	(21,768		)	(46,198		)	(42,606		)
Interest and other income	1,330			1,242			2,486			2,525
Gain (loss) on early extinguishment of debt	5			(65		)	22			(68		)
(Loss) income from continuing operations before equity in income of unconsolidated entities and income taxes	(48,325		)	16,880			(40,247		)	27,897
Equity in income of unconsolidated entities	10			9			20			34
Income tax (expense) benefit	(1		)	(50		)	7			(105		)
(Loss) income from continuing operations	(48,316		)	16,839			(40,220		)	27,826
Discontinued operations	—			394			—			156
(Loss) income before gain on sales of real estate	(48,316		)	17,233			(40,220		)	27,982
Gain on sales of real estate	—			(1		)	—			3,985
Net (loss) income	(48,316		)	17,232			(40,220		)	31,967
Net loss (income) attributable to noncontrolling interests:
Common units in COPLP	1,976			(476		)	1,849			(874		)
Preferred units in COPLP	(165		)	(165		)	(330		)	(330		)
Other consolidated entities	(914		)	(810		)	(1,892		)	(1,627		)
Net (loss) income attributable to COPT	(47,419		)	15,781			(40,593		)	29,136
Preferred share dividends	(3,553		)	(3,553		)	(7,105		)	(7,105		)
Net (loss) income attributable to COPT common shareholders	$	(50,972	)	$	12,228		$	(47,698	)	$	22,031
Net (loss) income attributable to COPT:
(Loss) income from continuing operations	$	(47,419	)	$	15,402		$	(40,593	)	$	28,983
Discontinued operations, net	—			379			—			153
Net (loss) income attributable to COPT	$	(47,419	)	$	15,781		$	(40,593	)	$	29,136
Basic earnings per common share (1)
(Loss) income from continuing operations	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Diluted earnings per common share (1)
(Loss) income from continuing operations	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Dividends declared per common share	$	0.275		$	0.275		$	0.550		$	0.550

(1) Basic and diluted earnings per common share are calculated based on amounts attributable to common shareholders of Corporate Office Properties Trust.

See accompanying notes to consolidated financial statements.

4

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Net (loss) income	$	(48,316	)	$	17,232		$	(40,220	)	$	31,967
Other comprehensive (loss) income
Unrealized (loss) gain on interest rate derivatives	(5,704		)	392			(16,988		)	(3,082		)
Losses on interest rate derivatives included in interest expense	850			769			1,720			1,542
Equity in other comprehensive loss of equity method investee	(184		)	(264		)	(184		)	(264		)
Other comprehensive (loss) income	(5,038		)	897			(15,452		)	(1,804		)
Comprehensive (loss) income	(53,354		)	18,129			(55,672		)	30,163
Comprehensive loss (income) attributable to noncontrolling interests	1,085			(1,542		)	205			(2,871		)
Comprehensive (loss) income attributable to COPT	$	(52,269	)	$	16,587		$	(55,467	)	$	27,292

See accompanying notes to consolidated financial statements.

5

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Equity

(Dollars in thousands)

(unaudited)

	Preferred Shares		Common Shares		Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balance at December 31, 2014 (93,255,284 common shares outstanding)	$	199,083	$	933	$	1,969,968		$	(717,264	)	$	(1,297	)	$	69,461		$	1,520,884
Conversion of common units to common shares (158,000 shares)	—		2		2,120			—			—			(2,122		)	—
Common shares issued under at-the-market program (890,241 shares)	—		9		26,526			—			—			—			26,535
Exercise of share options (76,474 shares)	—		—		2,008			—			—			—			2,008
Share-based compensation (149,619 shares issued, net of redemptions)	—		2		3,656			—			—			—			3,658
Redemption of vested equity awards	—		—		(2,245		)	—			—			—			(2,245		)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	—		—		(519		)	—			—			519			—
Comprehensive income	—		—		—			29,136			(1,844		)	1,728			29,020
Dividends	—		—		—			(59,106		)	—			—			(59,106		)
Distributions to owners of common and preferred units in COPLP	—		—		—			—			—			(2,354		)	(2,354		)
Distributions to noncontrolling interests in other consolidated entities	—		—		—			—			—			(28		)	(28		)
Adjustment to arrive at fair value of redeemable noncontrolling interest	—		—		(739		)	—			—			—			(739		)
Balance at June 30, 2015 (94,529,618 common shares outstanding)	$	199,083	$	946	$	2,000,775		$	(747,234	)	$	(3,141	)	$	67,204		$	1,517,633
Balance at December 31, 2015 (94,531,512 common shares outstanding)	$	199,083	$	945	$	2,004,507		$	(657,172	)	$	(2,838	)	$	72,039		$	1,616,564
Conversion of common units to common shares (26,758 shares)	—		—		371			—			—			(371		)	—
Costs associated with common shares issued to the public	—		—		(5		)	—			—			—			(5		)
Share-based compensation (141,089 shares issued, net of redemptions)	—		2		4,301			—			—			—			4,303
Redemption of vested equity awards	—		—		(1,492		)	—			—			—			(1,492		)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	—		—		(5		)	—			—			5			—
Comprehensive loss	—		—		—			(40,593		)	(14,874		)	(1,322		)	(56,789		)
Dividends	—		—		—			(59,175		)	—			—			(59,175		)
Distributions to owners of common and preferred units in COPLP	—		—		—			—			—			(2,346		)	(2,346		)
Distributions to noncontrolling interests in other consolidated entities	—		—		—			—			—			(8		)	(8		)
Adjustment to arrive at fair value of redeemable noncontrolling interest	—		—		(349		)	—			—			—			(349		)
Balance at June 30, 2016 (94,699,359 common shares outstanding)	$	199,083	$	947	$	2,007,328		$	(756,940	)	$	(17,712	)	$	67,997		$	1,500,703

See accompanying notes to consolidated financial statements.

6

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	For the Six Months Ended June 30,
	2016			2015
Cash flows from operating activities
Revenues from real estate operations received	$	260,984		$	240,538
Construction contract and other service revenues received	34,992			86,790
Property operating expenses paid	(87,005		)	(79,667		)
Construction contract and other service expenses paid	(24,303		)	(76,355		)
General, administrative, leasing, business development and land carry costs paid	(19,212		)	(20,121		)
Interest expense paid	(41,179		)	(32,375		)
Interest and other income received	128			4,055
Other	(5		)	(26		)
Net cash provided by operating activities	124,400			122,839
Cash flows from investing activities
Construction, development and redevelopment	(75,339		)	(117,498		)
Acquisitions of operating properties and related intangible assets	—			(137,125		)
Tenant improvements on operating properties	(14,862		)	(10,314		)
Other capital improvements on operating properties	(16,007		)	(8,372		)
Proceeds from dispositions of properties	5,448			17,424
Investing receivables payments received	—			5,114
Leasing costs paid	(3,434		)	(6,732		)
Other	(13		)	(3,538		)
Net cash used in investing activities	(104,207		)	(261,041		)
Cash flows from financing activities
Proceeds from debt
Revolving Credit Facility	133,500			294,000
Unsecured senior notes	—			296,580
Other debt proceeds	45,000			50,000
Repayments of debt
Revolving Credit Facility	(119,000		)	(377,000		)
Scheduled principal amortization	(3,532		)	(3,319		)
Other debt repayments	(40,498		)	(50,630		)
Deferred financing costs paid	(528		)	(4,693		)
Net proceeds from issuance of common shares	(5		)	28,567
Common share dividends paid	(52,021		)	(51,642		)
Preferred share dividends paid	(7,105		)	(7,105		)
Distributions paid to noncontrolling interests in COPLP	(2,362		)	(2,461		)
Distributions paid to redeemable noncontrolling interests	(14,306		)	—
Redemption of vested equity awards	(1,492		)	(2,245		)
Other	(4,837		)	(853		)
Net cash (used in) provided by financing activities	(67,186		)	169,199
Net (decrease) increase in cash and cash equivalents	(46,993		)	30,997
Cash and cash equivalents
Beginning of period	60,310			6,077
End of period	$	13,317		$	37,074

See accompanying notes to consolidated financial statements.

7

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

	For the Six Months Ended June 30,
	2016			2015
Reconciliation of net (loss) income to net cash provided by operating activities:
Net (loss) income	$	(40,220	)	$	31,967
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and other amortization	68,901			66,404
Impairment losses	72,138			1,472
Losses on interest rate derivatives	1,870			—
Amortization of deferred financing costs and net debt discounts	2,998			2,618
Increase in deferred rent receivable	(1,276		)	(5,956		)
Gain on sales of real estate	—			(3,985		)
Share-based compensation	3,839			3,210
Other	(1,725		)	1,754
Operating changes in assets and liabilities:
(Increase) decrease in accounts receivable	(3,320		)	10,655
Increase in restricted cash and marketable securities	(389		)	(735		)
Decrease in prepaid expenses and other assets, net	11,303			6,518
Increase in accounts payable, accrued expenses and other liabilities	15,394			12,557
Decrease in rents received in advance and security deposits	(5,113		)	(3,640		)
Net cash provided by operating activities	$	124,400		$	122,839
Supplemental schedule of non-cash investing and financing activities:
Increase in accrued capital improvements, leasing and other investing activity costs	$	1,604		$	15,927
Increase in property and redeemable noncontrolling interests in connection with property contributed in a joint venture	$	22,600		$	—
Decrease in redeemable noncontrolling interests and increase in other liabilities in connection with distribution payable to redeemable noncontrolling interest	$	6,675		$	—
Other liabilities assumed on acquisition of operating properties	$	—		$	5,265
Decrease in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests	$	(15,268	)	$	(1,540	)
Equity in other comprehensive loss of an equity method investee	$	(184	)	$	(264	)
Dividends/distribution payable	$	30,219		$	30,178
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares	$	371		$	2,122
Adjustments to noncontrolling interests resulting from changes in COPLP ownership	$	5		$	519
Increase in redeemable noncontrolling interest and decrease in equity to carry redeemable noncontrolling interest at fair value	$	349		$	739

See accompanying notes to consolidated financial statements.

8

Corporate Office Properties, L.P. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except unit data)

(unaudited)

	June 30, 2016			December 31, 2015
Assets
Properties, net:
Operating properties, net	$	2,782,330		$	2,920,529
Projects in development or held for future development	387,397			429,219
Total properties, net	3,169,727			3,349,748
Assets held for sale, net	300,584			96,782
Cash and cash equivalents	13,317			60,310
Restricted cash and marketable securities	3,256			1,953
Accounts receivable (net of allowance for doubtful accounts of $745 and $1,525, respectively)	32,505			29,167
Deferred rent receivable (net of allowance of $422 and $1,962, respectively)	92,316			105,484
Intangible assets on real estate acquisitions, net	88,788			98,338
Deferred leasing costs (net of accumulated amortization of $63,768 and $66,364, respectively)	42,632			53,868
Investing receivables	50,162			47,875
Prepaid expenses and other assets, net	43,359			60,024
Total assets	$	3,836,646		$	3,903,549
Liabilities and equity
Liabilities:
Debt, net	$	2,094,486		$	2,077,752
Accounts payable and accrued expenses	92,848			91,755
Rents received in advance and security deposits	32,035			37,148
Distributions payable	30,219			30,178
Deferred revenue associated with operating leases	17,560			19,758
Interest rate derivatives	20,245			3,160
Other liabilities	26,077			8,016
Total liabilities	2,313,470			2,267,767
Commitments and contingencies (Note 15)
Redeemable noncontrolling interests	22,473			19,218
Equity:
Corporate Office Properties, L.P.’s equity:
Preferred units
General partner, preferred units outstanding of 7,431,667 at June 30, 2016 and December 31, 2015	199,083			199,083
Limited partner, 352,000 preferred units outstanding at June 30, 2016 and December 31, 2015	8,800			8,800
Common units, 94,699,359 and 94,531,512 held by the general partner and 3,650,633 and 3,677,391 held by limited partners at June 30, 2016 and December 31, 2015, respectively	1,299,571			1,400,745
Accumulated other comprehensive loss	(18,437		)	(2,985		)
Total Corporate Office Properties, L.P.’s equity	1,489,017			1,605,643
Noncontrolling interests in subsidiaries	11,686			10,921
Total equity	1,500,703			1,616,564
Total liabilities, redeemable noncontrolling interest and equity	$	3,836,646		$	3,903,549

See accompanying notes to consolidated financial statements.

9

Corporate Office Properties, L.P. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per unit data)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Revenues
Rental revenue	$	107,524		$	105,508		$	212,906		$	203,746
Tenant recoveries and other real estate operations revenue	26,400			22,683			54,105			47,155
Construction contract and other service revenues	12,003			42,172			23,223			80,496
Total revenues	145,927			170,363			290,234			331,397
Expenses
Property operating expenses	48,141			46,418			100,016			97,099
Depreciation and amortization associated with real estate operations	33,248			33,786			67,775			65,385
Construction contract and other service expenses	11,478			41,293			22,172			78,791
Impairment losses	69,692			1,238			72,138			1,238
General, administrative and leasing expenses	8,026			7,534			19,909			15,425
Business development expenses and land carry costs	2,363			2,623			4,781			5,413
Total operating expenses	172,948			132,892			286,791			263,351
Operating (loss) income	(27,021		)	37,471			3,443			68,046
Interest expense	(22,639		)	(21,768		)	(46,198		)	(42,606		)
Interest and other income	1,330			1,242			2,486			2,525
Gain (loss) on early extinguishment of debt	5			(65		)	22			(68		)
(Loss) income from continuing operations before equity in income of unconsolidated entities and income taxes	(48,325		)	16,880			(40,247		)	27,897
Equity in income of unconsolidated entities	10			9			20			34
Income tax (expense) benefit	(1		)	(50		)	7			(105		)
(Loss) income from continuing operations	(48,316		)	16,839			(40,220		)	27,826
Discontinued operations	—			394			—			156
(Loss) income before gain on sales of real estate	(48,316		)	17,233			(40,220		)	27,982
Gain on sales of real estate	—			(1		)	—			3,985
Net (loss) income	(48,316		)	17,232			(40,220		)	31,967
Net income attributable to noncontrolling interests in consolidated entities	(911		)	(812		)	(1,890		)	(1,630		)
Net (loss) income attributable to COPLP	(49,227		)	16,420			(42,110		)	30,337
Preferred unit distributions	(3,718		)	(3,718		)	(7,435		)	(7,435		)
Net (loss) income attributable to COPLP common unitholders	$	(52,945	)	$	12,702		$	(49,545	)	$	22,902
Net (loss) income attributable to COPLP:
(Loss) income from continuing operations	$	(49,227	)	$	16,026		$	(42,110	)	$	30,178
Discontinued operations, net	—			394			—			159
Net (loss) income attributable to COPLP	$	(49,227	)	$	16,420		$	(42,110	)	$	30,337
Basic earnings per common unit (1)
(Loss) income from continuing operations	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Diluted earnings per common unit (1)
(Loss) income from continuing operations	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Distributions declared per common unit	$	0.275		$	0.275		$	0.550		$	0.550

(1) Basic and diluted earnings per common unit are calculated based on amounts attributable to common unitholders of Corporate Office Properties, L.P.

See accompanying notes to consolidated financial statements.

10

Corporate Office Properties, L.P. and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Net (loss) income	$	(48,316	)	$	17,232		$	(40,220	)	$	31,967
Other comprehensive (loss) income
Unrealized (loss) gain on interest rate derivatives	(5,704		)	392			(16,988		)	(3,082		)
Losses on interest rate derivatives included in interest expense	850			769			1,720			1,542
Equity in other comprehensive loss of equity method investee	(184		)	(264		)	(184		)	(264		)
Other comprehensive (loss) income	(5,038		)	897			(15,452		)	(1,804		)
Comprehensive (loss) income	(53,354		)	18,129			(55,672		)	30,163
Comprehensive income attributable to noncontrolling interests	(911		)	(872		)	(1,890		)	(1,745		)
Comprehensive (loss) income attributable to COPLP	$	(54,265	)	$	17,257		$	(57,562	)	$	28,418

See accompanying notes to consolidated financial statements.

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Corporate Office Properties, L.P. and Subsidiaries

Consolidated Statements of Equity

(Dollars in thousands)

(unaudited)

	Limited Partner Preferred Units				General Partner  Preferred Units				Common Units				Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests in Subsidiaries
	Units	Amount			Units	Amount			Units	Amount									Total Equity
Balance at December 31, 2014	352,000	$	8,800		7,431,667	$	199,083		97,092,835	$	1,305,219		$	(1,381	)	$	9,163		$	1,520,884
Issuance of common units resulting from common shares issued under at-the-market program	—	—			—	—			890,241	26,535			—			—			26,535
Issuance of common units resulting from exercise of share options	—	—			—	—			76,474	2,008			—			—			2,008
Share-based compensation (units net of redemption)	—	—			—	—			149,619	3,658			—			—			3,658
Redemptions of vested equity awards	—	—			—	—			—	(2,245		)	—			—			(2,245		)
Comprehensive income	—	330			—	7,105			—	22,902			(1,919		)	602			29,020
Distributions to owners of common and preferred units	—	(330		)	—	(7,105		)	—	(54,025		)	—			—			(61,460		)
Distributions to noncontrolling interests in subsidiaries	—	—			—	—			—	—			—			(28		)	(28		)
Adjustment to arrive at fair value of redeemable noncontrolling interest	—	—			—	—			—	(739		)	—			—			(739		)
Balance at June 30, 2015	352,000	$	8,800		7,431,667	$	199,083		98,209,169	$	1,303,313		$	(3,300	)	$	9,737		$	1,517,633
Balance at December 31, 2015	352,000	$	8,800		7,431,667	$	199,083		98,208,903	$	1,400,745		$	(2,985	)	$	10,921		$	1,616,564
Costs associated with common shares issued to the public	—	—			—	—			—	(5		)	—			—			(5		)
Share-based compensation (units net of redemption)	—	—			—	—			141,089	4,303			—			—			4,303
Redemptions of vested equity awards	—	—			—	—			—	(1,492		)	—			—			(1,492		)
Comprehensive loss	—	330			—	7,105			—	(49,545		)	(15,452		)	773			(56,789		)
Distributions to owners of common and preferred units	—	(330		)	—	(7,105		)	—	(54,086		)	—			—			(61,521		)
Distributions to noncontrolling interests in subsidiaries	—	—			—	—			—	—			—			(8		)	(8		)
Adjustment to arrive at fair value of redeemable noncontrolling interest	—	—			—	—			—	(349		)	—			—			(349		)
Balance at June 30, 2016	352,000	$	8,800		7,431,667	$	199,083		98,349,992	$	1,299,571		$	(18,437	)	$	11,686		$	1,500,703

See accompanying notes to consolidated financial statements.

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Corporate Office Properties, L.P. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	For the Six Months Ended June 30,
	2016			2015
Cash flows from operating activities
Revenues from real estate operations received	$	260,984		$	240,538
Construction contract and other service revenues received	34,992			86,790
Property operating expenses paid	(87,005		)	(79,667		)
Construction contract and other service expenses paid	(24,303		)	(76,355		)
General, administrative, leasing, business development and land carry costs paid	(19,212		)	(20,121		)
Interest expense paid	(41,179		)	(32,375		)
Interest and other income received	128			4,055
Other	(5		)	(26		)
Net cash provided by operating activities	124,400			122,839
Cash flows from investing activities
Construction, development and redevelopment	(75,339		)	(117,498		)
Acquisitions of operating properties and related intangible assets	—			(137,125		)
Tenant improvements on operating properties	(14,862		)	(10,314		)
Other capital improvements on operating properties	(16,007		)	(8,372		)
Proceeds from dispositions of properties	5,448			17,424
Investing receivables payments received	—			5,114
Leasing costs paid	(3,434		)	(6,732		)
Other	(13		)	(3,538		)
Net cash used in investing activities	(104,207		)	(261,041		)
Cash flows from financing activities
Proceeds from debt
Revolving Credit Facility	133,500			294,000
Unsecured senior notes	—			296,580
Other debt proceeds	45,000			50,000
Repayments of debt
Revolving Credit Facility	(119,000		)	(377,000		)
Scheduled principal amortization	(3,532		)	(3,319		)
Other debt repayments	(40,498		)	(50,630		)
Deferred financing costs paid	(528		)	(4,693		)
Net proceeds from issuance of common units	(5		)	28,567
Common unit distributions paid	(54,053		)	(53,773		)
Preferred unit distributions paid	(7,435		)	(7,435		)
Redemption of vested equity awards	(1,492		)	(2,245		)
Distributions paid to redeemable noncontrolling interests	(14,306		)	—
Other	(4,837		)	(853		)
Net cash (used in) provided by financing activities	(67,186		)	169,199
Net (decrease) increase in cash and cash equivalents	(46,993		)	30,997
Cash and cash equivalents
Beginning of period	60,310			6,077
End of period	$	13,317		$	37,074

See accompanying notes to consolidated financial statements.

13

Corporate Office Properties, L.P. and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

(in thousands)

(unaudited)

	For the Six Months Ended June 30,
	2016			2015
Reconciliation of net (loss) income to net cash provided by operating activities:
Net (loss) income	$	(40,220	)	$	31,967
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and other amortization	68,901			66,404
Impairment losses	72,138			1,472
Losses on interest rate derivatives	1,870			—
Amortization of deferred financing costs and net debt discounts	2,998			2,618
Increase in deferred rent receivable	(1,276		)	(5,956		)
Gain on sales of real estate	—			(3,985		)
Share-based compensation	3,839			3,210
Other	(1,725		)	1,754
Operating changes in assets and liabilities:
(Increase) decrease in accounts receivable	(3,320		)	10,655
Increase in restricted cash and marketable securities	(1,106		)	(744		)
Decrease in prepaid expenses and other assets, net	11,303			6,518
Increase in accounts payable, accrued expenses and other liabilities	16,111			12,566
Decrease in rents received in advance and security deposits	(5,113		)	(3,640		)
Net cash provided by operating activities	$	124,400		$	122,839
Supplemental schedule of non-cash investing and financing activities:
Increase in accrued capital improvements, leasing and other investing activity costs	$	1,604		$	15,927
Increase in property and redeemable noncontrolling interests in connection with property contributed in a joint venture	$	22,600		$	—
Decrease in redeemable noncontrolling interests and increase in other liabilities in connection with distribution payable to redeemable noncontrolling interest	$	6,675		$	—
Other liabilities assumed on acquisition of operating properties	$	—		$	5,265
Decrease in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests	$	(15,268	)	$	(1,540	)
Equity in other comprehensive loss of an equity method investee	$	(184	)	$	(264	)
Distributions payable	$	30,219		$	30,178
Increase in redeemable noncontrolling interest and decrease in equity to carry redeemable noncontrolling interest at fair value	$	349		$	739

See accompanying notes to consolidated financial statements.

14

Corporate Office Properties Trust and Subsidiaries and Corporate Office Properties, L.P. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

1.    Organization

Corporate Office Properties Trust (“COPT”) and subsidiaries (collectively, the “Company”) is a fully-integrated and self-managed real estate investment trust (“REIT”). Corporate Office Properties, L.P. (“COPLP”) and subsidiaries (collectively, the “Operating Partnership”) is the entity through which COPT, the sole general partner of COPLP, conducts almost all of its operations and owns almost all of its assets. Unless otherwise expressly stated or the context otherwise requires, “we”, “us” and “our” as used herein refer to each of the Company and the Operating Partnership. We own, manage, lease, develop and selectively acquire office and data center properties. The majority of our portfolio is in locations that support United States Government agencies and their 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 (“Defense/IT Locations”). We also own a complementary portfolio of traditional office properties located in select urban/urban-like submarkets within our regional footprint with durable Class-A office fundamentals and characteristics, as well as other properties supporting general commercial office tenants (“Regional Office”). As of June 30, 2016, our properties included the following:

• 181 operating office properties totaling 18.4 million square feet, including 11 triple-net leased, single-tenant data center properties;

• 12 office properties under, or contractually committed for, construction or redevelopment that we estimate will total approximately 1.5 million square feet upon completion, including two partially operational properties

included above and two properties completed but held for future lease to the United States Government;

• 1,379 acres of land we control that we believe could be developed into approximately 16.7 million square feet; and

• a wholesale data center with a critical load of 19.25 megawatts.

COPLP owns real estate both directly and through subsidiary partnerships and limited liability companies (“LLCs”).  In addition to owning real estate, COPLP also owns subsidiaries that provide real estate services such as property management and construction and development services primarily for our properties but also for third parties. Some of these services are performed by a taxable REIT subsidiary (“TRS”).

Equity interests in COPLP are in the form of common and preferred units. As of June 30, 2016, COPT owned 96.3% of the outstanding COPLP common units (“common units”) and 95.5% of the outstanding COPLP preferred units (“preferred units”); the remaining common and preferred units in COPLP were owned by third parties. Common units in COPLP not owned by COPT carry certain redemption rights. The number of common units in COPLP owned by COPT is equivalent to the number of outstanding common shares of beneficial interest (“common shares”) of COPT, and the entitlement of all COPLP common units to quarterly distributions and payments in liquidation is substantially the same as those of COPT common shareholders. Similarly, in the case of each series of preferred units in COPLP held by COPT, there is a series of preferred shares of beneficial interest (“preferred shares”) in COPT that is equivalent in number and carries substantially the same terms as such series of COPLP preferred units. COPT’s common shares are publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “OFC”.

Because COPLP is managed by COPT, and COPT conducts substantially all of its operations through COPLP, we refer to COPT’s executive officers as COPLP’s executive officers, and although, as a partnership, COPLP does not have a board of trustees, we refer to COPT’s Board of Trustees as COPLP’s Board of Trustees.

2.Summary of Significant Accounting Policies

Basis of Presentation

The COPT consolidated financial statements include the accounts of COPT, the Operating Partnership, their subsidiaries and other entities in which COPT has a majority voting interest and control.  The COPLP consolidated financial statements include the accounts of COPLP, its subsidiaries and other entities in which COPLP has a majority voting interest and control.  We also consolidate certain entities when control of such entities can be achieved through means other than voting rights (“variable interest entities” or “VIEs”) if we are deemed to be the primary beneficiary of such entities.  We eliminate all intercompany balances and transactions in consolidation.

 We use the equity method of accounting when we own an interest in an entity and can exert significant influence over but cannot control the entity’s operations. We discontinue equity method accounting if our investment in an entity (and net

15

advances) is reduced to zero unless we have guaranteed obligations of the entity or are otherwise committed to provide further financial support for the entity.

We use the cost method of accounting when we own an interest in an entity and cannot exert significant influence over its operations.

These interim financial statements should be read together with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2015 included in our 2015 Annual Report on Form 10-K.  The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly present our financial position and results of operations.  All adjustments are of a normal recurring nature.  The consolidated financial statements have been prepared using the accounting policies described in our 2015 Annual Report on Form 10-K.

Recent Accounting Pronouncements

We adopted guidance issued by the Financial Accounting Standards Board (“FASB”) effective January 1, 2016 regarding the presentation of extraordinary and unusual items in statements of operations. This guidance eliminates the concept of extraordinary items. However, the presentation and disclosure requirements for items that are either unusual in nature or infrequent in occurrence remain and will be expanded to include items that are both unusual in nature and infrequent in occurrence. Our adoption of this guidance did not affect on our reported consolidated financial statements.

We adopted guidance issued by the FASB effective January 1, 2016 modifying the analysis that must be performed by us in determining whether we should consolidate certain types of legal entities. The guidance did not amend the existing disclosure requirements for VIEs or voting interest model entities.  The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, COPLP is considered a variable interest entity of COPT. As COPLP was already consolidated in the balance sheets of COPT, the identification of COPLP as a variable interest entity had no impact on the consolidated financial statements.  There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption.  In addition, there were no voting interest entities under prior existing guidance determined to be variable interest entities under the revised guidance.  

We adopted effective January 1, 2016 guidance that eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination.  The guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should be either presented separately on the face of the statement of operations or disclosed in the notes. Our adoption of this guidance did not affect our reported consolidated financial statements.

In May 2014, the FASB issued guidance regarding the recognition of revenue from contracts with customers. Under this guidance, an entity will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We are required to adopt this guidance for our annual and interim periods beginning January 1, 2018 using one of two methods: retrospective restatement for each reporting period presented at the time of adoption, or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

In February 2016, the FASB issued guidance that sets forth principles for the recognition, measurement, presentation and disclosure of leases.  This guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. The resulting classification determines whether the lease expense is recognized based on an effective interest method or straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The guidance requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases.  This guidance is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

In March 2016, the FASB issued guidance intended to simplify certain aspects of the accounting for employee based share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the consolidated statement of cash flows. This guidance is effective for annual periods beginning after

16

December 15, 2016, and interim periods within those annual periods, with early adoption permitted. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

3.Fair Value Measurements

Recurring Fair Value Measurements

COPT has a non-qualified elective deferred compensation plan for certain members of our management team that permits participants to defer up to 100% of their compensation on a pre-tax basis and receive a tax-deferred return on such deferrals. The assets held in the plan (comprised primarily of mutual funds and equity securities) and the corresponding liability to the participants are measured at fair value on a recurring basis on COPT’s consolidated balance sheet using quoted market prices, as are other marketable securities that we hold. The balance of the plan, which was fully funded, totaled $5.0 million as of June 30, 2016, and is included in the accompanying COPT consolidated balance sheets in the line entitled restricted cash and marketable securities. The offsetting liability associated with the plan is adjusted to fair value at the end of each accounting period based on the fair value of the plan assets and reported in other liabilities on COPT’s consolidated balance sheets. The assets of the plan and other marketable securities that we hold are classified in Level 1 of the fair value hierarchy. The liability associated with the plan is classified in Level 2 of the fair value hierarchy.

The fair values of our interest rate derivatives are determined using widely accepted valuation techniques, including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While we determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our interest rate derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of June 30, 2016, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivatives and determined that these adjustments are not significant. As a result, we determined that our interest rate derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, other assets (excluding investing receivables) and accounts payable and accrued expenses are reasonable estimates of their fair values because of the short maturities of these instruments.  As discussed in Note 6, we estimated the fair values of our investing receivables based on the discounted estimated future cash flows of the loans (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans with similar maturities and credit quality, and the estimated cash payments include scheduled principal and interest payments.  For our disclosure of debt fair values in Note 8, we estimated the fair value of our unsecured senior notes based on quoted market rates for publicly-traded debt (categorized within Level 2 of the fair value hierarchy) and estimated the fair value of our other debt based on the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans, or groups of loans, with similar maturities and credit quality, and the estimated future payments include scheduled principal and interest payments.  Fair value estimates are made as of a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment.  Settlement at such fair value amounts may not be possible and may not be a prudent management decision.

For additional fair value information, please refer to Note 6 for investing receivables, Note 8 for debt and Note 9 for interest rate derivatives. 

17

COPT and Subsidiaries

The table below sets forth financial assets and liabilities of COPT and its subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2016 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets(Level 1)		Significant Other Observable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
Assets:
Marketable securities in deferred compensation plan (1)
Mutual funds	$	4,954	$	—	$	—	$	4,954
Other	92		—		—		92
Total assets	$	5,046	$	—	$	—	$	5,046
Liabilities:
Deferred compensation plan liability (2)	$	—	$	5,046	$	—	$	5,046
Interest rate derivatives	—		20,245		—		20,245
Total liabilities	$	—	$	25,291	$	—	$	25,291

(1) Included in the line entitled “restricted cash and marketable securities” on COPT’s consolidated balance sheet.

(2) Included in the line entitled “other liabilities” on COPT’s consolidated balance sheet.

COPLP and Subsidiaries

The table below sets forth financial assets and liabilities of COPLP and its subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2016 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets(Level 1)		Significant Other Observable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
Liabilities:
Interest rate derivatives	$	—	$	20,245	$	—	$	20,245

Nonrecurring Fair Value Measurements

During the second quarter of 2016, as part of our closing process, we conducted our quarterly review of our portfolio for indicators of impairment considering the refined investment strategy of our newly-appointed Chief Executive Officer and concluded that we would: (1) not hold our operating properties in Aberdeen, Maryland for the long-term; (2) sell specific properties in our Northern Virginia Defense/IT and Fort Meade/BW Corridor sub-segments; (3) not develop commercial properties on land in Frederick, Maryland; and (4) sell the remaining operating property in Greater Philadelphia that had not previously been classified as held for sale. Accordingly, we performed recoverability analyses for each of these properties and recorded the following impairment losses resulting from nonrecurring fair value measurements:

• $34.4 million on operating properties in Aberdeen, Maryland (included in our Other segment). After shortening our estimated holding period for these properties, we determined that the carrying amount of the properties would not likely be recovered from the operation and eventual dispositions of the properties during the shortened holding period. Accordingly, we adjusted the properties to their estimated fair value;

• $14.1 million on operating properties in our Northern Virginia Defense/IT and Fort Meade/BW Corridor sub-segments that we reclassified to held for sale during the period whose carrying amounts exceeded their estimated fair values less cost to sell;

• $8.2 million on land in Frederick, Maryland. We determined that the carrying amount of the land would not likely be recovered from the sale of this property. Accordingly, we adjusted the land to its estimated fair value;

• $6.2 million on a property in Greater Philadelphia (included in our Regional Office segment) that we reclassified to held for sale during the period whose carrying amounts exceeded its estimated fair value less cost to sell; and

• $4.4 million on land in Aberdeen, Maryland. In performing our analysis related to the operating properties in Aberdeen, we determined that the weakening leasing and overall commercial real estate conditions in that market indicated that our land holdings in the market may be impaired. As a result, we determined that the carrying amount of the land was not recoverable and, accordingly, adjusted the land to its estimated fair value.

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During the six months ended June 30, 2016, we also recognized the following impairment losses resulting from nonrecurring fair value measurements:

• $3.4 million (primarily in the three months ended March 31, 2016) on land in Colorado Springs, Colorado, the carrying amount of which exceeded the estimated fair value less costs to sell. Most of these losses pertained to land we decided to sell during the three months ended March 31, 2016 that was reclassified as held for sale, and the remainder was attributable to further decreases in fair value of properties previously classified as held for sale based on recent bids from and negotiations with prospective buyers; and

• $1.4 million (primarily in the three months ended March 31, 2016) primarily on operating properties in White Marsh, Maryland (included in our Regional Office segment) classified as held for sale whose carrying amounts exceeded their estimated fair values less costs to sell based on recent negotiations with prospective buyers.

The table below sets forth the fair value hierarchy of the valuation technique we used to determine nonrecurring fair value measurements of these assets as of June 30, 2016 (dollars in thousands):

	Fair Values as of June 30, 2016
	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Operating properties, net (1)	$	—	$	—	$	13,700	$	13,700
Projects in development or held for future development (2)	—		—		9,117		9,117
Assets held for sale, net (3)	—		—		55,322		55,322

(1) Valuations were determined using a discounted cash flow model. Refer to table below for quantitative information about significant unobservable inputs used in the model.

(2) Valuation was determined using the comparable sales approach.

(3) Represents fair value less estimated costs to sell using contract prices or bids that were deemed indicative of fair value.

The table below sets forth quantitative information about significant unobservable inputs used for the Level 3 fair value measurements reported above for operating properties as of June 30, 2016:

Unobservable Input	Range (Weighted Average)
Discount rate	11.0% to 12.0% (11.6%)
Capitalization rate	9.0% to 10.0% (9.5%)

4.Properties, Net

Operating properties, net consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Land	$	455,355		$	463,305
Buildings and improvements	3,005,802			3,157,587
Less: Accumulated depreciation	(678,827		)	(700,363		)
Operating properties, net	$	2,782,330		$	2,920,529

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Projects in development or held for future development consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Land	$	209,202	$	207,774
Development in progress, excluding land	178,195		221,445
Projects in development or held for future development	$	387,397	$	429,219

Our properties held for sale included:

• as of June 30, 2016: 13 operating properties in White Marsh, Maryland (included in our Regional Office segment); four operating properties in Greater Philadelphia (included in our Regional Office segment); ten operating properties in our Fort Meade/BW Corridor sub-segment; two operating properties in San Antonio (included in our Other segment); one operating property in our Northern Virginia Defense/IT sub-segment; and land in Northern Virginia, Colorado Springs and Greater Philadelphia; and

• as of December 31, 2015: 13 operating properties in White Marsh, Maryland (included in our Regional Office segment); two operating properties in San Antonio (included in our Other segment); and land in Northern Virginia and Colorado Springs.

The table below sets forth the components of assets held for sale on our consolidated balance sheet for these properties (in thousands):

	June 30, 2016		December 31, 2015
Properties, net	$	269,008	$	90,188
Deferred rent receivable	15,765		2,891
Intangible assets on real estate acquisitions, net	1,591		1,591
Deferred leasing costs, net	10,869		1,391
Lease incentives, net	3,351		721
Assets held for sale, net	$	300,584	$	96,782

Acquisitions

We acquired the following operating properties in 2015:

• 250 W. Pratt Street, a 367,000 square foot office property in Baltimore, Maryland that was 96.2% leased, for $61.8 million on March 19, 2015;

• 2600 Park Tower Drive, a 237,000 square foot office property in Vienna, Virginia (in the Northern Virginia region) that was 100% leased, for $80.5 million on April 15, 2015; and

• 100 Light Street, a 558,000 square foot office property in Baltimore, Maryland that was 93.5% leased, and its structured parking garage, 30 Light Street, for $121.2 million on August 7, 2015. In connection with that acquisition, we assumed a $55.0 million mortgage loan with a fair value at assumption of $55.5 million.

These properties contributed:

• revenues of $9.2 million for the three months ended June 30, 2016, $4.0 million for the three months ended June 30, 2015, $18.4 million for the six months ended June 30, 2016 and $4.3 million for the six months ended June 30, 2015; and

• net income from continuing operations of $1.1 million for the three months ended June 30, 2016, $40,000 for the three months ended June 30, 2015, $2.0 million for the six months ended June 30, 2016 and $210,000 for the six months ended June 30, 2015.

We accounted for these acquisitions as business combinations. We included the results of operations for the acquisitions in our consolidated statements of operations from their respective purchase dates through June 30, 2016. The following table presents pro forma information for COPT and subsidiaries as if these acquisitions had occurred on January 1, 2014. This pro forma information also includes adjustments to reclassify operating property acquisition costs to the six months ended June 30, 2014 from the 2015 periods in which they were actually incurred. The pro forma financial information was prepared for comparative purposes only and is not necessarily indicative of what would have occurred had these acquisitions been made at that time or of results which may occur in the future (in thousands, except per share amounts).

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	For the Three Months Ended June 30, 2015		For the Six Months Ended June 30, 2015
	(Unaudited)
Pro forma total revenues	$	175,996	$	345,921
Pro forma net income attributable to COPT common shareholders	$	13,259	$	24,106
Pro forma EPS:
Basic	$	0.14	$	0.25
Diluted	$	0.14	$	0.25

2016 Dispositions

We sold land in the six months endedJune 30, 2016 for $5.7 million, with no gain recognized.

2016 Construction Activities

During the six months endedJune 30, 2016, we placed into service 298,000 square feet in two newly constructed office properties and 55,000 square feet in two redeveloped properties (including a partially operational property). As of June 30, 2016, we had nine office properties under construction, or for which we were contractually committed to construct, that we estimate will total 1.4 million square feet upon completion (including two properties completed but held for future lease to the United States Government) and three office properties under redevelopment that we estimate will total 104,000 square feet upon completion.

5.Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in consolidated real estate joint ventures as of June 30, 2016 (dollars in thousands):

		Nominal
		Ownership		June 30, 2016				(1)
	Date	% as of		Total		Encumbered		Total
	Acquired	6/30/2016	Nature of Activity	Assets		Assets		Liabilities
LW Redstone Company, LLC	3/23/2010	85%	Development and operation of real estate (2)	$	151,416	$	81,094	$	52,362
M Square Associates, LLC	6/26/2007	50%	Development and operation of real estate (3)	65,788		47,399		46,205
Stevens Investors, LLC	8/11/2015	95%	Development of real estate (4)	38,859		—		7,446
				$	256,063	$	128,493	$	106,013

(1) Excludes amounts eliminated in consolidation.

(2) This joint venture’s properties are in Huntsville, Alabama.

(3) This joint venture’s properties are in College Park, Maryland.

(4) This joint venture’s property is in Washington, DC.

In January 2016, our partner in Stevens Investors, LLC contributed to the joint venture, for a value of $22.6 million, interests in contracts controlling land to be developed (including a purchase agreement and a ground lease). Our partner subsequently received a cash distribution from the joint venture of $13.4 million, which was funded by us. Our partner is also entitled to receive an additional distribution from the joint venture of $6.7 million to be funded by us (expected later in 2016 or 2017) that was reported in other liabilities on our consolidated balance sheet as of June 30, 2016.

6.     Investing Receivables

Investing receivables, including accrued interest thereon, consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Notes receivable from the City of Huntsville	$	47,142	$	44,875
Other investing loans receivable	3,020		3,000
	$	50,162	$	47,875

Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture (see Note 5) and carry an interest rate of 9.95%.

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We did not have an allowance for credit losses in connection with our investing receivables as of June 30, 2016 or December 31, 2015.  The fair value of these receivables approximated their carrying amounts as of June 30, 2016 and December 31, 2015.

7.    Prepaid Expenses and Other Assets, Net

Prepaid expenses and other assets consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Prepaid expenses	$	10,301	$	23,009
Lease incentives, net	7,873		11,133
Furniture, fixtures and equipment, net	5,686		6,004
Construction contract costs incurred in excess of billings	5,281		3,261
Deferred financing costs, net (1)	4,497		5,867
Deferred tax asset, net (2)	3,589		3,467
Other assets	6,132		7,283
Prepaid expenses and other assets, net	$	43,359	$	60,024

(1) Represents deferred costs, net of accumulated amortization, attributable to our Revolving Credit Facility and interest rate derivatives.

(2) Includes a valuation allowance of $2.1 million.

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8.    Debt, Net

Our debt consisted of the following (dollars in thousands):

	Carrying Value (1) as of					Scheduled Maturity
	June 30, 2016		December 31, 2015		Stated Interest Rates as of	as of
					June 30, 2016	June 30, 2016
Mortgage and Other Secured Loans:
Fixed rate mortgage loans (2)	$	318,243	$	281,208	3.82% - 7.87% (3)	2016-2026
Variable rate secured loans	13,608		49,792		LIBOR + 1.85% (4)	2016-2020
Total mortgage and other secured loans	331,851		331,000
Revolving Credit Facility	58,000		43,500		LIBOR + 0.875% to 1.60% (5)	May 2019
Term Loan Facilities (6)	516,508		515,902		LIBOR + 0.90% to 2.60% (7)	2019-2022
Unsecured Senior Notes
3.600%, $350,000 aggregate principal	346,920		346,714		3.60% (8)	May 2023
5.250%, $250,000 aggregate principal	245,951		245,731		5.25% (9)	February 2024
3.700%, $300,000 aggregate principal	297,609		297,378		3.70% (10)	June 2021
5.000%, $300,000 aggregate principal	296,192		296,019		5.00% (11)	July 2025
Unsecured notes payable	1,455		1,508		0% (12)	2026
Total debt, net	$	2,094,486	$	2,077,752

(1) The carrying values of our loans other than the Revolving Credit Facility reflect net deferred financing costs of $7.4 million as of June 30, 2016 and $8.0 million as of December 31, 2015.

(2)   Several of the fixed rate mortgages carry interest rates that were above or below market rates upon assumption and therefore were recorded at their fair value based on applicable effective interest rates.  The carrying values of these loans reflect net unamortized premiums totaling $459,000 as of June 30, 2016 and $514,000 as of December 31, 2015.

(3) The weighted average interest rate on our fixed rate mortgage loans was 5.75% as of June 30, 2016.

(4)  The interest rate on our variable rate secured loan as of June 30, 2016 was 2.31%.

(5) The weighted average interest rate on the Revolving Credit Facility was 1.62% as of June 30, 2016.

(6)   An additional $150 million in borrowings is available to be drawn under a term loan. In addition, we have the ability to borrow an additional $430.0 million in the aggregate under these term loan facilities, provided that there is no default under the facilities and subject to the approval of the lenders.

(7)  The weighted average interest rate on these loans was 2.10% as of June 30, 2016.

(8) The carrying value of these notes reflects an unamortized discount totaling $2.1 millionas of June 30, 2016 and $2.2 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%. 

(9) The carrying value of these notes reflectsan unamortized discount totaling $3.6 millionas of June 30, 2016 and $3.8 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%. 

(10) The carrying value of these notes reflects an unamortized discount totaling $1.9 millionas of June 30, 2016 and $2.1 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.85%. 

(11) The carrying value of these notes reflects an unamortized discount totaling $3.2 millionas of June 30, 2016 and $3.3 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.

(12)  These notes carry interest rates that were below market rates upon assumption and therefore were recorded at their fair value based on applicable effective interest rates.  The carrying value of these notes reflects an unamortized discount totaling $506,000 as of June 30, 2016 and $554,000 as of December 31, 2015.

All debt is owed by the Operating Partnership. While COPT is not directly obligated by any debt, it has guaranteed the Operating Partnership’s Revolving Credit Facility, Term Loan Facilities and Unsecured Senior Notes.

Certain of our debt instruments require that we comply with a number of restrictive financial covenants.  As of June 30, 2016, we were within the compliance requirements of these financial covenants.

We capitalized interest costs of $1.3 million in the three months ended June 30, 2016, $2.0 million in the three months ended June 30, 2015, $3.1 million in the six months ended June 30, 2016 and $4.1 million in the six months ended June 30, 2015.

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The following table sets forth information pertaining to the fair value of our debt (in thousands): 

	June 30, 2016				December 31, 2015
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Fixed-rate debt
Unsecured Senior Notes	$	1,186,672	$	1,227,235	$	1,185,842	$	1,211,658
Other fixed-rate debt	319,698		329,066		282,716		291,991
Variable-rate debt	588,116		592,032		609,194		610,987
	$	2,094,486	$	2,148,333	$	2,077,752	$	2,114,636

9.    Interest Rate Derivatives

The following table sets forth the key terms and fair values of our interest rate swap derivatives (dollars in thousands):

							Fair Value at
Notional Amount			Fixed Rate	Floating Rate Index	Effective Date	Expiration Date	June 30, 2016			December 31, 2015
$	100,000		0.8055%	One-Month LIBOR	9/2/2014	9/1/2016	$	(58	)	$	(148	)
100,000			0.8100%	One-Month LIBOR	9/2/2014	9/1/2016	(59		)	(151		)
100,000			1.6730%	One-Month LIBOR	9/1/2015	8/1/2019	(3,117		)	(1,217		)
100,000			1.7300%	One-Month LIBOR	9/1/2015	8/1/2019	(3,293		)	(1,429		)
13,765		(1)	1.3900%	One-Month LIBOR	10/13/2015	10/1/2020	(337		)	53
100,000			1.9013%	One-Month LIBOR	9/1/2016	12/1/2022	(5,367		)	(138		)
100,000			1.9050%	One-Month LIBOR	9/1/2016	12/1/2022	(5,336		)	(45		)
50,000			1.9079%	One-Month LIBOR	9/1/2016	12/1/2022	(2,678		)	(32		)
							$	(20,245	)	$	(3,107	)

(1) The notional amount of this instrument is scheduled to amortize to $12.1 million.

Each of the interest rate swaps set forth in the table above was designated as a cash flow hedge of interest rate risk.

The table below sets forth the fair value of our interest rate derivatives as well as their classification on our consolidated balance sheets (in thousands):

		Fair Value at
Derivatives	Balance Sheet Location	June 30, 2016			December 31, 2015
Interest rate swaps designated as cash flow hedges	Prepaid expenses and other assets	$	—		$	53
Interest rate swaps designated as cash flow hedges	Interest rate derivatives	(20,245		)	(3,160		)

The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016			2015		2016			2015
Amount of (loss) gain recognized in accumulated other comprehensive loss (“AOCL”) (effective portion)	$	(5,704	)	$	392	$	(16,988	)	$	(3,082	)
Amount of losses reclassified from AOCL into interest expense (effective portion)	850			769		1,720			1,542
Amount of loss recognized in interest expense (ineffective portion)	319			—		1,870			—

Over the next 12 months, we estimate that approximately $5.6 million of losses will be reclassified from AOCL as an increase to interest expense.

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We have agreements with each of our interest rate derivative counterparties that contain provisions under which, if we default or are capable of being declared in default on defined levels of our indebtedness, we could also be declared in default on our derivative obligations.  These agreements also incorporate the loan covenant provisions of our indebtedness with a lender affiliate of the derivative counterparties.  Failure to comply with the loan covenant provisions could result in our being declared in default on any derivative instrument obligations covered by the agreements.  As of June 30, 2016, the fair value of interest rate derivatives in a liability position related to these agreements was $21.1 million, excluding the effects of accrued interest and credit valuation adjustments. As of June 30, 2016, we had not posted any collateral related to these agreements.  We are not in default with any of these provisions.  If we breached any of these provisions, we could be required to settle our obligations under the agreements at their termination value of $21.4 million.

10.    Redeemable Noncontrolling Interests

Our partners in two real estate joint ventures, LW Redstone Company, LLC and Stevens Investors, LLC (discussed further in Note 5), have the right to require us to acquire their respective interests at fair value; accordingly, we classify the fair value of our partners’ interests as redeemable noncontrolling interests in the mezzanine section of our consolidated balance sheet. We determine the fair value of the interests based on unobservable inputs after considering the assumptions that market participants would make in pricing the interest. We apply a discount rate to the estimated future cash flows allocable to our partners from the properties underlying the respective joint ventures. Estimated cash flows used in such analyses are based on our plans for the properties and our views of market and economic conditions, and consider items such as current and future rental rates, occupancies for the properties and comparable properties and estimated operating and capital expenditures. The table below sets forth the activity for these redeemable noncontrolling interests (in thousands):

	For the Six Months Ended June 30,
	2016			2015
Beginning balance	$	19,218		$	18,417
Contributions from noncontrolling interests	22,778			—
Distributions to noncontrolling interests	(20,989		)	(885		)
Net income attributable to noncontrolling interests	1,117			1,143
Adjustment to arrive at fair value of interests	349			739
Ending balance	$	22,473		$	19,414

11.    Equity

During the six months endedJune 30, 2016, certain COPLP limited partners redeemed 26,758 common units in COPLP for an equal number of common shares in COPT.

See Note 13 for disclosure of COPT common share and COPLP common unit activity pertaining to our share-based compensation plans.

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12.    Information by Business Segment

Our segment reporting includes the following segments: Defense/IT Locations; Regional Office; our operating wholesale data center; and other. Our segment reporting also includes reporting for Defense/IT Locations sub-segments, which include the following: Fort George G. Meade and the Baltimore/Washington Corridor (referred to herein as “Fort Meade/BW Corridor”); Northern Virginia Defense/IT Locations; Lackland Air Force Base (in San Antonio); locations serving the U.S. Navy (“Navy Support Locations”), which included properties proximate to the Washington Navy Yard, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; Redstone Arsenal (in Huntsville); and data center shells (properties leased to tenants to be operated as data centers in which the tenants generally fund the costs for the power, fiber connectivity and data center infrastructure). The table below reports segment financial information for our reportable segments (in thousands).  We measure the performance of our segments through the measure we define as NOI from real estate operations, which is derived by subtracting property operating expenses from revenues from real estate operations.

	Operating Office Property Segments
	Defense/Information Technology Locations
	Fort Meade/BW Corridor		Northern Virginia Defense/IT		Lackland Air Force Base		Navy Support Locations		Redstone Arsenal		Data Center Shells		Total Defense/IT Locations		Regional Office		Operating Wholesale Data Center			Other			Total
Three Months Ended June 30, 2016
Revenues from real estate operations	$	60,912	$	12,057	$	11,651	$	6,998	$	3,191	$	7,288	$	102,097	$	23,283	$	6,804		$	1,740		$	133,924
Property operating expenses	20,378		4,307		6,844		2,675		960		826		35,990		8,721		2,651			779			48,141
NOI from real estate operations	$	40,534	$	7,750	$	4,807	$	4,323	$	2,231	$	6,462	$	66,107	$	14,562	$	4,153		$	961		$	85,783
Additions to long-lived assets	$	7,096	$	3,059	$	—	$	2,233	$	301	$	—	$	12,689	$	2,180	$	—		$	153		$	15,022
Transfers from non-operating properties	$	768	$	27,944	$	231	$	—	$	4	$	29,857	$	58,804	$	26	$	(482	)	$	—		$	58,348
Three Months Ended June 30, 2015							—
Revenues from real estate operations	$	60,007	$	13,462	$	9,743	$	7,186	$	2,658	$	5,037	$	98,093	$	24,400	$	3,820		$	1,882		$	128,195
Property operating expenses	19,480		5,354		5,349		3,390		888		499		34,960		8,406		2,221			820			46,407
NOI from real estate operations	$	40,527	$	8,108	$	4,394	$	3,796	$	1,770	$	4,538	$	63,133	$	15,994	$	1,599		$	1,062		$	81,788
Additions to long-lived assets	$	5,141	$	83,913	$	—	$	1,769	$	208	$	—	$	91,031	$	3,396	$	78		$	210		$	94,715
Transfers from non-operating properties	$	6,098	$	7,735	$	468	$	—	$	8,980	$	911	$	24,192	$	5,218	$	15,202		$	12		$	44,624
Six Months Ended June 30, 2016
Revenues from real estate operations	$	123,421	$	24,173	$	21,876	$	13,932	$	6,307	$	13,618	$	203,327	$	46,785	$	13,297		$	3,602		$	267,011
Property operating expenses	43,624		8,848		12,264		6,199		1,938		1,636		74,509		18,552		5,312			1,643			100,016
NOI from real estate operations	$	79,797	$	15,325	$	9,612	$	7,733	$	4,369	$	11,982	$	128,818	$	28,233	$	7,985		$	1,959		$	166,995
Additions to long-lived assets	$	13,615	$	6,137	$	—	$	3,503	$	919	$	—	$	24,174	$	4,939	$	—		$	310		$	29,423
Transfers from non-operating properties	$	36,519	$	27,850	$	237	$	—	$	215	$	55,954	$	120,775	$	108	$	(431	)	$	(11	)	$	120,441
Segment assets at June 30, 2016	$	1,305,769	$	424,441	$	133,359	$	195,195	$	106,810	$	256,276	$	2,421,850	$	594,750	$	237,226		$	35,291		$	3,289,117
Six Months Ended June 30, 2015
Revenues from real estate operations	$	121,191	$	24,508	$	18,408	$	14,451	$	5,104	$	10,151	$	193,813	$	46,360	$	6,855		$	3,877		$	250,905
Property operating expenses	42,996		10,970		10,112		6,788		1,717		1,194		73,777		17,154		4,433			1,729			97,093
NOI from real estate operations	$	78,195	$	13,538	$	8,296	$	7,663	$	3,387	$	8,957	$	120,036	$	29,206	$	2,422		$	2,148		$	153,812
Additions to long-lived assets	$	8,586	$	84,700	$	—	$	3,362	$	291	$	—	$	96,939	$	69,330	$	108		$	309		$	166,686
Transfers from non-operating properties	$	19,028	$	51,208	$	31,559	$	—	$	11,977	$	16,008	$	129,780	$	16,725	$	15,379		$	12		$	161,896
Segment assets at June 30, 2015	$	1,266,632	$	499,601	$	134,127	$	194,764	$	107,677	$	170,006	$	2,372,807	$	598,030	$	175,563		$	72,257		$	3,218,657

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The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016		2015			2016		2015
Segment revenues from real estate operations	$	133,924	$	128,195		$	267,011	$	250,905
Construction contract and other service revenues	12,003		42,172			23,223		80,496
Less: Revenues from discontinued operations	—		(4		)	—		(4		)
Total revenues	$	145,927	$	170,363		$	290,234	$	331,397

The following table reconciles our segment property operating expenses to property operating expenses as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Segment property operating expenses	$	48,141	$	46,407	$	100,016	$	97,093
Less: Property operating expenses from discontinued operations	—		11		—		6
Total property operating expenses	$	48,141	$	46,418	$	100,016	$	97,099

As previously discussed, we provide real estate services such as property management and construction and development services primarily for our properties but also for third parties.  The primary manner in which we evaluate the operating performance of our service activities is through a measure we define as net operating income from service operations (“NOI from service operations”), which is based on the net of revenues and expenses from these activities.  Construction contract and other service revenues and expenses consist primarily of subcontracted costs that are reimbursed to us by the customer along with a management fee. The operating margins from these activities are small relative to the revenue.  We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations. The table below sets forth the computation of our NOI from service operations (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Construction contract and other service revenues	$	12,003		$	42,172		$	23,223		$	80,496
Construction contract and other service expenses	(11,478		)	(41,293		)	(22,172		)	(78,791		)
NOI from service operations	$	525		$	879		$	1,051		$	1,705

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The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to income from continuing operations as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
NOI from real estate operations	$	85,783		$	81,788		$	166,995		$	153,812
NOI from service operations	525			879			1,051			1,705
Interest and other income	1,330			1,242			2,486			2,525
Equity in income of unconsolidated entities	10			9			20			34
Income tax (expense) benefit	(1		)	(50		)	7			(105		)
Other adjustments:	—						—
Depreciation and other amortization associated with real estate operations	(33,248		)	(33,786		)	(67,775		)	(65,385		)
Impairment losses	(69,692		)	(1,238		)	(72,138		)	(1,238		)
General, administrative and leasing expenses	(8,026		)	(7,534		)	(19,909		)	(15,425		)
Business development expenses and land carry costs	(2,363		)	(2,623		)	(4,781		)	(5,413		)
Interest expense	(22,639		)	(21,768		)	(46,198		)	(42,606		)
NOI from discontinued operations	—			(15		)	—			(10		)
Gain (loss) on early extinguishment of debt	5			(65		)	22			(68		)
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826

The following table reconciles our segment assets to the consolidated total assets of COPT and subsidiaries (in thousands):

	June 30, 2016		June 30, 2015
Segment assets	$	3,289,117	$	3,218,657
Non-operating property assets	413,597		527,742
Other assets	138,978		157,660
Total COPT consolidated assets	$	3,841,692	$	3,904,059

The accounting policies of the segments are the same as those used to prepare our consolidated financial statements, except that discontinued operations are not presented separately for segment purposes.  In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization, impairment losses, gain (loss) on early extinguishment of debt and gain on sales of real estate to our real estate segments since they are not included in the measure of segment profit reviewed by management.  We also did not allocate general, administrative and leasing expenses, business development expenses and land carry costs, interest and other income, equity in income of unconsolidated entities, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.

13.    Share-Based Compensation and Other Compensation Matters

Performance Share Units (“PSUs”)

On March 1, 2016, our Board of Trustees granted 26,299 PSUs with an aggregate grant date fair value of $1.0 million to executives.  The PSUs have a performance period beginning on January 1, 2016 and concluding on the earlier of December 31, 2018 or the date of: (1) termination by us without cause, death or disability of the executive or constructive discharge of the executive (collectively, “qualified termination”); or (2) a sale event.  The number of PSUs earned (“earned PSUs”) at the end of the performance period will be determined based on the percentile rank of COPT’s total shareholder return relative to a peer group of companies, as set forth in the following schedule:

Percentile Rank	Earned PSUs Payout %
75th or greater	200% of PSUs granted
50th or greater	100% of PSUs granted
25th	50% of PSUs granted
Below 25th	0% of PSUs granted

If the percentile rank exceeds the 25th percentile and is between two of the percentile ranks set forth in the table above, then the percentage of the earned PSUs will be interpolated between the ranges set forth in the table above to reflect any performance

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between the listed percentiles.  At the end of the performance period, we, in settlement of the award, will issue a number of fully-vested COPT common shares equal to the sum of:

• the number of earned PSUs in settlement of the award plan; plus

• the aggregate dividends that would have been paid with respect to the common shares issued in settlement of the earned PSUs through the date of settlement had such shares been issued on the grant date, divided by the share price on such settlement date, as defined under the terms of the agreement.

If a performance period ends due to a sale event or qualified termination, the number of earned PSUs is prorated based on the portion of the three-year performance period that has elapsed.  If employment is terminated by the employee or by us for cause, all PSUs are forfeited.  PSUs do not carry voting rights.

We computed a grant date fair value of $38.21 per PSU using a Monte Carlo model, which included assumptions of, among other things, the following: baseline common share value of $23.90; expected volatility for COPT common shares of 20.4%; and a risk-free interest rate of 0.96%.  We are recognizing the grant date fair value in connection with these PSU awards over the period commencing on March 1, 2016 and ending on December 31, 2018.

Based on COPT’s total shareholder return relative to its peer group of companies, for PSUs issued in 2014 and 2015 to Mr. Wayne H. Lingafelter, our former Executive Vice President, Development & Construction Services, who departed on March 31, 2016, we issued 10,326 common shares on May 30, 2016 in settlement of such PSUs.

Restricted Shares

During the six months endedJune 30, 2016, certain employees were granted a total of 197,087 restricted common shares with an aggregate grant date fair value of $4.8 million (weighted average of $24.11 per share).  Restricted shares granted to employees vest based on increments and over periods of time set forth under the terms of the respective awards provided that the employees remain employed by us.  During the six months endedJune 30, 2016, forfeiture restrictions lapsed on 159,171 previously issued common shares; these shares had a weighted average grant date fair value of $27.62 per share, and the aggregate intrinsic value of the shares on the vesting dates was $3.8 million.

Deferred Share Awards

During the six months endedJune 30, 2016, nonemployee members of our Board of Trustees were granted a total of 24,944 deferred share awards with an aggregate grant date fair value of $671,000 ($26.89 per share). Deferred share awards vest on the first anniversary of the grant date, provided that the Trustee remains in his or her position. We settle deferred share awards by issuing an equivalent number of common shares upon vesting of the awards or a later date elected by the Trustee (generally upon cessation of being a Trustee). During the six months endedJune 30, 2016, we issued 12,028 common shares in settlement of deferred share awards granted in 2015; these shares had a grant date fair value of $26.70 per share, and the aggregate intrinsic value of the shares on the settlement date was $322,000.

Executive Transition Costs

Our Board of Trustees appointed Stephen E. Budorick, our Executive Vice President and Chief Operating Officer since September 2011, to become our President and Chief Executive Officer effective May 12, 2016, the date of the Company’s 2016 Annual Meeting of Shareholders. On that date, Roger A. Waesche, Jr., our current President and Chief Executive Officer, left the Company to pursue other interests, and he was not nominated for reelection as a Trustee. The Board appointed Mr. Budorick to our Board of Trustees after the 2016 Annual Meeting of Shareholders. In addition, our Executive Vice President, Development & Construction Services, Wayne H. Lingafelter, departed the Company to pursue other interests effective March 31, 2016. We recognized executive transition costs of approximately $4.4 million in the six months ended June 30, 2016 primarily in connection with the departure of Mr. Waesche and Mr. Lingafelter.

 

14.    Earnings Per Share (“EPS”) and Earnings Per Unit (“EPU”)

COPT and Subsidiaries EPS

We present both basic and diluted EPS.  We compute basic EPS by dividing net income available to common shareholders allocable to unrestricted common shares under the two-class method by the weighted average number of unrestricted common shares outstanding during the period.  Our computation of diluted EPS is similar except that:

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• the denominator is increased to include: (1) the weighted average number of potential additional common shares that would have been outstanding if securities that are convertible into COPT common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to share-based compensation using the treasury stock or if-converted methods; and

• the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common shares that we added to the denominator.

Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Numerator:
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826
Gain on sales of real estate, net	—			(1		)	—			3,985
Preferred share dividends	(3,553		)	(3,553		)	(7,105		)	(7,105		)
Loss (income) from continuing operations attributable to noncontrolling interests	897			(1,436		)	(373		)	(2,828		)
Income from continuing operations attributable to share-based compensation awards	(96		)	(113		)	(214		)	(235		)
Numerator for basic and diluted EPS from continuing operations attributable to COPT common shareholders	$	(51,068	)	$	11,736		$	(47,912	)	$	21,643
Discontinued operations	—			394			—			156
Discontinued operations attributable to noncontrolling interests	—			(15		)	—			(3		)
Numerator for basic and diluted EPS on net income attributable to COPT common shareholders	$	(51,068	)	$	12,115		$	(47,912	)	$	21,796
Denominator (all weighted averages):
Denominator for basic EPS (common shares)	94,300			94,128			94,251			93,666
Dilutive effect of share-based compensation awards	—			35			—			114
Denominator for diluted EPS (common shares)	94,300			94,163			94,251			93,780
Basic EPS:
(Loss) income from continuing operations attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPT common shareholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Diluted EPS:
(Loss) income from continuing operations attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPT common shareholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23

Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):

	Weighted Average Shares Excluded from Denominator
	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Conversion of common units	3,676	3,680	3,676	3,706
Conversion of Series I Preferred Units	176	176	176	176
Conversion of Series K Preferred Shares	434	434	434	434

The following share-based compensation securities were excluded from the computation of diluted EPS because their effects were antidilutive:

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• weighted average restricted shares and deferred share awards for the three months ended June 30, 2016 and 2015 of 403,000 and 426,000, respectively, and for the six months ended June 30, 2016 and 2015 of 404,000 and 413,000, respectively; and

• weighted average options for the three months ended June 30, 2016 and 2015 of 309,000 and 473,000, respectively, and for the six months ended June 30, 2016 and 2015 of 344,000 and 472,000, respectively.

We had outstanding senior notes, which we redeemed in April 2015, with an exchange settlement feature, but such notes did not affect our diluted EPS reported above since the weighted average closing price of COPT’s common shares during each of the periods was less than the exchange prices per common share applicable for such periods.

COPLP and Subsidiaries EPU

We present both basic and diluted EPU.  We compute basic EPU by dividing net income available to common unitholders allocable to unrestricted common units under the two-class method by the weighted average number of unrestricted common units outstanding during the period.  Our computation of diluted EPU is similar except that:

• the denominator is increased to include: (1) the weighted average number of potential additional common units that would have been outstanding if securities that are convertible into our common units were converted; and (2) the effect of dilutive potential common units outstanding during the period attributable to share-based compensation using the treasury stock or if-converted methods; and

• the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common units that we added to the denominator.

Summaries of the numerator and denominator for purposes of basic and diluted EPU calculations are set forth below (in thousands, except per unit data):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Numerator:
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826
Gain on sales of real estate, net	—			(1		)	—			3,985
Preferred unit distributions	(3,718		)	(3,718		)	(7,435		)	(7,435		)
Income from continuing operations attributable to noncontrolling interests	(911		)	(812		)	(1,890		)	(1,633		)
Income from continuing operations attributable to share-based compensation awards	(96		)	(113		)	(214		)	(235		)
Numerator for basic and diluted EPU from continuing operations attributable to COPLP common unitholders	$	(53,041	)	$	12,195		$	(49,759	)	$	22,508
Discontinued operations	—			394			—			156
Discontinued operations attributable to noncontrolling interests	—			—			—			3
Numerator for basic and diluted EPU on net income attributable to COPLP common unitholders	$	(53,041	)	$	12,589		$	(49,759	)	$	22,667
Denominator (all weighted averages):
Denominator for basic EPU (common units)	97,976			97,808			97,927			97,372
Dilutive effect of share-based compensation awards	—			35			—			114
Denominator for diluted EPU (common units)	97,976			97,843			97,927			97,486
Basic EPU:
(Loss) income from continuing operations attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPLP common unitholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Diluted EPU:
(Loss) income from continuing operations attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPLP common unitholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23

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Our diluted EPU computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPU for the respective periods (in thousands):

	Weighted Average Units Excluded from Denominator
	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Conversion of Series I preferred units	176	176	176	176
Conversion of Series K preferred units	434	434	434	434

The following share-based compensation securities were excluded from the computation of diluted EPU because their effects were antidilutive:

• weighted average restricted units and deferred share awards for the three months ended June 30, 2016 and 2015 of 403,000 and 426,000, respectively, and for the six months ended June 30, 2016 and 2015 of 404,000 and 413,000, respectively; and

• weighted average options for the three months ended June 30, 2016 and 2015 of 309,000 and 473,000, respectively, and for the six months ended June 30, 2016 and 2015 of 344,000 and 472,000, respectively.

We had outstanding senior notes, which we redeemed in April 2015, with an exchange settlement feature, but such notes did not affect our diluted EPU reported above since the weighted average closing price of COPT’s common shares during each of the periods was less than the exchange prices per common share applicable for such periods.

15.    Commitments and Contingencies

Litigation

In the normal course of business, we are involved in legal actions arising from our ownership and administration of properties.  We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated.  Management does not anticipate that any liabilities that may result from such proceedings will have a materially adverse effect on our financial position, operations or liquidity.  Our assessment of the potential outcomes of these matters involves significant judgment and is subject to change based on future developments.

Environmental

We are subject to various Federal, state and local environmental regulations related to our property ownership and operation.  We have performed environmental assessments of our properties, the results of which have not revealed any environmental liability that we believe would have a materially adverse effect on our financial position, operations or liquidity.

Tax Incremental Financing Obligation

In August 2010, Anne Arundel County, Maryland issued $30 million in tax incremental financing bonds to third-party investors in order to finance public improvements needed in connection with our project known as National Business Park North.  The real estate taxes on increases in assessed value of a development district encompassing National Business Park North are to be transferred to a special fund pledged to the repayment of the bonds.  We recognized a $1.9 million liability through June 30, 2016 representing our estimated obligation to fund through a special tax any future shortfalls between debt service on the bonds and real estate taxes available to repay the bonds.

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Operating Leases

We are obligated as lessee under operating leases (mostly ground leases) with various expiration dates extending to the year 2100. Future minimum rental payments due under the terms of these operating leases as of June 30, 2016 follow (in thousands):

Year Ending December 31,
2016 (1)	$	603
2017	1,139
2018	1,092
2019	1,067
2020	1,084
Thereafter	86,805
	$	91,790

(1) Represents six months ending December 31, 2016.

Contractual Obligations

We had amounts remaining to be incurred under various contractual obligations as of June 30, 2016 that included the following:

• new development and redevelopment obligations of $78.8 million;

• capital expenditures for operating properties of $48.7 million;

• third party construction and development of $17.3 million; and

• purchase obligations of $2.5 million.

Environmental Indemnity Agreement

In connection with a lease and subsequent sale in 2008 and 2010 of three properties in Dayton, New Jersey, we agreed to provide certain environmental indemnifications. The prior owner of the properties, a Fortune 100 company that is responsible for groundwater contamination at such properties, previously agreed to indemnify us for (1) direct losses incurred in connection with the contamination and (2) its failure to perform remediation activities required by the State of New Jersey, up to the point that the state declares the remediation to be complete.  Under the environmental indemnification agreement, we agreed to the following:

• to indemnify the tenant against losses covered under the prior owner’s indemnity agreement if the prior owner fails to indemnify the tenant for such losses.  This indemnification is capped at $5.0 million in perpetuity after the State of New Jersey declares the remediation to be complete;

• to indemnify the tenant for consequential damages (e.g., business interruption) at one of the buildings in perpetuity and another of the buildings through 2025.  This indemnification is limited to $12.5 million; and

• to pay 50% of additional costs related to construction and environmental regulatory activities incurred by the tenant as a result of the indemnified environmental condition of the properties.  This indemnification is limited to $300,000 annually and $1.5 million in the aggregate.

16.    Subsequent Event

On July 21, 2016, we sold a 50% interest in six triple-net leased, single-tenant data center properties by contributing them into a newly-formed joint venture for a property value of $147.6 million. We obtained $60 million in non-recourse mortgage loans on the properties through the joint venture immediately prior to the sale of our interest and received the net proceeds. Our partner in the joint venture acquired the 50% interest in the joint venture from us for $44 million. We will account for our 50% interest in the joint venture using the equity method of accounting. Due to our continuing involvement in the properties through the joint venture, we recognized a partial gain on the sale of our interest of approximately $18 million.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

During the six months endedJune 30, 2016: 

• we finished the period with occupancy of our portfolio of operating office properties at 91.2%;

• we placed into service an aggregate of 353,000 square feet in newly constructed and redeveloped properties that were 85.6% leased as of June 30, 2016;

• we classified additional properties as held for sale with aggregate carrying amounts of $211 million after related impairments. We continue to evaluate properties for sale, and decisions to sell certain additional properties could result in additional impairment losses;

• our Board of Trustees appointed Stephen E. Budorick, our Executive Vice President and Chief Operating Officer since September 2011, to become our President and Chief Executive Officer effective May 12, 2016, the date of the Company’s 2016 Annual Meeting of Shareholders. On that date, Roger A. Waesche, Jr., our current President and Chief Executive Officer, departed the Company to pursue other interests, and he was not nominated for reelection as a Trustee. The Board appointed Mr. Budorick to our Board of Trustees after the 2016 Annual Meeting of Shareholders; and

• our Executive Vice President, Development & Construction Services, Wayne H. Lingafelter, departed the Company to pursue other interests effective March 31, 2016.

On July 21, 2016, we sold a 50% interest in six triple-net leased, single-tenant data center properties by contributing them into a newly-formed joint venture for a property value of $147.6 million. We obtained $60 million in non-recourse mortgage loans on the properties through the joint venture immediately prior to the sale of our interest and received the net proceeds. Our partner in the joint venture acquired the 50% interest in the joint venture from us for $44 million. We will account for our 50% interest in the joint venture using the equity method of accounting. Due to our continuing involvement in the properties through the joint venture, we recognized a partial gain on the sale of our interest of approximately $18 million.

We discuss significant factors contributing to changes in our net income in the section below entitled “Results of Operations.” The results of operations discussion is combined for COPT and COPLP because there are no material differences in the results of operations between the two reporting entities.

In addition, the section below entitled “Liquidity and Capital Resources” includes discussions of, among other things:

• how we expect to generate cash for short and long-term capital needs; and

• our commitments and contingencies.

You should refer to our consolidated financial statements and the notes thereto as you read this section.

This section contains “forward-looking” statements, as defined in the Private Securities Litigation Act of 1995, that are based on our current expectations, estimates and projections about future events and financial trends affecting the financial condition and operations of our business. 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;

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• 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 significant 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 forward-looking statements.

Occupancy and Leasing

Office Properties

The tables below set forth occupancy information pertaining to our portfolio of operating office properties:

	June 30, 2016			December 31, 2015
Occupancy rates at period end
Total	91.2		%	91.6		%
Defense/IT Locations:
Fort Meade/BW Corridor	92.6		%	94.5		%
Northern Virginia Defense/IT	82.0		%	81.9		%
Lackland Air Force Base	100.0		%	100.0		%
Navy Support Locations	74.7		%	72.1		%
Redstone Arsenal	98.9		%	97.0		%
Data Center Shells	100.0		%	100.0		%
Regional Office	96.5		%	95.4		%
Other	54.8		%	57.3		%
Average contractual annual rental rate per square foot at period end (1)	$	29.61		$	29.55

(1)  Includes estimated expense reimbursements.

	Rentable Square Feet		Occupied Square Feet
	(in thousands)
December 31, 2015	18,053		16,535
Square feet vacated upon lease expiration (1)	—		(342	)
Occupancy of previously vacated space in connection with new leases (2)	—		262
Square feet constructed or redeveloped	353		335
Other changes	(4	)	(2	)
June 30, 2016	18,402		16,788

(1)  Includes lease terminations and space reductions occurring in connection with lease renewals.

(2) Excludes occupancy of vacant square feet acquired or developed.

During the six months endedJune 30, 2016, we completed 1.6 million square feet of leasing, including 546,000 of construction and redevelopment space, and renewed 75.3% of the square footage of our lease expirations (including the effect of early renewals).

Occupancy of our Same Office Properties decreased from 91.1% as of December 31, 2015 to 90.8% as of June 30, 2016.

35

Wholesale Data Center Property

The leased portion of our 19.25 megawatt wholesale data center property decreased from 17.8 megawatts as of December 31, 2015 to 15.8 megawatts as of June 30, 2016 due to a tenant departure.

Results of Operations

We evaluate the operating performance of our properties using NOI from real estate operations, our segment performance measure derived by subtracting property operating expenses from revenues from real estate operations.  We view our NOI from real estate operations as comprising the following primary categories of operating properties:

• office properties owned and 100% operational throughout the current and prior year reporting periods, excluding properties held for future disposition.  We define these as changes from “Same Office Properties”;

• office properties acquired during the current and prior year reporting periods;

• constructed or redeveloped office properties placed into service that were not 100% operational throughout the current and prior year reporting periods;

• our wholesale data center;

• properties held for sale as of June 30, 2016; and

• property dispositions.

In addition to owning properties, we provide construction management and other services. The primary manner in which we evaluate the operating performance of our construction management and other service activities is through a measure we define as NOI from service operations, which is based on the net of the revenues and expenses from these activities.  The revenues and expenses from these activities consist primarily of subcontracted costs that are reimbursed to us by customers along with a management fee.  The operating margins from these activities are small relative to the revenue.  We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations.

We believe that operating income, as reported on our consolidated statements of operations, is the most directly comparable generally accepted accounting principles (“GAAP”) measure for both NOI from real estate operations and NOI from service operations.  Since both of these measures exclude certain items includable in operating income, reliance on these measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are considered alongside other GAAP and non-GAAP measures.

36

The table below reconciles NOI from real estate operations and NOI from service operations to operating income reported on the consolidated statements of operations of COPT and subsidiaries:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
	(in thousands)
NOI from real estate operations	$	85,783		$	81,788		$	166,995		$	153,812
NOI from service operations	525			879			1,051			1,705
Less: NOI from discontinued operations	—			(15		)	—			(10		)
Depreciation and amortization associated with real estate operations	(33,248		)	(33,786		)	(67,775		)	(65,385		)
Impairment losses	(69,692		)	(1,238		)	(72,138		)	(1,238		)
General, administrative and leasing expenses	(8,026		)	(7,534		)	(19,909		)	(15,425		)
Business development expenses and land carry costs	(2,363		)	(2,623		)	(4,781		)	(5,413		)
Operating (loss) income	$	(27,021	)	$	37,471		$	3,443		$	68,046

Comparison of Statements of Operations for the Three Months Ended June 30, 2016 and 2015

	For the Three Months Ended June 30,
	2016			2015			Variance
	(in thousands)
Revenues
Revenues from real estate operations	$	133,924		$	128,191		$	5,733
Construction contract and other service revenues	12,003			42,172			(30,169		)
Total revenues	145,927			170,363			(24,436		)
Expenses
Property operating expenses	48,141			46,418			1,723
Depreciation and amortization associated with real estate operations	33,248			33,786			(538		)
Construction contract and other service expenses	11,478			41,293			(29,815		)
Impairment losses	69,692			1,238			68,454
General, administrative and leasing expenses	8,026			7,534			492
Business development expenses and land carry costs	2,363			2,623			(260		)
Total operating expenses	172,948			132,892			40,056
Operating (loss) income	(27,021		)	37,471			(64,492		)
Interest expense	(22,639		)	(21,768		)	(871		)
Interest and other income	1,330			1,242			88
Gain (loss) on early extinguishment of debt	5			(65		)	70
Equity in income of unconsolidated entities	10			9			1
Income tax expense	(1		)	(50		)	49
(Loss) income from continuing operations	(48,316		)	16,839			(65,155		)
Discontinued operations	—			394			(394		)
Gain on sales of real estate	—			(1		)	1
Net (loss) income	$	(48,316	)	$	17,232		$	(65,548	)

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NOI from Real Estate Operations
	For the Three Months Ended June 30,
	2016			2015			Variance
	(Dollars in thousands, except per square foot data)
Revenues
Same Office Properties revenues
Rental revenue, excluding lease termination revenue	$	79,072		$	78,352		$	720
Lease termination revenue	336			1,012			(676		)
Tenant recoveries and other real estate operations revenue	21,010			19,023			1,987
Same Office Properties total revenues	100,418			98,387			2,031
Constructed and developed office properties placed in service	6,675			2,696			3,979
Acquired office properties	9,208			3,950			5,258
Wholesale data center	6,804			3,820			2,984
Properties held for sale	10,665			10,484			181
Dispositions	22			8,743			(8,721		)
Other	132			115			17
	133,924			128,195			5,729
Property operating expenses
Same Office Properties	36,358			35,705			653
Constructed and developed office properties placed in service	1,649			725			924
Acquired office properties	3,686			1,385			2,301
Wholesale data center	2,651			2,221			430
Properties held for sale	3,640			3,259			381
Dispositions	(14		)	3,182			(3,196		)
Other	171			(70		)	241
	48,141			46,407			1,734
NOI from real estate operations
Same Office Properties	64,060			62,682			1,378
Constructed and developed office properties placed in service	5,026			1,971			3,055
Acquired office properties	5,522			2,565			2,957
Wholesale data center	4,153			1,599			2,554
Properties held for sale	7,025			7,225			(200		)
Dispositions	36			5,561			(5,525		)
Other	(39		)	185			(224		)
	$	85,783		$	81,788		$	3,995
Same Office Properties rent statistics
Average occupancy rate	90.7		%	91.0		%	-0.3		%
Average straight-line rent per occupied square foot (1)	$	6.26		$	6.18		$	0.08

(1)  Includes minimum base rents, net of abatements, and lease incentives on a straight-line basis for the three-month periods set forth above.

Our Same Office Properties pool consisted of 136 office properties, comprising 75.7% of our total operating office square footage as of June 30, 2016 (85.1% excluding the effect of properties held for sale). This pool of properties changed from the pool used for purposes of comparing 2015 and 2014 in our 2015 Annual Report on Form 10-K due to the addition of four properties placed in service and 100% operational by January 1, 2015 and the removal of 13 same office properties reclassified to held for sale in 2016.

Our NOI from constructed office properties placed in service included 12 properties placed in service in 2015 and 2016, and our NOI from acquired office properties included our 2015 acquisitions of 250 W. Pratt Street, 2600 Park Tower Drive and 100 and 30 Light Street.

The increase in NOI from our wholesale data center was attributable to higher occupancy in the current period.

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NOI from Service Operations

	For the Three Months Ended June 30,
	2016		2015		Variance
	(in thousands)
Construction contract and other service revenues	$	12,003	$	42,172	$	(30,169	)
Construction contract and other service expenses	11,478		41,293		(29,815		)
NOI from service operations	$	525	$	879	$	(354	)

Construction contract and other service revenue and expenses decreased due primarily to a lower volume of construction activity in connection with several of our tenants. Construction contract activity is inherently subject to significant variability depending on the volume and nature of projects undertaken by us (primarily on behalf of tenants). Service operations are an ancillary component of our overall operations that typically contribute little operating income relative to our real estate operations.

Impairment Losses

During the second quarter of 2016, as part of our closing process, we conducted our quarterly review of our portfolio for indicators of impairment considering the refined investment strategy of our newly-appointed Chief Executive Officer and concluded that we would: (1) not hold our operating properties in Aberdeen, Maryland for the long-term; (2) sell specific properties in our Northern Virginia Defense/IT and Fort Meade/BW Corridor sub-segments; (3) not develop commercial properties on land in Frederick, Maryland; and (4) sell the remaining operating property in Greater Philadelphia that had not previously been classified as held for sale. Accordingly, we performed recoverability analyses for each of these properties and recorded the following impairment losses resulting from nonrecurring fair value measurements:

• $34.4 million on operating properties in Aberdeen, Maryland (included in our Other segment). After shortening our estimated holding period for these properties, we determined that the carrying amount of the properties would not likely be recovered from the operation and eventual dispositions of the properties during the shortened holding period. Accordingly, we adjusted the properties to their estimated fair value;

• $14.1 million on operating properties in our Northern Virginia Defense/IT and Fort Meade/BW Corridor sub-segments that we reclassified to held for sale during the period whose carrying amounts exceeded their estimated fair values less cost to sell;

• $8.2 million on land in Frederick, Maryland. We determined that the carrying amount of the land would not likely be recovered from the sale of this property. Accordingly, we adjusted the land to its estimated fair value;

• $6.2 million on a property in Greater Philadelphia (included in our Regional Office segment) that we reclassified to held for sale during the period whose carrying amounts exceeded its estimated fair value less cost to sell;

• $4.4 million on land in Aberdeen, Maryland. In performing our analysis related to the operating properties in Aberdeen, we determined that the weakening leasing and overall commercial real estate conditions in that market indicated that our land holdings in the market may be impaired. As a result, we determined that the carrying amount of the land was not recoverable and, accordingly, adjusted the land to its estimated fair value; and

• $2.4 million primarily on land in Colorado Springs, Colorado and operating properties in White Marsh, Maryland.

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Comparison of Statements of Operations for the Six Months Ended June 30, 2016 and 2015

	For the Six Months Ended June 30,
	2016			2015			Variance
	(in thousands)
Revenues
Revenues from real estate operations	$	267,011		$	250,901		$	16,110
Construction contract and other service revenues	23,223			80,496			(57,273		)
Total revenues	290,234			331,397			(41,163		)
Expenses
Property operating expenses	100,016			97,099			2,917
Depreciation and amortization associated with real estate operations	67,775			65,385			2,390
Construction contract and other service expenses	22,172			78,791			(56,619		)
Impairment losses	72,138			1,238			70,900
General, administrative and leasing expenses	19,909			15,425			4,484
Business development expenses and land carry costs	4,781			5,413			(632		)
Total operating expenses	286,791			263,351			23,440
Operating income	3,443			68,046			(64,603		)
Interest expense	(46,198		)	(42,606		)	(3,592		)
Interest and other income	2,486			2,525			(39		)
Gain (loss) on early extinguishment of debt	22			(68		)	90
Equity in income of unconsolidated entities	20			34			(14		)
Income tax benefit (expense)	7			(105		)	112
(Loss) income from continuing operations	(40,220		)	27,826			(68,046		)
Discontinued operations	—			156			(156		)
Gain on sales of real estate	—			3,985			(3,985		)
Net (loss) income	$	(40,220	)	$	31,967		$	(72,187	)

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NOI from Real Estate Operations
	For the Six Months Ended June 30,
	2016			2015			Variance
	(Dollars in thousands, except per square foot data)
Revenues
Same Office Properties revenues
Rental revenue, excluding lease termination revenue	$	156,662		$	156,228		$	434
Lease termination revenue	1,289			1,765			(476		)
Tenant recoveries and other real estate operations revenue	43,072			40,132			2,940
Same Office Properties total revenues	201,023			198,125			2,898
Constructed and developed office properties placed in service	12,347			3,886			8,461
Acquired office properties	18,418			4,282			14,136
Wholesale data center	13,297			6,855			6,442
Properties held for sale	21,581			20,452			1,129
Dispositions	94			17,067			(16,973		)
Other	251			238			13
	267,011			250,905			16,106
Property operating expenses
Same Office Properties	75,280			74,940			340
Constructed and developed office properties placed in service	3,189			1,131			2,058
Acquired office properties	7,554			1,547			6,007
Wholesale data center	5,312			4,433			879
Properties held for sale	8,383			7,682			701
Dispositions	(18		)	7,380			(7,398		)
Other	316			(20		)	336
	100,016			97,093			2,923
NOI from real estate operations
Same Office Properties	125,743			123,185			2,558
Constructed and developed office properties placed in service	9,158			2,755			6,403
Acquired office properties	10,864			2,735			8,129
Wholesale data center	7,985			2,422			5,563
Properties held for sale	13,198			12,770			428
Dispositions	112			9,687			(9,575		)
Other	(65		)	258			(323		)
	$	166,995		$	153,812		$	13,183
Same Office Properties rent statistics
Average occupancy rate	90.5		%	90.8		%	-0.3		%
Average straight-line rent per occupied square foot (1)	$	12.42		$	12.34		$	0.08

(1)  Includes minimum base rents, net of abatements, and lease incentives on a straight-line basis for the six-month periods set forth above.

Our NOI from constructed office properties placed in service included 12 properties placed in service in 2015 and 2016, and our NOI from acquired office properties included our 2015 acquisitions of 250 W. Pratt Street, 2600 Park Tower Drive and 100 and 30 Light Street.

The increase in NOI from our wholesale data center was attributable to higher occupancy in the current period.

NOI from Service Operations

	For the Six Months Ended June 30,
	2016		2015		Variance
	(in thousands)
Construction contract and other service revenues	$	23,223	$	80,496	$	(57,273	)
Construction contract and other service expenses	22,172		78,791		(56,619		)
NOI from service operations	$	1,051	$	1,705	$	(654	)

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Construction contract and other service revenue and expenses decreased due primarily to a lower volume of construction activity in connection with several of our tenants.

Impairment Losses

The increase in impairment losses recognized in the current period was attributable primarily to the losses described for the three-month period ended June 30, 2016.

General, Administrative and Leasing Expenses

The increase in general, administrative and leasing expenses was attributable to $4.4 million in executive transition costs incurred in the current period, mostly in connection with the departures of Mr. Waesche and Mr. Lingafelter.

Interest Expense 

The increase in interest expense in the current period included $1.9 million in hedge ineffectiveness on our interest rate swaps recognized in the current period and the effect of a 5% increase in our average outstanding debt in the current period relative to the prior period.

Gain on Sales of Real Estate

We recognized gain on sales of real estate of $4.0 million in the prior period in connection with land sales.

Funds from Operations

Funds from operations (“FFO”) is defined as net income computed using GAAP, excluding gains on sales of, and impairment losses on, previously depreciated operating properties, plus real estate-related depreciation and amortization. When multiple properties consisting of both operating and non-operating properties exist on a single tax parcel, we classify all of the gains on sales of, and impairment losses on, the tax parcel as all being for previously depreciated operating properties when most of the value of the parcel is associated with operating properties on the parcel. We believe that we use the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO, although others may interpret the definition differently and, accordingly, our presentation of FFO may differ from those of other REITs.  We believe that FFO is useful to management and investors as a supplemental measure of operating performance because, by excluding gains related to sales of, and impairment losses on, previously depreciated operating properties, net of related tax benefit, and excluding real estate-related depreciation and amortization, FFO can help one compare our operating performance between periods.  In addition, since most equity REITs provide FFO information to the investment community, we believe that FFO is useful to investors as a supplemental measure for comparing our results to those of other equity REITs.  We believe that net income is the most directly comparable GAAP measure to FFO.

Since FFO excludes certain items includable in net income, reliance on the measure has limitations; management compensates for these limitations by using the measure simply as a supplemental measure that is weighed in the balance with other GAAP and non-GAAP measures. FFO is not necessarily an indication of our cash flow available to fund cash needs.  Additionally, it should not be used as an alternative to net income when evaluating our financial performance or to cash flow from operating, investing and financing activities when evaluating our liquidity or ability to make cash distributions or pay debt service.

Basic FFO available to common share and common unit holders (“Basic FFO”) is FFO adjusted to subtract (1) preferred share dividends, (2) issuance costs associated with redeemed preferred shares, (3) income attributable to noncontrolling interests through ownership of preferred units in the Operating Partnership or interests in other consolidated entities not owned by us, (4) depreciation and amortization allocable to noncontrolling interests in other consolidated entities and (5) Basic FFO allocable to restricted shares.  With these adjustments, Basic FFO represents FFO available to common shareholders and common unitholders.  Common units in the Operating Partnership are substantially similar to our common shares and are exchangeable into common shares, subject to certain conditions.  We believe that Basic FFO is useful to investors due to the close correlation of common units to common shares.  We believe that net income is the most directly comparable GAAP measure to Basic FFO.  Basic FFO has essentially the same limitations as FFO; management compensates for these limitations in essentially the same manner as described above for FFO.

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Diluted FFO available to common share and common unit holders (“Diluted FFO”) is 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.  We believe that Diluted FFO is useful to investors because it is the numerator used to compute Diluted FFO per share, discussed below.  We believe that net income is the most directly comparable GAAP measure to Diluted FFO.  Since Diluted FFO excludes certain items includable in the numerator to diluted EPS, reliance on the measure has limitations; management compensates for these limitations by using the measure simply as a supplemental measure that is weighed in the balance with other GAAP and non-GAAP measures.  Diluted FFO is not necessarily an indication of our cash flow available to fund cash needs.  Additionally, it should not be used as an alternative to net income when evaluating our financial performance or to cash flow from operating, investing and financing activities when evaluating our liquidity or ability to make cash distributions or pay debt service.

Diluted FFO available to common share and common unit holders, as adjusted for comparability is defined as Diluted FFO adjusted to exclude operating property acquisition costs; gains on sales of, and impairment losses on, properties other than previously depreciated operating properties, net of associated income tax; gain or loss on early extinguishment of debt; FFO associated with properties securing non-recourse debt on which we have defaulted and which we have extinguished, or expect to extinguish, via conveyance of such properties, including property NOI and interest expense (discussed further below); loss on interest rate derivatives; demolition costs on redevelopment properties; executive transition costs; and issuance costs associated with redeemed preferred shares.  We believe this to be a useful supplemental measure alongside Diluted FFO as it excludes gains and losses from certain investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. The adjustment for FFO associated with properties securing non-recourse debt on which we have defaulted pertains to the periods subsequent to our default on one loan’s payment terms, which was the result of our decision to not support payments on the loan since the estimated fair value of the properties was less than the loan balance. While we continued as the legal owner of the properties during this period up until the transfer of ownership, all cash flows produced by them went directly to the lender and we did not fund any debt service shortfalls, which included incremental additional interest under the default rate of $2.0 million in the three months ended June 30, 2015 and $4.0 million in the six months ended June 30, 2015. We believe that net income is the most directly comparable GAAP measure to this non-GAAP measure.  This measure has essentially the same limitations as Diluted FFO, as well as the further limitation of not reflecting the effects of the excluded items; we compensate for these limitations in essentially the same manner as described above for Diluted FFO.

Diluted FFO per share is (1) Diluted FFO divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged.  We believe that Diluted FFO per share is useful to investors because it provides investors with a further context for evaluating our FFO results in the same manner that investors use earnings per share (“EPS”) in evaluating net income available to common shareholders.  In addition, since most equity REITs provide Diluted FFO per share information to the investment community, we believe that Diluted FFO per share is a useful supplemental measure for comparing us to other equity REITs. We believe that diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share. Diluted FFO per share has most of the same limitations as Diluted FFO (described above); management compensates for these limitations in essentially the same manner as described above for Diluted FFO.

Diluted FFO per share, as adjusted for comparability is (1) Diluted FFO, as adjusted for comparability divided by (2) the sum of the (a) weighted average common shares outstanding during a period, (b) weighted average common units outstanding during a period and (c) weighted average number of potential additional common shares that would have been outstanding during a period if other securities that are convertible or exchangeable into common shares were converted or exchanged.  We believe that this measure is useful to investors because it provides investors with a further context for evaluating our FFO results.  We believe this to be a useful supplemental measure alongside Diluted FFO per share as it excludes gains and losses from certain investing and financing activities and certain other items that we believe are not closely correlated to (or associated with) our operating performance. We believe that diluted EPS is the most directly comparable GAAP measure to this per share measure.  This measure has most of the same limitations as Diluted FFO (described above) as well as the further limitation of not reflecting the effects of the excluded items; we compensate for these limitations in essentially the same manner as described above for Diluted FFO.

The computations for all of the above measures on a diluted basis assume the conversion of common units in COPLP but do not assume the conversion of other securities that are convertible into common shares if the conversion of those securities would increase per share measures in a given period.

We use measures called payout ratios as supplemental measures of our ability to make distributions to investors based on each of the following: FFO; Diluted FFO; and Diluted FFO, adjusted for comparability. These measures are defined as (1) the

43

sum of (a) dividends on common shares and (b) distributions to holders of interests in COPLP and dividends on convertible preferred shares when such distributions and dividends are included in Diluted FFO divided by either (2) FFO, Diluted FFO or Diluted FFO, adjusted for comparability.

The table appearing on the following page sets forth the computation of the above stated measures for the three and six months endedJune 30, 2016 and 2015, and provides reconciliations to the GAAP measures of COPT and subsidiaries associated with such measures:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
	(Dollars and shares in thousands,  except per share data)
Net (loss) income	$	(48,316	)	$	17,232		$	(40,220	)	$	31,967
Add Real estate-related depreciation and amortization	33,248			33,786			67,775			65,385
Add: Impairment losses on previously depreciated operating properties	55,124			1,239			55,971			1,472
FFO	40,056			52,257			83,526			98,824
Less: Noncontrolling interests-preferred units in the Operating Partnership	(165		)	(165		)	(330		)	(330		)
Less: FFO allocable to other noncontrolling interests	(1,014		)	(1,072		)	(2,041		)	(1,742		)
Less: Preferred share dividends	(3,553		)	(3,553		)	(7,105		)	(7,105		)
Basic and diluted FFO allocable to share-based compensation awards	(130		)	(202		)	(296		)	(385		)
Basic and diluted FFO available to common share and common unit holders	$	35,194		$	47,265		$	73,754		$	89,262
Add: Operating property acquisition costs	—			361			—			1,407
Less: Gain on sales of non-operating properties	—			1			—			(3,985		)
Impairment losses on non-operating properties	14,568			—			16,167			—
Losses on interest rate derivatives	319			—			1,870			—
Less: Gain on early extinguishment of debt	(5		)	(315		)	(22		)	(312		)
Add: Executive transition costs	247			—			4,384			—
Add: Negative FFO of properties conveyed to extinguish debt in default	—			3,419			—			7,690
Add: Demolition costs on redevelopment properties	370			66			578			241
Less: Diluted FFO comparability adjustments allocable to share-based compensation awards	(63		)	(14		)	(94		)	(21		)
Diluted FFO available to common share and common unit holders, as adjusted for comparability	$	50,630		$	50,783		$	96,637		$	94,282
Weighted average common shares	94,300			94,128			94,251			93,666
Conversion of weighted average common units	3,676			3,680			3,676			3,706
Weighted average common shares/units - Basic FFO	97,976			97,808			97,927			97,372
Dilutive effect of share-based compensation awards	117			35			107			114
Weighted average common shares/units - Diluted FFO and Diluted FFO, as adj. for comparability	98,093			97,843			98,034			97,486
Diluted FFO per share	$	0.36		$	0.48		$	0.75		$	0.92
Diluted FFO per share, as adjusted for comparability	$	0.52		$	0.52		$	0.99		$	0.97
Denominator for diluted EPS	94,300			94,163			94,251			93,780
Weighted average common units	3,676			3,680			3,676			3,706
Anti-dilutive EPS effect of share-based compensation awards	117			—			107			—
Denominator for diluted FFO per share measures	98,093			97,843			98,034			97,486

44

Property Additions

The table below sets forth the major components of our additions to properties for the six months endedJune 30, 2016 (in thousands):

Construction, development and redevelopment	$	105,657
Tenant improvements on operating properties	16,172		(1)
Capital improvements on operating properties	9,099
	$	130,928

(1) Tenant improvement costs incurred on newly-constructed properties are classified in this table as construction, development and redevelopment.

Cash Flows

Net cash flow provided by operating activities increased $1.6 million when comparing the six months endedJune 30, 2016 and 2015. This increase included: a $13.1 million increase in cash flow from real estate operations due primarily to properties acquired and placed in service since the prior period; offset in part by an $8.8 million increase in interest expense paid from the prior to the current period due primarily to an increase resulting from the timing of interest payments from new debt requiring interest payments semi-annually rather than monthly.

Net cash flow used in investing activities decreased $156.8 million when comparing the six months endedJune 30, 2016 and 2015 due primarily to operating property acquisitions in 2015 when none occurred in 2016 and lower development expenditures in 2016.

Net cash flow used in financing activities in the six months endedJune 30, 2016 was $67.2 million, and included the following:

• dividends and/or distributions to equity holders of $61.5 million; and

• distributions to redeemable noncontrolling interests of $14.3 million related primarily to distributions to our partner in Stevens Investors, LLC, as discussed in Note 5 to the consolidated financial statements; offset in part by

• net proceeds from debt borrowings of $15.5 million.

Net cash flow provided by financing activities in the six months endedJune 30, 2015 was $169.2 million, and included the following:

• net proceeds from debt borrowings of $209.6 million; and

• net proceeds from the issuance of common shares (or units) of $28.6 million; offset in part by

• dividends and/or distributions to equity holders of $61.2 million.

Liquidity and Capital Resources of COPT

COPLP is the entity through which COPT, the sole general partner of COPLP, conducts almost all of its operations and owns almost all of its assets. COPT issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurring certain expenses in operating as a public company which are fully reimbursed by COPLP. COPT itself does not hold any indebtedness, and its only material asset is its ownership of partnership interests of COPLP. COPT’s principal funding requirement is the payment of dividends on its common and preferred shares. COPT’s principal source of funding for its dividend payments is distributions it receives from COPLP.

As of June 30, 2016, COPT owned 96.3% of the outstanding common units and 95.5% of the outstanding preferred units in COPLP; the remaining common and preferred units in COPLP were owned by third parties. As the sole general partner of COPLP, COPT has the full, exclusive and complete responsibility for COPLP’s day-to-day management and control.

The liquidity of COPT is dependent on COPLP’s ability to make sufficient distributions to COPT. The primary cash requirement of COPT is its payment of dividends to its shareholders. COPT also guarantees some of the Operating Partnership’s debt, as discussed further in Note 8 of the notes to consolidated financial statements included elsewhere herein. If the Operating Partnership fails to fulfill certain of its debt requirements, which trigger COPT’s guarantee obligations, then COPT will be required to fulfill its cash payment commitments under such guarantees. However, COPT’s only significant asset is its investment in COPLP.

45

As discussed further below, we believe the Operating Partnership’s sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured line of credit, are adequate for it to make its distribution payments to COPT and, in turn, for COPT to make its dividend payments to its shareholders.

COPT’s short-term liquidity requirements consist primarily of funds to pay for future dividends expected to be paid to its shareholders. COPT periodically accesses the public equity markets to raise capital by issuing common and/or preferred shares.

For COPT to maintain its qualification as a REIT, it must pay dividends to its shareholders aggregating annually at least 90% of its ordinary taxable income. As a result of this distribution requirement, it cannot rely on retained earnings to fund its ongoing operations to the same extent that some other companies can. COPT may need to continue to raise capital in the equity markets to fund COPLP’s working capital needs, acquisitions and developments.

Liquidity and Capital Resources of COPLP

Our primary cash requirements are for operating expenses, debt service, development of new properties, improvements to existing properties and acquisitions.  We expect to continue to use cash flow provided by operations as the primary source to meet our short-term capital needs, including property operating expenses, general and administrative expenses, interest expense, scheduled principal amortization of debt, distributions to our security holders and improvements to existing properties.  As of June 30, 2016, we had $13.3 million in cash and cash equivalents.

Our senior unsecured debt is currently rated investment grade by the three major rating agencies. We aim to maintain an investment grade rating to enable us to use debt comprised of unsecured, primarily fixed-rate debt (including the effect of interest rate swaps) from public markets and banks. We also use secured nonrecourse debt from institutional lenders and banks, when appropriate. In addition, we periodically access the public equity markets to raise capital by issuing common and/or preferred shares.

We use our Revolving Credit Facility to initially finance much of our investing activities.  We subsequently pay down the facility using proceeds from long-term borrowings, equity issuances and property sales.  The lenders’ aggregate commitment under the facility is $800.0 million, with the ability for us to increase the lenders’ aggregate commitment to $1.3 billion, provided that there is no default under the facility and subject to the approval of the lenders. Amounts available under the facility are computed based on 60% of our unencumbered asset value, as defined in the loan agreement.  The Revolving Credit Facility matures in May 2019, and may be extended by two six-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.075% of the total availability of the facility. As of June 30, 2016, the maximum borrowing capacity under this facility totaled $800.0 million, of which $727.2 million was available.

In addition, as of June 30, 2016, we have $150.0 million available to be drawn upon under an unsecured term loan that we expect to use to repay borrowings under our Revolving Credit Facility.

We believe that our liquidity and capital resources are adequate for our near-term and longer-term requirements without necessitating property sales.  We do, however, expect to raise approximately $440 million from sales of interests in properties in 2016 and use the proceeds to repay borrowings and fund development costs.

46

The following table summarizes our contractual obligations as of June 30, 2016 (in thousands):

	For the Periods Ending December 31,
	2016		2017		2018		2019		2020		Thereafter		Total
Contractual obligations (1)
Debt (2)
Balloon payments due upon maturity	$	161,435	$	—	$	—	$	178,000	$	312,132	$	1,426,832	$	2,078,399
Scheduled principal payments	3,035		4,061		4,241		4,387		4,024		14,553		34,301
Interest on debt (3)	38,347		70,585		70,411		68,306		62,236		165,577		475,462
New development and redevelopment obligations (4)(5)	50,967		25,380		2,492		—		—		—		78,839
Third-party construction and development obligations (5)(6)	13,673		3,649		—		—		—		—		17,322
Capital expenditures for operating properties (5)(7)	27,212		16,882		4,580		—		—		—		48,674
Operating leases (8)	603		1,139		1,092		1,067		1,084		86,805		91,790
Other obligations	655		851		458		379		136		5		2,484
Total contractual cash obligations	$	295,927	$	122,547	$	83,274	$	252,139	$	379,612	$	1,693,772	$	2,827,271

(1) The contractual obligations set forth in this table exclude property operations contracts that may be terminated with notice of one month or less.

(2) Represents scheduled principal amortization payments and maturities only and therefore excludes net debt discounts and deferred financing costs of $18.2 million. On July 1, 2016, we repaid our balloon payments due upon maturity in 2016 using borrowings from our Revolving Credit Facility. As of June 30, 2016, maturities include $58.0 million in 2019 that may be extended to 2020, subject to certain conditions.

(3) Represents interest costs for our outstanding debt as of June 30, 2016 for the terms of such debt.  For variable rate debt, the amounts reflected above used June 30, 2016 interest rates on variable rate debt in computing interest costs for the terms of such debt.

(4) Represents contractual obligations pertaining to new development and redevelopment activities.

(5) Due to the long-term nature of certain construction and development contracts and leases included in these lines, the amounts reported in the table represent our estimate of the timing for the related obligations being payable.

(6)   Represents contractual obligations pertaining to projects for which we are acting as construction manager on behalf of unrelated parties who are our clients.  We expect to be reimbursed in full for these costs by our clients.

(7) Represents contractual obligations pertaining to recurring and nonrecurring capital expenditures for our operating properties.  We expect to finance these costs primarily using cash flow from operations.

(8)  We expect to pay these items using cash flow from operations.

We expect to spend approximately $95 million on construction and development costs and approximately $35 million on improvements to operating properties (including the commitments set forth in the table above) during the remainder of 2016.  We expect to fund the construction and development costs using primarily cash on hand and borrowings under our Revolving Credit Facility.  We expect to use proceeds from the disposition of properties to repay borrowings under our Revolving Credit Facility. We expect to fund improvements to existing operating properties using cash flow from operations.

Certain of our debt instruments require that we comply with a number of restrictive financial covenants, including maximum leverage ratio, unencumbered leverage ratio, minimum net worth, minimum fixed charge coverage, minimum unencumbered interest coverage ratio, minimum debt service and maximum secured indebtedness ratio.  As of June 30, 2016, we were in compliance with these financial covenants.

47

Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements during the six months endedJune 30, 2016.

Inflation

Most of our tenants are obligated to pay their share of a building’s operating expenses to the extent such expenses exceed amounts established in their leases, which are based on historical expense levels.  Some of our tenants are obligated to pay their full share of a building’s operating expenses.  These arrangements somewhat reduce our exposure to increases in such costs resulting from inflation.

Recent Accounting Pronouncements

See Note 2 to our consolidated financial statements for information regarding recent accounting pronouncements.

Item 3.Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain market risks, one of the most predominant of which is a change in interest rates.  Increases in interest rates can result in increased interest expense under our Revolving Credit Facility and other variable rate debt.  Increases in interest rates can also result in increased interest expense when our fixed rate debt matures and needs to be refinanced.

The following table sets forth as of June 30, 2016 our debt obligations and weighted average interest rates on debt maturing each year (dollars in thousands):

	For the Periods Ending December 31,
	2016			2017			2018			2019			2020			Thereafter			Total
Debt:
Fixed rate debt (1)	$	164,291		$	3,692		$	3,858		$	3,991		$	3,718		$	1,341,385		$	1,520,935
Weighted average interest rate	7.22		%	4.34		%	4.37		%	4.36		%	3.96		%	4.30		%	4.61		%
Variable rate debt (2)	$	179		$	369		$	383		$	178,396		$	312,438		$	100,000		$	591,765
Weighted average interest rate (3)	2.31		%	2.31		%	2.31		%	2.25		%	1.88		%	2.26		%	2.06		%

(1)   Represents principal maturities only and therefore excludes net discounts and deferred financing costs of $18.2 million. On July 1, 2016, we repaid $162.5 million in debt maturing in 2016 using borrowings from our Revolving Credit Facility.

(2)  As of June 30, 2016, maturities include $58.0 million in 2019 that may be extended to 2020, subject to certain conditions.

(3)  The amounts reflected above used June 30, 2016 interest rates on variable rate debt.

The fair value of our debt was $2.1 billion as of June 30, 2016.  If interest rates had been 1% lower, the fair value of our fixed-rate debt would have increased by approximately $105 million as of June 30, 2016.

The following table sets forth information pertaining to interest rate swap contracts in place as of June 30, 2016 and December 31, 2015 and their respective fair values (dollars in thousands):

							Fair Value at
Notional Amount			Fixed Rate	Floating Rate Index	Effective Date	Expiration Date	June 30, 2016			December 31, 2015
$	100,000		0.8055%	One-Month LIBOR	9/2/2014	9/1/2016	$	(58	)	$	(148	)
100,000			0.8100%	One-Month LIBOR	9/2/2014	9/1/2016	(59		)	(151		)
100,000			1.6730%	One-Month LIBOR	9/1/2015	8/1/2019	(3,117		)	(1,217		)
100,000			1.7300%	One-Month LIBOR	9/1/2015	8/1/2019	(3,293		)	(1,429		)
13,765		(1)	1.3900%	One-Month LIBOR	10/13/2015	10/1/2020	(337		)	53
100,000			1.9013%	One-Month LIBOR	9/1/2016	12/1/2022	(5,367		)	(138		)
100,000			1.9050%	One-Month LIBOR	9/1/2016	12/1/2022	(5,336		)	(45		)
50,000			1.9079%	One-Month LIBOR	9/1/2016	12/1/2022	(2,678		)	(32		)
							$	(20,245	)	$	(3,107	)

(1) The notional amount of this instrument is scheduled to amortize to $12.1 million.

48

Based on our variable-rate debt balances, including the effect of interest rate swap contracts, our interest expense would have increased by $1.2 million in the six months endedJune 30, 2016 if the one-month LIBOR rate was 1% higher.

Item 4.Controls and Procedures

COPT

(a) Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of June 30, 2016.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of June 30, 2016 were functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed or submitted under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Change in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

COPLP

(a) Evaluation of Disclosure Controls and Procedures

The Operating Partnership’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) as of June 30, 2016.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Operating Partnership’s disclosure controls and procedures as of June 30, 2016 were functioning effectively to provide reasonable assurance that the information required to be disclosed by the Operating Partnership in reports filed or submitted under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to the Operating Partnership’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Change in Internal Control over Financial Reporting

No change in the Operating Partnership’s internal control over financial reporting occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

PART II

Item 1.Legal Proceedings

We are not currently involved in any material litigation nor, to our knowledge, is any material litigation currently threatened against the Company or the Operating Partnership (other than routine litigation arising in the ordinary course of business, substantially all of which is expected to be covered by liability insurance).

Item 1A.  Risk Factors

There have been no material changes to the risk factors included in our 2015 Annual Report on Form 10-K.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(a) During the three months ended June 30, 2016, 26,758 of COPLP’s common units were exchanged for 26,758 COPT common shares in accordance with COPLP’s Second Amended and Restated Limited Partnership Agreement, as amended.  The issuance of these common shares was effected in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

49

(b) Not applicable

(c) Not applicable

Item 3.Defaults Upon Senior Securities

(a) Not applicable

(b) Not applicable

Item 4.Mine Safety Disclosures

Not applicable

Item 5.Other Information

None

50

Item 6.Exhibits

(a) Exhibits:

EXHIBIT NO.	DESCRIPTION
10.1	Letter Agreement, dated May 12, 2016, between Corporate Office Properties Trust, Corporate Office Properties, L.P., and Stephen E. Budorick (filed with the Company’s Current Report on Form 8-K dated May 17, 2016 and incorporated herein by reference).
12.1	COPT’s Statement regarding Computation of Earnings to Combined Fixed Charges and Preferred Share Dividends (filed herewith).
12.2	COPLP’s Statement regarding Computation of Consolidated Ratio of Earnings to Fixed Charges (filed herewith).
31.1	Certification of the Chief Executive Officer of Corporate Office Properties Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith).
31.2	Certification of the Chief Financial Officer of Corporate Office Properties Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith).
31.3	Certification of the Chief Executive Officer of Corporate Office Properties, L.P. required by Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith).
31.4	Certification of the Chief Financial Officer of Corporate Office Properties, L.P. required by Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith).
32.1	Certification of the Chief Executive Officer of Corporate Office Properties Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) (Furnished herewith).
32.2	Certification of the Chief Financial Officer of Corporate Office Properties Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended). (Furnished herewith).
32.3	Certification of the Chief Executive Officer of Corporate Office Properties, L.P. required by Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) (Furnished herewith).
32.4	Certification of the Chief Financial Officer of Corporate Office Properties, L.P. required by Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended). (Furnished herewith).
101.INS	XBRL Instance Document (filed herewith).
101.SCH	XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.LAB	XBRL Extension Labels Linkbase (filed herewith).
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).

51

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the undersigned Registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CORPORATE OFFICE PROPERTIES TRUST		CORPORATE OFFICE PROPERTIES, L.P.
			By: Corporate Office Properties Trust,
			its General Partner
	/s/ Stephen E. Budorick		/s/ Stephen E. Budorick
	Stephen E. Budorick		Stephen E. Budorick
	President and Chief Executive Officer		President and Chief Executive Officer
	/s/ Anthony Mifsud		/s/ Anthony Mifsud
	Anthony Mifsud		Anthony Mifsud
	Executive Vice President and Chief Financial Officer		Executive Vice President and Chief Financial Officer
Dated:	August 2, 2016	Dated:	August 2, 2016

52

EX-12.1

EXHIBIT 12.1

Corporate Office Properties Trust

Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends

(Dollars in thousands)

	Six Months Ended,
	June 30, 2016
Earnings:
Loss from continuing operations before equity in income of unconsolidated entities and income taxes	$	(40,247	)
Combined fixed charges and preferred share dividends (from below)	57,040
Amortization of capitalized interest	1,387
Subtract:
Capitalized interest (from below)	(3,062		)
Preferred share dividends included in fixed charges	(7,105		)
Preferred unit distributions included in fixed charges	(330		)
Preferred distributions of other consolidated entities	(8		)
Total earnings	$	7,675
Combined Fixed Charges and Preferred Share Dividends:
Combined fixed charges and preferred share dividends:
Interest expense on continuing operations	$	46,198
Capitalized interest (internal and external)	3,062
Interest included in rental expense	337
Preferred share dividends	7,105
Preferred unit distributions	330
Preferred distributions of other consolidated entities	8
Total combined fixed charges and preferred share dividends	$	57,040
Ratio of earnings to combined fixed charges and preferred share dividends	0.13
Deficiency	$	49,365

For purposes of calculating the above ratios, earnings were computed by adding fixed charges (excluding capitalized interest), gain on sales of real estate (excluding discontinued operations) amortization of capitalized interest and distributed income of equity investees to income from continuing operations before noncontrolling interests, equity in income of unconsolidated entities and income taxes. Fixed charges consist of interest costs and capitalized amortization of debt issuance costs.

EX-12.2

EXHIBIT 12.2

Corporate Office Properties, L.P.

Ratio of Earnings to Fixed Charges

(Dollars in thousands)

	Six Months Ended,
Earnings:	June 30, 2016
Loss from continuing operations before equity in income of unconsolidated entities and income taxes	$	(40,247	)
Fixed charges (from below)	49,605
Amortization of capitalized interest	1,387
Subtract:
Capitalized interest (from below)	(3,062		)
Preferred distributions of other consolidated entities	(8		)
Total earnings	$	7,675
Fixed charges:
Interest expense on continuing operations	$	46,198
Capitalized interest (internal and external)	3,062
Interest included in rental expense	337
Preferred distributions of other consolidated entities	8
Total fixed charges	$	49,605
Ratio of earnings to fixed charges	0.15
Deficiency	$	41,930

For purposes of calculating the above ratios, earnings were computed by adding fixed charges (excluding capitalized interest), gain on sales of real estate (excluding discontinued operations) amortization of capitalized interest and distributed income of equity investees to income from continuing operations before noncontrolling interests, equity in income of unconsolidated entities and income taxes. Fixed charges consist of interest costs and capitalized amortization of debt issuance costs.

EX-31.1

EXHIBIT 31.1

CORPORATE OFFICE PROPERTIES TRUST

CERTIFICATIONS REQUIRED BY

RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

CERTIFICATIONS

I, Stephen E. Budorick, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Corporate Office Properties Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 2, 2016	/s/ Stephen E. Budorick
		Stephen E. Budorick
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CORPORATE OFFICE PROPERTIES TRUST

CERTIFICATIONS REQUIRED BY

RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

CERTIFICATIONS

I, Anthony Mifsud, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Corporate Office Properties Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date:	August 2, 2016	/s/ Anthony Mifsud
		Anthony Mifsud
		Chief Financial Officer

EX-31.3

EXHIBIT 31.3

CORPORATE OFFICE PROPERTIES, L.P.

CERTIFICATIONS REQUIRED BY

RULE 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

CERTIFICATIONS

I, Stephen E. Budorick, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Corporate Office Properties, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 2, 2016	/s/ Stephen E. Budorick
		Stephen E. Budorick
		President and Chief Executive Officer

EX-31.4

EXHIBIT 31.4

CORPORATE OFFICE PROPERTIES, L.P.

CERTIFICATIONS REQUIRED BY

RULE 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

CERTIFICATIONS

I, Anthony Mifsud, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Corporate Office Properties, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date:	August 2, 2016	/s/ Anthony Mifsud
		Anthony Mifsud
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CORPORATE OFFICE PROPERTIES TRUST

CERTIFICATIONS REQUIRED BY

RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report on Form 10-Q of Corporate Office Properties Trust (the “Company”) for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen E. Budorick, President and Chief Executive Officer of the Company, certify that to my knowledge:

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Stephen E. Budorick
Stephen E. Budorick
President and Chief Executive Officer
Date:	August 2, 2016

EX-32.2

EXHIBIT 32.2

CORPORATE OFFICE PROPERTIES TRUST

CERTIFICATIONS REQUIRED BY

RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report on Form 10-Q of Corporate Office Properties Trust (the “Company”) for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony Mifsud, Chief Financial Officer of the Company, certify that to my knowledge:

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Anthony Mifsud
Anthony Mifsud
Chief Financial Officer
Date:	August 2, 2016

EX-32.3

EXHIBIT 32.3

CORPORATE OFFICE PROPERTIES, L.P.

CERTIFICATIONS REQUIRED BY

RULE 15d-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report on Form 10-Q of Corporate Office Properties, L.P. (the “Company”) for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen E. Budorick, President and Chief Executive Officer of the Company, certify that to my knowledge:

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Stephen E. Budorick
Stephen E. Budorick
President and Chief Executive Officer
Date:	August 2, 2016

EX-32.4

EXHIBIT 32.4

CORPORATE OFFICE PROPERTIES, L.P.

CERTIFICATIONS REQUIRED BY

RULE 15d-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report on Form 10-Q of Corporate Office Properties, L.P. (the “Company”) for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony Mifsud, Chief Financial Officer of the Company, certify that to my knowledge:

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Anthony Mifsud
Anthony Mifsud
Chief Financial Officer
Date:	August 2, 2016

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 22, 2016
Entity Information [Line Items]
Entity Registrant Name	CORPORATE OFFICE PROPERTIES TRUST
Entity Central Index Key	0000860546
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		94,759,023
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Corporate Office Properties, L.P.
Entity Information [Line Items]
Entity Registrant Name	CORPORATE OFFICE PROPERTIES, L.P.
Entity Central Index Key	0001577966
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Properties, net:
Operating properties, net	$ 2,782,330	$ 2,920,529
Projects in development or held for future development	387,397	429,219
Total properties, net	3,169,727	3,349,748
Assets held for sale, net	300,584	96,782
Cash and cash equivalents	13,317	60,310
Restricted cash and marketable securities	8,302	7,716
Accounts receivable (net of allowance for doubtful accounts of $745 and $1,525, respectively)	32,505	29,167
Deferred rent receivable (net of allowance of $422 and $1,962, respectively)	92,316	105,484
Intangible assets on real estate acquisitions, net	88,788	98,338
Deferred leasing costs (net of accumulated amortization of $63,768 and $66,364, respectively)	42,632	53,868
Investing receivables	50,162	47,875
Prepaid expenses and other assets, net	43,359	60,024
Total assets	3,841,692	3,909,312
Liabilities:
Debt, net	2,094,486	2,077,752
Accounts payable and accrued expenses	92,848	91,755
Rents received in advance and security deposits	32,035	37,148
Dividends and distributions payable	30,219	30,178
Deferred revenue associated with operating leases	17,560	19,758
Interest rate derivatives	20,245	3,160
Other liabilities	31,123	13,779
Total liabilities	2,318,516	2,273,530
Commitments and contingencies (Note 15)
Redeemable noncontrolling interests	22,473	19,218
Corporate Office Properties Trust’s shareholders’ equity:
Preferred Shares of beneficial interest at liquidation preference ($0.01 par value; 25,000,000 shares authorized, shares issued and outstanding of 7,431,667 at June 30, 2016 and December 31, 2015)	199,083	199,083
Common Shares of beneficial interest	947	945
Additional paid-in capital	2,007,328	2,004,507
Cumulative distributions in excess of net income	(756,940)	(657,172)
Accumulated other comprehensive loss	(17,712)	(2,838)
Total Corporate Office Properties Trust’s shareholders’ equity	1,432,706	1,544,525
Noncontrolling interests in subsidiaries:
Common units in COPLP	47,550	52,359
Preferred units in COPLP	8,800	8,800
Other consolidated entities	11,647	10,880
Noncontrolling interests in subsidiaries	67,997	72,039
Total equity	1,500,703	1,616,564
Total liabilities, redeemable noncontrolling interest and equity	3,841,692	3,909,312
Corporate Office Properties, L.P.
Properties, net:
Operating properties, net	2,782,330	2,920,529
Projects in development or held for future development	387,397	429,219
Total properties, net	3,169,727	3,349,748
Assets held for sale, net	300,584	96,782
Cash and cash equivalents	13,317	60,310
Restricted cash and marketable securities	3,256	1,953
Accounts receivable (net of allowance for doubtful accounts of $745 and $1,525, respectively)	32,505	29,167
Deferred rent receivable (net of allowance of $422 and $1,962, respectively)	92,316	105,484
Intangible assets on real estate acquisitions, net	88,788	98,338
Deferred leasing costs (net of accumulated amortization of $63,768 and $66,364, respectively)	42,632	53,868
Investing receivables	50,162	47,875
Prepaid expenses and other assets, net	43,359	60,024
Total assets	3,836,646	3,903,549
Liabilities:
Debt, net	2,094,486	2,077,752
Accounts payable and accrued expenses	92,848	91,755
Rents received in advance and security deposits	32,035	37,148
Dividends and distributions payable	30,219	30,178
Deferred revenue associated with operating leases	17,560	19,758
Interest rate derivatives	20,245	3,160
Other liabilities	26,077	8,016
Total liabilities	2,313,470	2,267,767
Commitments and contingencies (Note 15)
Redeemable noncontrolling interests	22,473	19,218
Corporate Office Properties Trust’s shareholders’ equity:
Common Shares of beneficial interest	1,299,571	1,400,745
Accumulated other comprehensive loss	(18,437)	(2,985)
Total Corporate Office Properties Trust’s shareholders’ equity	1,489,017	1,605,643
Noncontrolling interests in subsidiaries:
Noncontrolling interests in subsidiaries	11,686	10,921
Total equity	1,500,703	1,616,564
Total liabilities, redeemable noncontrolling interest and equity	3,836,646	3,903,549
General Partner | Corporate Office Properties, L.P.
Corporate Office Properties Trust’s shareholders’ equity:
Preferred partners' capital accounts	199,083	199,083
Limited Partner | Corporate Office Properties, L.P.
Corporate Office Properties Trust’s shareholders’ equity:
Preferred partners' capital accounts	$ 8,800	$ 8,800

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Allowance for doubtful accounts - AR	$ 745	$ 1,525
Deferred rent receivable	422	1,962
Deferred leasing costs, accumulated amortization	$ 63,768	$ 66,364
Preferred Shares of beneficial interest, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Shares of beneficial interest, shares authorized	25,000,000	25,000,000
Preferred Shares of beneficial interest, shares issued	7,431,667	7,431,667
Preferred Shares of beneficial interest, shares outstanding	7,431,667	7,431,667
Common Shares of beneficial interest, par value (in dollars per share)	$ 0.01	$ 0.01
Common Shares of beneficial interest, shares authorized	125,000,000	125,000,000
Common Shares of beneficial interest, shares issued	94,699,359	94,531,512
Common Shares of beneficial interest, shares outstanding	94,699,359	94,531,512
Corporate Office Properties, L.P.
Allowance for doubtful accounts - AR	$ 745	$ 1,525
Deferred rent receivable	422	1,962
Deferred leasing costs, accumulated amortization	$ 63,768	$ 66,364
Corporate Office Properties, L.P. | General Partner
Common Shares of beneficial interest, shares outstanding	94,699,359	94,531,512
Preferred Units, Outstanding	7,431,667	7,431,667
Corporate Office Properties, L.P. | Limited Partner
Common Shares of beneficial interest, shares outstanding	3,650,633	3,677,391
Preferred Units, Outstanding	352,000	352,000

XML

Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended			6 Months Ended
		Jun. 30, 2016		Jun. 30, 2015	Jun. 30, 2016		Jun. 30, 2015
Revenues
Rental revenue		$ 107,524		$ 105,508	$ 212,906		$ 203,746
Tenant recoveries and other real estate operations revenue		26,400		22,683	54,105		47,155
Construction contract and other service revenues		12,003		42,172	23,223		80,496
Total revenues		145,927		170,363	290,234		331,397
Expenses
Property operating expenses		48,141		46,418	100,016		97,099
Depreciation and amortization associated with real estate operations		33,248		33,786	67,775		65,385
Construction contract and other service expenses		11,478		41,293	22,172		78,791
Impairment losses		69,692		1,238	72,138		1,238
General, administrative and leasing expenses		8,026		7,534	19,909		15,425
Business development expenses and land carry costs		2,363		2,623	4,781		5,413
Total operating expenses		172,948		132,892	286,791		263,351
Operating (loss) income		(27,021)		37,471	3,443		68,046
Interest expense		(22,639)		(21,768)	(46,198)		(42,606)
Interest and other income		1,330		1,242	2,486		2,525
Gain (loss) on early extinguishment of debt		5		(65)	22		(68)
(Loss) income from continuing operations before equity in income of unconsolidated entities and income taxes		(48,325)		16,880	(40,247)		27,897
Equity in income of unconsolidated entities		10		9	20		34
Income tax (expense) benefit		(1)		(50)	7		(105)
(Loss) income from continuing operations		(48,316)		16,839	(40,220)		27,826
Discontinued operations		0		394	0		156
(Loss) income before gain on sales of real estate		(48,316)		17,233	(40,220)		27,982
Gain on sales of real estate		0		(1)	0		3,985
Net (loss) income		(48,316)		17,232	(40,220)		31,967
Net loss (income) attributable to noncontrolling interests:
Common units in COPLP		1,976		(476)	1,849		(874)
Preferred units in COPLP		(165)		(165)	(330)		(330)
Other consolidated entities		(914)		(810)	(1,892)		(1,627)
Net (loss) income attributable to COPT		(47,419)		15,781	(40,593)		29,136
Preferred share/unit dividends/distributions		(3,553)		(3,553)	(7,105)		(7,105)
Net (loss) income attributable to COPT common shareholders		(50,972)		12,228	(47,698)		22,031
Net (loss) income attributable to COPT:
(Loss) income from continuing operations		(47,419)		15,402	(40,593)		28,983
Discontinued operations, net		0		379	0		153
Net (loss) income attributable to COPT		$ (47,419)		$ 15,781	$ (40,593)		$ 29,136
Basic earnings per common share
(Loss) income from continuing operations (in dollars per share/unit)		$ (0.54)	[1]	$ 0.13	$ (0.51)	[1]	$ 0.23	[1]
Discontinued operations (in dollars per share/unit)	[1]	0.00		0.00	0.00		0.00
Net (loss) income attributable to COPT common shareholders (in dollars per share/unit)	[1]	(0.54)		0.13	(0.51)		0.23
Diluted earnings per common share
(Loss) income from continuing operations (in dollars per share/unit)		(0.54)	[1]	0.13	(0.51)	[1]	0.23	[1]
Discontinued operations (in dollars per share/unit)	[1]	0.00		0.00	0.00		0.00
Net (loss) income attributable to COPT common shareholders (in dollars per share/unit)	[1]	(0.54)		0.13	(0.51)		0.23
Dividends declared per common share/unit (in dollars per share		$ 0.2750		$ 0.275	$ 0.55		$ 0.55
Corporate Office Properties, L.P.
Revenues
Rental revenue		$ 107,524		$ 105,508	$ 212,906		$ 203,746
Tenant recoveries and other real estate operations revenue		26,400		22,683	54,105		47,155
Construction contract and other service revenues		12,003		42,172	23,223		80,496
Total revenues		145,927		170,363	290,234		331,397
Expenses
Property operating expenses		48,141		46,418	100,016		97,099
Depreciation and amortization associated with real estate operations		33,248		33,786	67,775		65,385
Construction contract and other service expenses		11,478		41,293	22,172		78,791
Impairment losses		69,692		1,238	72,138		1,238
General, administrative and leasing expenses		8,026		7,534	19,909		15,425
Business development expenses and land carry costs		2,363		2,623	4,781		5,413
Total operating expenses		172,948		132,892	286,791		263,351
Operating (loss) income		(27,021)		37,471	3,443		68,046
Interest expense		(22,639)		(21,768)	(46,198)		(42,606)
Interest and other income		1,330		1,242	2,486		2,525
Gain (loss) on early extinguishment of debt		5		(65)	22		(68)
(Loss) income from continuing operations before equity in income of unconsolidated entities and income taxes		(48,325)		16,880	(40,247)		27,897
Equity in income of unconsolidated entities		10		9	20		34
Income tax (expense) benefit		(1)		(50)	7		(105)
(Loss) income from continuing operations		(48,316)		16,839	(40,220)		27,826
Discontinued operations		0		394	0		156
(Loss) income before gain on sales of real estate		(48,316)		17,233	(40,220)		27,982
Gain on sales of real estate		0		(1)	0		3,985
Net (loss) income		(48,316)		17,232	(40,220)		31,967
Net loss (income) attributable to noncontrolling interests:
Net income attributable to noncontrolling interests in consolidated entities		(911)		(812)	(1,890)		(1,630)
Net (loss) income attributable to COPT		(49,227)		16,420	(42,110)		30,337
Preferred share/unit dividends/distributions		(3,718)		(3,718)	(7,435)		(7,435)
Net (loss) income attributable to COPT common shareholders		(52,945)		12,702	(49,545)		22,902
Net (loss) income attributable to COPT:
(Loss) income from continuing operations		(49,227)		16,026	(42,110)		30,178
Discontinued operations, net		0		394	0		159
Net (loss) income attributable to COPT		$ (49,227)		$ 16,420	$ (42,110)		$ 30,337
Basic earnings per common share
(Loss) income from continuing operations (in dollars per share/unit)	[2]	$ (0.54)		$ 0.13	$ (0.51)		$ 0.23
Discontinued operations (in dollars per share/unit)	[2]	0.00		0.00	0.00		0.00
Net (loss) income attributable to COPT common shareholders (in dollars per share/unit)	[2]	(0.54)		0.13	(0.51)		0.23
Diluted earnings per common share
(Loss) income from continuing operations (in dollars per share/unit)	[2]	(0.54)		0.13	(0.51)		0.23
Discontinued operations (in dollars per share/unit)	[2]	0.00		0.00	0.00		0.00
Net (loss) income attributable to COPT common shareholders (in dollars per share/unit)	[2]	(0.54)		0.13	(0.51)		0.23
Dividends declared per common share/unit (in dollars per share		$ 0.275		$ 0.275	$ 0.55		$ 0.55

[1] Basic and diluted earnings per common share are calculated based on amounts attributable to common shareholders of Corporate Office Properties Trust.

[2] Basic and diluted earnings per common unit are calculated based on amounts attributable to common unitholders of Corporate Office Properties, L.P.

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net (loss) income	$ (48,316)	$ 17,232	$ (40,220)	$ 31,967
Other comprehensive (loss) income
Unrealized (loss) gain on interest rate derivatives	(5,704)	392	(16,988)	(3,082)
Losses on interest rate derivatives included in interest expense	850	769	1,720	1,542
Equity in other comprehensive loss of equity method investee	(184)	(264)	(184)	(264)
Other comprehensive (loss) income	(5,038)	897	(15,452)	(1,804)
Comprehensive (loss) income	(53,354)	18,129	(55,672)	30,163
Comprehensive loss (income) attributable to noncontrolling interests	1,085	(1,542)	205	(2,871)
Comprehensive (loss) income attributable to COPT	(52,269)	16,587	(55,467)	27,292
Corporate Office Properties, L.P.
Net (loss) income	(48,316)	17,232	(40,220)	31,967
Other comprehensive (loss) income
Unrealized (loss) gain on interest rate derivatives	(5,704)	392	(16,988)	(3,082)
Losses on interest rate derivatives included in interest expense	850	769	1,720	1,542
Equity in other comprehensive loss of equity method investee	(184)	(264)	(184)	(264)
Other comprehensive (loss) income	(5,038)	897	(15,452)	(1,804)
Comprehensive (loss) income	(53,354)	18,129	(55,672)	30,163
Comprehensive loss (income) attributable to noncontrolling interests	(911)	(872)	(1,890)	(1,745)
Comprehensive (loss) income attributable to COPT	$ (54,265)	$ 17,257	$ (57,562)	$ 28,418

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Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Preferred Shares	Common Shares	Additional Paid-in Capital	Cumulative Distributions in Excess of Net Income	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests	Corporate Office Properties, L.P.	Corporate Office Properties, L.P. Common Shares	Corporate Office Properties, L.P. Accumulated Other Comprehensive Income (Loss)	Corporate Office Properties, L.P. Noncontrolling Interests	Corporate Office Properties, L.P. Limited Partner	Corporate Office Properties, L.P. Limited Partner Preferred Shares	Corporate Office Properties, L.P. General Partner	Corporate Office Properties, L.P. General Partner Preferred Shares
Balance (COPT: 93,255,284 shares and 94,531,512 shares as of December 31, 2014 and 2015, respectively) at Dec. 31, 2014	$ 1,520,884	$ 199,083	$ 933	$ 1,969,968	$ (717,264)	$ (1,297)	$ 69,461	$ 1,520,884	$ 1,305,219	$ (1,381)	$ 9,163		$ 8,800		$ 199,083
Balance (preferred units) at Dec. 31, 2014													352,000		7,431,667
Balance (in units/ shares) at Dec. 31, 2014	93,255,284								97,092,835
Increase (Decrease) in Shareholders' Equity
Conversion of common units to common shares (COPT: 158,000 and 26,758 shares for the six months ended June 30, 2015 and 2016, respectively)	$ 0		2	2,120			(2,122)
Issuance of common units resulting from common shares issued under at-the-market program (in units)									890,241
Issuance of common units resulting from common shares issued under at-the-market program (COPT: 890,241 shares for the six months ended June 30, 2015)	$ 26,535		9	26,526				26,535	$ 26,535
Exercise of share options (in units/shares)	76,474								76,474
Exercise of share options (COPT: 76,474 shares for the six months ended June 30, 2015)	$ 2,008		0	2,008				2,008	$ 2,008
Share-based compensation issuance, net of redemptions (in units/shares)	149,619								149,619
Share-based compensation issuance, net of redemptions (COPT: 149,619 and 141,089 shares issued, net of redemptions for the six months ended June 30, 2015 and 2016, respectively)	$ 3,658		2	3,656				3,658	$ 3,658
Redemption of vested equity awards	(2,245)			(2,245)				(2,245)	(2,245)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	0			(519)			519
Comprehensive income (loss)	29,020				29,136	(1,844)	1,728	29,020	22,902	(1,919)	602		$ 330		$ 7,105
Dividends / Distributions to owners of common and preferred units	(59,106)				(59,106)			(61,460)	(54,025)				$ (330)		$ (7,105)
Distributions to owners of common and preferred units in COPLP	(2,354)						(2,354)
Distributions to noncontrolling interests in subsidiaries	(28)						(28)	(28)			(28)
Adjustment to arrive at fair value of redeemable noncontrolling interest	$ (739)			(739)				(739)	$ (739)
Balance (in units/ shares) at Jun. 30, 2015	94,529,618								98,209,169
Balance (preferred units) at Jun. 30, 2015													352,000		7,431,667
Balance (COPT: 94,529,618 shares and 94,699,359 shares as of June 30, 2015 and 2016, respectively) at Jun. 30, 2015	$ 1,517,633	199,083	946	2,000,775	(747,234)	(3,141)	67,204	1,517,633	$ 1,303,313	(3,300)	9,737		$ 8,800		$ 199,083
Balance (COPT: 93,255,284 shares and 94,531,512 shares as of December 31, 2014 and 2015, respectively) at Dec. 31, 2015	$ 1,616,564	199,083	945	2,004,507	(657,172)	(2,838)	72,039	1,616,564	$ 1,400,745	(2,985)	10,921		$ 8,800		$ 199,083
Balance (preferred units) at Dec. 31, 2015												352,000	352,000	7,431,667	7,431,667
Balance (in units/ shares) at Dec. 31, 2015	94,531,512								98,208,903			3,677,391		94,531,512
Increase (Decrease) in Shareholders' Equity
Conversion of common units to common shares (COPT: 158,000 and 26,758 shares for the six months ended June 30, 2015 and 2016, respectively)	$ 0		0	371			(371)
Costs associated with common shares issued to the public	$ (5)			(5)				(5)	$ (5)
Share-based compensation issuance, net of redemptions (in units/shares)	141,089								141,089
Share-based compensation issuance, net of redemptions (COPT: 149,619 and 141,089 shares issued, net of redemptions for the six months ended June 30, 2015 and 2016, respectively)	$ 4,303		2	4,301				4,303	$ 4,303
Redemption of vested equity awards	(1,492)			(1,492)				(1,492)	(1,492)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	0			(5)			5
Comprehensive income (loss)	(56,789)				(40,593)	(14,874)	(1,322)	(56,789)	(49,545)	(15,452)	773		$ 330		$ 7,105
Dividends / Distributions to owners of common and preferred units	(59,175)				(59,175)			(61,521)	(54,086)				$ (330)		$ (7,105)
Distributions to owners of common and preferred units in COPLP	(2,346)						(2,346)
Distributions to noncontrolling interests in subsidiaries	(8)						(8)	(8)			(8)
Adjustment to arrive at fair value of redeemable noncontrolling interest	$ (349)			(349)				(349)	$ (349)
Balance (in units/ shares) at Jun. 30, 2016	94,699,359								98,349,992.000			3,650,633		94,699,359
Balance (preferred units) at Jun. 30, 2016												352,000	352,000	7,431,667	7,431,667
Balance (COPT: 94,529,618 shares and 94,699,359 shares as of June 30, 2015 and 2016, respectively) at Jun. 30, 2016	$ 1,500,703	$ 199,083	$ 947	$ 2,007,328	$ (756,940)	$ (17,712)	$ 67,997	$ 1,500,703	$ 1,299,571	$ (18,437)	$ 11,686		$ 8,800		$ 199,083

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Consolidated Statements of Equity (Parenthetical) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Balance (in units/ shares)	94,699,359	94,529,618	94,531,512	93,255,284
Conversion of common units to common shares (in units/ shares)	26,758	158,000
Exercise of share options (in units/shares)		76,474
Share-based compensation issuance, net of redemptions (in units/shares)	141,089	149,619
Common Shares
Issuance of common units resulting from common shares issued under at-the-market program (in units)		890,241

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Revenues from real estate operations received	$ 260,984	$ 240,538
Construction contract and other service revenues received	34,992	86,790
Property operating expenses paid	(87,005)	(79,667)
Construction contract and other service expenses paid	(24,303)	(76,355)
General, administrative, leasing, business development and land carry costs paid	(19,212)	(20,121)
Interest expense paid	(41,179)	(32,375)
Interest and other income received	128	4,055
Other	(5)	(26)
Net cash provided by operating activities	124,400	122,839
Cash flows from investing activities
Construction, development and redevelopment	(75,339)	(117,498)
Acquisitions of operating properties and related intangible assets	0	(137,125)
Tenant improvements on operating properties	(14,862)	(10,314)
Other capital improvements on operating properties	(16,007)	(8,372)
Proceeds from dispositions of properties	5,448	17,424
Investing receivables payments received	0	5,114
Leasing costs paid	(3,434)	(6,732)
Other	(13)	(3,538)
Net cash used in investing activities	(104,207)	(261,041)
Proceeds from debt
Revolving Credit Facility	133,500	294,000
Unsecured senior notes	0	296,580
Other debt proceeds	45,000	50,000
Repayments of debt
Revolving Credit Facility	(119,000)	(377,000)
Scheduled principal amortization	(3,532)	(3,319)
Other debt repayments	(40,498)	(50,630)
Deferred financing costs paid	(528)	(4,693)
Net proceeds from issuance of common shares/units	(5)	28,567
Common share/unit dividends/distributions paid	(52,021)	(51,642)
Preferred share/unit dividends/distributions paid	(7,105)	(7,105)
Distributions paid to noncontrolling interests in COPLP	(2,362)	(2,461)
Distributions paid to redeemable noncontrolling interests	(14,306)	0
Redemption of vested equity awards	(1,492)	(2,245)
Other	(4,837)	(853)
Net cash (used in) provided by financing activities	(67,186)	169,199
Net (decrease) increase in cash and cash equivalents	(46,993)	30,997
Cash and cash equivalents
Beginning of period	60,310	6,077
End of period	13,317	37,074
Reconciliation of net (loss) income to net cash provided by operating activities:
Net (loss) income	(40,220)	31,967
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and other amortization	68,901	66,404
Impairment losses	72,138	1,472
Losses on interest rate derivatives	1,870	0
Amortization of deferred financing costs and net debt discounts	2,998	2,618
Increase in deferred rent receivable	(1,276)	(5,956)
Gain on sales of real estate	0	(3,985)
Share-based compensation	3,839	3,210
Other	(1,725)	1,754
Operating changes in assets and liabilities:
(Increase) decrease in accounts receivable	(3,320)	10,655
Increase in restricted cash and marketable securities	(389)	(735)
Decrease in prepaid expenses and other assets, net	11,303	6,518
Increase in accounts payable, accrued expenses and other liabilities	15,394	12,557
Decrease in rents received in advance and security deposits	(5,113)	(3,640)
Net cash provided by operating activities	124,400	122,839
Supplemental schedule of non-cash investing and financing activities:
Increase in accrued capital improvements, leasing and other investing activity costs	1,604	15,927
Increase in property and redeemable noncontrolling interests in connection with property contributed in a joint venture	22,600	0
Decrease in redeemable noncontrolling interests and increase in other liabilities in connection with distribution payable to redeemable noncontrolling interest	6,675	0
Other liabilities assumed on acquisition of operating properties	0	5,265
Decrease in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests	(15,268)	(1,540)
Equity in other comprehensive loss of an equity method investee	(184)	(264)
Dividends/distributions payable	30,219	30,178
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares	371	2,122
Adjustments to noncontrolling interests resulting from changes in COPLP ownership	5	519
Increase in redeemable noncontrolling interest and decrease in equity to carry redeemable noncontrolling interest at fair value	349	739
Corporate Office Properties, L.P.
Cash flows from operating activities
Revenues from real estate operations received	260,984	240,538
Construction contract and other service revenues received	34,992	86,790
Property operating expenses paid	(87,005)	(79,667)
Construction contract and other service expenses paid	(24,303)	(76,355)
General, administrative, leasing, business development and land carry costs paid	(19,212)	(20,121)
Interest expense paid	(41,179)	(32,375)
Interest and other income received	128	4,055
Other	(5)	(26)
Net cash provided by operating activities	124,400	122,839
Cash flows from investing activities
Construction, development and redevelopment	(75,339)	(117,498)
Acquisitions of operating properties and related intangible assets	0	(137,125)
Tenant improvements on operating properties	(14,862)	(10,314)
Other capital improvements on operating properties	(16,007)	(8,372)
Proceeds from dispositions of properties	5,448	17,424
Investing receivables payments received	0	5,114
Leasing costs paid	(3,434)	(6,732)
Other	(13)	(3,538)
Net cash used in investing activities	(104,207)	(261,041)
Proceeds from debt
Revolving Credit Facility	133,500	294,000
Unsecured senior notes	0	296,580
Other debt proceeds	45,000	50,000
Repayments of debt
Revolving Credit Facility	(119,000)	(377,000)
Scheduled principal amortization	(3,532)	(3,319)
Other debt repayments	(40,498)	(50,630)
Deferred financing costs paid	(528)	(4,693)
Net proceeds from issuance of common shares/units	(5)	28,567
Common share/unit dividends/distributions paid	(54,053)	(53,773)
Preferred share/unit dividends/distributions paid	(7,435)	(7,435)
Distributions paid to redeemable noncontrolling interests	(14,306)	0
Redemption of vested equity awards	(1,492)	(2,245)
Other	(4,837)	(853)
Net cash (used in) provided by financing activities	(67,186)	169,199
Net (decrease) increase in cash and cash equivalents	(46,993)	30,997
Cash and cash equivalents
Beginning of period	60,310	6,077
End of period	13,317	37,074
Reconciliation of net (loss) income to net cash provided by operating activities:
Net (loss) income	(40,220)	31,967
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and other amortization	68,901	66,404
Impairment losses	72,138	1,472
Losses on interest rate derivatives	1,870	0
Amortization of deferred financing costs and net debt discounts	2,998	2,618
Increase in deferred rent receivable	(1,276)	(5,956)
Gain on sales of real estate	0	(3,985)
Share-based compensation	3,839	3,210
Other	(1,725)	1,754
Operating changes in assets and liabilities:
(Increase) decrease in accounts receivable	(3,320)	10,655
Increase in restricted cash and marketable securities	(1,106)	(744)
Decrease in prepaid expenses and other assets, net	11,303	6,518
Increase in accounts payable, accrued expenses and other liabilities	16,111	12,566
Decrease in rents received in advance and security deposits	(5,113)	(3,640)
Net cash provided by operating activities	124,400	122,839
Supplemental schedule of non-cash investing and financing activities:
Increase in accrued capital improvements, leasing and other investing activity costs	1,604	15,927
Increase in property and redeemable noncontrolling interests in connection with property contributed in a joint venture	22,600	0
Decrease in redeemable noncontrolling interests and increase in other liabilities in connection with distribution payable to redeemable noncontrolling interest	6,675	0
Other liabilities assumed on acquisition of operating properties	0	5,265
Decrease in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests	(15,268)	(1,540)
Equity in other comprehensive loss of an equity method investee	(184)	(264)
Dividends/distributions payable	30,219	30,178
Increase in redeemable noncontrolling interest and decrease in equity to carry redeemable noncontrolling interest at fair value	$ 349	$ 739

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Organization

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Corporate Office Properties Trust (“COPT”) and subsidiaries (collectively, the “Company”) is a fully-integrated and self-managed real estate investment trust (“REIT”). Corporate Office Properties, L.P. (“COPLP”) and subsidiaries (collectively, the “Operating Partnership”) is the entity through which COPT, the sole general partner of COPLP, conducts almost all of its operations and owns almost all of its assets. Unless otherwise expressly stated or the context otherwise requires, “we”, “us” and “our” as used herein refer to each of the Company and the Operating Partnership. We own, manage, lease, develop and selectively acquire office and data center properties. The majority of our portfolio is in locations that support United States Government agencies and their 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 (“Defense/IT Locations”). We also own a complementary portfolio of traditional office properties located in select urban/urban-like submarkets within our regional footprint with durable Class-A office fundamentals and characteristics, as well as other properties supporting general commercial office tenants (“Regional Office”). As of June 30, 2016, our properties included the following:

• 181 operating office properties totaling 18.4 million square feet, including 11 triple-net leased, single-tenant data center properties;

• 12 office properties under, or contractually committed for, construction or redevelopment that we estimate will total approximately 1.5 million square feet upon completion, including two partially operational properties

included above and two properties completed but held for future lease to the United States Government;

• 1,379 acres of land we control that we believe could be developed into approximately 16.7 million square feet; and

• a wholesale data center with a critical load of 19.25 megawatts.

COPLP owns real estate both directly and through subsidiary partnerships and limited liability companies (“LLCs”).  In addition to owning real estate, COPLP also owns subsidiaries that provide real estate services such as property management and construction and development services primarily for our properties but also for third parties. Some of these services are performed by a taxable REIT subsidiary (“TRS”).

Equity interests in COPLP are in the form of common and preferred units. As of June 30, 2016, COPT owned 96.3% of the outstanding COPLP common units (“common units”) and 95.5% of the outstanding COPLP preferred units (“preferred units”); the remaining common and preferred units in COPLP were owned by third parties. Common units in COPLP not owned by COPT carry certain redemption rights. The number of common units in COPLP owned by COPT is equivalent to the number of outstanding common shares of beneficial interest (“common shares”) of COPT, and the entitlement of all COPLP common units to quarterly distributions and payments in liquidation is substantially the same as those of COPT common shareholders. Similarly, in the case of each series of preferred units in COPLP held by COPT, there is a series of preferred shares of beneficial interest (“preferred shares”) in COPT that is equivalent in number and carries substantially the same terms as such series of COPLP preferred units. COPT’s common shares are publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “OFC”.

Because COPLP is managed by COPT, and COPT conducts substantially all of its operations through COPLP, we refer to COPT’s executive officers as COPLP’s executive officers, and although, as a partnership, COPLP does not have a board of trustees, we refer to COPT’s Board of Trustees as COPLP’s Board of Trustees.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The COPT consolidated financial statements include the accounts of COPT, the Operating Partnership, their subsidiaries and other entities in which COPT has a majority voting interest and control.  The COPLP consolidated financial statements include the accounts of COPLP, its subsidiaries and other entities in which COPLP has a majority voting interest and control.  We also consolidate certain entities when control of such entities can be achieved through means other than voting rights (“variable interest entities” or “VIEs”) if we are deemed to be the primary beneficiary of such entities.  We eliminate all intercompany balances and transactions in consolidation.

 We use the equity method of accounting when we own an interest in an entity and can exert significant influence over but cannot control the entity’s operations. We discontinue equity method accounting if our investment in an entity (and net advances) is reduced to zero unless we have guaranteed obligations of the entity or are otherwise committed to provide further financial support for the entity.

We use the cost method of accounting when we own an interest in an entity and cannot exert significant influence over its operations.

These interim financial statements should be read together with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2015 included in our 2015 Annual Report on Form 10-K.  The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly present our financial position and results of operations.  All adjustments are of a normal recurring nature.  The consolidated financial statements have been prepared using the accounting policies described in our 2015 Annual Report on Form 10-K.

Recent Accounting Pronouncements

We adopted guidance issued by the Financial Accounting Standards Board (“FASB”) effective January 1, 2016 regarding the presentation of extraordinary and unusual items in statements of operations. This guidance eliminates the concept of extraordinary items. However, the presentation and disclosure requirements for items that are either unusual in nature or infrequent in occurrence remain and will be expanded to include items that are both unusual in nature and infrequent in occurrence. Our adoption of this guidance did not affect on our reported consolidated financial statements.

We adopted guidance issued by the FASB effective January 1, 2016 modifying the analysis that must be performed by us in determining whether we should consolidate certain types of legal entities. The guidance did not amend the existing disclosure requirements for VIEs or voting interest model entities.  The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, COPLP is considered a variable interest entity of COPT. As COPLP was already consolidated in the balance sheets of COPT, the identification of COPLP as a variable interest entity had no impact on the consolidated financial statements.  There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption.  In addition, there were no voting interest entities under prior existing guidance determined to be variable interest entities under the revised guidance.  

We adopted effective January 1, 2016 guidance that eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination.  The guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should be either presented separately on the face of the statement of operations or disclosed in the notes. Our adoption of this guidance did not affect our reported consolidated financial statements.

In May 2014, the FASB issued guidance regarding the recognition of revenue from contracts with customers. Under this guidance, an entity will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We are required to adopt this guidance for our annual and interim periods beginning January 1, 2018 using one of two methods: retrospective restatement for each reporting period presented at the time of adoption, or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

In February 2016, the FASB issued guidance that sets forth principles for the recognition, measurement, presentation and disclosure of leases.  This guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. The resulting classification determines whether the lease expense is recognized based on an effective interest method or straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The guidance requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases.  This guidance is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

In March 2016, the FASB issued guidance intended to simplify certain aspects of the accounting for employee based share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the consolidated statement of cash flows. This guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Recurring Fair Value Measurements

COPT has a non-qualified elective deferred compensation plan for certain members of our management team that permits participants to defer up to 100% of their compensation on a pre-tax basis and receive a tax-deferred return on such deferrals. The assets held in the plan (comprised primarily of mutual funds and equity securities) and the corresponding liability to the participants are measured at fair value on a recurring basis on COPT’s consolidated balance sheet using quoted market prices, as are other marketable securities that we hold. The balance of the plan, which was fully funded, totaled $5.0 million as of June 30, 2016, and is included in the accompanying COPT consolidated balance sheets in the line entitled restricted cash and marketable securities. The offsetting liability associated with the plan is adjusted to fair value at the end of each accounting period based on the fair value of the plan assets and reported in other liabilities on COPT’s consolidated balance sheets. The assets of the plan and other marketable securities that we hold are classified in Level 1 of the fair value hierarchy. The liability associated with the plan is classified in Level 2 of the fair value hierarchy.

The fair values of our interest rate derivatives are determined using widely accepted valuation techniques, including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While we determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our interest rate derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of June 30, 2016, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivatives and determined that these adjustments are not significant. As a result, we determined that our interest rate derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, other assets (excluding investing receivables) and accounts payable and accrued expenses are reasonable estimates of their fair values because of the short maturities of these instruments.  As discussed in Note 6, we estimated the fair values of our investing receivables based on the discounted estimated future cash flows of the loans (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans with similar maturities and credit quality, and the estimated cash payments include scheduled principal and interest payments.  For our disclosure of debt fair values in Note 8, we estimated the fair value of our unsecured senior notes based on quoted market rates for publicly-traded debt (categorized within Level 2 of the fair value hierarchy) and estimated the fair value of our other debt based on the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans, or groups of loans, with similar maturities and credit quality, and the estimated future payments include scheduled principal and interest payments.  Fair value estimates are made as of a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment.  Settlement at such fair value amounts may not be possible and may not be a prudent management decision.

For additional fair value information, please refer to Note 6 for investing receivables, Note 8 for debt and Note 9 for interest rate derivatives. 

COPT and Subsidiaries

The table below sets forth financial assets and liabilities of COPT and its subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2016 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets(Level 1)		Significant Other Observable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
Assets:
Marketable securities in deferred compensation plan (1)
Mutual funds	$	4,954	$	—	$	—	$	4,954
Other	92		—		—		92
Total assets	$	5,046	$	—	$	—	$	5,046
Liabilities:
Deferred compensation plan liability (2)	$	—	$	5,046	$	—	$	5,046
Interest rate derivatives	—		20,245		—		20,245
Total liabilities	$	—	$	25,291	$	—	$	25,291

(1) Included in the line entitled “restricted cash and marketable securities” on COPT’s consolidated balance sheet.

(2) Included in the line entitled “other liabilities” on COPT’s consolidated balance sheet.

COPLP and Subsidiaries

The table below sets forth financial assets and liabilities of COPLP and its subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2016 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets(Level 1)		Significant Other Observable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
Liabilities:
Interest rate derivatives	$	—	$	20,245	$	—	$	20,245

Nonrecurring Fair Value Measurements

During the second quarter of 2016, as part of our closing process, we conducted our quarterly review of our portfolio for indicators of impairment considering the refined investment strategy of our newly-appointed Chief Executive Officer and concluded that we would: (1) not hold our operating properties in Aberdeen, Maryland for the long-term; (2) sell specific properties in our Northern Virginia Defense/IT and Fort Meade/BW Corridor sub-segments; (3) not develop commercial properties on land in Frederick, Maryland; and (4) sell the remaining operating property in Greater Philadelphia that had not previously been classified as held for sale. Accordingly, we performed recoverability analyses for each of these properties and recorded the following impairment losses resulting from nonrecurring fair value measurements:

• $34.4 million on operating properties in Aberdeen, Maryland (included in our Other segment). After shortening our estimated holding period for these properties, we determined that the carrying amount of the properties would not likely be recovered from the operation and eventual dispositions of the properties during the shortened holding period. Accordingly, we adjusted the properties to their estimated fair value;

• $14.1 million on operating properties in our Northern Virginia Defense/IT and Fort Meade/BW Corridor sub-segments that we reclassified to held for sale during the period whose carrying amounts exceeded their estimated fair values less cost to sell;

• $8.2 million on land in Frederick, Maryland. We determined that the carrying amount of the land would not likely be recovered from the sale of this property. Accordingly, we adjusted the land to its estimated fair value;

• $6.2 million on a property in Greater Philadelphia (included in our Regional Office segment) that we reclassified to held for sale during the period whose carrying amounts exceeded its estimated fair value less cost to sell; and

• $4.4 million on land in Aberdeen, Maryland. In performing our analysis related to the operating properties in Aberdeen, we determined that the weakening leasing and overall commercial real estate conditions in that market indicated that our land holdings in the market may be impaired. As a result, we determined that the carrying amount of the land was not recoverable and, accordingly, adjusted the land to its estimated fair value.

During the six months ended June 30, 2016, we also recognized the following impairment losses resulting from nonrecurring fair value measurements:

• $3.4 million (primarily in the three months ended March 31, 2016) on land in Colorado Springs, Colorado, the carrying amount of which exceeded the estimated fair value less costs to sell. Most of these losses pertained to land we decided to sell during the three months ended March 31, 2016 that was reclassified as held for sale, and the remainder was attributable to further decreases in fair value of properties previously classified as held for sale based on recent bids from and negotiations with prospective buyers; and

• $1.4 million (primarily in the three months ended March 31, 2016) primarily on operating properties in White Marsh, Maryland (included in our Regional Office segment) classified as held for sale whose carrying amounts exceeded their estimated fair values less costs to sell based on recent negotiations with prospective buyers.

The table below sets forth the fair value hierarchy of the valuation technique we used to determine nonrecurring fair value measurements of these assets as of June 30, 2016 (dollars in thousands):

	Fair Values as of June 30, 2016
	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Operating properties, net (1)	$	—	$	—	$	13,700	$	13,700
Projects in development or held for future development (2)	—		—		9,117		9,117
Assets held for sale, net (3)	—		—		55,322		55,322

(1) Valuations were determined using a discounted cash flow model. Refer to table below for quantitative information about significant unobservable inputs used in the model.

(2) Valuation was determined using the comparable sales approach.

(3) Represents fair value less estimated costs to sell using contract prices or bids that were deemed indicative of fair value.

The table below sets forth quantitative information about significant unobservable inputs used for the Level 3 fair value measurements reported above for operating properties as of June 30, 2016:

Unobservable Input	Range (Weighted Average)
Discount rate	11.0% to 12.0% (11.6%)
Capitalization rate	9.0% to 10.0% (9.5%)

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Properties, Net

6 Months Ended

Jun. 30, 2016

Real Estate [Abstract]

Properties, Net

Properties, Net

Operating properties, net consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Land	$	455,355		$	463,305
Buildings and improvements	3,005,802			3,157,587
Less: Accumulated depreciation	(678,827		)	(700,363		)
Operating properties, net	$	2,782,330		$	2,920,529

Projects in development or held for future development consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Land	$	209,202	$	207,774
Development in progress, excluding land	178,195		221,445
Projects in development or held for future development	$	387,397	$	429,219

Our properties held for sale included:

• as of June 30, 2016: 13 operating properties in White Marsh, Maryland (included in our Regional Office segment); four operating properties in Greater Philadelphia (included in our Regional Office segment); ten operating properties in our Fort Meade/BW Corridor sub-segment; two operating properties in San Antonio (included in our Other segment); one operating property in our Northern Virginia Defense/IT sub-segment; and land in Northern Virginia, Colorado Springs and Greater Philadelphia; and

• as of December 31, 2015: 13 operating properties in White Marsh, Maryland (included in our Regional Office segment); two operating properties in San Antonio (included in our Other segment); and land in Northern Virginia and Colorado Springs.

The table below sets forth the components of assets held for sale on our consolidated balance sheet for these properties (in thousands):

	June 30, 2016		December 31, 2015
Properties, net	$	269,008	$	90,188
Deferred rent receivable	15,765		2,891
Intangible assets on real estate acquisitions, net	1,591		1,591
Deferred leasing costs, net	10,869		1,391
Lease incentives, net	3,351		721
Assets held for sale, net	$	300,584	$	96,782

Acquisitions

We acquired the following operating properties in 2015:

• 250 W. Pratt Street, a 367,000 square foot office property in Baltimore, Maryland that was 96.2% leased, for $61.8 million on March 19, 2015;

• 2600 Park Tower Drive, a 237,000 square foot office property in Vienna, Virginia (in the Northern Virginia region) that was 100% leased, for $80.5 million on April 15, 2015; and

• 100 Light Street, a 558,000 square foot office property in Baltimore, Maryland that was 93.5% leased, and its structured parking garage, 30 Light Street, for $121.2 million on August 7, 2015. In connection with that acquisition, we assumed a $55.0 million mortgage loan with a fair value at assumption of $55.5 million.

These properties contributed:

• revenues of $9.2 million for the three months ended June 30, 2016, $4.0 million for the three months ended June 30, 2015, $18.4 million for the six months ended June 30, 2016 and $4.3 million for the six months ended June 30, 2015; and

• net income from continuing operations of $1.1 million for the three months ended June 30, 2016, $40,000 for the three months ended June 30, 2015, $2.0 million for the six months ended June 30, 2016 and $210,000 for the six months ended June 30, 2015.

We accounted for these acquisitions as business combinations. We included the results of operations for the acquisitions in our consolidated statements of operations from their respective purchase dates through June 30, 2016. The following table presents pro forma information for COPT and subsidiaries as if these acquisitions had occurred on January 1, 2014. This pro forma information also includes adjustments to reclassify operating property acquisition costs to the six months ended June 30, 2014 from the 2015 periods in which they were actually incurred. The pro forma financial information was prepared for comparative purposes only and is not necessarily indicative of what would have occurred had these acquisitions been made at that time or of results which may occur in the future (in thousands, except per share amounts).

	For the Three Months Ended June 30, 2015		For the Six Months Ended June 30, 2015
	(Unaudited)
Pro forma total revenues	$	175,996	$	345,921
Pro forma net income attributable to COPT common shareholders	$	13,259	$	24,106
Pro forma EPS:
Basic	$	0.14	$	0.25
Diluted	$	0.14	$	0.25

2016 Dispositions

We sold land in the six months endedJune 30, 2016 for $5.7 million, with no gain recognized.

2016 Construction Activities

During the six months endedJune 30, 2016, we placed into service 298,000 square feet in two newly constructed office properties and 55,000 square feet in two redeveloped properties (including a partially operational property). As of June 30, 2016, we had nine office properties under construction, or for which we were contractually committed to construct, that we estimate will total 1.4 million square feet upon completion (including two properties completed but held for future lease to the United States Government) and three office properties under redevelopment that we estimate will total 104,000 square feet upon completion.

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Real Estate Joint Ventures

6 Months Ended

Jun. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Real Estate Joint Ventures

Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in consolidated real estate joint ventures as of June 30, 2016 (dollars in thousands):

		Nominal
		Ownership		June 30, 2016				(1)
	Date	% as of		Total		Encumbered		Total
	Acquired	6/30/2016	Nature of Activity	Assets		Assets		Liabilities
LW Redstone Company, LLC	3/23/2010	85%	Development and operation of real estate (2)	$	151,416	$	81,094	$	52,362
M Square Associates, LLC	6/26/2007	50%	Development and operation of real estate (3)	65,788		47,399		46,205
Stevens Investors, LLC	8/11/2015	95%	Development of real estate (4)	38,859		—		7,446
				$	256,063	$	128,493	$	106,013

(1) Excludes amounts eliminated in consolidation.

(2) This joint venture’s properties are in Huntsville, Alabama.

(3) This joint venture’s properties are in College Park, Maryland.

(4) This joint venture’s property is in Washington, DC.

In January 2016, our partner in Stevens Investors, LLC contributed to the joint venture, for a value of $22.6 million, interests in contracts controlling land to be developed (including a purchase agreement and a ground lease). Our partner subsequently received a cash distribution from the joint venture of $13.4 million, which was funded by us. Our partner is also entitled to receive an additional distribution from the joint venture of $6.7 million to be funded by us (expected later in 2016 or 2017) that was reported in other liabilities on our consolidated balance sheet as of June 30, 2016.

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Investing Receivables

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Investing Receivables

Investing Receivables

Investing receivables, including accrued interest thereon, consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Notes receivable from the City of Huntsville	$	47,142	$	44,875
Other investing loans receivable	3,020		3,000
	$	50,162	$	47,875

Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture (see Note 5) and carry an interest rate of 9.95%.

We did not have an allowance for credit losses in connection with our investing receivables as of June 30, 2016 or December 31, 2015.  The fair value of these receivables approximated their carrying amounts as of June 30, 2016 and December 31, 2015.

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Prepaid Expenses and Other Assets, Net

6 Months Ended

Jun. 30, 2016

Prepaid Expense and Other Assets [Abstract]

Prepaid Expenses and Other Assets, Net

Prepaid Expenses and Other Assets, Net

Prepaid expenses and other assets consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Prepaid expenses	$	10,301	$	23,009
Lease incentives, net	7,873		11,133
Furniture, fixtures and equipment, net	5,686		6,004
Construction contract costs incurred in excess of billings	5,281		3,261
Deferred financing costs, net (1)	4,497		5,867
Deferred tax asset, net (2)	3,589		3,467
Other assets	6,132		7,283
Prepaid expenses and other assets, net	$	43,359	$	60,024

(1) Represents deferred costs, net of accumulated amortization, attributable to our Revolving Credit Facility and interest rate derivatives.

(2) Includes a valuation allowance of $2.1 million.

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Debt, Net

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt, Net

Debt, Net

Our debt consisted of the following (dollars in thousands):

	Carrying Value (1) as of					Scheduled Maturity
	June 30, 2016		December 31, 2015		Stated Interest Rates as of	as of
					June 30, 2016	June 30, 2016
Mortgage and Other Secured Loans:
Fixed rate mortgage loans (2)	$	318,243	$	281,208	3.82% - 7.87% (3)	2016-2026
Variable rate secured loans	13,608		49,792		LIBOR + 1.85% (4)	2016-2020
Total mortgage and other secured loans	331,851		331,000
Revolving Credit Facility	58,000		43,500		LIBOR + 0.875% to 1.60% (5)	May 2019
Term Loan Facilities (6)	516,508		515,902		LIBOR + 0.90% to 2.60% (7)	2019-2022
Unsecured Senior Notes
3.600%, $350,000 aggregate principal	346,920		346,714		3.60% (8)	May 2023
5.250%, $250,000 aggregate principal	245,951		245,731		5.25% (9)	February 2024
3.700%, $300,000 aggregate principal	297,609		297,378		3.70% (10)	June 2021
5.000%, $300,000 aggregate principal	296,192		296,019		5.00% (11)	July 2025
Unsecured notes payable	1,455		1,508		0% (12)	2026
Total debt, net	$	2,094,486	$	2,077,752

(1) The carrying values of our loans other than the Revolving Credit Facility reflect net deferred financing costs of $7.4 million as of June 30, 2016 and $8.0 million as of December 31, 2015.

(2)   Several of the fixed rate mortgages carry interest rates that were above or below market rates upon assumption and therefore were recorded at their fair value based on applicable effective interest rates.  The carrying values of these loans reflect net unamortized premiums totaling $459,000 as of June 30, 2016 and $514,000 as of December 31, 2015.

(3) The weighted average interest rate on our fixed rate mortgage loans was 5.75% as of June 30, 2016.

(4)  The interest rate on our variable rate secured loan as of June 30, 2016 was 2.31%.

(5) The weighted average interest rate on the Revolving Credit Facility was 1.62% as of June 30, 2016.

(6)   An additional $150 million in borrowings is available to be drawn under a term loan. In addition, we have the ability to borrow an additional $430.0 million in the aggregate under these term loan facilities, provided that there is no default under the facilities and subject to the approval of the lenders.

(7)  The weighted average interest rate on these loans was 2.10% as of June 30, 2016.

(8) The carrying value of these notes reflects an unamortized discount totaling $2.1 millionas of June 30, 2016 and $2.2 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%. 

(9) The carrying value of these notes reflectsan unamortized discount totaling $3.6 millionas of June 30, 2016 and $3.8 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%. 

(10) The carrying value of these notes reflects an unamortized discount totaling $1.9 millionas of June 30, 2016 and $2.1 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.85%. 

(11) The carrying value of these notes reflects an unamortized discount totaling $3.2 millionas of June 30, 2016 and $3.3 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.

(12)  These notes carry interest rates that were below market rates upon assumption and therefore were recorded at their fair value based on applicable effective interest rates.  The carrying value of these notes reflects an unamortized discount totaling $506,000 as of June 30, 2016 and $554,000 as of December 31, 2015.

All debt is owed by the Operating Partnership. While COPT is not directly obligated by any debt, it has guaranteed the Operating Partnership’s Revolving Credit Facility, Term Loan Facilities and Unsecured Senior Notes.

Certain of our debt instruments require that we comply with a number of restrictive financial covenants.  As of June 30, 2016, we were within the compliance requirements of these financial covenants.

We capitalized interest costs of $1.3 million in the three months ended June 30, 2016, $2.0 million in the three months ended June 30, 2015, $3.1 million in the six months ended June 30, 2016 and $4.1 million in the six months ended June 30, 2015.

The following table sets forth information pertaining to the fair value of our debt (in thousands): 

	June 30, 2016				December 31, 2015
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Fixed-rate debt
Unsecured Senior Notes	$	1,186,672	$	1,227,235	$	1,185,842	$	1,211,658
Other fixed-rate debt	319,698		329,066		282,716		291,991
Variable-rate debt	588,116		592,032		609,194		610,987
	$	2,094,486	$	2,148,333	$	2,077,752	$	2,114,636

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Interest Rate Derivatives

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest Rate Derivatives

Interest Rate Derivatives

The following table sets forth the key terms and fair values of our interest rate swap derivatives (dollars in thousands):

							Fair Value at
Notional Amount			Fixed Rate	Floating Rate Index	Effective Date	Expiration Date	June 30, 2016			December 31, 2015
$	100,000		0.8055%	One-Month LIBOR	9/2/2014	9/1/2016	$	(58	)	$	(148	)
100,000			0.8100%	One-Month LIBOR	9/2/2014	9/1/2016	(59		)	(151		)
100,000			1.6730%	One-Month LIBOR	9/1/2015	8/1/2019	(3,117		)	(1,217		)
100,000			1.7300%	One-Month LIBOR	9/1/2015	8/1/2019	(3,293		)	(1,429		)
13,765		(1)	1.3900%	One-Month LIBOR	10/13/2015	10/1/2020	(337		)	53
100,000			1.9013%	One-Month LIBOR	9/1/2016	12/1/2022	(5,367		)	(138		)
100,000			1.9050%	One-Month LIBOR	9/1/2016	12/1/2022	(5,336		)	(45		)
50,000			1.9079%	One-Month LIBOR	9/1/2016	12/1/2022	(2,678		)	(32		)
							$	(20,245	)	$	(3,107	)

(1) The notional amount of this instrument is scheduled to amortize to $12.1 million.

Each of the interest rate swaps set forth in the table above was designated as a cash flow hedge of interest rate risk.

The table below sets forth the fair value of our interest rate derivatives as well as their classification on our consolidated balance sheets (in thousands):

		Fair Value at
Derivatives	Balance Sheet Location	June 30, 2016			December 31, 2015
Interest rate swaps designated as cash flow hedges	Prepaid expenses and other assets	$	—		$	53
Interest rate swaps designated as cash flow hedges	Interest rate derivatives	(20,245		)	(3,160		)

The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016			2015		2016			2015
Amount of (loss) gain recognized in accumulated other comprehensive loss (“AOCL”) (effective portion)	$	(5,704	)	$	392	$	(16,988	)	$	(3,082	)
Amount of losses reclassified from AOCL into interest expense (effective portion)	850			769		1,720			1,542
Amount of loss recognized in interest expense (ineffective portion)	319			—		1,870			—

Over the next 12 months, we estimate that approximately $5.6 million of losses will be reclassified from AOCL as an increase to interest expense.

We have agreements with each of our interest rate derivative counterparties that contain provisions under which, if we default or are capable of being declared in default on defined levels of our indebtedness, we could also be declared in default on our derivative obligations.  These agreements also incorporate the loan covenant provisions of our indebtedness with a lender affiliate of the derivative counterparties.  Failure to comply with the loan covenant provisions could result in our being declared in default on any derivative instrument obligations covered by the agreements.  As of June 30, 2016, the fair value of interest rate derivatives in a liability position related to these agreements was $21.1 million, excluding the effects of accrued interest and credit valuation adjustments. As of June 30, 2016, we had not posted any collateral related to these agreements.  We are not in default with any of these provisions.  If we breached any of these provisions, we could be required to settle our obligations under the agreements at their termination value of $21.4 million.

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Redeemable Noncontrolling Interests

6 Months Ended

Jun. 30, 2016

Noncontrolling Interest [Abstract]

Redeemable Noncontrolling Interests

Redeemable Noncontrolling Interests

Our partners in two real estate joint ventures, LW Redstone Company, LLC and Stevens Investors, LLC (discussed further in Note 5), have the right to require us to acquire their respective interests at fair value; accordingly, we classify the fair value of our partners’ interests as redeemable noncontrolling interests in the mezzanine section of our consolidated balance sheet. We determine the fair value of the interests based on unobservable inputs after considering the assumptions that market participants would make in pricing the interest. We apply a discount rate to the estimated future cash flows allocable to our partners from the properties underlying the respective joint ventures. Estimated cash flows used in such analyses are based on our plans for the properties and our views of market and economic conditions, and consider items such as current and future rental rates, occupancies for the properties and comparable properties and estimated operating and capital expenditures. The table below sets forth the activity for these redeemable noncontrolling interests (in thousands):

	For the Six Months Ended June 30,
	2016			2015
Beginning balance	$	19,218		$	18,417
Contributions from noncontrolling interests	22,778			—
Distributions to noncontrolling interests	(20,989		)	(885		)
Net income attributable to noncontrolling interests	1,117			1,143
Adjustment to arrive at fair value of interests	349			739
Ending balance	$	22,473		$	19,414

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Equity

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Equity

Equity

During the six months endedJune 30, 2016, certain COPLP limited partners redeemed 26,758 common units in COPLP for an equal number of common shares in COPT.

See Note 13 for disclosure of COPT common share and COPLP common unit activity pertaining to our share-based compensation plans.

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Information by Business Segment

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Information by Business Segment

Information by Business Segment

Our segment reporting includes the following segments: Defense/IT Locations; Regional Office; our operating wholesale data center; and other. Our segment reporting also includes reporting for Defense/IT Locations sub-segments, which include the following: Fort George G. Meade and the Baltimore/Washington Corridor (referred to herein as “Fort Meade/BW Corridor”); Northern Virginia Defense/IT Locations; Lackland Air Force Base (in San Antonio); locations serving the U.S. Navy (“Navy Support Locations”), which included properties proximate to the Washington Navy Yard, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; Redstone Arsenal (in Huntsville); and data center shells (properties leased to tenants to be operated as data centers in which the tenants generally fund the costs for the power, fiber connectivity and data center infrastructure). The table below reports segment financial information for our reportable segments (in thousands).  We measure the performance of our segments through the measure we define as NOI from real estate operations, which is derived by subtracting property operating expenses from revenues from real estate operations.

	Operating Office Property Segments
	Defense/Information Technology Locations
	Fort Meade/BW Corridor		Northern Virginia Defense/IT		Lackland Air Force Base		Navy Support Locations		Redstone Arsenal		Data Center Shells		Total Defense/IT Locations		Regional Office		Operating Wholesale Data Center			Other			Total
Three Months Ended June 30, 2016
Revenues from real estate operations	$	60,912	$	12,057	$	11,651	$	6,998	$	3,191	$	7,288	$	102,097	$	23,283	$	6,804		$	1,740		$	133,924
Property operating expenses	20,378		4,307		6,844		2,675		960		826		35,990		8,721		2,651			779			48,141
NOI from real estate operations	$	40,534	$	7,750	$	4,807	$	4,323	$	2,231	$	6,462	$	66,107	$	14,562	$	4,153		$	961		$	85,783
Additions to long-lived assets	$	7,096	$	3,059	$	—	$	2,233	$	301	$	—	$	12,689	$	2,180	$	—		$	153		$	15,022
Transfers from non-operating properties	$	768	$	27,944	$	231	$	—	$	4	$	29,857	$	58,804	$	26	$	(482	)	$	—		$	58,348
Three Months Ended June 30, 2015							—
Revenues from real estate operations	$	60,007	$	13,462	$	9,743	$	7,186	$	2,658	$	5,037	$	98,093	$	24,400	$	3,820		$	1,882		$	128,195
Property operating expenses	19,480		5,354		5,349		3,390		888		499		34,960		8,406		2,221			820			46,407
NOI from real estate operations	$	40,527	$	8,108	$	4,394	$	3,796	$	1,770	$	4,538	$	63,133	$	15,994	$	1,599		$	1,062		$	81,788
Additions to long-lived assets	$	5,141	$	83,913	$	—	$	1,769	$	208	$	—	$	91,031	$	3,396	$	78		$	210		$	94,715
Transfers from non-operating properties	$	6,098	$	7,735	$	468	$	—	$	8,980	$	911	$	24,192	$	5,218	$	15,202		$	12		$	44,624
Six Months Ended June 30, 2016
Revenues from real estate operations	$	123,421	$	24,173	$	21,876	$	13,932	$	6,307	$	13,618	$	203,327	$	46,785	$	13,297		$	3,602		$	267,011
Property operating expenses	43,624		8,848		12,264		6,199		1,938		1,636		74,509		18,552		5,312			1,643			100,016
NOI from real estate operations	$	79,797	$	15,325	$	9,612	$	7,733	$	4,369	$	11,982	$	128,818	$	28,233	$	7,985		$	1,959		$	166,995
Additions to long-lived assets	$	13,615	$	6,137	$	—	$	3,503	$	919	$	—	$	24,174	$	4,939	$	—		$	310		$	29,423
Transfers from non-operating properties	$	36,519	$	27,850	$	237	$	—	$	215	$	55,954	$	120,775	$	108	$	(431	)	$	(11	)	$	120,441
Segment assets at June 30, 2016	$	1,305,769	$	424,441	$	133,359	$	195,195	$	106,810	$	256,276	$	2,421,850	$	594,750	$	237,226		$	35,291		$	3,289,117
Six Months Ended June 30, 2015
Revenues from real estate operations	$	121,191	$	24,508	$	18,408	$	14,451	$	5,104	$	10,151	$	193,813	$	46,360	$	6,855		$	3,877		$	250,905
Property operating expenses	42,996		10,970		10,112		6,788		1,717		1,194		73,777		17,154		4,433			1,729			97,093
NOI from real estate operations	$	78,195	$	13,538	$	8,296	$	7,663	$	3,387	$	8,957	$	120,036	$	29,206	$	2,422		$	2,148		$	153,812
Additions to long-lived assets	$	8,586	$	84,700	$	—	$	3,362	$	291	$	—	$	96,939	$	69,330	$	108		$	309		$	166,686
Transfers from non-operating properties	$	19,028	$	51,208	$	31,559	$	—	$	11,977	$	16,008	$	129,780	$	16,725	$	15,379		$	12		$	161,896
Segment assets at June 30, 2015	$	1,266,632	$	499,601	$	134,127	$	194,764	$	107,677	$	170,006	$	2,372,807	$	598,030	$	175,563		$	72,257		$	3,218,657

The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016		2015			2016		2015
Segment revenues from real estate operations	$	133,924	$	128,195		$	267,011	$	250,905
Construction contract and other service revenues	12,003		42,172			23,223		80,496
Less: Revenues from discontinued operations	—		(4		)	—		(4		)
Total revenues	$	145,927	$	170,363		$	290,234	$	331,397

The following table reconciles our segment property operating expenses to property operating expenses as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Segment property operating expenses	$	48,141	$	46,407	$	100,016	$	97,093
Less: Property operating expenses from discontinued operations	—		11		—		6
Total property operating expenses	$	48,141	$	46,418	$	100,016	$	97,099

As previously discussed, we provide real estate services such as property management and construction and development services primarily for our properties but also for third parties.  The primary manner in which we evaluate the operating performance of our service activities is through a measure we define as net operating income from service operations (“NOI from service operations”), which is based on the net of revenues and expenses from these activities.  Construction contract and other service revenues and expenses consist primarily of subcontracted costs that are reimbursed to us by the customer along with a management fee. The operating margins from these activities are small relative to the revenue.  We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations. The table below sets forth the computation of our NOI from service operations (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Construction contract and other service revenues	$	12,003		$	42,172		$	23,223		$	80,496
Construction contract and other service expenses	(11,478		)	(41,293		)	(22,172		)	(78,791		)
NOI from service operations	$	525		$	879		$	1,051		$	1,705

The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to income from continuing operations as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
NOI from real estate operations	$	85,783		$	81,788		$	166,995		$	153,812
NOI from service operations	525			879			1,051			1,705
Interest and other income	1,330			1,242			2,486			2,525
Equity in income of unconsolidated entities	10			9			20			34
Income tax (expense) benefit	(1		)	(50		)	7			(105		)
Other adjustments:	—						—
Depreciation and other amortization associated with real estate operations	(33,248		)	(33,786		)	(67,775		)	(65,385		)
Impairment losses	(69,692		)	(1,238		)	(72,138		)	(1,238		)
General, administrative and leasing expenses	(8,026		)	(7,534		)	(19,909		)	(15,425		)
Business development expenses and land carry costs	(2,363		)	(2,623		)	(4,781		)	(5,413		)
Interest expense	(22,639		)	(21,768		)	(46,198		)	(42,606		)
NOI from discontinued operations	—			(15		)	—			(10		)
Gain (loss) on early extinguishment of debt	5			(65		)	22			(68		)
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826

The following table reconciles our segment assets to the consolidated total assets of COPT and subsidiaries (in thousands):

	June 30, 2016		June 30, 2015
Segment assets	$	3,289,117	$	3,218,657
Non-operating property assets	413,597		527,742
Other assets	138,978		157,660
Total COPT consolidated assets	$	3,841,692	$	3,904,059

The accounting policies of the segments are the same as those used to prepare our consolidated financial statements, except that discontinued operations are not presented separately for segment purposes.  In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization, impairment losses, gain (loss) on early extinguishment of debt and gain on sales of real estate to our real estate segments since they are not included in the measure of segment profit reviewed by management.  We also did not allocate general, administrative and leasing expenses, business development expenses and land carry costs, interest and other income, equity in income of unconsolidated entities, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.

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Share-Based Compensation and Other Compensation Matters

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation and Other Compensation Matters

Share-Based Compensation and Other Compensation Matters

Performance Share Units (“PSUs”)

On March 1, 2016, our Board of Trustees granted 26,299 PSUs with an aggregate grant date fair value of $1.0 million to executives.  The PSUs have a performance period beginning on January 1, 2016 and concluding on the earlier of December 31, 2018 or the date of: (1) termination by us without cause, death or disability of the executive or constructive discharge of the executive (collectively, “qualified termination”); or (2) a sale event.  The number of PSUs earned (“earned PSUs”) at the end of the performance period will be determined based on the percentile rank of COPT’s total shareholder return relative to a peer group of companies, as set forth in the following schedule:

Percentile Rank	Earned PSUs Payout %
75th or greater	200% of PSUs granted
50th or greater	100% of PSUs granted
25th	50% of PSUs granted
Below 25th	0% of PSUs granted

If the percentile rank exceeds the 25th percentile and is between two of the percentile ranks set forth in the table above, then the percentage of the earned PSUs will be interpolated between the ranges set forth in the table above to reflect any performance between the listed percentiles.  At the end of the performance period, we, in settlement of the award, will issue a number of fully-vested COPT common shares equal to the sum of:

• the number of earned PSUs in settlement of the award plan; plus

• the aggregate dividends that would have been paid with respect to the common shares issued in settlement of the earned PSUs through the date of settlement had such shares been issued on the grant date, divided by the share price on such settlement date, as defined under the terms of the agreement.

If a performance period ends due to a sale event or qualified termination, the number of earned PSUs is prorated based on the portion of the three-year performance period that has elapsed.  If employment is terminated by the employee or by us for cause, all PSUs are forfeited.  PSUs do not carry voting rights.

We computed a grant date fair value of $38.21 per PSU using a Monte Carlo model, which included assumptions of, among other things, the following: baseline common share value of $23.90; expected volatility for COPT common shares of 20.4%; and a risk-free interest rate of 0.96%.  We are recognizing the grant date fair value in connection with these PSU awards over the period commencing on March 1, 2016 and ending on December 31, 2018.

Based on COPT’s total shareholder return relative to its peer group of companies, for PSUs issued in 2014 and 2015 to Mr. Wayne H. Lingafelter, our former Executive Vice President, Development & Construction Services, who departed on March 31, 2016, we issued 10,326 common shares on May 30, 2016 in settlement of such PSUs.

Restricted Shares

During the six months endedJune 30, 2016, certain employees were granted a total of 197,087 restricted common shares with an aggregate grant date fair value of $4.8 million (weighted average of $24.11 per share).  Restricted shares granted to employees vest based on increments and over periods of time set forth under the terms of the respective awards provided that the employees remain employed by us.  During the six months endedJune 30, 2016, forfeiture restrictions lapsed on 159,171 previously issued common shares; these shares had a weighted average grant date fair value of $27.62 per share, and the aggregate intrinsic value of the shares on the vesting dates was $3.8 million.

Deferred Share Awards

During the six months endedJune 30, 2016, nonemployee members of our Board of Trustees were granted a total of 24,944 deferred share awards with an aggregate grant date fair value of $671,000 ($26.89 per share). Deferred share awards vest on the first anniversary of the grant date, provided that the Trustee remains in his or her position. We settle deferred share awards by issuing an equivalent number of common shares upon vesting of the awards or a later date elected by the Trustee (generally upon cessation of being a Trustee). During the six months endedJune 30, 2016, we issued 12,028 common shares in settlement of deferred share awards granted in 2015; these shares had a grant date fair value of $26.70 per share, and the aggregate intrinsic value of the shares on the settlement date was $322,000.

Executive Transition Costs

Our Board of Trustees appointed Stephen E. Budorick, our Executive Vice President and Chief Operating Officer since September 2011, to become our President and Chief Executive Officer effective May 12, 2016, the date of the Company’s 2016 Annual Meeting of Shareholders. On that date, Roger A. Waesche, Jr., our current President and Chief Executive Officer, left the Company to pursue other interests, and he was not nominated for reelection as a Trustee. The Board appointed Mr. Budorick to our Board of Trustees after the 2016 Annual Meeting of Shareholders. In addition, our Executive Vice President, Development & Construction Services, Wayne H. Lingafelter, departed the Company to pursue other interests effective March 31, 2016. We recognized executive transition costs of approximately $4.4 million in the six months ended June 30, 2016 primarily in connection with the departure of Mr. Waesche and Mr. Lingafelter.

 

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Earnings Per Share ("EPS") and Earnings Per Unit ("EPU")

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share (“EPS”) and Earnings Per Unit (“EPU”)

Earnings Per Share (“EPS”) and Earnings Per Unit (“EPU”)

COPT and Subsidiaries EPS

We present both basic and diluted EPS.  We compute basic EPS by dividing net income available to common shareholders allocable to unrestricted common shares under the two-class method by the weighted average number of unrestricted common shares outstanding during the period.  Our computation of diluted EPS is similar except that:

• the denominator is increased to include: (1) the weighted average number of potential additional common shares that would have been outstanding if securities that are convertible into COPT common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to share-based compensation using the treasury stock or if-converted methods; and

• the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common shares that we added to the denominator.

Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Numerator:
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826
Gain on sales of real estate, net	—			(1		)	—			3,985
Preferred share dividends	(3,553		)	(3,553		)	(7,105		)	(7,105		)
Loss (income) from continuing operations attributable to noncontrolling interests	897			(1,436		)	(373		)	(2,828		)
Income from continuing operations attributable to share-based compensation awards	(96		)	(113		)	(214		)	(235		)
Numerator for basic and diluted EPS from continuing operations attributable to COPT common shareholders	$	(51,068	)	$	11,736		$	(47,912	)	$	21,643
Discontinued operations	—			394			—			156
Discontinued operations attributable to noncontrolling interests	—			(15		)	—			(3		)
Numerator for basic and diluted EPS on net income attributable to COPT common shareholders	$	(51,068	)	$	12,115		$	(47,912	)	$	21,796
Denominator (all weighted averages):
Denominator for basic EPS (common shares)	94,300			94,128			94,251			93,666
Dilutive effect of share-based compensation awards	—			35			—			114
Denominator for diluted EPS (common shares)	94,300			94,163			94,251			93,780
Basic EPS:
(Loss) income from continuing operations attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPT common shareholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Diluted EPS:
(Loss) income from continuing operations attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPT common shareholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23

Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):

	Weighted Average Shares Excluded from Denominator
	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Conversion of common units	3,676	3,680	3,676	3,706
Conversion of Series I Preferred Units	176	176	176	176
Conversion of Series K Preferred Shares	434	434	434	434

The following share-based compensation securities were excluded from the computation of diluted EPS because their effects were antidilutive:

• weighted average restricted shares and deferred share awards for the three months ended June 30, 2016 and 2015 of 403,000 and 426,000, respectively, and for the six months ended June 30, 2016 and 2015 of 404,000 and 413,000, respectively; and

• weighted average options for the three months ended June 30, 2016 and 2015 of 309,000 and 473,000, respectively, and for the six months ended June 30, 2016 and 2015 of 344,000 and 472,000, respectively.

We had outstanding senior notes, which we redeemed in April 2015, with an exchange settlement feature, but such notes did not affect our diluted EPS reported above since the weighted average closing price of COPT’s common shares during each of the periods was less than the exchange prices per common share applicable for such periods.

COPLP and Subsidiaries EPU

We present both basic and diluted EPU.  We compute basic EPU by dividing net income available to common unitholders allocable to unrestricted common units under the two-class method by the weighted average number of unrestricted common units outstanding during the period.  Our computation of diluted EPU is similar except that:

• the denominator is increased to include: (1) the weighted average number of potential additional common units that would have been outstanding if securities that are convertible into our common units were converted; and (2) the effect of dilutive potential common units outstanding during the period attributable to share-based compensation using the treasury stock or if-converted methods; and

• the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common units that we added to the denominator.

Summaries of the numerator and denominator for purposes of basic and diluted EPU calculations are set forth below (in thousands, except per unit data):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Numerator:
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826
Gain on sales of real estate, net	—			(1		)	—			3,985
Preferred unit distributions	(3,718		)	(3,718		)	(7,435		)	(7,435		)
Income from continuing operations attributable to noncontrolling interests	(911		)	(812		)	(1,890		)	(1,633		)
Income from continuing operations attributable to share-based compensation awards	(96		)	(113		)	(214		)	(235		)
Numerator for basic and diluted EPU from continuing operations attributable to COPLP common unitholders	$	(53,041	)	$	12,195		$	(49,759	)	$	22,508
Discontinued operations	—			394			—			156
Discontinued operations attributable to noncontrolling interests	—			—			—			3
Numerator for basic and diluted EPU on net income attributable to COPLP common unitholders	$	(53,041	)	$	12,589		$	(49,759	)	$	22,667
Denominator (all weighted averages):
Denominator for basic EPU (common units)	97,976			97,808			97,927			97,372
Dilutive effect of share-based compensation awards	—			35			—			114
Denominator for diluted EPU (common units)	97,976			97,843			97,927			97,486
Basic EPU:
(Loss) income from continuing operations attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPLP common unitholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Diluted EPU:
(Loss) income from continuing operations attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPLP common unitholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23

Our diluted EPU computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPU for the respective periods (in thousands):

	Weighted Average Units Excluded from Denominator
	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Conversion of Series I preferred units	176	176	176	176
Conversion of Series K preferred units	434	434	434	434

The following share-based compensation securities were excluded from the computation of diluted EPU because their effects were antidilutive:

• weighted average restricted units and deferred share awards for the three months ended June 30, 2016 and 2015 of 403,000 and 426,000, respectively, and for the six months ended June 30, 2016 and 2015 of 404,000 and 413,000, respectively; and

• weighted average options for the three months ended June 30, 2016 and 2015 of 309,000 and 473,000, respectively, and for the six months ended June 30, 2016 and 2015 of 344,000 and 472,000, respectively.

We had outstanding senior notes, which we redeemed in April 2015, with an exchange settlement feature, but such notes did not affect our diluted EPU reported above since the weighted average closing price of COPT’s common shares during each of the periods was less than the exchange prices per common share applicable for such periods.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

In the normal course of business, we are involved in legal actions arising from our ownership and administration of properties.  We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated.  Management does not anticipate that any liabilities that may result from such proceedings will have a materially adverse effect on our financial position, operations or liquidity.  Our assessment of the potential outcomes of these matters involves significant judgment and is subject to change based on future developments.

Environmental

We are subject to various Federal, state and local environmental regulations related to our property ownership and operation.  We have performed environmental assessments of our properties, the results of which have not revealed any environmental liability that we believe would have a materially adverse effect on our financial position, operations or liquidity.

Tax Incremental Financing Obligation

In August 2010, Anne Arundel County, Maryland issued $30 million in tax incremental financing bonds to third-party investors in order to finance public improvements needed in connection with our project known as National Business Park North.  The real estate taxes on increases in assessed value of a development district encompassing National Business Park North are to be transferred to a special fund pledged to the repayment of the bonds.  We recognized a $1.9 million liability through June 30, 2016 representing our estimated obligation to fund through a special tax any future shortfalls between debt service on the bonds and real estate taxes available to repay the bonds.

Operating Leases

We are obligated as lessee under operating leases (mostly ground leases) with various expiration dates extending to the year 2100. Future minimum rental payments due under the terms of these operating leases as of June 30, 2016 follow (in thousands):

Year Ending December 31,
2016 (1)	$	603
2017	1,139
2018	1,092
2019	1,067
2020	1,084
Thereafter	86,805
	$	91,790

(1) Represents six months ending December 31, 2016.

Contractual Obligations

We had amounts remaining to be incurred under various contractual obligations as of June 30, 2016 that included the following:

• new development and redevelopment obligations of $78.8 million;

• capital expenditures for operating properties of $48.7 million;

• third party construction and development of $17.3 million; and

• purchase obligations of $2.5 million.

Environmental Indemnity Agreement

In connection with a lease and subsequent sale in 2008 and 2010 of three properties in Dayton, New Jersey, we agreed to provide certain environmental indemnifications. The prior owner of the properties, a Fortune 100 company that is responsible for groundwater contamination at such properties, previously agreed to indemnify us for (1) direct losses incurred in connection with the contamination and (2) its failure to perform remediation activities required by the State of New Jersey, up to the point that the state declares the remediation to be complete.  Under the environmental indemnification agreement, we agreed to the following:

• to indemnify the tenant against losses covered under the prior owner’s indemnity agreement if the prior owner fails to indemnify the tenant for such losses.  This indemnification is capped at $5.0 million in perpetuity after the State of New Jersey declares the remediation to be complete;

• to indemnify the tenant for consequential damages (e.g., business interruption) at one of the buildings in perpetuity and another of the buildings through 2025.  This indemnification is limited to $12.5 million; and

• to pay 50% of additional costs related to construction and environmental regulatory activities incurred by the tenant as a result of the indemnified environmental condition of the properties.  This indemnification is limited to $300,000 annually and $1.5 million in the aggregate.

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Subsequent Event

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On July 21, 2016, we sold a 50% interest in six triple-net leased, single-tenant data center properties by contributing them into a newly-formed joint venture for a property value of $147.6 million. We obtained $60 million in non-recourse mortgage loans on the properties through the joint venture immediately prior to the sale of our interest and received the net proceeds. Our partner in the joint venture acquired the 50% interest in the joint venture from us for $44 million. We will account for our 50% interest in the joint venture using the equity method of accounting. Due to our continuing involvement in the properties through the joint venture, we recognized a partial gain on the sale of our interest of approximately $18 million.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The COPT consolidated financial statements include the accounts of COPT, the Operating Partnership, their subsidiaries and other entities in which COPT has a majority voting interest and control.  The COPLP consolidated financial statements include the accounts of COPLP, its subsidiaries and other entities in which COPLP has a majority voting interest and control.  We also consolidate certain entities when control of such entities can be achieved through means other than voting rights (“variable interest entities” or “VIEs”) if we are deemed to be the primary beneficiary of such entities.  We eliminate all intercompany balances and transactions in consolidation.

 We use the equity method of accounting when we own an interest in an entity and can exert significant influence over but cannot control the entity’s operations. We discontinue equity method accounting if our investment in an entity (and net advances) is reduced to zero unless we have guaranteed obligations of the entity or are otherwise committed to provide further financial support for the entity.

We use the cost method of accounting when we own an interest in an entity and cannot exert significant influence over its operations.

These interim financial statements should be read together with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2015 included in our 2015 Annual Report on Form 10-K.  The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly present our financial position and results of operations.  All adjustments are of a normal recurring nature.  The consolidated financial statements have been prepared using the accounting policies described in our 2015 Annual Report on Form 10-K.

Recent Accounting Pronouncement

Recent Accounting Pronouncements

We adopted guidance issued by the Financial Accounting Standards Board (“FASB”) effective January 1, 2016 regarding the presentation of extraordinary and unusual items in statements of operations. This guidance eliminates the concept of extraordinary items. However, the presentation and disclosure requirements for items that are either unusual in nature or infrequent in occurrence remain and will be expanded to include items that are both unusual in nature and infrequent in occurrence. Our adoption of this guidance did not affect on our reported consolidated financial statements.

We adopted guidance issued by the FASB effective January 1, 2016 modifying the analysis that must be performed by us in determining whether we should consolidate certain types of legal entities. The guidance did not amend the existing disclosure requirements for VIEs or voting interest model entities.  The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, COPLP is considered a variable interest entity of COPT. As COPLP was already consolidated in the balance sheets of COPT, the identification of COPLP as a variable interest entity had no impact on the consolidated financial statements.  There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption.  In addition, there were no voting interest entities under prior existing guidance determined to be variable interest entities under the revised guidance.  

We adopted effective January 1, 2016 guidance that eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination.  The guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should be either presented separately on the face of the statement of operations or disclosed in the notes. Our adoption of this guidance did not affect our reported consolidated financial statements.

In May 2014, the FASB issued guidance regarding the recognition of revenue from contracts with customers. Under this guidance, an entity will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We are required to adopt this guidance for our annual and interim periods beginning January 1, 2018 using one of two methods: retrospective restatement for each reporting period presented at the time of adoption, or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

In February 2016, the FASB issued guidance that sets forth principles for the recognition, measurement, presentation and disclosure of leases.  This guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. The resulting classification determines whether the lease expense is recognized based on an effective interest method or straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The guidance requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases.  This guidance is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

In March 2016, the FASB issued guidance intended to simplify certain aspects of the accounting for employee based share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the consolidated statement of cash flows. This guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. We are currently assessing the financial impact of this guidance on our consolidated financial statements.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of fair value assets and liabilities measured on recurring basis

The table below sets forth financial assets and liabilities of COPLP and its subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2016 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets(Level 1)		Significant Other Observable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
Liabilities:
Interest rate derivatives	$	—	$	20,245	$	—	$	20,245

The table below sets forth financial assets and liabilities of COPT and its subsidiaries that are accounted for at fair value on a recurring basis as of June 30, 2016 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):

Description	Quoted Prices in Active Markets for Identical Assets(Level 1)		Significant Other Observable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
Assets:
Marketable securities in deferred compensation plan (1)
Mutual funds	$	4,954	$	—	$	—	$	4,954
Other	92		—		—		92
Total assets	$	5,046	$	—	$	—	$	5,046
Liabilities:
Deferred compensation plan liability (2)	$	—	$	5,046	$	—	$	5,046
Interest rate derivatives	—		20,245		—		20,245
Total liabilities	$	—	$	25,291	$	—	$	25,291

(1) Included in the line entitled “restricted cash and marketable securities” on COPT’s consolidated balance sheet.

(2) Included in the line entitled “other liabilities” on COPT’s consolidated balance sheet.

Schedule of fair value hierarchy of impaired properties and other assets associated with such properties

The table below sets forth the fair value hierarchy of the valuation technique we used to determine nonrecurring fair value measurements of these assets as of June 30, 2016 (dollars in thousands):

	Fair Values as of June 30, 2016
	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Operating properties, net (1)	$	—	$	—	$	13,700	$	13,700
Projects in development or held for future development (2)	—		—		9,117		9,117
Assets held for sale, net (3)	—		—		55,322		55,322

(1) Valuations were determined using a discounted cash flow model. Refer to table below for quantitative information about significant unobservable inputs used in the model.

(2) Valuation was determined using the comparable sales approach.

(3) Represents fair value less estimated costs to sell using contract prices or bids that were deemed indicative of fair value.

Schedule of quantitative information about significant unobservable inputs used for Level 3 fair value measurements

The table below sets forth quantitative information about significant unobservable inputs used for the Level 3 fair value measurements reported above for operating properties as of June 30, 2016:

Unobservable Input	Range (Weighted Average)
Discount rate	11.0% to 12.0% (11.6%)
Capitalization rate	9.0% to 10.0% (9.5%)

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Properties, Net (Tables)

6 Months Ended

Jun. 30, 2016

Real Estate [Abstract]

Schedule of operating properties, net

Operating properties, net consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Land	$	455,355		$	463,305
Buildings and improvements	3,005,802			3,157,587
Less: Accumulated depreciation	(678,827		)	(700,363		)
Operating properties, net	$	2,782,330		$	2,920,529

Schedule of projects in development or held for future development

Projects in development or held for future development consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Land	$	209,202	$	207,774
Development in progress, excluding land	178,195		221,445
Projects in development or held for future development	$	387,397	$	429,219

Components of assets held for sale

The table below sets forth the components of assets held for sale on our consolidated balance sheet for these properties (in thousands):

	June 30, 2016		December 31, 2015
Properties, net	$	269,008	$	90,188
Deferred rent receivable	15,765		2,891
Intangible assets on real estate acquisitions, net	1,591		1,591
Deferred leasing costs, net	10,869		1,391
Lease incentives, net	3,351		721
Assets held for sale, net	$	300,584	$	96,782

Pro Forma results

The pro forma financial information was prepared for comparative purposes only and is not necessarily indicative of what would have occurred had these acquisitions been made at that time or of results which may occur in the future (in thousands, except per share amounts).

	For the Three Months Ended June 30, 2015		For the Six Months Ended June 30, 2015
	(Unaudited)
Pro forma total revenues	$	175,996	$	345,921
Pro forma net income attributable to COPT common shareholders	$	13,259	$	24,106
Pro forma EPS:
Basic	$	0.14	$	0.25
Diluted	$	0.14	$	0.25

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Real Estate Joint Ventures (Tables)

6 Months Ended

Jun. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Schedule of information related to investments in consolidated real estate joint ventures

The table below sets forth information pertaining to our investments in consolidated real estate joint ventures as of June 30, 2016 (dollars in thousands):

		Nominal
		Ownership		June 30, 2016				(1)
	Date	% as of		Total		Encumbered		Total
	Acquired	6/30/2016	Nature of Activity	Assets		Assets		Liabilities
LW Redstone Company, LLC	3/23/2010	85%	Development and operation of real estate (2)	$	151,416	$	81,094	$	52,362
M Square Associates, LLC	6/26/2007	50%	Development and operation of real estate (3)	65,788		47,399		46,205
Stevens Investors, LLC	8/11/2015	95%	Development of real estate (4)	38,859		—		7,446
				$	256,063	$	128,493	$	106,013

(1) Excludes amounts eliminated in consolidation.

(2) This joint venture’s properties are in Huntsville, Alabama.

(3) This joint venture’s properties are in College Park, Maryland.

(4) This joint venture’s property is in Washington, DC.

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Investing Receivables (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Schedule of investing receivables

Investing receivables, including accrued interest thereon, consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Notes receivable from the City of Huntsville	$	47,142	$	44,875
Other investing loans receivable	3,020		3,000
	$	50,162	$	47,875

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Prepaid Expenses and Other Assets, Net (Tables)

6 Months Ended

Jun. 30, 2016

Prepaid Expense and Other Assets [Abstract]

Schedule of prepaid expenses and other assets

Prepaid expenses and other assets consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Prepaid expenses	$	10,301	$	23,009
Lease incentives, net	7,873		11,133
Furniture, fixtures and equipment, net	5,686		6,004
Construction contract costs incurred in excess of billings	5,281		3,261
Deferred financing costs, net (1)	4,497		5,867
Deferred tax asset, net (2)	3,589		3,467
Other assets	6,132		7,283
Prepaid expenses and other assets, net	$	43,359	$	60,024

(1) Represents deferred costs, net of accumulated amortization, attributable to our Revolving Credit Facility and interest rate derivatives.

(2) Includes a valuation allowance of $2.1 million.

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Debt, Net (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of debt

Our debt consisted of the following (dollars in thousands):

	Carrying Value (1) as of					Scheduled Maturity
	June 30, 2016		December 31, 2015		Stated Interest Rates as of	as of
					June 30, 2016	June 30, 2016
Mortgage and Other Secured Loans:
Fixed rate mortgage loans (2)	$	318,243	$	281,208	3.82% - 7.87% (3)	2016-2026
Variable rate secured loans	13,608		49,792		LIBOR + 1.85% (4)	2016-2020
Total mortgage and other secured loans	331,851		331,000
Revolving Credit Facility	58,000		43,500		LIBOR + 0.875% to 1.60% (5)	May 2019
Term Loan Facilities (6)	516,508		515,902		LIBOR + 0.90% to 2.60% (7)	2019-2022
Unsecured Senior Notes
3.600%, $350,000 aggregate principal	346,920		346,714		3.60% (8)	May 2023
5.250%, $250,000 aggregate principal	245,951		245,731		5.25% (9)	February 2024
3.700%, $300,000 aggregate principal	297,609		297,378		3.70% (10)	June 2021
5.000%, $300,000 aggregate principal	296,192		296,019		5.00% (11)	July 2025
Unsecured notes payable	1,455		1,508		0% (12)	2026
Total debt, net	$	2,094,486	$	2,077,752

(1) The carrying values of our loans other than the Revolving Credit Facility reflect net deferred financing costs of $7.4 million as of June 30, 2016 and $8.0 million as of December 31, 2015.

(2)   Several of the fixed rate mortgages carry interest rates that were above or below market rates upon assumption and therefore were recorded at their fair value based on applicable effective interest rates.  The carrying values of these loans reflect net unamortized premiums totaling $459,000 as of June 30, 2016 and $514,000 as of December 31, 2015.

(3) The weighted average interest rate on our fixed rate mortgage loans was 5.75% as of June 30, 2016.

(4)  The interest rate on our variable rate secured loan as of June 30, 2016 was 2.31%.

(5) The weighted average interest rate on the Revolving Credit Facility was 1.62% as of June 30, 2016.

(6)   An additional $150 million in borrowings is available to be drawn under a term loan. In addition, we have the ability to borrow an additional $430.0 million in the aggregate under these term loan facilities, provided that there is no default under the facilities and subject to the approval of the lenders.

(7)  The weighted average interest rate on these loans was 2.10% as of June 30, 2016.

(8) The carrying value of these notes reflects an unamortized discount totaling $2.1 millionas of June 30, 2016 and $2.2 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%. 

(9) The carrying value of these notes reflectsan unamortized discount totaling $3.6 millionas of June 30, 2016 and $3.8 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%. 

(10) The carrying value of these notes reflects an unamortized discount totaling $1.9 millionas of June 30, 2016 and $2.1 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.85%. 

(11) The carrying value of these notes reflects an unamortized discount totaling $3.2 millionas of June 30, 2016 and $3.3 million as of December 31, 2015.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.

(12)  These notes carry interest rates that were below market rates upon assumption and therefore were recorded at their fair value based on applicable effective interest rates.  The carrying value of these notes reflects an unamortized discount totaling $506,000 as of June 30, 2016 and $554,000 as of December 31, 2015.

Schedule of the fair value of debt

The following table sets forth information pertaining to the fair value of our debt (in thousands): 

	June 30, 2016				December 31, 2015
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Fixed-rate debt
Unsecured Senior Notes	$	1,186,672	$	1,227,235	$	1,185,842	$	1,211,658
Other fixed-rate debt	319,698		329,066		282,716		291,991
Variable-rate debt	588,116		592,032		609,194		610,987
	$	2,094,486	$	2,148,333	$	2,077,752	$	2,114,636

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Interest Rate Derivatives (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of key terms and fair values of interest rate swap derivatives

The following table sets forth the key terms and fair values of our interest rate swap derivatives (dollars in thousands):

							Fair Value at
Notional Amount			Fixed Rate	Floating Rate Index	Effective Date	Expiration Date	June 30, 2016			December 31, 2015
$	100,000		0.8055%	One-Month LIBOR	9/2/2014	9/1/2016	$	(58	)	$	(148	)
100,000			0.8100%	One-Month LIBOR	9/2/2014	9/1/2016	(59		)	(151		)
100,000			1.6730%	One-Month LIBOR	9/1/2015	8/1/2019	(3,117		)	(1,217		)
100,000			1.7300%	One-Month LIBOR	9/1/2015	8/1/2019	(3,293		)	(1,429		)
13,765		(1)	1.3900%	One-Month LIBOR	10/13/2015	10/1/2020	(337		)	53
100,000			1.9013%	One-Month LIBOR	9/1/2016	12/1/2022	(5,367		)	(138		)
100,000			1.9050%	One-Month LIBOR	9/1/2016	12/1/2022	(5,336		)	(45		)
50,000			1.9079%	One-Month LIBOR	9/1/2016	12/1/2022	(2,678		)	(32		)
							$	(20,245	)	$	(3,107	)

(1) The notional amount of this instrument is scheduled to amortize to $12.1 million.

Schedule of fair value and balance sheet classification of interest rate derivatives

The table below sets forth the fair value of our interest rate derivatives as well as their classification on our consolidated balance sheets (in thousands):

		Fair Value at
Derivatives	Balance Sheet Location	June 30, 2016			December 31, 2015
Interest rate swaps designated as cash flow hedges	Prepaid expenses and other assets	$	—		$	53
Interest rate swaps designated as cash flow hedges	Interest rate derivatives	(20,245		)	(3,160		)

Schedule of effect of interest rate derivatives on consolidated statements of operations and comprehensive income

The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016			2015		2016			2015
Amount of (loss) gain recognized in accumulated other comprehensive loss (“AOCL”) (effective portion)	$	(5,704	)	$	392	$	(16,988	)	$	(3,082	)
Amount of losses reclassified from AOCL into interest expense (effective portion)	850			769		1,720			1,542
Amount of loss recognized in interest expense (ineffective portion)	319			—		1,870			—

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Redeemable Noncontrolling Interests (Tables)

6 Months Ended

Jun. 30, 2016

Noncontrolling Interest [Abstract]

Schedule of activity for redeemable noncontrolling interest

The table below sets forth the activity for these redeemable noncontrolling interests (in thousands):

	For the Six Months Ended June 30,
	2016			2015
Beginning balance	$	19,218		$	18,417
Contributions from noncontrolling interests	22,778			—
Distributions to noncontrolling interests	(20,989		)	(885		)
Net income attributable to noncontrolling interests	1,117			1,143
Adjustment to arrive at fair value of interests	349			739
Ending balance	$	22,473		$	19,414

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Information by Business Segment (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Schedule of segment financial information for real estate operations

	Operating Office Property Segments
	Defense/Information Technology Locations
	Fort Meade/BW Corridor		Northern Virginia Defense/IT		Lackland Air Force Base		Navy Support Locations		Redstone Arsenal		Data Center Shells		Total Defense/IT Locations		Regional Office		Operating Wholesale Data Center			Other			Total
Three Months Ended June 30, 2016
Revenues from real estate operations	$	60,912	$	12,057	$	11,651	$	6,998	$	3,191	$	7,288	$	102,097	$	23,283	$	6,804		$	1,740		$	133,924
Property operating expenses	20,378		4,307		6,844		2,675		960		826		35,990		8,721		2,651			779			48,141
NOI from real estate operations	$	40,534	$	7,750	$	4,807	$	4,323	$	2,231	$	6,462	$	66,107	$	14,562	$	4,153		$	961		$	85,783
Additions to long-lived assets	$	7,096	$	3,059	$	—	$	2,233	$	301	$	—	$	12,689	$	2,180	$	—		$	153		$	15,022
Transfers from non-operating properties	$	768	$	27,944	$	231	$	—	$	4	$	29,857	$	58,804	$	26	$	(482	)	$	—		$	58,348
Three Months Ended June 30, 2015							—
Revenues from real estate operations	$	60,007	$	13,462	$	9,743	$	7,186	$	2,658	$	5,037	$	98,093	$	24,400	$	3,820		$	1,882		$	128,195
Property operating expenses	19,480		5,354		5,349		3,390		888		499		34,960		8,406		2,221			820			46,407
NOI from real estate operations	$	40,527	$	8,108	$	4,394	$	3,796	$	1,770	$	4,538	$	63,133	$	15,994	$	1,599		$	1,062		$	81,788
Additions to long-lived assets	$	5,141	$	83,913	$	—	$	1,769	$	208	$	—	$	91,031	$	3,396	$	78		$	210		$	94,715
Transfers from non-operating properties	$	6,098	$	7,735	$	468	$	—	$	8,980	$	911	$	24,192	$	5,218	$	15,202		$	12		$	44,624
Six Months Ended June 30, 2016
Revenues from real estate operations	$	123,421	$	24,173	$	21,876	$	13,932	$	6,307	$	13,618	$	203,327	$	46,785	$	13,297		$	3,602		$	267,011
Property operating expenses	43,624		8,848		12,264		6,199		1,938		1,636		74,509		18,552		5,312			1,643			100,016
NOI from real estate operations	$	79,797	$	15,325	$	9,612	$	7,733	$	4,369	$	11,982	$	128,818	$	28,233	$	7,985		$	1,959		$	166,995
Additions to long-lived assets	$	13,615	$	6,137	$	—	$	3,503	$	919	$	—	$	24,174	$	4,939	$	—		$	310		$	29,423
Transfers from non-operating properties	$	36,519	$	27,850	$	237	$	—	$	215	$	55,954	$	120,775	$	108	$	(431	)	$	(11	)	$	120,441
Segment assets at June 30, 2016	$	1,305,769	$	424,441	$	133,359	$	195,195	$	106,810	$	256,276	$	2,421,850	$	594,750	$	237,226		$	35,291		$	3,289,117
Six Months Ended June 30, 2015
Revenues from real estate operations	$	121,191	$	24,508	$	18,408	$	14,451	$	5,104	$	10,151	$	193,813	$	46,360	$	6,855		$	3,877		$	250,905
Property operating expenses	42,996		10,970		10,112		6,788		1,717		1,194		73,777		17,154		4,433			1,729			97,093
NOI from real estate operations	$	78,195	$	13,538	$	8,296	$	7,663	$	3,387	$	8,957	$	120,036	$	29,206	$	2,422		$	2,148		$	153,812
Additions to long-lived assets	$	8,586	$	84,700	$	—	$	3,362	$	291	$	—	$	96,939	$	69,330	$	108		$	309		$	166,686
Transfers from non-operating properties	$	19,028	$	51,208	$	31,559	$	—	$	11,977	$	16,008	$	129,780	$	16,725	$	15,379		$	12		$	161,896
Segment assets at June 30, 2015	$	1,266,632	$	499,601	$	134,127	$	194,764	$	107,677	$	170,006	$	2,372,807	$	598,030	$	175,563		$	72,257		$	3,218,657

Schedule of reconciliation of segment revenues to total revenues

The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016		2015			2016		2015
Segment revenues from real estate operations	$	133,924	$	128,195		$	267,011	$	250,905
Construction contract and other service revenues	12,003		42,172			23,223		80,496
Less: Revenues from discontinued operations	—		(4		)	—		(4		)
Total revenues	$	145,927	$	170,363		$	290,234	$	331,397

Schedule of reconciliation of segment property operating expenses to total property operating expenses

The following table reconciles our segment property operating expenses to property operating expenses as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Segment property operating expenses	$	48,141	$	46,407	$	100,016	$	97,093
Less: Property operating expenses from discontinued operations	—		11		—		6
Total property operating expenses	$	48,141	$	46,418	$	100,016	$	97,099

Schedule of computation of net operating income from service operations

The table below sets forth the computation of our NOI from service operations (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Construction contract and other service revenues	$	12,003		$	42,172		$	23,223		$	80,496
Construction contract and other service expenses	(11,478		)	(41,293		)	(22,172		)	(78,791		)
NOI from service operations	$	525		$	879		$	1,051		$	1,705

Schedule of reconciliation of net operating income from real estate operations and service operations to (loss) income from continuing operations

The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to income from continuing operations as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
NOI from real estate operations	$	85,783		$	81,788		$	166,995		$	153,812
NOI from service operations	525			879			1,051			1,705
Interest and other income	1,330			1,242			2,486			2,525
Equity in income of unconsolidated entities	10			9			20			34
Income tax (expense) benefit	(1		)	(50		)	7			(105		)
Other adjustments:	—						—
Depreciation and other amortization associated with real estate operations	(33,248		)	(33,786		)	(67,775		)	(65,385		)
Impairment losses	(69,692		)	(1,238		)	(72,138		)	(1,238		)
General, administrative and leasing expenses	(8,026		)	(7,534		)	(19,909		)	(15,425		)
Business development expenses and land carry costs	(2,363		)	(2,623		)	(4,781		)	(5,413		)
Interest expense	(22,639		)	(21,768		)	(46,198		)	(42,606		)
NOI from discontinued operations	—			(15		)	—			(10		)
Gain (loss) on early extinguishment of debt	5			(65		)	22			(68		)
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826

Schedule of reconciliation of segment assets to total assets

The following table reconciles our segment assets to the consolidated total assets of COPT and subsidiaries (in thousands):

	June 30, 2016		June 30, 2015
Segment assets	$	3,289,117	$	3,218,657
Non-operating property assets	413,597		527,742
Other assets	138,978		157,660
Total COPT consolidated assets	$	3,841,692	$	3,904,059

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Share-Based Compensation and Other Compensation Matters (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of payouts for defined performance under performance-based awards of share-based compensation

The number of PSUs earned (“earned PSUs”) at the end of the performance period will be determined based on the percentile rank of COPT’s total shareholder return relative to a peer group of companies, as set forth in the following schedule:

Percentile Rank	Earned PSUs Payout %
75th or greater	200% of PSUs granted
50th or greater	100% of PSUs granted
25th	50% of PSUs granted
Below 25th	0% of PSUs granted

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Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Line Items]

Summary of calculation of numerator and denominator in basic and diluted earnings per share

Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Numerator:
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826
Gain on sales of real estate, net	—			(1		)	—			3,985
Preferred share dividends	(3,553		)	(3,553		)	(7,105		)	(7,105		)
Loss (income) from continuing operations attributable to noncontrolling interests	897			(1,436		)	(373		)	(2,828		)
Income from continuing operations attributable to share-based compensation awards	(96		)	(113		)	(214		)	(235		)
Numerator for basic and diluted EPS from continuing operations attributable to COPT common shareholders	$	(51,068	)	$	11,736		$	(47,912	)	$	21,643
Discontinued operations	—			394			—			156
Discontinued operations attributable to noncontrolling interests	—			(15		)	—			(3		)
Numerator for basic and diluted EPS on net income attributable to COPT common shareholders	$	(51,068	)	$	12,115		$	(47,912	)	$	21,796
Denominator (all weighted averages):
Denominator for basic EPS (common shares)	94,300			94,128			94,251			93,666
Dilutive effect of share-based compensation awards	—			35			—			114
Denominator for diluted EPS (common shares)	94,300			94,163			94,251			93,780
Basic EPS:
(Loss) income from continuing operations attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPT common shareholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Diluted EPS:
(Loss) income from continuing operations attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPT common shareholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPT common shareholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23

Schedule of securities excluded from computation of diluted earnings per share

Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):

	Weighted Average Shares Excluded from Denominator
	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Conversion of common units	3,676	3,680	3,676	3,706
Conversion of Series I Preferred Units	176	176	176	176
Conversion of Series K Preferred Shares	434	434	434	434

Corporate Office Properties, L.P.

Earnings Per Share [Line Items]

Summary of calculation of numerator and denominator in basic and diluted earnings per share

Summaries of the numerator and denominator for purposes of basic and diluted EPU calculations are set forth below (in thousands, except per unit data):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Numerator:
(Loss) income from continuing operations	$	(48,316	)	$	16,839		$	(40,220	)	$	27,826
Gain on sales of real estate, net	—			(1		)	—			3,985
Preferred unit distributions	(3,718		)	(3,718		)	(7,435		)	(7,435		)
Income from continuing operations attributable to noncontrolling interests	(911		)	(812		)	(1,890		)	(1,633		)
Income from continuing operations attributable to share-based compensation awards	(96		)	(113		)	(214		)	(235		)
Numerator for basic and diluted EPU from continuing operations attributable to COPLP common unitholders	$	(53,041	)	$	12,195		$	(49,759	)	$	22,508
Discontinued operations	—			394			—			156
Discontinued operations attributable to noncontrolling interests	—			—			—			3
Numerator for basic and diluted EPU on net income attributable to COPLP common unitholders	$	(53,041	)	$	12,589		$	(49,759	)	$	22,667
Denominator (all weighted averages):
Denominator for basic EPU (common units)	97,976			97,808			97,927			97,372
Dilutive effect of share-based compensation awards	—			35			—			114
Denominator for diluted EPU (common units)	97,976			97,843			97,927			97,486
Basic EPU:
(Loss) income from continuing operations attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPLP common unitholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Diluted EPU:
(Loss) income from continuing operations attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23
Discontinued operations attributable to COPLP common unitholders	0.00			0.00			0.00			0.00
Net (loss) income attributable to COPLP common unitholders	$	(0.54	)	$	0.13		$	(0.51	)	$	0.23

Schedule of securities excluded from computation of diluted earnings per share

Our diluted EPU computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPU for the respective periods (in thousands):

	Weighted Average Units Excluded from Denominator
	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Conversion of Series I preferred units	176	176	176	176
Conversion of Series K preferred units	434	434	434	434

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Future minimum rental payments for operating leases

Future minimum rental payments due under the terms of these operating leases as of June 30, 2016 follow (in thousands):

Year Ending December 31,
2016 (1)	$	603
2017	1,139
2018	1,092
2019	1,067
2020	1,084
Thereafter	86,805
	$	91,790

(1) Represents six months ending December 31, 2016.

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Organization (Details) ft² in Thousands	Jun. 30, 2016 ft² a Property MW
Properties under or approved for redevelopment
Investments in real estate
Number of real estate properties	3
Area of real estate property (in square feet or acres) | ft²	104
Operating office properties
Investments in real estate
Number of real estate properties	181
Area of real estate property (in square feet or acres) | ft²	18,400
Operating office properties | Single-tenant data centers
Investments in real estate
Number of real estate properties	11
Office properties under, or contractually committed for, construction or approved for redevelopment
Investments in real estate
Number of real estate properties	12
Area of real estate property (in square feet or acres) | ft²	1,500
Office properties under, or contractually committed for, construction or approved for redevelopment | Properties completed Held-for-future lease
Investments in real estate
Number of real estate properties	2
Partially operational properties | Properties under or approved for redevelopment
Investments in real estate
Number of real estate properties	2
Land controlled for future development
Investments in real estate
Area of real estate property (in square feet or acres) | a	1,379
Developable square feet | ft²	16,700
Wholesale data centers
Investments in real estate
Critical load (in megawatts) | MW	19.25

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Organization (Details 2) - Corporate Office Properties, L.P.	6 Months Ended
	Jun. 30, 2016
Common Units
Forms of ownership in Operating Partnership and ownership percentage by the entity
Percentage ownership in operating partnership	96.30%
Preferred Units
Forms of ownership in Operating Partnership and ownership percentage by the entity
Percentage ownership in operating partnership	95.50%

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Fair Value Measurements (Details) - Deferred compensation plan - Management $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Assets and liabilities measured at fair value on a recurring basis
Maximum percentage of participants' compensation which is deferrable (as a percent)	100.00%
Balance of the plan which was fully funded	$ 5.0

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Fair Value Measurements (Details 2) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Liabilities:
Interest rate derivatives	$ 20,245	$ 3,160
Corporate Office Properties, L.P.
Liabilities:
Interest rate derivatives	20,245	$ 3,160
Fair value measurement on a recurring basis
Assets:
Assets	5,046
Liabilities:
Deferred compensation plan liability	5,046
Interest rate derivatives	20,245
Liabilities	25,291
Fair value measurement on a recurring basis | Mutual funds
Assets:
Marketable securities in deferred compensation plan	4,954
Fair value measurement on a recurring basis | Other
Assets:
Marketable securities in deferred compensation plan	92
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Assets	5,046
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds
Assets:
Marketable securities in deferred compensation plan	4,954
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other
Assets:
Marketable securities in deferred compensation plan	92
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2)
Assets:
Assets	0
Liabilities:
Deferred compensation plan liability	5,046
Interest rate derivatives	20,245
Liabilities	25,291
Fair value measurement on a recurring basis | Corporate Office Properties, L.P.
Liabilities:
Interest rate derivatives	20,245
Fair value measurement on a recurring basis | Corporate Office Properties, L.P. | Significant Other Observable Inputs (Level 2)
Liabilities:
Interest rate derivatives	$ 20,245

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Fair Value Measurements (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Assets and liabilities measured at fair value on a non-recurring basis
Impairment losses	$ 69,692	$ 1,238	$ 72,138	$ 1,238
Fair value measurement on a recurring basis
Assets and liabilities measured at fair value on a non-recurring basis
Assets	5,046		5,046
Fair value measurement on a nonrecurring basis | Projects in development or held for future development
Assets and liabilities measured at fair value on a non-recurring basis
Assets	9,117		9,117
Fair value measurement on a nonrecurring basis | Projects in development or held for future development | Significant Unobservable Inputs (Level 3)
Assets and liabilities measured at fair value on a non-recurring basis
Assets	9,117		9,117
Fair value measurement on a nonrecurring basis | Northern Virginia Defense/IT and Fort Meade/BW Corridor | Assets held for sale, net
Assets and liabilities measured at fair value on a non-recurring basis
Impairment losses	14,100
Fair value measurement on a nonrecurring basis | Aberdeen, Maryland | Land in development or held for future development
Assets and liabilities measured at fair value on a non-recurring basis
Impairment losses	4,400
Fair value measurement on a nonrecurring basis | Aberdeen, Maryland | Other Segments | Operating properties, net
Assets and liabilities measured at fair value on a non-recurring basis
Impairment losses	34,400
Fair value measurement on a nonrecurring basis | Frederick, Maryland | Land in development or held for future development
Assets and liabilities measured at fair value on a non-recurring basis
Impairment losses	8,200
Fair value measurement on a nonrecurring basis | Greater Philadelphia, Pennsylvania | Regional Office | Assets held for sale, net
Assets and liabilities measured at fair value on a non-recurring basis
Impairment losses	6,200
Fair value measurement on a nonrecurring basis | Colorado Springs | Assets held for sale, net
Assets and liabilities measured at fair value on a non-recurring basis
Impairment losses			3,400
Fair value measurement on a nonrecurring basis | White Marsh, Maryland | Regional Office | Assets held for sale, net
Assets and liabilities measured at fair value on a non-recurring basis
Impairment losses			1,400
Assets held for sale, net | Fair value measurement on a nonrecurring basis
Assets and liabilities measured at fair value on a non-recurring basis
Assets	55,322		55,322
Assets held for sale, net | Fair value measurement on a nonrecurring basis | Significant Unobservable Inputs (Level 3)
Assets and liabilities measured at fair value on a non-recurring basis
Assets	55,322		55,322
Operating properties, net | Fair value measurement on a nonrecurring basis
Assets and liabilities measured at fair value on a non-recurring basis
Assets	13,700		13,700
Operating properties, net | Fair value measurement on a nonrecurring basis | Significant Unobservable Inputs (Level 3)
Assets and liabilities measured at fair value on a non-recurring basis
Assets	$ 13,700		$ 13,700

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Fair Value Measurements (Details 4) - Fair value measurement on a nonrecurring basis - Significant Unobservable Inputs (Level 3) - Discounted Cash Flow	6 Months Ended
	Jun. 30, 2016
Minimum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate (percent)	11.00%
Capitalization rate (percent)	9.00%
Maximum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate (percent)	12.00%
Capitalization rate (percent)	10.00%
Weighted Average
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate (percent)	11.60%
Capitalization rate (percent)	9.60%

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Properties, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Investments in real estate
Less: accumulated depreciation	$ (678,827)	$ (700,363)
Operating properties, net	2,782,330	2,920,529
Land
Investments in real estate
Gross	455,355	463,305
Buildings and improvements
Investments in real estate
Gross	$ 3,005,802	$ 3,157,587

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Properties, Net (Details 2) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Properties
Projects in development or held for future development	$ 387,397	$ 429,219
Projects in development or held for future development | Land in development or held for future development
Properties
Projects in development or held for future development	209,202	207,774
Projects in development or held for future development | Construction in progress, excluding land
Properties
Projects in development or held for future development	$ 178,195	$ 221,445

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Properties, Net (Details 3) $ in Thousands	Jun. 30, 2016 USD ($) Property	Dec. 31, 2015 USD ($) Property
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale, net | $	$ 300,584	$ 96,782
Assets held for sale, net
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Properties, net | $	269,008	90,188
Deferred rent receivable | $	15,765	2,891
Intangible assets on real estate acquisitions, net | $	1,591	1,591
Deferred leasing costs, net | $	10,869	1,391
Lease incentives, net | $	3,351	721
Assets held for sale, net | $	$ 300,584	$ 96,782
Fort Meade/BW Corridor | 2016 Assets Held For Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | Property	10
Regional Office | White Marsh, Maryland | 2016 Assets Held For Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | Property	13
Regional Office | White Marsh, Maryland | 2015 Assets Held For Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | Property		13
Regional Office | Greater Philadelphia, Pennsylvania | 2016 Assets Held For Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | Property	4
Other Segments | San Antonio, Texas | 2016 Assets Held For Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | Property	2
Other Segments | San Antonio, Texas | 2015 Assets Held For Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | Property		2
Defense/Information Technology Locations | Northern Virginia Defense/IT | 2016 Assets Held For Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties | Property	1

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Properties, Net (Details 4) ft² in Thousands, $ in Thousands				3 Months Ended		6 Months Ended
	Aug. 07, 2015 USD ($) ft²	Apr. 15, 2015 USD ($) ft²	Mar. 19, 2015 USD ($) ft²	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)
2015 Acquisitions
Business Acquisition [Line Items]
Contributed revenues				$ 9,200	$ 4,000	$ 18,400	$ 4,300
Contributed net income from continuing operations				$ 1,100	$ 40	$ 2,000	$ 210
250 W Pratt St | Baltimore, Maryland
Business Acquisition [Line Items]
Square footage of real estate properties (in square feet) | ft²			367
Acquired property percentage leased			96.20%
Total acquisition cost			$ 61,800
2600 Park Tower Drive | Northern Virginia
Business Acquisition [Line Items]
Square footage of real estate properties (in square feet) | ft²		237
Acquired property percentage leased		100.00%
Total acquisition cost		$ 80,500
100 and 30 Light Street | Baltimore, Maryland
Business Acquisition [Line Items]
Square footage of real estate properties (in square feet) | ft²	558
Acquired property percentage leased	93.50%
Total acquisition cost	$ 121,200
Business combination, liabilities assumed	55,000
Fair value assumption of debt	$ 55,500

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Properties, Net (Details 5) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015
Real Estate [Abstract]
Pro forma total revenues	$ 175,996	$ 345,921
Pro forma net income attributable to COPT common shareholders	$ 13,259	$ 24,106
Pro Forma EPS, Basic (in dollars per share)	$ 0.14	$ 0.25
Pro Forma EPS, Diluted (in dollars per share)	$ 0.14	$ 0.25

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Properties, Net (Details 6) ft² in Thousands, $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($) ft² Property
Construction and Redevelopment Activities
Sale price of land | $	$ 5.7
Office properties under, or contractually committed for, construction or approved for redevelopment
Construction and Redevelopment Activities
Number of real estate properties	12
Square footage of real estate properties (in square feet) | ft²	1,500
Newly constructed properties placed in service
Construction and Redevelopment Activities
Square feet of properties placed in service | ft²	298
Number of real estate properties	2
Newly redeveloped properties placed in service
Construction and Redevelopment Activities
Square feet of properties placed in service | ft²	55
Number of real estate properties	2
Properties under construction or contractually committed for construction
Construction and Redevelopment Activities
Number of real estate properties	9
Square footage of real estate properties (in square feet) | ft²	1,400
Properties completed Held-for-future lease | Office properties under, or contractually committed for, construction or approved for redevelopment
Construction and Redevelopment Activities
Number of real estate properties	2
Properties under or approved for redevelopment
Construction and Redevelopment Activities
Number of real estate properties	3
Square footage of real estate properties (in square feet) | ft²	104

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Real Estate Joint Ventures (Details) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Jan. 31, 2016	Jun. 30, 2016	Jun. 30, 2015
Investments in consolidated real estate joint ventures
Value of properties contributed		$ 22,600	$ 0
Consolidated real estate joint ventures
Investments in consolidated real estate joint ventures
Total Assets		256,063
Encumbered Assets		128,493
Total Liabilities		$ 106,013
Variable Interest Entity, Primary Beneficiary | LW Redstone Company, LLC
Investments in consolidated real estate joint ventures
Ownership (as a percent)		85.00%
Total Assets		$ 151,416
Encumbered Assets		81,094
Total Liabilities		$ 52,362
Variable Interest Entity, Primary Beneficiary | M Square Associates, LLC
Investments in consolidated real estate joint ventures
Ownership (as a percent)		50.00%
Total Assets		$ 65,788
Encumbered Assets		47,399
Total Liabilities		$ 46,205
Variable Interest Entity, Primary Beneficiary | Stevens Investors, LLC
Investments in consolidated real estate joint ventures
Ownership (as a percent)		95.00%
Total Assets		$ 38,859
Encumbered Assets		0
Total Liabilities		7,446
Value of properties contributed	$ 22,600
Distributions to joint venture	$ 13,400
Variable Interest Entity, Primary Beneficiary | Stevens Investors, LLC | Other Liabilities
Investments in consolidated real estate joint ventures
Due to Affiliate		$ 6,700

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Investing Receivables (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Investing receivables	$ 50,162	$ 47,875
Notes Receivable from City of Huntsville
Accounts, Notes, Loans and Financing Receivable [Line Items]
Investing receivables	$ 47,142	44,875
Notes Receivable from City of Huntsville | LW Redstone Company, LLC
Accounts, Notes, Loans and Financing Receivable [Line Items]
Stated interest rate (as a percent)	9.95%
Other investing loans receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Investing receivables	$ 3,020	$ 3,000

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Prepaid Expenses and Other Assets, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Prepaid Expense and Other Assets [Abstract]
Prepaid expenses	$ 10,301	$ 23,009
Lease incentives, net	7,873	11,133
Furniture, fixtures and equipment, net	5,686	6,004
Construction contract costs incurred in excess of billings	5,281	3,261
Deferred financing costs, net	4,497	5,867
Deferred tax asset, net	3,589	3,467
Other assets	6,132	7,283
Prepaid expenses and other assets, net	43,359	60,024
Taxable REIT Subsidiary
Mortgage and Other Investing Receivables [Line Items]
Deferred tax assets, valuation allowance	$ 2,100	$ 2,100

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Debt, Net (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Debt
Carrying Value	$ 2,094,486,000		$ 2,094,486,000		$ 2,077,752,000
Deferred financing costs, net	4,497,000		4,497,000		5,867,000
Interest costs capitalized	1,300,000	$ 2,000,000	3,100,000	$ 4,100,000
Loans payable
Debt
Deferred financing costs, net	7,400,000		7,400,000		8,000,000
Mortgage and Other Secured Loans:
Debt
Carrying Value	331,851,000		331,851,000		331,000,000
Fixed rate mortgage loans
Debt
Carrying Value	318,243,000		$ 318,243,000		281,208,000
Stated interest rates, low end of range (as a percent)			3.82%
Stated interest rates, high end of range (as a percent)			7.87%
Unamortized premium included in carrying value	$ 459,000		$ 459,000		514,000
Weighted average interest rate (as a percent)	5.75%		5.75%
Variable rate secured loans
Debt
Carrying Value	$ 13,608,000		$ 13,608,000		49,792,000
Description of variable rate basis			LIBOR
Stated interest rate (as a percent)	2.31%		2.31%
Variable rate secured loans | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread (as a percent)			1.85%
Variable rate secured loans | Revolving Credit Facility
Debt
Weighted average interest rate (as a percent)	1.62%		1.62%
Revolving Credit Facility
Debt
Carrying Value	$ 58,000,000		$ 58,000,000		43,500,000
Description of variable rate basis			LIBOR
Revolving Credit Facility | Minimum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread (as a percent)			0.875%
Revolving Credit Facility | Maximum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread (as a percent)			1.60%
Term Loan Facilities
Debt
Carrying Value	516,508,000		$ 516,508,000		515,902,000
Increase to maximum borrowing capacity	150,000,000		150,000,000
Aggregate additional borrowing capacity available	$ 430,000,000		$ 430,000,000
Description of variable rate basis			LIBOR
Weighted average interest rate (as a percent)	2.10%		2.10%
Term Loan Facilities | Minimum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread (as a percent)			0.90%
Term Loan Facilities | Maximum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread (as a percent)			2.60%
3.60% Senior Notes | Unsecured senior notes
Debt
Carrying Value	$ 346,920,000		$ 346,920,000		346,714,000
Stated interest rate (as a percent)	3.60%		3.60%
Debt instrument, face amount	$ 350,000		$ 350,000
Unamortized discount included in carrying value	$ 2,100,000		$ 2,100,000		2,200,000
Interest rate on debt (as a percent)	3.70%		3.70%
5.250% Senior Notes | Unsecured senior notes
Debt
Carrying Value	$ 245,951,000		$ 245,951,000		245,731,000
Stated interest rate (as a percent)	5.25%		5.25%
Debt instrument, face amount	$ 250,000		$ 250,000
Unamortized discount included in carrying value	$ 3,600,000		$ 3,600,000		3,800,000
Interest rate on debt (as a percent)	5.49%		5.49%
3.70% Senior Notes | Unsecured senior notes
Debt
Carrying Value	$ 297,609,000		$ 297,609,000		297,378,000
Stated interest rate (as a percent)	3.70%		3.70%
Debt instrument, face amount	$ 300,000		$ 300,000
Unamortized discount included in carrying value	$ 1,900,000		$ 1,900,000		2,100,000
Interest rate on debt (as a percent)	3.85%		3.85%
5.000% Senior Notes | Unsecured senior notes
Debt
Carrying Value	$ 296,192,000		$ 296,192,000		296,019,000
Stated interest rate (as a percent)	5.00%		5.00%
Debt instrument, face amount	$ 300,000		$ 300,000
Unamortized discount included in carrying value	$ 3,200,000		$ 3,200,000		3,300,000
Interest rate on debt (as a percent)	5.15%		5.15%
Unsecured notes payable
Debt
Carrying Value	$ 1,455,000		$ 1,455,000		1,508,000
Stated interest rate (as a percent)	0.00%		0.00%
Unamortized discount included in carrying value	$ 506,000		$ 506,000		$ 554,000

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Debt, Net (Details 2) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Carrying amount and estimated fair value of debt
Carrying Value	$ 2,094,486	$ 2,077,752
Carrying Amount
Carrying amount and estimated fair value of debt
Variable-rate debt	588,116	609,194
Carrying Value	2,094,486	2,077,752
Carrying Amount | Unsecured senior notes
Carrying amount and estimated fair value of debt
Fixed-rate debt	1,186,672	1,185,842
Carrying Amount | Other fixed-rate debt
Carrying amount and estimated fair value of debt
Fixed-rate debt	319,698	282,716
Total Estimated Fair Value
Carrying amount and estimated fair value of debt
Variable-rate debt	592,032	610,987
Carrying Value	2,148,333	2,114,636
Total Estimated Fair Value | Unsecured senior notes
Carrying amount and estimated fair value of debt
Fixed-rate debt	1,227,235	1,211,658
Total Estimated Fair Value | Other fixed-rate debt
Carrying amount and estimated fair value of debt
Fixed-rate debt	$ 329,066	$ 291,991

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Interest Rate Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income
Amount of (loss) gain recognized in accumulated other comprehensive loss (“AOCL”) (effective portion)	$ (5,704)	$ 392	$ (16,988)	$ (3,082)
Amount of losses reclassified from AOCL into interest expense (effective portion)	850	769	1,720	1,542
Interest rate swaps
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income
Approximate loss amount to be reclassified from AOCI to interest expense over the next 12 months	5,600		5,600
Interest rate derivatives in liability position, fair value	21,100		21,100
Termination value to settle obligations under interest rate derivative agreements	21,400		21,400
Interest rate swaps | Interest Expense
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income
Amount of loss recognized in interest expense (ineffective portion)	319	$ 0	1,870	$ 0
Interest rate swaps | Prepaid expenses and other current assets
Fair value of interest rate derivatives and balance sheet classification
Interest rate derivatives	0		0		$ 53
Interest rate swaps | Interest rate derivatives
Fair value of interest rate derivatives and balance sheet classification
Fair value of Interest rate swaps classified as interest rate derivatives	(20,245)		(20,245)		(3,160)
Designated
Fair values of interest rate swap derivatives
Fair value of interest rate swaps	(20,245)		(20,245)		(3,107)
Designated | Interest rate swap, effective date September 2, 2014, swap one
Fair values of interest rate swap derivatives
Notional Amount	$ 100,000		$ 100,000
Fixed rate (as a percent)	0.8055%		0.8055%
Fair value of interest rate swaps	$ (58)		$ (58)		(148)
Designated | Interest rate swap, effective date September 2, 2014, swap two
Fair values of interest rate swap derivatives
Notional Amount	$ 100,000		$ 100,000
Fixed rate (as a percent)	0.81%		0.81%
Fair value of interest rate swaps	$ (59)		$ (59)		(151)
Designated | Interest rate swap, effective date September 1, 2015, swap one
Fair values of interest rate swap derivatives
Notional Amount	$ 100,000		$ 100,000
Fixed rate (as a percent)	1.673%		1.673%
Fair value of interest rate swaps	$ (3,117)		$ (3,117)		(1,217)
Designated | Interest rate swap, effective date September 1, 2015, swap two
Fair values of interest rate swap derivatives
Notional Amount	$ 100,000		$ 100,000
Fixed rate (as a percent)	1.73%		1.73%
Fair value of interest rate swaps	$ (3,293)		$ (3,293)		(1,429)
Designated | Interest rate swap, effective October 13, 2015
Fair values of interest rate swap derivatives
Notional Amount	$ 13,765		$ 13,765
Fixed rate (as a percent)	1.39%		1.39%
Fair value of interest rate swaps	$ (337)		$ (337)		53
Notional amount of interest rate derivatives after scheduled amortization	12,100		12,100
Designated | Interest rate swap, effective September 1, 2016, swap one
Fair values of interest rate swap derivatives
Notional Amount	$ 100,000		$ 100,000
Fixed rate (as a percent)	1.9013%		1.9013%
Fair value of interest rate swaps	$ (5,367)		$ (5,367)		(138)
Designated | Interest rate swap, effective September 1, 2016, swap two
Fair values of interest rate swap derivatives
Notional Amount	$ 100,000		$ 100,000
Fixed rate (as a percent)	1.905%		1.905%
Fair value of interest rate swaps	$ (5,336)		$ (5,336)		(45)
Designated | Interest rate swap, effective September 1, 2016, swap three
Fair values of interest rate swap derivatives
Notional Amount	$ 50,000		$ 50,000
Fixed rate (as a percent)	1.9079%		1.9079%
Fair value of interest rate swaps	$ (2,678)		$ (2,678)		$ (32)

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Redeemable Noncontrolling Interests (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) joint_venture	Jun. 30, 2015 USD ($)
Noncontrolling Interest [Abstract]
Number of joint ventures with redeemable noncontrolling interests | joint_venture	2
Redeemable Noncontrolling Interest [Roll Forward]
Beginning balance	$ 19,218	$ 18,417
Contributions from noncontrolling interests	22,778	0
Distributions to noncontrolling interests	(20,989)	(885)
Net income attributable to noncontrolling interests	1,117	1,143
Adjustment to arrive at fair value of interests	349	739
Ending balance	$ 22,473	$ 19,414

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Equity (Details) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Equity [Abstract]
Conversion of common units to common shares (in units/ shares)	26,758	158,000

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Information by Business Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Segment financial information for real estate operations
Revenues from real estate operations	$ 133,924	$ 128,195	$ 267,011	$ 250,905
Property operating expenses	48,141	46,407	100,016	97,093
NOI from real estate operations	85,783	81,788	166,995	153,812
Segment assets	3,841,692	3,904,059	3,841,692	3,904,059	$ 3,909,312
Segment assets
Segment financial information for real estate operations
Revenues from real estate operations	133,924	128,195	267,011	250,905
Property operating expenses	48,141	46,407	100,016	97,093
NOI from real estate operations	85,783	81,788	166,995	153,812
Additions to long-lived assets	15,022	94,715	29,423	166,686
Transfers from non-operating properties	58,348	44,624	120,441	161,896
Segment assets	3,289,117	3,218,657	3,289,117	3,218,657
Segment assets | Defense/Information Technology Locations
Segment financial information for real estate operations
Revenues from real estate operations	102,097	98,093	203,327	193,813
Property operating expenses	35,990	34,960	74,509	73,777
NOI from real estate operations	66,107	63,133	128,818	120,036
Additions to long-lived assets	12,689	91,031	24,174	96,939
Transfers from non-operating properties	58,804	24,192	120,775	129,780
Segment assets	2,421,850	2,372,807	2,421,850	2,372,807
Segment assets | Defense/Information Technology Locations | Fort Meade/BW Corridor
Segment financial information for real estate operations
Revenues from real estate operations	60,912	60,007	123,421	121,191
Property operating expenses	20,378	19,480	43,624	42,996
NOI from real estate operations	40,534	40,527	79,797	78,195
Additions to long-lived assets	7,096	5,141	13,615	8,586
Transfers from non-operating properties	768	6,098	36,519	19,028
Segment assets	1,305,769	1,266,632	1,305,769	1,266,632
Segment assets | Defense/Information Technology Locations | Northern Virginia Defense/IT
Segment financial information for real estate operations
Revenues from real estate operations	12,057	13,462	24,173	24,508
Property operating expenses	4,307	5,354	8,848	10,970
NOI from real estate operations	7,750	8,108	15,325	13,538
Additions to long-lived assets	3,059	83,913	6,137	84,700
Transfers from non-operating properties	27,944	7,735	27,850	51,208
Segment assets	424,441	499,601	424,441	499,601
Segment assets | Defense/Information Technology Locations | Lackland Air Force Base
Segment financial information for real estate operations
Revenues from real estate operations	11,651	9,743	21,876	18,408
Property operating expenses	6,844	5,349	12,264	10,112
NOI from real estate operations	4,807	4,394	9,612	8,296
Additions to long-lived assets	0	0	0	0
Transfers from non-operating properties	231	468	237	31,559
Segment assets	133,359	134,127	133,359	134,127
Segment assets | Defense/Information Technology Locations | Navy Support Locations
Segment financial information for real estate operations
Revenues from real estate operations	6,998	7,186	13,932	14,451
Property operating expenses	2,675	3,390	6,199	6,788
NOI from real estate operations	4,323	3,796	7,733	7,663
Additions to long-lived assets	2,233	1,769	3,503	3,362
Transfers from non-operating properties	0	0	0	0
Segment assets	195,195	194,764	195,195	194,764
Segment assets | Defense/Information Technology Locations | Redstone Arsenal
Segment financial information for real estate operations
Revenues from real estate operations	3,191	2,658	6,307	5,104
Property operating expenses	960	888	1,938	1,717
NOI from real estate operations	2,231	1,770	4,369	3,387
Additions to long-lived assets	301	208	919	291
Transfers from non-operating properties	4	8,980	215	11,977
Segment assets	106,810	107,677	106,810	107,677
Segment assets | Defense/Information Technology Locations | Data Center Shells
Segment financial information for real estate operations
Revenues from real estate operations	7,288	5,037	13,618	10,151
Property operating expenses	826	499	1,636	1,194
NOI from real estate operations	6,462	4,538	11,982	8,957
Additions to long-lived assets	0	0	0	0
Transfers from non-operating properties	29,857	911	55,954	16,008
Segment assets	256,276	170,006	256,276	170,006
Segment assets | Regional Office
Segment financial information for real estate operations
Revenues from real estate operations	23,283	24,400	46,785	46,360
Property operating expenses	8,721	8,406	18,552	17,154
NOI from real estate operations	14,562	15,994	28,233	29,206
Additions to long-lived assets	2,180	3,396	4,939	69,330
Transfers from non-operating properties	26	5,218	108	16,725
Segment assets	594,750	598,030	594,750	598,030
Segment assets | Wholesale data centers
Segment financial information for real estate operations
Revenues from real estate operations	6,804	3,820	13,297	6,855
Property operating expenses	2,651	2,221	5,312	4,433
NOI from real estate operations	4,153	1,599	7,985	2,422
Additions to long-lived assets	0	78	0	108
Transfers from non-operating properties	(482)	15,202	(431)	15,379
Segment assets	237,226	175,563	237,226	175,563
Segment assets | Other Segments
Segment financial information for real estate operations
Revenues from real estate operations	1,740	1,882	3,602	3,877
Property operating expenses	779	820	1,643	1,729
NOI from real estate operations	961	1,062	1,959	2,148
Additions to long-lived assets	153	210	310	309
Transfers from non-operating properties	0	12	(11)	12
Segment assets	$ 35,291	$ 72,257	$ 35,291	$ 72,257

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Information by Business Segment (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Reconciliation of segment revenues to total revenues
Segment revenues from real estate operations	$ 133,924	$ 128,195	$ 267,011	$ 250,905
Construction contract and other service revenues	12,003	42,172	23,223	80,496
Less: Revenues from discontinued operations	0	(4)	0	(4)
Total revenues	145,927	170,363	290,234	331,397
Reconciliation of segment property operating expenses to property operating expenses
Segment property operating expenses	48,141	46,407	100,016	97,093
Less: Property operating expenses from discontinued operations	0	11	0	6
Total property operating expenses	48,141	46,418	100,016	97,099
Computation of net operating income from service operations
Construction contract and other service revenues	12,003	42,172	23,223	80,496
Construction contract and other service expenses	(11,478)	(41,293)	(22,172)	(78,791)
NOI from service operations	525	879	1,051	1,705
Reconciliation of NOI from real estate operations and NOI from service operations to (loss) income from continuing operations
NOI from real estate operations	85,783	81,788	166,995	153,812
NOI from service operations	525	879	1,051	1,705
Interest and other income	1,330	1,242	2,486	2,525
Equity in income of unconsolidated entities	10	9	20	34
Income tax (expense) benefit	(1)	(50)	7	(105)
Other adjustments:
Depreciation and other amortization associated with real estate operations	(33,248)	(33,786)	(67,775)	(65,385)
Impairment losses	(69,692)	(1,238)	(72,138)	(1,238)
General, administrative and leasing expenses	(8,026)	(7,534)	(19,909)	(15,425)
Business development expenses and land carry costs	(2,363)	(2,623)	(4,781)	(5,413)
Interest expense	(22,639)	(21,768)	(46,198)	(42,606)
NOI from discontinued operations	0	(15)	0	(10)
Gain (loss) on early extinguishment of debt	5	(65)	22	(68)
(Loss) income from continuing operations	$ (48,316)	$ 16,839	$ (40,220)	$ 27,826

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Information by Business Segment (Details 3) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Reconciliation of segment assets to total assets
Assets	$ 3,841,692	$ 3,909,312	$ 3,904,059
Segment assets
Reconciliation of segment assets to total assets
Assets	3,289,117		3,218,657
Non-operating property assets
Reconciliation of segment assets to total assets
Assets	413,597		527,742
Other assets
Reconciliation of segment assets to total assets
Assets	$ 138,978		$ 157,660

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Share-Based Compensation and Other Compensation Matters (Details)			6 Months Ended
	May 30, 2016 shares	Mar. 01, 2016 USD ($) shares	Jun. 30, 2016 USD ($) Percentile_Rank $ / shares shares
Chief Executive Officer and Executive Vice President
Other Share-based Compensation Additional Disclosures
Executive transition cost | $			$ 4,400,000
Performance share units
Share-Based Compensation
Stock awards granted (in shares or units) | shares		26,299
Aggregate grant date fair value | $		$ 1,000,000
Potential earned PSUs payout for defined levels of performance under awards
Earned PSUs payout (as a percent of PSUs granted) on 75th or greater percentile rank			200.00%
Earned PSUs payout (as a percent of PSUs granted) on 50th percentile rank			100.00%
Earned PSUs payout (as a percent of PSUs granted) on 25th percentile rank			50.00%
Performance share units granted on percentile rank below 25th (as a percent)			0.00%
The number of percentile ranks to fall between to earn interpolated PSUs between such percentile ranks, conditioned on the percentile rank exceeding 25% | Percentile_Rank			2
Assumptions used to value stock awards
Performance period of the award			3 years
Weighted average grant date fair value (in dollars per share) | $ / shares			$ 38.21
Baseline value per common share (in dollars per share) | $ / shares			$ 23.90
Expected volatility of common shares (as a percent)			20.40%
Risk-free interest rate (as a percent)			0.96%
Restricted shares
Share-Based Compensation
Stock awards granted (in shares or units) | shares			197,087
Aggregate grant date fair value | $			$ 4,800,000
Assumptions used to value stock awards
Weighted average grant date fair value (in dollars per share) | $ / shares			$ 24.11
Other Share-based Compensation Additional Disclosures
Shares vested (in shares) | shares			159,171
Weighted average fair value of shares vested (in dollars per share) | $ / shares			$ 27.62
Aggregate intrinsic value of awards upon vesting | $			$ 3,800,000
Deferred share award
Share-Based Compensation
Stock awards granted (in shares or units) | shares			24,944
Aggregate grant date fair value | $			$ 671,000
Assumptions used to value stock awards
Weighted average grant date fair value (in dollars per share) | $ / shares			$ 26.89
Other Share-based Compensation Additional Disclosures
Shares vested (in shares) | shares			12,028
Weighted average fair value of shares vested (in dollars per share) | $ / shares			$ 26.70
Aggregate intrinsic value of awards upon vesting | $			$ 322,000
2014 and 2015 PSU Grants | Performance share units | Executive Vice President
Other Share-based Compensation Additional Disclosures
Shares issued (in shares) | shares	10,326

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Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended			6 Months Ended
		Jun. 30, 2016		Jun. 30, 2015	Jun. 30, 2016		Jun. 30, 2015
Numerator:
(Loss) income from continuing operations		$ (48,316)		$ 16,839	$ (40,220)		$ 27,826
Gain on sales of real estate, net		0		(1)	0		3,985
Preferred share/unit dividends/distributions		(3,553)		(3,553)	(7,105)		(7,105)
Income from continuing operations attributable to noncontrolling interests		897		(1,436)	(373)		(2,828)
Income from continuing operations attributable to share-based compensation awards		(96)		(113)	(214)		(235)
Numerator for basic and diluted EPS from continuing operations attributable to COPT common shareholders		(51,068)		11,736	(47,912)		21,643
Discontinued operations		0		394	0		156
Discontinued operations attributable to noncontrolling interests		0		(15)	0		(3)
Numerator for basic and diluted EPS on net income attributable to COPT common shareholders		$ (51,068)		$ 12,115	$ (47,912)		$ 21,796
Denominator (all weighted averages):
Denominator for basic EPS (common shares)		94,300		94,128	94,251		93,666
Dilutive effect of share-based compensation awards (shares)		0		35	0		114
Denominator for diluted EPS (common shares)		94,300		94,163	94,251		93,780
Basic EPS:
(Loss) income from continuing operations (in dollars per share/unit)		$ (0.54)	[1]	$ 0.13	$ (0.51)	[1]	$ 0.23	[1]
Discontinued operations (in dollars per share/unit)	[1]	0.00		0.00	0.00		0.00
Net (loss) income attributable to COPT common shareholders (in dollars per share/unit)	[1]	(0.54)		0.13	(0.51)		0.23
Diluted EPS:
(Loss) income from continuing operations (in dollars per share/unit)		(0.54)	[1]	0.13	(0.51)	[1]	0.23	[1]
Discontinued operations (in dollars per share/unit)	[1]	0.00		0.00	0.00		0.00
Net (loss) income attributable to COPT common shareholders (in dollars per share/unit)	[1]	$ (0.54)		$ 0.13	$ (0.51)		$ 0.23
Corporate Office Properties, L.P.
Numerator:
(Loss) income from continuing operations		$ (48,316)		$ 16,839	$ (40,220)		$ 27,826
Gain on sales of real estate, net		0		(1)	0		3,985
Preferred share/unit dividends/distributions		(3,718)		(3,718)	(7,435)		(7,435)
Income from continuing operations attributable to noncontrolling interests		(911)		(812)	(1,890)		(1,633)
Income from continuing operations attributable to share-based compensation awards		(96)		(113)	(214)		(235)
Numerator for basic and diluted EPS from continuing operations attributable to COPT common shareholders		(53,041)		12,195	(49,759)		22,508
Discontinued operations		0		394	0		156
Discontinued operations attributable to noncontrolling interests		0		0	0		3
Numerator for basic and diluted EPS on net income attributable to COPT common shareholders		$ (53,041)		$ 12,589	$ (49,759)		$ 22,667
Denominator (all weighted averages):
Denominator for basic EPS (common shares)		97,976		97,808	97,927		97,372
Dilutive effect of share-based compensation awards (shares)		0		35	0		114
Denominator for diluted EPS (common shares)		97,976		97,843	97,927		97,486
Basic EPS:
(Loss) income from continuing operations (in dollars per share/unit)	[2]	$ (0.54)		$ 0.13	$ (0.51)		$ 0.23
Discontinued operations (in dollars per share/unit)	[2]	0.00		0.00	0.00		0.00
Net (loss) income attributable to COPT common shareholders (in dollars per share/unit)	[2]	(0.54)		0.13	(0.51)		0.23
Diluted EPS:
(Loss) income from continuing operations (in dollars per share/unit)	[2]	(0.54)		0.13	(0.51)		0.23
Discontinued operations (in dollars per share/unit)	[2]	0.00		0.00	0.00		0.00
Net (loss) income attributable to COPT common shareholders (in dollars per share/unit)	[2]	$ (0.54)		$ 0.13	$ (0.51)		$ 0.23

[1] Basic and diluted earnings per common share are calculated based on amounts attributable to common shareholders of Corporate Office Properties Trust.

[2] Basic and diluted earnings per common unit are calculated based on amounts attributable to common unitholders of Corporate Office Properties, L.P.

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Earnings Per Share ("EPS") and Earnings Per Unit ("EPU") (Details 2) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Conversion of common units
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	3,676,000	3,680,000	3,676,000	3,706,000
Conversion of Series I Preferred Units
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	176,000	176,000	176,000	176,000
Conversion of Series K Preferred Shares
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	434,000	434,000	434,000	434,000
Weighted average restricted stock and deferred shares
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	403,000	426,000	404,000	413,000
Weighted average options
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	309,000	473,000	344,000	472,000
Corporate Office Properties, L.P. | Weighted average restricted stock and deferred shares
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	403,000	426,000	404,000	413,000
Corporate Office Properties, L.P. | Weighted average options
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	309,000	473,000	344,000	472,000
Corporate Office Properties, L.P. | Conversion of Series I preferred units
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	176,000	176,000	176,000	176,000
Corporate Office Properties, L.P. | Conversion of Series K preferred units
Antidilutive securities
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	434,000	434,000	434,000	434,000

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Commitments and Contingencies - Narrative (Details)	Jun. 30, 2016 USD ($) Property	Aug. 31, 2010 USD ($)
Tax incremental financing obligation
Liability recognized with regard to tax incremental financing obligation at end of current period	$ 1,900,000
Environmental Indemnity Agreement
Number of lease properties which were provided environmental indemnifications | Property	3
Environmental indemnification to the tenant against losses covered under prior owner's indemnity agreement	$ 5,000,000
Maximum environmental indemnification to the tenant against consequential damages after acquisition of property	$ 12,500,000
Additional costs agreed to be paid by the entity related to construction and environmental regulatory activities (as a percent)	50.00%
Maximum annual additional costs agreed to be paid by the entity related to construction and environmental regulatory activities	$ 300,000
Maximum additional costs agreed to be paid by the entity related to construction and environmental regulatory activities	1,500,000
New Development and Redevelopment Obligations
Loss Contingencies [Line Items]
Purchase obligations	78,800,000
Capital Expenditures For Operating Properties
Loss Contingencies [Line Items]
Purchase obligations	48,700,000
Third Party Construction and Development
Loss Contingencies [Line Items]
Purchase obligations	17,300,000
Other Purchase Obligations
Loss Contingencies [Line Items]
Purchase obligations	$ 2,500,000
Anne Arundel County, Maryland | Tax Incremental Financing Bond
Tax incremental financing obligation
Debt instrument, face amount		$ 30,000,000

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Commitments and Contingencies - Future Minimum Payments (Details) $ in Thousands	Jun. 30, 2016 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2016	$ 603
2017	1,139
2018	1,092
2019	1,067
2020	1,084
Thereafter	86,805
Total	$ 91,790

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Subsequent Event (Details) $ in Thousands		6 Months Ended
	Jul. 21, 2016 USD ($) Property	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)
Subsequent Event [Line Items]
Value of properties contributed		$ 22,600	$ 0
Subsequent Event | Single-tenant data centers | Operating office properties
Subsequent Event [Line Items]
Ownership percentage sold (percent)	50.00%
Number of properties contributed | Property	6
Value of properties contributed	$ 147,600
Debt instrument, face amount	60,000
Transaction value of disposition of interest in properties	44,000
Gain on sale of interest in properties	$ 18,000