10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q 

(Mark one)

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

For the quarterly period ended September 30, 2021

or

☐ 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

(Exact name of registrant as specified in its charter)

Maryland	23-2947217
(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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of beneficial interest, $0.01 par value	OFC	New York Stock Exchange

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. ☒ Yes   ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes   ☐ No

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

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   ☒ No

As of October 22, 2021, 112,324,851 of Corporate Office Properties Trust’s Common Shares of Beneficial Interest, $0.01 par value, were issued and outstanding.

TABLE OF CONTENTS

FORM 10-Q

		PAGE
PART I: FINANCIAL INFORMATION
Item 1:	Financial Statements
Consolidated Financial Statements
	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (unaudited)	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	5
	Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)	8
Notes to Consolidated Financial Statements (unaudited)		10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4:	Controls and Procedures	45
PART II: OTHER INFORMATION
Item 1:	Legal Proceedings	45
Item 1A:	Risk Factors	46
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3:	Defaults Upon Senior Securities	46
Item 4:	Mine Safety Disclosures	46
Item 5:	Other Information	46
Item 6:	Exhibits	47
SIGNATURES		48

2

PART I: FINANCIAL INFORMATION

ITEM 1. Financial Statements

Corporate Office Properties Trust and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)

	September 30, 2021		December 31, 2020
Assets
Properties, net:
Operating properties, net	$	3,227,797	$	3,115,280
Projects in development or held for future development	379,325		447,269
Total properties, net	3,607,122		3,562,549
Property - operating right-of-use assets	38,854		40,570
Property - finance right-of-use assets	40,077		40,425
Assets held for sale, net	2,821		—
Cash and cash equivalents	14,570		18,369
Investment in unconsolidated real estate joint ventures	40,304		29,303
Accounts receivable, net	33,110		41,637
Deferred rent receivable	103,062		92,876
Intangible assets on real estate acquisitions, net	15,788		19,344
Deferred leasing costs (net of accumulated amortization of $31,975 and $30,375, respectively)	62,269		58,613
Investing receivables (net of allowance for credit losses of $1,415 and $2,851, respectively)	75,947		68,754
Prepaid expenses and other assets, net	117,214		104,583
Total assets	$	4,151,138	$	4,077,023
Liabilities and equity
Liabilities:
Debt, net	$	2,159,732	$	2,086,918
Accounts payable and accrued expenses	176,636		142,717
Rents received in advance and security deposits	32,092		33,425
Dividends and distributions payable	31,306		31,231
Deferred revenue associated with operating leases	8,704		10,832
Property - operating lease liabilities	29,630		30,746
Interest rate derivatives	5,562		9,522
Other liabilities	10,691		12,490
Total liabilities	2,454,353		2,357,881
Commitments and contingencies (Note 18)
Redeemable noncontrolling interests	26,006		25,430
Equity:
Corporate Office Properties Trust’s shareholders’ equity:
Common Shares of beneficial interest ($0.01 par value; 150,000,000 shares authorized; shares issued and outstanding of 112,325,411 at September 30, 2021 and 112,181,759 at December 31, 2020)	1,123		1,122
Additional paid-in capital	2,480,412		2,478,906
Cumulative distributions in excess of net income	(839,676)		(809,836)
Accumulated other comprehensive loss	(5,347)		(9,157)
Total Corporate Office Properties Trust’s shareholders’ equity	1,636,512		1,661,035
Noncontrolling interests in subsidiaries:
Common units in Corporate Office Properties, L.P. (“COPLP”)	21,568		20,465
Other consolidated entities	12,699		12,212
Noncontrolling interests in subsidiaries	34,267		32,677
Total equity	1,670,779		1,693,712
Total liabilities, redeemable noncontrolling interests and equity	$	4,151,138	$	4,077,023

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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Lease revenue	$	145,749	$	133,875	$	434,031	$	397,034
Other property revenue	841		568		2,146		2,063
Construction contract and other service revenues	28,046		20,323		64,592		46,240
Total revenues	174,636		154,766		500,769		445,337
Operating expenses
Property operating expenses	57,190		51,552		168,780		151,755
Depreciation and amortization associated with real estate operations	36,611		35,332		111,487		101,540
Construction contract and other service expenses	27,089		19,220		61,964		44,052
Impairment losses	—		1,530		—		1,530
General, administrative and leasing expenses	9,342		7,467		26,970		23,111
Business development expenses and land carry costs	1,093		1,094		3,559		3,474
Total operating expenses	131,325		116,195		372,760		325,462
Interest expense	(15,720)		(17,152)		(49,181)		(50,789)
Interest and other income	1,818		1,746		5,911		5,233
Credit loss recoveries	326		1,465		1,040		161
Gain on sales of real estate	(32)		—		39,711		5
Loss on early extinguishment of debt	(1,159)		(3,237)		(59,553)		(3,237)
Loss on interest rate derivatives	—		(53,196)		—		(53,196)
Income (loss) before equity in income of unconsolidated entities and income taxes	28,544		(31,803)		65,937		18,052
Equity in income of unconsolidated entities	297		477		779		1,372
Income tax expense	(47)		(16)		(103)		(95)
Net income (loss)	28,794		(31,342)		66,613		19,329
Net (income) loss attributable to noncontrolling interests:
Common units in COPLP	(357)		386		(831)		(185)
Preferred units in COPLP	—		(77)		—		(231)
Other consolidated entities	(1,336)		(812)		(2,949)		(3,207)
Net income (loss) attributable to COPT common shareholders	$	27,101	$	(31,845)	$	62,833	$	15,706
Earnings per common share: (1)
Net income (loss) attributable to COPT common shareholders - basic	$	0.24	$	(0.29)	$	0.56	$	0.14
Net income (loss) attributable to COPT common shareholders - diluted	$	0.24	$	(0.29)	$	0.56	$	0.14

(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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	28,794	$	(31,342)	$	66,613	$	19,329
Other comprehensive income:
Unrealized (loss) income on interest rate derivatives	(118)		1,428		426		(39,592)
Reclassification adjustments on interest rate derivatives recognized in interest expense	1,226		1,342		3,604		2,408
Reclassification adjustments on interest rate derivatives recognized in loss on interest rate derivatives	—		51,865		—		51,865
Total other comprehensive income	1,108		54,635		4,030		14,681
Comprehensive income	29,902		23,293		70,643		34,010
Comprehensive income attributable to noncontrolling interests	(1,733)		(1,173)		(4,000)		(3,408)
Comprehensive income attributable to COPT	$	28,169	$	22,120	$	66,643	$	30,602

See accompanying notes to consolidated financial statements.

5

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Equity

(Dollars in thousands)

(unaudited)

	Common Shares		Additional Paid-in Capital		Cumulative Distributions in Excess of Net Income		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
For the Three Months Ended September 30, 2020
Balance at June 30, 2020 (112,183,192 common shares outstanding)	$	1,122	$	2,477,977	$	(797,959)	$	(64,513)	$	40,297	$	1,656,924
Share-based compensation (7,504 shares redeemed, net of issuances)	—		1,223		—		—		561		1,784
Redemption of vested equity awards	—		(57)		—		—		—		(57)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	—		552		—		—		(552)		—
Comprehensive income	—		—		(31,845)		53,965		533		22,653
Dividends	—		—		(30,843)		—		—		(30,843)
Distributions to owners of common and preferred units in COPLP	—		—		—		—		(444)		(444)
Distributions to noncontrolling interests in other consolidated entities	—		—		—		—		(7)		(7)
Adjustment to arrive at fair value of redeemable noncontrolling interests	—		(374)		—		—		—		(374)
Balance at September 30, 2020 (112,175,688 common shares outstanding)	$	1,122	$	2,479,321	$	(860,647)	$	(10,548)	$	40,388	$	1,649,636
For the Three Months Ended September 30, 2021
Balance at June 30, 2021 (112,336,070 common shares outstanding)	$	1,123	$	2,478,416	$	(835,894)	$	(6,415)	$	34,082	$	1,671,312
Redemption of common units	—		—		—		—		(56)		(56)
Share-based compensation (10,659 shares redeemed, net of issuances)	—		1,064		—		—		1,098		2,162
Redemption of vested equity awards	—		(64)		—		—		—		(64)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	—		1,051		—		—		(1,051)		—
Comprehensive income	—		—		27,101		1,068		600		28,769
Dividends	—		—		(30,883)		—		—		(30,883)
Distributions to owners of common units in COPLP	—		—		—		—		(398)		(398)
Distributions to noncontrolling interests in other consolidated entities	—		—		—		—		(8)		(8)
Adjustment to arrive at fair value of redeemable noncontrolling interests	—		(55)		—		—		—		(55)
Balance at September 30, 2021 (112,325,411 common shares outstanding)	$	1,123	$	2,480,412	$	(839,676)	$	(5,347)	$	34,267	$	1,670,779

See accompanying notes to consolidated financial statements.

6

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Equity

(Dollars in thousands)

(unaudited)

	Common Shares		Additional Paid-in Capital		Cumulative Distributions in Excess of Net Income		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
For the Nine Months Ended September 30, 2020
Balance at December 31, 2019 (112,068,705 common shares outstanding)	$	1,121	$	2,481,558	$	(778,275)	$	(25,444)	$	40,285	$	1,719,245
Cumulative effect of accounting change for adoption of credit loss guidance	—		—		(5,541)		—		—		(5,541)
Balance at December 31, 2019, as adjusted	1,121		2,481,558		(783,816)		(25,444)		40,285		1,713,704
Conversion of common units to common shares (12,009 shares)	—		182		—		—		(182)		—
Share-based compensation (94,974 shares issued, net of redemptions)	1		3,394		—		—		1,335		4,730
Redemption of vested equity awards	—		(1,629)		—		—		—		(1,629)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	—		527		—		—		(527)		—
Comprehensive income	—		—		15,706		14,896		693		31,295
Dividends	—		—		(92,537)		—		—		(92,537)
Distributions to owners of common and preferred units in COPLP	—		—		—		—		(1,306)		(1,306)
Contributions from noncontrolling interests in other consolidated entities	—		—		—		—		112		112
Distributions to noncontrolling interests in other consolidated entities	—		—		—		—		(22)		(22)
Adjustment to arrive at fair value of redeemable noncontrolling interests	—		(4,711)		—		—		—		(4,711)
Balance at September 30, 2020 (112,175,688 common shares outstanding)	$	1,122	$	2,479,321	$	(860,647)	$	(10,548)	$	40,388	$	1,649,636
For the Nine Months Ended September 30, 2021
Balance at December 31, 2020 (112,181,759 common shares outstanding)	$	1,122	$	2,478,906	$	(809,836)	$	(9,157)	$	32,677	$	1,693,712
Conversion of common units to common shares (8,054 shares)	—		121		—		—		(121)		—
Redemption of common units	—		—		—		—		(297)		(297)
Share-based compensation (135,598 shares issued, net of redemptions)	1		3,239		—		—		3,082		6,322
Redemption of vested equity awards	—		(2,422)		—		—		—		(2,422)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	—		1,245		—		—		(1,245)		—
Comprehensive income	—		—		62,833		3,810		1,714		68,357
Dividends	—		—		(92,673)		—		—		(92,673)
Distributions to owners of common units in COPLP	—		—		—		—		(1,196)		(1,196)
Distributions to noncontrolling interests in other consolidated entities	—		—		—		—		(23)		(23)
Adjustment to arrive at fair value of redeemable noncontrolling interests	—		(677)		—		—		—		(677)
Other	—		—		—		—		(324)		(324)
Balance at September 30, 2021 (112,325,411 common shares outstanding)	$	1,123	$	2,480,412	$	(839,676)	$	(5,347)	$	34,267	$	1,670,779

See accompanying notes to consolidated financial statements.

7

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited) 

	For the Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities
Revenues from real estate operations received	$	427,448	$	394,094
Construction contract and other service revenues received	68,780		53,911
Property operating expenses paid	(168,009)		(159,007)
Construction contract and other service expenses paid	(50,275)		(45,686)
General, administrative, leasing, business development and land carry costs paid	(22,367)		(24,408)
Interest expense paid	(46,621)		(49,693)
Lease incentives paid	(8,694)		(12,634)
Other	(359)		2,464
Net cash provided by operating activities	199,903		159,041
Cash flows from investing activities
Development and redevelopment of properties	(176,554)		(284,416)
Tenant improvements on operating properties	(15,149)		(23,377)
Other capital improvements on operating properties	(19,256)		(24,797)
Proceeds from sale of properties	114,050		—
Non-operating distributions from unconsolidated real estate joint venture	872		2,287
Leasing costs paid	(14,929)		(12,455)
Settlement of interest rate derivatives	—		(53,130)
Other	(1,026)		(321)
Net cash used in investing activities	(111,992)		(396,209)
Cash flows from financing activities
Proceeds from debt
Revolving Credit Facility	456,000		409,000
Unsecured senior notes	987,210		395,264
Other debt proceeds	4,630		199,088
Repayments of debt
Revolving Credit Facility	(589,000)		(529,000)
Unsecured senior notes	(600,000)		(122,948)
Scheduled principal amortization	(2,911)		(3,077)
Other debt repayments	(188,960)		—
Deferred financing costs paid	(2,662)		(2,161)
Payments in connection with early extinguishment of debt	(55,720)		(3,037)
Common share dividends paid	(92,632)		(92,512)
Distributions paid to redeemable noncontrolling interests	(1,687)		(13,515)
Redemption of vested equity awards	(2,422)		(1,629)
Other	(3,645)		(1,760)
Net cash (used in) provided by financing activities	(91,799)		233,713
Net decrease in cash and cash equivalents and restricted cash	(3,888)		(3,455)
Cash and cash equivalents and restricted cash
Beginning of period	22,033		18,130
End of period	$	18,145	$	14,675

See accompanying notes to consolidated financial statements.

8

Corporate Office Properties Trust and Subsidiaries

Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

	For the Nine Months Ended September 30,
	2021		2020
Reconciliation of net income to net cash provided by operating activities:
Net income	$	66,613	$	19,329
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and other amortization	113,676		102,864
Impairment losses	—		1,530
Amortization of deferred financing costs and net debt discounts	3,969		3,104
Increase in deferred rent receivable	(13,515)		(3,560)
Gain on sales of real estate	(39,711)		(5)
Share-based compensation	5,960		4,753
Loss on early extinguishment of debt	59,553		3,237
Loss on interest rate derivatives	—		53,196
Other	(3,708)		(4,184)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	6,269		(744)
Increase in prepaid expenses and other assets, net	(13,120)		(13,164)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	15,250		(3,971)
Decrease in rents received in advance and security deposits	(1,333)		(3,344)
Net cash provided by operating activities	$	199,903	$	159,041
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents at beginning of period	$	18,369	$	14,733
Restricted cash at beginning of period	3,664		3,397
Cash and cash equivalents and restricted cash at beginning of period	$	22,033	$	18,130
Cash and cash equivalents at end of period	$	14,570	$	11,458
Restricted cash at end of period	3,575		3,217
Cash and cash equivalents and restricted cash at end of period	$	18,145	$	14,675
Supplemental schedule of non-cash investing and financing activities:
Increase (decrease) in accrued capital improvements, leasing and other investing activity costs	$	17,590	$	(195)
Recognition of operating right-of-use assets and related lease liabilities	$	328	$	8,955
Investment in unconsolidated real estate joint venture retained in property disposition	$	11,842	$	—
Increase (decrease) in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests	$	4,030	$	(37,183)
Dividends/distributions payable	$	31,306	$	31,307
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares	$	121	$	182
Adjustments to noncontrolling interests resulting from changes in COPLP ownership	$	(1,245)	$	(527)
Increase in redeemable noncontrolling interests and decrease in equity to carry redeemable noncontrolling interests at fair value	$	677	$	4,711

See accompanying notes to consolidated financial statements.

9

Corporate Office Properties Trust and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

1.    Organization

Corporate Office Properties Trust (“COPT”) and subsidiaries (collectively, the “Company”, “we” or “us”) is a fully-integrated and self-managed real estate investment trust (“REIT”). We own, manage, lease, develop and selectively acquire office and data center properties. The majority of our portfolio is in locations that support the United States Government (“USG”) and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what we believe are growing, durable, priority missions (“Defense/IT Locations”). We also own a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office”). As of September 30, 2021, our properties included the following:

•186 properties totaling 21.7 million square feet comprised of 16.9 million square feet in 160 office properties and 4.7 million square feet in 26 single-tenant data center shell properties (“data center shells”). We owned 19 of these data center shells through unconsolidated real estate joint ventures;

•a wholesale data center with a capacity of 19.25 megawatts;

•13 properties under development (10 office properties and three data center shells), including three partially-operational properties, that we estimate will total approximately 1.8 million square feet upon completion; and

•approximately 720 acres of land controlled for future development that we believe could be developed into approximately 8.9 million square feet and 43 acres of other land.

We conduct almost all of our operations and own almost all of our assets through our operating partnership, Corporate Office Properties, L.P. (“COPLP”) and subsidiaries (collectively, the “Operating Partnership”), of which COPT is the sole general partner. COPLP owns real estate 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, development and construction 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 September 30, 2021, COPT owned 98.3% of the outstanding COPLP common units (“common units”) and there were no preferred units outstanding. Common units not owned by COPT carry certain redemption rights. The number of common units owned by COPT is equivalent to the number of outstanding common shares of beneficial interest (“common shares”) of COPT, and the entitlement of common units to quarterly distributions and payments in liquidation is substantially the same as that of COPT common shareholders.

COPT’s common shares are publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “OFC”.

2.    Summary of Significant Accounting Policies

Basis of Presentation

The 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.  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.

When we own an equity investment in an entity and cannot exert significant influence over its operations, we measure the investment at fair value, with changes recognized through net income. For an investment without a readily determinable fair value, we measure the investment at cost, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer.

These interim financial statements should be read together with the consolidated financial statements and notes thereto as

10

of and for the year ended December 31, 2020 included in the Company’s and Operating Partnership’s 2020 Annual Report on Form 10-K.  The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly state 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 the Company’s and Operating Partnership’s 2020 Annual Report on Form 10-K as updated for our adoption of recent accounting pronouncements discussed below.

Reclassifications

We reclassified certain amounts from the prior period to conform to the current period presentation of our consolidated financial statements with no effect on previously reported net income or equity.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued guidance containing practical expedients for reference rate reform related activities pertaining to debt, leases, derivatives and other contracts. The guidance is optional and may be elected over time as reference rate reform activities occur. In 2020, we elected to apply an expedient to treat any changes in loans resulting from reference rate reform as debt modifications (as opposed to extinguishments) and hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of the hedge accounting expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate the impact of this guidance and may apply other elections as applicable as additional changes in the market occur.

3.     Fair Value Measurements

Recurring Fair Value Measurements

We have a non-qualified elective deferred compensation plan for Trustees and certain members of our management team that, prior to December 31, 2019, permitted participants to defer up to 100% of their compensation on a pre-tax basis and receive a tax-deferred return on such deferrals. Effective December 31, 2019, no new investments of deferred compensation were eligible for the plan.  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 our consolidated balance sheets using quoted market prices, as are other marketable securities that we hold. The balance of the plan, which was fully funded and totaled $2.6 million as of September 30, 2021, is included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets along with an insignificant amount of other 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 our consolidated balance sheets. The assets of the plan are classified in Level 1 of the fair value hierarchy, while the offsetting liability 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 September 30, 2021, 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.  The fair values of our investing receivables, as disclosed in Note 7, were 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 9, 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

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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. 

For additional fair value information, refer to Note 7 for investing receivables, Note 9 for debt and Note 10 for interest rate derivatives. 

The table below sets forth our financial assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2021 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	$	2,545	$	—	$	—	$	2,545
Other	71		—		—		71
Other marketable securities (1)	33		—		—		33
Interest rate derivatives (1)	—		70		—		70
Total assets	$	2,649	$	70	$	—	$	2,719
Liabilities:
Deferred compensation plan liability (2)	$	—	$	2,616	$	—	$	2,616
Interest rate derivatives	—		5,562		—		5,562
Total liabilities	$	—	$	8,178	$	—	$	8,178

(1)Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.

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

4.    Properties, Net

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

	September 30, 2021		December 31, 2020
Land	$	539,899	$	528,269
Buildings and improvements	3,890,678		3,711,264
Less: Accumulated depreciation	(1,202,780)		(1,124,253)
Operating properties, net	$	3,227,797	$	3,115,280

As of September 30, 2021, we had one property in our data center shells sub-segment previously removed from service that was classified as assets held for sale, net on our consolidated balance sheet, the sole component of which was properties, net.

2021 Dispositions

On June 2, 2021, we sold a 90% interest in two data center shell properties in Northern Virginia based on an aggregate property value of $118.8 million and retained a 10% interest in the properties through B RE COPT DC JV III LLC, a newly-formed joint venture. Our partner in the joint venture acquired the 90% interest from us for $106.9 million. We account for our interest in the joint venture using the equity method of accounting as described further in Note 6. We recognized a gain on sale of $40.2 million in the nine months ended September 30, 2021.

2021 Development Activities

During the nine months ended September 30, 2021, we placed into service 709,000 square feet in six newly-developed properties. As of September 30, 2021, we had 13 properties under development, including three partially-operational properties, that we estimate will total 1.8 million square feet upon completion.

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5.    Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under the lease. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease revenue	2021		2020		2021		2020
Fixed	$	114,309	$	106,743	$	340,157	$	314,845
Variable	31,440		27,132		93,874		82,189
	$	145,749	$	133,875	$	434,031	$	397,034

Fixed contractual payments due under our property leases were as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Sales-type leases
2021 (1)	$	109,800	$	221
2022	418,746		960
2023	370,652		960
2024	323,198		960
2025	241,090		960
Thereafter	1,020,675		4,516
Total contractual payments	$	2,484,161	8,577
Less: Amount representing interest			(2,277)
Net investment in sales-type leases			$	6,300

(1)Represents the three months ending December 31, 2021.

Lessee Arrangements

As of September 30, 2021, our balance sheet included $78.9 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating with various expiration dates. Our property right-of-use assets consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Right-of-use assets
Operating leases - Property	Property - operating right-of-use assets	$	38,854	$	40,570
Finance leases - Property (1)	Property - finance right-of-use assets	40,077		40,425
Total right-of-use assets		$	78,931	$	80,995

(1)On October 22, 2021, we acquired land leased in Washington, D.C., for which we had a $37.8 million right-of-use asset as of September 30, 2021, for a nominal amount under a bargain purchase option.

Property lease liabilities consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Lease liabilities
Operating leases - Property	Property - operating lease liabilities	$	29,630	$	30,746
Finance leases - Property	Other liabilities	14		28
Total lease liabilities		$	29,644	$	30,774

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The table below sets forth the weighted average terms and discount rates of our property leases as of September 30, 2021:

Weighted average remaining lease term
Operating leases	51 years
Finance leases	< 1 year
Weighted average discount rate
Operating leases	7.16	%
Finance leases	3.62	%

The table below presents our total property lease cost (in thousands):

	Statement of Operations Location	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease cost		2021		2020		2021		2020
Operating lease cost
Property leases - fixed	Property operating expenses	$	1,013	$	598	$	2,999	$	1,465
Property leases - variable	Property operating expenses	11		107		31		116
Finance lease cost
Amortization of property right-of-use assets	Property operating expenses	5		9		23		27
		$	1,029	$	714	$	3,053	$	1,608

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

	For the Nine Months Ended September 30,
Supplemental cash flow information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,399	$	987
Financing cash flows for financing leases	$	14	$	674

Payments on property leases were due as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Finance leases		Total
2021 (1)	$	807	$	—	$	807
2022	3,297		14		3,311
2023	3,352		—		3,352
2024	3,403		—		3,403
2025	1,749		—		1,749
Thereafter	123,979		—		123,979
Total lease payments	136,587		14		136,601
Less: Amount representing interest	(106,957)		—		(106,957)
Lease liability	$	29,630	$	14	$	29,644

(1)Represents the three months ending December 31, 2021.

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6.    Real Estate Joint Ventures

Consolidated Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in consolidated real estate joint ventures as of September 30, 2021 (dollars in thousands):

				September 30, 2021 (1)
	Date Acquired	Nominal Ownership %		Total Assets		Encumbered Assets		Total Liabilities
Entity			Location
LW Redstone Company, LLC (2)	3/23/2010	85%	Huntsville, Alabama	$	453,496	$	90,295	$	99,173
Stevens Investors, LLC	8/11/2015	95%	Washington, DC	164,189		—		859
M Square Associates, LLC	6/26/2007	50%	College Park, Maryland	100,634		60,950		52,527
				$	718,319	$	151,245	$	152,559

(1)Excludes amounts eliminated in consolidation.

(2)We fund all capital requirements. Our partner generally receives distributions of the first $1.2 million of annual operating cash flows and we receive the remainder.

On August 11, 2021, we entered into a $112.0 million construction loan with Stevens Investors, LLC to enable it to early extinguish a third party construction loan. Our loan to the joint venture, which is eliminated in consolidation, carries an interest rate of LIBOR plus 2.35% and had a balance of $90.5 million as of September 30, 2021. The loan matures on August 11, 2024, and we have priority for repayment in full of borrowings and accrued interest on the loan over partner distributions of any future refinancing proceeds or other available cash flows.

Unconsolidated Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in unconsolidated real estate joint ventures accounted for using the equity method of accounting (dollars in thousands):

	Date Acquired	Nominal Ownership %	Number of Properties	Carrying Value of Investment (1)
Entity				September 30, 2021		December 31, 2020
B RE COPT DC JV II LLC (2)	10/30/2020	10%	8	$	15,735	$	15,988
BREIT COPT DC JV LLC	6/20/2019	10%	9	12,620		13,315
B RE COPT DC JV III LLC	6/2/2021	10%	2	11,949		—
			19	$	40,304	$	29,303

(1)Included in the line entitled “investment in unconsolidated real estate joint ventures” on our consolidated balance sheets.

(2)Our investment in B RE COPT DC JV II LLC was lower than our share of the joint venture’s equity by $7.3 million as of September 30, 2021 and $7.4 million as of December 31, 2020 due to a difference between our cost basis and our share of the joint venture’s underlying equity in its net assets. We recognize adjustments to our share of the joint venture’s earnings and losses resulting from this basis difference in the underlying assets of the joint venture.

As described further in Note 4, on June 2, 2021, we sold a 90% interest in two data center shell properties in Northern Virginia and retained a 10% interest in the properties through B RE COPT DC JV III LLC, a newly-formed joint venture. We concluded that the joint venture is a variable interest entity. Under the terms of the joint venture agreement, we and our partner receive returns in proportion to our investments, and our maximum exposure to losses is limited to our investment, subject to certain indemnification obligations with respect to any nonrecourse debt secured by the properties. The nature of our involvement in the activities of the joint venture does not give us power over decisions that significantly affect its economic performance.

7.    Investing Receivables

Investing receivables consisted of the following (in thousands): 

	September 30, 2021		December 31, 2020
Notes receivable from the City of Huntsville	$	71,322	$	65,564
Other investing loans receivable	6,040		6,041
Amortized cost basis	77,362		71,605
Allowance for credit losses	(1,415)		(2,851)
Investing receivables, net	$	75,947	$	68,754

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The balances above include accrued interest receivable, net of allowance for credit losses, of $3.6 million as of September 30, 2021 and $4.8 million as of December 31, 2020.

Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture (see Note 6) and carry an interest rate of 9.95%. Our other investing loans receivable carry an interest rate of 8.0%.

The fair value of these receivables was approximately $78 million as of September 30, 2021 and $73 million as of December 31, 2020.

8.    Prepaid Expenses and Other Assets, Net

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

	September 30, 2021		December 31, 2020
Lease incentives, net	$	40,150	$	35,642
Prepaid expenses	26,815		19,690
Construction contract costs in excess of billings, net	12,987		10,343
Furniture, fixtures and equipment, net	10,008		10,433
Net investment in sales-type leases	6,300		6,573
Non-real estate equity investments	5,545		5,509
Restricted cash	3,575		3,664
Marketable securities in deferred compensation plan	2,616		3,027
Deferred tax asset, net (1)	1,883		1,989
Deferred financing costs, net (2)	1,595		2,439
Other assets	5,740		5,274
Prepaid expenses and other assets, net	$	117,214	$	104,583

(1)Includes a valuation allowance of $24,000 as of September 30, 2021 and $201,000 as of December 31, 2020.

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

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9.    Debt, Net

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

	Carrying Value (1) as of
	September 30, 2021		December 31, 2020		September 30, 2021
					Stated Interest Rates	Scheduled Maturity
Mortgage and Other Secured Debt:
Fixed rate mortgage debt (2)	$	137,310	$	139,991	3.82% - 4.62% (3)	2023-2026
Variable rate secured debt	33,698		115,119		LIBOR + 1.45% to 1.55% (4)	2025-2026
Total mortgage and other secured debt	171,008		255,110
Revolving Credit Facility (5)	10,000		143,000		LIBOR + 0.775% to 1.45% (6)	March 2023 (5)
Term Loan Facility	299,274		398,447		LIBOR + 1.00% to 1.65% (7)	December 2022
Unsecured Senior Notes
5.00%, $300,000 aggregate principal	298,235		297,915		5.00% (8)	July 2025
2.25%, $400,000 aggregate principal	395,232		394,464		2.25% (9)	March 2026
2.00%, $400,000 aggregate principal	396,394		—		2.00% (10)	January 2029
2.75%, $600,000 aggregate principal	588,798		—		2.75% (10)	April 2031
3.60%, $350,000 aggregate principal	—		348,888		3.60% (11)	N/A (11)
5.25%, $250,000 aggregate principal	—		248,194		5.25% (12)	N/A (12)
Unsecured note payable	791		900		0% (13)	May 2026
Total debt, net	$	2,159,732	$	2,086,918

(1)The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $5.4 million as of September 30, 2021 and $5.9 million as of December 31, 2020.

(2)Certain of the fixed rate mortgages carry interest rates that, upon assumption, were above or below market rates 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 $108,000 as of September 30, 2021 and $155,000 as of December 31, 2020.

(3)The weighted average interest rate on our fixed rate mortgage debt was 4.16% as of September 30, 2021.

(4)The weighted average interest rate on our variable rate secured debt was 1.60% as of September 30, 2021.

(5)The facility matures in March 2023, with the ability for us to further extend such maturity 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 under the facility for each extension period. In connection with this facility, we also have the ability to borrow up to $500.0 million under new term loans from the facility’s lender group provided that there is no default under the facility and subject to the approval of the lenders.

(6)The weighted average interest rate on the Revolving Credit Facility was 1.19% as of September 30, 2021.

(7)The interest rate on this loan was 1.09% as of September 30, 2021.

(8)The carrying value of these notes reflects an unamortized discount totaling $1.5 million as of September 30, 2021 and $1.8 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.

(9)The carrying value of these notes reflects an unamortized discount totaling $3.9 million as of September 30, 2021 and $4.5 million as of December 31, 2020. The effective interest rate under the notes, including amortization of the issuance costs, was 2.48%.

(10)Refer to paragraph below for further disclosure.

(11)The carrying value of these notes reflects an unamortized discount totaling $781,000 as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%. Refer to paragraph below for further disclosure.

(12)The carrying value of these notes reflects an unamortized discount totaling $1.6 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%. Refer to paragraph below for further disclosure.

(13)This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates.  The carrying value of this note reflects an unamortized discount totaling $120,000 as of September 30, 2021 and $161,000 as of December 31, 2020.

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

We issued the following unsecured senior notes in 2021:

•$600.0 million of 2.75% Senior Notes due 2031 (the “2.75% Notes”) at an initial offering price of 98.95% of their face value on March 11, 2021, resulting in proceeds, after deducting underwriting discounts, but before other offering expenses, of $589.8 million. The notes mature on April 15, 2031. The carrying value of these notes reflects an unamortized discount totaling $9.7 million as of September 30, 2021. The effective interest rate under the notes, including amortization of discount and issuance costs, was 2.94%; and

•$400.0 million of 2.00% Senior Notes due 2029 (the “2.00% Notes”) at an initial offering price of 99.97% of their face value on August 11, 2021, resulting in proceeds, after deducting underwriting discounts, but before other offering

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expenses, of $397.4 million. The notes mature on January 15, 2029. The carrying value of these notes reflects an unamortized discount totaling $2.6 million as of September 30, 2021. The effective interest rate under the notes, including amortization of discount and issuance costs, was 2.09%.

We may redeem these notes, in whole at any time or in part from time to time, at our option, at a redemption price equal to the greater of (1) the aggregate principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption) discounted to its present value, on a semi-annual basis at an adjusted treasury rate plus a spread (25 basis points for the 2.75% Notes and 20 basis points for the 2.00% Notes), plus accrued and unpaid interest thereon to the date of redemption. However, if this redemption occurs on or after January 15, 2031 for the 2.75% Notes or November 15, 2028 for the 2.00% Notes, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the redemption date. These notes are unconditionally guaranteed by COPT.

With regard to our 3.60% Senior Notes due 2023 (the “3.60% Notes”) and 5.25% Senior Notes due 2024 (the “5.25% Notes”), we:

•effective March 11, 2021, purchased pursuant to tender offers $184.4 million of 3.60% Notes for $196.7 million and $145.6 million of 5.25% Notes for $164.7 million, plus accrued interest; and

•on April 12, 2021, redeemed the remaining $165.6 million of 3.60% Notes for $176.3 million and $104.4 million of 5.25% Notes for $117.7 million, plus accrued interest.

In connection with these purchases and redemptions, we recognized a loss on early extinguishment of debt of $58.4 million in the nine months ended September 30, 2021.

On August 11, 2021, we repaid $100.0 million of our term loan facility.

Certain of our debt instruments require that we comply with a number of restrictive financial covenants.  As of September 30, 2021, we were compliant with these financial covenants.

We capitalized interest costs of $1.8 million in the three months ended September 30, 2021, $2.9 million in the three months ended September 30, 2020, $5.3 million in the nine months ended September 30, 2021 and $9.4 million in the nine months ended September 30, 2020.

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

	September 30, 2021				December 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed-rate debt
Unsecured Senior Notes	$	1,678,659	$	1,723,267	$	1,289,461	$	1,334,342
Other fixed-rate debt	138,101		136,653		140,891		142,838
Variable-rate debt	342,972		343,577		656,566		654,102
	$	2,159,732	$	2,203,497	$	2,086,918	$	2,131,282

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10.    Interest Rate Derivatives

The following table sets forth the key terms and fair values of our interest rate swap derivatives, each of which was designated as a cash flow hedge of interest rate risk (dollars in thousands):

							Fair Value at
Notional Amount			Fixed Rate	Floating Rate Index	Effective Date	Expiration Date	September 30, 2021		December 31, 2020
$	100,000		1.901%	One-Month LIBOR	9/1/2016	12/1/2022	$	(2,065)	$	(3,394)
$	100,000		1.905%	One-Month LIBOR	9/1/2016	12/1/2022	(2,070)		(3,401)
$	50,000		1.908%	One-Month LIBOR	9/1/2016	12/1/2022	(1,036)		(1,704)
$	11,180	(1)	1.678%	One-Month LIBOR	8/1/2019	8/1/2026	(391)		(733)
$	23,000	(2)	0.573%	One-Month LIBOR	4/1/2020	3/26/2025	70		(290)
							$	(5,492)	$	(9,522)

(1)The notional amount of this instrument is scheduled to amortize to $10.0 million.

(2)The notional amount of this instrument is scheduled to amortize to $22.1 million.

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	September 30, 2021		December 31, 2020
Interest rate swaps designated as cash flow hedges	Prepaid expenses and other assets, net	$	70	$	—
Interest rate swaps designated as cash flow hedges	Interest rate derivatives (liabilities)	$	(5,562)	$	(9,522)

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

	Amount of (Loss) Income Recognized in AOCL on Derivatives								Amount of Loss Reclassified from AOCL into Interest Expense on Statement of Operations
Derivatives in Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Interest rate derivatives	$	(118)	$	1,428	$	426	$	(39,592)	$	(1,226)	$	(1,342)	$	(3,604)	$	(2,408)

	Amount of Loss Reclassified from AOCL into Loss on Interest Rate Derivatives on Statement of Operations								Amount of Loss Recognized on Undesignated Swaps in Loss on Interest Rate Derivatives on Statement of Operations
Derivatives in Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Interest rate derivatives	$	—	$	(51,865)	$	—	$	(51,865)	$	—	$	(1,265)	$	—	$	(1,265)

Based on the fair value of our derivatives as of September 30, 2021, we estimate that approximately $4.8 million of losses will be reclassified from AOCL as an increase to interest expense over the next 12 months.

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. 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 September 30, 2021, we were not in default with any of these provisions. As of September 30, 2021, the fair value of interest rate derivatives in a liability position related to these agreements was $5.6 million, excluding the effects of accrued interest and credit valuation adjustments. As of September 30, 2021, we had not posted any collateral related to these agreements.  If we breach any of these provisions, we could be required to settle our obligations under the agreements at their termination value, which was $6.0 million as of September 30, 2021.

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11.    Redeemable Noncontrolling Interests

Our partners in two real estate joint ventures, LW Redstone Company, LLC and Stevens Investors, LLC, 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 sheets. The table below sets forth the activity for these redeemable noncontrolling interests (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	25,430	$	29,431
Distributions to noncontrolling interests	(2,387)		(13,335)
Net income attributable to noncontrolling interests	2,286		2,715
Adjustment to arrive at fair value of interests	677		4,711
Ending balance	$	26,006	$	23,522

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, occupancy projections and estimated operating and development expenditures.

12.    Equity

Common Shares

As of September 30, 2021, we had remaining capacity under our at-the-market stock offering program equal to an aggregate gross sales price of $300 million in common share sales.

During the nine months ended September 30, 2021, certain COPLP limited partners converted 8,054 common units in COPLP for an equal number of common shares.

We declared dividends per common share of $0.275 in the three months ended September 30, 2021 and 2020 and $0.825 in the nine months ended September 30, 2021 and 2020.

See Note 16 for disclosure of COPT common share and COPLP common unit activity pertaining to our share-based compensation plans.

13.    Credit Losses, Financial Assets and Other Instruments

The table below sets forth the activity for the allowance for credit losses (in thousands):

	For the Nine Months Ended September 30, 2021
	Investing Receivables		Tenant Notes Receivable (1)		Other Assets (2)		Total
December 31, 2020	$	2,851	$	1,203	$	643	$	4,697
Credit loss (recoveries) expense	(1,436)		(114)		510		(1,040)
September 30, 2021	$	1,415	$	1,089	$	1,153	$	3,657

(1)Included in the line entitled “accounts receivable, net” on our consolidated balance sheets.

(2)The balance as of September 30, 2021 and December 31, 2020 included $705,000 and $257,000, respectively, in the line entitled “accounts receivable, net” and $448,000 and $386,000, respectively, in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets.

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The following table presents the amortized cost basis of our investing receivables, tenant notes receivable and sales-type lease receivables by credit risk classification, by origination year as of September 30, 2021 (in thousands):

	Origination Year
	2016 and Earlier		2017		2018		2019		2020		2021		Total
Investing receivables:
Credit risk classification:
Investment grade	$	68,773	$	1,043	$	—	$	—	$	1,057	$	449	$	71,322
Non-investment grade	—		—		—		6,040		—		—		6,040
Total	$	68,773	$	1,043	$	—	$	6,040	$	1,057	$	449	$	77,362
Tenant notes receivable:
Credit risk classification:
Investment grade	$	—	$	—	$	949	$	69	$	297	$	—	$	1,315
Non-investment grade	221		—		141		147		1,763		—		2,272
Total	$	221	$	—	$	1,090	$	216	$	2,060	$	—	$	3,587
Sales-type lease receivables:
Credit risk classification:
Investment grade	$	—	$	—	$	—	$	—	$	6,300	$	—	$	6,300

Our investment grade credit risk classification represents entities with investment grade credit ratings from ratings agencies (such as Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. or Fitch Ratings Ltd.), meaning that they are considered to have at least an adequate capacity to meet their financial commitments, with credit risk ranging from minimal to moderate. Our non-investment grade credit risk classification represents entities with either no credit agency credit ratings or ratings deemed to be sub-investment grade; we believe that there is significantly more credit risk associated with this classification. The credit risk classifications of our investing receivables and tenant notes receivable were last updated in September 2021.

An insignificant portion of the investing and tenant notes receivables set forth above was past due, which we define as being delinquent by more than three months from the due date.

Notes receivable on nonaccrual status as of September 30, 2021 and December 31, 2020 were not significant. We did not recognize any interest income on notes receivable on nonaccrual status during the three or nine months ended September 30, 2021 and 2020.

14.    Information by Business Segment

We have the following reportable segments: Defense/IT Locations; Regional Office; Wholesale Data Center; and Other. We also report on Defense/IT Locations sub-segments, which include the following: Fort George G. Meade and the Baltimore/Washington Corridor (“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 fund the costs for the power, fiber connectivity and data center infrastructure).

We measure the performance of our segments through the measure we define as net operating income from real estate operations (“NOI from real estate operations”), which includes: real estate revenues and property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate joint ventures (“UJVs”) that is allocable to our ownership interest (“UJV NOI allocable to COPT”). Amounts reported for segment assets represent long-lived assets associated with consolidated operating properties (including the carrying value of properties, right-of-use assets, net of related lease liabilities, intangible assets, deferred leasing costs, deferred rents receivable and lease incentives) and the carrying value of investments in UJVs owning operating properties. Amounts reported as additions to long-lived assets represent additions to existing consolidated operating properties, excluding transfers from non-operating properties, which we report separately.

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The table below reports segment financial information for our reportable segments (in thousands): 

	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 September 30, 2021
Revenues from real estate operations	$	66,029	$	15,291	$	14,519	$	8,558	$	9,144	$	6,913	$	120,454	$	16,810	$	8,637	$	689	$	146,590
Property operating expenses	(22,956)		(5,980)		(6,935)		(3,454)		(3,003)		(657)		(42,985)		(8,395)		(5,345)		(465)		(57,190)
UJV NOI allocable to COPT	—		—		—		—		—		1,060		1,060		—		—		—		1,060
NOI from real estate operations	$	43,073	$	9,311	$	7,584	$	5,104	$	6,141	$	7,316	$	78,529	$	8,415	$	3,292	$	224	$	90,460
Additions to long-lived assets	$	10,671	$	1,614	$	—	$	897	$	107	$	—	$	13,289	$	5,319	$	1,141	$	69	$	19,818
Transfers from non-operating properties	$	53,935	$	87,986	$	7,332	$	—	$	5,519	$	421	$	155,193	$	381	$	—	$	—	$	155,574
Three Months Ended September 30, 2020
Revenues from real estate operations	$	63,328	$	14,699	$	12,602	$	8,006	$	6,079	$	7,995	$	112,709	$	14,913	$	6,068	$	753	$	134,443
Property operating expenses	(21,537)		(5,245)		(7,116)		(3,044)		(2,029)		(861)		(39,832)		(7,782)		(3,642)		(296)		(51,552)
UJV NOI allocable to COPT	—		—		—		—		—		1,752		1,752		—		—		—		1,752
NOI from real estate operations	$	41,791	$	9,454	$	5,486	$	4,962	$	4,050	$	8,886	$	74,629	$	7,131	$	2,426	$	457	$	84,643
Additions to long-lived assets	$	7,511	$	2,219	$	—	$	1,650	$	6,382	$	—	$	17,762	$	5,303	$	1,917	$	(3)	$	24,979
Transfers from non-operating properties	$	(209)	$	58	$	221	$	—	$	61,520	$	65,269	$	126,859	$	—	$	—	$	—	$	126,859
Nine Months Ended September 30, 2021
Revenues from real estate operations	$	197,315	$	45,214	$	40,762	$	25,401	$	26,172	$	23,770	$	358,634	$	50,371	$	24,902	$	2,270	$	436,177
Property operating expenses	(69,341)		(17,394)		(21,315)		(10,114)		(8,525)		(2,516)		(129,205)		(23,901)		(14,395)		(1,279)		(168,780)
UJV NOI allocable to COPT	—		—		—		—		—		2,950		2,950		—		—		—		2,950
NOI from real estate operations	$	127,974	$	27,820	$	19,447	$	15,287	$	17,647	$	24,204	$	232,379	$	26,470	$	10,507	$	991	$	270,347
Additions to long-lived assets	$	29,063	$	2,921	$	—	$	2,654	$	3,418	$	—	$	38,056	$	13,430	$	1,490	$	82	$	53,058
Transfers from non-operating properties	$	55,075	$	88,099	$	56,601	$	—	$	19,724	$	2,423	$	221,922	$	38,738	$	—	$	—	$	260,660
Segment assets at September 30, 2021	$	1,315,101	$	470,077	$	196,624	$	172,381	$	299,184	$	353,340	$	2,806,707	$	538,080	$	194,576	$	3,508	$	3,542,871
Nine Months Ended September 30, 2020
Revenues from real estate operations	$	190,464	$	42,824	$	37,935	$	24,466	$	15,402	$	20,648	$	331,739	$	45,535	$	19,695	$	2,128	$	399,097
Property operating expenses	(63,618)		(15,765)		(21,696)		(9,500)		(5,488)		(2,307)		(118,374)		(22,207)		(10,338)		(836)		(151,755)
UJV NOI allocable to COPT	—		—		—		—		—		5,190		5,190		—		—		—		5,190
NOI from real estate operations	$	126,846	$	27,059	$	16,239	$	14,966	$	9,914	$	23,531	$	218,555	$	23,328	$	9,357	$	1,292	$	252,532
Additions to long-lived assets	$	22,144	$	8,114	$	—	$	5,518	$	6,698	$	—	$	42,474	$	13,105	$	10,699	$	165	$	66,443
Transfers from non-operating properties	$	4,304	$	838	$	381	$	—	$	91,827	$	171,465	$	268,815	$	—	$	—	$	—	$	268,815
Segment assets at September 30, 2020	$	1,264,547	$	392,226	$	143,206	$	180,337	$	234,355	$	446,530	$	2,661,201	$	387,290	$	204,834	$	3,643	$	3,256,968

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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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Segment revenues from real estate operations	$	146,590	$	134,443	$	436,177	$	399,097
Construction contract and other service revenues	28,046		20,323		64,592		46,240
Total revenues	$	174,636	$	154,766	$	500,769	$	445,337

The following table reconciles UJV NOI allocable to COPT to equity in income of unconsolidated entities as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
UJV NOI allocable to COPT	$	1,060	$	1,752	$	2,950	$	5,190
Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense	(763)		(1,274)		(2,167)		(3,814)
Add: Equity in loss of unconsolidated non-real estate entities	—		(1)		(4)		(4)
Equity in income of unconsolidated entities	$	297	$	477	$	779	$	1,372

As previously discussed, we provide real estate services such as property management, development and construction 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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract and other service revenues	$	28,046	$	20,323	$	64,592	$	46,240
Construction contract and other service expenses	(27,089)		(19,220)		(61,964)		(44,052)
NOI from service operations	$	957	$	1,103	$	2,628	$	2,188

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
NOI from real estate operations	$	90,460	$	84,643	$	270,347	$	252,532
NOI from service operations	957		1,103		2,628		2,188
Interest and other income	1,818		1,746		5,911		5,233
Credit loss recoveries	326		1,465		1,040		161
Gain on sales of real estate	(32)		—		39,711		5
Equity in income of unconsolidated entities	297		477		779		1,372
Income tax expense	(47)		(16)		(103)		(95)
Depreciation and other amortization associated with real estate operations	(36,611)		(35,332)		(111,487)		(101,540)
Impairment losses	—		(1,530)		—		(1,530)
General, administrative and leasing expenses	(9,342)		(7,467)		(26,970)		(23,111)
Business development expenses and land carry costs	(1,093)		(1,094)		(3,559)		(3,474)
Interest expense	(15,720)		(17,152)		(49,181)		(50,789)
UJV NOI allocable to COPT included in equity in income of unconsolidated entities	(1,060)		(1,752)		(2,950)		(5,190)
Loss on early extinguishment of debt	(1,159)		(3,237)		(59,553)		(3,237)
Loss on interest rate derivatives	—		(53,196)		—		(53,196)
Net income (loss)	$	28,794	$	(31,342)	$	66,613	$	19,329

The following table reconciles our segment assets to our consolidated total assets (in thousands): 

	September 30, 2021		September 30, 2020
Segment assets	$	3,542,871	$	3,256,968
Operating properties lease liabilities included in segment assets	29,644		26,054
Non-operating property assets	385,025		642,182
Other assets	193,598		194,985
Total consolidated assets	$	4,151,138	$	4,120,189

The accounting policies of the segments are the same as those used to prepare our consolidated financial statements.  In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization, impairment losses, gain on sales of real estate, loss on early extinguishment of debt, loss on interest rate derivatives and equity in income of unconsolidated entities not included in NOI 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, credit loss (expense) recoveries, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.

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15.    Construction Contract and Other Service Revenues

We disaggregate our construction contract and other service revenues by compensation arrangement and by service type as we believe it best depicts the nature, timing and uncertainty of our revenue. The table below reports construction contract and other service revenues by compensation arrangement (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract revenue:
Guaranteed maximum price	$	15,846	$	4,358	$	29,335	$	14,834
Cost-plus fee	4,742		13,249		23,075		20,121
Firm fixed price	7,042		1,365		10,954		9,421
Other	416		1,351		1,228		1,864
	$	28,046	$	20,323	$	64,592	$	46,240

The table below reports construction contract and other service revenues by service type (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract revenue:
Construction	$	26,893	$	18,786	$	61,477	$	42,520
Design	737		186		1,887		1,856
Other	416		1,351		1,228		1,864
	$	28,046	$	20,323	$	64,592	$	46,240

We recognized an insignificant amount of revenue in the three and nine months ended September 30, 2021 and 2020 from performance obligations satisfied (or partially satisfied) in previous periods.

Accounts receivable related to our construction contract services is included in accounts receivable, net on our consolidated balance sheets. The beginning and ending balances of accounts receivable related to our construction contracts were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	13,997	$	12,378
Ending balance	$	5,726	$	11,183

Contract assets, which we refer to herein as construction contract costs in excess of billings, net, are included in prepaid expenses and other assets, net reported on our consolidated balance sheets. The beginning and ending balances of our contract assets were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	10,343	$	17,223
Ending balance	$	12,987	$	13,980

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Contract liabilities are included in other liabilities reported on our consolidated balance sheets. Changes in contract liabilities were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	4,610	$	1,184
Ending balance	$	3,818	$	5,236
Portion of beginning balance recognized in revenue during:
Three months ended September 30	$	9	$	19
Nine months ended September 30	$	2,626	$	757

Revenue allocated to the remaining performance obligations under existing contracts as of September 30, 2021 that will be recognized as revenue in future periods was $159.2 million, of which we expect to recognize approximately $29 million in the three months ending December 31, 2021 and most of the remainder in 2022.

We have no deferred incremental costs incurred to obtain or fulfill our construction contracts or other service revenues as of September 30, 2021 and December 31, 2020. Our credit loss expense on construction contracts receivables and unbilled construction revenue totaled $412,000 and $463,000 in the three and nine months ended September 30, 2021, respectively, and was insignificant in the three and nine months ended September 30, 2020.

16.    Share-Based Compensation

Restricted Shares

During the nine months ended September 30, 2021, certain employees and non-employee members of our Board of Trustees (“Trustees”) were granted a total of 165,770 restricted common shares with an aggregate grant date fair value of $4.4 million (weighted average of $26.25 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 employee remains employed by us. Restricted shares granted to non-employee Trustees vest on the first anniversary of the grant date, provided that the Trustee remains in his or her position. During the nine months ended September 30, 2021, forfeiture restrictions lapsed on 157,066 previously issued common shares; these shares had a weighted average grant date fair value of $25.88 per share, and the aggregate intrinsic value of the shares on the vesting dates was $4.1 million.

Performance Share Awards (“PSUs”)

We issued 93,824 common shares on February 3, 2021 to executives in settlement of PSUs granted in 2018, representing 200% of the target awards for those PSUs.

Profit Interest Units in COPLP (“PIUs”)

We granted two forms of PIUs: time-based PIUs (“TB-PIUs”); and performance-based PIUs (“PB-PIUs”). TB-PIUs are subject to forfeiture restrictions until the end of the requisite service period, at which time the TB-PIUs automatically convert into vested PIUs. PB-PIUs are subject to a market condition in that the number of earned awards are determined at the end of the performance period (as described further below) and then settled in vested PIUs. Vested PIUs carry substantially the same rights to redemption and distributions as non-PIU common units.

TB-PIUs

During the nine months ended September 30, 2021, we granted 93,983 TB-PIUs with an aggregate grant date fair value of $2.5 million (weighted average of $26.16 per TB-PIU) to senior management team members and certain non-employee Trustees. TB-PIUs granted to senior management team members generally vest in equal annual increments over a three-year period beginning on the first anniversary of the date of grant provided that the employee remains employed by us. TB-PIUs granted to non-employee Trustees vest on the first anniversary of the grant date, provided that the Trustee remains in his or her position. Prior to vesting, TB-PIUs carry substantially the same rights to distributions as non-PIU common units but carry no redemption rights. During the nine months ended September 30, 2021, forfeiture restrictions lapsed on 40,591 previously issued TB-PIUs; these TB-PIUs had a weighted average grant date fair value of $25.14 per unit, and the aggregate intrinsic value of the TB-PIUs on the vesting date was $1.1 million.

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PB-PIUs

On January 1, 2021, we granted certain senior management team members 227,544 PB-PIUs with a three-year performance period concluding on the earlier of December 31, 2023 or the date of: (1) termination by us without cause, death or disability of the employee or constructive discharge of the employee (collectively, “qualified termination”); or (2) a sale event.  The number of earned awards at the end of the performance period will be determined based on the percentile rank of COPT’s total shareholder return (“TSR”) relative to a peer group of companies, as set forth in the following schedule:

Percentile Rank	Earned PB-PIUs Payout %
75th or greater	100% of PB-PIUs granted
50th (target)	50% of PB-PIUs granted
25th	25% of PB-PIUs granted
Below 25th	0% of PB-PIUs 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 awards will be interpolated between the ranges set forth in the table above to reflect any performance between the listed percentiles.  If COPT’s TSR during the measurement period is negative, the maximum number of earned awards will be limited to the target level payout percentage.  During the performance period, PB-PIUs carry rights to distributions equal to 10% of the distribution rights of non-PIU common units but carry no redemption rights.

At the end of the performance period, we will settle the award by issuing vested PIUs equal to: the number of earned awards; and the excess, if any, of (1) the aggregate distributions that would have been paid with respect to vested PIUs issued in settlement of the earned awards through the date of settlement had such vested PIUs been issued on the grant date over (2) the aggregate distributions made on the PB-PIUs during the performance period, divided by the price of our common shares on the settlement date. If a performance period ends due to a sale event or qualified termination, the number of earned awards 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 PB-PIUs are forfeited.

These PB-PIU grants had an aggregate grant date fair value of $3.4 million ($30.03 per target-level award associated with the grants) which is being recognized over the performance period. The grant date fair value was computed using a Monte Carlo model that included the following assumptions: baseline common share value of $26.08; expected volatility for common shares of 34.7%; and a risk-free interest rate of 0.18%.  

Deferred Share Awards

During the nine months ended September 30, 2021, a non-employee Trustee was granted 3,416 deferred share awards with an aggregate grant date fair value of $93,000 ($27.12 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).

17.    Earnings Per Share (“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 common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to redeemable noncontrolling interests and share-based compensation awards using the if-converted or treasury stock 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 add to the denominator.

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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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net income (loss) attributable to COPT	$	27,101	$	(31,845)	$	62,833	$	15,706
Income attributable to share-based compensation awards	(92)		(145)		(337)		(365)
Numerator for basic EPS on net income (loss) attributable to COPT common shareholders	27,009		(31,990)		62,496		15,341
Redeemable noncontrolling interests	(89)		—		(82)		—
Income attributable to share-based compensation awards	13		—		17		6
Numerator for diluted EPS on net income (loss) attributable to COPT common shareholders	$	26,933	$	(31,990)	$	62,431	$	15,347
Denominator (all weighted averages):
Denominator for basic EPS (common shares)	111,985		111,811		111,949		111,778
Dilutive effect of redeemable noncontrolling interests	138		—		130		—
Dilutive effect of share-based compensation awards	375		—		285		278
Denominator for diluted EPS (common shares)	112,498		111,811		112,364		112,056
Basic EPS	$	0.24	$	(0.29)	$	0.56	$	0.14
Diluted EPS	$	0.24	$	(0.29)	$	0.56	$	0.14

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 September 30,		For the Nine Months Ended September 30,
	2021	2020	2021	2020
Conversion of common units	1,262	1,240	1,257	1,235
Conversion of redeemable noncontrolling interests	782	973	793	954
Conversion of Series I Preferred Units	—	176	—	176

The following securities were also excluded from the computation of diluted EPS because their effect was antidilutive:

•weighted average restricted shares and deferred share awards for the three months ended September 30, 2021 and 2020 of 410,000 and 429,000, respectively, and for the nine months ended September 30, 2021 and 2020 of 416,000 and 432,000, respectively;

•weighted average unvested TB-PIUs for the three months ended September 30, 2021 and 2020 of 168,000 and 91,000, respectively, and for the nine months ended September 30, 2021 and 2020 of 155,000 and 85,000, respectively; and

•weighted average unvested PB-PIUs for the nine months ended September 30, 2021 of 228,000.

18.    Commitments and Contingencies

Litigation and Claims

In the normal course of business, we are subject to legal actions and other claims.  We record losses for specific legal proceedings and claims when we determine that a loss is probable and the amount of loss can be reasonably estimated.  As of September 30, 2021, management believes that it is reasonably possible that we could recognize a loss of up to $3.4 million for certain municipal tax claims; while we do not believe this loss would materially affect our financial position or liquidity, it could be material to our results of operations. Management believes that it is also reasonably possible that we could incur losses pursuant to other claims but do not believe such losses would materially affect our financial position, liquidity or results of operations. Our assessment of the potential outcomes of these matters involves significant judgment and is subject to change based on future developments.

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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.

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 limited to $19 million in the aggregate. We have insurance coverage in place to mitigate much of any potential future losses that may result from these indemnification agreements.

Tax Incremental Financing Obligation

Anne Arundel County, Maryland issued tax incremental financing bonds to third-party investors in order to finance public improvements needed in connection with our project known as the National Business Park.  These bonds had a remaining principal balance of approximately $31 million as of September 30, 2021. The real estate taxes on increases in assessed values post-bond issuance of properties in development districts encompassing the National Business Park are transferred to a special fund pledged to the repayment of the bonds. While we are obligated to fund, through a special tax, any future shortfalls between debt service of the bonds and real estate taxes available to repay the bonds, as of September 30, 2021, we do not expect any such future fundings will be required.

Effects of COVID-19

As of the date of this filing, spread of COVID-19 continues world- and nation-wide. Since the beginning of the year, the United States has significantly increased the proportion of the population that has received COVID-19 vaccines, and there is increased confidence that spread of COVID-19 can, to a large extent, be contained through vaccinations and wearing masks indoors in public. As a result, most restrictive measures previously instituted to control spread have been gradually lifted and an increased proportion of the population has resumed a return to normal activities. However, there continues to be significant uncertainty regarding the duration and extent of the pandemic due to factors such as the continuing spread of the virus, the pace of world- and nation-wide vaccination efforts, the emergence of new variants of the virus and the efficacy of vaccines against such variants. While the pandemic has impacted the operations of much of the commercial real estate industry, we believe that we have been less susceptible to such impact due to our portfolio’s significant concentration in Defense/IT Locations. As a result, we believe that we have not been significantly affected by the pandemic.

COVID-19, along with measures instituted to prevent spread, may adversely affect us in many ways, including, but not limited to:

•disruption of our tenants’ operations, which could adversely affect their ability, or willingness, to sustain their businesses and/or fulfill their lease obligations;

•our ability to maintain occupancy in our properties and obtain new leases for unoccupied and new development space at favorable terms or at all;

•shortages in supply of products or services from our and our tenants’ vendors that are needed for us and our tenants to operate effectively, and which could lead to increased costs for such products and services;

•access to debt and equity capital on attractive terms or at all. Severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our or our tenants’ ability to access capital necessary to fund operations, refinance debt or fund planned investments on a timely basis, and may adversely affect the valuation of financial assets and liabilities;

•our and our tenants’ ability to continue or complete planned development, including the potential for delays in the supply of materials or labor necessary for development; and

•an increase in the pace of businesses implementing remote work arrangements over the long-term, which would adversely effect demand for office space.

The extent of the effect on our operations, financial condition and cash flows will be dependent on future developments, including the duration and extent of the pandemic, the prevalence, strength and duration of restrictive measures and the resulting effects on our tenants, potential future tenants, the commercial real estate industry and the broader economy, all of which are uncertain and difficult to predict.

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

Overview

During the nine months ended September 30, 2021, we: 

•finished the period with our office and data center shell portfolio 93.3% occupied and 94.6% leased;

•placed into service 709,000 square feet in six newly-developed office properties that were 90.4% leased as of September 30, 2021;

•refinanced certain unsecured senior notes issuances with a new unsecured senior note issuance by:

◦issuing $600.0 million of 2.75% Notes at an initial offering price of 98.95% of their face value on March 11, 2021. The proceeds from this issuance, after deducting underwriting discounts but before other offering expenses, were $589.8 million; and

◦purchasing or redeeming $350.0 million of 3.60% Notes (52.7% of such notes effective March 11, 2021 and the remaining notes on April 12, 2021) and $250.0 million of 5.25% Notes (58.2% of such notes effective March 11, 2021 and the remaining notes on April 12, 2021) for $373.1 million and $282.4 million, respectively, plus accrued interest. In connection with these purchases, we recognized a loss on early extinguishment of debt in the nine months ended September 30, 2021 of $58.4 million.

We used borrowings under our Revolving Credit Facility to fund the net cash outlay resulting from this refinancing;

•issued $400.0 million of 2.00% Notes at an initial offering price of 99.97% of their face value on August 11, 2021. The proceeds from this issuance, after deducting underwriting discounts but before other offering expenses, were $397.4 million. We used $100.0 million of the proceeds from this issuance to repay a portion of our term loan facility, $89.0 million to pay off a construction loan and most of the remaining proceeds to repay borrowings under our Revolving Credit Facility; and

•sold a 90% interest in two data center shell properties in Northern Virginia on June 2, 2021 based on an aggregate property value of $118.8 million and retained a 10% interest in the properties through B RE COPT DC JV III LLC, a newly-formed joint venture. Our partner in the joint venture acquired the 90% interest from us for $106.9 million, which was used by us to repay borrowings under our Revolving Credit Facility.

With regard to our operating portfolio square footage, occupancy and leasing statistics included below and elsewhere in this Quarterly Report on Form 10-Q, amounts disclosed include information pertaining to properties owned through unconsolidated real estate joint ventures.

We discuss significant factors contributing to changes in our net income in the section below entitled “Results of Operations.” 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 Reform 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, construction costs and property values;

•adverse changes in the real estate markets, including, among other things, increased competition with other companies;

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•risks and uncertainties regarding the impact of the COVID-19 pandemic, and similar pandemics, along with restrictive measures instituted to prevent spread, on our business, the real estate industry and national, regional and local economic conditions;

•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 reduced or delayed demand for additional space by our strategic customers;

•our ability to borrow on favorable terms;

•risks of real estate acquisition and development activities, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development or operating costs may be greater than anticipated;

•risks of investing through joint venture structures, including risks that our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our objectives;

•changes in our plans for properties or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of significant impairment losses;

•our ability to satisfy and operate effectively under Federal income tax rules relating to real estate investment trusts and partnerships;

•possible adverse changes in tax laws;

•the dilutive effects of issuing additional common shares;

•our ability to achieve projected results;

•security breaches relating to cyber attacks, cyber intrusions or other factors; and

•environmental requirements.

We undertake no obligation to publicly update or supplement forward-looking statements.

Effects of COVID-19

As of the date of this filing, spread of COVID-19 continues world- and nation-wide. Since the beginning of the year, the United States has significantly increased the proportion of the population that has received COVID-19 vaccines, and there is increased confidence that spread of COVID-19 can, to a large extent, be contained through vaccinations and wearing masks indoors in public. As a result, most restrictive measures previously instituted to control spread have been gradually lifted and an increased proportion of the population has resumed a return to normal activities. However, there continues to be significant uncertainty regarding the duration and extent of the pandemic due to factors such as the continuing spread of the virus, the pace of world- and nation-wide vaccination efforts, the emergence of new variants of the virus and the efficacy of vaccines against such variants.

While the pandemic has impacted the operations of much of the commercial real estate industry, we believe that we have been less susceptible to such impact due to our portfolio’s significant concentration in Defense/IT Locations. As a result, our results of operations were not significantly affected by the pandemic. For the three and nine months ended September 30, 2021, our:

•Same Properties NOI from real estate operations increased relative to the comparable 2020 periods by $2.7 million and $3.7 million, respectively, and was only minimally affected by the pandemic-related effect of lower provisions for collectability losses in the 2021 periods relative to the 2020 periods; and

•lease revenue collections were not significantly affected by the pandemic. After agreeing to deferred payment arrangements for approximately $2.6 million in lease receivables last year (most of which was repaid by June 30, 2021), we did not agree to significant additional arrangements to date in 2021.

While we do not currently expect that the pandemic will significantly affect our future results of operations, financial condition or cash flows, we believe that the impact will be dependent on future developments, including the duration and extent of the pandemic, the prevalence, strength and duration of restrictive measures and the resulting effects on our tenants, potential future tenants, the commercial real estate industry and the broader economy, all of which are uncertain and difficult to predict. Nevertheless, we believe at this time that there is more inherent risk associated with the operations of our Regional Office properties than our Defense/IT Locations.

While we do not believe that our development leasing and ability to renew leases scheduled to expire have been significantly affected by the pandemic, we do believe that the impact of the restrictive measures and the economic uncertainty caused by the pandemic has impacted our timing and volume of vacant space leasing, and may continue to do so in the future, particularly for our Regional Office properties.

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The pandemic enhances the risk of us being able to stay on pace to complete development and begin operations on schedule due to the potential for delays from: jurisdictional permitting and inspections; factories’ ability to provide materials; and possible labor shortages. These types of issues have not significantly affected us to date but could in the future, depending on pandemic related developments.

We do not expect that we will be required to incur significant additional capital expenditures on existing properties as a result of the pandemic.

Occupancy and Leasing

Office and Data Center Shell Portfolio

The tables below set forth occupancy information pertaining to our portfolio of office and data center shell properties:

	September 30, 2021			December 31, 2020
Occupancy rates at period end
Total	93.3		%	94.1		%
Defense/IT Locations:
Fort Meade/BW Corridor	90.4		%	91.0		%
Northern Virginia Defense/IT	88.8		%	88.1		%
Lackland Air Force Base	100.0		%	100.0		%
Navy Support Locations	96.5		%	97.2		%
Redstone Arsenal	99.3		%	99.4		%
Data Center Shells	100.0		%	100.0		%
Total Defense/IT Locations	94.1		%	94.5		%
Regional Office	87.8		%	92.5		%
Other	66.2		%	68.4		%
Average contractual annual rental rate per square foot at period end (1)	$	32.38		$	31.50

(1)Includes estimated expense reimbursements.

	Rentable Square Feet	Occupied Square Feet
	(in thousands)
December 31, 2020	20,959	19,722
Vacated upon lease expiration (1)	—	(524)
Occupancy for new leases	—	387
Developed or redeveloped	709	628
Other changes	(8)	—
September 30, 2021	21,660	20,213

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

During the nine months ended September 30, 2021, we completed 2.7 million square feet of leasing, including: renewed leases on 1.4 million square feet, representing 74.6% of the square footage of our lease expirations (including the effect of early renewals); 420,000 square feet of vacant space; and 915,000 square feet of development space.

Wholesale Data Center

Our 19.25 megawatt wholesale data center was 86.7% leased as of September 30, 2021 and December 31, 2020. An 11.25 megawatt lease that expired in August 2020 remains in place until renewed by both parties or terminated by either party.

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Results of Operations

We evaluate the operating performance of our properties using NOI from real estate operations, our segment performance measure, which includes: real estate revenues and property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate joint ventures (“UJVs”) that is allocable to our ownership interest (“UJV NOI allocable to COPT”).  We view our NOI from real estate operations as comprising the following primary categories:

•office and data center shell properties:

•stably owned and 100% operational throughout the current and prior year reporting periods being compared.  We define these as changes from “Same Properties”;

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

•disposed; and

•our wholesale data center.

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.

Since both of the measures discussed above exclude certain items includable in net 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. A reconciliation of NOI from real estate operations and NOI from service operations to net income reported on our consolidated statements of operations is provided in Note 14 to our consolidated financial statements.

Comparison of Statements of Operations for the Three Months Ended September 30, 2021 and 2020

	For the Three Months Ended September 30,
	2021		2020		Variance
	(in thousands)
Revenues
Revenues from real estate operations	$	146,590	$	134,443	$	12,147
Construction contract and other service revenues	28,046		20,323		7,723
Total revenues	174,636		154,766		19,870
Operating expenses
Property operating expenses	57,190		51,552		5,638
Depreciation and amortization associated with real estate operations	36,611		35,332		1,279
Construction contract and other service expenses	27,089		19,220		7,869
Impairment losses	—		1,530		(1,530)
General, administrative and leasing expenses	9,342		7,467		1,875
Business development expenses and land carry costs	1,093		1,094		(1)
Total operating expenses	131,325		116,195		15,130
Interest expense	(15,720)		(17,152)		1,432
Interest and other income	1,818		1,746		72
Credit loss recoveries	326		1,465		(1,139)
Gain on sales of real estate	(32)		—		(32)
Loss on early extinguishment of debt	(1,159)		(3,237)		2,078
Loss on interest rate derivatives	—		(53,196)		53,196
Equity in income of unconsolidated entities	297		477		(180)
Income tax expense	(47)		(16)		(31)
Net income (loss)	$	28,794	$	(31,342)	$	60,136

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NOI from Real Estate Operations

	For the Three Months Ended September 30,
	2021			2020			Variance
	(Dollars in thousands, except per square foot data)
Revenues
Same Properties revenues
Lease revenue, excluding net lease termination revenue and provision for collectability losses	$	123,331		$	119,782		$	3,549
Lease termination revenue, net	853			455			398
Provision for collectability losses included in lease revenue	1			(412)			413
Other property revenue	808			573			235
Same Properties total revenues	124,993			120,398			4,595
Developed and redeveloped properties placed in service	12,937			4,930			8,007
Wholesale data center	8,637			6,068			2,569
Dispositions	(154)			3,047			(3,201)
Other	177			—			177
	146,590			134,443			12,147
Property operating expenses
Same Properties	(48,769)			(46,856)			(1,913)
Developed and redeveloped properties placed in service	(2,945)			(726)			(2,219)
Wholesale data center	(5,345)			(3,642)			(1,703)
Dispositions	(44)			(326)			282
Other	(87)			(2)			(85)
	(57,190)			(51,552)			(5,638)
UJV NOI allocable to COPT
Same Properties	504			504			—
Retained interest in newly-formed UJVs	575			—			575
Dispositions	(19)			1,248			(1,267)
	1,060			1,752			(692)
NOI from real estate operations
Same Properties	76,728			74,046			2,682
Developed and redeveloped properties placed in service	9,992			4,204			5,788
Wholesale data center	3,292			2,426			866
Dispositions, net of retained interest in newly-formed UJVs	358			3,969			(3,611)
Other	90			(2)			92
	$	90,460		$	84,643		$	5,817
Same Properties NOI from real estate operations by segment
Defense/IT Locations	$	68,664		$	66,459		$	2,205
Regional Office	7,739			7,131			608
Other	325			456			(131)
	$	76,728		$	74,046		$	2,682
Same Properties rent statistics
Average occupancy rate	92.0		%	92.8		%	(0.8		%)
Average straight-line rent per occupied square foot (1)	$	6.59		$	6.49		$	0.10

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

Our Same Properties pool consisted of 159 properties, comprising 80.2% of our office and data center shell portfolio’s square footage as of September 30, 2021. This pool of properties changed from the pool used for purposes of comparing 2020 and 2019 in our 2020 Annual Report on Form 10-K due to the: addition of eight properties placed in service and 100%

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operational on or before January 1, 2020 and nine properties owned through an unconsolidated real estate joint venture that was formed in 2019; and removal of two properties in which we sold a 90% interest.

Regarding the changes in NOI from real estate operations reported above:

•the increase for our Same Properties pool was due primarily to higher rent per occupied square foot in the current period due to an increase in rental rates (mostly from leases of renewed or previously-vacant space), offset in part by lower occupancy in the current period;

•developed and redeveloped properties placed in service reflects the effect of 17 properties placed in service in 2020 and 2021; and

•dispositions, net of retained interest in newly-formed UJVs reflects the effect of our decrease in ownership of eight data center shells in 2020 and two in 2021.

NOI from Service Operations

	For the Three Months Ended September 30,
	2021		2020		Variance
	(in thousands)
Construction contract and other service revenues	$	28,046	$	20,323	$	7,723
Construction contract and other service expenses	(27,089)		(19,220)		(7,869)
NOI from service operations	$	957	$	1,103	$	(146)

Construction contract and other service revenue and expenses increased due primarily to a higher 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 an insignificant amount of income relative to our real estate operations.

General, administrative and leasing expenses

General, administrative and leasing expenses increased in large part due to higher compensation related expenses in the current period.

Loss on extinguishment of debt

The loss on early extinguishment of debt in the current period was attributable to our repayment of $100.0 million of our term loan facility and payoff of a construction loan. The loss on early extinguishment of debt in the prior period was attributable to our purchase of 3.70% Senior Notes due 2021.

Loss on interest rate derivatives

We recognized a loss in the prior period on interest rate swaps previously designated as cash flow hedges of interest expense on forecasted future borrowings that we determined would probably not occur.

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Comparison of Statements of Operations for the Nine Months Ended September 30, 2021 and 2020

	For the Nine Months Ended September 30,
	2021		2020		Variance
	(in thousands)
Revenues
Revenues from real estate operations	$	436,177	$	399,097	$	37,080
Construction contract and other service revenues	64,592		46,240		18,352
Total revenues	500,769		445,337		55,432
Operating expenses
Property operating expenses	168,780		151,755		17,025
Depreciation and amortization associated with real estate operations	111,487		101,540		9,947
Construction contract and other service expenses	61,964		44,052		17,912
Impairment losses	—		1,530		(1,530)
General, administrative and leasing expenses	26,970		23,111		3,859
Business development expenses and land carry costs	3,559		3,474		85
Total operating expenses	372,760		325,462		47,298
Interest expense	(49,181)		(50,789)		1,608
Interest and other income	5,911		5,233		678
Credit loss recoveries	1,040		161		879
Gain on sales of real estate	39,711		5		39,706
Loss on early extinguishment of debt	(59,553)		(3,237)		(56,316)
Loss on interest rate derivatives	—		(53,196)		53,196
Equity in income of unconsolidated entities	779		1,372		(593)
Income tax expense	(103)		(95)		(8)
Net income	$	66,613	$	19,329	$	47,284

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NOI from Real Estate Operations

	For the Nine Months Ended September 30,
	2021			2020			Variance
	(Dollars in thousands, except per square foot data)
Revenues
Same Properties revenues
Lease revenue, excluding lease termination revenue and provision for collectability losses	$	367,002		$	361,032		$	5,970
Lease termination revenue, net	3,309			693			2,616
Provision for collectability losses included in lease revenue	(118)			(1,894)			1,776
Other property revenue	2,047			2,060			(13)
Same Properties total revenues	372,240			361,891			10,349
Developed and redeveloped properties placed in service	35,902			8,410			27,492
Wholesale data center	24,902			19,695			5,207
Dispositions	2,691			9,097			(6,406)
Other	442			4			438
	436,177			399,097			37,080
Property operating expenses
Same Properties	(145,830)			(139,209)			(6,621)
Developed and redeveloped properties placed in service	(7,795)			(1,246)			(6,549)
Wholesale data center	(14,395)			(10,338)			(4,057)
Dispositions	(477)			(952)			475
Other	(283)			(10)			(273)
	(168,780)			(151,755)			(17,025)
UJV NOI allocable to COPT
Same Properties	1,506			1,515			(9)
Retained interest in newly-formed UJVs	1,463			—			1,463
Dispositions	(19)			3,675			(3,694)
	2,950			5,190			(2,240)
NOI from real estate operations
Same Properties	227,916			224,197			3,719
Developed and redeveloped properties placed in service	28,107			7,164			20,943
Wholesale data center	10,507			9,357			1,150
Dispositions, net of retained interest in newly-formed UJVs	3,658			11,820			(8,162)
Other	159			(6)			165
	$	270,347		$	252,532		$	17,815
Same Properties NOI from real estate operations by segment
Defense/IT Locations	$	203,232		$	199,577		$	3,655
Regional Office	23,674			23,328			346
Other	1,010			1,292			(282)
	$	227,916		$	224,197		$	3,719
Same Properties rent statistics
Average occupancy rate	92.4		%	92.7		%	(0.3		%)
Average straight-line rent per occupied square foot (1)	$	19.62		$	19.42		$	0.20

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

Regarding the changes in NOI from real estate operations reported above:

•the increase for our Same Properties pool was due primarily to: higher rent per occupied square foot in the current period due to an increase in rental rates (mostly from leases of renewed or previously-vacant space); and higher lease termination

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revenues and lower provisions for collectability losses in the current period; offset in part by higher snow removal costs in the current period;

•developed and redeveloped properties placed in service reflects the effect of 17 properties placed in service in 2020 and 2021; and

•dispositions, net of retained interest in newly-formed UJVs reflects the effect of our decrease in ownership of eight data center shells in 2020 and two in 2021.

NOI from Service Operations

	For the Nine Months Ended September 30,
	2021		2020		Variance
	(in thousands)
Construction contract and other service revenues	$	64,592	$	46,240	$	18,352
Construction contract and other service expenses	(61,964)		(44,052)		(17,912)
NOI from service operations	$	2,628	$	2,188	$	440

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

Depreciation and amortization associated with real estate operations

The increase in depreciation and amortization associated with real estate operations was mostly attributable to newly-developed properties placed in service.

General, administrative and leasing expenses

General, administrative and leasing expenses increased in large part due to higher compensation related expenses in the current period.

Gain on sales of real estate

The gain on sales of real estate was due to our sale of a 90% interest in two data center shell properties in the current period.

Loss on extinguishment of debt

The loss on early extinguishment of debt in the current period was attributable to our purchase and redemption of 3.60% Notes and 5.25% Notes, repayment of $100.0 million of our term loan facility and payoff of a construction loan. The loss on early extinguishment of debt in the prior period was attributable to our purchase of 3.70% Senior Notes due 2021.

Loss on interest rate derivatives

Refer to our explanation above for the three-month periods.

Funds from Operations

Funds from operations (“FFO”) is defined as net income computed using GAAP, excluding gains on sales and impairment losses of real estate (net of associated income tax) and real estate-related depreciation and amortization. FFO also includes adjustments to net income for the effects of the items noted above pertaining to UJVs that were allocable to our ownership interest in the UJVs. 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 on sales and impairment losses of real estate and investments in unconsolidated real estate joint ventures (net of associated income tax), and 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.

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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 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) income attributable to noncontrolling interests through ownership of preferred units in the Operating Partnership or interests in other consolidated entities not owned by us, (3) depreciation and amortization allocable to noncontrolling interests in other consolidated entities and (4) Basic FFO allocable to share-based compensation awards.  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.

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; 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, interest expense and gains on debt extinguishment (discussed further below); loss on interest rate derivatives; demolition costs on redevelopment and nonrecurring improvements; executive transition costs; issuance costs associated with redeemed preferred shares; allocations of FFO to holders on noncontrolling interests resulting from capital events; and certain other expenses that we believe are not closely correlated with our operating performance.  This measure also includes adjustments for the effects of the items noted above pertaining to UJVs that were allocable to our ownership interest in the UJVs. 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. 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

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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.

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The table below sets forth the computation of the above stated measures, and provides reconciliations to our GAAP measures associated with such measures:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(Dollars and shares in thousands, except per share data)
Net income (loss)	$	28,794	$	(31,342)	$	66,613	$	19,329
Real estate-related depreciation and amortization	36,611		35,332		111,487		101,540
Depreciation and amortization on UJVs allocable to COPT	525		819		1,455		2,455
Impairment losses on real estate	—		1,530		—		1,530
Gain on sales of real estate	32		—		(39,711)		(5)
FFO	65,962		6,339		139,844		124,849
FFO allocable to other noncontrolling interests	(1,696)		(1,074)		(4,025)		(14,614)
Basic FFO allocable to share-based compensation awards	(313)		(119)		(663)		(449)
Noncontrolling interests-preferred units in the Operating Partnership	—		(77)		—		(231)
Basic FFO available to common share and common unit holders	63,953		5,069		135,156		109,555
Redeemable noncontrolling interests	(68)		—		1		103
Diluted FFO adjustments allocable to share-based compensation awards	13		—		27		—
Diluted FFO available to common share and common unit holders	63,898		5,069		135,184		109,658
Loss on interest rate derivatives	—		53,196		—		53,196
Loss on early extinguishment of debt	1,159		3,237		59,553		3,237
Demolition costs on redevelopment and nonrecurring improvements	129		11		431		63
Diluted FFO comparability adjustments for redeemable noncontrolling interests	—		34		—		—
Diluted FFO comparability adjustments allocable to share-based compensation awards	(7)		(139)		(300)		(307)
Dilutive preferred units in the Operating Partnership	—		77		—		231
FFO allocation to other noncontrolling interests resulting from capital event	—		—		—		11,090
Diluted FFO available to common share and common unit holders, as adjusted for comparability	$	65,179	$	61,485	$	194,868	$	177,168
Weighted average common shares	111,985		111,811		111,949		111,778
Conversion of weighted average common units	1,262		1,240		1,257		1,235
Weighted average common shares/units - Basic FFO per share	113,247		113,051		113,206		113,013
Dilutive effect of share-based compensation awards	375		274		311		278
Redeemable noncontrolling interests	138		—		130		125
Weighted average common shares/units - Diluted FFO per share	113,760		113,325		113,647		113,416
Redeemable noncontrolling interests	—		109		—		—
Dilutive convertible preferred units	—		176		—		176
Weighted average common shares/units - Diluted FFO per share, as adjusted for comparability	113,760		113,610		113,647		113,592
Diluted FFO per share	$	0.56	$	0.04	$	1.19	$	0.97
Diluted FFO per share, as adjusted for comparability	$	0.57	$	0.54	$	1.71	$	1.56
Denominator for diluted EPS	112,498		111,811		112,364		112,056
Weighted average common units	1,262		1,240		1,257		1,235
Redeemable noncontrolling interests	—		—		—		125
Anti-dilutive EPS effect of share-based compensation awards	—		274		26		—
Denominator for diluted FFO per share	113,760		113,325		113,647		113,416
Redeemable noncontrolling interests	—		109		—		—
Dilutive convertible preferred units	—		176		—		176
Denominator for diluted FFO per share, as adjusted for comparability	113,760		113,610		113,647		113,592

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Property Additions

The table below sets forth the major components of our additions to properties for the nine months ended September 30, 2021 (in thousands):

Development	$	195,825
Tenant improvements on operating properties (1)	16,665
Capital improvements on operating properties	18,191
	$	230,681

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

Cash Flows

Net cash flow from operating activities increased $40.9 million when comparing the nine months ended September 30, 2021 and 2020 due primarily to an increase in cash flow from real estate operations resulting from the growth of our property portfolio and an increase associated with the timing of cash flow from third-party construction projects.

Net cash flow used in investing activities decreased $284.2 million when comparing the nine months ended September 30, 2021 and 2020 due primarily to our receipt of $114.1 million in property disposition proceeds in 2021 mostly from our sale of a 90% interest in two data center shells, a $107.9 million decrease in cash outlays for development and redevelopment of properties and the effect of $53.1 million paid in the prior period to cash settle interest rate swaps.

Net cash flow used in financing activities in the nine months ended September 30, 2021 was $91.8 million, and included dividends to common shareholders of $92.6 million. Net proceeds from debt borrowings during the period totaled $11.2 million, which included the net effect of our purchase and redemption of 3.60% Notes and 5.25% Notes (and related early extinguishment costs), issuance of 2.75% Notes and 2.00% Notes and the repayment of a portion of our term loan facility and payoff of a construction loan (and related early extinguishment costs).

Net cash flow provided by financing activities in the nine months ended September 30, 2020 was $233.7 million, and included the following:

•net proceeds from debt borrowings of $345.3 million, which included the net increase from our issuance of 2.25% Notes and purchase of 3.70% Notes (and related early extinguishment costs); offset in part by

•dividends to common shareholders of $92.5 million.

Supplemental Guarantor Information

As of September 30, 2021, COPLP had several series of unsecured senior notes outstanding that were issued in transactions registered with the SEC under the Securities Act of 1933, as amended. These notes are COPLP’s direct, senior unsecured and unsubordinated obligations and rank equally in right of payment with all of COPLP’s existing and future senior unsecured and unsubordinated indebtedness. However, these notes are effectively subordinated in right of payment to COPLP’s existing and future secured indebtedness. The notes are also effectively subordinated in right of payment to all existing and future liabilities and other indebtedness, whether secured or unsecured, of COPLP's subsidiaries. COPT fully and unconditionally guarantees COPLP’s obligations under these notes. COPT’s guarantees of these notes are senior unsecured obligations that rank equally in right of payment with other senior unsecured obligations of, or guarantees by, COPT. COPT itself does not hold any indebtedness, and its only material asset is its investment in COPLP.

In March 2020, the SEC adopted amendments to Rule 3-10 of Regulation S-X and adopted Rule 13-01 of Regulation S-X to simplify disclosure requirements related to certain registered securities that became effective on January 4, 2021. As a result of these amendments, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and, subject to certain exceptions, summarized financial information. Accordingly, we no longer present separate consolidated financial statements for the Operating Partnership. Furthermore, as permitted under Rule 13-01(a)(4)(vi), we have excluded summarized financial information for the Operating Partnership since: the assets, liabilities, and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company; and we believe that inclusion of such summarized financial information would be repetitive and not provide incremental value to investors.

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Liquidity and Capital Resources

Our primary cash requirements are for operating expenses, debt service, development of new properties, improvements to existing properties and dividends to our shareholders.  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, dividends to our shareholders, distributions to COPLP’s unitholders and improvements to existing properties.  As of September 30, 2021, we had $14.6 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 primarily for joint venture financings. In addition, we periodically raise equity when we access the public equity markets 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 cash available from operations and proceeds from long-term borrowings, equity issuances and sales of interests in properties.  The lenders’ aggregate commitment under the facility is $800.0 million, with the ability for us to increase the lenders’ aggregate commitment to $1.25 billion, provided that there is no default under the facility and subject to the approval of the lenders. The facility matures in March 2023, 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 under the facility for each extension period. As of September 30, 2021, the maximum borrowing capacity under this facility totaled $800.0 million, of which $790.0 million was available.

We have a program in place under which we may offer and sell common shares in at-the-market stock offerings having an aggregate gross sales price of up to $300 million. Under this program, we may also, at our discretion, sell common shares under forward equity sales agreements. The use of a forward equity sales agreement would enable us to lock in a price on a sale of common shares when the agreement is executed but defer receiving the proceeds from the sale until a later date.

We believe that our liquidity and capital resources are adequate for our near-term and longer-term requirements without necessitating property sales. However, we may dispose of interests in properties opportunistically or when market conditions otherwise warrant. In addition, we believe that we have the ability to raise additional equity by selling interests in data center shells through joint ventures.

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Our contractual obligations as of September 30, 2021 included the following (in thousands):

	For the Periods Ending December 31,
	2021		2022		2023		2024		2025		Thereafter		Total
Contractual obligations (1)
Debt (2)
Balloon payments due upon maturity	$	—	$	300,000	$	73,578	$	27,649	$	322,100	$	1,445,623	$	2,168,950
Scheduled principal payments (3)	1,045		4,498		3,552		2,334		1,617		677		13,723
Interest on debt (3)(4)	14,562		57,963		52,759		51,009		42,665		114,185		333,143
Development obligations (5)(6)	77,621		161,023		46,081		—		—		—		284,725
Third-party construction cost obligations (6)(7)	26,773		100,000		—		—		—		—		126,773
Tenant and other building improvements (3)(6)	13,811		22,465		33,203		—		—		—		69,479
Property finance leases (principal and interest) (3)	—		14		—		—		—		—		14
Property operating leases (3)	807		3,297		3,352		3,403		1,749		123,979		136,587
Total contractual cash obligations	$	134,619	$	649,260	$	212,525	$	84,395	$	368,131	$	1,684,464	$	3,133,394

(1)The contractual obligations set forth in this table exclude contracts for property operations and certain other contracts entered into in the normal course of business. Also excluded are accruals and payables incurred and interest rate derivative liabilities, which are reflected in our reported liabilities (although debt and lease liabilities are included on the table).

(2)Represents scheduled principal amortization payments and maturities only and therefore excludes net debt discounts and deferred financing costs of $22.9 million. As of September 30, 2021, maturities in 2023 included $10.0 million that may be extended to 2024, subject to certain conditions.

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

(4)Represents interest costs for our outstanding debt as of September 30, 2021 for the terms of such debt.  For variable rate debt, the amounts reflected above used September 30, 2021 interest rates on variable rate debt in computing interest costs for the terms of such debt. We expect to pay these items using cash flow from operations.

(5)Represents contractual obligations pertaining to new development activities.

(6)Due to the long-term nature of certain development and construction 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.

(7)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.

We expect to spend approximately $85 million on development costs and approximately $40 million on improvements and leasing costs for operating properties (including the commitments set forth in the table above) during the remainder of 2021.  We expect to fund the development costs initially using primarily borrowings under our Revolving Credit Facility.  We expect to fund improvements to existing operating properties using cash flow from operating activities.

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 September 30, 2021, we were compliant with these covenants.

Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements during the nine months ended September 30, 2021.

Inflation

Most of our tenants are obligated to pay their share of a property’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.

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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 September 30, 2021 our debt obligations and weighted average interest rates on debt maturing each year (dollars in thousands):

	For the Periods Ending December 31,
	2021		2022		2023		2024		2025		Thereafter		Total
Debt:
Fixed rate debt (1)	$	985	$	4,033	$	66,590	$	29,443	$	301,302	$	1,436,140	$	1,838,493
Weighted average interest rate	3.97%		3.98%		4.22%		4.42%		4.99%		2.43%		2.95%
Variable rate debt	$	60	$	300,465	$	10,540	$	540	$	22,415	$	10,160	$	344,180
Weighted average interest rate (2)	1.54%		1.09%		1.21%		1.59%		1.63%		1.54%		1.14%

(1)Represents principal maturities only and therefore excludes net discounts and deferred financing costs of $22.9 million. As of September 30, 2021, maturities in 2023 included $10.0 million that may be extended to 2024, subject to certain conditions.

(2)The amounts reflected above used interest rates as of September 30, 2021 for variable rate debt.

The fair value of our debt was $2.2 billion as of September 30, 2021.  If interest rates had been 1% lower, the fair value of our fixed-rate debt would have increased by approximately $110 million as of September 30, 2021.

See Note 10 to our consolidated financial statements for information pertaining to interest rate swap contracts in place as of September 30, 2021 and their respective fair values.

Based on our variable-rate debt balances, including the effect of interest rate swap contracts, our interest expense would have increased by $2.5 million in the nine months ended September 30, 2021 if the applicable LIBOR rate was 1% higher.

Item 4.           Controls and Procedures

(a)                                  Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2021.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2021 were functioning effectively to provide reasonable assurance that the information required to be disclosed 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 our management, including our 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 our internal control over financial reporting occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1.           Legal Proceedings

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

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Item 1A.  Risk Factors

 There have been no material changes to the risk factors included in our 2020 Annual Report on Form 10-K.

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

(a)          Not applicable

(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

On November 1, 2021, COPT and COPLP, entered into Letter Agreements (the “2021 Letter Agreements”) with Todd Hartman, our Executive Vice President and Chief Operating Officer, and Anthony Mifsud, our Executive Vice President and Chief Financial Officer, regarding their participation in COPT’s and COPLP’s Executive Change in Control and Severance Plan (the “Plan”). The 2021 Letter Agreements supersede previous Letter Agreements that COPT and COPLP had with Mr. Hartman and Mr. Mifsud dated November 30, 2020 and November 1, 2016, respectively, pertaining to their respective participation in the Plan. The 2021 Letter Agreements establish 5-year participation periods for Mr. Hartman and Mr. Mifsud under the Plan, after which they will cease to participate in the Plan unless otherwise agreed to by COPT, COPLP and the respective executives.

Under the Plan, each executive selected to participate is entitled to receive the following payments and benefits in the event the executive is terminated prior to the end of any defined participation period for any reason other than death, disability or for “cause,” as defined in the Plan, or is “Constructively Discharged,” as defined in the Plan: (1) a severance payment equal to a specified severance multiple, described below, multiplied by the sum of the executive’s annual base salary plus the average of the executive’s annual cash performance bonuses for the last three years; (2) a pro-rated annual cash performance bonus for the year of termination through the date of termination based on the amount of the executive’s target annual cash performance bonus for that year; (3) full vesting of equity awards subject to a time-based vesting schedule (with vesting of equity awards subject to performance-based vesting conditions to remain governed by the terms of the applicable award agreement); (4) the right to exercise existing stock options for up to 18 months following termination; and (5) continuing coverage under COPLP’s group medical, dental and vision plans for up to 24 months following termination unless such benefits are available to the executive through another group plan. If any payments and benefits to be paid or provided to an executive, whether pursuant to the Plan or otherwise, would be subject to “golden parachute” excise taxes under the Internal Revenue Code, the executive’s payments and benefits will be reduced to the extent necessary to avoid such excise taxes, but only if such a reduction of pay or benefits would result in a greater after-tax benefit to the executive.

An executive’s receipt of payments and benefits under the Plan will be conditioned upon the executive’s execution of a general release of claims in favor of COPT and COPLP. In addition, in order to participate in the Plan, an executive must agree to comply with non-competition and non-solicitation covenants while the executive is employed and for 12 months thereafter and confidentiality and non-disparagement covenants. COPT and COPLP may amend or terminate the Plan at any time, provided that executive’s rights to payments and benefits upon a termination in connection with or within 12 months after a “Change in Control,” as defined in the Plan, may not be adversely affected by an amendment or termination occurring within 12 months before or after the Change in Control.

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Messrs. Hartman’s and Mifsud’s severance multiple under the Plan will be 1.00 or, in the event of a termination within six months prior to and 12 months after a Change in Control, the multiple will be 2.99.

Item 6.           Exhibits

(a)          Exhibits:

EXHIBIT NO.	DESCRIPTION
10.1	Third Supplemental Indenture, by and among Corporate Office Properties, L.P., as issuer, Corporate Office Properties Trust, as guarantor, and U.S. Bank National Association, as trustee (filed with the Company’s Current Report on Form 8-K dated August 11, 2021 and incorporated herein by reference).
10.2	Letter Agreement, dated November 1, 2021, between Corporate Office Properties Trust, Corporate Office Properties, L.P., and Todd Hartman (filed herewith).
10.3	Letter Agreement, dated November 1, 2021, between Corporate Office Properties Trust, Corporate Office Properties, L.P., and Anthony Mifsud (filed herewith).
22.1	List of Subsidiary Issuers and Guaranteed Securities (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).
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).
101.INS	XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document (filed herewith).
101.SCH	Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.LAB	Inline XBRL Extension Labels Linkbase (filed herewith).
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

47

SIGNATURES

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

	CORPORATE OFFICE PROPERTIES TRUST
	/s/ Stephen E. Budorick
	Stephen E. Budorick
	President and Chief Executive Officer
	/s/ Anthony Mifsud
	Anthony Mifsud
	Executive Vice President and Chief Financial Officer
Dated:	November 1, 2021

48

EX-10.2

Hartman, Todd W.

November 1, 2021

5-Year

Exhibit 10.2

	Corporate Office Properties Trust
	6711 Columbia Gateway Drive, Suite 300
	Columbia, MD 21046
	443.285.5400 // copt.com
	NYSE: OFC

LETTER AGREEMENT

November 1, 2021

Dear Todd:

We are pleased to inform you that the Board of Trustees of Corporate Office Properties Trust (the “Company”) has determined that, effective as of November 1, 2021 (the “Participation Date”), you are eligible to participate in the Corporate Office Properties Trust, Corporate Office Properties L.P. Executive Change in Control and Severance Plan (the “Plan”) as a Covered Executive, subject to the terms and conditions of the Plan, for a period of 5 years from the Participation Date (the “Participation Period”), at which point you will cease to participate in the Plan unless otherwise agreed by you, the Company and the Employer. Capitalized terms used herein and not defined herein shall have the meanings given to such terms in the Plan.

The terms of the Plan are detailed in the copy of the Plan that is attached as Exhibit A to this Letter Agreement, and those terms, including without limitation, Sections 6 and 7 of the Plan, are incorporated in and made a part of this Letter Agreement. As described in more detail in the Plan, the Plan entitles you to certain severance benefits in the event that your employment with the Employer terminates under certain circumstances. By signing this Letter Agreement and as a condition of your eligibility for the payments and benefits set forth in the Plan, you agree to comply with the provisions of the Plan and you agree to comply with the provisions of the confidentiality, non-competition, non-solicitation and non-disparagement requirements set forth on Exhibit B to this Letter Agreement (collectively the “Restrictive Covenants”) during your employment and, to the extent required by the Restrictive Covenants, after your employment ends regardless of the reason for the ending of such employment (and regardless of whether such termination occurs during the Participation Period); provided that, unless otherwise agreed by you, the provisions of Section 2(a) of the Restrictive Covenants (i.e., the Non-Competition Covenant, as defined therein) will not apply following a termination of your employment in the event that such termination occurs after the end of the Participation Period. Your Termination Payment Multiple shall be 1.00, your Change in Control Termination Payment Multiple shall be 2.99, and your Maximum Medical Benefit Continuation Period shall be 12 months.

This Letter Agreement and the Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersede in all respects any and all prior agreements between you and the Company concerning such subject matter.

By signing below, you agree to the terms and conditions of the Restrictive Covenants set forth on Exhibit B hereto, and acknowledge (i) your participation in the Plan pursuant to this Letter Agreement as of the Participation Date, (ii) that you have received and read a copy of the Plan, (iii) that you agree that any termination benefits provided for in the Plan are subject to all of the terms and conditions of the Plan and you agree to such terms and conditions, (iv) that the Company and the Employer may amend or terminate the Plan at any time, and (v) that the Restrictive Covenants shall survive and continue to apply notwithstanding (a) any amendment or termination of the Plan (or the benefits to be provided thereunder) in the future or (b) except as set forth above with respect to the Non-Competition Covenant, the expiration of the Participation Period.

Congratulations on being selected to participate in the Plan.

“Employer”

Corporate Office Properties L.P., a Delaware limited partnership

By: Corporate Office Properties Trust, a Maryland real estate investment trust

By: /s/ Stephen E. Budorick

Name: Stephen E. Budorick

Title: President + CEO

“Company”

Corporate Office Properties Trust, a Maryland real estate investment trust

By: /s/ Stephen E. Budorick

Name: Stephen E. Budorick

Title: President + CEO

AGREED TO AND ACCEPTED

/s/ Todd W. Hartman

Todd W. Hartman

2

Hartman, Todd W.

November 1, 2021

5-Year

EXHIBIT A

TO THE LETTER AGREEMENT

[See the Plan filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of Corporate Office Properties Trust for the Quarter Ended June 30, 2021.]

EXHIBIT B

TO THE LETTER AGREEMENT

Restrictive Covenants

Capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Corporate Office Properties Trust, Corporate Office Properties L.P. Executive Change in Control and Severance Plan (the “Plan”) and in the Letter Agreement under the Plan to which this Exhibit B is attached. In consideration of, among other things, the Covered Executive’s participation in the Plan and continued employment by the Employer, the Covered Executive agrees to comply with the covenants, terms and conditions set forth below. The Covered Executive acknowledges that the covenants, terms and conditions set forth below will continue to apply notwithstanding any amendment or termination of the Plan (or the benefits to be provided thereunder) in the future.

1.Confidentiality and Loyalty. The Covered Executive acknowledges that heretofore or hereafter during the course of the Covered Executive’s employment the Covered Executive has produced and received, and may hereafter produce, receive and otherwise have access to various materials, records, data, trade secrets and information not generally available to the public (collectively, “Confidential Information”) regarding the Employer and its subsidiaries and affiliates. Accordingly, during and subsequent to termination of the Covered Executive’s employment with the Employer, the Covered Executive shall hold in confidence and not directly or indirectly disclose, use, copy or make lists of any such Confidential Information, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing by the Employer, required by law or by any competent administrative agency or judicial authority, or otherwise as reasonably necessary or appropriate in connection with the performance by the Covered Executive of the Covered Executive’s duties hereunder. All records, files, documents, computer diskettes, computer programs and other computer-generated material, as well as all other materials or copies thereof relating to the business of the Employer, which the Covered Executive shall prepare or use, shall be and remain the sole property of the Employer, shall not be removed from the Employer’s premises without its written consent, and shall be promptly returned to the Employer upon termination of the Covered Executive’s employment. The Covered Executive agrees to abide by the reasonable policies of the Employer, as in effect from time to time, respecting confidentiality and the avoidance of interests conflicting with those of the Employer.

2.Non-Competition; Non-Solicitation; Non-Disparagement.

(a)Non-Competition. The Employer and the Covered Executive have jointly reviewed the tenant lists, property submittals, logs, broker lists, and operations of the Employer, and have agreed that as an essential ingredient of and in consideration of the Covered Executive’s participation in the Plan, the Covered Executive hereby agrees that, except with the express prior written consent of the Employer, while the Covered Executive is employed by the Employer and for a period of 12 months after the termination of the Covered Executive’s employment with the Employer for any reason (the “Restrictive Period”), the Covered Executive will not directly or indirectly compete with the business of the Employer, including, but not by

2

way of limitation, by directly or indirectly owning, managing, operating, controlling, financing, investing, or by directly or indirectly (including, but not limited to, through a joint venture) serving as an employee, officer, trustee or director of or consultant or other external advisor to a Similar Business (as defined below) (the “Non-Competition Covenant”). For purposes of this paragraph (a), a business shall be considered to be a “Similar Business” as of a particular date if it is engaged in the ownership, development, operation, management or leasing of real estate in any geographic market or submarket in which the Employer either (i) owned, developed, operated or leased, collectively, more than 1,000,000 square feet of property of the same or similar type (e.g., office, data center, industrial, residential or self-storage) as of the earliest of such date, the date of termination of the Covered Executive’s employment with the Employer or the date of a Change in Control (as defined in the Plan), or (ii) had commenced construction or agreed to acquire or manage more than 500,000 square feet of property of the same or similar type within the 12 months preceding the earliest of such date, the date of termination of the Covered Executive’s employment with the Employer or the date of a Change in Control (as defined in the Plan). If the Covered Executive violates the Non-Competition Covenant and the Employer brings legal action for injunctive or other relief, the Employer shall not, as a result of the time involved in obtaining such relief, be deprived of the benefit of the full period of the Non-Competition Covenant. Accordingly, the Non-Competition Covenant shall be deemed to have the duration specified in this paragraph (a) computed from the date the relief is granted but reduced by the time between the period when the Restrictive Period began to run and the date of the first violation of the Non-Competition Covenant by the Covered Executive. The foregoing Non-Competition Covenant shall not prohibit a Covered Executive from owning, directly or indirectly, capital stock or similar securities which are listed on a securities exchange which do not represent more than five percent (5%) of the outstanding capital stock of any corporation.

(b)Non-Solicitation. The Covered Executive agrees that, except with the express prior written consent of the Employer, while the Covered Executive is employed by the Employer and for a period of 12 months thereafter, the Covered Executive will not directly or indirectly solicit or induce, or attempt to solicit or induce, any employee or agent of Employer to terminate employment with Employer or become employed by any other person, firm, partnership, corporation, trust or other entity, or any customer, client, independent contractor, business relation, or any other person or entity to cease doing business with the Company.

(c)Non-Disparagement. While the Covered Executive is employed and for twelve (12) months following termination of a Covered Executive’s employment for any reason, the Covered Executive shall not intentionally disclose or cause to be disclosed any negative, adverse or derogatory comments or information about (i) the Employer or its employees or the trustees of the Company; (ii) the properties of or any product or service provided by the Employer; or (iii) the Employer’s prospects for the future. For twelve (12) months following termination of the Covered Executive’s employment for any reason, the Employer shall not disclose or cause to be disclosed any negative, adverse or derogatory comments or information about the Covered Executive. Nothing in this Section shall prohibit either the Employer or a Covered Executive from testifying truthfully in any legal or administrative proceeding or making any other truthful disclosure required by applicable law.

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(d)Remedies for Certain Breached. The Covered Executive acknowledges that the restrictions contained in Sections 1 and 2 of this Exhibit B are reasonable and necessary for the protection of the legitimate proprietary business interests of the Employer; that any violation of these restrictions would cause substantial injury to the Employer and such interests; that the Employer would not have caused the Covered Executive to participate under the Plan without receiving the additional consideration offered by the Covered Executive in binding himself to these restrictions; and that such restrictions were a material inducement to the Employer to offer the benefits set forth in the Plan. In the event of any violation or threatened violation of these restrictions, the Employer shall be relieved of any further obligations under the Plan, shall be entitled to seek any rights, remedies or damages available at law, in equity or otherwise under the Plan, and shall be entitled to seek preliminary and temporary injunctive relief granted by a court of competent jurisdiction to prevent or restrain any such violation by the Covered Executive and any and all persons directly or indirectly acting for or with the Covered Executive, as the case may be, while awaiting the decision of the arbitrator selected in accordance with Section 6 of the Plan, which decision, if rendered adverse to the Covered Executive, may include permanent injunctive relief to be granted by the court.

(e)Definition of Employer. For purposes of Sections 1 and 2, the term “Employer” shall be deemed to include all of the Employer’s subsidiaries and affiliates.

3.Arbitration of Disputes; Enforcement and Governing Law. Sections 6 and 7 of the Plan are expressly incorporated by reference into this Exhibit B.

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Hartman, Todd W.

November 1, 2021

5-Year

EXHIBIT II

RELEASE

This Release (the “Release”) is entered into by [___________] (the “Covered Executive”) pursuant to the Corporate Office Properties Trust, Corporate Office Properties L.P. Executive Change in Control and Severance Plan (the “Plan”). This Release is the “Release” referenced in the Plan. Terms with initial capitalization that are not otherwise defined in this Release have the meanings set forth in the Plan. The consideration for the Covered Executive’s agreement to this Release consists of the [Termination Payment/Change in Control Termination Payment]1 and other consideration set forth in Section 3 of the Plan.

1.In consideration of the [Termination Payment/Change in Control Termination Payment] and other consideration set forth in Section 3 of the Plan, the Covered Executive hereby releases and forever discharges the Company and the Employer, the predecessors, successors, assigns and affiliates of each of the Company and the Employer, and current and former members, partners, trustees, officers, employees, representatives, attorneys, agents and all persons acting by, through, under or in concert with any of the foregoing (any and all of whom or which are referred to hereinafter as the “Releasees”) from any claim, demand, right, action or cause of action, of whatever nature or kind, in law, equity, administrative proceedings, or otherwise, whether based upon any law, statute, ordinance, rule, regulation, common law, or otherwise, or any entitlement to attorneys’ fees, costs or expenses, and from any other matter under any other theory, whether known or unknown, suspected or claimed, liquidated or unliquidated, absolute or contingent (collectively, “Claims”), which arose or occurred at any time prior to the date the Covered Executive signed this Release, including, but not limited to, any Claim relating in any way to the Covered Executive’s employment, or the termination thereof, by the Employer, the Company and/or any subsidiary of either, saving and excepting however, the Covered Executive’s rights to any earned but unpaid base salary, unpaid expense reimbursements, accrued but unused vacation and any vested benefits the Covered Executive may have under any employee benefit plan of the Employer (the “Accrued Benefit”), the Covered Executive’s rights under Section 2(c) of Exhibit B to the Letter Agreement, any Claim that cannot be waived as a matter of law and, subject to this Release becoming effective, the Covered Executive’s right to receive payment of the [Termination Payment/Change in Control Termination Payment] and provision of the other consideration set forth in Section 3 of the Plan, nor shall this Release constitute a waiver of any vested rights under any 401(k), retirement or other ERISA-governed plan, or a waiver of any of vested stock options or restricted shares, if any. Without restricting the foregoing, this Release Agreement includes: (1) any Claim brought under any federal, state, or local fair employment practices law, including, but not limited to: the Age Discrimination in Employment Act (ADEA), Title VII of the Civil Rights Act of 1964, Section 1981 of the Civil Rights Act of 1866, the Americans with Disabilities Act (ADA) as amended, the Equal Pay Act (EPA), the Genetic Information Nondiscrimination Act (GINA), and the Uniformed Services Employment and Reemployment Rights Act (USERRA); (2) any Claim brought under any state or federal law regarding wages, benefits, or employment practices, including the Family and Medical Leave Act; (3) any contract Claims; (4) any

1. Include only the applicable payment.

intentional or unintentional tort Claims, including, but not limited to: defamation, libel, slander, abusive or wrongful discharge, fraud or misrepresentation; and (5) any Claims alleging retaliation and/or any whistleblower Claims, including Claims arising under the Sarbanes-Oxley Act and the Dodd Frank Act.

2.The Covered Executive promises and covenants not to commence any action or proceeding against any Releasee for any released Claim before any federal or state court or, except as expressly stated herein, administrative agency, civil rights commission or other forum. If the Covered Executive commences any action or proceeding in violation of this paragraph, the Employer and the Company shall be excused from making any further payments, continuing any other benefits, or providing other consideration otherwise owed under the Plan other than the Accrued Benefit. Notwithstanding the foregoing, the parties recognize the authority of the Equal Employment Opportunity Commission (“EEOC”) to enforce the statutes which come under its jurisdiction, and this Release is not intended to prevent the Covered Executive from filing a charge or participating in any investigation or proceeding conducted by the EEOC. To the extent any proceeding is commenced against any of the Releasees by any person, entity or agency in any forum, the Covered Executive waives any Claim or right to money damages, attorneys’ fees, or other legal or equitable relief awarded by any jury, court or governmental agency related to any released Claim. Further notwithstanding the foregoing, this paragraph shall not apply to any proceeding initiated by the Covered Executive to the extent that the Covered Executive asserts that any Releasee has violated ADEA, including any challenge to the effectiveness of the release of Claims under ADEA. For the avoidance of doubt, this exception for the pursuit of ADEA Claims shall not be construed as an acknowledgment that the release of ADEA Claims is in any way ineffective, shall not be construed to affect the effectiveness of the Covered Executive’s release of ADEA Claims and shall not affect the right of any Releasee to rely on the Covered Executive’s release of ADEA Claims as a defense to any claim under ADEA. This exception is solely for the purpose of conforming this paragraph to the limitations set forth in 29 C.F.R. Sec. 1625.23.

3.Ongoing Obligations of the Covered Executive. The Covered Executive reaffirms the Covered Executive’s ongoing obligations under the Plan and the Letter Agreement, including without limitation the Covered Executive’s obligations under Exhibit B to the Letter Agreement.

4.No Assignment. The Covered Executive represents that the Covered Executive has not assigned to any other person or entity any Claims against any Releasee.

5.Right to Consider and Revoke Release. The Covered Executive acknowledges that this Release is deemed to be delivered to the Covered Executive on the Covered Executive’s Date of Termination; provided that the Covered Executive’s employment is terminated in connection with a Terminating Event. The Covered Executive acknowledges that the Covered Executive has been given the opportunity to consider this Release for a period ending forty-five (45) days after the Date of Termination. In the event the Covered Executive executed this Release within less than forty-five (45) days after the delivery of this Release to the Covered Executive, the Covered Executive acknowledges that such decision was entirely voluntary and that the Covered Executive had the opportunity to consider this Release until the end of the forty-five (45) day period. To accept this Release, the Covered Executive shall deliver a signed

2

Release to the Senior Vice President, Human Resources of the Company (the “SVP-HR”) within such forty-five (45) day period. For a period of seven (7) days from the date when the Covered Executive executes this Release (the “Revocation Period”), the Covered Executive shall retain the right to revoke this Release by written notice that is received by the SVP-HR on or before the last day of the Revocation Period. This Release shall take effect only if it is executed and delivered within the forty-five (45) day period as set forth above and if it is not revoked pursuant to the preceding sentence. If those conditions are satisfied, this Release shall become effective and enforceable on the date immediately following the last day of the Revocation Period (the “Effective Date”). The signed Release and any revocation may be delivered to the SVP-HR by hand or by a PDF copy attached to an email to the SVP-HR. If the Release is sent by email of a PDF copy, the Covered Executive shall separately send an original of the signed Release to the SVP-HR by first class mail or otherwise promptly after sending such email.

6.Other Terms.

(a)Legal Representation; Review of Release. The Covered Executive acknowledges that the Covered Executive has been advised to discuss all aspects of this Release with the Covered Executive’s attorney, that the Covered Executive has carefully read and fully understands all of the provisions of this Release and that the Covered Executive is voluntarily entering into this Release.

(b)Binding Nature of Release. This Release shall be binding upon the Covered Executive and upon the Covered Executive’s heirs, administrators, representatives and executors.

(c)Amendment. This Release may be amended only upon a written agreement executed by the Covered Executive, the Company and the Employer.

(d)Governing Law and Interpretation. This Release shall be deemed to be made and entered into in the State of Maryland, and shall in all respects be interpreted, enforced and governed under the laws of the State of Maryland, without giving effect to the conflict of laws provisions of Maryland law. The language of all parts of this Release shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against the Company, the Employer or the Covered Executive.

(e)Absence of Reliance. The Covered Executive acknowledges that the Covered Executive is not relying on any promises or representations by the Company or the Employer or any of their respective agents, representatives or attorneys regarding any subject matter addressed in this Release.

So agreed.

______________________________________    _____________________________

[Covered Executive]                    Date

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EX-10.3

Mifsud, Anthony

November 1, 2021

5-Year

Exhibit 10.3

	Corporate Office Properties Trust
	6711 Columbia Gateway Drive, Suite 300
	Columbia, MD 21046
	443.285.5400 // copt.com
	NYSE: OFC

LETTER AGREEMENT

November 1, 2021

Dear Anthony:

We are pleased to inform you that the Board of Trustees of Corporate Office Properties Trust (the “Company”) has determined that, effective as of November 1, 2021 (the “Participation Date”), you are eligible to participate in the Corporate Office Properties Trust, Corporate Office Properties L.P. Executive Change in Control and Severance Plan (the “Plan”) as a Covered Executive, subject to the terms and conditions of the Plan, for a period of 5 years from the Participation Date (the “Participation Period”), at which point you will cease to participate in the Plan unless otherwise agreed by you, the Company and the Employer. Capitalized terms used herein and not defined herein shall have the meanings given to such terms in the Plan.

The terms of the Plan are detailed in the copy of the Plan that is attached as Exhibit A to this Letter Agreement, and those terms, including without limitation, Sections 6 and 7 of the Plan, are incorporated in and made a part of this Letter Agreement. As described in more detail in the Plan, the Plan entitles you to certain severance benefits in the event that your employment with the Employer terminates under certain circumstances. By signing this Letter Agreement and as a condition of your eligibility for the payments and benefits set forth in the Plan, you agree to comply with the provisions of the Plan and you agree to comply with the provisions of the confidentiality, non-competition, non-solicitation and non-disparagement requirements set forth on Exhibit B to this Letter Agreement (collectively the “Restrictive Covenants”) during your employment and, to the extent required by the Restrictive Covenants, after your employment ends regardless of the reason for the ending of such employment (and regardless of whether such termination occurs during the Participation Period); provided that, unless otherwise agreed by you, the provisions of Section 2(a) of the Restrictive Covenants (i.e., the Non-Competition Covenant, as defined therein) will not apply following a termination of your employment in the event that such termination occurs after the end of the Participation Period. Your Termination Payment Multiple shall be 1.00, your Change in Control Termination Payment Multiple shall be 2.99, and your Maximum Medical Benefit Continuation Period shall be 12 months.

This Letter Agreement and the Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersede in all respects any and all prior agreements between you and the Company concerning such subject matter.

By signing below, you agree to the terms and conditions of the Restrictive Covenants set forth on Exhibit B hereto, and acknowledge (i) your participation in the Plan pursuant to this Letter Agreement as of the Participation Date, (ii) that you have received and read a copy of the Plan, (iii) that you agree that any termination benefits provided for in the Plan are subject to all of the terms and conditions of the Plan and you agree to such terms and conditions, (iv) that the Company and the Employer may amend or terminate the Plan at any time, and (v) that the Restrictive Covenants shall survive and continue to apply notwithstanding (a) any amendment or termination of the Plan (or the benefits to be provided thereunder) in the future or (b) except as set forth above with respect to the Non-Competition Covenant, the expiration of the Participation Period.

Congratulations on being selected to participate in the Plan.

“Employer”

Corporate Office Properties L.P., a Delaware limited partnership

By: Corporate Office Properties Trust, a Maryland real estate investment trust

By: /s/ Stephen E. Budorick

Name: Stephen E. Budorick

Title: President + CEO

“Company”

Corporate Office Properties Trust, a Maryland real estate investment trust

By: /s/ Stephen E. Budorick

Name: Stephen E. Budorick

Title: President + CEO

AGREED TO AND ACCEPTED

/s/ Anthony Mifsud

Anthony Mifsud

2

Mifsud, Anthony

November 1, 2021

5-Year

EXHIBIT A

TO THE LETTER AGREEMENT

[See the Plan filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of Corporate Office Properties Trust for the Quarter Ended June 30, 2021.]

EXHIBIT B

TO THE LETTER AGREEMENT

Restrictive Covenants

Capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Corporate Office Properties Trust, Corporate Office Properties L.P. Executive Change in Control and Severance Plan (the “Plan”) and in the Letter Agreement under the Plan to which this Exhibit B is attached. In consideration of, among other things, the Covered Executive’s participation in the Plan and continued employment by the Employer, the Covered Executive agrees to comply with the covenants, terms and conditions set forth below. The Covered Executive acknowledges that the covenants, terms and conditions set forth below will continue to apply notwithstanding any amendment or termination of the Plan (or the benefits to be provided thereunder) in the future.

1.Confidentiality and Loyalty. The Covered Executive acknowledges that heretofore or hereafter during the course of the Covered Executive’s employment the Covered Executive has produced and received, and may hereafter produce, receive and otherwise have access to various materials, records, data, trade secrets and information not generally available to the public (collectively, “Confidential Information”) regarding the Employer and its subsidiaries and affiliates. Accordingly, during and subsequent to termination of the Covered Executive’s employment with the Employer, the Covered Executive shall hold in confidence and not directly or indirectly disclose, use, copy or make lists of any such Confidential Information, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing by the Employer, required by law or by any competent administrative agency or judicial authority, or otherwise as reasonably necessary or appropriate in connection with the performance by the Covered Executive of the Covered Executive’s duties hereunder. All records, files, documents, computer diskettes, computer programs and other computer-generated material, as well as all other materials or copies thereof relating to the business of the Employer, which the Covered Executive shall prepare or use, shall be and remain the sole property of the Employer, shall not be removed from the Employer’s premises without its written consent, and shall be promptly returned to the Employer upon termination of the Covered Executive’s employment. The Covered Executive agrees to abide by the reasonable policies of the Employer, as in effect from time to time, respecting confidentiality and the avoidance of interests conflicting with those of the Employer.

2.Non-Competition; Non-Solicitation; Non-Disparagement.

(a)Non-Competition. The Employer and the Covered Executive have jointly reviewed the tenant lists, property submittals, logs, broker lists, and operations of the Employer, and have agreed that as an essential ingredient of and in consideration of the Covered Executive’s participation in the Plan, the Covered Executive hereby agrees that, except with the express prior written consent of the Employer, while the Covered Executive is employed by the Employer and for a period of 12 months after the termination of the Covered Executive’s employment with the Employer for any reason (the “Restrictive Period”), the Covered Executive will not directly or indirectly compete with the business of the Employer, including, but not by

2

way of limitation, by directly or indirectly owning, managing, operating, controlling, financing, investing, or by directly or indirectly (including, but not limited to, through a joint venture) serving as an employee, officer, trustee or director of or consultant or other external advisor to a Similar Business (as defined below) (the “Non-Competition Covenant”). For purposes of this paragraph (a), a business shall be considered to be a “Similar Business” as of a particular date if it is engaged in the ownership, development, operation, management or leasing of real estate in any geographic market or submarket in which the Employer either (i) owned, developed, operated or leased, collectively, more than 1,000,000 square feet of property of the same or similar type (e.g., office, data center, industrial, residential or self-storage) as of the earliest of such date, the date of termination of the Covered Executive’s employment with the Employer or the date of a Change in Control (as defined in the Plan), or (ii) had commenced construction or agreed to acquire or manage more than 500,000 square feet of property of the same or similar type within the 12 months preceding the earliest of such date, the date of termination of the Covered Executive’s employment with the Employer or the date of a Change in Control (as defined in the Plan). If the Covered Executive violates the Non-Competition Covenant and the Employer brings legal action for injunctive or other relief, the Employer shall not, as a result of the time involved in obtaining such relief, be deprived of the benefit of the full period of the Non-Competition Covenant. Accordingly, the Non-Competition Covenant shall be deemed to have the duration specified in this paragraph (a) computed from the date the relief is granted but reduced by the time between the period when the Restrictive Period began to run and the date of the first violation of the Non-Competition Covenant by the Covered Executive. The foregoing Non-Competition Covenant shall not prohibit a Covered Executive from owning, directly or indirectly, capital stock or similar securities which are listed on a securities exchange which do not represent more than five percent (5%) of the outstanding capital stock of any corporation.

(b)Non-Solicitation. The Covered Executive agrees that, except with the express prior written consent of the Employer, while the Covered Executive is employed by the Employer and for a period of 12 months thereafter, the Covered Executive will not directly or indirectly solicit or induce, or attempt to solicit or induce, any employee or agent of Employer to terminate employment with Employer or become employed by any other person, firm, partnership, corporation, trust or other entity, or any customer, client, independent contractor, business relation, or any other person or entity to cease doing business with the Company.

(c)Non-Disparagement. While the Covered Executive is employed and for twelve (12) months following termination of a Covered Executive’s employment for any reason, the Covered Executive shall not intentionally disclose or cause to be disclosed any negative, adverse or derogatory comments or information about (i) the Employer or its employees or the trustees of the Company; (ii) the properties of or any product or service provided by the Employer; or (iii) the Employer’s prospects for the future. For twelve (12) months following termination of the Covered Executive’s employment for any reason, the Employer shall not disclose or cause to be disclosed any negative, adverse or derogatory comments or information about the Covered Executive. Nothing in this Section shall prohibit either the Employer or a Covered Executive from testifying truthfully in any legal or administrative proceeding or making any other truthful disclosure required by applicable law.

3

(d)Remedies for Certain Breached. The Covered Executive acknowledges that the restrictions contained in Sections 1 and 2 of this Exhibit B are reasonable and necessary for the protection of the legitimate proprietary business interests of the Employer; that any violation of these restrictions would cause substantial injury to the Employer and such interests; that the Employer would not have caused the Covered Executive to participate under the Plan without receiving the additional consideration offered by the Covered Executive in binding himself to these restrictions; and that such restrictions were a material inducement to the Employer to offer the benefits set forth in the Plan. In the event of any violation or threatened violation of these restrictions, the Employer shall be relieved of any further obligations under the Plan, shall be entitled to seek any rights, remedies or damages available at law, in equity or otherwise under the Plan, and shall be entitled to seek preliminary and temporary injunctive relief granted by a court of competent jurisdiction to prevent or restrain any such violation by the Covered Executive and any and all persons directly or indirectly acting for or with the Covered Executive, as the case may be, while awaiting the decision of the arbitrator selected in accordance with Section 6 of the Plan, which decision, if rendered adverse to the Covered Executive, may include permanent injunctive relief to be granted by the court.

(e)Definition of Employer. For purposes of Sections 1 and 2, the term “Employer” shall be deemed to include all of the Employer’s subsidiaries and affiliates.

3.Arbitration of Disputes; Enforcement and Governing Law. Sections 6 and 7 of the Plan are expressly incorporated by reference into this Exhibit B.

4

Mifsud, Anthony

November 1, 2021

5-Year

EXHIBIT II

RELEASE

This Release (the “Release”) is entered into by [___________] (the “Covered Executive”) pursuant to the Corporate Office Properties Trust, Corporate Office Properties L.P. Executive Change in Control and Severance Plan (the “Plan”). This Release is the “Release” referenced in the Plan. Terms with initial capitalization that are not otherwise defined in this Release have the meanings set forth in the Plan. The consideration for the Covered Executive’s agreement to this Release consists of the [Termination Payment/Change in Control Termination Payment]1 and other consideration set forth in Section 3 of the Plan.

1.In consideration of the [Termination Payment/Change in Control Termination Payment] and other consideration set forth in Section 3 of the Plan, the Covered Executive hereby releases and forever discharges the Company and the Employer, the predecessors, successors, assigns and affiliates of each of the Company and the Employer, and current and former members, partners, trustees, officers, employees, representatives, attorneys, agents and all persons acting by, through, under or in concert with any of the foregoing (any and all of whom or which are referred to hereinafter as the “Releasees”) from any claim, demand, right, action or cause of action, of whatever nature or kind, in law, equity, administrative proceedings, or otherwise, whether based upon any law, statute, ordinance, rule, regulation, common law, or otherwise, or any entitlement to attorneys’ fees, costs or expenses, and from any other matter under any other theory, whether known or unknown, suspected or claimed, liquidated or unliquidated, absolute or contingent (collectively, “Claims”), which arose or occurred at any time prior to the date the Covered Executive signed this Release, including, but not limited to, any Claim relating in any way to the Covered Executive’s employment, or the termination thereof, by the Employer, the Company and/or any subsidiary of either, saving and excepting however, the Covered Executive’s rights to any earned but unpaid base salary, unpaid expense reimbursements, accrued but unused vacation and any vested benefits the Covered Executive may have under any employee benefit plan of the Employer (the “Accrued Benefit”), the Covered Executive’s rights under Section 2(c) of Exhibit B to the Letter Agreement, any Claim that cannot be waived as a matter of law and, subject to this Release becoming effective, the Covered Executive’s right to receive payment of the [Termination Payment/Change in Control Termination Payment] and provision of the other consideration set forth in Section 3 of the Plan, nor shall this Release constitute a waiver of any vested rights under any 401(k), retirement or other ERISA-governed plan, or a waiver of any of vested stock options or restricted shares, if any. Without restricting the foregoing, this Release Agreement includes: (1) any Claim brought under any federal, state, or local fair employment practices law, including, but not limited to: the Age Discrimination in Employment Act (ADEA), Title VII of the Civil Rights Act of 1964, Section 1981 of the Civil Rights Act of 1866, the Americans with Disabilities Act (ADA) as amended, the Equal Pay Act (EPA), the Genetic Information Nondiscrimination Act (GINA), and the Uniformed Services Employment and Reemployment Rights Act (USERRA); (2) any Claim brought under any state or federal law regarding wages, benefits, or employment practices, including the Family and Medical Leave Act; (3) any contract Claims; (4) any

1. Include only the applicable payment.

1

intentional or unintentional tort Claims, including, but not limited to: defamation, libel, slander, abusive or wrongful discharge, fraud or misrepresentation; and (5) any Claims alleging retaliation and/or any whistleblower Claims, including Claims arising under the Sarbanes-Oxley Act and the Dodd Frank Act.

2.The Covered Executive promises and covenants not to commence any action or proceeding against any Releasee for any released Claim before any federal or state court or, except as expressly stated herein, administrative agency, civil rights commission or other forum. If the Covered Executive commences any action or proceeding in violation of this paragraph, the Employer and the Company shall be excused from making any further payments, continuing any other benefits, or providing other consideration otherwise owed under the Plan other than the Accrued Benefit. Notwithstanding the foregoing, the parties recognize the authority of the Equal Employment Opportunity Commission (“EEOC”) to enforce the statutes which come under its jurisdiction, and this Release is not intended to prevent the Covered Executive from filing a charge or participating in any investigation or proceeding conducted by the EEOC. To the extent any proceeding is commenced against any of the Releasees by any person, entity or agency in any forum, the Covered Executive waives any Claim or right to money damages, attorneys’ fees, or other legal or equitable relief awarded by any jury, court or governmental agency related to any released Claim. Further notwithstanding the foregoing, this paragraph shall not apply to any proceeding initiated by the Covered Executive to the extent that the Covered Executive asserts that any Releasee has violated ADEA, including any challenge to the effectiveness of the release of Claims under ADEA. For the avoidance of doubt, this exception for the pursuit of ADEA Claims shall not be construed as an acknowledgment that the release of ADEA Claims is in any way ineffective, shall not be construed to affect the effectiveness of the Covered Executive’s release of ADEA Claims and shall not affect the right of any Releasee to rely on the Covered Executive’s release of ADEA Claims as a defense to any claim under ADEA. This exception is solely for the purpose of conforming this paragraph to the limitations set forth in 29 C.F.R. Sec. 1625.23.

3.Ongoing Obligations of the Covered Executive. The Covered Executive reaffirms the Covered Executive’s ongoing obligations under the Plan and the Letter Agreement, including without limitation the Covered Executive’s obligations under Exhibit B to the Letter Agreement.

4.No Assignment. The Covered Executive represents that the Covered Executive has not assigned to any other person or entity any Claims against any Releasee.

5.Right to Consider and Revoke Release. The Covered Executive acknowledges that this Release is deemed to be delivered to the Covered Executive on the Covered Executive’s Date of Termination; provided that the Covered Executive’s employment is terminated in connection with a Terminating Event. The Covered Executive acknowledges that the Covered Executive has been given the opportunity to consider this Release for a period ending forty-five (45) days after the Date of Termination. In the event the Covered Executive executed this Release within less than forty-five (45) days after the delivery of this Release to the Covered Executive, the Covered Executive acknowledges that such decision was entirely voluntary and that the Covered Executive had the opportunity to consider this Release until the end of the forty-five (45) day period. To accept this Release, the Covered Executive shall deliver a signed

2

Release to the Senior Vice President, Human Resources of the Company (the “SVP-HR”) within such forty-five (45) day period. For a period of seven (7) days from the date when the Covered Executive executes this Release (the “Revocation Period”), the Covered Executive shall retain the right to revoke this Release by written notice that is received by the SVP-HR on or before the last day of the Revocation Period. This Release shall take effect only if it is executed and delivered within the forty-five (45) day period as set forth above and if it is not revoked pursuant to the preceding sentence. If those conditions are satisfied, this Release shall become effective and enforceable on the date immediately following the last day of the Revocation Period (the “Effective Date”). The signed Release and any revocation may be delivered to the SVP-HR by hand or by a PDF copy attached to an email to the SVP-HR. If the Release is sent by email of a PDF copy, the Covered Executive shall separately send an original of the signed Release to the SVP-HR by first class mail or otherwise promptly after sending such email.

6.Other Terms.

(a)Legal Representation; Review of Release. The Covered Executive acknowledges that the Covered Executive has been advised to discuss all aspects of this Release with the Covered Executive’s attorney, that the Covered Executive has carefully read and fully understands all of the provisions of this Release and that the Covered Executive is voluntarily entering into this Release.

(b)Binding Nature of Release. This Release shall be binding upon the Covered Executive and upon the Covered Executive’s heirs, administrators, representatives and executors.

(c)Amendment. This Release may be amended only upon a written agreement executed by the Covered Executive, the Company and the Employer.

(d)Governing Law and Interpretation. This Release shall be deemed to be made and entered into in the State of Maryland, and shall in all respects be interpreted, enforced and governed under the laws of the State of Maryland, without giving effect to the conflict of laws provisions of Maryland law. The language of all parts of this Release shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against the Company, the Employer or the Covered Executive.

(e)Absence of Reliance. The Covered Executive acknowledges that the Covered Executive is not relying on any promises or representations by the Company or the Employer or any of their respective agents, representatives or attorneys regarding any subject matter addressed in this Release.

So agreed.

______________________________________    _____________________________

[Covered Executive]                    Date

3

EX-22.1

EXHIBIT 22.1

List of Subsidiary Issuers of Guaranteed Securities

As of September 30, 2021, Corporate Office Properties Trust was the guarantor of the outstanding guaranteed debt securities of its subsidiaries, as listed below:

Debt Instrument	Issuer
5.000% Senior Notes due 2025	Corporate Office Properties, L.P.
2.250% Senior Notes due 2026	Corporate Office Properties, L.P.
2.000% Senior Notes due 2029	Corporate Office Properties, L.P.
2.750% Senior Notes due 2031	Corporate Office Properties, L.P.

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:	November 1, 2021	/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:	November 1, 2021	/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 September 30, 2021, 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:	November 1, 2021

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 September 30, 2021, 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:	November 1, 2021

XML

Cover - shares	9 Months Ended
	Sep. 30, 2021	Oct. 22, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	1-14023
Entity Registrant Name	CORPORATE OFFICE PROPERTIES TRUST
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	23-2947217
Entity Address, Address Line One	6711 Columbia Gateway Drive
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Columbia
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	21046
City Area Code	443
Local Phone Number	285-5400
Title of 12(b) Security	Common Shares of beneficial interest, $0.01 par value
Trading Symbol	OFC
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		112,324,851
Entity Central Index Key	0000860546
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Properties, net:
Operating properties, net	$ 3,227,797	$ 3,115,280
Projects in development or held for future development	379,325	447,269
Total properties, net	3,607,122	3,562,549
Property - operating right-of-use assets	38,854	40,570
Property - finance right-of-use assets	40,077	40,425
Assets held for sale, net	2,821	0
Cash and cash equivalents	14,570	18,369
Investment in unconsolidated real estate joint ventures	40,304	29,303
Accounts receivable, net	33,110	41,637
Deferred rent receivable	103,062	92,876
Intangible assets on real estate acquisitions, net	15,788	19,344
Deferred leasing costs (net of accumulated amortization of $31,975 and $30,375, respectively)	62,269	58,613
Prepaid expenses and other assets, net	117,214	104,583
Total assets	4,151,138	4,077,023
Liabilities:
Debt, net	2,159,732	2,086,918
Accounts payable and accrued expenses	176,636	142,717
Rents received in advance and security deposits	32,092	33,425
Dividends and distributions payable	31,306	31,231
Deferred revenue associated with operating leases	8,704	10,832
Property - operating lease liabilities	29,630	30,746
Interest rate derivatives	5,562	9,522
Other liabilities	10,691	12,490
Total liabilities	2,454,353	2,357,881
Commitments and contingencies (Note 18)
Redeemable noncontrolling interests	26,006	25,430
Corporate Office Properties Trust’s shareholders’ equity:
Common Shares of beneficial interest ($0.01 par value; 150,000,000 shares authorized; shares issued and outstanding of 112,325,411 at September 30, 2021 and 112,181,759 at December 31, 2020)	1,123	1,122
Additional paid-in capital	2,480,412	2,478,906
Cumulative distributions in excess of net income	(839,676)	(809,836)
Accumulated other comprehensive loss	(5,347)	(9,157)
Total Corporate Office Properties Trust’s shareholders’ equity	1,636,512	1,661,035
Noncontrolling interests in subsidiaries:
Common units in Corporate Office Properties, L.P. (“COPLP”)	21,568	20,465
Other consolidated entities	12,699	12,212
Noncontrolling interests in subsidiaries	34,267	32,677
Total equity	1,670,779	1,693,712
Total liabilities, redeemable noncontrolling interests and equity	4,151,138	4,077,023
Investing Receivables
Properties, net:
Investing receivables (net of allowance for credit losses of $1,415 and $2,851, respectively)	$ 75,947	$ 68,754

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Accumulated amortization of deferred leasing costs	$ 31,975	$ 30,375
Common Shares of beneficial interest, par value (in dollars per share)	$ 0.01	$ 0.01
Common Shares of beneficial interest, shares authorized (in shares)	150,000,000	150,000,000
Common Shares of beneficial interest issued (in shares)	112,325,411	112,181,759
Common Shares of beneficial interest, shares outstanding (in shares)	112,325,411	112,181,759
Investing Receivables
Investing receivable allowance for credit loss	$ 1,415	$ 2,851

XML

Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenues
Lease revenue		$ 145,749	$ 133,875	$ 434,031	$ 397,034
Other property revenue		841	568	2,146	2,063
Construction contract and other service revenues		28,046	20,323	64,592	46,240
Total revenues		174,636	154,766	500,769	445,337
Operating expenses
Property operating expenses		57,190	51,552	168,780	151,755
Depreciation and amortization associated with real estate operations		36,611	35,332	111,487	101,540
Construction contract and other service expenses		27,089	19,220	61,964	44,052
Impairment losses		0	1,530	0	1,530
General, administrative and leasing expenses		9,342	7,467	26,970	23,111
Business development expenses and land carry costs		1,093	1,094	3,559	3,474
Total operating expenses		131,325	116,195	372,760	325,462
Interest expense		(15,720)	(17,152)	(49,181)	(50,789)
Interest and other income		1,818	1,746	5,911	5,233
Credit loss recoveries		326	1,465	1,040	161
Gain on sales of real estate		(32)	0	39,711	5
Loss on early extinguishment of debt		(1,159)	(3,237)	(59,553)	(3,237)
Loss on interest rate derivatives		0	(53,196)	0	(53,196)
Income (loss) before equity in income of unconsolidated entities and income taxes		28,544	(31,803)	65,937	18,052
Equity in income of unconsolidated entities		297	477	779	1,372
Income tax expense		(47)	(16)	(103)	(95)
Net income (loss)		28,794	(31,342)	66,613	19,329
Net (income) loss attributable to noncontrolling interests:
Common units in COPLP		(357)	386	(831)	(185)
Preferred units in COPLP		0	(77)	0	(231)
Other consolidated entities		(1,336)	(812)	(2,949)	(3,207)
Net income (loss) attributable to COPT common shareholders		$ 27,101	$ (31,845)	$ 62,833	$ 15,706
Earnings per common share:
Net income (loss) attributable to COPT common shareholders - basic (in dollars per share)	[1]	$ 0.24	$ (0.29)	$ 0.56	$ 0.14
Net income (loss) attributable to COPT common shareholders - diluted (in dollars per share)	[1]	$ 0.24	$ (0.29)	$ 0.56	$ 0.14

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

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 28,794	$ (31,342)	$ 66,613	$ 19,329
Other comprehensive income:
Unrealized (loss) income on interest rate derivatives	(118)	1,428	426	(39,592)
Reclassification adjustments on interest rate derivatives recognized in interest expense	1,226	1,342	3,604	2,408
Reclassification adjustments on interest rate derivatives recognized in loss on interest rate derivatives	0	51,865	0	51,865
Total other comprehensive income	1,108	54,635	4,030	14,681
Comprehensive income	29,902	23,293	70,643	34,010
Comprehensive income attributable to noncontrolling interests	(1,733)	(1,173)	(4,000)	(3,408)
Comprehensive income attributable to COPT	$ 28,169	$ 22,120	$ 66,643	$ 30,602

XML

Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Common Shares	Additional Paid-in Capital	Cumulative Distributions in Excess of Net Income	Accumulated Other Comprehensive Loss	Noncontrolling Interests	Cumulative Effect, Period Of Adoption, Adjustment	Cumulative Effect, Period Of Adoption, Adjustment Cumulative Distributions in Excess of Net Income	Cumulative Effect, Period of Adoption, Adjusted Balance	Cumulative Effect, Period of Adoption, Adjusted Balance Common Shares	Cumulative Effect, Period of Adoption, Adjusted Balance Additional Paid-in Capital	Cumulative Effect, Period of Adoption, Adjusted Balance Cumulative Distributions in Excess of Net Income	Cumulative Effect, Period of Adoption, Adjusted Balance Accumulated Other Comprehensive Loss	Cumulative Effect, Period of Adoption, Adjusted Balance Noncontrolling Interests
Balance at Dec. 31, 2019	$ 1,719,245	$ 1,121	$ 2,481,558	$ (778,275)	$ (25,444)	$ 40,285	$ (5,541)	$ (5,541)	$ 1,713,704	$ 1,121	$ 2,481,558	$ (783,816)	$ (25,444)	$ 40,285
Increase (Decrease) in Shareholders' Equity
Conversion of common units to common shares	0		182			(182)
Share-based compensation issuance, net of redemptions	4,730	1	3,394			1,335
Redemption of vested equity awards	(1,629)		(1,629)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	0		527			(527)
Comprehensive income	31,295			15,706	14,896	693
Dividends	(92,537)			(92,537)
Distributions to owners of common and preferred units in COPLP	(1,306)					(1,306)
Contributions from noncontrolling interests in other consolidated entities	112					112
Distributions to noncontrolling interests in other consolidated entities	(22)					(22)
Adjustment to arrive at fair value of redeemable noncontrolling interests	(4,711)		(4,711)
Balance at Sep. 30, 2020	1,649,636	1,122	2,479,321	(860,647)	(10,548)	40,388
Balance at Jun. 30, 2020	1,656,924	1,122	2,477,977	(797,959)	(64,513)	40,297
Increase (Decrease) in Shareholders' Equity
Share-based compensation issuance, net of redemptions	1,784	0	1,223			561
Redemption of vested equity awards	(57)		(57)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	0		552			(552)
Comprehensive income	22,653			(31,845)	53,965	533
Dividends	(30,843)			(30,843)
Distributions to owners of common and preferred units in COPLP	(444)					(444)
Distributions to noncontrolling interests in other consolidated entities	(7)					(7)
Adjustment to arrive at fair value of redeemable noncontrolling interests	(374)		(374)
Balance at Sep. 30, 2020	1,649,636	1,122	2,479,321	(860,647)	(10,548)	40,388
Balance at Dec. 31, 2020	1,693,712	1,122	2,478,906	(809,836)	(9,157)	32,677
Increase (Decrease) in Shareholders' Equity
Conversion of common units to common shares	0		121			(121)
Redemption of common units	(297)					(297)
Share-based compensation issuance, net of redemptions	6,322	1	3,239			3,082
Redemption of vested equity awards	(2,422)		(2,422)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	0		1,245			(1,245)
Comprehensive income	68,357			62,833	3,810	1,714
Dividends	(92,673)			(92,673)
Distributions to owners of common and preferred units in COPLP	(1,196)					(1,196)
Distributions to noncontrolling interests in other consolidated entities	(23)					(23)
Adjustment to arrive at fair value of redeemable noncontrolling interests	(677)		(677)
Other	(324)					(324)
Balance at Sep. 30, 2021	1,670,779	1,123	2,480,412	(839,676)	(5,347)	34,267
Balance at Jun. 30, 2021	1,671,312	1,123	2,478,416	(835,894)	(6,415)	34,082
Increase (Decrease) in Shareholders' Equity
Redemption of common units	(56)					(56)
Share-based compensation issuance, net of redemptions	2,162		1,064			1,098
Redemption of vested equity awards	(64)		(64)
Adjustments to noncontrolling interests resulting from changes in ownership of COPLP	0		1,051			(1,051)
Comprehensive income	28,769			27,101	1,068	600
Dividends	(30,883)			(30,883)
Distributions to owners of common and preferred units in COPLP	(398)					(398)
Distributions to noncontrolling interests in other consolidated entities	(8)					(8)
Adjustment to arrive at fair value of redeemable noncontrolling interests	(55)		(55)
Balance at Sep. 30, 2021	$ 1,670,779	$ 1,123	$ 2,480,412	$ (839,676)	$ (5,347)	$ 34,267

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Consolidated Statements of Equity (Parenthetical) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Stockholders' Equity [Abstract]
Shares outstanding (in shares)	112,325,411	112,175,688	112,325,411	112,175,688
Conversion of common units to common shares (in shares)			8,054	12,009
Share-based compensation issuance, net of redemptions (in shares)	(10,659)	(7,504)	135,598	94,974

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities
Revenues from real estate operations received	$ 427,448	$ 394,094
Construction contract and other service revenues received	68,780	53,911
Property operating expenses paid	(168,009)	(159,007)
Construction contract and other service expenses paid	(50,275)	(45,686)
General, administrative, leasing, business development and land carry costs paid	(22,367)	(24,408)
Interest expense paid	(46,621)	(49,693)
Lease incentives paid	(8,694)	(12,634)
Other	(359)	2,464
Net cash provided by operating activities	199,903	159,041
Cash flows from investing activities
Development and redevelopment of properties	(176,554)	(284,416)
Tenant improvements on operating properties	(15,149)	(23,377)
Other capital improvements on operating properties	(19,256)	(24,797)
Proceeds from sale of properties	114,050	0
Non-operating distributions from unconsolidated real estate joint venture	872	2,287
Leasing costs paid	(14,929)	(12,455)
Settlement of interest rate derivatives	0	(53,130)
Other	(1,026)	(321)
Net cash used in investing activities	(111,992)	(396,209)
Proceeds from debt
Revolving Credit Facility	456,000	409,000
Unsecured senior notes	987,210	395,264
Other debt proceeds	4,630	199,088
Repayments of debt
Revolving Credit Facility	(589,000)	(529,000)
Unsecured senior notes	(600,000)	(122,948)
Scheduled principal amortization	(2,911)	(3,077)
Other debt repayments	(188,960)	0
Deferred financing costs paid	(2,662)	(2,161)
Payments in connection with early extinguishment of debt	(55,720)	(3,037)
Common share dividends paid	(92,632)	(92,512)
Distributions paid to redeemable noncontrolling interests	(1,687)	(13,515)
Redemption of vested equity awards	(2,422)	(1,629)
Other	(3,645)	(1,760)
Net cash (used in) provided by financing activities	(91,799)	233,713
Net decrease in cash and cash equivalents and restricted cash	(3,888)	(3,455)
Cash and cash equivalents and restricted cash
Beginning of period	22,033	18,130
End of period	18,145	14,675
Reconciliation of net income to net cash provided by operating activities:
Net income	66,613	19,329
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and other amortization	113,676	102,864
Impairment losses	0	1,530
Amortization of deferred financing costs and net debt discounts	3,969	3,104
Increase in deferred rent receivable	(13,515)	(3,560)
Gain on sales of real estate	(39,711)	(5)
Share-based compensation	5,960	4,753
Loss on early extinguishment of debt	59,553	3,237
Loss on interest rate derivatives	0	53,196
Other	(3,708)	(4,184)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	6,269	(744)
Increase in prepaid expenses and other assets, net	(13,120)	(13,164)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	15,250	(3,971)
Decrease in rents received in advance and security deposits	(1,333)	(3,344)
Net cash provided by operating activities	199,903	159,041
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	14,570	11,458
Restricted cash	3,575	3,217
Cash and cash equivalents and restricted cash	18,145	14,675
Supplemental schedule of non-cash investing and financing activities:
Increase (decrease) in accrued capital improvements, leasing and other investing activity costs	17,590	(195)
Recognition of operating right-of-use assets and related lease liabilities	328	8,955
Investment in unconsolidated real estate joint venture retained in property disposition	11,842	0
Increase (decrease) in fair value of derivatives applied to accumulated other comprehensive loss and noncontrolling interests	4,030	(37,183)
Dividends/distributions payable	31,306	31,307
Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares	121	182
Adjustments to noncontrolling interests resulting from changes in COPLP ownership	(1,245)	(527)
Increase in redeemable noncontrolling interests and decrease in equity to carry redeemable noncontrolling interests at fair value	$ 677	$ 4,711

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Organization

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Corporate Office Properties Trust (“COPT”) and subsidiaries (collectively, the “Company”, “we” or “us”) is a fully-integrated and self-managed real estate investment trust (“REIT”). We own, manage, lease, develop and selectively acquire office and data center properties. The majority of our portfolio is in locations that support the United States Government (“USG”) and its contractors, most of whom are engaged in national security, defense and information technology (“IT”) related activities servicing what we believe are growing, durable, priority missions (“Defense/IT Locations”). We also own a portfolio of office properties located in select urban/urban-like submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (“Regional Office”). As of September 30, 2021, our properties included the following:

•186 properties totaling 21.7 million square feet comprised of 16.9 million square feet in 160 office properties and 4.7 million square feet in 26 single-tenant data center shell properties (“data center shells”). We owned 19 of these data center shells through unconsolidated real estate joint ventures;

•a wholesale data center with a capacity of 19.25 megawatts;

•13 properties under development (10 office properties and three data center shells), including three partially-operational properties, that we estimate will total approximately 1.8 million square feet upon completion; and

•approximately 720 acres of land controlled for future development that we believe could be developed into approximately 8.9 million square feet and 43 acres of other land.

We conduct almost all of our operations and own almost all of our assets through our operating partnership, Corporate Office Properties, L.P. (“COPLP”) and subsidiaries (collectively, the “Operating Partnership”), of which COPT is the sole general partner. COPLP owns real estate 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, development and construction 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 September 30, 2021, COPT owned 98.3% of the outstanding COPLP common units (“common units”) and there were no preferred units outstanding. Common units not owned by COPT carry certain redemption rights. The number of common units owned by COPT is equivalent to the number of outstanding common shares of beneficial interest (“common shares”) of COPT, and the entitlement of common units to quarterly distributions and payments in liquidation is substantially the same as that of COPT common shareholders.

COPT’s common shares are publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “OFC”.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The 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.  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.

When we own an equity investment in an entity and cannot exert significant influence over its operations, we measure the investment at fair value, with changes recognized through net income. For an investment without a readily determinable fair value, we measure the investment at cost, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer.

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, 2020 included in the Company’s and Operating Partnership’s 2020 Annual Report on Form 10-K.  The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly state 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 the Company’s and Operating Partnership’s 2020 Annual Report on Form 10-K as updated for our adoption of recent accounting pronouncements discussed below.

Reclassifications

We reclassified certain amounts from the prior period to conform to the current period presentation of our consolidated financial statements with no effect on previously reported net income or equity.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued guidance containing practical expedients for reference rate reform related activities pertaining to debt, leases, derivatives and other contracts. The guidance is optional and may be elected over time as reference rate reform activities occur. In 2020, we elected to apply an expedient to treat any changes in loans resulting from reference rate reform as debt modifications (as opposed to extinguishments) and hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of the hedge accounting expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate the impact of this guidance and may apply other elections as applicable as additional changes in the market occur.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Recurring Fair Value Measurements

We have a non-qualified elective deferred compensation plan for Trustees and certain members of our management team that, prior to December 31, 2019, permitted participants to defer up to 100% of their compensation on a pre-tax basis and receive a tax-deferred return on such deferrals. Effective December 31, 2019, no new investments of deferred compensation were eligible for the plan.  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 our consolidated balance sheets using quoted market prices, as are other marketable securities that we hold. The balance of the plan, which was fully funded and totaled $2.6 million as of September 30, 2021, is included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets along with an insignificant amount of other 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 our consolidated balance sheets. The assets of the plan are classified in Level 1 of the fair value hierarchy, while the offsetting liability 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 September 30, 2021, 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.  The fair values of our investing receivables, as disclosed in Note 7, were 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 9, 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. 

For additional fair value information, refer to Note 7 for investing receivables, Note 9 for debt and Note 10 for interest rate derivatives. 

The table below sets forth our financial assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2021 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	$	2,545	$	—	$	—	$	2,545
Other	71		—		—		71
Other marketable securities (1)	33		—		—		33
Interest rate derivatives (1)	—		70		—		70
Total assets	$	2,649	$	70	$	—	$	2,719
Liabilities:
Deferred compensation plan liability (2)	$	—	$	2,616	$	—	$	2,616
Interest rate derivatives	—		5,562		—		5,562
Total liabilities	$	—	$	8,178	$	—	$	8,178

(1)Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.

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

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Properties, Net

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Properties, Net

Properties, Net

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

	September 30, 2021		December 31, 2020
Land	$	539,899	$	528,269
Buildings and improvements	3,890,678		3,711,264
Less: Accumulated depreciation	(1,202,780)		(1,124,253)
Operating properties, net	$	3,227,797	$	3,115,280

As of September 30, 2021, we had one property in our data center shells sub-segment previously removed from service that was classified as assets held for sale, net on our consolidated balance sheet, the sole component of which was properties, net.

2021 Dispositions

On June 2, 2021, we sold a 90% interest in two data center shell properties in Northern Virginia based on an aggregate property value of $118.8 million and retained a 10% interest in the properties through B RE COPT DC JV III LLC, a newly-formed joint venture. Our partner in the joint venture acquired the 90% interest from us for $106.9 million. We account for our interest in the joint venture using the equity method of accounting as described further in Note 6. We recognized a gain on sale of $40.2 million in the nine months ended September 30, 2021.

2021 Development Activities

During the nine months ended September 30, 2021, we placed into service 709,000 square feet in six newly-developed properties. As of September 30, 2021, we had 13 properties under development, including three partially-operational properties, that we estimate will total 1.8 million square feet upon completion.

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Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under the lease. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease revenue	2021		2020		2021		2020
Fixed	$	114,309	$	106,743	$	340,157	$	314,845
Variable	31,440		27,132		93,874		82,189
	$	145,749	$	133,875	$	434,031	$	397,034

Fixed contractual payments due under our property leases were as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Sales-type leases
2021 (1)	$	109,800	$	221
2022	418,746		960
2023	370,652		960
2024	323,198		960
2025	241,090		960
Thereafter	1,020,675		4,516
Total contractual payments	$	2,484,161	8,577
Less: Amount representing interest			(2,277)
Net investment in sales-type leases			$	6,300

(1)Represents the three months ending December 31, 2021.

Lessee Arrangements

As of September 30, 2021, our balance sheet included $78.9 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating with various expiration dates. Our property right-of-use assets consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Right-of-use assets
Operating leases - Property	Property - operating right-of-use assets	$	38,854	$	40,570
Finance leases - Property (1)	Property - finance right-of-use assets	40,077		40,425
Total right-of-use assets		$	78,931	$	80,995

(1)On October 22, 2021, we acquired land leased in Washington, D.C., for which we had a $37.8 million right-of-use asset as of September 30, 2021, for a nominal amount under a bargain purchase option.

Property lease liabilities consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Lease liabilities
Operating leases - Property	Property - operating lease liabilities	$	29,630	$	30,746
Finance leases - Property	Other liabilities	14		28
Total lease liabilities		$	29,644	$	30,774

The table below sets forth the weighted average terms and discount rates of our property leases as of September 30, 2021:

Weighted average remaining lease term
Operating leases	51 years
Finance leases	< 1 year
Weighted average discount rate
Operating leases	7.16	%
Finance leases	3.62	%

The table below presents our total property lease cost (in thousands):

	Statement of Operations Location	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease cost		2021		2020		2021		2020
Operating lease cost
Property leases - fixed	Property operating expenses	$	1,013	$	598	$	2,999	$	1,465
Property leases - variable	Property operating expenses	11		107		31		116
Finance lease cost
Amortization of property right-of-use assets	Property operating expenses	5		9		23		27
		$	1,029	$	714	$	3,053	$	1,608

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

	For the Nine Months Ended September 30,
Supplemental cash flow information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,399	$	987
Financing cash flows for financing leases	$	14	$	674

Payments on property leases were due as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Finance leases		Total
2021 (1)	$	807	$	—	$	807
2022	3,297		14		3,311
2023	3,352		—		3,352
2024	3,403		—		3,403
2025	1,749		—		1,749
Thereafter	123,979		—		123,979
Total lease payments	136,587		14		136,601
Less: Amount representing interest	(106,957)		—		(106,957)
Lease liability	$	29,630	$	14	$	29,644

(1)Represents the three months ending December 31, 2021.

Leases

Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under the lease. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease revenue	2021		2020		2021		2020
Fixed	$	114,309	$	106,743	$	340,157	$	314,845
Variable	31,440		27,132		93,874		82,189
	$	145,749	$	133,875	$	434,031	$	397,034

Fixed contractual payments due under our property leases were as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Sales-type leases
2021 (1)	$	109,800	$	221
2022	418,746		960
2023	370,652		960
2024	323,198		960
2025	241,090		960
Thereafter	1,020,675		4,516
Total contractual payments	$	2,484,161	8,577
Less: Amount representing interest			(2,277)
Net investment in sales-type leases			$	6,300

(1)Represents the three months ending December 31, 2021.

Lessee Arrangements

As of September 30, 2021, our balance sheet included $78.9 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating with various expiration dates. Our property right-of-use assets consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Right-of-use assets
Operating leases - Property	Property - operating right-of-use assets	$	38,854	$	40,570
Finance leases - Property (1)	Property - finance right-of-use assets	40,077		40,425
Total right-of-use assets		$	78,931	$	80,995

(1)On October 22, 2021, we acquired land leased in Washington, D.C., for which we had a $37.8 million right-of-use asset as of September 30, 2021, for a nominal amount under a bargain purchase option.

Property lease liabilities consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Lease liabilities
Operating leases - Property	Property - operating lease liabilities	$	29,630	$	30,746
Finance leases - Property	Other liabilities	14		28
Total lease liabilities		$	29,644	$	30,774

The table below sets forth the weighted average terms and discount rates of our property leases as of September 30, 2021:

Weighted average remaining lease term
Operating leases	51 years
Finance leases	< 1 year
Weighted average discount rate
Operating leases	7.16	%
Finance leases	3.62	%

The table below presents our total property lease cost (in thousands):

	Statement of Operations Location	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease cost		2021		2020		2021		2020
Operating lease cost
Property leases - fixed	Property operating expenses	$	1,013	$	598	$	2,999	$	1,465
Property leases - variable	Property operating expenses	11		107		31		116
Finance lease cost
Amortization of property right-of-use assets	Property operating expenses	5		9		23		27
		$	1,029	$	714	$	3,053	$	1,608

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

	For the Nine Months Ended September 30,
Supplemental cash flow information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,399	$	987
Financing cash flows for financing leases	$	14	$	674

Payments on property leases were due as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Finance leases		Total
2021 (1)	$	807	$	—	$	807
2022	3,297		14		3,311
2023	3,352		—		3,352
2024	3,403		—		3,403
2025	1,749		—		1,749
Thereafter	123,979		—		123,979
Total lease payments	136,587		14		136,601
Less: Amount representing interest	(106,957)		—		(106,957)
Lease liability	$	29,630	$	14	$	29,644

(1)Represents the three months ending December 31, 2021.

Leases

Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under the lease. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease revenue	2021		2020		2021		2020
Fixed	$	114,309	$	106,743	$	340,157	$	314,845
Variable	31,440		27,132		93,874		82,189
	$	145,749	$	133,875	$	434,031	$	397,034

Fixed contractual payments due under our property leases were as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Sales-type leases
2021 (1)	$	109,800	$	221
2022	418,746		960
2023	370,652		960
2024	323,198		960
2025	241,090		960
Thereafter	1,020,675		4,516
Total contractual payments	$	2,484,161	8,577
Less: Amount representing interest			(2,277)
Net investment in sales-type leases			$	6,300

(1)Represents the three months ending December 31, 2021.

Lessee Arrangements

As of September 30, 2021, our balance sheet included $78.9 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating with various expiration dates. Our property right-of-use assets consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Right-of-use assets
Operating leases - Property	Property - operating right-of-use assets	$	38,854	$	40,570
Finance leases - Property (1)	Property - finance right-of-use assets	40,077		40,425
Total right-of-use assets		$	78,931	$	80,995

(1)On October 22, 2021, we acquired land leased in Washington, D.C., for which we had a $37.8 million right-of-use asset as of September 30, 2021, for a nominal amount under a bargain purchase option.

Property lease liabilities consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Lease liabilities
Operating leases - Property	Property - operating lease liabilities	$	29,630	$	30,746
Finance leases - Property	Other liabilities	14		28
Total lease liabilities		$	29,644	$	30,774

The table below sets forth the weighted average terms and discount rates of our property leases as of September 30, 2021:

Weighted average remaining lease term
Operating leases	51 years
Finance leases	< 1 year
Weighted average discount rate
Operating leases	7.16	%
Finance leases	3.62	%

The table below presents our total property lease cost (in thousands):

	Statement of Operations Location	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease cost		2021		2020		2021		2020
Operating lease cost
Property leases - fixed	Property operating expenses	$	1,013	$	598	$	2,999	$	1,465
Property leases - variable	Property operating expenses	11		107		31		116
Finance lease cost
Amortization of property right-of-use assets	Property operating expenses	5		9		23		27
		$	1,029	$	714	$	3,053	$	1,608

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

	For the Nine Months Ended September 30,
Supplemental cash flow information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,399	$	987
Financing cash flows for financing leases	$	14	$	674

Payments on property leases were due as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Finance leases		Total
2021 (1)	$	807	$	—	$	807
2022	3,297		14		3,311
2023	3,352		—		3,352
2024	3,403		—		3,403
2025	1,749		—		1,749
Thereafter	123,979		—		123,979
Total lease payments	136,587		14		136,601
Less: Amount representing interest	(106,957)		—		(106,957)
Lease liability	$	29,630	$	14	$	29,644

(1)Represents the three months ending December 31, 2021.

Leases

Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under the lease. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease revenue	2021		2020		2021		2020
Fixed	$	114,309	$	106,743	$	340,157	$	314,845
Variable	31,440		27,132		93,874		82,189
	$	145,749	$	133,875	$	434,031	$	397,034

Fixed contractual payments due under our property leases were as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Sales-type leases
2021 (1)	$	109,800	$	221
2022	418,746		960
2023	370,652		960
2024	323,198		960
2025	241,090		960
Thereafter	1,020,675		4,516
Total contractual payments	$	2,484,161	8,577
Less: Amount representing interest			(2,277)
Net investment in sales-type leases			$	6,300

(1)Represents the three months ending December 31, 2021.

Lessee Arrangements

As of September 30, 2021, our balance sheet included $78.9 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating with various expiration dates. Our property right-of-use assets consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Right-of-use assets
Operating leases - Property	Property - operating right-of-use assets	$	38,854	$	40,570
Finance leases - Property (1)	Property - finance right-of-use assets	40,077		40,425
Total right-of-use assets		$	78,931	$	80,995

(1)On October 22, 2021, we acquired land leased in Washington, D.C., for which we had a $37.8 million right-of-use asset as of September 30, 2021, for a nominal amount under a bargain purchase option.

Property lease liabilities consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Lease liabilities
Operating leases - Property	Property - operating lease liabilities	$	29,630	$	30,746
Finance leases - Property	Other liabilities	14		28
Total lease liabilities		$	29,644	$	30,774

The table below sets forth the weighted average terms and discount rates of our property leases as of September 30, 2021:

Weighted average remaining lease term
Operating leases	51 years
Finance leases	< 1 year
Weighted average discount rate
Operating leases	7.16	%
Finance leases	3.62	%

The table below presents our total property lease cost (in thousands):

	Statement of Operations Location	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease cost		2021		2020		2021		2020
Operating lease cost
Property leases - fixed	Property operating expenses	$	1,013	$	598	$	2,999	$	1,465
Property leases - variable	Property operating expenses	11		107		31		116
Finance lease cost
Amortization of property right-of-use assets	Property operating expenses	5		9		23		27
		$	1,029	$	714	$	3,053	$	1,608

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

	For the Nine Months Ended September 30,
Supplemental cash flow information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,399	$	987
Financing cash flows for financing leases	$	14	$	674

Payments on property leases were due as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Finance leases		Total
2021 (1)	$	807	$	—	$	807
2022	3,297		14		3,311
2023	3,352		—		3,352
2024	3,403		—		3,403
2025	1,749		—		1,749
Thereafter	123,979		—		123,979
Total lease payments	136,587		14		136,601
Less: Amount representing interest	(106,957)		—		(106,957)
Lease liability	$	29,630	$	14	$	29,644

(1)Represents the three months ending December 31, 2021.

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Real Estate Joint Ventures

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Real Estate Joint Ventures

Real Estate Joint Ventures

Consolidated Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in consolidated real estate joint ventures as of September 30, 2021 (dollars in thousands):

				September 30, 2021 (1)
	Date Acquired	Nominal Ownership %		Total Assets		Encumbered Assets		Total Liabilities
Entity			Location
LW Redstone Company, LLC (2)	3/23/2010	85%	Huntsville, Alabama	$	453,496	$	90,295	$	99,173
Stevens Investors, LLC	8/11/2015	95%	Washington, DC	164,189		—		859
M Square Associates, LLC	6/26/2007	50%	College Park, Maryland	100,634		60,950		52,527
				$	718,319	$	151,245	$	152,559

(1)Excludes amounts eliminated in consolidation.

(2)We fund all capital requirements. Our partner generally receives distributions of the first $1.2 million of annual operating cash flows and we receive the remainder.

On August 11, 2021, we entered into a $112.0 million construction loan with Stevens Investors, LLC to enable it to early extinguish a third party construction loan. Our loan to the joint venture, which is eliminated in consolidation, carries an interest rate of LIBOR plus 2.35% and had a balance of $90.5 million as of September 30, 2021. The loan matures on August 11, 2024, and we have priority for repayment in full of borrowings and accrued interest on the loan over partner distributions of any future refinancing proceeds or other available cash flows.

Unconsolidated Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in unconsolidated real estate joint ventures accounted for using the equity method of accounting (dollars in thousands):

	Date Acquired	Nominal Ownership %	Number of Properties	Carrying Value of Investment (1)
Entity				September 30, 2021		December 31, 2020
B RE COPT DC JV II LLC (2)	10/30/2020	10%	8	$	15,735	$	15,988
BREIT COPT DC JV LLC	6/20/2019	10%	9	12,620		13,315
B RE COPT DC JV III LLC	6/2/2021	10%	2	11,949		—
			19	$	40,304	$	29,303

(1)Included in the line entitled “investment in unconsolidated real estate joint ventures” on our consolidated balance sheets.

(2)Our investment in B RE COPT DC JV II LLC was lower than our share of the joint venture’s equity by $7.3 million as of September 30, 2021 and $7.4 million as of December 31, 2020 due to a difference between our cost basis and our share of the joint venture’s underlying equity in its net assets. We recognize adjustments to our share of the joint venture’s earnings and losses resulting from this basis difference in the underlying assets of the joint venture.

As described further in Note 4, on June 2, 2021, we sold a 90% interest in two data center shell properties in Northern Virginia and retained a 10% interest in the properties through B RE COPT DC JV III LLC, a newly-formed joint venture. We concluded that the joint venture is a variable interest entity. Under the terms of the joint venture agreement, we and our partner receive returns in proportion to our investments, and our maximum exposure to losses is limited to our investment, subject to certain indemnification obligations with respect to any nonrecourse debt secured by the properties. The nature of our involvement in the activities of the joint venture does not give us power over decisions that significantly affect its economic performance.

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Investing Receivables

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Investing Receivables

Investing Receivables

Investing receivables consisted of the following (in thousands): 

	September 30, 2021		December 31, 2020
Notes receivable from the City of Huntsville	$	71,322	$	65,564
Other investing loans receivable	6,040		6,041
Amortized cost basis	77,362		71,605
Allowance for credit losses	(1,415)		(2,851)
Investing receivables, net	$	75,947	$	68,754

The balances above include accrued interest receivable, net of allowance for credit losses, of $3.6 million as of September 30, 2021 and $4.8 million as of December 31, 2020.

Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture (see Note 6) and carry an interest rate of 9.95%. Our other investing loans receivable carry an interest rate of 8.0%.

The fair value of these receivables was approximately $78 million as of September 30, 2021 and $73 million as of December 31, 2020.

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Prepaid Expenses and Other Assets, Net

9 Months Ended

Sep. 30, 2021

Prepaid Expense and Other Assets [Abstract]

Prepaid Expenses and Other Assets, Net

Prepaid Expenses and Other Assets, Net

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

	September 30, 2021		December 31, 2020
Lease incentives, net	$	40,150	$	35,642
Prepaid expenses	26,815		19,690
Construction contract costs in excess of billings, net	12,987		10,343
Furniture, fixtures and equipment, net	10,008		10,433
Net investment in sales-type leases	6,300		6,573
Non-real estate equity investments	5,545		5,509
Restricted cash	3,575		3,664
Marketable securities in deferred compensation plan	2,616		3,027
Deferred tax asset, net (1)	1,883		1,989
Deferred financing costs, net (2)	1,595		2,439
Other assets	5,740		5,274
Prepaid expenses and other assets, net	$	117,214	$	104,583

(1)Includes a valuation allowance of $24,000 as of September 30, 2021 and $201,000 as of December 31, 2020.

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

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Debt, Net

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt, Net

Debt, Net

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

	Carrying Value (1) as of
	September 30, 2021		December 31, 2020		September 30, 2021
					Stated Interest Rates	Scheduled Maturity
Mortgage and Other Secured Debt:
Fixed rate mortgage debt (2)	$	137,310	$	139,991	3.82% - 4.62% (3)	2023-2026
Variable rate secured debt	33,698		115,119		LIBOR + 1.45% to 1.55% (4)	2025-2026
Total mortgage and other secured debt	171,008		255,110
Revolving Credit Facility (5)	10,000		143,000		LIBOR + 0.775% to 1.45% (6)	March 2023 (5)
Term Loan Facility	299,274		398,447		LIBOR + 1.00% to 1.65% (7)	December 2022
Unsecured Senior Notes
5.00%, $300,000 aggregate principal	298,235		297,915		5.00% (8)	July 2025
2.25%, $400,000 aggregate principal	395,232		394,464		2.25% (9)	March 2026
2.00%, $400,000 aggregate principal	396,394		—		2.00% (10)	January 2029
2.75%, $600,000 aggregate principal	588,798		—		2.75% (10)	April 2031
3.60%, $350,000 aggregate principal	—		348,888		3.60% (11)	N/A (11)
5.25%, $250,000 aggregate principal	—		248,194		5.25% (12)	N/A (12)
Unsecured note payable	791		900		0% (13)	May 2026
Total debt, net	$	2,159,732	$	2,086,918

(1)The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $5.4 million as of September 30, 2021 and $5.9 million as of December 31, 2020.

(2)Certain of the fixed rate mortgages carry interest rates that, upon assumption, were above or below market rates 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 $108,000 as of September 30, 2021 and $155,000 as of December 31, 2020.

(3)The weighted average interest rate on our fixed rate mortgage debt was 4.16% as of September 30, 2021.

(4)The weighted average interest rate on our variable rate secured debt was 1.60% as of September 30, 2021.

(5)The facility matures in March 2023, with the ability for us to further extend such maturity 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 under the facility for each extension period. In connection with this facility, we also have the ability to borrow up to $500.0 million under new term loans from the facility’s lender group provided that there is no default under the facility and subject to the approval of the lenders.

(6)The weighted average interest rate on the Revolving Credit Facility was 1.19% as of September 30, 2021.

(7)The interest rate on this loan was 1.09% as of September 30, 2021.

(8)The carrying value of these notes reflects an unamortized discount totaling $1.5 million as of September 30, 2021 and $1.8 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.

(9)The carrying value of these notes reflects an unamortized discount totaling $3.9 million as of September 30, 2021 and $4.5 million as of December 31, 2020. The effective interest rate under the notes, including amortization of the issuance costs, was 2.48%.

(10)Refer to paragraph below for further disclosure.

(11)The carrying value of these notes reflects an unamortized discount totaling $781,000 as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%. Refer to paragraph below for further disclosure.

(12)The carrying value of these notes reflects an unamortized discount totaling $1.6 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%. Refer to paragraph below for further disclosure.

(13)This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates.  The carrying value of this note reflects an unamortized discount totaling $120,000 as of September 30, 2021 and $161,000 as of December 31, 2020.

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

We issued the following unsecured senior notes in 2021:

•$600.0 million of 2.75% Senior Notes due 2031 (the “2.75% Notes”) at an initial offering price of 98.95% of their face value on March 11, 2021, resulting in proceeds, after deducting underwriting discounts, but before other offering expenses, of $589.8 million. The notes mature on April 15, 2031. The carrying value of these notes reflects an unamortized discount totaling $9.7 million as of September 30, 2021. The effective interest rate under the notes, including amortization of discount and issuance costs, was 2.94%; and

•$400.0 million of 2.00% Senior Notes due 2029 (the “2.00% Notes”) at an initial offering price of 99.97% of their face value on August 11, 2021, resulting in proceeds, after deducting underwriting discounts, but before other offering

expenses, of $397.4 million. The notes mature on January 15, 2029. The carrying value of these notes reflects an unamortized discount totaling $2.6 million as of September 30, 2021. The effective interest rate under the notes, including amortization of discount and issuance costs, was 2.09%.

We may redeem these notes, in whole at any time or in part from time to time, at our option, at a redemption price equal to the greater of (1) the aggregate principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption) discounted to its present value, on a semi-annual basis at an adjusted treasury rate plus a spread (25 basis points for the 2.75% Notes and 20 basis points for the 2.00% Notes), plus accrued and unpaid interest thereon to the date of redemption. However, if this redemption occurs on or after January 15, 2031 for the 2.75% Notes or November 15, 2028 for the 2.00% Notes, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the redemption date. These notes are unconditionally guaranteed by COPT.

With regard to our 3.60% Senior Notes due 2023 (the “3.60% Notes”) and 5.25% Senior Notes due 2024 (the “5.25% Notes”), we:

•effective March 11, 2021, purchased pursuant to tender offers $184.4 million of 3.60% Notes for $196.7 million and $145.6 million of 5.25% Notes for $164.7 million, plus accrued interest; and

•on April 12, 2021, redeemed the remaining $165.6 million of 3.60% Notes for $176.3 million and $104.4 million of 5.25% Notes for $117.7 million, plus accrued interest.

In connection with these purchases and redemptions, we recognized a loss on early extinguishment of debt of $58.4 million in the nine months ended September 30, 2021.

On August 11, 2021, we repaid $100.0 million of our term loan facility.

Certain of our debt instruments require that we comply with a number of restrictive financial covenants.  As of September 30, 2021, we were compliant with these financial covenants.

We capitalized interest costs of $1.8 million in the three months ended September 30, 2021, $2.9 million in the three months ended September 30, 2020, $5.3 million in the nine months ended September 30, 2021 and $9.4 million in the nine months ended September 30, 2020.

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

	September 30, 2021				December 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed-rate debt
Unsecured Senior Notes	$	1,678,659	$	1,723,267	$	1,289,461	$	1,334,342
Other fixed-rate debt	138,101		136,653		140,891		142,838
Variable-rate debt	342,972		343,577		656,566		654,102
	$	2,159,732	$	2,203,497	$	2,086,918	$	2,131,282

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Interest Rate Derivatives

9 Months Ended

Sep. 30, 2021

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, each of which was designated as a cash flow hedge of interest rate risk (dollars in thousands):

							Fair Value at
Notional Amount			Fixed Rate	Floating Rate Index	Effective Date	Expiration Date	September 30, 2021		December 31, 2020
$	100,000		1.901%	One-Month LIBOR	9/1/2016	12/1/2022	$	(2,065)	$	(3,394)
$	100,000		1.905%	One-Month LIBOR	9/1/2016	12/1/2022	(2,070)		(3,401)
$	50,000		1.908%	One-Month LIBOR	9/1/2016	12/1/2022	(1,036)		(1,704)
$	11,180	(1)	1.678%	One-Month LIBOR	8/1/2019	8/1/2026	(391)		(733)
$	23,000	(2)	0.573%	One-Month LIBOR	4/1/2020	3/26/2025	70		(290)
							$	(5,492)	$	(9,522)

(1)The notional amount of this instrument is scheduled to amortize to $10.0 million.

(2)The notional amount of this instrument is scheduled to amortize to $22.1 million.

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	September 30, 2021		December 31, 2020
Interest rate swaps designated as cash flow hedges	Prepaid expenses and other assets, net	$	70	$	—
Interest rate swaps designated as cash flow hedges	Interest rate derivatives (liabilities)	$	(5,562)	$	(9,522)

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

	Amount of (Loss) Income Recognized in AOCL on Derivatives								Amount of Loss Reclassified from AOCL into Interest Expense on Statement of Operations
Derivatives in Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Interest rate derivatives	$	(118)	$	1,428	$	426	$	(39,592)	$	(1,226)	$	(1,342)	$	(3,604)	$	(2,408)

	Amount of Loss Reclassified from AOCL into Loss on Interest Rate Derivatives on Statement of Operations								Amount of Loss Recognized on Undesignated Swaps in Loss on Interest Rate Derivatives on Statement of Operations
Derivatives in Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Interest rate derivatives	$	—	$	(51,865)	$	—	$	(51,865)	$	—	$	(1,265)	$	—	$	(1,265)

Based on the fair value of our derivatives as of September 30, 2021, we estimate that approximately $4.8 million of losses will be reclassified from AOCL as an increase to interest expense over the next 12 months.

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. 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 September 30, 2021, we were not in default with any of these provisions. As of September 30, 2021, the fair value of interest rate derivatives in a liability position related to these agreements was $5.6 million, excluding the effects of accrued interest and credit valuation adjustments. As of September 30, 2021, we had not posted any collateral related to these agreements.  If we breach any of these provisions, we could be required to settle our obligations under the agreements at their termination value, which was $6.0 million as of September 30, 2021.

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Redeemable Noncontrolling Interests

9 Months Ended

Sep. 30, 2021

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

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	25,430	$	29,431
Distributions to noncontrolling interests	(2,387)		(13,335)
Net income attributable to noncontrolling interests	2,286		2,715
Adjustment to arrive at fair value of interests	677		4,711
Ending balance	$	26,006	$	23,522

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, occupancy projections and estimated operating and development expenditures.

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Equity

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Equity

Equity

Common Shares

As of September 30, 2021, we had remaining capacity under our at-the-market stock offering program equal to an aggregate gross sales price of $300 million in common share sales.

During the nine months ended September 30, 2021, certain COPLP limited partners converted 8,054 common units in COPLP for an equal number of common shares.

We declared dividends per common share of $0.275 in the three months ended September 30, 2021 and 2020 and $0.825 in the nine months ended September 30, 2021 and 2020.

See Note 16 for disclosure of COPT common share and COPLP common unit activity pertaining to our share-based compensation plans.

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Credit Losses, Financial Assets and Other Instruments

9 Months Ended

Sep. 30, 2021

Credit Loss [Abstract]

Credit Losses, Financial Assets and Other Instruments

Credit Losses, Financial Assets and Other Instruments

The table below sets forth the activity for the allowance for credit losses (in thousands):

	For the Nine Months Ended September 30, 2021
	Investing Receivables		Tenant Notes Receivable (1)		Other Assets (2)		Total
December 31, 2020	$	2,851	$	1,203	$	643	$	4,697
Credit loss (recoveries) expense	(1,436)		(114)		510		(1,040)
September 30, 2021	$	1,415	$	1,089	$	1,153	$	3,657

(1)Included in the line entitled “accounts receivable, net” on our consolidated balance sheets.

(2)The balance as of September 30, 2021 and December 31, 2020 included $705,000 and $257,000, respectively, in the line entitled “accounts receivable, net” and $448,000 and $386,000, respectively, in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets.

The following table presents the amortized cost basis of our investing receivables, tenant notes receivable and sales-type lease receivables by credit risk classification, by origination year as of September 30, 2021 (in thousands):

	Origination Year
	2016 and Earlier		2017		2018		2019		2020		2021		Total
Investing receivables:
Credit risk classification:
Investment grade	$	68,773	$	1,043	$	—	$	—	$	1,057	$	449	$	71,322
Non-investment grade	—		—		—		6,040		—		—		6,040
Total	$	68,773	$	1,043	$	—	$	6,040	$	1,057	$	449	$	77,362
Tenant notes receivable:
Credit risk classification:
Investment grade	$	—	$	—	$	949	$	69	$	297	$	—	$	1,315
Non-investment grade	221		—		141		147		1,763		—		2,272
Total	$	221	$	—	$	1,090	$	216	$	2,060	$	—	$	3,587
Sales-type lease receivables:
Credit risk classification:
Investment grade	$	—	$	—	$	—	$	—	$	6,300	$	—	$	6,300

Our investment grade credit risk classification represents entities with investment grade credit ratings from ratings agencies (such as Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. or Fitch Ratings Ltd.), meaning that they are considered to have at least an adequate capacity to meet their financial commitments, with credit risk ranging from minimal to moderate. Our non-investment grade credit risk classification represents entities with either no credit agency credit ratings or ratings deemed to be sub-investment grade; we believe that there is significantly more credit risk associated with this classification. The credit risk classifications of our investing receivables and tenant notes receivable were last updated in September 2021.

An insignificant portion of the investing and tenant notes receivables set forth above was past due, which we define as being delinquent by more than three months from the due date.

Notes receivable on nonaccrual status as of September 30, 2021 and December 31, 2020 were not significant. We did not recognize any interest income on notes receivable on nonaccrual status during the three or nine months ended September 30, 2021 and 2020.

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Information by Business Segment

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Information by Business Segment

Information by Business SegmentWe have the following reportable segments: Defense/IT Locations; Regional Office; Wholesale Data Center; and Other. We also report on Defense/IT Locations sub-segments, which include the following: Fort George G. Meade and the Baltimore/Washington Corridor (“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 fund the costs for the power, fiber connectivity and data center infrastructure). We measure the performance of our segments through the measure we define as net operating income from real estate operations (“NOI from real estate operations”), which includes: real estate revenues and property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate joint ventures (“UJVs”) that is allocable to our ownership interest (“UJV NOI allocable to COPT”). Amounts reported for segment assets represent long-lived assets associated with consolidated operating properties (including the carrying value of properties, right-of-use assets, net of related lease liabilities, intangible assets, deferred leasing costs, deferred rents receivable and lease incentives) and the carrying value of investments in UJVs owning operating properties. Amounts reported as additions to long-lived assets represent additions to existing consolidated operating properties, excluding transfers from non-operating properties, which we report separately.

The table below reports segment financial information for our reportable segments (in thousands): 

	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 September 30, 2021
Revenues from real estate operations	$	66,029	$	15,291	$	14,519	$	8,558	$	9,144	$	6,913	$	120,454	$	16,810	$	8,637	$	689	$	146,590
Property operating expenses	(22,956)		(5,980)		(6,935)		(3,454)		(3,003)		(657)		(42,985)		(8,395)		(5,345)		(465)		(57,190)
UJV NOI allocable to COPT	—		—		—		—		—		1,060		1,060		—		—		—		1,060
NOI from real estate operations	$	43,073	$	9,311	$	7,584	$	5,104	$	6,141	$	7,316	$	78,529	$	8,415	$	3,292	$	224	$	90,460
Additions to long-lived assets	$	10,671	$	1,614	$	—	$	897	$	107	$	—	$	13,289	$	5,319	$	1,141	$	69	$	19,818
Transfers from non-operating properties	$	53,935	$	87,986	$	7,332	$	—	$	5,519	$	421	$	155,193	$	381	$	—	$	—	$	155,574
Three Months Ended September 30, 2020
Revenues from real estate operations	$	63,328	$	14,699	$	12,602	$	8,006	$	6,079	$	7,995	$	112,709	$	14,913	$	6,068	$	753	$	134,443
Property operating expenses	(21,537)		(5,245)		(7,116)		(3,044)		(2,029)		(861)		(39,832)		(7,782)		(3,642)		(296)		(51,552)
UJV NOI allocable to COPT	—		—		—		—		—		1,752		1,752		—		—		—		1,752
NOI from real estate operations	$	41,791	$	9,454	$	5,486	$	4,962	$	4,050	$	8,886	$	74,629	$	7,131	$	2,426	$	457	$	84,643
Additions to long-lived assets	$	7,511	$	2,219	$	—	$	1,650	$	6,382	$	—	$	17,762	$	5,303	$	1,917	$	(3)	$	24,979
Transfers from non-operating properties	$	(209)	$	58	$	221	$	—	$	61,520	$	65,269	$	126,859	$	—	$	—	$	—	$	126,859
Nine Months Ended September 30, 2021
Revenues from real estate operations	$	197,315	$	45,214	$	40,762	$	25,401	$	26,172	$	23,770	$	358,634	$	50,371	$	24,902	$	2,270	$	436,177
Property operating expenses	(69,341)		(17,394)		(21,315)		(10,114)		(8,525)		(2,516)		(129,205)		(23,901)		(14,395)		(1,279)		(168,780)
UJV NOI allocable to COPT	—		—		—		—		—		2,950		2,950		—		—		—		2,950
NOI from real estate operations	$	127,974	$	27,820	$	19,447	$	15,287	$	17,647	$	24,204	$	232,379	$	26,470	$	10,507	$	991	$	270,347
Additions to long-lived assets	$	29,063	$	2,921	$	—	$	2,654	$	3,418	$	—	$	38,056	$	13,430	$	1,490	$	82	$	53,058
Transfers from non-operating properties	$	55,075	$	88,099	$	56,601	$	—	$	19,724	$	2,423	$	221,922	$	38,738	$	—	$	—	$	260,660
Segment assets at September 30, 2021	$	1,315,101	$	470,077	$	196,624	$	172,381	$	299,184	$	353,340	$	2,806,707	$	538,080	$	194,576	$	3,508	$	3,542,871
Nine Months Ended September 30, 2020
Revenues from real estate operations	$	190,464	$	42,824	$	37,935	$	24,466	$	15,402	$	20,648	$	331,739	$	45,535	$	19,695	$	2,128	$	399,097
Property operating expenses	(63,618)		(15,765)		(21,696)		(9,500)		(5,488)		(2,307)		(118,374)		(22,207)		(10,338)		(836)		(151,755)
UJV NOI allocable to COPT	—		—		—		—		—		5,190		5,190		—		—		—		5,190
NOI from real estate operations	$	126,846	$	27,059	$	16,239	$	14,966	$	9,914	$	23,531	$	218,555	$	23,328	$	9,357	$	1,292	$	252,532
Additions to long-lived assets	$	22,144	$	8,114	$	—	$	5,518	$	6,698	$	—	$	42,474	$	13,105	$	10,699	$	165	$	66,443
Transfers from non-operating properties	$	4,304	$	838	$	381	$	—	$	91,827	$	171,465	$	268,815	$	—	$	—	$	—	$	268,815
Segment assets at September 30, 2020	$	1,264,547	$	392,226	$	143,206	$	180,337	$	234,355	$	446,530	$	2,661,201	$	387,290	$	204,834	$	3,643	$	3,256,968

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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Segment revenues from real estate operations	$	146,590	$	134,443	$	436,177	$	399,097
Construction contract and other service revenues	28,046		20,323		64,592		46,240
Total revenues	$	174,636	$	154,766	$	500,769	$	445,337

The following table reconciles UJV NOI allocable to COPT to equity in income of unconsolidated entities as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
UJV NOI allocable to COPT	$	1,060	$	1,752	$	2,950	$	5,190
Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense	(763)		(1,274)		(2,167)		(3,814)
Add: Equity in loss of unconsolidated non-real estate entities	—		(1)		(4)		(4)
Equity in income of unconsolidated entities	$	297	$	477	$	779	$	1,372

As previously discussed, we provide real estate services such as property management, development and construction 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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract and other service revenues	$	28,046	$	20,323	$	64,592	$	46,240
Construction contract and other service expenses	(27,089)		(19,220)		(61,964)		(44,052)
NOI from service operations	$	957	$	1,103	$	2,628	$	2,188

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
NOI from real estate operations	$	90,460	$	84,643	$	270,347	$	252,532
NOI from service operations	957		1,103		2,628		2,188
Interest and other income	1,818		1,746		5,911		5,233
Credit loss recoveries	326		1,465		1,040		161
Gain on sales of real estate	(32)		—		39,711		5
Equity in income of unconsolidated entities	297		477		779		1,372
Income tax expense	(47)		(16)		(103)		(95)
Depreciation and other amortization associated with real estate operations	(36,611)		(35,332)		(111,487)		(101,540)
Impairment losses	—		(1,530)		—		(1,530)
General, administrative and leasing expenses	(9,342)		(7,467)		(26,970)		(23,111)
Business development expenses and land carry costs	(1,093)		(1,094)		(3,559)		(3,474)
Interest expense	(15,720)		(17,152)		(49,181)		(50,789)
UJV NOI allocable to COPT included in equity in income of unconsolidated entities	(1,060)		(1,752)		(2,950)		(5,190)
Loss on early extinguishment of debt	(1,159)		(3,237)		(59,553)		(3,237)
Loss on interest rate derivatives	—		(53,196)		—		(53,196)
Net income (loss)	$	28,794	$	(31,342)	$	66,613	$	19,329

The following table reconciles our segment assets to our consolidated total assets (in thousands): 

	September 30, 2021		September 30, 2020
Segment assets	$	3,542,871	$	3,256,968
Operating properties lease liabilities included in segment assets	29,644		26,054
Non-operating property assets	385,025		642,182
Other assets	193,598		194,985
Total consolidated assets	$	4,151,138	$	4,120,189

The accounting policies of the segments are the same as those used to prepare our consolidated financial statements.  In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization, impairment losses, gain on sales of real estate, loss on early extinguishment of debt, loss on interest rate derivatives and equity in income of unconsolidated entities not included in NOI 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, credit loss (expense) recoveries, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.

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Construction Contract and Other Service Revenues

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Construction Contract and Other Service Revenues

Construction Contract and Other Service Revenues

We disaggregate our construction contract and other service revenues by compensation arrangement and by service type as we believe it best depicts the nature, timing and uncertainty of our revenue. The table below reports construction contract and other service revenues by compensation arrangement (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract revenue:
Guaranteed maximum price	$	15,846	$	4,358	$	29,335	$	14,834
Cost-plus fee	4,742		13,249		23,075		20,121
Firm fixed price	7,042		1,365		10,954		9,421
Other	416		1,351		1,228		1,864
	$	28,046	$	20,323	$	64,592	$	46,240

The table below reports construction contract and other service revenues by service type (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract revenue:
Construction	$	26,893	$	18,786	$	61,477	$	42,520
Design	737		186		1,887		1,856
Other	416		1,351		1,228		1,864
	$	28,046	$	20,323	$	64,592	$	46,240

We recognized an insignificant amount of revenue in the three and nine months ended September 30, 2021 and 2020 from performance obligations satisfied (or partially satisfied) in previous periods.

Accounts receivable related to our construction contract services is included in accounts receivable, net on our consolidated balance sheets. The beginning and ending balances of accounts receivable related to our construction contracts were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	13,997	$	12,378
Ending balance	$	5,726	$	11,183

Contract assets, which we refer to herein as construction contract costs in excess of billings, net, are included in prepaid expenses and other assets, net reported on our consolidated balance sheets. The beginning and ending balances of our contract assets were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	10,343	$	17,223
Ending balance	$	12,987	$	13,980

Contract liabilities are included in other liabilities reported on our consolidated balance sheets. Changes in contract liabilities were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	4,610	$	1,184
Ending balance	$	3,818	$	5,236
Portion of beginning balance recognized in revenue during:
Three months ended September 30	$	9	$	19
Nine months ended September 30	$	2,626	$	757

Revenue allocated to the remaining performance obligations under existing contracts as of September 30, 2021 that will be recognized as revenue in future periods was $159.2 million, of which we expect to recognize approximately $29 million in the three months ending December 31, 2021 and most of the remainder in 2022.

We have no deferred incremental costs incurred to obtain or fulfill our construction contracts or other service revenues as of September 30, 2021 and December 31, 2020. Our credit loss expense on construction contracts receivables and unbilled construction revenue totaled $412,000 and $463,000 in the three and nine months ended September 30, 2021, respectively, and was insignificant in the three and nine months ended September 30, 2020.

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Share-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based Compensation

Restricted Shares

During the nine months ended September 30, 2021, certain employees and non-employee members of our Board of Trustees (“Trustees”) were granted a total of 165,770 restricted common shares with an aggregate grant date fair value of $4.4 million (weighted average of $26.25 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 employee remains employed by us. Restricted shares granted to non-employee Trustees vest on the first anniversary of the grant date, provided that the Trustee remains in his or her position. During the nine months ended September 30, 2021, forfeiture restrictions lapsed on 157,066 previously issued common shares; these shares had a weighted average grant date fair value of $25.88 per share, and the aggregate intrinsic value of the shares on the vesting dates was $4.1 million.

Performance Share Awards (“PSUs”)

We issued 93,824 common shares on February 3, 2021 to executives in settlement of PSUs granted in 2018, representing 200% of the target awards for those PSUs.

Profit Interest Units in COPLP (“PIUs”)

We granted two forms of PIUs: time-based PIUs (“TB-PIUs”); and performance-based PIUs (“PB-PIUs”). TB-PIUs are subject to forfeiture restrictions until the end of the requisite service period, at which time the TB-PIUs automatically convert into vested PIUs. PB-PIUs are subject to a market condition in that the number of earned awards are determined at the end of the performance period (as described further below) and then settled in vested PIUs. Vested PIUs carry substantially the same rights to redemption and distributions as non-PIU common units.

TB-PIUs

During the nine months ended September 30, 2021, we granted 93,983 TB-PIUs with an aggregate grant date fair value of $2.5 million (weighted average of $26.16 per TB-PIU) to senior management team members and certain non-employee Trustees. TB-PIUs granted to senior management team members generally vest in equal annual increments over a three-year period beginning on the first anniversary of the date of grant provided that the employee remains employed by us. TB-PIUs granted to non-employee Trustees vest on the first anniversary of the grant date, provided that the Trustee remains in his or her position. Prior to vesting, TB-PIUs carry substantially the same rights to distributions as non-PIU common units but carry no redemption rights. During the nine months ended September 30, 2021, forfeiture restrictions lapsed on 40,591 previously issued TB-PIUs; these TB-PIUs had a weighted average grant date fair value of $25.14 per unit, and the aggregate intrinsic value of the TB-PIUs on the vesting date was $1.1 million.

PB-PIUs

On January 1, 2021, we granted certain senior management team members 227,544 PB-PIUs with a three-year performance period concluding on the earlier of December 31, 2023 or the date of: (1) termination by us without cause, death or disability of the employee or constructive discharge of the employee (collectively, “qualified termination”); or (2) a sale event.  The number of earned awards at the end of the performance period will be determined based on the percentile rank of COPT’s total shareholder return (“TSR”) relative to a peer group of companies, as set forth in the following schedule:

Percentile Rank	Earned PB-PIUs Payout %
75th or greater	100% of PB-PIUs granted
50th (target)	50% of PB-PIUs granted
25th	25% of PB-PIUs granted
Below 25th	0% of PB-PIUs 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 awards will be interpolated between the ranges set forth in the table above to reflect any performance between the listed percentiles.  If COPT’s TSR during the measurement period is negative, the maximum number of earned awards will be limited to the target level payout percentage.  During the performance period, PB-PIUs carry rights to distributions equal to 10% of the distribution rights of non-PIU common units but carry no redemption rights.

At the end of the performance period, we will settle the award by issuing vested PIUs equal to: the number of earned awards; and the excess, if any, of (1) the aggregate distributions that would have been paid with respect to vested PIUs issued in settlement of the earned awards through the date of settlement had such vested PIUs been issued on the grant date over (2) the aggregate distributions made on the PB-PIUs during the performance period, divided by the price of our common shares on the settlement date. If a performance period ends due to a sale event or qualified termination, the number of earned awards 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 PB-PIUs are forfeited.

These PB-PIU grants had an aggregate grant date fair value of $3.4 million ($30.03 per target-level award associated with the grants) which is being recognized over the performance period. The grant date fair value was computed using a Monte Carlo model that included the following assumptions: baseline common share value of $26.08; expected volatility for common shares of 34.7%; and a risk-free interest rate of 0.18%.  

Deferred Share Awards

During the nine months ended September 30, 2021, a non-employee Trustee was granted 3,416 deferred share awards with an aggregate grant date fair value of $93,000 ($27.12 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).

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Earnings Per Share ("EPS")

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share (“EPS”)

Earnings Per Share (“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 common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to redeemable noncontrolling interests and share-based compensation awards using the if-converted or treasury stock 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 add 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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net income (loss) attributable to COPT	$	27,101	$	(31,845)	$	62,833	$	15,706
Income attributable to share-based compensation awards	(92)		(145)		(337)		(365)
Numerator for basic EPS on net income (loss) attributable to COPT common shareholders	27,009		(31,990)		62,496		15,341
Redeemable noncontrolling interests	(89)		—		(82)		—
Income attributable to share-based compensation awards	13		—		17		6
Numerator for diluted EPS on net income (loss) attributable to COPT common shareholders	$	26,933	$	(31,990)	$	62,431	$	15,347
Denominator (all weighted averages):
Denominator for basic EPS (common shares)	111,985		111,811		111,949		111,778
Dilutive effect of redeemable noncontrolling interests	138		—		130		—
Dilutive effect of share-based compensation awards	375		—		285		278
Denominator for diluted EPS (common shares)	112,498		111,811		112,364		112,056
Basic EPS	$	0.24	$	(0.29)	$	0.56	$	0.14
Diluted EPS	$	0.24	$	(0.29)	$	0.56	$	0.14

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 September 30,		For the Nine Months Ended September 30,
	2021	2020	2021	2020
Conversion of common units	1,262	1,240	1,257	1,235
Conversion of redeemable noncontrolling interests	782	973	793	954
Conversion of Series I Preferred Units	—	176	—	176

The following securities were also excluded from the computation of diluted EPS because their effect was antidilutive:

•weighted average restricted shares and deferred share awards for the three months ended September 30, 2021 and 2020 of 410,000 and 429,000, respectively, and for the nine months ended September 30, 2021 and 2020 of 416,000 and 432,000, respectively;

•weighted average unvested TB-PIUs for the three months ended September 30, 2021 and 2020 of 168,000 and 91,000, respectively, and for the nine months ended September 30, 2021 and 2020 of 155,000 and 85,000, respectively; and

•weighted average unvested PB-PIUs for the nine months ended September 30, 2021 of 228,000

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation and Claims

In the normal course of business, we are subject to legal actions and other claims.  We record losses for specific legal proceedings and claims when we determine that a loss is probable and the amount of loss can be reasonably estimated.  As of September 30, 2021, management believes that it is reasonably possible that we could recognize a loss of up to $3.4 million for certain municipal tax claims; while we do not believe this loss would materially affect our financial position or liquidity, it could be material to our results of operations. Management believes that it is also reasonably possible that we could incur losses pursuant to other claims but do not believe such losses would materially affect our financial position, liquidity or results of operations. 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.

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 limited to $19 million in the aggregate. We have insurance coverage in place to mitigate much of any potential future losses that may result from these indemnification agreements.

Tax Incremental Financing Obligation

Anne Arundel County, Maryland issued tax incremental financing bonds to third-party investors in order to finance public improvements needed in connection with our project known as the National Business Park.  These bonds had a remaining principal balance of approximately $31 million as of September 30, 2021. The real estate taxes on increases in assessed values post-bond issuance of properties in development districts encompassing the National Business Park are transferred to a special fund pledged to the repayment of the bonds. While we are obligated to fund, through a special tax, any future shortfalls between debt service of the bonds and real estate taxes available to repay the bonds, as of September 30, 2021, we do not expect any such future fundings will be required.

Effects of COVID-19

As of the date of this filing, spread of COVID-19 continues world- and nation-wide. Since the beginning of the year, the United States has significantly increased the proportion of the population that has received COVID-19 vaccines, and there is increased confidence that spread of COVID-19 can, to a large extent, be contained through vaccinations and wearing masks indoors in public. As a result, most restrictive measures previously instituted to control spread have been gradually lifted and an increased proportion of the population has resumed a return to normal activities. However, there continues to be significant uncertainty regarding the duration and extent of the pandemic due to factors such as the continuing spread of the virus, the pace of world- and nation-wide vaccination efforts, the emergence of new variants of the virus and the efficacy of vaccines against such variants. While the pandemic has impacted the operations of much of the commercial real estate industry, we believe that we have been less susceptible to such impact due to our portfolio’s significant concentration in Defense/IT Locations. As a result, we believe that we have not been significantly affected by the pandemic.

COVID-19, along with measures instituted to prevent spread, may adversely affect us in many ways, including, but not limited to:

•disruption of our tenants’ operations, which could adversely affect their ability, or willingness, to sustain their businesses and/or fulfill their lease obligations;

•our ability to maintain occupancy in our properties and obtain new leases for unoccupied and new development space at favorable terms or at all;

•shortages in supply of products or services from our and our tenants’ vendors that are needed for us and our tenants to operate effectively, and which could lead to increased costs for such products and services;

•access to debt and equity capital on attractive terms or at all. Severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our or our tenants’ ability to access capital necessary to fund operations, refinance debt or fund planned investments on a timely basis, and may adversely affect the valuation of financial assets and liabilities;

•our and our tenants’ ability to continue or complete planned development, including the potential for delays in the supply of materials or labor necessary for development; and

•an increase in the pace of businesses implementing remote work arrangements over the long-term, which would adversely effect demand for office space.

The extent of the effect on our operations, financial condition and cash flows will be dependent on future developments, including the duration and extent of the pandemic, the prevalence, strength and duration of restrictive measures and the resulting effects on our tenants, potential future tenants, the commercial real estate industry and the broader economy, all of which are uncertain and difficult to predict.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The 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.  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.

When we own an equity investment in an entity and cannot exert significant influence over its operations, we measure the investment at fair value, with changes recognized through net income. For an investment without a readily determinable fair value, we measure the investment at cost, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer.

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, 2020 included in the Company’s and Operating Partnership’s 2020 Annual Report on Form 10-K.  The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly state 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 the Company’s and Operating Partnership’s 2020 Annual Report on Form 10-K as updated for our adoption of recent accounting pronouncements discussed below.

Reclassifications

Reclassifications

We reclassified certain amounts from the prior period to conform to the current period presentation of our consolidated financial statements with no effect on previously reported net income or equity.

Recent Accounting Pronouncements

Recent Accounting PronouncementsIn March 2020, the Financial Accounting Standards Board issued guidance containing practical expedients for reference rate reform related activities pertaining to debt, leases, derivatives and other contracts. The guidance is optional and may be elected over time as reference rate reform activities occur. In 2020, we elected to apply an expedient to treat any changes in loans resulting from reference rate reform as debt modifications (as opposed to extinguishments) and hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of the hedge accounting expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate the impact of this guidance and may apply other elections as applicable as additional changes in the market occur.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of fair value assets and liabilities measured on recurring basis

The table below sets forth our financial assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2021 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	$	2,545	$	—	$	—	$	2,545
Other	71		—		—		71
Other marketable securities (1)	33		—		—		33
Interest rate derivatives (1)	—		70		—		70
Total assets	$	2,649	$	70	$	—	$	2,719
Liabilities:
Deferred compensation plan liability (2)	$	—	$	2,616	$	—	$	2,616
Interest rate derivatives	—		5,562		—		5,562
Total liabilities	$	—	$	8,178	$	—	$	8,178

(1)Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.

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

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Properties, Net (Tables)

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Schedule of operating properties, net

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

	September 30, 2021		December 31, 2020
Land	$	539,899	$	528,269
Buildings and improvements	3,890,678		3,711,264
Less: Accumulated depreciation	(1,202,780)		(1,124,253)
Operating properties, net	$	3,227,797	$	3,115,280

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Leases (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Operating Lease Revenue Recognized

The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease revenue	2021		2020		2021		2020
Fixed	$	114,309	$	106,743	$	340,157	$	314,845
Variable	31,440		27,132		93,874		82,189
	$	145,749	$	133,875	$	434,031	$	397,034

Sales-type Leases Fixed Contractual Payments Due

Fixed contractual payments due under our property leases were as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Sales-type leases
2021 (1)	$	109,800	$	221
2022	418,746		960
2023	370,652		960
2024	323,198		960
2025	241,090		960
Thereafter	1,020,675		4,516
Total contractual payments	$	2,484,161	8,577
Less: Amount representing interest			(2,277)
Net investment in sales-type leases			$	6,300

(1)Represents the three months ending December 31, 2021.

Operating Leases Fixed Contractual Payments Due

Fixed contractual payments due under our property leases were as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Sales-type leases
2021 (1)	$	109,800	$	221
2022	418,746		960
2023	370,652		960
2024	323,198		960
2025	241,090		960
Thereafter	1,020,675		4,516
Total contractual payments	$	2,484,161	8,577
Less: Amount representing interest			(2,277)
Net investment in sales-type leases			$	6,300

(1)Represents the three months ending December 31, 2021.

Right-of-Use Assets and Lease Liabilities

Our property right-of-use assets consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Right-of-use assets
Operating leases - Property	Property - operating right-of-use assets	$	38,854	$	40,570
Finance leases - Property (1)	Property - finance right-of-use assets	40,077		40,425
Total right-of-use assets		$	78,931	$	80,995

(1)On October 22, 2021, we acquired land leased in Washington, D.C., for which we had a $37.8 million right-of-use asset as of September 30, 2021, for a nominal amount under a bargain purchase option.

Property lease liabilities consisted of the following (in thousands):

Leases	Balance Sheet Location	September 30, 2021		December 31, 2020
Lease liabilities
Operating leases - Property	Property - operating lease liabilities	$	29,630	$	30,746
Finance leases - Property	Other liabilities	14		28
Total lease liabilities		$	29,644	$	30,774

Lease Costs

The table below sets forth the weighted average terms and discount rates of our property leases as of September 30, 2021:

Weighted average remaining lease term
Operating leases	51 years
Finance leases	< 1 year
Weighted average discount rate
Operating leases	7.16	%
Finance leases	3.62	%

The table below presents our total property lease cost (in thousands):

	Statement of Operations Location	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease cost		2021		2020		2021		2020
Operating lease cost
Property leases - fixed	Property operating expenses	$	1,013	$	598	$	2,999	$	1,465
Property leases - variable	Property operating expenses	11		107		31		116
Finance lease cost
Amortization of property right-of-use assets	Property operating expenses	5		9		23		27
		$	1,029	$	714	$	3,053	$	1,608

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

	For the Nine Months Ended September 30,
Supplemental cash flow information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,399	$	987
Financing cash flows for financing leases	$	14	$	674

Finance Lease, Liability, Maturity

Payments on property leases were due as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Finance leases		Total
2021 (1)	$	807	$	—	$	807
2022	3,297		14		3,311
2023	3,352		—		3,352
2024	3,403		—		3,403
2025	1,749		—		1,749
Thereafter	123,979		—		123,979
Total lease payments	136,587		14		136,601
Less: Amount representing interest	(106,957)		—		(106,957)
Lease liability	$	29,630	$	14	$	29,644

(1)Represents the three months ending December 31, 2021.

Operating Lease, Liability, Maturity

Payments on property leases were due as follows (in thousands):

	As of September 30, 2021
Year Ending December 31,	Operating leases		Finance leases		Total
2021 (1)	$	807	$	—	$	807
2022	3,297		14		3,311
2023	3,352		—		3,352
2024	3,403		—		3,403
2025	1,749		—		1,749
Thereafter	123,979		—		123,979
Total lease payments	136,587		14		136,601
Less: Amount representing interest	(106,957)		—		(106,957)
Lease liability	$	29,630	$	14	$	29,644

(1)Represents the three months ending December 31, 2021.

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Real Estate Joint Ventures (Tables)

9 Months Ended

Sep. 30, 2021

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 September 30, 2021 (dollars in thousands):

				September 30, 2021 (1)
	Date Acquired	Nominal Ownership %		Total Assets		Encumbered Assets		Total Liabilities
Entity			Location
LW Redstone Company, LLC (2)	3/23/2010	85%	Huntsville, Alabama	$	453,496	$	90,295	$	99,173
Stevens Investors, LLC	8/11/2015	95%	Washington, DC	164,189		—		859
M Square Associates, LLC	6/26/2007	50%	College Park, Maryland	100,634		60,950		52,527
				$	718,319	$	151,245	$	152,559

(1)Excludes amounts eliminated in consolidation.

(2)We fund all capital requirements. Our partner generally receives distributions of the first $1.2 million of annual operating cash flows and we receive the remainder.

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

The table below sets forth information pertaining to our investments in unconsolidated real estate joint ventures accounted for using the equity method of accounting (dollars in thousands):

	Date Acquired	Nominal Ownership %	Number of Properties	Carrying Value of Investment (1)
Entity				September 30, 2021		December 31, 2020
B RE COPT DC JV II LLC (2)	10/30/2020	10%	8	$	15,735	$	15,988
BREIT COPT DC JV LLC	6/20/2019	10%	9	12,620		13,315
B RE COPT DC JV III LLC	6/2/2021	10%	2	11,949		—
			19	$	40,304	$	29,303

(1)Included in the line entitled “investment in unconsolidated real estate joint ventures” on our consolidated balance sheets.

(2)Our investment in B RE COPT DC JV II LLC was lower than our share of the joint venture’s equity by $7.3 million as of September 30, 2021 and $7.4 million as of December 31, 2020 due to a difference between our cost basis and our share of the joint venture’s underlying equity in its net assets. We recognize adjustments to our share of the joint venture’s earnings and losses resulting from this basis difference in the underlying assets of the joint venture.

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Investing Receivables (Tables)

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Schedule of investing receivables

Investing receivables consisted of the following (in thousands): 

	September 30, 2021		December 31, 2020
Notes receivable from the City of Huntsville	$	71,322	$	65,564
Other investing loans receivable	6,040		6,041
Amortized cost basis	77,362		71,605
Allowance for credit losses	(1,415)		(2,851)
Investing receivables, net	$	75,947	$	68,754

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Prepaid Expenses and Other Assets, Net (Tables)

9 Months Ended

Sep. 30, 2021

Prepaid Expense and Other Assets [Abstract]

Schedule of prepaid expenses and other assets

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

	September 30, 2021		December 31, 2020
Lease incentives, net	$	40,150	$	35,642
Prepaid expenses	26,815		19,690
Construction contract costs in excess of billings, net	12,987		10,343
Furniture, fixtures and equipment, net	10,008		10,433
Net investment in sales-type leases	6,300		6,573
Non-real estate equity investments	5,545		5,509
Restricted cash	3,575		3,664
Marketable securities in deferred compensation plan	2,616		3,027
Deferred tax asset, net (1)	1,883		1,989
Deferred financing costs, net (2)	1,595		2,439
Other assets	5,740		5,274
Prepaid expenses and other assets, net	$	117,214	$	104,583

(1)Includes a valuation allowance of $24,000 as of September 30, 2021 and $201,000 as of December 31, 2020.

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

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Debt, Net (Tables)

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Schedule of debt

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

	Carrying Value (1) as of
	September 30, 2021		December 31, 2020		September 30, 2021
					Stated Interest Rates	Scheduled Maturity
Mortgage and Other Secured Debt:
Fixed rate mortgage debt (2)	$	137,310	$	139,991	3.82% - 4.62% (3)	2023-2026
Variable rate secured debt	33,698		115,119		LIBOR + 1.45% to 1.55% (4)	2025-2026
Total mortgage and other secured debt	171,008		255,110
Revolving Credit Facility (5)	10,000		143,000		LIBOR + 0.775% to 1.45% (6)	March 2023 (5)
Term Loan Facility	299,274		398,447		LIBOR + 1.00% to 1.65% (7)	December 2022
Unsecured Senior Notes
5.00%, $300,000 aggregate principal	298,235		297,915		5.00% (8)	July 2025
2.25%, $400,000 aggregate principal	395,232		394,464		2.25% (9)	March 2026
2.00%, $400,000 aggregate principal	396,394		—		2.00% (10)	January 2029
2.75%, $600,000 aggregate principal	588,798		—		2.75% (10)	April 2031
3.60%, $350,000 aggregate principal	—		348,888		3.60% (11)	N/A (11)
5.25%, $250,000 aggregate principal	—		248,194		5.25% (12)	N/A (12)
Unsecured note payable	791		900		0% (13)	May 2026
Total debt, net	$	2,159,732	$	2,086,918

(1)The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $5.4 million as of September 30, 2021 and $5.9 million as of December 31, 2020.

(2)Certain of the fixed rate mortgages carry interest rates that, upon assumption, were above or below market rates 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 $108,000 as of September 30, 2021 and $155,000 as of December 31, 2020.

(3)The weighted average interest rate on our fixed rate mortgage debt was 4.16% as of September 30, 2021.

(4)The weighted average interest rate on our variable rate secured debt was 1.60% as of September 30, 2021.

(5)The facility matures in March 2023, with the ability for us to further extend such maturity 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 under the facility for each extension period. In connection with this facility, we also have the ability to borrow up to $500.0 million under new term loans from the facility’s lender group provided that there is no default under the facility and subject to the approval of the lenders.

(6)The weighted average interest rate on the Revolving Credit Facility was 1.19% as of September 30, 2021.

(7)The interest rate on this loan was 1.09% as of September 30, 2021.

(8)The carrying value of these notes reflects an unamortized discount totaling $1.5 million as of September 30, 2021 and $1.8 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.15%.

(9)The carrying value of these notes reflects an unamortized discount totaling $3.9 million as of September 30, 2021 and $4.5 million as of December 31, 2020. The effective interest rate under the notes, including amortization of the issuance costs, was 2.48%.

(10)Refer to paragraph below for further disclosure.

(11)The carrying value of these notes reflects an unamortized discount totaling $781,000 as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 3.70%. Refer to paragraph below for further disclosure.

(12)The carrying value of these notes reflects an unamortized discount totaling $1.6 million as of December 31, 2020.  The effective interest rate under the notes, including amortization of the issuance costs, was 5.49%. Refer to paragraph below for further disclosure.

(13)This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates.  The carrying value of this note reflects an unamortized discount totaling $120,000 as of September 30, 2021 and $161,000 as of December 31, 2020.

Schedule of the fair value of debt

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

	September 30, 2021				December 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed-rate debt
Unsecured Senior Notes	$	1,678,659	$	1,723,267	$	1,289,461	$	1,334,342
Other fixed-rate debt	138,101		136,653		140,891		142,838
Variable-rate debt	342,972		343,577		656,566		654,102
	$	2,159,732	$	2,203,497	$	2,086,918	$	2,131,282

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Interest Rate Derivatives (Tables)

9 Months Ended

Sep. 30, 2021

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, each of which was designated as a cash flow hedge of interest rate risk (dollars in thousands):

							Fair Value at
Notional Amount			Fixed Rate	Floating Rate Index	Effective Date	Expiration Date	September 30, 2021		December 31, 2020
$	100,000		1.901%	One-Month LIBOR	9/1/2016	12/1/2022	$	(2,065)	$	(3,394)
$	100,000		1.905%	One-Month LIBOR	9/1/2016	12/1/2022	(2,070)		(3,401)
$	50,000		1.908%	One-Month LIBOR	9/1/2016	12/1/2022	(1,036)		(1,704)
$	11,180	(1)	1.678%	One-Month LIBOR	8/1/2019	8/1/2026	(391)		(733)
$	23,000	(2)	0.573%	One-Month LIBOR	4/1/2020	3/26/2025	70		(290)
							$	(5,492)	$	(9,522)

(1)The notional amount of this instrument is scheduled to amortize to $10.0 million.

(2)The notional amount of this instrument is scheduled to amortize to $22.1 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	September 30, 2021		December 31, 2020
Interest rate swaps designated as cash flow hedges	Prepaid expenses and other assets, net	$	70	$	—
Interest rate swaps designated as cash flow hedges	Interest rate derivatives (liabilities)	$	(5,562)	$	(9,522)

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

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

	Amount of (Loss) Income Recognized in AOCL on Derivatives								Amount of Loss Reclassified from AOCL into Interest Expense on Statement of Operations
Derivatives in Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Interest rate derivatives	$	(118)	$	1,428	$	426	$	(39,592)	$	(1,226)	$	(1,342)	$	(3,604)	$	(2,408)

	Amount of Loss Reclassified from AOCL into Loss on Interest Rate Derivatives on Statement of Operations								Amount of Loss Recognized on Undesignated Swaps in Loss on Interest Rate Derivatives on Statement of Operations
Derivatives in Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Interest rate derivatives	$	—	$	(51,865)	$	—	$	(51,865)	$	—	$	(1,265)	$	—	$	(1,265)

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Redeemable Noncontrolling Interests (Tables)

9 Months Ended

Sep. 30, 2021

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 Nine Months Ended September 30,
	2021		2020
Beginning balance	$	25,430	$	29,431
Distributions to noncontrolling interests	(2,387)		(13,335)
Net income attributable to noncontrolling interests	2,286		2,715
Adjustment to arrive at fair value of interests	677		4,711
Ending balance	$	26,006	$	23,522

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Credit Losses, Financial Assets and Other Instruments (Tables)

9 Months Ended

Sep. 30, 2021

Credit Loss [Abstract]

Credit Losses, Financial Assets and Other Instruments, Allowance for Credit Loss

The table below sets forth the activity for the allowance for credit losses (in thousands):

	For the Nine Months Ended September 30, 2021
	Investing Receivables		Tenant Notes Receivable (1)		Other Assets (2)		Total
December 31, 2020	$	2,851	$	1,203	$	643	$	4,697
Credit loss (recoveries) expense	(1,436)		(114)		510		(1,040)
September 30, 2021	$	1,415	$	1,089	$	1,153	$	3,657

(1)Included in the line entitled “accounts receivable, net” on our consolidated balance sheets.

(2)The balance as of September 30, 2021 and December 31, 2020 included $705,000 and $257,000, respectively, in the line entitled “accounts receivable, net” and $448,000 and $386,000, respectively, in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets.

Financing Receivable Credit Quality Indicator

The following table presents the amortized cost basis of our investing receivables, tenant notes receivable and sales-type lease receivables by credit risk classification, by origination year as of September 30, 2021 (in thousands):

	Origination Year
	2016 and Earlier		2017		2018		2019		2020		2021		Total
Investing receivables:
Credit risk classification:
Investment grade	$	68,773	$	1,043	$	—	$	—	$	1,057	$	449	$	71,322
Non-investment grade	—		—		—		6,040		—		—		6,040
Total	$	68,773	$	1,043	$	—	$	6,040	$	1,057	$	449	$	77,362
Tenant notes receivable:
Credit risk classification:
Investment grade	$	—	$	—	$	949	$	69	$	297	$	—	$	1,315
Non-investment grade	221		—		141		147		1,763		—		2,272
Total	$	221	$	—	$	1,090	$	216	$	2,060	$	—	$	3,587
Sales-type lease receivables:
Credit risk classification:
Investment grade	$	—	$	—	$	—	$	—	$	6,300	$	—	$	6,300

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Information by Business Segment (Tables)

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Schedule of segment financial information for real estate operations

The table below reports segment financial information for our reportable segments (in thousands): 

	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 September 30, 2021
Revenues from real estate operations	$	66,029	$	15,291	$	14,519	$	8,558	$	9,144	$	6,913	$	120,454	$	16,810	$	8,637	$	689	$	146,590
Property operating expenses	(22,956)		(5,980)		(6,935)		(3,454)		(3,003)		(657)		(42,985)		(8,395)		(5,345)		(465)		(57,190)
UJV NOI allocable to COPT	—		—		—		—		—		1,060		1,060		—		—		—		1,060
NOI from real estate operations	$	43,073	$	9,311	$	7,584	$	5,104	$	6,141	$	7,316	$	78,529	$	8,415	$	3,292	$	224	$	90,460
Additions to long-lived assets	$	10,671	$	1,614	$	—	$	897	$	107	$	—	$	13,289	$	5,319	$	1,141	$	69	$	19,818
Transfers from non-operating properties	$	53,935	$	87,986	$	7,332	$	—	$	5,519	$	421	$	155,193	$	381	$	—	$	—	$	155,574
Three Months Ended September 30, 2020
Revenues from real estate operations	$	63,328	$	14,699	$	12,602	$	8,006	$	6,079	$	7,995	$	112,709	$	14,913	$	6,068	$	753	$	134,443
Property operating expenses	(21,537)		(5,245)		(7,116)		(3,044)		(2,029)		(861)		(39,832)		(7,782)		(3,642)		(296)		(51,552)
UJV NOI allocable to COPT	—		—		—		—		—		1,752		1,752		—		—		—		1,752
NOI from real estate operations	$	41,791	$	9,454	$	5,486	$	4,962	$	4,050	$	8,886	$	74,629	$	7,131	$	2,426	$	457	$	84,643
Additions to long-lived assets	$	7,511	$	2,219	$	—	$	1,650	$	6,382	$	—	$	17,762	$	5,303	$	1,917	$	(3)	$	24,979
Transfers from non-operating properties	$	(209)	$	58	$	221	$	—	$	61,520	$	65,269	$	126,859	$	—	$	—	$	—	$	126,859
Nine Months Ended September 30, 2021
Revenues from real estate operations	$	197,315	$	45,214	$	40,762	$	25,401	$	26,172	$	23,770	$	358,634	$	50,371	$	24,902	$	2,270	$	436,177
Property operating expenses	(69,341)		(17,394)		(21,315)		(10,114)		(8,525)		(2,516)		(129,205)		(23,901)		(14,395)		(1,279)		(168,780)
UJV NOI allocable to COPT	—		—		—		—		—		2,950		2,950		—		—		—		2,950
NOI from real estate operations	$	127,974	$	27,820	$	19,447	$	15,287	$	17,647	$	24,204	$	232,379	$	26,470	$	10,507	$	991	$	270,347
Additions to long-lived assets	$	29,063	$	2,921	$	—	$	2,654	$	3,418	$	—	$	38,056	$	13,430	$	1,490	$	82	$	53,058
Transfers from non-operating properties	$	55,075	$	88,099	$	56,601	$	—	$	19,724	$	2,423	$	221,922	$	38,738	$	—	$	—	$	260,660
Segment assets at September 30, 2021	$	1,315,101	$	470,077	$	196,624	$	172,381	$	299,184	$	353,340	$	2,806,707	$	538,080	$	194,576	$	3,508	$	3,542,871
Nine Months Ended September 30, 2020
Revenues from real estate operations	$	190,464	$	42,824	$	37,935	$	24,466	$	15,402	$	20,648	$	331,739	$	45,535	$	19,695	$	2,128	$	399,097
Property operating expenses	(63,618)		(15,765)		(21,696)		(9,500)		(5,488)		(2,307)		(118,374)		(22,207)		(10,338)		(836)		(151,755)
UJV NOI allocable to COPT	—		—		—		—		—		5,190		5,190		—		—		—		5,190
NOI from real estate operations	$	126,846	$	27,059	$	16,239	$	14,966	$	9,914	$	23,531	$	218,555	$	23,328	$	9,357	$	1,292	$	252,532
Additions to long-lived assets	$	22,144	$	8,114	$	—	$	5,518	$	6,698	$	—	$	42,474	$	13,105	$	10,699	$	165	$	66,443
Transfers from non-operating properties	$	4,304	$	838	$	381	$	—	$	91,827	$	171,465	$	268,815	$	—	$	—	$	—	$	268,815
Segment assets at September 30, 2020	$	1,264,547	$	392,226	$	143,206	$	180,337	$	234,355	$	446,530	$	2,661,201	$	387,290	$	204,834	$	3,643	$	3,256,968

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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Segment revenues from real estate operations	$	146,590	$	134,443	$	436,177	$	399,097
Construction contract and other service revenues	28,046		20,323		64,592		46,240
Total revenues	$	174,636	$	154,766	$	500,769	$	445,337

Reconciliation of UJV NOI allocable to COPT to equity in income of unconsolidated entities

The following table reconciles UJV NOI allocable to COPT to equity in income of unconsolidated entities as reported on our consolidated statements of operations (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
UJV NOI allocable to COPT	$	1,060	$	1,752	$	2,950	$	5,190
Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense	(763)		(1,274)		(2,167)		(3,814)
Add: Equity in loss of unconsolidated non-real estate entities	—		(1)		(4)		(4)
Equity in income of unconsolidated entities	$	297	$	477	$	779	$	1,372

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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract and other service revenues	$	28,046	$	20,323	$	64,592	$	46,240
Construction contract and other service expenses	(27,089)		(19,220)		(61,964)		(44,052)
NOI from service operations	$	957	$	1,103	$	2,628	$	2,188

Schedule of reconciliation of net operating income from real estate operations and service operations to net income

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
NOI from real estate operations	$	90,460	$	84,643	$	270,347	$	252,532
NOI from service operations	957		1,103		2,628		2,188
Interest and other income	1,818		1,746		5,911		5,233
Credit loss recoveries	326		1,465		1,040		161
Gain on sales of real estate	(32)		—		39,711		5
Equity in income of unconsolidated entities	297		477		779		1,372
Income tax expense	(47)		(16)		(103)		(95)
Depreciation and other amortization associated with real estate operations	(36,611)		(35,332)		(111,487)		(101,540)
Impairment losses	—		(1,530)		—		(1,530)
General, administrative and leasing expenses	(9,342)		(7,467)		(26,970)		(23,111)
Business development expenses and land carry costs	(1,093)		(1,094)		(3,559)		(3,474)
Interest expense	(15,720)		(17,152)		(49,181)		(50,789)
UJV NOI allocable to COPT included in equity in income of unconsolidated entities	(1,060)		(1,752)		(2,950)		(5,190)
Loss on early extinguishment of debt	(1,159)		(3,237)		(59,553)		(3,237)
Loss on interest rate derivatives	—		(53,196)		—		(53,196)
Net income (loss)	$	28,794	$	(31,342)	$	66,613	$	19,329

Schedule of reconciliation of segment assets to total assets

The following table reconciles our segment assets to our consolidated total assets (in thousands): 

	September 30, 2021		September 30, 2020
Segment assets	$	3,542,871	$	3,256,968
Operating properties lease liabilities included in segment assets	29,644		26,054
Non-operating property assets	385,025		642,182
Other assets	193,598		194,985
Total consolidated assets	$	4,151,138	$	4,120,189

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Construction Contract and Other Service Revenues (Tables)

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The table below reports construction contract and other service revenues by compensation arrangement (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract revenue:
Guaranteed maximum price	$	15,846	$	4,358	$	29,335	$	14,834
Cost-plus fee	4,742		13,249		23,075		20,121
Firm fixed price	7,042		1,365		10,954		9,421
Other	416		1,351		1,228		1,864
	$	28,046	$	20,323	$	64,592	$	46,240

The table below reports construction contract and other service revenues by service type (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Construction contract revenue:
Construction	$	26,893	$	18,786	$	61,477	$	42,520
Design	737		186		1,887		1,856
Other	416		1,351		1,228		1,864
	$	28,046	$	20,323	$	64,592	$	46,240

Contract with Customer, Contract Asset, Contract Liability and Receivable

The beginning and ending balances of accounts receivable related to our construction contracts were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	13,997	$	12,378
Ending balance	$	5,726	$	11,183

The beginning and ending balances of our contract assets were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	10,343	$	17,223
Ending balance	$	12,987	$	13,980

Changes in contract liabilities were as follows (in thousands):

	For the Nine Months Ended September 30,
	2021		2020
Beginning balance	$	4,610	$	1,184
Ending balance	$	3,818	$	5,236
Portion of beginning balance recognized in revenue during:
Three months ended September 30	$	9	$	19
Nine months ended September 30	$	2,626	$	757

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Schedule of payouts for defined performance under PB-PIUs

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

Percentile Rank	Earned PB-PIUs Payout %
75th or greater	100% of PB-PIUs granted
50th (target)	50% of PB-PIUs granted
25th	25% of PB-PIUs granted
Below 25th	0% of PB-PIUs granted

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Earnings Per Share ("EPS") (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

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 September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net income (loss) attributable to COPT	$	27,101	$	(31,845)	$	62,833	$	15,706
Income attributable to share-based compensation awards	(92)		(145)		(337)		(365)
Numerator for basic EPS on net income (loss) attributable to COPT common shareholders	27,009		(31,990)		62,496		15,341
Redeemable noncontrolling interests	(89)		—		(82)		—
Income attributable to share-based compensation awards	13		—		17		6
Numerator for diluted EPS on net income (loss) attributable to COPT common shareholders	$	26,933	$	(31,990)	$	62,431	$	15,347
Denominator (all weighted averages):
Denominator for basic EPS (common shares)	111,985		111,811		111,949		111,778
Dilutive effect of redeemable noncontrolling interests	138		—		130		—
Dilutive effect of share-based compensation awards	375		—		285		278
Denominator for diluted EPS (common shares)	112,498		111,811		112,364		112,056
Basic EPS	$	0.24	$	(0.29)	$	0.56	$	0.14
Diluted EPS	$	0.24	$	(0.29)	$	0.56	$	0.14

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 September 30,		For the Nine Months Ended September 30,
	2021	2020	2021	2020
Conversion of common units	1,262	1,240	1,257	1,235
Conversion of redeemable noncontrolling interests	782	973	793	954
Conversion of Series I Preferred Units	—	176	—	176

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Organization - Narrative 1 (Details) - Sep. 30, 2021 ft² in Millions	property	ft²	MW	a
Unconsolidated Real Estate Joint Ventures
Investments in real estate
Number of real estate properties	19
Operating Properties
Investments in real estate
Number of real estate properties	186
Area of real estate property (in sqft or acres) | ft²		21.7
Operating Properties | Office Properties
Investments in real estate
Number of real estate properties	160
Area of real estate property (in sqft or acres) | ft²		16.9
Operating Properties | Single-tenant data centers
Investments in real estate
Number of real estate properties	26
Area of real estate property (in sqft or acres) | ft²		4.7
Operating Properties | Single-tenant data centers | Unconsolidated Real Estate Joint Ventures
Investments in real estate
Number of real estate properties	19
Operating wholesale data center
Investments in real estate
Capacity (in megawatts) | MW			19.25
Properties under development
Investments in real estate
Number of real estate properties	13
Area of real estate property (in sqft or acres) | ft²		1.8
Properties under development | Office Properties
Investments in real estate
Number of real estate properties	10
Properties under development | Single-tenant data centers
Investments in real estate
Number of real estate properties	3
Properties under development, partially-operational
Investments in real estate
Number of real estate properties	3
Land controlled for future development
Investments in real estate
Area of real estate property (in sqft or acres)		8.9		720
Other Land
Investments in real estate
Area of real estate property (in sqft or acres) | a				43

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Organization - Narrative 2 (Details) - Corporate Office Properties, L.P.	9 Months Ended
	Sep. 30, 2021 shares
Preferred Units
Forms of ownership in Operating Partnership and ownership percentage by the entity
Limited partners' capital account, units outstanding (in units)	0
COPT | Common Units
Forms of ownership in Operating Partnership and ownership percentage by the entity
Percentage ownership in operating partnership	98.30%

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Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Sep. 30, 2021	Dec. 31, 2020
Assets and liabilities measured at fair value on a recurring basis
Marketable securities in deferred compensation plan		$ 2,616	$ 3,027
Fair value measurement on a recurring basis | Deferred compensation plan | Trustees and Management
Assets and liabilities measured at fair value on a recurring basis
Maximum percentage of participants' compensation which is deferrable	100.00%
Marketable securities in deferred compensation plan		$ 2,600

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Fair Value Measurements - Assets and Liabilities, Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets:
Marketable securities in deferred compensation plan	$ 2,616	$ 3,027
Fair value measurement on a recurring basis
Assets:
Other marketable securities	33
Interest rate derivatives	70
Total assets	2,719
Liabilities:
Deferred compensation plan liability	2,616
Interest rate derivatives	5,562
Total liabilities	8,178
Fair value measurement on a recurring basis | Mutual funds
Assets:
Marketable securities in deferred compensation plan	2,545
Fair value measurement on a recurring basis | Other
Assets:
Marketable securities in deferred compensation plan	71
Fair value measurement on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Other marketable securities	33
Interest rate derivatives	0
Total assets	2,649
Liabilities:
Deferred compensation plan liability	0
Interest rate derivatives	0
Total liabilities	0
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	2,545
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	71
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2)
Assets:
Other marketable securities	0
Interest rate derivatives	70
Total assets	70
Liabilities:
Deferred compensation plan liability	2,616
Interest rate derivatives	5,562
Total liabilities	8,178
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | Mutual funds
Assets:
Marketable securities in deferred compensation plan	0
Fair value measurement on a recurring basis | Significant Other Observable Inputs (Level 2) | Other
Assets:
Marketable securities in deferred compensation plan	0
Fair value measurement on a recurring basis | Significant Unobservable  Inputs (Level 3)
Assets:
Other marketable securities	0
Interest rate derivatives	0
Total assets	0
Liabilities:
Deferred compensation plan liability	0
Interest rate derivatives	0
Total liabilities	0
Fair value measurement on a recurring basis | Significant Unobservable  Inputs (Level 3) | Mutual funds
Assets:
Marketable securities in deferred compensation plan	0
Fair value measurement on a recurring basis | Significant Unobservable  Inputs (Level 3) | Other
Assets:
Marketable securities in deferred compensation plan	$ 0

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Properties, Net - Operating properties, net (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Operating properties, net
Operating properties, net	$ 3,227,797	$ 3,115,280
Operating Properties, net
Operating properties, net
Less: accumulated depreciation	(1,202,780)	(1,124,253)
Operating properties, net	3,227,797	3,115,280
Operating Properties, net | Land
Operating properties, net
Gross	539,899	528,269
Operating Properties, net | Buildings and improvements
Operating properties, net
Gross	$ 3,890,678	$ 3,711,264

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Properties, Net - Narrative (Details) ft² in Thousands, $ in Millions		9 Months Ended
	Jun. 02, 2021 USD ($) property	Sep. 30, 2021 USD ($) ft² property Property
B RE COPT DC JV III LLC
Real Estate [Line Items]
Nominal Ownership %	10.00%	10.00%
Number of real estate properties		2
Disposed of by sale | Data Center Shells in Northern Virginia
Real Estate [Line Items]
Ownership percentage sold	90.00%
Number of real estate properties sold	2
Transaction value | $	$ 118.8
Proceeds from sale | $	$ 106.9
Gain on sale of ownership interest | $		$ 40.2
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Data Center Shells
Real Estate [Line Items]
Real estate properties held for sale | Property		1
Newly developed properties placed in service
Real Estate [Line Items]
Area of real estate property (in sqft or acres) | ft²		709
Number of real estate properties		6
Properties under development
Real Estate [Line Items]
Area of real estate property (in sqft or acres) | ft²		1,800
Number of real estate properties		13
Properties under development, partially-operational
Real Estate [Line Items]
Number of real estate properties		3

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Leases - Lease Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Leases [Abstract]
Fixed	$ 114,309	$ 106,743	$ 340,157	$ 314,845
Variable	31,440	27,132	93,874	82,189
Lease revenue	$ 145,749	$ 133,875	$ 434,031	$ 397,034

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Leases - Payments to be Received (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Operating leases
2021	$ 109,800
2022	418,746
2023	370,652
2024	323,198
2025	241,090
Thereafter	1,020,675
Total contractual payments	2,484,161
Sales-type leases
2021	221
2022	960
2023	960
2024	960
2025	960
Thereafter	4,516
Total contractual payments	8,577
Less: Amount representing interest	(2,277)
Net investment in sales-type leases	$ 6,300

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Leases - Lessee Arrangements (Details) $ in Millions	Sep. 30, 2021 USD ($)
Leases [Abstract]
Lessee right-of-use asset	$ 78.9

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Leases - Right-of-Use Assets and Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Leases [Abstract]
Operating leases - Property	$ 38,854	$ 40,570
Finance leases - Property	40,077	40,425
Total right-of-use assets	78,931	80,995
Property - operating lease liabilities	29,630	30,746
Finance leases - Property	14	28
Total lease liabilities	$ 29,644	$ 30,774
Finance Lease, Liability, Statement of Financial Position [Extensible List]	Other liabilities	Other liabilities

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Leases - Narrative (Details) $ in Millions	Oct. 22, 2021 USD ($)
Land | Subsequent Event
Lessee, Lease, Description [Line Items]
Carrying value of finance lease right of use asset acquired under bargain purchase option	$ 37.8

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Leases - Weighted Average Terms and Discount Rates (Details)	Sep. 30, 2021
Leases [Abstract]
Operating leases, Weighted average remaining lease term	51 years
Finance leases, Weighted average remaining lease term (less than)	1 year
Operating lease, Weighted average discount rate	7.16%
Finance lease, Weighted average discount rate	3.62%

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Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Lessee, Lease, Description [Line Items]
Lease costs	$ 1,029	$ 714	$ 3,053	$ 1,608
Property Operating Expense
Lessee, Lease, Description [Line Items]
Property leases - fixed	1,013	598	2,999	1,465
Property leases - variable	11	107	31	116
Finance lease cost - Amortization of property right-of-use assets	$ 5	$ 9	$ 23	$ 27

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Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Leases [Abstract]
Operating cash flows for operating leases	$ 2,399	$ 987
Financing cash flows for financing leases	$ 14	$ 674

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Leases - Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Operating leases
2021	$ 807
2022	3,297
2023	3,352
2024	3,403
2025	1,749
Thereafter	123,979
Total lease payments	136,587
Less: Amount representing interest	(106,957)
Lease liability	29,630	$ 30,746
Finance leases
2021	0
2022	14
2023	0
2024	0
2025	0
Thereafter	0
Total lease payments	14
Less: Amount representing interest	0
Lease liability	14	28
Total
2021	807
2022	3,311
2023	3,352
2024	3,403
2025	1,749
Thereafter	123,979
Total lease payments	136,601
Less: Amount representing interest	(106,957)
Total lease liabilities	$ 29,644	$ 30,774

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Real Estate Joint Ventures - Investments in Consolidated Real Estate Joint Ventures (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020	Sep. 30, 2020
Investments in consolidated real estate joint ventures
Total Assets	$ 4,151,138	$ 4,077,023	$ 4,120,189
Total Liabilities	2,454,353	$ 2,357,881
LW Redstone Company LLC
Investments in consolidated real estate joint ventures
Preferred distributions of annual operating cash flows to partner	1,200
Variable Interest Entity, Primary Beneficiary
Investments in consolidated real estate joint ventures
Total Assets	718,319
Encumbered Assets	151,245
Total Liabilities	$ 152,559
Variable Interest Entity, Primary Beneficiary | LW Redstone Company LLC
Investments in consolidated real estate joint ventures
Nominal Ownership %	85.00%
Total Assets	$ 453,496
Encumbered Assets	90,295
Total Liabilities	$ 99,173
Variable Interest Entity, Primary Beneficiary | Stevens Investors, LLC
Investments in consolidated real estate joint ventures
Nominal Ownership %	95.00%
Total Assets	$ 164,189
Encumbered Assets	0
Total Liabilities	$ 859
Variable Interest Entity, Primary Beneficiary | M Square Associates, LLC
Investments in consolidated real estate joint ventures
Nominal Ownership %	50.00%
Total Assets	$ 100,634
Encumbered Assets	60,950
Total Liabilities	$ 52,527

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Real Estate Joint Ventures - Narrative (Details) $ in Millions	Aug. 11, 2021 USD ($)	Sep. 30, 2021 USD ($)	Jun. 02, 2021 property
Stevens Investors, LLC | Construction Loan
Real Estate [Line Items]
Related party transaction, amount of transaction	$ 112.0
Loans and leases receivable, related parties		$ 90.5
B RE COPT DC JV III LLC
Real Estate [Line Items]
Nominal Ownership %		10.00%	10.00%
Disposed of by sale | Data Center Shells in Northern Virginia
Real Estate [Line Items]
Ownership percentage sold			90.00%
Number of real estate properties sold | property			2
London Interbank Offered Rate (LIBOR) | Stevens Investors, LLC | Construction Loan
Real Estate [Line Items]
Related party transaction, rate	2.35%

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Real Estate Joint Ventures - Investments in Unconsolidated Real Estate Joint Ventures (Details) $ in Thousands	Sep. 30, 2021 USD ($) property	Jun. 02, 2021	Dec. 31, 2020 USD ($)
Unconsolidated Real Estate Joint Ventures
Schedule of Equity Method Investments [Line Items]
Number of real estate properties | property	19
Carrying value of Investments	$ 40,304		$ 29,303
B RE COPT DC JV II LLC
Schedule of Equity Method Investments [Line Items]
Nominal Ownership %	10.00%
Number of real estate properties | property	8
Carrying value of Investments	$ 15,735		15,988
Difference between the joint venture's cost basis and the entity's share of B RE COPT’s underlying equity in the net assets acquired from GI-COPT	$ 7,300		7,400
BREIT COPT DC JV LLC
Schedule of Equity Method Investments [Line Items]
Nominal Ownership %	10.00%
Number of real estate properties | property	9
Carrying value of Investments	$ 12,620		13,315
B RE COPT DC JV III LLC
Schedule of Equity Method Investments [Line Items]
Nominal Ownership %	10.00%	10.00%
Number of real estate properties | property	2
Carrying value of Investments	$ 11,949		$ 0

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Investing Receivables - Investing Receivables (Details) - Investing Receivables - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amortized cost basis	$ 77,362	$ 71,605
Allowance for credit losses	(1,415)	(2,851)
Investing receivables, net	75,947	68,754
Notes receivable from the City of Huntsville
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amortized cost basis	71,322	65,564
Other investing loans receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amortized cost basis	$ 6,040	$ 6,041

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Investing Receivables - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Investing Receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable, fair value disclosure	$ 78.0	$ 73.0
Investing Receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accrued interest receivable, net of allowance for credit losses	$ 3.6	$ 4.8
Investing Receivables | Other investing loans receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest rate	8.00%
Investing Receivables | LW Redstone Company LLC | Notes receivable from the City of Huntsville
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest rate	9.95%

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Prepaid Expenses and Other Assets, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Lease incentives, net	$ 40,150	$ 35,642
Prepaid expenses	26,815	19,690
Construction contract costs in excess of billings, net	12,987	10,343
Furniture, fixtures and equipment, net	10,008	10,433
Net investment in sales-type leases	6,300	6,573
Non-real estate equity investments	5,545	5,509
Restricted cash	3,575	3,664	$ 3,217	$ 3,397
Marketable securities in deferred compensation plan	2,616	3,027
Deferred tax asset, net	1,883	1,989
Deferred financing costs, net	1,595	2,439
Other assets	5,740	5,274
Total	117,214	104,583
Taxable REIT Subsidiary
Property, Plant and Equipment [Line Items]
Deferred tax assets, valuation allowance	$ 24	$ 201

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Debt, Net - Schedule of Debt (Details)	9 Months Ended
	Sep. 30, 2021 USD ($) extension	Aug. 11, 2021 USD ($)	Mar. 11, 2021 USD ($)	Dec. 31, 2020 USD ($)
Debt
Carrying Value	$ 2,159,732,000			$ 2,086,918,000
Mortgage and other secured debt
Debt
Carrying Value	171,008,000			255,110,000
Loans payable
Debt
Debt issuance costs	$ 5,400,000			5,900,000
Line of Credit | Revolving Credit Facility
Debt
Number of extensions | extension	2
Extension option period (in years)	6 months
Line of credit facility, extension fee percentage	0.075%
Fixed rate mortgage debt | Mortgage and other secured debt
Debt
Carrying Value	$ 137,310,000			139,991,000
Unamortized premium included in carrying value	$ 108,000			155,000
Weighted average interest rate (as a percent)	4.16%
Fixed rate mortgage debt | Mortgage and other secured debt | Minimum
Debt
Interest rate	3.82%
Fixed rate mortgage debt | Mortgage and other secured debt | Maximum
Debt
Interest rate	4.62%
Variable-rate secured debt | Mortgage and other secured debt
Debt
Carrying Value	$ 33,698,000			115,119,000
Variable-rate secured debt | Mortgage and other secured debt | London Interbank Offered Rate (LIBOR)
Debt
Weighted average interest rate (as a percent)	1.60%
Variable-rate secured debt | Mortgage and other secured debt | Minimum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread	1.45%
Variable-rate secured debt | Mortgage and other secured debt | Maximum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread	1.55%
Revolving Credit Facility
Debt
Carrying Value	$ 10,000,000			143,000,000
Aggregate additional borrowing capacity available	$ 500,000,000
Revolving Credit Facility | London Interbank Offered Rate (LIBOR)
Debt
Weighted average interest rate (as a percent)	1.19%
Revolving Credit Facility | Minimum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread	0.775%
Revolving Credit Facility | Maximum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread	1.45%
Term Loan Facility
Debt
Carrying Value	$ 299,274,000			398,447,000
Term Loan Facility | London Interbank Offered Rate (LIBOR)
Debt
Interest rate	1.09%
Term Loan Facility | Minimum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread	1.00%
Term Loan Facility | Maximum | London Interbank Offered Rate (LIBOR)
Debt
Variable rate, spread	1.65%
5.00%, $300,000 aggregate principal | Unsecured senior notes
Debt
Interest rate	5.00%
Debt instrument, face amount	$ 300,000,000
Carrying Value	298,235,000			297,915,000
Unamortized discount included in carrying value	$ 1,500,000			1,800,000
Effective interest rate on debt	5.15%
2.25%, $400,000 aggregate principal | Unsecured senior notes
Debt
Interest rate	2.25%
Debt instrument, face amount	$ 400,000,000
Carrying Value	395,232,000			394,464,000
Unamortized discount included in carrying value	$ 3,900,000			4,500,000
Effective interest rate on debt	2.48%
2.00%, $400,000 aggregate principal | Unsecured senior notes
Debt
Interest rate	2.00%
Debt instrument, face amount	$ 400,000,000	$ 400,000,000
Carrying Value	396,394,000			0
Unamortized discount included in carrying value	$ 2,600,000
Effective interest rate on debt	2.09%
2.75%, $600,000 aggregate principal | Unsecured senior notes
Debt
Interest rate	2.75%
Debt instrument, face amount	$ 600,000,000		$ 600,000,000
Carrying Value	588,798,000			0
Unamortized discount included in carrying value	$ 9,700,000
Effective interest rate on debt	2.94%
3.60%, $350,000 aggregate principal | Unsecured senior notes
Debt
Interest rate	3.60%
Debt instrument, face amount	$ 350,000,000
Carrying Value	$ 0			348,888,000
Unamortized discount included in carrying value				$ 781,000
Effective interest rate on debt				3.70%
5.25%, $250,000 aggregate principal | Unsecured senior notes
Debt
Interest rate	5.25%
Debt instrument, face amount	$ 250,000,000
Carrying Value	$ 0			$ 248,194,000
Unamortized discount included in carrying value				$ 1,600,000
Effective interest rate on debt				5.49%
Unsecured note payable
Debt
Interest rate	0.00%
Carrying Value	$ 791,000			$ 900,000
Unamortized discount included in carrying value	$ 120,000			$ 161,000

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Debt, Net (Narrative) (Details) - USD ($)			3 Months Ended		9 Months Ended
	Aug. 11, 2021	Mar. 11, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Apr. 12, 2021	Dec. 31, 2020
Debt
Loss on early extinguishment of debt			$ 1,159,000	$ 3,237,000	$ 59,553,000	$ 3,237,000
Interest costs capitalized			1,800,000	$ 2,900,000	5,300,000	$ 9,400,000
2.75% Notes | Unsecured senior notes
Debt
Debt instrument, face amount		$ 600,000,000	600,000,000		600,000,000
Initial offering price		98.95%
Proceeds from issuance of debt		$ 589,800,000
Redemption price on or after three months prior to maturity date		100.00%
Unamortized discount included in carrying value			$ 9,700,000		$ 9,700,000
Effective interest rate on debt			2.94%		2.94%
2.75% Notes | Unsecured senior notes | Adjusted Treasury
Debt
Basis point used in determining redemption price prior to maturity		0.25%
2.00% Notes | Unsecured senior notes
Debt
Debt instrument, face amount	$ 400,000,000		$ 400,000,000		$ 400,000,000
Initial offering price	99.97%
Proceeds from issuance of debt	$ 397,400,000
Redemption price on or after three months prior to maturity date	100.00%
Unamortized discount included in carrying value			$ 2,600,000		$ 2,600,000
Effective interest rate on debt			2.09%		2.09%
2.00% Notes | Unsecured senior notes | Adjusted Treasury
Debt
Basis point used in determining redemption price prior to maturity	0.20%
3.60% Senior Notes and 5.25% Senior Notes | Unsecured senior notes
Debt
Loss on early extinguishment of debt					$ 58,400,000
3.60% Senior Notes | Unsecured senior notes
Debt
Debt instrument, face amount			$ 350,000,000		350,000,000
Unamortized discount included in carrying value								$ 781,000
Effective interest rate on debt								3.70%
Repurchased face amount		$ 184,400,000					$ 165,600,000
Repurchase face amount including accrued interest		196,700,000					176,300,000
5.250% Senior Notes | Unsecured senior notes
Debt
Debt instrument, face amount			$ 250,000,000		$ 250,000,000
Unamortized discount included in carrying value								$ 1,600,000
Effective interest rate on debt								5.49%
Repurchased face amount		145,600,000					104,400,000
Repurchase face amount including accrued interest		$ 164,700,000					$ 117,700,000
Term Loan Facility
Debt
Repayments of long-term debt	$ 100,000,000

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Debt, Net - Fair Value of Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Carrying Amount
Carrying amount and estimated fair value of debt
Long-term debt	$ 2,159,732	$ 2,086,918
Carrying Amount | Unsecured senior notes
Carrying amount and estimated fair value of debt
Long-term debt	1,678,659	1,289,461
Carrying Amount | Other fixed-rate debt
Carrying amount and estimated fair value of debt
Long-term debt	138,101	140,891
Carrying Amount | Variable-rate secured debt
Carrying amount and estimated fair value of debt
Long-term debt	342,972	656,566
Estimated Fair Value
Carrying amount and estimated fair value of debt
Long-term debt	2,203,497	2,131,282
Estimated Fair Value | Unsecured senior notes
Carrying amount and estimated fair value of debt
Long-term debt	1,723,267	1,334,342
Estimated Fair Value | Other fixed-rate debt
Carrying amount and estimated fair value of debt
Long-term debt	136,653	142,838
Estimated Fair Value | Variable-rate secured debt
Carrying amount and estimated fair value of debt
Long-term debt	$ 343,577	$ 654,102

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Interest Rate Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income
Amount of (Loss) Income Recognized in AOCL on Derivatives	$ (118)	$ 1,428	$ 426	$ (39,592)
Amount of Loss Reclassified from AOCL into Interest Expense on Statement of Operations	(1,226)	(1,342)	(3,604)	(2,408)
Loss on interest rate derivatives	0	(53,196)	0	(53,196)
Interest rate swaps | Reclassification out of Accumulated Other Comprehensive Income | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income
Loss on interest rate derivatives	0	(51,865)	0	(51,865)
Interest rate swaps | Interest Expense
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income
Amount of Loss Reclassified from AOCL into Interest Expense on Statement of Operations	(1,226)	(1,342)	(3,604)	(2,408)
Interest rate swaps | Prepaid expenses and other assets, net
Fair value of interest rate derivatives and balance sheet classification
Interest rate swaps designated as cash flow hedges	70		70		$ 0
Interest rate swaps | Interest rate derivatives (liabilities)
Fair value of interest rate derivatives and balance sheet classification
Interest rate swaps designated as cash flow hedges	(5,562)		(5,562)		(9,522)
Undesignated Swaps
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income
Loss on interest rate derivatives	0	$ (1,265)	0	$ (1,265)
Designated
Fair values of interest rate swap derivatives
Fair value of interest rate swaps	(5,492)		(5,492)		(9,522)
Designated | Interest rate swaps
Effect of interest rate derivatives on consolidated statements of operations and comprehensive income
Approximate amount to be reclassified from AOCL to interest expense over the next 12 months	4,800		4,800
Fair value of derivative liability	5,600		5,600
Settlement amount of derivative obligation at termination value	6,000		6,000
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	1.901%		1.901%
Fair value of interest rate swaps	$ (2,065)		$ (2,065)		(3,394)
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	1.905%		1.905%
Fair value of interest rate swaps	$ (2,070)		$ (2,070)		(3,401)
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	1.908%		1.908%
Fair value of interest rate swaps	$ (1,036)		$ (1,036)		(1,704)
Designated | Interest rate swap, effective August 1, 2019
Fair values of interest rate swap derivatives
Notional Amount	$ 11,180		$ 11,180
Fixed Rate	1.678%		1.678%
Fair value of interest rate swaps	$ (391)		$ (391)		(733)
Notional amount of interest rate derivatives after scheduled amortization	10,000		10,000
Designated | Interest rate swap, effective April 1, 2020, swap two
Fair values of interest rate swap derivatives
Notional Amount	$ 23,000		$ 23,000
Fixed Rate	0.573%		0.573%
Fair value of interest rate swaps	$ 70		$ 70		$ (290)
Notional amount of interest rate derivatives after scheduled amortization	$ 22,100		$ 22,100

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Redeemable Noncontrolling Interests (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($) joint_venture	Sep. 30, 2020 USD ($)
Noncontrolling Interest [Abstract]
Number of joint ventures with redeemable noncontrolling interests | joint_venture	2
Redeemable Noncontrolling Interest [Roll Forward]
Beginning balance	$ 25,430	$ 29,431
Distributions to noncontrolling interests	(2,387)	(13,335)
Net income attributable to noncontrolling interests	2,286	2,715
Adjustment to arrive at fair value of interests	677	4,711
Ending balance	$ 26,006	$ 23,522

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Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Class of Stock [Line Items]
Conversion of common units to common shares (in shares)			8,054	12,009
Dividends declared per share (in usd per share)	$ 0.275	$ 0.275	$ 0.825	$ 0.825
Common Shares
Class of Stock [Line Items]
At the market, offering program established, aggregate value	$ 300		$ 300
Conversion of common units to common shares (in shares)			8,054

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Credit Losses, Financial Assets and Other Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Credit Losses, Financial Assets and Other Instruments [Roll Forward]
December 31, 2020			$ 4,697
Credit loss (recoveries) expense	$ (326)	$ (1,465)	(1,040)	$ (161)
September 30, 2021	3,657		3,657
Other Assets
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
December 31, 2020			643
Credit loss (recoveries) expense			510
September 30, 2021	1,153		1,153
Accounts receivable, allowance for credit loss	1,153		1,153
Other Assets | Accounts Receivable, Net
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
December 31, 2020			257
September 30, 2021	705		705
Accounts receivable, allowance for credit loss	705		705
Other Assets | Prepaid expenses and other assets, net
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
December 31, 2020			386
September 30, 2021	448		448
Accounts receivable, allowance for credit loss	448		448
Investing Receivables
Financing Receivable, Allowance for Credit Loss [Roll Forward]
December 31, 2020			2,851
Credit loss (recoveries) expense			(1,436)
September 30, 2021	1,415		1,415
Tenant Notes Receivables
Financing Receivable, Allowance for Credit Loss [Roll Forward]
December 31, 2020			1,203
Credit loss (recoveries) expense			(114)
September 30, 2021	$ 1,089		$ 1,089

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Credit Losses, Financial Assets and Other Instruments (Credit Risk Classification) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Investing Receivables
Financing Receivable, Credit Quality Indicator [Line Items]
2016 and Earlier	$ 68,773
2017	1,043
2018	0
2019	6,040
2020	1,057
2021	449
Total	77,362	$ 71,605
Investing Receivables | Investment grade
Financing Receivable, Credit Quality Indicator [Line Items]
2016 and Earlier	68,773
2017	1,043
2018	0
2019	0
2020	1,057
2021	449
Total	71,322
Investing Receivables | Non-investment grade
Financing Receivable, Credit Quality Indicator [Line Items]
2016 and Earlier	0
2017	0
2018	0
2019	6,040
2020	0
2021	0
Total	6,040
Tenant Notes Receivables
Financing Receivable, Credit Quality Indicator [Line Items]
2016 and Earlier	221
2017	0
2018	1,090
2019	216
2020	2,060
2021	0
Total	3,587
Tenant Notes Receivables | Investment grade
Financing Receivable, Credit Quality Indicator [Line Items]
2016 and Earlier	0
2017	0
2018	949
2019	69
2020	297
2021	0
Total	1,315
Tenant Notes Receivables | Non-investment grade
Financing Receivable, Credit Quality Indicator [Line Items]
2016 and Earlier	221
2017	0
2018	141
2019	147
2020	1,763
2021	0
Total	2,272
Sales-Type Lease Receivables | Investment grade
Financing Receivable, Credit Quality Indicator [Line Items]
2016 and Earlier	0
2017	0
2018	0
2019	0
2020	6,300
2021	0
Total	$ 6,300

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Information by Business Segment - Segment Financial Information for Our Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Segment financial information for real estate operations
Revenues from real estate operations	$ 174,636	$ 154,766	$ 500,769	$ 445,337
Property operating expenses	(57,190)	(51,552)	(168,780)	(151,755)
UJV NOI allocable to COPT	1,060	1,752	2,950	5,190
Segment assets	4,151,138	4,120,189	4,151,138	4,120,189	$ 4,077,023
Segment assets
Segment financial information for real estate operations
Segment assets	3,542,871	3,256,968	3,542,871	3,256,968
Real estate operations
Segment financial information for real estate operations
Revenues from real estate operations	146,590	134,443	436,177	399,097
Property operating expenses	(57,190)	(51,552)	(168,780)	(151,755)
UJV NOI allocable to COPT	1,060	1,752	2,950	5,190
NOI from real estate operations	90,460	84,643	270,347	252,532
Additions to long-lived assets	19,818	24,979	53,058	66,443
Transfers from non-operating properties	155,574	126,859	260,660	268,815
Real estate operations | Defense/Information Technology Locations
Segment financial information for real estate operations
Revenues from real estate operations	120,454	112,709	358,634	331,739
Property operating expenses	(42,985)	(39,832)	(129,205)	(118,374)
UJV NOI allocable to COPT	1,060	1,752	2,950	5,190
NOI from real estate operations	78,529	74,629	232,379	218,555
Additions to long-lived assets	13,289	17,762	38,056	42,474
Transfers from non-operating properties	155,193	126,859	221,922	268,815
Real estate operations | Defense/Information Technology Locations | Fort Meade/BW Corridor
Segment financial information for real estate operations
Revenues from real estate operations	66,029	63,328	197,315	190,464
Property operating expenses	(22,956)	(21,537)	(69,341)	(63,618)
UJV NOI allocable to COPT	0	0	0	0
NOI from real estate operations	43,073	41,791	127,974	126,846
Additions to long-lived assets	10,671	7,511	29,063	22,144
Transfers from non-operating properties	53,935	(209)	55,075	4,304
Real estate operations | Defense/Information Technology Locations | Northern Virginia Defense/IT
Segment financial information for real estate operations
Revenues from real estate operations	15,291	14,699	45,214	42,824
Property operating expenses	(5,980)	(5,245)	(17,394)	(15,765)
UJV NOI allocable to COPT	0	0	0	0
NOI from real estate operations	9,311	9,454	27,820	27,059
Additions to long-lived assets	1,614	2,219	2,921	8,114
Transfers from non-operating properties	87,986	58	88,099	838
Real estate operations | Defense/Information Technology Locations | Lackland Air Force Base
Segment financial information for real estate operations
Revenues from real estate operations	14,519	12,602	40,762	37,935
Property operating expenses	(6,935)	(7,116)	(21,315)	(21,696)
UJV NOI allocable to COPT	0	0	0	0
NOI from real estate operations	7,584	5,486	19,447	16,239
Additions to long-lived assets	0	0	0	0
Transfers from non-operating properties	7,332	221	56,601	381
Real estate operations | Defense/Information Technology Locations | Navy Support Locations
Segment financial information for real estate operations
Revenues from real estate operations	8,558	8,006	25,401	24,466
Property operating expenses	(3,454)	(3,044)	(10,114)	(9,500)
UJV NOI allocable to COPT	0	0	0	0
NOI from real estate operations	5,104	4,962	15,287	14,966
Additions to long-lived assets	897	1,650	2,654	5,518
Transfers from non-operating properties	0	0	0	0
Real estate operations | Defense/Information Technology Locations | Redstone Arsenal
Segment financial information for real estate operations
Revenues from real estate operations	9,144	6,079	26,172	15,402
Property operating expenses	(3,003)	(2,029)	(8,525)	(5,488)
UJV NOI allocable to COPT	0	0	0	0
NOI from real estate operations	6,141	4,050	17,647	9,914
Additions to long-lived assets	107	6,382	3,418	6,698
Transfers from non-operating properties	5,519	61,520	19,724	91,827
Real estate operations | Defense/Information Technology Locations | Data Center Shells
Segment financial information for real estate operations
Revenues from real estate operations	6,913	7,995	23,770	20,648
Property operating expenses	(657)	(861)	(2,516)	(2,307)
UJV NOI allocable to COPT	1,060	1,752	2,950	5,190
NOI from real estate operations	7,316	8,886	24,204	23,531
Additions to long-lived assets	0	0	0	0
Transfers from non-operating properties	421	65,269	2,423	171,465
Real estate operations | Regional Office
Segment financial information for real estate operations
Revenues from real estate operations	16,810	14,913	50,371	45,535
Property operating expenses	(8,395)	(7,782)	(23,901)	(22,207)
UJV NOI allocable to COPT	0	0	0	0
NOI from real estate operations	8,415	7,131	26,470	23,328
Additions to long-lived assets	5,319	5,303	13,430	13,105
Transfers from non-operating properties	381	0	38,738	0
Real estate operations | Operating wholesale data center
Segment financial information for real estate operations
Revenues from real estate operations	8,637	6,068	24,902	19,695
Property operating expenses	(5,345)	(3,642)	(14,395)	(10,338)
UJV NOI allocable to COPT	0	0	0	0
NOI from real estate operations	3,292	2,426	10,507	9,357
Additions to long-lived assets	1,141	1,917	1,490	10,699
Transfers from non-operating properties	0	0	0	0
Real estate operations | Other
Segment financial information for real estate operations
Revenues from real estate operations	689	753	2,270	2,128
Property operating expenses	(465)	(296)	(1,279)	(836)
UJV NOI allocable to COPT	0	0	0	0
NOI from real estate operations	224	457	991	1,292
Additions to long-lived assets	69	(3)	82	165
Transfers from non-operating properties	0	0	0	0
Real estate operations | Segment assets
Segment financial information for real estate operations
Segment assets	3,542,871	3,256,968	3,542,871	3,256,968
Real estate operations | Segment assets | Defense/Information Technology Locations
Segment financial information for real estate operations
Segment assets	2,806,707	2,661,201	2,806,707	2,661,201
Real estate operations | Segment assets | Defense/Information Technology Locations | Fort Meade/BW Corridor
Segment financial information for real estate operations
Segment assets	1,315,101	1,264,547	1,315,101	1,264,547
Real estate operations | Segment assets | Defense/Information Technology Locations | Northern Virginia Defense/IT
Segment financial information for real estate operations
Segment assets	470,077	392,226	470,077	392,226
Real estate operations | Segment assets | Defense/Information Technology Locations | Lackland Air Force Base
Segment financial information for real estate operations
Segment assets	196,624	143,206	196,624	143,206
Real estate operations | Segment assets | Defense/Information Technology Locations | Navy Support Locations
Segment financial information for real estate operations
Segment assets	172,381	180,337	172,381	180,337
Real estate operations | Segment assets | Defense/Information Technology Locations | Redstone Arsenal
Segment financial information for real estate operations
Segment assets	299,184	234,355	299,184	234,355
Real estate operations | Segment assets | Defense/Information Technology Locations | Data Center Shells
Segment financial information for real estate operations
Segment assets	353,340	446,530	353,340	446,530
Real estate operations | Segment assets | Regional Office
Segment financial information for real estate operations
Segment assets	538,080	387,290	538,080	387,290
Real estate operations | Segment assets | Operating wholesale data center
Segment financial information for real estate operations
Segment assets	194,576	204,834	194,576	204,834
Real estate operations | Segment assets | Other
Segment financial information for real estate operations
Segment assets	$ 3,508	$ 3,643	$ 3,508	$ 3,643

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Information by Business Segment - Reconciliation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Reconciliation of segment revenues to total revenues
Total revenues	$ 174,636	$ 154,766	$ 500,769	$ 445,337
Construction contract and other service revenues	28,046	20,323	64,592	46,240
Reconciliation of UJV NOI allocable to COPT to Equity Income in Unconsolidated entities [Abstract]
UJV NOI allocable to COPT	1,060	1,752	2,950	5,190
Less: Income from UJV allocable to COPT attributable to depreciation and amortization expense and interest expense	(763)	(1,274)	(2,167)	(3,814)
Add: Equity in loss of unconsolidated non-real estate entities	0	(1)	(4)	(4)
Equity in income of unconsolidated entities	297	477	779	1,372
Computation of net operating income from service operations
Construction contract and other service revenues	28,046	20,323	64,592	46,240
Construction contract and other service expenses	(27,089)	(19,220)	(61,964)	(44,052)
Real estate operations
Reconciliation of segment revenues to total revenues
Total revenues	146,590	134,443	436,177	399,097
Reconciliation of UJV NOI allocable to COPT to Equity Income in Unconsolidated entities [Abstract]
UJV NOI allocable to COPT	1,060	1,752	2,950	5,190
Service operations
Computation of net operating income from service operations
NOI from service operations	$ 957	$ 1,103	$ 2,628	$ 2,188

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Information by Business Segment - Reconciliation of NOI from Real Estate Operations and NOI from Service Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Segment financial information for real estate operations
Interest and other income	$ 1,818	$ 1,746	$ 5,911	$ 5,233
Credit loss recoveries	326	1,465	1,040	161
Gain on sales of real estate	(32)	0	39,711	5
Equity in income of unconsolidated entities	297	477	779	1,372
Income tax expense	(47)	(16)	(103)	(95)
Depreciation and other amortization associated with real estate operations	(36,611)	(35,332)	(111,487)	(101,540)
Impairment losses	0	(1,530)	0	(1,530)
General, administrative and leasing expenses	(9,342)	(7,467)	(26,970)	(23,111)
Business development expenses and land carry costs	(1,093)	(1,094)	(3,559)	(3,474)
Interest expense	(15,720)	(17,152)	(49,181)	(50,789)
UJV NOI allocable to COPT included in equity in income of unconsolidated entities	(1,060)	(1,752)	(2,950)	(5,190)
Loss on early extinguishment of debt	(1,159)	(3,237)	(59,553)	(3,237)
Loss on interest rate derivatives	0	(53,196)	0	(53,196)
Net income (loss)	28,794	(31,342)	66,613	19,329
Real estate operations
Segment financial information for real estate operations
NOI from real estate operations	90,460	84,643	270,347	252,532
UJV NOI allocable to COPT included in equity in income of unconsolidated entities	(1,060)	(1,752)	(2,950)	(5,190)
Service operations
Segment financial information for real estate operations
NOI from service operations	$ 957	$ 1,103	$ 2,628	$ 2,188

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Information by Business Segment - Reconciliation of Segment Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020	Sep. 30, 2020
Reconciliation of segment assets to total assets
Total consolidated assets	$ 4,151,138	$ 4,077,023	$ 4,120,189
Operating properties lease liabilities included in segment assets	29,630	$ 30,746
Segment assets
Reconciliation of segment assets to total assets
Total consolidated assets	3,542,871		3,256,968
Operating properties lease liabilities included in segment assets	29,644		26,054
Non-operating property assets
Reconciliation of segment assets to total assets
Total consolidated assets	385,025		642,182
Other assets
Reconciliation of segment assets to total assets
Total consolidated assets	$ 193,598		$ 194,985

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Construction Contract and Other Service Revenues - Construction Contracts and Other Service Revenues by Compensation Arrangement and Service Type (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation of Revenue [Line Items]
Construction contract and other service revenues	$ 28,046	$ 20,323	$ 64,592	$ 46,240
Construction
Disaggregation of Revenue [Line Items]
Construction contract and other service revenues	26,893	18,786	61,477	42,520
Design
Disaggregation of Revenue [Line Items]
Construction contract and other service revenues	737	186	1,887	1,856
Other
Disaggregation of Revenue [Line Items]
Construction contract and other service revenues	416	1,351	1,228	1,864
Guaranteed maximum price
Disaggregation of Revenue [Line Items]
Construction contract and other service revenues	15,846	4,358	29,335	14,834
Cost-plus fee
Disaggregation of Revenue [Line Items]
Construction contract and other service revenues	4,742	13,249	23,075	20,121
Firm fixed price
Disaggregation of Revenue [Line Items]
Construction contract and other service revenues	7,042	1,365	10,954	9,421
Other
Disaggregation of Revenue [Line Items]
Construction contract and other service revenues	$ 416	$ 1,351	$ 1,228	$ 1,864

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Construction Contract and Other Service Revenues - Rollforwards (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Change in Accounts Receivable
Beginning balance			$ 41,637
Ending balance	$ 33,110		33,110
Change in Contract with Customer, Asset
Beginning balance			10,343
Ending balance	12,987		12,987
Construction Contract Revenue
Change in Accounts Receivable
Beginning balance			13,997	$ 12,378
Ending balance	5,726	$ 11,183	5,726	11,183
Change in Contract with Customer, Asset
Beginning balance			10,343	17,223
Ending balance	12,987	13,980	12,987	13,980
Change in Contract with Customer, Liability
Beginning balance			4,610	1,184
Ending balance	3,818	5,236	3,818	5,236
Portion of beginning balance recognized in revenue during the period	$ 9	$ 19	$ 2,626	$ 757

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Construction Contract and Other Service Revenues - Performance Obligation Narrative (Details) - Construction Contract Revenue $ in Millions	Sep. 30, 2021 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 159.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 29.0
Revenue, remaining performance obligation, expected timing of satisfaction, period	3 months

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Construction Contract and Other Service Revenues - Narrative (Details) - Construction Contract Revenue - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Capitalized contract cost, net	$ 0	$ 0	$ 0
Contract with customer, receivable, credit loss expense	$ 412,000	$ 463,000

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Share-Based Compensation (Details) $ / shares in Units, $ in Thousands			9 Months Ended
	Feb. 03, 2021 shares	Jan. 01, 2021 USD ($) Percentile_Rank $ / shares shares	Sep. 30, 2021 USD ($) form $ / shares shares
Restricted shares
Share-Based Compensation
Stock awards granted (in shares or units) | shares			165,770
Aggregate grant date fair value | $			$ 4,400
Aggregate weighted average grant date fair value (in dollars per share) | $ / shares			$ 26.25
Shares vested (in shares) | shares			157,066
Weighted average fair value of shares vested (in dollars per share) | $ / shares			$ 25.88
Aggregate intrinsic value of awards upon vesting | $			$ 4,100
PIUs
Share-Based Compensation
Number of forms of profit interest units | form			2
Performance-based PIU's
Share-Based Compensation
Aggregate grant date fair value | $		$ 3,400
Potential earned PSUs payout for defined levels of performance under awards
Earned PB-PIUs payout (as a percent of PB-PIUs granted) on 75th or greater percentile rank		100.00%
Earned PB-PIUs payout (as a percent of PB-PIUs granted) on 50th percentile rank		50.00%
Earned PB-PIUs payout (as a percent of PB-PIUs granted) on 25th percentile rank		25.00%
Earned PB-PIUs granted on percentile rank below 25th (as a percent)		0.00%
The number of percentile ranks to fall between to earn interpolated PB-PIUs between such percentile ranks, conditioned on the percentile rank exceeding 25% | Percentile_Rank		2
Percent of award distribution rights		10.00%
Award performance period		3 years
Assumptions used to value stock awards
Baseline value per common share (in dollars per share) | $ / shares		$ 26.08
Expected volatility of common shares (as a percent)		34.70%
Risk-free interest rate (as a percent)		0.18%
Performance-based PIU's | Target Level
Share-Based Compensation
Aggregate weighted average grant date fair value (in dollars per share) | $ / shares		$ 30.03
Deferred Share Awards
Share-Based Compensation
Stock awards granted (in shares or units) | shares			3,416
Aggregate grant date fair value | $			$ 93
Aggregate weighted average grant date fair value (in dollars per share) | $ / shares			$ 27.12
Executives | 2018 PSU Grants | Performance share units
Share-Based Compensation
Shares issued (in shares) | shares	93,824
Percentage of target	200.00%
Senior Management Team Members and Certain Non-Employee Trustees | Time-based PIU's
Share-Based Compensation
Stock awards granted (in shares or units) | shares			93,983
Aggregate grant date fair value | $			$ 2,500
Aggregate weighted average grant date fair value (in dollars per share) | $ / shares			$ 26.16
Shares vested (in shares) | shares			40,591
Weighted average fair value of shares vested (in dollars per share) | $ / shares			$ 25.14
Aggregate intrinsic value of awards upon vesting | $			$ 1,100
Senior Management Team Members | Time-based PIU's
Share-Based Compensation
Award vesting period			3 years
Senior Management Team Members | Performance-based PIU's
Share-Based Compensation
Stock awards granted (in shares or units) | shares		227,544
Award vesting period		3 years
Certain Non-Employee Trustees | Restricted shares
Share-Based Compensation
Award vesting period			1 year
Certain Non-Employee Trustees | Time-based PIU's
Share-Based Compensation
Award vesting period			1 year
Certain Non-Employee Trustees | Deferred Share Awards
Share-Based Compensation
Award vesting period			1 year

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Earnings Per Share ("EPS") (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Numerator:
Net income (loss) attributable to COPT		$ 27,101	$ (31,845)	$ 62,833	$ 15,706
Income attributable to share-based compensation awards		(92)	(145)	(337)	(365)
Numerator for basic EPS on net income (loss) attributable to COPT common shareholders		27,009	(31,990)	62,496	15,341
Redeemable noncontrolling interests		(89)	0	(82)	0
Income attributable to share-based compensation awards		13	0	17	6
Numerator for diluted EPS on net income (loss) attributable to COPT common shareholders		$ 26,933	$ (31,990)	$ 62,431	$ 15,347
Denominator (all weighted averages):
Denominator for basic EPS (common shares)		111,985	111,811	111,949	111,778
Dilutive effect of redeemable noncontrolling interests		138	0	130	0
Dilutive effect of share-based compensation awards (in shares)		375	0	285	278
Denominator for diluted EPS (common shares)		112,498	111,811	112,364	112,056
Basic EPS:
Basic EPS (in dollars per share)	[1]	$ 0.24	$ (0.29)	$ 0.56	$ 0.14
Diluted EPS:
Diluted EPS (in dollars per share)	[1]	$ 0.24	$ (0.29)	$ 0.56	$ 0.14

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

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Earnings Per Share ("EPS") (Details 2) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Conversion of common units
Antidilutive securities
Weighted average antidilutive securities excluded from computation of diluted earnings per share (in shares)	1,262	1,240	1,257	1,235
Conversion of redeemable noncontrolling interests
Antidilutive securities
Weighted average antidilutive securities excluded from computation of diluted earnings per share (in shares)	782	973	793	954
Conversion of Series I preferred units
Antidilutive securities
Weighted average antidilutive securities excluded from computation of diluted earnings per share (in shares)	0	176	0	176
Weighted average restricted shares and deferred shares
Antidilutive securities
Weighted average antidilutive securities excluded from computation of diluted earnings per share (in shares)	410	429	416	432
Weighted average unvested TB-PIUs
Antidilutive securities
Weighted average antidilutive securities excluded from computation of diluted earnings per share (in shares)	168	91	155	85
Weighted average unvested PB-PIUs
Antidilutive securities
Weighted average antidilutive securities excluded from computation of diluted earnings per share (in shares)			228

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Commitments and Contingencies (Details) $ in Millions	Sep. 30, 2021 USD ($) property
Commitments and Contingencies
Estimate of possible loss	$ 3.4
Environmental Indemnity Agreement
Number of lease properties which were provided environmental indemnifications | property	3
Maximum environmental indemnification to the tenant against consequential damages after acquisition of property	$ 19.0
Anne Arundel County, Maryland | Tax Incremental Financing Bond
Environmental Indemnity Agreement
Maximum exposure	$ 31.0

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Label	Element	Value
Accounting Standards Update [Extensible Enumeration]	us-gaap_AccountingStandardsUpdateExtensibleList	Accounting Standards Update 2016-13 [Member]