Welcome to the Corporate Office Properties Trust Third Quarter 2014 Earnings Conference Call. As a reminder, today’s call is being recorded. At this time, I will turn the call over to Stephanie Krewson Kelly, COPT’s Vice President of Investor Relations. Ms. Krewson Kelly, please go ahead.

Thank you, Sarah. Good afternoon, and welcome to COP’s conference call to discuss the company’s third quarter 2014 results and our outlook for the remainder of the year. With me today are Roger Waesche, President and CEO; Steve Riffee, Executive Vice President and CFO; Steve Budorick, EVP and COO; Wayne Lingafelter, EVP of Development and Construction; and Anthony Mifsud, SVP of Finance and Treasurer. As management discusses GAAP and non-GAAP measures, you will find a reconciliation of such financial measures in the press release issued earlier this morning and under the Investor section of our website. At the conclusion of management’s remarks, the call will be opened up for your questions. Before turning the call over to management, let me remind you that statements made during this call may be deemed forward-looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995 and that actual results may differ materially due to a variety of risks, uncertainties and other factors. Please refer to today’s press release in our SEC filings for a detailed discussion of forward-looking statements. I will now turn the call over to Roger.

Thank you, Stephanie, and good afternoon everyone. Third quarter FFO per share as adjusted for comparability of $0.48 was at the high end of our guidance range. Importantly, third quarter results were 9% higher than the $0.44 we reported in the second quarter evidencing that our quarterly FFO per share did indeed bottom in the second quarter and is now rebuilding. As Steve Budorick will detail, our overall portfolio is 91.5% occupied and 93% leased. Supply remains in check in each of our markets and demand continues to form along three lines. Our U.S. Government customers and defense IT contractors continue to need modern, efficient, strategically located properties to execute their missions. Traditional office senates [ph] and the healthcare, education and professional services industries are growing in and around the BW Corridor where over half of our properties are located. And cybersecurity companies both and large and small continue to establish beachheads and expand operations in Maryland Cyber Valley, the center of which is U.S. Cyber Command at Fort Meade. In the third quarter, for example, 213,000 square feet or 45% of our new and development leasing was cyber-related. Market fundamentals have been building towards a more favorable leasing environment for several quarters. Supply has been limited in our submarkets and demand has been building consistently. Beginning in 2015, occupancy gains and improving leasing economics in the majority of markets will combine with new EBITDA from value-added development to drive annual FFO and NAV per share gains. With that, I’ll turn the call over to Steve Budorick.

Thanks, Roger. I’ll start by providing some color on occupancy gains in the quarter. At September 30th, our total office portfolio was 93% leased and 91.5% occupied. The 220 basis point increase in occupancy relative to the June 30th levels reflects 130 basis point increase related to new tenants taking occupancy, a 15 basis point increase related to placing NBP 312 and DC-9 in the service and a decline in vacancy from the sale of eight buildings during the quarter. At September 30th, our same office portfolio of 151 buildings was 93.3% leased and 92.1% occupied. Same office occupancy increased 130 basis points during the third quarter reflecting occupancy gains that were broad-based throughout our portfolio. The positive leasing momentum we’ve experienced since the passage of the Bipartisan Budget Act continued in the third quarter as evidenced by our solid leasing volume and economics. In the third quarter, we executed a total of 857,00 square feet of new and renewal leasing and an average of term of almost seven years. This was our third consecutive quarter of longer lease terms bringing our nine-month average term to 6.8 years. Total leasing included 384,000 square feet of renewals. The associated 82% renewal rate for the quarter was in line with our expectation and increased our renewal rate for the year to 74% back to full year renewal rate to be about 65% reflecting non-renewals we identified in our initial 2014 guidance. The largest of these non-renewals is the 153,000 square foot aerospace lease which expires at the end of November. We’re working with several prospective tenants interested in backfilling the space because of its proximity to the nearby demand drivers. Cash rents on renewals in the quarter were essentially flat. One quarter is not a trend make. But our general feeling is…

Thanks, Steve, and good afternoon everyone. FFO per share as adjusted for comparability for the quarter was $0.48. Modestly higher NOI and other fees and income enabled us to come in at the high end of our guidance range. Our AFFO payout ratio for the nine months ended September 30th was 81%. For the full year, we project an AFFO payout ratio of 80%. Our same office portfolio represented 89% of total square footage and 90% of our total cash NOI. And cash NOI from the pool grew by 90 basis points over the third quarter of last year. Turning to our balance sheet in the quarter, we monetized nearly $60 million of low and non-yielding assets from the WhiteMarsh portfolio. We also focused on resolving the $150 million loan that is secured by two office buildings in Northern Virginia. And consistent with prior guidance, we expect to convey these two buildings in exchange for extinguishing the debts this fourth quarter. Our balance sheet and credit metrics continue to improve. During the quarter, our debt to adjusted book ratio declined from 43.9% to 42.8%. Our adjusted debt to EBITDA ratio decreased from 7.1 times to 6.7 times. And our fixed charge coverage ratio increased from 2.6 times to 2.7 times. We are affirming our fourth quarter guidance for FFO per share as adjusted for comparability of between $0.48 and $0.50. We expect same office cash NOI to grow 350 to 400 basis points relative to the fourth quarter 2013. For the full year, our guidance for FFO per share as adjusted for comparability is now $1.87 to $1.89. And with that, I will now turn the call to Wayne.

Thanks, Steve. I’ll start by making a few brief remarks about the development and redevelopment portfolio which currently stands 10 buildings encompassing 1.1 million square feet that are 51% leased. We placed two fully leased buildings into service during the quarter which are there for no longer listed on Pages 24 and 25 of the supplement, NBP 312, a 125,000 square foot government building and DC-9 at Ashburn Crossing in Northern Virginia, a 110,000 square foot build to suit. During the quarter, we started construction at 7400 Redstone Gateway, a single-storey, 69,000 square foot flex building. It will be joined to 7200 Redstone Gateway. The resulting 131,000 square foot property will service the Regional Headquarters for DRS, the second major defense contractor to relocate its Huntsville operations to Redstone Gateway to serve the various missions at the Redstone arsenal. We anticipate the core property lease will commence early in the third quarter of 2015. Finally, I’d like to highlight the significant progress we made this quarter in disposing of non-strategic plan. This capital recycling activity was comprised of two transactions which generated gross proceeds of $28.2 million and a gain of sale of approximately $5.5 million. In the larger of the two transactions, we generated value above our investment basis through a development strategy which included enhanced entitlements, modest infrastructure investment and personal leasing. This same approach will be applied to certain parcels in our non-strategic land portfolio, increase the value of that land and improve its marketability. The third quarter dispositions reduced the non-strategic land bank by 25% and lowered our investment in these positions to approximately $60 million. We currently have two additional parcels under contracts for sale at a combined value that exceeds $20 million. While these contracts do have certain due diligence contingencies, we are encouraged by the buyers’ progress and believe the sales could close in the first half of 2015. And with that, I’ll turn the call back to Roger.

Thank you, Wayne. Our third quarter results mark the beginning of new growth for COPT, our portfolio is well leased and we expect 2015 to be another strong leasing year. Our development platform is uniquely positioned to benefit from cybersecurity growth. Demand for new space to accommodate growth or to reap operating efficiencies remain strong. Each of these factors bolsters our expectation for higher FFO and NAV. Before opening up the call for questions, I’d like to take a minute to acknowledge the coming leadership change in senior leadership as we announced last week, Steve Riffee will be leaving after he fulfills his contract on March 31st. And our Treasurer, Anthony Mifsud will become CFO effective April 1st. I’d like to thank Steve publicly for his devotion to this company, for his leadership and for his friendship over the last eight years. We could not have accomplished all that we have without you. Thank you, Steve. Many of you have already met Anthony who joined COPT in 2007 and has been instrumental in affecting the balance sheet accomplishments with Steve. Anthony was a finance executive with The Rouse Company for 15 years before joining us. He is a well-respected member of the COPT team and will be a strong CFO. With that, operator, please open up the call for questions.

Okay. (Operator instructions) Our first question here comes from Craig Mailman from KeyBanc Capital Markets. Craig Mailman – KeyBanc Capital Markets: Hey guys. Steve Budorick, maybe just go back to your comment about better pricing power over the next several quarters. As you look out to the 2015 roll, could you maybe just give us what you think the embedded mark-to-market is for those leases and maybe the markets with the better closes to flat or maybe positive?

Sure. We’re experiencing the most weakness in Northern Virginia. And those on a cash basis are rolling down 5% to as much as 9% on a cash basis. On the Maryland side of the river, we have much stronger pricing power. And in the third quarter, 65% of our leases rolled positive. And in aggregate, that 65% rolled up 1.9%, 4%. So I think that helps characterize – demonstrate the statistics we’ve been experiencing. And we’re feeling strength building on the Maryland side. Craig Mailman – KeyBanc Capital Markets: All right. So if you had to put whatever percentage on that 13% to throw in, kind of where do you think it ticks [ph] and I know you guys haven’t given 2015 guidance, but just kind of gut feeling.

My gut is down 2 to down 3. Craig Mailman – KeyBanc Capital Markets: And then you mentioned the two remaining development sites that are vacant in terms like it’s going to be first half, 2015 deals, when do you think those would take occupancy?

Probably about – usually about a year after when we execute the leases because the tenant fit-out is very complicated. And we’ll be finishing the shelves on those in the first quarter of 2015 and then they’ll be eligible for lease. Craig Mailman – KeyBanc Capital Markets: Okay. Where are you guys seeing the most demand for new starts assuming those get done? You are pretty much leased up assuming KEYW takes the remaining stays for the runoff, kind of where are you guys looking to start new product.

Several sites in Northern Virginia, in Maryland, in and around NBP, potentially Columbia Gateway and potentially in Huntsville.

Craig, it’s Wayne. I’d just add to that. Steve made the reference to the million square foot shadow pipeline and as he said, it’s geographically diverse. But it’s important to know it is all strategic demand that we’re tracking. And I think that depending upon how much of that we are able to execute on, it’s very well pre-leased. Craig Mailman – KeyBanc Capital Markets: Okay. That’s helpful. And then just one last one. Any update on Patriot Ridge and 3120 Fairview? Any activity there?

Yes, we have activity at both. I think in the first quarter we talked about increases in showings that were starting to occur as Bipartisan Act got passed. It’s translated into some pretty significant awards out of various agencies around Fort Belvoir. So those contract awards totaled about $8 billion. We have multiple groups now looking at planning, waiting for the actual past quarters to be awarded under that new wave of contracts that got awarded. So we’re filing another quarter or two that we should be in position to start booking leases at Patriot Ridge. And we’ve had reasonably good activity at 3120 Fairview. We’ve put some space with it this year. We’re working with a couple of users right now. One of which would essentially put the building away. That’s early in that competition, but we have line of sight on opportunities. Craig Mailman – KeyBanc Capital Markets: Okay. Do you guys think the midterm elections at all have impact one or another on demand that you’re seeing?

I don’t feel that the election has impacted demand. I do feel that the increased flow of contracts in the multiple locations has kind of swelled our operating leasing pipeline to a pretty high level right now. Much of it is contract contingent, but there’s a lot of activity. Craig Mailman – KeyBanc Capital Markets: Great. Thank you, guys.

Okay. Our next question comes from Jamie Feldman from Bank of America. Jamie Feldman – Bank of America: Great. Thank you. I think in the last quarter conference call, Steve Riffee, you were saying, maybe 1% to 1.5% same store NOI. How are you trending now?

I think we’re going to be good relative to the forecast that we had all year, Jamie, with the 350 to 400 basis point same store growth in the fourth quarter. So we feel good about the numbers that we’ve put out there for the year. Jamie Feldman – Bank of America: So you think you’ll still be above 1% for the full year?

Yes, I think. Jamie Feldman – Bank of America: I think you’re trending like 0.2% for the first nine months?

Yes, I think the fourth quarter is going to make a big difference. It was back-ended for us. Jamie Feldman – Bank of America: Okay. And then I know they’re pretty small leases, but can you just talk a little bit about some of the occupancy lots in St. Mary’s and King George and on the DC Riverfront? I guess just more generally kind of what’s going on in those submarkets and how you feel going forward.

St. Mary’s and King George has a lot of contract turnover with the new contract awards, so you’re losing a tenant and then capturing a tenant. It’ll be a lot of churn but we feel pretty good. I want to say that the St. Mary’s backlog is 185,000 square feet of various prospects we’re working with as those contract competitions roll through. But we feel like we’re going to come out of it pretty well. And then similarly, it’s not quite as active at Maritime but there’s good contract activity and we’re working with a few groups that believe they’re going to win and expand on our buildings. Jamie Feldman – Bank of America: Okay. And then I guess back to the election question that Craig had asked, so I guess just if you think about – let’s say we do get two sides – like the entire Congress goes republican, would that change anything for you guys? Is there any buzz about what that might mean for contract activity?

There really isn’t, I mean generally speaking. Overtime, the republicans have been a little more hawkish on defense spending and so we would expect that that would prevail. But we don’t see a big change – what’s driving defense spending is all the challenges that we’re facing in the world with ISIS and Russia and China and the Middle East, et cetera, et cetera. So it really is not political. It’s more the circumstances in the world. Jamie Feldman – Bank of America: Okay. And then where would you say leasing activity is trending so far in the fourth quarter?

It’s good. The renewals that we expected to get, we’re getting. And we’ve got, as Steve said, a pretty strong pipeline on the development side that hopefully we’ll have some of the significant announcements in the fourth quarter on preleasing.

Our – Jamie Feldman – Bank of America: All right, thank you. Sorry.

Yes, I was just going to point out that our operating portfolio pipeline is now up to about 785,000 square feet. And that’s after we’ve already leased 680,000 since we started measuring that about a year ago. Of that 784,000, we’ve got 30% of it under lease request which is a terminal [ph] term where we’re moving the documentation. And it’s probably increased 10% to 15% since the last call. Jamie Feldman – Bank of America: Okay. So just to be clear, you’re saying the 784,000 of lease is in discussion?

Active prospects where we believe we have a 50% chance or better to win the business. Jamie Feldman – Bank of America: Okay, and that’s outside of the development pipeline?

That’s outside development. That’s all operating. Jamie Feldman – Bank of America: Okay. All right, very helpful. Thanks, guys.

Okay. Our next question comes from Michael Bilerman from Citi. Manny Korchman – Citi: Hey, it’s actually Manny Korchman here with Michael. It looked like your TIs were a little bit elevated in the quarter, especially in some of the smaller deals. I was wondering if you could tell us what’s happening there.

We did have – we ran a little hot on TI in the quarter. There’s a couple of reasons for that. In Northern Virginia, we dealt with some space that rolled over that had been occupied for a very long time by a law firm where we took it down to bare [ph] space and then we let it – we did about 68,000 square feet of first generation leasing. Much of that getting at the stubborn parts of the portfolio. First generation means while we have owned it or since we have built it, it never got leased. And then in and around Fort Meade and Columbia Gateway, we did do 50,000 square feet with cyber tenants. And some of the smaller ones we allocated a little more TI to help them configure their spaces the way they need to have them for the long term for any technical buildout. So there’s kind of three sources. Manny Korchman – Citi: Which are discussions of a ramp in cyber security business, should we expect that trend to hold going forward?

I don’t really think so as you get through the bulk of the portfolio. As I mentioned, some of the spaces where we were addressing these cyber tenants were buildings that have been occupied for a very long time and we’re turning over. It’s more of a raw condition construction but as you get through the bulk of the portfolio, again, in the NBP where we have newer quality buildings, you don’t see that kind of TI at all. Manny Korchman – Citi: Great, thanks.

Okay. Our next question comes from Brendan Maiorana from Wells Fargo. Brendan Maiorana – Wells Fargo: Thanks. Steve Budorick, I apologize if I missed this but I think on previous calls you stated that you thought occupancy was likely to drop in Q4, I think somewhere between 50 and 100 basis points given that aerospace moveout. Is that still the expectation kind of from 9/30 to 12/31?

Yes, absolutely. We’ve been saying that for almost a year. We will be getting 150,000 square feet back from aerospace and about 50,000 square feet back from CSC in Huntsville. So we should drop to just below 91%.

Same office.

Same office. But having said that, we have connectivity behind both those expirations, quite a bit of activity looking for skip [ph] requirement in and around Westfields. There’s been a lot of contract activity in words, so we’re feeling pretty good about our opportunity to backfill aerospace in coming quarters or through the year. And then about a third of the space we’re getting back from CSC we’re already negotiating a lease time in Huntsville and we have good prospects for the balance of it. Brendan Maiorana – Wells Fargo: Okay, great. And with respect to the embedded gains on kind of the development or recently delivered projects that you talked about, so you said you had – and this may be for Steve Riffee or Steve Budorick, but I think you mentioned $5 million had been realized year-to-date. I think previously you guys expected $9 million to be realized during 2014. So do we get $4 million from those projects that will hit in the fourth quarter? And then how should we think about when the remaining $33 million that’s signed comes into NOI?

Brendan, we’ve realized $5 million through the first three quarters and a number in the fourth – the total for the year will be close to $9 million, $8 million and changed to $9 million. And so the balance of the $33 million would then hit in ‘15 and ‘16. Brendan Maiorana – Wells Fargo: And any sense of – I mean is it more weighted towards ‘15, back half of ‘15, kind of into ‘16? I’m just trying to think about how we should think about the progression of NOI growth from those signed leases.

It’s spread out. But again, it’s all signed, so it’s just a matter of how fast we can get the tenants in. And some of that depends on the tenant. And as Steve said earlier, some of them are tricky and complicated buildouts, so it’s really an execution issue and obviously we’re working feverishly to get tenants in as fast as possible. Brendan Maiorana – Wells Fargo: Okay, fair enough. And then just last one. Wayne, I think you mentioned eight projects that you were – development potential projects that you’re talking to. Probably not all of those hit, but that would strike me as maybe if you did have all of that and maybe if some additional projects were to hit, it seems like maybe the rate of development could be a little bit higher than the $200 million or so a year that you guys have kind of targeted as a midlevel run rate. Is that fair?

Yes, I think that’s fair, Brendan. We’ve kind of guided between $200 million and $250 million. And I think your observations are fair. One, if we’re successful with a higher percentage of those eight that we’re tracking, we’d certainly be at the high end of that range. Some of them have timing that stretch a little bit out into ‘15 that would mitigate it a bit but it’s on the high end. Brendan Maiorana – Wells Fargo: Okay. All right, thanks a lot.

Okay. Our next question comes from Dave Rodgers from Baird. David Rodgers – Robert W. Baird: Yes, good afternoon. Steve Budorick, maybe the first question for you. You talked about some contract rollover which is pretty typical in your business, but I guess following all the issues you’ve had with government budgeting, are you seeing anything different in the way the contracts are being allocated? And I guess I’m thinking particularly on how the new contract awards might deal with real estate or how those new tenants are thinking about kind of real estate relative to the old tenants. I guess are you seeing any downsizing in the way contracts are using space on an apples to apples contract basis?

Well, we’ve been experiencing some downsizing for the last couple of years, Dave, and we still see that from time to time. A contract rolls over from old to new and the new one starts a little more conservatively than the old one rolled out. Notwithstanding that, we’ve been gaining grounds on the overall portfolio because our activity levels are high. And there has been a lot of turnover as the government has gotten more focused on getting the lowest priced technically acceptable award criteria implemented as opposed to the best value. And we’re on top of those awards and getting out on the contractors to backfill when it impacts us. David Rodgers – Robert W. Baird: And Steve, maybe sticking with you, I think there’s a 310 basis point difference between your leased and occupied just in the regional office component. I think it’s smaller in your strategic. But within just that regional office component, I guess when did this come in and I guess how much of that really benefits the same store, if you have any of those numbers or at least some general thoughts around that?

From a timing standpoint, the spread between leased and occupied, you’ll see that over the next couple of quarters and it will have positive influences and things start – pardon me? And it will have positive influence. But remember, we’re going to get quite a bit of space vacating in this fourth quarter that we have to backfill again. And we’ve just talked about that rollover with aerospace and CSC. Good contract activity behind it but it’s going to take a few quarters to get that leasing done. David Rodgers – Robert W. Baird: And beyond this fourth quarter and the two known moveouts that are about 200,000 square feet, any other kind of known moveouts that are new that you’ve found out in the last 30, 60. 90 days?

No, we’re looking pretty solid for 2015. David Rodgers – Robert W. Baird: Okay, sounds good. Lastly on the datacenter side, you just finished one of the kind of, quote, “core development” for the datacenter project. Can you talk a little bit about any additional activity at DC-6, any additional core development opportunities if that’s kind of in your eight that you’re looking at? And then can you remind me of the remaining lease term at DC-6?

Okay. So let’s see, from the top. We are anticipating opportunities to do additional build to suit developments. There’s some element of that in our share of development pipeline. With regard to DC-6, we did not book or sign a contract in the quarter but we’re feeling very, very good about where we stand with the prospects that we have. We got a verbal award yesterday. That means nothing until we sign it. But a very important defense contractor has given us the verbal consent that they’re going to put an important piece of business in our building. We’re excited about that. And then behind that, we’ve got enough demand to actually fill the building – 12 to 23 megawatts that we consider active or decision-pending. And all of that activity is along the orientation that we’ve been describing all year, which is towards government and contractors or institutions that are looking for a very high level of datacenter reliability. David Rodgers – Robert W. Baird: In here [ph] would have been your 50% or greater confidence that you indicated earlier?

Some portions of that are. David Rodgers – Robert W. Baird: Okay.

I would say 3 megawatt to 5 megawatt level, I’m pretty confident we’re going to win. David Rodgers – Robert W. Baird: Great. Thank you.

All right, great. (Operator instructions) Our next question comes from John Guinee from Stifel. John Guinee – Stifel, Nicolaus & Co., Inc.: Great. Okay. Hey, thank you very much. Hey, refresh my memory, Wayne, upon looking at your development pipe, 312 NBP, is that – or 310 – I’m sorry – yes, 310 Centennial Way, is that inside the fenced area or is that outside the fenced area at NBP?

John, today it’s built outside the fence. It’s targeted for a government user. So if we’re successful in that pursuit, then it will be moved inside the fence line. John Guinee – Stifel, Nicolaus & Co., Inc.: Okay. And then at $300 of square foot, is there anything unusual there or is that just development cost with structured parking, et cetera?

Well, I think you touched on probably the most important part of that basis, and that’s that it is fully structured part. So it’s got a full complement of garage cost included in that $300. John Guinee – Stifel, Nicolaus & Co., Inc.: Okay. And then when you look at the NoVA A and B $280 and $260 a square foot, is that surface or is that structured parking or is there anything unusual in the development of those assets?

There’s nothing unusual in the development of that in terms of their scope. It is a strategic customer, so it’s comparable in that respect to the 310 building. It does have a combination of surface and structured parking. So there is some – some of the lower basis that you’re picking up on there is the result of that surface portion – surface parking portion. John Guinee – Stifel, Nicolaus & Co., Inc.: Got you. Okay. And then this is curiosity because, Steve, you probably never go there and most people wouldn’t know where it is, but if I look at St. Mary’s and King George County, 874,000 square feet, basically over half the space, 444,000 square feet either lease expiration fourth quarter or in 2015. Is the nature of the tenancy down there just month to month or year to year leases or is there something unusual there?

During the period of constrained spending, a lot of contracts were extended on short term bases – one- to two- to three-year renewals. And so that’s kind of piled up where we had to go short term and match lease terms with the contracts that the people had. As we move to a more normal contracting environment, it’ll start to spread out. John Guinee – Stifel, Nicolaus & Co., Inc.: Okay. But there is no other development by somebody else in that market that’s changing the dynamics of those two markets?

Not at all. John Guinee – Stifel, Nicolaus & Co., Inc.: Okay. And then last question, if you look at the – I’m looking at Page 19, BWI Corridor 20 lease is expiring $37.73. Is that pretty much the market rate in that 456,000 square feet or are there some very full leases in that number that skew it high?

Well, there is a customer embedded in a lot of that square footage that runs with a much higher operating expense component than a normal tenant does. And so those leases are grossed up for the fact that they require, in some cases – well, in many cases, 24/7, 365 and a higher level of immediate service to make sure the buildings are operating well. John Guinee – Stifel, Nicolaus & Co., Inc.: Great. Okay. Have a nice weekend. Thank you.

Thank you.

Thanks, John.

All right, great. It looks like there are no further questions in queue, so I’ll turn the call back over to Mr. Waesche for closing remarks.

Thank you all for joining us today. If your questions did not get answered, we are available to speak with you. Thank you and good day.

Thank you for your participation today in the Corporate Office Properties Trust Third Quarter 2014 Earnings Conference Call. This does conclude this presentation. You may now disconnect and have a great day.