Welcome to the Corporate Office Properties Trust fourth quarter and year-end 2007 Earnings Call. As a reminder, today's call is being recorded. At this time, I would turn the call over to Mary Ellen Fowler, the company's Vice President and Treasurer. Ms. Fowler, please go ahead.

Thank you and good morning, everyone. Yesterday our earnings press release was faxed or e-mailed to each of you. If there is anyone on the call who needs a copy of the release, or would like to get our quarterly supplemental package, please contact me after the call at 443-285-5450. Or you can access both documents from the Investor Relations section of our website at www.COPT.com. Within the supplemental package you'll find a reconciliation of non-GAAP financial measures to GAAP measures referenced throughout this call. Also under the investor relation section of our website, you will find a reconciliation of our first quarter and annual 2008 guidance. With me today is Rand Griffin, our President and CEO; Roger Waesche, our COO; and Steve Riffee, our CFO. In just a minute they will review the results of the fourth quarter and the year 2007 and then the call will be opened up for your questions. First I must remind all of you at the outset that certain statements made during this call regarding anticipated operating results and future events are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although such statements and projections are based on what we believe to be reasonable assumptions actual results may differ from those projected. These factors that could cause actual results to differ materially include without limitation, the ability to renew or release space under favorable terms, regulatory changes, changes in the economy, successful and timely completion of acquisitions and development projects, changes in interest rates and other risks associated with the commercial real estate business as detailed in our filings from time-to-time with the Securities and Exchange Commission. Now, I will turn the call over to Rand.

Thank you, Mary Ellen. Good morning and Happy Valentine's Day to everyone. As we look back at last year, 2007 was a great earnings year for COPT. We generated FFO of $2.24 per share, a 12.6% increase over 2006 results of FFO of $1.99 per share, which was prior to the write-off of $0.08 per share in 2006 for non-cash charges related to the redemption of our Series E and F preferred shares. We believe that our FFO growth is among the highest in the Office REIT sector, and compares favorably to FFO growth for the REIT sector overall. As most of you know, 2007 was a difficult year for REIT stock performance. Our stock price seemed to be negatively impacted more than most than most Office REITs. The factors that created turmoil in the market and the resulting poor stock performance, have little to no impact on the fundamental operating metrics of our company, and it was clearly a disconnect between operating fundamentals and our stock performance. The fundamental operating dynamics of our company remained strong. In fact, we had one of our highest FFO growth years during 2007, and the fundamentals remained strong for 2008 and beyond. We continue to experience steady occupancy, and no significant credit issues with our tenants. Our renewal rates continue to be strong, with steadily increasing rental rates, and we see additional demand to support new development from our locations, where we have strong government demand drivers. As Steve will discuss in a moment, we project another strong year for 2008 with FFO per share growth in the 8% to 11% range. This projection reflects our realistic view of the year with detailed recession planning in place. For example, we do not project any acquisitions nor do we expect or need to raise…

Thanks, Rand. At year end, our wholly-owned portfolio totaled 228 suburban office properties, with 17.8 million square feet in operation. We ended the year 92.6% occupied and 93.4% leased. Subsequent to year end, we sold our vacant 142,000 square foot, 429 Ridge Road property in New Jersey to the adjacent tenant, which move portfolio occupancy up over 93%. In terms of our niche, government and defense IT tenants, totaled 48% of their revenue, with the government at about 16% of revenues. We continue to expand these relationships. In the fourth quarter, the government committed to an additional 91,000 square feet in our San Antonio location, and we expanded our relationship with ITT by signing a 75,000 square foot lease at our 104,000 square foot Patriot Park VI building in Colorado Springs. We expect that ITT will expand to take 100% of the building, and will occupy the initial phase during the second quarter of 2008. ITT won the prime contract to upgrade the FAAs air traffic control system, and we expect subcontractors to borrow an adjacent building. In addition, we are starting to see some preliminary interest at NBP and Aberdeen Proving ground in Maryland. It would support relocations associated with BRAC. We had not anticipated any BRAC related activity during 2008. We are pleased to report that we are having some discussions with tenants to begin revealing their needs associated with BRAC. We are also starting to see some specific leasing activity at Fort Ritchie, although the requirements are complex, and will take some time to plan and execute. With respect to leasing during 2007, we had an active year signing leases for 2.6 million square feet of space. This total includes 1.7 million square feet of renewed leases, equating to a 69% renewal rate for the year at…

Thanks, Roger. Turning to our results, FFO for the year 2007 totaled $125.3 million or $2.24 per diluted share. In 2006, we reported FFO for the year of $98.9 million or $1.91 per diluted share representing a 17.3% increase on a per share basis. As you may recall, results for the 2006 year included an accounting charge of $3.9 million related to the write-off of original issuance costs for the redeemed Series E and Series F preferred shares. Excluding these charges from 2006 results, FFO per share increased 12.6% per diluted share on a year-over-year basis. FFO for the fourth quarter of 2007 totaled $32.8 million or $0.59 per diluted share, as compared to $25 million or $0.48 per diluted share for the fourth quarter of 2006. That represents an increase of 22.9% per diluted share. FFO for the fourth quarter 2006 included the accounting charge of $2.1 million related to the write-off of the original issuance cost for the redeemed Series F preferred shares. And excluding those charges from the fourth quarter of 2006 results, FFO per diluted share increased 13.5% per share over the comparable quarter. Regarding earnings per diluted share for the year, we recorded $0.39 compared to the $0.69 per diluted share for 2006. Net income for the year included $4.8 million of gains on the sale of real estate, net of minority interest and taxes, which is substantially below the $14.8 million of gains recognized during 2006. Turning to AFFO, after adjusting per capital expenditures in the straight lining of rents, our adjusted funds from operations increased 21.5% from $74.7 million in 2006 to $90.8 million in 2007. During 2007, we again increased our common dividend by 10% in September and continue to remain strong payout ratios. Our FFO payout ratio was 57.5% for the…

Thanks Steve. Turning to development, during 2007, we placed into service six buildings totaling 550,000 square feet, that were 95.4% leased at yearend. Four of the properties are leased by homebuilding users. This is a fourth time in a row that our development placed into service exceeded 95% leased, which is a testimony to the strength of our markets, and the depth of our tenant relationships. Our cash on cash unleveraged returns on development are still in the 10% range making this a very accretive growth engine for the company. In terms of development activity at year end, we had 10 buildings under construction for a total of 846,000 square feet at a cost of $162 million that were 36% pre-leased or committed. Three of these buildings have full building users. The leasing level at our 302 NBP building has remained at 51% due to holding space for the government mega-skip, which is secured space. The mega-skip would be spaced and leased to defense contractor employees who were being asked to move off Fort Meade, adjacent to our NBP Park. Since, we have good leasing demand at the park, we'll move the mega skip requirement to another building that's about to be started, and expect to rapidly compete 302 NBP leasing in first half of 2008. In addition at year end, we had under development close to 1.1 million square feet at a projected total cost of $233 million. These projects are in the design and permitting phase, but all are expected to start during 2008. Several of our investors have asked about our ability to pre-lease our constructions prior to starting these projects. With regard to our construction pipeline, we have found that we need to have products available in most of our locations to capture demand from our…

(Operators Instructions). And your first question comes from the line of John Guinee with Stifel. Please proceed.

John Guinee. Mary Ellen, are you there?

Yes, I'm here John, how are you?

Happy Valentines Day.

Same to you. John Guinee – Stifel: A couple of questions, just on accounting issue we're looking at this for a lot of people. You've got $215 million worth of land inventory. Can you walk through on both the interest query and the other query, what's your capitalizing and what's your expensing on that $250 million worth of land inventory?

John, we don't have in front of us project-by-project, but on average about 50% of our land is what is called from an accounting standpoint under active development. And therefore, we are capitalizing interest and property taxes on that. And the other half, we are expensing the interest associated with that and expensing the property taxes. John Guinee – Stifel: Okay. And then the second question. This all makes perfect sense to me and you guys did a great job of explaining it, but one disconnect is only $60 million of disposed and there are two places that's a disconnect. One is your development is much more in excess of $60 million a year and then two, as you're trying to focus the story more on the specialty. It seems as if there is a great opportunity to sell more than $60 million in 2008.

I think we were taking into consideration that reality for now, the sales market is pretty much frozen. You know nobody wants to buy, nobody wants to sell. And so we agree with you that as we focused the company more around government, defense and data then we needed to be selling off or joint venturing non-core assets and we are focused on that. But we want it to be realistic given that 2007 the market -- the financial markets are in such as state of term loan.

I think John, we are trying to be conservative there. I mean we have gone through and identified more than that in terms of what we deemed sort of non-core properties or properties where we have opportunity to joint venture or so but we are rearing on the side for conservatism. John Guinee – Stifel: Perfect. Thank you.

Thank you.

And you next question comes from the line of Michael Bilerman with Citi. Please proceed.

Good morning. This is [David Seamus] with Michael. Just a couple of quick questions. First of all, in terms of the development pipeline it looks like -- I know you talked about some of the projects are getting push back. I was hoping you can give a little bit more color why do they get pushed back, why do some of those projects fall off the list? Particularly, I saw that Interquest, so if could just talk about that a little bit?

Well, Interquest actually moved from -- it didn't actually move, it's moving to where we anticipated starting that in the first quarter. So it's still on the list.

We actually changed the name with that.

We changed the name it's called Epic One. We did move the two hybrid buildings that are also at Interquest and Colorado Springs. In the third quarter, those were under development and the fourth quarter those did move to under construction. And if I go down on the development from the construction that there was really no change, I mean other than dropping a couple into service and adding to the four building. So the four buildings that were added were in construction where the two buildings Hybrid I and II in Colorado Springs and then the two buildings that are in San Antonio for the government.

Okay.

And you look under development, the two buildings that were delayed that we really kind of decided to put them off were a Rockville and then in NBP, we moved up 300 NBP and are re-shifting 308 NBP, which is the other side of a parking garage that we're going to be constructing.

Got you

Two of the one shifted, as I said, out of under construction to the two Hybrid Is, out of from development to under construction. The two that were added for development were Patriot Park VI, as the result of the success in Colorado Springs with the lease to ITT, we do need to move that building up and so we anticipate starting that in the first quarter. And then also Northgate, which is the first building that we anticipate starting later this year at our Northgate project at Aberdeen. The remaining of the five that were delayed, really, we just went back and looked at the lease of timeframe and generally just reflected 12 months. And I would say that we did that last quarter looking at projects and that just simply looked at the timings of the starts and then looked at the timing of 12 months. And generally those are -- five of those were delayed, either a quarter, and one was delayed three quarters, mainly because of the permitting of start timeframes for that particular project.

And what is your expected yield on the developments?

Roughly 10% cash-on-cash.

Thanks. Also, you guys mentioned cutting your operating expenses, just wondering how you go about cutting them. It looks like right now you are about 39% of revenues, what can you feasibly get that down do in 2008?

We think we can increase our margins by about 2%. Our margins have actually dropped over the past year or two and some of that is a manifestation of character of the leases we know how in our portfolio as we've have taken on more gross leases versus net leases. Mathematically, your percentage margin goes down although as a practical matter than that rent, it stays the same but it just looks like your margins are spinning a little bit. But where we are focused on cost control is utilities and on labor and just some of the R&M elements of our business.

Okay. Great. Thank you.

And your next comes from the line of Chris Haley with Wachovia, please proceed.

Good morning.

Hi Chris.

Couple of questions if I can. Steve, could you remind me of the occupancy guidance again throughout the year the start and the end range?

Well, we started at 92 -- we ended 2007 at 92.6% It actually went slightly above 92.6% to 93% by the sale of the building and we're going to be just under -- we're going to build up to just under 94% by the end of the year based upon our assembly sub-schedules.

Okay. And do you, I don't hear anything but I'd appreciate any color you guys can provide in terms of where you believe your rents are either on the '08 escalations or just portfolio wide if that is easier on your major notes?

We think well, as we've mentioned for this year what's maturing is in the very low 20s and so we think we are 10% below market hopefully on a cash basis, but certainly on a GAAP basis. And in terms of market -- the market I'd say is on balance and our portfolio is about 10% below market. It's not significant in any market so it's not like we're flat in one market and up 20 in another.

Are the rents similar to Virginia or around BWI? You don't believe marginal rents have changed materially versus six months ago?

No not materially. We aren't seeing yet any significant rent crawl down or anything.

Okay. And the last question is, I very much appreciate the additional disclosure, which is very helpful and the disclosure that you offer in your quarterly packet much like some meetings we've had previously about the mix of demand for your development projects. First, do you anticipate providing that on a regular basis?

Yeah

Thank you, Rand. Would you characterize how those three buckets have shifted over the last six months?

I'd say Chris that the government and the defense information technology sector has grown and you can see that we went from 49%, which is under construction currently to then starting 77%. So, our construction volume and what we're anticipating to start let's say fairly steady. But it's been a pretty dramatic shift over to the government and the defense IT. And we think that's healthy. Those are sort of somewhat recession proof and what's interesting is that's really not yet reflective of the BRAC. And as Roger said we're starting to see a little bit of the BRAC activity. But the stars that we're anticipating this year none of them really well the one -- only the one would be averaging that reflects BRAC. So, we're pretty comfortable with where things look to be from a demand standpoint.

And the other two so that the market based demand now?

Market demand will have gone down than as a percentage and really, where we'll look again. Riffee said on the definition of that if we look around in a market and we've no product available within our portfolio and we look at the demand and we look at the RFPs that we're receiving and the expressions of interest. When we recognized that it's a 12-month timeframe to build a building, we'll then typically start that building if we're comfortable. Now clearly, when we looked around at the situation in Northern Virginia, we did not start there even though we're falling and there are now some deals floating around, we just are more comfortable with the overhang there. But we've gone ahead on the market demand position here in Gateway and also at our Arundel Preserve, which you could say we'll end up really being our government defense that one is the first building in a park that's immediately North of Fort Meade and diagonal to NBP. So, those are the two key ones that really were in response to market demand.

Thank you.

And your next question comes from the line of Rich Anderson with BMO Capital Markets, please proceed.

Thanks and good morning everybody.

Hi Rich.

Rand I mean that you or anybody I guess the development yield number of 10% is of course a very good number but it's also down from 11% in change that you are able to do in past years on average. What do you think is driving that number down?

Rich, I think the construction cost, while we're seeing them moderating somewhat still have been up a little bit. The other aspect, we're seeing that you just have to recognize in today's environment is that the IT packages, it's just more difficult to deliver a turnkey space for tenants on the newer buildings at -- we used to do $25. That's now moved up into the $40 range and in some instances even the $50 range. So I think that that's moved it up a little bit and also for a while we had reflected in there a little bit higher soft costs, permitting -- in every municipality, we're seeing fairly significant increases in permitting fees and other impact fees, particularly as the states start to decrease their revenue, expected revenue they're putting the pressure on the local municipalities who are stepping it up by adding costs to development. And that's starting to become almost, more of a percentage increase frankly than the construction costs increases as an absolute percentage. So it's come down a little bit, but we're very comfortable that those are still far and above, higher than most of our peers.

Understood. In terms of the questions for every year is new markets, Colorado Springs seems to be taking up a lot of your time now. Do you feel like you haven't the right mix for 2008 in terms of your markets, or could you see the company getting into another San Antonio or Colorado Springs in the next 12 months?

As we've said on previous calls Rich, we did spend really 2007 both absorbing the impact of Colorado Springs where we now have that pretty well staffed and well under development on the properties that we control and we feel very comfortable about our position there. We also had to absorb the Nottingham acquisition, which is almost like in effect buying a city, in terms of buying an entire submarket of 1.6 million square feet for that portion in White Marsh and taking on 19 new employees. We are at a point now I think where we are comfortable and are starting to reaccelerate our examination of other cities and also are kind of looking at specific requirements and data as well as in our other government and defense IT sectors. And in our plan there is nothing for 2008. We think that will more of over a 2009 at the earliest, if it occurs that's an upside to…

Okay.

…our numbers.

And then last question, you seem like you have a fair amount of protection in the Dalles South marketplace with no meaningful expirations despite the weak market, but where would you say do have some exposure to supply if it's not Dalles South where -- what markets do you have that have your attention right now from that perspective?

I think the only other one would be Columbia gateway, where they've absorbed between 500,000 and high of above 1.2 million square feet over the past years and there are currently some other buildings that also started slightly ahead of us. We are again pretty full with our 2.6 million square feet or 2.3 million square feet and felt comfortable to start. But we recognized that that might be slightly slower on the lease up. The BRAC will start to accelerate and we'll take care of it by the end of '09 certainly and into 2010. The rest of the markets were in good shape and we just don't see any real risk at all.

Okay. Great. Thanks very much.

Okay.

(Operator Instructions) And your next question comes from the line of Ian Weissman with Merrill Lynch. Please proceed.

Yes, good morning.

Hi, Ian.

Just given the way the stock currently trades, can you just talk to us a little bit about your thought process on the stock buybacks and maybe if you'd accelerate your dispositions this year. How do you waive additional development activity versus stock buybacks?

We look at that a lot and constantly and we've noticed that a certain number of our peers have been quite active on the stock buybacks. Our position has been that we're open to that. Our Board stands ready to take that action upon our recommendations. Currently though we're at a point, where when we look at the numbers and we look at the development yields that we're getting in the 10% range and we look at the other people that maybe don't have that kind of ability to accomplish those types of development yields and don't have the development opportunities that we have. I think our preference is to retain the liquidity both for the development activities as well as just to kind of look cautiously at the liquidity availability in the marketplace. So, today we have not recommended that to the Board and the stock price has of course recovered during January and hopefully we'll continue to see some upward movement.

Care to give us a surprise on where the stock looks attractive to buyback?

No.

Final question is, with respect to your lease up goals for the year, 94%, how much of that is Nottingham driven. Where do we end the year in Nottingham and what are your leasing goals at Nottingham this year?

White Marsh ended the year 86% occupied and our goal for the year is to take that up to 91%.

And where is the additional demand coming from? What type of business sector do you think will drive that demand of 500 basis points?

Health primarily we have a medical center there and we've got MedStar Health anchored in that community and Johns Hopkins has a major presence here and they are looking to expand. So, I'd say that's the number one industry group, the second area a little bit of financial services.

Okay, thank you very much.

Thank you.

There are no additional questions at this time. I'd now like to turn the call over to Rand Griffin for closing remarks.

Thank you for joining us today. As always we do appreciate your participation and support and input and enthusiasm throughout the past year. We hope we can live up to your expectations of this year. We are available to answer any other questions you might have. And thank you and everyone have a good Valentine's Day. Thank you.