- The Washington Times - Tuesday, October 29, 2002

Shares of Corporate Office Properties Trust have held firm in recent weeks as other commercial real estate stocks faltered.
With a unique portfolio of suburban office parks and a government-heavy tenant base, the Columbia, Md.-based real estate investment trust has been relatively immune to the recent downturn in the sector.
"We're very highly concentrated in the intelligence and defense sector, and that helps a lot because it's nice and stable," said Corporate Office Properties' Chief Operating Officer Rand Griffin.
About 30 percent of the company's revenue comes from government contractors. That figure may increase to 40 percent, Mr. Griffin said.
Since Sept. 1, shares of Corporate Office Properties have fallen 57 cents, or 4 percent, while the Standard and Poor's REIT index dropped about 9 points, or 9.3 percent. Shares rose 8 cents yesterday to close at $13.53.
The company last week announced third-quarter profits of $6.16 million, up from $5.22 million in the third quarter a year ago.
Key to the company's success, real estate analysts said, is its heavy presence in the area surrounding Baltimore, particularly near Baltimore-Washington International Airport.
The airport, along with the National Security Agency, has attracted a host of defense and government contractors, which offers a stable tenant base.
And the demand has continued to grow. Since Oct. 1, "every single major defense company has called needing more space," Mr. Griffin said.
Corporate Office Properties' total portfolio, which includes 111 office properties and 9 million square feet, is about 94 percent leased. Most of the company's properties are found in suburban office parks, such as Airport Square, Commons Corporate Center and National Business Park, all along the Baltimore-Washington Parkway north of Columbia.
These parks are generally not as lucrative as downtown office buildings because rents are lower, but increased security needs, including larger setbacks and specially designed buildings, have forced many companies into the suburbs.
"[Corporate Office Properties] has a history of being at the forefront of meeting security needs," said Christopher Lucas, a real estate analyst with Ferris Baker Watts in Lynchburg, Va.
The company is slowly but surely entering the suburban Washington market. In August, it paid $47 million for two buildings in Chantilly totaling more than 290,000 square feet. The properties are located inside the Westfields Corporate Center, of which Corporate Office Properties owns 760,000 square feet. The center helps serve the National Reconnaissance Office, which builds satellites for the CIA and the Pentagon.
Also, the company recently bought a 236,000-square-foot building in north Silver Spring, near the intersection of New Hampshire Avenue and Route 29. Both of these new acquisitions are more than 95 percent leased, mostly by government contractors.
Entering the D.C. market is tough, analysts said, and Corporate Office Properties is smart to keep its focus on government and defense contractors.
"Once you start moving into the [suburban Washington] area, you're starting to compete with more capital," Mr. Lucas said. "It's a lot more difficult to navigate that."

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