Baird's latest report on COPT says that while theMilwaukee-based firm is "less bullish on office companiesgenerally," it believes the Columbia, MD-based REIT's focus on thefederal government and its contractors as its primary tenant base"insulates it from typical landlord concerns such as credit anddemand risk." Those factors might not be remarkable during boomtimes, but they are serving COPT well during this downturn.

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The Baird report--authored by analysts Christopher R. Lucas, AviLerner and David S. Nebinski--says the factors underlying COPT'ssteadfast performance "position it to be among the industry leadersin earnings growth." The Baird team also anticipates thatdevelopment activity will accelerate over the next five years dueto BRAC demand from COPT's tenant base.

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COPT already has a number of new projects under way despite adownturn that has throttled new development for many, if not most,in the industry. The REIT ended the quarter with 12 buildingstotaling 1.26 million square feet under construction at anestimated cost of $266 million. Those buildings were 41% preleased.COPT has an additional nine buildings under developmentrepresenting one million square feet at an estimated cost of $203.8million. It also is working two redevelopment projects, totaling493,000 square feet, at an estimated cost of $57 million.

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Among the new buildings that got under way in Q3 was 5850University Research Court in College Park, MD. The123,000-square-foot building is a part of M Square Research Park, a750,000-square-foot project comprising eight buildings that COPT isdeveloping in a joint venture with the University of Maryland andManekin LLC. The 124-acre site is owned by the University ofMaryland and is its designated official research park.

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Baird's report also notes that COPT is well positioned for otherfuture development as the dominant owner of both existing officebuildings and development land in key submarkets. Among these isthe area near Fort Meade, located between Washington DC andBaltimore.

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Of course, COPT's strategy and its concentration in certainmarkets are not without risks, according to Baird's team. Chiefamong these are the prospect that the REIT's property values maydecline in the near term as a result of higher long-term interestrates or expectations of weaker economic growth--risks that faceall REITs, the analysts point out.

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The second major risk factor that COPT faces is "the level ofgeographic asset concentration," according to the Baird report.However, the analysts add "we believe that real estate is a localbusiness and that there are significant advantages to being thelocal sharpshooter with significant market penetration."

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COPT's properties are concentrated primarily around WashingtonDC in Virginia and Maryland, but it also owns assets in New Jersey,Pennsylvania and Colorado. At the end of the third quarter, itowned 254 office and data properties totaling 19.1 million rentablesquare feet, which included 19 properties totaling 847,000 squarefeet held through joint ventures.

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COPT's latest quarterly results included a year-over-year 10.3%increase to 64 cents per share of diluted funds from operations anda four-cent increase to 19 cents in earnings per share. Randall M.Griffin, president and CEO of the REIT, noted in a preparedstatement that the quarterly results indicate that, "despite adeteriorating economy, we are well positioned for the balance of2008 and into 2009 to deliver strong FFO growth."

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