COLUMBIA, MD-Corporate Office Property Trust delivered better-than-expected earnings for the first quarter of 2012, posting diluted funds from operations that were two cents above its guidance range. In a conference call with investors and analysts Friday morning, president and CEO Roger A. Waesche Jr., attributed the increase to the Mid-Atlantic’s mild winter and the resulting lower-than-budgeted property operating expenses, as well as higher-than-expected development fee income.

Diluted earnings per share was $0.04 for the quarter ended March 31, compared to a loss of $0.33 in the first quarter of 2011. Diluted FFO per share, a key metric for REITs, was $0.53 for the quarter--an 8% increase from the $0.49 reported for Q1 ’11.

COPT also reported that the weighted average remaining lease term for its portfolio was 4.7 years and the average rental rate, including tenant reimbursements, was $26.95 per foot. Its portfolio was 87% occupied and 89% leased as of March 31, up 80 and 70 basis points, respectively, from year-end. By the end of Q1, the REIT had six office properties totaling 789,000 square feet under construction for a total projected cost of $197.7 million. Of this amount, $136.4 million had been incurred. COPT also secured leases totaling 570,000 square feet in the first quarter, including 86,000 square feet of development leasing.

Anticipating government space needs, the REIT’s main tenant base, will not be easy in the coming months, Waesche said: “There’s an increasing likelihood that a defense budget for this fiscal year will not be passed before the election.”

However, some broad observations can be made about the Defense Department’s needs, he said. It is clear that large weapon systems are heading for the chopping block, while spending on cybersecurity is likely to increase. These trends should further boost the REIT’s leasing activities.