Md. REIT returns 329% in 5 years

COPT finds building near NSA, BWI pays off

January 08, 2004|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

Building commercial office space in Maryland can pay off big, particularly if the next-door neighbor is the National Security Agency.

Columbia-based Corporate Office Properties Trust has pulled off the highest five-year shareholder return among the nation's 21 office real estate investment trusts.

Company officials attributed the cumulative 329 percent return from 1999 through the end of last year to desirable markets and a strategy focusing on the government intelligence community.

The REIT is benefiting greatly from growth in homeland security spending - government and defense-related businesses make up nearly 40 percent of its leasing portfolio, up from about a quarter in 2002.

"It's a heck of a return over five years," said Chris Lucas, senior REIT analyst at the investment banking firm of Ferris, Baker Watts.

Its five-year performance was second among all publicly traded equity REITs.

Chelsea Property Group Inc., a major owner and operator of outlet centers that is based in Roseland, N.J., delivered a 338.6 percent cumulative return.

COPT's 2003 shareholder return was 57.6 percent, its best performance during the five-year period. Its stock - which stood at $7.13 at the beginning of 1999 - closed at $20.41 yesterday, down 15 cents, in trading on the New York Stock Exchange.

The company owns 119 office properties. It grew from 2 million square feet to 10 million square feet in the past five years through development and acquisitions, and its assets jumped from $500 million to $1.3 billion.

"We've invested more money in Maryland than any other company, period," said Randall M. Griffin, COPT's president and chief executive officer, referring to capital projects during that period.

Its holdings include the National Business Park, next to Fort Meade and the National Security Agency, where space is leased up as quickly as it can be built; 34 buildings immediately around Baltimore-Washington International Airport; almost half of the Columbia Gateway office park next to Interstate 95; and about 35 percent of an office park next to the National Reconnaissance Office in Northern Virginia.

"They have locations that are in demand by businesses that require additional space," said Lucas, the Ferris Baker analyst.

"The National Business Park, clearly, with its proximity to NSA, has been a huge win for them. ... The federal government's a growth business and always has been."

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