EPS of $0.31 FFO per Share, as Adjusted for Comparability, of $0.65 4.8% FFO per Share Growth Year-over-Year Met Midpoint of Guidance

Reiterates Midpoint of 2025 FFO per Share Guidance of $2.66 Implies 3.5% FFO per Share Growth for the Year

Continued Strong Occupancy and Leased Levels Defense/IT Portfolio 95.3% Occupied and 96.6% Leased Occupancy Rate Exceeded 94% for 9 Consecutive Quarters

Same Property Cash NOI Increased 7.1% Reiterates Midpoint of Same Property Cash NOI Guidance for the Year of 2.75%

Committed $52 million of Capital to New Investment in Huntsville $308 million of Active Developments (756,000 SF) are 62% Leased

Excellent Leasing to Start the Year Total Leasing of 647,000 SF

120,000 SF of Vacancy Leasing On Track to Achieve/Exceed Annual Target of 400,000 SF

Tenant Retention of 75% On Track to Achieve Annual Goal of 75%-85%

89,000 SF of Investment Leasing

COLUMBIA, Md., April 28, 2025--(BUSINESS WIRE)--COPT Defense Properties ("COPT Defense" or the "Company") (NYSE: CDP) announced results for the first quarter ended March 31, 2025.

Management Comments

Stephen E. Budorick, COPT Defense’s President & Chief Executive Officer, commented, "Our Defense/IT investment strategy, which concentrates our portfolio near priority U.S. defense installations, generated strong results in the first quarter with FFO per share at the midpoint of our guidance range, despite incurring higher than expected net weather-related expenses. Our performance year-to-date is tracking according to plan and we are reiterating the midpoint of our 2025 FFO per share guidance range at $2.66, which implies 3.5% year-over-year growth.

In terms of our leasing achievements, we are off to a great start, as we have executed 179,000 square feet of vacancy leasing and over 100,000 square feet of investment leasing year-to-date, while maintaining a strong tenant retention rate of 75%. Our Defense/IT Portfolio was 95.3% occupied and 96.6% leased at quarter-end, and marked nine consecutive quarters in which our occupancy rate exceeded 94%, highlighting the strength and durability of our portfolio.

In terms of external growth, we commenced construction on a 150,000 square foot development at Redstone Gateway in order to capture near-term demand, as we only have 37,000 square feet of inventory across our entire 2.5 million square foot Huntsville portfolio.

Our actual and expected performance led our Board of Trustees to approve a 3.4% increase in our quarterly dividend in February, which marks our third consecutive annual increase, amounting to a 10.9% cumulative increase since 2022. Looking forward, we continue to anticipate compound annual FFO per share growth of roughly 4% between 2023 to 2026."

Story Continues

Financial Highlights

1st Quarter Financial Results:

> Diluted earnings per share ("EPS") was $0.31 for the quarter ended March 31, 2025, compared to $0.29 for the quarter ended March 31, 2024.

> Diluted funds from operations per share ("FFOPS"), as calculated in accordance with Nareit’s definition and as adjusted for comparability, was $0.65 for the quarter ended March 31, 2025, compared to $0.62 for the quarter ended March 31, 2024.

Operating Performance Highlights

Operating Portfolio Summary:

> At March 31, 2025, the Company’s 24.5 million square foot total portfolio was 93.6% occupied and 95.1% leased, which includes the 22.6 million square foot Defense/IT Portfolio that was 95.3% occupied and 96.6% leased.

> During the quarter ended March 31, 2025, the Company placed into service 10,000 square feet of development that was 100% leased.

Same Property Performance:

> At March 31, 2025, the Company’s 23.9 million square foot Same Property portfolio was 94.1% occupied and 95.2% leased.

> The Company’s Same Property cash NOI increased 7.1% in the quarter ended March 31, 2025, compared to the same period in 2024.

Leasing:

> Total Square Feet Leased: For the quarter ended March 31, 2025, the Company leased 647,000 square feet, including 438,000 square feet of renewals, 120,000 square feet of vacancy leasing, and 89,000 square feet of investment leasing.

> Tenant Retention Rates: During the quarter ended March 31, 2025, the Company renewed 74.9% of expiring square feet in its total portfolio, all of which was in the Defense/IT Portfolio.

> Rent Spreads and Average Escalations on Renewing Leases: For the quarter ended March 31, 2025, straight-line rents on renewals increased 8.2% and cash rents on renewed space decreased 0.9% while annual escalations on renewing leases averaged 2.6%.

> Lease Terms: In the quarter ended March 31, 2025, lease terms averaged 3.4 years on renewing leases, 7.1 years on vacancy leasing, and 10.5 years on investment leasing.

Investment Activity Highlights

> Development Pipeline: The Company’s development pipeline consists of five properties totaling 756,000 square feet that were 62% leased as of April 14, 2025. These projects represent a total estimated investment of $308 million, of which $91 million was spent as of March 31, 2025.

Balance Sheet and Capital Transaction Highlights

> For the quarter ended March 31, 2025, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.7x.

> At March 31, 2025, the Company’s net debt to in-place adjusted EBITDA ratio was 6.1x and its net debt adjusted for fully-leased investment properties to in-place adjusted EBITDA ratio was 6.0x.

> At March 31, 2025, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.4% with a weighted average maturity of 4.5 years, and 98% of the Company’s debt was subject to fixed interest rates.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its first quarter 2025 conference call; the presentation can be viewed and downloaded from the ‘Financial Info – Financial Results’ section of COPT Defense’s Investors website: https://investors.copt.com/financial-information/financial-results

2025 Guidance

Management is narrowing its full-year guidance for diluted EPS and diluted FFOPS, per Nareit and as adjusted for comparability of $1.27-$1.35 and $2.62-$2.70, respectively to new ranges of $1.28-$1.34 and $2.63-$2.69, respectively. Management is establishing second quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.31-$0.33 and $0.65-$0.67, respectively. Reconciliations of projected diluted EPS to projected diluted FFOPS, in accordance with Nareit and as adjusted for comparability are as follows:

Reconciliation of Diluted EPS to FFOPS, per Nareit, and As Adjusted for Comparability  Quarter Ending
June 30, 2025  Year Ending
December 31, 2025 Low  High  Low  High Diluted EPS  $ 0.31  $ 0.33  $ 1.28  $ 1.34 Real estate-related depreciation and amortization   0.34   0.34   1.35   1.35 Diluted FFOPS, Nareit definition and as adjusted for comparability  $ 0.65  $ 0.67  $ 2.63  $ 2.69

The Company detailed its initial full year guidance, with supporting assumptions, in a separate press release issued February 6, 2025; that release can be found in the ‘News & Events – Press Releases’ section of COPT Defense’s Investors website: https://investors.copt.com/news-events/press-releases

Conference Call Information

Management will discuss first quarter 2025 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:

Conference Call Date:  Tuesday, April 29, 2025 Time:  12:00 p.m. Eastern Time

Participants must register for the conference call at the link below to receive the dial-in number and personal pin. Registering only takes a few moments and provides direct access to the conference call without waiting for an operator. You may register at any time, including up to and after the call start time: https://register-conf.media-server.com/register/BIcd5f0d58372b4632aafb741d70095683

The conference call will also be available via live webcast in the ‘News & Events – IR Calendar’ section of COPT Defense’s Investors website: https://investors.copt.com/news-events/ir-calendar

Replay Information

A replay of the conference call will be immediately available via webcast only on COPT Defense’s Investors website and will be maintained on the website for approximately 90 days after the conference call.

Definitions

For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.

About COPT Defense

COPT Defense, an S&P MidCap 400 Company, is a self-managed REIT focused on owning, operating and developing properties in locations proximate to, or sometimes containing, key U.S. Government ("USG") defense installations and missions (referred to as its Defense/IT Portfolio). The Company’s tenants include the USG and their defense contractors, who are primarily engaged in priority national security activities, and who generally require mission-critical and high security property enhancements. As of March 31, 2025, the Company’s Defense/IT Portfolio of 198 properties, including 24 owned through unconsolidated joint ventures, encompassed 22.6 million square feet and was 96.6% leased.

Forward-Looking Information

This press release may contain "forward-looking" statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company’s current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as "may," "will," "should," "could," "believe," "anticipate," "expect," "estimate," "plan" or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Although the Company believes that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements and the Company undertakes no obligation to update or supplement any forward-looking statements.

The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Source: COPT Defense Properties

COPT Defense Properties

Summary Financial Data

(unaudited)

(dollars and shares in thousands, except per share data)  For the Three Months Ended
March 31, 2025    2024  Revenues  Lease revenue $ 175,308   $ 165,433  Other property revenue  2,289    1,230  Construction contract and other service revenues  10,259    26,603  Total revenues  187,856    193,266  Operating expenses  Property operating expenses  72,040    66,746  Depreciation and amortization associated with real estate operations  39,359    38,351  Construction contract and other service expenses  9,705    26,007  General and administrative expenses  8,148    8,378  Leasing expenses  2,999    2,187  Business development expenses and land carry costs  1,009    1,182  Total operating expenses  133,260    142,851  Interest expense  (20,504 )   (20,767 ) Interest and other income, net  1,568    4,122  Gain on sales of real estate  300    —  Income before equity in income of unconsolidated entities and income taxes  35,960    33,770  Equity in income of unconsolidated entities  371    69  Income tax expense  (103 )   (168 ) Net income  36,228    33,671  Net income attributable to noncontrolling interests  Common units in the Operating Partnership ("OP")  (726 )   (608 ) Other consolidated entities  (762 )   (454 ) Net income attributable to common shareholders $ 34,740   $ 32,609   Earnings per share ("EPS") computation  Numerator for diluted EPS  Net income attributable to common shareholders $ 34,740   $ 32,609  Amount allocable to share-based compensation awards  (143 )   (129 ) Numerator for diluted EPS $ 34,597   $ 32,480  Denominator  Weighted average common shares - basic  112,383    112,231  Dilutive effect of share-based compensation awards  643    509  Weighted average common shares - diluted  113,026    112,740  Diluted EPS $ 0.31   $ 0.29

COPT Defense Properties

Summary Financial Data

(unaudited)

(in thousands, except per share data)  For the Three Months Ended
March 31, 2025    2024  Net income $ 36,228   $ 33,671  Real estate-related depreciation and amortization  39,359    38,351  Gain on sales of real estate  (300 )   —  Depreciation and amortization on unconsolidated real estate JVs  741    777  Funds from operations ("FFO")  76,028    72,799  FFO allocable to other noncontrolling interests  (1,158 )   (836 ) Basic FFO allocable to share-based compensation awards  (530 )   (587 ) Basic FFO available to common share and common unit holders ("Basic FFO")  74,340    71,376  Redeemable noncontrolling interest  —    469  Diluted FFO adjustments allocable to share-based compensation awards  53    47  Diluted FFO available to common share and common unit holders ("Diluted FFO")  74,393    71,892  Executive transition costs  —    77  Diluted FFO available to common share and common unit holders, as adjusted for comparability  74,393    71,969  Straight line rent adjustments and lease incentive amortization  (1,699 )   3,473  Amortization of intangibles and other assets included in net operating income ("NOI")  162    122  Share-based compensation, net of amounts capitalized  2,854    2,645  Amortization of deferred financing costs  667    685  Amortization of net debt discounts, net of amounts capitalized  1,051    1,014  Replacement capital expenditures  (21,464 )   (20,776 ) Other  81    137  Diluted adjusted funds from operations available to common share and common unit holders ("Diluted AFFO") $ 56,045   $ 59,269  Diluted FFO per share $ 0.65   $ 0.62  Diluted FFO per share, as adjusted for comparability $ 0.65   $ 0.62  Dividends/distributions per common share/unit $ 0.305   $ 0.295

COPT Defense Properties

Summary Financial Data

(unaudited)

(Dollars and shares in thousands, except per share data)  March 31, 2025  December 31, 2024 Balance Sheet Data  Properties, net of accumulated depreciation $ 3,643,482   $ 3,630,526  Total assets $ 4,250,311   $ 4,254,191  Debt per balance sheet $ 2,412,670   $ 2,391,755  Total liabilities $ 2,688,481   $ 2,693,624  Redeemable noncontrolling interest $ 23,539   $ 23,974  Total equity $ 1,538,291   $ 1,536,593  Debt to assets  56.8 %   56.2 % Net debt to adjusted book  40.7 %   40.4 %  Defense/IT Portfolio Data (as of period end)  Number of operating properties  198    197  Total operational square feet (in thousands)  22,560    22,549  % Occupied  95.3 %   95.4 % % Leased  96.6 %   96.7 %  For the Three Months Ended
March 31, 2025    2024  GAAP  Payout ratio  Net income  97.2 %   100.7 % Debt ratios  Net income to interest expense ratio 1.8x  1.6x Debt to net income ratio 16.6x  17.9x Non-GAAP  Payout ratios  Diluted FFO  47.0 %   46.8 % Diluted FFO, as adjusted for comparability  47.0 %   46.7 % Diluted AFFO  62.4 %   56.8 % Debt ratios  Adjusted EBITDA fixed charge coverage ratio 4.7x  4.5x Net debt to in-place adjusted EBITDA ratio 6.1x  6.1x Net debt adj. for fully-leased investment properties to in-place adj. EBITDA ratio 6.0x  6.0x  Reconciliation of denominators for per share measures  Denominator for diluted EPS  113,026    112,740  Weighted average common units  2,047    1,625  Redeemable noncontrolling interest  —    947  Denominator for diluted FFO per share and as adjusted for comparability  115,073    115,312

COPT Defense Properties

Summary Financial Data

(unaudited)

(in thousands)  For the Three Months
Ended March 31, 2025    2024  Numerators for Payout Ratios  Dividends on unrestricted common and deferred shares $ 34,318   $ 33,143  Distributions on unrestricted common units  661    500  Dividends and distributions on restricted shares and units  236    267  Total dividends and distributions for GAAP payout ratio  35,215    33,910  Dividends and distributions on antidilutive shares and units  (237 )   (266 ) Dividends and distributions for non-GAAP payout ratios $ 34,978   $ 33,644   Reconciliation of net income to earnings before interest, income taxes, depreciation and amortization for real estate ("EBITDAre"), adjusted EBITDA and in-place adjusted EBITDA  Net income $ 36,228   $ 33,671  Interest expense  20,504    20,767  Income tax expense  103    168  Real estate-related depreciation and amortization  39,359    38,351  Other depreciation and amortization  542    608  Gain on sales of real estate  (300 )   —  Adjustments from unconsolidated real estate JVs  1,518    1,671  EBITDAre  97,954    95,236  Credit loss expense  515    22  Business development expenses  593    630  Executive transition costs  57    430  Net gain on other investments  —    (477 ) Adjusted EBITDA  99,119    95,841  Pro forma NOI adjustment for property changes within period  786    813  Change in collectability of deferred rental revenue  1,232    —  In-place adjusted EBITDA $ 101,137   $ 96,654   Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures  Tenant improvements and incentives $ 13,758   $ 12,776  Building improvements  1,872    4,953  Leasing costs  3,461    3,590  Net additions to tenant improvements and incentives  3,538    316  Excluded building improvements  (201 )   (818 ) Excluded leasing costs  (964 )   (41 ) Replacement capital expenditures $ 21,464   $ 20,776

COPT Defense Properties

Summary Financial Data

(unaudited)

(in thousands)  For the Three Months Ended
March 31, 2025    2024  Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA  Interest expense $ 20,504   $ 20,767  Less: Amortization of deferred financing costs  (667 )   (685 ) Less: Amortization of net debt discounts, net of amounts capitalized  (1,051 )   (1,014 ) COPT Defense’s share of interest expense of unconsolidated real estate JVs, excluding amortization of deferred financing costs and net debt premium and gain or loss on interest rate derivatives  752    804  Scheduled principal amortization  461    769  Capitalized interest  927    589  Denominator for fixed charge coverage-Adjusted EBITDA $ 20,926   $ 21,230   Reconciliation of net income to NOI from real estate operations, same property NOI from real estate operations and same property cash NOI from real estate operations  Net income $ 36,228   $ 33,671  Construction contract and other service revenues  (10,259 )   (26,603 ) Depreciation and other amortization associated with real estate operations  39,359    38,351  Construction contract and other service expenses  9,705    26,007  General and administrative expenses  8,148    8,378  Leasing expenses  2,999    2,187  Business development expenses and land carry costs  1,009    1,182  Interest expense  20,504    20,767  Interest and other income, net  (1,568 )   (4,122 ) Gain on sales of real estate  (300 )   —  Equity in income of unconsolidated entities  (371 )   (69 ) Unconsolidated real estate JVs NOI allocable to COPT Defense included in equity in income of unconsolidated entities  1,889    1,740  Income tax expense  103    168  NOI from real estate operations  107,446    101,657  Non-Same Property NOI from real estate operations  (3,170 )   (545 ) Same Property NOI from real estate operations  104,276    101,112  Straight line rent adjustments and lease incentive amortization  154    3,913  Amortization of acquired above- and below-market rents  (69 )   (69 ) Lease termination fees, net  (834 )   (775 ) Tenant funded landlord assets and lease incentives  (3,105 )   (10,364 ) Cash NOI adjustments in unconsolidated real estate JVs  (260 )   (262 ) Same Property Cash NOI from real estate operations $ 100,162   $ 93,555

COPT Defense Properties

Summary Financial Data

(unaudited)

(in thousands)  March 31, 2025  December 31, 2024 Reconciliation of total assets to adjusted book  Total assets  $ 4,250,311   $ 4,254,191  Accumulated depreciation   1,572,422    1,537,293  Accumulated amortization of intangibles on property acquisitions and deferred leasing costs   227,122    228,154  COPT Defense’s share of liabilities of unconsolidated real estate JVs   61,190    61,294  COPT Defense’s share of accumulated depreciation and amortization of unconsolidated real estate JVs   13,616    12,817  Less: Property - operating lease liabilities   (48,216 )   (49,240 ) Less: Property - finance lease liabilities   (384 )   (391 ) Less: Cash and cash equivalents   (24,292 )   (38,284 ) Less: COPT Defense’s share of cash of unconsolidated real estate JVs   (1,766 )   (2,053 ) Adjusted book  $ 6,050,003   $ 6,003,781

March 31, 2025  December 31, 2024  March 31, 2024 Reconciliation of debt to net debt and net debt adjusted for fully-leased investment properties  Debt per balance sheet  $ 2,412,670   $ 2,391,755   $ 2,416,873  Net discounts and deferred financing costs   21,886    23,262    27,358  COPT Defense’s share of unconsolidated JV gross debt   53,750    53,750    52,819  Gross debt   2,488,306    2,468,767    2,497,050  Less: Cash and cash equivalents   (24,292 )   (38,284 )   (123,144 ) Less: COPT Defense’s share of cash of unconsolidated real estate JVs   (1,766 )   (2,053 )   (1,159 ) Net debt   2,462,248    2,428,430    2,372,747  Costs incurred on fully-leased development properties   (27,499 )   (18,774 )   (43,034 ) Costs incurred on fully-leased operating property acquisitions   —    (17,034 )   —  Net debt adjusted for fully-leased investment properties  $ 2,434,749   $ 2,392,622   $ 2,329,713

View source version on businesswire.com: https://www.businesswire.com/news/home/20250428257091/en/

Contacts

IR Contacts: 
Venkat Kommineni, CFA 
443.285.5587 
[email protected]

Michelle Layne 
443.285.5452 
[email protected]

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