COPT DEFENSE PROPERTIES Investor
Presentation
Company
Presentation
JULY 2024
Table of Contents
RESULTS FOR 1Q 2024
Strong 1Q 2024 Results
- FFO per share* of $0.62 exceeded high-end of guidance
- Sixteen of past seventeen quarters met or exceeded midpoint of guidance
- Increase in same property cash NOI of 6.1%
- Increase in same property cash NOI of 4.8% from the 2023 pool
- Defense/IT Portfolio 96.8% leased and 95.6% occupied
- Same property portfolio 95.0% leased and 93.5% occupied
- Excellent leasing:
- 721,000 SF of total leasing
- 160,000 SF of vacancy leasing
- On track to achieve annual target of 400,000 SF
- 551,000 SF of renewal leasing
- Total retention rate of 78% | Defense/IT Portfolio retention rate of 83%
- On track to achieve annual goal of 75%-85%
- $91 million of capital committed to new investments
- Started two development projects with a estimated cost of $76 million and acquired a property for $15 million
4 | * FFOPS, as adjusted for comparability. |
UPDATED 2024 GUIDANCE
FY 2024 Guidance Summary1
FY 2023 Actual
FY 2024 Updated Guidance
Low Midpoint High
EPS | ($0.67) | $1.19 | $1.22 | $1.25 | |
FFOPS, as adjusted for comparability | $2.42 | $2.51 | $2.54 | $2.57 | |
Key Assumptions | |||||
2024 Same Property Pool: | |||||
> % Change in Cash NOI | 5.7%2 | 6% | 6.5% | 7% | |
> Year-end Occupancy | 93.8% | 93% | 93.5% | 94% | |
Leasing: | |||||
> Change in Cash Rents on Renewals | 1.5% | (1%) | 0% | 1% | |
> Tenant Retention | 80% | 75% | 80% | 85% | |
Cash NOI from Developments3 | $12.5 | $10 | $11 | $12 | |
Straight-line Rent & Other GAAP Adjustments | ($6.5) | $6 | $6.5 | $7 | |
Net Construction Contract & Other Service Revenues | $2.8 | $1.5 | $2 | $2.5 | |
Total G&A Expenses4 | $42.8 | $44 | $45 | $46 | |
Consolidated Interest Expense (net of Capitalized Interest) | $71.1 | $80 | $82 | $84 | |
Dividend / Diluted AFFO Payout Ratio | 63.9% | Below 65% | |||
Investment Activity | |||||
Capital Invested in Development / Acquisitions | $249 | $240 | $260 | $280 | |
Capital Commitment to New Investments | $280 | $200 | $220 | $240 | |
Property Sales | $190 | None |
1.Dollars are in millions (except per share data). 2.Same Property metrics in 2023 refer to the 2023 Pool.
3.The 2023 actual amount represents cash NOI from developments placed into service during 2022 and 2023. The 2024
6assumption amount represents cash NOI from developments placed into service during 2023 and 2024 and expected to be placed into service during 2024 and, as such, are not yet in the Company's same property portfolio.
4.Includes G&A, leasing expenses, business development expenses, and land carry costs.
Please see the Company's 2024 Guidance press release issued 2/8/24 for Management Commentary on initial 2024 guidance.
Green highlighted rows = Increase to guidance
2024 FY Guidance - Updates1
FFOPS*
Same Property % Change in Cash NOI
FY 2023
Actual
$2.42
5.7%2
FY 2024 Initial Guidance
as of 4Q 2023
Low | Midpoint | High |
$2.47 | $2.51 | $2.55 |
5% | 6% | 7% |
FY 2024 Updated Guidance
as of 1Q 2024
Low | Midpoint | High |
$2.51 | $2.54 | $2.57 |
6% | 6.5% | 7% |
- FFOPS*
- 3-centincrease in 2024 FFO per share guidance at the midpoint:
- Implies 5% year-over-year growth
- Driven by:
- Strong 1Q 2024 performance
- Acceleration of lease commencement dates on several leases
- Acquisition of Franklin Center
- Higher interest income
- Same Property % Change in Cash NOI
- 50 basis point increase at the midpoint
- Driven by:
- Lower than expected free rent concessions on renewals
- Better operating margins
7 | * Diluted FFOPS, as adjusted for comparability. |
1.Dollars are in millions (except per share data). |
2.Same Property metrics in 2023 refer to the 2023 Pool.
FACTORS SUPPORTING GROWTH
Positioned for Long-Term Growth + Value Creation
Concentrate assets in locations to serve high priority defense and cybersecurity missions of the U.S. Government
Defense tenant portfolio achieves
steady growth from:
- High occupancy and tenant retention
- Lower CapX
- Best-in-classtenant credit quality
Strong growth in defense spending
driving both operating and
development demand
Create value and FFO growth by completing low-risk development at Defense/IT Portfolio
Maintain strong investment grade balance sheet with ample
liquidity to support growth and create stability
9
Competitive Advantages
DIFFERENTIATED PLATFORM AS THE ONLY "GO-TO" PUBLIC COMPANY LANDLORD FOR SECURED, SPECIALIZED SPACE*
OPERATING PLATFORM
Our teams of managers have specialized skills and credentials required to handle the complex space and security needs of tenants in our Defense/IT Properties - a distinct competitive advantage over non-credentialed landlords
TRACK RECORD + CUSTOMER
RELATIONSHIPS
30 years of operating excellence and customer service - since 1992, one of the few trusted landlords able to accommodate U.S. Government and defense contractor tenant requirements
PROVEN DEVELOPMENT EXPERTISE
Trusted provider of secured, specialized space, with the ability to satisfy SCIF, ATFP and other requirements
UNIQUE + ADVANTAGED LAND
POSITIONS
Proximity to Demand Drivers - Properties and
entitled land adjacent to mission-critical,knowledge-based defense installations
10 | * Includes SCIF and ATFP buildings. |
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Disclaimer
COPT Defense Properties published this content on 01 July 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 July 2024 16:30:08 UTC.
