Copt Defense Properties · NYSE:CDP
Copt Defense Properties — Q1 2023 Earnings Presentation
54 slides from Copt Defense Properties's earnings presentation, Apr 28, 2023
Slide 1: 1Q 2023 Supplemental Information Package
1Q 2023 SUPPLEMENTAL INFORMATION PACKAGE Corporate Office Properties Trust
Slide 2: Supplemental Information & Earnings Release Table of Contents
Corporate Office Properties Trust Supplemental Information & Earnings Release - Unaudited For the Period Ended 3/31/23 Overview: Section I Summary Description 1 Equity Research Coverage 2 Selected Financial Summary Data 3 Selected Portfolio Data 5 Financial Statements: Section II Consolidated Balanc
Slide 3: Summary Description
Corporate Office Properties Trust Summary Description The Company Corporate Office Properties Trust (the “Company” or “COPT”) is a self-managed real estate investment trust (“REIT”). COPT is listed on the New York Stock Exchange under the symbol “OFC” and is an S&P MidCap 400 Company. We own, manage
Slide 4: Equity Research Coverage
Corporate Office Properties Trust Equity Research Coverage Firm Senior Analyst Phone Email Bank of America Securities Camille Bonnel 416-369-2140 camille.bonnel@bofa.com BTIG Tom Catherwood 212-738-6410 tcatherwood@btig.com Citigroup Global Markets Michael Griffin 212-816-5871 michael.a.griffin@citi
Slide 5: Selected Financial Summary Data
Corporate Office Properties Trust Selected Financial Summary Data (in thousands, except per share data) Page Three Months Ended SUMMARY OF RESULTS Refer. 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Net income 7 $ 80,398 $ 52,087 $ 32,316 $ 33,595 $ 60,824 NOI from real estate operations 13 $ 93,903 $ 9
Slide 6: Selected Financial Summary Data (continued)
Corporate Office Properties Trust Selected Financial Summary Data (continued) (in thousands, except ratios) Page Three Months Ended PAYOUT RATIOS AND CAPITALIZATION Refer. 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 GAAP Payout ratio: Net income N/A 40.6% 60.3% 97.1% 93.4% 51.6% Capitalization and debt
Slide 7: Selected Portfolio Data
Corporate Office Properties Trust Selected Portfolio Data (1) 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 # of Properties Total Portfolio 194 194 188 188 188 Consolidated Portfolio 170 173 169 169 169 Core Portfolio 192 192 186 186 186 Same Properties 180 180 180 180 180 % Occupied Total Portfolio 92.8
Slide 8: Consolidated Balance Sheets
Corporate Office Properties Trust Consolidated Balance Sheets (in thousands) 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Assets Properties, net: Operating properties, net $ 3,272,873 $ 3,258,899 $ 3,169,992 $ 3,180,790 $ 3,167,851 Development and redevelopment in progress, including land (1) 151,910 10
Slide 9: Consolidated Statements of Operations
Corporate Office Properties Trust Consolidated Statements of Operations (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Revenues Lease revenue $ 150,560 $ 150,022 $ 146,481 $ 142,277 $ 141,389 Other property revenue 1,121 1,163 1,206 969 891 Construction contract and other
Slide 10: Funds from Operations
Corporate Office Properties Trust Funds from Operations (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Net income $ 80,398 $ 52,087 $ 32,316 $ 33,595 $ 60,824 Real estate-related depreciation and amortization 36,995 36,907 35,247 34,812 34,264 Gain on sales of real estate
Slide 11: Diluted Share and Unit Computations
Corporate Office Properties Trust Diluted Share and Unit Computations (in thousands, except per share data) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 EPS Denominator: Weighted average common shares - basic 112,127 112,096 112,093 112,082 112,020 Dilutive effect of share-based compe
Slide 12: Adjusted Funds from Operations
Corporate Office Properties Trust Adjusted Funds from Operations (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Diluted FFO available to common share and common unit holders, as adjusted for comparability (1) $ 67,651 $ 68,794 $ 66,595 $ 67,584 $ 65,992 Straight line rent
Slide 13: EBITDAre and Adjusted EBITDA
Corporate Office Properties Trust EBITDAre and Adjusted EBITDA (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Net income $ 80,398 $ 52,087 $ 32,316 $ 33,595 $ 60,824 Interest expense 16,442 16,819 15,123 14,808 14,424 Income tax expense 125 223 67 4 153 Real estate-relate
Slide 14: Properties by Segment - 3/31/23
Corporate Office Properties Trust Properties by Segment - 3/31/23 (square feet in thousands) # of Operational Properties Square Feet % Occupied % Leased Core Portfolio: Defense/IT Locations: Fort Meade/Baltimore Washington (“BW”) Corridor: National Business Park 33 4,108 94.5% 98.5% Howard County 35
Slide 15: Consolidated Real Estate Revenues and NOI by Segment
Corporate Office Properties Trust Consolidated Real Estate Revenues and NOI by Segment (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Consolidated real estate revenues Defense/IT Locations: Fort Meade/BW Corridor $ 69,777 $ 69,778 $ 69,209 $ 67,589 $ 67,214 NoVA Defense/I
Slide 16: Cash NOI by Segment
Corporate Office Properties Trust Cash NOI by Segment (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Cash NOI from real estate operations (1) Defense/IT Locations: Fort Meade/BW Corridor $ 43,662 $ 45,106 $ 44,723 $ 43,613 $ 41,271 NoVA Defense/IT 11,423 10,274 10,197 10,
Slide 17: NOI from Real Estate Operations and Occupancy by Property Grouping
Corporate Office Properties Trust NOI from Real Estate Operations and Occupancy by Property Grouping - 3/31/23 (dollars and square feet in thousands) As of Period End NOI from Real Estate % of Total Operations (3) Annualized Annualized # of Operational % Occupied Rental Rental Three Months Property
Slide 18: Same Properties Average Occupancy Rates by Segment
Corporate Office Properties Trust Same Properties (1) Average Occupancy Rates by Segment (square feet in thousands) Three Months Ended # of Operational Properties Square Feet 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Core Portfolio: Defense/IT Locations: Fort Meade/BW Corridor 90 8,512 92.9% 92.5% 91
Slide 19: Same Properties Real Estate Revenues and NOI by Segment
Corporate Office Properties Trust Same Properties Real Estate Revenues and NOI by Segment (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Same Properties real estate revenues Defense/IT Locations: Fort Meade/BW Corridor $ 68,112 $ 68,673 $ 69,183 $ 67,586 $ 67,214 NoVA Def
Slide 20: Same Properties Cash NOI by Segment
Corporate Office Properties Trust Same Properties Cash NOI by Segment (dollars in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Same Properties cash NOI from real estate operations (“cash NOI”) Defense/IT Locations: Fort Meade/BW Corridor $ 43,949 $ 45,285 $ 44,723 $ 43,613
Slide 21: Leasing
Corporate Office Properties Trust Leasing (1)(2) Three Months Ended 3/31/23 (square feet in thousands) Defense/IT Locations Ft Meade/ NoVA Data Total BW Defense/ Navy Redstone Center Defense/IT Regional Corridor IT Support Arsenal Shells Locations Office Other Total Renewed Space Leased Square Feet
Slide 22: Lease Expiration Analysis as of 3/31/23
Corporate Office Properties Trust Lease Expiration Analysis as of 3/31/23 (1) (dollars and square feet in thousands, except per square foot amounts) Annualized % of Core/Total Annualized Rental Square Rental Annualized Revenue of Footage of Revenue of Rental Expiring Leases per Leases Expiring Reven
Slide 23: Lease Expiration Analysis (continued)
Annualized % of Core/Total Annualized Rental Square Rental Annualized Revenue of Footage of Revenue of Rental Expiring Leases per Leases Expiring Revenue Occupied Sq. Foot Segment of Lease and Year of Expiration (2) Expiring Leases (3) Expiring (3)(4) (3) Core Portfolio 21,246 $ 600,847 98.6% $ 34.2
Slide 24: 2023 Core Portfolio Quarterly Lease Expiration Analysis
Corporate Office Properties Trust 2023 Core Portfolio Quarterly Lease Expiration Analysis as of 3/31/23 (1) (dollars and square feet in thousands, except per square foot amounts) Annualized % of Core Annualized Rental Square Rental Annualized Revenue of Footage of Revenue of Rental Expiring Leases p
Slide 25: Top 20 Tenants
Corporate Office Properties Trust Top 20 Tenants as of 3/31/23 (1) (dollars and square feet in thousands) % Weighted Total of Total Average Annualized Annualized Occupied Remaining Rental Revenue Rental Square Lease Term Tenant (2) Revenue (2) Feet (3) United States Government (4) $ 218,478 35.8% 5,
Slide 26: Property Dispositions
Corporate Office Properties Trust Property Dispositions (dollars and square feet in thousands) % Occupied on Transaction # of Operational Transaction Transaction Value Property Property Segment Location Properties Square Feet Date Date (in millions) 90% interest in P2 A, B and C (1) Data Center Shel
Slide 27: Summary of Development Projects
Corporate Office Properties Trust Summary of Development Projects as of 3/31/23 (1) (dollars and square feet in thousands) Actual or as of 3/31/23 (2) Anticipated Total Cost to Date Shell Anticipated Rentable % Leased as Anticipated Placed in Completion Operational Property and Segment Location Squa
Slide 28: Development Placed in Service
Corporate Office Properties Trust Development Placed in Service as of 3/31/23 (square feet in thousands) Total Property Square Feet Placed in Service Total Space 2023 Placed in Service % % Leased as Rentable Leased as of Property and Location Property Segment of 3/31/23 Square Feet Prior Year 1st Qu
Slide 29: Summary of Land Owned/Controlled
Corporate Office Properties Trust Summary of Land Owned/Controlled as of 3/31/23 (1) (dollars and square feet in thousands) Estimated Developable Square Carrying Location Acres Feet Amount Land owned/controlled for future development Defense/IT Locations: Fort Meade/BW Corridor: National Business Pa
Slide 30: Capitalization Overview
Corporate Office Properties Trust Capitalization Overview (dollars, shares and units in thousands) Investment Grade Ratings & Outlook Latest Affirmation Wtd. Avg. Effective Amount Maturity Stated Rate Outstanding Fitch BBB- Stable 9/28/22 (Years) (1) Rate (2)(3) at 3/31/23 Moody’s Baa3 Stable 1/17/2
Slide 31: Summary of Outstanding Debt
Corporate Office Properties Trust Summary of Outstanding Debt as of 3/31/23 (dollars in thousands) Balloon Payment Amount Maturity Amount Due Upon Maturity Unsecured Debt Stated Rate Outstanding Date Secured Debt Stated Rate Outstanding Maturity Date LW Redstone: SOFR+ Revolving Credit Facility 0.10
Slide 32: Summary of Outstanding Debt (continued)
Corporate Office Properties Trust Summary of Outstanding Debt as of 3/31/23 (continued) $700,000 $ Consolidated debt maturities (in thousands) $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2023 2024 2025 2026 2027 (1) 2028 (2) 2029 2031 2033 Unsecured Secured Variable/Fixed Rate Debt Debt
Slide 33: Debt Analysis
Corporate Office Properties Trust Debt Analysis (dollars and square feet in thousands) As of and for As of and for Three Months Three Months Ended Ended Senior Note Covenants (1) Required 3/31/23 Line of Credit & Term Loan Covenants (1)(2) Required 3/31/23 Total Debt / Total Assets < 60% 38.5% Total
Slide 34: Consolidated Real Estate Joint Ventures
Corporate Office Properties Trust Consolidated Real Estate Joint Ventures as of 3/31/23 (dollars and square feet in thousands) NOI from Real Estate Operations (1) Venture Level COPT Operational Three Months Total Assets Debt Nominal Operating Properties Square Feet % Occupied % Leased Ended (2) Outs
Slide 35: Unconsolidated Real Estate Joint Ventures
Corporate Office Properties Trust Unconsolidated Real Estate Joint Ventures as of 3/31/23 (1) (dollars and square feet in thousands) Joint venture information COPT ownership % 10% COPT’s investment $ 40,476 (2) # of Properties 24 Square Feet 4,295 % Occupied 100% COPT’s share of ARR $ 6,641 Balance
Slide 36: Supplementary Reconciliations of Non-GAAP Measures
Corporate Office Properties Trust Supplementary Reconciliations of Non-GAAP Measure (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Net income $ 80,398 $ 52,087 $ 32,316 $ 33,595 $ 60,824 Construction contract and other service revenues (15,820) (24,062) (34,813) (42,557)
Slide 37: Supplementary Reconciliations of Non-GAAP Measures (continued)
Corporate Office Properties Trust Supplementary Reconciliations of Non-GAAP Measures (continued) (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Real estate revenues Lease revenue Fixed contractual payments $ 116,039 $ 116,349 $ 113,700 $ 112,691 $ 112,620 Variable lease p
Slide 38: Supplementary Reconciliations of Non-GAAP Measures (continued)
Corporate Office Properties Trust Supplementary Reconciliations of Non-GAAP Measures (continued) (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Total interest expense $ 16,442 $ 16,819 $ 15,123 $ 14,808 $ 14,424 Less: Amortization of deferred financing costs (632) (619) (
Slide 39: Supplementary Reconciliations of Non-GAAP Measures (continued)
Corporate Office Properties Trust Supplementary Reconciliations of Non-GAAP Measures (continued) (in thousands) Three Months Ended 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 Total assets $ 4,177,992 $ 4,257,275 $ 4,269,329 $ 4,185,193 $ 4,132,026 Accumulated depreciation 1,300,430 1,267,434 1,245,313
Slide 40: Definitions - Non-GAAP Measures
Corporate Office Properties Trust Definitions Non-GAAP Measures measure for assessing our un-levered performance and ability to repay outstanding debt from operations. We believe that net income is the most directly comparable GAAP We believe that the measures defined below that are not determined i
Slide 41: Definitions
Corporate Office Properties Trust Definitions funded landlord improvements, absent an adjustment from us, would result in large one- time lump sum amounts in Cash NOI that we do not believe are reflective of a property’s Diluted FFO available to common share and common unit holders, as adjusted for
Slide 42: Definitions
Corporate Office Properties Trust Definitions believe are not closely correlated to (or associated with) our operating performance. We of such period, including: (a) properties acquired, placed in service or expanded upon believe that diluted EPS is the most directly comparable GAAP measure to this
Slide 43: Definitions
Corporate Office Properties Trust Definitions Net debt to in-place adjusted EBITDA ratio and Net debt adjusted for fully-leased Pro forma net debt, pro forma net debt adjusted for fully-leased development, pro forma development to in-place adjusted EBITDA ratio in-place adjusted EBITDA and associate
Slide 44: Definitions - Other Definitions
Corporate Office Properties Trust Definitions Other Definitions Equity Market Capitalization — Defined as the sum of: (1) the product of the closing price of our common shares on the NYSE and the sum of (a) common shares Acquisition Costs — Transaction costs expensed in connection with executed or o
Slide 45: COPT First Quarter 2023 Results Exceed Guidance
6711 Columbia Gateway Drive, Suite 300 Columbia, Maryland 21046 Telephone 443-285-5400 Facsimile 443-285-7650 www.copt.com NYSE: OFC NEWS RELEASE FOR IMMEDIATE RELEASE IR Contacts: Venkat Kommineni, CFA Michelle Layne 443-285-5587 443-285-5452 venkat.kommineni@copt.com michelle.layne@copt.com COPT F
Slide 46: Earnings release: leasing and dividend commentary
which reflects our tenant’s need to execute their missions at our strategic locations. Leasing overall is off to a great start, having already achieved roughly 70% of our full year development leasing goal, while vacancy leasing is right on track with our 400,000 square foot goal. Our investment gra
Slide 47: Earnings release: coverage ratios and debt
• For the quarter ended March 31, 2023, the Company’s adjusted EBITDA fixed charge coverage ratio was 5.0x. • At March 31, 2023, the Company’s net debt to in-place adjusted EBITDA ratio was 6.2x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 5.8x. • At M
Slide 48: About COPT
About COPT COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties. The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and informati
Slide 49: Summary Financial Data (unaudited)
Corporate Office Properties Trust Summary Financial Data (unaudited) (dollars and shares in thousands, except per share data) For the Three Months Ended March 31, 2023 2022 Revenues Lease revenue $ 150,560 $ 141,389 Other property revenue 1,121 891 Construction contract and other service revenues 15
Slide 50: Summary Financial Data (unaudited)
Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands, except per share data) For the Three Months Ended March 31, 2023 2022 Net income $ 80,398 $ 60,824 Real estate-related depreciation and amortization 36,995 34,264 Gain on sales of real estate from continuing and disc
Slide 51: Summary Financial Data (unaudited)
Corporate Office Properties Trust Summary Financial Data (unaudited) (Dollars and shares in thousands, except per share data) March 31, December 31, 2023 2022 Balance Sheet Data Properties, net of accumulated depreciation $ 3,614,075 $ 3,556,398 Total assets $ 4,177,992 $ 4,257,275 Debt per balance
Slide 52: Summary Financial Data (unaudited)
Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) For the Three Months Ended March 31, 2023 2022 Numerators for Payout Ratios Dividends on unrestricted common and deferred shares $ 31,989 $ 30,837 Distributions on unrestricted common units 430 404 Dividends and dist
Slide 53: Summary Financial Data (unaudited)
Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) For the Three Months Ended March 31, 2023 2022 Reconciliation of interest expense to the denominator for fixed charge coverage- Adjusted EBITDA Interest expense $ 16,442 $ 14,424 Less: Amortization of deferred financ
Slide 54: Summary Financial Data (unaudited)
Corporate Office Properties Trust Summary Financial Data (unaudited) (in thousands) March 31, December 31, 2023 2022 Reconciliation of total assets to adjusted book Total assets $ 4,177,992 $ 4,257,275 Accumulated depreciation 1,300,430 1,267,434 Accumulated depreciation included in assets held for
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