Copt Defense Properties · NYSE:CDP
Copt Defense Properties — Q1 2025 Earnings Presentation
34 slides from Copt Defense Properties's earnings presentation, Apr 29, 2025
Slide 1: Results for 1st Quarter 2025 – Updated 2025 Guidance
Results for st 1 Quarter 2025 Updated 2025 Guidance APRIL 28, 2025 Change Presentation Title on First Master Slide
Slide 2: Table of Contents
Table of Contents RESULTS FOR 1ST QUARTER 2025 APPENDICES: > Page 3 > Page 24 UPDATED 2025 GUIDANCE > Safe Harbor | Page 25 > Page 5 > Definitions + Glossary | Page 26 FACTORS SUPPORTING GROWTH > Reconciliations | Page 31 > Page 7 PORTFOLIO UPDATE > Page 13 CONCLUSION: STRONG RESULTS + CONTINUED GRO
Slide 3: Results for 1st Quarter 2025
RESULTS FOR ST 1 QUARTER 2025
Slide 4: Strong 1st Quarter 2025 Results
st Strong 1 Quarter 2025 Results 1Q25 FFOPS, as adjusted for comparability $0.65 > FFO per share growth year-over-year 4.8% > Met midpoint of guidance > Met or exceeded guidance each quarter over the past 29 quarters Increase in Same Property cash NOI 7.1% > Increase excluding the benefit from real
Slide 5: Updated 2025 Guidance
UPDATED 2025 GUIDANCE
Slide 6: FY 2025 Guidance Summary
1 FY 2025 Guidance Summary FY 2025 Updated Guidance FY 2024 Actual Low Midpoint High EPS $1.23 $1.28 $1.31 $1.34 FFOPS, as adjusted for comparability $2.57 $2.63 $2.66 $2.69 > Year-Over-Year Growth 6.2% — 3.5% — Key Assumptions 2025 Same Property Pool: > % Change in Cash NOI 9.1%2 2.0% 2.75% 3.5% >
Slide 7: Factors Supporting Growth
FACTORS SUPPORTING GROWTH
Slide 8: Healthy DOD Spending
Healthy DOD Spending > FY 2024 National Defense DOD's Discretionary Budget Authority Authorization Act passed with ("Base Budget") bipartisan support in March $900 2024 and increased spending $850 creas e $831 % In 4% over FY 2023 $800 19.4 $799 > 19.4% increase over FY 2021 $750 $729 > 38.8% increa
Slide 9: Portfolio Supports Priority DOD Missions
Portfolio Supports Priority DOD Missions > Deeply concentrated our capital Total Portfolio by Demand Driver* allocation since 2012 in our Defense/IT Portfolio, which Demand Driver Total SF (000s) % Leased % ARR support priority U.S. Defense Missions Ft. Meade/BW Corridor 9,234 96% 46% > Only public
Slide 10: Capital Committed to New Investments
External Growth from Investment ALLOCATING CAPITAL TO PROJECTS AT OUR DEFENSE/IT LOCATIONS IS THE Capital Committed to New Investments ($) FOUNDATION FOR EXTERNAL GROWTH $450,000 $400,000 > Average development investment = $272 million > Active Development + Placed into $350,000 Capital Committed to
Slide 11: Strong Balance Sheet Supports Growth
Strong Balance Sheet Supports Growth Maintaining Our Strong Balance Sheet > Ability to Self-Fund Investment 6.4x > Can fund $250–$275 million of 6.2x 6.3x development/acquisition investment 6.2x on a leverage neutral basis 6.1x 6.1x 6.1x 6.0x 6.0x 6.0x 6.0x ~6.0x 6.0x > Equity component: cash flow f
Slide 12: Well-Staggered Debt Provides Stability
Well-Staggered Debt Provides Stability > Significant unencumbered pool of Debt Maturity Schedule assets as of 3/31/25 (in thousands) $700,000 > Unencumbered portfolio = 97% of total NOI from real estate operations $600,000 $600,000 > Secured debt accounts for only 3% of debt outstanding $500,000 $68
Slide 13: Portfolio Update
PORTFOLIO UPDATE
Slide 14: Strong Vacancy Leasing
Strong Vacancy Leasing Vacancy Leasing in Operating Portfolio* > Defense/IT Portfolio was 95.3% occupied and 96.6% leased at 2020 2021 2022 2023 2024 March 31, 2025 416,000 SF 616,000 SF 801,000 SF 452,000 SF 500,000 SF 800 100% > Excellent Vacancy leasing volume in 1Q 2025 exceeded 700 expectations
Slide 15: Growth in Cyber Leasing
Growth in Cyber Leasing Vacancy leasing tied to DOD cyber activity Over 70% of all cyber leasing in our portfolio has been steadily growing over the past 10 years has occurred at NBP and Columbia Gateway due to growth in DOD cyber funding during the past 10 years Cyber Leasing as a % of Vacancy Leas
Slide 16: Sector-Leading Tenant Retention
Sector-Leading Tenant Retention CDP's retention rate is DRIVEN BY: more than double that of the Office REITs that 1. UNIQUE + ADVANTAGED LOCATIONS Renewal Rates Since 2020 report this metric 2. SIGNIFICANT TENANT CO-INVESTMENT 90% 3. LONG-TERM TENANT RELATIONSHIPS 80% 4. OPERATING PLATFORM WITH CRED
Slide 17: Large Lease Expirations | 2Q 2024 Through 4Q 2026
Large Lease Expirations | 2Q 2024 Through 4Q 2026 EXPECT TO RENEW ~95% OF LARGE LEASES (>50,000 SF) EXPIRING THROUGH YEAR-END 2026 30 Month Outlook as of 2Q24 4.0M SF of Large Leases to Expire between 2Q24–4Q26... > 13 leases with the U.S. Government (all full building properties) > 12 leases in Def
Slide 18: U.S. Govt. Large Lease Expirations | 2Q 2024 Through 4Q 2026
U.S. Govt. Large Lease Expirations | 2Q 2024 Through 4Q 2026 EXPECT 100% RETENTION GIVEN MISSION-CRITICAL NATURE + USG INVESTMENT 18
Slide 19: Conclusion: Strong Results + Continued Growth Through 2026
CONCLUSION Strong Results + Continued Growth Through 2026
Slide 20: Achievements Over the Past Five Years
Achievements Over the Past Five Years* > Increased FFOPS by 27% (4.8% CAGR) and AFFO by 26% (4.7% CAGR) > Increased dividend by 10.9% over the past 3 years** > Placed $1.7 billion of developments into service (95% leased) > Increased total portfolio size by 28% > Increased occupancy > 70 basis point
Slide 21: Strong Growth in Profitability
Strong Growth in Profitability COPT Defense’s FFOPS has compounded at 4.6% 2025E FFOPS midpoint guidance of $2.66 implies per year from 2019–2025E 3.5% growth over 2024 results FFOPS, FFO, as Adjusted for Comparability as Adjusted for Comparability (in thousands) $2.70 $325,000 th $2.57 $306,000 $2.
Slide 22: Attractive Investment Opportunity
Attractive Investment Opportunity GROWTH DIVIDEND STOCK GROWTH Compound Annual Dividend per share FFOPS Growth has increased from 2019–2025E 10.9% since 2022 of 4.6% VALUE STOCK Trades at 9.9x FFO* 22 * As of the closing price on April 25, 2025.
Slide 23: Continued Growth Through 2026
Continued Growth Through 2026 > Strong leasing demand at existing FFOPS, properties as Adjusted for Comparability > $308 million of active developments $2.70 $2.66 (756,000 SF) are 62% leased* $2.60 $2.57 > ~1.2 million SF development leasing ) 5E pipeline and ~1.5 million SF of potential $2.50 -2 0
Slide 24: Appendices
APPENDICES >Safe Harbor >Definitions + Glossary >Reconciliations
Slide 25: Safe Harbor
Safe Harbor UNLESS OTHERWISE NOTED, INFORMATION IN THIS PRESENTATION REPRESENTS THE COMPANY'S CONSOLIDATED PORTFOLIO AS OF OR FOR THE QUARTER ENDED MARCH 31, 2025. > This presentation may contain forward-looking statements within the meaning of the Federal securities laws. Forward- looking statement
Slide 26: Definitions + Glossary
Definitions + Glossary Acquisition costs Average escalations Transaction costs expensed in connection with executed or anticipated acquisitions of operating Leasing statistic used to report average increase in rental rates over lease terms for leases with a properties. term of greater than one-year.
Slide 27: Definitions + Glossary (continued)
Definitions + Glossary (continued) Cash net operating income (“Cash NOI”) Diluted adjusted funds from operations available to common share and common unit NOI from real estate operations adjusted to eliminate the effects of: straight-line rental holders ("Diluted AFFO") adjustments, amortization of
Slide 28: Definitions + Glossary (continued)
Definitions + Glossary (continued) Diluted FFO per share, as adjusted for comparability In-place adjusted EBITDA Defined as (1) Diluted FFO available to common share and common unit holders, as adjusted for Defined as Adjusted EBITDA, as further adjusted for: (1) certain events occurring in a three
Slide 29: Definitions + Glossary (continued)
Definitions + Glossary (continued) Net debt adjusted for fully-leased investment properties Net debt to adjusted book and Net debt adjusted for fully-leased investment properties to adjusted book Defined as Net debt less costs incurred on properties under development and on operating These measures
Slide 30: Definitions + Glossary (continued)
Definitions + Glossary (continued) Replacement capital expenditures Straight-line rent Tenant improvements and incentives, building improvements and leasing costs incurred during the Includes annual minimum base rents, net of abatements and lease incentives and excluding rent period for operating pr
Slide 31: Reconciliations
Reconciliations Reconciliations of net income to diluted FFO, diluted FFO as adjusted for comparability and diluted AFFO Year Ended December 31, Three Months Ended (in thousands) 2019 2020 2021 2022 2023 2024 03/31/25 Net income (loss) $ 200,004 $ 102,878 $ 81,578 $ 178,822 $ (74,347) $ 143,942 $ 36
Slide 32: Reconciliations (continued)
Reconciliations (continued) Actuals Guidance Year Ending Reconciliations of diluted EPS to diluted FFOPS per Nareit and as Year Ended December 31, 2025 adjusted for comparability (in dollars per share) December 31, 2024 Low High Diluted EPS $ 1.23 $ 1.28 $ 1.34 Real estate-related depreciation and a
Slide 33: Reconciliations (continued)
Reconciliations (continued) Reconciliations of net income to Adjusted EBITDA, in-place adjusted EBITDA Three Months Ended and pro forma in-place adjusted EBITDA (in thousands) 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 3/31/25 Net income $ 44,877 $ 83,549 $ 14,965 $ 52,087 $ 34,820 $ 36,4
Slide 34: COPT Defense Properties
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COPT Defense Properties — Q1 2025 Earnings Presentation on 6ix