\nCOPT Defense Properties (\u201cCOPT Defense\u201d or the \u201cCompany\u201d) (NYSE: CDP) announced results for the first quarter ended March 31, 2025.\n<\/p>\n
Management Comments<\/span><\/b><\/p>\n \nStephen E. Budorick, COPT Defense\u2019s President & Chief Executive Officer, commented, \u201cOur 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.\n<\/p>\n \nIn 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.\n<\/p>\n \nIn 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.\n<\/p>\n \nOur 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.\u201d\n<\/p>\n Financial Highlights<\/span><\/b><\/p>\n 1st Quarter Financial Results:<\/b><\/p>\n \n> Diluted earnings per share (\u201cEPS\u201d) was $0.31 for the quarter ended March 31, 2025, compared to $0.29 for the quarter ended March 31, 2024.\n<\/p>\n \n> Diluted funds from operations per share (\u201cFFOPS\u201d), as calculated in accordance with Nareit\u2019s 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.\n<\/p>\n Operating Performance Highlights<\/span><\/b><\/p>\n Operating Portfolio Summary:<\/b><\/p>\n \n> At March 31, 2025, the Company\u2019s 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.\n<\/p>\n \n> During the quarter ended March 31, 2025, the Company placed into service 10,000 square feet of development that was 100% leased.\n<\/p>\n Same Property Performance:<\/b><\/p>\n \n> At March 31, 2025, the Company\u2019s 23.9 million square foot Same Property portfolio was 94.1% occupied and 95.2% leased.\n<\/p>\n \n> The Company\u2019s Same Property cash NOI increased 7.1% in the quarter ended March 31, 2025, compared to the same period in 2024.\n<\/p>\n Leasing:<\/b><\/p>\n \n> Total Square Feet Leased<\/span>: 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.\n<\/p>\n \n> Tenant Retention Rates<\/span>: 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.\n<\/p>\n \n> Rent Spreads and Average Escalations on Renewing Leases<\/span>: 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%.\n<\/p>\n \n> Lease Terms<\/span>: 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.\n<\/p>\n Investment Activity Highlights<\/span><\/b><\/p>\n \n> Development Pipeline: The Company\u2019s 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.\n<\/p>\n Balance Sheet and Capital Transaction Highlights<\/span><\/b><\/p>\n \n> For the quarter ended March 31, 2025, the Company\u2019s adjusted EBITDA fixed charge coverage ratio was 4.7x.\n<\/p>\n \n> At March 31, 2025, the Company\u2019s 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.\n<\/p>\n \n> At March 31, 2025, and including the effect of interest rate swaps, the Company\u2019s 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\u2019s debt was subject to fixed interest rates.\n<\/p>\n Associated Supplemental Presentation<\/span><\/b><\/p>\n \nPrior to the call, the Company will post a slide presentation to accompany management\u2019s prepared remarks for its first quarter 2025 conference call; the presentation can be viewed and downloaded from the \u2018Financial Info \u2013 Financial Results\u2019 section of COPT Defense\u2019s Investors website: https:\/\/investors.copt.com\/financial-information\/financial-results<\/a><\/p>\n 2025 Guidance<\/span><\/b><\/p>\n \nManagement 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:\n<\/p>\n
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