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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| COPT Defense Properties | NYSE:CDP | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| -0.53 | -1.78% | 29.24 | 29.59 | 28.88 | 29.24 | 933,284 | 01:00:00 |
From Jul 2024 to Jan 2025
_______________________________________________________________
EPS of $0.31 FFO per Share, as Adjusted for Comparability, of $0.64 1-cent above the Midpoint of Guidance
Increased Midpoint of 2024 FFO per Share Guidance by 2-cents to $2.56 Implies 5.8% FFO per Share Growth for the Year
Defense/IT Portfolio 95.5% Occupied and 96.7% Leased
Same Property Cash NOI Increased 10.9% in 2Q24 and 8.5% Year-to-Date Raised Midpoint of Same Property Cash NOI Guidance for the Year by 150 Basis Points to 8.0% Raised Midpoint of Same Property Year-End 2024 Occupancy Guidance by 25 Basis Points to 93.75%
959,000 SF of Active Developments are 74% Leased
_______________________________________________________________
Strong Leasing in 1H24; Well Positioned to Achieve 2024 Goals Total Leasing of 1.0 million SF in 2Q24 and 1.7 million SF Year-to-Date
104,000 SF in 2Q24 and 264,000 SF Year-to-Date of Vacancy Leasing On Track to Achieve or Exceed Annual Target of 400,000 SF
Tenant Retention of 86% in 2Q24 and 83% Year-to-Date Raised Midpoint of Guidance for the Year by 250 Basis Points to 82.5%
_______________________________________________________________
COPT Defense Properties (“COPT Defense” or the “Company”) (NYSE: CDP) announced results for the second quarter ended June 30, 2024.
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, continued to generate strong results during the second quarter, with FFO per share exceeding the midpoint of our guidance range. Based on this outperformance, and our forecast for the remainder of the year, we increased the midpoint of 2024 FFO per share guidance by $0.02 to $2.56, which implies nearly 6% year-over-year growth. This marks our second increase for the year and a total of $0.05 of outperformance compared to our initial guidance. The growth off the midpoint of our 2024 FFO per share guidance is one of the highest growth rates in the Nareit-defined Office REIT sector, and ranks in the 75th percentile for the entire REIT sector.
We are exceeding our plan in several areas and raised 2024 guidance on a group of key metrics. We increased the midpoint of 2024 guidance for same property cash NOI growth by 150 basis points to 8%, increased same property year-end occupancy by 25 basis points to 93.75%, and increased tenant retention by 250 basis points to 82.5%.
During the quarter, the year-over-year increase in same property cash NOI for our Total Portfolio was the highest level in over a decade, while the increase in our Defense/IT Portfolio was the highest level since we began reporting the segment.
Taken together, our solid performance during the first half of 2024, coupled with our strong full year outlook, illustrates the strength of demand we are seeing in our portfolio for tenants serving priority defense missions. Looking forward, we continue to anticipate compound annual FFO per share growth of at least 4% between 2023 and 2026.”
Financial Highlights
2nd Quarter Financial Results:
Operating Performance Highlights
Operating Portfolio Summary:
Same Property Performance:
Leasing:
Investment Activity Highlights
Balance Sheet and Capital Transaction Highlights
Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its second quarter 2024 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
2024 Guidance
Management is revising its full-year guidance for diluted EPS and diluted FFOPS, per Nareit and as adjusted for comparability, from the prior range of $1.19-$1.25, and $2.51-$2.57, respectively, to new ranges of $1.22-$1.26, and $2.54-$2.58, respectively. Management is establishing third quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.30-$0.32 and $0.63-$0.65, 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
September 30, 2024
Year Ending
December 31, 2024
Low
High
Low
High
Diluted EPS
$
0.30
$
0.32
$
1.22
$
1.26
Real estate-related depreciation and amortization
0.33
0.33
1.32
1.32
Diluted FFOPS, Nareit definition and as adjusted for comparability
$
0.63
$
0.65
$
2.54
$
2.58
Conference Call Information
Management will discuss second quarter 2024 results on its conference call tomorrow at 12:00 p.m. Eastern Time, details of which are listed below:
Conference Call Date:
Tuesday, July 30, 2024
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.vevent.com/register/BI51bd912e5a264e098e9d8c72a60cdb2c
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 June 30, 2024, the Company’s Defense/IT Portfolio of 193 properties, including 24 owned through unconsolidated joint ventures, encompassed 22.0 million square feet and was 96.7% 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, 2023.
Source: COPT Defense Properties
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2024
2023
2024
2023
Revenues
Lease revenue
$
165,619
$
153,682
$
331,052
$
304,242
Other property revenue
1,466
1,271
2,696
2,392
Construction contract and other service revenues
20,258
14,243
46,861
30,063
Total revenues
187,343
169,196
380,609
336,697
Operating expenses
Property operating expenses
63,410
61,600
130,156
121,020
Depreciation and amortization associated with real estate operations
38,161
37,600
76,512
74,595
Construction contract and other service expenses
19,612
13,555
45,619
28,756
General and administrative expenses
8,591
7,287
16,969
15,283
Leasing expenses
2,462
2,345
4,649
4,344
Business development expenses and land carry costs
979
726
2,161
1,221
Total operating expenses
133,215
123,113
276,066
245,219
Interest expense
(20,617
)
(16,519
)
(41,384
)
(32,961
)
Interest and other income, net
2,884
2,143
7,006
4,399
Gain on sales of real estate
—
14
—
49,392
Income before equity in income of unconsolidated entities and income taxes
36,395
31,721
70,165
112,308
Equity in income of unconsolidated entities
26
111
95
47
Income tax expense
(14
)
(190
)
(182
)
(315
)
Net income
36,407
31,642
70,078
112,040
Net income attributable to noncontrolling interests:
Common units in the Operating Partnership (“OP”)
(694
)
(516
)
(1,302
)
(1,809
)
Other consolidated entities
(599
)
(839
)
(1,053
)
(1,165
)
Net income attributable to common shareholders
$
35,114
$
30,287
$
67,723
$
109,066
Earnings per share (“EPS”) computation:
Numerator for diluted EPS:
Net income attributable to common shareholders
$
35,114
$
30,287
$
67,723
$
109,066
Amount allocable to share-based compensation awards
(92
)
(98
)
(215
)
(349
)
Redeemable noncontrolling interests
—
(51
)
—
(115
)
Numerator for diluted EPS
$
35,022
$
30,138
$
67,508
$
108,602
Denominator:
Weighted average common shares - basic
112,293
112,188
112,261
112,157
Dilutive effect of share-based compensation awards
492
426
501
418
Dilutive effect of redeemable noncontrolling interests
—
62
—
77
Weighted average common shares - diluted
112,785
112,676
112,762
112,652
Diluted EPS
$
0.31
$
0.27
$
0.60
$
0.96
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands, except per share data)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2024
2023
2024
2023
Net income
$
36,407
$
31,642
$
70,078
$
112,040
Real estate-related depreciation and amortization
38,161
37,600
76,512
74,595
Gain on sales of real estate
—
(14
)
—
(49,392
)
Depreciation and amortization on unconsolidated real estate JVs
778
805
1,555
1,606
Funds from operations (“FFO”)
75,346
70,033
148,145
138,849
FFO allocable to other noncontrolling interests
(984
)
(1,239
)
(1,820
)
(1,947
)
Basic FFO allocable to share-based compensation awards
(599
)
(480
)
(1,186
)
(946
)
Basic FFO available to common share and common unit holders (“Basic FFO”)
73,763
68,314
145,139
135,956
Redeemable noncontrolling interests
471
(28
)
940
(58
)
Diluted FFO adjustments allocable to share-based compensation awards
46
37
94
76
Diluted FFO available to common share and common unit holders (“Diluted FFO”)
74,280
68,323
146,173
135,974
Executive transition costs
81
248
158
248
Diluted FFO comparability adjustments allocable to share-based compensation awards
(1
)
(2
)
(1
)
(2
)
Diluted FFO available to common share and common unit holders, as adjusted for comparability
74,360
68,569
146,330
136,220
Straight line rent adjustments and lease incentive amortization
3,788
(3,161
)
7,261
(6,677
)
Amortization of intangibles and other assets included in net operating income (“NOI”)
211
17
333
(2
)
Share-based compensation, net of amounts capitalized
2,564
2,213
5,209
3,946
Amortization of deferred financing costs
681
628
1,366
1,260
Amortization of net debt discounts, net of amounts capitalized
1,023
622
2,037
1,240
Replacement capital expenditures
(21,250
)
(22,664
)
(42,026
)
(50,874
)
Other
58
(221
)
195
(494
)
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)
$
61,435
$
46,003
$
120,705
$
84,619
Diluted FFO per share
$
0.64
$
0.60
$
1.27
$
1.19
Diluted FFO per share, as adjusted for comparability
$
0.64
$
0.60
$
1.27
$
1.19
Dividends/distributions per common share/unit
$
0.295
$
0.285
$
0.59
$
0.57
COPT Defense Properties
Summary Financial Data
(unaudited)
(Dollars and shares in thousands, except per share data)
June 30, 2024
December 31, 2023
Balance Sheet Data
Properties, net of accumulated depreciation
$
3,535,593
$
3,503,678
Total assets
$
4,219,338
$
4,246,966
Debt per balance sheet
$
2,389,925
$
2,416,287
Total liabilities
$
2,666,067
$
2,699,631
Redeemable noncontrolling interests
$
22,765
$
23,580
Total equity
$
1,530,506
$
1,523,755
Debt to assets
56.6
%
56.9
%
Net debt to adjusted book
40.5
%
40.6
%
Defense/IT Portfolio Data (as of period end)
Number of operating properties
193
190
Total operational square feet (in thousands)
21,993
21,719
% Occupied
95.5
%
96.2
%
% Leased
96.7
%
97.2
%
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2024
2023
2024
2023
GAAP
Payout ratio:
Net income
93.1
%
103.1
%
96.8
%
58.3
%
Debt ratios:
Net income to interest expense ratio
1.8x
1.9x
1.7x
3.4x
Debt to net income ratio
16.4x
17.2x
N/A
N/A
Non-GAAP
Payout ratios:
Diluted FFO
45.3
%
47.5
%
46.0
%
47.7
%
Diluted FFO, as adjusted for comparability
45.3
%
47.3
%
46.0
%
47.6
%
Diluted AFFO
54.8
%
70.5
%
55.8
%
76.6
%
Debt ratios:
Adjusted EBITDA fixed charge coverage ratio
4.7x
4.9x
4.6x
5.0x
Net debt to in-place adjusted EBITDA ratio
6.0x
6.3x
N/A
N/A
Net debt adj. for fully-leased development to in-place adj. EBITDA ratio
5.9x
5.7x
N/A
N/A
Reconciliation of denominators for per share measures
Denominator for diluted EPS
112,785
112,676
112,762
112,652
Weighted average common units
1,703
1,514
1,664
1,502
Redeemable noncontrolling interests
926
—
937
—
Denominator for diluted FFO per share and as adjusted for comparability
115,414
114,190
115,363
114,154
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2024
2023
2024
2023
Numerators for Payout Ratios
Dividends on unrestricted common and deferred shares
$
33,153
$
31,995
$
66,296
$
63,984
Distributions on unrestricted common units
505
433
1,005
863
Dividends and distributions on restricted shares and units
238
204
505
419
Total dividends and distributions for GAAP payout ratio
33,896
32,632
67,806
65,266
Dividends and distributions on antidilutive shares and units
(241
)
(205
)
(507
)
(421
)
Dividends and distributions for non-GAAP payout ratios
$
33,655
$
32,427
$
67,299
$
64,845
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
$
36,407
$
31,642
$
70,078
$
112,040
Interest expense
20,617
16,519
41,384
32,961
Income tax expense
14
190
182
315
Real estate-related depreciation and amortization
38,161
37,600
76,512
74,595
Other depreciation and amortization
564
609
1,172
1,211
Gain on sales of real estate
—
(14
)
—
(49,392
)
Adjustments from unconsolidated real estate JVs
1,709
1,559
3,380
3,263
EBITDAre
97,472
88,105
192,708
174,993
Credit loss expense
436
238
458
305
Business development expenses
603
394
1,233
635
Executive transition costs
81
307
511
554
Net gain on other investments
—
—
(477
)
—
Adjusted EBITDA
98,592
89,044
$
194,433
$
176,487
Pro forma NOI adjustment for property changes within period
—
56
Change in collectability of deferred rental revenue
27
28
In-place adjusted EBITDA
$
98,619
$
89,128
Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures
Tenant improvements and incentives
$
15,045
$
32,619
$
27,821
$
52,605
Building improvements
5,705
2,766
10,658
4,907
Leasing costs
3,110
3,542
6,700
5,292
Net exclusions from tenant improvements and incentives
(1,040
)
(16,007
)
(724
)
(11,168
)
Excluded building improvements and leasing costs
(1,570
)
(256
)
(2,429
)
(762
)
Replacement capital expenditures
$
21,250
$
22,664
$
42,026
$
50,874
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2024
2023
2024
2023
Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA
Interest expense
$
20,617
$
16,519
$
41,384
$
32,961
Less: Amortization of deferred financing costs
(681
)
(628
)
(1,366
)
(1,260
)
Less: Amortization of net debt discounts, net of amounts capitalized
(1,023
)
(622
)
(2,037
)
(1,240
)
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
808
791
1,612
1,564
Scheduled principal amortization
662
746
1,431
1,536
Capitalized interest
643
1,194
1,232
1,964
Denominator for fixed charge coverage-Adjusted EBITDA
$
21,026
$
18,000
$
42,256
$
35,525
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
$
36,407
$
31,642
$
70,078
$
112,040
Construction contract and other service revenues
(20,258
)
(14,243
)
(46,861
)
(30,063
)
Depreciation and other amortization associated with real estate operations
38,161
37,600
76,512
74,595
Construction contract and other service expenses
19,612
13,555
45,619
28,756
General and administrative expenses
8,591
7,287
16,969
15,283
Leasing expenses
2,462
2,345
4,649
4,344
Business development expenses and land carry costs
979
726
2,161
1,221
Interest expense
20,617
16,519
41,384
32,961
Interest and other income, net
(2,884
)
(2,143
)
(7,006
)
(4,399
)
Gain on sales of real estate
—
(14
)
—
(49,392
)
Equity in income of unconsolidated entities
(26
)
(111
)
(95
)
(47
)
Unconsolidated real estate JVs NOI allocable to COPT Defense included in equity in income of unconsolidated entities
1,735
1,671
3,475
3,313
Income tax expense
14
190
182
315
NOI from real estate operations
105,410
95,024
207,067
188,927
Non-Same Property NOI from real estate operations
(6,738
)
(801
)
(12,992
)
(1,981
)
Same Property NOI from real estate operations
98,672
94,223
194,075
186,946
Straight line rent adjustments and lease incentive amortization
2,501
(2,696
)
7,868
(6,266
)
Amortization of acquired above- and below-market rents
(69
)
(129
)
(138
)
(295
)
Lease termination fees, net
(881
)
(1,059
)
(1,656
)
(2,280
)
Tenant funded landlord assets and lease incentives
(2,498
)
(2,213
)
(10,688
)
(3,435
)
Cash NOI adjustments in unconsolidated real estate JVs
(111
)
(137
)
(228
)
(290
)
Same Property Cash NOI from real estate operations
$
97,614
$
87,989
$
189,233
$
174,380
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
June 30, 2024
December 31, 2023
Reconciliation of total assets to adjusted book
Total assets
$
4,219,338
$
4,246,966
Accumulated depreciation
1,468,595
1,400,162
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs
226,739
228,484
COPT Defense’s share of liabilities of unconsolidated real estate JVs
60,922
60,583
COPT Defense’s share of accumulated depreciation and amortization of unconsolidated real estate JVs
11,199
9,528
Less: Property - operating lease liabilities
(33,818
)
(33,931
)
Less: Property - finance lease liabilities
(403
)
(415
)
Less: Cash and cash equivalents
(100,443
)
(167,820
)
Less: COPT Defense’s share of cash of unconsolidated real estate JVs
(1,278
)
(852
)
Adjusted book
$
5,850,851
$
5,742,705
June 30, 2024
December 31, 2023
June 30, 2023
Reconciliation of debt to net debt and net debt adjusted for fully-leased development
Debt per balance sheet
$
2,389,925
$
2,416,287
$
2,176,174
Net discounts and deferred financing costs
25,995
28,713
21,342
COPT Defense’s share of unconsolidated JV gross debt
52,981
52,613
52,364
Gross debt
2,468,901
2,497,613
2,249,880
Less: Cash and cash equivalents
(100,443
)
(167,820
)
(14,273
)
Less: COPT Defense’s share of cash of unconsolidated real estate JVs
(1,278
)
(852
)
(974
)
Net debt
2,367,180
2,328,941
2,234,633
Costs incurred on fully-leased development properties
(56,646
)
(53,914
)
(189,407
)
Net debt adjusted for fully-leased development
$
2,310,534
$
2,275,027
$
2,045,226
View source version on businesswire.com: https://www.businesswire.com/news/home/20240729687185/en/
IR Contacts: Venkat Kommineni, CFA 443.285.5587 venkat.kommineni@copt.com
Michelle Layne 443.285.5452 michelle.layne@copt.com
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