CDP COPT Defense Properties

_______________________________________________________________

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:

• Diluted earnings per share (“EPS”) was $0.31 for the quarter ended June 30, 2024, compared to $0.27 for the quarter ended June 30, 2023.
• Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition and as adjusted for comparability, was $0.64 for the quarter ended June 30, 2024, compared to $0.60 for the quarter ended June 30, 2023.

Operating Performance Highlights

Operating Portfolio Summary:

• At June 30, 2024, the Company’s 24.1 million square foot Total Portfolio was 93.6% occupied and 94.9% leased, which includes the 22.0 million square foot Defense/IT Portfolio that was 95.5% occupied and 96.7% leased.

Same Property Performance:

• At June 30, 2024, the Company’s 22.2 million square foot same property portfolio was 93.5% occupied and 95.0% leased.
• The Company’s same property cash NOI increased 10.9% for the three months ended June 30, 2024 compared to the same period in 2023.

Leasing:

• Total Square Feet Leased: For the quarter ended June 30, 2024, the Company leased 985,000 square feet, including 881,000 square feet of renewals and 104,000 square feet of vacancy leasing. For the six months ended June 30, 2024, the Company executed 1.7 million square feet of total leasing, including 1.4 million square feet of renewals, 264,000 square feet of vacancy leasing, and 10,000 square feet in development projects.
• Tenant Retention Rates: During the quarter ended June 30, 2024, the Company renewed 86.3% of expiring square feet in its Total Portfolio and 87.4% in its Defense/IT Portfolio. During the six months ended June 30, 2024, the Company renewed 82.9% of expiring square feet in its Total Portfolio and 85.7% in its Defense/IT Portfolio.
• Rent Spreads & Average Escalations on Renewing Leases: For the quarter and six months ended June 30, 2024, straight-line rents on renewals increased 7.7% and 6.4%, respectively, and cash rents on renewed space increased 0.6% and decreased 0.4%, respectively, while annual escalations on renewing leases averaged 2.2% and 2.3%, respectively.
• Lease Terms: In the quarter ended June 30, 2024, lease terms averaged 3.9 years on renewing leases and 8.1 years on vacancy leasing. For the six months ended June 30, 2024, lease terms averaged 4.0 years on renewing leases, 8.2 years on vacancy leasing, and 5.3 years on development leasing.

Investment Activity Highlights

• Development Pipeline: The Company’s development pipeline consists of six properties totaling 959,000 square feet that were 74% leased as of June 30, 2024. These projects represent a total estimated investment of $381.4 million, of which $119.0 million has been spent.

Balance Sheet and Capital Transaction Highlights

• For the quarter ended June 30, 2024, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.7x.
• At June 30, 2024, the Company’s net debt to in-place adjusted EBITDA ratio was 6.0x and its net debt adjusted for fully-leased development to in-place adjusted EBITDA ratio was 5.9x.
• At June 30, 2024, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.3% with a weighted average maturity of 5.2 years, and 100% of the Company’s debt was subject to fixed interest rates.

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