COPT DEFENSE PROPERTIES (CDP)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered solid operating results: revenue rose to $187.86M and Adjusted EBITDA reached $99.12M, with FFO per share (as adjusted) at $0.65, in line with guidance midpoint .
• Versus Wall Street consensus, CDP beat on revenue but missed on EPS; management cited $0.005 per share of higher net weather-related expenses and lower interest income from a reduced cash balance following 2024 investments and the Huntsville TIF repayment .
• Guidance was narrowed: FY25 EPS to $1.28–$1.34 and FFOPS (Nareit & as adjusted) to $2.63–$2.69; Q2 2025 guidance set at EPS $0.31–$0.33 and FFOPS $0.65–$0.67 .
• Leasing momentum remained strong: 647K sf total, with 120K sf vacancy leasing and tenant retention of 74.9%; Defense/IT occupancy 95.3% and leased 96.6% .
• Key catalysts: potential Space Command relocation to Huntsville in “weeks” (could drive demand), locked pricing for new Redstone development, and robust cyber-related leasing pipeline in Columbia Gateway and Fort Meade/BW Corridor .

What Went Well and What Went Wrong

What Went Well

• Strong top-line and NOI: total revenues up to $187.86M; NOI from real estate operations $107.45M; same property cash NOI up 7.1% YoY .
• Leasing execution: 647K sf leased in Q1 (438K renewals, 120K vacancy, 89K investment) with 74.9% retention; Defense/IT portfolio 95.3% occupied and 96.6% leased .
• Management reiterated FY25 FFOPS midpoint ($2.66) despite macro headlines; “FFO per share as adjusted…was $0.65…a 4.8% year-over-year increase” and “priority missions will not be impacted by DOGE” .

What Went Wrong

• EPS miss vs consensus: reported diluted EPS of $0.31 versus a higher Street EPS estimate; attributed to $0.005 per share net weather-related expense and lower interest income from reduced average cash balances and Huntsville TIF repayment .
• Slight downtick in same property cash NOI sequentially (from Q4 to Q1) and quarterly “noise” expected due to timing of real estate tax refunds vs 2024 receipt cadence .
• Data center development power timing elongated in Iowa; “two years would be a great result right now…could be more like three to four years,” tempering timing expectations for that pipeline .

Financial Results

Quarter-over-Quarter and Year-over-Year (actuals)

Segment Breakdown – Q1 2025

KPIs

Actual vs Wall Street Consensus – Q1 2025

Values marked with * are retrieved from S&P Global consensus.
Disclaimer: Values retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “FFO per share as adjusted for comparability was $0.65, right on the midpoint of guidance, a 4.8% year-over-year increase.”
• “We have not seen and do not expect to see an impact from DOGE on the priority missions we support.”
• “We commenced development of our next inventory building, 8500 Advanced Gateway…150,000 square feet…already have 90,000 square feet of prospects.”
• “Our Defense/IT portfolio occupancy rate has exceeded 94% for 9 consecutive quarters.”

Q&A Highlights

• Huntsville catalysts: Management expects Space Command relocation decision within weeks; missile defense program prioritization could drive demand but timing still forming .
• Capital/financing: Plan to issue a $400M bond in Q4 2025 to prefund Mar-26 maturity; indicative pricing “at or slightly higher than 6%” given market levels .
• Leasing economics: Pullback in free rent concessions; rent growth steady in stable markets; Q1 cost stats reflect improved terms .
• Data center timing: Iowa power availability elongated to 3–4 years; future land buys contingent on clearer power timelines .
• Portfolio mix: Columbia Gateway non-defense nonrenewal viewed as opportunity to deepen cyber/defense tenancy; backfill expected within 18–24 months .

Estimates Context

• Q1 2025 comparison: Revenue beat ($187.86M vs $185.78M consensus*), EPS miss ($0.31 vs $0.327*). Management pointed to $0.005 weather-related headwind and lower interest income from reduced cash and TIF repayment as primary EPS drivers .
• Near-term Street updates: With guidance narrowed and Q2 set at EPS $0.31–$0.33 and FFOPS $0.65–$0.67, estimates may adjust modestly toward company ranges given stable NOI growth and leasing pipeline .
  Values marked with * are retrieved from S&P Global consensus.
  Disclaimer: Values retrieved from S&P Global.

Key Takeaways for Investors

• Revenue resilience and NOI strength persist; Defense/IT occupancy and leasing remain robust, supporting stable FFOPS trajectory in 2025 .
• EPS variance versus consensus reflects transitory items (weather/timing of interest income); underlying cash NOI growth from embedded escalators/free-rent burn-off continues .
• Watch Huntsville catalysts (Space Command/missile defense) and Redstone development starts with locked pricing; the pipeline could accelerate leasing and future NOI .
• Cyber demand is a structural tailwind near Fort Meade/BW; Columbia Gateway and National Business Park remain focal points for secure space expansion .
• Data center land (Iowa) remains strategic but power timing pushes monetization further out; near-term growth more tied to Defense/IT offices and Redstone .
• Balance sheet/liquidity planning is proactive (prefunding 2026 bond); fixed-rate debt at ~98% and coverage ratios healthy, reducing refinancing risk .
• Trading lens: Revenue beat and reiterated midpoint support constructive bias; catalysts in Huntsville/cyber plus narrowing guidance bands can be stock-supportive as DOGE headlines fade .