Executive Summary

Q4 2024 was solid and in line with guidance: EPS $0.31, FFOPS $0.64, and FFOPS (as adjusted) $0.65, with Total Revenues $183.4M; Same-Property cash NOI rose 10.0% YoY, and Total Portfolio occupancy/leased ended at 93.6%/95.1% while Defense/IT occupancy/leased reached 95.6%/96.8% .
2025 guidance introduced: FFOPS $2.62–$2.70 (midpoint $2.66), Same-Property cash NOI +2.75% at midpoint (+3.3% vs normalized 2024), year-end same-property occupancy 93.5–94.5%, tenant retention 75–85%, with a planned $400M bond prefunding (≈$0.015 FFO drag) .
Operational strengths continue: FY 2024 Same-Property cash NOI +9.1% (record), tenant retention 86% (highest in 20+ years), 500k sq ft vacancy leasing (25% above target), and development pipeline 606k sq ft, 75% pre-leased, with two 100%-leased data center shells to be placed in service in 2025 .
Strategic positioning benefits from defense priorities (space, missile defense, naval expansion); management emphasized minimal GSA exposure (<1% of ARR) and sustained demand from government/contractor tenants—key narrative catalysts for 2025 .
Wall Street consensus estimates from S&P Global were unavailable at time of analysis; estimate comparison is omitted. Consensus data from S&P Global was unavailable.

What Went Well and What Went Wrong

What Went Well
- “Same-property cash NOI increased 9.1% year-over-year, which is the highest increase we've ever reported” (FY 2024); Q4 Same-Property cash NOI +10.0% YoY .
- Record retention: “tenant retention of 86%…highest annual level in over 20 years,” with Q4 quarterly retention at 93% and defense contractor retention at 95% .
- Strong leasing momentum: 500k sq ft vacancy leasing in 2024 (+25% vs 400k target), and Q4 total leasing 709k sq ft; management cites robust pipeline and SCIF demand .
What Went Wrong
- Q4 revenues declined sequentially (Total Revenues $183.4M vs $189.2M in Q3) amid lower construction/service revenues; lease revenue dipped modestly QoQ .
- CFO flagged nonrecurring 2024 tailwinds (free rent burn-off, tax appeals, lower seasonal ops costs); normalized Same-Property cash NOI growth for 2024 would have been 3.4%—implying moderation in 2025 growth .
- Planned $400M bond prefunding in Q4 2025 introduces ≈$0.015 drag to 2025 FFO, and variable-rate debt exposure expected to increase modestly (<10%) with line draws for development .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Total Revenues ($USD Millions)	$179.7	$187.3	$189.2	$183.4
Lease Revenue ($USD Millions)	$160.3	$165.6	$170.5	$169.8
Diluted EPS ($USD)	$0.30	$0.31	$0.32	$0.31
FFOPS – Nareit ($USD)	$0.62	$0.64	$0.65	$0.64
FFOPS – Adj. ($USD)	$0.62	$0.64	$0.65	$0.65
Net Income ($USD Millions)	$34.8	$36.4	$37.4	$36.5
Net Income Margin (%)	19.3%	19.4%	19.8%	19.9%
Adjusted EBITDA ($USD Millions)	$93.9	$98.6	$99.2	$98.6
Adjusted EBITDA Margin (%)	52.3%	52.6%	52.4%	53.8%
NOI from Real Estate Ops ($USD Millions)	$98.7	$105.4	$105.5	$106.3
Same-Property Cash NOI ($USD Millions)	$89.5	$97.6	$97.1	$98.5

Segment breakdown – Consolidated Real Estate Revenues

Segment ($USD Millions)	Q3 2024	Q4 2024
Fort Meade/BW Corridor	$80.1	$78.6
Northern Virginia Defense/IT	$22.1	$21.9
Lackland AFB (San Antonio)	$16.9	$18.1
Navy Support	$8.1	$8.1
Redstone Arsenal (Huntsville)	$18.3	$17.2
Data Center Shells – Consolidated	$9.0	$10.1
Other	$18.1	$17.5
Total	$172.6	$171.4

KPIs

KPI	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Total Portfolio Occupied / Leased (%)	94.2 / 95.3	93.6 / 94.9	93.1 / 94.8	93.6 / 95.1
Defense/IT Occupied / Leased (%)	96.2 / 97.2	95.5 / 96.7	95.0 / 96.5	95.6 / 96.8
Same-Property Occupancy (%)	93.8	93.5	93.6	94.1
Same-Property Cash NOI ($USD Millions)	$89.5	$97.6	$97.1	$98.5
Quarterly Retention (%)	—	86.3	87.6	93.0
Quarterly Total Sq Ft Leased (000s)	—	985	829	709

Notes: Net Income Margin and Adjusted EBITDA Margin are calculated from reported Net Income/Adjusted EBITDA and Total Revenues for each period .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
FFOPS (Adj.)	FY 2025	N/A	$2.62–$2.70; midpoint $2.66	New
Same-Property Cash NOI Growth	FY 2025	N/A	+2.75% midpoint; +3.3% vs normalized 2024	New
Same-Property Occupancy (Year-End)	FY 2025	N/A	93.5%–94.5%	New
Tenant Retention	FY 2025	N/A	75%–85%	New
Cash Rent Spreads on Renewals	FY 2025	N/A	Flat at midpoint; escalations ≈2.5%	New
Interest/Other Income	FY 2025	N/A	≈$0.03 YoY decline	New
Capital Plan – Bond Prefunding	Q4 2025	N/A	$400M issuance; ≈$0.015 FFO drag; proceeds to pay down revolver and held as cash	New
Development/Investment Spend	FY 2025	N/A	Development: $250–$300M; New investments: $200–$250M	New
Projects Placed Into Service	FY 2025	N/A	2 data center shells (100% leased), >$175M; partial of 9700 Advanced Gateway	New
Dividend	FY 2025	N/A	No change discussed; latest quarterly dividend $0.295	Maintained (implicitly)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Defense priorities (Space, Missile Defense, Naval)	Strategy focused near priority installations; development/leasing strength across Fort Meade, NoVA, Redstone; raised FY 2024 guidance multiple times	Explicit focus on space activities, missile defense (GMD), naval expansion; potential Space Command relocation benefits Huntsville	Strengthening
GSA exposure & government demand	U.S. Government ARR ~36% in Q3; strong retention and leasing; minimal GSA discussed only via tenant mix	Minimal GSA exposure: 8 leases, 185k sq ft, <1% ARR; SCIF-heavy, essential functions reduce risk	Clarified, de‑risking
Data center shells & Iowa land	Acquired 365 acres near Des Moines to expand data center shells; 100%-leased NoVA shells; pipeline 79% leased (Q3)	Path to ~1 GW power identified; timeline uncertain; two 100%-leased shells to be placed in service in 2025	Advancing; timeline watch
Leasing momentum & retention	Q2: 985k sf leased; Q3: 829k sf; retention 86–88%	Q4: 709k sf; quarterly retention 93%; FY retention 86% (record)	Durable/high quality
Occupancy trajectory	Same-Property occupancy 93.5–93.6% (Q2–Q3)	Same-Property occupancy 94.1% (highest in >decade); FY end step down in Q1 2025 then improve	Improving; near-term dip then recover
Financing & balance sheet	100% fixed-rate debt; tight bond spreads; net debt/in-place EBITDA ~6.1x (Q3)	Prefund $400M 2026 maturity in Q4 2025; 100% fixed at YE; variable <10% in 2025	Proactive/liquidity-first

Management Commentary

CEO: “2024 was another outstanding year…FFO per share…$2.57…an increase of 6.2% over 2023…Same-property cash NOI increased 9.1% year-over-year…tenant retention of 86%…highest annual level in over 20 years” .
CEO on policy tailwinds: “We expect [a] second Trump presidency will be very supportive…prioritize…Space activities, missile defense and expansion of naval capabilities…all…supported by different areas of our portfolio” .
CEO on GSA risk: “Our GSA exposure consists of only 8 leases totaling 185,000 square feet, representing less than 1% of annualized rental revenue” .
CFO: “We reported 2024 FFOPS (as adjusted) of $2.57…Same-property cash NOI normalized to exclude one-time items increased 3.4% in 2024…2025 FFOPS $2.62–$2.70…net impact on FFOPS guidance [of prefunding] approximately $0.015” .
COO: “Our leasing pipeline is strong…over 170k sq ft in advanced negotiations…Defense/IT portfolio vacancy leasing target 400k sq ft in 2025” .

Q&A Highlights

Defense budget dynamics: Management expects bipartisan DoD funding support to continue; customers show “no slowdown whatsoever,” potentially the opposite, indicating expansion .
Pricing power: Focus remains on reducing concessions and maximizing retention rather than pushing rates aggressively; cash rent spreads guided to flat at midpoint .
Data center land (Iowa): Path to roughly a gigawatt of power identified; timing general due to utility queue; 2025 spend on this is likely minimal .
Development starts: Plan to start 8,500 Rideout Road at Redstone; prepare secure campus for potential Space Command relocation; 2025 development capital excludes Space Command vertical spending .
Portfolio sales/liquidity: Office investment sales remain limited, largely distressed; cap rates not attractive—monitoring environment .

Estimates Context

S&P Global consensus estimates (EPS/Revenue) for Q4 2024 were unavailable due to API limit constraints; no estimate comparison is included. Consensus data from S&P Global was unavailable.

Key Takeaways for Investors

Portfolio resilience: Same-Property cash NOI at a record pace in 2024, high defense/IT occupancy/lease levels, and exceptional retention signal durable cash flows and lower re-leasing risk .
2025 setup: Guidance implies continued growth (midpoint FFOPS +3.5%); expect a near-term occupancy dip in Q1 from nonrenewals/contractions before improving as 2024 leases commence—trade around first-half vs second-half cadence .
Defense tailwinds as catalysts: Emphasis on space/missile defense/naval expansion aligns with Huntsville, Navy support, and DC Navy Yard adjacency—watch for build-to-suit and inventory development triggers (Space Command decision) .
Data center optionality: Two fully leased shells entering service in 2025 and long-term Iowa land option (power path confirmed) offer multi-year FFO/AFFO accretion potential; monitor power timing updates .
Balance sheet prudence: Prefunding 2026 maturity in Q4 2025 at tight spreads underpins liquidity and reduces refinancing risk, with minor FFO drag—risk-reward skew favorable in volatile credit environments .
Operating focus: Strategy favors concession discipline and high retention over rate pushes—supports steady NOI, minimizes downtime; expect cash rent spreads near flat, escalations ~2.5% .
Watchlist items: Q1 2025 occupancy dip; Iowa utility queue progress; Space Command decision; leasing velocity vs 400k target; debt market tone for Q4 2025 bond .

Citations: All metrics and statements sourced from CDP Q4 2024 8‑K press release and supplemental package and Q4 2024 earnings call transcript; prior quarter trend data from Q2/Q3 2024 8‑Ks. .

COPT DEFENSE PROPERTIES (CDP)·Q4 2024 Earnings Summary