COPT Defense Properties Soars to New Heights in 2024: A Year of Resilience and Record-Breaking Growth
COPT Defense Properties has just reported its fourth quarter and full year results for 2024, and it's been a year of outstanding achievement for the company. According to Stephen E. Budorick, President and CEO, '2024 was another outstanding year for the company. Our business plan proved resilient yet again as we met or outperformed every major target metrics.'
One of the key highlights from the quarter is the company's same-property cash NOI (Net Operating Income) increase of 9.1% year-over-year, which is the highest increase ever reported by the company. This demonstrates the strength and resilience of COPT Defense Properties' business model in the face of a challenging economic environment.
Additionally, the company executed an impressive 0.5 million square feet of vacancy leasing, representing 45% of the space that was available at the beginning of the year. Tenant retention rates also reached a record high of 86%, marking the highest annual level in over 20 years.
The company's strategic plan is paying off, with COPT Defense Properties committed to investing $212 million of capital in new investments, including its first building acquisitions since 2015 and in San Antonio Columbia Gateway. This demonstrates the company's confidence in its business model and its ability to adapt to changing market conditions.
In terms of guidance for 2025, COPT Defense Properties is establishing FFO (Funds From Operations) per share guidance of $2.66 at the midpoint, implying $0.09 or 3.5% growth over 2024's exceptional results. Net of nonrecurring events in 2024, this guidance supplies 4.7% normalized FFO growth per share in 2025.
The company is also expecting the new presidential administration to be supportive of its defense programs, with President Trump's national security philosophy emphasizing peace and strength through dominant military capability, capacity, and technical superiority. This is reminiscent of Ronald Reagan's massive defense program during his presidency, which saw defense spending growth of roughly 7% on a compound annual basis.
COPT Defense Properties has historically thrived under Republican administrations, with the company posting strong operating and leasing metrics during President Trump's first term. The company expects this trend to continue in 2025, with President Trump prioritizing three areas of defense: space activities, missile defense, and expansion of naval capabilities.
The company also addressed a common misperception regarding GSA leases, highlighting that its strategy and portfolio are anchored by large government tenancy, but it has minimal exposure to the GSA. Revenue from its 99 U.S. government leases generates 36% of its annualized rental revenue, with the vast majority of this space supporting high-potential national defense activities leased under the procurement authority of the mission.
