COPT Defense Properties Surpasses Q1 2025 Targets with Strong Leasing Activity and Narrowed Guidance
COPT Defense Properties has reported a strong start to 2025, surpassing its first quarter targets across various key performance indicators. The company's President and CEO, Steve Budorick, highlighted the strong results during a recent conference call, citing increased dividend payments, improved FFO per share, and healthy same-property cash NOI growth.
COPT Defense Properties achieved FFO per share as adjusted for comparability of $0.65, which is right on target with its previous guidance. This represents a 4.8% year-over-year increase. The company's same-property cash NOI grew by 7.1% year-over-year, further demonstrating the strength of its portfolio.
On the leasing front, COPT Defense Properties has signed a significant 179,000 square feet of vacancy leasing year-to-date, accounting for 45% of its full-year target. This activity is predominantly driven by Defense/IT locations, with nearly three-quarters of it happening in these areas. The company has also executed 100,000 square feet of investment leasing across three properties, including a notable 48,000 square foot lease at Franklin Center in Colombia way.
Tenant retention was healthy during the quarter, with 75% of tenants choosing to renew their leases. This is impressive given that the company absorbed a few contractions on non-renewals. COPT Defense Properties has committed over $50 million of capital to a new investment at Redstone Gateway in Huntsville.
The company's strategy of developing into visible demand continues to bear fruit, with its next inventory building commencing development. This 150,000 square foot building already has 90,000 square feet of prospects from three large defense contractors. COPT Defense Properties' Defense/IT portfolio occupancy rate has exceeded 94% for nine consecutive quarters, a testament to the company's successful strategy and performance.
Guidance for the year remains intact, with COPT Defense Properties maintaining its FFO per share guidance of $2.66 at the midpoint. This represents a 3.5% growth over the exceptional results achieved in 2024. The company has narrowed its range, as year-to-date performance is tracking according to plan.
COPT Defense Properties has responded to recent headlines on DOGE and defense spending by stating that these will not impact priority missions it supports. In fact, the company believes that some areas of the DoD, such as cybersecurity, missile defense, and autonomous and unmanned aerial systems, may even benefit from reallocation.
