COPT Defense Properties (CDP) | Investment Case

1. Company Snapshot

1.a. Company Description

COPT is a REIT that owns, manages, leases, develops and selectively acquires office and data center properties.The majority of its portfolio is in locations that support the United States Government and its contractors, most of whom are engaged in national security, defense and information technology (IT) related activities servicing what the Company believes are growing, durable, priority missions (Defense/IT Locations).The Company also owns a portfolio of office properties located in select urban submarkets in the Greater Washington, DC/Baltimore region with durable Class-A office fundamentals and characteristics (Regional Office Properties).

As of June 30, 2023, the Company derived 90% of its core portfolio annualized rental revenue from Defense/IT Locations and 10% from its Regional Office Properties.As of the same date and including 24 properties owned through unconsolidated joint ventures, COPT's core portfolio of 192 properties encompassed 22.9 million square feet and was 95% leased.

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1.b. Last Insights on CDP

COPT Defense Properties' recent performance was driven by strong Q2 2025 earnings, with FFO per share beating estimates at $0.68, up from $0.64 a year ago. The company's Defense/IT investment strategy yielded impressive results, with FFO per share exceeding guidance midpoint. A Zacks rating upgrade to Buy reflects growing optimism about its earnings prospects. With a high tenant occupancy rate and active development pipeline, the REIT is poised for future growth. Its solid balance sheet and investment-grade credit ratings mitigate potential risks.

1.c. Company Highlights

Last Price	29.11
Change Percentage	-1.49%
Open	29.41
Previous Close	29.55
Market Cap ( Millions)	3291
Volume	443115
Year High	33.49
Year Low	23.92
M A 50	28.88
M A 200	28.01

FCF Yield	7.35%
Dividend Yield	4.16%
ROE	9.93%
Debt / Equity	0.00%
Net Debt / EBIDTA	0.00%
Price To Book	2.11
Price Earnings Ratio	21.84
Price To FCF	13.6
Price To sales	4.39
EV / EBITDA	9.46

2. COP Defense Properties Beats Expectations with Strong Q3 2025 Results

COP Defense Properties reported a strong financial performance in Q3 2025, with FFO per share as adjusted for comparability coming in at $0.69, beating the midpoint of guidance by $0.02 and analyst estimates of $0.68. The company's same-property cash NOI increased 4.6% year-over-year for both the quarter and the first 9 months, driven by continued strong demand from defense contractors. The portfolio ended the quarter at 95.7% leased, the highest level in 20 years, with the Defense/IT portfolio at 97% leased.

Publication Date: Nov -14

                                    📋 Highlights
                                    FFO Per Share Outperformance:
                                                Q3 FFO per share was $0.69, $0.02 above guidance midpoint, with 6.2% YoY growth ($2.02 for 9 months) and 5.2% YoY 9-month growth.
Portfolio Occupancy Record:
                                                Portfolio ended at 95.7% leased, the highest in 20 years, with 78,000 sq ft of vacancy leased in Q3 and 432,000 sq ft for 9 months.
Defense/IT Portfolio Strength:
                                                Lease rate in Defense/IT portfolio rose 20 bps to 97%, while total portfolio lease rate increased 10 bps despite 10 bps occupancy decline.
Debt Facility Optimization:
                                                Upsized credit facility to $800M (from $600M), reduced SOFR spreads by 20-25 bps, and secured a $200M 4-year revolving credit facility for development projects.
Guidance Updates:
                                                2025 FFO per share increased to $2.70 (±$0.03), same-property NOI growth raised to 4%, and capital committed to new investments boosted to $250M (+$25M).

                                

Operational Highlights

The company signed 78,000 square feet of vacancy leasing in the quarter and 432,000 square feet during the first 9 months. Occupancy in the total portfolio declined 10 basis points sequentially, but the lease rate increased 10 basis points. The company's guidance updates include an increase in FFO per share by $0.03 to $2.70 a share, same-property cash NOI growth increased to 4%, and cash rent spreads on renewals increased by 200 basis points to 2%.

Debt and Liquidity

The company has taken steps to improve its debt profile, upsizing its credit facility by $200 million to $800 million, extending the maturity by 3 years to 2030, and achieving pricing at BBB flat, Baa2 spread levels. This led to a decline in the SOFR spread on the credit facility by 20 basis points to 85 basis points and a decline in the SOFR spread on the term loan by 25 basis points to 105 basis points. The company also closed a $200 million 4-year secured revolving credit facility in October.

Valuation

With a P/E Ratio of 21.63 and an EV/EBITDA of 9.37, the company's valuation appears reasonable given its strong financial performance and growth prospects. Analysts estimate next year's revenue growth at 5.5%, which is slightly higher than the company's historical growth rate. The Dividend Yield of 4.2% is also attractive, providing a relatively stable source of return for investors.

Outlook

The company is well-positioned to deliver another successful full year, with a compound annual FFO per share growth of over 4% between 2023 and 2026. The acquisition of Stonegate I is expected to contribute to the company's growth, and the company is optimistic about the potential for new developments in the area driven by the Golden Dome property. As the company continues to execute on its strategy, investors can expect continued strong financial performance and returns.

3. NewsRoom

Edgestream Partners L.P. Reduces Stake in COPT Defense Properties $CDP

Dec -04

Source: defenseworld.net

COPT Defense Properties (NYSE:CDP) Given Consensus Rating of “Moderate Buy” by Analysts

Dec -01

Source: defenseworld.net

Winners And Losers Of REIT Earnings Season

Nov -14

Source: seekingalpha.com

Fed Cuts, Yields Jump, REITs Dip

Nov -02

Source: seekingalpha.com

COPT Defense Properties (CDP) Q3 2025 Earnings Call Transcript

Oct -31

Source: seekingalpha.com

COPT Defense (CDP) Reports Q3 Earnings: What Key Metrics Have to Say

Oct -30

Source: zacks.com

COPT Defense (CDP) Surpasses Q3 FFO and Revenue Estimates

Oct -30

Source: zacks.com

COPT Defense Reports Third Quarter 2025 Results

Oct -30

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.33%)

6. Segments

Fort Meade/Baltimore Washington Corridor

Expected Growth: 4.5%

The 4.5% growth in the Fort Meade/Baltimore Washington Corridor is driven by the presence of COPT Defense Properties, a leading owner and operator of specialized office properties. Key drivers include the corridor's proximity to major defense installations, a highly educated workforce, and a strong demand for defense-related services, as well as the growing importance of cybersecurity and intelligence operations in the region.

Northern Virginia Defense/Information Technology

Expected Growth: 4.8%

Strong demand for defense and IT services in Northern Virginia, driven by proximity to the Pentagon and federal agencies, fuels growth. COPT's properties are strategically located near major defense contractors, supporting the segment's 4.8% growth. Additionally, the region's highly skilled workforce and investments in cybersecurity and data analytics further boost demand for defense and IT services.

Other

Expected Growth: 3.2%

COPT Defense Properties' 3.2% growth is driven by increasing demand for secure facilities, expansion of defense spending, and a growing need for data centers and cloud infrastructure. Additionally, the company's strategic acquisitions and development of properties in high-growth markets contribute to its growth momentum.

Lackland Air Force Base

Expected Growth: 4.2%

The 4.2% growth at Lackland Air Force Base is driven by increasing demand for defense infrastructure, strategic location, and COPT's expertise in managing defense properties. Additionally, the base's role in training and education, as well as its proximity to San Antonio's growing economy, contribute to the growth. Furthermore, the US government's continued investment in national defense and the base's importance in supporting military operations also support the growth.

Construction Contract and Other Service

Expected Growth: 4.0%

COPT Defense Properties' 4.0% growth in Construction Contract and Other Service is driven by increasing demand for secure facilities, expansion of government contracts, and rising investments in defense infrastructure. Additionally, the company's strategic partnerships and backlog of projects contribute to its growth momentum.

Redstone Arsenal

Expected Growth: 4.6%

Redstone Arsenal's 4.6% growth is driven by increasing demand for defense technology and cybersecurity, proximity to key government agencies, and COPT's strategic property management. The arsenal's role in missile defense and space exploration also fuels growth, as does the presence of major defense contractors like Boeing and Lockheed Martin.

Navy Support

Expected Growth: 4.1%

Navy Support from COPT Defense Properties' 4.1% growth driven by increasing demand for secure facilities, government investments in defense infrastructure, and strategic partnerships with the US Navy. Additionally, COPT's focus on mission-critical properties and its expertise in supporting defense operations contribute to its growth momentum.

Data Center Shells

Expected Growth: 4.9%

COPT Defense Properties' Data Center Shells growth is driven by increasing demand for secure and reliable data storage from government agencies and defense contractors, fueled by rising cybersecurity threats and growing adoption of cloud computing. Additionally, the company's strategic locations near major military bases and its expertise in meeting stringent security requirements contribute to its growth.

7. Detailed Products

Defense/Intelligence Properties

COPT Defense Properties specializes in acquiring, developing, and managing properties that support the U.S. government's defense and intelligence operations.

Data Center Properties

COPT Defense Properties offers data center properties that meet the unique requirements of defense and intelligence agencies, including high-security standards and redundant infrastructure.

Office and Administrative Properties

COPT Defense Properties provides office and administrative properties that cater to the specific needs of defense and intelligence agencies, including secure facilities and advanced IT infrastructure.

Research and Development Properties

COPT Defense Properties offers research and development properties that support the innovative work of defense and intelligence agencies, including specialized laboratories and testing facilities.

Training and Simulation Properties

COPT Defense Properties provides training and simulation properties that enable defense and intelligence agencies to train personnel and test systems in realistic and immersive environments.

8. COPT Defense Properties's Porter Forces

Forces Ranking

Threat Of Substitutes

COPT Defense Properties has a low threat of substitutes due to the unique nature of its defense properties, making it difficult for substitutes to enter the market.

Bargaining Power Of Customers

COPT Defense Properties has a medium bargaining power of customers due to the presence of a few large customers, but the company's diversified customer base mitigates this risk.

Bargaining Power Of Suppliers

COPT Defense Properties has a low bargaining power of suppliers due to its strong relationships with suppliers and the availability of alternative suppliers.

Threat Of New Entrants

COPT Defense Properties has a high threat of new entrants due to the attractiveness of the defense properties market, which may attract new competitors.

Intensity Of Rivalry

COPT Defense Properties operates in a moderately competitive market, with a few established players, but the company's strong brand and customer relationships help to mitigate the intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	62.67%
Debt Cost	3.95%
Equity Weight	37.33%
Equity Cost	8.62%
WACC	5.69%
Leverage	167.89%

11. Quality Control: COPT Defense Properties passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

COPT Defense

A-Score: 6.1/10

Value: 4.2

Growth: 4.8

Quality: 5.7

Yield: 8.0

Momentum: 4.0

Volatility: 10.0

1-Year Total Return ->

Kilroy Realty

A-Score: 6.0/10

Value: 5.1

Growth: 3.9

Quality: 5.8

Yield: 8.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

Highwoods Properties

A-Score: 5.9/10

Value: 4.8

Growth: 3.1

Quality: 5.4

Yield: 10.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

Douglas Emmett

A-Score: 4.9/10

Value: 4.3

Growth: 4.6

Quality: 3.7

Yield: 8.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

Boston Properties

A-Score: 4.8/10

Value: 3.3

Growth: 3.1

Quality: 3.8

Yield: 8.0

Momentum: 4.0

Volatility: 6.7

1-Year Total Return ->

SL Green Realty

A-Score: 4.1/10

Value: 2.1

Growth: 0.9

Quality: 3.5

Yield: 9.0

Momentum: 3.5

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-5.70%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.69%

COPT Defense Properties - US22002T1088

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CDP

1.c. Company Highlights

Average Quality

Medium Volatility

Average Growth

Revenues Beats

Earnings Miss

Lower Quality

Lower Growth

Stable Momentum

Earnings Beats

Fairly Valued

Less Volatile

Strong Momentum

Revenues Miss

Better Quality

Average Yield

2. COP Defense Properties Beats Expectations with Strong Q3 2025 Results

Operational Highlights

Debt and Liquidity

Valuation

Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.33%)

6. Segments

Fort Meade/Baltimore Washington Corridor

Expected Growth: 4.5%

Northern Virginia Defense/Information Technology

Expected Growth: 4.8%

Other

Expected Growth: 3.2%

Lackland Air Force Base

Expected Growth: 4.2%

Construction Contract and Other Service

Expected Growth: 4.0%

Redstone Arsenal

Expected Growth: 4.6%

Navy Support

Expected Growth: 4.1%

Data Center Shells

Expected Growth: 4.9%

7. Detailed Products

Defense/Intelligence Properties

Data Center Properties

Office and Administrative Properties

Research and Development Properties

Training and Simulation Properties

8. COPT Defense Properties's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: COPT Defense Properties passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

12.e Scoring ^Insights

12.f DCF ^BETA