COPT Defense Properties (CDP) Nareit REITweek: 2026 Investor Conference summary

Portfolio Overview and Strategy

• Specializes in mission-critical, high-security assets supporting U.S. defense, with 207 properties mainly near defense installations in Maryland, Virginia, Alabama, and Texas.

• 80% of the portfolio contains high-security measures, including SCIF and ATFP, with 93% of cash NOI from defense IT properties.

• Largest tenant is the U.S. government, with 99 leases across 70 properties, contributing 35% of annualized rental revenue; defense contractors contribute 52%.

• 90% of annualized rental revenue from Defense/IT tenants, with high credit quality.

• Strategy focuses on capital allocation to durable demand locations, highly pre-leased developments, and maintaining an investment-grade balance sheet.

Leasing, Retention, and Economics

• Achieved 1.2 million sq ft of renewal volume, with an 80% tenant retention rate, significantly above peers.

• Tenant retention at 91% in 1Q26, with a 10-year average of 79%.

• Lease concessions are down 25% since 2023, with tenants making significant investments, supporting high retention.

• Leases feature annual escalators, typically growing over 3.5% per year, and positive mark-to-market trends.

• Cash rent spreads on renewals reached 3.8%, with a 12% straight-line rent spread.

Demand Drivers and Development Pipeline

• FY 2027 DoD budget request of $1.425T, a 44% increase over FY 2026 enacted, expected to drive demand.

• 1 million sq ft under development across seven projects, 71% pre-leased, with $250–$290 million in starts expected for 2024.

• Huntsville (Redstone Arsenal) offers over 3 million sq ft of future development capacity, with significant government programs driving demand.

• Active development pipeline of $508M, with 1.0M SF at 77% leased.

• Typical development yields a threshold cash-on-cash return of 8.5% in the first year.