COPT Defense Acquires Land for Data Center Shell Development near Des Moines, IA and an 80,000 Square Foot Building in San Antonio, TX

Rhea-AI Summary

COPT Defense (NYSE: CDP) has made two strategic acquisitions: a 365-acre land parcel near Des Moines, Iowa for $32 million and an 80,000 square foot building in San Antonio, Texas for $17 million. The Iowa site can accommodate approximately 3.3 million square feet of data center development with 1 gigawatt power capacity. The San Antonio building is fully leased to the U.S. Government with occupancy expected in Q2 2025. Des Moines, being the 5th largest hyperscale market, offers attractive land values, power availability, renewable energy access, and tax incentives. The Company plans to self-fund the Iowa development on a leverage-neutral basis.

Positive

• Acquired 365-acre land parcel with 3.3M sq ft development potential
• Secured 100% occupancy for San Antonio building with U.S. Government leases
• Des Moines location offers strategic advantages in hyperscale market
• Development planned with leverage-neutral financing
• Portfolio occupancy rate at 96.7% as of June 2024

Negative

• San Antonio property revenue generation delayed until Q2 2025
• $49 million total investment requires significant capital outlay

Insights

Real Estate Investment Analyst

This strategic acquisition marks a significant expansion for COPT Defense with two key assets. The $32 million Des Moines land purchase represents substantial growth potential, capable of supporting 3.3 million square feet of data center development with 1 gigawatt power capacity. The location's advantages include favorable land values, renewable energy access and tax incentives in the nation's 5th largest hyperscale market.

The San Antonio acquisition at $17 million demonstrates strong execution with immediate value creation through two pre-secured government leases. This property enhances COPT's existing 1.0 million square foot campus in the area, strengthening their government-focused portfolio. The leverage-neutral development approach for the Des Moines project indicates prudent financial management, while the guaranteed government tenancy in San Antonio provides stable, long-term income streams.

COLUMBIA, Md.--(BUSINESS WIRE)-- COPT Defense Properties (NYSE: CDP) (“COPT Defense” or the “Company”) acquired a 365-acre land parcel near Des Moines, Iowa in late September for $32 million to expand its data center shell program. The existing zoning on the land allows for data center development and initial plans indicate that the site can accommodate approximately 3.3 million square feet of development, supported by an estimated 1 gigawatt of power capacity.

Also, late in the third quarter, the Company acquired an 80,000 square foot building at 3900 Rogers Road in San Antonio, Texas for $17 million. The building was vacant upon acquisition, and the Company subsequently executed two leases with the U.S. Government to occupy the entire building, which it expects to commence in the second quarter of 2025. The Class A office building was constructed in 2005, and is located 5 miles northwest of the Company’s approximately 1.0 million square foot campus, which is 100% leased and occupied.

Stephen E. Budorick, COPT Defense’s President & Chief Executive Officer, commented, “Our land acquisition outside of Des Moines, Iowa provides a significant opportunity for us to expand our highly successful data center shell program to a new market. Des Moines, the 5^th largest hyperscale market in the country is already home to several of the largest hyperscalers in the world, which are drawn to the market given attractive land values, power availability, with abundant access to renewable energy, access to long-haul fiber lines, and tax incentives enacted by supportive state and local governments. We expect this opportunity will fuel our development pipeline in the medium to long-term, and result in long-term accretion to FFO, AFFO, and NAV per share. Importantly, as we build out the parcel in phases, we plan to self-fund development of the site on a leverage-neutral basis.

“The acquisition of the Rogers Road building expands our relationship with the U.S. Government, provides additional operational scale given our nearby campus in San Antonio, will be accretive when rent commences in 2Q25, and reinforces our reputation as a trusted partner in supporting mission critical U.S. Government and defense contractor tenant requirements.”

Please see pages 8-22 of the Company’s 3Q24 Results Presentation for further details.

About COPT Defense

COPT Defense, an S&P MidCap 400 Company, is a self-managed REIT focused on owning, operating and developing properties in locations proximate to, or sometimes containing, key U.S. Government (“USG”) defense installations and missions (referred to as its Defense/IT Portfolio). The Company’s tenants include the USG and their defense contractors, who are primarily engaged in priority national security activities, and who generally require mission-critical and high security property enhancements. As of June 30, 2024, the Company’s Defense/IT Portfolio of 193 properties, including 24 owned through unconsolidated joint ventures, encompassed 22.0 million square feet and was 96.7% leased.

Forward-Looking Information

This press release may contain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company’s current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “could,” “believe,” “anticipate,” “expect,” “estimate,” “plan” or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Although the Company believes that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, the Company can give no assurance that these expectations, estimates and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements and the Company undertakes no obligation to update or supplement any forward-looking statements.

The areas of risk that may affect these expectations, estimates and projections include, but are not limited to, those risks described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Source: COPT Defense Properties

View source version on businesswire.com: https://www.businesswire.com/news/home/20241028783141/en/

IR Contacts:

Venkat Kommineni, CFA

443.285.5587

venkat.kommineni@copt.com

Michelle Layne

443.285.5452

michelle.layne@copt.com

Source: COPT Defense Properties

FAQ

What is the size and cost of COPT Defense's new land acquisition in Des Moines?

COPT Defense acquired a 365-acre land parcel near Des Moines, Iowa for $32 million, capable of accommodating approximately 3.3 million square feet of data center development with 1 gigawatt power capacity.

What are the details of COPT Defense's San Antonio property acquisition?

COPT Defense acquired an 80,000 square foot building at 3900 Rogers Road in San Antonio for $17 million, which is fully leased to the U.S. Government with occupancy expected to commence in Q2 2025.

Why did COPT Defense choose Des Moines for its data center expansion?

Des Moines was chosen because it's the 5th largest hyperscale market, offering attractive land values, power availability, renewable energy access, long-haul fiber lines access, and favorable tax incentives from supportive state and local governments.