Corporate Office Properties Trust

Transcription

1 Fairview Park Drive Falls Church Dulles Tech Center Herndon Corporate Office Properties Trust Northern Virginia Portfolio April 2014 The Preferred Provider of Mission Critical Real Estate Solutions Patriot Ridge Springfield Westfields Chantilly Westbranch Drive McLean

2 Itinerary 8:00-8:30AM Breakfast 8:30-8:45AM Stephanie Krewson, VP, Investor Relations Introduction 8:45-9:15AM Derrick Boegner, SVP, Asset Mgmt. & Leasing; Jason Krawiecki, Director, Leasing Overview of COPT s NoVA Portfolio 9:15-9:30AM Q&A 9:30AM Tour Bus leaves 2

3 I. Overview of COPT s NoVA Portfolio p. 4 II. Route 28-South, (Chantilly) p. 12 III. Tysons Corner, (McLean) p. 16 IV. Reston-Herndon p. 20 V. Other NoVA p. 24 a) 3120 Fairview Park Drive p. 25 b) Patriot Ridge p. 28 3

4 Overview of COPT s Northern Virginia Portfolio

5 Maryland 32 FORT MEADE Dulles Airport McLearen Center Westfields Chantilly Dulles Tower / Tech Pinnacle / Westbranch Fairview Park Washington, D.C. 66 Silver Spring Maritime Plaza Washington National Airport COPT DC-6 66 Manassas NGA Springfield Patriot Ridge 495 Virginia 95 FORT BELVOIR COPT I NoVA

6 Overview Summary of In-Service NoVA Office Portfolio: Total Year Built/ Square Feet 31-Dec-13 Rev per Address & Submarket Renovated Total Occ % Occ Occ SqFt Route 28-South (Chantilly)*: Conference Center Drive ,346 33, % $ Conference Center Drive ,757 70, % Conference Center Drive , , % Conference Center Drive , , % Conference Center Drive , , % Park Meadow Drive (Fairfax) , , % Stonecroft Boulevard ,099 88, % Subtotal Route 28-South (Chantilly)*: 14 yrs 767, , % Tyson's Corner (McLean): 1751 Pinnacle Drive 1989/ , , % Pinnacle Drive 1976/ , , % Westbranch Drive , , % Subtotal Tyson's Corner (McLean): 15 yrs 605, , % * Excludes the two WTP buildings that secure $150 million of indebtedness. COPT is evaluating the optimal resolution of this loan, including the conveying the properties to satisfy the loan. 6 6

7 Overview Summary of In-Service NoVA Office Portfolio (cont.): Total Year Built/ Square Feet 31-Dec-13 Rev per Address & Submarket Renovated Total Occ % Occ Occ SqFt Reston-Herndon: Sunrise Valley Road ,990 52, % $ Sunrise Valley Road ,068 77, % Woodland Park Road , , % McLearen Road , , % Towerview Road 1982/ , , % Subtotal Reston-Herndon: 13 yrs 915, , % Other NoVA Properties: 3120 Fairview Park Drive (Merrifield) ,669 91, % Backlick Road (Springfield) , , % Smith Switch Road (Ashburn) , , % Subtotal Other NoVA Properties: 3 yrs 622, , % TOTAL NOVA PORTFOLIO* 12 yrs 2,911,102 2,540, % $30.41 * Excludes the two WTP buildings that secure $150 million of indebtedness. COPT is evaluating the optimal resolution of this loan, including the conveying the properties to satisfy the loan. 7 7

8 Northern Virginia Portfolio Summary: COPT entered the Northern Virginia (NoVA) market in 2001 and has grown in a disciplined manner. None of COPT s NoVA assets were directly negatively impacted by the 2005 BRAC* move-outs. None of COPT s NoVA assets were part of our Strategic Reallocation Plan ( ). The majority of COPT s NoVA assets are strategically located proximate to government demand drivers and transportation solutions. The COPT brand is well-established, providing a competitive edge in leasing. * Base Realignment and Closure Commission of the United States Congress. 8 8

9 Northern Virginia Portfolio Supply: Lack of new construction However, 2.0 million SF of new supply delivered in 2013: Rosslyn 540,000 SF Pentagon City 320,000 SF (owned & occupied by Boeing) Also, 1.7 million SF scheduled to deliver in 2014: Tysons Corner 833,000 SF Eisenhower Avenue 336,000 SF Clarendon/Courthouse 300,000 SF Fairfax Center 112,500 SF 9 9

10 Northern Virginia Portfolio Demand: In 2013 NoVA experienced negative net absorption of 910,000 SF. In 4Q 13, however, the market saw modestly positive net absorption of 55,000 SF Most promising submarkets are: Reston, Herndon & Tysons Corner Densification still playing out to some degree Average deal size COPT is seeing is 5,000-10,000 SF Flight-to-quality by tenants of all sizes bodes well for newer buildings in amenity-rich locations Early termination options generally being exercised Bipartisan Budget Act of 2013 supports longer-term decision making, including lease term COPT seeing defense contractors trying to lock in long-term leases to take advantage of landlord concessions 10 10

11 Northern Virginia Portfolio Economic Statistics: NoVA vacancy statistics reflect recent BRAC move-outs in Crystal City and Skyline Asking rents are recovering, but concessions heavily favor tenants Table : NoVA Vacancy Rates Northern Virginia Period End National Region* COPT NoVA Portfolio % 13.2% 3.6% % 13.4% 4.6% % 13.4% 6.4% % 14.5% 16.8% % 16.5% 12.7% % 17.5% 10.2% Chart 1: Asking Rents in the U.S. vs. Northern Virginia Bps change National Northern Virginia Region* COPT NoVA Portfolio Source: CoStar Data is for Class A & B office properties (existing or under construction), only. * Includes the following submarkets: Annandale, Ballston, Clarendon/Courthouse, Crystal City, Eisenhower Ave Corridor, Fairfax Center, Fairfax City, Falls Church, Herndon, Huntington/Mt Vernon, I-395 Corridor, McLean, Merrifield, N Arlington/E FallsChurch, Oakton, Old Town Alexandria, Pentagon City, Reston, Rosslyn, Route 28 Corridor South, Springfield/Burke, Vienna, Virginia Square

12 Route 28-South (Chantilly)

13 PROPERTIES TO BE CONVEYED 7 8 Washington Technology Park: Conference Center Drive Washington Technology Park II: Conference Center Drive 13

14 Route 28-South (Chantilly) - Westfields Economic Statistics: COPT s low vacancy rate reflects our concentration of assets in the Westfields submarket, which has numerous U.S. Government demand drivers Asking rents are stable, but concessions heavily favor tenants Table : NoVA Submarket Vacancy Rates Northern Period End Virginia Region* Chantilly Submarket COPT Chantilly Portfolio** % 18.6% 15.1% % 18.4% 9.7% % 17.7% 6.7% Bps change ** Includes the two WTP buildings that are to be conveyed in Chart 1: Asking Rents in NoVA vs. Chantilly Submarket Northern Virginia Region* Chantilly Submarket COPT Chantilly Portfolio Source: CoStar Data is for Class A & B office properties (existing or under construction), only. * Includes the following submarkets: Annandale, Ballston, Clarendon/Courthouse, Crystal City, Eisenhower Ave Corridor, Fairfax Center, Fairfax City, Falls Church, Herndon, Huntington/Mt Vernon, I-395 Corridor, McLean, Merrifield, N Arlington/E FallsChurch, Oakton, Old Town Alexandria, Pentagon City, Reston, Rosslyn, Route 28 Corridor South, Springfield/Burke, Vienna, Virginia Square

15 Route 28-South (Chantilly) - Westfields History/Overview: Demand Driver: Multiple Federal Government Agencies At 1,100 acres, Westfields is one of Northern Virginia s largest and one of its most impressive office parks Total capacity at 16 million SF, current office is 7 million SF and approximately 900,000 SF of flex/industrial space Supported by a world class business hotel, restaurants and numerous amenities including childcare facilities Offers outstanding resources including tools, excellent fiber optic networks and redundant power capabilities COPT s portfolio of seven* properties containing 767,300 SF is currently 93.5% occupied, with the average age of 14 years Competition: Carr Properties, Duke Realty, BPG, PS Business Parks * Excludes the two Washington Technology Park properties, which secure $150 million of non-recourse debt that COPT is in the process of resolving. 15

16 Tysons Corner (McLean)

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18 Tysons Corner (McLean) Economic Statistics: COPT s portfolio occupancy in Tysons is comparable to the submarket, overall Asking rents have recovered since the last recession, but concessions heavily favor tenants Table : NoVA Submarket Vacancy Rates Northern Period End Virginia Region* McLean Submarket COPT McLean Portfolio % 8.3% 3.6% % 6.8% 11.2% % 7.2% 7.3% Bps change Chart 1: Asking Rents in NoVA vs. McLean Submarket Northern Virginia Region* McLean Submarket COPT McLean Portfolio Source: CoStar Data is for Class A & B office properties (existing or under construction), only. * Includes the following submarkets: Annandale, Ballston, Clarendon/Courthouse, Crystal City, Eisenhower Ave Corridor, Fairfax Center, Fairfax City, Falls Church, Herndon, Huntington/Mt Vernon, I-395 Corridor, McLean, Merrifield, N Arlington/E FallsChurch, Oakton, Old Town Alexandria, Pentagon City, Reston, Rosslyn, Route 28 Corridor South, Springfield/Burke, Vienna, Virginia Square

19 Tysons Corner (McLean) History/Overview: Demand Driver: USG; Financial Services, IT firms, Law offices, Insurance Metro: Some mid-size firms in the professional services (law, accounting, finance) are repositioning to be closer to the Metro in Tysons Corner, which is expected to open in July 2014 COPT owns three buildings in Tysons Corner that aggregate 605,000 SF, have an average age of 15 years, and are 92.7% occupied Competition: PS Business Parks KBS WRIT Lerner Beacon Brandywine TIAA-CREF Meridian Deutsche Asset Wealth Mgmt. American Realty Advisors MRP Realty Gannett Co., Inc. 19

20 Reston-Herndon

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22 Reston - Herndon Economic Statistics: COPT occupancy has rebounded in recent years, due to leasing momentum in two buildings: 2900 Towerview Road & Sunrise Valley Road, which are approximately 90% and 75% leased, respectively Asking rents declined in 2013, but show signs of stabilizing Table : NoVA Submarket Vacancy Rates Northern Period End Virginia Region* Herndon Submarket COPT Herndon Portfolio % 11.9% 25.2% % 14.3% 13.8% % 11.2% 14.3% Bps change Chart 1: Asking Rents in NoVA vs. Herndon Submarket Northern Virginia Region* Herndon Submarket COPT Herndon Portfolio Source: CoStar Data is for Class A & B office properties (existing or under construction), only. * Includes the following submarkets: Annandale, Ballston, Clarendon/Courthouse, Crystal City, Eisenhower Ave Corridor, Fairfax Center, Fairfax City, Falls Church, Herndon, Huntington/Mt Vernon, I-395 Corridor, McLean, Merrifield, N Arlington/E FallsChurch, Oakton, Old Town Alexandria, Pentagon City, Reston, Rosslyn, Route 28 Corridor South, Springfield/Burke, Vienna, Virginia Square

23 Reston Herndon History/Overview: Demand Driver: Multiple Federal Government Agencies, as well as IT/Software and Financial Services firms Amenity rich submarket; deep & varied housing market COPT s portfolio of five buildings are 13 years old, on average, and contain 916,000 SF that are 92.9% occupied. Competition: Brandywine Realty Brookfield Liberty Property Boston Properties 23

24 Other NoVA

25 3120 Fairview Park Drive

26 Featured Property: 3120 Fairview Park Drive History/Overview: Fairview Park is headquarters to several international Defense Contractors, including Northrop Grumman, General Dynamics, CSC & DynCorp International The U.S. Government completed the move of TRICARE to the park in Fairview Park Drive Contains 183,700 SF and, adjusting for 1Q 14 leasing, is 60% leased COPT purchased the newly constructed, vacant shell in 2010 as a value-added opportunity The uncertain budget environment that prevailed made tenants risk averse, which favored plug-and-play space Tenants did not want the added cost/risk associated with building out shell space Competition: Brandywine, Colonial 26

27 3120 Fairview Park Drive 8-story, 183,700 SF, Class A office building with 9-foot ceiling height 49% leased at 12/31/13; 60% leased at 3/31/14 Visibility from I-95 Structured parking 3.4/1,000 SF Pre-cast and architectural glass; designed to meet government security occupancy standards Loading dock with 2 dock leveler systems LEED Silver certified On-site fitness, management office and deli (pending) 27

28 Patriot Ridge

29 Maryland 32 FORT MEADE Dulles Airport McLearen Center Westfields Chantilly Dulles Tower /Tech Pinnacle / Westbranch Fairview Park 66 Silver Spring Washington, D.C. Maritime Plaza Washington National Airport COPT DC-6 66 Manassas NGA Springfield Patriot Ridge FORT BELVOIR 495 Virginia 95 COPT I Patriot Ridge

30 Patriot Ridge 30

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32 Northern Virginia Patriot Ridge History/Overview: COPT can develop up to 1 million SF of office space to accommodate contractors supporting the NGA, including: 1st building, 7770 Backlick Road contains 239,300 SF and is 50% leased Demand Driver: Fort Belvoir Fort Belvoir benefited more than any other military installation in the US from the 2005 BRAC The NGA (National Geospatial Intelligence Agency) opened its new 2.2 million SF HQ in 2011 (8,500 employees) Transportation loop changed between Metro, Patriot Ridge and NGA Vision Center Competition: ING Clarion Partners Metro Park, Belvoir Corporate Campus 32

33 Patriot Ridge 7770 Backlick Road 8-story, 239,300 SF, Class A office building As of 12/31/13: 50% leased Visibility from I-95 9-foot ceiling height Structured parking 3.4/1,000 SF (completed to accommodate existing and future phases) Pre-cast and architectural glass Loading dock with 2 dock leveler systems Designed to meet government security occupancy standards Landscaped courtyard with sculpture & seating area Built to achieve LEED Silver certification or higher On-site fitness, management office and deli 33

34 Patriot Ridge 7770 Backlick Road 34

35 Disclosure Unless otherwise noted, information in this presentation represents the Company s consolidated portfolio as of or for the quarter ended December 31, Defined terms for Non-GAAP measures used throughout may be found in the Disclosure. In addition, Reconciliations of Non-GAAP measures to the most comparable GAAP measures are included in the Disclosure. This presentation 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 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. Accordingly, 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. Important factors that may affect these expectations, estimates, and projections include, but are not limited to: general economic and business conditions, which will, among other things, affect office property and data center demand and rents, tenant creditworthiness, interest rates, financing availability and property values; adverse changes in the real estate markets, including, among other things, increased competition with other companies; governmental actions and initiatives, including risks associated with the impact of a government shutdown or budgetary reductions or impasses, such as a reduction in rental revenues, non-renewal of leases, and/or a curtailment of demand for additional space by strategic customers; and the Company s ability to sell properties included in its Strategic Reallocation Plan. The Company undertakes no obligation to update or supplement any forward-looking statements. For further information, please refer to the Company s filings with the SEC. 35

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