In Washington, D.C., constraints on building incremental supply combine with relatively steady demand for space from both U.S. and multinational entities to keep the long-term outlook favorable for landlords.
COPT's NOI margin is meaningfully below its early-2000s average near 70%. As COPT leases vacant space, it should be able to meaningfully expand its margin and cash flow.
COPT owns roughly 1,700 acres of land, which it could eventually develop into roughly 20 million square feet of additional office space, representing an option on future growth. Read more
COPT's mainly suburban office buildings won't fully participate in the favorable long-term dynamics of Washington, D.C.'s city center properties.
Although COPT has a large land bank, much of it is in areas where incremental demand for office space is unlikely to materialize anytime soon. In the meantime, the land is a sunk cost earning no immediate cash return.
In the recent low-rate environment, investors may have bid up prices of other sources of yield, such as REITs. There is risk that capital will flow out of REITs should interest rates rise in the future, pressuring asset values. Read more
COPT's historical capital-allocation decisions have been mixed. The firm has delivered outstanding total shareholder returns averaging roughly 15% since its 1995 initial public offering, beating the return on the S&P 500 by roughly 2 times over Read more
Corporate Office Properties Trust owns properties mainly in suburban office parks. It recently had roughly 200 properties with approximately 19 million square feet of space, Read more