COPT Defense Reports First Quarter 2026 Results
COLUMBIA, Md.--( BUSINESS WIRE)--COPT Defense Properties (“COPT Defense” or the “Company”) (NYSE: CDP) announced results for the first quarter ended March 31, 2026.
Management Comments
Stephen E. Budorick, COPT Defense’s President & Chief Executive Officer, commented, “We achieved solid results in the first quarter and our performance is tracking on all aspects of our full year plan. FFO per share exceeded the midpoint of our guidance range by $0.01. Based on this outperformance, and our forecast for the remainder of the year, we increased the midpoint of 2026 FFO per share guidance by $0.01 to $2.76.
In terms of our leasing achievements, we are off to a great start, as we have executed over 90,000 square feet of vacancy leasing, over 380,000 square feet of investment leasing, and a record 1.2 million square feet of renewal leasing in the first quarter, which equated to a strong tenant retention rate of 91%. Our strong renewal volume, retention, and cash rent spreads in the quarter were driven by the 953,000 square foot full renewal of our U.S. Government campus near Lackland Air Force Base in San Antonio. Our Defense/IT Portfolio was 95.6% occupied and 96.4% leased at quarter-end, and marked thirteen consecutive quarters in which our occupancy rate exceeded 94%, highlighting the strength and durability of our portfolio.
Over the past 4 months, we committed nearly $250 million to three new investments, consisting of a fully pre-leased build-to-suit development at The National Business Park in Maryland, an inventory building development that is designed for U.S. Government tenancy at Redstone Gateway in Alabama, and an acquisition of 17 acres of strategic land subject to a ground lease on which two fully leased strategic office buildings have been developed in Chantilly, Virginia. These investments serve to enhance and expand our relationships with leading defense contractor and U.S. Government tenants and position the Company to further expand our strategic portfolio in the future and ultimately drive shareholder value.
Our outstanding performance in 2025 and expected performance in 2026 led our Board of Trustees to approve a 4.9% increase in our quarterly dividend in February, which marks our fourth consecutive annual increase, amounting to a 16.4% cumulative increase since 2022. Finally, we were very pleased that Moody’s upgraded our investment grade rating by one level to Baa2 with a Stable outlook in March, which reflects the strength and specialized nature of our strategy, platform, and portfolio.”
Financial Highlights
1st Quarter Financial Results:
Operating Performance Highlights
Operating Portfolio Summary:
Same Property Performance:
Leasing:
Investment Activity Highlights
Balance Sheet and Capital Transaction Highlights
Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its first quarter 2026 conference call; the presentation can be viewed and downloaded from the ‘Financial Info – Financial Results’ section of COPT Defense’s Investors website: https://investors.copt.com/financial-information/financial-results
2026 Guidance
Management is revising and increasing the midpoint of its full-year guidance for diluted EPS and diluted FFOPS, per Nareit and as adjusted for comparability of $1.21-$1.29 and $2.71-$2.79, respectively, to new ranges of $1.24-$1.30 and $2.73-$2.79, respectively. Management is establishing second quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.31-$0.33 and $0.68-$0.70, respectively. Reconciliations of projected diluted EPS to projected diluted FFOPS, in accordance with Nareit and as adjusted for comparability, are as follows:
Reconciliation of Diluted EPS to FFOPS, per Nareit,
and As Adjusted for Comparability
Quarter Ending
June 30, 2026
Year Ending
December 31, 2026
Low
High
Low
High
Diluted EPS
$
0.31
$
0.33
$
1.24
$
1.30
Real estate-related depreciation and amortization
0.37
0.37
1.50
1.50
Gain on sales of real estate
—
—
(0.01
)
(0.01
)
Diluted FFOPS, Nareit definition and as adjusted for comparability
$
0.68
$
0.70
$
2.73
$
2.79
The Company detailed its initial full year guidance, with supporting assumptions, in a separate press release issued February 5, 2026; that release can be found in the ‘News & Events – Press Releases’ section of COPT Defense’s Investors website: https://investors.copt.com/news-events/press-releases
Conference Call Information
Management will discuss first quarter 2026 results on its conference call tomorrow, details of which are listed below:
Conference Call Date:
Tuesday, April 28, 2026
Time:
12:00 p.m. Eastern Time
Participants must register for the conference call at the link below to receive the dial-in number and personal pin. Registering only takes a few moments and provides direct access to the conference call without waiting for an operator. You may register at any time, including up to and after the call start time:
https://register-conf.media-server.com/register/BIe115c1b620434f18ba2fd85f99acc54d
The conference call will also be available via live webcast in the ‘News & Events – IR Calendar’ section of COPT Defense’s Investors website: https://investors.copt.com/news-events/ir-calendar
Replay Information
A replay of the conference call will be immediately available via webcast only on COPT Defense’s Investors website and will be maintained on the website for approximately 90 days after the conference call.
Definitions
For definitions of certain terms used in this press release, please refer to the information furnished in the Company’s Supplemental Information Package furnished on a Form 8-K which can be found on its website ( www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.
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 March 31, 2026, the Company’s Defense/IT Portfolio of 201 properties, including 24 owned through unconsolidated joint ventures, encompassed 23.2 million square feet and was 96.4% 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, 2025.
Source: COPT Defense Properties
COPT Defense Properties
Summary Financial Data
(unaudited)
(dollars and shares in thousands, except per share data)
For the Three Months Ended
March 31,
2026
2025
Revenues
Lease revenue
$
192,971
$
175,308
Other property revenue
1,625
2,289
Construction contract and other service revenues
6,041
10,259
Total revenues
200,637
187,856
Operating expenses
Property operating expenses
81,435
72,040
Depreciation and amortization associated with real estate operations
42,685
39,359
Construction contract and other service expenses
5,552
9,705
General and administrative expenses
8,456
8,148
Leasing expenses
2,994
2,999
Business development expenses and land carry costs
1,199
1,009
Total operating expenses
142,321
133,260
Interest expense
(23,996
)
(20,504
)
Interest and other income, net
3,955
1,568
Gain on sales of real estate
582
300
Income before equity in income of unconsolidated entities and income taxes
38,857
35,960
Equity in income of unconsolidated entities
1,406
371
Income tax expense
(124
)
(103
)
Net income
40,139
36,228
Net income attributable to noncontrolling interests
Common units in the Operating Partnership (“OP”)
(812
)
(726
)
Other consolidated entities
(771
)
(762
)
Net income attributable to common shareholders
$
38,556
$
34,740
Earnings per share (“EPS”) computation
Numerator for diluted EPS
Net income attributable to common shareholders
$
38,556
$
34,740
Amount allocable to share-based compensation awards
(161
)
(143
)
Numerator for diluted EPS
$
38,395
$
34,597
Denominator
Weighted average common shares - basic
112,806
112,383
Dilutive effect of share-based compensation awards
1,031
643
Dilutive exchangeable debt
472
—
Weighted average common shares - diluted
114,309
113,026
Diluted EPS
$
0.34
$
0.31
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands, except per share data)
For the Three Months Ended
March 31,
2026
2025
Net income
$
40,139
$
36,228
Real estate-related depreciation and amortization
42,685
39,359
Gain on sales of real estate
(582
)
(300
)
Depreciation and amortization on unconsolidated real estate JVs
742
741
Gain on sale of real estate on unconsolidated real estate JV
(1,146
)
—
Funds from operations (“FFO”)
81,838
76,028
FFO allocable to other noncontrolling interests
(1,131
)
(1,158
)
Basic FFO allocable to share-based compensation awards
(603
)
(530
)
Basic FFO available to common share and common unit holders (“Basic FFO”)
80,104
74,340
Diluted FFO adjustments allocable to share-based compensation awards
64
53
Diluted FFO available to common share and common unit holders and as adjusted for comparability
80,168
74,393
Straight line rent adjustments and lease incentive amortization
(1,330
)
(1,699
)
Amortization of intangibles and other assets included in net operating income (“NOI”)
60
162
Share-based compensation, net of amounts capitalized
3,186
2,854
Amortization of deferred financing costs
832
667
Amortization of net debt discounts, net of amounts capitalized
1,217
1,051
Replacement capital expenditures
(19,205
)
(21,464
)
Other
156
81
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)
$
65,084
$
56,045
Diluted FFO per share
$
0.69
$
0.65
Diluted FFO per share, as adjusted for comparability
$
0.69
$
0.65
Dividends/distributions per common share/unit
$
0.32
$
0.305
COPT Defense Properties
Summary Financial Data
(unaudited)
(dollars and shares in thousands, except per share data)
March 31,
2026
December 31,
2025
Balance sheet data
Properties, net of accumulated depreciation
$
3,802,976
$
3,783,477
Total assets
$
4,458,909
$
4,701,790
Debt per balance sheet
$
2,546,958
$
2,767,834
Total liabilities
$
2,867,138
$
3,114,115
Redeemable noncontrolling interest
$
25,130
$
25,506
Total equity
$
1,566,641
$
1,562,169
Debt to assets
57.1
%
58.9
%
Net debt to adjusted book
40.6
%
40.5
%
Defense/IT Portfolio data (as of period end)
Number of operating properties
201
201
Total operational square feet (in thousands)
23,167
23,159
% Occupied
95.6
%
95.5
%
% Leased
96.4
%
96.5
%
For the Three Months Ended
March 31,
2026
2025
GAAP
Payout ratio
Net income
92.5
%
97.2
%
Debt ratios
Net income to interest expense ratio
1.7x
1.8x
Debt to net income ratio
15.9x
16.6x
Non-GAAP
Payout ratios
Diluted FFO
46.0
%
47.0
%
Diluted FFO, as adjusted for comparability
46.0
%
47.0
%
Diluted AFFO
56.6
%
62.4
%
Debt ratios
Adjusted EBITDA fixed charge coverage ratio
4.3x
4.7x
Net debt to in-place adjusted EBITDA ratio
6.1x
6.1x
Net debt adjusted for fully-leased investment properties to in-place adjusted EBITDA ratio
5.9x
6.0x
Reconciliation of denominators for per share measures
Denominator for diluted EPS
114,309
113,026
Weighted average common units
2,063
2,047
Denominator for diluted FFO per share and as adjusted for comparability
116,372
115,073
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended
March 31,
2026
2025
Numerators for payout ratios
Dividends on unrestricted common and deferred shares
$
36,134
$
34,318
Distributions on unrestricted common units
711
661
Dividends and distributions on restricted shares and units
267
236
Total dividends and distributions for GAAP payout ratio
37,112
35,215
Dividends and distributions on antidilutive shares and units
(257
)
(237
)
Dividends and distributions for non-GAAP payout ratios
$
36,855
$
34,978
Reconciliation of net income to earnings before interest, income taxes, depreciation and amortization for real estate (“EBITDAre”), adjusted EBITDA, and in-place adjusted EBITDA
Net income
$
40,139
$
36,228
Interest expense
23,996
20,504
Income tax expense
124
103
Real estate-related depreciation and amortization
42,685
39,359
Other depreciation and amortization
416
542
Gain on sales of real estate
(582
)
(300
)
Adjustments from unconsolidated real estate JVs
650
1,518
EBITDAre
107,428
97,954
Credit loss (recoveries) expense
(369
)
515
Business development expenses
802
593
Executive transition costs
—
57
Net gain on other investments
(29
)
—
Adjusted EBITDA
107,832
99,119
Pro forma NOI adjustment for property changes within period
—
786
Change in collectability of deferred rental revenue
86
1,232
In-place adjusted EBITDA
$
107,918
$
101,137
Reconciliations of tenant improvements and incentives, building improvements, and leasing costs for operating properties to replacement capital expenditures
Tenant improvements and incentives
$
15,899
$
13,758
Building improvements
1,142
1,872
Leasing costs
1,547
3,461
Net additions to tenant improvements and incentives
924
3,538
Excluded building improvements
(307
)
(201
)
Excluded leasing costs
—
(964
)
Replacement capital expenditures
$
19,205
$
21,464
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended
March 31,
2026
2025
Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA
Interest expense
$
23,996
$
20,504
Less: Amortization of deferred financing costs
(832
)
(667
)
Less: Amortization of net debt discounts, net of amounts capitalized
(1,217
)
(1,051
)
COPT Defense’s share of interest expense of unconsolidated real estate JVs, excluding amortization of deferred financing costs and net debt premium and gain or loss on interest rate derivatives
947
752
Scheduled principal amortization
397
461
Capitalized interest, excluding amortization of deferred financing costs
1,679
927
Denominator for fixed charge coverage-Adjusted EBITDA
$
24,970
$
20,926
Reconciliation of net income to NOI from real estate operations, same property NOI from real estate operations, and same property cash NOI from real estate operations
Net income
$
40,139
$
36,228
Construction contract and other service revenues
(6,041
)
(10,259
)
Depreciation and other amortization associated with real estate operations
42,685
39,359
Construction contract and other service expenses
5,552
9,705
General and administrative expenses
8,456
8,148
Leasing expenses
2,994
2,999
Business development expenses and land carry costs
1,199
1,009
Interest expense
23,996
20,504
Interest and other income, net
(3,955
)
(1,568
)
Gain on sales of real estate
(582
)
(300
)
Equity in income of unconsolidated entities
(1,406
)
(371
)
Unconsolidated real estate JVs NOI allocable to COPT Defense included in equity in income of unconsolidated entities
2,056
1,889
Income tax expense
124
103
NOI from real estate operations
115,217
107,446
Non-Same Property NOI from real estate operations
(4,836
)
(400
)
Same Property NOI from real estate operations
110,381
107,046
Straight line rent adjustments and lease incentive amortization
677
(1,811
)
Amortization of acquired above- and below-market rents
80
64
Lease termination fees, net
(1,212
)
(834
)
Tenant funded landlord assets and lease incentives
(3,318
)
(3,413
)
Cash NOI adjustments in unconsolidated real estate JVs
(355
)
(260
)
Same Property Cash NOI from real estate operations
$
106,253
$
100,792
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
March 31,
2026
December 31,
2025
Reconciliation of total assets to adjusted book
Total assets
$
4,458,909
$
4,701,790
Accumulated depreciation
1,721,016
1,682,367
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs
227,989
228,656
COPT Defense’s share of liabilities of unconsolidated real estate JVs
82,353
82,039
COPT Defense’s share of accumulated depreciation and amortization of unconsolidated real estate JVs
16,583
16,000
Less: Property - operating lease liabilities
(43,768
)
(45,012
)
Less: Property - finance lease liabilities
(752
)
(363
)
Less: Cash and cash equivalents
(28,580
)
(274,986
)
Less: COPT Defense’s share of cash of unconsolidated real estate JVs
(1,230
)
(1,898
)
Adjusted book
$
6,432,520
$
6,388,593
March 31,
2026
December 31,
2025
March 31,
2025
Reconciliation of debt to net debt and net debt adjusted for fully-leased investment properties
Debt per balance sheet
$
2,546,958
$
2,767,834
$
2,412,670
Net discounts and deferred financing costs
21,946
23,466
21,886
COPT Defense’s share of unconsolidated JV gross debt
75,250
75,250
53,750
Gross debt
2,644,154
2,866,550
2,488,306
Less: Cash and cash equivalents
(28,580
)
(274,986
)
(24,292
)
Less: COPT Defense’s share of cash of unconsolidated real estate JVs
(1,230
)
(1,898
)
(1,766
)
Net debt
2,614,344
2,589,666
2,462,248
Costs incurred on fully-leased development properties
(82,576
)
(8,226
)
(27,499
)
Net debt adjusted for fully-leased investment properties
$
2,531,768
$
2,581,440
$
2,434,749