COPT Defense Reports Second Quarter 2026 Results
COLUMBIA, Md.--( BUSINESS WIRE)--COPT Defense Properties (“COPT Defense” or the “Company”) (NYSE: CDP) announced results for the second quarter ended June 30, 2026.
Management Comments
Stephen E. Budorick, COPT Defense’s President & Chief Executive Officer, commented, “Our performance during the first half of the year exceeded our plan and expectations in every respect. Our financial results, occupancy, leasing activity, and capital commitments to new investments continue to illustrate the benefits and opportunities from the strong demand for our portfolio, as FFO per share exceeded the midpoint of our guidance by $0.02 in the second quarter.
We increased the midpoint of 2026 FFO per share guidance by $0.02 to $2.78, which is $0.03 above our initial guidance. This is even more impressive considering this overcomes roughly $0.035 of incremental dilution from our Exchangeable Notes relative to our initial guidance, resulting from our 37% share price increase year-to-date. We also increased the midpoint of 2026 guidance for same property cash NOI growth by 100 basis points to 4.0%, the change in cash rents on renewals by 100 basis points to 3.0%, and capital commitment to new investments by $45 million to $335 million. Additionally, we raised our target for vacancy leasing by nearly 20% from 400,000 square feet to 475,000 square feet, based on the 231,000 square feet signed in the first half of the year, and our strong pipeline of deals in advanced negotiations.
We expect bipartisan support for growth in defense spending will continue, as the FY 2027 Budget Request calls for a 28% increase in the base budget to nearly $1.1 trillion, which excludes any additional funding from reconciliation. The FY 2027 Budget Requests also calls for meaningful increases in funding for the priority missions our portfolio supports, which includes intelligence, cybersecurity, and missile defense, thereby creating a favorable environment for continued demand in our portfolio."
Financial Highlights
2nd 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 second 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 $1.24-$1.30 and $2.73-$2.79, respectively, to new ranges of $1.39-$1.43 and $2.76-$2.80, respectively. Management is establishing third quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.37-$0.39 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
September 30, 2026
Year Ending
December 31, 2026
Low
High
Low
High
Diluted EPS
$
0.37
$
0.39
$
1.39
$
1.43
Real estate-related depreciation and amortization
0.37
0.37
1.50
1.50
Gain on sales of real estate
(0.06
)
(0.06
)
(0.13
)
(0.13
)
Diluted FFOPS, Nareit definition and as adjusted for comparability
$
0.68
$
0.70
$
2.76
$
2.80
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 second quarter 2026 results on its conference call tomorrow, details of which are listed below:
Conference Call Date:
Tuesday, July 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/BI747d6d14370a47ff9a560c5239e7db6a
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 June 30, 2026, the Company’s Defense/IT Portfolio of 202 properties, including 24 owned through unconsolidated joint ventures, encompassed 23.3 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)
(in thousands)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2026
2025
2026
2025
Revenues
Lease revenue
$
188,806
$
175,598
$
381,777
$
350,906
Other property revenue
1,820
1,859
3,445
4,148
Construction contract and other service revenues
6,766
12,458
12,807
22,717
Total revenues
197,392
189,915
398,029
377,771
Operating expenses
Property operating expenses
72,586
66,915
154,021
138,955
Depreciation and amortization associated with real estate operations
42,289
39,573
84,974
78,932
Construction contract and other service expenses
6,023
11,873
11,575
21,578
General and administrative expenses
9,237
8,202
17,693
16,350
Leasing expenses
3,089
2,613
6,083
5,612
Business development expenses and land carry costs
938
1,096
2,137
2,105
Total operating expenses
134,162
130,272
276,483
263,532
Interest expense
(24,444
)
(20,938
)
(48,440
)
(41,442
)
Interest and other income, net
2,973
1,223
6,928
2,791
Gain on sales of real estate
6,442
—
7,024
300
Income before equity in income of unconsolidated entities and income taxes
48,201
39,928
87,058
75,888
Equity in income of unconsolidated entities
392
355
1,798
726
Income tax expense
(34
)
(117
)
(158
)
(220
)
Net income
48,559
40,166
88,698
76,394
Net income attributable to noncontrolling interests
Common units in the Operating Partnership (“OP”)
(1,038
)
(846
)
(1,850
)
(1,572
)
Other consolidated entities
(1,084
)
(973
)
(1,855
)
(1,735
)
Net income attributable to common shareholders
$
46,437
$
38,347
$
84,993
$
73,087
Earnings per share (“EPS”) computation
Numerator for diluted EPS
Net income attributable to common shareholders
$
46,437
$
38,347
$
84,993
$
73,087
Amount allocable to share-based compensation awards
(183
)
(112
)
(343
)
(229
)
Numerator for diluted EPS
$
46,254
$
38,235
$
84,650
$
72,858
Denominator
Weighted average common shares - basic
112,871
112,459
112,839
112,421
Dilutive effect of share-based compensation awards
938
765
984
744
Dilutive exchangeable debt
1,087
—
763
—
Weighted average common shares - diluted
114,896
113,224
114,586
113,165
Diluted EPS
$
0.40
$
0.34
$
0.74
$
0.64
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands, except per share data)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2026
2025
2026
2025
Net income
$
48,559
$
40,166
$
88,698
$
76,394
Real estate-related depreciation and amortization
42,289
39,573
84,974
78,932
Gain on sales of real estate
(6,442
)
—
(7,024
)
(300
)
Depreciation and amortization on unconsolidated real estate JVs
726
732
1,468
1,473
Gain on sale of real estate on unconsolidated real estate JV
(130
)
—
(1,276
)
—
Funds from operations (“FFO”)
85,002
80,471
166,840
156,499
FFO allocable to other noncontrolling interests
(1,433
)
(1,382
)
(2,564
)
(2,540
)
Basic FFO allocable to share-based compensation awards
(617
)
(550
)
(1,220
)
(1,080
)
Basic FFO available to common share and common unit holders (“Basic FFO”)
82,952
78,539
163,056
152,879
Diluted FFO adjustments allocable to share-based compensation awards
63
96
127
201
Diluted FFO available to common share and common unit holders and as adjusted for comparability
83,015
78,635
163,183
153,080
Straight line rent adjustments and lease incentive amortization
5,377
(1,836
)
4,047
(3,535
)
Amortization of intangibles and other assets included in net operating income (“NOI”)
106
64
166
226
Sales-type lease adjustments
101
—
101
—
Share-based compensation, net of amounts capitalized
3,376
2,924
6,562
5,778
Amortization of deferred financing costs
794
657
1,626
1,324
Amortization of net debt discounts and commissions, net of amounts capitalized
1,076
1,060
2,293
2,111
Replacement capital expenditures
(25,117
)
(23,919
)
(44,322
)
(45,383
)
Other
386
75
542
156
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)
$
69,114
$
57,660
$
134,198
$
113,757
Diluted FFO per share
$
0.71
$
0.68
$
1.40
$
1.33
Diluted FFO per share, as adjusted for comparability
$
0.71
$
0.68
$
1.40
$
1.33
Dividends/distributions per common share/unit
$
0.32
$
0.305
$
0.64
$
0.61
COPT Defense Properties
Summary Financial Data
(unaudited)
(dollars and shares in thousands, except per share data)
June 30,
2026
December 31,
2025
Balance sheet data
Properties, net of accumulated depreciation
$
3,813,468
$
3,783,477
Total assets
$
4,515,281
$
4,701,790
Debt per balance sheet
$
2,592,436
$
2,767,834
Total liabilities
$
2,909,439
$
3,114,115
Redeemable noncontrolling interest
$
24,881
$
25,506
Total equity
$
1,580,961
$
1,562,169
Debt to assets
57.4
%
58.9
%
Net debt to adjusted book
40.8
%
40.5
%
Defense/IT Portfolio data (as of period end)
Number of operating properties
202
201
Total operational square feet (in thousands)
23,316
23,159
% Occupied
95.1
%
95.5
%
% Leased
96.4
%
96.5
%
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2026
2025
2026
2025
GAAP
Payout ratio
Net income
76.4
%
87.7
%
83.7
%
92.2
%
Debt ratios
Net income to interest expense ratio
2.0x
1.9x
1.8x
1.8x
Debt to net income ratio
13.3x
15.2x
N/A
N/A
Non-GAAP
Payout ratios
Diluted FFO
44.4
%
44.5
%
45.2
%
45.7
%
Diluted FFO, as adjusted for comparability
44.4
%
44.5
%
45.2
%
45.7
%
Diluted AFFO
53.3
%
60.7
%
54.9
%
61.5
%
Debt ratios
Adjusted EBITDA fixed charge coverage ratio
4.4x
4.9x
4.3x
4.8x
Net debt to in-place adjusted EBITDA ratio
6.0x
5.9x
N/A
N/A
Net debt adjusted for fully-leased investment properties to in-place adjusted EBITDA ratio
5.9x
5.8x
N/A
N/A
Reconciliation of denominators for per share measures
Denominator for diluted EPS
114,896
113,224
114,586
113,165
Weighted average common units
2,231
2,177
2,147
2,113
Denominator for diluted FFO per share and as adjusted for comparability
117,127
115,401
116,733
115,278
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2026
2025
2026
2025
Numerators for payout ratios
Dividends on unrestricted common and deferred shares
$
36,140
$
34,324
$
72,274
$
68,642
Distributions on unrestricted common units
717
666
1,428
1,327
Dividends and distributions on restricted shares and units
247
218
514
454
Total dividends and distributions for GAAP payout ratio
37,104
35,208
74,216
70,423
Dividends and distributions on antidilutive shares and units
(236
)
(194
)
(493
)
(407
)
Dividends and distributions for non-GAAP payout ratios
$
36,868
$
35,014
$
73,723
$
70,016
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
$
48,559
$
40,166
$
88,698
$
76,394
Interest expense
24,444
20,938
48,440
41,442
Income tax expense
34
117
158
220
Real estate-related depreciation and amortization
42,289
39,573
84,974
78,932
Other depreciation and amortization
466
468
882
1,010
Gain on sales of real estate
(6,442
)
—
(7,024
)
(300
)
Adjustments from unconsolidated real estate JVs
1,658
1,515
2,308
3,033
EBITDAre
111,008
102,777
218,436
200,731
Credit loss (recoveries) expense
(978
)
1,187
(1,347
)
1,702
Business development expenses
650
741
1,452
1,334
Executive transition costs
—
21
—
78
Net gain on other investments
—
—
(29
)
—
Adjusted EBITDA
110,680
104,726
$
218,512
$
203,845
Pro forma NOI adjustment for property changes within period
—
57
Change in collectability of deferred rental revenue
—
20
In-place adjusted EBITDA
$
110,680
$
104,803
Reconciliations of tenant improvements and incentives, building improvements, and leasing costs for operating properties to replacement capital expenditures
Tenant improvements and incentives
$
19,905
$
15,293
$
35,804
$
29,051
Building improvements
2,892
5,641
4,034
7,513
Leasing costs
1,420
4,929
2,967
8,390
Net additions to (exclusions from) tenant improvements and incentives
1,167
(241
)
2,091
3,297
Excluded building improvements
(267
)
(1,703
)
(574
)
(1,904
)
Excluded leasing costs
—
—
—
(964
)
Replacement capital expenditures
$
25,117
$
23,919
$
44,322
$
45,383
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2026
2025
2026
2025
Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA
Interest expense
$
24,444
$
20,938
$
48,440
$
41,442
Less: Amortization of deferred financing costs
(794
)
(657
)
(1,626
)
(1,324
)
Less: Amortization of net debt discounts and commissions, net of amounts capitalized
(1,076
)
(1,060
)
(2,293
)
(2,111
)
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
957
759
1,904
1,511
Scheduled principal amortization
260
457
657
918
Capitalized interest, excluding amortization of deferred financing costs
1,574
1,126
3,253
2,053
Denominator for fixed charge coverage-Adjusted EBITDA
$
25,365
$
21,563
$
50,335
$
42,489
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
$
48,559
$
40,166
$
88,698
$
76,394
Construction contract and other service revenues
(6,766
)
(12,458
)
(12,807
)
(22,717
)
Depreciation and other amortization associated with real estate operations
42,289
39,573
84,974
78,932
Construction contract and other service expenses
6,023
11,873
11,575
21,578
General and administrative expenses
9,237
8,202
17,693
16,350
Leasing expenses
3,089
2,613
6,083
5,612
Business development expenses and land carry costs
938
1,096
2,137
2,105
Interest expense
24,444
20,938
48,440
41,442
Interest and other income, net
(2,973
)
(1,223
)
(6,928
)
(2,791
)
Gain on sales of real estate
(6,442
)
—
(7,024
)
(300
)
Equity in income of unconsolidated entities
(392
)
(355
)
(1,798
)
(726
)
Unconsolidated real estate JVs NOI allocable to COPT Defense included in equity in income of unconsolidated entities
2,050
1,870
4,106
3,759
Income tax expense
34
117
158
220
NOI from real estate operations
120,090
112,412
235,307
219,858
Non-Same Property NOI from real estate operations
(5,123
)
(505
)
(9,959
)
(905
)
Same Property NOI from real estate operations
114,967
111,907
225,348
218,953
Straight line rent adjustments and lease incentive amortization
6,544
(1,282
)
7,221
(3,093
)
Amortization of acquired above- and below-market rents
125
65
205
129
Lease termination fees, net
(808
)
(728
)
(2,020
)
(1,562
)
Tenant funded landlord assets and lease incentives
(8,528
)
(5,223
)
(11,846
)
(8,636
)
Cash NOI adjustments in unconsolidated real estate JVs
(287
)
(220
)
(642
)
(480
)
Sales-type lease adjustments
239
—
239
—
Same Property Cash NOI from real estate operations
$
112,252
$
104,519
$
218,505
$
205,311
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
June 30,
2026
December 31,
2025
Reconciliation of total assets to adjusted book
Total assets
$
4,515,281
$
4,701,790
Accumulated depreciation
1,759,411
1,682,367
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs
224,598
228,656
COPT Defense’s share of liabilities of unconsolidated real estate JVs
82,420
82,039
COPT Defense’s share of accumulated depreciation and amortization of unconsolidated real estate JVs
16,497
16,000
Less: Property - operating lease liabilities
(42,485
)
(45,012
)
Less: Property - finance lease liabilities
(1,070
)
(363
)
Less: Cash and cash equivalents
(24,157
)
(274,986
)
Less: COPT Defense’s share of cash of unconsolidated real estate JVs
(1,332
)
(1,898
)
Adjusted book
$
6,529,163
$
6,388,593
June 30,
2026
December 31,
2025
June 30,
2025
Reconciliation of debt to net debt and net debt adjusted for fully-leased investment properties
Debt per balance sheet
$
2,592,436
$
2,767,834
$
2,438,591
Net discounts and commissions and deferred financing costs
20,604
23,466
20,509
COPT Defense’s share of unconsolidated JV gross debt
75,250
75,250
53,750
Gross debt
2,688,290
2,866,550
2,512,850
Less: Cash and cash equivalents
(24,157
)
(274,986
)
(21,288
)
Less: COPT Defense’s share of cash of unconsolidated real estate JVs
(1,332
)
(1,898
)
(1,944
)
Net debt
2,662,801
2,589,666
2,489,618
Costs incurred on fully-leased development properties
(62,558
)
(8,226
)
(60,302
)
Net debt adjusted for fully-leased investment properties
$
2,600,243
$
2,581,440
$
2,429,316