COPT Defense Reports Strong Full Year 2025 Results
COLUMBIA, Md.--( BUSINESS WIRE)--COPT Defense Properties (“COPT Defense” or the “Company”) (NYSE: CDP) announced results for the fourth quarter and full year ended December 31, 2025.
Management Comments
Stephen E. Budorick, COPT Defense’s President & Chief Executive Officer, commented, “We achieved excellent results in 2025, evidenced by our outperformance in FFO, leasing and capital commitments to new investments, along with our success in closing on three financings, which pre-fund our 2026 bond maturity and provide $400 million of additional liquidity to fund our external growth. We generated FFO per share growth, which represented a 5.8% increase over 2024’s results.
We executed 557,000 square feet of vacancy leasing, which was nearly 40% higher than our initial target. Our leasing success resulted in a 40 basis point year-over-year increase in our Total Portfolio occupancy to 94.0% and a 20 basis point increase in our Total Portfolio leased rate to 95.3%.
We committed $278 million to 5 new investments during 2025, that are 81% pre-leased on a weighted average basis, which speaks to our ability to capitalize on opportunities that drive exceptional risk-adjusted returns and fit within our broader strategy of allocating capital to locations that support priority national defense missions. Importantly, 4 of these 5 capital commitments represent an existing tenant expanding in our portfolio.
We have generated FFO per share growth in each of the past 7 years, which amounts to a compound annual growth rate of 5.0% between 2019 and 2025. Looking forward, our guidance implies continued growth in 2026, with FFO per share growth of 1.1% at the midpoint, which is in-line with our historical performance after adjusting for an increase in financing costs.”
Financial Highlights
4th Quarter Financial Results:
Full Year 2025 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 fourth quarter and full year 2025 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
The Company details its initial full year and first quarter guidance, with supporting assumptions, in a separate press release issued concurrently with this press release; 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 fourth quarter and full year 2025 results on its conference call tomorrow, details of which are listed below:
Conference Call Date:
Friday, February 6, 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/BI9dcc3f52190b419eb2751ac67965679e
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 December 31, 2025, the Company’s Defense/IT Portfolio of 201 properties, including 24 owned through unconsolidated joint ventures, encompassed 23.2 million square feet and was 96.5% 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, 2024.
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 December 31,
For the Years Ended
December 31,
2025
2024
2025
2024
Revenues
Lease revenue
$
185,002
$
169,765
$
714,180
$
671,366
Other property revenue
1,483
1,641
7,669
6,351
Construction contract and other service revenues
10,872
12,027
42,074
75,550
Total revenues
197,357
183,433
763,923
753,267
Operating expenses
Property operating expenses
74,616
66,964
283,927
266,001
Depreciation and amortization associated with real estate operations
42,263
38,821
161,826
153,640
Construction contract and other service expenses
10,432
11,519
39,962
73,265
General and administrative expenses
7,943
8,429
32,776
33,555
Leasing expenses
2,896
2,243
10,957
9,233
Business development expenses and land carry costs
904
1,171
4,107
4,250
Total operating expenses
139,054
129,147
533,555
539,944
Interest expense
(24,324
)
(20,391
)
(86,660
)
(82,151
)
Interest and other income, net
5,301
2,331
10,683
12,661
Gain on sales of real estate
32
—
3,350
—
Loss on early extinguishment of debt
(66
)
—
(66
)
—
Income before equity in income of unconsolidated entities and income taxes
39,246
36,226
157,675
143,833
Equity in income of unconsolidated entities
265
217
2,806
397
Income tax (expense) benefit
(115
)
24
(947
)
(288
)
Net income
39,396
36,467
159,534
143,942
Net income attributable to noncontrolling interests
Common units in the Operating Partnership (“OP”)
(743
)
(681
)
(3,239
)
(2,694
)
Other consolidated entities
(1,152
)
(665
)
(3,980
)
(2,319
)
Net income attributable to common shareholders
$
37,501
$
35,121
$
152,315
$
138,929
Earnings per share (“EPS”) computation
Numerator for diluted EPS
Net income attributable to common shareholders
$
37,501
$
35,121
$
152,315
$
138,929
Amount allocable to share-based compensation awards
(113
)
(103
)
(435
)
(421
)
Numerator for diluted EPS
$
37,388
$
35,018
$
151,880
$
138,508
Denominator
Weighted average common shares - basic
112,733
112,347
112,516
112,296
Dilutive effect of share-based compensation awards
850
711
788
603
Dilutive exchangeable debt
—
664
—
—
Weighted average common shares - diluted
113,583
113,722
113,304
112,899
Diluted EPS
$
0.33
$
0.31
$
1.34
$
1.23
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands, except per share data)
For the Three Months
Ended December 31,
For the Years Ended
December 31,
2025
2024
2025
2024
Net income
$
39,396
$
36,467
$
159,534
$
143,942
Real estate-related depreciation and amortization
42,263
38,821
161,826
153,640
Gain on sales of real estate
(32
)
—
(3,350
)
—
Depreciation and amortization on unconsolidated real estate JVs
744
745
2,950
3,056
Funds from operations (“FFO”)
82,371
76,033
320,960
300,638
FFO allocable to other noncontrolling interests
(1,524
)
(1,050
)
(5,566
)
(3,855
)
Basic FFO allocable to share-based compensation awards
(543
)
(614
)
(2,171
)
(2,417
)
Basic FFO available to common share and common unit holders (“Basic FFO”)
80,304
74,369
313,223
294,366
Redeemable noncontrolling interest
—
—
—
1,963
Diluted FFO adjustments allocable to share-based compensation awards
54
47
387
188
Diluted FFO available to common share and common unit holders (“Diluted FFO”)
80,358
74,416
313,610
296,517
Loss on early extinguishment of debt
66
—
66
—
Loss on early extinguishment of debt on unconsolidated real estate JVs
—
—
28
—
Executive transition costs
—
58
—
285
Diluted FFO comparability adjustments allocable to share-based compensation awards
—
(1
)
—
(2
)
Diluted FFO available to common share and common unit holders, as adjusted for comparability
80,424
74,473
313,704
296,800
Straight line rent adjustments and lease incentive amortization
3,634
2,950
5,152
10,824
Amortization of intangibles and other assets included in net operating income (“NOI”)
(384
)
211
(116
)
755
Share-based compensation, net of amounts capitalized
2,954
2,617
11,693
10,443
Amortization of deferred financing costs
817
671
2,798
2,708
Amortization of net debt discounts, net of amounts capitalized
1,282
1,041
4,463
4,110
Replacement capital expenditures
(31,290
)
(34,134
)
(103,655
)
(103,984
)
Other
(228
)
73
280
566
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”)
$
57,209
$
47,902
$
234,319
$
222,222
Diluted FFO per share
$
0.70
$
0.64
$
2.72
$
2.57
Diluted FFO per share, as adjusted for comparability
$
0.70
$
0.65
$
2.72
$
2.57
Dividends/distributions per common share/unit
$
0.305
$
0.295
$
1.22
$
1.18
COPT Defense Properties
Summary Financial Data
(unaudited)
(dollars and shares in thousands, except per share data)
December 31,
2025
December 31,
2024
Balance sheet data
Properties, net of accumulated depreciation
$
3,783,477
$
3,630,526
Total assets
$
4,701,790
$
4,254,191
Debt per balance sheet
$
2,767,834
$
2,391,755
Total liabilities
$
3,114,115
$
2,693,624
Redeemable noncontrolling interest
$
25,506
$
23,974
Total equity
$
1,562,169
$
1,536,593
Debt to assets
58.9
%
56.2
%
Net debt to adjusted book
40.5
%
40.4
%
Defense/IT Portfolio data (as of period end)
Number of operating properties
201
197
Total operational square feet (in thousands)
23,159
22,549
% Occupied
95.5
%
95.4
%
% Leased
96.5
%
96.7
%
For the Three Months Ended
December 31,
For the Years Ended
December 31,
2025
2024
2025
2024
GAAP
Payout ratio
Net income
89.3
%
93.0
%
88.3
%
94.2
%
Debt ratios
Net income to interest expense ratio
1.6x
1.8x
1.8x
1.8x
Debt to net income ratio
17.6x
16.4x
N/A
N/A
Non-GAAP
Payout ratios
Diluted FFO
43.5
%
45.2
%
44.7
%
45.4
%
Diluted FFO, as adjusted for comparability
43.5
%
45.2
%
44.6
%
45.4
%
Diluted AFFO
61.2
%
70.3
%
59.8
%
60.6
%
Debt ratios
Adjusted EBITDA fixed charge coverage ratio
4.3x
4.7x
4.6x
4.7x
Net debt to in-place adjusted EBITDA ratio
5.9x
6.0x
N/A
N/A
Net debt adj. for fully-leased investment properties to in-place adj. EBITDA ratio
5.8x
5.9x
N/A
N/A
Reconciliation of denominators for per share measures
Denominator for diluted EPS
113,583
113,722
113,304
112,899
Weighted average common units
1,926
1,664
2,083
1,672
Redeemable noncontrolling interest
—
—
—
842
Denominator for diluted FFO per share and as adjusted for comparability
115,509
115,386
115,387
115,413
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended
December 31,
For the Years Ended
December 31,
2025
2024
2025
2024
Numerators for payout ratios
Dividends on unrestricted common and deferred shares
$
34,414
$
33,167
$
137,388
$
132,628
Distributions on unrestricted common units
573
491
2,558
1,987
Dividends and distributions on restricted shares and units
205
248
868
1,000
Total dividends and distributions for GAAP payout ratio
35,192
33,906
140,814
135,615
Dividends and distributions on antidilutive shares and units
(198
)
(250
)
(774
)
(1,006
)
Dividends and distributions for non-GAAP payout ratios
$
34,994
$
33,656
$
140,040
$
134,609
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
$
39,396
$
36,467
$
159,534
$
143,942
Interest expense
24,324
20,391
86,660
82,151
Income tax expense (benefit)
115
(24
)
947
288
Real estate-related depreciation and amortization
42,263
38,821
161,826
153,640
Other depreciation and amortization
435
589
1,873
2,375
Gain on sales of real estate
(32
)
—
(3,350
)
—
Adjustments from unconsolidated real estate JVs
1,818
1,681
6,609
6,820
EBITDAre
108,319
97,925
414,099
389,216
Credit loss (recoveries) expense
(644
)
(113
)
734
383
Business development expenses
508
758
2,573
2,548
Executive transition costs
—
58
78
638
Loss on early extinguishment of debt
66
—
66
—
Loss on early extinguishment of debt on unconsolidated real estate JVs
—
—
28
—
Net gain on other investments
(26
)
—
(1,739
)
(488
)
Adjusted EBITDA
108,223
98,628
$
415,839
$
392,297
Pro forma NOI adjustment for property changes within period
1,969
528
Change in collectability of deferred rental revenue
127
1,646
In-place adjusted EBITDA
$
110,319
$
100,802
Reconciliations of tenant improvements and incentives, building improvements and leasing costs for operating properties to replacement capital expenditures
Tenant improvements and incentives
$
25,671
$
22,912
$
79,491
$
69,505
Building improvements
8,888
10,942
20,063
28,294
Leasing costs
5,008
2,629
15,638
12,342
Net exclusions from tenant improvements and incentives
(6,335
)
(7
)
(6,428
)
(3
)
Excluded building improvements
(1,942
)
(2,342
)
(4,145
)
(6,113
)
Excluded leasing costs
—
—
(964
)
(41
)
Replacement capital expenditures
$
31,290
$
34,134
$
103,655
$
103,984
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
For the Three Months Ended
December 31,
For the Years Ended
December 31,
2025
2024
2025
2024
Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA
Interest expense
$
24,324
$
20,391
$
86,660
$
82,151
Less: Amortization of deferred financing costs
(817
)
(671
)
(2,798
)
(2,708
)
Less: Amortization of net debt discounts, net of amounts capitalized
(1,282
)
(1,041
)
(4,463
)
(4,110
)
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
968
872
3,377
3,305
Scheduled principal amortization
416
455
1,792
2,334
Capitalized interest
1,714
928
5,059
2,872
Denominator for fixed charge coverage-Adjusted EBITDA
$
25,323
$
20,934
$
89,627
$
83,844
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
$
39,396
$
36,467
$
159,534
$
143,942
Construction contract and other service revenues
(10,872
)
(12,027
)
(42,074
)
(75,550
)
Depreciation and other amortization associated with real estate operations
42,263
38,821
161,826
153,640
Construction contract and other service expenses
10,432
11,519
39,962
73,265
General and administrative expenses
7,943
8,429
32,776
33,555
Leasing expenses
2,896
2,243
10,957
9,233
Business development expenses and land carry costs
904
1,171
4,107
4,250
Interest expense
24,324
20,391
86,660
82,151
Interest and other income, net
(5,301
)
(2,331
)
(10,683
)
(12,661
)
Gain on sales of real estate
(32
)
—
(3,350
)
—
Loss on early extinguishment of debt
66
—
66
—
Equity in income of unconsolidated entities
(265
)
(217
)
(2,806
)
(397
)
Unconsolidated real estate JVs NOI allocable to COPT Defense included in equity in income of unconsolidated entities
2,083
1,898
7,706
7,217
Income tax expense (benefit)
115
(24
)
947
288
NOI from real estate operations
113,952
106,340
445,628
418,933
Non-Same Property NOI from real estate operations
(6,795
)
(2,521
)
(17,660
)
(5,866
)
Same Property NOI from real estate operations
107,157
103,819
427,968
413,067
Straight line rent adjustments and lease incentive amortization
3,701
5,065
7,161
8,662
Amortization of acquired above- and below-market rents
(504
)
(69
)
(734
)
(276
)
Lease termination fees, net
(859
)
(864
)
(3,612
)
(3,451
)
Tenant funded landlord assets and lease incentives
(4,798
)
(6,035
)
(17,752
)
(21,100
)
Cash NOI adjustments in unconsolidated real estate JVs
(401
)
(287
)
(1,090
)
(1,083
)
Same Property Cash NOI from real estate operations
$
104,296
$
101,629
$
411,941
$
395,819
COPT Defense Properties
Summary Financial Data
(unaudited)
(in thousands)
December 31,
2025
December 31,
2024
Reconciliation of total assets to adjusted book
Total assets
$
4,701,790
$
4,254,191
Accumulated depreciation
1,682,367
1,537,293
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs
228,656
228,154
COPT Defense’s share of liabilities of unconsolidated real estate JVs
82,039
61,294
COPT Defense’s share of accumulated depreciation and amortization of unconsolidated real estate JVs
16,000
12,817
Less: Property - operating lease liabilities
(45,012
)
(49,240
)
Less: Property - finance lease liabilities
(363
)
(391
)
Less: Cash and cash equivalents
(274,986
)
(38,284
)
Less: COPT Defense’s share of cash of unconsolidated real estate JVs
(1,898
)
(2,053
)
Adjusted book
$
6,388,593
$
6,003,781
December 31,
2025
December 31,
2024
Reconciliation of debt to net debt and net debt adjusted for fully-leased investment properties
Debt per balance sheet
$
2,767,834
$
2,391,755
Net discounts and deferred financing costs
23,466
23,262
COPT Defense’s share of unconsolidated JV gross debt
75,250
53,750
Gross debt
2,866,550
2,468,767
Less: Cash and cash equivalents
(274,986
)
(38,284
)
Less: COPT Defense’s share of cash of unconsolidated real estate JVs
(1,898
)
(2,053
)
Net debt
2,589,666
2,428,430
Costs incurred on fully-leased development properties
(8,226
)
(18,774
)
Costs incurred on fully-leased operating property acquisitions
—
(17,034
)
Net debt adjusted for fully-leased investment properties
$
2,581,440
$
2,392,622