COPT Defense Properties (“COPT Defense” or the “Company”) (NYSE: CDP) announced results for the third quarter ended September 30, 2026.
Management Comments
Stephen E. Budorick, COPT Defense’s President & Chief Executive Officer, commented, “Our track record of outperformance continued in the third quarter, as FFO per share exceeded the midpoint of our guidance by $0.02. The portfolio continues to benefit from strong tenant demand for specialized space across all of our markets, driven by growth in programs supporting the defense of our nation.
We increased the midpoint of guidance for 2026 FFO per share, as adjusted for comparability, by $0.02 to $2.80, which is $0.05 above our initial guidance, and absorbs $0.03 of incremental dilution from our Exchangeable Notes, resulting from our 20% share price increase over the first nine months of the year. We increased the midpoint of 2026 guidance for Same Property cash NOI growth by 25 basis points to 4.25%, capital commitment to new investments by $40 million to $375 million, and capital invested in development and acquisitions by $15 million to $240 million. We decreased the midpoint of tenant retention by 2.5%, to 80%, taking advantage of opportunities to re-lease space to high value tenants with a track record of strong growth. We raised our target for vacancy leasing by over 30% from 475,000 square feet to 625,000 square feet, which is over 50% higher than our initial target of 400,000 square feet. This increased leasing target is driven in part by our decision to proactively capture space to accommodate new higher growth tenancy in Columbia Gateway and in Huntsville, which impacts our retention guidance but de-risks future lease expirations.
We expect the FY 2026 defense budget, along with the FY 2027 base budget request in which a 28% year-over-year increase is proposed, will provide a very supportive backdrop for demand in our portfolio to support priority missions, including intelligence, cybersecurity, and missile defense.”
Financial Highlights
3rd Quarter Financial Results:
- Diluted earnings per share (“EPS”) was $0.41 for the quarter ended September 30, 2026, compared to $0.37 for the quarter ended September 30, 2025.
- Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition and as adjusted for comparability, was $0.71 for the quarter ended September 30, 2026, compared to $0.69 for the quarter ended September 30, 2025.
Operating Performance Highlights
Operating Portfolio Summary:
- At September 30, 2026, the Company’s 25.3 million square foot total portfolio was 94.0% occupied and 95.0% leased, which includes the 23.3 million square foot Defense/IT Portfolio that was 95.2% occupied and 96.2% leased.
Same Property Performance:
- At September 30, 2026, the Company’s 24.6 million square foot Same Property portfolio was 93.9% occupied and 94.9% leased.
- The Company’s Same Property cash NOI increased 3.2% in the quarter ended September 30, 2026 compared to the same period in 2025.
Leasing:
- Total Square Feet Leased: For the quarter ended September 30, 2026, the Company leased 842,000 square feet, including 545,000 square feet of renewals, 222,000 square feet of vacancy leasing, and 75,000 square feet of investment leasing. For the nine months ended September 30, 2026, the Company executed 3.0 million square feet of total leasing, including 2.1 million square feet of renewals, 453,000 square feet of vacancy leasing, and 491,000 square feet of investment leasing.
- Tenant Retention Rates: During the quarter ended September 30, 2026, the Company renewed 69.9% of expiring square feet in its total portfolio. During the nine months ended September 30, 2026, the Company renewed 80.0% of expiring square feet in its total portfolio.
- Rent Spreads and Average Escalations on Renewing Leases: For the quarter ended September 30, 2026, straight-line rents on renewals increased 20.3% and cash rents on renewed space increased 8.5%, while annual escalations on renewing leases averaged 2.2%. For the nine months ended September 30, 2026, straight-line rents on renewals increased 12.7% and cash rents on renewed space increased 4.3%, while annual escalations on renewing leases averaged 2.8%.
- Lease Terms: In the quarter ended September 30, 2026, lease terms averaged 4.3 years on renewing leases, 7.2 years on vacancy leasing, and 11.6 years on investment leasing. For the nine months ended September 30, 2026, lease terms averaged 4.2 years on renewing leases, 7.0 years on vacancy leasing, and 12.9 years on investment leasing.
Investment Activity Highlights
- Development Pipeline: The Company’s development pipeline consists of eight properties totaling 1.1 million square feet that were 64% leased as of September 30, 2026. These projects represent a total estimated investment of $528 million, of which $185 million was spent as of September 30, 2026.
Balance Sheet and Capital Transaction Highlights
- For the quarter ended September 30, 2026, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.4x.
- At September 30, 2026, the Company’s net debt to in-place adjusted EBITDA ratio was 5.9x and its net debt adjusted for fully-leased investment properties to in-place adjusted EBITDA ratio was 5.6x.
- At September 30, 2026, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.8% with a weighted average maturity of 4 years (assuming exercise of available extension options), and 83% of the Company’s debt was subject to fixed interest rates.
Associated Supplemental Presentation
Prior to the call, the Company will post a slide presentation to accompany management’s prepared remarks for its third 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 and establishing fourth quarter guidance for diluted EPS, diluted FFOPS, per Nareit, and diluted FFOPS, as adjusted for comparability, as follows:
|
Reconciliation of Diluted EPS to FFOPS, per Nareit, and As Adjusted for Comparability |
|
Quarter Ending December 31, 2026 |
|
Year Ending December 31, 2026 |
||||||||||
|
|
Low |
|
High |
|
Low |
|
High |
|||||||
|
Diluted EPS |
|
$ |
0.29 |
|
$ |
0.31 |
|
$ |
1.43 |
|
|
$ |
1.45 |
|
|
Real estate-related depreciation and amortization |
|
|
0.37 |
|
|
0.37 |
|
|
1.48 |
|
|
|
1.48 |
|
|
Gain on sales of real estate |
|
|
— |
|
|
— |
|
|
(0.14 |
) |
|
|
(0.14 |
) |
|
Diluted FFOPS, Nareit definition |
|
|
0.66 |
|
|
0.68 |
|
|
2.77 |
|
|
|
2.79 |
|
|
Demolition costs on nonrecurring improvements |
|
|
0.02 |
|
|
0.02 |
|
|
0.02 |
|
|
|
0.02 |
|
|
Diluted FFOPS, as adjusted for comparability |
|
$ |
0.68 |
|
$ |
0.70 |
|
$ |
2.79 |
|
|
$ |
2.81 |
|
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 third quarter 2026 results on its conference call tomorrow, details of which are listed below:
|
Conference Call Date: |
Friday, October 30, 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/BI0a191ed3b81d41ebba9fb6ef7dec8896
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 September 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 96.2% 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 September 30, |
|
For the Nine Months Ended September 30, |
||||||||||||
|
|
|
2026 |
|
|
|
2025 |
|
|
|
2026 |
|
|
|
2025 |
|
|
Revenues |
|
|
|
|
|
|
|
||||||||
|
Lease revenue |
$ |
193,482 |
|
|
$ |
178,272 |
|
|
$ |
575,259 |
|
|
$ |
529,178 |
|
|
Other property revenue |
|
1,853 |
|
|
|
2,038 |
|
|
|
5,298 |
|
|
|
6,186 |
|
|
Construction contract and other service revenues |
|
13,424 |
|
|
|
8,485 |
|
|
|
26,231 |
|
|
|
31,202 |
|
|
Total revenues |
|
208,759 |
|
|
|
188,795 |
|
|
|
606,788 |
|
|
|
566,566 |
|
|
Operating expenses |
|
|
|
|
|
|
|
||||||||
|
Property operating expenses |
|
77,217 |
|
|
|
70,356 |
|
|
|
231,238 |
|
|
|
209,311 |
|
|
Depreciation and amortization associated with real estate operations |
|
42,966 |
|
|
|
40,631 |
|
|
|
127,940 |
|
|
|
119,563 |
|
|
Construction contract and other service expenses |
|
12,763 |
|
|
|
7,952 |
|
|
|
24,338 |
|
|
|
29,530 |
|
|
General and administrative expenses |
|
9,047 |
|
|
|
8,483 |
|
|
|
26,740 |
|
|
|
24,833 |
|
|
Leasing expenses |
|
2,780 |
|
|
|
2,449 |
|
|
|
8,863 |
|
|
|
8,061 |
|
|
Business development expenses and land carry costs |
|
729 |
|
|
|
1,098 |
|
|
|
2,866 |
|
|
|
3,203 |
|
|
Total operating expenses |
|
145,502 |
|
|
|
130,969 |
|
|
|
421,985 |
|
|
|
394,501 |
|
|
Interest expense |
|
(24,439 |
) |
|
|
(20,894 |
) |
|
|
(72,879 |
) |
|
|
(62,336 |
) |
|
Interest and other income, net |
|
2,984 |
|
|
|
2,591 |
|
|
|
9,912 |
|
|
|
5,382 |
|
|
Gain on sales of real estate |
|
7,673 |
|
|
|
3,018 |
|
|
|
14,697 |
|
|
|
3,318 |
|
|
Income before equity in income of unconsolidated entities and income taxes |
|
49,475 |
|
|
|
42,541 |
|
|
|
136,533 |
|
|
|
118,429 |
|
|
Equity in income of unconsolidated entities |
|
415 |
|
|
|
1,815 |
|
|
|
2,213 |
|
|
|
2,541 |
|
|
Income tax expense |
|
(96 |
) |
|
|
(612 |
) |
|
|
(254 |
) |
|
|
(832 |
) |
|
Net income |
|
49,794 |
|
|
|
43,744 |
|
|
|
138,492 |
|
|
|
120,138 |
|
|
Net income attributable to noncontrolling interests |
|
|
|
|
|
|
|
||||||||
|
Common units in the Operating Partnership (“OP”) |
|
(1,069 |
) |
|
|
(924 |
) |
|
|
(2,919 |
) |
|
|
(2,496 |
) |
|
Other consolidated entities |
|
(984 |
) |
|
|
(1,093 |
) |
|
|
(2,839 |
) |
|
|
(2,828 |
) |
|
Net income attributable to common shareholders |
$ |
47,741 |
|
|
$ |
41,727 |
|
|
$ |
132,734 |
|
|
$ |
114,814 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings per share (“EPS”) computation |
|
|
|
|
|
|
|
||||||||
|
Numerator for diluted EPS |
|
|
|
|
|
|
|
||||||||
|
Net income attributable to common shareholders |
$ |
47,741 |
|
|
$ |
41,727 |
|
|
$ |
132,734 |
|
|
$ |
114,814 |
|
|
Amount allocable to share-based compensation awards |
|
(183 |
) |
|
|
(133 |
) |
|
|
(525 |
) |
|
|
(340 |
) |
|
Numerator for diluted EPS |
$ |
47,558 |
|
|
$ |
41,594 |
|
|
$ |
132,209 |
|
|
$ |
114,474 |
|
|
Denominator |
|
|
|
|
|
|
|
||||||||
|
Weighted average common shares – basic |
|
112,886 |
|
|
|
112,485 |
|
|
|
112,855 |
|
|
|
112,442 |
|
|
Dilutive effect of share-based compensation awards |
|
945 |
|
|
|
702 |
|
|
|
971 |
|
|
|
749 |
|
|
Dilutive exchangeable debt |
|
2,088 |
|
|
|
— |
|
|
|
1,183 |
|
|
|
— |
|
|
Weighted average common shares – diluted |
|
115,919 |
|
|
|
113,187 |
|
|
|
115,009 |
|
|
|
113,191 |
|
|
Diluted EPS |
$ |
0.41 |
|
|
$ |
0.37 |
|
|
$ |
1.15 |
|
|
$ |
1.01 |
|
|
COPT Defense Properties Summary Financial Data (unaudited) (in thousands, except per share data) |
|||||||||||||||
|
|
For the Three Months Ended September 30, |
|
For the Nine Months Ended September 30, |
||||||||||||
|
|
|
2026 |
|
|
|
2025 |
|
|
|
2026 |
|
|
|
2025 |
|
|
Net income |
$ |
49,794 |
|
|
$ |
43,744 |
|
|
$ |
138,492 |
|
|
$ |
120,138 |
|
|
Real estate-related depreciation and amortization |
|
42,966 |
|
|
|
40,631 |
|
|
|
127,940 |
|
|
|
119,563 |
|
|
Gain on sales of real estate |
|
(7,673 |
) |
|
|
(3,018 |
) |
|
|
(14,697 |
) |
|
|
(3,318 |
) |
|
Depreciation and amortization on unconsolidated real estate JVs |
|
718 |
|
|
|
733 |
|
|
|
2,186 |
|
|
|
2,206 |
|
|
Gain on sale of real estate on unconsolidated real estate JV |
|
— |
|
|
|
— |
|
|
|
(1,276 |
) |
|
|
— |
|
|
Funds from operations (“FFO”) |
|
85,805 |
|
|
|
82,090 |
|
|
|
252,645 |
|
|
|
238,589 |
|
|
FFO allocable to other noncontrolling interests |
|
(1,342 |
) |
|
|
(1,502 |
) |
|
|
(3,906 |
) |
|
|
(4,042 |
) |
|
Basic FFO allocable to share-based compensation awards |
|
(620 |
) |
|
|
(548 |
) |
|
|
(1,840 |
) |
|
|
(1,628 |
) |
|
Basic FFO available to common share and common unit holders (“Basic FFO”) |
|
83,843 |
|
|
|
80,040 |
|
|
|
246,899 |
|
|
|
232,919 |
|
|
Diluted FFO adjustments allocable to share-based compensation awards |
|
63 |
|
|
|
53 |
|
|
|
190 |
|
|
|
294 |
|
|
Diluted FFO available to common share and common unit holders (“Diluted FFO”) |
|
83,906 |
|
|
|
80,093 |
|
|
|
247,089 |
|
|
|
233,213 |
|
|
Loss on early extinguishment of debt on unconsolidated real estate JVs |
|
— |
|
|
|
28 |
|
|
|
— |
|
|
|
28 |
|
|
Demolition costs on nonrecurring improvements |
|
97 |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
|
Diluted FFO comparability adjustments allocable to share-based compensation awards |
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
Diluted FFO available to common share and common unit holders, as adjusted for comparability |
|
84,002 |
|
|
|
80,121 |
|
|
|
247,185 |
|
|
|
233,241 |
|
|
Straight line rent adjustments and lease incentive amortization |
|
(828 |
) |
|
|
5,053 |
|
|
|
3,219 |
|
|
|
1,518 |
|
|
Amortization of intangibles and other assets included in net operating income (“NOI”) |
|
(5 |
) |
|
|
42 |
|
|
|
161 |
|
|
|
268 |
|
|
Sales-type lease adjustments |
|
33 |
|
|
|
— |
|
|
|
134 |
|
|
|
— |
|
|
Share-based compensation, net of amounts capitalized |
|
3,450 |
|
|
|
2,961 |
|
|
|
10,012 |
|
|
|
8,739 |
|
|
Amortization of deferred financing costs |
|
778 |
|
|
|
657 |
|
|
|
2,404 |
|
|
|
1,981 |
|
|
Amortization of net debt discounts and commissions, net of amounts capitalized |
|
1,087 |
|
|
|
1,070 |
|
|
|
3,380 |
|
|
|
3,181 |
|
|
Replacement capital expenditures |
|
(22,997 |
) |
|
|
(26,982 |
) |
|
|
(67,319 |
) |
|
|
(72,365 |
) |
|
Other |
|
(136 |
) |
|
|
352 |
|
|
|
406 |
|
|
|
508 |
|
|
Diluted adjusted funds from operations available to common share and common unit holders (“Diluted AFFO”) |
$ |
65,384 |
|
|
$ |
63,274 |
|
|
$ |
199,582 |
|
|
$ |
177,071 |
|
|
Diluted FFO per share |
$ |
0.71 |
|
|
$ |
0.69 |
|
|
$ |
2.11 |
|
|
$ |
2.02 |
|
|
Diluted FFO per share, as adjusted for comparability |
$ |
0.71 |
|
|
$ |
0.69 |
|
|
$ |
2.11 |
|
|
$ |
2.02 |
|
|
Dividends/distributions per common share/unit |
$ |
0.32 |
|
|
$ |
0.305 |
|
|
$ |
0.96 |
|
|
$ |
0.915 |
|
|
COPT Defense Properties Summary Financial Data (unaudited) (dollars and shares in thousands, except per share data) |
|||||||
|
|
September 30, 2026 |
|
December 31, 2025 |
||||
|
Balance sheet data |
|
|
|
||||
|
Properties, net of accumulated depreciation |
$ |
3,861,398 |
|
|
$ |
3,783,477 |
|
|
Total assets |
$ |
4,573,242 |
|
|
$ |
4,701,790 |
|
|
Debt per balance sheet |
$ |
2,579,733 |
|
|
$ |
2,767,834 |
|
|
Total liabilities |
$ |
2,952,058 |
|
|
$ |
3,114,115 |
|
|
Redeemable noncontrolling interest |
$ |
25,031 |
|
|
$ |
25,506 |
|
|
Total equity |
$ |
1,596,153 |
|
|
$ |
1,562,169 |
|
|
Debt to assets |
|
56.4 |
% |
|
|
58.9 |
% |
|
Net debt to adjusted book |
|
39.9 |
% |
|
|
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 |
|
95.2 |
% |
|
|
95.5 |
% |
|
% Leased |
|
96.2 |
% |
|
|
96.5 |
% |
|
|
For the Three Months Ended September 30, |
|
For the Nine Months Ended September 30, |
||||||||
|
|
2026 |
|
2025 |
|
2026 |
|
2025 |
||||
|
GAAP |
|
|
|
|
|
|
|
||||
|
Payout ratio |
|
|
|
|
|
|
|
||||
|
Net income |
74.5 |
% |
|
80.5 |
% |
|
80.4 |
% |
|
87.9 |
% |
|
Debt ratios |
|
|
|
|
|
|
|
||||
|
Net income to interest expense ratio |
2.0x |
|
2.1x |
|
1.9x |
|
1.9x |
||||
|
Debt to net income ratio |
13.0x |
|
14.0x |
|
N/A |
|
|
N/A |
|
||
|
Non-GAAP |
|
|
|
|
|
|
|
||||
|
Payout ratios |
|
|
|
|
|
|
|
||||
|
Diluted FFO |
43.9 |
% |
|
43.7 |
% |
|
44.8 |
% |
|
45.0 |
% |
|
Diluted FFO, as adjusted for comparability |
43.9 |
% |
|
43.7 |
% |
|
44.7 |
% |
|
45.0 |
% |
|
Diluted AFFO |
56.4 |
% |
|
55.3 |
% |
|
55.4 |
% |
|
59.3 |
% |
|
Debt ratios |
|
|
|
|
|
|
|
||||
|
Adjusted EBITDA fixed charge coverage ratio |
4.4x |
|
|
4.8x |
|
|
4.3x |
|
|
4.8x |
|
|
Net debt to in-place adjusted EBITDA ratio |
5.9x |
|
|
6.1x |
|
|
N/A |
|
|
N/A |
|
|
Net debt adjusted for fully-leased investment properties to in-place adjusted EBITDA ratio |
5.6x |
|
|
5.8x |
|
|
N/A |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
||||
|
Reconciliation of denominators for per share measures |
|
|
|
|
|
|
|||||
|
Denominator for diluted EPS |
115,919 |
|
|
113,187 |
|
|
115,009 |
|
|
113,191 |
|
|
Weighted average common units |
2,237 |
|
|
2,182 |
|
|
2,177 |
|
|
2,136 |
|
|
Denominator for diluted FFO per share and as adjusted for comparability |
118,156 |
|
|
115,369 |
|
|
117,186 |
|
|
115,327 |
|
|
COPT Defense Properties Summary Financial Data (unaudited) (in thousands) |
|||||||||||||||
|
|
For the Three Months Ended September 30, |
|
For the Nine Months Ended September 30, |
||||||||||||
|
|
|
2026 |
|
|
|
2025 |
|
|
|
2026 |
|
|
|
2025 |
|
|
Numerators for payout ratios |
|
|
|
|
|
|
|
||||||||
|
Dividends on unrestricted common and deferred shares |
$ |
36,143 |
|
|
$ |
34,332 |
|
|
$ |
108,417 |
|
|
$ |
102,974 |
|
|
Distributions on unrestricted common units |
|
715 |
|
|
|
658 |
|
|
|
2,143 |
|
|
|
1,985 |
|
|
Dividends and distributions on restricted shares and units |
|
239 |
|
|
|
209 |
|
|
|
753 |
|
|
|
663 |
|
|
Total dividends and distributions for GAAP payout ratio |
|
37,097 |
|
|
|
35,199 |
|
|
|
111,313 |
|
|
|
105,622 |
|
|
Dividends and distributions on antidilutive shares and units |
|
(230 |
) |
|
|
(202 |
) |
|
|
(723 |
) |
|
|
(592 |
) |
|
Dividends and distributions for non-GAAP payout ratios |
$ |
36,867 |
|
|
$ |
34,997 |
|
|
$ |
110,590 |
|
|
$ |
105,030 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
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 |
$ |
49,794 |
|
|
$ |
43,744 |
|
|
$ |
138,492 |
|
|
$ |
120,138 |
|
|
Interest expense |
|
24,439 |
|
|
|
20,894 |
|
|
|
72,879 |
|
|
|
62,336 |
|
|
Income tax expense |
|
96 |
|
|
|
612 |
|
|
|
254 |
|
|
|
832 |
|
|
Real estate-related depreciation and amortization |
|
42,966 |
|
|
|
40,631 |
|
|
|
127,940 |
|
|
|
119,563 |
|
|
Other depreciation and amortization |
|
482 |
|
|
|
428 |
|
|
|
1,364 |
|
|
|
1,438 |
|
|
Gain on sales of real estate |
|
(7,673 |
) |
|
|
(3,018 |
) |
|
|
(14,697 |
) |
|
|
(3,318 |
) |
|
Adjustments from unconsolidated real estate JVs |
|
1,797 |
|
|
|
1,758 |
|
|
|
4,105 |
|
|
|
4,791 |
|
|
EBITDAre |
|
111,901 |
|
|
|
105,049 |
|
|
|
330,337 |
|
|
|
305,780 |
|
|
Credit loss (recoveries) expense |
|
(1,096 |
) |
|
|
(324 |
) |
|
|
(2,443 |
) |
|
|
1,378 |
|
|
Business development expenses |
|
488 |
|
|
|
731 |
|
|
|
1,940 |
|
|
|
2,065 |
|
|
Demolition costs on nonrecurring improvements |
|
97 |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
|
Executive transition costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
78 |
|
|
Loss on early extinguishment of debt on unconsolidated real estate JVs |
|
— |
|
|
|
28 |
|
|
|
— |
|
|
|
28 |
|
|
Net gain on other investments |
|
— |
|
|
|
(1,713 |
) |
|
|
(29 |
) |
|
|
(1,713 |
) |
|
Adjusted EBITDA |
|
111,390 |
|
|
|
103,771 |
|
|
$ |
329,902 |
|
|
$ |
307,616 |
|
|
Pro forma NOI adjustment for property changes within period |
|
1,150 |
|
|
|
21 |
|
|
|
|
|
||||
|
Change in collectability of deferred rental revenue |
|
32 |
|
|
|
— |
|
|
|
|
|
||||
|
In-place adjusted EBITDA |
$ |
112,572 |
|
|
$ |
103,792 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Reconciliations of tenant improvements and incentives, building improvements, and leasing costs for operating properties to replacement capital expenditures |
|
|
|
|
|
|
|
||||||||
|
Tenant improvements and incentives |
$ |
19,173 |
|
|
$ |
24,769 |
|
|
$ |
54,977 |
|
|
$ |
53,820 |
|
|
Building improvements |
|
3,882 |
|
|
|
3,662 |
|
|
|
7,916 |
|
|
|
11,175 |
|
|
Leasing costs |
|
4,946 |
|
|
|
2,240 |
|
|
|
7,913 |
|
|
|
10,630 |
|
|
Net exclusions from tenant improvements and incentives |
|
(4,445 |
) |
|
|
(3,390 |
) |
|
|
(2,354 |
) |
|
|
(93 |
) |
|
Excluded building improvements |
|
(559 |
) |
|
|
(299 |
) |
|
|
(1,133 |
) |
|
|
(2,203 |
) |
|
Excluded leasing costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(964 |
) |
|
Replacement capital expenditures |
$ |
22,997 |
|
|
$ |
26,982 |
|
|
$ |
67,319 |
|
|
$ |
72,365 |
|
|
COPT Defense Properties Summary Financial Data (unaudited) (in thousands) |
|||||||||||||||
|
|
For the Three Months Ended September 30, |
|
For the Nine Months Ended September 30, |
||||||||||||
|
|
|
2026 |
|
|
|
2025 |
|
|
|
2026 |
|
|
|
2025 |
|
|
Reconciliation of interest expense to the denominator for fixed charge coverage-Adjusted EBITDA |
|
|
|
|
|
|
|
||||||||
|
Interest expense |
$ |
24,439 |
|
|
$ |
20,894 |
|
|
$ |
72,879 |
|
|
$ |
62,336 |
|
|
Less: Amortization of deferred financing costs |
|
(778 |
) |
|
|
(657 |
) |
|
|
(2,404 |
) |
|
|
(1,981 |
) |
|
Less: Amortization of net debt discounts and commissions, net of amounts capitalized |
|
(1,087 |
) |
|
|
(1,070 |
) |
|
|
(3,380 |
) |
|
|
(3,181 |
) |
|
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 |
|
971 |
|
|
|
898 |
|
|
|
2,875 |
|
|
|
2,409 |
|
|
Scheduled principal amortization |
|
20 |
|
|
|
458 |
|
|
|
677 |
|
|
|
1,376 |
|
|
Capitalized interest, excluding amortization of deferred financing costs |
|
2,031 |
|
|
|
1,292 |
|
|
|
5,284 |
|
|
|
3,345 |
|
|
Denominator for fixed charge coverage-Adjusted EBITDA |
$ |
25,596 |
|
|
$ |
21,815 |
|
|
$ |
75,931 |
|
|
$ |
64,304 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
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 |
$ |
49,794 |
|
|
$ |
43,744 |
|
|
$ |
138,492 |
|
|
$ |
120,138 |
|
|
Construction contract and other service revenues |
|
(13,424 |
) |
|
|
(8,485 |
) |
|
|
(26,231 |
) |
|
|
(31,202 |
) |
|
Depreciation and other amortization associated with real estate operations |
|
42,966 |
|
|
|
40,631 |
|
|
|
127,940 |
|
|
|
119,563 |
|
|
Construction contract and other service expenses |
|
12,763 |
|
|
|
7,952 |
|
|
|
24,338 |
|
|
|
29,530 |
|
|
General and administrative expenses |
|
9,047 |
|
|
|
8,483 |
|
|
|
26,740 |
|
|
|
24,833 |
|
|
Leasing expenses |
|
2,780 |
|
|
|
2,449 |
|
|
|
8,863 |
|
|
|
8,061 |
|
|
Business development expenses and land carry costs |
|
729 |
|
|
|
1,098 |
|
|
|
2,866 |
|
|
|
3,203 |
|
|
Interest expense |
|
24,439 |
|
|
|
20,894 |
|
|
|
72,879 |
|
|
|
62,336 |
|
|
Interest and other income, net |
|
(2,984 |
) |
|
|
(2,591 |
) |
|
|
(9,912 |
) |
|
|
(5,382 |
) |
|
Gain on sales of real estate |
|
(7,673 |
) |
|
|
(3,018 |
) |
|
|
(14,697 |
) |
|
|
(3,318 |
) |
|
Equity in income of unconsolidated entities |
|
(415 |
) |
|
|
(1,815 |
) |
|
|
(2,213 |
) |
|
|
(2,541 |
) |
|
Unconsolidated real estate JVs NOI allocable to COPT Defense included in equity in income of unconsolidated entities |
|
2,212 |
|
|
|
1,864 |
|
|
|
6,318 |
|
|
|
5,623 |
|
|
Income tax expense |
|
96 |
|
|
|
612 |
|
|
|
254 |
|
|
|
832 |
|
|
NOI from real estate operations |
|
120,330 |
|
|
|
111,818 |
|
|
|
355,637 |
|
|
|
331,676 |
|
|
Non-Same Property NOI from real estate operations |
|
(6,050 |
) |
|
|
(541 |
) |
|
|
(16,009 |
) |
|
|
(1,446 |
) |
|
Same Property NOI from real estate operations |
|
114,280 |
|
|
|
111,277 |
|
|
|
339,628 |
|
|
|
330,230 |
|
|
Straight line rent adjustments and lease incentive amortization |
|
1,108 |
|
|
|
2,185 |
|
|
|
8,329 |
|
|
|
(908 |
) |
|
Amortization of acquired above- and below-market rents |
|
15 |
|
|
|
41 |
|
|
|
220 |
|
|
|
170 |
|
|
Lease termination fees, net |
|
(1,901 |
) |
|
|
(1,191 |
) |
|
|
(3,921 |
) |
|
|
(2,753 |
) |
|
Tenant funded landlord assets and lease incentives |
|
(3,054 |
) |
|
|
(5,239 |
) |
|
|
(14,900 |
) |
|
|
(13,875 |
) |
|
Cash NOI adjustments in unconsolidated real estate JVs |
|
(421 |
) |
|
|
(209 |
) |
|
|
(1,063 |
) |
|
|
(689 |
) |
|
Sales-type lease adjustments |
|
243 |
|
|
|
— |
|
|
|
482 |
|
|
|
— |
|
|
Same Property Cash NOI from real estate operations |
$ |
110,270 |
|
|
$ |
106,864 |
|
|
$ |
328,775 |
|
|
$ |
312,175 |
|
|
COPT Defense Properties |
||||||||
|
|
|
September 30, 2026 |
|
December 31, 2025 |
||||
|
Reconciliation of total assets to adjusted book |
|
|
|
|
||||
|
Total assets |
|
$ |
4,573,242 |
|
|
$ |
4,701,790 |
|
|
Accumulated depreciation |
|
|
1,798,284 |
|
|
|
1,682,367 |
|
|
Accumulated amortization of intangibles on property acquisitions and deferred leasing costs |
|
|
226,159 |
|
|
|
228,656 |
|
|
COPT Defense’s share of liabilities of unconsolidated real estate JVs |
|
|
82,849 |
|
|
|
82,039 |
|
|
COPT Defense’s share of accumulated depreciation and amortization of unconsolidated real estate JVs |
|
|
17,265 |
|
|
|
16,000 |
|
|
Less: Property – operating lease liabilities |
|
|
(41,178 |
) |
|
|
(45,012 |
) |
|
Less: Property – finance lease liabilities |
|
|
(1,090 |
) |
|
|
(363 |
) |
|
Less: Cash and cash equivalents |
|
|
(24,262 |
) |
|
|
(274,986 |
) |
|
Less: COPT Defense’s share of cash of unconsolidated real estate JVs |
|
|
(1,332 |
) |
|
|
(1,898 |
) |
|
Adjusted book |
|
$ |
6,629,937 |
|
|
$ |
6,388,593 |
|
|
|
|
September 30, 2026 |
|
December 31, 2025 |
|
September 30, 2025 |
||||||
|
Reconciliation of debt to net debt and net debt adjusted for fully-leased investment properties |
|
|
|
|
|
|
||||||
|
Debt per balance sheet |
|
$ |
2,579,733 |
|
|
$ |
2,767,834 |
|
|
$ |
2,443,518 |
|
|
Net discounts and commissions and deferred financing costs |
|
|
19,267 |
|
|
|
23,466 |
|
|
|
19,123 |
|
|
COPT Defense’s share of unconsolidated JV gross secured debt |
|
|
75,250 |
|
|
|
75,250 |
|
|
|
75,250 |
|
|
Gross debt |
|
|
2,674,250 |
|
|
|
2,866,550 |
|
|
|
2,537,891 |
|
|
Less: Cash and cash equivalents |
|
|
(24,262 |
) |
|
|
(274,986 |
) |
|
|
(23,687 |
) |
|
Less: COPT Defense’s share of cash of unconsolidated real estate JVs |
|
|
(1,332 |
) |
|
|
(1,898 |
) |
|
|
(2,080 |
) |
|
Net debt |
|
|
2,648,656 |
|
|
|
2,589,666 |
|
|
|
2,512,124 |
|
|
Costs incurred on fully-leased development properties |
|
|
(112,988 |
) |
|
|
(8,226 |
) |
|
|
(83,794 |
) |
|
Net debt adjusted for fully-leased investment properties |
|
$ |
2,535,668 |
|
|
$ |
2,581,440 |
|
|
$ |
2,428,330 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20261029548923/en/
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