EPS of $0.34
FFO per Share, As Adjusted for Comparability, of $0.69
6.2% FFO per Share Growth Year-over-Year
1-cent above the Midpoint of Guidance
Increased Midpoint of 2026 FFO per Share Guidance by 1-cent to $2.76
Implies 1.5% FFO per Share Growth for the Year
Same Property Cash NOI Increased 5.4%
Increased Midpoint of 2026 Guidance by 50 basis points to 3.0%
Occupancy and Leased Levels
Total Portfolio 94.4% Occupied and 95.2% Leased
Defense/IT Portfolio 95.6% Occupied and 96.4% Leased
Leasing Activity
Total Leasing of 1.6 million SF
Vacancy Leasing of 92,000 SF
On Track to Achieve Annual Target of 400,000 SF
Renewal Leasing of 1.2 million SF
Tenant Retention of 91%
Increased Midpoint of 2026 Guidance by 250 basis points to 82.5%
Investment Leasing of 384,000 SF
Investment Activity
Committed $201 million of Capital to Two New Investments that are 61% Pre-Leased
Increased Midpoint of 2026 Guidance by $40 million to $290 million
COLUMBIA, Md.--(BUSINESS WIRE)--April 27, 2026--
COPT Defense Properties ("COPT Defense" or the "Company") $(CDP)$ 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:
-- Diluted earnings per share ("EPS") was $0.34 for the quarter ended
March 31, 2026, compared to $0.31 for the quarter ended March 31, 2025.
-- Diluted funds from operations per share ("FFOPS"), as calculated in
accordance with Nareit's definition and as adjusted for comparability,
was $0.69 for the quarter ended March 31, 2026, compared to $0.65 for the
quarter ended March 31, 2025.
Operating Performance Highlights
Operating Portfolio Summary:
-- At March 31, 2026, the Company's 25.2 million square foot total
portfolio was 94.4% occupied and 95.2% leased, which includes the 23.2
million square foot Defense/IT Portfolio that was 95.6% occupied and
96.4% leased.
Same Property Performance:
-- At March 31, 2026, the Company's 24.6 million square foot Same Property
portfolio was 94.2% occupied and 95.1% leased.
-- The Company's Same Property cash NOI increased 5.4% in the quarter
ended March 31, 2026 compared to the same period in 2025.
Leasing:
-- Total Square Feet Leased: For the quarter ended March 31, 2026, the Company leased 1.6 million square feet, including 1.2 million square feet of renewals, 92,000 square feet of vacancy leasing, and 384,000 square feet of investment leasing. -- Tenant Retention Rates: During the quarter ended March 31, 2026, the Company renewed 90.8% of expiring square feet in its total portfolio. -- Rent Spreads and Average Escalations on Renewing Leases: For the quarter ended March 31, 2026, straight-line rents on renewals increased 12.0% and cash rents on renewed space increased 3.8% while annual escalations on renewing leases averaged 3.1%. -- Lease Terms: In the quarter ended March 31, 2026, lease terms averaged 4.5 years on renewing leases, 6.6 years on vacancy leasing, and 13.4 years on investment leasing.
Investment Activity Highlights
-- Development Pipeline: The Company's development pipeline consists of
seven properties totaling 1.0 million square feet that were 73% leased as
of March 31, 2026. These projects represent a total estimated investment
of $508 million, of which $139 million was spent as of March 31, 2026.
The Company added two new investments to the development pipeline during
the quarter totaling 387,000 square feet that are 61% pre-leased and
represent $201 million in committed capital.
-- Acquisition: Subsequent to the quarter, on April 23, 2026, the Company
acquired approximately 17 acres of land for approximately $43 million,
subject to a ground lease on which two buildings at Mission Ridge 1 + 2,
located at 15020 and 15030 Conference Center Drive in Chantilly, Virginia,
have been developed. The buildings are fully leased to the U.S.
Government and defense contractors.
Balance Sheet and Capital Transaction Highlights
-- On March 16, 2026, the Company repaid at maturity $400 million in 2.25%
Notes, using the remaining excess available cash and cash equivalents
from prefunding this debt maturity with a new bond issuance in 2025 and
borrowings under our Revolving Credit Facility.
-- For the quarter ended March 31, 2026, the Company's adjusted EBITDA
fixed charge coverage ratio was 4.3x.
-- At March 31, 2026, the Company's net debt to in-place adjusted EBITDA
ratio was 6.1x and its net debt adjusted for fully-leased investment
properties to in-place adjusted EBITDA ratio was 5.9x.
-- At March 31, 2026, and including the effect of interest rate swaps, the
Company's weighted average effective interest rate on its consolidated
debt portfolio was 3.8% with a weighted average maturity of 4.5 years
(assuming exercise of available extension options), and 85% 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 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:
Quarter Ending Year Ending
June 30, 2026 December 31, 2026
------------------ ------------------------
Reconciliation of
Diluted EPS to
FFOPS, per
Nareit, and As
Adjusted for
Comparability 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, December 31,
2026 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)
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