COPT DEFENSE PROPERTIES
For the period ended Jun 30, 2025. Filed Jul 31, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 31, 2025
CDP$32.87+1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0000860546-25-000026
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-31.
0000860546-25-000038
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 93 previous paragraphs and 102 current paragraphs.
72 unchanged; 21 reworded; 2 added; 0 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 8 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
NOI from Real Estate Operations
Current report
NOI from Service Operations
Reworded paragraphs (21)
Previous wording
During the three months ended March 31, 2025, we:
Current wording
During the six months ended June 30, 2025, we:
Previous wording
finished the period with our portfolio 93.6% occupied and 95.1% leased; and
Current wording
finished the period with our portfolio 94.0% occupied and 95.6% leased; and
Previous wording
achieved a tenant retention rate of 74.9%, all of which was attributable to our Defense/IT Portfolio.
Current wording
achieved a tenant retention rate of 81.9%, which was driven by our Defense/IT Portfolio.
Previous wording
During the three months ended March 31, 2025, we leased 647,000 square feet, including: 438,000 square feet of renewal leasing (representing a tenant retention rate of 74.9%); 120,000 square feet of vacant space leasing; and 89,000 square feet of investment space leasing.
Current wording
During the six months ended June 30, 2025, we leased 1.4 million square feet, including: 915,000 square feet of renewal leasing (representing a tenant retention rate of 81.9%); 353,000 square feet of vacant space leasing; and 103,000 square feet of investment space leasing.
Previous wording
Our Same Property pool consisted of 198 properties, comprising 97.2% of our portfolio’s square footage as of March 31, 2025. This pool of properties changed from the pool used for purposes of comparing 2024 and 2023 in our 2024 Annual Report on Form 10-K due to the addition of six properties placed in service and 100% operational on or before January 1, 2024 and three properties owned through a UJV that was formed in 2023.
Current wording
Our Same Property pool consisted of 198 properties, comprising 97.1% of our portfolio’s square footage as of June 30, 2025. This pool of properties changed from the pool used for purposes of comparing 2024 and 2023 in our 2024 Annual Report on Form 10-K due to the addition of six properties placed in service and 100% operational on or before January 1, 2024 and three properties owned through a UJV that was formed in 2023.
Previous wording
the increase for our Same Properties was due in large part to additional revenue in the current period resulting from increased rental and occupancy rates. Our Same Properties also experienced increased property operating expenses, driven primarily by higher snow removal and utility expenses, the effect of which was mostly offset by increased tenant expense reimbursements and prior year real estate taxes refunded upon appeal. For the increases in our Same Properties by segment, the Defense/IT Portfolio increase was adversely affected by a $2.1 million collectability loss provision, while our Other segment increase included $2.1 million from a refund of prior year real estate taxes, net of related tenant reimbursements, at one of our properties;
Current wording
the increase for our Same Properties was due in large part to additional revenue in the current period resulting from increased rental and occupancy rates. Our Same Properties also experienced increased property operating expenses, driven primarily by higher snow removal and utility expenses, the effect of which was mostly offset by increased tenant expense reimbursements and prior year real estate taxes refunded upon appeal. For the increases in our Same Properties by segment, the Defense/IT Portfolio increase was adversely affected by $1.9 million in collectability loss provisions, while our Other segment increase included $2.2 million from refunds of prior year real estate taxes, net of related tenant reimbursements;
Previous wording
Interest and other income, net decreased due primarily to interest income earned from excess loan proceeds that we invested in short-term interest-bearing money market accounts in the prior period.
Current wording
Interest and other income, net decreased due in large part to interest income earned from excess loan proceeds that we invested in short-term interest-bearing money market accounts in the prior period.
Previous wording
The table below sets forth the major components of our additions to properties for the three months ended March 31, 2025 (in thousands):
Current wording
The table below sets forth the major components of our additions to properties for the six months ended June 30, 2025 (in thousands):
Previous wording
Net cash flow from operating activities increased $1.1 million when comparing the three months ended March 31, 2025 and 2024, which included offsetting changes in the timing of cash flows from real estate operations and third-party construction projects.
Current wording
Net cash flow from operating activities decreased $4.9 million when comparing the six months ended June 30, 2025 and 2024, which included offsetting changes in the timing of cash flows from real estate operations and third-party construction projects.
Previous wording
Net cash flow used in investing activities decreased $9.4 million when comparing the three months ended March 31, 2025 and 2024 due primarily to the acquisition of an operating property in the prior period.
Current wording
Net cash flow used in investing activities increased $16.3 million when comparing the six months ended June 30, 2025 and 2024 due primarily to cash paid for properties in development or held for future development and funding of investing receivables, which was partially offset by our acquisition of an operating property in the prior period.
Previous wording
Net cash flow used in financing activities in the three months ended March 31, 2025 was $16.2 million, and included primarily the following:
Current wording
Net cash flow used in financing activities in the six months ended June 30, 2025 was $27.7 million, and included primarily the following:
Previous wording
net proceeds from debt borrowings during the period of $19.5 million; and
Current wording
net proceeds from debt borrowings during the period of $44.1 million; and
Previous wording
dividends to common shareholders of $33.3 million.
Current wording
dividends to common shareholders of $67.7 million.
Previous wording
Net cash flow used in financing activities in the three months ended March 31, 2024 was $36.4 million, and included primarily the following:
Current wording
Net cash flow used in financing activities in the six months ended June 30, 2024 was $99.4 million, and included primarily the following:
Previous wording
repayments of debt borrowings during the period of $769,000; and
Current wording
repayments of debt borrowings during the period of $29.1 million; and
Previous wording
dividends to common shareholders of $32.1 million.
Current wording
dividends to common shareholders of $65.3 million.
Previous wording
As of March 31, 2025, we had $24.3 million in cash and cash equivalents.
Current wording
As of June 30, 2025, we had $21.3 million in cash and cash equivalents.
Previous wording
We have a Revolving Credit Facility with a maximum borrowing capacity of $600.0 million. We use this facility to initially fund most of the cash requirements from our investing activities, including property development and acquisition costs, as well as certain debt balloon payments due upon maturity. We then subsequently pay down the facility using cash available from operations and proceeds from financing and/or investing activities, such as long-term borrowings, equity issuances and sales of interests in properties. The facility matures in October 2026 and may be extended by two six-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.0625% of the total availability under the facility for each extension period. Our available borrowing capacity under the facility totaled $505.0 million as of March 31, 2025.
Current wording
We have a Revolving Credit Facility with a maximum borrowing capacity of $600.0 million. We use this facility to initially fund most of the cash requirements from our investing activities, including property development and acquisition costs, as well as certain debt balloon payments due upon maturity. We then subsequently pay down the facility using cash available from operations and proceeds from financing and/or investing activities, such as long-term borrowings, equity issuances and sales of interests in properties. The facility matures in October 2026 and may be extended by two six-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.0625% of the total availability under the facility for each extension period. Our available borrowing capacity under the facility totaled $480.0 million as of June 30, 2025.
Previous wording
Our senior unsecured debt is rated investment grade, with either stable or positive outlooks, by the three major rating agencies. We aim to maintain an investment grade rating to enable us to use debt comprised of unsecured, primarily fixed-rate debt (including the effect of interest rate swaps) from public markets and banks. We also use secured nonrecourse debt from institutional lenders and banks primarily for joint venture financings. In addition, we periodically raise equity when we access the public equity markets by issuing common shares and, to a lesser extent, preferred shares.
Current wording
Our senior unsecured debt is rated investment grade, with either stable or positive outlooks, by the three major rating agencies. We aim to maintain an investment grade rating to enable us to use debt comprised of unsecured, primarily fixed-rate debt (including the effect of interest rate swaps) from public markets and banks. We also use secured nonrecourse debt from institutional lenders and banks primarily for joint venture financings. In addition, we periodically raise equity when we access the public equity markets by issuing common shares.
Previous wording
tenant and capital improvements and leasing costs for operating properties (expected to total approximately $80 million during the remainder of 2025);
Current wording
tenant and capital improvements and leasing costs for operating properties (expected to total approximately $60 million during the remainder of 2025);
Previous wording
During the remainder of 2025, we expect to spend $150 million to $180 million on costs for properties actively under development, most of which was contractually obligated as of March 31, 2025. During the remainder of 2025 and beyond, we expect to continue to actively develop additional properties and also could opportunistically acquire operating properties. We expect to fund these activities using, in part, available cash flow from operations and any excess available cash and cash equivalents, with the balance funded, at least initially, using borrowings under our Revolving Credit Facility.
Current wording
During the remainder of 2025, we expect to spend $115 million to $135 million on costs for properties actively under development, most of which was contractually obligated as of June 30, 2025. During the remainder of 2025 and beyond, we expect to continue to actively develop additional properties and also could opportunistically acquire operating properties. We expect to fund these activities using, in part, available cash flow from operations and any excess available cash and cash equivalents, with the balance funded, at least initially, using borrowings under our Revolving Credit Facility.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
the increase for our Same Properties was due primarily to additional revenue in the current period resulting from increased rental and occupancy rates;
Current report — wording carried from elsewhere
Comparison of Statements of Operations for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
(1)Includes minimum base rents, net of abatements and lease incentives and excluding lease termination revenue, on a straight-line basis for the periods set forth above.
Current report — wording carried from elsewhere
Regarding the changes in NOI from real estate operations reported above:
Current report — wording carried from elsewhere
developed properties placed in service reflects the effect of four properties placed in service in 2024 and 2025; and
Current report — wording carried from elsewhere
acquired properties includes two operating office properties acquired in 2024.
Current report — wording carried from elsewhere
Construction contract and other service revenue and expenses decreased in the current period due primarily to a lower volume of construction activity for one of our tenants.