COPT DEFENSE PROPERTIES
For the period ended Jun 30, 2026. Filed Aug 3, 2026.
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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, 2026 · Filed Aug 3, 2026
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 2026-03-31; filed 2026-05-06.
0000860546-26-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-03.
0000860546-26-000040
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 99 previous paragraphs and 116 current paragraphs.
73 unchanged; 25 reworded; 11 added; 1 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 (11)
Current report
General, administrative, leasing, and other expenses increased due in large part to higher compensation-related expenses in the current period.
Current report
Interest expense increased in the current period due primarily to a higher interest rate on $400.0 million of our unsecured senior notes due to the refinancing of our 2.25% Notes that matured on March 16, 2026 with our 4.50% Senior Notes due 2030 (the “4.50% Notes”) issued in October 2025.
Current report
Gain on Sales of Real Estate
Current report
The gain on sales of real estate recognized in the current period was due to our sale of non-operating properties in Aberdeen, Maryland.
Current report
NOI from Real Estate Operations
Current report
•acquired properties includes an operating office property acquired in 2025 and a parcel of land subject to a ground lease that we acquired in 2026 and recorded as an investment in a sales-type lease.
Current report
NOI from Service Operations
Current report
Interest Expense
Current report
Interest and other income, net increased in the current period due in large part to net credit loss recoveries recognized on our investing receivables in the current period.
Current report
Gain on Sales of Real Estate
Current report
The gain on sales of real estate recognized in the current period was primarily due to our sale of non-operating properties in Aberdeen, Maryland.
Removed paragraphs (1)
Previous report
Interest and other income, net increased in the current period due in large part to interest income earned by a portion of the proceeds from the 4.50% Notes being invested in short-term interest-bearing money market accounts prior to repayment of the 2.25% Notes on March 16, 2026.
Reworded paragraphs (25)
Previous wording
During the three months ended March 31, 2026, we:
Current wording
During the six months ended June 30, 2026, we:
Previous wording
•finished the period with our portfolio 94.4% occupied and 95.2% leased;
Current wording
•finished the period with our portfolio 94.1% occupied and 95.6% leased;
Previous wording
•achieved a tenant retention rate of 90.8%, which was driven by our Defense/IT Portfolio; and
Current wording
•achieved a tenant retention rate of 84.4%, which was driven by our Defense/IT Portfolio;
Previous wording
On April 23, 2026, we acquired approximately 17 acres of land for a purchase price of approximately $43 million, subject to a ground lease underlying two fully-leased operating properties located at 15020 and 15030 Conference Center Drive in Chantilly, Virginia.
Current wording
•acquired approximately 17 acres of land on April 23, 2026 for a purchase price of $43.0 million, subject to a ground lease underlying two fully-leased operating properties located at 15020 and 15030 Conference Center Drive in Chantilly, Virginia; and
Previous wording
We refer to the measures annualized rental revenue (“ARR”), “tenant retention rate,” “investment space leasing,” and “vacant space leasing” in this Quarterly Report on Form 10-Q. ARR is a measure that we use to evaluate the sources of our rental revenue as of a point in time. It is computed by multiplying by 12 the sum of monthly contractual base rents and estimated monthly expense reimbursements under active leases as of a point in time (ignoring free rent then in effect and rent associated with tenant funded landlord assets). Our computation of ARR excludes the effect of lease incentives. We consider ARR to be a useful measure for analyzing revenue sources because, since it is point-in-time based, it does not contain increases and decreases in revenue associated with periods in which lease terms were not in effect; historical revenue under generally accepted accounting principles in the United States of America (“GAAP”) does contain such fluctuations. We find the measure particularly useful for leasing, tenant, segment, and industry analysis. In instances in which we report ARR per occupied square foot, the measure excludes revenue from leases not associated with our buildings. Tenant retention rate is a measure we use that represents the percentage of square feet renewed in a period relative to the total square feet scheduled to expire in that period, including the effect of early renewals. Investment space leasing represents vacant space leased within two years of the shell completion date for development properties or the acquisition date for operating property acquisitions. Vacant space leasing represents our vacated second-generation space leased and vacant space leased in development properties and operating property acquisitions after two years from such properties’ shell completion or acquisition date.
Current wording
We refer to the measures annualized rental revenue (“ARR”), “tenant retention rate,” “investment space leasing,” and “vacant space leasing” in this Quarterly Report on Form 10-Q. ARR is a measure that we use to evaluate the sources of our rental revenue as of a point in time. It is computed by multiplying by 12 the sum of monthly contractual base rents and estimated monthly expense reimbursements under active leases as of a point in time (ignoring free rent then in effect and rent associated with tenant funded landlord assets). Our computation of ARR excludes the effect of lease incentives. We consider ARR to be a useful measure for analyzing revenue sources because, since it is point-in-time based, it does not contain increases and decreases in revenue associated with periods in which lease terms were not in effect; historical revenue under GAAP does contain such fluctuations. We find the measure particularly useful for leasing, tenant, segment, and industry analysis. In instances in which we report ARR per occupied square foot, the measure excludes revenue from leases not associated with our buildings. Tenant retention rate is a measure we use that represents the percentage of square feet renewed in a period relative to the total square feet scheduled to expire in that period, including the effect of early renewals. Investment space leasing represents vacant space leased within two years of the shell completion date for development properties or the acquisition date for operating property acquisitions. Vacant space leasing represents our vacated second-generation space leased and vacant space leased in development properties and operating property acquisitions after two years from such properties’ shell completion or acquisition date.
Previous wording
During the three months ended March 31, 2026, we leased 1.6 million square feet, including: 1.2 million square feet of renewal leasing (representing a tenant retention rate of 90.8%); 92,000 square feet of vacant space leasing; and 384,000 square feet of investment space leasing.
Current wording
During the six months ended June 30, 2026, we leased 2.2 million square feet, including: 1.5 million square feet of renewal leasing (representing a tenant retention rate of 84.4%); 231,000 square feet of vacant space leasing; and 416,000 square feet of investment space leasing.
Previous wording
Our Same Property pool consisted of 203 properties, comprising 97.6% of our portfolio’s square footage as of March 31, 2026 and 95.8% of NOI from real estate operations for the three months then ended. This pool of properties changed from the pool used for purposes of comparing 2025 and 2024 in our 2025 Annual Report on Form 10-K due to the addition of three properties placed in service and 100% operational on or before January 1, 2025 and two properties acquired in 2024.
Current wording
Our Same Property pool consisted of 203 properties, comprising 97.1% of our portfolio’s square footage as of June 30, 2026 and 95.8% of NOI from real estate operations for the six months then ended. This pool of properties changed from the pool used for purposes of comparing 2025 and 2024 in our 2025 Annual Report on Form 10-K due to the addition of three properties placed in service and 100% operational on or before January 1, 2025 and two properties acquired in 2024.
Previous wording
•developed properties placed in service reflects the effect of three properties placed in service in 2025; and
Current wording
•developed properties placed in service reflects the effect of four properties placed in service in 2025 and 2026; and
Previous wording
•acquired property includes one operating office property acquired in 2025.
Current wording
•acquired property includes an operating office property acquired in 2025 and a parcel of land subject to a ground lease that we acquired in 2026 and recorded as an investment in a sales-type lease.
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 utility expenses (largely due to rate increases) and real estate taxes (due to our recognition in 2025 of prior year taxes refunded upon appeal), the effect of which was mostly offset by increased tenant expense reimbursements;
Current wording
•the increase for our Same Properties was due primarily 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 utility expenses and real estate taxes, due to in large part to our recognition in 2025 of prior year taxes refunded upon successful appeal, the effect of which was mostly offset by increased tenant expense reimbursements;
Previous wording
Interest expense increased in the current period due primarily to increased debt outstanding resulting from our issuance in October 2025 of $400.0 million of 4.50% Senior Notes due 2030 (the “4.50% Notes”) to prefund the repayment at maturity of our 2.25% Notes on March 16, 2026.
Current wording
Interest expense increased in the current period due primarily to our issuance in October 2025 of 4.50% Notes to refinance and prefund the repayment at maturity of our 2.25% Notes on March 16, 2026.
Previous wording
The table below presents the major components of our additions to properties for the three months ended March 31, 2026 (in thousands):
Current wording
The table below presents the major components of our additions to properties for the six months ended June 30, 2026 (in thousands):
Previous wording
Net cash flow from operating activities increased $24.3 million when comparing the three months ended March 31, 2026 and 2025, which was driven by increased cash flow from real estate operations due in large part to increased rental and occupancy rates and growth in our operating portfolio.
Current wording
Net cash flow from operating activities increased $27.5 million when comparing the six months ended June 30, 2026 and 2025 due to increased cash flow from real estate operations attributable in large part to increased rental and occupancy rates and growth in our operating portfolio, partially offset by higher cash paid for interest expense due primarily to our issuance in October 2025 of 4.50% Notes to refinance and prefund the repayment at maturity of our 2.25% Notes.
Previous wording
Net cash flow used in investing activities increased $12.8 million when comparing the three months ended March 31, 2026 and 2025 due primarily to increased cash outlays for property development activities in the current period, offset in part by the effect of investing receivables funded in the prior period.
Current wording
Net cash flow used in investing activities increased $36.9 million when comparing the six months ended June 30, 2026 and 2025 due primarily to our acquisition of an investment in a sales-type lease in the current period.
Previous wording
Net cash flow used in financing activities in the three months ended March 31, 2026 was $260.2 million, and included primarily the following:
Current wording
Net cash flow used in financing activities in the six months ended June 30, 2026 was $254.3 million, and included primarily the following:
Previous wording
•net repayments of debt borrowings during the period of $222.4 million, which included our repayment at maturity of $400.0 million in 2.25% Notes; and
Current wording
•net repayments of debt borrowings during the period of $178.3 million, which included our repayment at maturity of $400.0 million in 2.25% Notes; and
Previous wording
•dividends to common shareholders of $34.6 million.
Current wording
•dividends to common shareholders of $70.8 million.
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 of debt borrowings during the period of $19.5 million; and
Current wording
•net proceeds of 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
As of March 31, 2026, we had $28.6 million in cash and cash equivalents.
Current wording
As of June 30, 2026, we had $24.2 million in cash and cash equivalents.
Previous wording
We have a Revolving Credit Facility with a maximum borrowing capacity of $800.0 million. The facility matures in October 2029 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 $610.0 million as of March 31, 2026.
Current wording
We have a Revolving Credit Facility with a maximum borrowing capacity of $800.0 million. The facility matures in October 2029 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 $528.0 million as of June 30, 2026.
Previous wording
We also have a Revolving Development Facility with a maximum borrowing capacity of $200.0 million. The facility matures in October 2029 and may be extended by a 12-month period at our option, provided that there is no default under the facility and we pay an extension fee of 0.250% of the total amount available under the facility. Our available borrowing capacity under the facility totaled $62.0 million as of March 31, 2026.
Current wording
We also have a Revolving Development Facility with a maximum borrowing capacity of $200.0 million. The facility matures in October 2029 and may be extended by a 12-month period at our option, provided that there is no default under the facility and we pay an extension fee of 0.250% of the total amount available under the facility. Our available borrowing capacity under the facility totaled $64.0 million as of June 30, 2026.
Previous wording
•tenant and capital improvements and leasing costs for operating properties (expected to total approximately $80 million during the remainder of 2026);
Current wording
•tenant and capital improvements and leasing costs for operating properties (expected to total approximately $55 million during the remainder of 2026);
Previous wording
During the remainder of 2026, we expect to spend $125 million to $155 million on costs for properties actively under development, most of which was contractually obligated as of March 31, 2026, and have $45.6 million in debt balloon payments maturing in 2026. During the remainder of 2026 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, with the balance funded using any excess available cash and cash equivalents and borrowings under our Revolving Development Facility and Revolving Credit Facility.
Current wording
During the remainder of 2026, we expect to spend $85 million to $105 million on costs for properties actively under development, most of which was contractually obligated as of June 30, 2026, and have $10.0 million in debt balloon payments maturing in 2026. During the remainder of 2026 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, with the balance funded using any excess available cash and cash equivalents and borrowings under our Revolving Development Facility and 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, 2026 and 2025
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 2025 and 2026; and
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.
Current report — wording carried from elsewhere
•general, administrative, leasing, and other expenses;