COPT Defense Reports Strong Full Year 2025 Results

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:

• Diluted earnings per share (“EPS”) was $0.33 for the quarter ended December 31, 2025, compared to $0.31 for the quarter ended December 31, 2024.
• Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition and as adjusted for comparability, was $0.70 for the quarter ended December 31, 2025, compared to FFOPS per Nareit of $0.64 and FFOPS, as adjusted for comparability of $0.65 for the quarter ended December 31, 2024.

Full Year 2025 Financial Results:

• EPS for the year ended December 31, 2025 was $1.34 as compared to $1.23 for 2024.
• Per Nareit’s definition and as adjusted for comparability, FFOPS for 2025 was $2.72 as compared to $2.57 for 2024.

Operating Performance Highlights

Operating Portfolio Summary:

• At December 31, 2025, the Company’s 25.1 million square foot total portfolio was 94.0% occupied and 95.3% leased, which includes the 23.2 million square foot Defense/IT Portfolio that was 95.5% occupied and 96.5% leased.
• During the quarter and year ended December 31, 2025, the Company placed into service 418,000 and 468,000 square feet, respectively, of developments that were 100% leased.

Same Property Performance:

• At December 31, 2025, the Company’s 23.9 million square foot Same Property portfolio was 94.2% occupied and 95.3% leased.
• The Company’s Same Property cash NOI increased 2.6% and 4.1% in the quarter and year ended December 31, 2025, respectively, compared to the same periods in 2024.

Leasing:

• Total Square Feet Leased: For the quarter ended December 31, 2025, the Company leased 735,000 square feet, including 336,000 square feet of renewals, 125,000 square feet of vacancy leasing, and 274,000 square feet of investment leasing. For the year ended December 31, 2025, the Company executed 3.1 million square feet of total leasing, including 2.0 million square feet of renewals, 557,000 square feet of vacancy leasing, and 477,000 square feet of investment leasing.
• Tenant Retention Rates: During the quarter ended December 31, 2025, the Company renewed 62.5% of expiring square feet in its total portfolio. During the year ended December 31, 2025, the Company renewed 77.9% of expiring square feet in its total portfolio.
• Rent Spreads and Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2025, straight-line rents on renewals increased 3.4% and 9.6%, respectively, and cash rents on renewed space decreased 5.2% and increased 1.1%, respectively, while annual escalations on renewing leases averaged 2.5% and 2.0%, respectively.
• Lease Terms: In the quarter ended December 31, 2025, lease terms averaged 6.1 years on renewing leases, 6.9 years on vacancy leasing, and 14.5 years on investment leasing. For the year ended December 31, 2025, lease terms averaged 5.3 years on renewing leases, 7.6 years on vacancy leasing, and 13.1 years on investment leasing.

Investment Activity Highlights

• Development Pipeline: The Company’s development pipeline consists of six properties totaling 882,000 square feet that were 86% leased as of February 4, 2026. These projects represent a total estimated investment of $448 million, of which $110 million was spent as of December 31, 2025.
• Acquisition: On October 30, 2025, the Company acquired Stonegate I at 15050 Conference Center Drive in Chantilly, Virginia, a 142,000 square foot Class A office building for a gross purchase price of $40 million. The building is fully leased to a top 20 U.S. Government defense contractor.
  • Please see the Company’s acquisition press release dated October 30, 2025.

Balance Sheet and Capital Transaction Highlights

• On October 2, 2025, the Company issued $400 million of 4.50% Senior Notes due 2030. The Company intends to use the net proceeds to repay the 2.25% Senior Notes at maturity in March 2026. Until March, the proceeds are being used for general corporate purposes, including paying down amounts under its Revolving Credit Facility and investment in interest-bearing accounts.
• On October 6, 2025, the Company entered into an amendment to the credit agreement underlying its Revolving Credit Facility (the “Revolver”) and Unsecured Bank Term Loan (the “Term Loan”). This amendment: increased the aggregate lender commitment under the Revolver from $600 million to $800 million; extended the maturity date of the Revolver from October 2026 to October 2029, which may be extended by two six-month periods at the Company’s option; reduced the initial interest rate on the Revolver to SOFR + 0.85% and on the Term Loan to SOFR + 1.05%; and eliminated the 0.10% SOFR transition charge.
• On October 16, 2025, the Company entered into a secured revolving credit agreement with a lender for an aggregate of $200 million of available borrowings, which the Company intends to use to fund property development activities.
• For the quarter ended December 31, 2025, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.3x.
• At December 31, 2025, 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 5.8x.
• At December 31, 2025, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.5% with a weighted average maturity of 4.1 years (assuming exercise of available extension options), and 100% 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 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:

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