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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended			September 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from						to

Commission File Number: 1-14023

COPT DEFENSE PROPERTIES

(Exact name of registrant as specified in its charter)


Maryland						23-2947217
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)


6711 Columbia Gateway Drive, Suite 300, Columbia, MD			21046
(Address of principal executive offices)			(Zip Code)

(443) 285-5400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of beneficial interest, $0.01 par value	CDP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of October 23, 2025, 113,210,594 of COPT Defense Properties’ Common Shares of Beneficial Interest, $0.01 par value, were issued and outstanding.

TABLE OF CONTENTS

FORM 10-Q


		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
Consolidated Financial Statements
	Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (unaudited)	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)	5
	Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (unaudited)	8






Notes to Consolidated Financial Statements (unaudited)		10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42

SIGNATURES		43

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

COPT Defense Properties and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)


	September 30, 2025		December 31, 2024
Assets
Properties, net
Operating properties, net	$	3,372,672	$	3,353,477
Projects in development or held for future development	353,184		277,049
Total properties, net	3,725,856		3,630,526
Property - operating lease right-of-use assets	51,838		55,760


Cash and cash equivalents	23,687		38,284
Investment in unconsolidated real estate joint ventures	36,301		39,360
Accounts receivable, net	38,931		42,234
Deferred rent receivable	173,758		161,438
Lease incentives, net	68,263		64,013
Deferred leasing costs (net of accumulated amortization of $42,807 and $44,060, respectively)	72,272		71,268
Investing receivables (net of allowance for credit losses of $4,204 and $2,792, respectively)	79,772		69,680

Prepaid expenses and other assets, net	80,754		81,628
Total assets	$	4,351,432	$	4,254,191
Liabilities and equity
Liabilities
Debt, net	$	2,443,518	$	2,391,755
Accounts payable and accrued expenses	135,331		126,031
Rents received in advance and security deposits	36,988		38,560
Dividends and distributions payable	35,220		33,909
Deferred revenue associated with operating leases	43,671		39,752
Property - operating lease liabilities	46,203		49,240

Other liabilities	31,245		14,377
Total liabilities	2,772,176		2,693,624
Commitments and contingencies (Note 17)
Redeemable noncontrolling interest	24,217		23,974
Equity
Shareholders’ equity
Common Shares of beneficial interest ($0.01 par value; 150,000,000 shares authorized; shares issued and outstanding of 112,950,359 at September 30, 2025 and 112,703,460 at December 31, 2024)	1,130		1,127
Additional paid-in capital	2,497,736		2,494,369
Cumulative distributions in excess of net income	(991,935)		(1,003,401)
Accumulated other comprehensive income	79		988
Total shareholders’ equity	1,507,010		1,493,083
Noncontrolling interests in subsidiaries
Common units in COPT Defense Properties, L.P. (“CDPLP”)	33,024		28,935

Other consolidated entities	15,005		14,575
Noncontrolling interests in subsidiaries	48,029		43,510
Total equity	1,555,039		1,536,593
Total liabilities, redeemable noncontrolling interest and equity	$	4,351,432	$	4,254,191

See accompanying notes to consolidated financial statements.

COPT Defense Properties and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Revenues
Lease revenue	$	178,272	$	170,549	$	529,178	$	501,601
Other property revenue	2,038		2,014		6,186		4,710
Construction contract and other service revenues	8,485		16,662		31,202		63,523
Total revenues	188,795		189,225		566,566		569,834
Operating expenses
Property operating expenses	70,356		68,881		209,311		199,037
Depreciation and amortization associated with real estate operations	40,631		38,307		119,563		114,819
Construction contract and other service expenses	7,952		16,127		29,530		61,746

General, administrative, leasing and other expenses	12,030		11,416		36,097		35,195
Total operating expenses	130,969		134,731		394,501		410,797
Interest expense	(20,894)		(20,376)		(62,336)		(61,760)
Interest and other income, net	2,591		3,324		5,382		10,330
Gain on sales of real estate	3,018		—		3,318		—


Income before equity in income of unconsolidated entities and income taxes	42,541		37,442		118,429		107,607
Equity in income of unconsolidated entities	1,815		85		2,541		180
Income tax expense	(612)		(130)		(832)		(312)


Net income	43,744		37,397		120,138		107,475
Net income attributable to noncontrolling interests
Common units in CDPLP	(924)		(711)		(2,496)		(2,013)

Other consolidated entities	(1,093)		(601)		(2,828)		(1,654)



Net income attributable to common shareholders	$	41,727	$	36,085	$	114,814	$	103,808

Earnings per common share


Net income attributable to common shareholders - basic	$	0.37	$	0.32	$	1.02	$	0.92



Net income attributable to common shareholders - diluted	$	0.37	$	0.32	$	1.01	$	0.92

See accompanying notes to consolidated financial statements.

COPT Defense Properties and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Net income	$	43,744	$	37,397	$	120,138	$	107,475
Other comprehensive loss
Unrealized income (loss) on interest rate derivatives	67		(2,582)		261		1,309
Reclassification adjustments on interest rate derivatives recognized in interest expense	(368)		(1,170)		(1,296)		(3,522)


Total other comprehensive loss	(301)		(3,752)		(1,035)		(2,213)
Comprehensive income	43,443		33,645		119,103		105,262
Comprehensive income attributable to noncontrolling interests	(1,979)		(1,116)		(5,198)		(3,511)
Comprehensive income attributable to common shareholders	$	41,464	$	32,529	$	113,905	$	101,751

See accompanying notes to consolidated financial statements.

COPT Defense Properties and Subsidiaries

Consolidated Statements of Equity

(Dollars in thousands)

(unaudited)


	Common Shares		Additional Paid-in Capital		Cumulative Distributions in Excess of Net Income		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total
For the Three Months Ended September 30, 2024
Balance at June 30, 2024 (112,650,930 common shares outstanding)	$	1,127	$	2,489,931	$	(1,008,087)	$	3,614	$	43,921	$	1,530,506
Conversion of common units to common shares (40,000 shares)	—		538		—		—		(538)		—
Redemption of common units	—		—		—		—		(142)		(142)


Share-based compensation (2,276 shares issued, net of redemptions)	—		1,012		—		—		1,729		2,741
Redemption of vested equity awards	—		(66)		—		—		—		(66)
Adjustments to noncontrolling interests resulting from changes in ownership of CDPLP	—		1,597		—		—		(1,597)		—
Comprehensive income	—		—		36,085		(3,556)		610		33,139
Dividends	—		—		(33,258)		—		—		(33,258)
Distributions to owners of common units in CDPLP	—		—		—		—		(645)		(645)

Distributions to noncontrolling interests in other consolidated entities	—		—		—		—		(8)		(8)
Adjustments for changes in fair value of redeemable noncontrolling interest	—		328		—		—		—		328


Balance at September 30, 2024 (112,693,206 common shares outstanding)	$	1,127	$	2,493,340	$	(1,005,260)	$	58	$	43,330	$	1,532,595

For the Three Months Ended September 30, 2025
Balance at June 30, 2025 (112,929,288 common shares outstanding)	$	1,129	$	2,495,422	$	(999,218)	$	342	$	48,066	$	1,545,741


Conversion of common units to common shares (22,292 shares)	1		302		—		—		(303)		—

Redemption of common units	—		—		—		—		(129)		(129)
Share-based compensation (1,221 shares redeemed, net of issuances)	—		1,116		—		—		2,022		3,138
Redemption of vested equity awards	—		(55)		—		—		—		(55)
Adjustments to noncontrolling interests resulting from changes in ownership of CDPLP	—		1,910		—		—		(1,910)		—
Comprehensive income	—		—		41,727		(263)		1,045		42,509
Dividends	—		—		(34,444)		—		—		(34,444)
Distributions to owners of common units in CDPLP	—		—		—		—		(754)		(754)

Distributions to noncontrolling interests in other consolidated entities	—		—		—		—		(8)		(8)
Adjustments for changes in fair value of redeemable noncontrolling interest	—		(959)		—		—		—		(959)


Balance at September 30, 2025 (112,950,359 common shares outstanding)	$	1,130	$	2,497,736	$	(991,935)	$	79	$	48,029	$	1,555,039

See accompanying notes to consolidated financial statements.

COPT Defense Properties and Subsidiaries

Consolidated Statements of Equity (continued)

(Dollars in thousands)

(unaudited)


	Common Shares		Additional Paid-in Capital		Cumulative Distributions in Excess of Net Income		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total
For the Nine Months Ended September 30, 2024
Balance at December 31, 2023 (112,555,352 common shares outstanding)	$	1,126	$	2,489,989	$	(1,009,318)	$	2,115	$	39,843	$	1,523,755



Conversion of common units to common shares (40,000 shares)	—		538		—		—		(538)		—
Redemption of common units	—		—		—		—		(1,420)		(1,420)


Share-based compensation (97,854 shares issued, net of redemptions)	1		3,132		—		—		5,093		8,226
Redemption of vested equity awards	—		(1,194)		—		—		—		(1,194)
Adjustments to noncontrolling interests resulting from changes in ownership of CDPLP	—		(269)		—		—		269		—
Comprehensive income	—		—		103,808		(2,057)		2,065		103,816
Dividends	—		—		(99,750)		—		—		(99,750)
Distributions to owners of common units in CDPLP	—		—		—		—		(1,959)		(1,959)

Distributions to noncontrolling interests in other consolidated entities	—		—		—		—		(23)		(23)
Adjustments for changes in fair value of redeemable noncontrolling interest	—		1,144		—		—		—		1,144



Balance at September 30, 2024 (112,693,206 common shares outstanding)	$	1,127	$	2,493,340	$	(1,005,260)	$	58	$	43,330	$	1,532,595

For the Nine Months Ended September 30, 2025
Balance at December 31, 2024 (112,703,460 common shares outstanding)	$	1,127	$	2,494,369	$	(1,003,401)	$	988	$	43,510	$	1,536,593


Conversion of common units to common shares (33,881 shares)	1		458		—		—		(459)		—
Redemption of common units	—		—		—		—		(469)		(469)


Share-based compensation (213,018 shares issued, net of redemptions)	2		3,368		—		—		5,863		9,233
Redemption of vested equity awards	—		(1,264)		—		—		—		(1,264)
Adjustments to noncontrolling interests resulting from changes in ownership of CDPLP	—		1,048		—		—		(1,048)		—
Comprehensive income	—		—		114,814		(909)		2,929		116,834
Dividends	—		—		(103,348)		—		—		(103,348)
Distributions to owners of common units in CDPLP	—		—		—		—		(2,274)		(2,274)

Distributions to noncontrolling interests in other consolidated entities	—		—		—		—		(23)		(23)
Adjustments for changes in fair value of redeemable noncontrolling interest	—		(243)		—		—		—		(243)



Balance at September 30, 2025 (112,950,359 common shares outstanding)	$	1,130	$	2,497,736	$	(991,935)	$	79	$	48,029	$	1,555,039

See accompanying notes to consolidated financial statements.

COPT Defense Properties and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	For the Nine Months Ended September 30,
	2025		2024
Cash flows from operating activities
Revenues from real estate operations received	$	532,741	$	513,267
Construction contract and other service revenues received	40,457		60,441
Property operating expenses paid	(212,184)		(196,123)
Construction contract and other service expenses paid	(33,437)		(54,728)
General, administrative, leasing and other expenses paid	(26,839)		(26,210)
Interest expense paid	(58,878)		(58,742)
Lease incentives paid	(17,247)		(13,893)



Interest and other income received	2,885		6,426

Other	1,112		(561)
Net cash provided by operating activities	228,610		229,877
Cash flows from investing activities
Properties in development or held for future development	(130,789)		(129,387)
Acquisitions of operating properties and related intangible assets	—		(32,244)
Tenant improvements on operating properties	(41,764)		(36,698)
Other capital improvements on operating properties	(16,015)		(22,572)



Non-operating distributions from unconsolidated real estate joint venture	21,874		962
Investing receivables funded	(9,521)		(2,087)

Leasing costs paid	(12,187)		(10,743)



Other	5,286		3,649
Net cash used in investing activities	(183,116)		(229,120)
Cash flows from financing activities
Proceeds from debt
Revolving Credit Facility	313,000		—



Repayments of debt
Revolving Credit Facility	(264,000)		—


Scheduled principal amortization	(1,376)		(1,879)
Other debt repayments	—		(27,649)





Common share dividends paid	(102,155)		(98,581)





Other	(5,870)		(6,401)
Net cash used in financing activities	(60,401)		(134,510)
Net decrease in cash and cash equivalents and restricted cash	(14,907)		(133,753)
Cash and cash equivalents and restricted cash
Beginning of period	39,697		169,424
End of period	$	24,790	$	35,671

See accompanying notes to consolidated financial statements.

COPT Defense Properties and Subsidiaries

Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)


	For the Nine Months Ended September 30,
	2025		2024
Reconciliation of net income to net cash provided by operating activities
Net income	$	120,138	$	107,475
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and other amortization	121,001		116,605



Amortization of deferred financing costs and net debt discounts	5,162		5,106
Change in net deferred rent receivable and liability	(8,146)		(1,103)
Gain on sales of real estate	(3,318)		—

Share-based compensation	8,739		7,826


Other	(2,797)		(2,399)
Changes in operating assets and liabilities
Decrease in accounts receivable	3,421		6,503
Increase in lease incentives and prepaid expenses and other assets, net	(6,800)		(14,279)
(Decrease) increase in accounts payable, accrued expenses and other liabilities	(7,218)		6,339
Decrease in rents received in advance and security deposits	(1,572)		(2,196)

Net cash provided by operating activities	$	228,610	$	229,877
Reconciliation of cash and cash equivalents and restricted cash
Cash and cash equivalents at beginning of period	$	38,284	$	167,820
Restricted cash at beginning of period	1,413		1,604
Cash and cash equivalents and restricted cash at beginning of period	$	39,697	$	169,424

Cash and cash equivalents at end of period	$	23,687	$	34,478
Restricted cash at end of period	1,103		1,193
Cash and cash equivalents and restricted cash at end of period	$	24,790	$	35,671
Supplemental schedule of non-cash investing and financing activities
Increase (decrease) in accrued capital improvements, leasing and other investing activity costs	$	14,221	$	(9,008)


Recognition of operating right-of-use assets and related lease liabilities	$	302	$	2,976












Decrease in fair value of derivatives applied to accumulated other comprehensive income and noncontrolling interests	$	(1,035)	$	(2,213)

Dividends/distributions payable	$	35,220	$	33,915

Decrease in noncontrolling interests and increase in shareholders’ equity in connection with the conversion of common units into common shares	$	459	$	538
Adjustments to noncontrolling interests resulting from changes in CDPLP ownership	$	(1,048)	$	269
Increase (decrease) in redeemable noncontrolling interest and decrease (increase) in equity to adjust for changes in fair value of redeemable noncontrolling interest	$	243	$	(1,144)

See accompanying notes to consolidated financial statements.

COPT Defense Properties and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

1. Organization

COPT Defense Properties (“COPT Defense”) and subsidiaries (collectively, the “Company”, “we” or “us”) is a fully-integrated and self-managed real estate investment trust (“REIT”) focused on owning, operating and developing properties in locations proximate to, or sometimes containing, key U.S. Government (“USG”) defense installations and missions (which we refer to herein as our Defense/IT Portfolio). Our 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, 2025, our Defense/IT Portfolio included:

•198 operating properties totaling 22.6 million square feet comprised of 16.7 million square feet in 167 office properties and 5.9 million square feet in 31 single-tenant data center shells. We owned 24 of these data center shells totaling 4.3 million square feet through unconsolidated real estate joint ventures;

•five properties under development (three office properties and two data center shells) that will total approximately 812,000 square feet upon completion; and

•approximately 1,000 acres of land controlled that we believe could be developed into approximately 10.7 million square feet.

We also owned six other operating properties totaling 2.0 million square feet and approximately 50 acres of other developable land in the Greater Washington, DC/Baltimore region as of September 30, 2025.

We conduct almost all of our operations and own almost all of our assets through our operating partnership, COPT Defense Properties, L.P. (“CDPLP”) and subsidiaries (collectively, the “Operating Partnership”), of which COPT Defense is the sole general partner. CDPLP owns real estate directly and through subsidiary partnerships and limited liability companies (“LLCs”). In addition to owning real estate, CDPLP also owns subsidiaries that provide real estate services such as property management, development and construction services primarily for our properties but also for third parties, most of which are tenants. Some of these services are performed by a taxable REIT subsidiary (“TRS”).

Equity interests in CDPLP are in the form of common and preferred units. As of September 30, 2025, COPT Defense owned 97.3% of the outstanding CDPLP common units (“common units”) and there were no preferred units outstanding. Common units not owned by COPT Defense carry certain redemption rights. The number of common units owned by COPT Defense is equivalent to the number of outstanding common shares of beneficial interest (“common shares”) of COPT Defense, and the entitlement of common units to quarterly distributions and payments in liquidation is substantially the same as that of COPT Defense common shareholders.

COPT Defense’s common shares are publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “CDP”.

2. Summary of Significant Accounting Policies

Basis of Presentation

These consolidated financial statements include the accounts of COPT Defense, the Operating Partnership, their subsidiaries and other entities in which COPT Defense has a majority voting interest and control. We also consolidate certain entities when control of such entities can be achieved through means other than voting rights (“variable interest entities” or “VIEs”) if we are deemed to be the primary beneficiary of such entities. We eliminate all intercompany balances and transactions in consolidation.

We use the equity method of accounting when we own an interest in an entity and can exert significant influence over but cannot control the entity’s operations. We discontinue equity method accounting if our investment in an entity (and net advances) is reduced to zero unless we have guaranteed obligations of the entity or are otherwise committed to provide further financial support for the entity.

When we own an equity investment in an entity and cannot exert significant influence over its operations, we measure the investment at fair value, with changes recognized through net income. For an investment without a readily determinable fair value, we measure the investment at cost, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer.

These interim financial statements should be read together with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2024 included in our 2024 Annual Report on Form 10-K. The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly state our financial position and results of operations. All adjustments are of a normal recurring nature. The consolidated financial statements have been prepared using the accounting policies described in our 2024 Annual Report on Form 10-K.

Reclassifications

We reclassified certain amounts from prior periods to conform to the current period presentation of our consolidated financial statements with no effect on previously reported net income or equity.

Recent Accounting Pronouncements

Effective January 1, 2025, we adopted guidance issued by the Financial Accounting Standards Board (“FASB”) aimed at reducing complexity and diversity in practice in determining whether a profits interest award is accounted for as a share-based payment. Our adoption of this guidance did not change the accounting for any of our share-based compensation award types, and therefore did not affect our consolidated financial statements.

In December 2023, the FASB issued guidance to improve income tax disclosures. This guidance requires enhanced annual disclosures primarily related to existing rate reconciliation and income taxes paid disclosure requirements and is effective for us for our 2025 annual reporting. We expect to apply this guidance prospectively and do not expect it to materially affect our future related disclosures.

In November 2024, the FASB issued guidance requiring disaggregated disclosure of specified information about certain expense categories included in expense line items on the consolidated statements of operations in the notes to the financial statements. This guidance is effective for us for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. We expect to apply this guidance prospectively to financial statements issued for reporting periods after the effective date. We are currently assessing the application of this guidance on our future consolidated financial statements.

In July 2025, the FASB issued guidance providing a practical expedient for use in estimating expected credit losses on non-lease revenue related accounts receivable and contract assets. The practical expedient permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The guidance is effective for us for interim and annual periods beginning after December 15, 2025. Early adoption is permitted and the guidance will be applied prospectively. We are currently assessing the application of this guidance on our future consolidated financial statements.

3. Fair Value Measurements

Recurring Fair Value Measurements

The fair values of our interest rate derivatives, as disclosed in Note 9, are determined using widely accepted valuation techniques, including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While we determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our interest rate derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default. However, as of September 30, 2025, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivatives and determined that these adjustments were not significant. As a result, we determined that our interest rate derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, other assets (excluding investing receivables) and accounts payable and accrued expenses are reasonable estimates of their fair values because of the short maturities of these instruments. The fair values of our investing receivables, as disclosed in Note 7, were based on the discounted estimated future cash flows of the loans (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans with similar maturities and credit quality, and the estimated cash payments include scheduled principal and interest payments. For our disclosure of debt fair values in Note 8, we estimated the fair value of our unsecured senior notes based on quoted market rates for our senior notes (categorized within Level 1 of the fair value hierarchy) and estimated the fair value of our other debt based on the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans, or groups of loans, with similar maturities and credit quality, and the estimated future payments include scheduled principal and interest payments. Fair value estimates are made as of a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment.

The table below sets forth our financial assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2025 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):


Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets (1)
Interest rate derivatives	$	—	$	280	$	—	$	280

(1)Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.

4. Properties, Net

Operating properties, net consisted of the following (in thousands):


	September 30, 2025		December 31, 2024
Land	$	495,523	$	495,707
Buildings and improvements	4,521,621		4,395,063
Less: Accumulated depreciation	(1,644,472)		(1,537,293)
Operating properties, net	$	3,372,672	$	3,353,477

5. Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed-lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below-market lease intangibles; and variable-lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under leases. The table below sets forth our composition of lease revenue recognized between fixed- and variable-lease revenue (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease revenue	2025		2024		2025		2024
Fixed	$	135,957	$	129,357	$	403,982	$	382,918
Variable	42,315		41,192		125,196		118,683
	$	178,272	$	170,549	$	529,178	$	501,601

Lessee Arrangements

As of September 30, 2025, our balance sheet included $54.3 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating with various expiration dates. Our property right-of-use assets and property lease liabilities on our consolidated balance sheets consisted of the following (in thousands):


Leases	Balance Sheet Location	September 30, 2025		December 31, 2024
Right-of-use assets
Operating leases - Property	Property - operating lease right-of-use assets	$	51,838	$	55,760
Finance leases - Property	Prepaid expenses and other assets, net	2,435		2,491
Total right-of-use assets		$	54,273	$	58,251
Lease liabilities
Operating leases - Property	Property - operating lease liabilities	$	46,203	$	49,240
Finance leases - Property	Other liabilities	370		391
Total lease liabilities		$	46,573	$	49,631

As of September 30, 2025, our operating leases had a weighted average remaining lease term of 40 years and a weighted average discount rate of 7.4%, while our finance leases had a weighted average remaining lease term of seven years and a weighted average discount rate of 9.1%. The table below presents our total property lease cost (in thousands):


	Statement of Operations Location	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Lease cost		2025		2024		2025		2024
Operating lease cost
Property leases - fixed	Property operating expenses	$	2,276	$	1,929	$	6,813	$	5,687
Property leases - variable	Property operating expenses	27		42		81		219
Finance lease cost
Amortization of property right-of-use assets	Property operating expenses	19		19		56		56
Interest on lease liabilities	Interest expense	8		9		26		28
		$	2,330	$	1,999	$	6,976	$	5,990

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):


	For the Nine Months Ended September 30,
Supplemental cash flow information	2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	5,928	$	5,232
Operating cash flows for finance leases	$	26	$	28
Financing cash flows for finance leases	$	21	$	18

Payments on property leases were due as follows (in thousands):


	September 30, 2025
Year Ending December 31,	Operating Leases		Finance Leases
2025 (1)	$	2,011	$	15
2026	8,217		65
2027	8,418		67
2028	2,838		69
2029	2,094		71
Thereafter	153,999		226
Total lease payments	177,577		513
Less: Amount representing interest	(131,374)		(143)
Lease liability	$	46,203	$	370

(1)Represents the three months ending December 31, 2025.

6. Real Estate Joint Ventures

Consolidated Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in consolidated real estate joint ventures, which are each variable interest entities (dollars in thousands):


		Nominal Ownership %		September 30, 2025
	Date Formed			Total Assets		Encumbered Assets		Total Liabilities		Mortgage Debt
Entity			Location
LW Redstone Company, LLC (1)	3/23/2010	85%	Huntsville, AL	$	763,461	$	35,224	$	82,178	$	21,950
Stevens Investors, LLC	8/11/2015	95%	Washington, DC	139,649		—		3,171		—
M Square Associates, LLC	6/26/2007	50%	College Park, MD	99,839		54,735		48,715		46,506
				$	1,002,949	$	89,959	$	134,064	$	68,456

(1)We fund all capital requirements. Our partner receives distributions of $1.2 million of annual operating cash flows and we receive the remainder.

Unconsolidated Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in unconsolidated real estate joint ventures accounted for using the equity method of accounting (dollars in thousands):


	Date Formed	Nominal Ownership %	Number of Properties	Carrying Value of Investment (1)
Entity				September 30, 2025		December 31, 2024
Redshift JV LLC	1/10/2023	10%	3	$	20,804	$	20,921
BREIT COPT DC JV LLC	6/20/2019	10%	9	8,830		9,584
Quark JV LLC	12/14/2022	10%	2	6,667		6,706
B RE COPT DC JV III LLC	6/2/2021	10%	2	(493)		2,149
B RE COPT DC JV II LLC (2)	10/30/2020	10%	8	(22,057)		(3,409)
			24	$	13,751	$	35,951

(1)Included $36.3 million and $39.4 million reported in “investment in unconsolidated real estate joint ventures” and $22.6 million and $3.4 million for investments with deficit balances reported in “other liabilities” on our consolidated balance sheets as of September 30, 2025 and December 31, 2024, respectively. Investments with deficit balances are attributable to JV distributions of nonrecourse debt refinancing proceeds in excess of our equity in B RE COPT DC JV III LLC and B RE COPT DC JV II LLC; we are obligated to fund our share of future cash flow requirements of these joint ventures.

(2)Our investment in B RE COPT DC JV II LLC was lower than our share of the joint venture’s equity by $6.5 million as of September 30, 2025 and $6.7 million as of December 31, 2024 due to a difference between our cost basis and our share of the joint venture’s underlying equity in its net assets. We recognize adjustments to our share of the joint venture’s earnings and losses resulting from this basis difference in the underlying assets of the joint venture.

7. Investing Receivables

Investing receivables consisted of the following (in thousands):


	September 30, 2025		December 31, 2024
Notes receivable from the City of Huntsville	$	73,774	$	69,241
Other investing loans receivable	10,202		3,231
Amortized cost basis	83,976		72,472
Allowance for credit losses	(4,204)		(2,792)
Investing receivables, net	$	79,772	$	69,680

The balances above include accrued interest receivable, net of allowance for credit losses, of $4.5 million as of September 30, 2025 and $3.2 million as of December 31, 2024.

Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture (see Note 6) and carry an interest rate of 9.95%. Our other investing loans receivable as of September 30, 2025 carry effective interest rates ranging from 12.0% to 14.0% and mature by early 2026.

The fair value of these receivables was approximately $84 million as of September 30, 2025 and $72 million as of December 31, 2024.

8. Debt, Net

Our debt consisted of the following (dollars in thousands):



	Carrying Value (1) as of					September 30, 2025
	September 30, 2025		December 31, 2024
					Stated Interest Rates		Scheduled Maturity
Mortgage and Other Secured Debt
Fixed-rate mortgage debt	$	36,336	$	37,130		3.82%		June 2026

Variable-rate secured debt	32,120		32,471			SOFR + 0.10% + 1.45% to 1.55% (2)		2026 (3)
Total mortgage and other secured debt	68,456		69,601
Revolving Credit Facility (4)	124,000		75,000			SOFR + 0.10% + 0.725% to 1.400% (5)		October 2026 (4)
Term Loan Facility (6)	124,891		124,633			SOFR + 0.10% + 0.850% to 1.700% (7)		January 2026 (6)
Unsecured Senior Notes
2.25%, $400,000 aggregate principal	399,532		398,699			2.25% (8)		March 2026
5.25%, $345,000 aggregate principal (9)	338,990		337,588			5.25% (10)		September 2028
2.00%, $400,000 aggregate principal	398,334		397,961			2.00% (11)		January 2029
2.75%, $600,000 aggregate principal	593,186		592,330			2.75% (12)		April 2031
2.90%, $400,000 aggregate principal	396,020		395,692			2.90% (13)		December 2033

Unsecured note payable	109		251			0% (14)		May 2026
Total debt, net	$	2,443,518	$	2,391,755

(1)The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $3.0 million as of September 30, 2025 and $4.0 million as of December 31, 2024.

(2)Including the effect of an interest rate swap that hedges the risk of interest rate changes, the weighted average interest rate on our variable-rate secured debt as of September 30, 2025 was 5.14%; excluding the effect of this swap, the weighted average interest rate on this debt as of September 30, 2025 was 5.95%.

(3)Most of this debt may be extended by a 12-month period at our option, provided that there is no default on the debt and we pay an extension fee of 0.10% of the debt balance.

(4)The facility matures in October 2026, with the ability for us to extend such maturity 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. Refer to subsequent events disclosure pertaining to this facility in Note 18.

(5)The weighted average interest rate on the Revolving Credit Facility was 5.37% as of September 30, 2025, excluding the effect of interest rate swaps that hedge the risk of interest rate changes (see Note 9 to our consolidated financial statements).

(6)This facility matures in January 2026, with the ability for us to extend such maturity by two 12-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.125% of the outstanding loan balance for each extension period. Refer to subsequent events disclosure pertaining to this facility in Note 18.

(7)The interest rate on this loan was 5.68% as of September 30, 2025, excluding the effect of interest rate swaps that hedge the risk of interest rate changes (see Note 9 to our consolidated financial statements).

(8)The carrying value of these notes reflects unamortized discounts and commissions totaling $382,000 as of September 30, 2025 and $1.1 million as of December 31, 2024. The effective interest rate under the notes, including amortization of such costs, was 2.48%.

(9)These notes have an exchange settlement feature under which the notes may, under certain circumstances, be exchangeable at the option of the holders. Upon exchange, the principal amount of notes is payable in cash, with the remainder of the exchange obligation, if any, as determined based on the exchange price per common share at the time of settlement, payable in cash, common shares or a combination thereof at our election. As of September 30, 2025, the exchange rate of the notes equaled 33.4962 of our common shares per $1,000 principal amount of notes (equivalent to an exchange price of approximately $29.85 per common share).

(10)The carrying value of these notes reflects unamortized commissions totaling $5.3 million as of September 30, 2025 and $6.6 million as of December 31, 2024. The effective interest rate under the notes, including amortization of such costs, was 5.83%.

(11)The carrying value of these notes reflects unamortized discounts and commissions totaling $1.2 million as of September 30, 2025 and $1.5 million as of December 31, 2024. The effective interest rate under the notes, including amortization of such costs, was 2.09%.

(12)The carrying value of these notes reflects unamortized discounts and commissions totaling $5.9 million as of September 30, 2025 and $6.7 million as of December 31, 2024. The effective interest rate under the notes, including amortization of such costs, was 2.94%.

(13)The carrying value of these notes reflects unamortized discounts and commissions totaling $3.3 million as of September 30, 2025 and $3.5 million as of December 31, 2024. The effective interest rate under the notes, including amortization of such costs, was 3.01%.

(14)This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates. The carrying value of this note reflects an unamortized discount totaling $2,000 as of September 30, 2025 and $10,000 as of December 31, 2024.

All debt is owed by the Operating Partnership. While COPT Defense is not directly obligated by any debt, it has guaranteed CDPLP’s Revolving Credit Facility, Term Loan Facility and Unsecured Senior Notes. All of our mortgage and other secured debt as of September 30, 2025 was for consolidated real estate joint ventures (see Note 6).

The table below sets forth interest expense recognized on the 5.25% Exchangeable Senior Notes due 2028 (the “5.25% Notes”) (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Interest expense at stated interest rate	$	4,529	$	4,528	$	13,585	$	13,584
Interest expense associated with amortization of debt discount and issuance costs	416		393		1,231		1,162
Total	$	4,945	$	4,921	$	14,816	$	14,746

Certain of our debt instruments require that we comply with a number of restrictive financial covenants. As of September 30, 2025, we were compliant with these financial covenants.

Our debt matures on the following schedule (in thousands):


Year Ending December 31,	September 30, 2025
2025 (1)	$	466
2026	717,175
2027	—
2028	345,000
2029	400,000
Thereafter	1,000,000
Total	$	2,462,641	(2)

(1)Represents the three months ending December 31, 2025.

(2)Represents scheduled principal amortization and maturities only and therefore excludes net discounts and deferred financing costs of $19.1 million.

We capitalized interest costs of $1.3 million in the three months ended September 30, 2025, $712,000 in the three months ended September 30, 2024, $3.3 million in the nine months ended September 30, 2025 and $1.9 million in the nine months ended September 30, 2024.

The following table sets forth information pertaining to the fair value of our debt (in thousands):


	September 30, 2025				December 31, 2024
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Fixed-rate debt
Unsecured Senior Notes	$	2,126,062	$	2,025,731	$	2,122,270	$	1,946,905
Other fixed-rate debt	36,445		35,723		37,381		35,841
Variable-rate debt	281,011		281,561		232,104		232,768
	$	2,443,518	$	2,343,015	$	2,391,755	$	2,215,514

9. Interest Rate Derivatives

The following table sets forth the key terms and fair values of our interest rate swap derivatives (dollars in thousands):


							Fair Value at
Notional Amount			Fixed Rate	Floating Rate Index	Effective Date	Expiration Date	September 30, 2025		December 31, 2024
$	150,000		3.742%	One-Month SOFR	2/1/2023	2/2/2026	$	80	$	550
$	50,000		3.747%	One-Month SOFR	2/1/2023	2/2/2026	26		181
$	10,220	(1)	1.678%	SOFR + 0.10%	8/1/2019	8/1/2026	174		387
$	22,100		0.573%	SOFR + 0.10%	4/1/2020	3/26/2025	—		197
							$	280	$	1,315

(1)The notional amount of this instrument is scheduled to amortize to $10.0 million.

Each of these swaps was designated as a cash flow hedge of interest rate risk.

The table below sets forth the fair value of our interest rate derivatives as well as their classification on our consolidated balance sheets (in thousands):

Fair Value at

Derivatives

Balance Sheet Location

September 30,
2025

December 31,
2024

Interest rate swaps designated as cash flow hedges

Prepaid expenses and other assets, net

280

1,315

The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands):


	Amount of (Loss) Income Recognized in AOCI on Derivatives								Amount of Income Reclassified from AOCI into Interest Expense on Statement of Operations
Derivatives in Hedging Relationships	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024		2025		2024		2025		2024
Interest rate derivatives	$	67	$	(2,582)	$	261	$	1,309	$	368	$	1,170	$	1,296	$	3,522

Based on the fair value of our derivatives as of September 30, 2025, we estimate that approximately $280,000 of gains will be reclassified from accumulated other comprehensive income (“AOCI”) as a decrease to interest expense over the next 12 months.

We have agreements with each of our interest rate derivative counterparties that contain provisions under which, if we default or are capable of being declared in default on defined levels of our indebtedness, we could also be declared in default on our derivative obligations. Failure to comply with the loan covenant provisions could result in our being declared in default on any derivative instrument obligations covered by the agreements. As of September 30, 2025, we were not in default with any of these provisions. As of September 30, 2025, we did not have any derivatives in liability positions.

10. Redeemable Noncontrolling Interest

Redeemable noncontrolling interest on our consolidated balance sheets included the ownership interest of our partner in LW Redstone Company, LLC due to the partner’s rights to require us to acquire their interest. The table below sets forth the activity for redeemable noncontrolling interest (in thousands):


	For the Nine Months Ended September 30,
	2025		2024
Beginning balance	$	23,974	$	23,580

Distributions to noncontrolling interest	(2,269)		(1,446)
Net income attributable to noncontrolling interest	2,269		1,446
Adjustments for changes in fair value of interest	243		(1,144)

Ending balance	$	24,217	$	22,436

We determine the fair value of the interest based on unobservable inputs after considering the assumptions that market participants would make in pricing the interest. We apply a discount rate to the estimated future cash flows allocable to our partner from the properties underlying the respective joint venture. Estimated cash flows used in such analyses are based on our plans for the properties and our views of market and economic conditions, and consider items such as current and future rental rates, occupancy projections and estimated operating and development expenditures.

11. Equity

As of September 30, 2025, we had remaining capacity under our at-the-market stock offering program equal to an aggregate gross sales price of $300 million in common shares.

We declared dividends per common share of $0.305 in the three months ended September 30, 2025, $0.295 in the three months ended September 30, 2024, $0.915 in the nine months ended September 30, 2025 and $0.885 in the nine months ended September 30, 2024

During the nine months ended September 30, 2025, certain CDPLP limited partners converted 33,881 common units in CDPLP for an equal number of common shares.

See Note 15 for disclosure of common share activity pertaining to our share-based compensation plans.

12. Information by Business Segment

We have the following reportable segments: Defense/IT Portfolio; and Other. We also report on Defense/IT Portfolio sub-segments, which include the following: Fort George G. Meade and the Baltimore/Washington Corridor (“Fort Meade/BW Corridor”); Redstone Arsenal (in Huntsville, Alabama); Northern Virginia Defense/IT Locations (“NoVA Defense/IT”); Lackland Air Force Base (in San Antonio, Texas); locations serving the U.S. Navy (“Navy Support”), which included properties proximate to the Washington Navy Yard, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; and data center shells (properties leased to tenants to be operated as data centers in which the tenants fund the costs for the power, fiber connectivity and data center infrastructure). In the first quarter of 2025, we retrospectively reclassified two properties to our Fort Meade/BW Corridor sub-segment from our Other segment.

We measure the performance of our segments through the measure we define as net operating income from real estate operations (“NOI from real estate operations”), which includes real estate revenues and other segment items, which is comprised of: property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate joint ventures (“UJV” or “UJVs”) that is allocable to our ownership interest (“UJV NOI allocable to COPT Defense”). Property operating expenses represent costs associated with operating our properties, including property taxes, ground rents, utilities, property management, insurance, repairs and exterior and interior maintenance, as well as associated labor and indirect costs.

Our chief operating decision maker uses budget to actual comparisons of operating expense information on a consolidated basis and for our Same Property pool (defined as our properties stably owned and 100% operational throughout both the current and prior year) to manage expenses associated with operating our properties.

Amounts reported for segment assets represent long-lived assets associated with consolidated operating properties (including the carrying value of properties, right-of-use assets, net of related lease liabilities, intangible assets, deferred leasing costs, deferred rents receivable and lease incentives) and the carrying value of investments in UJVs owning operating properties, net of deficit investment balances reported in “other liabilities” on our consolidated balance sheets (which were included in our data center shells sub-segment and totaled $13.8 million and $36.4 million as of September 30, 2025 and 2024, respectively).

Amounts reported as additions to long-lived assets represent additions to existing consolidated operating properties, excluding transfers from non-operating properties, which we report separately.

The table below reports segment financial information for our reportable segments (in thousands):


	Defense/IT Portfolio
	Fort Meade/BW Corridor		Redstone Arsenal		NoVA Defense/IT		Lackland Air Force Base		Navy Support		Data Center Shells		Total Defense/IT Portfolio		Other		Total
Three Months Ended September 30, 2025
Revenues from real estate operations	$	81,756	$	19,477	$	22,343	$	18,555	$	8,727	$	10,715	$	161,573	$	18,737	$	180,310
Other segment items:
Property operating expenses	(28,477)		(7,250)		(8,891)		(10,245)		(4,016)		(1,701)		(60,580)		(9,776)		(70,356)
UJV NOI allocable to COPT Defense	—		—		—		—		—		1,864		1,864		—		1,864
Total other segment items	(28,477)		(7,250)		(8,891)		(10,245)		(4,016)		163		(58,716)		(9,776)		(68,492)
NOI from real estate operations	53,279		12,227		13,452		8,310		4,711		10,878		102,857		8,961		111,818
Additions to long-lived assets	$	12,812	$	2,209	$	7,061	$	7	$	5,962	$	—	$	28,051	$	2,866	$	30,917
Transfers from non-operating properties	$	19,751	$	4,806	$	26	$	—	$	—	$	1,215	$	25,798	$	142	$	25,940
Three Months Ended September 30, 2024
Revenues from real estate operations	$	80,757	$	18,332	$	22,083	$	16,879	$	8,068	$	9,029	$	155,148	$	17,415	$	172,563
Other segment items:
Property operating expenses	(28,342)		(6,463)		(9,252)		(9,160)		(4,084)		(1,554)		(58,855)		(10,026)		(68,881)
UJV NOI allocable to COPT Defense	—		—		—		—		—		1,844		1,844		—		1,844
Total other segment items	(28,342)		(6,463)		(9,252)		(9,160)		(4,084)		290		(57,011)		(10,026)		(67,037)
NOI from real estate operations	$	52,415	$	11,869	$	12,831	$	7,719	$	3,984	$	9,319	$	98,137	$	7,389	$	105,526
Additions to long-lived assets	$	14,101	$	1,521	$	5,357	$	17,034	$	3,520	$	—	$	41,533	$	4,040	$	45,573
Transfers from non-operating properties	$	418	$	25,846	$	16	$	—	$	66	$	406	$	26,752	$	141	$	26,893
Nine Months Ended September 30, 2025
Revenues from real estate operations	$	247,701	$	54,876	$	67,523	$	52,440	$	24,945	$	32,224	$	479,709	$	55,655	$	535,364
Other segment items:
Property operating expenses	(87,304)		(19,704)		(27,838)		(28,485)		(12,038)		(5,337)		(180,706)		(28,605)		(209,311)
UJV NOI allocable to COPT Defense	—		—		—		—		—		5,623		5,623		—		5,623
Total other segment items	(87,304)		(19,704)		(27,838)		(28,485)		(12,038)		286		(175,083)		(28,605)		(203,688)
NOI from real estate operations	$	160,397	$	35,172	$	39,685	$	23,955	$	12,907	$	32,510	$	304,626	$	27,050	$	331,676
Additions to long-lived assets	$	30,876	$	12,395	$	12,880	$	224	$	12,374	$	—	$	68,749	$	8,228	$	76,977
Transfers from non-operating properties	$	34,984	$	23,428	$	42	$	—	$	2	$	10,481	$	68,937	$	5,141	$	74,078
Segment assets at September 30, 2025	$	1,460,768	$	618,618	$	491,051	$	193,734	$	167,810	$	473,277	$	3,405,258	$	315,621	$	3,720,879
Nine Months Ended September 30, 2024
Revenues from real estate operations	$	238,012	$	52,157	$	64,110	$	49,737	$	24,534	$	27,086	$	455,636	$	50,675	$	506,311
Other segment items:
Property operating expenses	(81,718)		(17,976)		(27,444)		(26,645)		(11,343)		(4,588)		(169,714)		(29,323)		(199,037)
UJV NOI allocable to COPT Defense	—		—		—		—		—		5,319		5,319		—		5,319
Total other segment items	(81,718)		(17,976)		(27,444)		(26,645)		(11,343)		731		(164,395)		(29,323)		(193,718)
NOI from real estate operations	$	156,294	$	34,181	$	36,666	$	23,092	$	13,191	$	27,817	$	291,241	$	21,352	$	312,593
Additions to long-lived assets	$	48,370	$	2,545	$	19,762	$	17,034	$	6,049	$	—	$	93,760	$	14,287	$	108,047
Transfers from non-operating properties	$	2,658	$	60,119	$	1,011	$	9	$	106	$	3,891	$	67,794	$	1,884	$	69,678
Segment assets at September 30, 2024	$	1,450,602	$	602,573	$	492,912	$	200,968	$	161,007	$	427,972	$	3,336,034	$	311,421	$	3,647,455

The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Segment revenues from real estate operations	$	180,310	$	172,563	$	535,364	$	506,311
Construction contract and other service revenues	8,485		16,662		31,202		63,523

Total revenues	$	188,795	$	189,225	$	566,566	$	569,834

The following table reconciles UJV NOI allocable to COPT Defense to equity in income of unconsolidated entities as reported on our consolidated statements of operations (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
UJV NOI allocable to COPT Defense	$	1,864	$	1,844	$	5,623	$	5,319
Less: Income from UJV allocable to COPT Defense attributable to depreciation and amortization expense, interest expense and loss on early extinguishment of debt	(1,786)		(1,759)		(4,819)		(5,139)
Add: Equity in loss of unconsolidated non-real estate entities	1,737		—		1,737		—
Equity in income of unconsolidated entities	$	1,815	$	85	$	2,541	$	180

As previously discussed, we provide real estate services such as property management, development and construction services primarily for our properties but also for third parties. The primary manner in which we evaluate the operating performance of our service activities is through a measure we define as net operating income from service operations (“NOI from service operations”), which is based on the net of revenues and expenses from these activities. Construction contract and other service revenues and expenses consist primarily of subcontracted costs that are reimbursed to us by the customer along with a management fee. The operating margins from these activities are small relative to the revenue. We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations. The table below sets forth the computation of our NOI from service operations (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Construction contract and other service revenues	$	8,485	$	16,662	$	31,202	$	63,523
Construction contract and other service expenses	(7,952)		(16,127)		(29,530)		(61,746)
NOI from service operations	$	533	$	535	$	1,672	$	1,777

The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to net income as reported on our consolidated statements of operations (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
NOI from real estate operations	$	111,818	$	105,526	$	331,676	$	312,593
NOI from service operations	533		535		1,672		1,777
Depreciation and other amortization associated with real estate operations	(40,631)		(38,307)		(119,563)		(114,819)

General, administrative, leasing and other expenses	(12,030)		(11,416)		(36,097)		(35,195)
Interest expense	(20,894)		(20,376)		(62,336)		(61,760)
Interest and other income, net	2,591		3,324		5,382		10,330
Gain on sales of real estate	3,018		—		3,318		—


Equity in income of unconsolidated entities	1,815		85		2,541		180
UJV NOI allocable to COPT Defense included in equity in income of unconsolidated entities	(1,864)		(1,844)		(5,623)		(5,319)
Income tax expense	(612)		(130)		(832)		(312)


Net income	$	43,744	$	37,397	$	120,138	$	107,475

The following table reconciles our segment assets to our consolidated total assets (in thousands):


	September 30, 2025		September 30, 2024
Segment assets	$	3,720,879	$	3,647,455
Operating properties lease liabilities included in segment assets	46,573		34,012
Investment in UJV deficit balance included in segment assets	22,550		3,370
Non-operating property assets	353,184		314,729
Other assets	208,246		234,736
Total consolidated assets	4,351,432		4,234,302

The accounting policies of the segments are the same as those used to prepare our consolidated financial statements. In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization, gain on sales of real estate and equity in income of unconsolidated entities not included in NOI to our real estate segments since they are not included in the measure of segment profit reviewed by management. We also did not allocate general, administrative, leasing and other expenses, interest and other income, net, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.

13. Construction Contract and Other Service Revenues

We disaggregate in the table below our construction contract and other service revenues by compensation arrangement as we believe it best depicts the nature, timing and uncertainty of our revenue (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Construction contract revenue
Firm fixed price	$	3,525	$	8,158	$	15,338	$	29,343
Guaranteed maximum price	3,310		6,318		10,764		28,410
Cost-plus fee	1,323		1,868		4,230		4,574
Other	327		318		870		1,196
	$	8,485	$	16,662	$	31,202	$	63,523

We recognized an insignificant amount of revenue in the three and nine months ended September 30, 2025 and 2024 from performance obligations satisfied (or partially satisfied) in previous periods.

Accounts receivable related to our construction contract services is included in accounts receivable, net on our consolidated balance sheets. The beginning and ending balances of accounts receivable related to our construction contracts were as follows (in thousands):


	For the Nine Months Ended September 30,
	2025		2024
Beginning balance	$	8,828	$	10,500
Ending balance	$	2,308	$	3,836

Contract assets are included in prepaid expenses and other assets, net on our consolidated balance sheets. The beginning and ending balances of our contract assets were as follows (in thousands):


	For the Nine Months Ended September 30,
	2025		2024
Beginning balance	$	17,050	$	15,086
Ending balance	$	14,795	$	22,540

Contract liabilities are included in other liabilities on our consolidated balance sheets. Changes in contract liabilities were as follows (in thousands):


	For the Nine Months Ended September 30,
	2025		2024
Beginning balance	$	2,016	$	4,176
Ending balance	$	2,210	$	2,536
Portion of beginning balance recognized in revenue during:
Three months ended September 30,	$	16	$	87
Nine months ended September 30,	$	201	$	2,198

Revenue allocated to the remaining performance obligations under existing contracts as of September 30, 2025 that will be recognized as revenue in future periods was $30.7 million, of which we expect to recognize approximately $26 million in the three months ending December 31, 2025 and the remainder in 2026.

We have no deferred incremental costs incurred to obtain or fulfill our construction contracts or other service revenues as of September 30, 2025 and December 31, 2024. Credit loss expense or recoveries on construction contracts receivable and unbilled construction revenue were insignificant for the three and nine months ended September 30, 2025 and 2024.

14. Credit Losses on Financial Assets and Other Instruments

The table below sets forth the activity for our allowance for credit losses for the nine months ended September 30, 2025 and 2024 (in thousands):


	Investing Receivables		Tenant Notes Receivable (1)		Other Assets (2)		Total
December 31, 2024	$	2,792	$	615	$	75	$	3,482

Net credit loss expense (recoveries) (3)	1,412		(67)		33		1,378



September 30, 2025	$	4,204	$	548	$	108	$	4,860

December 31, 2023	$	2,377	$	666	$	153	$	3,196
Net credit loss expense (recoveries) (3)	490		57		(51)		496

September 30, 2024	$	2,867	$	723	$	102	$	3,692

(1)Included in the line entitled “accounts receivable, net” on our consolidated balance sheets.

(2)The balance as of September 30, 2025 and December 31, 2024 included $13,000 and $60,000, respectively, in the line entitled “accounts receivable, net” and $95,000 and $15,000, respectively, in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets.

(3)Included in the line entitled “interest and other income, net” on our consolidated statements of operations.

The following table presents the amortized cost basis of our investing receivables, tenant notes receivable and sales-type lease receivables by credit risk classification, by origination year as of September 30, 2025 (in thousands):


	Origination Year
	2020 and Earlier		2021		2022		2023		2024		2025		Total
Investing receivables
Credit risk classification
Investment grade	$	60,295	$	11,696	$	—	$	1,783	$	—	$	—	$	73,774
Non-investment grade	—		—		1,356		—		—		8,846		10,202
Total	$	60,295	$	11,696	$	1,356	$	1,783	$	—	$	8,846	$	83,976


Tenant notes receivable
Credit risk classification
Investment grade	$	456	$	—	$	—	$	—	$	—	$	—	$	456
Non-investment grade	1,197		—		—		—		358		23		1,578
Total	$	1,653	$	—	$	—	$	—	$	358	$	23	$	2,034


Sales-type lease receivables
Credit risk classification
Investment grade	$	3,999	$	—	$	—	$	—	$	—	$	—	$	3,999

Our investment grade credit risk classification represents entities with investment grade credit ratings from ratings agencies (such as S&P Global Ratings, Moody’s Investors Service, Inc. or Fitch Ratings, Inc.), meaning that they are considered to have at least an adequate capacity to meet their financial commitments, with credit risk ranging from minimal to moderate. Our non-investment grade credit risk classification represents entities with either no credit agency credit ratings or ratings deemed to be sub-investment grade; we believe that there is significantly more credit risk associated with this classification. The credit risk classifications of our investing receivables and tenant notes receivable were last updated in September 2025.

An insignificant portion of the investing and tenant notes receivables set forth above were past due, which we define as being delinquent by more than three months from the due date, as of September 30, 2025.

We did not have any tenant notes receivable on nonaccrual status as of September 30, 2025 and December 31, 2024. We did not recognize any interest income on tenant notes receivable on nonaccrual status during the three and nine months ended September 30, 2025 and 2024.

15. Share-Based Compensation

Restricted Shares

The following table summarizes restricted shares activity under our share-based compensation plan for the nine months ended September 30, 2025:


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2024	353,014	$	25.65
Granted	250,434	$	27.16
Forfeited	(23,481)	$	26.55
Vested	(138,547)	$	25.48
Unvested as of September 30, 2025	441,420	$	26.51

Restricted shares granted to employees generally vest based on increments and over periods of time set forth under the terms of the respective awards provided that the employee remains employed by us. Restricted shares granted to non-employee Trustees vest on the first anniversary of the grant date, provided that the Trustee remains in the position.

The aggregate intrinsic value of restricted shares that vested was $3.8 million for the nine months ended September 30, 2025.

Profit Interest Units in CDPLP (“PIUs”)

We granted two forms of PIUs: time-based PIUs (“TB-PIUs”); and performance-based PIUs (“PB-PIUs”). TB-PIUs are subject to forfeiture restrictions until the end of the requisite service period, at which time the TB-PIUs automatically convert into vested PIUs. PB-PIUs are subject to a market condition in that the number of earned awards are determined at the end of the performance period (as described further below) and then settled in vested PIUs. Vested PIUs automatically convert into common units in CDPLP if, or when, a book-up event (as defined under federal income tax regulations) has occurred and carry substantially the same rights to distributions as common units.

TB-PIUs

The following table summarizes TB-PIUs activity under our share-based compensation plans for the nine months ended September 30, 2025:


	Number of TB-PIUs	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2024	223,939	$	25.14
Granted	123,250	$	27.11

Vested	(106,592)	$	25.32
Unvested as of September 30, 2025	240,597	$	26.07

TB-PIUs granted to senior management team members vest based on increments and over periods of time set forth under the terms of the respective awards provided that the employee remains employed by us. TB-PIUs granted to non-employee Trustees vest on the first anniversary of the grant date, provided that the Trustee remains in the position. Prior to vesting, TB-PIUs carry substantially the same rights to distributions as common units but carry no redemption rights.

The aggregate intrinsic value of TB-PIUs that vested was $2.9 million for the nine months ended September 30, 2025.

Performance-Based Awards

On January 1, 2025, we granted certain senior management team members performance-based equity, in the form of either PB-PIUs or performance share units (“PSUs”) as based on the election of the grant recipients. The grant recipients elected to receive, in aggregate, 246,230 PB-PIUs (equal to 200% of the target award) and 20,296 PSUs (equal to 200% of the target award). These grants have a three-year performance period concluding on the earlier of December 31, 2027 or the date of: (1) termination by us without cause, death or disability of the employee or constructive discharge of the employee (collectively, “qualified termination”); or (2) a sale event.

The number of earned awards following the end of the performance period will be determined based on the percentile rank of COPT Defense’s total shareholder return (“TSR”) relative to a peer group of companies, as set forth in the following schedule:


Percentile Rank						Earned Award Payout %
75th or greater						200% of target award
50th (target)						100% of target award
25th						50% of target award
Below 25th						0% of target award

If the percentile rank exceeds the 25th percentile and is between two of the percentile ranks set forth in the table above, then the percentage of the earned awards will be interpolated between the ranges set forth in the table above to reflect any performance between the listed percentiles. If COPT Defense’s TSR is negative when its TSR’s percentile rank exceeds the 50th percentile, then the earned award payout percentage used to arrive at the earned awards would be reduced by 25 percentage points, but in no event to a payout percentage of less than 100% of the target award; however, the resulting reduction in earned awards would subsequently be deemed earned awards if COPT Defense’s TSR becomes positive on any date in the calendar year following the end of the performance period. In addition, regardless of COPT Defense’s TSR relative to the peer group, no less than 100% of the target award will be earned if COPT Defense’s TSR is at least 10% and no less than 50% of the target award will be earned if COPT Defense’s TSR is at least 6%, with linear interpolation if COPT Defense’s TSR is between 6% and 10%.

During the performance period, PB-PIUs carry rights to distributions equal to 10% of the distribution rights of common units but carry no redemption rights.

Following the end of the performance period, we will settle the awards as follows:

•for PB-PIUs, issuing vested PIUs equal to: the number of earned awards; and the excess, if any, of (1) the aggregate distributions that would have been paid with respect to vested PIUs issued in settlement of the earned awards through the date of settlement had such vested PIUs been issued on the grant date over (2) the aggregate distributions made on the PB-PIUs through the date of settlement, divided by the price of our common shares over a defined period of time; and

•for PSUs, issuing fully-vested COPT Defense shares equal to: the number of earned awards; and the aggregate dividends that would have been paid with respect to the common shares issued in settlement of the earned awards through the date of settlement had such shares been issued on the grant date, divided by the price of our common shares over a defined period of time.

If a performance period ends due to a sale event or qualified termination, the number of earned awards is prorated based on the portion of the three-year performance period that has elapsed. If employment is terminated by the employee or by us for cause, all unvested performance-based awards are forfeited.

These performance-based grants had an aggregate grant date fair value of $5.3 million ($43.33 per target-level award) in the form of PB-PIUs and $444,000 ($43.75 per target-level award) in the form of PSUs, which are being recognized over the performance period. The grant date fair value was computed using a Monte Carlo model that included the following assumptions: baseline common share value of $30.95; expected volatility for common shares of 28.3%; and a risk-free interest rate of 4.5%.

Based on COPT Defense’s TSR relative to its peer group of companies, for the 2022 PB-PIUs issued to executives that vested on December 31, 2024, we issued 212,831 vested PIUs in settlement of the PB-PIUs on February 1, 2025.

Deferred Share Awards

During the nine months ended September 30, 2025, a non-employee Trustee was granted 3,922 deferred share awards with an aggregate grant date fair value of $108,000 ($27.47 per share). Deferred share awards vest on the first anniversary of the grant date, provided that the Trustee remains in the position. We settle deferred share awards by issuing an equivalent number of common shares upon vesting of the awards or a later date elected by the Trustee (generally upon cessation of being a Trustee). During the nine months ended September 30, 2025, we issued 32,669 common shares in settlement of vested deferred share awards with a weighted average grant date fair value of $26.19 per award and an aggregate intrinsic value on the settlement date of $897,000.

16. Earnings Per Share (“EPS”)

We present both basic and diluted EPS. We compute basic EPS by dividing net income available to common shareholders allocable to unrestricted common shares by the weighted average number of unrestricted common shares outstanding during the period after allocating undistributed earnings between common shareholders and participating securities under the two-class method. Our participating securities include restricted shares and PIUs and deferred share awards not previously settled by common share issuances. Our computation of diluted EPS is similar except that:

•the denominator is increased to include: (1) the weighted average number of potential additional common shares that would have been outstanding if securities that are convertible into common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to redeemable noncontrolling interest and share-based compensation awards using the if-converted or treasury stock methods; and

•the numerator is adjusted to add back any changes in income that would result from the assumed conversion into common shares that we add to the denominator.

We compute diluted EPS using the treasury stock method for unvested restricted shares, TB-PIUs and deferred share awards and the if-converted method for exchangeable debt (including our 5.25% Notes), common units, redeemable noncontrolling interest, PB-PIUs, PSUs and vested PIUs and deferred share awards not previously settled by common share issuances.

Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Numerator


Net income attributable to common shareholders	$	41,727	$	36,085	$	114,814	$	103,808
Income attributable to share-based compensation awards for basic EPS	(161)		(127)		(484)		(385)
Numerator for basic EPS on net income attributable to common shareholders	41,566		35,958		114,330		103,423




Adjustment to income attributable to share-based compensation awards for diluted EPS	28		23		144		66
Numerator for diluted EPS on net income attributable to common shareholders	$	41,594	$	35,981	$	114,474	$	103,489





Denominator (all weighted averages)
Denominator for basic EPS (common shares)	112,485		112,314		112,442		112,279



Dilutive effect of share-based compensation awards	702		696		749		566
Denominator for diluted EPS (common shares)	113,187		113,010		113,191		112,845




Basic EPS attributable to common shareholders	$	0.37	$	0.32	$	1.02	$	0.92



Diluted EPS attributable to common shareholders	$	0.37	$	0.32	$	1.01	$	0.92

Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):


	Weighted Average Shares Excluded from Denominator
	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2025	2024	2025	2024
Conversion of common units	2,182	1,696	2,136	1,675
Conversion of redeemable noncontrolling interest	804	747	834	873

The following securities were also excluded from the computation of diluted EPS because their effect was antidilutive:

•weighted average restricted shares and deferred share awards of 502,000 and 436,000 for the three months ended September 30, 2025 and 2024, respectively, and 429,000 and 433,000 for the nine months ended September 30, 2025 and 2024, respectively;

•weighted average TB-PIUs of 241,000 and 229,000 for the three months ended September 30, 2025 and 2024, respectively, and 235,000 and 221,000 for the nine months ended September 30, 2025 and 2024, respectively;

•weighted average PB-PIUs of 718,000 for the three months ended September 30, 2024 and 740,000 for the nine months ended September 30, 2024; and

•weighted average vested PIUs of 223,000 and 212,000 for the three and nine months ended September 30, 2024, respectively.

Our 5.25% Notes issued in 2023 have an exchange settlement feature under which the principal amount of notes exchanged is payable in cash, with the remainder of the exchange obligation, if any, determined based on the exchange price per common share at the time of settlement, payable in cash, common shares or a combination thereof at our election. These notes did not affect our diluted EPS reported above since the weighted average closing price of our common shares for the three and nine months ended September 30, 2025 and 2024 was less than the exchange price applicable to those periods.

17. Commitments and Contingencies

Litigation and Claims

In the normal course of business, we are subject to legal actions and other claims. We record losses for specific legal proceedings and claims when we determine that a loss is probable and the amount of loss can be reasonably estimated. As of September 30, 2025, management believes that it is reasonably possible that we could recognize a loss of up to $5.2 million for certain municipal tax claims; while we do not believe this loss would materially affect our financial position or liquidity, it could be material to our results of operations. Management believes that it is also reasonably possible that we could incur losses pursuant to other claims but do not believe such losses would materially affect our financial position, liquidity or results of operations. Our assessment of the potential outcomes of these matters involves significant judgment and is subject to change based on future developments.

Environmental

We are subject to various federal, state and local environmental regulations related to our property ownership and operations. We have performed environmental assessments of our properties, the results of which have not revealed any environmental liability that we believe would have a materially adverse effect on our financial position, operations or liquidity.

In connection with a lease and subsequent sale in prior periods of three properties in Dayton, New Jersey, we agreed to provide certain environmental indemnifications limited to $19 million in the aggregate. We have insurance coverage in place to mitigate most of any potential future losses that may result from these indemnification agreements.

Tax Incremental Financing Obligation

Anne Arundel County, Maryland issued tax incremental financing bonds to third-party investors in order to finance public improvements needed in connection with our project known as the National Business Park. These bonds had a remaining principal balance of approximately $23 million as of September 30, 2025. The real estate taxes on increases in assessed values post-bond issuance of properties in development districts encompassing the National Business Park are transferred to a special fund pledged to the repayment of the bonds. While we are obligated to fund, through a special tax, any future shortfalls between debt service of the bonds and real estate taxes available to repay the bonds, as of September 30, 2025, we do not expect any such future fundings will be required.

18. Subsequent Events

On October 2, 2025, CDPLP issued $400.0 million of 4.50% Senior Notes due 2030 (the “4.50% Notes”) at an initial offering price of 99.46% of their face value. The proceeds from this issuance, after deducting underwriting discounts and commissions, but before other offering expenses, were $395.5 million. The notes mature on October 15, 2030. We may redeem the notes, in whole at any time or in part from time to time, at our option, at a redemption price equal to the greater of (1) the aggregate principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption) discounted to its present value, on a semi-annual basis at an adjusted treasury rate plus a spread of 15 basis points, plus accrued and unpaid interest thereon to the date of redemption. However, if this redemption occurs on or after September 15, 2030, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the applicable redemption date. These notes are unconditionally guaranteed by COPT Defense.

On October 6, 2025, we entered into an amendment to the existing credit agreement underlying our Revolving Credit Facility and Term Loan Facility. The resulting amended credit Agreement (the “Amended Credit Agreement”) includes the following provisions:

•for the Revolving Credit Facility:

•an aggregate commitment by the lenders of $800.0 million (increased from $600.0 million);

•an interest rate based on the Secured Overnight Financing Rate (“SOFR”) plus 0.725% to 1.400%, as determined by the credit ratings assigned to CDPLP by S&P Global Ratings, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. (collectively, the “Ratings Agencies”) or otherwise specified under the Amended Credit Agreement, with no SOFR transition charge;

•a quarterly fee based on the lenders’ commitment under the facility multiplied by a per annum rate of 0.125% to 0.300%, as determined by the credit ratings assigned to CDPLP by the Ratings Agencies or otherwise specified under the Amended Credit Agreement; and

•an extension of the maturity date from October 26, 2026 to October 5, 2029, with the ability for us to extend such maturity by two six-month periods at our option, provided that there is no default under the Amended Credit Agreement and we pay an extension fee of 0.0625% of the total availability under the facility for each extension period; and

•for the Term Loan Facility:

•an interest rate based on SOFR plus 0.850% to 1.700%, as determined by the credit ratings assigned to CDPLP by the Ratings Agencies or otherwise specified under the Amended Credit Agreement, with no SOFR transition charge; and

•maintained the facility’s maturity date of January 30, 2026, with the ability for us to extend such maturity by two 12-month periods at our option, provided that there is no default under the Amended Credit Agreement and we pay an extension fee of 0.125% of the outstanding term loans under the agreement for each extension period.

On October 16, 2025, we entered into a credit agreement for a secured revolving line of credit that we expect to use to fund property development activities (the “Revolving Development Facility”). The agreement provides for an initial aggregate commitment by the lender of $200.0 million, with a right for us to request an increase during the term to a maximum of $250.0 million, subject to lender approval. The facility matures on October 16, 2029, with the ability to extend such maturity 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. The interest rate on the facility is based on SOFR plus 1.250% to 1.900%, as determined by the credit ratings assigned to CDPLP by the Ratings Agencies or otherwise specified under the agreement. The facility also carries a quarterly fee that is based on the lenders’ commitment multiplied by a per annum rate of 0.125% to 0.300%, as determined by the credit ratings assigned to CDPLP by the Ratings Agencies or otherwise specified under the agreement.

On October 30, 2025, we acquired 15050 Conference Center Drive, a 142,000 square foot property in Chantilly, Virginia (included in the NoVA Defense/IT sub-segment of our Defense/IT Portfolio reportable segment) that was 100% leased, for a gross purchase price of approximately $40 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

During the nine months ended September 30, 2025, we:

•finished the period with our portfolio 93.9% occupied and 95.7% leased; and

•achieved a tenant retention rate of 81.9%, which was driven by our Defense/IT Portfolio.

Subsequent to September 30, 2025, we:

•issued $400.0 million of 4.50% Notes at an initial offering price of 99.46% of their face value on October 2, 2025, resulting in proceeds, after deducting underwriting discounts and commissions, but before other offering expenses, of $395.5 million. The net proceeds from the notes were used for general corporate purposes, including paying down amounts outstanding under our Revolving Credit Facility and pre-funding the repayment at maturity of our 2.25% Senior Notes due 2026, which resulted in a portion of the net proceeds being invested in interest-bearing accounts pending such use;

•entered into an amendment to the existing credit agreement underlying our Revolving Credit Facility and Term Loan Facility on October 6, 2025. The resulting Amended Credit Agreement provided for: an increase in the aggregate lender commitment under our Revolving Credit Facility from $600.0 million to $800.0 million; extended the previous maturity date of our Revolving Credit Facility by approximately three years; and changed the facilities’ interest and quarterly fee terms under the agreement;

•entered into the Revolving Development Facility, with an initial aggregate lender commitment of $200.0 million, on October 16, 2025. The net proceeds from our initial borrowing under this facility totaled approximately $154 million, which were used for general corporate purposes, including paying down amounts outstanding under our Revolving Credit Facility; and

•acquired 15050 Conference Center Drive, a 142,000 square foot property in Chantilly, Virginia that was 100% leased, for a gross purchase price of approximately $40 million on October 30, 2025.

We discuss significant factors contributing to changes in our net income in the section below entitled “Results of Operations.” In addition, the section below entitled “Liquidity and Capital Resources” includes discussions of, among other things:

•how we expect to generate and obtain cash for short and long-term capital needs; and

•material cash requirements for known contractual and other obligations.

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 source 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.

For operating portfolio square footage, occupancy and leasing statistics included below and elsewhere in this Quarterly Report on Form 10-Q, amounts disclosed include information pertaining to properties owned through unconsolidated real estate joint ventures except for amounts reported for ARR, which represent the portion attributable to our ownership interest.

You should refer to our consolidated financial statements and the notes thereto as you read this section.

This section contains “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995, that are based on our current expectations, estimates and projections about future events and financial trends affecting the financial condition and operations of our business. 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 we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations, estimates and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, we 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. We caution readers that forward-looking statements reflect our opinion only as of the date on which they were made. You should not place undue reliance on forward-looking statements. The following factors, among others,

could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•general economic and business conditions, which will, among other things, affect office property and data center demand and rents, tenant creditworthiness, interest rates, financing availability, property operating and construction costs, and property values;

•adverse changes in the real estate markets, including, among other things, increased competition with other companies;

•our ability to borrow on favorable terms;

•risks of property acquisition and development activities, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development or operating costs may be greater than anticipated;

•risks of investing through joint venture structures, including risks that our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our objectives;

•changes in our plans for properties or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of significant impairment losses;

•potential impact of prolonged government shutdowns or budgetary reductions or impasses, such as a reduction of rental revenues, non-renewal of leases and/or reduced or delayed demand for additional space by existing or new tenants;

•potential additional costs, such as capital improvements, fees and penalties, associated with environmental laws or regulations;

•adverse changes resulting from other government actions and initiatives, such as changes in taxation, zoning laws or other regulations;

•our ability to satisfy and operate effectively under federal income tax rules relating to real estate investment trusts and partnerships;

•the dilutive effects of issuing additional common shares; and

•security breaches relating to cyber attacks, cyber intrusions or other factors, and other significant disruptions of our information technology networks and related systems.

We undertake no obligation to publicly update or supplement forward-looking statements.

Occupancy and Leasing

The tables below set forth occupancy information:


	September 30, 2025			December 31, 2024
Occupancy rates at period end
Total	93.9		%	93.6		%
Defense/IT Portfolio
Fort Meade/BW Corridor	94.1		%	95.8		%
Redstone Arsenal	95.8		%	94.5		%
NoVA Defense/IT	93.0		%	91.7		%
Lackland Air Force Base	100.0		%	93.0		%
Navy Support	83.9		%	82.6		%
Data Center Shells	100.0		%	100.0		%
Total Defense/IT Portfolio	95.4		%	95.4		%

Other	76.8		%	72.7		%
ARR per occupied square foot at period end	$	35.96		$	35.35


	Rentable Square Feet	Occupied Square Feet
	(in thousands)
December 31, 2024	24,537	22,961
Vacated upon lease expiration (1)	—	(396)
Occupancy for new leases	—	477
Development placed in service	50	50


Other changes	(2)	(5)
September 30, 2025	24,585	23,087

(1)Includes lease terminations and space reductions occurring in connection with lease renewals.

During the nine months ended September 30, 2025, we leased 2.3 million square feet, including: 1.7 million square feet of renewal leasing (representing a tenant retention rate of 81.9%); 432,000 square feet of vacant space leasing; and 203,000 square feet of investment space leasing.

Results of Operations

We evaluate the operating performance of our properties using NOI from real estate operations, our segment performance measure, which includes: real estate revenues and property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate joint ventures (“UJV” or “UJVs”) that is allocable to our ownership interest (“UJV NOI allocable to COPT Defense”). The table below reconciles net income, the most directly comparable GAAP measure, to NOI from real estate operations:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
	(in thousands)
Net income	$	43,744	$	37,397	$	120,138	$	107,475
Construction contract and other service revenues	(8,485)		(16,662)		(31,202)		(63,523)
Depreciation and other amortization associated with real estate operations	40,631		38,307		119,563		114,819
Construction contract and other service expenses	7,952		16,127		29,530		61,746

General, administrative, leasing and other expenses	12,030		11,416		36,097		35,195
Interest expense	20,894		20,376		62,336		61,760
Interest and other income, net	(2,591)		(3,324)		(5,382)		(10,330)
Gain on sales of real estate	(3,018)		—		(3,318)		—

Equity in income of unconsolidated entities	(1,815)		(85)		(2,541)		(180)
UJV NOI allocable to COPT Defense included in equity in income of unconsolidated entities	1,864		1,844		5,623		5,319
Income tax expense	612		130		832		312



NOI from real estate operations	$	111,818	$	105,526	$	331,676	$	312,593

We view our changes in NOI from real estate operations as being comprised of the following primary categories:

•Same Property, which we define as properties stably owned and 100% operational throughout the current and prior year reporting periods being compared;

•developed properties placed into service that were not 100% operational throughout the current and prior year reporting periods being compared; and

•properties acquired during the current or prior year reporting periods being compared.

Our Same Property pool consisted of 198 properties, comprising 97.0% of our portfolio’s square footage as of September 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.

In addition to owning properties, we provide construction management and other services. The primary manner in which we evaluate the operating performance of our construction management and other service activities is through a measure we define as NOI from service operations, which is based on the net of the revenues and expenses from these activities. The revenues and expenses from these activities consist primarily of subcontracted costs that are reimbursed to us by customers along with a management fee. The operating margins from these activities are small relative to the revenue. We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations.

Since both of the measures discussed above exclude certain items includable in net income or loss, reliance on these measures has limitations; management compensates for these limitations by using the measures simply as supplemental measures that are considered alongside other GAAP and non-GAAP measures. A reconciliation of NOI from real estate operations and NOI from service operations to net income reported on the consolidated statements of operations is provided in Note 12 to our consolidated financial statements.

Comparison of Statements of Operations for the Three Months Ended September 30, 2025 and 2024


	For the Three Months Ended September 30,
	2025		2024		Variance
	(in thousands)
Revenues
Revenues from real estate operations	$	180,310	$	172,563	$	7,747
Construction contract and other service revenues	8,485		16,662		(8,177)
Total revenues	188,795		189,225		(430)
Operating expenses
Property operating expenses	70,356		68,881		1,475
Depreciation and amortization associated with real estate operations	40,631		38,307		2,324
Construction contract and other service expenses	7,952		16,127		(8,175)

General, administrative, leasing and other expenses	12,030		11,416		614
Total operating expenses	130,969		134,731		(3,762)
Interest expense	(20,894)		(20,376)		(518)
Interest and other income, net	2,591		3,324		(733)
Gain on sales of real estate	3,018		—		3,018


Equity in income of unconsolidated entities	1,815		85		1,730
Income tax expense	(612)		(130)		(482)


Net income	$	43,744	$	37,397	$	6,347

NOI from Real Estate Operations


	For the Three Months Ended September 30,
	2025			2024			Variance
	(Dollars in thousands, except per square foot data)
Revenues
Same Property revenues
Lease revenue, excluding lease termination revenue and collectability recovery provisions	$	169,766		$	165,468		$	4,298
Lease termination revenue, net	1,191			931			260
Collectability loss provisions included in lease revenue	(108)			(25)			(83)
Other property revenue	2,014			1,987			27
Same Property total revenues	172,863			168,361			4,502
Developed properties placed in service	3,446			1,206			2,240
Acquired properties	1,682			953			729


Other	2,319			2,043			276
	180,310			172,563			7,747
Property operating expenses
Same Property	(66,857)			(66,161)			(696)
Developed properties placed in service	(860)			(301)			(559)
Acquired properties	(634)			(501)			(133)


Other	(2,005)			(1,918)			(87)
	(70,356)			(68,881)			(1,475)

UJV NOI allocable to COPT Defense
Same Property	1,864			1,844			20




NOI from real estate operations
Same Property	107,870			104,044			3,826
Developed properties placed in service	2,586			905			1,681
Acquired properties	1,048			452			596


Other	314			125			189
	$	111,818		$	105,526		$	6,292

Same Property NOI from real estate operations by segment
Defense/IT Portfolio	$	99,223		$	96,820		$	2,403
Other	8,647			7,224			1,423
	$	107,870		$	104,044		$	3,826

Same Property rent statistics
Average occupancy rate	94.4		%	94.0		%	0.4		%
Average straight-line rent per occupied square foot (1)	$	7.13		$	6.92		$	0.21

(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.

Regarding the changes in NOI from real estate operations reported above:

•the increase for our Same Properties was due primarily to additional revenue in the current period resulting from increased rental and occupancy rates;

•developed properties placed in service reflects the effect of four properties placed in service in 2024 and 2025; and

•acquired properties includes two operating office properties acquired in 2024.

NOI from Service Operations


	For the Three Months Ended September 30,
	2025		2024		Variance
	(in thousands)
Construction contract and other service revenues	$	8,485	$	16,662	$	(8,177)
Construction contract and other service expenses	(7,952)		(16,127)		8,175
NOI from service operations	$	533	$	535	$	(2)

Construction contract and other service revenues and expenses decreased in the current period due to a lower volume of construction activity for one of our tenants. Construction contract activity is inherently subject to significant variability depending on the volume and nature of projects undertaken by us primarily on behalf of tenants. Service operations are an ancillary component of our overall operations that typically contribute an insignificant amount of income relative to our real estate operations.

Gain on Sales of Real Estate

We recognized a gain on sale of real estate of $3.0 million in the current period in connection with our sale of an undeveloped land parcel.

Comparison of Statements of Operations for the Nine Months Ended September 30, 2025 and 2024


	For the Nine Months Ended September 30,
	2025		2024		Variance
	(in thousands)
Revenues
Revenues from real estate operations	$	535,364	$	506,311	$	29,053
Construction contract and other service

COPT DEFENSE PROPERTIES 10-Q