COPT Defense Reports Second Quarter 2026 Results

EPS of $0.40
FFO per Share, As Adjusted for Comparability, of $0.71
4.4% FFO per Share Growth Year-over-Year
2-cents above the Midpoint of Guidance

Increased Midpoint of 2026 FFO per Share Guidance by 2-cents to $2.78
Implies 2.2% FFO per Share Growth for the Year

Same Property Cash NOI Increased 7.4%
Increased Midpoint of 2026 Guidance by 100 basis points to 4%

Occupancy and Leased Levels
Total Portfolio 94.1% Occupied and 95.6% Leased
Defense/IT Portfolio 95.1% Occupied and 96.4% Leased

Leasing Activity
Total Leasing in 2Q26 and 1H26 of 518,000 SF and 2.2 million SF, respectively

Vacancy Leasing in 2Q26 and 1H26 of 139,000 SF and 231,000 SF, respectively
Increased Annual Target to 475,000 SF from 400,000 SF

Renewal Leasing in 2Q26 and 1H26 of 347,000 SF and 1.5 million SF, respectively

Tenant Retention in 2Q26 and 1H26 of 68% and 84%, respectively

Investment Leasing in 2Q26 and 1H26 of 32,000 SF and 416,000 SF, respectively

Investment Activity

Committed $43 million of Capital to a Land and Ground Lease Acquisition in Chantilly, VA
Increased 2026 Guidance Target by $45 million to $335 million

COLUMBIA, Md., July 27, 2026--(BUSINESS WIRE)--COPT Defense Properties ("COPT Defense" or the "Company") (NYSE: CDP) announced results for the second quarter ended June 30, 2026.

Management Comments

Stephen E. Budorick, COPT Defense's President & Chief Executive Officer, commented, "Our performance during the first half of the year exceeded our plan and expectations in every respect. Our financial results, occupancy, leasing activity, and capital commitments to new investments continue to illustrate the benefits and opportunities from the strong demand for our portfolio, as FFO per share exceeded the midpoint of our guidance by $0.02 in the second quarter.

We increased the midpoint of 2026 FFO per share guidance by $0.02 to $2.78, which is $0.03 above our initial guidance. This is even more impressive considering this overcomes roughly $0.035 of incremental dilution from our Exchangeable Notes relative to our initial guidance, resulting from our 37% share price increase year-to-date. We also increased the midpoint of 2026 guidance for same property cash NOI growth by 100 basis points to 4.0%, the change in cash rents on renewals by 100 basis points to 3.0%, and capital commitment to new investments by $45 million to $335 million. Additionally, we raised our target for vacancy leasing by nearly 20% from 400,000 square feet to 475,000 square feet, based on the 231,000 square feet signed in the first half of the year, and our strong pipeline of deals in advanced negotiations.

Story Continues

We expect bipartisan support for growth in defense spending will continue, as the FY 2027 Budget Request calls for a 28% increase in the base budget to nearly $1.1 trillion, which excludes any additional funding from reconciliation. The FY 2027 Budget Requests also calls for meaningful increases in funding for the priority missions our portfolio supports, which includes intelligence, cybersecurity, and missile defense, thereby creating a favorable environment for continued demand in our portfolio."

Financial Highlights

2nd Quarter Financial Results:

Diluted earnings per share ("EPS") was $0.40 for the quarter ended June 30, 2026, compared to $0.34 for the quarter ended June 30, 2025. Diluted funds from operations per share ("FFOPS"), as calculated in accordance with Nareit's definition and as adjusted for comparability, was $0.71 for the quarter ended June 30, 2026, compared to $0.68 for the quarter ended June 30, 2025.

Operating Performance Highlights

Operating Portfolio Summary:

At June 30, 2026, the Company's 25.3 million square foot total portfolio was 94.1% occupied and 95.6% leased, which includes the 23.3 million square foot Defense/IT Portfolio that was 95.1% occupied and 96.4% leased.

Same Property Performance:

At June 30, 2026, the Company's 24.6 million square foot Same Property portfolio was 94.5% occupied and 95.4% leased. The Company's Same Property cash NOI increased 7.4% in the quarter ended June 30, 2026 compared to the same period in 2025.

Leasing:

Total Square Feet Leased: For the quarter ended June 30, 2026, the Company leased 518,000 square feet, including 347,000 square feet of renewals, 139,000 square feet of vacancy leasing, and 32,000 square feet of investment leasing. For the six months ended June 30, 2026, the Company executed 2.2 million square feet of total leasing, including 1.5 million square feet of renewals, 231,000 square feet of vacancy leasing, and 416,000 square feet of investment leasing. Tenant Retention Rates: During the quarter ended June 30, 2026, the Company renewed 68.4% of expiring square feet in its total portfolio. During the six months ended June 30, 2026, the Company renewed 84.4% of expiring square feet in its total portfolio. Rent Spreads and Average Escalations on Renewing Leases: For the quarter and six months ended June 30, 2026, straight-line rents on renewals increased 4.4% and 10.9%, respectively, and cash rents on renewed space decreased 0.2% and increased 3.2%, respectively, while annual escalations on renewing leases averaged 2.5% and 3.0%, respectively. Lease Terms: In the quarter ended June 30, 2026, lease terms averaged 2.9 years on renewing leases, 7.0 years on vacancy leasing, and 10.0 years on investment leasing. For the six months ended June 30, 2026, lease terms averaged 4.1 years on renewing leases, 6.8 years on vacancy leasing, and 13.1 years on investment leasing.

Investment Activity Highlights

Development Pipeline: The Company's development pipeline consists of six properties totaling 885,000 square feet that were 73% leased as of June 30, 2026. These projects represent a total estimated investment of $440 million, of which $115 million was spent as of June 30, 2026. Acquisition: On April 23, 2026, the Company acquired approximately 17 acres of land for approximately $43 million, subject to a ground lease on which two buildings at Mission Ridge 1 + 2, located at 15020 and 15030 Conference Center Drive in Chantilly, Virginia, were developed. The buildings are fully leased to the U.S. Government and defense contractors.

Please see pages 25-27 of the Company's 2Q26 Results Presentation (refer to the 'Associated Supplemental Presentation' section below).

Balance Sheet and Capital Transaction Highlights

For the quarter ended June 30, 2026, the Company's adjusted EBITDA fixed charge coverage ratio was 4.4x. At June 30, 2026, the Company's net debt to in-place adjusted EBITDA ratio was 6.0x and its net debt adjusted for fully-leased investment properties to in-place adjusted EBITDA ratio was 5.9x. At June 30, 2026, and including the effect of interest rate swaps, the Company's weighted average effective interest rate on its consolidated debt portfolio was 3.8% with a weighted average maturity of 4.3 years (assuming exercise of available extension options), and 82% of the Company's debt was subject to fixed interest rates.

Associated Supplemental Presentation

Prior to the call, the Company will post a slide presentation to accompany management's prepared remarks for its second quarter 2026 conference call; the presentation can be viewed and downloaded from the 'Financial Info – Financial Results' section of COPT Defense's Investors website: https://investors.copt.com/financial-information/financial-results

2026 Guidance

Management is revising and increasing the midpoint of its full-year guidance for diluted EPS and diluted FFOPS, per Nareit and as adjusted for comparability of $1.24-$1.30 and $2.73-$2.79, respectively, to new ranges of $1.39-$1.43 and $2.76-$2.80, respectively. Management is establishing third quarter guidance for diluted EPS and diluted FFOPS per Nareit and as adjusted for comparability at $0.37-$0.39 and $0.68-$0.70, respectively. Reconciliations of projected diluted EPS to projected diluted FFOPS, in accordance with Nareit and as adjusted for comparability, are as follows:

Reconciliation of Diluted EPS to FFOPS, per Nareit,

and As Adjusted for Comparability Quarter Ending
September 30, 2026 Year Ending
December 31, 2026 Low High Low High Diluted EPS $ 0.37 $ 0.39 $ 1.39 $ 1.43 Real estate-related depreciation and amortization 0.37 0.37 1.50 1.50 Gain on sales of real estate (0.06 ) (0.06 ) (0.13 ) (0.13 ) Diluted FFOPS, Nareit definition and as adjusted for comparability $ 0.68 $ 0.70 $ 2.76 $ 2.80

The Company detailed its initial full year guidance, with supporting assumptions, in a separate press release issued February 5, 2026; that release can be found in the 'News & Events – Press Releases' section of COPT Defense's Investors website: https://investors.copt.com/news-events/press-releases

Conference Call Information

Management will discuss second quarter 2026 results on its conference call tomorrow, details of which are listed below:

Conference Call Date: Tuesday, July 28, 2026 Time: 12:00 p.m. Eastern Time

Participants must register for the conference call at the link below to receive the dial-in number and personal pin. Registering only takes a few moments and provides direct access to the conference call without waiting for an operator. You may register at any time, including up to and after the call start time: https://register-conf.media-server.com/register/BI747d6d14370a47ff9a560c5239e7db6a

The conference call will also be available via live webcast in the 'News & Events – IR Calendar' section of COPT Defense's Investors website: https://investors.copt.com/news-events/ir-calendar

Replay Information

A replay of the conference call will be immediately available via webcast only on COPT Defense's Investors website and will be maintained on the website for approximately 90 days after the conference call.

Definitions

For definitions of certain terms used in this press release, please refer to the information furnished in the Company's Supplemental Information Package furnished on a Form 8-K which can be found on its website (www.copt.com). Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the attached tables.

About COPT Defense

COPT Defense, an S&P MidCap 400 Company, is a self-managed REIT focused on owning, operating, and developing properties in locations proximate to, or sometimes containing, key U.S. Government ("USG") defense installations and missions (referred to as its Defense/IT Portfolio). The Company's tenants include the USG and their defense contractors, who are primarily engaged in priority national security activities, and who generally require mission-critical and high security property enhancements. As of June 30, 2026, the Company's Defense/IT Portfolio of 202 properties, including 24 owned through unconsolidated joint ventures, encompassed 23.3 million square feet and was 96.4% leased.

Forward-Looking Information

This press release may contain "forward-looking" statements, as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that are based on the Company's current expectations, estimates and projections about future events and financial trends affecting the Company. Forward-looking statements can be identified by the use of words such as "may," "will," "should," "could," "believe," "anticipate," "expect," "estimate," "plan," or other comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Although the Company believes that the expectations, estimates, and projections reflected in such forward-looking statements are based on reasonable assumptions at the time made, the Company can give no assurance that these expectations, estimates, and projections will be achieved. Future events and actual results may differ materially from those discussed in the forward-looking statements and the Company undertakes no obligation to update or supplement any forward-looking statements.

The areas of risk that may affect these expectations, estimates, and projections include, but are not limited to, those risks described in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Source: COPT Defense Properties

COPT Defense Properties

Summary Financial Data

(unaudited)

(in thousands) For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Revenues Lease revenue $ 188,806 $ 175,598 $ 381,777 $ 350,906 Other property revenue 1,820 1,859 3,445 4,148 Construction contract and other service revenues 6,766 12,458 12,807 22,717 Total revenues 197,392 189,915 398,029 377,771 Operating expenses Property operating expenses 72,586 66,915 154,021 138,955 Depreciation and amortization associated with real estate operations 42,289 39,573 84,974 78,932 Construction contract and other service expenses 6,023 11,873 11,575 21,578 General and administrative expenses 9,237 8,202 17,693 16,350 Leasing expenses 3,089 2,613 6,083 5,612 Business development expenses and land carry costs 938 1,096 2,137 2,105 Total operating expenses 134,162 130,272 276,483 263,532 Interest expense (24,444 ) (20,938 ) (48,440 ) (41,442 ) Interest and other income, net 2,973 1,223 6,928 2,791 Gain on sales of real estate 6,442 — 7,024 300 Income before equity in income of unconsolidated entities and income taxes 48,201 39,928 87,058 75,888 Equity in income of unconsolidated entities 392 355 1,798 726 Income tax expense (34 ) (117 ) (158 ) (220 ) Net income 48,559 40,166 88,698 76,394 Net income attributable to noncontrolling interests Common units in the Operating Partnership ("OP") (1,038 ) (846 ) (1,850 ) (1,572 ) Other consolidated entities (1,084 ) (973 ) (1,855 ) (1,735 ) Net income attributable to common shareholders $ 46,437 $ 38,347 $ 84,993 $ 73,087 Earnings per share ("EPS") computation Numerator for diluted EPS Net income attributable to common shareholders $ 46,437 $ 38,347 $ 84,993 $ 73,087 Amount allocable to share-based compensation awards (183 ) (112 ) (343 ) (229 ) Numerator for diluted EPS $ 46,254 $ 38,235 $ 84,650 $ 72,858 Denominator Weighted average common shares - basic 112,871 112,459 112,839 112,421 Dilutive effect of share-based compensation awards 938 765 984 744 Dilutive exchangeable debt 1,087 — 763 — Weighted average common shares - diluted 114,896 113,224 114,586 113,165 Diluted EPS $ 0.40 $ 0.34 $ 0.74 $ 0.64

COPT Defense Properties

Summary Financial Data

(unaudited)

(in thousands, except per share data) For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Net income $ 48,559 $ 40,166 $ 88,698 $ 76,394 Real estate-related depreciation and amortization 42,289 39,573 84,974 78,932 Gain on sales of real estate (6,442 ) — (7,024 ) (300 ) Depreciation and amortization on unconsolidated real estate JVs 726 732 1,468 1,473 Gain on sale of real estate on unconsolidated real estate JV (130 ) — (1,276 ) — Funds from operations ("FFO") 85,002 80,471 166,840 156,499 FFO allocable to other noncontrolling interests (1,433 ) (1,382 ) (2,564 ) (2,540 ) Basic FFO allocable to share-based compensation awards (617 ) (550 ) (1,220 ) (1,080 ) Basic FFO available to common share and common unit holders ("Basic FFO") 82,952 78,539 163,056 152,879 Diluted FFO adjustments allocable to share-based compensation awards 63 96 127 201 Diluted FFO available to common share and common unit holders and as adjusted for comparability 83,015 78,635 163,183 153,080 Straight line rent adjustments and lease incentive amortization 5,377 (1,836 ) 4,047 (3,535 ) Amortization of intangibles and other assets included in net operating income ("NOI") 106 64 166 226 Sales-type lease adjustments 101 — 101 — Share-based compensation, net of amounts capitalized 3,376 2,924 6,562 5,778 Amortization of deferred financing costs 794 657 1,626 1,324 Amortization of net debt discounts and commissions, net of amounts capitalized 1,076 1,060 2,293 2,111 Replacement capital expenditures (25,117 ) (23,919 ) (44,322 ) (45,383 ) Other 386 75 542 156 Diluted adjusted funds from operations available to common share and common unit holders ("Diluted AFFO") $ 69,114 $ 57,660 $ 134,198 $ 113,757 Diluted FFO per share $ 0.71 $ 0.68 $ 1.40 $ 1.33 Diluted FFO per share, as adjusted for comparability $ 0.71 $ 0.68 $ 1.40 $ 1.33 Dividends/distributions per common share/unit $ 0.32 $ 0.305 $ 0.64 $ 0.61

COPT Defense Properties

Summary Financial Data

(unaudited)

(dollars and shares in thousands, except per share data) June 30,
2026 December 31,
2025 Balance sheet data Properties, net of accumulated depreciation $ 3,813,468 $ 3,783,477 Total assets $ 4,515,281 $ 4,701,790 Debt per balance sheet $ 2,592,436 $ 2,767,834 Total liabilities $ 2,909,439 $ 3,114,115 Redeemable noncontrolling interest $ 24,881 $ 25,506 Total equity $ 1,580,961 $ 1,562,169 Debt to assets 57.4 % 58.9 % Net debt to adjusted book 40.8 % 40.5 % Defense/IT Portfolio data (as of period end) Number of operating properties 202 201 Total operational square feet (in thousands) 23,316 23,159 % Occupied 95.1 % 95.5 % % Leased 96.4 % 96.5 %

For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 GAAP Payout ratio Net income 76.4 % 87.7 % 83.7 % 92.2 % Debt ratios Net income to interest expense ratio 2.0x 1.9x 1.8x 1.8x Debt to net income ratio 13.3x 15.2x N/A N/A Non-GAAP Payout ratios Diluted FFO 44.4 % 44.5 % 45.2 % 45.7 % Diluted FFO, as adjusted for comparability 44.4 % 44.5 % 45.2 % 45.7 % Diluted AFFO 53.3 % 60.7 % 54.9 % 61.5 % Debt ratios Adjusted EBITDA fixed charge coverage ratio 4.4x 4.9x 4.3x 4.8x ...

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