Core Insights - Pyxus International, Inc. has been recognized as a Supplier Engagement Leader by CDP, earning an "A" rating for the second consecutive year, highlighting its effective collaboration with suppliers, particularly its global farmer base [1][2][3] Company Overview - Pyxus International, Inc. is a global agricultural company with over 150 years of experience in delivering value-added products and services [4] - The company is committed to transforming lives and promoting sustainable practices through responsibly sourced and traceable products [4] Environmental Commitment - The Supplier Engagement Assessment by CDP evaluates companies' climate change engagement with suppliers, focusing on governance, targets, scope 3 emissions, and value chain engagement [2][3] - Pyxus emphasizes its collaboration with contracted growers to educate and train them on best practices and climate change adaptation, which is linked to reducing indirect greenhouse gas emissions [3]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the company's consolidated financial statements and related disclosures for the reporting period [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of COPT Defense Properties and its subsidiaries for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes explaining accounting policies, fair value measurements, debt, equity, segment information, and other financial disclosures [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Details the company's assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----- | :------------ | :---------------- | :----- | | Total Assets | $4,286,950 | $4,254,191 | $32,759 | | Properties, net | $3,682,556 | $3,630,526 | $52,030 | | Debt, net | $2,438,591 | $2,391,755 | $46,836 | | Total Liabilities | $2,717,951 | $2,693,624 | $24,327 | | Total Equity | $1,545,741 | $1,536,593 | $9,148 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Reports the company's revenues, expenses, and net income over specific periods Consolidated Statements of Operations Highlights (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Total Revenues | $189,915 | $187,343 | $2,572 | 1.4% | | Lease revenue | $175,598 | $165,619 | $9,979 | 6.0% | | Construction contract and other service revenues | $12,458 | $20,258 | $(7,800) | -38.5% | | Total Operating Expenses | $130,272 | $133,215 | $(2,943) | -2.2% | | Net income attributable to common shareholders | $38,347 | $35,114 | $3,233 | 9.2% | | Basic EPS | $0.34 | $0.31 | $0.03 | 9.7% | | Diluted EPS | $0.34 | $0.31 | $0.03 | 9.7% | Consolidated Statements of Operations Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Total Revenues | $377,771 | $380,609 | $(2,838) | -0.7% | | Lease revenue | $350,906 | $331,052 | $19,854 | 6.0% | | Construction contract and other service revenues | $22,717 | $46,861 | $(24,144) | -51.5% | | Total Operating Expenses | $263,532 | $276,066 | $(12,534) | -4.5% | | Net income attributable to common shareholders | $73,087 | $67,723 | $5,364 | 7.9% | | Basic EPS | $0.65 | $0.60 | $0.05 | 8.3% | | Diluted EPS | $0.64 | $0.60 | $0.04 | 6.7% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Presents net income and other comprehensive income components, reflecting total changes in equity Consolidated Statements of Comprehensive Income Highlights (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Net income | $40,166 | $36,407 | $3,759 | 10.3% | | Total other comprehensive (loss) income | $(92) | $(262) | $170 | -64.9% | | Comprehensive income attributable to common shareholders | $38,286 | $34,879 | $3,407 | 9.8% | Consolidated Statements of Comprehensive Income Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Net income | $76,394 | $70,078 | $6,316 | 9.0% | | Total other comprehensive (loss) income | $(734) | $1,539 | $(2,273) | -147.7% | | Comprehensive income attributable to common shareholders | $72,441 | $69,222 | $3,219 | 4.6% | [Consolidated Statements of Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Equity) Outlines changes in the company's equity accounts over the reporting period Consolidated Statements of Equity Highlights (Six Months Ended June 30, 2025, in thousands) | Metric | Balance at Dec 31, 2024 | Comprehensive Income | Dividends | Share-based Compensation | Balance at Jun 30, 2025 | | :----- | :-------------------- | :------------------- | :-------- | :----------------------- | :-------------------- | | Total Equity | $1,536,593 | $74,325 | $(68,904) | $6,095 | $1,545,741 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Net cash provided by operating activities | $159,972 | $164,825 | $(4,853) | -2.9% | | Net cash used in investing activities | $(148,573) | $(132,242) | $(16,331) | 12.3% | | Net cash used in financing activities | $(27,713) | $(99,404) | $71,691 | -72.1% | | Net decrease in cash and cash equivalents and restricted cash | $(16,314) | $(66,821) | $50,507 | -75.6% | | Cash and cash equivalents and restricted cash, End of period | $23,383 | $102,603 | $(79,220) | -77.2% | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies, financial statement line items, and other disclosures [1. Organization](index=10&type=section&id=1.%20Organization) Describes the company's structure, business, and ownership details - COPT Defense Properties is a self-managed REIT focused on owning, operating, and developing properties near U.S. Government defense installations, with **97.2% ownership** in its operating partnership, CDPLP[27](index=27&type=chunk)[29](index=29&type=chunk) Defense/IT Portfolio Overview (as of June 30, 2025) | Portfolio Component | Details | | :------------------ | :------ | | Operating Properties | 198 properties, 22.6 million sq ft (16.7M sq ft office, 5.9M sq ft data center shells) | | Properties Under Development | 5 properties (3 office, 2 data center shells), ~756,000 sq ft upon completion | | Developable Land | ~1,010 acres, potential for ~10.8 million sq ft | [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and methods applied in financial reporting - The company consolidates entities where it has a majority voting interest or is the primary beneficiary of VIEs, using the equity method for significant influence and fair value/cost for other investments[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - Adopted FASB guidance on profits interest awards effective January 1, 2025, with no material effect on financial statements[37](index=37&type=chunk) - New FASB guidance on income tax disclosures is effective for 2025 annual reporting, not expected to materially affect future disclosures[38](index=38&type=chunk) - New FASB guidance on disaggregated expense disclosures is effective for annual periods after December 15, 2026, and interim periods after December 15, 2027; impact is currently being assessed[39](index=39&type=chunk) [3. Fair Value Measurements](index=11&type=section&id=3.%20Fair%20Value%20Measurements) Details the valuation techniques and inputs used for financial instruments measured at fair value - Interest rate derivatives are classified as Level 2 in the fair value hierarchy, with credit valuation adjustments using Level 3 inputs deemed not significant[40](index=40&type=chunk) - Unsecured senior notes are valued using Level 1 inputs (quoted market rates), while other debt and investing receivables use Level 3 inputs (discounted estimated future cash flows)[41](index=41&type=chunk) Fair Value Measurements of Financial Assets (June 30, 2025, in thousands) | Description | Level 1 | Level 2 | Level 3 | Total | | :---------- | :------ | :------ | :------ | :---- | | Interest rate derivatives | $— | $581 | $— | $581 | [4. Properties, Net](index=12&type=section&id=4.%20Properties%2C%20Net) Provides a breakdown of the company's real estate properties, including buildings and accumulated depreciation Operating Properties, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----- | :------------ | :---------------- | :----- | | Operating properties, net | $3,359,676 | $3,353,477 | $6,199 | | Buildings and improvements | $4,472,185 | $4,395,063 | $77,122 | | Accumulated depreciation | $(1,608,032) | $(1,537,293) | $(70,739) | [5. Leases](index=12&type=section&id=5.%20Leases) Presents information on the company's lessor and lessee arrangements, including lease revenues and costs Lessor Arrangements - Lease Revenue (Six Months Ended June 30, in thousands) | Lease Revenue Type | 2025 | 2024 | Change | YoY Change (%) | | :----------------- | :--- | :--- | :----- | :------------- | | Fixed | $268,025 | $253,561 | $14,464 | 5.7% | | Variable | $82,881 | $77,491 | $5,390 | 7.0% | | Total Lease Revenue | $350,906 | $331,052 | $19,854 | 6.0% | - As of June 30, 2025, operating leases had a weighted average remaining lease term of **39 years** and a weighted average discount rate of **7.3%**[45](index=45&type=chunk) Lessee Arrangements - Property Lease Cost (Six Months Ended June 30, in thousands) | Lease Cost Type | 2025 | 2024 | Change | YoY Change (%) | | :-------------- | :--- | :--- | :----- | :------------- | | Operating lease cost | $4,591 | $3,935 | $656 | 16.7% | | Finance lease cost | $55 | $56 | $(1) | -1.8% | | Total Property Lease Cost | $4,646 | $3,991 | $655 | 16.4% | [6. Real Estate Joint Ventures](index=14&type=section&id=6.%20Real%20Estate%20Joint%20Ventures) Details the company's investments in consolidated and unconsolidated real estate joint ventures Consolidated Real Estate Joint Ventures (June 30, 2025, in thousands) | Entity | Nominal Ownership % | Location | Total Encumbered Assets | Mortgage Debt | | :----- | :------------------ | :------- | :---------------------- | :------------ | | LW Redstone Company, LLC | 85% | Huntsville, AL | $747,960 | $22,025 | | Stevens Investors, LLC | 95% | Washington, DC | $141,483 | $— | | M Square Associates, LLC | 50% | College Park, MD | $100,213 | $46,816 | Unconsolidated Real Estate Joint Ventures - Carrying Value (June 30, 2025, in thousands) | Entity | Nominal Ownership % | Number of Properties | Carrying Value of Investment | | :----- | :------------------ | :------------------- | :--------------------------- | | Redshift JV LLC | 10% | 3 | $20,842 | | BREIT COPT DC JV LLC | 10% | 9 | $9,058 | | Quark JV LLC | 10% | 2 | $6,675 | | B RE COPT DC JV III LLC | 10% | 2 | $1,980 | | B RE COPT DC JV II LLC | 10% | 8 | $(3,823) | | Total | | 24 | $34,732 | [7. Investing Receivables](index=15&type=section&id=7.%20Investing%20Receivables) Describes the nature and balances of the company's investing loans and notes receivable Investing Receivables, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----- | :------------ | :---------------- | :----- | | Investing receivables, net | $79,300 | $69,680 | $9,620 | | Notes receivable from City of Huntsville | $71,963 | $69,241 | $2,722 | | Other investing loans receivable | $11,903 | $3,231 | $8,672 | | Allowance for credit losses | $(4,566) | $(2,792) | $(1,774) | - Notes receivable from the City of Huntsville carry a **9.95% interest rate**, while other investing loans receivable carry effective interest rates ranging from **12.0% to 14.0%** and mature by early 2026[51](index=51&type=chunk) [8. Debt, Net](index=16&type=section&id=8.%20Debt%2C%20Net) Provides a comprehensive overview of the company's debt obligations, including types, interest rates, and maturities Debt, Net (June 30, 2025, in thousands) | Debt Type | Carrying Value | Stated Interest Rate | Scheduled Maturity | | :-------- | :------------- | :------------------- | :----------------- | | Mortgage and Other Secured Debt | $68,841 | 3.82% (fixed), SOFR + 0.10% + 1.45-1.55% (variable) | June 2026, 2026 | | Revolving Credit Facility | $120,000 | SOFR + 0.10% + 0.725-1.400% | October 2026 | | Term Loan Facility | $124,805 | SOFR + 0.10% + 0.850-1.700% | January 2026 | | Unsecured Senior Notes (various) | $2,124,788 | 2.00% - 5.25% | March 2026 - December 2033 | | Total Debt, Net | $2,438,591 | | | - The company was compliant with all restrictive financial covenants as of June 30, 2025[62](index=62&type=chunk)[164](index=164&type=chunk) Debt Maturity Schedule (June 30, 2025, in thousands) | Year Ending December 31, | Amount | | :----------------------- | :----- | | 2025 (remaining 6 months) | $925 | | 2026 | $713,175 | | 2027 | $— | | 2028 | $345,000 | | 2029 | $400,000 | | Thereafter | $1,000,000 | | Total | $2,459,100 | [9. Interest Rate Derivatives](index=17&type=section&id=9.%20Interest%20Rate%20Derivatives) Details the fair value and impact of the company's interest rate derivative instruments Fair Value of Interest Rate Derivatives (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----- | :------------ | :---------------- | :----- | | Fair Value | $581 | $1,315 | $(734) | - Approximately **$569,000** of gains are estimated to be reclassified from accumulated other comprehensive income (AOCI) as a decrease to interest expense over the next 12 months[68](index=68&type=chunk) [10. Redeemable Noncontrolling Interest](index=18&type=section&id=10.%20Redeemable%20Noncontrolling%20Interest) Reports changes in the redeemable noncontrolling interest during the reporting period Redeemable Noncontrolling Interest Activity (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Beginning balance | $23,974 | $23,580 | $394 | | Ending balance | $23,258 | $22,765 | $493 | | Adjustments for changes in fair value of interest | $(716) | $(816) | $100 | [11. Equity](index=18&type=section&id=11.%20Equity) Summarizes key equity-related activities, including stock offerings and dividends - Remaining capacity under the at-the-market stock offering program is **$300 million**[71](index=71&type=chunk) Dividends per Common Share | Period | Dividends per Common Share | | :----- | :------------------------- | | Three months ended June 30, 2025 | $0.305 | | Three months ended June 30, 2024 | $0.295 | | Six months ended June 30, 2025 | $0.61 | | Six months ended June 30, 2024 | $0.59 | - **11,589 common units** in CDPLP were converted to common shares during the six months ended June 30, 2025[71](index=71&type=chunk) [12. Information by Business Segment](index=19&type=section&id=12.%20Information%20by%20Business%20Segment) Presents financial performance data disaggregated by the company's operating segments - The company's reportable segments are Defense/IT Portfolio and Other, with the Defense/IT Portfolio further broken down into sub-segments[73](index=73&type=chunk) - Segment performance is measured by Net Operating Income from real estate operations (NOI from real estate operations)[74](index=74&type=chunk) Same Property NOI from Real Estate Operations by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change | YoY Change (%) | | :------ | :--- | :--- | :----- | :------------- | | Defense/IT Portfolio | $195,631 | $191,552 | $4,079 | 2.1% | | Other | $17,310 | $13,652 | $3,658 | 26.8% | | Total Same Property NOI from real estate operations | $212,941 | $205,204 | $7,737 | 3.8% | Total Revenues by Type (Six Months Ended June 30, in thousands) | Revenue Type | 2025 | 2024 | Change | YoY Change (%) | | :----------- | :--- | :--- | :----- | :------------- | | Segment revenues from real estate operations | $355,054 | $333,748 | $21,306 | 6.4% | | Construction contract and other service revenues | $22,717 | $46,861 | $(24,144) | -51.5% | | Total Revenues | $377,771 | $380,609 | $(2,838) | -0.7% | [13. Construction Contract and Other Service Revenues](index=24&type=section&id=13.%20Construction%20Contract%20and%20Other%20Service%20Revenues) Details revenues from construction contracts and other services by compensation arrangement Construction Contract and Other Service Revenues by Compensation Arrangement (Six Months Ended June 30, in thousands) | Revenue Type | 2025 | 2024 | Change | YoY Change (%) | | :----------- | :--- | :--- | :----- | :------------- | | Firm fixed price | $11,813 | $21,185 | $(9,372) | -44.2% | | Guaranteed maximum price | $7,454 | $22,092 | $(14,638) | -66.3% | | Cost-plus fee | $2,907 | $2,706 | $201 | 7.4% | | Other | $543 | $878 | $(335) | -38.2% | | Total | $22,717 | $46,861 | $(24,144) | -51.5% | - Revenue allocated to remaining performance obligations as of June 30, 2025, was **$23.4 million**, all expected to be recognized in the six months ending December 31, 2025[86](index=86&type=chunk) [14. Credit Losses on Financial Assets and Other Instruments](index=25&type=section&id=14.%20Credit%20Losses%20on%20Financial%20Assets%20and%20Other%20Instruments) Provides information on the allowance for credit losses and credit quality of financial assets Allowance for Credit Losses Activity (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Beginning balance | $3,482 | $3,196 | $286 | | Net credit loss expense (recoveries) | $1,702 | $458 | $1,244 | | Ending balance | $5,184 | $3,654 | $1,530 | - As of June 30, 2025, **$71,963 thousand** of investing receivables were investment grade, and **$11,903 thousand** were non-investment grade. For tenant notes receivable, **$480 thousand** were investment grade, and **$1,654 thousand** were non-investment grade[90](index=90&type=chunk) [15. Share-Based Compensation](index=26&type=section&id=15.%20Share-Based%20Compensation) Details activity related to restricted shares and profit interest units under share-based compensation plans Restricted Shares Activity (Six Months Ended June 30, 2025) | Metric | Number of Shares | Weighted Average Grant Date Fair Value | | :----- | :--------------- | :----------------------------------- | | Unvested as of Dec 31, 2024 | 353,014 | $25.65 | | Granted | 238,084 | $27.07 | | Forfeited | (11,824) | $26.49 | | Vested | (133,247) | $25.43 | | Unvested as of Jun 30, 2025 | 446,027 | $26.46 | Time-Based Profit Interest Units (TB-PIUs) Activity (Six Months Ended June 30, 2025) | Metric | Number of TB-PIUs | Weighted Average Grant Date Fair Value | | :----- | :---------------- | :----------------------------------- | | Unvested as of Dec 31, 2024 | 223,939 | $25.14 | | Granted | 123,250 | $27.11 | | Vested | (106,592) | $25.32 | | Unvested as of Jun 30, 2025 | 240,597 | $26.07 | - Performance-based awards granted on January 1, 2025, include **246,230 PB-PIUs** and **20,296 PSUs**, with a three-year performance period tied to COPT Defense's total shareholder return (TSR) relative to a peer group[98](index=98&type=chunk)[99](index=99&type=chunk) [16. Earnings Per Share ("EPS")](index=28&type=section&id=16.%20Earnings%20Per%20Share%20%28%22EPS%22%29) Presents basic and diluted earnings per share calculations and related adjustments EPS Summary (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Basic EPS attributable to common shareholders | $0.34 | $0.31 | $0.03 | 9.7% | | Diluted EPS attributable to common shareholders | $0.34 | $0.31 | $0.03 | 9.7% | EPS Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Basic EPS attributable to common shareholders | $0.65 | $0.60 | $0.05 | 8.3% | | Diluted EPS attributable to common shareholders | $0.64 | $0.60 | $0.04 | 6.7% | - Diluted EPS computations exclude the conversion of common units and redeemable noncontrolling interest, as well as certain share-based compensation awards, because their effect was antidilutive for the respective periods[107](index=107&type=chunk)[109](index=109&type=chunk) [17. Commitments and Contingencies](index=29&type=section&id=17.%20Commitments%20and%20Contingencies) Discloses potential future obligations and liabilities, including legal and environmental matters - Management believes it is reasonably possible to recognize a loss of up to **$5.1 million** for certain municipal tax claims, which could be material to results of operations[111](index=111&type=chunk) - Environmental assessments have not revealed any environmental liability that would have a materially adverse effect on financial position, operations, or liquidity[112](index=112&type=chunk) - The company does not expect future fundings for its **$25 million** tax incremental financing obligation related to the National Business Park[114](index=114&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting key performance indicators such as occupancy, leasing activity, and Net Operating Income (NOI). It details the drivers behind changes in revenues and expenses for both real estate and service operations, discusses Funds from Operations (FFO), property additions, cash flows, and outlines the company's liquidity and capital resources [Overview](index=30&type=section&id=Overview) Provides a high-level summary of the company's operational performance, occupancy, and key forward-looking statements - Portfolio occupancy was **94.0%** and leased percentage was **95.6%** as of June 30, 2025[119](index=119&type=chunk) - Achieved an **81.9% tenant retention rate** for the six months ended June 30, 2025, primarily driven by the Defense/IT Portfolio[119](index=119&type=chunk)[123](index=123&type=chunk) - Forward-looking statements are subject to risks including general economic conditions, real estate market changes, borrowing ability, property acquisition/development risks, joint venture risks, government actions, and cybersecurity[120](index=120&type=chunk)[124](index=124&type=chunk) [Occupancy and Leasing](index=31&type=section&id=Occupancy%20and%20Leasing) Details the company's portfolio occupancy rates, leasing activity, and tenant retention metrics Occupancy Rates at Period End | Segment | June 30, 2025 | December 31, 2024 | Change (pp) | | :------ | :------------ | :---------------- | :---------- | | Total | 94.0% | 93.6% | 0.4% | | Defense/IT Portfolio | 95.6% | 95.4% | 0.2% | | Data Center Shells | 100.0% | 100.0% | 0.0% | | Other | 76.2% | 72.7% | 3.5% | - Annualized Rental Revenue (ARR) per occupied square foot increased to **$35.77** at June 30, 2025, from **$35.35** at December 31, 2024[122](index=122&type=chunk) - Leased **1.4 million square feet** during the six months ended June 30, 2025, comprising **915,000 sq ft of renewals** (81.9% retention), **353,000 sq ft of vacant space**, and **103,000 sq ft of investment space**[123](index=123&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance by comparing revenues and expenses across reporting periods - Operating performance is evaluated using Net Operating Income (NOI) from real estate operations and NOI from service operations[125](index=125&type=chunk)[126](index=126&type=chunk) - The Same Property pool consisted of **198 properties**, representing **97.1%** of the portfolio's square footage as of June 30, 2025[125](index=125&type=chunk) [Comparison of Statements of Operations for the Three Months Ended June 30, 2025 and 2024](index=33&type=section&id=Comparison%20of%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Compares the company's operational results for the three-month periods ended June 30 Statements of Operations Comparison (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Variance | | :----- | :--- | :--- | :------- | | Revenues from real estate operations | $177,457 | $167,085 | $10,372 | | Construction contract and other service revenues | $12,458 | $20,258 | $(7,800) | | Total revenues | $189,915 | $187,343 | $2,572 | | Total operating expenses | $130,272 | $133,215 | $(2,943) | | Net income | $40,166 | $36,407 | $3,759 | [NOI from Real Estate Operations (3 Months)](index=34&type=section&id=NOI%20from%20Real%20Estate%20Operations%20%283%20Months%29) Analyzes Net Operating Income from real estate for the three-month period, highlighting drivers of change NOI from Real Estate Operations (Three Months Ended June 30, in thousands) | Category | 2025 | 2024 | Variance | | :------- | :--- | :--- | :------- | | Same Property NOI | $108,665 | $104,092 | $4,573 | | Developed properties placed in service | $2,424 | $844 | $1,580 | | Acquired properties | $926 | $370 | $556 | | Total NOI from real estate operations | $112,412 | $105,410 | $7,002 | - The increase in Same Property NOI was primarily due to additional revenue from increased rental and occupancy rates[131](index=131&type=chunk) - Average occupancy rate for Same Property increased by **0.5%** to **94.3%**, and average straight-line rent per occupied square foot increased by **$0.25** to **$7.10**[130](index=130&type=chunk) [NOI from Service Operations (3 Months)](index=35&type=section&id=NOI%20from%20Service%20Operations%20%283%20Months%29) Analyzes Net Operating Income from service operations for the three-month period NOI from Service Operations (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Variance | | :----- | :--- | :--- | :------- | | Construction contract and other service revenues | $12,458 | $20,258 | $(7,800) | | Construction contract and other service expenses | $(11,873) | $(19,612) | $7,739 | | NOI from service operations | $585 | $646 | $(61) | - Decrease in service operations NOI was due to lower volume of construction activity for a tenant[132](index=132&type=chunk) [Comparison of Statements of Operations for the Six Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20Statements%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Compares the company's operational results for the six-month periods ended June 30 Statements of Operations Comparison (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Variance | | :----- | :--- | :--- | :------- | | Revenues from real estate operations | $355,054 | $333,748 | $21,306 | | Construction contract and other service revenues | $22,717 | $46,861 | $(24,144) | | Total revenues | $377,771 | $380,609 | $(2,838) | | Total operating expenses | $263,532 | $276,066 | $(12,534) | | Net income | $76,394 | $70,078 | $6,316 | [NOI from Real Estate Operations (6 Months)](index=36&type=section&id=NOI%20from%20Real%20Estate%20Operations%20%286%20Months%29) Analyzes Net Operating Income from real estate for the six-month period, highlighting drivers of change NOI from Real Estate Operations (Six Months Ended June 30, in thousands) | Category | 2025 | 2024 | Variance | | :------- | :--- | :--- | :------- | | Same Property NOI | $212,941 | $205,204 | $7,737 | | Developed properties placed in service | $4,896 | $1,106 | $3,790 | | Acquired properties | $1,242 | $441 | $801 | | Total NOI from real estate operations | $219,858 | $207,067 | $12,791 | - Same Property NOI increase was largely due to additional revenue from increased rental and occupancy rates, partially offset by higher property operating expenses[136](index=136&type=chunk) - The Other segment's NOI increase included **$2.2 million** from refunds of prior year real estate taxes, net of related tenant reimbursements[136](index=136&type=chunk) - Average occupancy rate for Same Property increased by **0.4%** to **94.2%**, and average straight-line rent per occupied square foot increased by **$0.45** to **$14.14**[135](index=135&type=chunk) [NOI from Service Operations (6 Months)](index=37&type=section&id=NOI%20from%20Service%20Operations%20%286%20Months%29) Analyzes Net Operating Income from service operations for the six-month period NOI from Service Operations (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Variance | | :----- | :--- | :--- | :------- | | Construction contract and other service revenues | $22,717 | $46,861 | $(24,144) | | Construction contract and other service expenses | $(21,578) | $(45,619) | $24,041 | | NOI from service operations | $1,139 | $1,242 | $(103) | - Decrease in service operations NOI was due to lower volume of construction activity for a tenant[137](index=137&type=chunk) [Interest and Other Income, Net](index=37&type=section&id=Interest%20and%20Other%20Income%2C%20Net) Discusses the components and changes in the company's interest and other net income Interest and Other Income, Net (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Interest and other income, net | $2,791 | $7,006 | $(4,215) | -60.2% | - Decrease primarily due to lower interest income from excess loan proceeds invested in short-term money market accounts in the prior period[138](index=138&type=chunk) [Funds from Operations](index=37&type=section&id=Funds%20from%20Operations) Explains the calculation and drivers of Funds from Operations (FFO), a key REIT performance metric - Funds from Operations (FFO) is a non-GAAP measure used to compare operating performance between periods by excluding real estate-related depreciation, amortization, and gains/losses on sales[139](index=139&type=chunk) Diluted FFO per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Diluted FFO per share | $0.68 | $0.64 | $0.04 | 6.3% | Diluted FFO per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :----- | :--- | :--- | :----- | :------------- | | Diluted FFO per share | $1.33 | $1.27 | $0.06 | 4.7% | [Property Additions](index=40&type=section&id=Property%20Additions) Details capital expenditures related to properties in development, tenant improvements, and capital improvements Major Components of Property Additions (Six Months Ended June 30, 2025, in thousands) | Component | Amount | | :-------- | :----- | | Properties in development or held for future development | $93,771 | | Tenant improvements on operating properties | $21,670 | | Capital improvements on operating properties | $7,513 | | Total | $122,954 | [Cash Flows](index=40&type=section&id=Cash%20Flows) Analyzes the company's cash flow activities from operations, investing, and financing - Net cash flow from operating activities decreased by **$4.9 million** for the six months ended June 30, 2025, compared to 2024[151](index=151&type=chunk) - Net cash flow used in investing activities increased by **$16.3 million**, primarily due to properties in development and funding of investing receivables[152](index=152&type=chunk) - Net cash flow used in financing activities decreased by **$71.7 million**, driven by **$44.1 million** net debt proceeds in 2025 versus **$29.1 million** debt repayments in 2024[152](index=152&type=chunk)[157](index=157&type=chunk) [Supplemental Guarantor Information](index=40&type=section&id=Supplemental%20Guarantor%20Information) Provides additional financial information regarding the company's guarantees of its operating partnership's obligations - COPT Defense fully and unconditionally guarantees CDPLP's unsecured senior notes and other obligations[153](index=153&type=chunk) - COPT Defense holds no direct indebtedness, and its only material asset is its investment in CDPLP[153](index=153&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's current liquidity position, capital availability, and future cash requirements Liquidity Position (as of June 30, 2025, in thousands) | Metric | Amount | | :----- | :----- | | Cash and cash equivalents | $21,300 | | Available borrowing capacity under Revolving Credit Facility | $480,000 | - The company expects to spend **$115 million to $135 million** on properties actively under development during the remainder of 2025[162](index=162&type=chunk) - Material cash requirements include property operating expenses, construction expenses, general/administrative expenses, debt service, property development costs, tenant/capital improvements, debt balloon payments, and dividends[166](index=166&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate risk. It explains how changes in interest rates could impact variable-rate debt and refinanced fixed-rate debt, providing a quantitative sensitivity analysis for interest expense and debt fair value - Primary market risk exposure is to changes in interest rates, affecting variable-rate debt and refinanced fixed-rate debt[165](index=165&type=chunk) - A **1% increase** in the applicable variable index rate would have increased interest expense by approximately **$260,000** for the six months ended June 30, 2025[169](index=169&type=chunk) Debt Obligations and Weighted Average Interest Rates (June 30, 2025, in thousands) | Debt Type | 2025 (remaining) | 2026 | 2028 | 2029 | Thereafter | Total | | :-------- | :--------------- | :--- | :--- | :--- | :--------- | :---- | | Fixed rate debt | $655 | $436,140 | $345,000 | $400,000 | $1,000,000 | $2,181,795 | | Wtd Avg Interest Rate (Fixed) | 3.24% | 2.38% | 5.25% | 2.00% | 2.81% | 2.96% | | Variable rate debt | $270 | $277,035 | $— | $— | $— | $277,305 | | Wtd Avg Interest Rate (Variable) | 5.89% | 5.63% | —% | —% | —% | 5.64% | [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of June 30, 2025. No material changes in internal control over financial reporting occurred during the most recent fiscal quarter - Disclosure controls and procedures were functioning effectively as of June 30, 2025[170](index=170&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[171](index=171&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) Contains non-financial disclosures and other required information not covered in Part I [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material litigation, nor is any material litigation currently threatened against it, beyond routine matters expected to be covered by liability insurance - No material litigation is currently ongoing or threatened against the company[172](index=172&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to risk factors since the 2024 Annual Report on Form 10-K[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the current reporting period - Not applicable[174](index=174&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the current reporting period - Not applicable[175](index=175&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the current reporting period - Not applicable[175](index=175&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) During the quarter ended June 30, 2025, no trustees or executive officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements - No Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements were adopted or terminated by trustees or executive officers during the quarter[176](index=176&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, as well as various XBRL (eXtensible Business Reporting Language) documents - Includes certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and various XBRL documents (Exhibits 101.INS, SCH, CAL, LAB, PRE, DEF, 104)[178](index=178&type=chunk) [SIGNATURES](index=44&type=section&id=SIGNATURES) Confirms the official signing and certification of the report by authorized officers [SIGNATURES](index=44&type=section&id=SIGNATURES) The report is officially signed by Stephen E. Budorick, President and Chief Executive Officer, and Anthony Mifsud, Executive Vice President and Chief Financial Officer, on behalf of COPT Defense Properties - Report signed by Stephen E. Budorick (President and CEO) and Anthony Mifsud (EVP and CFO) on July 31, 2025[183](index=183&type=chunk)

Core Insights - Albert Anthony is a Croatian-American business author and media contributor with a focus on financial markets, launching a book titled "Financial Markets: The Next Generation" in 2025 [1] - He has a non-traditional financial background, having worked as an analyst in the IT sector for Fortune 500 companies, which has informed his approach to equities research [1] - Anthony founded his own equities research firm, Albert Anthony & Company, in 2021, operating it entirely remotely [1] Background and Experience - Albert Anthony grew up in the New York City area and has ties to Croatia, participating in numerous business and innovation conferences in southern Europe [1] - He has completed degrees and ongoing training from institutions like Drew University and the Corporate Finance Institute [1] - In addition to his financial commentary, he has been involved in European casting agencies and has appeared in regional media channels in Croatia [1] Future Endeavors - Anthony is set to launch a YouTube show titled "Financial Markets with Albert Anthony" in 2025, where he will provide market commentary similar to his written work [1]

Core Insights - Atos has been recognized for the fifth time as a Supplier Engagement Leader by the Carbon Disclosure Project (CDP) for its leadership in corporate supply chain engagement on climate change and environmental issues [1] - The company focuses on tackling its Scope 3 emissions, which account for 95.5% of its greenhouse gas (GHG) footprint, by collaborating with suppliers to enhance their sustainability performance [2] - Atos aims to engage more suppliers on sustainability issues and support them in their decarbonization efforts to meet GHG emission reduction targets [3] Company Overview - Atos Group is a global leader in digital transformation with approximately 72,000 employees and annual revenue of around €10 billion, operating in 68 countries [4] - The company is recognized as the European leader in cybersecurity, cloud, and high-performance computing, committed to a secure and decarbonized future [4] - Atos provides tailored AI-powered, end-to-end solutions for various industries, emphasizing sustainable development and technological excellence [5]

Financial Data and Key Metrics Changes - The company reported FFO per share of $0.68, which is $0.02 above the midpoint of guidance and represents a year-over-year increase of 6.3% [4][24] - Same property cash NOI increased by 2.2% year-over-year, driven by a 50 basis point increase in average occupancy [25][24] - The company increased the midpoint of full year guidance for same property cash NOI growth by 50 basis points to 3.25% [25] Business Line Data and Key Metrics Changes - The total portfolio is 95.6% leased, the highest level in nearly twenty years, with tenant retention at 90% during the quarter [5][12] - The defense IT portfolio occupancy increased to 95.6%, with Northern Virginia properties reaching 94% leased and 93% occupied, the highest levels in over a decade [12] - The company signed 353,000 square feet of vacancy leasing during the first half of the year, achieving 88% of the full year target [5][13] Market Data and Key Metrics Changes - The defense budget for 2026 is projected at nearly $950 billion, a 13% year-over-year increase, which is the largest nominal increase in at least twenty-five years [7][11] - The intelligence budget is expected to increase by $14 billion or 14% year-over-year, which is a key demand driver for the company's Northern Virginia and Fort Meade portfolios [8][11] Company Strategy and Development Direction - The company is focused on capturing additional leasing demand and capitalizing on external growth opportunities due to the strong growth outlook for defense spending [22][31] - The company plans to maintain its full year guidance for capital commitment to new investments at $200 million to $250 million [21] - The company is in advanced stages of negotiations on multiple build-to-suit opportunities, targeting an 8.5% cash yield on initial development costs [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the leasing environment, noting strong demand and tenant sentiment following the recent defense budget appropriations [38][58] - The company anticipates enhanced leasing activity will resume in 2026 following the appropriation of the 2025 defense budget [13] - Management expects 2025 to be the seventh consecutive year of FFO per share growth, with a revised guidance implying an annual increase of 3.9% [30][31] Other Important Information - The company has a strong balance sheet, with 97% of its debt at fixed rates, and plans to refinance a $400 million bond maturing in March 2026 [27][28] - The company is tracking a 1,300,000 square foot development leasing pipeline, with an additional 1,100,000 square feet of potential development opportunities [22] Q&A Session Summary Question: Can you talk about the build-to-suit negotiations and expected returns? - Management indicated ongoing discussions in three submarkets, targeting an 8.5% cash yield on initial development costs, with positive trends in negotiations [36] Question: What immediate impacts have been felt from the new legislation? - Management noted an increase in optimism and activity from tenants following the election, with a strong outlook maintained [38] Question: How do you expect the new defense budget to translate into opportunities? - Management highlighted expectations for mission expansions and increased leasing activity, particularly in the intelligence community [42] Question: What is the status of the $400 million bond issuance? - Management provided current trading spreads for potential bond issuance, indicating ongoing evaluation of terms [46] Question: Are any build-to-suit opportunities tied to Golden Dome or Space Command? - Management clarified that current negotiations do not involve these programs, but expressed readiness to support future needs [50] Question: Can you discuss the current leasing environment and demand? - Management reported strong demand across all submarkets, with notable interest in specific properties [58] Question: What are the plans for the Des Moines land parcel? - Management is engaged with the power company for future capacity, indicating a long-term investment perspective [59][62]

Financial Data and Key Metrics Changes - The company reported FFO per share of $0.68, which is $0.02 above the midpoint of guidance and represents a 6.3% year-over-year increase [3][4][22] - Same property cash NOI increased by 2.2% year-over-year, driven by a 50 basis point increase in average occupancy [4][22] - The company increased the midpoint of full year guidance for same property cash NOI growth by 50 basis points to 3.25% [22][25] Business Line Data and Key Metrics Changes - The total portfolio is 95.6% leased, the highest level in nearly twenty years, with a tenant retention rate of 90% during the quarter [4][11] - The company signed 353,000 square feet of vacancy leasing during the first half of the year, achieving 88% of the initial full year target [4][12] - In the defense IT portfolio, occupancy increased to 95.6%, with Northern Virginia properties reaching 94% leased, the highest levels in over a decade [11][12] Market Data and Key Metrics Changes - The defense budget for 2026 is projected at nearly $950 billion, a 13% year-over-year increase, which is the largest nominal increase in at least twenty-five years [6][10] - The intelligence budget is set to increase by $14 billion or 14% year-over-year, which is a key demand driver for the company's Northern Virginia and Fort Meade portfolios [7][10] Company Strategy and Development Direction - The company is focused on capitalizing on the increased defense spending, particularly in areas such as intelligence, surveillance, reconnaissance, and cybersecurity [10][27] - The company plans to maintain a capital commitment for new investments between $200 million and $250 million, with a development leasing pipeline of 1.3 million square feet [20][21] - The company is well-positioned to capture additional leasing demand and capitalize on external growth opportunities due to the strong growth outlook for defense spending [21][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the leasing environment, noting strong demand and tenant activity following the recent defense budget appropriations [34][52] - The company anticipates enhanced leasing activity will resume in 2026, following the appropriations and contract awards [12][27] - Management expects 2025 to be the seventh consecutive year of FFO per share growth, with a revised guidance implying an annual increase of 3.9% [26][27] Other Important Information - The company has a strong balance sheet, with 97% of its debt at fixed rates, and plans to refinance a $400 million bond maturing in March 2026 [24][25] - The company is focused on maintaining high tenant retention rates, with a historical retention rate of 98% over the past three years for large leases [15][16] Q&A Session Summary Question: Can you talk about the build-to-suit negotiations and expected returns? - The company is in discussions across three sub-markets, targeting an 8.5% cash yield on initial development costs, with positive trends in negotiations [32] Question: What immediate impacts have you felt from the new legislation? - There has been an increase in optimism and activity from tenants, although no significant inflection has been noted since the legislation passed [34] Question: How do you expect the new legislation to translate into opportunities? - The legislation is expected to lead to mission expansions and increased activity in the intelligence community, which should benefit the company's portfolio [38] Question: What is the current leasing environment like? - The leasing environment remains strong, with contractors showing clarity and optimism following the budget passing [52] Question: Are there any plans to bring assets to market? - The company is eager to bring assets to market but is waiting for an improvement in the interest rate environment [76]

Financial Performance - The Funds From Operations Per Share (FFOPS), adjusted for comparability, reached $0.68 for 2Q25 and $1.33 for 1H25[12] - Year-over-year FFO per share growth was 6.3% for 2Q25 and 4.7% for 1H25[12] - The company increased 2025 FFO per share guidance by 1 cent at the midpoint, implying 3.9% year-over-year growth[19, 81] - Same Property Cash Net Operating Income (NOI) increased by 2.2% for 2Q25 and 4.6% for 1H25 across the total portfolio[12] Portfolio Metrics - Occupancy rate for the Defense/IT Portfolio was 95.6% occupied and 96.8% leased[12] - Total leasing activity amounted to 724,000 square feet in 2Q25 and 1.4 million square feet in 1H25[12] - The company increased the annual vacancy leasing target to 450,000 square feet from 400,000 square feet[12, 55] - Tenant retention rate for the total portfolio was 90%[12] Strategic Factors - The One Big Beautiful Bill Act (OBBBA) passed in July 2025, adding approximately $113 billion for Department of Defense (DOD) activities in FY 2026, representing a 13% increase over FY 2025 enacted levels[30] - The company expects to renew approximately 95% of large leases (greater than 50,000 square feet) expiring through year-end 2026[66]

Group 1 - COPT Defense (CDP) reported quarterly funds from operations (FFO) of $0.68 per share, exceeding the Zacks Consensus Estimate of $0.67 per share, and up from $0.64 per share a year ago [1][2] - The company achieved revenues of $189.92 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.13%, compared to $187.34 million in the same quarter last year [3] - COPT Defense has outperformed consensus FFO estimates two times and revenue estimates four times over the last four quarters [2][3] Group 2 - The stock has underperformed the market, losing about 9.4% since the beginning of the year, while the S&P 500 gained 8.6% [4] - The current consensus FFO estimate for the upcoming quarter is $0.68 on revenues of $187.28 million, and for the current fiscal year, it is $2.67 on revenues of $749.72 million [8] - The Zacks Industry Rank for REIT and Equity Trust - Other is in the top 38% of over 250 Zacks industries, indicating a favorable outlook for the industry [9]

[Overview](index=3&type=section&id=OVERVIEW) [Summary Description](index=3&type=section&id=Summary%20Description) COPT Defense Properties is a REIT specializing in properties for the U.S. Government and defense contractors, with its **22.6 million** sq ft Defense/IT Portfolio **96.8%** leased - The company focuses on properties near key U.S. Government defense installations, serving tenants engaged in priority national security activities[5](index=5&type=chunk) Portfolio Snapshot as of June 30, 2025 | Metric | Value | | :--- | :--- | | **Portfolio** | Defense/IT | | **Number of Properties** | 198 | | **Total Square Feet** | **22.6 million** | | **% Leased** | **96.8%** | - The company holds investment-grade credit ratings: Fitch (**BBB-** Stable), Moody's (**Baa3** Positive), and S&P (**BBB-** Stable)[6](index=6&type=chunk) [Equity Research Coverage](index=4&type=section&id=Equity%20Research%20Coverage) Eight investment firms publish research on COPT Defense Properties, with their analyses not representing the company's views - The company is covered by analysts from firms including BTIG, Citigroup, Evercore ISI, Green Street, Jefferies, JP Morgan, Truist Securities, and Wells Fargo Securities[9](index=9&type=chunk) [Selected Financial Summary Data](index=5&type=section&id=Selected%20Financial%20Summary%20Data) Q2 **2025** net income was **$40.2 million** and diluted FFO per share **$0.68**, with six-month net income growing to **$76.4 million** and net debt to EBITDA stable at **5.9x** Q2 2025 Financial Highlights (Three Months Ended 6/30/25) | Metric | Value (in thousands, except per share) | | :--- | :--- | | Net income | **$40,166** | | Diluted EPS | **$0.34** | | FFO per Nareit | **$80,471** | | Diluted FFO per share | **$0.68** | | Dividend per common share | **$0.305** | Six Months Ended Financial Comparison (6/30/25 vs 6/30/24) | Metric | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Net income | **$76,394** | **$70,078** | | Diluted EPS | **$0.64** | **$0.60** | | Diluted FFO per share | **$1.33** | **$1.27** | | Same Property cash NOI | **$202,872** | **$194,027** | Key Ratios as of 6/30/25 | Ratio | Value | | :--- | :--- | | Debt to assets | **56.9%** | | Diluted FFO Payout Ratio | **44.5%** | | Diluted AFFO Payout Ratio | **60.7%** | | Net debt to in-place adj. EBITDA ratio | **5.9x** | [Selected Portfolio Data](index=7&type=section&id=Selected%20Portfolio%20Data) As of Q2 **2025**, the total portfolio was **95.6%** leased (**24.6 million** sq ft), with the core Defense/IT Portfolio at **96.8%** leased (**22.6 million** sq ft) Portfolio Metrics as of June 30, 2025 | Portfolio Type | of Properties | Square Feet (thousands) | % Occupied | % Leased | | :--- | :--- | :--- | :--- | :--- | | **Total Portfolio** | **204** | **24,571** | **94.0%** | **95.6%** | | **Defense/IT Portfolio** | **198** | **22,583** | **95.6%** | **96.8%** | | **Consolidated Portfolio** | **180** | **20,276** | **92.8%** | **94.6%** | [Financial Statements](index=8&type=section&id=FINANCIAL%20STATEMENTS) [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of June **30**, **2025**, total assets were **$4.29 billion**, liabilities **$2.72 billion**, debt **$2.44 billion**, and equity **$1.55 billion**, reflecting steady growth Consolidated Balance Sheet Highlights (in thousands) | Account | 6/30/25 | 12/31/24 | | :--- | :--- | :--- | | **Total properties, net** | **$3,682,556** | **$3,630,526** | | **Total assets** | **$4,286,950** | **$4,254,191** | | **Debt** | **$2,438,591** | **$2,391,755** | | **Total liabilities** | **$2,717,951** | **$2,693,624** | | **Total equity** | **$1,545,741** | **$1,536,593** | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 **2025** revenues reached **$189.9 million** and net income **$40.2 million**, with six-month net income rising to **$76.4 million** from **$70.1 million** in **2024** Statement of Operations Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenues | **$189,915** | **$187,343** | | Total operating expenses | **$130,272** | **$133,215** | | Interest expense | (**$20,938**) | (**$20,617**) | | Net income | **$40,166** | **$36,407** | | Net income attributable to common shareholders | **$38,347** | **$35,114** | [Funds from Operations (FFO)](index=10&type=section&id=Funds%20from%20Operations) Q2 **2025** FFO per Nareit was **$80.5 million**, with diluted FFO at **$78.6 million**; six-month diluted FFO grew to **$153.1 million** from **$146.2 million** FFO Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | **$40,166** | **$36,407** | | Real estate-related depreciation and amortization | **$39,573** | **$38,161** | | **FFO - per Nareit** | **$80,471** | **$75,346** | | **Diluted FFO available to common share and common unit holders** | **$78,635** | **$74,280** | [Diluted Share and Unit Computations](index=11&type=section&id=Diluted%20Share%20%2B%20Unit%20Computations) Q2 **2025** diluted EPS was **$0.34** and diluted FFO per share **$0.68**, up from **$0.31** and **$0.64** respectively in Q2 **2024** Per Share Data for Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted EPS | **$0.34** | **$0.31** | | Diluted FFO per share - Nareit | **$0.68** | **$0.64** | | Diluted FFO per share - as adjusted | **$0.68** | **$0.64** | | Denominator for diluted EPS (thousands) | **113,224** | **112,785** | | Denominator for diluted FFO (thousands) | **115,401** | **115,414** | [Adjusted Funds from Operations (AFFO)](index=12&type=section&id=Adjusted%20Funds%20from%20Operations) Q2 **2025** diluted AFFO was **$57.7 million**, lower than Q2 **2024**'s **$61.4 million**, primarily due to higher replacement capital expenditures Diluted AFFO Reconciliation for Q2 2025 (in thousands) | Line Item | Amount | | :--- | :--- | | Diluted FFO available, as adjusted | **$78,635** | | Straight line rent adjustments | (**$1,836**) | | Share-based compensation | **$2,924** | | Replacement capital expenditures | (**$23,919**) | | **Diluted AFFO available** | **$57,660** | [EBITDAre and Adjusted EBITDA](index=13&type=section&id=EBITDAre%20%2B%20Adjusted%20EBITDA) Q2 **2025** EBITDAre was **$102.8 million**, with Adjusted EBITDA at **$104.7 million**, a notable increase from Q2 **2024**'s **$98.6 million** EBITDAre and Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | **$40,166** | **$36,407** | | Interest expense | **$20,938** | **$20,617** | | Real estate-related depreciation & amortization | **$39,573** | **$38,161** | | **EBITDAre** | **$102,777** | **$97,472** | | **Adjusted EBITDA** | **$104,726** | **$98,592** | | **In-place adjusted EBITDA** | **$104,803** | **$98,619** | [Portfolio Information](index=14&type=section&id=PORTFOLIO%20INFORMATION) [Properties by Segment](index=14&type=section&id=Properties%20by%20Segment) As of June **30**, **2025**, the Defense/IT Portfolio (**198** properties) was **96.8%** leased, with Data Center Shells **100%** leased, indicating strong demand Defense/IT Portfolio by Segment (as of 6/30/25) | Segment | of Properties | Operational Square Feet (k) | % Occupied | % Leased | | :--- | :--- | :--- | :--- | :--- | | Fort Meade/BW Corridor | **95** | **9,234** | **94.5%** | **95.5%** | | NoVA Defense/IT | **16** | **2,501** | **93.1%** | **94.1%** | | Lackland Air Force Base | **9** | **1,142** | **100.0%** | **100.0%** | | Redstone Arsenal | **25** | **2,511** | **95.8%** | **98.4%** | | Data Center Shells (Total) | **31** | **5,924** | **100.0%** | **100.0%** | | **Total Defense/IT Portfolio** | **198** | **22,583** | **95.6%** | **96.8%** | [Consolidated Real Estate Revenues & NOI by Segment](index=15&type=section&id=Consolidated%20Real%20Estate%20Revenues%20%2B%20NOI%20by%20Segment) Q2 **2025** consolidated Defense/IT Portfolio generated **$158.7 million** in revenues and **$103.8 million** in NOI, with total NOI at **$112.4 million** Q2 2025 Revenue and NOI by Segment (in thousands) | Segment | Consolidated Real Estate Revenues | NOI from Real Estate Operations | | :--- | :--- | :--- | | Fort Meade/BW Corridor | **$81,337** | **$54,440** | | NoVA Defense/IT | **$22,018** | **$13,160** | | Redstone Arsenal | **$18,977** | **$12,817** | | **Total Defense/IT Portfolio** | **$158,709** | **$103,784** | | **Total Real Estate Operations** | **$177,457** | **$112,412** | [Cash NOI by Segment](index=16&type=section&id=Cash%20NOI%20by%20Segment) Q2 **2025** total Cash NOI was **$104.9 million**, up from **$101.4 million** in Q2 **2024**, with the Defense/IT Portfolio contributing **$96.9 million** Q2 2025 Cash NOI by Segment (in thousands) | Segment | Q2 2025 Cash NOI | Q2 2024 Cash NOI | | :--- | :--- | :--- | | Fort Meade/BW Corridor | **$51,640** | **$51,380** | | NoVA Defense/IT | **$12,717** | **$12,452** | | **Total Defense/IT Portfolio** | **$96,873** | **$93,875** | | **Total Cash NOI** | **$104,927** | **$101,381** | [NOI and Occupancy by Property Grouping](index=17&type=section&id=NOI%20from%20Real%20Estate%20Operations%20%2B%20Occupancy%20by%20PropertyGrouping) As of June **30**, **2025**, the Same Property portfolio was **96.2%** occupied, generating **$100.4 million** in Q2 NOI and accounting for **87.5%** of total ARR Portfolio Breakdown as of 6/30/25 | Property Grouping | of Properties | % Occupied | % Leased | Q2 2025 NOI (thousands) | | :--- | :--- | :--- | :--- | :--- | | **Same Property (Defense/IT)** | **192** | **96.2%** | **97.0%** | **$100,434** | | **Properties Placed in Service** | **4** | **84.4%** | **93.8%** | **$2,424** | | **Acquired properties** | **2** | **67.4%** | **84.4%** | **$926** | | **Total Portfolio** | **204** | **94.0%** | **95.6%** | **$112,412** | [Same Property Occupancy Rates by Segment](index=18&type=section&id=Same%20Property%20Average%20Occupancy%20Rates%20by%20Segment) The Same Property portfolio maintained high occupancy, with period-end rates increasing to **94.5%** overall and **96.2%** for Defense/IT in Q2 **2025** Same Property Period End Occupancy Rates | Portfolio | 6/30/25 | 3/31/25 | 6/30/24 | | :--- | :--- | :--- | :--- | | Total Same Property | **94.5%** | **94.1%** | **93.9%** | | Defense/IT Portfolio | **96.2%** | **95.9%** | **95.8%** | [Same Property Revenues and NOI by Segment](index=19&type=section&id=Same%20Property%20Real%20Estate%20Revenues%20%2B%20NOI%20by%20Segment) Q2 **2025** Same Property NOI increased to **$108.7 million**, with year-to-date growth of **3.8%** to **$212.9 million**, driven by the Defense/IT portfolio Same Property NOI Comparison (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Same Property NOI** | **$108,665** | **$104,092** | **$212,941** | **$205,204** | | **Defense/IT Portfolio Same Property NOI** | **$100,434** | **$96,673** | **$195,631** | **$191,552** | [Same Property Cash NOI by Segment](index=20&type=section&id=Same%20Property%20Cash%20NOI%20by%20Segment) Total Same Property Cash NOI increased by **2.2%** in Q2 **2025** and **4.6%** year-to-date, with the Defense/IT portfolio showing **2.0%** and **3.0%** growth respectively - Total Same Property cash NOI increased by **2.2%** in Q2 **2025** and **4.6%** for the six months ended **6/30/25**, compared to the same periods in the prior year[61](index=61&type=chunk)[62](index=62&type=chunk) - The Defense/IT Portfolio's Same Property cash NOI grew by **2.0%** in Q2 **2025** and **3.0%** for the six months ended **6/30/25**, year-over-year[61](index=61&type=chunk)[62](index=62&type=chunk) [Leasing Activity](index=21&type=section&id=Leasing) Q2 **2025** leasing totaled **724,000** sq ft with **89.7%** retention, and straight-line rents on renewals increased **9.5%**, while cash rents decreased **3.1%** Leasing Summary for Q2 2025 (Total Portfolio) | Leasing Metric | Square Feet (thousands) | Details | | :--- | :--- | :--- | | **Total Leased** | **724** | - | | Renewed Space | **477** | **89.7%** Retention Rate | | Vacant Space Leased | **233** | Avg. Term: **7.9** years | | New Leases (Investment) | **14** | Avg. Term: **5.4** years | - For renewed space in Q2 **2025**, straight-line rents increased by **9.5%**, while cash rents decreased by **3.1%**[65](index=65&type=chunk) - For the six months ended June **30**, **2025**, total leasing activity was **1,371,000** square feet, with a tenant retention rate of **81.9%**[69](index=69&type=chunk) [Lease Expiration Analysis](index=23&type=section&id=Lease%20Expiration%20Analysis) As of June **30**, **2025**, **17.3%** of Defense/IT ARR expires in remaining **2025**, with a **5.0**-year weighted average lease term and **37.2%** expiring after **2029** Defense/IT Portfolio Lease Expiration Schedule by ARR | Year of Expiration | % of Defense/IT ARR Expiring | | :--- | :--- | | **2025** | **17.3%** | | **2026** | **9.1%** | | **2027** | **9.4%** | | **2028** | **15.7%** | | **2029** | **11.3%** | | Thereafter | **37.2%** | - The weighted average remaining lease term for the total portfolio is **5.0** years as of June **30**, **2025**[73](index=73&type=chunk) [2025 Defense/IT Portfolio Quarterly Lease Expiration Analysis](index=25&type=section&id=2025%20Defense%2FIT%20Portfolio%20Quarterly%20Lease%20Expiration%20Analysis) Remaining **2025** Defense/IT lease expirations total **$109.4 million** in ARR, with Q3 seeing **8.9%** (**$55.9 million**) and Q4 **8.5%** (**$53.5 million**) 2025 Quarterly Lease Expirations (Defense/IT Portfolio) | Quarter of Expiration | Square Footage Expiring (k) | Annualized Rental Revenue Expiring (k) | % of Defense/IT ARR Expiring | | :--- | :--- | :--- | :--- | | Q3 **2025** | **1,296** | **$55,909** | **8.9%** | | Q4 **2025** | **943** | **$53,488** | **8.5%** | | **Total 2025 Remaining** | **2,239** | **$109,397** | **17.3%** | [Top 20 Tenants](index=26&type=section&id=Top%2020%20Tenants) The top **20** tenants, including the U.S. Government (**35.8%** of ARR), account for **73.0%** of total annualized rental revenue, highlighting portfolio stability - The U.S. Government is the largest tenant, accounting for **35.8%** of total Annualized Rental Revenue (ARR) and occupying **5.6 million** square feet[81](index=81&type=chunk) - The top **20** tenants, including major defense contractors like General Dynamics, Northrop Grumman, and The Boeing Company, represent **73.0%** of total ARR[81](index=81&type=chunk) [Investing Activity](index=27&type=section&id=INVESTING%20ACTIVITY) [Summary of Development Projects](index=27&type=section&id=Summary%20of%20Development%20Projects) As of June **30**, **2025**, COPT Defense has a **756,000** sq ft development pipeline (**62%** pre-leased) with an anticipated cost of **$308.7 million**, including fully leased data center shells Development Pipeline Summary (as of 6/30/25) | Metric | Value | | :--- | :--- | | Total Projects | **5** | | Total Rentable Square Feet | **756,000** | | % Leased | **62%** | | Anticipated Total Cost | **$308.7 million** | | Cost to Date | **$134.4 million** | - The development pipeline is heavily weighted towards data center shells, with two projects in Northern VA totaling **418,000** sq. ft. that are **100%** leased[84](index=84&type=chunk) [Development Placed in Service](index=28&type=section&id=Development%20Placed%20in%20Service) In H1 **2025**, **36,000** sq ft of the **9700** Advanced Gateway project in Huntsville, AL, was placed in service and was **100%** leased 2025 Development Placed in Service | Property | Location | Total 2025 Sq. Ft. Placed in Service | % Leased as of 6/30/25 | | :--- | :--- | :--- | :--- | | **9700** Advanced Gateway | Huntsville, AL | **36,000** | **100%** | [Summary of Land Owned/Controlled](index=29&type=section&id=Summary%20of%20Land%20Owned%2FControlled) As of June **30**, **2025**, the company holds **1,008** acres of land for future Defense/IT development, with **10.8 million** sq ft potential and a **$204.5 million** book value Land Inventory for Future Development (as of 6/30/25) | Portfolio | Acres | Estimated Developable Sq. Ft. (k) | Carrying Amount (k) | | :--- | :--- | :--- | :--- | | **Defense/IT Portfolio** | **1,008** | **10,846** | **$204,517** | | Other | **53** | **1,538** | **$9,653** | | **Total** | **1,061** | **12,384** | **$214,170** | [Capitalization](index=30&type=section&id=CAPITALIZATION) [Capitalization Overview](index=30&type=section&id=Capitalization%20Overview) As of June **30**, **2025**, total market capitalization was **$5.64 billion**, with **$2.46 billion** in consolidated debt at a **3.40%** effective rate and **97%** fixed-rate Debt Profile as of 6/30/25 | Debt Type | Wtd. Avg. Maturity (Years) | Effective Rate | Amount Outstanding (thousands) | | :--- | :--- | :--- | :--- | | Fixed-rate debt | **4.4** | **3.34%** | **$2,392,075** | | Variable-rate debt | **2.3** | **5.62%** | **$67,025** | | **Total Consolidated Debt** | **4.2** | **3.40%** | **$2,459,100** | Market Capitalization as of 6/30/25 (in thousands) | Metric | Value | | :--- | :--- | | Closing Common Share Price | **$27.58** | | Equity Market Capitalization | **$3,181,463** | | **Total Market Capitalization** | **$5,640,563** | [Summary of Outstanding Debt](index=31&type=section&id=Summary%20of%20Outstanding%20Debt) As of June **30**, **2025**, consolidated debt totaled **$2.46 billion**, primarily **$2.15 billion** in senior unsecured notes, with **$2.39 billion** being unsecured Major Debt Components as of 6/30/25 (in thousands) | Debt Instrument | Amount Outstanding | Maturity Date | | :--- | :--- | :--- | | Revolving Credit Facility | **$120,000** | Oct-**26** | | Senior Unsecured Notes (Subtotal) | **$2,145,000** | Various (**2026**-**2033**) | | Unsecured Bank Term Loan | **$125,000** | Jan-**26** | | Total Secured Debt | **$68,939** | Various (**2026**) | | **Consolidated Debt** | **$2,459,100** | - | [Debt Analysis](index=33&type=section&id=Debt%20Analysis) As of Q2 **2025**, COPT Defense complied with all debt covenants, with Total Debt to Assets at **41.4%** and Net Debt to EBITDA at **5.9x**, indicating a healthy debt profile Covenant Compliance as of 6/30/25 | Covenant (Senior Notes) | Required | Actual | | :--- | :--- | :--- | | Total Debt / Total Assets | < **60%** | **41.4%** | | Secured Debt / Total Assets | < **40%** | **1.2%** | | Debt Service Coverage | > **1.5x** | **4.8x** | | Unencumbered Assets / Unsecured Debt | > **150%** | **241.3%** | Key Debt Ratios as of 6/30/25 | Ratio | Value | | :--- | :--- | | Net debt to in-place adj. EBITDA | **5.9x** | | Adjusted EBITDA fixed charge coverage | **4.9x** | | Net debt to adjusted book | **40.6%** | [Consolidated Real Estate Joint Ventures](index=34&type=section&id=Consolidated%20Real%20Estate%20Joint%20Ventures) As of June **30**, **2025**, consolidated JVs, primarily LW Redstone, held **$866.2 million** in assets and **$68.9 million** in debt, including **24** operating properties Key Consolidated JVs as of 6/30/25 | Joint Venture | Location | COPT Ownership % | Total Assets (k) | Debt Outstanding (k) | | :--- | :--- | :--- | :--- | :--- | | M Square Associates, LLC | Suburban MD | **50%** | **$92,870** | **$46,914** | | LW Redstone Company, LLC | Huntsville, AL | **85%** | **$631,843** | **$22,025** | | Stevens Place | Washington, DC | **95%** | **$141,483** | **$0** | [Unconsolidated Real Estate Joint Ventures](index=35&type=section&id=Unconsolidated%20Real%20Estate%20Joint%20Ventures) The company holds a **10%** interest in five unconsolidated JVs with **24** data center shell properties (**4.3 million** sq ft, **100%** occupied), contributing **$1.87 million** in Q2 NOI Unconsolidated JV Summary (as of 6/30/25) | Metric | Total | COPT Defense's Share (10%) | | :--- | :--- | :--- | | of Properties | **24** | - | | Square Feet | **4,295,000** | - | | % Occupied | **100%** | - | | Total Assets (k) | **$1,022,601** | **$102,260** | | Debt (k) | **$536,435** | **$53,644** | | Q2 **2025** NOI (k) | **$18,706** | **$1,870** | [Reconciliations & Definitions](index=36&type=section&id=RECONCILIATIONS%20%2B%20DEFINITIONS) [Supplementary Reconciliations of Non-GAAP Measures](index=36&type=section&id=Supplementary%20Reconciliations%20of%20Non-GAAP%20Measures) This section provides detailed reconciliations of non-GAAP financial measures, including NOI, Cash NOI, Same Property NOI, Adjusted Book, and Net Debt, ensuring transparency - Provides a reconciliation from Net Income to NOI from real estate operations, showing a Q2 **2025** NOI of **$112.4 million**[121](index=121&type=chunk) - Details the calculation of Same Property Cash NOI, arriving at **$102.7 million** for Q2 **2025**[121](index=121&type=chunk) - Shows the calculation of Adjusted Book and Net Debt, with values of **$6.12 billion** and **$2.49 billion** respectively as of June **30**, **2025**[127](index=127&type=chunk) [Definitions](index=39&type=section&id=Definitions) This section defines key non-GAAP terms like FFO, AFFO, EBITDAre, Adjusted EBITDA, NOI, and Cash NOI, clarifying how management assesses performance - Defines Funds from Operations (FFO) according to Nareit's standard, as net income excluding gains/losses from property sales and real estate depreciation[146](index=146&type=chunk) - Defines Net Operating Income (NOI) as the primary segment performance measure, including revenues and property expenses from consolidated and unconsolidated JVs[153](index=153&type=chunk) - Defines Same Property as operating properties that have been stably owned and **100%** operational since at least January **1**, **2024**[169](index=169&type=chunk) [Earnings Release](index=44&type=section&id=EARNINGS%20RELEASE) [Second Quarter 2025 Results Highlights](index=44&type=section&id=Second%20Quarter%202025%20Results%20Highlights) COPT Defense reported strong Q2 **2025** results with **6.3%** FFO per share growth to **$0.68**, raising full-year guidance and achieving **2.2%** Same Property Cash NOI growth - FFO per Share, as Adjusted for Comparability, was **$0.68**, a **6.3%** YoY increase[173](index=173&type=chunk) - The midpoint of **2025** FFO per Share Guidance was increased by **1**-cent to **$2.67**[173](index=173&type=chunk) - The Defense/IT Portfolio was **96.8%** leased, and the company achieved **1.4 million** SF of leasing in the first half of **2025**[173](index=173&type=chunk) [Management Comments](index=45&type=section&id=Management%20Comments) CEO Stephen E. Budorick noted strong Defense/IT performance, raising **2025** guidance for cash NOI growth and tenant retention, anticipating **4%** FFO per share growth driven by increased defense spending - Raised **2025** guidance for same property cash NOI growth by **50** bps to **3.25%** and tenant retention by **250** bps to **82.5%**[177](index=177&type=chunk) - Increased the annual target for vacancy leasing by **12.5%** to **450,000** square feet[177](index=177&type=chunk) - Management anticipates continued growth driven by increased defense spending, with the 'One Big Beautiful Bill Act' adding **$150 billion** to defense spending over the next few years[178](index=178&type=chunk) [Financial and Operational Highlights](index=45&type=section&id=Financial%20and%20Operational%20Highlights) Q2 **2025** saw strong financial and operational performance, with diluted FFO per share of **$0.68**, **2.2%** Same Property cash NOI growth, and a solid **5.9x** net debt to EBITDA ratio [Operating Performance](index=45&type=section&id=Operating%20Performance) Q2 **2025** diluted EPS was **$0.34** and FFOPS **$0.68**, with the Defense/IT Portfolio **96.8%** leased and Same Property cash NOI up **2.2%** YoY Q2 2025 Operating Metrics | Metric | Value | | :--- | :--- | | Diluted EPS | **$0.34** | | Diluted FFOPS | **$0.68** | | Defense/IT Portfolio % Leased | **96.8%** | | Same Property Cash NOI Increase | **2.2%** | [Leasing Activity](index=46&type=section&id=Leasing%20Activity) Q2 **2025** total leasing was **724,000** sq ft with **89.7%** retention, and straight-line rents on renewals increased by **9.5%** Leasing Highlights | Metric | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | Total Square Feet Leased | **724,000** | **1,400,000** | | Tenant Retention Rate | **89.7%** | **81.9%** | | Straight-line Rent Change (Renewals) | **+9.5%** | **+8.8%** | | Cash Rent Change (Renewals) | **-3.1%** | **-2.0%** | [Investment Activity](index=46&type=section&id=Investment%20Activity) The active development pipeline includes five properties totaling **756,000** sq ft, **62%** leased, with an estimated total investment of **$309 million** - The development pipeline consists of **5** properties, totaling **756,000** sq. ft., which are **62%** leased, with a total estimated investment of **$309 million**[182](index=182&type=chunk) [Balance Sheet](index=46&type=section&id=Balance%20Sheet) The company maintains a strong balance sheet with a **4.9x** adjusted EBITDA fixed charge coverage and **5.9x** net debt to EBITDA, with **97%** fixed-rate debt at **3.4%** effective interest - Key leverage and coverage ratios as of June **30**, **2025**: - Adjusted EBITDA fixed charge coverage ratio: **4.9x** - Net debt to in-place adjusted EBITDA ratio: **5.9x** - Net debt adjusted for fully-leased investment properties to in-place adj. EBITDA ratio: **5.8x**[183](index=183&type=chunk) [2025 Guidance](index=47&type=section&id=2025%20Guidance) Management increased full-year **2025** diluted FFO per share guidance to **$2.65**-**$2.69** and set Q3 guidance at **$0.66**-**$0.68**, following strong H1 performance Updated 2025 Guidance | Metric | Q3 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Diluted EPS | **$0.32** - **$0.34** | **$1.30** - **$1.34** | | Diluted FFOPS | **$0.66** - **$0.68** | **$2.65** - **$2.69** |

Company Overview - COPT Defense (CDP) is a real estate investment trust (REIT) specializing in suburban office properties, currently experiencing a share price decline of -10.02% this year [3] - The company is based in Columbia and operates within the Finance sector [3] Dividend Information - CDP is currently distributing a dividend of $0.31 per share, resulting in a dividend yield of 4.38%, which is lower than the industry average yield of 4.84% and significantly higher than the S&P 500's yield of 1.52% [3] - The annualized dividend of $1.22 represents a 3.4% increase from the previous year, with an average annual increase of 2.33% over the last five years [4] - The current payout ratio for CDP is 47%, indicating that the company pays out 47% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year 2025, the Zacks Consensus Estimate predicts earnings of $2.67 per share, reflecting a year-over-year growth rate of 3.89% [5] - The company's future dividend growth will be contingent on earnings growth and the payout ratio [4] Investment Appeal - CDP is positioned as an attractive investment opportunity due to its dividend yield and strong Zacks Rank of 2 (Buy) [6] - The company is seen as a viable option for income investors, especially in the context of rising interest rates, where high-yielding stocks may face challenges [6]