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What changed in COPT DEFENSE PROPERTIES's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of COPT DEFENSE PROPERTIES's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+218 added−204 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-21)

Top changes in COPT DEFENSE PROPERTIES's 2025 10-K

218 paragraphs added · 204 removed · 159 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeRecognizing this, we conduct job-tailored safety training on an ongoing basis. We also monitor our workers’ compensation claims to measure the effectiveness of our safety program. Talent Development : We aim to attract, retain and develop our top talent throughout the employment cycle to enhance our present and future workforce.
Biggest changeOur culture supports our aim of attracting, retaining and developing our top talent throughout the employment cycle to enhance our present and future workforce, with a strong belief in equal opportunity, engagement and ethics. We conduct job-tailored safety training on an ongoing basis.
Capital Strategy: Our capital strategy is aimed at maintaining continuous access to capital irrespective of market conditions in the most cost-effective manner by: > maintaining an investment grade rating to enable us to use debt comprised primarily of unsecured, fixed-rate debt (including the effect of interest rate swaps) from public markets and banks; > using secured nonrecourse debt from institutional lenders and banks; > managing our debt by monitoring, among other things: (1) the relationship of certain measures of earnings to our debt level and to certain capital costs; (2) the timing of debt maturities to ensure that maturities in any one year do not exceed levels that we believe we can refinance; (3) our exposure to changes in interest rates; and (4) our total and secured debt levels relative to our overall capital structure; > monitoring capacity available under revolving credit facilities and equity offering programs to provide liquidity to fund investment activities and other capital needs; > raising equity through issuances of common shares and, to a lesser extent, issuances of common equity in CDPLP and preferred equity; > recycling proceeds from sales of interests in properties, including through joint venture structures for certain investments, to fund property investment activities and/or reduce overall debt; > paying dividends at a level that is at least sufficient for us to maintain our REIT status; and > continuously evaluating the ability of our capital resources to accommodate our plans for growth.
Capital Strategy: Our capital strategy is aimed at maintaining continuous access to capital in the most cost-effective manner, irrespective of market conditions, by: • maintaining an investment grade rating to enable us to use debt comprised primarily of unsecured, fixed-rate debt (including the effect of interest rate swaps) from public markets and banks; • using secured nonrecourse debt from institutional lenders and banks; • managing our debt by monitoring, among other things: (1) the relationship of certain measures of earnings to our debt level and to certain capital costs; (2) the timing of debt maturities to ensure that maturities in any one year do not exceed levels that we believe we can refinance; (3) our exposure to changes in interest rates; and (4) our total and secured debt levels relative to our overall capital structure; • monitoring capacity available under revolving credit facilities and equity offering programs to provide liquidity to fund investment activities and other capital needs; • raising equity through issuances of common shares and, to a lesser extent, issuances of common equity in CDPLP and preferred equity; • recycling proceeds from sales of interests in properties, including through joint venture structures for certain investments, to fund property investment activities and/or reduce overall debt; • paying dividends at a level that is at least sufficient for us to maintain our REIT status; and • continuously evaluating the ability of our capital resources to accommodate our plans for growth.
Due to this business strategy, our Defense/IT Portfolio has certain distinguishing characteristics relative to typical commercial office properties, including: > proximity to demand drivers, which is generally preferred, and often required, for tenants to execute their missions; > demand that is driven by, and correlated with, national security spending for activities occurring in the properties’ respective demand drivers, which we believe supports higher tenant retention and less susceptibility to the effects of overall economic conditions than typical office properties; > higher likelihood of significant tenant investments in properties for unique needs, such as Sensitive Compartmented Information Facility (“SCIF”), critical power supply, access control and operational redundancy, which we believe may make tenants unable, or less likely, to relocate; > ability of many of the properties leased to the USG to meet Anti-Terrorism Force Protection (“ATFP”) requirements; and > higher preponderance of tenants who require their employees to work in the properties for security purposes, which we believe makes them less susceptible to remote work trends.
Due to this business strategy, our Defense/IT Portfolio has certain distinguishing characteristics relative to typical commercial office properties, including: • proximity to demand drivers, which is generally preferred, and often required, for tenants to execute their missions; • demand that is driven by, and correlated with, national security spending for activities occurring in the properties’ respective demand drivers, which we believe may make tenants unable, or less likely, to relocate, and is less susceptible to the effects of overall economic conditions than typical office properties; • higher likelihood of significant tenant investments in properties for unique needs, such as Sensitive Compartmented Information Facility (“SCIF”), critical power supply, access control and operational redundancy, which we believe supports higher tenant retention; • ability of many of the properties leased to the USG to meet Anti-Terrorism Force Protection (“ATFP”) requirements; and • higher preponderance of tenants who require their employees to work in the properties for security purposes, which we believe makes them less susceptible to remote work trends.
We believe that our cross-discipline teams collectively complement our Defense/IT strategy due to: > well-established relationships with the USG and its contractors, many of whom lease space in more than one of our properties, and in multiple geographic locations in some cases; > extensive experience in developing: > high quality office properties; > secured, specialized space, with the ability to satisfy the USG’s unique needs (including SCIF, ATFP and access control requirements); and > data center shells to customer specifications within very condensed timeframes to accommodate time-sensitive tenant demand; and > depth of knowledge, specialized skills and credentialed personnel in operating and developing highly-specialized properties with complex space and security-oriented needs.
We believe that our cross-discipline teams collectively complement our Defense/IT strategy due to: • well-established relationships with the USG and its contractors, many of whom lease space in more than one of our properties, and in multiple geographic locations in some cases; • extensive experience in developing: • high quality office properties; • secured, specialized space, with the ability to satisfy the USG’s and defense contractor’s unique needs (including SCIF, ATFP and access control requirements); and • data center shells to customer specifications within very condensed timeframes to accommodate time-sensitive tenant demand; and • depth of knowledge, specialized skills and credentialed personnel in operating and developing highly-specialized properties with complex space and security-oriented needs.
We aim to develop and operate our portfolio to create healthier work environments and reduce consumption of resources by: (1) developing new buildings designed to use resources with a high level of efficiency and low impact on human health and the environment during their life cycles through our participation in the U.S.
We aim to develop and operate our portfolio to create healthier work environments and reduce consumption of resources by: • developing new buildings designed to use resources with a high level of efficiency and low impact on human health and the environment during their life cycles through our participation in the U.S.
Demand drivers for our Defense/IT Portfolio include: > high-priority facilities and missions of USG organizations and agencies supporting defense and national security activities, such as intelligence, surveillance, reconnaissance, missile defense, cybersecurity, space exploration, research and development and advanced weapons systems testing and engineering, in Maryland, Northern Virginia, Washington, DC, Huntsville, Alabama and San Antonio, Texas; and > data center shells developed in response to demand driven by advancements in cloud computing and Artificial Intelligence.
Demand drivers for our Defense/IT Portfolio include: • high-priority facilities and missions of USG organizations and agencies supporting defense and national security activities, such as intelligence, surveillance, reconnaissance, missile defense and space activities, cybersecurity and network activities, research and development and advanced weapons systems testing and engineering, in Maryland, Huntsville, Alabama, Northern Virginia, Washington, DC and San Antonio, Texas; and • data center shells developed in response to demand driven by advancements in cloud computing and Artificial Intelligence.
If there is an increase in the costs for us to retain employees, or if we otherwise fail to attract and retain employees, our business and operating results could be adversely affected.
If there is an increase in the costs for us to retain employees, or if we otherwise fail to attract and retain employees, our business and operating results could be adversely affected. 8
Green Building Council’s Leadership in Energy and Environmental Design (“LEED”) program, targeting new office properties to meet LEED certification standards or, when not possible, striving to otherwise incorporate LEED criteria into property designs; (2) adopting select property operations practices from the Environmental Protection Agency’s Green Building standards and LEED for Building Operations and Maintenance (“LEED O+M: Existing Buildings”) guidelines for much of our portfolio, including cleaning, recycling, integrated pest management, energy reduction and landscaping practices; (3) investing in building automation systems and high-efficiency heating, ventilation and air conditioning systems and implementing resource conservation practices to reduce energy consumption; and (4) investing in water-saving features.
Green Building Council’s Leadership in Energy and Environmental Design (“LEED”) program, targeting new office properties to meet LEED certification standards or, when not possible, striving to otherwise incorporate LEED criteria into property designs; • adopting select property operations practices from the Environmental Protection Agency’s Green Building standards and LEED for Building Operations and Maintenance (“LEED O+M: Existing Buildings”) guidelines for much of our portfolio, including cleaning, recycling, integrated pest management, energy reduction and landscaping practices; • investing in building automation systems and high-efficiency heating, ventilation and air conditioning systems and implementing resource conservation practices to reduce energy consumption; and • investing in water-saving features.
While we typically prefer properties to be significantly leased prior to commencing development, we develop properties ahead of completed leasing in certain locations where we believe that consistent demand and high occupancy rates warrant building of inventory to accommodate future anticipated USG and contractor demand.
While we typically prefer properties to be significantly leased prior to commencing development, we develop properties ahead of completed leasing in certain locations where we believe that consistent demand and high occupancy rates warrant building of inventory to accommodate anticipated USG and/or contractor demand.
The properties in this portfolio are adjacent to, or contain, their demand drivers, whose activities pertain more to knowledge and technology (i.e., research and development and other highly-technical defense and security areas) rather than to force structure (i.e., troops) and weapon system mass production.
The properties in this portfolio are adjacent to, or contain, their demand drivers, whose activities pertain more to knowledge and technology missions of the USG (i.e., research and development and other highly-technical defense and security areas) rather than to force structure (i.e., troops) and weapon system mass production.
In addition, we have made available on our Internet website under the heading “Corporate Governance” the charters for our Board of Trustees’ Audit, Compensation, Investment and Nominating and Corporate Governance Committees, as well as our Corporate Governance Guidelines, Code of Business Conduct and Ethics and Code of Ethics for Financial Officers.
In addition, we have made available on our internet website under the heading “Investors” and sub-heading “Governance” the charters for our Board of Trustees’ Audit, Compensation, Investment and Nominating and Corporate Governance Committees, as well as our Corporate Governance Guidelines, Code of Business Conduct and Ethics and Code of Ethics for Financial Officers.
We also owned eight other operating properties totaling 2.1 million square feet and approximately 50 acres of other developable land in the Greater Washington, DC/Baltimore region as of December 31, 2024. We conduct almost all of our operations and own almost all of our assets through our operating partnership, COPT Defense Properties, L.P.
We also owned sixother operating properties totaling 2.0 million square feet and approximately 50 acres of other developable land in the Greater Washington, DC/Baltimore region as of December 31, 2025. We conduct almost all of our operations and own almost all of our assets through our operating partnership, COPT Defense Properties, L.P.
Defense/IT Strategy : We focus on owning, operating and developing Defense/IT Portfolio properties, which as of December 31, 2024 accounted for 195 of our 203 properties, representing 90.3% of our annualized rental revenue (“ARR”), and we control developable land to accommodate future growth in this portfolio.
Defense/IT Strategy : We focus on owning, operating and developing Defense/IT Portfolio properties, which as of December 31, 2025 accounted for 201 of our 207 properties, representing 90.3% of our annualized rental revenue (“ARR”), and we control developable land to accommodate future growth in this portfolio.
We occasionally compete with other entities, including other publicly-traded commercial REITs, for acquisitions of land and/or commercial properties. Competitors for such acquisitions may have substantially greater financial resources than ours. In addition, our competitors may be willing to accept lower returns on their investments or may be willing to incur higher leverage.
Competitors for such acquisitions may have substantially greater financial resources than ours. In addition, our competitors may be willing to accept lower returns on their investments or may be willing to incur higher leverage. We also compete with other entities, including other publicly-traded commercial office REITs, for capital.
We intend to sell our other office properties when we believe that market conditions and opportunities position us to be able to optimize our return on investment. 6 Asset Management Strategy: We aggressively manage our portfolio to maximize the value and operating performance of each property through: (1) proactive property management and leasing; (2) maximizing tenant retention in order to minimize space downtime and capital requirements associated with space rollover; (3) increasing rental rates where market conditions permit; (4) leasing vacant space; (5) achievement of operating efficiencies by increasing economies of scale and, where possible, aggregating vendor contracts to achieve volume pricing discounts; and (6) redevelopment when we believe property conditions and market demand warrant.
Asset Management Strategy: We aggressively manage our portfolio to maximize the value and operating performance of each property through: (1) proactive property management and leasing; (2) maximizing tenant retention in order to minimize space downtime and capital requirements associated with space rollover; (3) increasing rental rates where market conditions 6 permit; (4) leasing vacant space; (5) achievement of operating efficiencies by increasing economies of scale and, where possible, aggregating vendor contracts to achieve volume pricing discounts; and (6) redevelopment when we believe property conditions and market demand warrant.
As of December 31, 2024, COPT Defense owned 97.5% of the outstanding CDPLP common units (“common units”) and there were no preferred units outstanding. Common units not owned by COPT Defense carry certain redemption rights.
Equity interests in CDPLP are in the form of common and preferred units. As of December 31, 2025, COPT Defense owned 97.5% of the outstanding CDPLP common units (“common units”) and there were no preferred units outstanding. Common units not owned by COPT Defense carry certain redemption rights.
In addition to owning real estate, CDPLP also owns subsidiaries that provide real estate services such as property management, development and construction services primarily for our properties but also for third parties. Some of these services are performed by a taxable REIT subsidiary (“TRS”). Equity interests in CDPLP are in the form of common and preferred units.
In addition to owning real estate, CDPLP also owns subsidiaries that provide real estate services such as property management, development and construction services primarily for our properties but also for third parties, most of which are tenants. Some of these services are performed by a taxable REIT subsidiary (“TRS”).
Navy (“Navy Support”). Properties in this sub-segment as of December 31, 2024 were proximate to the Washington Navy Yard in Washington, DC, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; > Redstone Arsenal in Huntsville, Alabama; and 7 > data center shells in Northern Virginia.
Properties in this sub-segment as of December 31, 2025 were proximate to the Washington Navy Yard in Washington, DC, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; and • data center shells in Northern Virginia.
We also compete with other entities, including other publicly-traded commercial office REITs, for capital. This competition could adversely affect our ability to raise capital that we may need to fulfill our capital strategy. In addition, we compete with other entities for talent.
This competition could adversely affect our ability to raise capital that we may need to fulfill our capital strategy. In addition, we compete with other entities for talent.
Our compensation program includes: base salary; an annual cash bonus program based on the achievement of individual, business unit and company objectives; health and wellbeing benefits; a retirement savings plan with a company match; financially-supported learning programs; and employee recognition programs.
Our total rewards program includes: base salary; an annual cash bonus program based on the achievement of corporate, business unit, and individual objectives; health and wellbeing benefits; common equity to new employees, with annual opportunities for additional equity; a retirement savings plan with a company match; financially-supported learning programs; and employee recognition programs.
Our data center shells in operations or under development as of December 31, 2024 were located in Northern Virginia, one of the largest data center markets in the world due in large part to its central location along the United States’ Eastern Seaboard, robust fiber connectivity infrastructure and access to reliable and affordable utilities required to support operations.
The hub of our data center portfolio is in Northern Virginia, one of the largest data center markets in the world due in large part to its central location along the United States’ Eastern Seaboard, robust fiber connectivity infrastructure and access to reliable and affordable utilities required to support operations.
We have participated in the annual Global Real Estate Sustainability Benchmark survey, which is widely recognized for measuring the environmental, social and governance (“ESG”) performance of real estate companies and funds, and earned an overall score of “Green Star” on the survey in each of the last 10 years, representing the highest quadrant of achievement.
In 2025, we continued our annual participation in the Global Real Estate Sustainability Benchmark survey, which is widely recognized for measuring the environmental, social and governance performance of real estate companies and funds, and earned an overall score of “Green Star” on the survey, representing the highest quadrant of achievement, for the 11th consecutive year.
As of December 31, 2024: our Defense/IT Portfolio segment included 195 of our operating properties, representing 91.3% of our square feet in operations, and all of our properties under development were for this segment; and our Other segment included our remaining eight operating properties, representing 8.7% of our square feet in operations.
As of December 31, 2025: our Defense/IT Portfolio segment included 201 of our operating properties, representing 92.1% of our square feet in operations, and all of our properties under development were for this segment; and our Other segment included our remaining six operating properties, representing 7.9% of our square feet in operations.
To a lesser extent, we may also pursue growth through acquisitions, seeking to execute such transactions at attractive yields and below replacement cost.
To a lesser extent, we may also pursue growth in our Defense/IT Portfolio through acquisitions serving missions tied to demand drivers, seeking to execute such transactions at attractive yields and below replacement cost.
We owned 24 of these data center shells through unconsolidated real estate joint ventures; > four properties under development (two office properties and two data center shells) that will total approximately 606,000 square feet upon completion; and > approximately 1,020 acres of land controlled that we believe could be developed into approximately 11.0 million square feet.
We owned 24 of these properties totaling 4.3 million square feet through unconsolidated real estate joint ventures; • fiveproperties under development that will total approximately 646,000 square feet upon completion; and • approximately 1,000 acres of land controlled that we believe could be developed into approximately 10.6 million square feet.
Other Office Properties : In addition to our Defense/IT Portfolio, we also owned eight other office properties located in the Greater Washington, DC/Baltimore region as of December 31, 2024, representing 9.7% of our ARR.
Other Properties : In addition to our Defense/IT Portfolio, we also owned six office properties located in the Greater Washington, DC/Baltimore region as of December 31, 2025, representing 9.7% of our ARR. We intend to sell these properties when we believe that market conditions and opportunities position us to be able to optimize our return on investment.
The competitive environment for leasing is affected considerably by a number of factors including, among other things, changes in economic conditions and supply of and demand for space. These factors may make it difficult for us to lease existing vacant space and space associated with future lease expirations at rental rates that are sufficient to produce acceptable operating cash flows.
These factors may make it difficult for us to lease existing vacant space and space associated with future lease expirations at rental rates that are sufficient to produce acceptable operating cash flows. We compete with other entities, including other publicly-traded commercial REITs, for acquisitions of land and/or commercial properties.
Some of the properties competing with ours may be newer or in more desirable locations, or the competing properties’ owners may be willing to accept lower rents. We also compete with our own tenants, many of whom have the right to sublease their space.
Competition The commercial real estate market is highly competitive. Numerous commercial landlords compete with us for tenants. Some of the properties competing with ours may be newer or in more desirable locations, or the competing properties’ owners may be willing to accept lower rents.
Industry Segments As of December 31, 2024, our operations included the following reportable segments: Defense/IT Portfolio and Other. Our Defense/IT Portfolio segment included the following sub-segments: > Fort George G. Meade and the Baltimore/Washington Corridor (“Fort Meade/BW Corridor”); > Northern Virginia Defense/IT Locations (“NoVA Defense/IT”); > Lackland Air Force Base in San Antonio, Texas; > locations serving the U.S.
Meade and the Baltimore/Washington Corridor (“Fort Meade/BW Corridor”); • Redstone Arsenal in Huntsville, Alabama; • Northern Virginia Defense/IT Locations (“NoVA Defense/IT”); • Lackland Air Force Base in San Antonio, Texas; 7 • locations serving the U.S. Navy (“Navy Support”).
Property Investment Strategy: We expand our portfolio of operating properties primarily through property development in support of our Defense/IT strategy, and we have significant land holdings adjacent to, or containing, demand drivers that we believe can further support that growth while serving as a barrier against competitive supply.
We have significant land holdings adjacent to demand drivers that we believe can further support such growth while serving as a barrier against competitive supply. We pursue development activities as market conditions and leasing opportunities support favorable risk-adjusted returns on investment.
Human Capital Our Workforce : As of December 31, 2024, our workforce was comprised of 427 employees based in Maryland, where we are headquartered, Virginia, Washington, DC, Alabama and Texas. Our workforce has varying expertise, and includes: > Building Technicians (175 employees), o f which approximately 35% were of minority race.
Human Capital Our Workforce : As of December 31, 2025, our workforce was comprised of 430 employees based in Maryland where we are headquartered, Virginia, Washington, DC, Alabama and Texas. Our workforce has varying expertise among both our onsite operations teams (representing 61% of our total workforce) and corporate positions (the remaining 39% of our total workforce).
Our tenants include the USG and their defense contractors, who are primarily engaged in priority national security activities, and who generally require mission-critical and high security property enhancements.
Our tenants include the USG and its defense contractors, who are primarily engaged in priority national security activities, and who generally require mission-critical and high security property enhancements. Our property portfolio is predominantly comprised of office properties and single-tenant data center shells. As of December 31, 2025, our Defense/IT Portfolio included: • 201 operating properties totaling 23.2 million square feet.
Culture and Workforce Engagement : We develop and reinforce our culture by emphasizing our core values, illustrated by the actiiVe acronym that stands for: Accountability, Commitment, Teamwork, Integrity, Innovation, Value Creation and Excellence. These values are intended to serve as a compass to our workforce to inform behavior and fuel our success. We believe in equal opportunity, engagement and ethics.
Our Culture : We seek to engage our employees by developing and reinforcing our culture by emphasizing our core values, illustrated by the actiiVe acronym, which stands for: Accountability, Commitment, Teamwork, Integrity, Innovation, Value Creation and Excellence.
In support of our Defense/IT Portfolio strategy, over one-third of our employees carry government credentials. We operate in markets in which we compete for human capital. We rely on our employees to drive our success and we support them with a variety of programs to enhance their workplace engagement and job fulfillment.
We rely on our employees to drive our success, and we support them with a variety of programs to attract, align, and grow their capabilities, and enhance their workplace experience through our culture and total rewards program, which includes comprehensive compensation and benefits.
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As of December 31, 2024, our Defense/IT Portfolio included: > 195 operating properties totaling 22.4 million square feet comprised of 16.5 million square feet in 164 office properties and 5.9 million square feet in 31 single-tenant data center shells.
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External Growth Strategy: Allocating investment capital to new properties serves as the foundation for our external growth. Our external growth strategy is concentrated on identifying future development opportunities, either on existing or acquired land, in support of our Defense/IT strategy.
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We pursue development activities as market conditions and leasing opportunities support favorable risk-adjusted returns on investment.
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Industry Segments As of December 31, 2025, our operations included the following reportable segments: Defense/IT Portfolio and Other. Our Defense/IT Portfolio segment included the following sub-segments: • Fort George G.
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Building technicians are skilled trades professionals who perform mechanical and operating systems maintenance and otherwise service our properties; and > Office Staff (252 employees), of which approximately 56% were female and approximately 30% of minority race, including: > Operations Management (83 employees): Property managers and support staff who service our tenant customer needs. > Asset Management and Leasing (11 employees): Customer-facing leaders who drive the financial performance of our assets. > Development and Construction (31 employees): Project managers and support staff who drive our development pipeline and interior design. > Finance and Accounting (70 employees): Professionals who manage our financial activities. > Company Support Functions (46 employees): Includes Human Resources, Investor Relations, Legal, Marketing, Information Technology, Facility Security and Corporate Administrative Support. > Senior Leadership (11 employees): Our business line and Company leaders, including our Named Executive Officers, who interface with our Board of Trustees and shareholders and manage our business strategy, functional activities, risk and overall success.
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In support of our Defense/IT Portfolio strategy, over one-third of our employees carry government credentials. During 2025, our workforce size did not change significantly, with 70 new hires and 67 departures, including 12 retirements, representing a turnover rate of approximately 15.6% total, or 12.8% without retirements.
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All employees must adhere to our Code of Business Conduct and Ethics. We survey our workforce annually to measure employee engagement and identify opportunities for further improvement, which we believe has helped us to achieve annual “great workplace” honors for over a decade. Compensation Program : Our compensation philosophy is driven by accountability, which results in a pay-for-performance structure.
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To effectively compete for human capital, we monitor employment trends and enhance our programs to maintain our strong workforce posture.
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We also grant common equity to all new full-time employees and provide our senior management team and high performers with the ability to earn additional grants to align their interests with those of our shareholders and to incent retention. Wellbeing and Safety : We view wellbeing as including four facets: Life, Mind, Body and Giving.
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We also foster strong ties and encourage employee engagement with our communities by contributing time, effort, financial support and expertise. Our Total Rewards : Our total rewards program philosophy is driven by accountability, which results in a pay-for-performance structure.
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We design programs to support each of these facets. We directly incent wellbeing engagement through a points-driven program each year. Employees who achieve a points threshold receive reductions in medical premiums or contributions to their health savings accounts. We believe this program enhances employee engagement and reduces medical costs. Safety is a key part of our employee wellbeing.
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We also compete with our own tenants, many of whom have the right to sublease their space. The competitive environment for leasing is affected considerably by a number of factors including, among other things, changes in economic conditions and supply of and demand for space.
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During 2024, our workforce size increased by approximately 4%, with 83 new hires and 66 departures, including 10 retirements, representing an attrition rate of approximately 15.5% total, or 13.1% without retirements. We offer robust learning programs to all employees, including educational assistance for college-level and vocational degree programs.
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We cover employee expenses for licenses and certifications, management and leadership courses, key skills training 8 and industry and professional conferences. Further, we offer Company-sponsored internship and mentorship programs to facilitate teaching and learning from others. Community Engagement : We encourage employee engagement with our communities to enhance our citizenship and facilitate personal growth and wellbeing.
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We provide a platform for our employees to engage with our communities by contributing time, effort, money and expertise. This includes providing employees eight hours or more of paid time per year to engage in volunteer activities to serve our community directly in a company-organized team or individual format.
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Our employees select community non-profits for Corporate giving grants and for volunteer time contributions. We empower our employees to become involved and fuel our success in community partnerships. Competition The commercial real estate market is highly competitive. Numerous commercial landlords compete with us for tenants.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf lenders default under these facilities by not being able or willing to fund a borrowing request, it would adversely affect our ability to access borrowing capacity under these facilities. We may suffer adverse effects as a result of the indebtedness that we carry and the terms and covenants that relate to this debt.
Biggest changeOur lenders under these and other facilities could, for financial hardship or other reasons, fail to honor their commitments to fund our requests for borrowings under these facilities. If lenders default under these facilities by not being able or willing to fund a borrowing request, it would adversely affect our ability to access borrowing capacity under these facilities.
The determination that COPT Defense is a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control. For example, to qualify as a REIT, at least 95% of COPT Defense’s gross income must come from certain sources that are specified in the REIT tax laws.
The determination that COPT Defense is a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control. For example, to qualify as a REIT, at least 95% of COPT Defense’s gross income must come from certain sources that are specified in REIT tax laws.
Our ability to make distributions at expected levels is also dependent, in part, on other matters, including, but not limited to: > continued property occupancy and timely receipt of rent from our tenants; > the amount of future capital expenditures and expenses for our properties; > our leasing activity and future rental rates; > the strength of the commercial real estate market; 14 > our ability to compete with other entities, including with other publicly-traded commercial REITs; > governmental actions and initiatives, including risks associated with the impact of a prolonged government shutdown or budgetary reductions or impasses; > our costs of compliance with environmental and other laws; > our corporate overhead levels; and > our amount of uninsured losses.
Our ability to make distributions at expected levels is also dependent, in part, on other matters, including, but not limited to: • continued property occupancy and timely receipt of rent from our tenants; • the amount of future capital expenditures and expenses for our properties; • our leasing activity and future rental rates; • the strength of the commercial real estate market; • our ability to compete with other entities, including with other publicly-traded commercial REITs; • governmental actions and initiatives, including risks associated with the impact of a prolonged government shutdown or budgetary reductions or impasses; • our costs of compliance with environmental and other laws; • our corporate overhead levels; and • our amount of uninsured losses.
In addition, if lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance and/or refinance our properties and execute our growth strategies. Moreover, there are some loss events for which we cannot obtain insurance at reasonable costs, or at all, such as acts of war.
In addition, if lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance and/or refinance our properties and execute our growth strategies. Moreover, there are some loss events for which we cannot obtain insurance at 12 reasonable costs, or at all, such as acts of war.
Furthermore, Congress and the Internal Revenue Service could make changes to the tax laws and regulations and the courts could issue new rulings that make it more difficult or impossible for COPT Defense to remain qualified as a REIT. If COPT Defense fails to qualify as a REIT, it would be subject to federal income tax at regular corporate rates.
Furthermore, Congress and the Internal Revenue Service could make changes to the tax laws and regulations and the courts could issue new rulings that make it more difficult or impossible for COPT Defense to remain qualified as a REIT. 16 If COPT Defense fails to qualify as a REIT, it would be subject to federal income tax at regular corporate rates.
Moreover, additional debt financing may substantially increase our leverage and subject us to covenants that restrict management’s flexibility in directing our operations. Our inability to obtain capital when needed could have a material adverse effect on our ability to expand our business and fund other cash requirements.
Additional debt financing may substantially increase our leverage and subject us to covenants that restrict management’s flexibility in directing our operations. Our inability to obtain capital when needed could have a material adverse effect on our ability to expand our business and fund other cash requirements.
We are also subject to the risks that: > we may not be able to refinance our existing indebtedness, or may only be able to do so on terms that are less favorable to us than the terms of our existing indebtedness; > in the event of our default under the terms of our Revolving Credit Facility, CDPLP could be restricted from making cash distributions to COPT Defense unless such distributions are required to maintain COPT Defense’s qualification as a REIT, 13 which could result in reduced distributions to our equityholders or the need for us to incur additional debt to fund such distributions; and > if we are unable to pay our debt service on time or are unable to comply with restrictive financial covenants for certain of our debt, our lenders could foreclose on our properties securing such debt.
We are also subject to risks that: • we may not be able to refinance our existing indebtedness, or may only be able to do so on terms that are less favorable to us than the terms of our existing indebtedness; • in the event that we default under the terms of our Revolving Credit Facility and Revolving Development Facility, CDPLP could be restricted from making cash distributions to COPT Defense unless such distributions are required to maintain COPT Defense’s qualification as a REIT, which could result in reduced distributions to our equityholders or the need for us to incur additional debt to fund such distributions; and • if we are unable to pay our debt service on time or are unable to comply with restrictive financial covenants for certain of our debt, our lenders could foreclose on our properties securing such debt.
However, we may incur significant losses and harm to our financial condition in the future if we were holding large sums of cash in any of these financial institutions at a time when they filed for bankruptcy protection or otherwise failed.
However, we may incur significant losses and harm to our financial condition in 14 the future if we were holding large sums of cash in any of these financial institutions at a time when they filed for bankruptcy protection or otherwise failed.
These conditions include, but are not limited to: > downturns in national, regional and local economic environments, including increases in the unemployment rate and inflation or deflation; > competition from other properties; > deteriorating local real estate market conditions, such as oversupply, reduction in demand and decreasing rental rates; > declining real estate valuations; > adverse developments concerning our tenants, which could affect our ability to collect rents and execute lease renewals; > increasing operating costs, including real estate taxes, utilities, insurance and other expenses, some of which we may not be able to pass through to tenants; > increasing vacancies and the need to periodically repair, renovate and re-lease space; > trends in office real estate that may adversely affect future demand, including remote work and flexible work arrangements, open workspaces and coworking spaces; > increasing interest rates and unavailability of financing on acceptable terms or at all; > unavailability of financing for potential purchasers of our properties; > potential impact of prolonged government shutdowns or budgetary reductions or impasses, such as a reduction of rental revenues, non-renewal of leases and/or reduced or delayed demand for additional space by existing or new tenants; 9 > potential additional costs, such as capital improvements, fees and penalties, associated with environmental laws and regulations; > adverse changes from other government actions and initiatives, such as changes in taxation, zoning laws or other regulations; > potential inability to secure adequate insurance; > adverse consequences resulting from civil disturbances, natural disasters, terrorist acts or acts of war; and > adverse consequences resulting from climate-related risks.
These conditions, include, but are not limited to: • downturns in national, regional and local economic environments, including increases in the unemployment rate and inflation or deflation; • competition from other properties; • deteriorating local real estate market conditions, such as oversupply, reduction in demand and decreasing rental rates; • declining real estate valuations; • adverse developments concerning our tenants, which could affect our ability to collect rents and execute lease renewals; • increasing operating costs, including real estate taxes, utilities, insurance and other expenses, some of which we may not be able to recover from tenants; • increasing vacancies and the need to periodically repair, renovate and re-lease space; • trends in office real estate that may adversely affect future demand, including remote work and flexible work arrangements, open workspaces and coworking spaces; • increasing interest rates and unavailability of financing on acceptable terms or at all; • unavailability of financing for potential purchasers of our properties; • impact of prolonged government shutdowns or budgetary reductions or impasses, such as a reduction of rental revenues, non-renewal of leases and/or reduced or delayed demand for additional space by existing or new tenants; • potential additional costs, such as capital improvements, fees and penalties, associated with environmental laws and regulations; • adverse changes from other government actions and initiatives, such as changes in taxation, zoning laws or other regulations; • potential inability to secure adequate insurance; • adverse consequences resulting from civil disturbances, natural disasters, terrorist acts or acts of war; and • adverse consequences resulting from climate-related risks.
We believe that our future additional capital investments and potential fees and penalties resulting from the State of Maryland legislation, and other similar federal, state or local laws or regulations in the future, could potentially be substantial and may not be recoverable from our tenants.
We believe that our future additional capital investments and potential fees and penalties resulting from the State of Maryland legislation, and other similar federal, state or local laws or regulations in the future, could be substantial and may not be recoverable from our tenants.
After such an attack or incident, tenants in these areas may choose to relocate their businesses to areas of the United States that may be perceived to be less 12 likely targets of future attacks or unrest, and fewer customers may choose to patronize businesses in these areas.
After such an attack or incident, tenants in these areas may choose to relocate their businesses to areas of the United States that may be perceived to be less likely targets of future attacks or unrest, and fewer customers may choose to patronize businesses in these areas.
In addition, we could suffer serious reputational harm if allegations of impropriety were made against us. Risks Associated with Financing and Other Capital-Related Matters We are dependent on external sources of capital for growth. Because COPT Defense is a REIT, it must distribute at least 90% of its annual taxable income to its shareholders.
In addition, we could suffer serious reputational harm if allegations of impropriety were made against us. Risks Associated with Financing and Other Capital-Related Matters We are dependent on external sources of capital for growth and other business purposes. Because COPT Defense is a REIT, it must distribute at least 90% of its annual taxable income to its shareholders.
You should carefully consider each of these risks and uncertainties, along with all of the information in this Annual Report on Form 10-K and its Exhibits, including our consolidated financial statements and notes thereto for the year ended December 31, 2024 included in a separate section at the end of this report beginning on page F-1.
You should carefully consider each of these risks and uncertainties, along with all of the information in this Annual Report on Form 10-K and its Exhibits, including our consolidated financial statements and notes thereto for the year ended December 31, 2025 included in a separate section at the end of this report beginning on page F-1.
We may be adversely affected by the impact of climate-related risks. We may be adversely affected by extreme weather events, such as heavy rainstorms, hurricanes, floods and tornadoes, which could result in significant property damage and make it more difficult for us to obtain affordable insurance coverage in the future.
We may be adversely affected by the impact of climate-related risks. We may be adversely affected by extreme weather events, such as heavy storms, hurricanes, floods and tornadoes, which could result in significant property damage and make it more difficult for us to obtain affordable insurance coverage in the future.
A security breach or other significant disruption involving our IT networks and related systems, or those of certain of our vendors or service providers, could: > disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our tenants; > increase the likelihood of missed reporting or permitting deadlines; > affect our ability to properly monitor our compliance with rules and regulations regarding our qualification as a REIT; > result in unauthorized access to, and/or destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-parties; > disrupt or disable the building systems relied upon by us and our tenants for the effective and efficient use of our properties; > require significant management attention and resources to remedy any resulting damages; > subject us to termination of leases or other agreements or claims for breach of contract, damages or other penalties; and > damage our reputation among our tenants and investors generally. 15 Please refer to Item 1C, Cybersecurity, for disclosure regarding our cybersecurity risk management, strategy and governance.
A security breach or other significant disruption involving our IT networks and related systems, or those of certain of our vendors or service providers, could: • disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our tenants; • increase the likelihood of missed reporting or permitting deadlines; • affect our ability to properly monitor our compliance with rules and regulations regarding our qualification as a REIT; • result in unauthorized access to, and/or destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-parties; • disrupt or disable the building systems relied upon by us and our tenants for the effective and efficient use of our properties; • require significant management attention and resources to remedy any resulting damages; • subject us to claims for damages and other penalties or potentially breach of contract; and • damage our reputation among our tenants and investors generally.
Numerous commercial properties compete with our properties for tenants; some of the properties competing with ours may be newer or in more desirable locations, or the competing properties’ owners may be willing to accept lower rates than are acceptable to us.
Numerous commercial properties compete with our properties for tenants; some of the properties competing with ours may be newer, better equipped to meet tenant needs or in more desirable locations, or the competing properties’ owners may be willing to accept lower rates than are acceptable to us.
In addition, such conditions could disrupt the operations or profitability of our business or increase the level of risk that we may not be able to obtain new financing for development activities, refinancing of existing debt, acquisitions or other capital requirements at reasonable terms, if at all, or to execute dispositions of our properties on a satisfactory time frame or on satisfactory terms, if at all.
In addition, such conditions could disrupt the operations or profitability of our business or increase the risk of us not being able to obtain new financing for development activities, refinancing of existing debt, acquisitions or other capital requirements at reasonable terms, if at all, or to execute dispositions of our properties on a satisfactory time frame or on satisfactory terms, if at all.
Our business may be affected by adverse economic conditions. Our business may be affected by adverse economic conditions in the United States, real estate industry as a whole or local markets in which our properties are located, including the impact of high unemployment, inflation or deflation, constrained credit and shortages of goods or services.
Our business may be affected by adverse economic conditions in the United States, real estate industry as a whole or local markets in which our properties are located, including the impact of high unemployment, inflation or deflation, constrained credit and shortages of goods or services. Such conditions could be triggered by geopolitical or other world events.
Many of our properties are also concentrated in business parks in which we own most of the properties. Consequently, our portfolio of properties is not broadly distributed geographically.
Many of our properties are also concentrated in business parks in which we own most of the properties. As a result, our portfolio of properties is not broadly distributed geographically.
If a tenant or other party with whom we conduct business is placed on the OFAC list or is otherwise a party with whom we are prohibited from doing business, we would be required to terminate our lease or other agreement with them. Item 1B. Unresolved Staff Comments None.
If a tenant or other party with whom we conduct business is placed on the OFAC list or is otherwise a party with whom we are prohibited from doing business, we would be required to terminate our lease or other agreement with them.
These acquisitions may entail risks in addition to those we face with acquisitions in more familiar regions, such as our not sufficiently anticipating conditions or trends in such regions and therefore not being able to operate the acquired properties profitably.
We may pursue selective acquisitions of properties in regions where we have not previously owned properties. These acquisitions may entail risks in addition to those we face with acquisitions in more familiar regions, such as our not sufficiently anticipating conditions or trends in such regions and therefore not being able to operate the acquired properties profitably.
For new tenants or upon expiration of existing leases, we generally must make improvements and pay other leasing costs for which we may not receive increased rents. We also make building-related capital improvements for which tenants may not reimburse us.
For new tenants or upon expiration of existing leases, we generally must make improvements and pay other leasing costs for which we may not receive increased rents.
Such conditions could potentially be triggered by geopolitical or other world events. Adverse economic conditions could increase the likelihood of tenants encountering financial difficulties, including bankruptcy, insolvency or general downturn of business, and as a result could increase the likelihood of tenants defaulting on their lease obligations to us.
Adverse economic conditions could increase the likelihood of tenants encountering financial difficulties, including bankruptcy, insolvency or general downturn of business, and as a result could increase the likelihood of tenants defaulting on their lease obligations to us.
If our properties do not generate revenue sufficient to meet our operating expenses and capital costs, we may need to borrow additional amounts to cover these costs. In such circumstances, we would likely have lower profits or possibly incur losses.
We also make building-related capital improvements for which tenants may not reimburse us. 9 If our properties do not generate revenue sufficient to meet our operating expenses and capital costs, we may need to borrow additional amounts to cover these costs. In such circumstances, we would likely have lower profits or possibly incur losses.
COPT Defense is also required to distribute to shareholders at least 90% of its annual taxable income. The fact that COPT Defense holds most of its assets through CDPLP and its subsidiaries further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize COPT Defense’s REIT status.
COPT Defense is also required to distribute to shareholders at least 90% of its annual taxable income. The fact that COPT Defense holds most of its assets through CDPLP and its subsidiaries further complicates the application of the REIT requirements.
Virtually all of our unsecured debt is cross-defaulted, which means that failure to pay interest or principal on such debt above a threshold value will create a default on certain of our other debt. If interest rates were to rise, our debt service payments on debt with variable interest rates would increase.
Virtually all of our unsecured debt is cross-defaulted, which means that failure to pay interest or principal on such debt above a threshold value will create a default on certain of our other debt.
As a result, we could be harmed by a decline in the real estate market or general economic conditions in the Mid-Atlantic region, the Greater Washington, DC/Baltimore region or markets, submarkets or business parks in which our properties are located. We would suffer economic harm if we were unable to renew our leases on favorable terms.
As a result, we could be harmed by a decline in the real estate market or general economic conditions in the Mid-Atlantic region, the Greater Washington, DC/Baltimore region or markets, submarkets or business parks in which our properties are located.
Also, due to the difference in time between when we receive revenue and pay expenses and when we report such items for distribution purposes, it is possible that we may need to borrow funds for COPT Defense to meet the 90% distribution requirement. We may issue additional common or preferred equity that dilutes our shareholders’ interests.
Moreover, due to the difference in time between when we receive revenue and pay expenses and when we report such items for distribution purposes, it is possible that we may need to borrow funds for COPT Defense to meet the 90% distribution requirement.
A number of factors could cause our security prices to decline. As is the case with any publicly-traded securities, certain factors outside of our control could influence the value of our equity security issuances.
Our existing shareholders’ interests could be diluted if such additional issuances were to occur. A number of factors could cause our security prices to decline. As is the case with any publicly-traded securities, certain factors outside of our control could influence the value of our equity security issuances.
We may be adversely affected by environmental, social and governance matters. Certain investors and other stakeholders focus on environmental, social and governance matters. If our perceived commitment to environmental, social and governance matters fails to meet the expectations of these investors and other stakeholders, it could adversely affect their willingness to invest in, or otherwise do business with, us.
If our perceived commitment to environmental, social and governance matters fails to meet the expectations of these investors and other stakeholders, it could adversely affect their willingness to invest in, or otherwise do business with, us. 15 We may suffer adverse effects from epidemics or pandemics.
We may be adversely affected by legislation and regulatory changes aimed at combating climate change. For example, the State of Maryland enacted legislation that will subject our properties in the state (approximately half of our portfolio at year end) to future energy performance standards (with potential monetary penalties for failing to meet such standards), building code changes and other requirements.
For example, the State of Maryland enacted legislation that will subject our properties in the state (approximately half of our operating portfolio as of year end) to future energy performance standards (with potential monetary penalties for failing to meet such standards), building code changes and other requirements.
In addition, since the variable interest rate spread and facility fees on certain of our debt, including our Revolving Credit Facility and a term loan facility, is determined based on our credit ratings, a downgrade in our credit ratings would increase the payments required on such debt. We have certain distribution requirements that reduce cash available for other business purposes.
In addition, since the variable interest rate spread and facility fees on certain of our debt, including our Revolving Credit Facility, Revolving Development Facility and a term loan facility, is determined based on our credit ratings, a downgrade in our credit ratings would increase the payments required on such debt.
Acquisitions of commercial properties 11 entail risks, such as the risk that we may not be in a position, or have the opportunity in the future, to make suitable property acquisitions on advantageous terms and/or that such acquisitions fail to perform as expected. We may pursue selective acquisitions of properties in regions where we have not previously owned properties.
We may pursue acquisitions of existing commercial real estate properties as part of our external growth strategy. Acquisitions of commercial properties entail risks, such as the risk that we may not be in a position, or have the opportunity in the future, to make suitable property acquisitions on advantageous terms and/or that such acquisitions fail to perform as expected.
We may issue additional common shares or new issuances of preferred shares without shareholder approval. Similarly, we may issue additional common or preferred units in CDPLP for contributions of cash or property without approval by our shareholders. Our existing shareholders’ interests could be diluted if such additional issuances were to occur.
We may issue additional common or preferred equity that dilutes our shareholders’ interests. We may issue additional common shares or new issuances of preferred shares without shareholder approval. Similarly, we may issue additional common or preferred units in CDPLP for contributions of cash or property without approval by our shareholders.
Our Senior Notes are currently rated investment grade, with either stable or positive outlooks, by the three major rating agencies. These credit ratings are subject to ongoing evaluation by the credit rating agencies and can change.
A downgrade in our credit ratings would materially adversely affect our business and financial condition. The three major rating agencies currently rate our Senior Notes as investment grade, with either stable or positive outlooks. These credit ratings are subject to ongoing evaluation by the credit rating agencies and can change.
As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it. We may be subject to possible environmental liabilities. We are subject to various federal, state and local environmental laws, including air and water quality, hazardous or toxic substances and health and safety.
As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it. 11 We may be subject to possible environmental liabilities.
As of December 31, 2024, our 10 largest tenants accounted for 63.8% of our total ARR, the three largest of these tenants accounted for 50.5%, and the USG, our largest tenant, accounted for 35.9%.
As of December 31, 2025, our 10 largest tenants accounted for 64.4% of our total ARR, the three largest of these tenants accounted for 51.1%, and the USG, our largest tenant, accounted for 35.4%.
As of December 31, 2024, we had $2.4 billion in debt with future maturities as set forth in Note 8 to our consolidated financial statements. Payments of principal and interest on our debt may leave us with insufficient cash to operate our properties or pay distributions to COPT Defense’s shareholders required to maintain COPT Defense’s qualification as a REIT.
Payments of principal and interest on our debt may leave us with insufficient cash to operate our properties or pay distributions to COPT Defense’s shareholders required to maintain COPT Defense’s qualification as a REIT.
These practices could enable businesses to reduce their office space requirements. A continuation or acceleration of these trends could erode demand for commercial office space and, in turn, place downward pressure on occupancy, rental rates and property valuations. We may encounter a significant decline in the value of our real estate.
A continuation or acceleration of these trends could erode demand for commercial office space and, in turn, place downward pressure on occupancy, rental rates and property valuations.
In addition, we can make distributions to holders of our common shares only after we make preferential distributions to holders of any outstanding preferred equity. Our ability to pay distributions may be limited, and we cannot provide assurance that we will be able to pay distributions regularly.
In addition, we can make distributions to holders of our common shares only after we make preferential distributions to holders of any outstanding preferred equity.
Resolutions adopted by our Board of Trustees and/or provisions of our bylaws exempt us from such laws, but our Board of Trustees can alter its resolutions or change our bylaws at any time to make these laws applicable to us. 16 COPT Defense’s failure to qualify as a REIT would have adverse tax consequences, which would substantially reduce funds available to make distributions to our shareholders.
Resolutions adopted by our Board of Trustees and/or provisions of our bylaws exempt us from such laws, but our Board of Trustees can alter its resolutions or change our bylaws at any time to make these laws applicable to us.
When leases expire, our tenants may not renew or may renew on terms less favorable to us than the terms of their original leases. If a tenant vacates a property, we can expect to experience a vacancy for some period of time, as well as incur higher leasing costs than we would likely incur if a tenant renews.
If a tenant vacates a property, we can expect to experience a vacancy for some period of time, as well as incur higher leasing costs than we would likely incur if a tenant renews. As a result, we may be harmed if we experience a high volume of tenant departures at the end of their lease terms.
In addition, uncertainty regarding the potential for future government spending for such activities could also decrease or delay leasing activity from existing or new tenants engaged in these activities. 10 Our future ability to fuel growth through data center shell development may be adversely affected should we suffer a loss of future development opportunities with our data center shell customer or are unable to locate suitable developable land.
Our future ability to fuel growth through data center shell development may be adversely affected should we suffer a loss of future development opportunities with our data center shell customer or are unable to locate suitable developable land.
Data center shells have been a growth driver for our Defense/IT Locations strategy. Since 2013, we have developed 31 data center shells in Northern Virginia totaling 5.9 million square feet for a Fortune 100 Company cloud computing customer, and we had an additional two under development totaling 418,000 square feet for that tenant as of December 31, 2024.
Data center shells have been a growth driver for our Defense/IT Locations strategy, including the 33 data center shells in Northern Virginia totaling 6.3 million square feet that we developed for a Fortune 100 Company cloud computing customer, whose total leased space from us accounted for 11.3% of our ARR as of December 31, 2025.
Our operations likely will not generate enough cash flow to repay all of our debt without additional borrowings, equity issuances and/or sales of interests in properties. If we cannot refinance, extend the repayment date of, or otherwise raise funds required to repay debt by its maturity date, we would default on such debt.
If interest rates were to rise, our debt service payments on debt with variable interest rates would increase. 13 Our operations likely will not generate enough cash flow to repay all of our debt without additional borrowings, equity issuances and/or sales of interests in properties.
As a result, we may be harmed if we experience a high volume of tenant departures at the end of their lease terms. We may be adversely affected by trends in the office real estate industry. Certain businesses have implemented remote work and flexible work arrangements and/or utilized open workspaces and coworking spaces.
We may be adversely affected by trends in the office real estate industry. Certain businesses have implemented remote work and flexible work arrangements (although some businesses have subsequently curtailed such arrangements) and/or utilized open workspaces and coworking spaces. These practices could enable businesses to reduce their office space requirements.
We believe that COPT Defense has qualified for taxation as a REIT for federal income tax purposes since 1992. We plan for COPT Defense to continue to meet the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex.
COPT Defense’s failure to qualify as a REIT would have adverse tax consequences, which would substantially reduce funds available to make distributions to our shareholders. We believe that COPT Defense has qualified for taxation as a REIT for federal income tax purposes since 1992, and we plan for it to continue to meet the requirements for REIT qualification.
Our organizational documents do not limit the amount of indebtedness that we may incur. Therefore, we may incur additional indebtedness and become more highly leveraged, which could harm our financial position. A downgrade in our credit ratings would materially adversely affect our business and financial condition.
If we cannot refinance, extend the repayment date of, or otherwise raise funds required to repay debt by its maturity date, we would default on such debt. Our organizational documents do not limit the amount of indebtedness that we may incur. Therefore, we may incur additional indebtedness and become more highly leveraged, which could harm our financial position.
We often use our Revolving Credit Facility to initially finance much of our investing activities and certain financing activities. Our lenders under this and other facilities could, for financial hardship or other reasons, fail to honor their commitments to fund our requests for borrowings under these facilities.
We use our primary revolving credit facility (the “Revolving Credit Facility”) and a separate facility that we use for funding development activities (the “Revolving Development Facility”) to initially fund much of our investing activities and certain financing activities.
Removed
As of December 31, 2024, 90.3% of our ARR was from our Defense/IT Portfolio.
Added
Certain of these conditions are further discussed in the risk factors that follow. Our business may be affected by adverse economic conditions.
Removed
We may suffer adverse effects from acquisitions of commercial real estate properties. We may pursue acquisitions of existing commercial real estate properties as part of our property investment strategy.
Added
For the 43-day long government shutdown in 2025, the most significant effect on us was that it delayed our ability to progress, or finalize, leasing activities, but our existing USG leases remained in effect and most rent payments continued to occur in a timely manner. As of December 31, 2025, 90.3% of our ARR was from our Defense/IT Portfolio.
Removed
Since COPT Defense is a REIT, it must distribute to its shareholders at least 90% of its annual taxable income, which limits the amount of cash that can be retained for other business purposes, including amounts to fund development activities and acquisitions.
Added
Uncertainty regarding the potential amount of future government spending for such activities could also decrease or delay leasing activity from existing or new tenants engaged in these activities.
Removed
Our ability to pay distributions will depend on a number of things discussed elsewhere herein, including our ability to operate profitably and generate cash flow from our operations. We cannot guarantee that we will be able to pay distributions on a regular quarterly basis in the future.
Added
Our Defense/IT Portfolio growth could be adversely affected by USG decisions to own properties rather than lease them from us, which could affect our ability to renew existing leases or enter into new ones with it, or could prompt it to elect to acquire existing properties from us in exchange for just compensation.
Removed
Additionally, the terms of some of our debt may limit our ability to make some types of payments and distributions in the event of certain default situations.
Added
In addition, to the extent that the USG enacts changes to its secured-space requirements over time, certain of our secured-space properties not meeting new requirements could become less attractive to existing or prospective tenants, or we may need to incur additional capital investments for these properties to meet such requirements in order to retain existing tenants or attract new ones.
Removed
This may limit our ability to make some types of payments, including payments of distributions on common or preferred shares, unless we meet certain financial tests or such payments or distributions are required to maintain COPT Defense’s qualification as a REIT.
Added
While the Greater Washington, DC/Baltimore region’s economy in 2025 was adversely affected by the federal government’s spending reduction initiatives, workforce reductions and 43-day long government shutdown, we have not to date been significantly affected by these government activities 10 and resulting regional economic effects due primarily to the unique demand associated with our Defense/IT Portfolio, which, we believe, is less susceptible to the effects of overall economic conditions than typical office properties.
Removed
We may suffer adverse effects from epidemics or pandemics.
Added
We would suffer economic harm if we were unable to renew our leases on favorable terms. When leases expire, our tenants may not renew or may renew on terms less favorable to us than the terms of their original leases.
Added
These trends have not significantly affected us to date due to our high concentration of Defense/IT Portfolio properties, which have a higher preponderance of tenants who require their employees to work in the properties for security purposes. We may encounter a significant decline in the value of our real estate.
Added
Inflation and, to a lesser extent, supply chain disruptions, including such conditions triggered by geopolitical or other world events, could negatively impact our development activities; continually escalating development costs would require us to commensurately escalate rents on development properties, which may affect demand for space in such properties. We may suffer adverse effects from acquisitions of commercial real estate properties.
Added
We are subject to various federal, state and local environmental laws, including air and water quality, hazardous or toxic substances and health and safety.
Added
We may be adversely affected by legislation and regulatory changes aimed at combating climate change.
Added
We may suffer adverse effects as a result of the indebtedness that we carry and the terms and covenants that relate to this debt. As of December 31, 2025, we had $2.8 billion in debt with future maturities as set forth in Note 8 to our consolidated financial statements.
Added
Please refer to Item 1C, Cybersecurity, for disclosure regarding our cybersecurity risk management, strategy and governance. The use of technology based on artificial intelligence and machine learning presents risks and challenges that may adversely affect our business and results of operations.
Added
We may use artificial intelligence and machine learning technology (collectively, “AI”) capabilities with the goal of enhancing efficiencies in conducting our business. As of December 31, 2025, our deployment and application of AI was limited.
Added
While AI tools hold promise for optimizing our work processes and driving efficiencies, they also present risks, challenges and unintended consequences that could adversely affect our business and results of operations or those of our tenants.
Added
These include, but are not limited to: • the release, leak or disclosure of proprietary, confidential, sensitive or otherwise valuable information resulting from our use of AI tools, including potential unauthorized use of such tools by our employees; • the incorporation of AI by our clients, vendors, contractors and other third-parties into their products or services, with or without our knowledge, in a manner that could give rise to issues pertaining to data privacy and confidentiality considerations; and • the evolving legal regulations relating to AI, which may require significant resources to modify and maintain business practices to comply with applicable law or otherwise result in legal or regulatory action or create additional liabilities.
Added
We may be adversely affected by environmental, social and governance matters. Certain investors and other stakeholders focus on environmental, social and governance matters.
Added
Many of these requirements are highly complex, which could result in even a technical or inadvertent mistake that could jeopardize COPT Defense’s REIT status.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+1 added−1 removed11 unchanged
Biggest changeThis team’s efforts are further informed through their participation in external cybersecurity-related panels, industry presentations and advisory boards, tabletop exercises and information-sharing collaborations and partnerships. 17 Our IT team executes a series of preventive, detective and responsive measures aimed towards managing our cybersecurity risks, including the following: > administering a series of processes and automated tools to monitor and alert for potentially malicious activities and vulnerabilities on our network, systems, applications and devices, with the ability to terminate processes and isolate potential vulnerabilities; > employing tools and controls to support our efforts in identity and access management, device and user management, and authentication; > ongoing cybersecurity maintenance activities, including scheduled maintenance time windows for comprehensive system updates to occur, with additional ad hoc updates, monitoring of all Company devices for timeliness of security updates and pushing time-sensitive updates to our system infrastructure and devices, as appropriate; > recurring, redundant backups of our applications, servers and data, with replication to remote storage locations; > assessing audit reports issued on controls of certain outsourced, or externally-hosted, systems or applications; and > periodically evaluating our readiness by performing testing of our process and system for responding to cyber events, including our ability to recover following such events.
Biggest changeOur IT team executes a series of preventive, detective and responsive measures aimed towards managing our cybersecurity risks, including the following: • administering a series of processes and automated tools to monitor and alert for potentially malicious activities and vulnerabilities on our network, systems, applications and devices, with the ability to terminate processes and isolate potential vulnerabilities; • employing tools and controls to support our efforts in identity and access management, device and user management, and authentication; • ongoing cybersecurity maintenance activities, including scheduled maintenance time windows for comprehensive system updates to occur, with additional ad hoc updates, monitoring of all Company devices for timeliness of security updates and pushing time-sensitive updates to our system infrastructure and devices, as appropriate; • recurring, redundant backups of our applications, servers and data, with replication to remote storage locations; • assessing audit reports issued on controls of certain outsourced, or externally-hosted, systems or applications; and • periodically evaluating our readiness by performing testing of our process and system for responding to cyber events, including our ability to recover following such events. 17 We engage consultants: • on an ongoing basis for certain aspects of our IT team’s recurring monitoring and alert processes and round-the-clock support, as needed; and • periodically to perform penetration testing and vulnerability scanning of our systems, websites and properties, run or support tabletop exercises and complete cyber risk-based assessments of us.
We also are subject to legal and regulatory requirements that affect our response to cybersecurity-risk management, including the Sarbanes-Oxley Act, state data breach notification requirements and certain requirements under our leases with tenants. 18
We also are subject to legal and regulatory requirements that affect our response to cybersecurity-risk management, including the Sarbanes-Oxley Act, federal and state data breach notification requirements and certain requirements under our leases with tenants. 18
Removed
We engage consultants: > on an ongoing basis for certain aspects of our IT team’s recurring monitoring and alert processes and round-the-clock support, as needed; and > periodically to perform penetration testing and vulnerability scanning of our systems, websites and properties, run or support tabletop exercises and complete cyber risk-based assessments of us.
Added
This team’s efforts are further informed through their participation in external cybersecurity-related panels, industry presentations and advisory boards, tabletop exercises and information-sharing collaborations and partnerships.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLease Expirations The following table provides a summary schedule of lease expirations for leases in place at our operating properties as of December 31, 2024 based on the non-cancelable term of tenant leases determined in accordance with generally accepted accounting principles in the United States of America (“GAAP”) (dollars and square feet in thousands, except per square foot amounts): Year of Lease Expiration Square Footage of Leases Expiring ARR of Expiring Leases (1) Percentage of Total ARR Expiring (1) Total ARR of Expiring Leases Per Occupied Square Foot (1) 2025 2,980 $ 131,582 19.2 % $ 44.12 2026 2,307 73,396 10.7 % $ 38.50 2027 2,060 63,147 9.2 % $ 36.40 2028 3,157 102,608 14.9 % $ 35.85 2029 3,218 74,826 10.9 % $ 32.13 2030 1,888 46,280 6.7 % $ 30.92 2031 1,063 19,179 2.8 % $ 28.47 2032 283 9,036 1.3 % $ 31.89 2033 661 26,558 3.9 % $ 40.19 2034 1,576 37,700 5.5 % $ 30.24 2035 1,271 42,142 6.1 % $ 33.15 2036 1,089 13,139 1.9 % $ 31.61 2037 102 9,768 1.4 % $ 94.77 2038 569 14,986 2.2 % $ 26.33 2039 483 10,706 1.6 % $ 22.16 2040 254 6,592 1.0 % $ 25.87 2041 (2) — 4,936 0.7 % $ — 2063 (2) — 137 — % $ — 2072 (2) — 126 — % $ — Total 22,961 $ 686,844 100.0 % $ 35.35 (1) Refer to definition provided in Item 7 of this Annual Report on Form 10-K.
Biggest changeLease payments will commence under the site-specific leases as cash rents under tenant leases commence at the respective properties. 20 Lease Expirations The following table provides a summary schedule of lease expirations for leases in place at our operating properties as of December 31, 2025 based on the non-cancelable term of tenant leases determined in accordance with generally accepted accounting principles in the United States of America (“GAAP”) (dollars and square feet in thousands, except per square foot amounts): Year of Lease Expiration Square Footage of Leases Expiring ARR of Expiring Leases (1) Percentage of Total ARR Expiring (1) Total ARR of Expiring Leases Per Occupied Square Foot (1) 2026 2,906 $ 140,301 19.3 % $ 48.24 2027 2,060 63,131 8.7 % $ 36.40 2028 3,426 119,880 16.5 % $ 38.06 2029 3,622 91,563 12.6 % $ 33.51 2030 1,943 50,461 6.9 % $ 32.40 2031 1,824 33,842 4.7 % $ 32.93 2032 462 12,575 1.7 % $ 27.23 2033 775 31,574 4.3 % $ 40.74 2034 1,677 41,651 5.7 % $ 30.91 2035 1,482 50,830 7.0 % $ 34.29 2036 1,248 17,213 2.4 % $ 29.95 2037 133 10,704 1.5 % $ 79.68 2038 651 19,893 2.7 % $ 30.53 2039 483 10,980 1.5 % $ 22.73 2040 422 11,248 1.5 % $ 26.64 2041 39 5,924 0.8 % $ 22.78 2042 277 9,651 1.3 % $ 34.79 2043 193 4,906 0.7 % $ 25.42 2045 16 1,231 0.2 % $ 75.00 2046 10 259 — % $ 25.25 2063 (2) — 139 — % $ — 2072 (2) — 129 — % $ — Total 23,649 $ 728,085 100.0 % $ 36.14 (1) Refer to definition provided in Item 7 of this Annual Report on Form 10-K.
(2) Includes only ground leases. 20 With regard to the leases reported above as expiring in 2025, we believe that the weighted average ARR per occupied square foot for such leases as of December 31, 2024, on average, approximated current market rents for the related space, with specific results varying by market.
(2) Includes only ground leases. With regard to the leases reported above as expiring in 2026, we believe that the weighted average ARR per occupied square foot for such leases as of December 31, 2025, on average, was approximately 1.0% to 3.0% lower than estimated current market rents for the related space, with specific results varying by market.
As this land is developed in the future, the joint venture will execute site-specific leases under the master lease agreement. Lease payments will commence under the site-specific leases as cash rents under tenant leases commence at the respective properties. (2) Represents land acquired in September 2024.
As this land is developed in the future, the joint venture will execute site-specific leases under the master lease agreement.
The following table provides certain information about properties that were under, or contractually committed for, development as of December 31, 2024 (dollars and square feet in thousands): Property and Location Estimated Rentable Square Feet Upon Completion Percentage Leased Calendar Quarter Anticipated to be Operational Costs Incurred to Date (1) Estimated Costs to Complete (1) Fort Meade/BW Corridor: 400 National Business Parkway Annapolis Junction, MD 138 0% 2Q 26 $ 41,546 $ 23,554 Redstone Arsenal: 9700 Advanced Gateway Huntsville, AL 50 73% 1Q 26 7,121 3,917 Data Center Shells: MP 3 Northern Virginia 225 100% 3Q 25 12,172 99,628 Southpoint Phase 2 Bldg B Northern Virginia 193 100% 4Q 25 6,602 58,398 Subtotal / Average 418 100% 18,774 158,026 Total Under Development 606 75% $ 67,441 $ 185,497 (1) Includes land, development, leasing costs and allocated portion of structured parking and other shared infrastructure, if applicable. 19 The following table provides certain information about land that we owned or controlled as of December 31, 2024, including properties under ground lease to us (square feet in thousands): Segment Acres Estimated Developable Square Feet Defense/IT Portfolio land owned/controlled for future development: Fort Meade/BW Corridor: National Business Park (Annapolis Junction, MD) 144 1,483 Howard County, MD 19 290 Other 126 1,338 Total Fort Meade/BW Corridor 289 3,111 NoVA Defense/IT 29 1,171 Navy Support 38 64 Redstone Arsenal (1) 295 3,350 Data Center Shells (2) 365 3,300 Total Defense/IT Portfolio land owned/controlled for future development 1,016 10,996 Other land owned/controlled 53 1,538 Total Land Owned/Controlled 1,069 12,534 (1) This land is owned by the USG and is controlled under a long-term master lease agreement to a consolidated joint venture.
The following table provides certain information about properties that were under, or contractually committed for, development as of December 31, 2025 (dollars and square feet in thousands): Property and Location Estimated Rentable Square Feet Upon Completion Percentage Leased Calendar Quarter Anticipated to be Operational Costs Incurred to Date (1) Estimated Costs to Complete (1) Fort Meade/BW Corridor 400 National Business Parkway Annapolis Junction, MD 148 0% 2Q 26 $ 49,799 $ 18,456 4400 River Road College Park, MD 110 100% 3Q 27 4,867 61,399 Fort Meade/BW Corridor Subtotal / Average 258 43% 54,666 79,855 Redstone Arsenal 7700 Advanced Gateway Huntsville, AL 101 100% 1Q 27 2,546 24,718 8500 Advanced Gateway Huntsville, AL 155 20% 2Q 27 28,654 23,663 Redstone Arsenal Subtotal / Average 256 52% 31,200 48,381 Lackland Air Force Base Project EL 2 San Antonio, TX 132 100% 4Q 27 813 86,787 Total Under Development 646 58% $ 86,679 $ 215,023 (1) Includes land, development, leasing costs and allocated portion of structured parking and other shared infrastructure, if applicable. 19 The following table provides certain information about land that we owned or controlled as of December 31, 2025, including properties under ground lease to us (square feet in thousands): Segment Acres Estimated Developable Square Feet Defense/IT Portfolio land owned/controlled for future development Fort Meade/BW Corridor National Business Park (Annapolis Junction, MD) 144 1,483 Howard County, MD 19 290 Other 123 1,228 Total Fort Meade/BW Corridor 286 3,001 Redstone Arsenal (1) 280 3,099 NoVA Defense/IT 29 1,171 Navy Support 38 64 Data Center Shells 365 3,300 Total Defense/IT Portfolio land owned/controlled for future development 998 10,635 Other land owned/controlled 47 1,478 Total Land Owned/Controlled 1,045 12,113 (1) This land is owned by the USG and is controlled by us under a long-term master lease agreement to a consolidated joint venture.
Properties The following table provides certain information about our operating property segments as of December 31, 2024 (dollars and square feet in thousands, except per square foot amounts): Segment Number of Properties Operational Square Feet Occupancy (1) ARR (2) ARR per Occupied Square Foot (2) Defense/IT Portfolio: Fort Meade/BW Corridor: National Business Park (Annapolis Junction, MD) 34 4,286 99.4 % $ 181,841 $ 42.66 Howard County, MD 36 3,063 92.4 % 85,630 $ 30.21 Other 23 1,725 95.0 % 54,879 $ 33.35 Fort Meade/BW Corridor Subtotal / Average 93 9,074 96.2 % 322,350 $ 36.88 NoVA Defense/IT 16 2,500 91.7 % 89,553 $ 39.07 Lackland Air Force Base 9 1,143 93.0 % 69,367 $ 60.70 Navy Support 22 1,271 82.6 % 31,158 $ 29.66 Redstone Arsenal 24 2,475 94.5 % 60,897 $ 25.89 Data Center Shells: Consolidated Properties 7 1,633 100.0 % 39,107 $ 23.95 Unconsolidated Joint Venture Properties 24 4,295 100.0 % 7,853 $ 18.28 Defense/IT Portfolio Subtotal / Average 195 22,391 95.6 % 620,285 $ 35.05 Other 8 2,146 72.8 % 66,559 $ 38.74 Total Operating Properties / Average 203 24,537 93.6 % $ 686,844 $ 35.35 Total Consolidated Operating Properties $ 678,991 (1) This percentage is based upon all rentable square feet under lease terms that were in effect as of December 31, 2024.
Properties The following table provides certain information about our operating property segments as of December 31, 2025 (dollars and square feet in thousands, except per square foot amounts): Segment Number of Properties Operational Square Feet Occupancy (1) ARR (2) ARR per Occupied Square Foot (2) Defense/IT Portfolio Fort Meade/BW Corridor National Business Park (Annapolis Junction, MD) 34 4,288 96.8 % $ 182,792 $ 44.03 Howard County, MD 36 3,064 89.2 % 82,553 $ 30.13 Other 25 1,883 93.3 % 58,654 $ 33.24 Fort Meade/BW Corridor Subtotal / Average 95 9,235 93.6 % 323,999 $ 37.44 Redstone Arsenal 25 2,525 96.1 % 64,160 $ 26.31 NoVA Defense/IT 17 2,643 93.5 % 100,065 $ 40.50 Lackland Air Force Base 9 1,143 100.0 % 73,213 $ 59.71 Navy Support 22 1,271 86.9 % 34,583 $ 31.32 Data Center Shells Consolidated Properties 9 2,047 100.0 % 52,952 $ 25.87 Unconsolidated Joint Venture Properties 24 4,295 100.0 % 8,286 $ 19.29 Defense/IT Portfolio Subtotal / Average 201 23,159 95.5 % 657,258 $ 35.67 Other 6 1,988 76.6 % 70,827 $ 41.78 Total Operating Properties / Average 207 25,147 94.0 % $ 728,085 $ 36.14 Total Consolidated Operating Properties $ 719,799 (1) This percentage is based upon all rentable square feet under lease terms that were in effect as of December 31, 2025.
(2) Refer to definition provided in Item 7 of this Annual Report on Form 10-K.
(2) Refer to definition provided in Item 7 of this Annual Report on Form 10-K. Our computation of ARR excludes the effect of lease incentives; the ARR per occupied square foot, including the effect of lease incentives, was $35.43 for our total operating properties and $35.06 for our Defense/IT Portfolio.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings (a) We are not currently involved in any material litigation nor, to our knowledge, is any material litigation currently threatened against us (other than routine litigation arising in the ordinary course of business, substantially all of which is expected to be covered by liability insurance). (b) None. Item 4. Mine Safety Disclosures Not applicable PART II
Biggest changeItem 3. Legal Proceedings (a) We are not currently involved in any material litigation nor, to our knowledge, is any material litigation currently threatened against us (other than routine litigation arising in the ordinary course of business, substantially all of which is expected to be covered by liability insurance). (b) None. Item 4.
Added
Mine Safety Disclosures Not applicable 21 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis number does not include shareholders whose shares were held of record by a brokerage house or clearing agency, but does include any such brokerage house or clearing agency as one record holder. 21 Common Shares Performance Graph The graph and the table set forth below assume $100 was invested on December 31, 2019 in our common shares.
Biggest changeThis number does not include shareholders whose shares were held of record by a brokerage house or clearing agency, but does include any such brokerage house or clearing agency as one record holder.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Our common shares trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “CDP”. The number of holders of record of our common shares was 446 as of February 5, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Our common shares trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “CDP”. The number of holders of record of our common shares was 448 as of February 4, 2026.
The graph and the table compare the cumulative return (assuming reinvestment of dividends) of this investment with a $100 investment at that time in the S&P 500 Index and the Office Property Sector of the FTSE All Equity REITs Index of the National Association of Real Estate Investment Trusts (“Nareit”) (the “Office Sector Index”): Period Ended Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 COPT Defense Properties $ 100 $ 93 $ 104 $ 100 $ 104 $ 131 S&P 500 Index $ 100 $ 118 $ 152 $ 125 $ 158 $ 197 Office Sector Index $ 100 $ 82 $ 100 $ 62 $ 63 $ 77 Shares Authorized for Issuance Under Equity Compensation Plans For the information required by Item 5 (a) related to shares authorized for issuance under equity compensation plans, you should refer to our definitive proxy statement relating to the 2025 Annual Meeting of our Shareholders to be filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
The graph and the table compare the cumulative return (assuming reinvestment of dividends) of this investment with a $100 investment at that time in the S&P 500 Index and the Office Property Sector of the FTSE All Equity REITs Index of the National Association of Real Estate Investment Trusts (“Nareit”) (the “Office Sector Index”): Period Ended Index 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 COPT Defense Properties $ 100 $ 112 $ 108 $ 112 $ 141 $ 132 S&P 500 Index $ 100 $ 129 $ 105 $ 133 $ 166 $ 196 Office Sector Index $ 100 $ 122 $ 76 $ 78 $ 94 $ 81 Shares Authorized for Issuance Under Equity Compensation Plans For the information required by Item 5 (a) related to shares authorized for issuance under equity compensation plans, you should refer to our definitive proxy statement relating to the 2026 Annual Meeting of our Shareholders to be filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Added
Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended December 31, 2025, we issued 262,165 common shares in exchange for 262,165 CDPLP common units in accordance with CDPLP’s Third Amended and Restated Limited Partnership Agreement, as amended.
Added
The issuance of these common shares relied upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. Common Shares Performance Graph The graph and the table set forth below assume $100 was invested on December 31, 2020 in our common shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeComparison of Statements of Operations for the Years Ended December 31, 2024 and 2023 For the Years Ended December 31, 2024 2023 Variance (in thousands) Revenues Revenues from real estate operations $ 677,717 $ 624,803 $ 52,914 Construction contract and other service revenues 75,550 60,179 15,371 Total revenues 753,267 684,982 68,285 Operating expenses Property operating expenses 266,001 247,385 18,616 Depreciation and amortization associated with real estate operations 153,640 148,950 4,690 Construction contract and other service expenses 73,265 57,416 15,849 Impairment losses — 252,797 (252,797) General, administrative, leasing and other expenses 47,038 42,769 4,269 Total operating expenses 539,944 749,317 (209,373) Interest expense (82,151) (71,142) (11,009) Interest and other income, net 12,661 12,587 74 Gain on sales of real estate — 49,392 (49,392) Equity in income (loss) of unconsolidated entities 397 (261) 658 Income tax expense (288) (588) 300 Net income (loss) $ 143,942 $ (74,347) $ 218,289 31 NOI from Real Estate Operations For the Years Ended December 31, 2024 2023 Variance (Dollars in thousands, except per square foot data) Revenues Same Property revenues Lease revenue, excluding lease termination revenue and collectability loss provisions $ 629,389 $ 604,397 $ 24,992 Lease termination revenue, net 3,451 3,745 (294) Collectability loss provisions included in lease revenue (3,157) (1,313) (1,844) Other property revenue 6,241 4,832 1,409 Same Property total revenues 635,924 611,661 24,263 Developed properties placed in service 30,488 5,079 25,409 Acquired properties 3,024 — 3,024 Dispositions, net of retained interest in newly-formed UJVs (3) 401 (404) Other 8,284 7,662 622 677,717 624,803 52,914 Property operating expenses Same Property (250,314) (239,768) (10,546) Developed properties placed in service (6,222) (705) (5,517) Acquired properties (1,833) — (1,833) Dispositions, net of retained interest in newly-formed UJVs (31) (56) 25 Other (7,601) (6,856) (745) (266,001) (247,385) (18,616) UJV NOI allocable to COPT Defense Same Property 5,459 4,946 513 Retained interests in newly-formed UJVs 1,758 1,713 45 7,217 6,659 558 NOI from real estate operations Same Property 391,069 376,839 14,230 Developed properties placed in service 24,266 4,374 19,892 Acquired properties 1,191 — 1,191 Dispositions, net of retained interest in newly-formed UJVs 1,724 2,058 (334) Other 683 806 (123) $ 418,933 $ 384,077 $ 34,856 Same Property NOI from real estate operations by segment Defense/IT Portfolio $ 361,642 $ 348,707 $ 12,935 Other 29,427 28,132 1,295 $ 391,069 $ 376,839 $ 14,230 Same Property rent statistics Average occupancy rate 93.6 % 93.2 % 0.4 % Average straight-line rent per occupied square foot (1) $ 27.74 $ 27.17 $ 0.57 (1) Includes minimum base rents, net of abatements and lease incentives and excluding lease termination revenue, on a straight-line basis for the years set forth above. 32 Regarding the changes in NOI from real estate operations reported above: > the increase for our Same Property pool was due in large part to additional revenue in 2024 resulting from increased rental and occupancy rates; > developed properties placed in service reflects the effect of nine properties placed in service in 2024 and 2023; > acquired properties includes two operating office properties acquired in 2024; and > dispositions, net of retained interest in newly-formed UJVs reflects the effect of our sale of 90% of our interests in three data center shells in 2023.
Biggest changeA reconciliation of NOI from real estate operations and NOI from service operations to net income reported on the consolidated statements of operations is provided in Note 13 to our consolidated financial statements. 31 Comparison of Statements of Operations for the Years Ended December 31, 2025 and 2024 For the Years Ended December 31, 2025 2024 Variance (in thousands) Revenues Revenues from real estate operations $ 721,849 $ 677,717 $ 44,132 Construction contract and other service revenues 42,074 75,550 (33,476) Total revenues 763,923 753,267 10,656 Operating expenses Property operating expenses 283,927 266,001 17,926 Depreciation and amortization associated with real estate operations 161,826 153,640 8,186 Construction contract and other service expenses 39,962 73,265 (33,303) General, administrative, leasing and other expenses 47,840 47,038 802 Total operating expenses 533,555 539,944 (6,389) Interest expense (86,660) (82,151) (4,509) Interest and other income, net 10,683 12,661 (1,978) Gain on sales of real estate 3,350 — 3,350 Loss on early extinguishment of debt (66) — (66) Equity in income of unconsolidated entities 2,806 397 2,409 Income tax expense (947) (288) (659) Net income $ 159,534 $ 143,942 $ 15,592 32 NOI from Real Estate Operations For the Years Ended December 31, 2025 2024 Variance (Dollars in thousands, except per square foot data) Revenues Same Property revenues Lease revenue, excluding lease termination revenue and collectability loss provisions $ 680,993 $ 654,994 $ 25,999 Lease termination revenue, net 3,612 3,451 161 Collectability loss provisions included in lease revenue (2,136) (3,157) 1,021 Other property revenue 7,568 6,241 1,327 Same Property total revenues 690,037 661,529 28,508 Developed properties placed in service 15,086 4,883 10,203 Acquired properties 7,066 3,024 4,042 Other 9,660 8,281 1,379 721,849 677,717 44,132 Property operating expenses Same Property (269,775) (255,679) (14,096) Developed properties placed in service (3,017) (857) (2,160) Acquired properties (2,967) (1,833) (1,134) Other (8,168) (7,632) (536) (283,927) (266,001) (17,926) UJV NOI allocable to COPT Defense Same Property 7,706 7,217 489 7,706 7,217 489 NOI from real estate operations Same Property 427,968 413,067 14,901 Developed properties placed in service 12,069 4,026 8,043 Acquired properties 4,099 1,191 2,908 Other 1,492 649 843 $ 445,628 $ 418,933 $ 26,695 Same Property NOI from real estate operations by segment Defense/IT Portfolio $ 393,882 $ 384,887 $ 8,995 Other 34,086 28,180 5,906 $ 427,968 $ 413,067 $ 14,901 Same Property rent statistics Average occupancy rate 94.3 % 93.9 % 0.4 % Average straight-line rent per occupied square foot (1) $ 28.42 $ 27.62 $ 0.80 (1) Includes minimum base rents, net of abatements and lease incentives and excluding lease termination revenue, on a straight-line basis for the years set forth above.
Additionally, it should not be used as an alternative to net income or loss when evaluating our financial performance or to cash flow from operating, investing and financing activities when evaluating our liquidity or ability to make cash distributions or pay debt service.
Additionally, it should not be used as an alternative to net income or loss when evaluating our financial performance or to cash flow from operating, investing and financing activities when evaluating our liquidity or ability to make cash distributions or pay debt service.
Important factors that may affect these expectations, estimates and projections include, but are not limited to: > general economic and business conditions, which will, among other things, affect office property and data center demand and rents, tenant creditworthiness, interest rates, financing availability, property operating and construction costs, and property values; > adverse changes in the real estate markets, including, among other things, increased competition with other companies; > our ability to borrow on favorable terms; > risks of property acquisition and development activities, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development or operating costs may be greater than anticipated; > risks of investing through joint venture structures, including risks that our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our objectives; > changes in our plans for properties or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of significant impairment losses; > potential impact of prolonged government shutdowns or budgetary reductions or impasses, such as a reduction of rental revenues, non-renewal of leases and/or reduced or delayed demand for additional space by existing or new tenants; > potential additional costs, such as capital improvements, fees and penalties, associated with environmental laws or regulations; > adverse changes resulting from other government actions and initiatives, such as changes in taxation, zoning laws or other regulations; > our ability to satisfy and operate effectively under federal income tax rules relating to real estate investment trusts and partnerships; > the dilutive effects of issuing additional common shares; and > security breaches relating to cyber attacks, cyber intrusions or other factors, and other significant disruptions of our information technology networks and related systems.
Important factors that may affect these expectations, estimates and projections include, but are not limited to: • general economic and business conditions, which will, among other things, affect office property and data center demand and rents, tenant creditworthiness, interest rates, financing availability, property operating and construction costs, and property values; • adverse changes in the real estate markets, including, among other things, increased competition with other companies; • our ability to borrow on favorable terms or at all; • risks of property acquisition and development activities, including, among other things, risks that development projects may not be completed on schedule, that tenants may not take occupancy or pay rent or that development or operating costs may be greater than anticipated; • risks of investing through joint venture structures, including risks that our joint venture partners may not fulfill their financial obligations as investors or may take actions that are inconsistent with our objectives; • changes in our plans for properties or views of market economic conditions or failure to obtain development rights, either of which could result in recognition of significant impairment losses; • potential impact of prolonged government shutdowns or budgetary reductions or impasses, such as a reduction of rental revenues, non-renewal of leases and/or reduced or delayed demand for additional space by existing or new tenants; • potential additional costs, such as capital improvements, fees and penalties, associated with environmental laws or regulations; • adverse changes resulting from other government actions and initiatives, such as changes in taxation, zoning laws or other regulations; • our ability to satisfy and operate effectively under federal income tax rules relating to real estate investment trusts and partnerships; • the dilutive effects of issuing additional common shares; and • security breaches relating to cyber attacks, cyber intrusions or other factors, and other significant disruptions of our information technology networks and related systems.
Factors we consider in making this assessment include the uniqueness of the purpose or location of the property, the availability of a comparable replacement property, the relative importance or significance of the property to the continuation of the lessee’s line of business and the existence of tenant leasehold improvements or other assets whose value would be impaired by the tenant vacating or discontinuing use of the leased property.
Factors we consider in making this 26 assessment include the uniqueness of the purpose or location of the property, the availability of a comparable replacement property, the relative importance or significance of the property to the continuation of the lessee’s line of business and the existence of tenant leasehold improvements or other assets whose value would be impaired by the tenant vacating or discontinuing use of the leased property.
Our determination of appropriate 26 capitalization or discount rates for use in estimating property fair values also requires significant judgment and is typically based on many factors, including the prevailing rate for the market or submarket, as well as the quality, location and other unique attributes of the property.
Our determination of appropriate capitalization or discount rates for use in estimating property fair values also requires significant judgment and is typically based on many factors, including the prevailing rate for the market or submarket, as well as the quality, location and other unique attributes of the property.
In addition, since most equity REITs provide Diluted FFO per share information to the investment community, we believe that Diluted FFO per share is a useful supplemental measure for comparing us to other equity REITs. We believe that diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share.
In addition, since most equity REITs provide Diluted FFO per share information to the investment community, we believe that Diluted FFO per share is a useful 35 supplemental measure for comparing us to other equity REITs. We believe that diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share.
This measure has essentially the same limitations as Diluted FFO, as well as the further limitation of 34 not reflecting the effects of the excluded items; we compensate for these limitations in essentially the same manner as described above for Diluted FFO.
This measure has essentially the same limitations as Diluted FFO, as well as the further limitation of not reflecting the effects of the excluded items; we compensate for these limitations in essentially the same manner as described above for Diluted FFO.
Our material cash requirements, including contractual and other obligations, include: > property operating expenses, including future lease obligations from us as a lessee; > construction contract expenses; > general, administrative, leasing and other expenses; > debt service, including interest expense; > property development costs; > tenant and capital improvements and leasing costs for operating properties (expected to total approximately $100 million in 2025); > debt balloon payments due upon maturity; and > dividends to our shareholders.
Our material cash requirements, including contractual and other obligations, include: • property operating expenses, including future lease obligations from us as a lessee; • construction contract expenses; • general, administrative, leasing and other expenses; • debt service, including interest expense; • property development costs; • tenant and capital improvements and leasing costs for operating properties (expected to total approximately $100 million in 2026); • debt balloon payments due upon maturity; and • dividends to our shareholders.
Assessment of Lease Term as Lessor As discussed above, a significant portion of our portfolio is leased to the USG, and the majority of those leases provide for one-year terms, with a series of one-year renewal options (with defined rent escalations upon each renewal), and/or provide for early termination rights.
Assessment of Lease Term as Lessor A significant portion of our portfolio is leased to the USG, and the majority of those leases provide for one-year terms, with a series of one-year renewal options (with defined rent escalations upon each renewal), and/or provide for early termination rights.
We expect to use cash flow from operations in 2025 and annually thereafter for the foreseeable future to fund all of these cash requirements except for debt balloon payments due upon maturity and a portion of property development costs, the fundings for which are discussed below.
We expect to use cash flow from operations in 2026 and annually thereafter for the foreseeable future to fund all of these cash requirements except for debt balloon payments due upon maturity and a portion of property development costs, the fundings for which are discussed below.
Our estimates of fair value consider matters such as recent sales data for comparable properties and, where applicable, contracts or the results of negotiations with prospective purchasers. These estimates are subject to revision as market conditions, and our assessment of such conditions, change.
Our estimates of fair value consider matters such as recent sales data for comparable properties and, when applicable, contracts or the results of negotiations with prospective purchasers. These estimates are subject to revision as market conditions, and our assessment of such conditions, change.
For further discussion of the concept of “operational,” refer to the Properties section of Note 2 of the consolidated financial statements; > developed properties placed into service that were not 100% operational throughout the two years being compared; 30 > acquired properties; and > disposed properties.
For further discussion of the concept of “operational,” refer to the Properties section of Note 2 of the consolidated financial statements; • developed properties placed into service that were not 100% operational throughout the two years being compared; and • acquired properties.
Diluted FFO available to common share and common unit holders, as adjusted for comparability is defined as Diluted FFO adjusted to exclude: operating property acquisition costs (for acquisitions classified as business combinations); gain or loss on early extinguishment of debt; FFO associated with properties that secured non-recourse debt on which we defaulted and, subsequently, extinguished via conveyance of such properties (including property NOI, interest expense and gains on debt extinguishment); loss on interest rate derivatives; and executive transition costs associated with named executive officers.
Diluted FFO available to common share and common unit holders, as adjusted for comparability is defined as Diluted FFO adjusted to exclude: operating property acquisition costs (for acquisitions classified as business combinations); gain or loss on early extinguishment of debt; demolition costs on redevelopment and nonrecurring improvements; FFO associated with properties that secured non-recourse debt on which we defaulted and, subsequently, extinguished via conveyance of such properties (including property NOI, interest expense and gains on debt extinguishment); loss on interest rate derivatives; and executive transition costs associated with named executive officers.
Supplemental Guarantor Information As of December 31, 2024, CDPLP had several series of unsecured senior notes outstanding that were issued in transactions registered with the SEC under the Securities Act of 1933, as amended.
Supplemental Guarantor Information As of December 31, 2025, CDPLP had several series of unsecured senior notes outstanding that were issued in transactions registered with the SEC under the Securities Act of 1933, as amended.
We believe that this demand drove our strong retention rate for the properties in this segment, along with the following unique advantages associated with our Defense/IT strategy: proximity of the properties to the demand drivers they serve; prevalence of significant investments in high security improvements, which may make tenants unable, or less likely, to relocate; and the high level of technical proficiency and credentials of our operations team (many of whom are credentialed) charged with managing these spaces.
We believe that this demand drove the strong performance of this segment, along with the following unique advantages associated with our Defense/IT strategy: proximity of the properties to the demand drivers they serve; prevalence of significant investments in high security improvements, which may make tenants unable, or less likely, to relocate; and the high level of technical proficiency and credentials of our operations team (many of whom are credentialed) charged with managing these spaces.
Changes in the estimated future cash flows due to changes in our plans for a property or significant changes in our views regarding property market and economic conditions and/or our ability to obtain development rights could result in recognition of impairment losses that could be substantial. 27 Concentration of Operations Customer Concentration of Property Operations The table below sets forth the 20 largest tenants in our portfolio of operating properties based on percentage of ARR: Percentage of ARR of Operating Properties for 20 Largest Tenants as of December 31, Tenant (1) 2024 2023 2022 USG 35.9 % 35.9 % 35.5 % Fortune 100 Company 9.8 % 8.7 % 8.4 % General Dynamics Corporation 4.8 % 5.0 % 5.1 % Northrop Grumman Corporation 2.2 % 2.3 % 2.4 % The Boeing Company 2.1 % 2.3 % 2.4 % CACI International Inc 2.1 % 2.3 % 2.4 % Peraton Corp. 2.0 % 2.0 % 2.1 % Booz Allen Hamilton, Inc. 1.8 % 1.8 % 1.9 % Fortune 100 Company 1.7 % 1.8 % 1.9 % Morrison & Foerster, LLP 1.4 % 1.5 % 1.4 % CareFirst Inc. 1.4 % 1.4 % 1.5 % KBR, Inc. 1.1 % 1.2 % 1.2 % Amentum Holdings, LLC 1.1 % N/A N/A Yulista Holding, LLC 1.0 % 1.1 % 1.1 % AT&T Corporation 1.0 % 1.0 % 1.1 % Mantech International Corp. 1.0 % 1.0 % 1.0 % University System of Maryland 0.9 % 0.9 % N/A Wells Fargo & Company 0.9 % 1.0 % 1.1 % Lockheed Martin Corporation 0.8 % NA N/A Miles and Stockbridge, P.C. 0.8 % 1.0 % 1.1 % RTX Corporation N/A 1.1 % 1.1 % Jacobs Engineering Group Inc.
Changes in the estimated future cash flows due to changes in our plans for a property or significant changes in our views regarding property market and economic conditions and/or our ability to obtain development rights could result in recognition of impairment losses that could be substantial. 27 Concentration of Operations Customer Concentration of Property Operations The table below sets forth the 20 largest tenants in our portfolio of operating properties based on percentage of ARR (dollars in thousands): Percentage of ARR of Operating Properties for 20 Largest Tenants as of December 31, Tenant (1) 2025 2024 2023 USG 35.4 % 35.9 % 35.9 % Fortune 100 Company 11.3 % 9.8 % 8.7 % General Dynamics Corporation 4.5 % 4.8 % 5.0 % Peraton Corp. 2.6 % 2.0 % 2.0 % The Boeing Company 2.1 % 2.1 % 2.3 % Northrop Grumman Corporation 2.1 % 2.2 % 2.3 % CACI International Inc 2.0 % 2.1 % 2.3 % Fortune 100 Company 1.7 % 1.7 % 1.8 % Booz Allen Hamilton, Inc. 1.5 % 1.8 % 1.8 % Morrison & Foerster, LLP 1.4 % 1.4 % 1.5 % KBR, Inc. 1.1 % 1.1 % 1.2 % CareFirst, Inc. 1.1 % 1.4 % 1.4 % Amentum Holdings, LLC 1.0 % 1.1 % N/A Yulista Holding, LLC 1.0 % 1.0 % 1.1 % Mantech International Corp. 1.0 % 1.0 % 1.0 % AT&T Corporation 0.9 % 1.0 % 1.0 % University System of Maryland 0.9 % 0.9 % 0.9 % Wells Fargo & Company 0.8 % 0.9 % 1.0 % Lockheed Martin Corporation 0.8 % 0.8 % NA The MITRE Corporation 0.7 % N/A N/A Miles and Stockbridge, P.C.
Straight-line rents include annual minimum base rents, net of abatements and lease incentives and excluding rent associated with tenant funded landlord assets, on a straight-line basis over the term of the lease, and estimated annual expense reimbursements (as of lease commencement for new or renewed leases or as of lease expiration for expiring leases).
Straight-line rents include: (1) annual minimum base rents, net of abatements and lease incentives and excluding rent associated with tenant funded landlord assets, on a straight-line basis over the term of the lease; (2) and estimated annual expense reimbursements. Straight-line rents are disclosed as of lease commencement for new or renewed leases or as of lease expiration for expiring leases.
ARR is a measure that we use to evaluate the source of our rental revenue as of a point in time.
ARR is a measure that we use to evaluate the sources of our rental revenue as of a point in time.
The facility matures in October 2026 and may be extended by two six-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.0625% of the total availability under the facility for each extension period. Our available borrowing capacity under the facility totaled $525.0 million as of December 31, 2024.
The facility matures in October 2029 and may be extended by two six-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.0625% of the total availability under the facility for each extension period. Our available borrowing capacity under the facility totaled $746.0 million as of December 31, 2025.
Our business is driven by our Defense/IT Portfolio segment, which as of year end represented 91.3% of our property square footage and 90.3% of our ARR.
Our business is driven by our Defense/IT Portfolio segment, which as of year end represented 92.1% of our property square footage and 90.3% of our ARR.
This pool of properties changed from the pool used for purposes of comparing 2023 and 2022 in our 2023 Annual Report on Form 10-K due to the addition of seven properties placed in service and 100% operational on or before January 1, 2023 and two properties owned through a UJV that was formed in 2022.
This pool of properties changed from the pool used for purposes of comparing 2024 and 2023 in our 2024 Annual Report on Form 10-K due to the addition of six properties placed in service and 100% operational on or before January 1, 2024 and three properties owned through a UJV that was formed in 2023.
Our general, administrative, leasing and other expenses are reported net of amounts capitalized for compensation and indirect costs associated with properties, or portions thereof, undergoing development activities. Our capitalized compensation and indirect costs totaled $9.3 million in 2024 and $9.5 million in 2023.
General, Administrative, Leasing and Other Expenses Our general, administrative, leasing and other expenses are reported net of amounts capitalized for compensation and indirect costs associated with properties, or portions thereof, undergoing development activities. Our capitalized compensation and indirect costs totaled $10.6 million in 2025 and $9.3 million in 2024.
We also use secured nonrecourse debt from institutional lenders and banks primarily for joint venture financings. In addition, we periodically raise equity when we access the public equity markets by issuing common shares and, to a lesser extent, preferred shares.
We also use secured nonrecourse debt from institutional lenders and banks primarily for joint venture financings. In addition, we periodically raise equity when we access the public equity markets by issuing common shares.
In 2025 and beyond, we expect to continue to actively develop additional properties and also could opportunistically acquire operating properties. We expect to fund these activities using, in part, available cash flow from operations and any excess available cash and cash equivalents, with the balance funded, at least initially, using borrowings under our Revolving Credit Facility.
In 2026 and beyond, we expect to continue to actively develop additional properties and also could opportunistically acquire operating properties. We expect to fund these activities using, in part, available cash flow from operations, with the balance funded using any remaining excess available cash and cash equivalents and borrowings under our Revolving Development Facility and Revolving Credit Facility.
We believe that the critical nature of the activities served by this segment’s properties has helped fuel strong demand for space, enabling the segment to consistently achieve year end occupancy of at least 93% in recent years.
We believe that the critical nature of the activities served by this segment’s properties has 23 helped fuel strong demand for space, enabling the segment to consistently achieve year end occupancy of at least 93% for each of the last nine years.
We discuss significant factors contributing to changes in our net income or loss between 2024 and 2023 in the section below entitled “Results of Operations.” In addition, the section below entitled “Liquidity and Capital Resources” includes discussions of, among other things: > how we expect to generate and obtain cash for short and long-term capital needs; and > material cash requirements for known contractual and other obligations.
Additional disclosure comparing our 2025 and 2024 results of operations is provided below. 25 We discuss significant factors contributing to changes in our net income between 2025 and 2024 in the section below entitled “Results of Operations.” In addition, the section below entitled “Liquidity and Capital Resources” includes discussions of, among other things: • how we expect to generate and obtain cash for short and long-term capital needs; and • material cash requirements for known contractual and other obligations.
N/A 1.0 % 1.0 % The MITRE Corporation N/A N/A 0.8 % Subtotal of 20 largest tenants 73.8 % 74.3 % 74.5 % All remaining tenants 26.2 % 25.7 % 25.5 % Total 100.0 % 100.0 % 100.0 % Total ARR $ 686,844 $ 646,660 $ 609,700 (1) Includes affiliated organizations where applicable.
N/A 0.8 % 1.0 % RTX Corporation N/A N/A 1.1 % Jacobs Engineering Group Inc. N/A N/A 1.0 % Subtotal of 20 largest tenants 73.9 % 73.8 % 74.3 % All remaining tenants 26.1 % 26.2 % 25.7 % Total 100.0 % 100.0 % 100.0 % Total ARR $ 728,085 $ 686,844 $ 646,660 (1) Includes affiliated organizations where applicable.
The cash rents for our renewals (totaling $35.26 per square foot) increased on average by approximately 0.6% and the straight-line rents (totaling $35.47 per square foot) increased on average by approximately 8.6% relative to the leases previously in place for the space.
The cash rents for our renewals (totaling $34.38 per square foot) increased on average by approximately 1.1% and the 29 straight-line rents (totaling $34.50 per square foot) increased on average by approximately 9.6% relative to the leases previously in place for the space.
Investment space leasing represents vacant space leased within two years of the shell completion date for development properties or the acquisition date for operating property acquisitions.
Investment space leasing represents vacant space leased within two years of the shell completion date for development properties or the acquisition date for operating property acquisitions. Vacant space leasing represents our vacated second-generation space leased and vacant space leased in development properties and operating property acquisitions after two years from such properties’ shell completion or acquisition date.
The renewed leases had a weighted average lease term of approximately 3.9 years, with average escalations per year of 2.4%, and the per annum average committed costs associated with completing the leasing was approximately $2.79 per square foot; > 500,000 square feet of vacant space leased, most of which for our Defense/IT Portfolio.
The renewed leases had a weighted average lease term of approximately 5.3 years, with average escalations per year of 2.0%, and the per annum average committed costs associated with completing the leasing was approximately $2.51 per square foot; • 557,000 square feet of vacant space leased, including 424,000 in our Defense/IT Portfolio and 133,000 in our Other segment.
Funds from Operations Funds from operations (“FFO”) is defined as net income or loss computed using GAAP, excluding gains on sales and impairment losses of real estate and investments in UJVs (net of associated income tax) and real estate-related depreciation and amortization.
Gain on Sales of Real Estate We recognized a gain on sale of real estate of $3.0 million in 2025 in connection with our sale of an undeveloped land parcel. 34 Funds from Operations Funds from operations (“FFO”) is defined as net income or loss computed using GAAP, excluding gains on sales and impairment losses of real estate and investments in UJVs (net of associated income tax) and real estate-related depreciation and amortization.
This increase was driven primarily by a: > $19.9 million increase from newly-developed properties placed in service; and > $14.2 million increase from our Same Properties, which included the effect of increased rental and occupancy rates in our Defense/IT Portfolio; and > diluted funds from operations per share, as adjusted for comparability increased 6.2% and the numerator for that measure increased $20.9 million, or 7.6%, relative to 2023 due primarily to increased NOI from real estate operations in 2024, offset in part by higher interest expense.
This increase was driven primarily by a $14.9 million increase from our Same Properties, which included the effect of increased rental and occupancy rates in our Defense/IT Portfolio, and an $11.0 million increase from external growth in our portfolio, including newly-developed properties placed in service and property acquisitions; and • diluted funds from operations per share, as adjusted for comparability increased 5.8% relative to 2024 due primarily to increased NOI from real estate operations in 2025.
The table below reconciles net income (loss), the most directly comparable GAAP measure, to NOI from real estate operations: For the Years Ended December 31, 2024 2023 (in thousands) Net income (loss) $ 143,942 $ (74,347) Construction contract and other service revenues (75,550) (60,179) Depreciation and other amortization associated with real estate operations 153,640 148,950 Construction contract and other service expenses 73,265 57,416 Impairment losses — 252,797 General, administrative, leasing and other expenses 47,038 42,769 Interest expense 82,151 71,142 Interest and other income, net (12,661) (12,587) Gain on sales of real estate — (49,392) Equity in (income) loss of unconsolidated entities (397) 261 UJV NOI allocable to COPT Defense included in equity in income (loss) of unconsolidated entities 7,217 6,659 Income tax expense 288 588 NOI from real estate operations $ 418,933 $ 384,077 We view our changes in NOI from real estate operations as being comprised of the following primary categories: > Same Property, which we define as properties stably owned and 100% operational throughout the two years being compared.
The table below reconciles net income, the most directly comparable GAAP measure, to NOI from real estate operations: For the Years Ended December 31, 2025 2024 (in thousands) Net income $ 159,534 $ 143,942 Construction contract and other service revenues (42,074) (75,550) Depreciation and other amortization associated with real estate operations 161,826 153,640 Construction contract and other service expenses 39,962 73,265 General, administrative, leasing and other expenses 47,840 47,038 Interest expense 86,660 82,151 Interest and other income, net (10,683) (12,661) Gain on sales of real estate (3,350) — Loss on early extinguishment of debt 66 — Equity in income of unconsolidated entities (2,806) (397) UJV NOI allocable to COPT Defense included in equity in income of unconsolidated entities 7,706 7,217 Income tax expense 947 288 NOI from real estate operations $ 445,628 $ 418,933 , Our changes in NOI from real estate operations included the following primary categories: • Same Property, which we define as properties stably owned and 100% operational throughout the two years being compared.
Our Same Property pool consisted of 189 properties, comprising 90.6% of our portfolio’s square footage as of December 31, 2024.
Our Same Property pool consisted of 198 properties, comprising 94.9% of our portfolio’s square footage as of December 31, 2025.
These measures are defined as (1) the sum of dividends on unrestricted common and deferred shares and distributions to holders of interests in CDPLP to the extent they are dilutive in the respective related non-GAAP per share numerators divided by (2) the respective non-GAAP measures. 35 The table below sets forth the computation of the above stated measures for 2024 and 2023 and provides reconciliations from the GAAP measures associated with such measures: For the Years Ended December 31, 2024 2023 (Dollars and shares in thousands, except per share data) Net income (loss) $ 143,942 $ (74,347) Real estate-related depreciation and amortization 153,640 148,950 Impairment losses on real estate — 252,797 Gain on sales of real estate — (49,392) Depreciation and amortization on UJVs allocable to COPT Defense 3,056 3,217 FFO 300,638 281,225 FFO allocable to other noncontrolling interests (3,855) (3,978) Basic FFO allocable to share-based compensation awards (2,417) (1,940) Basic FFO available to common share and common unit holders 294,366 275,307 Redeemable noncontrolling interests 1,963 (58) Diluted FFO adjustments allocable to share-based compensation awards 188 150 Diluted FFO available to common share and common unit holders 296,517 275,399 Executive transition costs 285 518 Diluted FFO comparability adjustments allocable to share-based compensation awards (2) (4) Diluted FFO available to common share and common unit holders, as adjusted for comparability $ 296,800 $ 275,913 Weighted average common shares 112,296 112,178 Conversion of weighted average common units 1,672 1,509 Weighted average common shares/units - Basic FFO per share 113,968 113,687 Dilutive effect of share-based compensation awards 603 424 Redeemable noncontrolling interests 842 38 Weighted average common shares/units - Diluted FFO per share and as adjusted for comparability 115,413 114,149 Diluted EPS $ 1.23 $ (0.67) Diluted FFO per share $ 2.57 $ 2.41 Diluted FFO per share, as adjusted for comparability $ 2.57 $ 2.42 Denominator for diluted EPS 112,899 112,178 Weighted average common units 1,672 1,509 Redeemable noncontrolling interests 842 38 Dilutive effect of additional share-based compensation awards — 424 Denominator for diluted FFO per share and as adjusted for comparability 115,413 114,149 Dividends on unrestricted common and deferred shares $ 132,628 $ 127,978 Distributions on unrestricted common units 1,987 1,725 Dividends and distributions on restricted shares and units 1,000 828 Dividends and distributions for net income payout ratio $ 135,615 $ 130,531 Dividends on unrestricted common and deferred shares $ 132,628 $ 127,978 Distributions on unrestricted common units 1,987 1,725 Dividends and distributions for FFO payout ratio 134,615 129,703 Dividends and distributions adjustments for dilution (6) (7) Dividends and distributions for diluted non-GAAP payout ratios $ 134,609 $ 129,696 Net income payout ratio 94.2 % N/A FFO payout ratio 44.8 % 46.1 % Diluted FFO payout ratio 45.4 % 47.1 % Diluted FFO payout ratio, as adjusted for comparability 45.4 % 47.0 % 36 Property Additions The table below sets forth the major components of our additions to properties for 2024 and 2023: For the Years Ended December 31, 2024 2023 Variance (in thousands) Properties in development or held for future development $ 153,306 $ 248,790 $ (95,484) Tenant improvements on operating properties (1) 57,496 58,315 (819) Capital improvements on operating properties 28,294 25,976 2,318 Acquisition of operating properties (2) 24,996 — 24,996 $ 264,092 $ 333,081 $ (68,989) (1) Tenant improvement costs incurred on newly-developed properties are classified in this table as development.
These measures are defined as (1) the sum of dividends on unrestricted common and deferred shares and distributions to holders of interests in CDPLP to the extent they are dilutive in the respective related non-GAAP per share numerators divided by (2) the respective non-GAAP measures. 36 The table below sets forth the computation of the above stated measures for 2025 and 2024 and provides reconciliations from the GAAP measures associated with such measures: For the Years Ended December 31, 2025 2024 (Dollars and shares in thousands, except per share data) Net income $ 159,534 $ 143,942 Real estate-related depreciation and amortization 161,826 153,640 Gain on sales of real estate (3,350) — Depreciation and amortization on UJVs allocable to COPT Defense 2,950 3,056 FFO 320,960 300,638 FFO allocable to other noncontrolling interests (5,566) (3,855) Basic FFO allocable to share-based compensation awards (2,171) (2,417) Basic FFO available to common share and common unit holders 313,223 294,366 Redeemable noncontrolling interests — 1,963 Diluted FFO adjustments allocable to share-based compensation awards 387 188 Diluted FFO available to common share and common unit holders 313,610 296,517 Loss on early extinguishment of debt 66 — Executive transition costs — 285 Loss on early extinguishment of debt on unconsolidated real estate JVs 28 — Diluted FFO comparability adjustments allocable to share-based compensation awards — (2) Diluted FFO available to common share and common unit holders, as adjusted for comparability $ 313,704 $ 296,800 Weighted average common shares 112,516 112,296 Conversion of weighted average common units 2,083 1,672 Weighted average common shares/units - Basic FFO per share 114,599 113,968 Dilutive effect of share-based compensation awards 788 603 Redeemable noncontrolling interests — 842 Weighted average common shares/units - Diluted FFO per share and as adjusted for comparability 115,387 115,413 Diluted EPS $ 1.34 $ 1.23 Diluted FFO per share $ 2.72 $ 2.57 Diluted FFO per share, as adjusted for comparability $ 2.72 $ 2.57 Denominator for diluted EPS 113,304 112,899 Weighted average common units 2,083 1,672 Redeemable noncontrolling interests — 842 Denominator for diluted FFO per share and as adjusted for comparability 115,387 115,413 Dividends on unrestricted common and deferred shares $ 137,388 $ 132,628 Distributions on unrestricted common units 2,558 1,987 Dividends and distributions on restricted shares and units 868 1,000 Dividends and distributions for net income payout ratio $ 140,814 $ 135,615 Dividends on unrestricted common and deferred shares $ 137,388 $ 132,628 Distributions on unrestricted common units 2,558 1,987 Dividends and distributions for FFO payout ratio 139,946 134,615 Dividends and distributions adjustments for dilution 94 (6) Dividends and distributions for diluted non-GAAP payout ratios $ 140,040 $ 134,609 Net income payout ratio 88.3 % 94.2 % FFO payout ratio 43.6 % 44.8 % Diluted FFO payout ratio 44.7 % 45.4 % Diluted FFO payout ratio, as adjusted for comparability 44.6 % 45.4 % 37 Property Additions The table below sets forth the major components of our additions to properties for 2025 and 2024: For the Years Ended December 31, 2025 2024 Variance (in thousands) Properties in development or held for future development $ 200,839 $ 153,306 $ 47,533 Tenant improvements on operating properties (1) 58,771 57,496 1,275 Capital improvements on operating properties 20,063 28,294 (8,231) Acquisition of operating properties (2) 20,300 24,996 (4,696) $ 299,973 $ 264,092 $ 35,881 (1) Tenant improvement costs incurred on newly-developed properties are classified in this table as development.
In 2025, we expect to spend $180 million to $220 million on costs for properties actively under development, most of which was contractually obligated as of December 31, 2024, and have $22.1 million in debt balloon payments maturing in 2025 that we expect to extend to 2026.
In 2026, we expect to spend $135 million to $175 million on costs for properties actively under development, most of which was contractually obligated as of December 31, 2025, and have $445.6 million in debt balloon payments maturing in 2026 (including the repayment at maturity of the 2.25% Notes).
Please refer to the section below entitled “Occupancy and Leasing” for additional related disclosure. 24 As of December 31, 2024, we ended the year with: > no significant debt maturing until 2026; > $525.0 million in available borrowing capacity under our Revolving Credit Facility; > no variable-rate debt exposure, including the effect of interest rate swaps; > only 2.9% of our outstanding debt encumbered by properties; and > the ability to fund the equity portion of our investing activities with cash flow from operations for the foreseeable future.
As of December 31, 2025, we ended the year with: • $400.0 million in 2.25% Notes maturing in March 2026 and no significant debt maturing thereafter until 2028; • $275.0 million in cash and cash equivalents; • $746.0 million in available borrowing capacity under our Revolving Credit Facility; • $104.0 million in available borrowing capacity under our Revolving Development Facility; • no variable-rate debt exposure, including the effect of interest rate swaps, although a $200.0 million notional amount of these swaps expired in February 2026; • 5.1% of our outstanding debt encumbered by properties; and • the ability to fund the equity portion of our investing activities with cash flow from operations for the foreseeable future.
Net cash flow provided by financing activities in 2023 was $46.3 million, and included primarily the following: > net proceeds from debt borrowings during the period of $181.4 million, which included the net effect of our issuance of the 5.25% Notes and a net paydown of borrowings under our Revolving Credit Facility using proceeds from the notes issuance and from property sales; and > dividends to common shareholders of $127.2 million.
Net cash flow provided by financing activities in 2025 was $216.5 million, and included primarily the following: • net proceeds of debt borrowings during the period of $371.7 million, which included proceeds from our issuance of the 4.50% Notes; and • dividends to common shareholders of $136.6 million.
The cash rents of this leasing totaled $35.23 per square foot and the straight-line rents totaled $36.26 per square foot; these leases had a weighted average lease term of approximately 7.7 years, with average escalations per year of 2.5%, and the per annum average committed costs associated with completing this leasing was approximately $11.60 per square foot; and > 124,000 square feet of investment space in our Defense/IT Portfolio, with weighted average lease terms of 8.2 years, including our leasing of 3900 Rogers Road subsequent to its acquisition. 29 Lease Expirations The table below sets forth as of December 31, 2024 our scheduled lease expirations based on the non-cancelable term of tenant leases determined in accordance with GAAP for our properties by segment/sub-segment in terms of percentage of ARR: Expiration of ARR of Operating Properties 2025 2026 2027 2028 2029 Thereafter Total Defense/IT Portfolio: Fort Meade/BW Corridor 10.1 % 6.0 % 5.5 % 9.6 % 4.4 % 11.4 % 47.0 % NoVA Defense/IT 0.3 % 0.3 % 0.9 % 2.5 % 3.7 % 5.2 % 13.0 % Lackland Air Force Base (1) 6.7 % 1.9 % 0.0 % 0.0 % 0.0 % 1.5 % 10.1 % Navy Support 0.6 % 1.1 % 1.4 % 0.4 % 0.4 % 0.6 % 4.5 % Redstone Arsenal 0.8 % 0.4 % 0.7 % 0.2 % 1.1 % 5.8 % 8.9 % Data Center Shells 0.0 % 0.1 % 0.1 % 0.1 % 0.3 % 6.2 % 6.8 % Other 0.6 % 0.9 % 0.6 % 2.2 % 1.0 % 4.4 % 9.7 % Total 19.2 % 10.7 % 9.2 % 14.9 % 10.9 % 35.1 % 100.0 % (1) Includes scheduled lease expirations in 2025 totaling $46.2 million in ARR on 703,000 square feet that we expect to renew.
Lease Expirations The table below sets forth as of December 31, 2025 our scheduled lease expirations based on the non-cancelable term of tenant leases determined in accordance with GAAP for our properties by segment/sub-segment in terms of percentage of ARR: Expiration of ARR of Operating Properties 2026 2027 2028 2029 2030 Thereafter Total Defense/IT Portfolio Fort Meade/BW Corridor 9.5 % 5.5 % 10.8 % 5.6 % 4.9 % 8.2 % 44.5 % Redstone Arsenal 0.1 % 0.7 % 0.1 % 1.4 % 0.9 % 5.6 % 8.8 % NoVA Defense/IT 0.4 % 0.5 % 2.5 % 3.9 % 0.6 % 5.8 % 13.7 % Lackland Air Force Base 8.2 % — % — % — % — % 1.8 % 10.1 % Navy Support 0.7 % 1.3 % 0.6 % 0.5 % 0.2 % 1.4 % 4.8 % Data Center Shells — % 0.1 % 0.1 % 0.3 % 0.1 % 7.8 % 8.4 % Other 0.3 % 0.5 % 2.3 % 0.9 % 0.2 % 5.5 % 9.7 % Total 19.3 % 8.7 % 16.5 % 12.6 % 6.9 % 36.1 % 100.0 % As of December 31, 2025, USG leases accounted for 83.3% of our total portfolio’s 2026 scheduled lease expirations, including 80.0% of Fort Meade/BW Corridor and 100% of Lackland Air Force Base scheduled lease expirations.
Vacant space leasing represents our vacated second-generation space leased and vacant space leased in development properties and operating property acquisitions after two years from such properties’ shell completion or acquisition date. 25 We also refer to the measures “cash rents”, “straight-line rents”, and “committed costs” in the “Occupancy and Leasing” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Annual Report on Form 10-K.
We also refer to the measures “cash rents”, “straight-line rents”, and “committed costs” in the “Occupancy and Leasing” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Annual Report on Form 10-K.
For our 2024 results of operations: > our diluted earnings per share increased from a loss of $(0.67) per share in 2023 to earnings of $1.23 per share in 2024, and our net income increased from a loss of $(74.3) million in 2023 to income of $143.9 million in 2024 due primarily to $252.8 million in impairment losses that we recognized in 2023 on six operating properties in our Other segment and a parcel of other land that we control; > net operating income (“NOI”) from real estate operations, our segment performance measure, increased $34.9 million, or 9.1%, relative to 2023.
For our 2025 results of operations: • our diluted earnings per share increased from $1.23 per share in 2024 to $1.34 per share in 2025, and our net income increased from $143.9 million in 2024 to $159.5 million in 2025, due primarily to increased income from our real estate operations; • net operating income (“NOI”) from real estate operations, our segment performance measure, increased $26.7 million, or 6.4%, relative to 2024.
Concentration of Properties by Segment The table below sets forth the segment allocation of our ARR (square feet in thousands): Percentage of ARR as of December 31, Operational Square Feet as of December 31, Region 2024 2023 2022 2024 2023 2022 Defense/IT Portfolio: Fort Meade/BW Corridor 47.0 % 47.7 % 46.8 % 9,074 8,880 8,695 NoVA Defense/IT 13.0 % 12.8 % 13.3 % 2,500 2,501 2,499 Lackland Air Force Base 10.1 % 9.5 % 9.9 % 1,143 1,062 1,060 Navy Support 4.5 % 5.2 % 5.4 % 1,271 1,273 1,262 Redstone Arsenal 8.9 % 8.8 % 7.6 % 2,475 2,300 2,070 Data Center Shells 6.8 % 5.8 % 6.7 % 5,928 5,703 5,283 Total Defense/IT Portfolio 90.3 % 89.8 % 89.7 % 22,391 21,719 20,869 Other 9.7 % 10.2 % 10.3 % 2,146 2,140 2,137 100.0 % 100.0 % 100.0 % 24,537 23,859 23,006 28 Occupancy and Leasing The tables below set forth occupancy information (excluding our Wholesale Data Center that we sold on January 25, 2022): December 31, 2024 2023 2022 Occupancy rates at period end Total 93.6 % 94.2 % 92.7 % Defense/IT Portfolio: Fort Meade/BW Corridor 96.2 % 96.4 % 92.7 % NoVA Defense/IT 91.7 % 88.9 % 90.0 % Lackland Air Force Base 93.0 % 100.0 % 100.0 % Navy Support 82.6 % 87.4 % 89.8 % Redstone Arsenal 94.5 % 97.5 % 89.9 % Data Center Shells 100.0 % 100.0 % 100.0 % Total Defense/IT Portfolio 95.6 % 96.2 % 94.1 % Other 72.8 % 73.2 % 78.8 % ARR per occupied square foot at year end $ 35.35 $ 34.14 $ 33.16 Rentable Square Feet Occupied Square Feet (in thousands) December 31, 2023 23,859 22,470 Vacated upon lease expiration (1) — (506) Occupancy for new leases — 563 Development placed in service 399 325 Acquisitions 282 112 Other changes (3) (3) December 31, 2024 24,537 22,961 (1) Includes lease terminations and space reductions occurring in connection with lease renewals.
Occupancy and Leasing The tables below set forth occupancy information: December 31, 2025 2024 2023 Occupancy rates at year end Total 94.0 % 93.6 % 94.2 % Defense/IT Portfolio: Fort Meade/BW Corridor 93.6 % 95.8 % 96.0 % Redstone Arsenal 96.1 % 94.5 % 97.5 % NoVA Defense/IT 93.5 % 91.7 % 88.9 % Lackland Air Force Base 100.0 % 93.0 % 100.0 % Navy Support 86.9 % 82.6 % 87.4 % Data Center Shells 100.0 % 100.0 % 100.0 % Total Defense/IT Portfolio 95.5 % 95.4 % 96.1 % Other 76.6 % 72.7 % 73.0 % ARR per occupied square foot at year end $ 36.14 $ 35.35 $ 34.14 Rentable Square Feet Occupied Square Feet (in thousands) December 31, 2024 24,537 22,961 Vacated upon lease expiration (1) — (597) Occupancy for new leases — 678 Development placed in service 468 468 Acquisition 142 142 Other changes — (3) December 31, 2025 25,147 23,649 (1) Includes lease terminations and space reductions occurring in connection with lease renewals.
We provide disclosure in our consolidated financial statements on our future lessee obligations (expected to be funded primarily by cash flow from operations) in Note 5 and future debt obligations (expected to be refinanced by new debt borrowings or funded by future equity issuances and/or sales of interests in properties) in Note 8.
We provide disclosure in our consolidated financial statements on our future lessee obligations (expected to be funded primarily by cash flow from operations) in Note 5 and future debt obligations (expected to be funded by any remaining excess available cash and cash equivalents, refinanced by new debt borrowings or funded by future equity issuances and/or sales of interests in properties) in Note 8. 39 Certain of our debt instruments require that we comply with a number of restrictive financial covenants, including maximum leverage ratio, unencumbered leverage ratio, minimum net worth, minimum fixed charge coverage, minimum unencumbered interest coverage ratio, minimum debt service and maximum secured indebtedness ratio.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements for information regarding recent accounting pronouncements. 38
As of December 31, 2025, we were compliant with these covenants. Recent Accounting Pronouncements See Note 2 to our consolidated financial statements for information regarding recent accounting pronouncements.
We do not consider these properties to be strategic holdings since they do not align with our Defense/IT strategy.
One property accounted for 37% of this segment’s vacant space and 11% of our total portfolio’s vacant space. We do not consider our Other segment’s properties to be strategic holdings since they do not align with our Defense/IT strategy.
The weighted average lease term as of December 31, 2024 was approximately five years. We believe that the weighted average ARR per occupied square foot for leases expiring in 2025, on average, approximated current market rents for the related space, with specific results varying by segment/sub-segment.
We believe that the weighted average ARR per occupied square foot for leases expiring in 2026, on average, was approximately 1.0% to 3.0% lower than estimated current market rents for the related space, with specific results varying by segment/sub-segment. 30 Results of Operations For a discussion of our results of operations comparison for 2024 and 2023, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on February 21, 2025.
We then subsequently pay down the facility using cash available from operations and proceeds from financing and/or investing activities, such as long-term borrowings, equity issuances and sales of interests in properties.
We expect to use our Revolving Credit Facility to initially fund most of the cash requirements from our other investing activities, including development cash requirements in excess of Revolving Development Facility available borrowings, as well as pay downs of the Revolving Development Facility discussed above and certain debt balloon payments due upon maturity; we expect to pay down this facility using cash available from operations and proceeds from financing and/or investing activities, such as long-term borrowings, equity issuances and sales of interests in properties.
In 2024, our Defense/IT Portfolio: > increased its Same Property pool’s average occupancy from 95.0% in 2023 to 95.8% in 2024, ending the year 96.4% occupied; 23 > achieved a near-record tenant retention rate of 88.6%, with average increases in rent per renewed square foot of 1.0% for cash rents (with a compound annual growth rate of 2.8%) and 8.9% for straight-line rents; and > leased 388,000 of its vacant space, which exceeded the expiring lease square footage that was vacated.
In 2025, our Defense/IT Portfolio: • achieved a tenant retention rate of 79.3%, our 10th consecutive year with a retention rate of at least 75%, with average increases in rent per renewed square foot of 2.7% for cash rents and 11.0% for straight-line rents; • leased 424,000 square feet of its vacant space, achieving progress across its sub-segments; • increased its Same Property pool’s average occupancy from 95.9% in 2024 to 96.0% in 2025, ending the year 95.8% occupied; and • completed 477,000 square feet in investment space leasing, including the four new development properties discussed below and vacant space in a property that we acquired last year.
Interest Expense The table below sets forth components of our interest expense: For the Years Ended December 31, 2024 2023 Variance (in thousands) Interest on unsecured senior notes $ 67,301 $ 53,546 $ 13,755 Interest on mortgage and other secured debt 4,245 5,072 (827) Interest on unsecured term debt 8,338 8,139 199 Interest on Revolving Credit Facility 5,009 8,341 (3,332) Interest expense offsets from interest rate swaps (4,330) (3,900) (430) Amortization of deferred financing costs 2,708 2,580 128 Other interest 1,752 1,843 (91) Capitalized interest (2,872) (4,479) 1,607 Interest expense $ 82,151 $ 71,142 $ 11,009 Interest expense increased due primarily to the issuance in September 2023 of our 5.25% Exchangeable Senior Notes due 2028 (“5.25% Notes”). 33 Our average outstanding debt was $2.4 billion in 2024 and $2.3 billion in 2023, and our weighted average effective interest rate on debt was approximately 3.2% in 2024 and 3.0% in 2023.
Interest Expense The table below sets forth components of our interest expense: For the Years Ended December 31, 2025 2024 Variance (in thousands) Interest on unsecured senior notes $ 72,115 $ 67,301 $ 4,814 Interest on mortgage and other secured debt 4,531 4,245 286 Interest on unsecured term debt 6,304 8,338 (2,034) Interest on Revolving Credit Facility 5,541 5,009 532 Interest expense offsets from interest rate swaps (1,491) (4,330) 2,839 Amortization of deferred financing costs 2,910 2,708 202 Other interest 1,921 1,752 169 Capitalized interest (5,171) (2,872) (2,299) Interest expense $ 86,660 $ 82,151 $ 4,509 Interest expense increased due primarily to the issuance in October 2025 of our 4.50% Senior Notes due 2030 to pre-fund the repayment at maturity of our 2.25% Notes.
Liquidity and Capital Resources As of December 31, 2024, we had $38.3 million in cash and cash equivalents. 37 We have a Revolving Credit Facility with a maximum borrowing capacity of $600.0 million.
Liquidity and Capital Resources As of December 31, 2025, we had $275.0 million in cash and cash equivalents.
In 2024, our total portfolio also included eight office properties in our Other segment, which as of year end represented 8.7% of our property square footage and 9.7% of our ARR. These properties, which have experienced a challenging leasing environment for several years, had an average occupancy rate of 72.7% in 2024.
In 2025, our total portfolio also included six office properties in our Other segment, which as of year end represented 7.9% of our property square footage and 9.7% of our ARR, and accounted for 31% of the portfolio’s vacant space.
Conversely, the 2024 year end occupancy rate of our Same Property pool (which excludes the effect of properties acquired and placed in service) increased (relative to 2023) from 93.8% to 94.1% for our total portfolio and from 96.0% to 96.4% for the Defense/IT Portfolio component due to lease commencements on vacant space leasing and strong tenant retention (86.0% for the total portfolio and 88.6% for the Defense/IT Portfolio).
The 2025 year end occupancy rate of our Same Property pool (which excludes the effect of properties acquired and placed in service in 2024 and 2025) decreased (relative to 2024) from 94.4% to 94.2% for our total portfolio and from 96.4% to 95.8% for the Defense/IT Portfolio component due primarily to several leases not renewed upon expiration in our Fort Meade/BW Corridor and Redstone Arsenal sub-segments.
As of December 31, 2024, we had scheduled lease expirations for 3.0 million square feet in 2025, representing 13.0% of our total occupied square feet and 19.2% of our total ARR, including: > 2.8 million square feet in our Defense/IT Portfolio segment, a high proportion of which we expect to renew due to the unique retention advantages associated with our Defense/IT strategy discussed above; and > 144,000 square feet in our Other segment, the renewal of which we believe was highly uncertain.
We expect to renew virtually all of these scheduled lease expirations due to the strong demand for space and unique retention advantages associated with our Defense/IT strategy discussed above; and • 82,000 square feet in our Other segment, which represented 5.4% of this segment’s occupied square feet.
As of December 31, 2024 we had scheduled lease expirations in 2025 for 144,000 square feet, or 9.2%, of this sub-segment’s occupied square feet, the renewal of which we believed was uncertain. In 2024, we leased 3.2 million square feet, including the following: > 2.6 million square feet in renewed leases, representing a tenant retention rate of 86.0%.
In 2025, we leased 3.1 million square feet, including the following: • 2.0 million square feet in renewed leases, representing a tenant retention rate of 77.9%. Most of these lease renewals were for our Defense/IT Portfolio, which had a retention rate of 79.3%, while our Other segment had a retention rate of 60.5%.
While we intend to sell them when market conditions and opportunities position us to optimize our return on investment, we did not initiate plans for sales in 2024 due in large part to the effects of increased interest rates and debt availability on potential buyers.
While we intend to sell them when market conditions and opportunities position us to optimize our return on investment, we did not initiate plans for sales in 2025 due in part to continued unfavorable capital markets for potential buyers. 24 Our total portfolio’s 2025 year end occupancy rate increased (relative to 2024) from 93.6% to 94.0% due primarily to improved occupancy in our Other segment resulting from vacant space leasing, with occupancy for our Defense/IT Portfolio increasing slightly from 95.4% to 95.5%.
NOI from Service Operations For the Years Ended December 31, 2024 2023 Variance (in thousands) Construction contract and other service revenues $ 75,550 $ 60,179 $ 15,371 Construction contract and other service expenses (73,265) (57,416) (15,849) NOI from service operations $ 2,285 $ 2,763 $ (478) Construction contract and other service revenues and expenses increased in 2024 due to a higher volume of construction activity for one of our tenants.
Our Same Properties also experienced increased property operating expenses, driven primarily by higher utility expenses (largely due to rate increases), labor-related increases in landscaping and janitorial and increased snow removal costs, the effect of which was mostly offset by increased tenant expense reimbursements and prior year real estate taxes refunded upon appeal; • developed properties placed in service reflects the effect of sixproperties placed in service in 2025 and 2024; and • acquired properties includes threeoperating office properties acquired in 2025 and 2024. 33 NOI from Service Operations For the Years Ended December 31, 2025 2024 Variance (in thousands) Construction contract and other service revenues $ 42,074 $ 75,550 $ (33,476) Construction contract and other service expenses (39,962) (73,265) 33,303 NOI from service operations $ 2,112 $ 2,285 $ (173) Construction contract and other service revenues and expenses decreased in 2025 due to a lower volume of construction activity for one of our tenants.
Net cash flow used in investing activities increased $121.4 million from 2023 to 2024 due primarily to proceeds from properties sold in 2023 (which included our sale of a 90% interest in three data center shells), which was partially offset by decreased cash paid for properties in development or held for future development.
Net cash flow used in investing activities decreased $1.3 million from 2024 to 2025, which included the effects of additional cash flow from distributions in 2025 of debt refinancing proceeds received from two of our UJVs, offset in part by increased cash outlays for property development activities, tenant improvements on operating properties and leasing costs.
Removed
Overview In 2024, we: > achieved year end occupancy of 93.6% for our total portfolio and 95.6% for our Defense/IT Portfolio; > completed strong leasing in our operating portfolio, with our highest tenant retention rate in over 20 years and vacant space leased during the year exceeding space vacated upon lease expirations; > placed into service space in three properties that were substantially leased and commenced development of two additional properties; > acquired operating properties for the first time in nine years to add supply to highly-leased business parks; > replenished our supply of land to support future data center shell development; and > ended the year with no significant debt maturing until 2026 and most of our Revolving Credit Facility’s borrowing capacity available.
Added
Overview In 2025, we: • achieved year end occupancy of 94.0% for our total portfolio and 95.5% for our Defense/IT Portfolio, both of which increased from year end 2024; • completed strong leasing in our operating portfolio, including 557,000 square feet in vacancy leasing, a volume equating to 47% of the unleased space we had as of year end 2024, and a 77.9% tenant retention rate; • committed capital to five new external growth investments across four Defense/IT Portfolio sub-segments, including: • four new development properties totaling 498,000 square feet, three of which were fully pre-leased; and • a fully-occupied, 142,000 square foot Defense/IT Portfolio property acquisition, which reinforces our position as the largest landlord in a highly-leased business park; • placed into service 468,000 newly-developed, fully-leased square feet across three Defense/IT Portfolio properties; • closed on three new financings, which pre-funded the repayment at maturity of a bond maturing in March 2026 and provided additional liquidity to fund our external growth; and • ended the year with no significant debt maturing until 2028 other than the pre-funded 2026 bond maturity.
Removed
Demand for secure space was strong, which we believe was bolstered in part by the nation’s challenges associated with global conflicts and the continued need to boost cybersecurity capabilities, and enabled us to improve lease economics by increasing cash rental rates, with fewer rent concessions.
Added
Throughout 2025, we experienced strong demand from defense contractors looking for new or incremental space to support mission programs and contracts, a significant amount of which required secured space.
Removed
Our Defense/IT Portfolio also benefited from continued defense budget appropriation increases, with bipartisan support in recent years.
Added
Our Defense/IT Portfolio also has benefited from continued defense budget appropriation increases, with bipartisan support, a trend we expect could continue for the foreseeable future with the 2026 USG defense budget appropriations increase approved in February 2026, along with the additional appropriations included in the One Big Beautiful Bill Act passed in July 2025.
Removed
As global threats to our national security and that of our allies continue to evolve and, in some cases, escalate, we believe that defense spending for the critical missions that our portfolio supports, such as intelligence, surveillance and cyber, will continue to be considered vital for the foreseeable future.
Added
We expect that these enhanced USG commitments to defense investment will support additional demand for our portfolio as the priority missions our tenants support are expected to see increased funding to counter an increasingly complex national security environment.
Removed
Strong Defense/IT Portfolio demand coupled with limited vacancy drove our need to invest in additional space, which we addressed in 2024 by: > acquiring vacant space in two operating properties, including: > 6841 Benjamin Franklin Drive, a 202,000 square foot property in Columbia, Maryland that was 56% leased, for a purchase price of $15.0 million on March 15, 2024; and > 3900 Rogers Road, an 80,000 square foot property in San Antonio, Texas that was vacant on the acquisition date and subsequently leased in full to the USG, for a purchase price of $17.0 million on September 26, 2024.
Added
These missions include intelligence, surveillance and reconnaissance, cybersecurity and network activities, naval sea and air technology development, unmanned aerial vehicles and missile defense and space activities.
Removed
We believe that these acquisitions provided space that was needed to service existing demand and were completed at substantial discounts to replacement cost; and > developing space in new properties, including: > 399,000 square feet placed in service during the year in three properties that were 83% leased as of year end in our Data Center Shells and Redstone Arsenal sub-segments; and > 606,000 square feet under development at year end in four properties that were 75% leased, including: two fully-leased data center shells scheduled to be placed in service in 2025; and one property each in Fort Meade/BW Corridor and Redstone Arsenal on which we commenced development in 2024 ahead of completed leasing to accommodate future anticipated USG and contractor demand; and > acquiring 365 acres of land near Des Moines, Iowa for $32.0 million on September 27, 2024 that we believe could be developed into approximately 3.3 million square feet of data center shell space in the long term.
Added
For the 43-day long federal government shutdown in 2025, the most significant effect on us was that it delayed our ability to progress, or finalize, certain of our Defense/IT Portfolio segment’s renewal leasing activities, but our existing USG leases remained in effect and the majority of our rent payments continued to occur in a timely manner.
Removed
We believe that significant demand for data center shells exists, fueled in large part by advancements in cloud computing and artificial intelligence, and Des Moines is one of the largest hyperscale data center markets in the United States.
Added
Strong Defense/IT Portfolio demand coupled with limited vacancy in our operating portfolio drove our need to continue to invest in additional space, which we addressed in 2025 through the following external growth investments: • developing space in new properties, including: • 468,000 square feet placed in service during the year in three fully-leased, newly-developed properties in our Data Center Shells and Redstone Arsenal sub-segments; and • 498,000 square feet in new capital commitments in four development properties across our Fort Meade/BW Corridor, Redstone Arsenal and Lackland Air Force Base sub-segments for an anticipated total cost of approximately $233.4 million.
Removed
We funded these property investments primarily using excess available cash flow from operations and cash and cash equivalents that we had remaining from our issuance of unsecured senior notes in 2023.
Added
As of December 31, 2025, we had an aggregate of 646,000 square feet under development in five properties that were 58% leased, including: three fully-leased properties expected to be placed in service in 2027; and two properties across our Fort Meade/BW Corridor and Redstone Arsenal sub-segments with minimal pre-leasing being developed to accommodate future anticipated USG and contractor demand, which are expected to be placed in service in 2026 and 2027; and • acquiring 15050 Conference Center Drive, a 142,000 square foot property in Chantilly, Virginia (included in our NoVA Defense/IT sub-segment), for a gross purchase price of $40.0 million, or $32.6 million net of a $7.4 million credit for an unpaid tenant improvement allowance.
Removed
Our 2024 year end occupancy rate decreased (relative to 2023) from 94.2% to 93.6% for our total portfolio and from 96.2% to 95.6% for our Defense/IT Portfolio due primarily to the vacant space that we acquired and placed in service in 2024 to feed demand in highly-leased business parks.
Added
This property, with significant secured-space enhancements, is located in a supply-constrained submarket in which we are the largest landlord, and is 100% leased to an existing defense contractor tenant of ours. We funded these property investments primarily using excess available cash flow from operations and borrowings under our Revolving Credit Facility and Revolving Development Facility (discussed below).
Removed
Economically, we believe that the: > rate of cost increases that we observed or experienced in recent years subsided to a more normalized level, and therefore did not significantly affect us in 2024; > lingering effects of instability in debt and equity markets also did not significantly affect us in 2024 since we had sufficient liquidity to fund our forecasted investing and financing activities through at least 2025 and virtually no variable-rate debt exposure.
Added
These properties, which have experienced a challenging leasing environment for several years, increased their average occupancy rate from 72.5% in 2024 to 75.5% in 2025, and we were successful in leasing 133,000 square feet of this segment’s vacant space in 2025, which exceeded the expiring lease square footage that was vacated.
Removed
However, constraints in commercial debt availability and elevated interest rates were not conducive to proper valuations from potential buyers of properties in our Other segment.
Added
As of December 31, 2025, we had scheduled lease expirations for 2.9 million square feet in 2026, representing 12.3% of our total occupied square feet and 19.3% of our total ARR, including: • 2.8 million square feet in our Defense/IT Portfolio segment, which included several large USG leases whose renewals were affected by the federal government shutdown.
Removed
In early 2026, we have $400.0 million in unsecured senior notes with a stated interest rate of 2.25% maturing that we will need to repay; to the extent that we refinance this debt with new unsecured fixed-rate debt, we expect it would be at a higher interest rate; and > continued prevalence of remote- and flexible-work arrangements that have adversely effected the United States office real estate industry in recent years has not significantly affected us due to our Defense/IT strategy, which results in a higher preponderance of tenants who require their employees to work in the properties for security purposes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−0 removed1 unchanged
Biggest change(2) As of December 31, 2024, maturities in 2025 included $22.1 million that may be extended to 2027 and 2026 included $75.0 million that may be extended to 2027 and $125.0 million that may be extended to 2028, all subject to certain conditions. (3) The amounts reflected above used interest rates as of December 31, 2024 for variable-rate debt.
Biggest change(2) Maturities in 2027 included $50.0 million that may be extended to 2028, subject to certain conditions. Maturities in 2029 included $150.0 million that may be extended to 2030, subject to certain conditions. (3) Represents interest rates in effect for variable-rate debt as of December 31, 2025.
See Note 9 to our consolidated financial statements for information pertaining to interest rate swap contracts in place as of December 31, 2024 and 2023 and their respective fair values.
See Note 9 to our consolidated financial statements for information pertaining to interest rate swap contracts in place as of December 31, 2025 and 2024 and their respective fair values.
Interest expense in 2024 was less sensitive to a change in interest rates than 2023 due primarily to our having no variable-rate debt outstanding for most of 2024, including the effect of interest rate swaps.
Interest expense in 2025 was more sensitive to a change in interest rates than 2024 due primarily to our having no variable-rate debt outstanding for most of 2024, including the effect of interest rate swaps.
The fair value of our debt was $2.2 billion as of December 31, 2024 and 2023. If interest rates had been 1% lower, the fair value of our fixed-rate debt would have increased by approximately $72 million as of December 31, 2024 and $82 million as of December 31, 2023.
The fair value of our debt was $2.7 billion as of December 31, 2025 and $2.2 billion as of December 31, 2024. If interest rates had been 1% lower, the fair value of our fixed-rate debt would have increased by approximately $88 million as of December 31, 2025 and $72 million as of December 31, 2024.
Based on our variable-rate debt balances, including the effect of interest rate swap contracts, our interest expense would have increased by $34,000 in 2024 and $764,000 in 2023 if the applicable variable index rate was 1% higher.
Based on our variable-rate debt balances, including the effect of interest rate swap contracts, our interest expense would have increased by approximately $512,000 in 2025 and $34,000 in 2024 if the applicable variable index rate was 1% higher.
Increases in interest rates can result in increased interest expense under our Revolving Credit Facility and other variable-rate debt to the extent we do not have interest rate swaps in place to hedge the effect of such rate increases. Increases in interest rates can also result in increased interest expense when our fixed-rate debt matures and needs to be refinanced.
Increases in interest rates can result in increased interest expense under our Revolving Credit Facility, Revolving Development Facility and other variable-rate debt to the extent we do not have interest rate swaps in place to hedge the effect of such rate increases.
The following table sets forth as of December 31, 2024 our debt obligations and weighted average interest rates on debt maturing each year (dollars in thousands): For the Years Ending December 31, 2025 2026 2027 2028 2029 Thereafter Total Debt: Fixed-rate debt (1) $ 1,302 $ 436,140 $ — $ 345,000 $ 400,000 $ 1,000,000 $ 2,182,442 Weighted average interest rate 3.23% 2.38% —% 5.25% 2.00% 2.81% 2.96% Variable-rate debt (2) $ 22,415 $ 210,160 $ — $ — $ — $ — $ 232,575 Weighted average interest rate (3) 6.19% 5.87% —% —% —% —% 5.90% (1) Represents principal maturities only and therefore excludes net discounts and deferred financing costs of $23.3 million.
The following table sets forth as of December 31, 2025 our debt obligations and weighted average interest rates on debt maturing each year (dollars in thousands): For the Years Ending December 31, 2026 2027 2028 2029 2030 Thereafter Total Debt Fixed-rate debt (1) $ 436,140 $ — $ 345,000 $ 400,000 $ 400,000 $ 1,000,000 $ 2,581,140 Weighted average interest rate 2.38% —% 5.25% 2.00% 4.25% 2.81% 3.16% Variable-rate debt (2) $ 10,160 $ 50,000 $ — $ 150,000 $ — $ — $ 210,160 Weighted average interest rate (3) 5.21% 4.92% —% 4.92% —% —% 4.94% (1) Represents principal maturities only and therefore excludes net discounts and deferred financing costs of $23.5 million.
Added
Increases in interest rates can also result in increased interest expense when our fixed-rate debt matures and needs to be refinanced.

Other CDP 10-K year-over-year comparisons