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What changed in COPT DEFENSE PROPERTIES's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of COPT DEFENSE PROPERTIES's 2023 and 2024 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 2024 report.

+209 added−223 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-22)

Top changes in COPT DEFENSE PROPERTIES's 2024 10-K

209 paragraphs added · 223 removed · 173 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

42 edited+4 added−4 removed13 unchanged
Biggest changeGreen 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 LEED for Building Operations and Maintenance (“LEED O+M: Existing Buildings”) guidelines for much of our portfolio, including cleaning, recycling, energy reduction and landscaping practices; (3) investing in building automation systems and high-efficiency heating and air conditioning equipment and implementing resource conservation practices to reduce energy consumption; (4) investing in water-saving features; and (5) participating in the annual Global Real Estate Sustainability Benchmark (“GRESB”) survey, which is widely recognized for measuring the environmental, social and governance (“ESG”) performance of real estate companies and funds.
Biggest changeGreen 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.
In addition, we have made available on our Internet website under the heading “Corporate Governance” the charters for our Board of Trustees’ Audit, Nominating and Corporate Governance, Compensation and Investment 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 “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.
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 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 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.
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 development and other 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 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.
We aim to sustainably 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: (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 enter into long-term leases for these properties prior to commencing development, with triple-net structures, rent escalators and multiple extension options. Additionally, our tenants’ significant funding of the costs to fully power and equip these properties greatly enhances the value of these properties and creates high barriers to exit for such tenants.
We typically enter into long-term leases for these properties prior to commencing development, with triple-net structures, rent escalators and multiple extension options. Additionally, our tenants’ significant funding of the costs to fully power and equip these properties greatly enhances the value of these properties and creates high barriers to exit for such tenants.
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) 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 (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.
Industry Segments As of December 31, 2023, 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.
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.
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, 2023. 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 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.
Our compensation program includes: base salary; an annual cash bonus program based on the achievement of individual, business unit and company objectives; health and welfare benefits; a retirement savings plan with a company match; financially-supported learning programs; and employee recognition programs.
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.
We make available on our Internet website free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably possible after we file such material with the Securities and Exchange Commission (the “SEC”).
We make available on our Internet website free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably possible after we file such material with the SEC.
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 has made them less susceptible to the effects of conditions in the overall economy 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 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 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.
All employees must adhere to our Code of Business Conduct. We typically survey our workforce annually to measure employee engagement and identify opportunities for further improvement, which we believe has helped us to achieve annual “best workplace” honors for over a decade. Compensation Program : Our compensation philosophy is driven by accountability, which results in a pay-for-performance structure.
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.
Our Defense/IT Portfolio includes data center shells, which are properties leased to tenants to be operated as data centers in which we provide tenants with only the core building and basic power, while the tenants fund the costs for the critical power, fiber connectivity and data center infrastructure.
Our Defense/IT Portfolio’s data center shells are properties leased to tenants to be operated as data centers in which we provide tenants with only the land, core building and basic power, while the tenants fund the costs for the critical power, fiber connectivity and data center infrastructure.
Navy (“Navy Support”). Properties in this sub-segment as of December 31, 2023 were proximate to the Washington Navy Yard in Washington, D.C., 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.
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.
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”).
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.
Building technicians are skilled trades professionals who perform mechanical and operating systems maintenance and otherwise service our properties; and > Office Staff, outlined below, of which approximately 53% were female and approximately 32% of minority race: > Operations Management (73 employees): Property managers and support staff who service our tenant customer needs. > Asset Management and Leasing (10 employees): Customer-facing leaders who drive the financial performance of our assets. > Development and Construction (30 employees): Project managers and support staff who drive our development pipeline and interior design. > Finance and Accounting (68 employees): Professionals who manage our financial activities. > Company Support Functions (44 employees): Includes Human Resources, Investor Relations, Investments, Legal, Marketing, Information Technology, Facility Security and Corporate Administrative Support. > Senior Leadership (13 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.
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.
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 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.
We design programs to support each of these dimensions. We directly incent wellbeing behaviors through a points-driven program each year. Employees who achieve the points threshold receive reductions in medical premiums or contributions to their health savings accounts. We believe this program enhances employee wellbeing and reduces medical costs.
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.
We provide a platform for employees to engage with communities by contributing time, effort, money and expertise, which includes providing employees eight hours of paid time per year to engage in volunteer activities to serve our community directly in a company-organized team or individual format. Our employees select community non-profits for Corporate giving grants and for volunteer time contributions.
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.
Human Capital Our Workforce : As of December 31, 2023, our workforce was comprised of 410 employees based in Maryland, where we are headquartered, Virginia, Washington, D.C., Alabama and Texas. Our workforce has varying expertise, and includes: > Building Technicians (172 employees), o f which approximately 32% were of minority race.
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.
We owned 24 of these data center shells through unconsolidated real estate joint ventures; > five properties under development (two office properties and three data center shells) that will total approximately 817,000 square feet upon completion; and > approximately 660 acres of land controlled that we believe could be developed into approximately 7.9 million square feet.
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.
As of December 31, 2023: our Defense/IT Portfolio segment included 190 of our operating properties, representing 91.0% 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 9.0% of our square feet in operations.
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.
We intend to make available on our website any future amendments or waivers to our Code of Business Conduct and Ethics and Code of Ethics for Financial Officers within four business days after any such amendments or waivers.
We intend to make available on our website any future amendments or waivers to our Code of Business Conduct and Ethics and Code of Ethics for Financial Officers within four business days after any such amendments or waivers. The information on our Internet site is not part of this report.
Defense/IT Strategy : We focus on owning, operating and developing Defense/IT Portfolio properties, which as of December 31, 2023 accounted for 190 of our 198 properties, representing 89.8% of our annualized rental revenue, 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, 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.
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 five dimensions: Physical, Emotional, Career, Financial and Community.
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.
Business and Growth Strategies Our primary goal is to deliver attractive total returns to our shareholders. This section sets forth key components of our business and growth strategies that we have in place to support this goal.
This section sets forth key components of our business and growth strategies that we have in place to support this goal.
As of December 31, 2023, our Defense/IT Portfolio included: > 190 operating properties totaling 21.7 million square feet comprised of 16.0 million square feet in 160 office properties and 5.7 million square feet in 30 single-tenant data center shells.
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.
Property Development and Acquisition 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 that we believe can further support that 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.
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.
The information on our Internet site is not part of this report. 5 The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. This Internet website can be accessed at www.sec.gov.
The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. This Internet website can be accessed at www.sec.gov. 5 Business and Growth Strategies Our primary goal is to deliver attractive total returns to our shareholders.
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. 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.
In September 2023, the ticker symbol under which our common shares are publicly traded on the New York Stock Exchange (“NYSE”) changed from “OFC” to “CDP”.
COPT Defense’s common shares are publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “CDP”.
Further, we offer internship and mentorship programs to facilitate teaching and learning from others. Community Engagement : We encourage employee engagement with our communities to facilitate personal growth and connection and to enhance our citizenship within our communities.
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.
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. In September 2023, we changed our name from Corporate Office Properties Trust to COPT Defense Properties to better describe our investment strategy’s focus on locations serving our country’s priority defense activities.
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.
Demand drivers for our Defense/IT Portfolio include: > mission-critical 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, D.C., Huntsville, Alabama and San Antonio Texas; and > data center shells 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.
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.
Other Office Properties : In addition to our Defense/IT Portfolio, we also owned eight other office properties as of December 31, 2023, representing 10.2% of our annualized rental revenue.
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.
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. 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.
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.
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 occasionally compete with other entities, including other publicly-traded commercial REITs, for acquisitions of land and/or commercial properties.
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.
Safety is a key part of our employee wellbeing, largely weighted in the Physical dimension. Recognizing 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.
Recognizing 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.
During 2023, our workforce size did not change significantly, with 72 new hires and 57 departures (an attrition rate of approximately 13.9%). 8 We offer robust learning programs to all employees, including educational assistance for college-level and vocational degree programs, and cover all expenses for licenses and certifications, management and leadership courses, key skills training and industry and professional conferences.
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.
We earned an overall score of “Green Star” on the GRESB survey in each of the last nine years, representing the highest quadrant of achievement on the survey.
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 September 2023, we changed CDPLP’s name from Corporate Office Properties, L.P. to COPT Defense Properties, L.P. Equity interests in CDPLP are in the form of common and preferred units. As of December 31, 2023, COPT Defense owned 97.8% of the outstanding CDPLP common units (“common units”) and there were no preferred units outstanding.
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.
Removed
Common units not owned by COPT Defense carry certain redemption rights.
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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.
Removed
Included among these properties is a portfolio of properties located in the Greater Washington, DC/Baltimore region, which we historically referred to as Regional Office; in 2023, we concluded that these properties were no longer strategic holdings since they do not align with our Defense/IT strategy.
Added
We pursue development activities as market conditions and leasing opportunities support favorable risk-adjusted returns on investment.
Removed
Talent Development : We aim to attract, retain and develop our top talent throughout the employment cycle in order to enhance our talent pool.
Added
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.
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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.
Added
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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+5 added−6 removed92 unchanged
Biggest changeThese 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; > trends in office real estate that may adversely affect future demand, including remote work and flexible work arrangements, open workspaces and coworking spaces; > 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; > increasing interest rates and unavailability of financing on acceptable terms or at all; > unavailability of financing for potential purchasers of our properties; 9 > 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 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.
Biggest changeThese 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.
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, 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 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.
The occurrence of epidemics or pandemics may adversely affect us in many ways, including, but not limited to: > disruption of our tenants’ operations, which could adversely affect their ability, or willingness, to sustain their businesses and/or fulfill their lease obligations; > our ability to maintain occupancy in our properties and obtain new leases for unoccupied and new development space at favorable terms or at all; > shortages in supply of products or services from vendors that are needed for us and our tenants to operate effectively, and which could lead to increased costs for such products and services; > access to debt and equity capital on attractive terms or at all.
The occurrence of epidemics or pandemics may adversely affect us in many ways, including, but not limited to: > disruption of our tenants’ operations, which could adversely affect their ability, or willingness, to sustain their businesses and/or fulfill their lease obligations; > our ability to maintain occupancy in our properties and obtain new leases for unoccupied space at favorable terms or at all; > shortages in supply of products or services from vendors that are needed for us and our tenants to operate effectively, and which could lead to increased costs for such products and services; > access to debt and equity capital on attractive terms or at all.
Our Board of Trustees may issue preferred shares with such preferences, rights, powers and restrictions if it chooses to do so, which could also delay or prevent a change in control. 16 In addition, various Maryland laws may have the effect of discouraging offers to acquire us, even if the acquisition would be advantageous to shareholders.
Our Board of Trustees may issue preferred shares with such preferences, rights, powers and restrictions if it chooses to do so, which could also delay or prevent a change in control. In addition, various Maryland laws may have the effect of discouraging offers to acquire us, even if the acquisition would be advantageous to shareholders.
This in turn would trigger a decrease in demand for space in these areas that could increase vacancies in our properties and adversely affect property rental rates and valuations. We may be subject to increased costs of insurance and limitations on coverage. Our portfolio of properties is insured for losses under our property, casualty and umbrella insurance policies.
This in turn may trigger a decrease in demand for space in these areas that could increase vacancies in our properties and adversely affect property rental rates and valuations. We may be subject to increased costs of insurance and limitations on coverage. Our portfolio of properties is insured for losses under our property, casualty and umbrella insurance policies.
If an audit or investigation of us were to uncover improper or illegal activities associated with our activities for the USG, we may be subject to civil or criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the USG.
If an audit or investigation of us were to uncover improper activities associated with our activities for the USG, we may be subject to civil or criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the USG.
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 pursue selective acquisitions of properties in regions where we have not previously owned properties.
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.
Therefore, our ability to fund much of these activities is dependent on our ability to externally generate capital through issuances of new debt, common shares, preferred shares, common or preferred units in CDPLP or sales of interests in properties. These capital sources may not be available on favorable terms or at all.
Therefore, our ability to fund much of these activities is dependent on our ability to externally generate capital through issuances of new debt, common shares, preferred shares, common or preferred units in CDPLP or sales of interests in properties. These capital sources may not be available to us on favorable terms or at all.
These laws can impose liability on current and prior property owners or operators for the costs of removal or remediation of hazardous substances released on a property, even if the property owner was not responsible for, or even aware of, the release of the hazardous substances. Costs resulting from environmental liability could be substantial.
These laws can impose liability on current and prior property owners or operators for the costs of removal or remediation of hazardous substances released on a property, even if the property owner was not responsible for, or even aware of, the release of the hazardous substances. Uninsured costs resulting from environmental liability could be substantial.
Some of our loan agreements contain provisions that could, in the event of default, restrict future distributions unless we meet certain financial tests or such payments or distributions are required to 14 maintain COPT Defense’s qualification as a REIT.
Some of our loan agreements contain provisions that could, in the event of default, restrict future distributions unless we meet certain financial tests or such payments or distributions are required to maintain COPT Defense’s qualification as a REIT.
This may limit our ability to make some types of payments, including payment 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.
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.
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.
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.
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, 2023 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, 2024 included in a separate section at the end of this report beginning on page F-1.
Severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our or our tenants’ ability to access capital necessary to fund operations, refinance debt or fund planned investments on a timely basis, and may adversely affect the valuation of financial assets and liabilities; and > our and our tenants’ ability to continue or complete planned development, including the potential for delays in the supply of materials or labor necessary for development.
Severe disruption and instability in the global financial markets or deterioration in credit and financing conditions may affect our or our tenants’ ability to access capital necessary to fund operations, refinance debt or fund planned investments on a timely basis, and may adversely affect the valuation of financial assets and liabilities; and > our and our tenants’ ability to continue or complete planned development, including the potential for delays in the supply of materials or labor necessary for development.
Furthermore, Congress and the Internal Revenue Service might make changes to the tax laws and regulations and the courts might 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. If COPT Defense fails to qualify as a REIT, it would be subject to federal income tax at regular corporate rates.
We may be adversely affected by the impact of climate-related risks. We may be adversely affected by extreme weather events, such as 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 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.
Virtually all of our unsecured debt is cross-defaulted, which means that failure to pay interest or principal on the 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. If interest rates were to rise, our debt service payments on debt with variable interest rates would increase.
Examples of such conditions include a broader economic recession, declining demand for space and decreases in market rental rates and/or market values of real estate assets. If our real estate assets significantly decline in value, it could result in our recognition of impairment losses.
Examples of such conditions include a broader economic recession, declining demand for space, increases in interest rates and decreases in market rental rates and/or market values of real estate assets. If our real estate assets significantly decline in value, it could result in our recognition of impairment losses.
When we develop or redevelop properties, we assume a number of risks, including, but not limited to, the risk of: actual costs 11 exceeding our budgets; conditions or events occurring that delay or preclude our ability to complete the project as originally planned or at all; projected leasing not occurring as expected or at all, or occurring at lower than expected rental rates; and not being able to obtain financing to fund property development activities.
When we develop or redevelop properties, we assume a number of risks, including, but not limited to, the risk of: actual costs exceeding our budgets; conditions or events occurring that delay or preclude our ability to complete the project as originally planned or at all; projected leasing not occurring as expected or at all, or occurring at lower than expected rental rates; and not being able to fund property development activities.
At any time, U.S. federal tax laws or the administrative interpretations of those laws may be changed. We cannot predict whether, when or to what extent new U.S. federal tax laws, regulations, interpretations or rulings will be issued.
At any time, U.S. federal tax laws or the administrative interpretations of those laws may change. We cannot predict whether, when or to what extent new U.S. federal tax laws, regulations, interpretations or rulings will be issued.
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; > 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; 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.
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.
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.
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; 15 > 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.
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.
The Ownership Limit and the restrictions on ownership of our common shares may delay or prevent a transaction or a change of control that might involve a premium price for our common shares or otherwise be in the best interest of our shareholders.
These restrictions on ownership of our common shares may delay or prevent a transaction or a change of control that might involve a premium price for our common shares or otherwise be in the best interest of our shareholders.
Our Senior Notes are currently rated investment grade, with stable outlooks, by the three major rating agencies. These credit ratings are subject to ongoing evaluation by the credit rating agencies and can change.
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.
We may experience significant losses and harm to our financial condition if financial institutions holding our cash and cash equivalents file for bankruptcy protection. We believe that we maintain our cash and cash equivalents with high quality financial institutions.
We may experience significant losses and harm to our financial condition if financial institutions holding our cash and cash equivalents file for bankruptcy protection or otherwise failed. We believe that we maintain our cash and cash equivalents with high quality financial institutions.
A reduction in government spending targeting the activities of the USG or its contractors (such as knowledge- and technology-based defense and security activities) in this portfolio’s demand drivers could adversely affect our tenants’ ability to fulfill lease obligations, renew leases or enter into new leases and limit our future growth from properties whose demand rely on such activities.
A temporary or permanent reduction in government spending targeting the activities of the USG or its contractors in this portfolio’s demand drivers could adversely affect our tenants’ ability to fulfill lease obligations, renew leases or enter into new leases and limit our future growth from properties whose demand rely on such activities.
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.
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.
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 development and acquisition strategy.
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.
We would be harmed if any of our largest tenants fail to make rental payments to us over an extended period of time, including as a result of a prolonged government shutdown, or if the USG elects to terminate some or all of its leases and the space cannot be re-leased on satisfactory terms. 10 As of December 31, 2023, 89.8% of our annualized rental revenue was from our Defense/IT Portfolio.
We would be harmed if any of our largest tenants fail to make rental payments to us over an extended period of time, including as a result of a prolonged government shutdown, or if the USG elects to terminate some or all of its leases and the space cannot be re-leased on satisfactory terms.
If our perceived commitment to environmental, social and governance matters fails to meet the expectations of investors and other stakeholders, it could adversely affect their willingness to invest in, or otherwise do business with, us. We may suffer adverse effects from epidemics or pandemics.
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.
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. Even a technical or inadvertent mistake could jeopardize COPT Defense’s REIT status.
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. We may be subject to other possible liabilities that would adversely affect our financial position and cash flows.
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.
As of December 31, 2023, our 10 largest tenants accounted for 63.5% of our total annualized rental revenue, the three largest of these tenants accounted for 49.6%, and the USG, our largest tenant, accounted for 35.9%.
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%.
Most of our properties are located in the Mid-Atlantic region of the United States, particularly in the Greater Washington, DC/Baltimore region. 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. Consequently, our portfolio of properties is not broadly distributed geographically.
Attacks by terrorists or foreign nations, or incidents related to social unrest, could directly or 12 indirectly damage our properties or cause losses that materially exceed our insurance coverage.
We have significant investments in properties located in large metropolitan areas or near military installations. Attacks by terrorists or foreign nations, or incidents related to social unrest, could directly or indirectly damage our properties or cause losses that materially exceed our insurance coverage.
Since 2013, we have developed 30 data center shells in Northern Virginia totaling 5.7 million square feet for a Fortune 100 Company tenant, and we had an additional three under development totaling 643,000 square feet for that tenant as of December 31, 2023.
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.
These properties have also garnered the interest of outside investors, enabling us to raise capital by selling ownership interests through joint venture structures at favorable profit margins, and to apply the proceeds towards other development opportunities. As of December 31, 2023, we did not have additional land under control in Northern Virginia for the future development of data center shells.
Historically, these properties have also garnered the interest of outside investors, enabling us to raise capital by selling ownership interests through joint venture structures at favorable profit margins, and to apply the proceeds towards other development opportunities.
Payments of principal and interest on our debt may leave us with insufficient cash to operate 13 our properties or pay distributions to COPT Defense’s shareholders required to maintain COPT Defense’s qualification as a REIT.
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.
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.
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.
If we are unable to locate additional data center shell development opportunities, we may no longer be able to develop data center shells. We may suffer economic harm in the event of a decline in the real estate market or general economic conditions in the Mid-Atlantic region, particularly in the Greater Washington, DC/Baltimore region, or in particular business parks.
We may suffer economic harm in the event of a decline in the real estate market or general economic conditions in the Mid-Atlantic region, particularly in the Greater Washington, DC/Baltimore region, or in particular business parks. Most of our properties are located in the Mid-Atlantic region of the United States, particularly in the Greater Washington, DC/Baltimore region.
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. COPT Defense is also required to distribute to shareholders at least 90% of its annual taxable income.
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.
Attacks by terrorists or foreign nations or incidents related to social unrest may adversely affect the value of our properties, our financial position and cash flows. We have significant investments in properties located in large metropolitan areas or near military installations.
These laws may require significant property modifications in the future and could result in the levy of fines against us. Attacks by terrorists or foreign nations or incidents related to social unrest may adversely affect the value of our properties, our financial position and cash flows.
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. We plan for COPT Defense to continue to meet the requirements for taxation as a REIT.
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.
Our properties may be subject to other risks related to current or future laws, including laws relating to zoning, development, fire and life safety requirements and other matters. These laws may require significant property modifications in the future and could result in the levy of fines against us.
We may be subject to other possible liabilities that would adversely affect our financial position and cash flows. Our properties may be subject to other risks related to current or future laws, including laws relating to zoning, development, fire and life safety requirements and other matters.
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.
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.
Removed
For additional information regarding our tenant concentrations, refer to the section entitled “Concentration of Operations” within the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We calculate annualized rental revenue by multiplying by 12 the sum of monthly contractual base rents (ignoring free rent then in effect and rent associated with tenant funded landlord assets) and estimated monthly expense reimbursements under active leases in our portfolio as of the date defined; with regard to properties owned through unconsolidated real estate joint ventures, we include the portion of annualized rental revenue allocable to our ownership interests.
Added
For additional information regarding our tenant concentrations, refer to the section entitled “Concentration of Operations” within the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We further define ARR in Item 7 of this Annual Report on Form 10-K.
Removed
Moreover, we may face additional economic harm in the event of long-term displacement, or elimination, of government spending for defense installations or missions from which demand for our Defense/IT Portfolio’s properties is driven. Our future ability to develop data center shells will be limited without additional land to do so.
Added
As of December 31, 2024, 90.3% of our ARR was from our Defense/IT Portfolio.
Removed
As of December 31, 2023, we had $2.4 billion in debt, the future maturities of which are set forth in Note 8 to our consolidated financial statements.
Added
Our ability to continue to use data center shell development as a growth driver and possible future source of capital may be limited if our cloud computing customer no longer chooses to allocate development opportunities to us or if we are unable to acquire suitable land for development.
Removed
As a result, if we are unable to meet the applicable financial tests, we may not be able to pay distributions in one or more periods.
Added
Other risks and uncertainties we may encounter as a result of such laws or regulations include, but are not limited to, limited availability of equipment, contractors and services required to complete the resulting capital improvements and potential future effects of increased electrification requirements, such as increased electricity rates and power grid constraints.
Removed
Please refer to Item 1C for disclosure regarding our cybersecurity risk management, strategy and governance. We may be adversely affected by environmental, social and governance matters. Certain investors and other stakeholders are increasingly focused on environmental, social and governance matters.
Added
We may suffer adverse effects from epidemics or pandemics.
Removed
Many of these requirements, however, are highly technical and complex. 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.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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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 information technology 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 and 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 occurring as needed, 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 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.
Organizationally, we aim to further support the forementioned measures through: > purchase and contracting controls aimed at preventing our entry into purchases or service arrangements: with entities blocked or banned by OFAC or the Federal Trade Commission; or outside of manufacturer authorized distribution channels; and > education of our employees, including cybersecurity-related training and periodic reminders and promotions regarding potential risks.
Organizationally, we aim to further support the forementioned measures through: > purchase and contracting controls aimed at preventing our entry into purchases or service arrangements: with entities blocked or banned by OFAC or the Federal Trade Commission; or outside of manufacturer authorized distribution channels; and > education of our employees, including cybersecurity-related training and periodic reminders regarding potential risks.
We engage consultants: > on an ongoing basis for certain aspects of our information technology 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 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.
Under our response protocols, following identification of such an incident, our CIO or other members of the information technology team would notify our executive team, which then would notify the Chairman of our Board of Trustees and assemble an Incident Management Team, comprised of certain defined management team members and external consultants, who collectively would assess and monitor the situation and manage internal and external communications.
Under our response protocols, following identification of such an incident, our CIO or other members of the IT team would notify our executive team, which then would notify the Chairman of our Board of Trustees and assemble an Incident Management Team, comprised of certain defined management team members and external consultants, who collectively would assess and monitor the situation and manage internal and external communications.
Our CIO, a Certified Information Systems Security Professional (“CISSP”) with over 20 years of information systems and information security leadership experience, leads our information technology team members, many of whom have USG security clearances and include one additional CISSP certified team member, in supporting our cybersecurity risk management efforts.
Our CIO, a Certified Information Systems Security Professional (“CISSP”) with over 20 years of information systems and information security leadership experience, leads our information technology team (“IT team”) members, many of whom have USG security clearances (including our CIO) and include one additional CISSP team member, in supporting our cybersecurity risk management efforts.
Two members of this committee possess cybersecurity and information systems experience, which we believe brings valuable insight and perspective to our risk management strategy. Our CIO and CFO also provide an annual review of our cyber risk assessment to our full Board of Trustees.
Two members of this committee possess technology and cybersecurity experience, which we believe brings valuable insight and perspective to our risk management strategy. Our CIO and CFO also provide an annual review of our cyber risk assessment to our full Board of Trustees.
Item 1C. Cybersecurity (a) As discussed in Item 1A, Risk Factors, we face risks associated with security breaches and other significant disruptions of our IT networks and related information systems, which are essential to our business operations.
Item 1C. Cybersecurity (a) As discussed in Item 1A, Risk Factors, we face risks associated with security breaches and other significant disruptions of our IT networks and related systems that are essential to our business operations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides certain information about land that we owned or controlled as of December 31, 2023, 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 1,630 Howard County, MD 19 290 Other 126 1,338 Total Fort Meade/BW Corridor 289 3,258 NoVA Defense/IT 29 1,171 Navy Support 38 64 Redstone Arsenal (1) 300 3,400 Total Defense/IT Portfolio land owned/controlled for future development 656 7,893 Other land owned/controlled 53 1,538 Total Land Owned/Controlled 709 9,431 (1) This land is owned by the USG and is controlled under a long-term master lease agreement to a consolidated joint venture.
Biggest changeThe 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.
(2) Includes only ground leases. With regard to the leases reported above as expiring in 2024, we believe that the weighted average annualized rental revenue per occupied square foot for such leases as of December 31, 2023, on average, approximated estimated current market rents for the related space, with specific results varying by market.
(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.
As this land is developed in the future, the joint venture will execute site-specific leases under the master lease agreement.
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.
Properties The following table provides certain information about our operating property segments as of December 31, 2023 (dollars and square feet in thousands, except per square foot amounts): Segment Number of Properties Operational Square Feet Occupancy (1) Annualized Rental Revenue (2) Annualized Rental Revenue per Occupied Square Foot (2) Defense/IT Portfolio: Fort Meade/BW Corridor: National Business Park (Annapolis Junction, MD) 34 4,293 99.3 % $ 176,899 $ 41.49 Howard County, MD 35 2,862 93.9 % 78,389 $ 29.12 Other 23 1,725 93.1 % 53,064 $ 32.90 Fort Meade/BW Corridor Subtotal / Average 92 8,880 96.4 % 308,352 $ 35.99 NoVA Defense/IT 16 2,501 88.9 % 82,482 $ 37.09 Lackland Air Force Base 8 1,062 100.0 % 61,383 $ 53.27 Navy Support 22 1,273 87.4 % 33,420 $ 30.04 Redstone Arsenal 22 2,300 97.5 % 56,918 $ 25.24 Data Center Shells: Consolidated Properties 6 1,408 100.0 % 31,087 $ 22.08 Unconsolidated Joint Venture Properties 24 4,295 100.0 % 6,741 $ 15.69 Defense/IT Portfolio Subtotal / Average 190 21,719 96.2 % 580,383 $ 33.74 Other 8 2,140 73.2 % 66,277 $ 38.42 Total Operating Properties / Average 198 23,859 94.2 % $ 646,660 $ 34.14 Total Consolidated Operating Properties $ 639,920 (1) This percentage is based upon all rentable square feet under lease terms that were in effect as of December 31, 2023.
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.
Lease 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, 2023 based on the non-cancelable term of tenant leases determined in accordance with generally accepted accounting principles (dollars and square feet in thousands, except per square foot amounts): Year of Lease Expiration Square Footage of Leases Expiring Annualized Rental Revenue of Expiring Leases (1) Percentage of Total Annualized Rental Revenue Expiring (1) Total Annualized Rental Revenue of Expiring Leases Per Occupied Square Foot (1) 2024 2,576 $ 82,599 12.8 % $ 35.92 2025 3,645 145,662 22.5 % $ 39.51 2026 1,959 61,398 9.5 % $ 39.41 2027 1,714 49,383 7.6 % $ 35.59 2028 2,418 64,392 10.0 % $ 32.92 2029 2,321 52,455 8.1 % $ 30.72 2030 1,320 29,624 4.6 % $ 28.51 2031 959 16,649 2.6 % $ 29.19 2032 230 7,209 1.1 % $ 31.30 2033 646 22,836 3.5 % $ 35.37 2034 1,438 32,661 5.1 % $ 29.46 2035 1,080 33,217 5.1 % $ 30.75 2036 1,010 9,908 1.5 % $ 29.44 2037 102 9,573 1.5 % $ 92.86 2038 569 14,207 2.2 % $ 24.96 2039 483 9,786 1.5 % $ 20.25 2041 (2) — 4,841 0.8 % N/A 2063 (2) — 135 — % N/A 2072 (2) — 125 — % N/A Total 22,470 $ 646,660 100.0 % $ 34.14 (1) Refer to definition provided on first page of Item 2 of this Annual Report on Form 10-K.
Lease 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.
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(2) Annualized rental revenue is the monthly contractual base rent as of December 31, 2023 (ignoring free rent then in effect and rent associated with tenant funded landlord assets) multiplied by 12, plus the estimated annualized expense reimbursements under existing leases for occupied space.
Added
(2) Refer to definition provided in Item 7 of this Annual Report on Form 10-K.
Removed
With regard to properties owned through unconsolidated real estate joint ventures, we include the portion of annualized rental revenue allocable to our ownership interest.
Removed
We consider annualized rental revenue to be a useful measure for analyzing revenue sources because, since it is point-in-time based, it does not contain increases and decreases in revenue associated with periods in which lease terms were not in effect; historical revenue under generally accepted accounting principles does contain such fluctuations.
Removed
We find the measure particularly useful for leasing, tenant, segment and industry analysis.
Removed
Our calculation of annualized rental revenue per occupied square foot excludes revenue of our reportable segments from leases not associated with our buildings. 19 The following table provides certain information about properties that were under, or contractually committed for, development as of December 31, 2023 (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) Redstone Arsenal: 5300 Redstone Gateway Huntsville, Alabama 46 100% 1Q 24 $ 17,973 $ 2,578 8100 Rideout Road Huntsville, Alabama 128 42% 3Q 24 30,485 13,478 Subtotal / Average 174 57% 48,458 16,056 Data Center Shells: Southpoint Phase 2 Bldg A Northern Virginia 225 100% 3Q 24 20,760 61,740 Southpoint Phase 2 Bldg B Northern Virginia 193 100% 3Q 25 5,150 59,850 MP 3 Northern Virginia 225 100% 4Q 25 10,031 101,769 Subtotal / Average 643 100% 35,941 223,359 Total Under Development 817 91% $ 84,399 $ 239,415 (1) Includes land, development, leasing costs and allocated portion of structured parking and other shared infrastructure, if applicable.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings 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). Item 4. Mine Safety Disclosures Not applicable. 21 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. Mine Safety Disclosures Not applicable PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShares Authorized for Issuance Under Equity Compensation Plans For the information required by Item 5 (a) related to shares authorized for issuance under equity compensation plan, you should refer to our definitive proxy statement relating to the 2024 Annual Meeting of our Shareholders to be filed with the 22 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.
Biggest changeThe 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.
This 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. Common Shares Performance Graph The graph and the table set forth below assume $100 was invested on December 31, 2018 in our common shares.
This 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.
(b) Not applicable (c) None Item 6. [Reserved] 23
(b) Not applicable (c) None. Item 6. [Reserved] 22
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) In September 2023, the ticker symbol under which our common shares are publicly traded on the New York Stock Exchange (“NYSE”) changed from “OFC” to “CDP”. The number of holders of record of our common shares was 439 as of February 7, 2024.
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.
Removed
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, the FTSE All Equity REITs Index of the National Association of Real Estate Investment Trusts (“Nareit”) (the “All Equity REITs Index”) and the Office Property Sector of the FTSE All Equity REITs Index of Nareit (the “Office Sector Index”): Period Ended Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 COPT Defense Properties $ 100.00 $ 145.23 $ 134.90 $ 150.59 $ 145.69 $ 150.89 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Office Property Sector of FTSE Nareit All Equity REITs Index $ 100.00 $ 131.42 $ 107.19 $ 130.77 $ 81.58 $ 83.23 FTSE Nareit All Equity REITs Index $ 100.00 $ 128.66 $ 122.07 $ 172.49 $ 129.45 $ 144.16 In our 2022 Annual Report on Form 10-K, we used the All Equity REITs Index for purposes of comparing the performance of our shares to an industry index of our peers.
Removed
Effective for our 2023 Annual Report on Form 10-K, we changed the industry index of our peers to the Office Sector Index as we believe it to be a closer representation of our business model than the broader index we previously used.
Removed
Since 2023 is the initial year for our change in the industry index of our peers, we are presenting both of these indexes in the graph and table included above.

Item 7. Management's Discussion & Analysis

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

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Biggest changeChanges 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. 28 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 annualized rental revenue: Percentage of Annualized Rental Revenue of Operating Properties for 20 Largest Tenants as of December 31, Tenant (1) 2023 2022 2021 USG 35.9 % 35.5 % 35.6 % Fortune 100 Company 8.7 % 8.4 % 9.2 % General Dynamics Corporation 5.0 % 5.1 % 5.6 % CACI International Inc 2.3 % 2.4 % 2.4 % Northrop Grumman Corporation 2.3 % 2.4 % 1.4 % The Boeing Company 2.3 % 2.4 % 2.5 % Peraton Corp. 2.0 % 2.1 % 2.1 % Booz Allen Hamilton, Inc. 1.8 % 1.9 % 1.9 % Fortune 100 Company 1.8 % 1.9 % N/A Morrison & Foerster, LLP 1.5 % 1.4 % 1.0 % CareFirst Inc. 1.4 % 1.5 % 1.7 % KBR, Inc. 1.2 % 1.2 % N/A Yulista Holding, LLC 1.1 % 1.1 % 1.1 % RTX Corporation 1.1 % 1.1 % 1.1 % Miles and Stockbridge, PC 1.0 % 1.1 % 1.0 % AT&T Corporation 1.0 % 1.1 % 1.1 % Mantech International Corp. 1.0 % 1.0 % 1.0 % Jacobs Engineering Group Inc. 1.0 % 1.0 % 1.0 % Wells Fargo & Company 1.0 % 1.1 % 1.1 % University System of Maryland 0.9 % N/A 0.8 % The MITRE Corporation N/A 0.8 % 0.8 % Transamerica Life Insurance Company N/A N/A 0.9 % Subtotal of 20 largest tenants 74.3 % 74.5 % 73.3 % All remaining tenants 25.7 % 25.5 % 26.7 % Total 100.0 % 100.0 % 100.0 % Total annualized rental revenue $ 646,660 $ 609,700 $ 589,425 (1) Includes affiliated organizations where applicable. 29 Concentration of Properties by Segment The table below sets forth the segment allocation of our annualized rental revenue (excluding our Wholesale Data Center that we sold on January 25, 2022) as of the end of the last three calendar years: Percentage of Annualized Rental Revenue as of December 31, Number of Properties as of December 31, Region 2023 2022 2021 2023 2022 2021 Defense/IT Portfolio: Fort Meade/BW Corridor 47.7 % 46.8 % 47.0 % 92 91 90 NoVA Defense/IT 12.8 % 13.3 % 13.9 % 16 16 16 Lackland Air Force Base 9.5 % 9.9 % 10.6 % 8 8 8 Navy Support 5.2 % 5.4 % 5.9 % 22 22 21 Redstone Arsenal 8.8 % 7.6 % 5.4 % 22 21 17 Data Center Shells 5.8 % 6.7 % 5.3 % 30 28 26 Total Defense/IT Portfolio 89.8 % 89.7 % 88.1 % 190 186 178 Other 10.2 % 10.3 % 11.9 % 8 8 8 100.0 % 100.0 % 100.0 % 198 194 186 The changes in revenue concentration reflected above between year-end 2022 and 2023 were attributable primarily to the: increasing effects in 2023 of occupied properties placed in service (most notably for Fort Meade/BW Corridor, Redstone Arsenal and Data Center Shells) and occupancy from vacant space leasing for Fort Meade/BW Corridor and Redstone Arsenal; offset in part by the decreasing effect from our sale of interests in Data Center Shells in 2023.
Biggest changeChanges 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.
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 a 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; > 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.
Net cash flow provided by financing activities in 2023 was $46.3 million, and included primarily the following: > net proceeds of 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 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.
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 renewal), and/or provide for early termination rights.
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.
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.
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.
Construction contract activity is inherently subject to significant variability depending on the volume and nature of projects undertaken by us on behalf of tenants. Service operations are an ancillary component of our overall operations that typically contribute an insignificant amount of income relative to our real estate operations.
Construction contract activity is inherently subject to significant variability depending on the volume and nature of projects undertaken by us primarily on behalf of tenants. Service operations are an ancillary component of our overall operations that typically contribute an insignificant amount of income relative to our real estate operations.
For most of our leases with the USG, our estimates of lease term conclude 27 that exercise of existing renewal options, or continuation of such leases without exercising early termination rights, is reasonably certain as it relates to the expected lease end date.
For most of our leases with the USG, our estimates of lease term conclude that exercise of existing renewal options, or continuation of such leases without exercising early termination rights, is reasonably certain as it relates to the expected lease end date.
However, these notes are effectively subordinated in right of payment to CDPLP’s existing and future secured indebtedness. The notes are also effectively subordinated in right of payment to all existing and future liabilities and other indebtedness, whether secured or unsecured, of CDPLP's subsidiaries. COPT Defense fully and unconditionally guarantees CDPLP’s obligations under these notes.
The notes are also effectively subordinated in right of payment to all existing and future liabilities and other indebtedness, whether secured or unsecured, of CDPLP's subsidiaries. COPT Defense fully and unconditionally guarantees CDPLP’s obligations under these notes.
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.
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.
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, 2023.
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.
We expect to use cash flow from operations in 2024 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 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.
Our senior unsecured debt is rated investment grade, with stable outlooks, by the three major rating agencies. We aim to maintain an investment grade rating to enable us to use debt comprised of unsecured, primarily fixed-rate debt (including the effect of interest rate swaps) from public markets and banks.
Our senior unsecured debt is rated investment grade, with either stable or positive outlooks, by the three major rating agencies. We aim to maintain an investment grade rating to enable us to use debt comprised of unsecured, primarily fixed-rate debt (including the effect of interest rate swaps) from public markets and banks.
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 $85 million in 2024); > 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 2025); > debt balloon payments due upon maturity; and > dividends to our shareholders.
Historically, future market rental and occupancy rates have tended to be the most variable assumption in our impairment analyses of properties to be held and used; while changes in these assumptions can significantly affect our estimates of property undiscounted future cash flows in our recoverability analyses, such changes historically have not usually resulted in impairment losses since the resulting recoverability analyses still have tended to exceed the carrying value of the property asset groups.
Historically, future market rental and occupancy rates and tenant improvement requirements have tended to be the most variable assumptions in our impairment analyses of properties to be held and used; while changes in these assumptions can significantly affect our estimates of property undiscounted future cash flows in our recoverability analyses, such changes historically have not usually resulted in impairment losses since the resulting recoverability analyses still have tended to exceed the carrying value of the property asset groups.
Gain on Sales of Real Estate The gain on sales of real estate recognized in 2023 was due to our sale of a 90% interest in three data center shell properties. Gain on sales of real estate in 2022 was due to our sale of a 90% interest in two data center shell properties.
Gain on Sales of Real Estate The gain on sales of real estate recognized in 2023 was due to our sale of a 90% interest in three data center shell properties.
It is computed by multiplying by 12 the sum of monthly contractual base rents and estimated monthly expense reimbursements under active leases as of a point in time (ignoring free rent then in effect and rent associated with tenant funded landlord assets). Our computation of annualized rental revenue excludes the effect of lease incentives.
It is computed by multiplying by 12 the sum of monthly contractual base rents and estimated monthly expense reimbursements under active leases as of a point in time (ignoring free rent then in effect and rent associated with tenant funded landlord assets). Our computation of ARR excludes the effect of lease incentives.
As a result of this process, we shortened the expected holding periods for six operating properties in our Other segment and a parcel of land located in Baltimore, Maryland, Northern Virginia and Washington, D.C.
As a result of this process, we shortened the expected holding periods for six operating properties in our Other segment and a parcel of land located in Baltimore, Maryland, Northern Virginia and Washington, DC.
We evaluate the operating performance of our properties using NOI from real estate operations, our segment performance measure, which includes: real estate revenues and property operating expenses from continuing and discontinued operations; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate 31 joint ventures (“UJVs”) that is allocable to our ownership interest (“UJV NOI allocable to COPT Defense”).
We evaluate the operating performance of our properties using NOI from real estate operations, our segment performance measure, which includes: real estate revenues and property operating expenses; and the net of revenues and property operating expenses of real estate operations owned through unconsolidated real estate joint ventures (“UJV” or “UJVs”) that is allocable to our ownership interest (“UJV NOI allocable to COPT Defense”).
Results of Operations For a discussion of our results of operations comparison for 2022 and 2021, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on February 24, 2023.
Results of Operations For a discussion of our results of operations comparison for 2023 and 2022, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 22, 2024.
With regard to our operating portfolio square footage, occupancy and leasing statistics included below and elsewhere in this Annual Report on Form 10-K, amounts disclosed include total information pertaining to properties owned through unconsolidated real estate joint ventures except for amounts reported for annualized rental revenue, which represent the portion attributable to our ownership interest.
For operating portfolio square footage, occupancy and leasing statistics included below and elsewhere in this Annual Report on Form 10-K, amounts disclosed include information pertaining to properties owned through unconsolidated real estate joint ventures except for amounts reported for ARR, which represent the portion attributable to our ownership interest.
The primary manner in which we evaluate the operating performance of our construction management and other service activities is through a measure we define as NOI from service operations, which is based on the net of the revenues and expenses from these activities.
In addition to owning properties, we provide construction management and other services. The primary manner in which we evaluate the operating performance of our construction management and other service activities is through a measure we define as NOI from service operations, which is based on the net of the revenues and expenses from these activities.
General, Administrative, Leasing and Other Expenses Our general, administrative, leasing and other expenses are net of amounts capitalized for compensation and indirect costs associated with properties, or portions thereof, undergoing development or redevelopment activities. Our capitalized compensation and indirect costs totaled $9.5 million in 2023 and $10.7 million in 2022.
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.
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.
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. As of December 31, 2024, we were compliant with these covenants.
Additional disclosure comparing our 2023 and 2022 results of operations is provided below. 26 We discuss significant factors contributing to changes in our net income between 2023 and 2022 in the section below entitled “Results of Operations.” In addition, the section below entitled “Liquidity and Capital Resources” includes discussions of, among other things: > how we expect to generate and obtain cash for short and long-term capital needs; and > material cash requirements for known contractual and other obligations.
We 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.
As permitted under Rule 13-01(a)(4)(vi), we do not provide summarized financial information for the Operating Partnership since: the assets, liabilities, and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company; and we believe that inclusion of such summarized financial information would be repetitive and not provide incremental value to investors. 39 Liquidity and Capital Resources As of December 31, 2023, we had $167.8 million in cash and cash equivalents.
As permitted under Rule 13-01(a)(4)(vi), we do not provide summarized financial information for the Operating Partnership since: the assets, liabilities, and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company; and we believe that inclusion of such summarized financial information would be repetitive and not provide incremental value to investors.
This change was comprised primarily of: > a $26.4 million increase from newly-developed properties placed in service; and > a $10.5 million increase from our Same Properties, which included the effect of increased occupancy in our Defense/IT Portfolio; offset in part by > a $15.1 million decrease from property dispositions; and > diluted funds from operations per share, as adjusted for comparability increased 2.5% and the numerator for that measure increased $6.9 million, or 2.6%, relative to 2022, due primarily to increased NOI from real estate operations in 2023, offset in part by higher interest expense.
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.
For further discussion of the concept of “operational,” refer to the Properties section of Note 2 of the consolidated financial statements; > developed or redeveloped properties placed into service that were not 100% operational throughout the two years being compared; and > disposed properties. In addition to owning properties, we provide construction management and other services.
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.
Most of these lease renewals were for our Defense/IT Portfolio, which had a retention rate of 85.7%, while our Other segment had a retention rate of 25.3%.
Most of these lease renewals were for our Defense/IT Portfolio, which had a retention rate of 88.6%, while our Other segment had a retention rate of 49.4%.
The renewed leases had a weighted average lease term of approximately 4.8 years, with average escalations per year of 2.6%, and the per annum average committed costs associated with completing the leasing was approximately $3.16 per square foot. In 2023, we also completed leasing on 452,000 square feet of vacant space, predominantly for our Defense/IT Portfolio.
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 cash rents for our renewals (totaling $34.69 per square foot) increased on average by approximately 1.5% and the straight-line rents (totaling $34.69 per square foot) increased on average by approximately 9.3% relative to the leases previously in place for the space.
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.
We have a Revolving Credit Facility with a maximum borrowing capacity of $600.0 million. We use this facility to initially fund most of the cash requirements from our investing activities, including property development/redevelopment costs, as well as certain debt balloon payments due upon maturity.
We use this facility to initially fund most of the cash requirements from our investing activities, including property development and acquisition costs, as well as certain debt balloon payments due upon maturity.
We expect to fund these cash requirements using, in part, remaining cash flow from operations and any remaining excess available cash and cash equivalents, with the balance funded using borrowings under our Revolving Credit Facility, at least initially.
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.
We consider annualized rental revenue to be a useful measure for analyzing revenue sources because, since it is point-in-time based, it does not contain increases and decreases in revenue associated with periods in which lease terms were not in effect; historical revenue under generally accepted accounting principles in the United States of America (“GAAP”) does contain such fluctuations.
We consider ARR to be a useful measure for analyzing revenue sources because, since it is point-in-time based, it does not contain increases and decreases in revenue associated with periods in which lease terms were not in effect; historical revenue under GAAP does contain such fluctuations. We find the measure particularly useful for leasing, tenant, segment and industry analysis.
The table below reconciles NOI from real estate operations to net (loss) income, the most directly comparable GAAP measure: For the Years Ended December 31, 2023 2022 (in thousands) Net (loss) income $ (74,347) $ 178,822 Construction contract and other service revenues (60,179) (154,632) Depreciation and other amortization associated with real estate operations 148,950 141,230 Construction contract and other service expenses 57,416 149,963 Impairment losses 252,797 — General, administrative, leasing and other expenses 42,769 38,991 Interest expense 71,142 61,174 Interest and other income, net (12,587) (9,070) Gain on sales of real estate from continuing operations (49,392) (19,250) Loss on early extinguishment of debt — 609 Equity in loss (income) of unconsolidated entities 261 (1,743) UJV NOI allocable to COPT Defense included in equity in (loss) income of unconsolidated entities 6,659 4,327 Income tax expense 588 447 Discontinued operations — (29,573) Revenues from real estate operations from discontinued operations — 1,980 Property operating expenses from discontinued operations — (971) NOI from real estate operations $ 384,077 $ 362,304 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 (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.
We believe that the weighted average annualized rental revenue per occupied square foot for leases expiring in 2024, on average, approximated estimated current market rents for the related space, with specific results varying by segment/sub-segment.
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.
Our Same Property pool consisted of 180 properties, comprising 86.4% of our portfolio’s square footage as of December 31, 2023.
Our Same Property pool consisted of 189 properties, comprising 90.6% of our portfolio’s square footage as of December 31, 2024.
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 for purposes of calculating the respective related non-GAAP per share measures, divided by (2) the respective non-GAAP measures. 37 The table below sets forth the computation of the above stated measures for 2023 and 2022 and provides reconciliations to the GAAP measures associated with such measures: For the Years Ended December 31, 2023 2022 (Dollars and shares in thousands, except per share data) Net (loss) income $ (74,347) $ 178,822 Real estate-related depreciation and amortization 148,950 141,230 Impairment losses on real estate 252,797 — Gain on sales of real estate (49,392) (47,814) Depreciation and amortization on UJVs allocable to COPT Defense 3,217 2,101 FFO 281,225 274,339 FFO allocable to other noncontrolling interests (3,978) (4,795) Basic FFO allocable to share-based compensation awards (1,940) (1,433) Basic FFO available to common share and common unit holders 275,307 268,111 Redeemable noncontrolling interests (58) (34) Diluted FFO adjustments allocable to share-based compensation awards 150 109 Diluted FFO available to common share and common unit holders 275,399 268,186 Loss on early extinguishment of debt — 609 Executive transition costs 518 343 Gain on early extinguishment of debt on unconsolidated real estate JVs — (168) Diluted FFO comparability adjustments allocable to share-based compensation awards (4) (5) Diluted FFO available to common share and common unit holders, as adjusted for comparability $ 275,913 $ 268,965 Weighted average common shares 112,178 112,073 Conversion of weighted average common units 1,509 1,454 Weighted average common shares/units - Basic FFO per share 113,687 113,527 Dilutive effect of share-based compensation awards 424 431 Redeemable noncontrolling interests 38 116 Weighted average common shares/units - Diluted FFO per share and as adjusted for comparability 114,149 114,074 Diluted EPS $ (0.67) $ 1.53 Diluted FFO per share $ 2.41 $ 2.35 Diluted FFO per share, as adjusted for comparability $ 2.42 $ 2.36 Denominator for diluted EPS 112,178 112,620 Weighted average common units 1,509 1,454 Redeemable noncontrolling interests 38 — Dilutive effect of additional share-based compensation awards 424 — Denominator for diluted FFO per share and as adjusted for comparability 114,149 114,074 Dividends on unrestricted common and deferred shares $ 127,978 $ 123,367 Dividends and distributions on restricted shares and units 828 567 Distributions on unrestricted common units 1,725 1,623 Dividends and distributions for net income payout ratio $ 130,531 $ 125,557 Dividends on unrestricted common and deferred shares $ 127,978 $ 123,367 Distributions on unrestricted common units 1,725 1,623 Dividends and distributions for FFO payout ratio 129,703 124,990 Dividends and distributions adjustments for dilution (7) 51 Dividends and distributions for diluted non-GAAP payout ratios $ 129,696 $ 125,041 Net income payout ratio N/A 70.2 % FFO payout ratio 46.1 % 45.6 % Diluted FFO payout ratio 47.1 % 46.6 % Diluted FFO payout ratio, as adjusted for comparability 47.0 % 46.5 % 38 Property Additions The table below sets forth the major components of our additions to properties for 2023 and 2022: For the Years Ended December 31, 2023 2022 Variance (in thousands) Development $ 248,790 $ 266,680 $ (17,890) Tenant improvements on operating properties (1) 58,315 54,494 3,821 Capital improvements on operating properties 25,976 29,528 (3,552) $ 333,081 $ 350,702 $ (17,621) (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. 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.
Supplemental Guarantor Information As of December 31, 2023, CDPLP had several series of unsecured senior notes outstanding that were issued in transactions registered with the SEC under the Securities Act. These notes are CDPLP’s direct, senior unsecured and unsubordinated obligations and rank equally in right of payment with all of CDPLP’s existing and future senior unsecured and unsubordinated indebtedness.
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.
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 refer to the measures “ARR”, “tenant retention rate”, “investment space leasing” and “vacant space leasing” in various sections 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 2023 results of operations: > our diluted earnings per share decreased from $1.53 per share in 2022 to a loss per share of $(0.67) in 2023, and our net income decreased from $178.8 million in 2022 to a loss of $(74.3) million in 2023 due primarily to $252.8 million in impairment losses that we recognized in 2023.
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.
In 2024, we expect to spend $240 million to $280 million on development costs, most of which was contractually obligated as of December 31, 2023, and had $27.6 million in debt balloon payments maturing in 2024.
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.
NOI from Service Operations For the Years Ended December 31, 2023 2022 Variance (in thousands) Construction contract and other service revenues $ 60,179 $ 154,632 $ (94,453) Construction contract and other service expenses (57,416) (149,963) 92,547 NOI from service operations $ 2,763 $ 4,669 $ (1,906) Construction contract and other service revenues and expenses decreased in 2023 due primarily to a lower volume of construction activity for one of our tenants.
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.
Occupancy and Leasing The tables below set forth occupancy information (excluding our Wholesale Data Center that we sold on January 25, 2022): December 31, 2023 2022 2021 Occupancy rates at period end Total 94.2 % 92.7 % 92.4 % Defense/IT Portfolio: Fort Meade/BW Corridor 96.4 % 92.7 % 90.0 % NoVA Defense/IT 88.9 % 90.0 % 88.3 % Lackland Air Force Base 100.0 % 100.0 % 100.0 % Navy Support 87.4 % 89.8 % 93.9 % Redstone Arsenal 97.5 % 89.9 % 90.8 % Data Center Shells 100.0 % 100.0 % 100.0 % Total Defense/IT Portfolio 96.2 % 94.1 % 93.0 % Other 73.2 % 78.8 % 87.0 % Annualized rental revenue per occupied square foot at year end $ 34.14 $ 33.16 $ 32.47 Rentable Square Feet Occupied Square Feet (in thousands) December 31, 2022 23,006 21,327 Vacated upon lease expiration (1) — (504) Occupancy for new leases — 818 Development placed in service 848 827 Other changes 5 2 December 31, 2023 23,859 22,470 (1) Includes lease terminations and space reductions occurring in connection with lease renewals. 30 With regard to changes in occupancy from December 31, 2022 to December 31, 2023: > Fort Meade/BW Corridor: Increase was due primarily to the commencement of occupancy from vacant space leasing in a number of properties in this sub-segment; > Navy Support: Decreased despite an 80.5% tenant retention rate in 2023 due to minimal commencement of occupancy from vacant space leasing.
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.
Lease Expirations The table below sets forth as of December 31, 2023 our scheduled lease expirations based on the non-cancelable term of tenant leases determined in accordance with generally accepted accounting principles for our properties by segment/sub-segment in terms of percentage of annualized rental revenue: Expiration of Annualized Rental Revenue of Operating Properties 2024 2025 2026 2027 2028 Thereafter Total Defense/IT Portfolio: Fort Meade/BW Corridor 8.4 % 11.1 % 5.1 % 4.0 % 7.1 % 11.9 % 47.7 % NoVA Defense/IT 1.5 % 1.8 % 0.3 % 1.0 % 1.1 % 7.0 % 12.8 % Lackland Air Force Base 0.0 % 6.2 % 1.9 % 0.0 % 0.0 % 1.4 % 9.5 % Navy Support 1.6 % 0.7 % 0.9 % 1.2 % 0.2 % 0.5 % 5.2 % Redstone Arsenal 0.5 % 1.1 % 0.1 % 0.7 % 0.0 % 6.4 % 8.8 % Data Center Shells 0.1 % 0.0 % 0.1 % 0.1 % 0.1 % 5.4 % 5.8 % Other 0.7 % 1.6 % 0.9 % 0.7 % 1.4 % 5.0 % 10.2 % Total 12.8 % 22.5 % 9.5 % 7.6 % 10.0 % 37.6 % 100.0 % The weighted average lease term as of December 31, 2023 was approximately five years.
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.
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. 36 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; 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; executive transition costs associated with named executive officers; and, for periods prior to October 1, 2022, demolition costs on redevelopment and nonrecurring improvements and executive transition costs associated with other senior management team members.
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.
As of December 31, 2023, 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 expected until late-2024, including the effect of interest rate swaps; > only 4.1% of our outstanding debt encumbered by properties; and 25 > $167.8 million in cash on hand.
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.
However, we did not initiate plans for sales of these properties in 2023 due in part to the anticipated 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 2024 due in large part to the effects of increased interest rates and debt availability on potential buyers.
As of December 31, 2023 we had scheduled lease expirations in 2024 for 352,000 square feet, or 32%, of this sub-segment’s occupied square feet, most of which we expect to renew; > Redstone Arsenal: Increase was due primarily to the commencement of occupancy from vacant space leasing in a number of properties in this sub-segment; and > Other: Decreased due to vacated space resulting from its 25.3% tenant retention rate and minimal vacant space leasing.
As of December 31, 2024 we had scheduled lease expirations in 2025 for 166,000 square feet, or 15.8%, of this sub-segment’s occupied square feet, most of which we expect to renew; > Redstone Arsenal: Decreased due primarily to vacant space placed into service in a newly-developed property to accommodate future anticipated demand in a highly-leased business park; and > Other: Decreased due to vacated space resulting from a 49.4% tenant retention rate, the effect of which outweighed lease commencements on vacant space leased.
Net cash flow used in investing activities increased $86.2 million from 2022 to 2023 due in large part to lower proceeds from properties sold in 2023, which included our sale of a 90% interest in three data center shells, relative to 2022, which included sales of our wholesale data center and a 90% interest in two data center shells.
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.
As of December 31, 2023, we were compliant with these covenants. 40 Recent Accounting Pronouncements See Note 2 to our consolidated financial statements for information regarding recent accounting pronouncements.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements for information regarding recent accounting pronouncements. 38
As of December 31, 2023, we had scheduled lease expirations for 2.6 million square feet in 2024, representing 11.5% of our total occupied square feet and 12.8% of our total annualized rental revenue, including: > 2.4 million square feet in our Defense/IT Portfolio segment, a high proportion of which we expect to renew; and > 161,000 square feet in our Other segment, most of which we do not expect to renew.
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 find the measure particularly useful for leasing, tenant, segment and industry analysis. Tenant retention rate is a measure we use that represents the percentage of square feet renewed in a period relative to the total square feet scheduled to expire in that period; we include the effect of early renewals in this measure.
In instances in which we report ARR per occupied square foot, the measure excludes revenue from leases not associated with our buildings. Tenant retention rate is a measure we use that represents the percentage of square feet renewed in a period relative to the total square feet scheduled to expire in that period, including the effect of early renewals.
This pool of properties changed from the pool used for purposes of comparing 2022 and 2021 in our 2022 Annual Report on Form 10-K due to the: addition of seven properties placed in service and 100% operational on or before January 1, 2022 and two properties owned through a UJV that was formed in 2021; and removal of three properties in which we sold a 90% interest in 2023. 34 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 2023 resulting from higher occupancy and the commencement of tenant expense reimbursements on certain recently commenced leases; > developed and redeveloped properties placed in service reflects the effect of 13 properties placed in service in 2023 and 2022; 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 and two in 2022, as well as the sale of our wholesale data center on January 25, 2022.
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.
Cash Flows Net cash flow from operating activities increased $10.4 million, or 3.9%, from 2022 to 2023, which included the effects of increased cash flow from real estate operations resulting from the growth of our operating portfolio, offset in part by higher payments for lease incentives and sales-type lease costs and lower interest income received on investing receivables from the City of Huntsville in 2023.
Cash Flows Net cash flow from operating activities increased $54.7 million, or 19.8%, from 2023 to 2024 due primarily to the effects of the growth of our operating portfolio, along with an increase in interest income on investing receivables received in 2024, and partially offset by higher cash paid for interest expense on our 5.25% Notes issued in September 2023.
Interest Expense The table below sets forth components of our interest expense: For the Years Ended December 31, 2023 2022 Variance (in thousands) Interest on unsecured senior notes $ 53,546 $ 47,496 $ 6,050 Interest on mortgage and other secured debt 5,072 4,632 440 Interest on unsecured term debt 8,139 3,503 4,636 Interest on Revolving Credit Facility 8,341 6,800 1,541 Interest expense (offsets) additions from interest rate swaps (3,900) 946 (4,846) Amortization of deferred financing costs 2,580 2,297 283 Other interest 1,843 2,209 (366) Capitalized interest (4,479) (6,709) 2,230 Interest expense $ 71,142 $ 61,174 $ 9,968 Regarding the changes in interest expense components reported above: the increase for unsecured senior notes was attributable to the 5.25% Notes issued in September 2023; and the increases for the unsecured term debt and Revolving Credit Facility were attributable to higher variable interest rates, the effect of which was mostly offset by interest rate swaps in place during the respective periods.
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.
Our properties under development included three data center shells and two properties in Redstone Arsenal. We believe that our Defense/IT Portfolio has strongly benefited from continued: > defense budget appropriation increases, with bipartisan support, and without extended delays in appropriations in recent years.
Our Defense/IT Portfolio also benefited from continued defense budget appropriation increases, with bipartisan support in recent years.
Net cash flow used in financing activities in 2022 was $183.2 million, and included primarily the following: > dividends to common shareholders of $123.6 million; and > net repayments of debt borrowings during the period of $43.3 million, which included the net effect of: repayments of our Revolving Credit Facility and term loan facility primarily using property sale proceeds; proceeds from our Revolving Credit Facility used primarily to fund property development; and the refinancing of our existing Revolving Credit Facility and term loan facility using proceeds from new facilities.
Net cash flow used in financing activities in 2024 was $169.7 million, and included primarily the following: > net repayments of debt borrowings during the period of $30.0 million; and > dividends to common shareholders of $131.8 million.
Our strengthened operating property occupancy in 2023 included increases in: > total portfolio year-end occupancy rate from 92.7% to 94.2%, with a year-end leased rate of 95.3%; > Defense/IT Portfolio year-end occupancy rate from 94.1% to 96.2%, with a year-end leased rate of 97.2%; 24 > Same Property year-end occupancy rate from 92.0% to 93.4%, with a year-end leased rate of 94.7% for our Same Properties in total and 96.8% for the Defense/IT Portfolio component; and > average Same Property occupancy from 91.6% to 92.7%, and from 92.9% to 94.7% for the Defense/IT Portfolio component.
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).
A reconciliation of NOI from real estate operations and NOI from service operations to (loss) income from continuing operations reported on the consolidated statements of operations is provided in Note 13 to our consolidated financial statements. 32 Comparison of Statements of Operations for the Years Ended December 31, 2023 and 2022 For the Years Ended December 31, 2023 2022 Variance (in thousands) Revenues Revenues from real estate operations $ 624,803 $ 584,398 $ 40,405 Construction contract and other service revenues 60,179 154,632 (94,453) Total revenues 684,982 739,030 (54,048) Operating expenses Property operating expenses 247,385 227,430 19,955 Depreciation and amortization associated with real estate operations 148,950 141,230 7,720 Construction contract and other service expenses 57,416 149,963 (92,547) Impairment losses 252,797 — 252,797 General, administrative, leasing and other expenses 42,769 38,991 3,778 Total operating expenses 749,317 557,614 191,703 Interest expense (71,142) (61,174) (9,968) Interest and other income, net 12,587 9,070 3,517 Gain on sales of real estate 49,392 19,250 30,142 Loss on early extinguishment of debt — (609) 609 Equity in (loss) income of unconsolidated entities (261) 1,743 (2,004) Income tax expense (588) (447) (141) (Loss) income from continuing operations (74,347) 149,249 (223,596) Discontinued operations — 29,573 (29,573) Net (loss) income $ (74,347) $ 178,822 $ (253,169) 33 NOI from Real Estate Operations For the Years Ended December 31, 2023 2022 Variance (Dollars in thousands, except per square foot data) Revenues Same Property revenues Lease revenue, excluding lease termination revenue and collectability loss provisions $ 567,320 $ 544,312 $ 23,008 Lease termination revenue, net 3,745 2,237 1,508 Collectability loss provisions included in lease revenue (1,313) (745) (568) Other property revenue 4,832 4,077 755 Same Property total revenues 574,584 549,881 24,703 Developed and redeveloped properties placed in service 42,156 10,515 31,641 Dispositions, net of retained interest in newly-formed UJVs 400 21,404 (21,004) Other 7,663 4,578 3,085 624,803 586,378 38,425 Property operating expenses Same Property (234,052) (219,876) (14,176) Developed and redeveloped properties placed in service (6,421) (1,177) (5,244) Dispositions, net of retained interest in newly-formed UJVs (56) (3,665) 3,609 Other (6,856) (3,683) (3,173) (247,385) (228,401) (18,984) UJV NOI allocable to COPT Defense Same Property 4,301 4,308 (7) Retained interests in newly-formed UJVs 2,358 19 2,339 6,659 4,327 2,332 NOI from real estate operations Same Property 344,833 334,313 10,520 Developed and redeveloped properties placed in service 35,735 9,338 26,397 Dispositions, net of retained interest in newly-formed UJVs 2,702 17,758 (15,056) Other 807 895 (88) $ 384,077 $ 362,304 $ 21,773 Same Property NOI from real estate operations by segment Defense/IT Portfolio $ 316,701 $ 305,377 $ 11,324 Other 28,132 28,936 (804) $ 344,833 $ 334,313 $ 10,520 Same Property rent statistics Average occupancy rate 92.7 % 91.6 % 1.1 % Average straight-line rent per occupied square foot (1) $ 27.13 $ 26.94 $ 0.19 (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.
Comparison 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.
We refer to the measures “annualized rental revenue” and “tenant retention rate” in various sections of the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Annual Report on Form 10-K. Annualized rental revenue 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 source of our rental revenue as of a point in time.
In addition, we owned eight office properties in our Other segment as of December 31, 2023 that we do not consider strategic holdings since they do not align with our Defense/IT strategy. We intend to sell these properties when we believe that market conditions and opportunities position us to optimize our return on investment.
We do not consider these properties to be strategic holdings since they do not align with our Defense/IT strategy.
Overview In 2023, we: > experienced continued strong demand across our Defense/IT Portfolio segments that drove: > strengthened occupancy of our operating properties, with year-end occupancy and leased rates at near-record levels; and > near-record tenant retention rates, at increased rent levels; > continued growth through substantially pre-leased development, with space placed in service during the year that was virtually full and a pipeline of substantially pre-leased properties under development at year end; > raised capital from a sale of interests in data center shell properties, using the proceeds to create borrowing capacity to fund future development activities; > opportunistically issued debt through a private placement to pre-fund the expected borrowings needed to fund our forecasted development activities for most of the next three years; and > ended the year with no significant debt maturing until 2026, most of our Revolving Credit Facility’s borrowing capacity available and significant cash balances on hand.
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.
Removed
Strong demand from our Defense/IT Portfolio drove increased property occupancy that more than offset the continuing effects of lagging demand in our Other segment.
Added
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.
Removed
We also in 2023 achieved a tenant retention rate of 79.7% for the portfolio, and 85.7% for our Defense/IT Portfolio segment, which were near record levels. Our increased occupancy and leased rates were attributable primarily to our strong tenant retention coupled with the effects of our vacant space leasing efforts.
Added
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.
Removed
Defense/IT Portfolio demand also continued to feed growth in our portfolio through property development.
Added
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.
Removed
In 2023, our Defense/IT Portfolio: > placed into service 848,000 square feet in six properties that were 98% leased, mostly in our Data Center Shells, Redstone Arsenal and Fort Meade/BW Corridor sub-segments; and > ended the year with 817,000 square feet under development in an additional five properties that were 91% leased, three of which were scheduled to be placed in service in 2024.
Added
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.
Removed
However, future leasing demand could be delayed or diminish if this bipartisan support does not continue or if appropriations legislation to fund approved defense budgets faces extended delays (including the USG’s 2024 fiscal year defense budget, which was authorized but was awaiting appropriations as of the date of this filing); and > demand for data center shells in Northern Virginia, one of the largest data center markets in the world.
Added
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.
Removed
We believe that our properties in operations and undergoing development in this sub-segment will continue to benefit from strong demand through high tenant retention, with renewals at increased rental rates. However, as of December 31, 2023, we did not have additional land under control in Northern Virginia for the future development of data center shells.
Added
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.
Removed
As a result, our ability to continue to develop data center shells, as we have for the past decade, may be limited.
Added
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.
Removed
Please refer to the section below entitled “Occupancy and Leasing” for additional related disclosure. On January 10, 2023, we raised $190.2 million in capital from our sale of a 90% interest in three data center shell properties in Northern Virginia, resulting in a gain on sale of $49.4 million.
Added
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.
Removed
We retained a 10% interest in the properties through a newly-formed joint venture. We used substantially all of the proceeds from this sale to pay down our Revolving Credit Facility to create additional borrowing capacity available to fund future development.
Added
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−1 removed2 unchanged
Biggest changeInterest expense in 2023 was less sensitive to a change in interest rates than 2022 due primarily to our having a lower average variable-rate debt balance in 2023, including the effect of interest rate swaps. Item 8. Financial Statements and Supplementary Data This item is included in a separate section at the end of this report beginning on page F-1.
Biggest changeInterest 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.
See Note 9 to our consolidated financial statements for information pertaining to interest rate swap contracts in place as of December 31, 2023 and 2022 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, 2024 and 2023 and their respective fair values.
The fair value of our debt was $2.2 billion as of December 31, 2023 and $1.9 billion as of December 31, 2022. If interest rates had been 1% lower, the fair value of our fixed-rate debt would have increased by approximately $82 million as of December 31, 2023 and $88 million as of December 31, 2022.
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.
Based on our variable-rate debt balances, including the effect of interest rate swap contracts, our interest expense would have increased by $764,000 in 2023 and $1.5 million in 2022 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 $34,000 in 2024 and $764,000 in 2023 if the applicable variable index rate was 1% higher.
(2) As of December 31, 2023, maturities in 2026 included $75.0 million that may be extended to 2027 and $125.0 million that may be extended to 2028, both subject to certain conditions. (3) The amounts reflected above used interest rates as of December 31, 2023 for variable-rate debt.
(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.
The following table sets forth as of December 31, 2023 our debt obligations and weighted average interest rates on debt maturing each year (dollars in thousands): For the Years Ending December 31, 2024 2025 2026 2027 2028 Thereafter Total Debt: Fixed-rate debt (1) $ 29,443 $ 1,302 $ 436,140 $ — $ 345,000 $ 1,400,000 $ 2,211,885 Weighted average interest rate 4.42% 3.23% 2.38% —% 5.25% 2.58% 2.98% Variable-rate debt (2) $ 540 $ 22,415 $ 210,160 $ — $ — $ — $ 233,115 Weighted average interest rate (3) 6.93% 6.97% 6.66% —% —% —% 6.69% (1) Represents principal maturities only and therefore excludes net discounts and deferred financing costs of $28.7 million.
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.
Removed
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

Other CDP 10-K year-over-year comparisons