COPT Defense Reports Strong Third Quarter 2025 Results, Raises Full-Year Guidance
COPT Defense Properties (NYSE: CDP), a leading owner, developer, and operator of mission-critical properties serving the U.S. defense and IT sectors, announced solid financial and operational results for the third quarter ended September 30, 2025. The company once again demonstrated the strength of its specialized Defense/IT investment strategy, outperforming expectations across key performance metrics and raising full-year guidance.
Third Quarter Financial Highlights
COPT Defense reported diluted earnings per share (EPS) of $0.37, up from $0.32 in the same quarter of 2024, representing year-over-year growth of nearly 16%.
Funds From Operations (FFO) per share, as adjusted for comparability, reached $0.69, an increase of 6.2% compared to $0.65 a year earlier, exceeding the midpoint of company guidance by two cents.
The company raised its full-year 2025 FFO per share guidance midpoint by three cents to $2.70, implying a 5.1% year-over-year growth rate. Management attributed this performance to strong leasing activity, higher occupancy, and disciplined portfolio management across its defense-focused assets.
Same-property cash net operating income (NOI) increased 4.6% during the quarter and on a year-to-date basis. Reflecting continued portfolio strength, COPT Defense raised the midpoint of its 2025 same-property NOI growth guidance by 75 basis points to 4.0%.
Operational Excellence and Occupancy
The company continues to post some of the highest occupancy and leasing rates in its 25-year history.
At the end of the third quarter, the total portfolio—comprising 24.6 million square feet—was 93.9% occupied and 95.7% leased, marking the highest leased rate in two decades.
The core Defense/IT portfolio, representing 22.6 million square feet, was 95.4% occupied and 97.0% leased, reflecting the ongoing strength of demand from U.S. government and defense contractors located near mission-critical installations.
COPT Defense raised its full-year 2025 guidance for same-property occupancy by 20 basis points to 94.2%, signaling confidence in its leasing pipeline and tenant retention momentum.
Leasing Performance Surpasses Expectations
COPT Defense’s leasing success continued to outperform expectations through the third quarter.
The company leased 971,000 square feet in Q3 2025, bringing the total year-to-date leasing to 2.3 million square feet.
Vacancy leasing accounted for 78,000 square feet in the quarter and 432,000 square feet year-to-date, surpassing prior goals. Consequently, management raised its annual vacancy leasing target from 450,000 square feet to 500,000 square feet, representing a 25% increase from the initial 2025 target.
Tenant retention remained robust at 82% for both the quarter and the year-to-date period, demonstrating continued satisfaction among existing tenants and the value of COPT’s defense-centric properties.
Investment leasing—leasing tied to newly developed or recently acquired properties—totaled 101,000 square feet in the third quarter and 203,000 square feet year-to-date, supporting external growth initiatives.
CEO Commentary: Strategic Growth and Market Leadership
Stephen E. Budorick, President and Chief Executive Officer of COPT Defense, commented on the results:
Our Defense/IT investment strategy—focusing on properties near key U.S. defense installations—continues to deliver outstanding results. FFO per share exceeded the midpoint of our guidance, and we’ve raised our full-year forecast to reflect this performance. We’re outperforming in multiple areas and have increased guidance for NOI growth, rent spreads, and occupancy.
Budorick also highlighted new capital commitments and strong balance sheet positioning:
Over the past several weeks, we committed $72 million to two strategic investments—both deepening relationships with key Defense/IT tenants. We began construction on a 101,000-square-foot build-to-suit development for Yulista at Redstone Gateway in Huntsville and acquired a 142,000-square-foot fully leased office property in Chantilly, Virginia. This acquisition enhances our dominance in the Westfields submarket, where we now own nearly one-third of all office inventory. We’ve also strengthened our liquidity by securing $400 million in new financing, pre-funding our 2026 bond maturity.
Budorick concluded by reaffirming long-term growth goals:
We’ve delivered excellent results through the first nine months of 2025 and expect a strong fourth quarter. We remain on track for compound annual FFO per share growth exceeding 4% from 2023 through 2026.
Detailed Financial ad Operating Results
Financial Performance:
- Diluted EPS: $0.37 (up from $0.32 in Q3 2024)
- FFO per Share (adjusted): $0.69 (up from $0.65 in Q3 2024)
- Same Property Cash NOI: +4.6% year-over-year
Operating Portfolio:
- Total Portfolio Size: 24.6 million SF
- Occupancy: 93.9%
- Leased: 95.7%
- Defense/IT Portfolio: 22.6 million SF; 95.4% occupied, 97.0% leased
Same Property Performance:
- Same Property Portfolio: 23.9 million SF
- Occupancy: 94.3%
- Leased: 95.8%
Leasing Activity:
- Total Leased in Q3: 971,000 SF
- Year-to-Date Leasing: 2.3 million SF
- Tenant Retention: 81.8% in Q3; 81.9% YTD
- Rent Growth: Cash rents +7.5% in Q3, +2.4% YTD; straight-line rents +13.4% in Q3, +11.0% YTD
- Lease Terms: Average 5.4 years (renewals), 8.6 years (vacancy), 12.6 years (investment)
Investment and Development Activity
COPT Defense continues to deploy capital strategically in high-demand defense markets.
- Development Pipeline: Five projects totaling 812,000 square feet, 68% leased, representing a $311 million total investment.
- Capital Deployed (as of Q3 2025): $154 million.
- Recent Acquisition: Stonegate I, a 142,000-square-foot Class A office building in Chantilly, VA, for $40.2 million. Fully leased to a top 20 U.S. defense contractor, the acquisition meets development yield thresholds and is accretive to FFO per share.
These projects further reinforce COPT Defense’s leadership in mission-critical real estate and its commitment to serving the defense sector’s long-term infrastructure needs.
Balance Sheet and Capital Management
COPT Defense’s capital structure remains strong, supporting both growth and flexibility.
- New Bond Issuance: On October 2, 2025, the company issued $400 million of 4.50% Senior Notes due 2030 to pre-fund its 2026 bond maturity.
- Credit Facility Amendment: On October 6, 2025, COPT amended its Revolving Credit Facility and Term Loan, increasing the Revolver commitment from $600 million to $800 million, extending maturity to October 2029, and lowering interest spreads to SOFR + 0.85%.
- New Secured Revolver: On October 16, 2025, the company entered a new $200 million secured revolving credit agreement to fund development activities.
As of September 30, 2025:
- Adjusted EBITDA fixed charge coverage ratio: 4.8x
- Net debt-to-EBITDA ratio: 6.1x (or 5.8x adjusted for fully-leased assets)
- Weighted average effective interest rate: 3.4%
- Weighted average debt maturity: 4.1 years
- Fixed-rate debt exposure: 97%
These measures reflect prudent financial management and a well-hedged balance sheet positioned for growth.
Revised 2025 Guidance
Based on strong year-to-date performance and a positive leasing outlook, management raised full-year 2025 guidance:
- Diluted EPS: $1.35 – $1.37 (previously $1.30 – $1.34)
- FFO per Share (adjusted): $2.69 – $2.71 (previously $2.65 – $2.69)
- Q4 2025 Guidance: EPS $0.32 – $0.34; FFO per share $0.67 – $0.69
The company reaffirmed expectations for sustained NOI growth, record occupancy, and disciplined capital allocation into 2026.
About COPT Defense
COPT Defense Properties (NYSE: CDP) is a REIT specializing in owning, managing, and developing properties that support the U.S. government and its contractors engaged in defense, intelligence, and information technology missions. The company’s portfolio is strategically positioned near priority defense installations, providing secure, high-performance work environments for tenants advancing critical national security programs.
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