COPT Defense Properties Establishes 2026 Financial Guidance
COPT Defense Properties (NYSE: CDP) (“COPT Defense” or the “Company”), a leading real estate investment trust focused on defense and government tenants, has established its financial guidance for the year ending December 31, 2026. The guidance reflects the Company’s expectations for earnings growth, operating performance, and disciplined capital deployment, supported by strong occupancy levels, stable tenant retention, and contributions from recently completed developments and acquisitions.
Full-Year 2026 Financial Guidance
For the full year ending December 31, 2026, COPT Defense expects to deliver the following results:
- Diluted earnings per share (EPS) in the range of $1.21 to $1.29
- Diluted funds from operations per share (FFOPS), as defined by Nareit and adjusted for comparability, in the range of $2.71 to $2.79
Management expects year-over-year performance to be driven primarily by increased net operating income (NOI) from the Company’s Same Property portfolio, contributions from developments placed into service, and the impact of acquisitions completed in 2025. These gains are expected to be partially offset by higher financing costs, including interest expense associated with refinancing activities, lower interest income, potential dilution from exchangeable notes, and certain non-recurring items.
First Quarter 2026 Financial Guidance
For the quarter ending March 31, 2026, COPT Defense has established the following guidance:
- Diluted EPS in the range of $0.30 to $0.32
- Diluted FFOPS, as defined by Nareit and adjusted for comparability, in the range of $0.67 to $0.69
Compared to the fourth quarter of 2025, first-quarter FFOPS is expected to decline modestly by approximately two cents, primarily due to higher seasonal operating expenses and reduced interest income.
Reconciliation of EPS to FFOPS
COPT Defense has provided reconciliations of projected diluted EPS to projected diluted FFOPS, in accordance with Nareit definitions and adjusted for comparability.
Quarter Ending March 31, 2026
- Diluted EPS: $0.30 to $0.32
- Real estate-related depreciation and amortization: $0.37
- Diluted FFOPS: $0.67 to $0.69
Year Ending December 31, 2026
- Diluted EPS: $1.21 to $1.29
- Real estate-related depreciation and amortization: $1.50
- Diluted FFOPS: $2.71 to $2.79
These reconciliations highlight the impact of non-cash depreciation and amortization expenses that are added back to earnings to arrive at FFOPS.
Key Assumptions Underpinning 2026 Guidance
The Company’s 2026 guidance is supported by a range of operational and financial assumptions related to earnings growth, portfolio performance, expense management, and capital investment.
Earnings Performance Expectations
COPT Defense reported diluted EPS of $1.34 and diluted FFOPS of $2.72 in 2025. For 2026, diluted EPS is expected to range from $1.21 to $1.29, while diluted FFOPS is projected between $2.71 and $2.79. Growth is expected to be driven by higher NOI from stabilized assets and newly delivered developments, offset by increased interest expense and lower interest income.
Same Property Portfolio Assumptions
The Company’s Same Property portfolio is expected to remain a stable contributor to earnings in 2026.
- Cash NOI growth is projected to range from 2.0% to 3.0%, with a midpoint assumption of 2.5%. Growth is expected to come from contractual rent escalations, rent commencements from leasing activity completed in 2024 and 2025, and higher cash rents at properties added to the 2026 pool. These gains are expected to be partially offset by the absence of certain non-recurring operating expense savings realized in 2025.
- Year-end occupancy is projected to range between 93.5% and 94.5%, reflecting relatively stable occupancy levels throughout the year.
- Tenant retention is assumed to range from 75% to 85%, consistent with historical performance.
- Cash rent growth on renewals is expected to range from 1.0% to 3.0%.
NOI Contributions from Investments
NOI from investments is expected to range between $19.0 million and $21.0 million in 2026. This includes contributions from approximately $180 million of developments delivered in 2025, representing roughly 470,000 square feet that are fully leased, as well as the $40 million Stonegate I acquisition, which includes approximately 140,000 square feet and is fully leased.
These contributions are expected to be partially offset by the placement of NBP 400 into service during the second quarter of 2026, at which point interest and operating expenses will no longer be capitalized.
Expense and Financing Assumptions
- Total general and administrative expenses, including leasing, business development, and land carry costs, are expected to range from $48.0 million to $50.0 million.Consolidated interest expense, net of capitalized interest, is projected to range from $94.0 million to $98.0 million. The increase reflects the refinancing of the Company’s $400 million unsecured bond maturing in March 2026, with an anticipated interest rate spread of approximately 235 basis points above the maturing bond.
- Interest and other income, net, is expected to decline to a range of $8.5 million to $9.5 million, driven by lower average cash balances and anticipated paydowns of loan receivables, including the note receivable from the City of Huntsville.
Dividend Policy and Capital Allocation
COPT Defense expects its dividend payout ratio, measured as a percentage of diluted adjusted funds from operations (AFFO), to remain below 65% in 2026, reflecting a continued focus on balance sheet strength and long-term sustainability.
Investment Activity Outlook
- Capital invested in development and acquisitions is projected to range from $200 million to $250 million, representing anticipated funding for ongoing development projects.
- Capital commitments to new investments are expected to range from $225 million to $275 million, primarily focused on the Fort Meade/BW Corridor and Redstone Arsenal markets.
- Property sales are expected to be immaterial, with no significant asset dispositions planned for 2026.
First Quarter 2026 Operating Assumptions
For the first quarter of 2026, diluted EPS is expected to range from $0.30 to $0.32, compared to $0.33 in the fourth quarter of 2025. Diluted FFOPS is projected to range from $0.67 to $0.69, down slightly from $0.70 in the prior quarter, reflecting higher seasonal operating expenses and reduced interest income.
SOURCE LINK : https://www.businesswire.com/
