000086054612/312024Q1FALSEhttp://fasb.org/us-gaap/2023#PrepaidExpenseAndOtherAssetshttp://fasb.org/us-gaap/2023#PrepaidExpenseAndOtherAssetshttp://fasb.org/us-gaap/2023#OtherLiabilitieshttp://fasb.org/us-gaap/2023#OtherLiabilities0.033388200008605462024-01-012024-03-3100008605462024-04-22xbrli:shares00008605462024-03-31iso4217:USD00008605462023-12-310000860546ofc:InvestingReceivablesMember2024-03-310000860546ofc:InvestingReceivablesMember2023-12-31iso4217:USDxbrli:shares00008605462023-01-012023-03-3100008605462022-12-310000860546us-gaap:CommonStockMember2022-12-310000860546us-gaap:AdditionalPaidInCapitalMember2022-12-310000860546us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2022-12-310000860546us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000860546us-gaap:NoncontrollingInterestMember2022-12-310000860546us-gaap:NoncontrollingInterestMember2023-01-012023-03-310000860546us-gaap:CommonStockMember2023-01-012023-03-310000860546us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310000860546us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2023-01-012023-03-310000860546us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-3100008605462023-03-310000860546us-gaap:CommonStockMember2023-03-310000860546us-gaap:AdditionalPaidInCapitalMember2023-03-310000860546us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2023-03-310000860546us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000860546us-gaap:NoncontrollingInterestMember2023-03-310000860546us-gaap:CommonStockMember2023-12-310000860546us-gaap:AdditionalPaidInCapitalMember2023-12-310000860546us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2023-12-310000860546us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310000860546us-gaap:NoncontrollingInterestMember2023-12-310000860546us-gaap:NoncontrollingInterestMember2024-01-012024-03-310000860546us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310000860546us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2024-01-012024-03-310000860546us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310000860546us-gaap:CommonStockMember2024-03-310000860546us-gaap:AdditionalPaidInCapitalMember2024-03-310000860546us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2024-03-310000860546us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310000860546us-gaap:NoncontrollingInterestMember2024-03-310000860546ofc:DefenseITPortfolioMemberofc:OperatingPropertiesMember2024-03-31ofc:propertyutr:sqft0000860546ofc:DefenseITPortfolioMemberofc:OfficePropertiesMemberofc:OperatingPropertiesMember2024-03-310000860546ofc:DefenseITPortfolioMemberofc:SingleTenantDataCentersMemberofc:OperatingPropertiesMember2024-03-310000860546ofc:DefenseITPortfolioMemberofc:UnconsolidatedRealEstateJointVenturesMemberofc:SingleTenantDataCentersMemberofc:OperatingPropertiesMember2024-03-310000860546ofc:DefenseITPortfolioMemberofc:PropertiesUnderDevelopmentMember2024-03-310000860546ofc:DefenseITPortfolioMemberofc:OfficePropertiesMemberofc:PropertiesUnderDevelopmentMember2024-03-310000860546ofc:DefenseITPortfolioMemberofc:SingleTenantDataCentersMemberofc:PropertiesUnderDevelopmentMember2024-03-310000860546ofc:PropertiesUnderDevelopmentPartiallyOperationalofc:DefenseITPortfolioMember2024-03-310000860546ofc:LandControlledForDevelopmentMemberofc:DefenseITPortfolioMember2024-03-31utr:acre0000860546us-gaap:AllOtherSegmentsMemberofc:OperatingPropertiesMemberofc:GreaterWashingtonDCBaltimoreMember2024-03-310000860546ofc:LandControlledForDevelopmentMemberus-gaap:AllOtherSegmentsMemberofc:GreaterWashingtonDCBaltimoreMember2024-03-310000860546ofc:COPTDefensePropertiesMemberofc:CommonUnitsMemberofc:COPTDefensePropertiesL.P.Membersrt:SubsidiariesMember2024-01-012024-03-31xbrli:pure0000860546us-gaap:PreferredStockMembersrt:SubsidiariesMember2024-03-310000860546us-gaap:FairValueMeasurementsRecurringMemberus-gaap:DeferredCompensationExcludingShareBasedPaymentsAndRetirementBenefitsMembersrt:ManagementMember2019-01-012019-12-310000860546us-gaap:FairValueMeasurementsRecurringMemberus-gaap:DeferredCompensationExcludingShareBasedPaymentsAndRetirementBenefitsMembersrt:ManagementMember2024-03-310000860546us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2024-03-310000860546us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2024-03-310000860546us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2024-03-310000860546us-gaap:FairValueMeasurementsRecurringMember2024-03-310000860546us-gaap:LandMemberofc:OperatingPropertiesMember2024-03-310000860546us-gaap:LandMemberofc:OperatingPropertiesMember2023-12-310000860546us-gaap:BuildingAndBuildingImprovementsMemberofc:OperatingPropertiesMember2024-03-310000860546us-gaap:BuildingAndBuildingImprovementsMemberofc:OperatingPropertiesMember2023-12-310000860546ofc:OperatingPropertiesMember2024-03-310000860546ofc:OperatingPropertiesMember2023-12-310000860546ofc:A6841BenjaminFranklinDriveMember2024-03-150000860546ofc:A6841BenjaminFranklinDriveMember2024-03-152024-03-150000860546us-gaap:LandMemberofc:A6841BenjaminFranklinDriveMember2024-03-152024-03-150000860546us-gaap:BuildingAndBuildingImprovementsMemberofc:A6841BenjaminFranklinDriveMember2024-03-152024-03-150000860546us-gaap:CustomerRelationshipsMemberofc:A6841BenjaminFranklinDriveMember2024-03-152024-03-150000860546ofc:InPlaceLeaseValueMemberofc:A6841BenjaminFranklinDriveMember2024-03-152024-03-150000860546us-gaap:LeasesAcquiredInPlaceMarketAdjustmentMemberofc:A6841BenjaminFranklinDriveMember2024-03-152024-03-150000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:LwRedstoneCompanyLlcMember2024-01-012024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:LwRedstoneCompanyLlcMember2024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:AssetPledgedAsCollateralMemberofc:LwRedstoneCompanyLlcMember2024-03-310000860546us-gaap:SecuredDebtMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:LwRedstoneCompanyLlcMember2024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:StevensInvestorsLLCMember2024-01-012024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:StevensInvestorsLLCMember2024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:AssetPledgedAsCollateralMemberofc:StevensInvestorsLLCMember2024-03-310000860546us-gaap:SecuredDebtMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:StevensInvestorsLLCMember2024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:MSquareAssociatesLlcMember2024-01-012024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:MSquareAssociatesLlcMember2024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:AssetPledgedAsCollateralMemberofc:MSquareAssociatesLlcMember2024-03-310000860546us-gaap:SecuredDebtMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberofc:MSquareAssociatesLlcMember2024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-03-310000860546us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberus-gaap:AssetPledgedAsCollateralMember2024-03-310000860546us-gaap:SecuredDebtMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-03-310000860546ofc:LwRedstoneCompanyLlcMember2024-01-012024-03-310000860546ofc:RedshiftJVLLCMember2024-03-310000860546ofc:RedshiftJVLLCMember2023-12-310000860546ofc:BREITCOPTDCJVLLCMember2024-03-310000860546ofc:BREITCOPTDCJVLLCMember2023-12-310000860546ofc:QuarkJVLLCMember2024-03-310000860546ofc:QuarkJVLLCMember2023-12-310000860546ofc:BRECOPTDCJVIIILLCMember2024-03-310000860546ofc:BRECOPTDCJVIIILLCMember2023-12-310000860546ofc:BRECOPTDCJVIILLCMember2024-03-310000860546ofc:BRECOPTDCJVIILLCMember2023-12-310000860546ofc:UnconsolidatedRealEstateJointVenturesMember2024-03-310000860546ofc:UnconsolidatedRealEstateJointVenturesMember2023-12-310000860546ofc:InvestingReceivablesMemberofc:NotesReceivableFromCityOfHuntsvilleMember2024-03-310000860546ofc:InvestingReceivablesMemberofc:NotesReceivableFromCityOfHuntsvilleMember2023-12-310000860546ofc:InvestingReceivablesMemberofc:OtherInvestingLoansReceivablesMember2024-03-310000860546ofc:InvestingReceivablesMemberofc:OtherInvestingLoansReceivablesMember2023-12-310000860546ofc:NotesReceivableFromCityOfHuntsvilleMemberofc:InvestingReceivablesMemberofc:LwRedstoneCompanyLlcMember2024-03-310000860546ofc:FixedRateSecuredDebtMemberus-gaap:SecuredDebtMember2024-03-310000860546ofc:FixedRateSecuredDebtMemberus-gaap:SecuredDebtMember2023-12-310000860546ofc:FixedRateSecuredDebtMemberus-gaap:SecuredDebtMembersrt:MinimumMember2024-03-310000860546ofc:FixedRateSecuredDebtMembersrt:MaximumMemberus-gaap:SecuredDebtMember2024-03-310000860546us-gaap:SecuredDebtMemberofc:VariableRateDebtMember2024-03-310000860546us-gaap:SecuredDebtMemberofc:VariableRateDebtMember2023-12-310000860546ofc:VariableRateDebtMemberus-gaap:SecuredDebtMemberofc:SecuredOvernightFinancingRateMember2024-01-012024-03-310000860546ofc:VariableRateDebtMemberus-gaap:SecuredDebtMemberofc:SecuredOvernightFinancingRateMembersrt:MinimumMember2024-01-012024-03-310000860546srt:MaximumMemberofc:VariableRateDebtMemberus-gaap:SecuredDebtMemberofc:SecuredOvernightFinancingRateMember2024-01-012024-03-310000860546us-gaap:SecuredDebtMember2024-03-310000860546us-gaap:SecuredDebtMember2023-12-310000860546us-gaap:RevolvingCreditFacilityMember2024-03-310000860546us-gaap:RevolvingCreditFacilityMember2023-12-310000860546us-gaap:RevolvingCreditFacilityMemberofc:SecuredOvernightFinancingRateMember2024-01-012024-03-310000860546us-gaap:RevolvingCreditFacilityMemberofc:SecuredOvernightFinancingRateMembersrt:MinimumMember2024-01-012024-03-310000860546srt:MaximumMemberus-gaap:RevolvingCreditFacilityMemberofc:SecuredOvernightFinancingRateMember2024-01-012024-03-310000860546ofc:TermLoanFacilityMember2024-03-310000860546ofc:TermLoanFacilityMember2023-12-310000860546ofc:SecuredOvernightFinancingRateMemberofc:TermLoanFacilityMember2024-01-012024-03-310000860546ofc:SecuredOvernightFinancingRateMemberofc:TermLoanFacilityMembersrt:MinimumMember2024-01-012024-03-310000860546srt:MaximumMemberofc:SecuredOvernightFinancingRateMemberofc:TermLoanFacilityMember2024-01-012024-03-310000860546us-gaap:SeniorNotesMemberofc:A225SeniorNotesMember2024-03-310000860546us-gaap:SeniorNotesMemberofc:A225SeniorNotesMember2023-12-310000860546us-gaap:SeniorNotesMemberofc:A525SeniorNotesMember2024-03-310000860546us-gaap:SeniorNotesMemberofc:A525SeniorNotesMember2023-12-310000860546us-gaap:SeniorNotesMemberofc:A200SeniorNotesMember2024-03-310000860546us-gaap:SeniorNotesMemberofc:A200SeniorNotesMember2023-12-310000860546us-gaap:SeniorNotesMemberofc:A275SeniorNotesMember2024-03-310000860546us-gaap:SeniorNotesMemberofc:A275SeniorNotesMember2023-12-310000860546us-gaap:SeniorNotesMemberofc:A290SeniorNotesMember2024-03-310000860546us-gaap:SeniorNotesMemberofc:A290SeniorNotesMember2023-12-310000860546us-gaap:NotesPayableOtherPayablesMember2024-03-310000860546us-gaap:NotesPayableOtherPayablesMember2023-12-310000860546us-gaap:LoansPayableMember2024-03-310000860546us-gaap:LoansPayableMember2023-12-310000860546ofc:VariableRateDebtMemberus-gaap:SecuredDebtMemberus-gaap:InterestRateSwapMemberofc:SecuredOvernightFinancingRateMember2024-03-310000860546ofc:VariableRateDebtMemberus-gaap:SecuredDebtMemberofc:SecuredOvernightFinancingRateMember2024-03-31ofc:extension0000860546us-gaap:SecuredDebtMemberofc:VariableRateDebtMember2024-01-012024-03-310000860546us-gaap:RevolvingCreditFacilityMemberofc:SecuredOvernightFinancingRateMember2024-03-310000860546us-gaap:RevolvingCreditFacilityMember2024-01-012024-03-310000860546ofc:SecuredOvernightFinancingRateMemberofc:TermLoanFacilityMember2024-03-310000860546ofc:TermLoanFacilityMember2024-01-012024-03-310000860546ofc:A525SeniorNotesMember2024-01-012024-03-310000860546us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2024-03-310000860546us-gaap:SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310000860546us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-12-310000860546us-gaap:SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310000860546us-gaap:CarryingReportedAmountFairValueDisclosureMemberofc:OtherFixedRateDebtMember2024-03-310000860546us-gaap:EstimateOfFairValueFairValueDisclosureMemberofc:OtherFixedRateDebtMember2024-03-310000860546us-gaap:CarryingReportedAmountFairValueDisclosureMemberofc:OtherFixedRateDebtMember2023-12-310000860546us-gaap:EstimateOfFairValueFairValueDisclosureMemberofc:OtherFixedRateDebtMember2023-12-310000860546us-gaap:CarryingReportedAmountFairValueDisclosureMemberofc:VariableRateDebtMember2024-03-310000860546ofc:VariableRateDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310000860546us-gaap:CarryingReportedAmountFairValueDisclosureMemberofc:VariableRateDebtMember2023-12-310000860546ofc:VariableRateDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310000860546us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310000860546us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310000860546us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310000860546us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310000860546us-gaap:SeniorNotesMemberofc:A525SeniorNotesMember2024-03-312024-03-310000860546ofc:InterestRateSwapEffectiveAugust12019Memberus-gaap:DesignatedAsHedgingInstrumentMember2024-03-310000860546ofc:InterestRateSwapEffectiveAugust12019Memberus-gaap:DesignatedAsHedgingInstrumentMemberofc:SecuredOvernightFinancingRateMember2023-12-310000860546ofc:InterestRateSwapEffectiveAugust12019Memberus-gaap:DesignatedAsHedgingInstrumentMember2023-12-310000860546us-gaap:DesignatedAsHedgingInstrumentMemberofc:InterestRateSwapEffectiveApril20200.573Member2024-03-310000860546us-gaap:DesignatedAsHedgingInstrumentMemberofc:SecuredOvernightFinancingRateMemberofc:InterestRateSwapEffectiveApril20200.573Member2023-12-310000860546us-gaap:DesignatedAsHedgingInstrumentMemberofc:InterestRateSwapEffectiveApril20200.573Member2023-12-310000860546ofc:InterestRateSwapEffectiveFebruary20233742Memberus-gaap:DesignatedAsHedgingInstrumentMember2024-03-310000860546ofc:InterestRateSwapEffectiveFebruary20233742Memberus-gaap:DesignatedAsHedgingInstrumentMember2023-12-310000860546us-gaap:DesignatedAsHedgingInstrumentMemberofc:InterestRateSwapEffectiveFebruary20233747Member2024-03-310000860546us-gaap:DesignatedAsHedgingInstrumentMemberofc:InterestRateSwapEffectiveFebruary20233747Member2023-12-310000860546us-gaap:InterestRateSwapMemberofc:PrepaidExpensesandOtherAssetsNetMember2024-03-310000860546us-gaap:InterestRateSwapMemberofc:PrepaidExpensesandOtherAssetsNetMember2023-12-310000860546us-gaap:InterestRateSwapMember2024-01-012024-03-310000860546us-gaap:InterestRateSwapMember2023-01-012023-03-310000860546us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2024-01-012024-03-310000860546us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2023-01-012023-03-310000860546us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-03-310000860546ofc:FortMeadeandBaltimoreWashingtonCorridorMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2024-01-012024-03-310000860546ofc:DefenseITPortfolioMemberofc:NoVADefenseITMemberofc:RealEstateOperationsMember2024-01-012024-03-310000860546ofc:LacklandAirForceBaseMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2024-01-012024-03-310000860546ofc:DefenseITPortfolioMemberofc:RealEstateOperationsMemberofc:NavySupportMember2024-01-012024-03-310000860546ofc:DefenseITPortfolioMemberofc:RedstoneArsenalMemberofc:RealEstateOperationsMember2024-01-012024-03-310000860546ofc:DefenseITPortfolioMemberofc:DataCenterShellsMemberofc:RealEstateOperationsMember2024-01-012024-03-310000860546ofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2024-01-012024-03-310000860546us-gaap:AllOtherSegmentsMemberofc:RealEstateOperationsMember2024-01-012024-03-310000860546ofc:RealEstateOperationsMember2024-01-012024-03-310000860546ofc:FortMeadeandBaltimoreWashingtonCorridorMemberus-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2024-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:NoVADefenseITMemberofc:RealEstateOperationsMember2024-03-310000860546us-gaap:OperatingSegmentsMemberofc:LacklandAirForceBaseMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2024-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMemberofc:NavySupportMember2024-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:RedstoneArsenalMemberofc:RealEstateOperationsMember2024-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:DataCenterShellsMemberofc:RealEstateOperationsMember2024-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2024-03-310000860546us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMemberofc:RealEstateOperationsMember2024-03-310000860546us-gaap:OperatingSegmentsMemberofc:RealEstateOperationsMember2024-03-310000860546ofc:FortMeadeandBaltimoreWashingtonCorridorMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2023-01-012023-03-310000860546ofc:DefenseITPortfolioMemberofc:NoVADefenseITMemberofc:RealEstateOperationsMember2023-01-012023-03-310000860546ofc:LacklandAirForceBaseMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2023-01-012023-03-310000860546ofc:DefenseITPortfolioMemberofc:RealEstateOperationsMemberofc:NavySupportMember2023-01-012023-03-310000860546ofc:DefenseITPortfolioMemberofc:RedstoneArsenalMemberofc:RealEstateOperationsMember2023-01-012023-03-310000860546ofc:DefenseITPortfolioMemberofc:DataCenterShellsMemberofc:RealEstateOperationsMember2023-01-012023-03-310000860546ofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2023-01-012023-03-310000860546us-gaap:AllOtherSegmentsMemberofc:RealEstateOperationsMember2023-01-012023-03-310000860546ofc:RealEstateOperationsMember2023-01-012023-03-310000860546ofc:FortMeadeandBaltimoreWashingtonCorridorMemberus-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2023-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:NoVADefenseITMemberofc:RealEstateOperationsMember2023-03-310000860546us-gaap:OperatingSegmentsMemberofc:LacklandAirForceBaseMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2023-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMemberofc:NavySupportMember2023-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:RedstoneArsenalMemberofc:RealEstateOperationsMember2023-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:DataCenterShellsMemberofc:RealEstateOperationsMember2023-03-310000860546us-gaap:OperatingSegmentsMemberofc:DefenseITPortfolioMemberofc:RealEstateOperationsMember2023-03-310000860546us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMemberofc:RealEstateOperationsMember2023-03-310000860546us-gaap:OperatingSegmentsMemberofc:RealEstateOperationsMember2023-03-310000860546ofc:ServiceOperationsMember2024-01-012024-03-310000860546ofc:ServiceOperationsMember2023-01-012023-03-310000860546us-gaap:OperatingSegmentsMember2024-03-310000860546us-gaap:OperatingSegmentsMember2023-03-310000860546us-gaap:MaterialReconcilingItemsMember2024-03-310000860546us-gaap:MaterialReconcilingItemsMember2023-03-310000860546us-gaap:CorporateNonSegmentMember2024-03-310000860546us-gaap:CorporateNonSegmentMember2023-03-310000860546ofc:GuaranteedMaximumPriceMember2024-01-012024-03-310000860546ofc:GuaranteedMaximumPriceMember2023-01-012023-03-310000860546us-gaap:FixedPriceContractMember2024-01-012024-03-310000860546us-gaap:FixedPriceContractMember2023-01-012023-03-310000860546ofc:CostplusFeeContractMember2024-01-012024-03-310000860546ofc:CostplusFeeContractMember2023-01-012023-03-310000860546ofc:OtherServicesRevenueMember2024-01-012024-03-310000860546ofc:OtherServicesRevenueMember2023-01-012023-03-310000860546ofc:ConstructionContractRevenueMember2023-12-310000860546ofc:ConstructionContractRevenueMember2022-12-310000860546ofc:ConstructionContractRevenueMember2024-03-310000860546ofc:ConstructionContractRevenueMember2023-03-310000860546ofc:ConstructionContractRevenueMember2024-01-012024-03-310000860546ofc:ConstructionContractRevenueMember2023-01-012023-03-310000860546ofc:ConstructionContractRevenueMember2024-04-012024-03-310000860546ofc:TenantNotesReceivablesMember2023-12-310000860546us-gaap:OtherAssetsMember2023-12-310000860546ofc:InvestingReceivablesMember2024-01-012024-03-310000860546ofc:TenantNotesReceivablesMember2024-01-012024-03-310000860546us-gaap:OtherAssetsMember2024-01-012024-03-310000860546ofc:TenantNotesReceivablesMember2024-03-310000860546us-gaap:OtherAssetsMember2024-03-310000860546ofc:InvestingReceivablesMember2022-12-310000860546ofc:TenantNotesReceivablesMember2022-12-310000860546us-gaap:OtherAssetsMember2022-12-310000860546ofc:InvestingReceivablesMember2023-01-012023-03-310000860546ofc:TenantNotesReceivablesMember2023-01-012023-03-310000860546us-gaap:OtherAssetsMember2023-01-012023-03-310000860546ofc:InvestingReceivablesMember2023-03-310000860546ofc:TenantNotesReceivablesMember2023-03-310000860546us-gaap:OtherAssetsMember2023-03-310000860546us-gaap:OtherAssetsMemberofc:AccountsReceivableNetMember2024-03-310000860546us-gaap:OtherAssetsMemberofc:AccountsReceivableNetMember2023-12-310000860546us-gaap:OtherAssetsMemberofc:PrepaidExpensesandOtherAssetsNetMember2024-03-310000860546us-gaap:OtherAssetsMemberofc:PrepaidExpensesandOtherAssetsNetMember2023-12-310000860546ofc:InvestingReceivablesMemberus-gaap:InternalInvestmentGradeMember2024-03-310000860546ofc:InvestingReceivablesMemberus-gaap:InternalNoninvestmentGradeMember2024-03-310000860546ofc:TenantNotesReceivablesMemberus-gaap:InternalInvestmentGradeMember2024-03-310000860546ofc:TenantNotesReceivablesMemberus-gaap:InternalNoninvestmentGradeMember2024-03-310000860546ofc:SalesTypeLeaseReceivablesMemberus-gaap:InternalInvestmentGradeMember2024-03-310000860546us-gaap:RestrictedStockMember2023-12-310000860546us-gaap:RestrictedStockMember2024-01-012024-03-310000860546us-gaap:RestrictedStockMember2024-03-310000860546ofc:ProfitInterestUnitsMember2024-03-31ofc:form0000860546ofc:TimebasedProfitInterestUnitsMember2023-12-310000860546ofc:TimebasedProfitInterestUnitsMember2024-01-012024-03-310000860546ofc:TimebasedProfitInterestUnitsMember2024-03-310000860546ofc:PerformancebasedPIUsMemberofc:SeniorManagementTeamMembersMember2024-01-012024-01-010000860546ofc:PerformancebasedPIUsMember2024-01-012024-01-01ofc:percentile_rank0000860546ofc:TargetLevelMemberofc:PerformancebasedPIUsMember2024-01-012024-01-010000860546ofc:ExecutivesMemberofc:A2021PBPIUMemberofc:PerformancebasedPIUsMember2024-02-012024-02-010000860546ofc:ExchangeableCommonUnitsMember2024-01-012024-03-310000860546ofc:ExchangeableCommonUnitsMember2023-01-012023-03-310000860546ofc:RedeemableNoncontrollingInterestMember2024-01-012024-03-310000860546ofc:RedeemableNoncontrollingInterestMember2023-01-012023-03-310000860546ofc:RestrictedStockandDeferredSharesMember2024-01-012024-03-310000860546ofc:RestrictedStockandDeferredSharesMember2023-01-012023-03-310000860546ofc:UnvestedTBPIUsMember2024-01-012024-03-310000860546ofc:UnvestedTBPIUsMember2023-01-012023-03-310000860546ofc:WeightedAverageVestedPIUsMember2024-01-012024-03-310000860546ofc:WeightedAverageVestedPIUsMember2023-01-012023-03-310000860546ofc:AnneArundelCountyMarylandMemberofc:TaxIncrementalFinancingBondMember2024-03-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q 
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedMarch 31, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission file number 1-14023
COPTMain.jpg
COPT DEFENSE PROPERTIES
(Exact name of registrant as specified in its charter)
Maryland 23-2947217
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6711 Columbia Gateway Drive, Suite 300, Columbia, MD
21046
(Address of principal executive offices)(Zip Code)
 
Registrant’s telephone number, including area code:  (443) 285-5400

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares of beneficial interest, $0.01 par valueCDPNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes   ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes   ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ☒ No

As of April 22, 2024, 112,634,870 of COPT Defense Properties’ Common Shares of Beneficial Interest, $0.01 par value, were issued and outstanding.



TABLE OF CONTENTS
 
FORM 10-Q
 
 PAGE
 
 
   
 
  

2


PART I: FINANCIAL INFORMATION
Item 1. Financial Statements

COPT Defense Properties and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
March 31,
2024
December 31,
2023
Assets  
Properties, net:  
Operating properties, net$3,272,452 $3,246,806 
Projects in development or held for future development245,426 256,872 
Total properties, net3,517,878 3,503,678 
Property - operating right-of-use assets40,368 41,296 
Cash and cash equivalents123,144 167,820 
Investment in unconsolidated real estate joint ventures40,597 41,052 
Accounts receivable, net50,088 48,946 
Deferred rent receivable 153,788 149,237 
Lease incentives, net61,150 61,331 
Deferred leasing costs (net of accumulated amortization of $41,846 and $41,448, respectively)
70,902 70,057 
Investing receivables (net of allowance for credit losses of $2,361 and $2,377, respectively)
82,523 81,512 
Prepaid expenses and other assets, net92,457 82,037 
Total assets$4,232,895 $4,246,966 
Liabilities and equity  
Liabilities:  
Debt, net$2,416,873 $2,416,287 
Accounts payable and accrued expenses111,981 133,315 
Rents received in advance and security deposits37,557 35,409 
Dividends and distributions payable33,906 32,644 
Deferred revenue associated with operating leases34,019 29,049 
Property - operating lease liabilities33,141 33,931 
Other liabilities16,406 18,996 
Total liabilities2,683,883 2,699,631 
Commitments and contingencies (Note 17)
Redeemable noncontrolling interests22,966 23,580 
Equity:  
Shareholders’ equity:  
Common Shares of beneficial interest ($0.01 par value; 150,000,000 shares authorized; shares issued and outstanding of 112,640,861 at March 31, 2024 and 112,555,352 at December 31, 2023)
1,126 1,126 
Additional paid-in capital2,487,468 2,489,989 
Cumulative distributions in excess of net income(1,009,964)(1,009,318)
Accumulated other comprehensive income 3,849 2,115 
Total shareholders’ equity1,482,479 1,483,912 
Noncontrolling interests in subsidiaries:  
Common units in COPT Defense Properties, L.P. (“CDPLP”)29,214 25,502 
Other consolidated entities14,353 14,341 
Noncontrolling interests in subsidiaries43,567 39,843 
Total equity1,526,046 1,523,755 
Total liabilities, redeemable noncontrolling interests and equity$4,232,895 $4,246,966 

See accompanying notes to consolidated financial statements.
3


COPT Defense Properties and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
For the Three Months Ended March 31,
 20242023
Revenues  
Lease revenue$165,433 $150,560 
Other property revenue1,230 1,121 
Construction contract and other service revenues26,603 15,820 
Total revenues193,266 167,501 
Operating expenses  
Property operating expenses66,746 59,420 
Depreciation and amortization associated with real estate operations38,351 36,995 
Construction contract and other service expenses26,007 15,201 
General, administrative, leasing and other expenses11,747 10,490 
Total operating expenses142,851 122,106 
Interest expense(20,767)(16,442)
Interest and other income, net4,122 2,256 
Gain on sales of real estate 49,378 
Income before equity in income (loss) of unconsolidated entities and income taxes33,770 80,587 
Equity in income (loss) of unconsolidated entities69 (64)
Income tax expense(168)(125)
Net income 33,671 80,398 
Net income attributable to noncontrolling interests:  
Common units in CDPLP(608)(1,293)
Other consolidated entities(454)(326)
Net income attributable to common shareholders$32,609 $78,779 
Earnings per common share:   
Net income attributable to common shareholders - basic$0.29 $0.70 
Net income attributable to common shareholders - diluted$0.29 $0.70 

See accompanying notes to consolidated financial statements.
4


COPT Defense Properties and Subsidiaries
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
For the Three Months Ended March 31,
 20242023
Net income$33,671 $80,398 
Other comprehensive income (loss):  
Unrealized income (loss) on interest rate derivatives2,981 (215)
Reclassification adjustments on interest rate derivatives recognized in interest expense
(1,180)(591)
Total other comprehensive income (loss)1,801 (806)
Comprehensive income35,472 79,592 
Comprehensive income attributable to noncontrolling interests(1,129)(1,531)
Comprehensive income attributable to common shareholders$34,343 $78,061 
 
See accompanying notes to consolidated financial statements.


5


COPT Defense Properties and Subsidiaries
Consolidated Statements of Equity
(Dollars in thousands)
(unaudited)
Common
Shares
Additional
Paid-in
Capital
Cumulative
Distributions in
Excess of Net
Income
Accumulated
Other
Comprehensive Income
Noncontrolling
Interests
Total
For the Three Months Ended March 31, 2023
Balance at December 31, 2022 (112,423,893 common shares outstanding)
$1,124 $2,486,116 $(807,508)$2,071 $39,652 $1,721,455 
Redemption of common units— — — — (373)(373)
Share-based compensation (89,964 shares issued, net of redemptions)
1 1,059 — — 754 1,814 
Redemption of vested equity awards— (1,113)— — — (1,113)
Adjustments to noncontrolling interests resulting from changes in ownership of CDPLP— (2,342)— — 2,342  
Comprehensive income— — 78,779 (718)832 78,893 
Dividends— — (32,091)— — (32,091)
Distributions to owners of common units in CDPLP— — — — (544)(544)
Distributions to noncontrolling interests in other consolidated entities— — — — (8)(8)
Adjustments for changes in fair value of redeemable noncontrolling interests— 781 — — — 781 
Balance at March 31, 2023 (112,513,857 common shares outstanding)
$1,125 $2,484,501 $(760,820)$1,353 $42,655 $1,768,814 
For the Three Months Ended March 31, 2024
Balance at December 31, 2023 (112,555,352 common shares outstanding)
$1,126 $2,489,989 $(1,009,318)$2,115 $39,843 $1,523,755 
Redemption of common units— — — — (1,180)(1,180)
Share-based compensation (85,509 shares issued, net of redemptions)
— 1,158 — — 1,652 2,810 
Redemption of vested equity awards— (1,039)— — — (1,039)
Adjustments to noncontrolling interests resulting from changes in ownership of CDPLP— (3,255)— — 3,255  
Comprehensive income— — 32,609 1,734 660 35,003 
Dividends— — (33,255)— — (33,255)
Distributions to owners of common units in CDPLP— — — — (655)(655)
Distributions to noncontrolling interests in other consolidated entities— — — — (8)(8)
Adjustments for changes in fair value of redeemable noncontrolling interests— 615 — — — 615 
Balance at March 31, 2024 (112,640,861 common shares outstanding)
$1,126 $2,487,468 $(1,009,964)$3,849 $43,567 $1,526,046 

See accompanying notes to consolidated financial statements.



6


COPT Defense Properties and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited) 
For the Three Months Ended March 31,
 20242023
Cash flows from operating activities  
Revenues from real estate operations received$173,830 $152,273 
Construction contract and other service revenues received11,445 18,765 
Property operating expenses paid(58,314)(55,753)
Construction contract and other service expenses paid(18,894)(21,999)
General, administrative, leasing and other expenses paid(11,828)(11,681)
Interest expense paid(20,996)(12,031)
Lease incentives paid(6,578)(10,350)
Interest and other income received3,551 1,316 
Other(1,226)(1,795)
Net cash provided by operating activities70,990 58,745 
Cash flows from investing activities  
Acquisitions of operating properties and related intangible assets(15,210) 
Development of properties(39,932)(71,282)
Tenant improvements on operating properties(7,946)(22,568)
Other capital improvements on operating properties(13,084)(5,512)
Proceeds from sale of properties 189,325 
Leasing costs paid(2,666)(4,655)
Other(73)(125)
Net cash (used in) provided by investing activities(78,911)85,183 
Cash flows from financing activities  
Proceeds from debt
Revolving Credit Facility 95,000 
Repayments of debt
Revolving Credit Facility (188,000)
Scheduled principal amortization(769)(790)
Other debt repayments (15,902)
Common share dividends paid(32,104)(30,941)
Other(3,546)(2,900)
Net cash used in financing activities(36,419)(143,533)
Net (decrease) increase in cash and cash equivalents and restricted cash(44,340)395 
Cash and cash equivalents and restricted cash  
Beginning of period169,424 16,509 
End of period$125,084 $16,904 

See accompanying notes to consolidated financial statements.
 

7


COPT Defense Properties and Subsidiaries
Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
For the Three Months Ended March 31,
 20242023
Reconciliation of net income to net cash provided by operating activities:  
Net income $33,671 $80,398 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and other amortization38,959 37,597 
Amortization of deferred financing costs and net debt discounts1,699 1,250 
Change in net deferred rent receivable and liability496 (6,869)
Gain on sales of real estate (49,378)
Share-based compensation2,645 1,733 
Other(178)(376)
Changes in operating assets and liabilities: 
Increase in accounts receivable(1,303)(2,802)
(Increase) decrease in lease incentives and prepaid expenses and other assets, net(2,498)9,361 
Decrease in accounts payable, accrued expenses and other liabilities(4,649)(16,806)
Increase in rents received in advance and security deposits2,148 4,637 
Net cash provided by operating activities$70,990 $58,745 
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents at beginning of period$167,820 $12,337 
Restricted cash at beginning of period1,604 4,172 
Cash and cash equivalents and restricted cash at beginning of period$169,424 $16,509 
Cash and cash equivalents at end of period$123,144 $15,199 
Restricted cash at end of period1,940 1,705 
Cash and cash equivalents and restricted cash at end of period$125,084 $16,904 
Supplemental schedule of non-cash investing and financing activities:  
Decrease in accrued capital improvements, leasing and other investing activity costs$(19,113)$(11,043)
Recognition of operating right-of-use assets and related lease liabilities$277 $6,697 
Recognition of finance right-of-use assets and related lease liabilities$ $434 
Investment in unconsolidated real estate joint venture retained in property disposition$ $21,121 
Increase (decrease) in fair value of derivatives applied to accumulated other comprehensive income and noncontrolling interests$1,801 $(806)
Dividends/distributions payable$33,906 $32,630 
Adjustments to noncontrolling interests resulting from changes in CDPLP ownership$3,255 $2,342 
Decrease in redeemable noncontrolling interests and increase in equity to adjust for changes in fair value of redeemable noncontrolling interests$(615)$(781)
 
See accompanying notes to consolidated financial statements.

8


COPT Defense Properties and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
 
1.    Organization
 
COPT Defense Properties (“COPT Defense”) and subsidiaries (collectively, the “Company”, “we” or “us”) is a fully-integrated and self-managed real estate investment trust (“REIT”) focused on owning, operating and developing properties in locations proximate to, or sometimes containing, key U.S. Government (“USG”) defense installations and missions (which we refer to herein as our Defense/IT Portfolio). 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. As of March 31, 2024, our Defense/IT Portfolio included:

193 operating properties totaling 22.0 million square feet comprised of 16.3 million square feet in 163 office properties and 5.7 million square feet in 30 single-tenant data center shells. We owned 24 of these data center shells through unconsolidated real estate joint ventures;
six properties under development (three office properties and three data center shells), including one partially-operational property, that will total approximately 959,000 square feet upon completion; and
approximately 650 acres of land controlled that we believe could be developed into approximately 7.7 million square feet.

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 March 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. (“CDPLP”) and subsidiaries (collectively, the “Operating Partnership”), of which COPT Defense is the sole general partner. CDPLP owns real estate directly and through subsidiary partnerships and limited liability companies (“LLCs”).  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. As of March 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. The number of common units owned by COPT Defense is equivalent to the number of outstanding common shares of beneficial interest (“common shares”) of COPT Defense, and the entitlement of common units to quarterly distributions and payments in liquidation is substantially the same as that of COPT Defense common shareholders.

COPT Defense’s common shares are publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “CDP”.
  
2.    Summary of Significant Accounting Policies
 
Basis of Presentation
 
These consolidated financial statements include the accounts of COPT Defense, the Operating Partnership, their subsidiaries and other entities in which COPT Defense has a majority voting interest and control.  We also consolidate certain entities when control of such entities can be achieved through means other than voting rights (“variable interest entities” or “VIEs”) if we are deemed to be the primary beneficiary of such entities.  We eliminate all intercompany balances and transactions in consolidation.

We use the equity method of accounting when we own an interest in an entity and can exert significant influence over but cannot control the entity’s operations. We discontinue equity method accounting if our investment in an entity (and net advances) is reduced to zero unless we have guaranteed obligations of the entity or are otherwise committed to provide further financial support for the entity.
 
When we own an equity investment in an entity and cannot exert significant influence over its operations, we measure the investment at fair value, with changes recognized through net income. For an investment without a readily determinable fair value, we measure the investment at cost, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer.

These interim financial statements should be read together with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 included in our 2023 Annual Report on Form 10-K.  The unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly state our financial position and results of operations.  All adjustments are of a normal recurring nature.  The consolidated financial statements have been prepared using the accounting policies described in our 2023 Annual Report on Form 10-K.
9



Reclassifications

We reclassified certain amounts from prior periods to conform to the current period presentation of our consolidated financial statements with no effect on previously reported net income or equity.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standard Board (“FASB”) issued guidance to improve reportable segment disclosure requirements. This guidance requires disclosure of incremental segment information on an annual and interim basis and is effective for us beginning after December 15, 2024. Early adoption is permitted. The guidance will be applied retrospectively to all periods presented unless it is impracticable to do so. We are currently assessing the impact of this guidance on our future related disclosures.

In December 2023, the FASB issued guidance to improve income tax disclosures. This guidance requires enhanced annual disclosures primarily related to existing rate reconciliation and income taxes paid disclosure requirements and is effective for us for annual periods beginning after December 15, 2024. Early adoption is permitted. We expect to apply this guidance prospectively. We are currently assessing the application of this guidance but do not expect it to materially affect our future related disclosures.

In March 2024, the FASB issued guidance to reduce complexity and diversity in practice in determining whether a profits interest award is accounted for as a share-based payment. This guidance is effective for us for annual and interim periods beginning after December 15, 2024. Early adoption is permitted. This guidance can be applied either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest or similar awards granted or modified on or after the effective date for our application of this guidance. We are currently assessing the application of this guidance on our future related disclosures.

3.     Fair Value Measurements

Recurring Fair Value Measurements

We have a non-qualified elective deferred compensation plan for Trustees and certain members of our management team that, prior to December 31, 2019, permitted participants to defer up to 100% of their compensation on a pre-tax basis and receive a tax-deferred return on such deferrals. Effective December 31, 2019, no new investments of deferred compensation were eligible for the plan.  The assets held in the plan (comprised of mutual funds) and the corresponding liability to the participants are measured at fair value on a recurring basis on our consolidated balance sheets using quoted market prices. The balance of the plan, which was fully funded and totaled $2.0 million as of March 31, 2024, is included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheets. The offsetting liability associated with the plan is adjusted to fair value at the end of each accounting period based on the fair value of the plan assets and reported in “other liabilities” on our consolidated balance sheets. The assets of the plan are classified in Level 1 of the fair value hierarchy, while the offsetting liability is classified in Level 2 of the fair value hierarchy.

The fair values of our interest rate derivatives, as disclosed in Note 9, are determined using widely accepted valuation techniques, including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While we determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our interest rate derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default. However, as of March 31, 2024, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivatives and determined that these adjustments were not significant. As a result, we determined that our interest rate derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, other assets (excluding investing receivables) and accounts payable and accrued expenses are reasonable estimates of their fair values because of the short maturities of these instruments.  The fair values of our investing receivables, as disclosed in Note 7, were based on the discounted estimated future cash flows of the loans (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans with similar maturities and credit quality, and the estimated cash payments include scheduled principal and interest payments.  For our disclosure of debt fair values in Note 8, we estimated the fair value of our unsecured senior notes based on quoted market rates for our senior notes (categorized within Level 1 of the fair value hierarchy) and estimated the fair value of our other debt based on the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans, or groups of loans, with similar maturities and credit quality, and the estimated future payments include scheduled principal and interest payments.  Fair value estimates are made as of a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment. 

10


The table below sets forth our financial assets and liabilities accounted for at fair value on a recurring basis as of March 31, 2024 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):
DescriptionQuoted Prices in
Active Markets for
Identical Assets (Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable 
Inputs
(Level 3)
Total
Assets: (1)    
Marketable securities in deferred compensation plan $1,959 $ $ $1,959 
Interest rate derivatives  4,359  4,359 
Total assets$1,959 $4,359 $ $6,318 
Liabilities: (2)    
Deferred compensation plan liability $ $1,959 $ $1,959 
(1)Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.
(2)Included in the line entitled “other liabilities” on our consolidated balance sheet.

4.    Properties, Net
 
Operating properties, net consisted of the following (in thousands): 
March 31,
2024
December 31,
2023
Land$488,371 $482,964 
Buildings and improvements4,218,702 4,164,004 
Less: Accumulated depreciation(1,434,621)(1,400,162)
Operating properties, net$3,272,452 $3,246,806 

On March 15, 2024, we acquired 6841 Benjamin Franklin Drive, a 202,000 square foot operating office property in Columbia, Maryland (included in the Fort Meade/BW Corridor sub-segment of our Defense/IT Portfolio reportable segment) that was 56% leased, for a purchase price of $15.0 million. The table below sets forth the allocation of the purchase price and transaction costs associated with this acquisition (in thousands):
Land, operating properties$5,428 
Building and improvements2,534 
Intangible assets on real estate acquisitions7,248 
Total acquisition cost$15,210 

Intangible assets recorded in connection with this acquisition included the following (dollars in thousands):
Weighted Average Amortization Period
 (in Years)
Tenant relationship value$3,752 12.4
In-place lease value2,229 2.4
Above-market leases1,267 2.4
$7,248 7.6

11


5.    Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed-lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below-market lease intangibles; and variable-lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under leases. The table below sets forth our composition of lease revenue recognized between fixed- and variable-lease revenue (in thousands):
For the Three Months Ended March 31,
Lease revenue 20242023
Fixed$126,198 $116,039 
Variable 39,235 34,521 
$165,433 $150,560 

Lessee Arrangements

As of March 31, 2024, our balance sheet included $42.9 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating with various expiration dates. Our property right-of-use assets and property lease liabilities on our consolidated balance sheets consisted of the following (in thousands):
LeasesBalance Sheet LocationMarch 31,
2024
December 31,
2023
Right-of-use assets
Operating leases - PropertyProperty - operating right-of-use assets$40,368 $41,296 
Finance leases - PropertyPrepaid expenses and other assets, net2,547 2,565 
Total right-of-use assets$42,915 $43,861 
Lease liabilities
Operating leases - PropertyProperty - operating lease liabilities$33,141 $33,931 
Finance leases - PropertyOther liabilities409 415 
Total lease liabilities$33,550 $34,346 

As of March 31, 2024, our operating leases had a weighted average remaining lease term of 51 years and a weighted average discount rate of 7.32%, while our finance leases had a weighted average remaining lease term of nine years and a weighted average discount rate of 9.14%. The table below presents our total property lease cost (in thousands):
Statement of Operations LocationFor the Three Months Ended March 31,
Lease cost20242023
Operating lease cost
Property leases - fixedProperty operating expenses$1,859 $1,535 
Property leases - variableProperty operating expenses34 17 
Finance lease cost
Amortization of property right-of-use assetsProperty operating expenses19 20 
Interest on lease liabilitiesInterest expense9 13 
$1,921 $1,585 

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):
For the Three Months Ended March 31,
Supplemental cash flow information20242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$1,724 $1,185 
Operating cash flows for financing leases$9 $13 
Financing cash flows for financing leases$6 $4 

12


Payments on property leases were due as follows (in thousands):
March 31, 2024
Year Ending December 31,Operating LeasesFinance Leases
2024 (1)
$5,099 $46 
20252,403 63 
20261,815 65 
20271,830 66 
20281,847 69 
Thereafter139,906 297 
Total lease payments152,900 606 
Less: Amount representing interest(119,759)(197)
Lease liability$33,141 $409 
(1)Represents the nine months ending December 31, 2024.

6.    Real Estate Joint Ventures

Consolidated Real Estate Joint Ventures

The table below sets forth information as of March 31, 2024 pertaining to our investments in consolidated real estate joint ventures, which are each variable interest entities (dollars in thousands):
  Nominal Ownership % 
March 31, 2024
Date FormedTotal
Assets
Encumbered AssetsTotal LiabilitiesMortgage Debt
EntityLocation
LW Redstone Company, LLC (1)3/23/201085%Huntsville, Alabama$723,509 $98,418 $98,619 $50,205 
Stevens Investors, LLC 8/11/201595%Washington, D.C.130,123  3,579  
M Square Associates, LLC6/26/200750%College Park, Maryland98,456 56,944 50,317 48,337 
 $952,088 $155,362 $152,515 $98,542 
(1)We fund all capital requirements. Our partner receives distributions of $1.2 million of annual operating cash flows and we receive the remainder.

Unconsolidated Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in unconsolidated real estate joint ventures accounted for using the equity method of accounting (dollars in thousands):
Date FormedNominal Ownership %Number of PropertiesCarrying Value of Investment (1)
EntityMarch 31,
2024
December 31,
2023
Redshift JV LLC1/10/202310%3 $21,021 $21,053 
BREIT COPT DC JV LLC6/20/201910%9 10,321 10,629 
Quark JV LLC12/14/202210%2 6,722 6,727 
B RE COPT DC JV III LLC6/2/202110%2 2,533 2,643 
B RE COPT DC JV II LLC (2)10/30/202010%8 (2,982)(2,777)
 24 $37,615 $38,275 
(1)Included $40.6 million and $41.1 million reported in “investment in unconsolidated real estate joint ventures” and $3.0 million and $2.8 million for investments with deficit balances reported in “other liabilities” on our consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively.
(2)Our investment in B RE COPT DC JV II LLC was lower than our share of the joint venture’s equity by $6.8 million as of March 31, 2024 and December 31, 2023 due to a difference between our cost basis and our share of the joint venture’s underlying equity in its net assets. We recognize adjustments to our share of the joint venture’s earnings and losses resulting from this basis difference in the underlying assets of the joint venture.
13


7.    Investing Receivables

Investing receivables consisted of the following (in thousands): 
March 31,
2024
December 31,
2023
Notes receivable from the City of Huntsville$78,017 $77,022 
Other investing loan receivable6,867 6,867 
Amortized cost basis84,884 83,889 
Allowance for credit losses(2,361)(2,377)
Investing receivables, net$82,523 $81,512 

The balances above include accrued interest receivable, net of allowance for credit losses, of $822,000 as of March 31, 2024 and $6.0 million as of December 31, 2023.

Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture (see Note 6) and carry an interest rate of 9.95%. Our other investing loan receivable as of March 31, 2024 carries a stated interest rate of 12.0% and matures in 2024.

The fair value of these receivables was approximately $85 million as of March 31, 2024 and $84 million as of December 31, 2023.

14


8.    Debt, Net
 
Our debt consisted of the following (dollars in thousands):
 Carrying Value (1) as ofMarch 31, 2024
March 31,
2024
December 31,
2023
 Stated Interest RatesScheduled Maturity
Mortgage and Other Secured Debt:    
Fixed-rate mortgage debt $65,753 $66,314 
3.82% to 4.62% (2)
2024-2026
Variable-rate secured debt 32,789 32,894 
SOFR + 0.10%
+ 1.45% to 1.55% (3)
2025-2026 (4)
Total mortgage and other secured debt98,542 99,208   
Revolving Credit Facility 75,000 75,000 
SOFR + 0.10%
+ 0.725% to 1.400% (5)
October 2026 (6)
Term Loan Facility124,376 124,291 
SOFR + 0.10%
+ 0.850% to 1.700% (7)
January 2026 (8)
Unsecured Senior Notes
2.25%, $400,000 aggregate principal
397,879 397,608 
2.25% (9)
March 2026
5.25%, $345,000 aggregate principal (10)
336,237 335,802 
5.25% (11)
 September 2028
2.00%, $400,000 aggregate principal
397,593 397,471 
2.00% (12)
January 2029
2.75%, $600,000 aggregate principal
591,489 591,212 
2.75% (13)
April 2031
2.90%, $400,000 aggregate principal
395,371 395,265 
2.90% (14)
December 2033
Unsecured note payable386 430 
0% (15)
May 2026
Total debt, net$2,416,873 $2,416,287   
(1)The carrying values of our debt other than the Revolving Credit Facility reflect net deferred financing costs of $5.0 million as of March 31, 2024 and $5.3 million as of December 31, 2023.
(2)The weighted average interest rate on our fixed-rate mortgage debt was 4.10% as of March 31, 2024.
(3)Including the effect of interest rate swaps that hedge the risk of interest rate changes, the weighted average interest rate on our variable-rate secured debt as of March 31, 2024 was 2.45%; excluding the effect of these swaps, the weighted average interest rate on this debt as of March 31, 2024 was 6.93%.
(4)Most of this debt matures in 2025, with the ability for us to extend such maturity by two 12-month periods at our option, provided that there is no default on the debt and we pay an extension fee of 0.10% of the debt balance for each extension period.
(5)The weighted average interest rate on the Revolving Credit Facility was 6.48% as of March 31, 2024, excluding the effect of interest rate swaps that hedge the risk of interest rate changes (see Note 9).
(6)The facility matures in October 2026, with the ability for us to extend such maturity 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.
(7)The interest rate on this loan was 6.73% as of March 31, 2024, excluding the effect of interest rate swaps that hedge the risk of interest rate changes (see Note 9).
(8)This facility matures in January 2026, with the ability for us to extend such maturity by two 12-month periods at our option, provided that there is no default under the facility and we pay an extension fee of 0.125% of the outstanding loan balance for each extension period.
(9)The carrying value of these notes reflects unamortized discounts and commissions totaling $1.7 million as of March 31, 2024 and $1.9 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 2.48%.
(10)As described further in our 2023 Annual Report on Form 10-K, these notes have an exchange settlement feature under which the notes may, under certain circumstances, be exchangeable at the option of the holders. Upon exchange, the principal amount of notes is payable in cash, with the remainder of the exchange obligation, if any, as determined based on the exchange price per common share at the time of settlement, payable in cash, common shares or a combination thereof at our election. As of March 31, 2024, the exchange rate of the notes equaled 33.3882 of our common shares per $1,000 principal amount of notes (equivalent to an exchange price of approximately $29.95 per common share).
(11)The carrying value of these notes reflects unamortized commissions totaling $7.7 million as of March 31, 2024 and $8.1 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 5.83%.
(12)The carrying value of these notes reflects unamortized discounts and commissions totaling $1.7 million as of March 31, 2024 and $1.8 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 2.09%.
(13)The carrying value of these notes reflects unamortized discounts and commissions totaling $7.4 million as of March 31, 2024 and $7.6 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 2.94%.
(14)The carrying value of these notes reflects unamortized discounts and commissions totaling $3.8 million as of March 31, 2024 and $3.9 million as of December 31, 2023. The effective interest rate under the notes, including amortization of such costs, was 3.01%.
(15)This note carries an interest rate that, upon assumption, was below market rates and it therefore was recorded at its fair value based on applicable effective interest rates.  The carrying value of this note reflects an unamortized discount totaling $25,000 as of March 31, 2024 and $32,000 as of December 31, 2023.
 
All debt is owed by the Operating Partnership. While COPT Defense is not directly obligated by any debt, it has guaranteed CDPLP’s Revolving Credit Facility, Term Loan Facility and Unsecured Senior Notes. All of our mortgage and other secured debt as of March 31, 2024 was for consolidated real estate joint ventures (see Note 6).

15


The table below sets forth interest expense recognized on the 5.25% Exchangeable Senior Notes due 2028 (the “5.25% Notes”) for the three months ended March 31, 2024 (in thousands):
Interest expense at stated interest rate$4,528 
Interest expense associated with amortization of debt discount and issuance costs382 
Total$4,910 

Certain of our debt instruments require that we comply with a number of restrictive financial covenants.  As of March 31, 2024, we were compliant with these financial covenants.

Our debt matures on the following schedule (in thousands):
Year Ending December 31,March 31, 2024
2024 (1)
$29,214 
202523,717 
2026646,300 
2027 
2028345,000 
Thereafter1,400,000 
Total$2,444,231 (2)
(1)Represents the nine months ending December 31, 2024.
(2)Represents scheduled principal amortization and maturities only and therefore excludes net discounts and deferred financing costs of $27.4 million.

We capitalized interest costs of $589,000 in the three months ended March 31, 2024 and $770,000 in the three months ended March 31, 2023.

The following table sets forth information pertaining to the fair value of our debt (in thousands): 
 March 31, 2024December 31, 2023
 Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Fixed-rate debt    
Unsecured Senior Notes$2,118,569 $1,880,835 $2,117,358 $1,876,611 
Other fixed-rate debt66,139 63,013 66,744 63,692 
Variable-rate debt232,165 232,105 232,185 232,270 
 $2,416,873 $2,175,953 $2,416,287 $2,172,573 
 
16


9.    Interest Rate Derivatives
 
The following table sets forth the key terms and fair values of our interest rate swap derivatives (dollars in thousands):
     Fair Value at
Notional Amount Fixed RateFloating Rate IndexEffective DateExpiration DateMarch 31,
2024
December 31,
2023
$10,580 (1)1.678%
SOFR + 0.10%
8/1/20198/1/2026$639 $571 
$22,400 (2)0.573%
SOFR + 0.10%
4/1/20203/26/2025963 1,084 
$150,000 3.742%One-Month SOFR2/1/20232/2/20262,071 681 
$50,000 3.747%One-Month SOFR2/1/20232/2/2026686 222 
      $4,359 $2,558 
(1)The notional amount of this instrument is scheduled to amortize to $10.0 million.
(2)The notional amount of this instrument is scheduled to amortize to $22.1 million.

Each of these swaps was designated as a cash flow hedge of interest rate risk.

The table below sets forth the fair value of our interest rate derivatives as well as their classification on our consolidated balance sheets (in thousands):
 Fair Value at
DerivativesBalance Sheet LocationMarch 31,
2024
December 31,
2023
Interest rate swaps designated as cash flow hedgesPrepaid expenses and other assets, net$4,359 $2,558 
 
The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands):
Amount of Income (Loss)
Recognized in
AOCI on Derivatives
Amount of Income Reclassified from AOCI into Interest Expense on Statement of Operations
Derivatives in Hedging RelationshipsFor the Three Months Ended March 31,For the Three Months Ended March 31,
2024202320242023
Interest rate derivatives$2,981 $(215)$1,180 $591 

Based on the fair value of our derivatives as of March 31, 2024, we estimate that approximately $3.6 million of gains will be reclassified from accumulated other comprehensive income (“ AOCI”) as a decrease to interest expense over the next 12 months.

We have agreements with each of our interest rate derivative counterparties that contain provisions under which, if we default or are capable of being declared in default on defined levels of our indebtedness, we could also be declared in default on our derivative obligations. Failure to comply with the loan covenant provisions could result in our being declared in default on any derivative instrument obligations covered by the agreements. As of March 31, 2024, we were not in default with any of these provisions. As of March 31, 2024, we did not have any derivatives in liability positions.

17


10.    Redeemable Noncontrolling Interests

Redeemable noncontrolling interests on our consolidated balance sheets include the ownership interests of our partners in LW Redstone Company, LLC and Stevens Investors, LLC due to the partners’ rights to require us to acquire their interests. Effective in June 2023, these rights expired for our Stevens Investors, LLC partners, which resulted in our reclassification of their interests from redeemable noncontrolling interests to the noncontrolling interests in subsidiaries section of equity. The table below sets forth the activity for redeemable noncontrolling interests (in thousands):
For the Three Months Ended March 31,
20242023
Beginning balance$23,580 $26,293 
Distributions to noncontrolling interests(468)(763)
Net income attributable to noncontrolling interests469 699 
Adjustments for changes in fair value of interests(615)(781)
Ending balance$22,966 $25,448 

We determine the fair value of the interests based on unobservable inputs after considering the assumptions that market participants would make in pricing the interest. We apply a discount rate to the estimated future cash flows allocable to our partners from the properties underlying the respective joint ventures. Estimated cash flows used in such analyses are based on our plans for the properties and our views of market and economic conditions, and consider items such as current and future rental rates, occupancy projections and estimated operating and development expenditures.

11.    Equity
 
As of March 31, 2024, we had remaining capacity under our at-the-market stock offering program equal to an aggregate gross sales price of $300 million in common shares.

We declared dividends per common share of $0.295 in the three months ended March 31, 2024 and $0.285 in the three months ended March 31, 2023.

See Note 15 for disclosure of common share activity pertaining to our share-based compensation plans.

18


12.    Information by Business Segment

We have the following reportable segments: Defense/IT Portfolio; and Other. We also report on Defense/IT Portfolio sub-segments, which include the following: 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. Navy (“Navy Support”), which included properties proximate to the Washington Navy Yard, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; Redstone Arsenal (in Huntsville, Alabama); and data center shells (properties leased to tenants to be operated as data centers in which the tenants fund the costs for the power, fiber connectivity and data center infrastructure).

We measure the performance of our segments through the measure we define as net operating income from real estate operations (“NOI from real estate operations”), 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”). Amounts reported for segment assets represent long-lived assets associated with consolidated operating properties (including the carrying value of properties, right-of-use assets, net of related lease liabilities, intangible assets, deferred leasing costs, deferred rents receivable and lease incentives) and the carrying value of investments in UJVs owning operating properties. Amounts reported as additions to long-lived assets represent additions to existing consolidated operating properties, excluding transfers from non-operating properties, which we report separately.
19




The table below reports segment financial information for our reportable segments (in thousands): 
Defense/IT Portfolio
 Fort Meade/BW CorridorNoVA Defense/ITLackland Air Force BaseNavy SupportRedstone ArsenalData Center ShellsTotal Defense/IT PortfolioOtherTotal
Three Months Ended March 31, 2024
      
Revenues from real estate operations$78,068 $21,426 $16,411 $8,226 $16,808 $8,457 $149,396 $17,267 $166,663 
Property operating expenses(27,890)(9,262)(8,688)(3,626)(5,792)(943)(56,201)(10,545)(66,746)
UJV NOI allocable to COPT Defense     1,740 1,740  1,740 
NOI from real estate operations$50,178 $12,164 $7,723 $4,600 $11,016 $9,254 $94,935 $6,722 $101,657 
Additions to long-lived assets$26,340 $4,491 $ $598 $672 $ $32,101 $4,790 $36,891 
Transfers from non-operating properties$1,575 $993 $9 $ $32,884 $3,075 $38,536 $9 $38,545 
Segment assets at March 31, 2024
$1,458,458 $489,544 $187,232 $161,210 $584,790 $434,194 $3,315,428 $312,784 $3,628,212 
Three Months Ended March 31, 2023
      
Revenues from real estate operations$69,777 $19,829 $15,605 $7,925 $13,414 $6,692 $133,242 $18,439 $151,681 
Property operating expenses(24,520)(7,572)(7,945)(3,543)(4,636)(594)(48,810)(10,610)(59,420)
UJV NOI allocable to COPT Defense     1,642 1,642  1,642 
NOI from real estate operations$45,257 $12,257 $7,660 $4,382 $8,778 $7,740 $86,074 $7,829 $93,903 
Additions to long-lived assets$12,135 $2,398 $62 $759 $6,594 $ $21,948 $3,289 $25,237 
Transfers from non-operating properties$5,781 $238 $28 $2,650 $14,392 $3,311 $26,400 $13 $26,413 
Segment assets at March 31, 2023
$1,390,273 $486,649 $193,160 $169,235 $472,237 $324,422 $3,035,976 $549,138 $3,585,114 

20


The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):
For the Three Months Ended March 31,
 20242023
Segment revenues from real estate operations$166,663 $151,681 
Construction contract and other service revenues26,603 15,820 
Total revenues$193,266 $167,501 
 
The following table reconciles UJV NOI allocable to COPT Defense to equity in income (loss) of unconsolidated entities as reported on our consolidated statements of operations (in thousands):
For the Three Months Ended March 31,
 20242023
UJV NOI allocable to COPT Defense$1,740 $1,642 
Less: Income from UJV allocable to COPT Defense attributable to depreciation and amortization expense and interest expense(1,671)(1,704)
Add: Equity in loss of unconsolidated non-real estate entities (2)
Equity in income (loss) of unconsolidated entities$69 $(64)
 
As previously discussed, we provide real estate services such as property management, development and construction services primarily for our properties but also for third parties.  The primary manner in which we evaluate the operating performance of our service activities is through a measure we define as net operating income from service operations (“NOI from service operations”), which is based on the net of revenues and expenses from these activities.  Construction contract and other service revenues and expenses consist primarily of subcontracted costs that are reimbursed to us by the customer along with a management fee. The operating margins from these activities are small relative to the revenue.  We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations. The table below sets forth the computation of our NOI from service operations (in thousands):
For the Three Months Ended March 31,
 20242023
Construction contract and other service revenues$26,603 $15,820 
Construction contract and other service expenses(26,007)(15,201)
NOI from service operations$596 $619 

The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to net income as reported on our consolidated statements of operations (in thousands):
For the Three Months Ended March 31,
 20242023
NOI from real estate operations$101,657 $93,903 
NOI from service operations596 619 
Depreciation and other amortization associated with real estate operations(38,351)(36,995)
General, administrative, leasing and other expenses(11,747)(10,490)
Interest expense(20,767)(16,442)
Interest and other income, net4,122 2,256 
Gain on sales of real estate 49,378 
Equity in income (loss) of unconsolidated entities69 (64)
UJV NOI allocable to COPT Defense included in equity in income (loss) of unconsolidated entities(1,740)(1,642)
Income tax expense(168)(125)
Net income$33,671 $80,398 
 
21


The following table reconciles our segment assets to our consolidated total assets (in thousands):
March 31,
2024
March 31,
2023
Segment assets$3,628,212 $3,585,114 
Operating properties lease liabilities included in segment assets33,550 35,327 
Non-operating property assets245,828 345,518 
Other assets325,305 212,033 
Total consolidated assets$4,232,895 $4,177,992 
 
The accounting policies of the segments are the same as those used to prepare our consolidated financial statements.  In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization, gain on sales of real estate and equity in income (loss) of unconsolidated entities not included in NOI to our real estate segments since they are not included in the measure of segment profit reviewed by management.  We also did not allocate general, administrative, leasing and other expenses, interest and other income, net, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.

13.    Construction Contract and Other Service Revenues

We disaggregate in the table below our construction contract and other service revenues by compensation arrangement as we believe it best depicts the nature, timing and uncertainty of our revenue (in thousands):
For the Three Months Ended March 31,
20242023
Construction contract revenue:
Guaranteed maximum price$13,640 $6,743 
Firm fixed price10,900 5,879 
Cost-plus fee