Annual report [Section 13 and 15(d), not S-K Item 405]

Information by Business Segment

v3.25.4
Information by Business Segment
 12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]  
Information by Business Segment Information by Business Segment
We organize our portfolio of operating properties into reportable segments by demand driver, which is based primarily on their location and secondarily on their physical characteristics and use. We have two reportable segments: Defense/IT Portfolio; and Other. We also report on Defense/IT Portfolio sub-segments, which include the following: Fort Meade/BW Corridor; Redstone Arsenal (in Huntsville, Alabama); 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 in Washington, DC, the Naval Air Station Patuxent River in Maryland and the Naval Surface Warfare Center Dahlgren Division in Virginia; and data center shells (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). In the first quarter of 2025, we retrospectively reclassified two properties to our Fort Meade/BW Corridor sub-segment from our Other segment.

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 other segment items, which is comprised of: 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”). Property operating expenses represent costs associated with operating our properties, including property taxes, ground rents, utilities, property management, insurance, repairs and exterior and interior maintenance, as well as associated labor and indirect costs.

FASB guidance on segment reporting uses the term chief operating decision maker to define a function responsible for allocating resources to and assessing the performance of the segments of a public entity. Our President and Chief Executive Officer served as our chief operating decision maker for each of the periods included herein. Our chief operating decision maker uses budget to actual comparisons of:

•NOI from real estate operations to assess the performance of our segments; and
•operating expense information on a consolidated basis and for our Same Property pool (defined as our properties stably owned and 100% operational throughout both the current and prior year) to manage expenses associated with operating our properties.

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, net of deficit investment balances reported in “other liabilities” on our consolidated balance sheets (which were included in our data center shells sub-segment and totaled $13.5 million, $36.0 million and $38.3 million as of December 31, 2025, 2024 and 2023, respectively).
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.
The table below reports segment financial information for our reportable segments (in thousands):
Defense/IT Portfolio
  Fort Meade/BW Corridor Redstone Arsenal NoVA Defense/IT Lackland Air Force Base Navy Support Data Center Shells Total Defense/IT Portfolio Other Total
Year Ended December 31, 2025
            
Revenues from real estate operations $ 329,916  $ 74,659  $ 90,830  $ 73,079  $ 33,566  $ 44,866  $ 646,916  $ 74,933  $ 721,849 
Other segment items
Property operating expenses (117,491) (26,630) (37,041) (40,065) (15,852) (7,493) (244,572) (39,355) (283,927)
UJV NOI allocable to COPT Defense —  —  —  —  —  7,706  7,706  —  7,706 
Total other segment items (117,491) (26,630) (37,041) (40,065) (15,852) 213  (236,866) (39,355) (276,221)
NOI from real estate operations $ 212,425  $ 48,029  $ 53,789  $ 33,014  $ 17,714  $ 45,079  $ 410,050  $ 35,578  $ 445,628 
Additions to long-lived assets $ 45,226  $ 13,118  $ 51,038  $ 1,509  $ 19,288  $ —  $ 130,179  $ 20,009  $ 150,188 
Transfers from non-operating properties $ 46,728  $ 25,383  $ 46  $ —  $ —  $ 114,726  $ 186,883  $ 5,854  $ 192,737 
Segment assets at December 31, 2025
 $ 1,467,935  $ 615,352  $ 522,301  $ 193,861  $ 172,101  $ 576,812  $ 3,548,362  $ 324,310  $ 3,872,672 
Year Ended December 31, 2024
              
Revenues from real estate operations $ 317,319  $ 69,317  $ 86,034  $ 67,837  $ 32,628  $ 37,190  $ 610,325  $ 67,392  $ 677,717 
Other segment items
Property operating expenses (108,789) (24,185) (36,059) (37,169) (15,146) (6,124) (227,472) (38,529) (266,001)
UJV NOI allocable to COPT Defense —  —  —  —  —  7,217  7,217  —  7,217 
Total other segment items (108,789) (24,185) (36,059) (37,169) (15,146) 1,093  (220,255) (38,529) (258,784)
NOI from real estate operations $ 208,530  $ 45,132  $ 49,975  $ 30,668  $ 17,482  $ 38,283  $ 390,070  $ 28,863  $ 418,933 
Additions to long-lived assets $ 64,237  $ 7,253  $ 27,205  $ 17,098  $ 10,128  $ —  $ 125,921  $ 19,864  $ 145,785 
Transfers from non-operating properties $ 4,041  $ 60,872  $ 1,016  $ 10  $ 352  $ 65,314  $ 131,605  $ 5,325  $ 136,930 
Segment assets at December 31, 2024
 $ 1,448,641  $ 601,430  $ 494,881  $ 199,166  $ 162,855  $ 488,429  $ 3,395,402  $ 315,245  $ 3,710,647 
Year Ended December 31, 2023
              
Revenues from real estate operations $ 292,699  $ 55,131  $ 80,413  $ 67,254  $ 32,638  $ 27,444  $ 555,579  $ 69,224  $ 624,803 
Other segment items
Property operating expenses (101,243) (19,148) (31,593) (36,616) (14,614) (2,703) (205,917) (41,468) (247,385)
UJV NOI allocable to COPT Defense —  —  —  —  —  6,659  6,659  —  6,659 
Total other segment items (101,243) (19,148) (31,593) (36,616) (14,614) 3,956  (199,258) (41,468) (240,726)
NOI from real estate operations $ 191,456  $ 35,983  $ 48,820  $ 30,638  $ 18,024  $ 31,400  $ 356,321  $ 27,756  $ 384,077 
Additions to long-lived assets $ 54,872  $ 20,949  $ 19,041  $ 62  $ 5,785  $ —  $ 100,709  $ 16,919  $ 117,628 
Transfers from non-operating properties $ 64,264  $ 86,868  $ 4,136  $ 166  $ 2,651  $ 115,052  $ 273,137  $ 2,671  $ 275,808 
Segment assets at December 31, 2023
 $ 1,449,638  $ 554,803  $ 490,104  $ 188,847  $ 163,818  $ 430,075  $ 3,277,285  $ 309,254  $ 3,586,539 
The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):
For the Years Ended December 31,
  2025 2024 2023
Segment revenues from real estate operations $ 721,849  $ 677,717  $ 624,803 
Construction contract and other service revenues 42,074  75,550  60,179 
Total revenues $ 763,923  $ 753,267  $ 684,982 

 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 Years Ended December 31,
  2025 2024 2023
UJV NOI allocable to COPT Defense $ 7,706  $ 7,217  $ 6,659 
Less: Income from UJVs allocable to COPT Defense attributable to depreciation and amortization expense, interest expense and loss on early extinguishment of debt (6,637) (6,820) (6,917)
Add: Equity in income (loss) of unconsolidated non-real estate entities 1,737  —  (3)
Equity in income (loss) of unconsolidated entities $ 2,806  $ 397  $ (261)

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 Years Ended December 31,
  2025 2024 2023
Construction contract and other service revenues $ 42,074  $ 75,550  $ 60,179 
Construction contract and other service expenses (39,962) (73,265) (57,416)
NOI from service operations $ 2,112  $ 2,285  $ 2,763 

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 Years Ended December 31,
  2025 2024 2023
NOI from real estate operations $ 445,628  $ 418,933  $ 384,077 
NOI from service operations 2,112  2,285  2,763 
Depreciation and other amortization associated with real estate operations (161,826) (153,640) (148,950)
Impairment losses —  —  (252,797)
General, administrative, leasing and other expenses (47,840) (47,038) (42,769)
Interest expense (86,660) (82,151) (71,142)
Interest and other income, net 10,683  12,661  12,587 
Gain on sales of real estate 3,350  —  49,392 
Loss on early extinguishment of debt (66) —  — 
Equity in income (loss) of unconsolidated entities 2,806  397  (261)
UJV NOI allocable to COPT Defense included in equity in income (loss) of unconsolidated entities (7,706) (7,217) (6,659)
Income tax expense (947) (288) (588)
Net income (loss) $ 159,534  $ 143,942  $ (74,347)
The following table reconciles our segment assets to our consolidated total assets (in thousands): 
As of December 31,
2025 2024
Segment assets $ 3,872,672  $ 3,710,647 
Operating properties lease liabilities included in segment assets 45,375  49,631 
Investment in UJV deficit balance included in segment assets 22,843  3,409 
Non-operating property assets 284,428  277,147 
Other assets 476,472  213,357 
Total consolidated assets $ 4,701,790  $ 4,254,191 
 
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, impairment losses, gain on sales of real estate, loss on early extinguishment of debt 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.