Quarterly report [Sections 13 or 15(d)]

Information by Business Segment

v3.26.1
Information by Business Segment
 3 Months Ended
Mar. 31, 2026
Segment Reporting [Abstract]  
Information by Business Segment Information by Business Segment
We have two 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”); Redstone Arsenal (in Huntsville, Alabama); 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 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).

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.

Our chief operating decision maker uses budget to actual comparisons of 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 included in our data center shells sub-segment (totaling $11.8 million and $35.1 million as of March 31, 2026 and 2025, respectively), which is net of deficit investment balances in UJVs reported in “other liabilities” on our consolidated balance sheets.

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 presents 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
Three Months Ended March 31, 2026
          
Revenues from real estate operations $ 87,533  $ 20,645  $ 24,816  $ 18,354  $ 8,992  $ 14,665  $ 175,005  $ 19,591  $ 194,596 
Other segment items
Property operating expenses (36,480) (7,249) (10,356) (8,998) (4,359) (2,549) (69,991) (11,444) (81,435)
UJV NOI allocable to COPT Defense —  —  —  —  —  2,056  2,056  —  2,056 
Total other segment items (36,480) (7,249) (10,356) (8,998) (4,359) (493) (67,935) (11,444) (79,379)
NOI from real estate operations $ 51,053  $ 13,396  $ 14,460  $ 9,356  $ 4,633  $ 14,172  $ 107,070  $ 8,147  $ 115,217 
Additions to long-lived assets $ 7,646  $ 882  $ 2,003  $ (56) $ 1,679  $ —  $ 12,154  $ 6,601  $ 18,755 
Transfers from non-operating properties $ 116  $ 2,909  $ 5  $ —  $ —  $ 15,556  $ 18,586  $ 388  $ 18,974 
Segment assets at March 31, 2026
 $ 1,454,179  $ 613,080  $ 517,239  $ 193,465  $ 172,205  $ 590,649  $ 3,540,817  $ 327,328  $ 3,868,145 
Three Months Ended March 31, 2025
          
Revenues from real estate operations $ 84,608  $ 16,422  $ 23,162  $ 16,410  $ 7,960  $ 10,865  $ 159,427  $ 18,170  $ 177,597 
Other segment items
Property operating expenses (31,930) (6,294) (10,089) (8,999) (4,166) (1,853) (63,331) (8,709) (72,040)
UJV NOI allocable to COPT Defense —  —  —  —  —  1,889  1,889  —  1,889 
Total other segment items (31,930) (6,294) (10,089) (8,999) (4,166) 36  (61,442) (8,709) (70,151)
NOI from real estate operations $ 52,678  $ 10,128  $ 13,073  $ 7,411  $ 3,794  $ 10,901  $ 97,985  $ 9,461  $ 107,446 
Additions to long-lived assets $ 8,093  $ 3,248  $ 2,556  $ 119  $ 3,666  $ —  $ 17,682  $ 1,733  $ 19,415 
Transfers from non-operating properties $ 1,337  $ 4,266  $ 18  $ —  $ —  $ 3,941  $ 9,562  $ 2,774  $ 12,336 
Segment assets at March 31, 2025
 $ 1,441,470  $ 601,935  $ 492,384  $ 197,349  $ 163,951  $ 490,998  $ 3,388,087  $ 314,871  $ 3,702,958 
The table below reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):
For the Three Months Ended March 31,
  2026 2025
Segment revenues from real estate operations $ 194,596  $ 177,597 
Construction contract and other service revenues 6,041  10,259 
Total revenues $ 200,637  $ 187,856 
 
The table below reconciles UJV NOI allocable to COPT Defense to equity in income of unconsolidated entities as reported on our consolidated statements of operations (in thousands):
For the Three Months Ended March 31,
  2026 2025
UJV NOI allocable to COPT Defense $ 2,056  $ 1,889 
Less: Income from UJV allocable to COPT Defense attributable to depreciation and amortization expense, interest expense, gain on sale of real estate, and loss on early extinguishment of debt (650) (1,518)
Equity in income of unconsolidated entities $ 1,406  $ 371 
 
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 presents the computation of our NOI from service operations (in thousands):
For the Three Months Ended March 31,
  2026 2025
Construction contract and other service revenues $ 6,041  $ 10,259 
Construction contract and other service expenses (5,552) (9,705)
NOI from service operations $ 489  $ 554 

The table below 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,
  2026 2025
NOI from real estate operations $ 115,217  $ 107,446 
NOI from service operations 489  554 
Depreciation and other amortization associated with real estate operations (42,685) (39,359)
General, administrative, leasing, and other expenses (12,649) (12,156)
Interest expense (23,996) (20,504)
Interest and other income, net 3,955  1,568 
Gain on sales of real estate 582  300 
Equity in income of unconsolidated entities 1,406  371 
UJV NOI allocable to COPT Defense included in equity in income of unconsolidated entities (2,056) (1,889)
Income tax expense (124) (103)
Net income $ 40,139  $ 36,228 
 
The table below reconciles our segment assets to our consolidated total assets (in thousands):
March 31,
2026		 March 31,
2025
Segment assets $ 3,868,145  $ 3,702,958 
Operating properties lease liabilities included in segment assets 44,520  48,600 
Investment in UJV deficit balance included in segment assets 24,013  3,895 
Non-operating property assets 312,587  300,241 
Other assets 209,644  194,617 
Total consolidated assets 4,458,909  4,250,311 
 
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 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.