COPT Defense Properties Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Earnings Per Share ("EPS")

Earnings Per Share ("EPS")

3 Months Ended

Mar. 31, 2026

We present both basic and diluted EPS. We compute basic EPS by dividing net income available to common shareholders allocable to unrestricted common shares by the weighted average number of unrestricted common shares outstanding during the period after allocating undistributed earnings between common shareholders and participating securities under the two-class method. Our participating securities include restricted shares and PIUs and deferred share awards not previously settled by common share issuances. Our computation of diluted EPS is similar except that:

•the denominator is increased to include: (1) the weighted average number of potential additional common shares that would have been outstanding if securities that are convertible into common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to a redeemable noncontrolling interest in a joint venture and share-based compensation awards using the if-converted or treasury stock methods; and

•the numerator is adjusted to add back any changes in income that would result from the assumed conversion into common shares that we add to the denominator.

We compute diluted EPS using the treasury stock method for unvested restricted shares, TB-PIUs, and deferred share awards and the if-converted method for exchangeable debt (including our 5.25% Notes), common units, redeemable noncontrolling interest, PB-PIUs, PSUs, and vested PIUs and deferred share awards not previously settled by common share issuances.

Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are presented below (in thousands, except per share data):


	For the Three Months Ended March 31,
	2026		2025
Numerator


Net income attributable to common shareholders	$	38,556	$	34,740
Income attributable to share-based compensation awards for basic EPS	(191)		(167)
Numerator for basic EPS on net income attributable to common shareholders	38,365		34,573




Adjustment to income attributable to share-based compensation awards for diluted EPS	30		24
Numerator for diluted EPS on net income attributable to common shareholders	$	38,395	$	34,597





Denominator (all weighted averages)
Denominator for basic EPS (common shares)	112,806		112,383
Dilutive effect of share-based compensation awards	1,031		643
Dilutive exchangeable debt	472		—


Denominator for diluted EPS (common shares)	114,309		113,026




Basic EPS attributable to common shareholders	$	0.34	$	0.31



Diluted EPS attributable to common shareholders	$	0.34	$	0.31

Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):


	Weighted Average Shares Excluded from Denominator
	For the Three Months Ended March 31,
	2026	2025
Conversion of common units	2,063	2,047
Conversion of redeemable noncontrolling interest	793	873

The following securities were also excluded from the computation of diluted EPS because their effect was antidilutive:

•weighted average restricted shares and deferred share awards of 520,000 and 471,000 for the three months ended March 31, 2026 and 2025, respectively; and

•weighted average TB-PIUs of 228,000 for the three months ended March 31, 2026 and 2025.

Our 5.25% Notes issued in 2023 have an exchange settlement feature under which the principal amount of notes exchanged is payable in cash, with the remainder of the exchange obligation, if any, 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. This feature of the 5.25% Notes affects our diluted EPS calculation for periods in which the weighted average closing price of our common shares is higher than the exchange price applicable to such periods, which resulted in an additional 472,000 shares in the denominator for diluted EPS for the three months ended March 31, 2026.