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")

9 Months Ended

Sep. 30, 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, 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 September 30,				For the Nine Months Ended September 30,
	2026		2025		2026		2025
Numerator


Net income attributable to common shareholders	$	47,741	$	41,727	$	132,734	$	114,814
Income attributable to share-based compensation awards for basic EPS	(220)		(161)		(628)		(484)
Numerator for basic EPS on net income attributable to common shareholders	47,521		41,566		132,106		114,330




Adjustment to income attributable to share-based compensation awards for diluted EPS	37		28		103		144
Numerator for diluted EPS on net income attributable to common shareholders	$	47,558	$	41,594	$	132,209	$	114,474





Denominator (all weighted averages)
Denominator for basic EPS (common shares)	112,886		112,485		112,855		112,442
Dilutive effect of share-based compensation awards	945		702		971		749
Dilutive exchangeable debt	2,088		—		1,183		—


Denominator for diluted EPS (common shares)	115,919		113,187		115,009		113,191




Basic EPS attributable to common shareholders	$	0.42	$	0.37	$	1.17	$	1.02



Diluted EPS attributable to common shareholders	$	0.41	$	0.37	$	1.15	$	1.01

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 September 30,		For the Nine Months Ended September 30,
	2026	2025	2026	2025
Conversion of common units	2,237	2,182	2,177	2,136
Conversion of redeemable noncontrolling interest	724	804	747	834

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 585,000 and 502,000 for the three months ended September 30, 2026 and 2025, respectively, and 561,000 and 429,000 for the nine months ended September 30, 2026 and 2025, respectively; and

•weighted average TB-PIUs of 216,000 and 241,000 for the three months ended September 30, 2026 and 2025, respectively, and 220,000 and 235,000 for the nine months ended September 30, 2026 and 2025, respectively.

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. Although we retain the option to pay the value in excess of the principal amount in cash, common shares, or a combination thereof, GAAP requires for diluted EPS reporting purposes that we assume such excess value is fully paid in the form of common shares for periods in which the weighted average closing price of our common shares is higher than the exchange price applicable to such periods. This resulted in us reporting an additional 2.1 million and 1.2 million shares in the denominator for diluted EPS for the three and nine months ended September 30, 2026, respectively.