CDP and CEO Steve. This session is for Citi clients only. Disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC26 to submit questions. Steve, we'll turn it over to you to introduce your company and team, provide any opening remarks, and tell the audience the top reasons an investor should buy your stock today, we can jump in the Q&A. [inaudible] Yeah, just tap the mic to turn it on. Tap the mic to turn it on. The green- Okay. Yeah. There you go. We're good. To my left is Anthony Mifsud. He's our Chief Financial Officer. To my right, Britt A. Snider, our Chief Operating Officer. I'm Stephen E. Budorick, CEO. Thank you, Seth. COPT Defense Properties is a specialized REIT deeply concentrated in mission-critical assets to support national defense activity of the U.S. government. The vast majority of our 207 properties are located adjacent to, or in some cases occupied by, priority defense missions, generally involving knowledge-based defense activities. The missions we support are intelligence, surveillance, and reconnaissance, cybersecurity and network activities, naval sea and air technology development, missile attack and defense systems, drone aviation technology development, cloud computing, and others. Our property locations are not typical for an office company. They're approximate to United States defense installations that have permanence in Maryland, Virginia, Alabama, and Texas. Our properties are improved for top-secret mission work. 80% of our Defense/IT portfolio contains high security operations. That includes nine U.S. government-secured campuses representing over 4 million sq ft. Those campuses are Antiterrorism/Force Protection constructed and include SCIF, which is Sensitive Compartmented Information Facility improvements. We have another 1 million sq ft of U.S. government high security leases outside of campuses that are SCIFed and access controlled. We have 6 million sq ft with defense contractor leases that contain SCIF, and we own 15 cloud computing campuses with over 6 million sq ft that are fenced and have limited access. Additionally, an important distinction is these defense tenants must work in their offices due to the security requirements. They're executing classified missions which must be performed in a secure space. If you take your work home, you go to jail. It's called espionage. Today, over 90% of our annualized rental revenue, or ARR, is derived from our Defense/IT properties. Our pre-lease developments will increase that figure in the coming years. Our Defense/IT segment was 96.5% leased at year-end, which is well above peer averages. The U.S. government is our largest tenant by revenue. We have 99 separate leases and 70 different properties totaling 5.7 million sq ft and producing 35% of our ARR. Our defense contractor tenants lease over 15 million sq ft. This includes 3 million sq ft of cyber defense contractor tenants. Defense contractors contribute 52% of our annualized rental revenue, and 16 of our top 20 tenants are defense contractors. Non-defense locations provide just 10% of our ARR, and this consists of five regional office assets located in the Baltimore waterfront, Tysons Corner, and Washington, D.C., in the CBD area. Our tenants in these assets have excellent credit postures as well, and we plan to recycle these assets as markets support a reasonable sale value. Our strategy is very straightforward. We allocate capital to durable demand locations that are adjacent to priority defense installations and missions. Our playbook is also straightforward. We execute low risk, highly pre-lease development, redevelopment, or in some cases, repositioning. We maintain a strong investment-grade balance sheet. Our competitive advantage really falls into four pillars. One is our operating platform. We have a unique platform where we're deeply experienced, and we have credentials. Over 35% of our company is credentialed to work in and create high security environments. We have deep development expertise, including secured compartmentalized information facilities, Antiterrorism/Force Protection, data center, and mission-critical facilities. We have a 30-plus year track record of providing space and then operating that space for the U.S. government and some of the most highly secure missions of our country. We have advantaged land positions approximate to these mission-critical, knowledge-based defense installations. In summary, we're a specialized REIT. It's not really correlated with the broader economy. Our assets have strategic features and locations. There's little risk of work from home, and there's strong demand for new development and vacancy leasing. With that, I'll turn it back to you. Great. Maybe just starting with some of the leasing activity, you know, the defense budget exceeds $950 billion. Historically, there's been a 12 to kind of 18-month lag between the appropriations and leasing activity. Does some of the kind of administration's urgency behind Golden Dome shorten that timeline? Or, you know, is that still kind of the right timeline we should thinking about from that impact? In the broader budget, I'd say the timeline would hold 12 to 18 months from the time funding is created till we see the demand for our portfolio. The reason for that is money tends to be allocated to a program, that program has to be defined, competed, awarded to a contractor, and then they can lease space. Golden Dome, on the other hand, is very different. It's a fast-track program. The notional initial value of the program is $175 billion, and the intent is to have the Golden Dome functional by 2028. To put that in context, $175 billion is like 20% of 1 year's defense contract for 1 program. The $25 billion that was allocated to fiscal year 2026 is a fast-track down payment, and the general who commands the program has been given uniquely strong authority to commit money quickly. Even though that program just got funded in July, on July 4th, we've already signed one lease for about 32,000 sq ft with a contractor specifically related to Golden Dome. Our development that is active at the Redstone Arsenal, we have about a 400% demand to supply relationship, and almost all of that is driven over Golden Dome. It's pretty exciting. It's early, but we think through this year, there'll be quite a bit of leasing driven off of that, which is much quicker than normal. Maybe following up on that, for the 400,000 sq ft of prospects at 8500 Advanced Gateway, how much of that is tied to hard-funded Golden Dome mandates versus contractors just positioning kind of ahead of awards in anticipation of funding? Right now, I handicap that about 50/50. Many contractors have received an award. Very few have received funding yet, but they've been given what's called an IDIQ, Indefinite Delivery, Indefinite Quantity contract vehicle that allows the money to flow into a specific program quickly. Some of them have real work objectives that they are pursuing, and the one lease we signed has a work objective. The two that were pretty advanced negotiations clearly have a work objective in mind. There are others that are handicapping the market for more of a long-term play. About 50/50. Okay. With Space Command moving to Huntsville, are you seeing any preemptive leasing from contractors, or is the market waiting for that to kind of formally happen? Can you remind us just kind of the process, you know, in that moving to Huntsville? The Space Command is a relocation from Colorado Springs to the Redstone Arsenal. The command itself is going through its planning process. We believe we'll be the beneficiary of one build-to-suit lease for the command, if not more in the future. The contractor tail is defined by the government as about two jobs for every one job that'll move. That command or that contractor tail is supporting the active command. You won't see that relocation occur until the command starts to phase its occupancy into the Redstone Arsenal, which is probably 24 months away, 18-24 before the first elements relocate. You kind of have talked about, you know, on the development side, just not really starting the next Redstone building until the 8,500 Advanced Gateway hits around that 60% kind of lease threshold. Just given the urgency of Golden Dome, would you kind of consider accelerating some of that development activity just in anticipation of that demand? Or how do you think about that? Yeah, just to be clear, that's actually committing to putting, you know, investment in the ground is what you're referring to. We've already pre-planned three different sized buildings, and we are permit-ready on all three of those. We've taken quite a bit of the development timeline and shortened that measurably. As we see the demand for 8500 start to commit, we don't necessarily need signed leases, but when we see that demand filling that building, we will start the next one. We have three alternative kind of structures that we can build depending on what the demand looks like. Maybe just kind of turning attention to kind of, you know, the expiration schedule for 2026. Can you just kind of update us on the delayed renewals from 2025 that got pushed, you know, from the government shutdown and kind of walk us through how the rest of the year's expirations are shaping up? We've got about 2.8 million sq ft that expires this year. The vast majority of that is U.S. government leases. The specific delays that you're referring to is about 1 million sq ft located in our Texas location that was because of approval processes just flipped into this year. Our large lease projection for, you know, a 30-month period is we'll renew 95% of our large leases or better. This year on our overall retention, we expect it to be we guide it to 80%, and we like to be at our guidance. Then just on some of the expirations, you know, can you remind us how that works? Is there incremental, you know, TIs that kind of go into the space upon renewal, or are most renewals kind of as-is renewals? Yeah, routinely, we do give some TI on renewals. I think if you do a good comprehensive look at our tenant improvement allowances relative to other companies in our segment, they're a fraction of theirs. Typically, about $3 a square foot a year on a renewal would be a healthy renewal tenant improvement. You know, with some of the kind of the geopolitical changes with Venezuela and more recently Iran, kind of how does that change the way you think about the government's need for space? The missions we support, those two particular situations are deployment of weapon systems and troops. Certainly, the missions we support support those, and some of them develop those systems. Our business is not one that's gonna flex up with the activity in Iran per se. That's more consumption of established weapon systems and deployment of troops to a hotspot in the United States. Ours is more knowledge-based defense activities. Certainly, many of the activities we support are clearly supporting that, but it's not gonna be an inflection point for our business. Our business is more long-term and methodical. Maybe switching some capital allocation topics. With your blended kind of development yield at 8.5%, and where, you know, the hyperscale shells kind of trade at, like, a 6%-7% yield, does that kind of require you to have the office kind of above a 9% to kind of maintain that blended yield? If where you're kind of underwriting hurdles for development spend. We're very comfortable with our office, our Defense/IT generally at 8.5 or north. Sometimes we exceed that 8.5 threshold, but that's our target. Certainly the work we've done in data center shells, we can be a little more aggressive on the rate because of the deep spread between value and cost. That's been a very profitable development realm for us. We'd welcome more, the two are kinda not related. Just, you know, you've kind of discussed kind of self-funding the equity that you need for development. Just, you know, does the renewals and, you know, potential kind of TIs, does that require you to hit the ATM, or can you fully fund your anticipated development spend with free cash flow? Yeah. Since really 2023, we've been in position to fund $275 million-$300 million a year on a leverage neutral basis because of the free cash flow we generate after our capital use for the portfolio and payment of our dividend. We don't see that changing. We've projected out through our five-year forecast we're solidly able to self-fund. Then with. by the way, raise our dividend this year and the last three. Yeah. W ith the pipeline kind of 86% pre-leased and there have been some stabilization with construction costs, you know, would you start to kind of do any development that's more spec development, or are you primarily sticking towards build-to-suit or kind of waiting until you hit certain kind of leasing thresholds to start new development activity? We primarily build-to-suit for our tenants. But in a couple of our locations in particular, we need to have inventory. We just announced the full building lease for a building that we started at the National Business Park. When we started that building, we were 99.7% leased, and our largest vacant space was 7,000 sq ft. To defend our franchise and that development, we need to have inventory to support growth. We built a 140,000 sq ft building, which we just leased. Similarly, in Redstone Arsenal, we have two vacant suites and 2.5 million sq ft. One's 10,000 feet, one's 25,000 feet. We're negotiating leases for both of those at this time. We started RG 8500, a 150,000 sq ft building. We have inventory available. We don't call it spec, we call it in-inventory development. When we're so heavily leased, we just have to have space to work with. We anticipate shortly proceeding with the next building in Redstone Gateway. You know, with being able to kind of develop that 8.5% yields with the credit primarily being, you know, the U.S. government or kind of, contractors that work closely with the U.S. government, how is the competitive landscape for those development projects, especially just kind of given the backdrop of an increasing defense spending budget? Who do you compete against? How do you win kind of those mandates? The extent that we have competition, it's really market to market, and I'd have to walk you through the portfolio. Generally, when we're developing, we're not really competing. We've got such a deep relationship with the contractors in the U.S. government. Remember, I talked about the four legs of our stool. We have advantaged land positions. There are companies that could develop in Huntsville, but they can't develop into the ecosystem of contractors we've built on our development, and they can't develop on the front door to the Redstone Arsenal with immediate access and interface with their government customer. In some of our locations, we have connectivity that they could not possibly compete with, which is a distinct advantage of having access to priority networks. We tend to negotiate those build suits with the long-term relationships we have with the contractors, and rarely are we head-to-head with another developer. You mentioned kind of the non-core buildings in D.C. and Baltimore and elsewhere. Can you just walk through maybe the timing and pricing expectations for those and, you know, what kind of pricing expectations would you have before you're looking to sell those? Well, I'm never gonna talk about pricing. I appreciate your question. Let's just put it this way. Timing will be dependent on the financial markets. The interest rates that are available to investors to invest in real estate. Currently, for office, private user office borrowing, they're pretty high interest rates. Anybody who wants to buy those buildings is gonna look for a return spread above the cost of their debt. Those are cap rates we're not willing to sell at. Four of those five buildings are very stable. In particular, the one in D.C. is an absolute trophy. We've got 12 years of wealth on that Class AA development. We'll be patient to let the capital markets pick back up. Is there any sense of, you know, are those kind of assets being marketed, and is there any kind of sense of increased interest that would suggest that it's more near-term, or is it more of kind of a long-term play at this point? We're not actively marketing any of them because we don't see the financial backdrop that we're looking for. We're constantly at working those assets to create value. You know, we'll just be very patient. You recently kind of raised the dividend, 4.9%, you know, which is kind of above, I think, what your guidance implies for, you know, FFO growth? You know, how do you kind of view the dividend and capital return? Are you expecting kind of an acceleration in FFO growth, you know, kind of beyond where you're at now? To be clear, the board makes decisions on our dividend. Our raises are tied to our projection of taxable income growth, so you can kind of put two and two together from there. One of the questions we've kind of been asking all the companies is on AI. You know, obviously, your product is very specialized, but just for how do you use AI at the company? W hat AI tools do you use is the first part of the question. How do you determine whether or not to develop something either internally or to use a third-party application? From an AI standpoint, we're very conservative. We do not, we would not, do not, and will not allow any AI application inside of our network, period. We just won't take the risk. We have a couple of uses through our accounting and reporting group where they are procuring data from AI located somewhere else to simplify their world. We're not by design a leader in the AI applications inside our company. How do you think AI changes. You know, obviously, your space is very specialized to support government missions. How do you think AI changes the way government kind of uses space? Does it change anything at all from your perspective? I think there's a lot of room for the government to get a boost out of AI, but I think about the IRS and administrative functions. I don't see it in the DOD in the near term. You know, maybe flipping to kind of the data center business that you guys have. You know, obviously AI has been a driver for development in that sector. Has it changed kind of any views on how much you would like to kind of do there? You know, you have the Iowa site. You know, can you give us an update there? Just how you think overall about kind of the data center platform that you have. Let me just address Iowa, and then I'll bridge back. Iowa's a long-term investment and a very modest amount of money. We're able to control significant anchorage in a market that an existing customer finds attractive. It'll probably take us four years to get the power to develop there, so it's more of a long-term investment play. We put a very modest amount of money into that land, $32 million, and the entirety of that development will be build-to-suit for a existing customer, when we get to the point where we can develop. With respect to AI, we have not done any AI data center development that we know of. We've developed on a build-to-suit basis only for a large cloud computing and government contractor. Would you kind of, as you think about deploying capital, would you look to do kind of any additional land sites or additional data center development? You know, how often do you kind of look at your land bank and see if there's a higher and better use for any land you have if it's possible to develop data centers? With the client in hand, we'd be willing to go to other markets and acquire land and develop. The challenge right now nationally is there's not enough power. It's just not available in almost any market, and I don't see us making any incremental land investment until there's access to power. With regard to redeploying our current land bank, I don't see us using that for AI data centers. Okay. Speaking of kind of the land bank, you know, you have, I think at National Business Park, around 1.5 million sq ft of future development. How are you thinking about kind of the scoping, you know, like a dollar amount of that future development and, you know, kind of timeline, at which that could be developed? The one and a half million sq ft you're referring to, I think is the NBP. Yep. We've held land in inventory supporting the missions at Fort Meade for the 15 years I've been with the company. We'll continue to hold that land 'cause it's very valuable, not only to our company and our shareholders, but to national security generally, to have the capacity to provide the support to the missions that we support. We don't have a timeline. We've built it into our cost structure. The land is valuable and, you know, we just announced the development that will go there on that land that's important to our country, and that's kind of the way we view it. We have significantly more development capacity in Huntsville. We're developed at 2.5 million sq ft. The land we control, we have 3.5 million sq ft of incremental capacity, surface park generally. We're very happy to just hold that position for the long term and develop into the mission growth. I guess as you think about kind of the demand drivers and the increased government spending, what would kind of drive you to accelerate some of that, you know, development of the land bank to the near term? Is there just not enough demand from tenants or leasing activity yet to warrant kind of shovels in the ground or, you know, just can you talk a little bit more about that? Yeah. I think I kinda already have. We, at the National Business Park, we built a building to create inventory. We have that lease that actually is gonna give us a little more room 'cause some of that occupancy will move out of existing buildings we have. When we get to a point where the accommodating the growth in mission is limited, then we'll deploy capital and build another building. In Huntsville, I think that pace is much quicker. You could expect with what I think is gonna happen over the next 2 years, maybe 2 buildings a year just to keep the inventory up. Okay. Great. Maybe just kind of, moving into our rapid fire within the last minute here. What will net effective rent growth be for the office sector overall in 2027, not your specific company? Nationally? Nationally. Minus 2%. Minus 2%. Will the office sector have more, fewer, or the same number of public companies a year from now? Fewer. Great. Thank you so much. All right. Thank you.