Q2 2026 COPT Defense Properties Earnings Call

July 28, 2026

Operator: Welcome to the COPT Defense Properties Q2 2026 results Conference Call. As a reminder, today's call is being recorded. At this time, I will turn the call over to Venkat Kommineni, COPT Defense's Vice President of Investor Relations. Mr. Kommineni, please go ahead.

Speaker #1: Mr. Kommineni, please go ahead.

Speaker #2: Thank you, Chief. Good afternoon, and welcome to COPT Defense's conference call to discuss Q2 results. With me today are Steve Budorick, President and CEO; Britt Snider, Executive Vice President and COO; and Anthony Mifsud, Executive Vice President and CFO.

Venkat Kommineni: Thank you, Lateef. Good afternoon, and welcome to COPT Defense's conference call to discuss Q2 results. With me today are Steve Budorick, President and CEO, Britt Snider, Executive Vice President and COO, and Anthony Mifsud, Executive Vice President and CFO. Reconciliations of GAAP and non-GAAP financial measures that management discusses are available on our website, in the results press release and presentation, and in our supplemental information package. As a reminder, forward-looking statements made during today's call are subject to risks and uncertainties, which are discussed in our SEC filings. Actual events and results can differ materially from these forward-looking statements, and the company does not undertake a duty to update them. Steve?

Speaker #2: Reconciliations of GAAP and non-GAAP financial measures that management discusses are available on our website, in the results press release and presentation, and in our supplemental information package.

Speaker #2: As a reminder, forward-looking statements made during today's call are subject to risks and uncertainties, which are discussed in our SEC filings. Actual events and results can differ materially from these forward-looking statements, and the company does not undertake a duty to update them.

Venkat Kommineni: As a reminder, forward-looking statements made during today's call are subject to risks and uncertainties, which are discussed in our SEC filings. Actual events and results can differ materially from these forward-looking statements, and the company does not undertake a duty to update them. Steve?

Speaker #2: Steve?

Speaker #3: Good afternoon, and thank you for joining us. The company delivered a strong first half of the year in all aspects of our financial and operating performance, and the defense economy we serve continues to be strong and benefits from increasing investment.

Stephen E. Budorick: Good afternoon, and thank you for joining us. The company delivered a strong H1 of the year in all aspects of our financial and operating performance, and the defense industry we serve continues to be strong and benefits from increasing investment. For the Q2, FFO per share was $0.71, which was $0.02 above the midpoint of guidance, represents a 4.4% increase year-over-year, and is the 24th consecutive quarter of year-over-year FFO per share growth for the company. Same property cash NOI increased 7.4% year-over-year, and we generated 6.4% growth in the H1 of the year. This was favorably impacted by the timing of lease and rent commencements. We expect growth will moderate slightly in the H2 of the year, which has been reflected in our annual guidance. Anthony will provide more detail.

Steve Budorick: Good afternoon, and thank you for joining us. The company delivered a strong H1 of the year in all aspects of our financial and operating performance, and the defense industry we serve continues to be strong and benefits from increasing investment. For the Q2, FFO per share was $0.71, which was $0.02 above the midpoint of guidance, represents a 4.4% increase year-over-year, and is the 24th consecutive quarter of year-over-year FFO per share growth for the company.

Speaker #3: For the second quarter, FFO per share was $0.71, which was $0.02 above the midpoint of guidance, represents a 4.4% increase year-over-year, and is the 24th consecutive quarter of year-over-year FFO per share growth for the company.

Speaker #3: Same-property cash NOI increased 7.4% year-over-year, and we generated 6.4% growth in the first half of the year. This was favorably impacted by the timing of lease and rent commencements.

Steve Budorick: Same property cash NOI increased 7.4% year-over-year, and we generated 6.4% growth in the H1 of the year. This was favorably impacted by the timing of lease and rent commencements. We expect growth will moderate slightly in the H2 of the year, which has been reflected in our annual guidance. Anthony will provide more detail.

Speaker #3: We expect growth will moderate slightly in the back half of the year, which has been reflected in our annual guidance. Anthony will provide more detail.

Speaker #3: We executed 139,000 square feet of vacancy leasing in the quarter and 231,000 square feet during the first half of the year. This amounts to nearly 6% of our full-year target and represents 20% of the unleased space we had at the beginning of the year.

Stephen E. Budorick: We executed 139,000 square feet of vacancy leasing in the quarter and 231,000 square feet there in H1. This amounts to nearly 6% of our full year target and represents 20% of the unleased space we had at the beginning of the year. We invested $43 million to acquire 17 acres of land and a ground lease in the Westfield submarket in Chantilly, Virginia, at a GAAP yield of roughly 7.5%, with some additional future upside. Turning to guidance. Based on our strong performance year to date and our outlook for H2, we increased the midpoint of 2026 guidance for four metrics. FFO per share increased by $0.02 to $2.78 per share. This implies 2.2% growth over 2025's results and is $0.03 above our initial guidance.

Steve Budorick: We executed 139,000sq ft of vacancy leasing in the quarter and 231,000 sq ft there in H1. This amounts to nearly 6% of our full year target and represents 20% of the unleased space we had at the beginning of the year. We invested $43 million to acquire 17 acres of land and a ground lease in the Westfield submarket in Chantilly, Virginia, at a GAAP yield of roughly 7.5%, with some additional future upside. Turning to guidance. Based on our strong performance year to date and our outlook for H2, we increased the midpoint of 2026 guidance for four metrics. FFO per share increased by $0.02 to $2.78 per share. This implies 2.2% growth over 2025's results and is $0.03 above our initial guidance.

Speaker #3: We invested $43 million to acquire 17 acres of land and a ground lease in the Westfield submarket in Chantilly, Virginia, at a gap yield of roughly 7.5%, with some additional future upside.

Speaker #3: Turning to guidance, based on our strong performance year to date and our outlook for the second half of the year, we increased the midpoint of 2026 guidance for four metrics.

Speaker #3: FFO per share increased by $0.02, to $2.78 per share. This implies 2.2% growth over 2025's results and is $0.03 above our initial guidance.

Speaker #3: This revised midpoint is even more impressive when you account for the 12 cents of higher financing costs year over year in our guidance, based on 8 cents of incremental net interest expense from our bond refinancing, and 4 cents of dilution from our exchangeable notes, resulting from our strong stock performance.

Stephen E. Budorick: This revised midpoint is even more impressive when you account for the $0.12 of higher financing costs year over year in our guidance, based on $0.08 of incremental net interest expense from our bond refinancing, and $0.04 of dilution from our exchangeable notes resulting from our strong stock performance. Same property cash NOI growth increased by 100 basis points to 4%, which is 150 basis points above our initial guidance. Cash rent spreads on renewals increased by 100 basis points to 3%, and our capital commitment to new investments increased by $45 million to $335 million. Additionally, our vacancy leasing target increased by nearly 20%, from 400,000 to 475,000 square feet. Moving on to the defense budget.

Steve Budorick: This revised midpoint is even more impressive when you account for the $0.12 of higher financing costs year over year in our guidance, based on $0.08 of incremental net interest expense from our bond refinancing, and $0.04 of dilution from our exchangeable notes resulting from our strong stock performance. Same property cash NOI growth increased by 100 basis points to 4%, which is 150 basis points above our initial guidance. Cash rent spreads on renewals increased by 100 basis points to 3%, and our capital commitment to new investments increased by $45 million to $335 million. Additionally, our vacancy leasing target increased by nearly 20%, from 400,000 to 475,000 square feet. Moving on to the defense budget.

Speaker #3: Same-property cash NOI growth increased by 100 basis points to 2.4%, which is 150 basis points above our initial guidance. Cash rent spreads on renewals increased by 100 basis points, to 3%, and our capital commitment to new investments increased by $45 million, to $335 million.

Speaker #3: Additionally, our vacancy leasing target increased by nearly 20%, from 400,000 to 475,000 square feet. Moving on to the defense budget: In April, the White House submitted the FY 2027 Defense Base Budget request, which asked for a 30% increase year-over-year to $1.1 trillion and amounts to a nearly 50% increase over the last five years.

Stephen E. Budorick: In April, the White House submitted the FY 2027 Defense Base budget request, which requested a 30% increase year over year to $1.1 trillion, and amounts to a nearly 50% increase over the last five years. Last week, Congress made progress on the legislation, and the House passed the National Defense Authorization Act, or NDAA, which matched the president's base budget request of $1.1 trillion. Reconciliation funding is expected to provide additional upside to FY 2027 spending, and the estimates range between $73 billion at the low end, based on the reconciliation framework passed by the House, all the way to the $350 billion at the high end, which was the president's request.

Steve Budorick: In April, the White House submitted the FY 2027 Defense Base budget request, which requested a 30% increase year over year to $1.1 trillion, and amounts to a nearly 50% increase over the last five years. Last week, Congress made progress on the legislation, and the House passed the National Defense Authorization Act, or NDAA, which matched the president's base budget request of $1.1 trillion. Reconciliation funding is expected to provide additional upside to FY 2027 spending, and the estimates range between $73 billion at the low end, based on the reconciliation framework passed by the House, all the way to the $350 billion at the high end, which was the president's request.

Speaker #3: Last week, Congress made progress on the legislation, and the House passed the National Defense Authorization Act, or NDAA, which matched the President's base budget request of $1.1 trillion.

Speaker #3: Reconciliation funding is expected to provide additional upside to FY 2027 spending, and the estimates range between $73 billion at the low end, based on the reconciliation framework passed by the House, all the way to $350 billion at the high end, which was the President's request.

Speaker #3: The NDAA calls for meaningful increases in funding in the priority missions that our portfolio supports, including a $16 billion, or 14%, increase for intelligence; a $4 billion, or 25%, increase for DoD cyber funding; and an additional $18 billion for Golden Dome.

Stephen E. Budorick: The NDAA calls for meaningful increases in funding in the priority missions that our portfolio supports, including the $16 billion or 14% increase for intelligence, a $4 billion or 25% increase for DoD cyber funding, and an additional $18 billion for Golden Dome. While the ultimate outcome is still being determined in Congress, our business is really driven off the base budget of $1.1 trillion, which is expected to be the new run rate for defense spending. Mike Rogers, the chairman of the House Armed Services Committee, was recently quoted stating that trillion-dollar base budgets are going to be the new normal. Regarding our growth opportunities, things are getting even more exciting at Redstone Gateway in Huntsville. In Q3, we will start two new development projects totaling 240,000 square feet because we have no contractor space left to lease.

Steve Budorick: The NDAA calls for meaningful increases in funding in the priority missions that our portfolio supports, including the $16 billion or 14% increase for intelligence, a $4 billion or 25% increase for DoD cyber funding, and an additional $18 billion for Golden Dome. While the ultimate outcome is still being determined in Congress, our business is really driven off the base budget of $1.1 trillion, which is expected to be the new run rate for defense spending. Mike Rogers, the chairman of the House Armed Services Committee, was recently quoted stating that trillion-dollar base budgets are going to be the new normal. Regarding our growth opportunities, things are getting even more exciting at Redstone Gateway in Huntsville. In Q3, we will start two new development projects totaling 240,000 square feet because we have no contractor space left to lease.

Speaker #3: While the ultimate outcome is still being determined in Congress, our business is really driven off the base budget of $1.1 trillion, which is expected to be the new run rate for defense spending.

Speaker #3: Mike Rogers, the Chairman of the House Armed Services Committee, was recently quoted stating that "trillion-dollar base budgets are going to be the new normal." Regarding our growth opportunities, things are getting even more exciting at Redstone Gateway in Huntsville.

Speaker #3: In the third quarter, we will start two new development projects totaling 240,000 square feet because we have no contractor space left to lease. Our 2.4 million-square-foot operating portfolio is 99.6% leased, and the only remaining availability is spoken for.

Stephen E. Budorick: Our 2.4 million square foot operating portfolio is 99.6% leased, and the only remaining availability is spoken for. Following the execution of this last 10,000 square foot lease, all 24 buildings will be 100% leased. In our active developments for defense contractors, 7,700 Advanced Gateway is fully leased, and 8,500 Advanced Gateway, our current inventory development, is 41% leased. We expect to sign a lease for 75,000 square feet this week, and we're negotiating a lease for the remaining 15,000 square feet, which we expect to sign next month. Beyond these deals in progress, we have another 415,000 square feet of demand from contractors for mission space related to Golden Dome and missile defense activities.

Steve Budorick: Our 2.4 million square foot operating portfolio is 99.6% leased, and the only remaining availability is spoken for. Following the execution of this last 10,000 square foot lease, all 24 buildings will be 100% leased. In our active developments for defense contractors, 7,700 Advanced Gateway is fully leased, and 8,500 Advanced Gateway, our current inventory development, is 41% leased. We expect to sign a lease for 75,000 square feet this week, and we're negotiating a lease for the remaining 15,000 square feet, which we expect to sign next month. Beyond these deals in progress, we have another 415,000 square feet of demand from contractors for mission space related to Golden Dome and missile defense activities.

Speaker #3: Following the execution of this last 10,000-square-foot lease, all 24 buildings will be 100% leased. In our active development's four defense contractors, 7,700 Advanced Gateway is fully leased, and 8,500 Advanced Gateway—our current inventory development—is 41% leased.

Speaker #3: We expect to sign a lease for 75,000 square feet this week, and we're negotiating a lease for the remaining 15,000 square feet, which we expect to sign next month.

Speaker #3: Beyond these deals in progress, we have another 450,000 square feet of demand from contractors for mission space related to Golden Dome and missile defense activities.

Speaker #3: Given our strong success in the quarter, and the depth of demand we're seeing, we're commencing development on two inventory buildings, consisting of RG6300, 180,000 square foot building, with 30,000 square foot floor plates which will deliver in early 2028.

Stephen E. Budorick: Given our strong success in the quarter and the depth of demand we're seeing, we're commencing development on two inventory buildings consisting of RG-6300, 180,000 square foot building with 30,000 square foot floor plates, which we'll deliver in early 2028. RG-2200, a 60,000 square foot building with 20,000 square foot floor plates, which we'll deliver in late 2027. These buildings will provide vital inventory to begin to meet the space and timing requirements of the current demand. Looking back, in 2011, we commenced our first development in Redstone Gateway, a 120,000 square foot building, in order to create the initial inventory to seed the park. We leased that building to a defense contractor shortly thereafter, and it has been 100% leased ever since. Over the past 15 years, we've developed 2.4 million square feet that will be 100% leased in the coming weeks.

Steve Budorick: Given our strong success in the quarter and the depth of demand we're seeing, we're commencing development on two inventory buildings consisting of RG-6300, 180,000 square foot building with 30,000 square foot floor plates, which we'll deliver in early 2028. RG-2200, a 60,000 square foot building with 20,000 square foot floor plates, which we'll deliver in late 2027. These buildings will provide vital inventory to begin to meet the space and timing requirements of the current demand. Looking back, in 2011, we commenced our first development in Redstone Gateway, a 120,000 square foot building, in order to create the initial inventory to seed the park. We leased that building to a defense contractor shortly thereafter, and it has been 100% leased ever since. Over the past 15 years, we've developed 2.4 million square feet that will be 100% leased in the coming weeks.

Speaker #3: And RG2200, a 60,000 square foot building, with 20,000 square foot floor plates which will deliver in late 2027. These buildings will provide vital inventory to begin to meet the space and timing requirements of the current demand.

Speaker #3: Looking back, in 2011, we commenced our first development in Redstone Gateway—a 120,000-square-foot building—in order to create the initial inventory to seed the park.

Speaker #3: We leased that building to a defense contractor shortly thereafter, and it has been 100% leased ever since. Over the past 15 years, we've developed 2.4 million square feet that will be 100% leased in the coming weeks.

Speaker #3: Upon completion of the three projects under active development, the park will be 2.8 million square feet, making Redstone Gateway our second-largest market concentration.

Stephen E. Budorick: Upon completion of the three projects under active development, the park will be 2.8 million square feet, making Redstone Gateway our second largest market concentration. Following completion of the two planned starts, the park will exceed 3 million square feet. For context, it took 21 years for the National Business Park to reach 3 million square feet after commencing development in 1990. Anticipating only our current planned activity, we'll achieve that milestone at Redstone Gateway in 16 years or 5 years earlier than the National Business Park. Given the strength of the demand we're seeing in the market, we look forward to updating this projection in the next 24 months. With that, I'll turn the call over to Britt.

Steve Budorick: Upon completion of the three projects under active development, the park will be 2.8 million square feet, making Redstone Gateway our second largest market concentration. Following completion of the two planned starts, the park will exceed 3 million square feet. For context, it took 21 years for the National Business Park to reach 3 million square feet after commencing development in 1990. Anticipating only our current planned activity, we'll achieve that milestone at Redstone Gateway in 16 years or 5 years earlier than the National Business Park. Given the strength of the demand we're seeing in the market, we look forward to updating this projection in the next 24 months. With that, I'll turn the call over to Britt.

Speaker #3: And following completion of the two planned starts, the park will exceed 3 million square feet. For context, it took 21 years for the National Business Park to reach 3 million square feet after commencing development in 1990.

Speaker #3: Anticipating only our current planned activity, we'll achieve that milestone at Redstone Gateway in 16 years—5 years earlier than at the National Business Park.

Speaker #3: Given the strength of the demand we're seeing in the market, we look forward to updating this projection in the next 24 months. And with that, I'll turn the call over to Britt.

Speaker #2: Thank you, Steve. Before I walk through our operating performance during the quarter, I'd like to share three key highlights. First, we are outperforming on vacancy leasing, driven by demand in our Fort Meade VW Corridor subsegment, materializing most significantly in Columbia Gateway.

Britt A. Snider: Thank you, Steve. Before I walk through our operating performance during the quarter, I'd like to share three key highlights. First, we are outperforming on vacancy leasing, driven by demand in our Fort Meade BW Corridor sub-segment, materializing most significantly in Columbia Gateway. Second, we continue to deliver sector-leading tenant retention. We averaged 84% in H1 and 79% over the past decade. Third, the government's massive investments in the missions that we support is providing not only current opportunities, but also long-term external growth potential. We finished the quarter with continued strength in both our leased and occupancy rates.

Britt Snider: Thank you, Steve. Before I walk through our operating performance during the quarter, I'd like to share three key highlights. First, we are outperforming on vacancy leasing, driven by demand in our Fort Meade BW Corridor sub-segment, materializing most significantly in Columbia Gateway. Second, we continue to deliver sector-leading tenant retention. We averaged 84% in H1 and 79% over the past decade. Third, the government's massive investments in the missions that we support is providing not only current opportunities, but also long-term external growth potential. We finished the quarter with continued strength in both our leased and occupancy rates.

Speaker #2: Second, we continue to deliver sector-leading tenant retention. We averaged 84% in the first half of the year, and 79% over the past decade. This provides a material capital advantage over traditional office landlords and is the foundation for our unique ability to self-fund the equity required for external growth.

Speaker #2: And third, the government's massive investments in the missions that we support is providing not only current opportunities, but also long-term external growth potential. We finished the quarter with continued strength in both our leased and occupancy rates. Our total portfolio was 95.6% leased and 94.1% occupied, while our defense IT portfolio was 95.6% leased and 95.1% occupied.

Britt A. Snider: Our total portfolio was 95.6% leased and 94.1% occupied, while our defense IT portfolio was 96.4% leased and 95.1% occupied. Two data points, which demonstrate the strength of the demand we're seeing in our markets and our ability to convert that demand into lease executions are, first, our Northern Virginia portfolio ended the quarter at 95.2% leased, which is the highest lease rate in this sub-segment in over a decade, and compares very favorably to the overall Northern Virginia market occupancy rate of about 78%. Second, our Columbia Gateway portfolio has seen significant momentum in terms of vacancy leasing over the past few years. In 2023, we executed 50,000 sq ft, which increased to nearly 100,000 sq ft in 2024 and surpassed 160,000 sq ft last year. In 2026 to date, we've executed 110,000 sq ft.

Britt Snider: Our total portfolio was 95.6% leased and 94.1% occupied, while our defense IT portfolio was 96.4% leased and 95.1% occupied. Two data points, which demonstrate the strength of the demand we're seeing in our markets and our ability to convert that demand into lease executions are, first, our Northern Virginia portfolio ended the quarter at 95.2% leased, which is the highest lease rate in this sub-segment in over a decade, and compares very favorably to the overall Northern Virginia market occupancy rate of about 78%. Second, our Columbia Gateway portfolio has seen significant momentum in terms of vacancy leasing over the past few years. In 2023, we executed 50,000 sq ft, which increased to nearly 100,000 sq ft in 2024 and surpassed 160,000 sq ft last year. In 2026 to date, we've executed 110,000 sq ft.

Speaker #2: Two data points which demonstrate the strength of the demand we're seeing in our markets, and our ability to convert that demand into lease executions, are: First, our Northern Virginia portfolio ended the quarter at 95.2% leased, which is the highest lease rate in this subsegment in over a decade.

Speaker #2: And it compares very favorably to the overall Northern Virginia market occupancy rate of about 78%. Second, our Columbia Gateway portfolio has seen significant momentum in terms of vacancy leasing over the past few years.

Speaker #2: In 2023, we executed 50,000 square feet, which increased to nearly 100,000 square feet in 2024, and surpassed 160,000 square feet last year. In 2026 to date, we've executed 110,000 square feet, and with the additional activity in the pipeline, we are confident this will be the strongest year for vacancy leasing in Columbia Gateway in over five years.

Britt A. Snider: With the additional activity in the pipeline, we are confident this will be the strongest year for vacancy leasing in Columbia Gateway in over five years. There were two temporary events in the quarter, which caused total occupancy to decline by 30 basis points in aggregate, both of which will reverse next quarter. First, we placed MBP 400, a nearly 150,000 sq ft building, into service as vacant space. However, the building is fully leased to a leading defense contractor, and the lease will commence in Q3. This delivery resulted in a 60 basis point decrease in occupancy in Q2 that will reverse in Q3. Second, a law firm tenant relocated within 100 Light Street in Baltimore and downsized modestly.

Britt Snider: With the additional activity in the pipeline, we are confident this will be the strongest year for vacancy leasing in Columbia Gateway in over five years. There were two temporary events in the quarter, which caused total occupancy to decline by 30 basis points in aggregate, both of which will reverse next quarter. First, we placed MBP 400, a nearly 150,000 sq ft building, into service as vacant space. However, the building is fully leased to a leading defense contractor, and the lease will commence in Q3. This delivery resulted in a 60 basis point decrease in occupancy in Q2 that will reverse in Q3. Second, a law firm tenant relocated within 100 Light Street in Baltimore and downsized modestly.

Speaker #2: There were two temporary events in the quarter which caused total occupancy to decline by 30 basis points in aggregate, both of which will reverse next quarter.

Speaker #2: First, we placed MBP 400, a nearly 150,000-square-foot building, into service as vacant space. However, the building is fully leased to a leading defense contractor, and the lease will commence in the third quarter.

Speaker #2: This delivery resulted in a 60-basis-point decrease in occupancy in Q2 that will reverse in Q3. Second, a law firm tenant relocated within 100 Light Street in Baltimore and downsized modestly.

Speaker #2: However, they continue to occupy their old space in the quarter, and this resulted in a temporary 30 basis point increase in both total and same-property occupancy, and an almost 400 basis point increase in the occupancy rate of the other portfolio.

Britt A. Snider: However, they continued to occupy their old space in the quarter, and this resulted in a temporary 30 basis point increase in both total and same property occupancy, and an almost 400 basis point increase in the occupancy rate of the other portfolio. The net impact of these two temporary events will be a 30 basis point increase in total occupancy in Q3. We executed 139,000 sq ft of vacancy leasing during Q2. Nearly 70% of which was with existing tenants, further demonstrating the strength of our franchise and our deep relationships within the defense industry. Year to date, we have signed 290,000 sq ft of vacancy leasing, which amounts to roughly 25% of the unleased space in our total portfolio at the beginning of the year and equates to over 70% of our initial full year target of 400,000 sq ft.

Britt Snider: However, they continued to occupy their old space in the quarter, and this resulted in a temporary 30 basis point increase in both total and same property occupancy, and an almost 400 basis point increase in the occupancy rate of the other portfolio. The net impact of these two temporary events will be a 30 basis point increase in total occupancy in Q3. We executed 139,000 sq ft of vacancy leasing during Q2. Nearly 70% of which was with existing tenants, further demonstrating the strength of our franchise and our deep relationships within the defense industry. Year to date, we have signed 290,000 sq ft of vacancy leasing, which amounts to roughly 25% of the unleased space in our total portfolio at the beginning of the year and equates to over 70% of our initial full year target of 400,000 sq ft.

Speaker #2: The net impact of these two temporary events will be a 30-basis-point increase in total occupancy in the third quarter. We executed 139,000 square feet of vacancy leasing during the second quarter, nearly 70% of which was with existing tenants, further demonstrating the strength of our franchise and our deep relationships within the defense industry.

Speaker #2: Year to date, we have signed 290,000 square feet of vacancy leasing, which amounts to roughly 25% of the unleased space in our total portfolio at the beginning of the year and equates to over 70% of our initial full-year target of 400,000 square feet.

Speaker #2: We have approximately 125,000 square feet of prospects in advanced negotiations, which we define as over 90% likely to execute. Taken together, we have over 415,000 square feet of leases either executed or in advanced negotiations.

Britt A. Snider: We have approximately 125,000 sq ft of prospects in advanced negotiations, which we define as over 90% likely to execute. Taken together, we have over 415,000 sq ft of leases, either executed or in advanced negotiations. This achievement, and the continued strength of our demand, gives us the confidence to raise our target to 475,000 sq ft for the year. Our leasing activity ratio is 69%, which equates to 770,000 sq ft of prospects on 1.1 million sq ft of availability. Turning to renewal leasing, we executed nearly 350,000 sq ft in the quarter, with tenant retention of 68%, cash rent spreads down 20 basis points, and GAAP rent spreads up 4.4%. We continue to leverage the strength of demand for our defense IT portfolio by minimizing concessions on renewal leasing. Year to date, our renewal concessions are down nearly 30% compared to 2025.

Britt Snider: We have approximately 125,000 sq ft of prospects in advanced negotiations, which we define as over 90% likely to execute. Taken together, we have over 415,000 sq ft of leases, either executed or in advanced negotiations. This achievement, and the continued strength of our demand, gives us the confidence to raise our target to 475,000 sq ft for the year. Our leasing activity ratio is 69%, which equates to 770,000 sq ft of prospects on 1.1 million sq ft of availability. Turning to renewal leasing, we executed nearly 350,000 sq ft in the quarter, with tenant retention of 68%, cash rent spreads down 20 basis points, and GAAP rent spreads up 4.4%. We continue to leverage the strength of demand for our defense IT portfolio by minimizing concessions on renewal leasing. Year to date, our renewal concessions are down nearly 30% compared to 2025.

Speaker #2: This achievement, and the continued strength of our demand, gives us the confidence to raise our target to 475,000 square feet for the year. Our leasing activity ratio is 69%, which equates to 770,000 square feet of prospects on 1.1 million square feet of availability.

Speaker #2: Turning to renewal leasing, we executed nearly 350,000 square feet in the quarter, with tenant retention of 68%. Cash rent spreads were down 20 basis points, and GAAP rent spreads were up 4.4%.

Speaker #2: We continue to leverage the strength of demand for our defense IT portfolio by minimizing concessions on renewal leasing. Year to date, our renewal concessions are down nearly 30% compared to 2025.

Speaker #2: Our relatively lower retention rate this quarter was driven by two strategic non-renewals in the Fort Meade VW Corridor. These non-renewals occurred following strategic expansions of two tenants into new properties, to accommodate the growth required for them to execute their priority missions.

Britt A. Snider: Our relatively lower retention rate this quarter was driven by two strategic non-renewals in the Fort Meade BW corridor. These non-renewals occurred following strategic expansions of two tenants into new properties to accommodate the growth required for them to execute their priority missions. Net of these two deals, retention would've been 12 percentage points higher. Notably, we backfilled one of the non-renewals immediately at a significant increase in rent, and the other provides the necessary growth capacity for a third tenant in our portfolio. These anomalies occur when you have the strong tenant relationships that we have, and our commitment to accommodate tenant growth in our highly occupied portfolio. Our full year outlook for tenant retention is unchanged at 80% to 85%. Our outlook for retention over the next several years continues to remain strong.

Britt Snider: Our relatively lower retention rate this quarter was driven by two strategic non-renewals in the Fort Meade BW corridor. These non-renewals occurred following strategic expansions of two tenants into new properties to accommodate the growth required for them to execute their priority missions. Net of these two deals, retention would've been 12 percentage points higher. Notably, we backfilled one of the non-renewals immediately at a significant increase in rent, and the other provides the necessary growth capacity for a third tenant in our portfolio. These anomalies occur when you have the strong tenant relationships that we have, and our commitment to accommodate tenant growth in our highly occupied portfolio. Our full year outlook for tenant retention is unchanged at 80% to 85%. Our outlook for retention over the next several years continues to remain strong.

Speaker #2: Net of these two deals, retention would have been 12 percentage points higher. Notably, we backfilled one of the non-renewals immediately at a significant increase in rent, and the other provides the necessary growth capacity for a third tenant in our portfolio.

Speaker #2: These anomalies occur when you have the strong tenant relationships that we have and our commitment to accommodate tenant growth in our highly occupied portfolio.

Speaker #2: Our full-year outlook for tenant retention is unchanged at 80 to 85 percent. Our outlook for retention over the next several years continues to remain strong.

Speaker #2: Looking at the flipbook, in the second quarter of 2024, we disclosed our view on the renewal of large leases—those in excess of 50,000 square feet—over the next 10 quarters through year-end 2026.

Britt A. Snider: Looking back, as shown on page 18 of our flip book, in Q2 of 2024, we disclosed our view on the renewal of large leases, those in excess of 50,000 sq ft, over the next 10 quarters through year-end 2026. At the time, we had 32 large leases totaling 4 million sq ft set to expire. Since then, we have renewed 24 of those leases and achieved a 97% retention rate on this 3 million sq ft. The remaining eight leases in that pool are all full building leases to the U.S. government, which total nearly 1 million sq ft. We expect to retain 100% of that lease space, with lease executions expected in 2027. When these eight leases renew, our retention on their 4 million sq ft pool will be nearly 98%, which compares favorably with our initial projection of over 95%.

Britt Snider: Looking back, as shown on page 18 of our flip book, in Q2 of 2024, we disclosed our view on the renewal of large leases, those in excess of 50,000 sq ft, over the next 10 quarters through year-end 2026. At the time, we had 32 large leases totaling 4 million sq ft set to expire. Since then, we have renewed 24 of those leases and achieved a 97% retention rate on this 3 million sq ft. The remaining eight leases in that pool are all full building leases to the U.S. government, which total nearly 1 million sq ft. We expect to retain 100% of that lease space, with lease executions expected in 2027. When these eight leases renew, our retention on their 4 million sq ft pool will be nearly 98%, which compares favorably with our initial projection of over 95%.

Speaker #2: At the time, we had 32 large leases totaling 4 million square feet set to expire. Since then, we have renewed 24 of those leases and achieved a 97% retention rate on this 3 million square feet.

Speaker #2: The remaining eight leases in that pool are all full-building leases to the U.S. government, totaling nearly one million square feet. We expect to retain 100% of that leased space, with lease executions expected in 2027.

Speaker #2: When these eight leases renew, our retention on the 4-million-square-foot pool will be nearly 98%, which compares favorably with our initial projection of over 95%.

Speaker #2: On page 19 of our flipbook, we expanded this disclosure to include our view of large lease expirations for the next 10 quarters, through year-end 2028.

Britt A. Snider: On page 19 of our flip book, we expanded this disclosure to include our view of large lease expirations for the next 10 quarters through year-end 2028. In this window, we have 39 large leases expiring totaling 4.1 million sq ft, which account for nearly 60% of our total expiring annualized rental revenue during the period. We expect approximately 90% retention on this population, and roughly 70% of this large lease pool by square footage, and 66% by annualized rental revenue, is government and data center shell tenants, for which we expect 100% retention. This pool includes two leases in our other segment, which equates to roughly 5%, or 160,000 sq ft of the total area, on which we expect approximately 50% retention.

Britt Snider: On page 19 of our flip book, we expanded this disclosure to include our view of large lease expirations for the next 10 quarters through year-end 2028. In this window, we have 39 large leases expiring totaling 4.1 million sq ft, which account for nearly 60% of our total expiring annualized rental revenue during the period. We expect approximately 90% retention on this population, and roughly 70% of this large lease pool by square footage, and 66% by annualized rental revenue, is government and data center shell tenants, for which we expect 100% retention. This pool includes two leases in our other segment, which equates to roughly 5%, or 160,000 sq ft of the total area, on which we expect approximately 50% retention.

Speaker #2: In this window, we have 39 large leases expiring, totaling 4.1 million square feet, which account for nearly 60% of our total expiring annualized rental revenue during the period.

Speaker #2: We expect approximately 90% retention on this population, and roughly 70% of this large lease pool by square footage—and 66% by annualized rental revenue—is government and data center shell tenants, for which we expect 100% retention.

Speaker #2: This pool includes two leases in our other segment, which equates to roughly 5%, or 160,000 square feet, of the total area, on which we expect approximately 50% retention.

Speaker #2: Looking back, since we started providing large lease retention disclosure four years ago, we have renewed 5 million square feet of large leases at a 98% retention rate.

Britt A. Snider: Looking back, since we started providing large lease retention disclosure four years ago, we have renewed 5 million sq ft of large leases at a 98% retention rate. Importantly, over those four years, we have retained 100% of the tenants in our portfolio, with only four modest downsizes that total less than 120,000 sq ft. We continue to provide this disclosure to reinforce the fact that our portfolio is not exposed to material non-renewals, which would impact occupancy, cash flow, and NOI. Moving on to development, our active pipeline now totals nearly 900,000 sq ft that is 73% pre-leased, and amounts to nearly $450 million in capital commitment. Four of the six projects are 100% pre-leased. In Huntsville, 8500 Advanced Gateway is 41% leased, and we are currently negotiating two leases that will bring this building to 100% leased this quarter.

Britt Snider: Looking back, since we started providing large lease retention disclosure four years ago, we have renewed 5 million sq ft of large leases at a 98% retention rate. Importantly, over those four years, we have retained 100% of the tenants in our portfolio, with only four modest downsizes that total less than 120,000 sq ft. We continue to provide this disclosure to reinforce the fact that our portfolio is not exposed to material non-renewals, which would impact occupancy, cash flow, and NOI. Moving on to development, our active pipeline now totals nearly 900,000 sq ft that is 73% pre-leased, and amounts to nearly $450 million in capital commitment. Four of the six projects are 100% pre-leased. In Huntsville, 8500 Advanced Gateway is 41% leased, and we are currently negotiating two leases that will bring this building to 100% leased this quarter.

Speaker #2: And importantly, over those four years, we have retained 100% of the tenants in our portfolio, with only four modest downsizes that total less than 120,000 square feet.

Speaker #2: We continue to provide this disclosure to reinforce the fact that our portfolio is not exposed to material non-renewals, which would impact occupancy, cash flow, and NOI.

Speaker #2: Moving on to development, our active pipeline now totals nearly 900,000 square feet. That is 73% pre-leased and amounts to nearly $450 million in capital commitment.

Speaker #2: Four of the six projects are 100% pre-leased. In Huntsville, 8,500 Advanced Gateway is 41% leased, and we are currently negotiating two leases that will bring this building to 100% leased this quarter.

Speaker #2: Four 10 Goss Road is our inventory building for the government, which is inside the fence. We are in active discussions with multiple government agencies related to missile defense and space activity, and we expect lease action for that building sometime in 2027.

Britt A. Snider: 410 Goss Road is our inventory building for the government, which is inside the fence. We are in active discussions with multiple government agencies related to missile defense and space activity, we expect lease action for that building sometime in 2027. As Steve discussed, we will commence development of RG 6300 and RG 2200 later this summer, which totals $91 million in capital commitments. Our development leasing pipeline, which we define as opportunities we consider 50% likely to win or better within two years or less, currently stands at nearly 1.2 million square feet, a 20% increase since last quarter. Beyond that, we're tracking an additional 900,000 square feet of potential development opportunities, a nearly 60% increase since last quarter. Combined, the pipeline increased over 500,000 square feet over the last quarter, this acceleration further reinforces our confidence in achieving external growth in the coming years.

Britt Snider: 410 Goss Road is our inventory building for the government, which is inside the fence. We are in active discussions with multiple government agencies related to missile defense and space activity, we expect lease action for that building sometime in 2027. As Steve discussed, we will commence development of RG 6300 and RG 2200 later this summer, which totals $91 million in capital commitments. Our development leasing pipeline, which we define as opportunities we consider 50% likely to win or better within two years or less, currently stands at nearly 1.2 million square feet, a 20% increase since last quarter. Beyond that, we're tracking an additional 900,000 square feet of potential development opportunities, a nearly 60% increase since last quarter. Combined, the pipeline increased over 500,000 square feet over the last quarter, this acceleration further reinforces our confidence in achieving external growth in the coming years.

Speaker #2: As Steve discussed, we will commence development of RG 6300 and RG 2200 later this summer, which totals $91 million in capital commitments. Our development leasing pipeline, which we define as opportunities we consider 50% likely to win or better within two years or less, currently stands at nearly 1.2 million square feet—a 20% increase since last quarter.

Speaker #2: Beyond that, we're tracking an additional 900,000 square feet of potential development opportunities, a nearly 60% increase since last quarter. Combined, the pipeline increased over 500,000 square feet over the last quarter, and this acceleration further reinforces our confidence in achieving external growth in the coming years.

Speaker #2: With that, I'll hand it over to Anthony.

Britt A. Snider: With that, I'll hand it over to Anthony.

Britt Snider: With that, I'll hand it over to Anthony.

Speaker #3: Thank you, Britt. We reported second quarter FFO per share of $0.71, which was $0.02 above the midpoint of guidance and represents a 4.4% increase year over year.

Anthony Mifsud: Thank you, Britt. We reported Q2 FFO per share of $0.71, which was $0.02 above the midpoint of guidance, represents a 4.4% increase year over year. The quarter benefited primarily from effective operating expense and property management, which resulted in lower net operating expenses, as well as higher net development fees. Same property cash NOI for the quarter increased 7.4% year over year, driven by cash rent commencement on developments and acquisitions placed into service in prior years. Cash rent increases on virtually all the leases in our portfolio, along with the benefits from the commencement of a large portion of the over half a million square feet of vacancy leasing executed last year. Same-property occupancy ended the quarter at 94.5%, which is up 30 basis points from last quarter due to the temporary occupancy bump at 100 Light Street that Britt mentioned.

Speaker #3: The quarter benefited primarily from effective operating expense and property management, which resulted in lower net operating expenses, as well as higher net development fees.

Speaker #3: Same-property cash NOI for the quarter increased 7.4% year-over-year, driven by cash rent commencement on developments and acquisitions placed into service in prior years, cash rent increases on virtually all the leases in our portfolio, along with the benefits from the commencement of a large portion of the over half a million square feet of vacancy leasing executed last year.

Speaker #3: Same-property occupancy ended the quarter at 94.5%, which is up 30 basis points from last quarter due to the temporary occupancy bump at 100 Light Street that Britt mentioned.

Speaker #3: We continue to expect same-property occupancy will end the year at roughly 94%. With respect to guidance, we increased the midpoint for the following four key metrics.

Anthony Mifsud: We continue to expect same-property occupancy will end the year at roughly 94%. With respect to guidance, we increased the midpoint for the following four key metrics. Regarding FFO per share, our assumed full year share count reflects roughly $0.04 of dilution from our exchangeable notes, the impact of which has doubled in each of the past two quarters. We will gladly manage through the impact of this dilution, since it is a result of our 38% stock price appreciation year to date. Despite this impact, we increased the midpoint of full year FFO per share guidance by $0.02 to $2.78.

Speaker #3: Regarding FFO per share, our assumed full-year share count reflects roughly $0.04 of dilution from our exchangeable notes, the impact of which has doubled in each of the past two quarters.

Speaker #3: We will gladly manage through the impact of this dilution, since it is a result of our 38% stock price appreciation year-to-date. And despite this impact, we increased the midpoint of full-year FFO per share guidance by $0.02 to $2.78.

Speaker #3: Our forecast for FFO has increased by $8 million since we established initial 2026 guidance, which is driven by $5 million of outperformance during the first half of the year, and $3 million from the net impact from the acquisition of Mission Ridge, additional interest income, and the expected settlement agreement with a non-defense tenant to regain control of much-needed inventory in Columbia Gateway.

Anthony Mifsud: Our forecast for FFO has increased by $8 million since we established initial 2026 guidance, which is driven by $5 million of outperformance during H1 of the year, and $3 million from the net impact from the acquisition of Mission Ridge, additional interest income, and an expected settlement agreement with a non-defense tenant to regain control of much needed inventory in Columbia Gateway. We increased the midpoint of same-property cash NOI growth by 100 basis points to 4%. This reflects the strong performance during H1 of the year, and our expectation that growth will moderate in H2 of the year due to several known move-outs and contractions, along with non-recurring real estate tax refunds received in H2 of 2025, primarily in Q3.

Speaker #3: We increased the midpoint of same-property cash NOI growth by 100 basis points to 4%. This reflects the strong performance during the first half of the year, and our expectation that growth will moderate in the back half of the year due to several known move-outs and contractions, along with non-recurring real estate tax refunds received in the back half of 2025, primarily in the third quarter.

Speaker #3: We increased the midpoint of the cash change and cash rents on renewals by 100 basis points, to 3%, which is positively impacted by several early renewals we expect to sign later this year.

Anthony Mifsud: We increased the midpoint of the change in cash rents on renewals by 100 basis points to 3%, which is positively impacted by several early renewals we expect to sign later this year. Finally, we increased the target of capital committed to new investment guidance by $40 million to $335 million, which reflects the impact of an additional start at Redstone Gateway. We are establishing FFO per share guidance for Q3 and Q4 at a range of $0.68 to $0.70. With that, I'll turn the call back to Steve.

Speaker #3: Finally, we increased the target of capital committed to new investment guidance by $40 million, to $330 million. This includes $5 million, which reflects the impact of an additional start at Redstone Gateway.

Speaker #3: We are establishing FFO per share guidance for the third and fourth quarters at a range of $0.68 to $0.70. With that, I'll turn the call back to Steve.

Speaker #4: Thank you. Summarizing the key themes of our call today: we outperformed our FFO objectives and raised our annual guidance, outpacing the incremental dilution resulting from our sector-leading 38% increase in share price year to date.

Stephen E. Budorick: Thank you. Summarizing the key themes of our call today. We outperformed our FFO objectives and raised our annual guidance, outpacing the incremental dilution resulting from our sector-leading 38% increase in share price year to date. We raised our guidance on three other metrics. Our tenant retention remains rock solid, providing the strong foundation to support continued growth in investment spending and FFO per share achievement. We continue to have the capacity to fund the equity component of roughly $300 million of investment on a leverage-neutral basis annually. We are committing another $91 million to new development in Redstone Gateway to begin to address the accelerating demand from space and missile programs our country is prioritizing. We continue to enjoy strong market fundamentals throughout our portfolio, supported by record increases in defense-based budget spending and growth in the priority missions we serve.

Steve Budorick: Thank you. Summarizing the key themes of our call today. We outperformed our FFO objectives and raised our annual guidance, outpacing the incremental dilution resulting from our sector-leading 38% increase in share price year to date. We raised our guidance on three other metrics. Our tenant retention remains rock solid, providing the strong foundation to support continued growth in investment spending and FFO per share achievement. We continue to have the capacity to fund the equity component of roughly $300 million of investment on a leverage-neutral basis annually. We are committing another $91 million to new development in Redstone Gateway to begin to address the accelerating demand from space and missile programs our country is prioritizing. We continue to enjoy strong market fundamentals throughout our portfolio, supported by record increases in defense-based budget spending and growth in the priority missions we serve.

Speaker #4: And we raised our guidance on three other metrics. Our tenant retention remains rock solid, providing the strong foundation to support continued growth in investment spending and FFO per share achievement.

Speaker #4: We continue to have the capacity to fund the equity component of roughly $300 million of investment on a leveraged neutral basis annually. We are committing another $91 million to new development in Redstone Gateway to begin to address the accelerating demand from space and missile programs our country is prioritizing.

Speaker #4: We continue to enjoy strong market fundamentals throughout our portfolio, supported by record increases in defense-based budget spending and growth in the priority missions we serve.

Speaker #4: We're benefiting from advancements in missile defense, cyber activities, quantum computing, military space activities, and intelligence programs, and this mission demand is durable and growing.

Stephen E. Budorick: We're benefiting from advancements in missile defense, cyber activities, quantum computing, military space activities, and intelligence programs. This mission demand is durable and growing. National defense spending has entered the era of trillion-dollar base budgets to support the creation and development of advanced technology weapons programs, thereby creating current and growing opportunities throughout our markets. We look forward to sharing our Q3 progress in October. With that, Operator, please open the call for questions.

Steve Budorick: We're benefiting from advancements in missile defense, cyber activities, quantum computing, military space activities, and intelligence programs. This mission demand is durable and growing. National defense spending has entered the era of trillion-dollar base budgets to support the creation and development of advanced technology weapons programs, thereby creating current and growing opportunities throughout our markets. We look forward to sharing our Q3 progress in October. With that, Operator, please open the call for questions.

Speaker #4: National defense spending has entered the era of trillion-dollar-based budgets, supporting the creation and development of advanced technology weapons programs and thereby creating current and growing opportunities throughout our markets.

Speaker #4: We look forward to sharing our third quarter progress in October, and with that, operator, please open the call for questions.

Operator: Thank you, Mr. Budorick. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Seth Bergey of Citigroup. Your line is open, Seth.

Speaker #5: Thank you, Mr. Budorick. As a reminder, to ask a question you will need to press *11 on your telephone. To remove yourself from the queue, you may press *11 again.

Speaker #5: Please stand by while we compile the Q&A roster. Our first question comes from the line of Seth Burgie of Citi. Seth, your line is open.

Seth Bergey: Hi, thanks for taking my question. I guess just the first one on the increase in the base budget. It sounds like based off your commentary that the 20% increase is kind of a structural step up, just given the expectation for it to be kind of a $1 trillion moving forward. Does that kind of change the way you think about the amount of capital you would look to deploy in future developments going forward?

Speaker #6: Hi. Thanks for taking my question. I guess just the first one on the increase in the base budget—and it sounds like, based off your commentary, that the 20% increase is kind of a structural step up, just given the expectation for it to be kind of a trillion dollars.

Speaker #6: Moving forward, does that kind of change the way you think about the amount of capital you would like to deploy in future developments going forward?

Speaker #4: No, not really. We've positioned the company very well to deploy capital on a low-risk basis where we see incremental opportunities. And to the extent this new elevated trillion-dollar level generates more activity, we're prepared, and we've got a strong balance sheet to support an increase in our investment on the same low-risk basis we've been running the company for the last 10 years.

Stephen E. Budorick: No, not really. We've positioned the company very well to deploy capital on a low risk basis where we see incremental opportunities. To the extent this new elevated $1 trillion-dollar level generates more activity, we're prepared, and we've got a strong balance sheet to support the increase in our investment on the same low risk basis we've been running the company for the last 10 years.

Steve Budorick: No, not really. We've positioned the company very well to deploy capital on a low risk basis where we see incremental opportunities. To the extent this new elevated $1 trillion-dollar level generates more activity, we're prepared, and we've got a strong balance sheet to support the increase in our investment on the same low risk basis we've been running the company for the last 10 years.

Speaker #6: Thanks. And then just any changes on your expectations for development yields? And then just given the year-to-date movement in the stock price, has that changed the way you think about funding development with free cash flow versus potentially issuing equity off the ATM?

Seth Bergey: Thanks. Just any changes on kind of your expectations for development yields? Just given kind of the year-to-date movement and the stock price, has that changed the way you think about funding development with free cash flow versus potentially issuing equity off the ATM?

Speaker #4: Well, let me take the first one first. We continue to achieve initial cash yields of roughly 8.5% on our new development. So, the target that we elevated from 8% a few years back—we've been able to hold that.

Stephen E. Budorick: Well, let me take the first one first. We continue to achieve initial cash yields of roughly 8.5% on our new development. It's a target that we elevated from 8% a few years back. We've been able to hold that, I don't see that target changing. With regard to funding, no, we have no interest or intention of funding with new equity issuance. We're very satisfied to continue to fund with free cash flow. We worked very hard for several years to get us in a position where we can grow this company without going to the market, we intend to keep it there.

Steve Budorick: Well, let me take the first one first. We continue to achieve initial cash yields of roughly 8.5% on our new development. It's a target that we elevated from 8% a few years back. We've been able to hold that, I don't see that target changing. With regard to funding, no, we have no interest or intention of funding with new equity issuance. We're very satisfied to continue to fund with free cash flow. We worked very hard for several years to get us in a position where we can grow this company without going to the market, we intend to keep it there.

Speaker #4: And I don't see that target changing. With regard to funding, no, we have no interest or intention of funding with new equity issuance, and we're very satisfied to continue to fund with free cash flow.

Speaker #4: We've worked very hard for several years to get us in a position where we can grow this company without going to the market, and we intend to keep it there.

Seth Bergey: Great. Thank you so much.

Speaker #6: Great. Thank you so much.

Speaker #5: Thank you. Our next question comes from the line of Manus Evic of Evercore. Your line is open, Manus.

Operator: Thank you. Our next question comes from the line of Manus Ebbecke of Evercore. Your line is open, Manus.

Speaker #7: Hey, there. And thanks for taking the question. Just curious, in addition to the two new starts that you have, you marked for Huntsville in Q3, if you kind of go through your portfolio and look at the different regions you're in, where could you see additional starts kind of coming up next?

Manus Ebbecke: Hey there, thanks for taking the question. Just curious, in addition to the two new starts that you have earmarked for Huntsville in Q3, if you kind of go through your portfolio and look at the different regions you're in, where could you see additional starts kind of coming up next? Which are kind of the next markets on your list where you think it's also getting really tight in supply versus the strong demand that you're seeing?

Speaker #7: Or which are kind of like the next markets on your list where you think it's also getting really tight on supply versus the strong demand that you're seeing?

Speaker #3: Yeah, well, hey Manus, this is Britt. First, I do want to hit on Huntsville because, I mean, we are taking a longer view on development there, just generally, beyond even these two.

Britt A. Snider: Well, hey, Manus, this is Britt. First, I do want to hit on Huntsville because we are taking a longer view on development there, just generally, beyond even these two, and investing in some pre-development dollars for the next four buildings beyond these two, and even looking at where we're going to site the next eight buildings beyond that. I think the demand in Huntsville is tangible. In addition to Huntsville, looking around the Fort Meade market is still showing signs of strong demand, and there's a few areas that we have at National Business Park and then also down around College Park that we like a lot for potential future development starts as well.

Britt Snider: Well, hey, Manus, this is Britt. First, I do want to hit on Huntsville because we are taking a longer view on development there, just generally, beyond even these two, and investing in some pre-development dollars for the next four buildings beyond these two, and even looking at where we're going to site the next eight buildings beyond that. I think the demand in Huntsville is tangible. In addition to Huntsville, looking around the Fort Meade market is still showing signs of strong demand, and there's a few areas that we have at National Business Park and then also down around College Park that we like a lot for potential future development starts as well.

Speaker #3: And investing in some pre-development dollars for the next four buildings beyond these two, and even looking at where we're going to site the next eight buildings beyond that.

Speaker #3: I mean, I think the demand in Huntsville is tangible. But in addition to Huntsville, looking around, the Fort Meade market is still showing signs of strong demand.

Speaker #3: And there are a few areas that we have—the National Business Park, and then also down around College Park—that we like a lot for potential future development starts as well.

Speaker #4: Yeah, and if I can add to that, Manus, we're starting two buildings, and our comments carefully said to begin to address the accelerating demand.

Stephen E. Budorick: If I can add to that, Manus. We're starting two buildings, and our comments carefully said, To begin to address the accelerating demand. We believe there's pretty strong potential to either add additional inventory or sign pre-leases beyond this initial two-building commitment we're making in the quarter.

Steve Budorick: If I can add to that, Manus. We're starting two buildings, and our comments carefully said, To begin to address the accelerating demand. We believe there's pretty strong potential to either add additional inventory or sign pre-leases beyond this initial two-building commitment we're making in the quarter.

Speaker #4: We believe there's pretty strong potential to either add additional inventory or sign pre-leases beyond this initial two-building commitment we're making in the quarter.

Speaker #5: Okay, makes sense. And maybe a quick—

Manus Ebbecke: Okay. Makes sense. Maybe a quick follow-up. I know you always are actively talking to your tenants and contractors in the areas that you guys are in. Just curious if there's any updated takes or kind of stories you can share on Golden Dome or Space Command that you've been hearing over the last few months, and how that could potentially kind of incrementally help you even in the future. Obviously, we understand the positive impact these two big programs have to you overall.

Speaker #6: Follow-up. I know you're always actively talking to your tenants and contractors in the areas that you guys are in. So I'm just curious if there's any updated takes or any stories you can share on Golden Dome or Space Command that you've been hearing over the last few months, and how that could potentially incrementally help you even in the future.

Speaker #6: Oh, see, we understand the positive impact these two big programs have on you overall.

Britt A. Snider: Well, I would say if you're looking at the nearer term pipeline of that, or higher probability to pipeline of 1.2 million square feet, I would say 83% of that higher probability pipeline is in Huntsville, and 50% of that is Golden Dome related. It is something that is steadily growing down there.

Britt Snider: Well, I would say if you're looking at the nearer term pipeline of that, or higher probability to pipeline of 1.2 million square feet, I would say 83% of that higher probability pipeline is in Huntsville, and 50% of that is Golden Dome related. It is something that is steadily growing down there.

Speaker #3: Well, I would say, if you're looking at the nearer-term pipeline or the higher probability pipeline of 1.2 million square feet, I would say 83% of that higher probability pipeline is in Huntsville, and 50% of that is Golden Dome-related.

Speaker #3: So, it is something that is steadily growing down there.

Speaker #6: All right. I appreciate it. Thank you so much.

Manus Ebbecke: All right. I appreciate it. Thank you so much.

Speaker #5: Our next question from the line of—go ahead, Blaine.

Operator: Our next question comes from the line of Blaine Heck. Please go ahead, Blaine.

Speaker #6: Great, thanks. Stephen, Britt, not to beat a dead horse here, but it does sound like activity is picking up rapidly in Huntsville—and not to overlook the increased guidance.

Blaine Heck: Great. Thanks. Steve and Britt, not to beat a dead horse here, it does sound like activity is picking up rapidly in Huntsville, and not to overlook the increased guidance. Do you think there's potential upside to the incremental $45 million of development starts in Huntsville in H2 of this year? I guess, are those two starts truly speculative, or do you have negotiations or even letters of intent on those buildings such that you could actually start more on a spec basis this year, or should we expect that ramp to be more in 2027 and beyond?

Speaker #6: But do you think there's potential upside to the incremental $45 million of development starts in Huntsville in the second half of this year?

Speaker #6: I guess, are those two starts truly speculative, or do you have negotiations or even letters of intent on those buildings such that you could actually start more on a spec basis this year, or should we expect that ramp to be more in 2027 and beyond?

Speaker #4: Well, there's a lot of activity. Timing is tough to predict. I would not like to overpromise on this call that more can occur during the year.

Stephen E. Budorick: Well, there's a lot of activity. Timing is tough to predict. I would not like to overpromise on this call that more can occur during the year. I can tell you, we don't have any pre-leases on those buildings. We consider them inventory because we're working with tenants on specific space requirements, and we picked those two sizes of buildings for a reason, to match the floor plates with the kind of demand we're seeing. We certainly anticipate activity beyond these two. We have every confidence we'll get these leased quickly. Whether it happens this year or next, we'll leave that to future calls.

Steve Budorick: Well, there's a lot of activity. Timing is tough to predict. I would not like to overpromise on this call that more can occur during the year. I can tell you, we don't have any pre-leases on those buildings. We consider them inventory because we're working with tenants on specific space requirements, and we picked those two sizes of buildings for a reason, to match the floor plates with the kind of demand we're seeing. We certainly anticipate activity beyond these two. We have every confidence we'll get these leased quickly. Whether it happens this year or next, we'll leave that to future calls.

Speaker #4: I can tell you we don't have any pre-leases on those buildings. We consider them inventory because we're working with tenants on specific space requirements, and we picked those two sizes of buildings for a reason—to match the floor plates with the kind of demand we're seeing.

Speaker #4: So we certainly anticipate activity beyond these two. We have every confidence we'll get these leased quickly. Whether it happens this year or next, we'll leave that to future calls.

Speaker #6: All right. Totally fair. Second question: I know it was a very recent acquisition, but wanted to ask whether there was any update on the ground lease in Chantilly, or any progress made towards potentially taking control of the assets there.

Blaine Heck: All right. Totally fair. Second question. Wanted to ask whether there was any update on the ground lease in Chantilly or any progress made towards potentially taking control of the assets there.

Speaker #4: So, we've made no progress in taking control of the assets. The facts are that the owner of the property had a mortgage that matured.

Stephen E. Budorick: We have made no progress at taking control of the assets. The facts are that the owner of the property had a mortgage that matured. It's not been repaid. The mortgage has been transferred to a special servicer. I believe they are working to refinance it, and that's all we really know. We know long term, we'd love to have those properties in our portfolio. Really are a perfect fit, both with tenant presence, the nature of the construction of the development, and the location. We believe sometime we'll be in a position to acquire those buildings.

Steve Budorick: We have made no progress at taking control of the assets. The facts are that the owner of the property had a mortgage that matured. It's not been repaid. The mortgage has been transferred to a special servicer. I believe they are working to refinance it, and that's all we really know. We know long term, we'd love to have those properties in our portfolio. Really are a perfect fit, both with tenant presence, the nature of the construction of the development, and the location. We believe sometime we'll be in a position to acquire those buildings.

Speaker #4: It has not been repaid. The mortgage has been transferred to a special servicer. I believe they're working to refinance it, and that's all we really know.

Speaker #4: We know long term we'd love to have those properties in our portfolio, because they're a perfect fit—both with tenant presence, the nature of the construction and development, and the location.

Speaker #4: And we believe that sometime we'll be in a position to acquire those buildings.

Speaker #6: Okay, great. Thanks, guys.

Blaine Heck: Okay. Great. Thanks, guys.

Speaker #5: Thank you. Our next question comes from the line of Anthony Pallon of J.P. Morgan. Your line is open, Anthony.

Operator: Thank you. Our next question comes from the line of Anthony Paolone of JPMorgan. Your line is open, Anthony.

Speaker #6: All right, great. Thanks. Yeah, I'm struck by just how much Golden Dome has had an impact on your leasing. So I'm just wondering, with midterms coming up—if that changes the sort of power in the House and Senate—does it have any implications on that, or do you think it has any implications on momentum anywhere else in the portfolio?

Anthony Paolone: Great, thanks. I'm struck by just how much Golden Dome has had an impact on your leasing. Just wondering with midterms coming up, if that changes power in the House and Senate. Does it have any implications on that, or do you think it has any implications on momentum anywhere else in the portfolio?

Speaker #4: Well, let's just say I need to regroup a little bit. Before this President got elected, we repeatedly said the one issue in the U.S. government that is bipartisan is increased defense spending.

Stephen E. Budorick: Well, let's just I got to regroup a little bit. Before this president got elected, we repeatedly said the one issue in the U.S. government that is bipartisan is increased defense spending. Under the prior president, the pattern was that the president didn't have strong interest in investing in defense. The White House requests were relatively flat, and the House and the Senate addressed the needs of the Department of Defense by increasing those budgets in a bipartisan way. I truly believe, irrespective of the outcome of the midterm, that bipartisan recognition of the need to have the strongest military on the face of the Earth and to invest in the new technologies that have the potential to change that balance will exist.

Steve Budorick: Well, let's just I got to regroup a little bit. Before this president got elected, we repeatedly said the one issue in the U.S. government that is bipartisan is increased defense spending. Under the prior president, the pattern was that the president didn't have strong interest in investing in defense. The White House requests were relatively flat, and the House and the Senate addressed the needs of the Department of Defense by increasing those budgets in a bipartisan way. I truly believe, irrespective of the outcome of the midterm, that bipartisan recognition of the need to have the strongest military on the face of the Earth and to invest in the new technologies that have the potential to change that balance will exist.

Speaker #4: Under the prior president, the pattern was that the president didn't have a strong interest in investing in defense. So the White House requests were relatively flat.

Speaker #4: And the House and the Senate addressed the needs of the defense department by increasing those budgets. On a bipartisan in a bipartisan way. So I truly believe irrespective of the outcome of the midterm, that bipartisan recognition of the need to have the strongest military on the face of the earth and to invest in the new technologies that have the potential to change that balance will exist.

Speaker #4: And so we're not fearing the midterm change. And we know that, irrespective of what happens in the House and Senate, we do have a president who's very motivated to see increases in defense spending.

Stephen E. Budorick: We're not fearing the midterm change, and we know that irrespective of what happens in the House and Senate, we do have a president who's very motivated to see increases in defense spending. I think it'll still be a favorable environment.

Steve Budorick: We're not fearing the midterm change, and we know that irrespective of what happens in the House and Senate, we do have a president who's very motivated to see increases in defense spending. I think it'll still be a favorable environment.

Speaker #4: So, I think it'll still be a favorable environment.

Speaker #6: Okay, thanks. And then just a follow-up. Obviously, there are a lot of participants at this point in liquidity and in the data center industry broadly. I know you guys have the Des Moines land, but just as you think about your positioning there and what you've done in the past, do you think you still have an opportunity there in the future?

Anthony Paolone: Okay. Thanks. Just a follow-up. Obviously, a lot of participants at this point in liquidity in the data center industry broadly. I know you guys have the Des Moines land, but just as you think about your positioning there and what you've done in the past, do you think you still have an opportunity there in the future? Do you see yourselves getting more active in that space, or has it just become too crowded?

Speaker #6: Do you see yourselves getting more active in that space, or has it just become too crowded?

Speaker #4: Well, I think we have a customer, and the customer has demand. The hard part right now is finding access to power. We continue to work with our customer on potential solutions.

Stephen E. Budorick: Well, I think we have a customer, and the customer has demand. The hard part right now is finding access to power. We continue to work with our customer on potential solutions. Long term, something's going to break in the power situation in Iowa, but we don't want to be the pioneer that breaks that. We're motivated to continue that development relationship. I just don't expect to see any leases for 12 to 24 months.

Steve Budorick: Well, I think we have a customer, and the customer has demand. The hard part right now is finding access to power. We continue to work with our customer on potential solutions. Long term, something's going to break in the power situation in Iowa, but we don't want to be the pioneer that breaks that. We're motivated to continue that development relationship. I just don't expect to see any leases for 12 to 24 months.

Speaker #4: Long term, something's going to break in the power situation in Iowa, but we don't want to be the pioneer that breaks that. And so we're motivated to continue that development relationship.

Speaker #4: I just don't expect to see any leases for 12 to 24 months.

Speaker #6: Okay. Thanks.

Anthony Paolone: Okay, thanks.

Speaker #5: Thank you. Our next question comes from the line of Richard Anderson of Cantor Fitzgerald. Please go ahead, Richard.

Operator: Thank you. Our next question comes from the line of Richard Anderson of Cantor Fitzgerald. Please go ahead, Richard.

Speaker #7: All right, thanks. Good afternoon, everyone. So Anthony, on your expectation of a moderating same-store growth profile in the second half, is there any circumstance where that may not happen?

Richard Anderson: All right, thanks. Good afternoon, everyone. Anthony, on your expectation of a moderating same-store growth profile in the H2, is there any circumstance where that may not happen? I know you mentioned known move-outs, but are they in the bag known move-outs, or is there anything that could happen where you may not do 7%+ same store, but something a little less impactful in terms of the moderating organic growth profile of the company?

Speaker #7: I know you mentioned known move-outs, but are they in the 'in the bag' known move-outs, or is there anything that could happen where you may not do 7% plus same-store, but something a little less impactful in terms of the moderating organic growth profile of the company?

Speaker #7: No, I think both the increases that are contractual, as well as the known move-outs, are move-outs that either occurred late in the second quarter or will occur early in the third quarter.

Anthony Mifsud: No, I think both on the increases that are contractual, as well as the known move-outs, those are move-outs that have either occurred late in Q2 or will occur early in Q3. The real estate tax refunds that we had the benefit of in H2 2025, we know will not recur in 2026. I think there's not a lot of variability in that math right now.

Speaker #7: And the real estate tax refunds that we had the benefit of in the second half of 2025, we know will not recur in 2026.

Speaker #7: So I think where there's not a lot of variability in that math right now, of tenant investment, certainly that's been a good environment for you in terms of SCIF exposure and the costs associated with that being funded largely by tenants.

Richard Anderson: Okay. In terms of tenant investment, certainly that's been a good environment for you in terms of SCIF exposure and the costs associated with that being funded largely by tenants. What is your expectation there going forward? I know you've had some good outcomes in terms of the investments made. You have stickier tenants and all that sort of stuff, but you're not going to have a comment about how much SCIF is in the total portfolio, perhaps. Is that going up in this environment? Just the demand for SCIF build-outs?

Speaker #7: What is your expectation there going forward? I know you've had some good outcomes in terms of the investments made. You have stickier tenants and all that sort of stuff.

Speaker #7: But you're not going to comment about how much SCIF is in the total portfolio, perhaps, but is that going up in this environment? Just the demand for SCIF build-outs?

Speaker #4: Unquestionably, over the last several years, almost every contractor involves a SCIF component. More and more programs are having elevated classification levels. All of the activity around Golden Dome, missile defense, Space Command, will have SCIF requirements to support it.

Stephen E. Budorick: Unquestionably. Over the last several years, almost every requirement for space with defense contractor involves a SCIF component. More and more programs are having elevated classification levels. All of the activity around Golden Dome, missile defense, Space Command, will have SCIF requirements to support it. The influence towards SCIF has never been higher than it is right now.

Steve Budorick: Unquestionably. Over the last several years, almost every requirement for space with defense contractor involves a SCIF component. More and more programs are having elevated classification levels. All of the activity around Golden Dome, missile defense, Space Command, will have SCIF requirements to support it. The influence towards SCIF has never been higher than it is right now.

Speaker #4: So the influence towards Skiff has never been higher than it is right now.

Speaker #7: And just so I have the math right, it's almost like 2x or 3x that the tenant pays for that versus your allowance. Is that correct?

Richard Anderson: Just so I have the math right, it's almost like 2 or 3x that the tenant pays for that versus your allowance. Is that correct?

Stephen E. Budorick: It's more like three or four to one.

Steve Budorick: It's more like three or four to one.

Speaker #4: It's more like three or four-to-one.

Speaker #7: Okay. And then lastly, on Huntsville, just to stick with that topic, I guess if Golden Dome was a person, it might be Donald Trump.

Richard Anderson: Okay. Lastly, on Huntsville, just to stick with that topic, I guess if Golden Dome was a person, it might be Donald Trump. I wonder, when you think about the growth of that campus, specifically as it relates to Golden Dome, I think that the land is subject to a ground lease with the government that may be able to release more land to you as the growth profile continues in that area. Is there some hesitation to sort of overplay that and wait for the next president? I think you're right about defense spending as a bipartisan situation. Is Golden Dome specifically an anybody president initiative?

Speaker #7: And I wonder, when you think about the growth of that campus, specifically as it relates to Golden Dome, I think the land is subject to a ground lease with the government. That may be able to release more land to you, too, as the growth profile continues in that area.

Speaker #7: But is there some hesitation to sort of overplay that and wait for the next president? I think you're right about defense spending as a bipartisan situation.

Speaker #7: Is Golden Dome specifically an Anybody President initiative?

Speaker #4: Well, that's the way I view it. This is opinion, right? I don't have a report to read to you, but the activities in Israel and Gaza, Ukraine, and now Iran and the Gulf States have really elevated the need for a robust, affordable anti-missile defense shield.

Stephen E. Budorick: Well, that's the way I view it. This is opinion, right? I don't have a report to read to you. The activities in Israel and Gaza, Ukraine, and now Iran and the Gulf States have really elevated the need for a robust, affordable anti-missile defense shield. We don't have that in the United States of America, per se. That's really what Golden Dome is. It's a long-term commitment to investing in things in space, capabilities from space, and broadening of that capability to bring that protection to the homeland. I don't care who's the president, you have to recognize, just look at Ukraine and look at the asymmetric impact that a small country like Ukraine is rendering on Russia right now. It's profound, and our decision-makers and our leaders will see that and continue to support the program.

Steve Budorick: Well, that's the way I view it. This is opinion, right? I don't have a report to read to you. The activities in Israel and Gaza, Ukraine, and now Iran and the Gulf States have really elevated the need for a robust, affordable anti-missile defense shield. We don't have that in the United States of America, per se. That's really what Golden Dome is. It's a long-term commitment to investing in things in space, capabilities from space, and broadening of that capability to bring that protection to the homeland. I don't care who's the president, you have to recognize, just look at Ukraine and look at the asymmetric impact that a small country like Ukraine is rendering on Russia right now. It's profound, and our decision-makers and our leaders will see that and continue to support the program.

Speaker #4: And we don't have that in the United States of America, per se. And that's really what Golden Dome is. So it's a long-term commitment to investing in things in space, capabilities from space, and broadening that capability to bring that protection to the homeland.

Speaker #4: And I don't care who's the president. You have to recognize—just look at Ukraine and look at the asymmetric impact that a small country like Ukraine is having on Russia right now.

Speaker #4: It's profound. And our decision makers and our leaders will see that and continue to support the program.

Speaker #7: Okay. Am I right in saying that you're paying a ground lease for virtually everything you have at Redstone Gateway?

Richard Anderson: Okay. Am I right in saying that you're paying a ground lease for virtually everything you have in Redstone Gateway?

Speaker #4: Yeah. Go ahead.

Stephen E. Budorick: Yeah. Go ahead, Britt.

Steve Budorick: Yeah. Go ahead, Britt.

Anthony Mifsud: Okay.

Anthony Mifsud: We are paying ground rent on the operating assets, and we only start to pay ground rent when cash rent commences on each of the development projects. There is an ongoing discussion with the Army about the potential to expand that in the future, but that is not something that we need right now because we have over 3 million square feet of land that we control, or that we can build 3 million square feet on the land we control already.

Speaker #7: We're paying ground rent on the operating assets, and we only start to pay ground rent when cash rent commences on each of the development projects.

Speaker #7: So there is an ongoing discussion with the Army about the potential to expand that in the future, but that's not something that we need. We have feet of land that we control, that we can build 3 million square feet on the land we control already.

Speaker #7: And how—Anthony, how big is that? I know it's not a discussion now, but could it be 2x the 5.5 million square feet or more?

Richard Anderson: Anthony, how big is that? I know it is not a discussion now, but could it be 2x the 5.5 million square feet, more?

Anthony Mifsud: Yeah.

Richard Anderson: Like 10 years from now?

Speaker #7: 10 years from now?

Stephen E. Budorick: That's hard to answer.

Steve Budorick: That's hard to answer.

Speaker #4: That's hard to answer. But Redstone are so is one, big, chunk of land. It's just an enormous military installation. I'm confident to say that land will never be scarcity of land will never be what holds the Redstone missions back.

Richard Anderson: Yeah. Okay.

Stephen E. Budorick: Redstone Arsenal is one big chunk of land. It's just an enormous military installation. I'm confident to say that scarcity of land will never be what holds the Redstone missions back.

Steve Budorick: Redstone Arsenal is one big chunk of land. It's just an enormous military installation. I'm confident to say that scarcity of land will never be what holds the Redstone missions back.

Speaker #7: Okay, fair enough. Thanks very much.

Richard Anderson: Okay. Fair enough. Thanks very much.

Speaker #2: Thank you. My next question comes from the line of Tom Catherwood at BTIG. Please go ahead, Tom.

Operator: Thank you. Our next question comes from the line of Thomas Catherwood of BTIG. Please go ahead, Tom.

Speaker #5: Thanks. I'm going to have to—and everybody. Britt, you may have partially answered this with your comments on planning ahead for future Redstone developments, but the completion timelines for RG6300 and RG2200 suggest something like 15 to 18 months of construction.

Thomas Catherwood: Thanks. Good afternoon, everybody. Britt, you may have partially answered this with your comments on planning ahead for future Redstone developments, the completion timelines for RG-6300 and RG-2200 suggest like 15 to 18 months of construction. Is that correct? Do you think you can achieve similar timelines on future projects there?

Tom Catherwood: Thanks. Good afternoon, everybody. Britt, you may have partially answered this with your comments on planning ahead for future Redstone developments, the completion timelines for RG-6300 and RG-2200 suggest like 15 to 18 months of construction. Is that correct? Do you think you can achieve similar timelines on future projects there?

Speaker #5: Is that correct? And do you think you can achieve similar timelines on future projects there?

Speaker #6: Yeah, I mean, I think, well, the RG2200 timeline is really kind of October of '27, and then 6300 would be kind of closer to March of '28.

Anthony Mifsud: Yeah. Well, the RG-2200 timeline is really kind of October 2027, 6300 would be kind of closer to March 2028. Those are the timelines for those buildings, which we think are very achievable, we actually think that provides some nice staggered delivery timing, call it five months, between those two. Timing wise, for duration of the projects, absolutely.

Speaker #6: So I mean, you actually I mean, those are the timelines for those buildings, which we think are very achievable. And we actually think that provides some nice staggered delivery timing call it five months.

Speaker #6: Between those two. But timing-wise, for duration of the projects, absolutely.

Speaker #4: But Britt made a comment about advancing our planning on the next sequence of buildings, which we are doing, with the intent of keeping those delivery times just as short as we can possibly do it.

Stephen E. Budorick: Britt made a comment about advancing our planning on the next sequence of buildings, which we are doing with the intent of keeping those delivery times just as short as we can possibly do it.

Steve Budorick: Britt made a comment about advancing our planning on the next sequence of buildings, which we are doing with the intent of keeping those delivery times just as short as we can possibly do it.

Speaker #5: Got it. I appreciate that, guys. And then the last one for me—and I know this is a small one—but you sold land in Aberdeen in Q2, and you moved some land in Hanover into the held-for-sale bucket.

Thomas Catherwood: Got it. Appreciate that, guys. The last one for me. I know this is a small one, you sold land in Aberdeen in Q2, you moved some land in Hanover into the held for sale bucket. Can you provide some more kind of color on those moves, is there some portion of the land in your portfolio right now that you might consider non-core or look to monetize in the near term?

Tom Catherwood: Got it. Appreciate that, guys. The last one for me. I know this is a small one, you sold land in Aberdeen in Q2, you moved some land in Hanover into the held for sale bucket. Can you provide some more kind of color on those moves, is there some portion of the land in your portfolio right now that you might consider non-core or look to monetize in the near term?

Speaker #5: Can you provide some more color on those moves? Also, is there any portion of the land in your portfolio right now that you might consider non-core or look to monetize in the near term?

Speaker #4: Both of those are probably the extent of it. You may recall that the company started development in Aberdeen in about 2010, and it never really materialized as expected.

Stephen E. Budorick: Both of those are probably the extent of it. You may recall that the company started development in Aberdeen in about 2010, it never really materialized as expected. We've had that surplus land we have no intention of investing. We saw a nice opportunity to transfer that land to the county that the development sits in. In Hanover, that's Orlando Preserve. That's a particular parcel because of the topography. It's better suited for residential than office, it made sense for us to monetize that chunk of land because we could not really envision a positive economic outcome developing on that topography. Beyond that, we have land we want to hold.

Steve Budorick: Both of those are probably the extent of it. You may recall that the company started development in Aberdeen in about 2010, it never really materialized as expected. We've had that surplus land we have no intention of investing. We saw a nice opportunity to transfer that land to the county that the development sits in. In Hanover, that's Orlando Preserve. That's a particular parcel because of the topography. It's better suited for residential than office, it made sense for us to monetize that chunk of land because we could not really envision a positive economic outcome developing on that topography. Beyond that, we have land we want to hold.

Speaker #4: So, we've had that surplus land. We have no intention of investing; we saw a nice opportunity to transfer that land to the county that the development sits in.

Speaker #4: And then in Hanover, that's a rental preserve. That's a particular parcel that, because of the topography, is better suited for residential than office. It made sense for us to monetize that chunk of land because we could not really envision a positive economic outcome developing on that topography.

Speaker #4: Beyond that, we have the land we want to hold.

Speaker #5: That's great. Thanks for the answers.

Thomas Catherwood: That's great. Thanks for the answers.

Tom Catherwood: That's great. Thanks for the answers.

Speaker #2: Thank you. As a reminder, to ask a question, please press star one-one on your telephone. Our next question comes from the line of Dylan Brzezinski of Green Street.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from the line of Dylan Burzinski of Green Street. Please go ahead, Dylan.

Speaker #2: Please go ahead, Dylan.

Speaker #3: Hi guys, thanks for taking the question. Just a quick one from me—you guys raised your capital committed to new investments guidance this quarter.

Dylan Burzinski: Hi, guys. Thanks for taking the question. Just a quick one from me. You guys raised your capital committed to new investments guidance this quarter. I guess, how should we be thinking about that on an ongoing basis in 2027 and beyond? Is the low to mid $300 million range a fair estimate as we look out to the future? Do you expect it to be in the $200 million range? Just any sort of insight you can provide there would be helpful. Thanks.

Speaker #3: I guess, how should we sort of be thinking about that on an ongoing basis in 27 and beyond? Is sort of the low to mid 300 million dollar range a fair estimate as we look out to the future?

Speaker #3: Do you expect it to sort of be in the 200 million dollar range? Just any sort of insight you can provide there would be helpful.

Speaker #3: Thanks.

Speaker #4: Well, it feels like guidance to me, Dylan.

Stephen E. Budorick: Well, that feels like guidance to me, Dylan.

Steve Budorick: Well, that feels like guidance to me, Dylan.

Stephen E. Budorick: The answer is yes.

Anthony Mifsud: The answer is yes.

Speaker #7: Answer is yes.

Speaker #4: We've been saying $250 to $300 million, and I think we'll just stick with that, with some ebb and flow. If our outlook is supportable to increase in the future, we gladly will.

Stephen E. Budorick: We've been saying $250 to 300 million, and I think we'll just stick with that. With some ebb and flow. If our outlook is supportable to increase in the future, we gladly will, but we're not going to do that now.

Steve Budorick: We've been saying $250 to 300 million, and I think we'll just stick with that. With some ebb and flow. If our outlook is supportable to increase in the future, we gladly will, but we're not going to do that now.

Speaker #4: But we're not going to do that now.

Speaker #3: Okay. Thanks, guys.

Dylan Burzinski: Okay. Thanks, guys.

Speaker #7: Thanks.

Stephen E. Budorick: Thanks.

Steve Budorick: Thanks.

Speaker #2: Thank you. I would now like to turn the call back to Mr. Budorick for closing remarks. Sir?

Operator: Thank you. I would now like to turn the call back to Mr. Budorick for closing remarks. Sir?

Speaker #4: So, thank you all for joining our call today. We are in our offices, so please coordinate through Venkat if you'd like a follow-up call. Thank you again.

Stephen E. Budorick: Thank you all for joining our call today. We are in our offices, so please coordinate through Venkat if you would like a follow-up call. Thank you again.

Steve Budorick: Thank you all for joining our call today. We are in our offices, so please coordinate through Venkat if you would like a follow-up call. Thank you again.

Speaker #2: Thank you for your participation today in the COPT Defense Properties second quarter 2026 results conference call. This concludes the presentation. You may now disconnect.

Operator: Thank you for your participation today in the COPT Defense Properties Q2 2026 Results Conference Call. This concludes the presentation. You may now disconnect. Good day.

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