COPT Defense Properties

Good day, ladies and gentlemen. Welcome to the COP Defense Properties First Quarter 2025 Results Conference Call. As a reminder, today's call is being recorded. At this time, I will turn the call over to Venkat Komaneni, COP Defense's Vice President of Investor Relations. Mr. Komaneni, please go ahead.

Thank you, Howard. Good afternoon, and welcome to COP Defense's conference call to discuss first quarter results. With me today are Steve Bedorek, President and CEO, Britt Snyder, Executive Vice President and COO, and Anthony Mistsud, 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?

Good afternoon, and thank you for joining us. We're off to a strong start in 2025, and our meeting are in some cases on track to exceed all of our 2025 targets. Given our strong results in 2024 and our outlook for 2025, We increased our annual dividend by 4 cents, which marks our third consecutive year of dividend increases, while continuing to maintain a very healthy AFFO payout ratio of 65%. FFO per share, as adjusted for comparability, was 65 cents, right on the midpoint of guidance, a 4.8% year-over-year increase. Same property cash NOI increased 7.1%, year over year. Anthony will provide some context, but we reiterate our full year guidance of 2.7% at the midpoint as we recognize some expected one-time items in the first quarter. We're off to an excellent start on the leasing front. We've signed 179,000 square feet of vacancy leasing year to date, which is 45% of our full year target. The 23 deals were distributed across each of our markets, and nearly three-quarters of the activity was at Defense IT locations. These executions amount to 15% of the space we had vacant at the beginning of the year. We also executed 100,000 square feet of investment leasing year-to-date across three properties, including a 48,000 square foot lease at Franklin Center and Columbia Gateway, a 41,000 square foot lease at 8100 Red Out Road in Huntsville, and a 14,000 square foot lease at 9700 Advanced Gateway, also in Huntsville, bringing that development to 100% lease. Tenant retention was a very healthy 75% during the quarter, even as we absorbed a few contractions and non-renewals. We committed over $50 million of capital to a new investment at Redstone Gateway. In Huntsville, we only have two suites totaling 37,000 square feet available across our entire 2.5 million square foot portfolio. Our 25 operating properties are 98.5% leased today, with 23 of those buildings 100% leased. Accordingly, We commenced development of our next inventory building, 8500 Advanced Gateway. This is 150,000 square foot building, and we already have 90,000 square feet of prospects on this space from three large defense contractors. This new development continues our successful strategy of developing into visible demand. One statistic, which illustrates the strength of our strategy and performance, is that our defense IT portfolio occupancy rate has exceeded 94% for nine consecutive quarters. Turning to guidance, we are maintaining 2025 FFO per share guidance of $2.66 at the midpoint and narrowing the range as our year-to-date performance is tracking according to plans. This guidance implies 9 cents or 3.5% growth over 2024's exceptional results. Now I want to make a few brief comments on the recent headlines. The primary questions we've received from investors and analysts over the past two months have centered on DOGE and defense spending. We have not seen, and we do not expect to see, and impact from DOGE on the priority missions we support. This statement is reinforced by our conversations with our government and contractor tenants and further evidence by our strong leasing activity and pipeline. We believe priority missions will not be impacted by DOGE and in fact, the 41,000 square foot investment lease we executed in Huntsville was with the Department of Defense and is an expansion of a priority program supporting missile defense. With respect to defense spending, in March, headlines emerged about an 8% cut. In actuality, the Secretary of Defense was referring to reallocating, not cutting, 8% of the defense budget from overhead to mission. The Secretary stated, and I quote, with DOGE, we are focusing as much as we can and headquarters and fat and top line stuff that allows us to reinvest elsewhere, end quote. In addition, the DOD outlined 17 areas that would be exempt from DOGE cuts and possibly be a beneficiary of reallocation, including cybersecurity and funding for cyber command, missile defense and funding for space command, surface ships and nuclear submarines and autonomous and unmanned aerial systems. These are all missions that our portfolio supports in our Fort Meade BW corridor, Redstone Gateway, and Navy support locations. Although the details of the fiscal year 2025 and expected fiscal year 2026 defense budgets have not been released, the recent commentary suggests there will be increases in defense spending. In our view, The goal of the administration is to extract from defense spending more mission output for every dollar of input while continuing to increase investment in defense to achieve their ultimate goal of peace through strength. We believe the missions we serve could be beneficiaries of these policies and investments over time as they align with the administration's priorities for national defense. And with that, I'll turn the call over to Brett.