COPT Defense Properties

Welcome to the COP Defense Properties Second 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 Komanini, COP Defense's Vice President of Investor Relations. Mr. Komanini, please go ahead.

Thank you, Lisa. Good afternoon, and welcome to COP Defense's Conference Call to discuss second quarter results. With me today are Steve Bedorek, President and CEO Britt Snyder, Executive Vice President and COO, and Anthony Misud, 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 files. Actual events and results can differ materially from these forward-looking statements and the company does not undertake a duty to update them. Steve?

Hello, and thank you for joining us. The company delivered another strong performance in the second quarter, continuing our 30-quarter streak of achieving our outperforming our FFO per share guidance and allowing us to increase our outlook on several performance metrics. Moreover, the recent defense budget appropriations sets forth a record increase in fence spending, which provides a strong backdrop for future strength in our business. Turning to results for the quarter, FFO per share suggested for comparability was 68 cents, two cents above the midpoint of guidance, and a 6.3% increase year over year. Same property, cash NOI for the quarter increased 2.2% year over year, and 4.6% during the first half of the year. We've generated excellent results on the leasing front. We signed 353,000 square feet of vacancy leasing during the first half of the year, which is 88% of our initial four-year target, and represents 30% of the unleased space we had at the beginning of the year. Tenant retention was incredibly strong. 90% during the quarter and 82% year-to-date. The key metric that illustrates the strength of our strategy and performance is that our total portfolio is 95.6% lease, which is the highest level in nearly 20 years. Turning to guidance. Based on our strong performance during the first half of the year, we increased the midpoint of FFO per share by one cent. We increased the midpoint of same property cash NOI growth by 50 basis points. We increased the midpoint for tenant retention to 82.5%, and we increased the full year target for vacancy leasing by 50,000 square feet. Britt and Anthony will provide more details on these increases. Now I'd like to discuss the defense budget outlook. The One Big Beautiful Bill Act, which was signed into law on July 4th, appropriates an additional $150 billion to defense spending over four years, the majority of which, or $113 billion, is allocated to 2026. The President's 2026 budget request, plus the appropriated funding in the Big Beautiful Bill, amounts to a defense budget of nearly $950 billion, or a 13% year-over-year increase. This is equivalent on a percentage basis to the restorative increase we experienced in 2018, and it's the largest nominal increase in at least 25 years. The 2026 budget request allocates $116 billion to intelligence, That's a $14 billion or 14% increase year over year. As a reminder, intelligence, surveillance, and reconnaissance are key demand drivers for our Northern Virginia, Fort Meade, and BWI portfolios. The request also includes over $16 billion for cybersecurity. That's a $2 billion increase or 14%. And recall, Cybersecurity is a key demand driver for our Fort Meade BWI sub-segment. A new priority for the Trump administration is the development of Golden Dome, a next-generation missile defense shield for the United States. The total projected cost is $175 billion, with a $25 billion down payment appropriated for 2026 in the big, beautiful bill. and the system is expected to be operational by 2029. The $150 billion of remaining costs to complete the project implies a significant ramp up in funding over the next three years. Redstone Arsenal in Huntsville is the center of excellence of our country's missile and defense technology development, and we expect a significant increase in activity at the Arsenal to develop and deploy Golden Dome. Recall that Red Sun Arsenal has a 75-year history of rocket and missile research, development, testing, and evaluation, and is supported by a well-established defense contractor ecosystem. And the Arsenal is home to the Missile Defense Agency, the Missile and Space Intelligence Center, Army Aviation and Missile Command, and the NASA Marshall Space Flight Center. These missions, among others, serve as the demand drivers for our Redstone Gateway portfolio, and the expected activity to create Golden Dome should present strong incremental opportunities. During the prior administration, our portfolio performed well, given bipartisan support for defense spending as we produced FFO per share growth of 21% between 2020 and 2024. Looking forward, the current administration is significantly increasing defense investment to strengthen capability, capacity, and lethality to realize its foreign policy objective of peace through strength. We view this as an inflection point for defense spending overall, but more importantly for the priority missions we support, which include intelligence surveillance and reconnaissance, cybersecurity, missile defense, naval fleet and aviation activity, and unmanned autonomous vehicles, among others. The administration's massive recommitment to defense investment should provide opportunities for us to create facility solutions for new and expanded missions in the near to medium term, following appropriations and contract awards, providing a runway to continue our highly successful record of creating shareholder value. And with that, I'll turn the call over to Brett.