COPT Defense Properties

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

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

Good afternoon, and thank you for joining us. The company's strong performance during the first half of the year continued throughout the third quarter and has resulted in an increase to our guidance for the year across several financial and operating metrics. We've extended our streak of achieving our outperforming our FFO per share guidance to 31 consecutive quarters. And in October, we successfully closed on three important financings, which pre-fund our 2026 bond maturity and provide additional liquidity to fund our external growth. Turning to results. FFO per share, as adjusted for comparability, was 69 cents in the quarter, two cents above the midpoint of guidance, and $2.02 for the first nine months. This is a 6.2% year-over-year increase for the quarter and a 5.2% increase for the first nine months. Same property cash NOI increased 4.6% year-over-year for both the quarter and the first nine months. We continue to outperform on the leasing front. The portfolio ended the quarter at 95.7% lease. That's our highest level in 20 years. We signed 78,000 square feet of vacancy leasing in the quarter and 432,000 square feet during the first nine months. This volume represents 36% of the unleased space we had at the beginning of the year. Recall, our initial vacancy leasing target of 400,000 square feet was increased to 450,000 square feet at the end of the second quarter, so our achievement year to date already represents 96% of that elevated target. Tenant retention remained strong at 82%, both during the quarter and the first nine months. We reduced our lease expiration exposure through year-end 2026 by 25%, or a million square feet since last quarter, and we expect significant progress in the fourth quarter. In recent weeks, we committed $72 million of capital to two external growth investments, both of which enhance our relationships with existing Defense IT tenants. First, we commenced construction of 7,700 Advanced Gateway, and our Redstone Gateway Campus. 100% pre-leased, $27 million development, which is our fourth Build the Sioux project with this tenant at that location. Second, we acquired Stone Gate One in Chantilly, Virginia. A $40 million purchase of a strategic property, fully leased to a top 20 US defense contractor, which represents this tenant's ninth location in our portfolio. Year-to-date, we have committed roughly $125 million of capital to three new investments against our original target of $225 million. We are in the advanced stages of negotiations. Our month will build to suit opportunities, and we expect to exceed our original capital commitment target. Turning to guidance, based on our strong performance year-to-date, we are increasing the midpoint of 2025 guidance for the following six metrics. FFO per share increases by 3 cents to $2.70 a share, which equates to 5.1% growth over 2024's results and is 4 cents above our initial guidance. Same property cash NOI growth increased to 75 basis points to 4%, which is 125 basis points above initial guidance. Same property year-end occupancy increases by 20 basis points to 94.2%. Cash rent spreads on renewals increases by 200 basis points to 2%. Our vacancy leasing target increases by another 50,000 square feet to 500,000 square feet, which is 25% or 100,000 square feet above our initial target. And capital committed to new investments increases by $25 million to $250 million. Britt and Anthony will provide more details on these increases. On September 2nd, President Trump announced the relocation of Space Command's headquarters from Peterson Space Force Base in Colorado Springs to Redstone Arsenal in Huntsville. The command is expected to relocate to our Redstone Gateway secured parcel. Since the announcement, we've been active dialogue with the leadership at both Space Command and Redstone Arsenal headquarters. to optimize their programming and sequencing activities for their new facilities. We expect the command to lease roughly 450,000 square feet in total, most likely in increments over time. Beyond the direct development opportunity with Space Command, we also expect defense contractor growth that supports the command will emerge in the Huntsville market. The government estimates this could eventually drive a two-to-one contractor tail over time, but this won't start to significantly materialize until Space Command has completed its relocation, expected in 2027. Of similar importance, the missions at Redstone Arsenal will play a key role in building the planned Golden Dome Missile Defense Shield and is driving contractor opportunities more quickly than the Space Command relocation. In addition to the mission work our tenants already conduct to support missile defense in the park, we are in discussions with defense contractors seeking space to compete for the incremental opportunities arising from Golden Dome, and one new lease has already been signed since the July funding, and additional contract awards are expected as soon as year end. Turning to the government shutdown, since the end of September, the Senate has failed to pass a continuing resolution putting the government into shutdown, which continues today. As a reminder, one, the government shutdowns do not materially impact our business as we still collect rent, and two, our buildings are well-occupied because they are leased to essential emissions. However, the shutdown does create some uncertainty around the timing of lease activities. Given the significant volume of government lease renewals contemplated in the fourth quarter, an extended shutdown could modestly impact our full year guidance for tenant retention and cash rent spreads due to timing delays. To be clear, any delay as a result of the shutdown only impacts the when for these renewals, not the if. Looking forward, we expect that when the FY2026 defense appropriation is approved, it will support additional demand for our portfolio as the priority missions our tenants support are expected to see increased funding to counter an increasingly complex national security environment. These missions include intelligence, surveillance, and reconnaissance, cybersecurity and network activities, naval sea and air technology development, unmanned aerial vehicles, and missile defense and space activities. So with that, I'll turn the call over to Brett.