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DATE

Tuesday, April 28, 2026 at 12 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Stephen E. Budorick
  • President — Britt Snider
  • Executive Vice President & Chief Financial Officer — Anthony Mifsud
  • Operator

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TAKEAWAYS

  • Dividend -- Increased by $0.06 per share, or 4.9%, marking a fourth consecutive year of dividend growth, with a cumulative 16.4% rise since 2022 and continued AFFO payout ratio below 65%.
  • Funds From Operations (FFO) Per Share -- $0.69, up 6.2% year over year and $0.01 above midpoint of guidance.
  • Same-Property Cash NOI -- Rose 5.4% year over year, partially driven by a 70-basis-point boost in average occupancy and burn-off of free rent.
  • Average Portfolio Occupancy -- 94.4% overall and 95.6% in the defense IT segment, representing increases of 80 and 30 basis points year over year, respectively.
  • Renewal Leasing Activity -- 1.2 million square feet with a 91% tenant retention rate, including the full renewal of a U.S. government campus totaling 953 thousand square feet and reducing 2026 expiring annualized rental revenue from 21% to 11%.
  • Vacancy Leasing -- 92 thousand square feet executed in the quarter; year to date, 152 thousand square feet, or 38% of the 2026 target; 115 thousand square feet in advanced negotiations.
  • Investment Leasing -- 384 thousand square feet executed, including two full-building leases at National Business Park.
  • Cash Rent Spreads -- Overall cash rent spreads on renewals increased 3.8%; San Antonio renewals specifically rose 4.2% with annual rent escalations of 3%.
  • Development Pipeline -- Over 1 million square feet active, 73% pre-leased, more than $500 million in capital commitments, with five of seven projects 100% pre-leased.
  • New Capital Commitments -- Nearly $250 million year to date, including a $55 million Redstone Gateway build-to-suit project (ATFP-compliant) and a $43 million ground lease acquisition in Westfields, with the Westfields office buildings fully leased to defense and government tenants.
  • Credit Rating -- Moody’s upgraded the investment grade rating to Baa2 with stable outlook, making the company one of three office REITs at that level.
  • Debt Refinancing -- $400 million bond repaid; new $400 million five-year unsecured notes issued at 4.5% yield and sector-leading 95-basis-point spread, resulting in $0.09 higher annual financing costs but with the next maturity not until 2028.
  • 2026 Guidance Midpoints Increased -- FFO per share by $0.01 to $2.76, same-property cash NOI growth by 50 basis points to 3%, tenant retention by 250 basis points to 82.5%, and new investment capital commitments by $40 million to $290 million.
  • Second Quarter FFO Per Share Guidance -- Initiated at $0.68 to $0.70 per share.
  • Defense Budget Tailwind -- The proposed U.S. defense budget for fiscal 2027 (ending Dec. 31, 2027) is $1.5 trillion, a roughly 45% increase year over year; the base budget of $1.1 trillion is nearly 30% higher and supports key portfolio tenant missions including intelligence, cyber, and "Golden Dome."

SUMMARY

Management articulated measurable progress in both leasing activity and capital deployment, notably mitigating 2026 lease expiration risk and expanding development exposure in high-priority submarkets aligned with rising U.S. defense spending. Fixed income investors’ recognition came via Moody’s investment grade upgrade to Baa2, highlighting portfolio strength and capital structure stability. Increased full-year guidance on key financial and operating metrics directly reflected both internal performance outperformance and accretive new investments, while debt maturity extension and proactive capital management reduced near-term refinancing risk.

  • Britt Snider noted over two-thirds of the full-year vacancy leasing target was either completed or in advanced negotiations as of April, with cyber-related demand prominent in the leasing mix.
  • Stephen E. Budorick stated, "Eighty percent of the dollar value is for 100% pre-leased projects, and 20% of the dollar value is creating much-needed inventory," underscoring a weighted focus on delivering contracted growth via pre-leased capital allocation.
  • Lease retention rates for large government leases (over 50 thousand square feet) achieved 97% since the company began tracking, with full 100% retention expected for remaining government-related expirations through 2027.
  • Active development was concentrated in Huntsville and Northern Virginia, where demand was linked to significant increases in federal cyber, intelligence, and defense budgets, though management explained new speculative inventory will only proceed as confirmed demand materializes.
  • The company signaled further portfolio consolidation and disposal of non-core assets could become viable as market cash flows recover, particularly in Washington, D.C, but did not indicate imminent dispositions due to current investment cash flows.

INDUSTRY GLOSSARY

  • ATFP (Anti-Terrorism/Force Protection): Facility design standards mandated by the U.S. Department of Defense to ensure building security against terrorist threats.
  • GAAP Rent Spread: The difference between the rental rate of expiring and renewal leases measured on a straight-line GAAP basis, not a cash basis.
  • Golden Dome: Multi-year U.S. government initiative, referenced in the defense budget, targeting enhanced missile defense infrastructure and programs.
  • SCIF (Sensitive Compartmented Information Facility): A secure area within a building used for sensitive U.S. government and defense contractor work, often supporting intelligence missions.

Full Conference Call Transcript

Stephen E. Budorick: Good afternoon, and thank you for joining us. We are off to a solid start in 2026, and all aspects of the business are on track to achieve our objectives for the year. Based on our strong results in 2025 and our outlook for 2026, in February we recommended, and our Board approved, an increase in our annual dividend of $0.06 per share, or 4.9%, marking our fourth consecutive year of dividend increases. Since 2022, our dividend has increased 16.4% and our FFO per share has increased 15.3%, demonstrating our attractive total return investment profile, all while maintaining a conservative AFFO payout ratio below 65% and continuing to have the capacity to self-fund the equity required for external investments.

For the first quarter, FFO per share was $0.69, which is $0.01 above the midpoint of guidance and represents a 6.2% year-over-year increase. Same-property cash NOI increased 5.4% year-over-year, driven in part by a 70-basis-point increase in our average occupancy. We executed 1.2 million square feet of renewal leasing and achieved a 91% retention rate. This included the full renewal of our nearly 1 million square foot campus leased to the U.S. government near Lackland Air Force Base in San Antonio. These renewals address a significant portion of our 2026 maturity risk, reducing our expiring annualized rental revenue from 21% at the beginning of the year to 11%.

We executed 92 thousand square feet of vacancy leasing; we are right on track to meet our full-year target of 400 thousand square feet. We executed 384 thousand square feet of investment leasing, which consists of two previously announced full-building leases at National Business Park. Year to date, we have committed nearly $250 million of capital to new investments consisting of 620 Guardian Way, which is a fully leased build-to-suit project at National Business Park, and two new investments totaling nearly $100 million. Based on these strong results, we are elevating forward guidance metrics, and Anthony will provide additional details in his section.

Regarding these two new investments: first, we committed $55 million to a 150 thousand square foot development project at Redstone Gateway, which sits inside the fence within our secure parcel on Redstone Arsenal. This investment creates Anti-Terrorism/Force Protection (ATFP)-compliant inventory for the United States government in advance of expected requirements. We are currently seeing demand for multiple government missions experiencing growth related to missile defense and space activities, which in aggregate exceeds the capacity of the building. Second, we committed roughly $43 million to the acquisition of 17 acres of land in a ground lease in the Westfields submarket in Chantilly, Virginia.

The ground lease has very attractive long-term economics and is supported by two highly strategic, 100% leased office buildings known as Mission Ridge. These buildings are occupied by the FBI's technology division, including their cyber group, and two leading defense contractors who are among our top 20 defense IT tenants. This transaction provides us with essentially perpetual control of a strategic land parcel in one of our priority submarkets in which we currently have a dominant market share, and importantly, a senior position in the capital structure, which should lead to an opportunity to acquire the leasehold interest at attractive terms sometime in the future.

Recall, last quarter we acquired Stonegate One in this same Westfields submarket, which was a $40 million purchase of a 140 thousand square foot building that is fully leased to a top 20 U.S. defense contractor. As shown on Slide 15 of our flipbook, Stonegate and Mission Ridge are located within a half mile of each other in the same rich ecosystem of defense contractors supporting the adjacent U.S. government demand drivers. In March, we were very pleased to receive the news that Moody's upgraded our investment grade rating by one level to Baa2 with a stable outlook. Over the past five years, we have issued $1.8 billion of unsecured debt in four separate offerings.

We achieved strong pricing in each of those transactions with a weighted average credit spread of 120 basis points and a maturity of nearly nine years. Clearly, our fixed income investors recognize the inherent strength of our strategy and our portfolio, and we are pleased to receive that recognition from Moody's as well. We are one of only three office REITs with a Baa2 rating, which we believe acknowledges our proven performance over the last six years, which encompassed the global COVID pandemic, a significant increase in both inflation and interest rates, along with factors that led to the highest U.S. office national vacancy rate in over 40 years.

Turning to the defense budget, earlier this month, President Trump submitted the FY 2027 budget, which the administration describes as a historic paradigm shift for investment in our national security infrastructure. The top-line figure for the defense budget request is a record $1.5 trillion, which is nearly a 45% increase year over year, and it is comprised of a base budget of $1.1 trillion and anticipated reconciliation funding of $350 billion. Our business is really driven off the proposed base budget of $1.1 trillion, which has been described by House Armed Services Committee Chairman Mike Rogers as the new baseline.

The FY 2027 proposed budget represents nearly a 30% increase over last year and nearly a 50% increase over the last five years. The defense base budget request includes a $16 billion increase for intelligence, or 14%, which is the largest year-over-year increase in over 20 years; a $4 billion increase for DoD cyber funding, or 25%, which is the largest increase in the history of DoD cyber funding; and an additional $18 billion for Golden Dome, which brings appropriations and requests to date for this program to roughly $40 billion of the $185 billion total. $21 billion was appropriated for Golden Dome in FY 2026.

Only a small portion of this amount has actually been awarded to date, which bodes well for emerging demand through the end of the year, and there is still more than $160 billion yet to be appropriated. This current and anticipated funding should provide a long runway of tenant demand that will develop and support the Golden Dome initiative in the coming years, as there is typically a 12 to 18 month lag time between appropriations and lease executions. The FY 2027 defense budget is a continuation of a 12-year trend of growth in defense spending and represents one of the few areas of public policy that garners strong bipartisan support.

The country's significant investment in the priority missions which our locations support should result in a favorable demand backdrop for our portfolio over the near and medium term and provide additional opportunities for external growth. With that, I will turn the call over to Britt.

Britt Snider: Thank you, Stephen. We finished the quarter with strong occupancy at 94.4% in the total portfolio and 95.6% in the defense IT portfolio. Year over year, occupancy increased in both portfolios by 80 basis points and 30 basis points, respectively. During the first quarter, we executed 92 thousand square feet of vacancy leasing, nearly 70% of which is tied to cyber activity. Year to date, we have signed 152 thousand square feet of vacancy leasing, which equates to 38% of our full-year target of 400 thousand square feet. We have approximately 115 thousand square feet of prospects in advanced negotiations, which we define as over 90% likely to execute.

Taken together, we have over 265 thousand square feet of leases either executed or in advanced negotiations, which amounts to two-thirds of our full-year target. In April, we leased the remaining floor at 8100 Rideout Road in Huntsville to a top 20 U.S. defense contractor. This lease doubles the tenant's footprint in the building to over 50 thousand square feet and brings the property to 100% leased. Twenty-three of the 24 operating buildings in our Redstone Gateway park are now 100% leased, bringing this nearly 2.5 million square foot campus to 99.6% leased, with only one 10 thousand square foot suite of availability.

Also in April, we signed a 12 thousand square foot expansion lease at Franklin Center in Columbia Gateway with a top 10 U.S. defense contractor. This lease increases the tenant's footprint in the building to 60 thousand square feet, and we are tracking 155 thousand square feet of prospects on the remaining 55 thousand square feet of availability. Turning to renewal leasing, we executed 1.2 million square feet in the quarter, with tenant retention of 91%, cash rent spreads up 3.8%, and GAAP rent spreads up 12%.

Our quarterly volume was driven by the full renewal of our U.S. government campus near Lackland Air Force Base in San Antonio, which totaled 953 thousand square feet and accounted for over 40% of our annualized rental revenue expiring in 2026 at the beginning of the year. Cash rent spreads on the San Antonio renewals increased 4.2% with annual rent bumps of 3%. Once we include these four large lease renewals in San Antonio, our track record for retention on leases in excess of 50 thousand square feet becomes even more impressive. For large leases that expire between mid-2024 and year-end 2026, we have renewed nearly 3 million square feet with a retention rate of 97%.

We have eight leases remaining totaling 950 thousand square feet, all with the U.S. government. We expect 100% retention on these leases, with executions anticipated in 2027. Additionally, since we started providing this disclosure nearly four years ago, we have renewed over 5 million square feet of large leases, a retention rate of over 97%. Moving on to development, we commenced two projects in the first quarter and our active pipeline now totals over 1 million square feet at 73% pre-leased and amounts to over $500 million in capital commitments. Each of these seven projects is on schedule and on budget, and five of the seven are 100% pre-leased.

The two developments with available space are both inventory buildings in Huntsville: one inside the fence targeting government tenancy, and one outside the fence for defense contractors. We commenced construction of 410 Goss Road in the first quarter, which is designed for the government inside the fence, and we are tracking demand that exceeds the availability in the building from multiple missions, all of which require secure facilities that are ATFP compliant. We achieved substantial completion of 8500 Advanced Gateway earlier this month, which is outside the fence and is currently 20% leased to a defense contractor.

We are finalizing a lease for a full floor, which we expect to execute imminently that will increase the lease rate to 40%, and we are working on another deal for two full floors, which would increase the lease rate to over 80%. We have already planned the next inventory building, RG 6300, and expect to commence development once we approach that 80% threshold. 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 million square feet. Beyond that, we are tracking an additional 600 thousand square feet of potential development opportunities. With that, I will hand it over to Anthony.

Anthony Mifsud: Thank you, Britt. We reported first quarter FFO per share of $0.69, which was $0.01 above the midpoint of guidance and represents a 6.2% increase year over year. The quarter benefited from the earlier-than-budgeted commencement of several leases, strong renewal leasing, the timing of certain R&M projects, and unbudgeted real estate tax refunds from continued successful assessment appeals. These favorable items were partially offset by higher-than-forecasted net winter weather-related expenses. Same-property cash NOI increased 5.4% year over year, driven by the burn-off of free rent on development and acquisition leases commenced in prior years and a 70-basis-point increase in same-property average occupancy.

We received $2 million less of nonrecurring real estate tax refunds in 2026, which muted this quarter's strong growth by approximately 200 basis points. Same-property occupancy ended the quarter at 94.2%, which is a 60-basis-point increase over the year and was driven by a 500-basis-point increase in the Other segment. With respect to capital transactions, on March 16, we repaid our $400 million bond, which carried an interest rate of 2.25%. Recall that we prefunded the capital for this maturity roughly seven months ago, when we issued $400 million of five-year unsecured notes at 4.5% at a sector-leading credit spread of 95 basis points.

The increased interest on this $400 million of debt results in $0.09 of higher financing costs in 2026. We have no significant near-term refinancing risk, as our next bond maturity is not until 2028. As Stephen mentioned, Moody's upgraded our investment grade credit rating in March to Baa2. In its press release, Moody's highlighted the strong operating performance of our specialized office portfolio, our solid EBITDA-to-interest expense ratio, and income growth from assets under development. I would like to give special recognition to our team who worked diligently to achieve this important milestone, which represents the culmination of years of effort and outreach. We appreciate that Moody's recognizes the strength and specialized nature of our strategy, platform, portfolio, and tenants.

With respect to guidance, we increased the midpoint for several items. We increased the midpoint of FFO per share guidance by $0.01 to $2.76, which is driven by the contribution from both the outperformance during the quarter and the Mission Ridge land acquisition, partially offset by the accounting treatment for the dilution from our exchangeable notes. We increased the midpoint of same-property cash NOI growth by 50 basis points to 3% due to stronger renewal leasing and unanticipated real estate tax refunds. We increased the midpoint of tenant retention guidance by 250 basis points to 82.5%. We increased the midpoint of capital committed to new investment guidance by $40 million to $290 million due to the Mission Ridge land acquisition.

Finally, we are establishing second quarter guidance for FFO per share in a range of $0.68 to $0.70. With that, I will turn the call back to Stephen.

Stephen E. Budorick: In closing, we are off to a great start to the year, with leasing volume right on track with the full-year plan. We delivered FFO per share growth of 6.2% year over year, marking our 23rd consecutive quarter of year-over-year growth. We increased the midpoint of 2026 guidance for four key metrics. We increased the dividend again in the first quarter by 4.9% and have increased it over 16% over the last four years. We committed nearly $250 million of capital to three new investments year to date, and since the beginning of 2025, the strength of our strategy has resulted in over $500 million of capital commitments to new investments consisting of eight projects in five different markets.

Eighty percent of the dollar value is for 100% pre-leased projects, and 20% of the dollar value is creating much-needed inventory to meet the demand we are seeing from both the U.S. government and defense contractors in parks where we have little to no availability. These investments, combined with the expected additional opportunities from the substantial increase in the proposed defense budget, will support the continued track record of growth we have delivered in NOI and shareholder value. With that, operator, please open the call for questions.

Operator: Thank you, Mr. Budorick. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from Seth Bergey of Citi. Your line is open.

Seth Bergey: Hey, thanks for taking my question. You have a slide in the flipbook on the long-term growth rate of about a 4.5% FFO per share CAGR. With the increase in defense spending, is that how you think about the long-term earnings power, or do you see a path to that accelerating as defense spending increases and the development pipeline continues to mature?

Stephen E. Budorick: Sure. The slide you are referring to demonstrates the 4.5% growth rate we have compounded at for the last seven or eight years. Looking forward, this year our growth is a little muted because of the $0.09 of additional interest expense Anthony referred to in his comments, so we expect to get somewhere around 1.5% of growth. Looking forward, we generally expect we can return to the growth path that we have experienced recently, and, hypothetically, there could be upside to that from the increase in defense spending.

I remind you that the bill has not even been passed and appropriated yet, so it is aspirational, but it certainly supports the continued trend we refer to over the last 12 years of increases in investment, which will be good for our business and potentially lead to a better outlook.

Seth Bergey: Great. And then with the acquisition, that is the second acquisition you have made in that submarket. Are there any other types of buildings or ground leases that you are looking at in that market? And as the business improves and defense spending increases, are you seeing any changes to other players in this space?

Stephen E. Budorick: To the first question, if you look at the aerial on Slide 15, you will see that market is, as we described it, a rich ecosystem of defense contractors supporting the local missions, and we own about 28% of that market now. There are certainly buildings that have great tenants with characteristics that would be compatible with us that, under the right price or terms, we would be very interested in buying. There are none currently available, but it is certainly one of the top three markets we have staked out, and we keep a pretty sharp eye on opportunities there. As to other players and increased competition, nothing meaningful that I could talk about.

There are several investment groups that are considerably smaller that like to invest in Northern Virginia in similar assets, and I think their interest will remain high as it has been in the past, but I cannot say that I identify any new entrants.

Operator: Thank you. Our next question comes from Steve Sakwa of Evercore ISI. Your line is open.

Steve Sakwa: Yes, thanks. Good afternoon. Stephen, are you thinking about the development pipeline and development starts any differently today, given all of the positive backdrop and tailwinds you talked about? Are you willing in some of the submarkets to have a little bit more spec product? And is the tenancy changing given some of the new entrants into the defense contracting business?

Stephen E. Budorick: We are not yet ready to start accumulating more inventory than we traditionally have, but we are certainly, for the last year and increasingly so, putting ourselves in a posture to move extremely quickly by redesigning and, in some cases, addressing land conditions in advance of the opportunity to cut our delivery timeframe. To the extent that demand ramps up, particularly in Huntsville where we expect it to ramp up to support Golden Dome, we are prepared to move more aggressively, but we need to see that demand materialize a little more formally than it has been.

Steve Sakwa: Got it. And as you think about vacancy leasing, maybe talk about where the focal points are and the prospects for driving occupancy even higher from current levels.

Britt Snider: In terms of prospects, in Northern Virginia we have been able to push some cash rents on recent deals, which is a good sign. The growth in cyber funding in the PW corridor is an area where we are starting to see more activity after a quieter period, and the funding is being allocated to missions we support in our buildings, including the cyber mission force. Those are two areas—Northern Virginia and the PW corridor—where we are going to see heightened vacancy leasing. We have certainly seen it in Columbia Gateway at the beginning of this year. We do not have any vacancy to lease in Huntsville; we are down to our last suite.

Operator: Thank you. Our next question comes from Blaine Heck of Wells Fargo. Your line is open.

Blaine Heck: Great, thanks. The FY 2027 budget request at roughly $1.5 trillion is clearly a major positive. Stephen, assuming that goes through, given that the increase is so substantial, do you think your tenant base will need to start leasing a bit earlier and get out ahead of the funds coming in, or do you think the normal 12 to 18 month lag still holds?

Stephen E. Budorick: Remember, you need to break that $1.5 trillion down into $350 billion that is anticipated to be a reconciliation appropriation, and if you break that down, that is really going for things that would not affect leases in our portfolio—such as increased inventory, munitions, shipbuilding. The almost 30% increase in the base budget certainly should affect our tenant base and hypothetically could influence their need for space. But again, it is too early; it has not been passed or appropriated. And then once it is appropriated, it has to flow through to the contractors. I think the 12 to 18 months is still going to hold.

Blaine Heck: Very helpful. We noticed your potential future opportunities in the development pipeline came down by about 400 thousand square feet from last quarter. Was there any specific driver behind that reduction? Any projects that might have fallen out of that bucket?

Stephen E. Budorick: We harvested some with deals that we announced last quarter, and we made a decision on one particular mission to reduce the possibility of future demand because they look pretty committed to a MILCON solution.

Operator: Thank you. Our next question comes from Thomas Catherwood of BTIG. Your line is open.

Thomas Catherwood: Thank you. Good afternoon, everybody. Going back to leasing, Britt, in the past you have talked about dialing back on tenant improvements and free rent, and that has shown up in the numbers. Two questions: how much growth are you getting on a net effective basis now, and as availabilities get tighter, how much more can you pull back on concessions?

Britt Snider: On NER, it is something we are very focused on for every deal. I do not have the exact percentage, but we have had an enhanced focus over the past couple of years. In certain markets, especially Northern Virginia, we have been able to pull back on concessions more than in the past. For tenants needing mission-critical space, they are willing to contribute more dollars to build out and upgrade their SCIFs, whereas we are staying generally at the same level, if not pulling back, and certainly in free rent we are really trying to pull back.

Thomas Catherwood: Would you say that is low single digits or high single digits on a net basis?

Britt Snider: Probably mid-single digits growth rate.

Stephen E. Budorick: Yes, that is about right.

Thomas Catherwood: Perfect. And Stephen, traditionally we thought of COPT Defense Properties with a focus on defense intelligence markets, and you have shied away from markets more focused on defense manufacturing or deployment. With the push to modernize defense capabilities, those lines seem to be blurring. Is that fair, and is that driving you to look at other markets you had not looked at before?

Stephen E. Budorick: If we are going to bridge into the realm of defense we have not traditionally served, it would be in conjunction with one of our tenants in a specific opportunity to support them with third-party capital. We have had conversations in the past with some of our tenants to move to other markets; we have not yet made that decision. I cannot say that is accelerating now, but on an individual basis we consider it.

Operator: Thank you. Our next question comes from Richard Anderson of Cantor Fitzgerald. Your line is open.

Richard Anderson: Thanks. Good afternoon. Speaking of other markets, what about Des Moines? What is the latest there as you look to build out data center shells?

Britt Snider: Data center shells in that market? It is going to be a great corn crop this year.

Stephen E. Budorick: No real update. We are at an impasse on power. We are waiting for the power situation to materialize. We told you in prior calls that to move forward today, the economic terms were too burdensome. We elected to step aside, let others lead in that market, and wait for the power company to adjust to the elevated demand for power for data in the market. We continue to see this as three to four years out.

Richard Anderson: As far as Huntsville, you mentioned 99.6% leased, 10 thousand square feet available in a single suite. That campus has the potential to be twice the size. With all that Golden Dome activity, what is the chance you could have the high-class problem of not having enough space?

Stephen E. Budorick: That is a long runway away. We have at least 2.5, really more like 3 million square feet of capacity. To the extent that we have that great news and we are absorbing it, recall that our partner, in essence, is the U.S. government. We lease land from them. It is an extraordinarily large parcel of property in the U.S.—the Redstone Arsenal—and we believe, in light of that kind of success, we can find a way to expand our enhanced use lease and continue to support the growth of the missions on the Arsenal. That is the least of my concerns.

Richard Anderson: On vacancy leasing, you are tracking 400 thousand square feet. In past years, you blew away your vacancy leasing targets. You are tracking in line now. Is that because the more you get occupied, the harder it is to execute on vacancy leasing? Should we not expect the 400 thousand target to go up meaningfully this year?

Stephen E. Budorick: Generally, that is fair. As our properties get as full as they are, it becomes more difficult to have inventory that matches exact emerging demand. We have done a good job continuing to attack it. We do get some space back, even with our extraordinary retention, that we can bring to market. The wildcard is whether we can make some hay with our other assets where we have more vacancy. We like to set a target and beat it, so we plan to do our best to beat the 400 thousand square foot goal, but we are comfortable we are going to make it.

Richard Anderson: One last one. On the defense budget, given its size, is it reasonable to assume it will take longer to pass, or because it is bipartisan, might you get to a final budget pretty soon after October 1?

Stephen E. Budorick: That is tough to handicap. We seem to find ourselves in new circumstances continually trying to get things appropriated and funded. I would think it is going to be difficult, not because it does not have bipartisan support, but because we have some adversarial objectives in the overall direction of the country, and it seems like anything is a potential bargaining chip, as we are seeing right now with the Department of Homeland Security unfunded at a point in time where we absolutely need the funding for so many reasons. Anyway, anything is possible.

Operator: Thank you. Our next question comes from Dylan Brzezinski of Green Street. Your line is open.

Dylan Brzezinski: Hi, guys. Most of my questions have been asked, but since you called out potential for vacancy leasing to accelerate in the PW corridor and Northern Virginia, it looks like Navy Support remains the most underleased in the portfolio, albeit still at a high level. What are the vacancy leasing prospects there?

Britt Snider: It is a much smaller portfolio for us, but in Navy Support we are seeing some improvements, especially in the Pax River area. There is a lot of autonomous vehicle and drone work happening there, so there has been some pickup. With our buildings next to the D.C. Navy Yard at Maritime Plaza, those have also seen quite a bit of activity and significant increases in occupancy over the past year. There is a lot of activity at the D.C. Navy Yard and contractor support there is critical. Pax River and the D.C. Maritime Plaza are two areas where we are seeing real prospect activity increase.

Dylan Brzezinski: And on acquisitions, any noticeable pickup, or is it still one-off opportunities?

Stephen E. Budorick: We are currently not looking at anything, and it continues to be one-off. Remember, we have a very focused investment strategy. In the broader market there is more activity, but within the small set of assets we would invest in, there is nothing currently we are tracking.

Operator: Thank you. As a reminder, if you have a question, please press 11. Our next question comes from Anthony Paolone of JPMorgan. Your line is open.

Anthony Paolone: Yes, thanks. Good afternoon. You touched on this a little bit, but that 1 million square foot development leasing pipeline for what is basically about 180 thousand square feet you have—how much of that pipeline is for that specific space versus requirements you might consider for incremental starts? And to the extent you do not accommodate them, where do these folks tend to go?

Stephen E. Budorick: Many of the items in that development pipeline anticipate new projects. I would say 25% to 30% are for things we are actually building currently. Some is overflow for the next set of buildings that would follow. It is more about where the demand is and ensuring we have inventory ready when it is time to move forward.

Anthony Paolone: Second, on the regional office portfolio, it is small and not much expires this year, but looking out the next couple of years, expirations start to get heavier. Any updated thoughts on how to mitigate that or the risk of that getting in the way of growth at the core?

Britt Snider: The team is already starting to address some of those expirations over the next several years with tenants, and they are working on transactions to pull those forward and get them done early to mitigate the risk. We want to ensure that our headline remains where it belongs, which is in our defense IT portfolio, and not on any blips within the other portfolio.

Operator: Thank you. Our next question comes from Steve Sakwa of Evercore ISI. Your line is open.

Steve Sakwa: Just one quick follow-up. Stephen, you have talked about selling some of the non-core office assets at the right time. We have seen some successful new developments in Washington, D.C., at exceptionally high rents. Does that make 2100 L Street a more viable disposition candidate today?

Stephen E. Budorick: Those benchmark rents support an increased expectation of value for the asset. They have been driven by a relatively small component of demand—very well-funded tenants that want true trophy space in a market that does not have any available. I do not think the investment cash flow has quite picked up enough where it would make sense to market that. I do not think we are that far away. Certainly, I think that opportunity comes quicker than we will see, say, in Baltimore or Tysons Corner.

Operator: Thank you. I will now turn the call back to Mr. Budorick for closing remarks.

Stephen E. Budorick: Thank you for joining our call today. We are in the office, so please coordinate with Venkat if you have a follow-up question you would like to discuss. Thanks again.

Operator: Thank you for your participation today in the COPT Defense Properties First Quarter 2026 Results Conference Call. This concludes the presentation, and you may now disconnect.

Unknown Speaker: Good day.