Good day, ladies and gentlemen. Welcome to the COPT 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 Kommineni, COPT Defense's Vice President of Investor Relations. Mr. Kommineni, please go ahead.

Thank you, Howard. Good afternoon, and welcome to COPT Defense's conference call to discuss first quarter 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?

Good afternoon, and thank you for joining us. We're off to a strong start in 2025 and are meeting or, 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 $0.04, 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 $0.65, 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 Rideout Road in Huntsville, and a 14,000 square foot lease at 9700 Advanced Gateway also in Huntsville, bringing that development to 100% leased. Tenant retention was a very healthy 75% during the quarter, even as we observed 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 2,500,000 square foot portfolio, as 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 a 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 that 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 plan. This guidance implies $0.09 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 an impact from DOGE on the priority missions we support. This statement is reinforced by our conversations with our government and contractor tenants and further evidenced 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 on headquarters and fat and top-line stuff that allows us to reinvest elsewhere.' In addition, the DoD outlines 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, nuclear submarines and autonomous and unmanned aerial systems. These are all missions that our portfolio supports in our Fort 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 Britt.

Thank you, Steve. We finished the quarter with strong occupancy in both the total portfolio at 93.6% and the Defense IT portfolio at 95.3%. We're off to a great start in terms of our leasing activity, and we're ahead of schedule for the year, and our pipeline remains strong. During the first quarter, we executed 120,000 square feet of vacancy leasing, comprised of 16 deals, over 40% of which contained secure space and nearly 50% of which is tied to cyber activity. We had broad-based leasing activity throughout our markets, but Columbia Gateway was the standout. We executed nearly 50,000 square feet of vacancy leasing in the park, including a 40,000 square foot expansion lease to a DoD cyber contractor. In 2019, this contractor signed a 12,000 square foot lease with us in Columbia Gateway. As their business grew, they reached a significant milestone in the life cycle of a small to midsize contractor, which is the ability to control their own secure space to compete for, win, and execute high security contract awards. With this expansion, the tenant now leases over 50,000 square feet, a majority of which will be secure space, and we look forward to supporting their future growth. This is just another example of our success story in Columbia Gateway, which has become the hub for cyber innovators near Fort Meade. It also illustrates our unique relationship with defense contractors as their lifecycle landlord, as we provide high-quality properties in the best locations to support priority missions, the expertise to construct secure space to execute those missions and the ability for these tenants to scale within our parks as their business grows while meeting their unique design and technology requirements. Sticking with the cyber theme, this quarter's cyber leasing volume was a continuation of the long-term trend we've been seeing. Since 2011, we've completed 3.2 million square feet of total leasing to DoD-related cyber tenants, now representing over 12% of our portfolio. In fact, 2024 was our second-highest year in terms of vacancy leasing tied to cyber activity. As shown on Slide 15 of our flip book, cyber leasing as a percentage of our vacancy leasing has steadily increased over the past 10 years from roughly 10% to over 30%, which correlates with growth in funding for U.S. Cyber Command located at Fort Meade. The National Business Park and Columbia Gateway have been the prime beneficiaries of this growth given their proximity to Fort Meade as these parks have captured roughly 70% of all cyber leasing in our portfolio over the last 10 years. Year-to-date, we have signed 179,000 square feet of vacancy leasing, nearly three-quarters of which is at our Defense IT locations. Notwithstanding our impressive leasing executions, our leasing pipeline remains strong as well. We have 975,000 square feet of prospects, which equates to a healthy activity ratio of 79% of the currently unleased space. 195,000 square feet of these prospects are classified as in advance negotiations, which we define as over 90% likely to execute. Taken together, we have over 370,000 square feet of leases either executed or in advance negotiations, which amounts to 93% of our full year target of 400,000 square feet, and we're still only in April. These totals also reflect the positive momentum in our other segment, with over 50,000 square feet of space leased year to date and another 50,000 square feet in advanced negotiations. Turning to renewal leasing, we executed 438,000 square feet in the first quarter, achieving a tenant retention of 75%. We renewed all of the leases we had expected and absorbed non-renewals that we had negotiated in early 2023 and 2024 as we discussed last quarter. Our full-year outlook remains unchanged in the 75% to 85% range. The largest non-renewal was a non-defense tenant in Columbia Gateway, which provides us with another opportunity to further deepen our concentration of defense and cyber tenants in the submarket. Turning to large leases expiring through 2026, as shown on Slide 17 of the flip book, we renewed three large leases in the quarter totaling 250,000 square feet with 88% retention. Over the last three quarters, we've renewed 1.1 million square feet of large leases at a 97% retention rate. That leaves 2.9 million square feet of large leases expiring over the next seven quarters, and we continue to expect a 95% retention rate on the full set of large leases expiring. On Slide 18, we provided additional detail on the large government leases included in that population. These government leases consist of 13 full building leases totaling 2 million square feet. We continue to expect 100% retention on these leases. This confidence is driven by the fact that 97% of the square footage is located in secure facilities. The government has invested significantly in these assets, and our 30-year history of achieving 100% retention on full building government leases. We've also been successful on the investment leasing front as we signed over 100,000 square feet year to date. At Franklin Center and Columbia Gateway, we signed a 48,000 square foot lease, primarily supporting Navy Cyber with a top 10 U.S. Defense contractor. Franklin Center is now 78% leased, which is ahead of the pace assumed in our acquisition underwriting, and we have 140,000 square feet of prospects on the remaining 44,000 square feet of availability. At 8100 Rideout Road in Huntsville, we signed a 41,000 square foot lease with the DoD for a missile defense mission, and that property is now 79% leased with only one 27,000 square foot floor remaining, and we have over 40,000 square feet of prospects for that space. Importantly, both of these leases support two priorities for the administration: cybersecurity and missile defense. And finally, at 9700 Advanced Gateway in Huntsville, we signed a lease for the remaining 14,000 square feet to a leading firm in the field of fiber laser technology. The building, which just reached substantial completion two months ago, is now fully leased and demonstrates the efficacy of our strategy to develop into visible demand. With respect to our inventory building in National Business Park, we commenced development on MVP 400 last year to provide 138,000 square feet of inventory at the 4.3 million square foot National Business Park, which is 98% leased. This building is now substantially complete, and our pipeline of prospects for this asset has grown to 340,000 square feet, one-third of which is related to DoD's cyber activity. 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 about 1,200,000 square feet. Beyond that, we're tracking another 1.5 million square feet of potential development opportunities. 100% of these 2.7 million square feet of demand for office space is at our Defense IT locations. In closing, our leasing activity to tenants executing priority missions is strong and broad-based throughout our Defense IT portfolio, demonstrating that our portfolio and our leasing momentum have not been and are not expected to be impacted by any of the DOGE initiatives, and we are well positioned to meet or beat our full-year vacancy leasing target. With that, I'll hand it over to Anthony.

Thank you, Britt. We reported first quarter FFO per share as adjusted for comparability of $0.65, which was at the midpoint of guidance and represents a year-over-year increase of 4.8%. We achieved the midpoint of guidance despite incurring $0.05 from higher net weather-related expenses relative to our budget. Year-over-year, FFO per share increased $0.03, absorbing a $0.25 reduction in interest income resulting from the investment of the proceeds from our exchangeable note offering into development and acquisitions last year, which led to $120 million lower average cash balance and an $8 million decline in our note receivable balance from the City of Huntsville due to a significant TIF repayment received last quarter. During the quarter, our same property cash NOI increased 7.1%, and excluding the benefit from real estate tax refunds recognized in our other segment, the year-over-year increase was 4.3%. This growth was driven primarily by cash NOI increases of approximately 3% from the vast majority of our portfolio, driven by the embedded cash rent increases in virtually all of our leases and the burn-off of free rent on development leases placed into service in 2023 and on leases that commenced later in 2024. These items were partially offset by higher year-over-year net weather-related expenses. We are maintaining the midpoint of our full year guidance for same property cash NOI growth of 2.75%. We expect growth for the remainder of the year for the majority of the portfolio will be relatively consistent with the 3% growth generated in the first quarter, which will be diminished by the impact from the first quarter contractions and non-renewals and the timing differences from the receipt of real estate tax refunds in 2024 as compared to 2025. To be clear, we expect the refunds from the successful appeals in 2025 will approximate the amount received in 2024, and therefore have no impact on our expected full-year growth in same property cash NOI, but creates quarterly noise. Our balance sheet remains strong and well-positioned to take advantage of opportunities, and at quarter end, 98% of our debt remained at fixed rates. We have been funding and expect to continue to fund the equity component of our investments with cash flow from operations after the dividend on a leverage-neutral basis and will continue to draw on the line of credit to fund the debt component. With respect to debt maturities, we plan on prefunding the capital required to refinance our $4 million 2.25% bond, which matures in March of 2026. Our guidance continues to assume a $400 million bond issuance in the fourth quarter. We plan on using the proceeds to temporarily repay the outstanding balance on the line of credit and hold the excess proceeds as cash until the March maturity. Despite the recent volatility in interest rates and in credit spreads in the fixed income market, our bonds continue to trade at one of the tightest spreads to treasuries of any equal or higher rated office peer. With respect to guidance, we are affirming the midpoint of 2025 FFO per share at $2.66 while narrowing the range by $0.01 at the high and low end as the year is progressing right on track with our forecast. We're establishing second quarter guidance for FFO per share as adjusted for comparability in the range of $0.65 to $0.67. With that, I'll turn the call back to Steve.

Thank you. I'll close by summarizing our key accomplishments and messages. We achieved excellent results in the first quarter, highlighted by our leasing achievements. We delivered FFO per share growth of 4.8% year-over-year, marking our 19th consecutive quarter of year-over-year growth. We expect 2025 to be our 7th consecutive year of FFO per share growth, and our guidance implies an annual increase of 3.5%. We increased the dividend again in the first quarter by 3.4% and have increased it by nearly 11% over the last three years. Our portfolio ended the year 95.1% leased, but we still set an aggressive target for vacancy leasing at 400,000 square feet. We're off to a strong start with over 370,000 square feet either executed or in advanced negotiations year-to-date, and we are well-positioned to meet or beat that target. We completed 103,000 square feet of investment leasing year-to-date. Our liquidity remains very strong, and we expect to continue self-funding the equity component of our capital investments going forward. And we continue to anticipate compound annual FFO per share growth of 4% between 2023 and 2026. Again, we're off to a great start in 2025, and we expect to deliver another successful year. With that, operator, please open the call for questions.

Thank you, Mr. Budorick. Please stand by while we compile the Q&A roster. Our first question or comment comes from Blaine Heck from Wells Fargo. Your line is open.

Great. Thanks. Good afternoon. Steve, can you give us any updates you might have on the potential Space Command relocation to Huntsville and also the potential for additional missile defense programs in Huntsville that you referenced on the last call?

Sure. So, there's a lot in the newsprint, particularly in the City of Huntsville, and there are very high expectations that a decision to relocate the command will occur. The timing, we believe, is within weeks, maybe a month, and it should be a pretty exciting opportunity for our shareholders overall. It's a little early in the process regarding missile defense to try to quantify increased demand, but the administration has made very clear that the Golden Dome missile defense program is going to be a high priority, and that program will be heavily concentrated on current missions and contractors that operate missile defense programs in Huntsville. So, it's not quite clear in a product from a production standpoint, but it's a very exciting programmatic shift that we think will serve us well.

Got it. That's helpful. Switching gears real quick, can you talk about your investment pipeline, specifically $225 million that is earmarked in guidance for new investments in 2025? I guess, what do you think the mix between acquisitions and developments will be in that total? Can you talk about the profile and yields you're targeting on acquisitions? And then any color on additional near-term development projects that you guys are eyeing at the moment?

Certainly. So, let me take that in layers. My current expectation is we'll meet that threshold with new development starts. There could be a possibility of an acquisition. We continue to look at opportunities as they arise. But as I've said on earlier calls, we have a very specific set of criteria that we apply to acquisition opportunities, and thus far, we have not found one that satisfies all our criteria. Turning to our expectations for that development, we are in multiple discussions with users that are motivated to get new facilities to support mission growth or programmatic growth in multiple places in our locations. And I don't want to be any more specific than that, but we're pretty excited about our opportunity to start new buildings for priority programs.

Great. Last one for me.

Yes, go ahead. Yes. I'm sorry, I talked to yield question. Our acquisition yields are at least they at least have to meet the threshold of our development yields. And you'll recall, we're targeting 8.5% cash yield on new development for non-data center assets. An acquisition yield would have to at least hit that threshold and show us some opportunity for growth from that level, and long-term sustainability of demand in the handset.

Okay, great. Very helpful there. Last one for me. With respect to data centers, there have been a lot of mixed messages on hyperscaler demand and some news of pullbacks from certain groups in the market. Do you see any of that impacting your tenants' plans with you in Des Moines or elsewhere or even impacting any of the data centers you currently own?

Let me take the last question. In no way will it affect the data centers we currently own. Then, with regard to our customers' long-term demand, we do not believe they are pulling back in the sense of the business component we serve with our data shell program. I think the biggest challenge we have with our customer, particularly in our land site in Iowa, is the timing of power availability. And currently, we don't have a clear path to the delivery timing yet, and so that's not really a component in our development pipeline as we speak today.

Got it. Thanks, Steve.

Thank you. Our next question or comment comes from the line of Seth Berge from Citi. Your line is now open.

Hi. You kind of talked about the progress you've made on vacancy leasing. Are you seeing that translate into fewer concessions or signs of stronger rent growth?

So, rent growth is really kind of determined by the market overall. We've had solid rent performance over the last several years. Our markets tend to stay very stable and don't spike and crash. So not so much in rent growth, but certainly in the strength of the concessions we give to lease that space. I think if you look at our statistics and the cost of leasing this quarter, you can see that. What you don't see on that report is we've been able to pull back quite a bit on any free rent concessions.

Thanks. That's helpful. And just one question about the bond offering. Where do you think you could kind of price that today?

Given where the 10-year is right now and where our longest bond is trading, that bond would probably price at or slightly higher than 6%.

Great. Thanks.

Thank you. Our next question or comment comes from the line of Anthony Paolone from JPMorgan. Your line is open.

Yes, thanks. You mentioned Columbia Gateway, I think, a few times in the commentary. Can you just remind us how much of that is tenanted by Defense/IT folks at this point versus more traditional office, or is there still more to kind of convert there?

I haven't run that exact math in a couple of quarters, but it's about 70%, 75% defense IT in our properties. There are other landlords, in fact, that don't have nearly as much or much of any defense contractor tenants because our franchise tends to dominate with that segment.

Okay. Got it. And then you talked about the investment spending likely skewed to development. Any sense as to construction cost implications from just what's happening on the macro side, and whether or not you're still pretty comfortable with yields and rents will be there at a level to achieve the yields you want?

Sure. So thus far, there's a lot of talk about tariffs, but there's really very little data coming out on the implications of tariffs. What I can tell you is we are very active in all of our active and potential developments, making sure we understand what our costs are and making sure we manage the yields we deliver to our investors. And where possible, we're locking into our longer lead term items to assure the pricing that we're counting on. With regard to the future, I just want to remind people, we operated through the inflationary period three years ago, and in one year, we had identical buildings escalating cost by 22% under the prior President. And that speaks to our ability to maintain the rents we need to get the yield on the costs we have. So, we're very confident that we can maintain our yield, and we're very diligent being prepared to be nimble should costs start to shift from the current tariff discussions.

And if I could just add one thing on the development project that Steve mentioned that we're kicking off, all of that pricing is locked in already. So that's a guaranteed maximum price contract.

Okay. Got it. That's all I got. Thank you.

Thank you. Our next question or comment comes from the line of Manus Ebbecke from Evercore ISI. Your line is open.

Thanks for taking the question. Just wanted to hop on to the advanced negotiation pipeline and deals that you have in there. Has maybe that mix changed since April in terms of what the U.S. Government represents out of prospects in that pipeline versus, like, maybe top 10 defense contractors? If there are more, like, new expansion type requirements or typical relocations to a certain area close to a base. Just maybe if you could help us understand that, that would be very helpful.

So that statistic is vacancy leasing, advanced negotiations. It's pretty broad-based. It's across multiple defense segments. There is one tenant in another that Britt's comments spoke to, that's a pretty large tenant. Besides that tenant, it's all defense and it's Northern Virginia, Fort Meade, and Navy support.

And pretty even between the government and the contractor.

Got you. Perfect. If I could maybe follow-up with one here on the lease expirations. I know you've alluded on the call and also talked about it last quarter that there is around that there is a larger share of government leases that are set to expire in '25 and '26, which you attacked like a very low risk of losing those leases. And I know we've talked about like 600,000 square feet of those short-term ones that were expected to be pushed from a '25 expiration into '26. Could you maybe just kind of like shine some light on how much progress has been done for those ones in the first quarter, and why maybe the government wouldn't want to sign longer renewals there, kind of going forward?

Well, they will sign longer renewals. The short-term push speaks to the way they address, I don't want to use the word holdover, it's not a holdover, but when they haven't gotten their renewal lease completed, they have a process where we sign a different agreement called standstill agreement, and they continue to pay the rent under the lease that's just expired. We continue to deliver the services called for in the lease. And when the ultimate longer-term renewal is done, we true up on the ultimate rate that should have been charged. It really speaks more to their ability to handle all the work and get it through the system in a timely basis. And that's why we set out to advise people that last year, we had some leases delayed into this year, and similarly, we expect that to kind of flow into next year. With regard to the first quarter, I don't believe we signed any of those leases. The government has a very predictable leasing cycle, and that activity tends to start to ramp up in June; often it's completed either in August or September at the end of their fiscal year. So, look for Q3 and potentially some Q2 results on those U.S. Government leases. But I reiterate, those 13 leases, we have full confidence we will renew 100% of them.

Perfect. Thank you. That's for me.

Thanks.

Thank you. Our next question or comment comes from the line of Richard Anderson from Wedbush Securities. Your line is open.

Okay. Thanks. Good afternoon. First question is for Anthony, and I'm not sure I'm exactly asking this correctly, but for the same store guidance of 2.75% for the full year, is that assuming the 4.3% in the first quarter, absent the tax appeal, or the 7.1%? I'm just trying to get a sense of how things will sort of flow on for the remaining quarters to get you to that 2.75%.

Well, I think you can look at it both ways. So, the 2.75% is not impacted on an annual basis by the real estate tax refunds received in 2024 and 2025 because the amounts in each year approximate the same amount. So, you can take it off the 7.1% or the 4.3%. It's the 7.1% is impacted by the higher tax amount received in the first quarter. Some of the subsequent three quarters in 2025 will be impacted by the fact that there's zero assumed in 2025, but we did receive refunds in each of the last three quarters of 2024.

Okay. So how would you, if you were me, how would you model? Is it sort of ratable growth across the remaining three quarters of the year? Or is there some sort of deceleration internal growth as the year progresses?

The largest of the three refunds we received last year was in the second quarter, and then it tailed off in the third and fourth.

Rich, let me just add one comment regarding how our stock has performed. It's a good opportunity for a savvy investor. Just had to let somebody know that fear can affect price. But as we've made clear in our comments and our results, our business is as strong as ever. It's a good opportunity to make an investment.

Okay. Thanks very much.

Thank you. Our next question or comment comes from the line of Peter Abramowitz from Jefferies. Your line is open, sir.

Yes. Thank you very much. I know you talked a lot about the retention. Just wanted to touch on the non-renewal. I think you mentioned it was in Columbia Gateway and maybe a question for Brett or Steve. I guess, how long are you underwriting right now to sort of backfill those spaces, just so we can get a sense if you do have any other move outs or expirations in the portfolio?

Yes, this is Brett. Yes. I mean, there's already a number of prospects looking at this. We have it conservatively underwritten in the eighteen-month timeframe, eighteen months to two years in that timeframe. But I mean, just given where the prospect activity is, we're confident we can see some get to a lease here quickly.

And then one other comment, Peter, that space is immediately across the courtyard in our headquarters rebuilding set. In 2020, we had a full building tenant non-renew, and that tenant was a function that was non-defense. So, it had a name that was the same name as one of our long-term great tenants, but it was non-defense function. We backfilled it in a year, and it's now over 80% defense contractors and has significant SCIF in the building. We think we view this non-renewal of the Blue Cross Blue Shield affiliate affords us a great opportunity to bring more cyber and defense tenants into our portfolio. So, it's a good thing in the long-term.

Got it. That's helpful. And then just wondering if you could touch on how's the leasing pipeline on some of those vacancies you have in the other portfolio? And I guess, how does that affect the capital plans longer term to eventually sell those buildings?

Yes. I'm happy to take the first part.

Yes. So, the pipeline for those other assets has actually been phenomenal. I mean, based on historical performance, what we're seeing is the credit of the landlords are being heavily evaluated by tenants and the brokers because obviously, they want to see execution and the ability to pay on TIs and leasing commissions. And there's a lot of landlords that are struggling in those markets. And so now we're seeing more tenants being directed our way. So, we feel very confident about our ability to lease that space and get more than our fair share of tenants in those markets. Do you want to talk to the capital?

Yes. And with regard to capital recycling, it's really going to be more a function. It's great news that we're going to get some occupancy back, and clearly, when you look at our vacancy, we've got a lot in those buildings. So, this is one of the places where we can really drive FFO growth. But in terms of recycling, the pricing is really going to be tied to interest rates and the ability of another investor to get attractive debt to make an investment in three very high-quality buildings. And I just don't see that occurring yet. So, it'll be a year or two out.

Got it. That's all for me. Thanks.

Thank you. Our next question or comment comes from the line of Dylan Brzezinski from Green Street. Your line is open, sir.

Hey, guys. Thanks for taking the question. And appreciate your comments on DOGE not having an impact in your guys' leasing activity or demand. But just sort of curious, one of the initiatives of DOGE floating around out there is the idea of them to monetize some of their real estate. So just curious if that is a potential opportunity for you guys in terms of acquisition set?

So, nothing I've seen or we've seen yet. My understanding is most of the real estate they want to sell is in Downtown D.C, occupied by non-defense tenants. That's not a sandbox we want to play in. So, I'm not expecting opportunity. The priority missions we support in the buildings that are owned by the U.S. Government are on military installations, and they will not sell those.

Makes sense. That's all for me. Thanks, guys.

Good.

Thank you. Our next question or comment comes from the line of Tom Catherwood from BTIG. Mr. Catherwood, your line is open.

Thank you. Just wanted to follow up on Blaine's initial Huntsville question. I think the FBI recently discussed expanding at the arsenal. And if memory serves me, the last large expansion there by the FBI was, I think, 2017 and 2018. Is that correct? And how did that result in demand in leasing at your portfolio?

I think most of the relocation was to a new micro campus they built on the arsenal, which is very impressive, by the way, when you tour it. And we have some FBI in our portfolio as well, but the bulk of it went to developed buildings. To the extent there is an increase in FBI, call it assignments to Red Zone, it could potentially drive leasing to some extent in our portfolio. It's too early to tell.

Got it. Appreciate that, Steve. And then last one for me. On the near-term development leasing pipeline, when we adjust for roughly 100,000 square feet of development that you've done, the pipeline is up 500,000 square feet quarter-over-quarter, which geographies or priority missions really drove that uptick?

Well, it's quite a bit in Fort Meade, BWI, and Huntsville, and one other, but not going to mention it.

Thank you. Our next question or comment comes from the line of Steve Sakwa from Evercore ISI. Your line is open.

Yes, thanks. I just had one follow up, Steve. And I guess related to Blaine's earlier question on the data center development in Iowa. When you bought that, I think there was an expectation it would take you maybe upwards of two years to secure power with the local power company. Has anything changed in that timeframe? Have things gotten elongated or more difficult? So, just kind of looking for any color on how those processes are unfolding in these municipalities.

Well, they're not unfolding quickly. And I would say, if anything, our expectations have elongated. Two years would be a great result right now, and we have no specificity. I think it could be more like three to four years.

Got it. I guess, does that maybe temper your enthusiasm for doing more of those just given the uncertainty around the timing?

Well, certainly, this last, say, twelve months has been an extraordinary period of time across the country with companies, individuals of all sorts asking for new power supply. And undoubtedly, the utility we're relying on has been, it's our interpretation, they've been overwhelmed by the request for power. And I think with some of the pullback on the AI computing expectations, that might mitigate. But from our standpoint, if we're going to buy another piece of land on spec or inform demand as we like to think of it, we're going to have to understand the power pretty clearly.

Got you. Thanks for the color.

Yes.

Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Budorick for any closing remarks.

Sure. Well, thank you all for joining our call today. We are in our offices. So please, if you want to talk to us, follow up by calling Venkat, and we look forward to talking to you if you do. Thanks.

Ladies and gentlemen, thank you for your participation today in the COPT Defense Properties first quarter 2025 results conference call. This concludes the presentation. You may now disconnect. Good day.