COPT DEFENSE PROPERTIES — Call Transcript 2026

Okay, folks. Thanks for joining us for our last session for the day. My name is Mark Streeter, and in addition to being the high-grade and high-yield transportation analyst, which is the hat I've been wearing, I think, for the last two days. I get to put on my REIT hat, 'cause I'm also our REIT credit analyst, and very pleased to, in partnership with my colleague, who's on the road, Anthony Mifsud, who covers COPT Defense Properties. Very pleased to have with us Stephen Budorick, President and Chief Executive Officer, joined by Venkat and Britt on his team. Steve, thanks for joining us, making it all the way down from the home office or the corporate office and the home office. I guess you have a long commute home tonight, but we were just talking about. Not that far, but. It's A little bit of traffic. 20 miles. Yeah. 25 miles. 25 miles. So, you know, just sort of thinking about, you know, maybe because there's some folks here in the room that might not know a lot about the story, you know, hopefully the folks on the webcast probably are a little bit more familiar, but maybe sort of just talk a little bit about, you know, your focus and then we'll jump into, you know, some questions on how, you know, especially how events of the recent weeks, you know, are sort of impacting your business. Maybe just sort of lay the groundwork with the basics before we jump in. Okay. COPT Defense Properties, we're a specialized real estate investment trust, or REIT, and we're deeply concentrated in mission-critical assets that support national defense activity in the United States. The vast majority of our 207 properties are located adjacent to or are occupied by priority defense missions, generally involving knowledge-based defense activities. The missions we support include intelligence, surveillance and reconnaissance, cybersecurity and network activities, naval, sea, and air technology development, missile attack and defense systems, drone aviation technology development, cloud computing, among others. Our property locations are not typical for an office company. They are proximate to United States defense installations that have permanence in Maryland, Virginia, Alabama, and Texas. Our properties are improved for top secret mission work. 80% of our portfolio contains high security operations. That includes 9 U.S. government secured campuses representing over four million sq ft that are built to antiterrorism/force protection standards and developed with SCIF improvements. We have another one million sq ft with the U.S. government in non-full building properties or leases, six million sq ft of defense contractor leases with SCIF, and we have 15 cloud computing campuses representing over six million sq ft. How's that for an intro? That's great. First off, occupancy right now in the portfolio, because certainly there's a lot of struggling office REITs, and I think that's probably the best sort of testament to your resiliency when I cover, certainly on the office side, some companies that have fallen below 80%. You know, where are you now and where have you been sort of at the lows? Right now we're 94.5% occupied. We are 95.5% leased overall, and 96.5% leased in our defense assets. Our lows, when I first joined the company and we were more of a diversified REIT. Mm-hmm with a suburban office presence, our low was probably about 87%. Yeah. We spent seven years repositioning the company to be a pure defense play. During that period of time, we sold 11 million sq ft of property and replaced it with high-value new developments in the defense space. Since then we've never been below 93%. Yeah. I mean, it's amazing testament to, especially with a low, now increasingly mid-triple B credit rating. Some of your peers in the pure office space, if we even want to call them peers, you know, have obviously, like I said, dipped below 80%, right? It's. You know, maybe you can talk a little bit about sort of your lease structure, you know, versus a typical sort of government lease. How are they different? The leases we do with the United States government are with the missions that we support. They're not GSA structured leases. There are a couple differences that we're able to achieve. On the one hand, we get annual escalators on our rent. It's not a flat rent structure. On the other hand, we've learned to be very accommodating to our government customers by basically doing one-year leases. When we sign a lease with the US government for a new building, it'll be a one-year lease with nine automatic renewals or 14 automatic renewals. And we have the confidence to accept that structure, one, because we don't have property level debt, we don't have to deal with lenders, but secondly, we know that the government will co-invest in those buildings as much money as we do, and that not just on improvement, the whole structure. With that confidence, we accept that structure because it allows them to score one year's rent at a time instead of scoring all the rent of a lease in one year. What has your retention rate been running with your government tenants direct rather than, you know, separating that from sort of adjacency tenants? Government approximates 100%. Yeah. In 34 years of leasing to the U.S. government, we've never had a full building non-renew. An amazing statistic. Can we talk? I like to point out, we have a building. Mm-hmm. Show me any other one in the country that's been leased every square foot every day for 34 years. Yeah, it's amazing. Maybe can you talk a little bit about. It's funny, we were talking about moats around the airline businesses at this conference earlier today. You know, yes, you can think about, like, loyalty for the big airlines, et cetera. Maybe talk about the moats around your building. You know, why can't someone else buy land next to one of your campuses and sort of throw a building up? You know, maybe I'm sort of thinking about, you know, like, you have cables underground, right, that tie into, you know, critical facilities and so forth. Maybe just sort of describe, you know, how high your barrier to entry is. I'll give you what we call our four pillars of strength. One is we have 30+ year track record with defense contractors in the U.S. government. The second is in those 34 years, we've developed a specialized workforce. 45% of our employees carry the highest credentials available to a contractor to support top secret missions. Including yourself, right? I'm not supposed to tell you. Okay. Sorry. Yes. Sorry. Yes. You're not supposed to ask. I thought that was public knowledge. Oops. It is now. We've committed to this business early. We have advantaged land positions. You know, our operating excellence, our top 15 tenants average six leases in four or five locations or more. We're tightly aligned with the industry, and we know how to support it. You made a big bet on Huntsville and the Redstone Arsenal a number of years ago, right? Maybe you can talk about why, how has that played out, what's the growth opportunity there outside of sort of your original core D.C. properties? In 2010, we entered into a joint venture relationship with a local developer that had won an enhanced use lease. We created a structure that gives them a preferred return of the incremental capital we invested in. It was barren land. We invested in infrastructure to create a business park. In 2011, we built our first building on spec. We had 0 pre-leasing. It took us about six months to convert that to a lease with Boeing, and it was actually a three-building lease, so we did two build-to-suits. That represented about 360,000 sq ft. Today, that park is over 2.5 million sq ft. It's virtually 100% leased or about to be leased. We're actively developing 150,000 sq ft inventory building that we have great demand for, and we have significant runway with about 3-3.5 million sq ft of additional development capacity. There's a lot of talk, you know, even before the hostilities in Iran, about the Golden Dome. You know, for those that don't understand the real estate business, don't understand your company, they read a lot about Trump's focus on a Golden Dome initiative. How does that impact your business? Well, Golden Dome or the current activities? Well, the Golden Dome first. Well, I'm gonna do it backwards. Okay. Do it backwards then. The current activities personifies to America what it's like to live in a world where you can be under threat of multiple missiles inbound in the places where you live, and it's a threat that our president has identified as intolerable for this country. Golden Dome envisions the kind of anti-missile defenses that Israel's had to deploy with their Iron Dome distributed eventually across the entire United States of America. It's aspirational in many respects. It's gonna use a lot of the great technology you can now see on TV, but it also aspires to bring some of that technology into space with space-based interceptors and eventually weaponry to deter it. Mm-hmm. That activity is really centered around the Redstone Arsenal. Mm-hmm ... where the Missile Defense Agency and the Defense Intelligence Agency for space are centered and, as a matter of fact, NASA and other space-oriented functions. We anticipate it's gonna be a big growth opportunity for our development outside the base. Remember, it just got funded in July. We've already signed one lease with defense contractors specifically. What was the funding for it? I'm not an aerospace defense guy. It was in the One Big Beautiful Bill Act. Yeah. It was $175 billion. Dedicated just to Golden Dome. to Golden Dome. Mm-hmm. If you think about that's roughly 20% of the prior year defense budget. Mm-hmm for one program over a three to four year period. The down payment that's in the FY 2026 budget is $25 billion. Interesting. It sounds like a great opportunity. You know, at your heart, you're a developer, right? You have a land bank. When you think about how much inventory to have in land and that pace of, you know, building, now we can call it spec or whatever, or inventory building, but knowing that the government is likely gonna be on the back end, how big is that land bank? How much are you doing annually in terms of trying to turn that raw inventory into, you know, new leasing? I think in total we've got development capacity for around eight million sq ft additional- Mm-hmm property, that's centered around priority defense locations. Mm-hmm Like Huntsville, Alabama, and I would say Fort Meade, Maryland. We don't force protection. We've just built it into our cost structure. Mm-hmm. We've achieved the point in time where we can self-fund $250 million-$300 million a year in new development without any external equity or capital source on a leverage neutral basis. We acquired this land to defend our franchise and to support our customers, and so we develop to known demand. You know, speaking on the development side, you were early on in the data center shell business with Amazon Web Services, right? I can neither confirm nor deny our tenant. Okay. That's who it is. Okay. We're gonna pretend we don't know. As I repeat, I neither confirmed nor denied. Okay. How much of your NOI comes from data centers? How has the shell business worked out? We can admit that you have data center shells, right? Maybe you could just talk about sort of the data center contribution and, you know, and I wanna dig into, as those leases come due, you know, how are rents rolling over? Maybe just whatever you can tell us about that side of the business. Sure. In total, we've developed about 4.6 million sq ft of data center shells. Mm-hmm for a very impressive customer. Mm-hmm. They were all pre-leased build-to-suits on a negotiated yield basis. One of the prices we had to pay- Mm-hmm to get ourselves to a point where we are able to self-fund our development- Mm-hmm ... is we entered into joint ventures with, quite a few of those, with Blackstone ultimately as our joint venture partner. We still own 10% of, let's say, two-thirds of that. Mm-hmm. Currently our data center shell exposure is really only about 8%. We have several that we've just completed the development of, and as rents kick in, it'll get up to 10 or 11. It's not as great. In a perfect world, I'd have kept every one of them. Mm-hmm because as the leases have matured, the net rents have increased by a minimum of 100%. Okay ... as high as about 130%. How much of those, you know, what's the cadence for? I know it's a smaller part of the portfolio, but how much is rolling over this year, next year? What's that churn? I think it's, you know, like two-three a year. Okay. All right, interesting. You know, is there any concern about the Department of Defense sort of taking its eyes off the ball of leasing space because they're so distracted with a war? Does it impact the day-to-day? I mean, we've got a government shutdown that we're dealing with partially. There's noise at the airports with TSA, et cetera. Does any of this noise, either with the war or the government funding, impact your ability to do sort of your regular way relationship with all the government agencies that you work with? No, it doesn't. First of all, during a shutdown, we do get paid rent. Government regulations require the contracts get paid, so it's never been an issue. The war fighting part of our customer base is not who we negotiate with for leasing space or renewing leases. It really has no material effect. It's more a headline risk. Sure. I like to say, when the headlines hit, it's a great opportunity to get an entry point in our stock. Yeah 'Cause we usually trade off a few dollars, and you can make a quick gain pretty quickly. Yeah. It's interesting, right? That kind of brings me to one of the points I wanted to mention. It's just, you know, when we look at the catalyst for the stock, right? You know, you hate to, like, boil it down to, like, war is good for you or conflict is good for you, and so forth. But I mean, if we try to separate what's going on with Iran and the Middle East and maybe, I mean, we had Venezuela, we have potentially Cuba coming, and so forth. You know, how do you think about sort of the catalyst for the stock outside of the conflicts, and what you think could propel the stock higher? I really don't believe the conflicts are the catalysts that drive our stock price. Mm-hmm our company. When the conflict occurs, the missions we support, the technology that's been developed, they apply that to the situation. The leases we have are with a variety of groups that are heavily engaged in executing that. That's not really what drives our stock. We're not selling missiles or weapons. Yeah. We're providing facilities for knowledge-based defense installations long term. I think a great catalyst for our stock is peace through strength. The recognition that the United States government is under-invested in defense, that at least before this most recent conflict, we've run the risk that we no longer have uncontested dominance in every theater of war, and that peace through strength demands that we invest to make sure that we have the most lethal fighting force in the world. You know, we talked a little bit about Golden Dome, but specifically on Space Command, are there different drivers there or opportunities for you there? Yeah. Space Command is one of the 11 combatant commands which are formed to integrate the activities of Army, Navy, Air Force, Space Force, Coast Guard into a single command structure for a theater. Current events, Central Command is executing oversight on all activities that involve the current conflict. Space Command is going to concentrate all the capabilities of the armed services for space activities. It had been stood up temporarily in Colorado Springs. When Space Force was created, Space Command was structured under the first Trump administration. They went through a process to pick the best location where it would be, should be. They came up with Huntsville, Alabama, Redstone Gateway, or Redstone Arsenal that was challenged and readjudicated twice. In all three competitions, Redstone Arsenal won the competition. The prior president used the executive order to freeze it in Colorado Springs. The current president has overruled that order, allowed the Air Force to make its own decision, and it was once again selected for Redstone Arsenal. It will be moving in these next three years to the Redstone Arsenal. The opportunity for us initially is we have a high confidence we're gonna provide an initial building- Mm-hmm to accept the early relocations because we can develop much quicker than the government can. There could potentially be opportunity to house the command itself beyond that, but we don't have clarity into that at this point in time. Ultimately, as the command relocates, the defense contractor community that supports that command is roughly 800 to 1.2 million sq ft of future demand that's going to want to be co-located with the command in Alabama. We think over the next two-four years, there'll be a really nice runway of growth for us in our Redstone Gateway. All right. That's helpful. If we take a step back, if you look at your total rental income, total NOI pie chart, how much right now is direct government leases versus government contractors versus something outside of that ecosystem, if we were to split it in those three ways? Roughly 35-36% U.S. government. Mm-hmm. 55% defense contractors, 10% non-defense. You know, we know on the government direct related, that's where the retention is highest, right? I mean, with the government contractors or the non-defense related, you know, how different are the characteristics of those, you know, of tenant retention rollover in those two subsets? Government, I'll just throw government defense contractors in. Okay. They're very comparable. Mm-hmm. You know, over the last 10 years, we've averaged 80% retention. Mm-hmm. That includes part of the portfolio that was non-defense. Mm-hmm. Our government tends to approximate one. Defense contractors, you know, any given year, there's some flux as contractors win or lose business. Mm-hmm ... make adjustments. I like to point out if we measured our renewal statistics as binary events, do we keep them or lose them? Yep. We'd be at almost one with defense contractors. They have to manage their portfolio to the current business needs. You sort of mentioned that you can self-fund the development without raising equity capital. Can you just update us on, you know, where leverage is versus your target? Let's start there. Our target is approximately 6x debt to EBITDA. We finished the year at 5.9x debt to EBITDA. Our credit rating and, our benchmark of peers would suggest we could get up to 6.4x or 6.5x debt to EBITDA, and we like to manage to a lower level, so we have embedded capacity to accept excess opportunity in the future. In a year where our development opportunity set were to exceed $250 million-$300 million, we have that capacity to go out and grab those developments. Mm-hmm Complete them. They will, of course, be pre-leased. The predominant portion of our development is pre-leased development. When that income comes online, it'll naturally return to the 6.0 debt to EBITDA. I'm sure you do your own benchmarking. I'm sure your finance team has done this with you going in to see the rating agencies. When you compare, you know, 6x leverage on your portfolio, which is, you know, mid-90s leased and so forth or occupied and show the stability of that cash flow, I mean, you have some, what I would call more the commodity office peers or even if we call it premium workspaces and so forth. The bottom line is we can look at the volatility of that cash flow, and there the leverage is often higher, much higher than your leverage, and the credit rating is often a notch or two higher. Now you've made some progress with the rating agencies recently. Maybe you could talk about that, and, you know, why do they still apply sort of a penalty to you? I mean, are they so fixated on size? No, it's actually worse than that. First of all, shameless plug, we just got upgraded by Moody's to Baa2 from Baa3. We're very, That was a layup for you. thrilled. I was leading you to that. Yes. All right. Did I slam it like Jordan? Yeah. Yeah. Good. You got it. Their argument for delaying or not upgrading through both of the major rating agencies is highly theoretical. Mm-hmm. They say we have a very tight concentration of customers. Mm-hmm a very tight concentration of assets. Now, I would flip it and say, "That's why we should be higher rated. Mm-hmm. We have the best credit tenants. Mm-hmm in the country, in the best locations where demand has proven to be high in any cycle you wanna refer to, but they kinda get that backwards. My smart-ass comment is, "Would we be a better risk if we had law firms across the country? Mm-hmm. I don't think we would. We have the United States government and defense contractors, and by the way, defense contractors have to be in good financial standing to do business with the United States government. What do you really think drove Moody's? What, you know, what changed in their mind? Was it just a recognition of the stability of your cash flow and occupancy in light of what's happened with the broader office peer set? They've always recognized the argument, but on several occasions they'd say, "Well, let's see how you do in this environment." When COVID hit, they said, "Let's see what happens through COVID." Well, we sailed through COVID without any problem. It was higher interest rates, it was higher inflation. Our durability, our seven-year track record of FFO growth, high occupancy, we've really demonstrated to them that we are far more resilient than their theoretical arguments might suggest. How should investors that might be new to your story, you know, think about which party is in control in Washington, D.C.? We have the midterm elections coming up. I think the expectation is that the Republicans won't hold everything, and that the pendulum will shift a little bit to the left. You know, is there. You've obviously done all the tracking, you know, between the correlation between the elections and DOD budget and so forth. What are some of the misconceptions regarding that? Is it something anyone should be worried about if that political pendulum does shift come November? The misconception is that throughout all parts of government, we have a disagreement between the parties, but in defense, we have very strong alignment. Mm-hmm. Over the last three presidential terms, it's a question of is it good or great? Mm-hmm. In each, through each one of those presidencies, there is a common recognition in the House Armed Services Committee and the Senate Committee on Armed Services. Mm-hmm ... that we need to invest in defense to keep America strong. We've, since sequestration, we have a graph, if you look at our reference material- Mm-hmm Defense budget has increased every year. Yeah. By an average of what? I think you know the stat. probably 7%. Yeah, 7%. Pretty good CAGR when that's driving your business. I wanna give our audience here in the room a chance to ask any questions. Anyone have one? Please, the mic is coming. Thank you. Can you talk about, there's a lot of energy, as evidenced by this conference and just what's going on in the world, around new entrants into the defense space. Can you talk about the kind of interactions you're having with some of those new entrants, and the kind of services or opportunities you can deliver to them, with your business? You're talking about the new startup companies? New startup companies who might not be familiar with this world and maybe. Yeah Say, "Oh, what's a SCIF? One, some of them have developed technology in other parts of the country and need, now that they've proven it out, to relocate to be near the commands they're gonna support. To that point, Golden Dome. Mm-hmm. Three or four technology companies are looking at leasing in our business park right now, because they'll be adjacent to the Golden Dome command structure. Another area of great demand that we've enjoyed is cybersecurity, 'cause we have significant holdings outside Fort Meade, where U.S. Cyber Command is held. We've been able to attract the good idea startup company, put them into, you know, the space that they can't afford, support 'em as they grow their business, relocate them to other buildings, and support them as they get the contract that allows them to have a SCIF with our deep experience in constructing SCIF, and guide them through the process and help get them up to speed. We have a concept that we call Life Cycle Landlord. We're constantly looking for that small guy who's breaking out, and we tell 'em, "I wanna be your landlord when you need a full building. One more in the room. Yilma Abebe. Can you talk about the 35% of your business that's direct in the government? Why would the government choose to lease and then own real estates outright? Well, the fact of the matter is the government never has enough money for the facilities that they require. The missions we support generally are funded out of the DOD, and there's a line item in the DOD budget called MILCON or military construction. For them to get a facility that they own, they have to compete with all the missions worldwide in the DOD from, you know, Okinawa to Europe to get that priority funding to build the building and there's just never enough money. We are, we don't get all of their business, but I like to say we fill the gaps. When there's not enough money for the missions we support, then they can move forward to lease space, and we've been a go-to source of that leasing for over 30 years. Anybody else? By the way, we can also build the antiterrorism/force protection building in half the time for half the money than it takes the U.S. government. We're also a speed to market kinda solution as well. Last question from me, Steve. Is there any opportunity to recreate what you did in Huntsville in another market? Is there like a list of. You know, does the government say, "Hey," not that they're gonna just tell you, but that, you know, "We'd like to work with you on, you know, here's a new area of the country that we think we might be building up a bigger presence"? We have several active dialogues where we've identified parts of the DOD that need the same kind of help we've given to the missions. Mm-hmm We support. I will never tell you where they are, and I will never tell you when we expect them to occur. I don't expect you to tell me where they are, but I am curious if you think that if we look five or 10 years from now, will your geographic footprint look different? I think five years from now we should be able to add at least one if not two more locations. Okay. Interesting. All right. I think we'll end it on that with a minute to spare. Great Stephen, thank you very much. Thanks to Britt and Venkat for coming. We appreciate you joining us at the Industrials Conference for a different twist on you know some of the opportunities in the defense-related industry. Good to have you. Thank you for having us. Okay. Appreciate it. Thank you.

Speaker 1: Okay, folks. Thanks for joining us for our last session for the day. My name is Mark Streeter, and in addition to being the high-grade and high-yield transportation analyst, which is the hat I've been wearing, I think, for the last two days. I get to put on my REIT hat, 'cause I'm also our REIT credit analyst, and very pleased to, in partnership with my colleague, who's on the road, Anthony Mifsud, who covers COPT Defense Properties. Very pleased to have with us Stephen Budorick, President and Chief Executive Officer, joined by Venkat and Britt on his team. Steve, thanks for joining us, making it all the way down from the home office or the corporate office and the home office. Okay, folks. okay folks Thanks for joining us for our last session for the day. thanks for joining us for our last session for the day My name is Mark Streeter, and in addition to being the high-grade and high-yield transportation analyst, which is the hat I've been wearing, I think, for the last two days. my name is mark streeter and in addition to being the high-grade and high-yield transportation analyst which is the hat i've been wearing i think for the last two days I get to put on my REIT hat, 'cause I'm also our REIT credit analyst, and very pleased to, in partnership with my colleague, who's on the road, Anthony Mifsud, who covers COPT Defense Properties. i get to put on my reit hat 'cause i'm also our reit credit analyst and very pleased to in partnership with my colleague who's on the road anthony mifsud who covers copt defense properties Very pleased to have with us Stephen Budorick, President and Chief Executive Officer, joined by Venkat and Britt on his team. very pleased to have with us stephen budorick president and chief executive officer joined by venkat and britt on his team Steve, thanks for joining us, making it all the way down from the home office or the corporate office and the home office. steve thanks for joining us making it all the way down from the home office or the corporate office and the home office I guess you have a long commute home tonight, but we were just talking about. Not that far, but. I guess you have a long commute home tonight, but we were just talking about. i guess you have a long commute home tonight but we were just talking about Not that far, but. not that far but

Speaker 2: It's It's it's

Speaker 1: A little bit of traffic. A little bit of traffic. a little bit of traffic

Speaker 2: 20 miles. 20 miles. 20 miles

Speaker 1: Yeah. Yeah. yeah

Speaker 2: 25 miles. 25 miles. 25 miles

Speaker 1: 25 miles. So, you know, just sort of thinking about, you know, maybe because there's some folks here in the room that might not know a lot about the story, you know, hopefully the folks on the webcast probably are a little bit more familiar, but maybe sort of just talk a little bit about, you know, your focus and then we'll jump into, you know, some questions on how, you know, especially how events of the recent weeks, you know, are sort of impacting your business. Maybe just sort of lay the groundwork with the basics before we jump in. 25 miles. 25 miles So, you know, just sort of thinking about, you know, maybe because there's some folks here in the room that might not know a lot about the story, you know, hopefully the folks on the webcast probably are a little bit more familiar, but maybe sort of just talk a little bit about, you know, your focus and then we'll jump into, you know, some questions on how, you know, especially how events of the recent weeks, you know, are sort of impacting your business. so you know just sort of thinking about you know maybe because there's some folks here in the room that might not know a lot about the story you know hopefully the folks on the webcast probably are a little bit more familiar but maybe sort of just talk a little bit about you know your focus and then we'll jump into you know some questions on how you know especially how events of the recent weeks you know are sort of impacting your business Maybe just sort of lay the groundwork with the basics before we jump in. maybe just sort of lay the groundwork with the basics before we jump in

Speaker 2: Okay. COPT Defense Properties, we're a specialized real estate investment trust, or REIT, and we're deeply concentrated in mission-critical assets that support national defense activity in the United States. The vast majority of our 207 properties are located adjacent to or are occupied by priority defense missions, generally involving knowledge-based defense activities. The missions we support include intelligence, surveillance and reconnaissance, cybersecurity and network activities, naval, sea, and air technology development, missile attack and defense systems, drone aviation technology development, cloud computing, among others. Our property locations are not typical for an office company. They are proximate to United States defense installations that have permanence in Maryland, Virginia, Alabama, and Texas. Our properties are improved for top secret mission work. 80% of our portfolio contains high security operations. Okay. okay COPT Defense Properties, we're a specialized real estate investment trust, or REIT, and we're deeply concentrated in mission-critical assets that support national defense activity in the United States. copt defense properties we're a specialized real estate investment trust or reit and we're deeply concentrated in mission-critical assets that support national defense activity in the united states The vast majority of our 207 properties are located adjacent to or are occupied by priority defense missions, generally involving knowledge-based defense activities. the vast majority of our 207 properties are located adjacent to or are occupied by priority defense missions generally involving knowledge-based defense activities The missions we support include intelligence, surveillance and reconnaissance, cybersecurity and network activities, naval, sea, and air technology development, missile attack and defense systems, drone aviation technology development, cloud computing, among others. the missions we support include intelligence surveillance and reconnaissance cybersecurity and network activities naval sea and air technology development missile attack and defense systems drone aviation technology development cloud computing among others Our property locations are not typical for an office company. our property locations are not typical for an office company They are proximate to United States defense installations that have permanence in Maryland, Virginia, Alabama, and Texas. they are proximate to united states defense installations that have permanence in maryland virginia alabama and texas Our properties are improved for top secret mission work. 80% of our portfolio contains high security operations. our properties are improved for top secret mission work 80% of our portfolio contains high security operations That includes 9 U.S. government secured campuses representing over four million sq ft that are built to antiterrorism/force protection standards and developed with SCIF improvements. We have another one million sq ft with the U.S. government in non-full building properties or leases, six million sq ft of defense contractor leases with SCIF, and we have 15 cloud computing campuses representing over six million sq ft. How's that for an intro? That includes 9 U.S. government secured campuses representing over four million sq ft that are built to antiterrorism/force protection standards and developed with SCIF improvements. that includes 9 u.s government secured campuses representing over four million sq ft that are built to antiterrorism/force protection standards and developed with scif improvements We have another one million sq ft with the U.S. government in non-full building properties or leases, six million sq ft of defense contractor leases with SCIF, and we have 15 cloud computing campuses representing over six million sq ft. we have another one million sq ft with the u.s government in non-full building properties or leases six million sq ft of defense contractor leases with scif and we have 15 cloud computing campuses representing over six million sq ft How's that for an intro? how's that for an intro

Speaker 1: That's great. First off, occupancy right now in the portfolio, because certainly there's a lot of struggling office REITs, and I think that's probably the best sort of testament to your resiliency when I cover, certainly on the office side, some companies that have fallen below 80%. You know, where are you now and where have you been sort of at the lows? That's great. that's great First off, occupancy right now in the portfolio, because certainly there's a lot of struggling office REITs, and I think that's probably the best sort of testament to your resiliency when I cover, certainly on the office side, some companies that have fallen below 80%. first off occupancy right now in the portfolio because certainly there's a lot of struggling office reits and i think that's probably the best sort of testament to your resiliency when i cover certainly on the office side some companies that have fallen below 80% You know, where are you now and where have you been sort of at the lows? you know where are you now and where have you been sort of at the lows

Speaker 2: Right now we're 94.5% occupied. We are 95.5% leased overall, and 96.5% leased in our defense assets. Our lows, when I first joined the company and we were more of a diversified REIT. Right now we're 94.5% occupied. right now we're 94.5% occupied We are 95.5% leased overall, and 96.5% leased in our defense assets. we are 95.5% leased overall and 96.5% leased in our defense assets Our lows, when I first joined the company and we were more of a diversified REIT. our lows when i first joined the company and we were more of a diversified reit

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: with a suburban office presence, our low was probably about 87%. with a suburban office presence, our low was probably about 87%. with a suburban office presence our low was probably about 87%

Speaker 1: Yeah. Yeah. yeah

Speaker 2: We spent seven years repositioning the company to be a pure defense play. During that period of time, we sold 11 million sq ft of property and replaced it with high-value new developments in the defense space. Since then we've never been below 93%. We spent seven years repositioning the company to be a pure defense play. we spent seven years repositioning the company to be a pure defense play During that period of time, we sold 11 million sq ft of property and replaced it with high-value new developments in the defense space. during that period of time we sold 11 million sq ft of property and replaced it with high-value new developments in the defense space Since then we've never been below 93%. since then we've never been below 93%

Speaker 1: Yeah. I mean, it's amazing testament to, especially with a low, now increasingly mid-triple B credit rating. Some of your peers in the pure office space, if we even want to call them peers, you know, have obviously, like I said, dipped below 80%, right? It's. You know, maybe you can talk a little bit about sort of your lease structure, you know, versus a typical sort of government lease. How are they different? Yeah. yeah I mean, it's amazing testament to, especially with a low, now increasingly mid-triple B credit rating. i mean it's amazing testament to especially with a low now increasingly mid-triple b credit rating Some of your peers in the pure office space, if we even want to call them peers, you know, have obviously, like I said, dipped below 80%, right? some of your peers in the pure office space if we even want to call them peers you know have obviously like i said dipped below 80% right It's. it's You know, maybe you can talk a little bit about sort of your lease structure, you know, versus a typical sort of government lease. you know maybe you can talk a little bit about sort of your lease structure you know versus a typical sort of government lease How are they different? how are they different

Speaker 2: The leases we do with the United States government are with the missions that we support. They're not GSA structured leases. There are a couple differences that we're able to achieve. On the one hand, we get annual escalators on our rent. It's not a flat rent structure. On the other hand, we've learned to be very accommodating to our government customers by basically doing one-year leases. When we sign a lease with the US government for a new building, it'll be a one-year lease with nine automatic renewals or 14 automatic renewals. And we have the confidence to accept that structure, one, because we don't have property level debt, we don't have to deal with lenders, but secondly, we know that the government will co-invest in those buildings as much money as we do, and that not just on improvement, the whole structure. The leases we do with the United States government are with the missions that we support. the leases we do with the united states government are with the missions that we support They're not GSA structured leases. they're not gsa structured leases There are a couple differences that we're able to achieve. there are a couple differences that we're able to achieve On the one hand, we get annual escalators on our rent. on the one hand we get annual escalators on our rent It's not a flat rent structure. it's not a flat rent structure On the other hand, we've learned to be very accommodating to our government customers by basically doing one-year leases. on the other hand we've learned to be very accommodating to our government customers by basically doing one-year leases When we sign a lease with the US government for a new building, it'll be a one-year lease with nine automatic renewals or 14 automatic renewals. when we sign a lease with the us government for a new building it'll be a one-year lease with nine automatic renewals or 14 automatic renewals And we have the confidence to accept that structure, one, because we don't have property level debt, we don't have to deal with lenders, but secondly, we know that the government will co-invest in those buildings as much money as we do, and that not just on improvement, the whole structure. and we have the confidence to accept that structure one because we don't have property level debt we don't have to deal with lenders but secondly we know that the government will co-invest in those buildings as much money as we do and that not just on improvement the whole structure With that confidence, we accept that structure because it allows them to score one year's rent at a time instead of scoring all the rent of a lease in one year. With that confidence, we accept that structure because it allows them to score one year's rent at a time instead of scoring all the rent of a lease in one year. with that confidence we accept that structure because it allows them to score one year's rent at a time instead of scoring all the rent of a lease in one year

Speaker 1: What has your retention rate been running with your government tenants direct rather than, you know, separating that from sort of adjacency tenants? What has your retention rate been running with your government tenants direct rather than, you know, separating that from sort of adjacency tenants? what has your retention rate been running with your government tenants direct rather than you know separating that from sort of adjacency tenants

Speaker 2: Government approximates 100%. Government approximates 100%. government approximates 100%

Speaker 1: Yeah. Yeah. yeah

Speaker 2: In 34 years of leasing to the U.S. government, we've never had a full building non-renew. In 34 years of leasing to the U.S. government, we've never had a full building non-renew. in 34 years of leasing to the u.s government we've never had a full building non-renew

Speaker 1: An amazing statistic. Can we talk? An amazing statistic. an amazing statistic Can we talk? can we talk

Speaker 2: I like to point out, we have a building. I like to point out, we have a building. i like to point out we have a building

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: Show me any other one in the country that's been leased every square foot every day for 34 years. Show me any other one in the country that's been leased every square foot every day for 34 years. show me any other one in the country that's been leased every square foot every day for 34 years

Speaker 1: Yeah, it's amazing. Maybe can you talk a little bit about. It's funny, we were talking about moats around the airline businesses at this conference earlier today. You know, yes, you can think about, like, loyalty for the big airlines, et cetera. Maybe talk about the moats around your building. You know, why can't someone else buy land next to one of your campuses and sort of throw a building up? You know, maybe I'm sort of thinking about, you know, like, you have cables underground, right, that tie into, you know, critical facilities and so forth. Maybe just sort of describe, you know, how high your barrier to entry is. Yeah, it's amazing. yeah it's amazing Maybe can you talk a little bit about. maybe can you talk a little bit about It's funny, we were talking about moats around the airline businesses at this conference earlier today. it's funny we were talking about moats around the airline businesses at this conference earlier today You know, yes, you can think about, like, loyalty for the big airlines, et cetera. you know yes you can think about like loyalty for the big airlines et cetera Maybe talk about the moats around your building. maybe talk about the moats around your building You know, why can't someone else buy land next to one of your campuses and sort of throw a building up? you know why can't someone else buy land next to one of your campuses and sort of throw a building up You know, maybe I'm sort of thinking about, you know, like, you have cables underground, right, that tie into, you know, critical facilities and so forth. you know maybe i'm sort of thinking about you know like you have cables underground right that tie into you know critical facilities and so forth Maybe just sort of describe, you know, how high your barrier to entry is. maybe just sort of describe you know how high your barrier to entry is

Speaker 2: I'll give you what we call our four pillars of strength. One is we have 30+ year track record with defense contractors in the U.S. government. The second is in those 34 years, we've developed a specialized workforce. 45% of our employees carry the highest credentials available to a contractor to support top secret missions. I'll give you what we call our four pillars of strength. i'll give you what we call our four pillars of strength One is we have 30+ year track record with defense contractors in the U.S. government. one is we have 30+ year track record with defense contractors in the u.s government The second is in those 34 years, we've developed a specialized workforce. 45% of our employees carry the highest credentials available to a contractor to support top secret missions. the second is in those 34 years we've developed a specialized workforce 45% of our employees carry the highest credentials available to a contractor to support top secret missions

Speaker 1: Including yourself, right? Including yourself, right? including yourself right

Speaker 2: I'm not supposed to tell you. I'm not supposed to tell you. i'm not supposed to tell you

Speaker 1: Okay. Sorry. Okay. okay Sorry. sorry

Speaker 2: Yes. Yes. yes

Speaker 1: Sorry. Sorry. sorry

Speaker 2: Yes. You're not supposed to ask. Yes. yes You're not supposed to ask. you're not supposed to ask

Speaker 1: I thought that was public knowledge. Oops. I thought that was public knowledge. i thought that was public knowledge Oops. oops

Speaker 2: It is now. We've committed to this business early. We have advantaged land positions. You know, our operating excellence, our top 15 tenants average six leases in four or five locations or more. We're tightly aligned with the industry, and we know how to support it. It is now. it is now We've committed to this business early. we've committed to this business early We have advantaged land positions. we have advantaged land positions You know, our operating excellence, our top 15 tenants average six leases in four or five locations or more. you know our operating excellence our top 15 tenants average six leases in four or five locations or more We're tightly aligned with the industry, and we know how to support it. we're tightly aligned with the industry and we know how to support it

Speaker 1: You made a big bet on Huntsville and the Redstone Arsenal a number of years ago, right? Maybe you can talk about why, how has that played out, what's the growth opportunity there outside of sort of your original core D.C. properties? You made a big bet on Huntsville and the Redstone Arsenal a number of years ago, right? you made a big bet on huntsville and the redstone arsenal a number of years ago right Maybe you can talk about why, how has that played out, what's the growth opportunity there outside of sort of your original core D.C. properties? maybe you can talk about why how has that played out what's the growth opportunity there outside of sort of your original core d.c properties

Speaker 2: In 2010, we entered into a joint venture relationship with a local developer that had won an enhanced use lease. We created a structure that gives them a preferred return of the incremental capital we invested in. It was barren land. We invested in infrastructure to create a business park. In 2011, we built our first building on spec. We had 0 pre-leasing. It took us about six months to convert that to a lease with Boeing, and it was actually a three-building lease, so we did two build-to-suits. That represented about 360,000 sq ft. Today, that park is over 2.5 million sq ft. It's virtually 100% leased or about to be leased. In 2010, we entered into a joint venture relationship with a local developer that had won an enhanced use lease. in 2010 we entered into a joint venture relationship with a local developer that had won an enhanced use lease We created a structure that gives them a preferred return of the incremental capital we invested in. we created a structure that gives them a preferred return of the incremental capital we invested in It was barren land. it was barren land We invested in infrastructure to create a business park. we invested in infrastructure to create a business park In 2011, we built our first building on spec. in 2011 we built our first building on spec We had 0 pre-leasing. we had 0 pre-leasing It took us about six months to convert that to a lease with Boeing, and it was actually a three-building lease, so we did two build-to-suits. it took us about six months to convert that to a lease with boeing and it was actually a three-building lease so we did two build-to-suits That represented about 360,000 sq ft. that represented about 360,000 sq ft Today, that park is over 2.5 million sq ft. today that park is over 2.5 million sq ft It's virtually 100% leased or about to be leased. it's virtually 100% leased or about to be leased We're actively developing 150,000 sq ft inventory building that we have great demand for, and we have significant runway with about 3-3.5 million sq ft of additional development capacity. We're actively developing 150,000 sq ft inventory building that we have great demand for, and we have significant runway with about 3-3.5 million sq ft of additional development capacity. we're actively developing 150,000 sq ft inventory building that we have great demand for and we have significant runway with about 3-3.5 million sq ft of additional development capacity

Speaker 1: There's a lot of talk, you know, even before the hostilities in Iran, about the Golden Dome. You know, for those that don't understand the real estate business, don't understand your company, they read a lot about Trump's focus on a Golden Dome initiative. How does that impact your business? There's a lot of talk, you know, even before the hostilities in Iran, about the Golden Dome. there's a lot of talk you know even before the hostilities in iran about the golden dome You know, for those that don't understand the real estate business, don't understand your company, they read a lot about Trump's focus on a Golden Dome initiative. you know for those that don't understand the real estate business don't understand your company they read a lot about trump's focus on a golden dome initiative How does that impact your business? how does that impact your business

Speaker 2: Well, Golden Dome or the current activities? Well, Golden Dome or the current activities? well golden dome or the current activities

Speaker 1: Well, the Golden Dome first. Well, the Golden Dome first. well the golden dome first

Speaker 2: Well, I'm gonna do it backwards. Well, I'm gonna do it backwards. well i'm gonna do it backwards

Speaker 1: Okay. Do it backwards then. Okay. okay Do it backwards then. do it backwards then

Speaker 2: The current activities personifies to America what it's like to live in a world where you can be under threat of multiple missiles inbound in the places where you live, and it's a threat that our president has identified as intolerable for this country. Golden Dome envisions the kind of anti-missile defenses that Israel's had to deploy with their Iron Dome distributed eventually across the entire United States of America. It's aspirational in many respects. It's gonna use a lot of the great technology you can now see on TV, but it also aspires to bring some of that technology into space with space-based interceptors and eventually weaponry to deter it. The current activities personifies to America what it's like to live in a world where you can be under threat of multiple missiles inbound in the places where you live, and it's a threat that our president has identified as intolerable for this country. the current activities personifies to america what it's like to live in a world where you can be under threat of multiple missiles inbound in the places where you live and it's a threat that our president has identified as intolerable for this country Golden Dome envisions the kind of anti-missile defenses that Israel's had to deploy with their Iron Dome distributed eventually across the entire United States of America. golden dome envisions the kind of anti-missile defenses that israel's had to deploy with their iron dome distributed eventually across the entire united states of america It's aspirational in many respects. it's aspirational in many respects It's gonna use a lot of the great technology you can now see on TV, but it also aspires to bring some of that technology into space with space-based interceptors and eventually weaponry to deter it. it's gonna use a lot of the great technology you can now see on tv but it also aspires to bring some of that technology into space with space-based interceptors and eventually weaponry to deter it

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: That activity is really centered around the Redstone Arsenal. That activity is really centered around the Redstone Arsenal. that activity is really centered around the redstone arsenal

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: ... where the Missile Defense Agency and the Defense Intelligence Agency for space are centered and, as a matter of fact, NASA and other space-oriented functions. We anticipate it's gonna be a big growth opportunity for our development outside the base. Remember, it just got funded in July. We've already signed one lease with defense contractors specifically. ... where the Missile Defense Agency and the Defense Intelligence Agency for space are centered and, as a matter of fact, NASA and other space-oriented functions. where the missile defense agency and the defense intelligence agency for space are centered and as a matter of fact nasa and other space-oriented functions We anticipate it's gonna be a big growth opportunity for our development outside the base. we anticipate it's gonna be a big growth opportunity for our development outside the base Remember, it just got funded in July. remember it just got funded in july We've already signed one lease with defense contractors specifically. we've already signed one lease with defense contractors specifically

Speaker 1: What was the funding for it? I'm not an aerospace defense guy. What was the funding for it? what was the funding for it I'm not an aerospace defense guy. i'm not an aerospace defense guy

Speaker 2: It was in the One Big Beautiful Bill Act. It was in the One Big Beautiful Bill Act. it was in the one big beautiful bill act

Speaker 1: Yeah. Yeah. yeah

Speaker 2: It was $175 billion. It was $175 billion. it was $175 billion

Speaker 1: Dedicated just to Golden Dome. Dedicated just to Golden Dome. dedicated just to golden dome

Speaker 2: to Golden Dome. to Golden Dome. to golden dome

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: If you think about that's roughly 20% of the prior year defense budget. If you think about that's roughly 20% of the prior year defense budget. if you think about that's roughly 20% of the prior year defense budget

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: for one program over a three to four year period. The down payment that's in the FY 2026 budget is $25 billion. for one program over a three to four year period. for one program over a three to four year period The down payment that's in the FY 2026 budget is $25 billion. the down payment that's in the fy 2026 budget is $25 billion

Speaker 1: Interesting. It sounds like a great opportunity. You know, at your heart, you're a developer, right? You have a land bank. When you think about how much inventory to have in land and that pace of, you know, building, now we can call it spec or whatever, or inventory building, but knowing that the government is likely gonna be on the back end, how big is that land bank? How much are you doing annually in terms of trying to turn that raw inventory into, you know, new leasing? Interesting. interesting It sounds like a great opportunity. it sounds like a great opportunity You know, at your heart, you're a developer, right? you know at your heart you're a developer right You have a land bank. you have a land bank When you think about how much inventory to have in land and that pace of, you know, building, now we can call it spec or whatever, or inventory building, but knowing that the government is likely gonna be on the back end, how big is that land bank? when you think about how much inventory to have in land and that pace of you know building now we can call it spec or whatever or inventory building but knowing that the government is likely gonna be on the back end how big is that land bank How much are you doing annually in terms of trying to turn that raw inventory into, you know, new leasing? how much are you doing annually in terms of trying to turn that raw inventory into you know new leasing

Speaker 2: I think in total we've got development capacity for around eight million sq ft additional- I think in total we've got development capacity for around eight million sq ft additional- i think in total we've got development capacity for around eight million sq ft additional-

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: property, that's centered around priority defense locations. property, that's centered around priority defense locations. property that's centered around priority defense locations

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: Like Huntsville, Alabama, and I would say Fort Meade, Maryland. We don't force protection. We've just built it into our cost structure. Like Huntsville, Alabama, and I would say Fort Meade, Maryland. like huntsville alabama and i would say fort meade maryland We don't force protection. we don't force protection We've just built it into our cost structure. we've just built it into our cost structure

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: We've achieved the point in time where we can self-fund $250 million-$300 million a year in new development without any external equity or capital source on a leverage neutral basis. We acquired this land to defend our franchise and to support our customers, and so we develop to known demand. We've achieved the point in time where we can self-fund $250 million-$300 million a year in new development without any external equity or capital source on a leverage neutral basis. we've achieved the point in time where we can self-fund $250 million-$300 million a year in new development without any external equity or capital source on a leverage neutral basis We acquired this land to defend our franchise and to support our customers, and so we develop to known demand. we acquired this land to defend our franchise and to support our customers and so we develop to known demand

Speaker 1: You know, speaking on the development side, you were early on in the data center shell business with Amazon Web Services, right? You know, speaking on the development side, you were early on in the data center shell business with Amazon Web Services, right? you know speaking on the development side you were early on in the data center shell business with amazon web services right

Speaker 2: I can neither confirm nor deny our tenant. I can neither confirm nor deny our tenant. i can neither confirm nor deny our tenant

Speaker 1: Okay. That's who it is. Okay. We're gonna pretend we don't know. Okay. okay That's who it is. that's who it is Okay. okay We're gonna pretend we don't know. we're gonna pretend we don't know

Speaker 2: As I repeat, I neither confirmed nor denied. As I repeat, I neither confirmed nor denied. as i repeat i neither confirmed nor denied

Speaker 1: Okay. How much of your NOI comes from data centers? How has the shell business worked out? We can admit that you have data center shells, right? Maybe you could just talk about sort of the data center contribution and, you know, and I wanna dig into, as those leases come due, you know, how are rents rolling over? Maybe just whatever you can tell us about that side of the business. Okay. okay How much of your NOI comes from data centers? how much of your noi comes from data centers How has the shell business worked out? how has the shell business worked out We can admit that you have data center shells, right? we can admit that you have data center shells right Maybe you could just talk about sort of the data center contribution and, you know, and I wanna dig into, as those leases come due, you know, how are rents rolling over? maybe you could just talk about sort of the data center contribution and you know and i wanna dig into as those leases come due you know how are rents rolling over Maybe just whatever you can tell us about that side of the business. maybe just whatever you can tell us about that side of the business

Speaker 2: Sure. In total, we've developed about 4.6 million sq ft of data center shells. Sure. sure In total, we've developed about 4.6 million sq ft of data center shells. in total we've developed about 4.6 million sq ft of data center shells

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: for a very impressive customer. for a very impressive customer. for a very impressive customer

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: They were all pre-leased build-to-suits on a negotiated yield basis. One of the prices we had to pay- They were all pre-leased build-to-suits on a negotiated yield basis. they were all pre-leased build-to-suits on a negotiated yield basis One of the prices we had to pay- one of the prices we had to pay-

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: to get ourselves to a point where we are able to self-fund our development- to get ourselves to a point where we are able to self-fund our development- to get ourselves to a point where we are able to self-fund our development-

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: ... is we entered into joint ventures with, quite a few of those, with Blackstone ultimately as our joint venture partner. We still own 10% of, let's say, two-thirds of that. ... is we entered into joint ventures with, quite a few of those, with Blackstone ultimately as our joint venture partner. is we entered into joint ventures with quite a few of those with blackstone ultimately as our joint venture partner We still own 10% of, let's say, two-thirds of that. we still own 10% of let's say two-thirds of that

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: Currently our data center shell exposure is really only about 8%. We have several that we've just completed the development of, and as rents kick in, it'll get up to 10 or 11. It's not as great. In a perfect world, I'd have kept every one of them. Currently our data center shell exposure is really only about 8%. currently our data center shell exposure is really only about 8% We have several that we've just completed the development of, and as rents kick in, it'll get up to 10 or 11. we have several that we've just completed the development of and as rents kick in it'll get up to 10 or 11 It's not as great. it's not as great In a perfect world, I'd have kept every one of them. in a perfect world i'd have kept every one of them

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: because as the leases have matured, the net rents have increased by a minimum of 100%. because as the leases have matured, the net rents have increased by a minimum of 100%. because as the leases have matured the net rents have increased by a minimum of 100%

Speaker 1: Okay Okay okay

Speaker 2: ... as high as about 130%. ... as high as about 130%. as high as about 130%

Speaker 1: How much of those, you know, what's the cadence for? I know it's a smaller part of the portfolio, but how much is rolling over this year, next year? What's that churn? How much of those, you know, what's the cadence for? how much of those you know what's the cadence for I know it's a smaller part of the portfolio, but how much is rolling over this year, next year? i know it's a smaller part of the portfolio but how much is rolling over this year next year What's that churn? what's that churn

Speaker 2: I think it's, you know, like two-three a year. I think it's, you know, like two-three a year. i think it's you know like two-three a year

Speaker 1: Okay. All right, interesting. You know, is there any concern about the Department of Defense sort of taking its eyes off the ball of leasing space because they're so distracted with a war? Does it impact the day-to-day? I mean, we've got a government shutdown that we're dealing with partially. There's noise at the airports with TSA, et cetera. Does any of this noise, either with the war or the government funding, impact your ability to do sort of your regular way relationship with all the government agencies that you work with? Okay. okay All right, interesting. all right interesting You know, is there any concern about the Department of Defense sort of taking its eyes off the ball of leasing space because they're so distracted with a war? you know is there any concern about the department of defense sort of taking its eyes off the ball of leasing space because they're so distracted with a war Does it impact the day-to-day? does it impact the day-to-day I mean, we've got a government shutdown that we're dealing with partially. i mean we've got a government shutdown that we're dealing with partially There's noise at the airports with TSA, et cetera. there's noise at the airports with tsa et cetera Does any of this noise, either with the war or the government funding, impact your ability to do sort of your regular way relationship with all the government agencies that you work with? does any of this noise either with the war or the government funding impact your ability to do sort of your regular way relationship with all the government agencies that you work with

Speaker 2: No, it doesn't. First of all, during a shutdown, we do get paid rent. Government regulations require the contracts get paid, so it's never been an issue. The war fighting part of our customer base is not who we negotiate with for leasing space or renewing leases. It really has no material effect. It's more a headline risk. No, it doesn't. no it doesn't First of all, during a shutdown, we do get paid rent. first of all during a shutdown we do get paid rent Government regulations require the contracts get paid, so it's never been an issue. government regulations require the contracts get paid so it's never been an issue The war fighting part of our customer base is not who we negotiate with for leasing space or renewing leases. the war fighting part of our customer base is not who we negotiate with for leasing space or renewing leases It really has no material effect. it really has no material effect It's more a headline risk. it's more a headline risk

Speaker 1: Sure. Sure. sure

Speaker 2: I like to say, when the headlines hit, it's a great opportunity to get an entry point in our stock. I like to say, when the headlines hit, it's a great opportunity to get an entry point in our stock. i like to say when the headlines hit it's a great opportunity to get an entry point in our stock

Speaker 1: Yeah Yeah yeah

Speaker 2: 'Cause we usually trade off a few dollars, and you can make a quick gain pretty quickly. 'Cause we usually trade off a few dollars, and you can make a quick gain pretty quickly. 'cause we usually trade off a few dollars and you can make a quick gain pretty quickly

Speaker 1: Yeah. It's interesting, right? That kind of brings me to one of the points I wanted to mention. It's just, you know, when we look at the catalyst for the stock, right? You know, you hate to, like, boil it down to, like, war is good for you or conflict is good for you, and so forth. But I mean, if we try to separate what's going on with Iran and the Middle East and maybe, I mean, we had Venezuela, we have potentially Cuba coming, and so forth. You know, how do you think about sort of the catalyst for the stock outside of the conflicts, and what you think could propel the stock higher? Yeah. yeah It's interesting, right? it's interesting right That kind of brings me to one of the points I wanted to mention. that kind of brings me to one of the points i wanted to mention It's just, you know, when we look at the catalyst for the stock, right? it's just you know when we look at the catalyst for the stock right You know, you hate to, like, boil it down to, like, war is good for you or conflict is good for you, and so forth. you know you hate to like boil it down to like war is good for you or conflict is good for you and so forth But I mean, if we try to separate what's going on with Iran and the Middle East and maybe, I mean, we had Venezuela, we have potentially Cuba coming, and so forth. but i mean if we try to separate what's going on with iran and the middle east and maybe i mean we had venezuela we have potentially cuba coming and so forth You know, how do you think about sort of the catalyst for the stock outside of the conflicts, and what you think could propel the stock higher? you know how do you think about sort of the catalyst for the stock outside of the conflicts and what you think could propel the stock higher

Speaker 2: I really don't believe the conflicts are the catalysts that drive our stock price. I really don't believe the conflicts are the catalysts that drive our stock price. i really don't believe the conflicts are the catalysts that drive our stock price

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: our company. When the conflict occurs, the missions we support, the technology that's been developed, they apply that to the situation. The leases we have are with a variety of groups that are heavily engaged in executing that. That's not really what drives our stock. We're not selling missiles or weapons. our company. our company When the conflict occurs, the missions we support, the technology that's been developed, they apply that to the situation. when the conflict occurs the missions we support the technology that's been developed they apply that to the situation The leases we have are with a variety of groups that are heavily engaged in executing that. the leases we have are with a variety of groups that are heavily engaged in executing that That's not really what drives our stock. that's not really what drives our stock We're not selling missiles or weapons. we're not selling missiles or weapons

Speaker 1: Yeah. Yeah. yeah

Speaker 2: We're providing facilities for knowledge-based defense installations long term. I think a great catalyst for our stock is peace through strength. The recognition that the United States government is under-invested in defense, that at least before this most recent conflict, we've run the risk that we no longer have uncontested dominance in every theater of war, and that peace through strength demands that we invest to make sure that we have the most lethal fighting force in the world. We're providing facilities for knowledge-based defense installations long term. we're providing facilities for knowledge-based defense installations long term I think a great catalyst for our stock is peace through strength. i think a great catalyst for our stock is peace through strength The recognition that the United States government is under-invested in defense, that at least before this most recent conflict, we've run the risk that we no longer have uncontested dominance in every theater of war, and that peace through strength demands that we invest to make sure that we have the most lethal fighting force in the world. the recognition that the united states government is under-invested in defense that at least before this most recent conflict we've run the risk that we no longer have uncontested dominance in every theater of war and that peace through strength demands that we invest to make sure that we have the most lethal fighting force in the world

Speaker 1: You know, we talked a little bit about Golden Dome, but specifically on Space Command, are there different drivers there or opportunities for you there? You know, we talked a little bit about Golden Dome, but specifically on Space Command, are there different drivers there or opportunities for you there? you know we talked a little bit about golden dome but specifically on space command are there different drivers there or opportunities for you there

Speaker 2: Yeah. Space Command is one of the 11 combatant commands which are formed to integrate the activities of Army, Navy, Air Force, Space Force, Coast Guard into a single command structure for a theater. Current events, Central Command is executing oversight on all activities that involve the current conflict. Space Command is going to concentrate all the capabilities of the armed services for space activities. It had been stood up temporarily in Colorado Springs. When Space Force was created, Space Command was structured under the first Trump administration. They went through a process to pick the best location where it would be, should be. They came up with Huntsville, Alabama, Redstone Gateway, or Redstone Arsenal that was challenged and readjudicated twice. In all three competitions, Redstone Arsenal won the competition. Yeah. yeah Space Command is one of the 11 combatant commands which are formed to integrate the activities of Army, Navy, Air Force, Space Force, Coast Guard into a single command structure for a theater. space command is one of the 11 combatant commands which are formed to integrate the activities of army navy air force space force coast guard into a single command structure for a theater Current events, Central Command is executing oversight on all activities that involve the current conflict. current events central command is executing oversight on all activities that involve the current conflict Space Command is going to concentrate all the capabilities of the armed services for space activities. space command is going to concentrate all the capabilities of the armed services for space activities It had been stood up temporarily in Colorado Springs. it had been stood up temporarily in colorado springs When Space Force was created, Space Command was structured under the first Trump administration. when space force was created space command was structured under the first trump administration They went through a process to pick the best location where it would be, should be. they went through a process to pick the best location where it would be should be They came up with Huntsville, Alabama, Redstone Gateway, or Redstone Arsenal that was challenged and readjudicated twice. they came up with huntsville alabama redstone gateway or redstone arsenal that was challenged and readjudicated twice In all three competitions, Redstone Arsenal won the competition. in all three competitions redstone arsenal won the competition The prior president used the executive order to freeze it in Colorado Springs. The current president has overruled that order, allowed the Air Force to make its own decision, and it was once again selected for Redstone Arsenal. It will be moving in these next three years to the Redstone Arsenal. The opportunity for us initially is we have a high confidence we're gonna provide an initial building- The prior president used the executive order to freeze it in Colorado Springs. the prior president used the executive order to freeze it in colorado springs The current president has overruled that order, allowed the Air Force to make its own decision, and it was once again selected for Redstone Arsenal. the current president has overruled that order allowed the air force to make its own decision and it was once again selected for redstone arsenal It will be moving in these next three years to the Redstone Arsenal. it will be moving in these next three years to the redstone arsenal The opportunity for us initially is we have a high confidence we're gonna provide an initial building- the opportunity for us initially is we have a high confidence we're gonna provide an initial building-

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: to accept the early relocations because we can develop much quicker than the government can. There could potentially be opportunity to house the command itself beyond that, but we don't have clarity into that at this point in time. Ultimately, as the command relocates, the defense contractor community that supports that command is roughly 800 to 1.2 million sq ft of future demand that's going to want to be co-located with the command in Alabama. We think over the next two-four years, there'll be a really nice runway of growth for us in our Redstone Gateway. to accept the early relocations because we can develop much quicker than the government can. to accept the early relocations because we can develop much quicker than the government can There could potentially be opportunity to house the command itself beyond that, but we don't have clarity into that at this point in time. there could potentially be opportunity to house the command itself beyond that but we don't have clarity into that at this point in time Ultimately, as the command relocates, the defense contractor community that supports that command is roughly 800 to 1.2 million sq ft of future demand that's going to want to be co-located with the command in Alabama. ultimately as the command relocates the defense contractor community that supports that command is roughly 800 to 1.2 million sq ft of future demand that's going to want to be co-located with the command in alabama We think over the next two-four years, there'll be a really nice runway of growth for us in our Redstone Gateway. we think over the next two-four years there'll be a really nice runway of growth for us in our redstone gateway

Speaker 1: All right. That's helpful. If we take a step back, if you look at your total rental income, total NOI pie chart, how much right now is direct government leases versus government contractors versus something outside of that ecosystem, if we were to split it in those three ways? All right. all right That's helpful. that's helpful If we take a step back, if you look at your total rental income, total NOI pie chart, how much right now is direct government leases versus government contractors versus something outside of that ecosystem, if we were to split it in those three ways? if we take a step back if you look at your total rental income total noi pie chart how much right now is direct government leases versus government contractors versus something outside of that ecosystem if we were to split it in those three ways

Speaker 2: Roughly 35-36% U.S. government. Roughly 35-36% U.S. government. roughly 35-36% u.s government

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: 55% defense contractors, 10% non-defense. 55% defense contractors, 10% non-defense. 55% defense contractors 10% non-defense

Speaker 1: You know, we know on the government direct related, that's where the retention is highest, right? I mean, with the government contractors or the non-defense related, you know, how different are the characteristics of those, you know, of tenant retention rollover in those two subsets? You know, we know on the government direct related, that's where the retention is highest, right? you know we know on the government direct related that's where the retention is highest right I mean, with the government contractors or the non-defense related, you know, how different are the characteristics of those, you know, of tenant retention rollover in those two subsets? i mean with the government contractors or the non-defense related you know how different are the characteristics of those you know of tenant retention rollover in those two subsets

Speaker 2: Government, I'll just throw government defense contractors in. Government, I'll just throw government defense contractors in. government i'll just throw government defense contractors in

Speaker 1: Okay. Okay. okay

Speaker 2: They're very comparable. They're very comparable. they're very comparable

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: You know, over the last 10 years, we've averaged 80% retention. You know, over the last 10 years, we've averaged 80% retention. you know over the last 10 years we've averaged 80% retention

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: That includes part of the portfolio that was non-defense. That includes part of the portfolio that was non-defense. that includes part of the portfolio that was non-defense

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: Our government tends to approximate one. Defense contractors, you know, any given year, there's some flux as contractors win or lose business. Our government tends to approximate one. our government tends to approximate one Defense contractors, you know, any given year, there's some flux as contractors win or lose business. defense contractors you know any given year there's some flux as contractors win or lose business

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: ... make adjustments. I like to point out if we measured our renewal statistics as binary events, do we keep them or lose them? ... make adjustments. make adjustments I like to point out if we measured our renewal statistics as binary events, do we keep them or lose them? i like to point out if we measured our renewal statistics as binary events do we keep them or lose them

Speaker 1: Yep. Yep. yep

Speaker 2: We'd be at almost one with defense contractors. They have to manage their portfolio to the current business needs. We'd be at almost one with defense contractors. we'd be at almost one with defense contractors They have to manage their portfolio to the current business needs. they have to manage their portfolio to the current business needs

Speaker 1: You sort of mentioned that you can self-fund the development without raising equity capital. Can you just update us on, you know, where leverage is versus your target? Let's start there. You sort of mentioned that you can self-fund the development without raising equity capital. you sort of mentioned that you can self-fund the development without raising equity capital Can you just update us on, you know, where leverage is versus your target? can you just update us on you know where leverage is versus your target Let's start there. let's start there

Speaker 2: Our target is approximately 6x debt to EBITDA. We finished the year at 5.9x debt to EBITDA. Our credit rating and, our benchmark of peers would suggest we could get up to 6.4x or 6.5x debt to EBITDA, and we like to manage to a lower level, so we have embedded capacity to accept excess opportunity in the future. In a year where our development opportunity set were to exceed $250 million-$300 million, we have that capacity to go out and grab those developments. Our target is approximately 6x debt to EBITDA. our target is approximately 6x debt to ebitda We finished the year at 5.9x debt to EBITDA. we finished the year at 5.9x debt to ebitda Our credit rating and, our benchmark of peers would suggest we could get up to 6.4x or 6.5x debt to EBITDA, and we like to manage to a lower level, so we have embedded capacity to accept excess opportunity in the future. our credit rating and our benchmark of peers would suggest we could get up to 6.4x or 6.5x debt to ebitda and we like to manage to a lower level so we have embedded capacity to accept excess opportunity in the future In a year where our development opportunity set were to exceed $250 million-$300 million, we have that capacity to go out and grab those developments. in a year where our development opportunity set were to exceed $250 million-$300 million we have that capacity to go out and grab those developments

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: Complete them. They will, of course, be pre-leased. The predominant portion of our development is pre-leased development. When that income comes online, it'll naturally return to the 6.0 debt to EBITDA. Complete them. complete them They will, of course, be pre-leased. they will of course be pre-leased The predominant portion of our development is pre-leased development. the predominant portion of our development is pre-leased development When that income comes online, it'll naturally return to the 6.0 debt to EBITDA. when that income comes online it'll naturally return to the 6.0 debt to ebitda

Speaker 1: I'm sure you do your own benchmarking. I'm sure your finance team has done this with you going in to see the rating agencies. When you compare, you know, 6x leverage on your portfolio, which is, you know, mid-90s leased and so forth or occupied and show the stability of that cash flow, I mean, you have some, what I would call more the commodity office peers or even if we call it premium workspaces and so forth. The bottom line is we can look at the volatility of that cash flow, and there the leverage is often higher, much higher than your leverage, and the credit rating is often a notch or two higher. Now you've made some progress with the rating agencies recently. I'm sure you do your own benchmarking. i'm sure you do your own benchmarking I'm sure your finance team has done this with you going in to see the rating agencies. i'm sure your finance team has done this with you going in to see the rating agencies When you compare, you know, 6x leverage on your portfolio, which is, you know, mid-90s leased and so forth or occupied and show the stability of that cash flow, I mean, you have some, what I would call more the commodity office peers or even if we call it premium workspaces and so forth. when you compare you know 6x leverage on your portfolio which is you know mid-90s leased and so forth or occupied and show the stability of that cash flow i mean you have some what i would call more the commodity office peers or even if we call it premium workspaces and so forth The bottom line is we can look at the volatility of that cash flow, and there the leverage is often higher, much higher than your leverage, and the credit rating is often a notch or two higher. the bottom line is we can look at the volatility of that cash flow and there the leverage is often higher much higher than your leverage and the credit rating is often a notch or two higher Now you've made some progress with the rating agencies recently. now you've made some progress with the rating agencies recently Maybe you could talk about that, and, you know, why do they still apply sort of a penalty to you? I mean, are they so fixated on size? Maybe you could talk about that, and, you know, why do they still apply sort of a penalty to you? maybe you could talk about that and you know why do they still apply sort of a penalty to you I mean, are they so fixated on size? i mean are they so fixated on size

Speaker 2: No, it's actually worse than that. First of all, shameless plug, we just got upgraded by Moody's to Baa2 from Baa3. We're very, No, it's actually worse than that. no it's actually worse than that First of all, shameless plug, we just got upgraded by Moody's to Baa2 from Baa3. first of all shameless plug we just got upgraded by moody's to baa2 from baa3 We're very, we're very

Speaker 1: That was a layup for you. That was a layup for you. that was a layup for you

Speaker 2: thrilled. thrilled. thrilled

Speaker 1: I was leading you to that. Yes. I was leading you to that. i was leading you to that Yes. yes

Speaker 2: All right. Did I slam it like Jordan? All right. all right Did I slam it like Jordan? did i slam it like jordan

Speaker 1: Yeah. Yeah. Yeah. yeah yeah Yeah. yeah

Speaker 2: Good. Good. good

Speaker 1: You got it. You got it. you got it

Speaker 2: Their argument for delaying or not upgrading through both of the major rating agencies is highly theoretical. Their argument for delaying or not upgrading through both of the major rating agencies is highly theoretical. their argument for delaying or not upgrading through both of the major rating agencies is highly theoretical

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: They say we have a very tight concentration of customers. They say we have a very tight concentration of customers. they say we have a very tight concentration of customers

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: a very tight concentration of assets. Now, I would flip it and say, "That's why we should be higher rated. a very tight concentration of assets. a very tight concentration of assets Now, I would flip it and say, "That's why we should be higher rated. now i would flip it and say "that's why we should be higher rated

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: We have the best credit tenants. We have the best credit tenants. we have the best credit tenants

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: in the country, in the best locations where demand has proven to be high in any cycle you wanna refer to, but they kinda get that backwards. My smart-ass comment is, "Would we be a better risk if we had law firms across the country? in the country, in the best locations where demand has proven to be high in any cycle you wanna refer to, but they kinda get that backwards. in the country in the best locations where demand has proven to be high in any cycle you wanna refer to but they kinda get that backwards My smart-ass comment is, "Would we be a better risk if we had law firms across the country? my smart-ass comment is "would we be a better risk if we had law firms across the country

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: I don't think we would. We have the United States government and defense contractors, and by the way, defense contractors have to be in good financial standing to do business with the United States government. I don't think we would. i don't think we would We have the United States government and defense contractors, and by the way, defense contractors have to be in good financial standing to do business with the United States government. we have the united states government and defense contractors and by the way defense contractors have to be in good financial standing to do business with the united states government

Speaker 1: What do you really think drove Moody's? What, you know, what changed in their mind? Was it just a recognition of the stability of your cash flow and occupancy in light of what's happened with the broader office peer set? What do you really think drove Moody's? what do you really think drove moody's What, you know, what changed in their mind? what you know what changed in their mind Was it just a recognition of the stability of your cash flow and occupancy in light of what's happened with the broader office peer set? was it just a recognition of the stability of your cash flow and occupancy in light of what's happened with the broader office peer set

Speaker 2: They've always recognized the argument, but on several occasions they'd say, "Well, let's see how you do in this environment." When COVID hit, they said, "Let's see what happens through COVID." Well, we sailed through COVID without any problem. It was higher interest rates, it was higher inflation. Our durability, our seven-year track record of FFO growth, high occupancy, we've really demonstrated to them that we are far more resilient than their theoretical arguments might suggest. They've always recognized the argument, but on several occasions they'd say, "Well, let's see how you do in this environment." When COVID hit, they said, "Let's see what happens through COVID." Well, we sailed through COVID without any problem. they've always recognized the argument but on several occasions they'd say "well let's see how you do in this environment." when covid hit they said "let's see what happens through covid." well we sailed through covid without any problem It was higher interest rates, it was higher inflation. it was higher interest rates it was higher inflation Our durability, our seven-year track record of FFO growth, high occupancy, we've really demonstrated to them that we are far more resilient than their theoretical arguments might suggest. our durability our seven-year track record of ffo growth high occupancy we've really demonstrated to them that we are far more resilient than their theoretical arguments might suggest

Speaker 1: How should investors that might be new to your story, you know, think about which party is in control in Washington, D.C.? We have the midterm elections coming up. I think the expectation is that the Republicans won't hold everything, and that the pendulum will shift a little bit to the left. You know, is there. You've obviously done all the tracking, you know, between the correlation between the elections and DOD budget and so forth. What are some of the misconceptions regarding that? Is it something anyone should be worried about if that political pendulum does shift come November? How should investors that might be new to your story, you know, think about which party is in control in Washington, D.C.? how should investors that might be new to your story you know think about which party is in control in washington d.c We have the midterm elections coming up. we have the midterm elections coming up I think the expectation is that the Republicans won't hold everything, and that the pendulum will shift a little bit to the left. i think the expectation is that the republicans won't hold everything and that the pendulum will shift a little bit to the left You know, is there. you know is there You've obviously done all the tracking, you know, between the correlation between the elections and DOD budget and so forth. you've obviously done all the tracking you know between the correlation between the elections and dod budget and so forth What are some of the misconceptions regarding that? what are some of the misconceptions regarding that Is it something anyone should be worried about if that political pendulum does shift come November? is it something anyone should be worried about if that political pendulum does shift come november

Speaker 2: The misconception is that throughout all parts of government, we have a disagreement between the parties, but in defense, we have very strong alignment. The misconception is that throughout all parts of government, we have a disagreement between the parties, but in defense, we have very strong alignment. the misconception is that throughout all parts of government we have a disagreement between the parties but in defense we have very strong alignment

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: Over the last three presidential terms, it's a question of is it good or great? Over the last three presidential terms, it's a question of is it good or great? over the last three presidential terms it's a question of is it good or great

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: In each, through each one of those presidencies, there is a common recognition in the House Armed Services Committee and the Senate Committee on Armed Services. In each, through each one of those presidencies, there is a common recognition in the House Armed Services Committee and the Senate Committee on Armed Services. in each through each one of those presidencies there is a common recognition in the house armed services committee and the senate committee on armed services

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: ... that we need to invest in defense to keep America strong. We've, since sequestration, we have a graph, if you look at our reference material- ... that we need to invest in defense to keep America strong. that we need to invest in defense to keep america strong We've, since sequestration, we have a graph, if you look at our reference material- we've since sequestration we have a graph if you look at our reference material-

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: Defense budget has increased every year. Defense budget has increased every year. defense budget has increased every year

Speaker 1: Yeah. By an average of what? I think you know the stat. Yeah. yeah By an average of what? by an average of what I think you know the stat. i think you know the stat

Speaker 2: probably 7%. probably 7%. probably 7%

Speaker 1: Yeah, 7%. Pretty good CAGR when that's driving your business. I wanna give our audience here in the room a chance to ask any questions. Anyone have one? Please, the mic is coming. Yeah, 7%. yeah 7% Pretty good CAGR when that's driving your business. pretty good cagr when that's driving your business I wanna give our audience here in the room a chance to ask any questions. i wanna give our audience here in the room a chance to ask any questions Anyone have one? anyone have one Please, the mic is coming. please the mic is coming

Speaker 3: Thank you. Can you talk about, there's a lot of energy, as evidenced by this conference and just what's going on in the world, around new entrants into the defense space. Can you talk about the kind of interactions you're having with some of those new entrants, and the kind of services or opportunities you can deliver to them, with your business? Thank you. thank you Can you talk about, there's a lot of energy, as evidenced by this conference and just what's going on in the world, around new entrants into the defense space. can you talk about there's a lot of energy as evidenced by this conference and just what's going on in the world around new entrants into the defense space Can you talk about the kind of interactions you're having with some of those new entrants, and the kind of services or opportunities you can deliver to them, with your business? can you talk about the kind of interactions you're having with some of those new entrants and the kind of services or opportunities you can deliver to them with your business

Speaker 2: You're talking about the new startup companies? You're talking about the new startup companies? you're talking about the new startup companies

Speaker 3: New startup companies who might not be familiar with this world and maybe. New startup companies who might not be familiar with this world and maybe. new startup companies who might not be familiar with this world and maybe

Speaker 2: Yeah Yeah yeah

Speaker 3: Say, "Oh, what's a SCIF? Say, "Oh, what's a SCIF? say "oh what's a scif

Speaker 2: One, some of them have developed technology in other parts of the country and need, now that they've proven it out, to relocate to be near the commands they're gonna support. To that point, Golden Dome. One, some of them have developed technology in other parts of the country and need, now that they've proven it out, to relocate to be near the commands they're gonna support. one some of them have developed technology in other parts of the country and need now that they've proven it out to relocate to be near the commands they're gonna support To that point, Golden Dome. to that point golden dome

Speaker 1: Mm-hmm. Mm-hmm. mm-hmm

Speaker 2: Three or four technology companies are looking at leasing in our business park right now, because they'll be adjacent to the Golden Dome command structure. Another area of great demand that we've enjoyed is cybersecurity, 'cause we have significant holdings outside Fort Meade, where U.S. Cyber Command is held. We've been able to attract the good idea startup company, put them into, you know, the space that they can't afford, support 'em as they grow their business, relocate them to other buildings, and support them as they get the contract that allows them to have a SCIF with our deep experience in constructing SCIF, and guide them through the process and help get them up to speed. We have a concept that we call Life Cycle Landlord. Three or four technology companies are looking at leasing in our business park right now, because they'll be adjacent to the Golden Dome command structure. three or four technology companies are looking at leasing in our business park right now because they'll be adjacent to the golden dome command structure Another area of great demand that we've enjoyed is cybersecurity, 'cause we have significant holdings outside Fort Meade, where U.S. another area of great demand that we've enjoyed is cybersecurity 'cause we have significant holdings outside fort meade where u.s Cyber Command is held. cyber command is held We've been able to attract the good idea startup company, put them into, you know, the space that they can't afford, support 'em as they grow their business, relocate them to other buildings, and support them as they get the contract that allows them to have a SCIF with our deep experience in constructing SCIF, and guide them through the process and help get them up to speed. we've been able to attract the good idea startup company put them into you know the space that they can't afford support 'em as they grow their business relocate them to other buildings and support them as they get the contract that allows them to have a scif with our deep experience in constructing scif and guide them through the process and help get them up to speed We have a concept that we call Life Cycle Landlord. we have a concept that we call life cycle landlord We're constantly looking for that small guy who's breaking out, and we tell 'em, "I wanna be your landlord when you need a full building. We're constantly looking for that small guy who's breaking out, and we tell 'em, "I wanna be your landlord when you need a full building. we're constantly looking for that small guy who's breaking out and we tell 'em "i wanna be your landlord when you need a full building

Speaker 1: One more in the room. Yilma Abebe. One more in the room. one more in the room Yilma Abebe. yilma abebe

Speaker 3: Can you talk about the 35% of your business that's direct in the government? Why would the government choose to lease and then own real estates outright? Can you talk about the 35% of your business that's direct in the government? can you talk about the 35% of your business that's direct in the government Why would the government choose to lease and then own real estates outright? why would the government choose to lease and then own real estates outright

Speaker 2: Well, the fact of the matter is the government never has enough money for the facilities that they require. The missions we support generally are funded out of the DOD, and there's a line item in the DOD budget called MILCON or military construction. For them to get a facility that they own, they have to compete with all the missions worldwide in the DOD from, you know, Okinawa to Europe to get that priority funding to build the building and there's just never enough money. We are, we don't get all of their business, but I like to say we fill the gaps. When there's not enough money for the missions we support, then they can move forward to lease space, and we've been a go-to source of that leasing for over 30 years. Well, the fact of the matter is the government never has enough money for the facilities that they require. well the fact of the matter is the government never has enough money for the facilities that they require The missions we support generally are funded out of the DOD, and there's a line item in the DOD budget called MILCON or military construction. the missions we support generally are funded out of the dod and there's a line item in the dod budget called milcon or military construction For them to get a facility that they own, they have to compete with all the missions worldwide in the DOD from, you know, Okinawa to Europe to get that priority funding to build the building and there's just never enough money. for them to get a facility that they own they have to compete with all the missions worldwide in the dod from you know okinawa to europe to get that priority funding to build the building and there's just never enough money We are, we don't get all of their business, but I like to say we fill the gaps. we are we don't get all of their business but i like to say we fill the gaps When there's not enough money for the missions we support, then they can move forward to lease space, and we've been a go-to source of that leasing for over 30 years. when there's not enough money for the missions we support then they can move forward to lease space and we've been a go-to source of that leasing for over 30 years

Speaker 1: Anybody else? Anybody else? anybody else

Speaker 2: By the way, we can also build the antiterrorism/force protection building in half the time for half the money than it takes the U.S. government. We're also a speed to market kinda solution as well. By the way, we can also build the antiterrorism/force protection building in half the time for half the money than it takes the U.S. government. by the way we can also build the antiterrorism/force protection building in half the time for half the money than it takes the u.s government We're also a speed to market kinda solution as well. we're also a speed to market kinda solution as well

Speaker 1: Last question from me, Steve. Is there any opportunity to recreate what you did in Huntsville in another market? Is there like a list of. You know, does the government say, "Hey," not that they're gonna just tell you, but that, you know, "We'd like to work with you on, you know, here's a new area of the country that we think we might be building up a bigger presence"? Last question from me, Steve. last question from me steve Is there any opportunity to recreate what you did in Huntsville in another market? is there any opportunity to recreate what you did in huntsville in another market Is there like a list of. is there like a list of You know, does the government say, "Hey," not that they're gonna just tell you, but that, you know, "We'd like to work with you on, you know, here's a new area of the country that we think we might be building up a bigger presence"? you know does the government say "hey," not that they're gonna just tell you but that you know "we'd like to work with you on you know here's a new area of the country that we think we might be building up a bigger presence"

Speaker 2: We have several active dialogues where we've identified parts of the DOD that need the same kind of help we've given to the missions. We have several active dialogues where we've identified parts of the DOD that need the same kind of help we've given to the missions. we have several active dialogues where we've identified parts of the dod that need the same kind of help we've given to the missions

Speaker 1: Mm-hmm Mm-hmm mm-hmm

Speaker 2: We support. I will never tell you where they are, and I will never tell you when we expect them to occur. We support. we support I will never tell you where they are, and I will never tell you when we expect them to occur. i will never tell you where they are and i will never tell you when we expect them to occur

Speaker 1: I don't expect you to tell me where they are, but I am curious if you think that if we look five or 10 years from now, will your geographic footprint look different? I don't expect you to tell me where they are, but I am curious if you think that if we look five or 10 years from now, will your geographic footprint look different? i don't expect you to tell me where they are but i am curious if you think that if we look five or 10 years from now will your geographic footprint look different

Speaker 2: I think five years from now we should be able to add at least one if not two more locations. I think five years from now we should be able to add at least one if not two more locations. i think five years from now we should be able to add at least one if not two more locations

Speaker 1: Okay. Interesting. All right. I think we'll end it on that with a minute to spare. Okay. okay Interesting. interesting All right. all right I think we'll end it on that with a minute to spare. i think we'll end it on that with a minute to spare

Speaker 2: Great Great great

Speaker 1: Stephen, thank you very much. Thanks to Britt and Venkat for coming. We appreciate you joining us at the Industrials Conference for a different twist on you know some of the opportunities in the defense-related industry. Good to have you. Stephen, thank you very much. stephen thank you very much Thanks to Britt and Venkat for coming. thanks to britt and venkat for coming We appreciate you joining us at the Industrials Conference for a different twist on you know some of the opportunities in the defense-related industry. we appreciate you joining us at the industrials conference for a different twist on you know some of the opportunities in the defense-related industry Good to have you. good to have you

Speaker 2: Thank you for having us. Thank you for having us. thank you for having us

Speaker 1: Okay. Okay. okay

Speaker 2: Appreciate it. Appreciate it. appreciate it

Speaker 1: Thank you. Thank you. thank you