COPT DEFENSE PROPERTIES — Call Transcript 2026

All right, let's get going here. Thanks everybody, good morning. My name is Tony Paolone. I'm a research analyst at JPMorgan, and I'm here to present the management team of COPT Defense Properties. It's my pleasure to introduce these guys, and then I'll moderate some Q&A. What we'll do is we typically do with these is keep these fairly open, so that if you have any questions, go ahead and raise your hand and I'll get you in here, and we'll keep the conversation going for the next 30 minutes. With that, I'm going to start at your left end of the table, Anthony Mifsud, who's Chief Financial Officer of the company, Steve Budorick, Chief Executive Officer, and Britt Snider, Chief Operating Officer of CDP. What I'll first do is kick it over to you, Steve, and maybe just give us a quick two to three minutes on COPT and what you do and what the portfolio looks like, and then we'll go from there. Okay. Thank you. COPT Defense Properties is a specialized REIT, deeply concentrated in mission critical assets that support the national defense activity of the United States government. The vast majority of our 207 properties are located adjacent to or occupied by priority defense missions, generally involving knowledge-based defense activities. The missions we support include intelligence, surveillance or reconnaissance, cyber security and network activities, naval, sea, and air technology development, missile attack and defense systems, drone aviation technology development, cloud computing, and others. Our property locations are not typical for an office company. They're 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 defense IT portfolio contains high security operations, and that includes nine U.S. Government secured campuses representing over 4 million square feet that's anti-terrorism force protected and contains SCIF, or Secured Compartmentalized Information Facility improvements. We have another 1 million square feet of high security leases with the U.S. Government that are SCIF and access controlled. We have 6 million square feet of defense contractor leases with SCIF, and 15 cloud computing campuses representing over 6 million square feet that are fenced with limited access. Additionally, these defense tenants must work in their office due to the security requirements. They're executing classified missions which must be performed in a secure space. If you take your work home, you go to jail. It's called espionage. Today, over 93% of our cash NOI is derived from defense IT properties. Our pre-lease developments will increase that figure in the coming years. Our defense IT segment was 96.4% leased at quarter end, which is well above the peer average. The U.S. government is our largest tenant by revenue. We have 99 separate leases and 70 different properties totaling 5.7 million square feet and producing 35% of our annualized rental revenue. Our defense contractor tenants lease over 15 million square feet. This includes over 3 million square feet of cyber defense contractor tenants. Defense contractors contribute 52% of our ARR, and 16 of our top 20 tenants are defense contractors. Non-defense locations provide less than 7% of cash NOI today. This consists of five regional office assets located in the Baltimore Waterfront, Tysons Corner in Washington, D.C., and the CBD. Our tenants in these assets have excellent credit postures. We do plan to recycle these assets as markets support reasonable sale values. Our strategy is straightforward. We allocate capital to durable demand locations adjacent to priority defense installations and missions. Our playbook is effective and low risk. We execute highly pre-leased developments, redevelopments, or repositionings. Occasionally, we find an asset that meets our criteria that we can invest in. We maintain a strong investment-grade rated balance sheet, evidenced by our recent upgrade by Moody's to Baa2. Our competitive advantage really has four pillars of excellence. We have an operating platform that's operated U.S. government high security facilities for over 30 years. Their experience and credentials, which is unique, 45% of our employees have active or pending security credentials. We have significant development expertise, which includes SCIF, ATFP, or Anti-Terrorism Force Protection, data center, and other mission-critical facilities. We have a 30-plus-year track record of building and operating the highest security facilities for the U.S. government and their defense contractors. We own advantage land positions, as our predecessors had foresight to invest in land approximate to priority locations. They're approximate to the mission-critical knowledge-based defense installations that we serve. In summary, we're a specialized REIT that is linked to the defense economy and not correlated with the broader economy. Our assets have strategic features and locations. There is little or no risk from work from home, and there's strong demand for new development and vacancy. With that, I'll turn it back to you. All right. Thanks, Steve. I want to get into the demand side because I think that's just so critical to what you all do. Before doing that, one thing you mentioned was your largest tenant being the U.S. government. Before we get too far, maybe can you step back and note the types of leases that you all have with the government that, in comparison to, say, like a typical GSA lease that many of us might be familiar with? So the parts of the Government we do business with have their own procurement authority because they need to be exempt from, just call it bureaucracy. They need what they need, where they need it, with the people they need to do business with, and they have discretion. One of the interesting components is our rents have escalators, annual escalators to the base rent, which is very different from GSA leases. Some of our customers, we sign what's technically a one-year lease, and those leases have automatic renewals that unless the tenant were to make an affirmative action, they automatically renew for four years, nine years, or 14 years. We do this to make it easy for them to score in the budget scoring process, and use basically one year of money to fund these leases. Got it. Thank you for that. Now let's go back to this demand. I think it's pretty clear these days that defense is pretty important. Maybe as you dig into your portfolio a bit more, are there parts of the defense budget or parts of the defense apparatus that are more or less important to driving demand in your portfolio? Well, our portfolio serves a variety of missions that I kind of went through in the beginning. Generally, as defense budgets go up, we see increases in demand in our portfolio. The 2026 defense budget was pretty extraordinary because it's almost $1 trillion, and it was a 20% year-over-year increase from 2025. Since 2016, we've enjoyed very good defense budget increases, on average about 4.5%. This 20% is the largest in over 10 years. There are two key areas in this year's defense budget that really stand out in favor of our portfolio. One is the intelligence budget, which is now $115 billion for 2026. It's a $14 billion increase, or almost 14%. That's the largest year-over-year increase in intelligence in over 20 years. Of course, the Cyber budget was increased to $16.5 billion. For those of you that don't know this, DoD Cyber is under the command of U.S. Cyber Command, which is located in Fort Meade, Maryland, which is basically the backyard of our company. They got a $2 billion increase of 13%, and that's a big driver of both our National Business Park and Columbia Gateway portfolio. Okay. Let's get into the portfolio. What's leasing been to date, and what did you tell us you were going to do on the leasing side this year? I'm going to let Britt answer this. Yeah. We've got. This is his realm. A target of 400,000 sq ft of vacancy leasing for the year. So far, we've completed 185,000 sq ft of leasing towards that target. We also have another 150,000 sq ft of deals that I would say are in advanced negotiations, which are right at the end of the negotiation period. If you take that, it's about 330,000-340,000 sq ft combined, and towards a 400,000 sq ft total. We're very confident where we are from a vacancy leasing perspective. Investment leasing, which is leasing we've done really for our development projects, that's approximately 400,000 sq ft that we've completed so far to date. A couple buildings, notably in our National Business Park portfolio in Maryland. Then we've done, so far, 1.2 million square feet of renewal volume in the portfolio, which includes our nearly one million square foot campus in San Antonio, which was obviously a huge driver to that early renewal number. So far, very active and successful beginning of the year. What's historically been your renewal rate? How frequently do your tenants stay? Yeah, it's really the backbone stat, I would say, of our portfolio. Our retention is generally in the 80% range when a lot of our peers are typically in the 40%-42% range. If you really think about the cost advantage of that with the downtime that other companies have to re-lease their projects and their buildings, that it's just a huge advantage. Downtime, TIs, leasing commissions, whereas that's significantly less on a renewal. 80% versus 42% retention, it's a huge advantage for us. What about lease economics? You're renewing a lot of your leases. You're doing well on the vacancy leasing. What do rental rate economics look like? Do you typically have brokers involved in these deals? Is there a lot of TI? What happens on a lease deal in your portfolio that might be the same or different than a typical office asset? Well, I would say from a lease economics perspective, our concessions are much more manageable, so the TIs, free rent, are significantly less than a typical deal. Also, I would say that the amount of investment that these tenants are making is significantly more. That creates alignment between us and the tenant, and actually it really speaks to the retention of why these tenants stick with us longer. Yeah, I would say our concessions are down 25% since 2023. Pretty significant ability for us to have additional pricing power when we're talking to tenants. One more item I'd throw in. Our leases are unique in that, as I mentioned, they have annual escalators of growth. They tend to grow north of 3.5% over the term. For the last three years, our mark-to-markets have been positive, 1%-2%. The embedded growth is really an indicator of how strong our portfolio functions. One of the things we've seen lately is a lot of tech companies, quantum, some of these other AI buzzwords and things out there, doing work for the government and becoming effectively contractors. Are you seeing that in your portfolio? Do these folks want to be in certain areas? Can you comment on that? We have quite a bit of tech company leases embedded in our portfolio. We don't identify where, but some of the big, very big names that choose to be anonymous are in multiple locations serving the DoD client. When it comes to quantum, Britt can share with you some recent news that's pretty exciting. We recently just had a groundbreaking at the University of Maryland, a site that we control in College Park, Maryland, with a build to suit for ARLIS, which is the Applied Research Laboratory for Intelligence and Security. That is a very unique building. The ARLIS was already a tenant in our portfolio on one floor of an existing building there. Now they came to us wanting an HQ. Having them there, it's a partnership with the University of Maryland, with DoD, specifically DARPA. It actually will house the first quantum computer in the state of Maryland. It's a very unique build-out for us. We're excited about the project. Maryland is making a huge investment to become what they call the quantum capital of the United States. There's, I think, a total of $1 billion investment that's going in to create a quantum ecosystem in Maryland. We're excited to be a part of that. I think it's a good pivot point into development here. Maybe with that, why don't you give us a little bit more detail on the development pipeline today, what you plan to spend on it over the course of this year, and just how you think about allocating to development over time, like your multi-year cadence of projects? Sure. Currently, we have about 1 million square feet under development, seven separate projects. Combined, about 71% pre-leased, represents a little over a half a trillion dollars. Half a billion. Half a billion, sorry. Got a little carried away. We have been a regular developer for 15 years. If you look back the last 10 years, on average, we put about $275 million to work primarily in development. During the last 10 years, we've only found three assets that fit our portfolio criteria that we could acquire. It's an essential part of our company. It's an essential part of servicing our clients because as missions grow, they need new modern facilities to support the missions that we align with. It's right down the middle of our fairway. Do you typically think about starting with a lease in hand, or how do you think about when to start projects? The vast majority of our development has been either significantly pre-leased or built to suit. We have two locations, two of our most successful parks, where we have gotten to the point where we are so fully leased, we have no inventory left. We start a building because we need inventory. For instance, in Alabama right now, we have 2.5 million square feet. We have 24 buildings that are 99.6% leased. We have one 10,000 sq ft vacancy in 24 buildings, and we have a tenant who's negotiating to lease that. We started a building last year to create inventory to support the growth at Redstone Arsenal. That building's 150,000 sq ft. It's 41% leased right now. Active negotiations will consume, if successful, the rest of that vacancy. We're currently working to kick off our next inventory building to supply that. We have similar characteristics at our National Business Park, where the last building we started, we were 4.5 million square feet. It was 99.5% leased, and our biggest vacancy was 7,000 sq ft. We built a building. Going back to Huntsville, how much runway do you have there? How much land, or how many years of projects do you think you could do there? Let me just share our development opportunity in Huntsville. We're literally partners with the United States Army in Huntsville. The land we control is owned by the U.S. Army. It's on the installation, but outside the secure perimeter, and we control it with what's essentially a perpetual land lease. By the way, we don't pay rent on land until we get a building and collect rent. We're built to 2.5 million square feet. We have over 3 million square feet of development capacity and the identified land under our lease right now, with opportunities to expand that in the future as our success merits it. I might add, it's a pretty exciting market right now because if you pay attention to some of the activities that, the drone attack and missile activities that happened in the Middle East over the last couple of years, the U.S. government's response is the Golden Dome program, which is designed, or conceptually will bring anti-missile, anti-drone defense to the continental United States, and Alaska, and Hawaii. It's a pretty impressive program. Its initial earmark is $185 billion over five years to create new technology and then coordinate existing technologies in the United States. The first $21 billion got appropriated in July, and very little of that money has been actually allocated to contract awards. In our business, when money gets allocated, typically we see the demand from that program expansion 12-18 months later. That sets forth a pretty exciting runway for us in Huntsville. By the way, that program is being coordinated out of the Redstone Arsenal in Huntsville. Then there's another $17 billion requested for FY 2027. It's one program. It's a staggering amount of money for one program. Yeah. Remind us, what did you tell the investment community that you would do in terms of starts this year on the development side and development leasing? Remind us. Where are you with that? We put out a dollar value, the midpoint of our guidance was $250 million. On our last call, we elevated that to $290 million. We're basically at $250 right now. One additional start, which will clearly happen in Huntsville, if not more than one, would satisfy the midpoint of our guidance. Okay. What do you make on all these developments? Money. All right, good answer. Our threshold cash on cash yield is 8.5% on the first year's cash rent. Sometimes we can do better than that. That's our threshold for approval. Got it. I want to pivot for one minute because data centers. Talk about your data center business, just because it's such a hot topic, and I think you all were doing this way before many others were doing it, and I think you've had one of the best interesting data center businesses out there. Just give everybody a sense of where that is today. We've been developing data centers for a particular cloud computing customer for 13 years. In total, we've developed about 6.3 million square feet. All of that has been pre-leased in a structure that's very compatible with our business scenarios, in that we acquire land, build the shell, assist in securing the location for them, and they invest in the critical power and MEP to make it a tier three or four data center. We're co-invested in these assets in a significant way. Spend ratio traditionally has been 9:1 or 10:1. $9 or $10 of the tenants for every $1 that we put in. Currently, we've just completed two build-to-suits. We've got a couple of smaller infill locations that we're working on that are modest in size. We acquired some land in Iowa, aspiring to do about maybe 3 million square feet of data centers in total, and a gigawatt of power. The conditions in the United States right now is that the demand for power exceeds the available supply in the distribution network. We're probably three to four years out from being able to start development on that project. Okay, right now, as you said, as a percentage of the company's NOI, how much is data centers? About 9%. 9%. Yeah. Okay. You'd mentioned earlier that it's been very difficult to find acquisitions. You're a developer. You did make an interesting acquisition this past quarter, though, basically a covered land play. Can you talk about that for a minute? Yeah. The market it's in is in Northern Virginia that serves the intelligence community. We're currently the largest landlord in that market, but we'd like to deepen our concentration. Another owner had a property that sits on a land lease, and they needed to refinance in 2024, and we looked to buy the asset and the land in a kind of a combined purchase, and it didn't work out from a pricing standpoint. The land became available and we stepped in, and we bought the land. Now we have the senior position, if you will, in the capital stack. The owner of the building is hoping to refinance a mortgage that's already matured. Long-term, we aspired to own the asset, but we aspired to own it with returns that are satisfactory to our objectives, similar to our development yields. We'll just sit and wait. Okay. The buildings are excellent buildings. First of all, they're pretty unusual, and they were built to ATFP standards without a pre-lease with the U.S. government tenant in it. The major tenant is the FBI Technology Division, which includes their cyber capabilities, and it is the COOP for the FBI headquarters, where the FBI director would displace in an event that the facility in the Reagan Building was compromised. Okay. Excuse me. We touched on a number of parts of your business. I want to loop Anthony into this. Why don't you piece this together for us if you can? You've got internal growth on the leasing side. You've got developments. You did make an acquisition. You got a balance sheet. Tie this all together for us, and what are the components of growth, and how do you think about growth in earnings the next couple of years? We've generated 4.5% compound annual growth in FFO per share from 2019 to the midpoint of our guidance for 2026. That is a combination of 2%-2.5% internal growth because of the escalators within our leases in our portfolio, and then the benefit of our developments placed into service throughout that period. Our expectation is that that platform will continue going forward with our operating portfolio continuing to generate that 2%-2.5% internal growth, and then external growth coming in that same kind of range, 2%-2.5%, as developments are placed into service. For 2026, the midpoint of our guidance that we updated in our last call is a 1.5% growth over 2025's results. That's a bit muted compared to what we've executed over the past several years because of the impact of a refinancing of a $400 million bond that matured in March. That bond had an interest rate of 2.25%, was refinanced with the lowest credit spread in the office sector at 95 basis points for a five year bond. The rate went from 2.25% to 4.5%. That is about a $0.09 impact for 2026 FFO per share. Excluding the impact of that financing cost, FFO, that 1.5% would have been 4.8%. Again, in line with what we've produced over the last seven years. Got it. To fund the development, walk us through where your target leverage is and what your source and uses look like. Sure. Our target leverage has been where we've maintained leverage over the past six to seven years, at ±6x as a developer. As Steve mentioned, having about a $500 million dollars worth of development for non-income-producing assets underway at any one time. Our portfolio generates about $100 million worth of free cash flow after our dividend and after the capital we invest in our operating portfolio. That, combined with the incremental EBITDA from our operating portfolio and from the developments placed into service, gives us the capacity to fund $250 million-$300 million worth of new development each year on a leverage-neutral basis. We've been in that position since 2024 with the ability to self-fund those development opportunities. That's really largely driven by what Steve and Britt mentioned with respect to our retention rate. Our capital can go to external growth as opposed to funding the re-leasing of non-renewals within the existing portfolio. Our very strong renewal rate supports that ability to self-fund. Got it. We got a question, so I'll let that happen because we're coming up on time. Yeah, that's okay, thanks. What's the useful life of these assets, and then what happens to the assets after they become obsolete and then to a purpose they have to [audio distortion]. Yeah. Let me just repeat it for the webcast. The question is just useful life of your assets and residual value, effectively. I don't think it normally in terms of useful life. When we develop a new asset, I would expect that the basic mechanicals are good for 25-30 years. Some of the assets that we have in the U.S. government have been fully leased for over 30 years. Over time, we routinely reinvest in those assets to keep them current and functioning. There's no shelf life, if you will. They are office buildings primarily. We have about 6 million square feet of data centers, but besides that, they're well-located office buildings. Their proximity to the mission is one of the key advantages to them, that the contractor or the government user is very proximate to the main mission. The interaction that's required between the contractor and the mission is a critical point of difference. We have a building that's been leased every day, every square foot, for 32 years to the United States Government. That building will be leased for the next 10-20 at least. Find me another one of those. All right. Well, we have one other question. Go ahead. [audio distortion] What share of your portfolio is SCIF? ATFP, SCIF and ATFP, Anti-Terrorism Force Protection. What percentage? What percentage? 80% of the portfolio contains some form of high security measures. I went through that. It starts with the nine U.S. Government campuses that are about 4.5 million square feet, both ATFP and SCIF. ATFP is a requirement for the government, not necessarily the defense contractor. We have another million square feet that's SCIF, but not ATFP, where under certain rules, they can be in other buildings. We've got over 6 million square feet of defense contractor space that is SCIF. Do those rules change, [audio distortion]. What rules? SCIF? [audio distortion] Yeah. They have changed over time. There is a current standard that's more significant. It was really initiated about 2011. There are times when older SCIFs have to get upgraded to that current standard. That burden is really a tenant burden, not a landlord burden. It's one of the things that really drives our amazing retention rate, is the location, for one. You can't get closer to the mission. Two is the tenant co-investment. When we fund a lease, we give it a market tenant improvement allowance. To build new SCIF today is almost $300 a foot. It's well above our Tenant Improvement, the tenant is coming out of pocket to make the investment. Once they build the SCIF, it can't be relocated, it can't be breached. It takes a special authorization to be able to build one in the first place. You can't just build one on spec. You have to be authorized by the government. It's a key component to our retention. Great. Well, we're up on time. I want to thank you guys for doing this and appreciate the audience here today. Thanks, everybody. Thanks again. Thank you.

Speaker 4: All right, let's get going here. Thanks everybody, good morning. My name is Tony Paolone. I'm a research analyst at JPMorgan, and I'm here to present the management team of COPT Defense Properties. It's my pleasure to introduce these guys, and then I'll moderate some Q&A. What we'll do is we typically do with these is keep these fairly open, so that if you have any questions, go ahead and raise your hand and I'll get you in here, and we'll keep the conversation going for the next 30 minutes. With that, I'm going to start at your left end of the table, Anthony Mifsud, who's Chief Financial Officer of the company, Steve Budorick, Chief Executive Officer, and Britt Snider, Chief Operating Officer of CDP. All right, let's get going here. all right let's get going here Thanks everybody, good morning. thanks everybody good morning My name is Tony Paolone. my name is tony paolone I'm a research analyst at JP Morgan, and I'm here to present the management team of COPT Defense Properties. i'm a research analyst at jp morgan and i'm here to present the management team of copt defense properties It's my pleasure to introduce these guys, and then I'll moderate some Q&A. it's my pleasure to introduce these guys and then i'll moderate some q&a What we'll do is we typically do with these is keep these fairly open, so that if you have any questions, go ahead and raise your hand and I'll get you in here, and we'll keep the conversation going for the next 30 minutes. what we'll do is we typically do with these is keep these fairly open so that if you have any questions go ahead and raise your hand and i'll get you in here and we'll keep the conversation going for the next 30 minutes With that, I'm going to start at your left end of the table, Anthony Mifsud, who's Chief Financial Officer of the company, Steve Budorick, Chief Executive Officer, and Britt Snider, Chief Operating Officer of CDP. with that i'm going to start at your left end of the table anthony mifsud who's chief financial officer of the company steve budorick chief executive officer and britt snider chief operating officer of cdp What I'll first do is kick it over to you, Steve, and maybe just give us a quick two to three minutes on COPT and what you do and what the portfolio looks like, and then we'll go from there. What I'll first do is kick it over to you, Steve, and maybe just give us a quick two to three minutes on COPT and what you do and what the portfolio looks like, and then we'll go from there. what i'll first do is kick it over to you steve and maybe just give us a quick two to three minutes on copt and what you do and what the portfolio looks like and then we'll go from there

Speaker 3: Okay. Thank you. COPT Defense Properties is a specialized REIT, deeply concentrated in mission critical assets that support the national defense activity of the United States government. The vast majority of our 207 properties are located adjacent to or occupied by priority defense missions, generally involving knowledge-based defense activities. The missions we support include intelligence, surveillance or reconnaissance, cyber security and network activities, naval, sea, and air technology development, missile attack and defense systems, drone aviation technology development, cloud computing, and others. Our property locations are not typical for an office company. They're proximate to United States defense installations that have permanence in Maryland, Virginia, Alabama, and Texas. Our properties are improved for top secret mission work. Okay. okay Thank you. thank you COPT Defense Properties is a specialized REIT, deeply concentrated in mission critical assets that support the national defense activity of the United States government. copt defense properties is a specialized reit deeply concentrated in mission critical assets that support the national defense activity of the united states government The vast majority of our 207 properties are located adjacent to or occupied by priority defense missions, generally involving knowledge-based defense activities. the vast majority of our 207 properties are located adjacent to or occupied by priority defense missions generally involving knowledge-based defense activities The missions we support include intelligence, surveillance or reconnaissance, cyber security and network activities, naval, sea, and air technology development, missile attack and defense systems, drone aviation technology development, cloud computing, and others. the missions we support include intelligence surveillance or reconnaissance cyber security and network activities naval sea and air technology development missile attack and defense systems drone aviation technology development cloud computing and others Our property locations are not typical for an office company. our property locations are not typical for an office company They're proximate to United States defense installations that have permanence in Maryland, Virginia, Alabama, and Texas. they're proximate to united states defense installations that have permanence in maryland virginia alabama and texas Our properties are improved for top secret mission work. our properties are improved for top secret mission work 80% of our defense IT portfolio contains high security operations, and that includes nine U.S. Government secured campuses representing over 4 million square feet that's anti-terrorism force protected and contains SCIF, or Secured Compartmentalized Information Facility improvements. We have another 1 million square feet of high security leases with the U.S. Government that are SCIF and access controlled. We have 6 million square feet of defense contractor leases with SCIF, and 15 cloud computing campuses representing over 6 million square feet that are fenced with limited access. Additionally, these defense tenants must work in their office due to the security requirements. They're executing classified missions which must be performed in a secure space. If you take your work home, you go to jail. It's called espionage. Today, over 93% of our cash NOI is derived from defense IT properties. 80% of our defense IT portfolio contains high security operations, and that includes nine U.S. 80% of our defense it portfolio contains high security operations and that includes nine u.s Government secured campuses representing over 4 million square feet that's anti-terrorism force protected and contains SCIF, or Secured Compartmentalized Information Facility improvements. government secured campuses representing over 4 million square feet that's anti-terrorism force protected and contains scif or secured compartmentalized information facility improvements We have another 1 million square feet of high security leases with the U.S. we have another 1 million square feet of high security leases with the u.s Government that are SCIF and access controlled. government that are scif and access controlled We have 6 million square feet of defense contractor leases with SCIF, and 15 cloud computing campuses representing over 6 million square feet that are fenced with limited access. we have 6 million square feet of defense contractor leases with scif and 15 cloud computing campuses representing over 6 million square feet that are fenced with limited access Additionally, these defense tenants must work in their office due to the security requirements. additionally these defense tenants must work in their office due to the security requirements They're executing classified missions which must be performed in a secure space. they're executing classified missions which must be performed in a secure space If you take your work home, you go to jail. if you take your work home you go to jail It's called espionage. it's called espionage Today, over 93% of our cash NOI is derived from defense IT properties. today over 93% of our cash noi is derived from defense it properties Our pre-lease developments will increase that figure in the coming years. Our defense IT segment was 96.4% leased at quarter end, which is well above the peer average. The U.S. government is our largest tenant by revenue. We have 99 separate leases and 70 different properties totaling 5.7 million square feet and producing 35% of our annualized rental revenue. Our defense contractor tenants lease over 15 million square feet. This includes over 3 million square feet of cyber defense contractor tenants. Defense contractors contribute 52% of our ARR, and 16 of our top 20 tenants are defense contractors. Non-defense locations provide less than 7% of cash NOI today. This consists of five regional office assets located in the Baltimore Waterfront, Tysons Corner in Washington, D.C., and the CBD. Our pre-lease developments will increase that figure in the coming years. our pre-lease developments will increase that figure in the coming years Our defense IT segment was 96.4% leased at quarter end, which is well above the peer average. our defense it segment was 96.4% leased at quarter end which is well above the peer average The U.S. government is our largest tenant by revenue. the u.s government is our largest tenant by revenue We have 99 separate leases and 70 different properties totaling 5.7 million square feet and producing 35% of our annualized rental revenue. we have 99 separate leases and 70 different properties totaling 5.7 million square feet and producing 35% of our annualized rental revenue Our defense contractor tenants lease over 15 million square feet. our defense contractor tenants lease over 15 million square feet This includes over 3 million square feet of cyber defense contractor tenants. this includes over 3 million square feet of cyber defense contractor tenants Defense contractors contribute 52% of our ARR, and 16 of our top 20 tenants are defense contractors. defense contractors contribute 52% of our arr and 16 of our top 20 tenants are defense contractors Non-defense locations provide less than 7% of cash NOI today. non-defense locations provide less than 7% of cash noi today This consists of five regional office assets located in the Baltimore Waterfront, Tysons Corner in Washington, D.C., and the CBD. this consists of five regional office assets located in the baltimore waterfront tysons corner in washington d.c and the cbd Our tenants in these assets have excellent credit postures. We do plan to recycle these assets as markets support reasonable sale values. Our strategy is straightforward. We allocate capital to durable demand locations adjacent to priority defense installations and missions. Our playbook is effective and low risk. We execute highly pre-leased developments, redevelopments, or repositionings. Occasionally, we find an asset that meets our criteria that we can invest in. We maintain a strong investment-grade rated balance sheet, evidenced by our recent upgrade by Moody's to Baa2. Our competitive advantage really has four pillars of excellence. We have an operating platform that's operated U.S. government high security facilities for over 30 years. Their experience and credentials, which is unique, 45% of our employees have active or pending security credentials. We have significant development expertise, which includes SCIF, ATFP, or Anti-Terrorism Force Protection, data center, and other mission-critical facilities. Our tenants in these assets have excellent credit postures. our tenants in these assets have excellent credit postures We do plan to recycle these assets as markets support reasonable sale values. we do plan to recycle these assets as markets support reasonable sale values Our strategy is straightforward. our strategy is straightforward We allocate capital to durable demand locations adjacent to priority defense installations and missions. we allocate capital to durable demand locations adjacent to priority defense installations and missions Our playbook is effective and low risk. our playbook is effective and low risk We execute highly pre-leased developments, redevelopments, or repositionings. we execute highly pre-leased developments redevelopments or repositionings Occasionally, we find an asset that meets our criteria that we can invest in. occasionally we find an asset that meets our criteria that we can invest in We maintain a strong investment-grade rated balance sheet, evidenced by our recent upgrade by Moody's to Baa2. we maintain a strong investment-grade rated balance sheet evidenced by our recent upgrade by moody's to baa2 Our competitive advantage really has four pillars of excellence. our competitive advantage really has four pillars of excellence We have an operating platform that's operated U.S. government high security facilities for over 30 years. we have an operating platform that's operated u.s government high security facilities for over 30 years Their experience and credentials, which is unique, 45% of our employees have active or pending security credentials. their experience and credentials which is unique 45% of our employees have active or pending security credentials We have significant development expertise, which includes SCIF, ATFP, or Anti-Terrorism Force Protection, data center, and other mission-critical facilities. we have significant development expertise which includes scif atfp or anti-terrorism force protection data center and other mission-critical facilities We have a 30-plus-year track record of building and operating the highest security facilities for the U.S. government and their defense contractors. We own advantage land positions, as our predecessors had foresight to invest in land approximate to priority locations. They're approximate to the mission-critical knowledge-based defense installations that we serve. In summary, we're a specialized REIT that is linked to the defense economy and not correlated with the broader economy. Our assets have strategic features and locations. There is little or no risk from work from home, and there's strong demand for new development and vacancy. With that, I'll turn it back to you. We have a 30-plus-year track record of building and operating the highest security facilities for the U.S. government and their defense contractors. we have a 30-plus-year track record of building and operating the highest security facilities for the u.s government and their defense contractors We own advantage land positions, as our predecessors had foresight to invest in land approximate to priority locations. we own advantage land positions as our predecessors had foresight to invest in land approximate to priority locations They're approximate to the mission-critical knowledge-based defense installations that we serve. they're approximate to the mission-critical knowledge-based defense installations that we serve In summary, we're a specialized REIT that is linked to the defense economy and not correlated with the broader economy. in summary we're a specialized reit that is linked to the defense economy and not correlated with the broader economy Our assets have strategic features and locations. our assets have strategic features and locations There is little or no risk from work from home, and there's strong demand for new development and vacancy. there is little or no risk from work from home and there's strong demand for new development and vacancy With that, I'll turn it back to you. with that i'll turn it back to you

Speaker 4: All right. Thanks, Steve. I want to get into the demand side because I think that's just so critical to what you all do. Before doing that, one thing you mentioned was your largest tenant being the U.S. government. Before we get too far, maybe can you step back and note the types of leases that you all have with the government that, in comparison to, say, like a typical GSA lease that many of us might be familiar with? All right. all right Thanks, Steve. thanks steve I want to get into the demand side because I think that's just so critical to what you all do. i want to get into the demand side because i think that's just so critical to what you all do Before doing that, one thing you mentioned was your largest tenant being the U.S. government. before doing that one thing you mentioned was your largest tenant being the u.s government Before we get too far, maybe can you step back and note the types of leases that you all have with the government that, in comparison to, say, like a typical GSA lease that many of us might be familiar with? before we get too far maybe can you step back and note the types of leases that you all have with the government that in comparison to say like a typical gsa lease that many of us might be familiar with

Speaker 3: So the parts of the Government we do business with have their own procurement authority because they need to be exempt from, just call it bureaucracy. They need what they need, where they need it, with the people they need to do business with, and they have discretion. One of the interesting components is our rents have escalators, annual escalators to the base rent, which is very different from GSA leases. Some of our customers, we sign what's technically a one-year lease, and those leases have automatic renewals that unless the tenant were to make an affirmative action, they automatically renew for four years, nine years, or 14 years. We do this to make it easy for them to score in the budget scoring process, and use basically one year of money to fund these leases. So the parts of the Government we do business with have their own procurement authority because they need to be exempt from, just call it bureaucracy. so the parts of the government we do business with have their own procurement authority because they need to be exempt from just call it bureaucracy They need what they need, where they need it, with the people they need to do business with, and they have discretion. they need what they need where they need it with the people they need to do business with and they have discretion One of the interesting components is our rents have escalators, annual escalators to the base rent, which is very different from GSA leases. one of the interesting components is our rents have escalators annual escalators to the base rent which is very different from gsa leases Some of our customers, we sign what's technically a one-year lease, and those leases have automatic renewals that unless the tenant were to make an affirmative action, they automatically renew for four years, nine years, or 14 years. some of our customers we sign what's technically a one-year lease and those leases have automatic renewals that unless the tenant were to make an affirmative action they automatically renew for four years nine years or 14 years We do this to make it easy for them to score in the budget scoring process, and use basically one year of money to fund these leases. we do this to make it easy for them to score in the budget scoring process and use basically one year of money to fund these leases

Speaker 4: Got it. Thank you for that. Now let's go back to this demand. I think it's pretty clear these days that defense is pretty important. Maybe as you dig into your portfolio a bit more, are there parts of the defense budget or parts of the defense apparatus that are more or less important to driving demand in your portfolio? Got it. got it Thank you for that. thank you for that Now let's go back to this demand. now let's go back to this demand I think it's pretty clear these days that defense is pretty important. i think it's pretty clear these days that defense is pretty important Maybe as you dig into your portfolio a bit more, are there parts of the defense budget or parts of the defense apparatus that are more or less important to driving demand in your portfolio? maybe as you dig into your portfolio a bit more are there parts of the defense budget or parts of the defense apparatus that are more or less important to driving demand in your portfolio

Speaker 3: Well, our portfolio serves a variety of missions that I kind of went through in the beginning. Generally, as defense budgets go up, we see increases in demand in our portfolio. The 2026 defense budget was pretty extraordinary because it's almost $1 trillion, and it was a 20% year-over-year increase from 2025. Since 2016, we've enjoyed very good defense budget increases, on average about 4.5%. This 20% is the largest in over 10 years. There are two key areas in this year's defense budget that really stand out in favor of our portfolio. One is the intelligence budget, which is now $115 billion for 2026. It's a $14 billion increase, or almost 14%. That's the largest year-over-year increase in intelligence in over 20 years. Of course, the Cyber budget was increased to $16.5 billion. Well, our portfolio serves a variety of missions that I kind of went through in the beginning. well our portfolio serves a variety of missions that i kind of went through in the beginning Generally, as defense budgets go up, we see increases in demand in our portfolio. generally as defense budgets go up we see increases in demand in our portfolio The 2026 defense budget was pretty extraordinary because it's almost $1 trillion, and it was a 20% year-over-year increase from 2025. the 2026 defense budget was pretty extraordinary because it's almost $1 trillion and it was a 20% year-over-year increase from 2025 Since 2016, we've enjoyed very good defense budget increases, on average about 4.5%. since 2016 we've enjoyed very good defense budget increases on average about 4.5% This 20% is the largest in over 10 years. this 20% is the largest in over 10 years There are two key areas in this year's defense budget that really stand out in favor of our portfolio. there are two key areas in this year's defense budget that really stand out in favor of our portfolio One is the intelligence budget, which is now $115 billion for 2026. one is the intelligence budget which is now $115 billion for 2026 It's a $14 billion increase, or almost 14%. it's a $14 billion increase or almost 14% That's the largest year-over-year increase in intelligence in over 20 years. that's the largest year-over-year increase in intelligence in over 20 years Of course, the Cyber budget was increased to $16.5 billion. of course the cyber budget was increased to $16.5 billion For those of you that don't know this, DoD Cyber is under the command of U.S. Cyber Command, which is located in Fort Meade, Maryland, which is basically the backyard of our company. They got a $2 billion increase of 13%, and that's a big driver of both our National Business Park and Columbia Gateway portfolio. For those of you that don't know this, DoD Cyber is under the command of U.S. for those of you that don't know this dod cyber is under the command of u.s Cyber Command, which is located in Fort Meade, Maryland, which is basically the backyard of our company. cyber command which is located in fort meade maryland which is basically the backyard of our company They got a $2 billion increase of 13%, and that's a big driver of both our National Business Park and Columbia Gateway portfolio. they got a $2 billion increase of 13% and that's a big driver of both our national business park and columbia gateway portfolio

Speaker 4: Okay. Let's get into the portfolio. What's leasing been to date, and what did you tell us you were going to do on the leasing side this year? Okay. okay Let's get into the portfolio. let's get into the portfolio What's leasing been to date, and what did you tell us you were going to do on the leasing side this year? what's leasing been to date and what did you tell us you were going to do on the leasing side this year

Speaker 3: I'm going to let Britt answer this. I'm going to let Britt answer this. i'm going to let britt answer this

Speaker 2: Yeah. We've got. Yeah. yeah We've got. we've got

Speaker 3: This is his realm. This is his realm. this is his realm

Speaker 2: A target of 400,000 sq ft of vacancy leasing for the year. So far, we've completed 185,000 sq ft of leasing towards that target. We also have another 150,000 sq ft of deals that I would say are in advanced negotiations, which are right at the end of the negotiation period. If you take that, it's about 330,000-340,000 sq ft combined, and towards a 400,000 sq ft total. We're very confident where we are from a vacancy leasing perspective. Investment leasing, which is leasing we've done really for our development projects, that's approximately 400,000 sq ft that we've completed so far to date. A couple buildings, notably in our National Business Park portfolio in Maryland. A target of 400,000 sq ft of vacancy leasing for the year. a target of 400,000 sq ft of vacancy leasing for the year So far, we've completed 185,000 sq ft of leasing towards that target. so far we've completed 185,000 sq ft of leasing towards that target We also have another 150,000 sq ft of deals that I would say are in advanced negotiations, which are right at the end of the negotiation period. we also have another 150,000 sq ft of deals that i would say are in advanced negotiations which are right at the end of the negotiation period If you take that, it's about 330,000- 340,000 sq ft combined, and towards a 400,000 sq ft total. if you take that it's about 330,000- 340,000 sq ft combined and towards a 400,000 sq ft total We're very confident where we are from a vacancy leasing perspective. we're very confident where we are from a vacancy leasing perspective Investment leasing, which is leasing we've done really for our development projects, that's approximately 400,000 sq ft that we've completed so far to date. investment leasing which is leasing we've done really for our development projects that's approximately 400,000 sq ft that we've completed so far to date A couple buildings, notably in our National Business Park portfolio in Maryland. a couple buildings notably in our national business park portfolio in maryland Then we've done, so far, 1.2 million square feet of renewal volume in the portfolio, which includes our nearly one million square foot campus in San Antonio, which was obviously a huge driver to that early renewal number. So far, very active and successful beginning of the year. Then we've done, so far, 1.2 million square feet of renewal volume in the portfolio, which includes our nearly one million square foot campus in San Antonio, which was obviously a huge driver to that early renewal number. then we've done so far 1.2 million square feet of renewal volume in the portfolio which includes our nearly one million square foot campus in san antonio which was obviously a huge driver to that early renewal number So far, very active and successful beginning of the year. so far very active and successful beginning of the year

Speaker 4: What's historically been your renewal rate? How frequently do your tenants stay? What's historically been your renewal rate? what's historically been your renewal rate How frequently do your tenants stay? how frequently do your tenants stay

Speaker 2: Yeah, it's really the backbone stat, I would say, of our portfolio. Our retention is generally in the 80% range when a lot of our peers are typically in the 40%-42% range. If you really think about the cost advantage of that with the downtime that other companies have to re-lease their projects and their buildings, that it's just a huge advantage. Downtime, TIs, leasing commissions, whereas that's significantly less on a renewal. 80% versus 42% retention, it's a huge advantage for us. Yeah, it's really the backbone stat, I would say, of our portfolio. yeah it's really the backbone stat i would say of our portfolio Our retention is generally in the 80% range when a lot of our peers are typically in the 40%-42% range. our retention is generally in the 80% range when a lot of our peers are typically in the 40%-42% range If you really think about the cost advantage of that with the downtime that other companies have to re-lease their projects and their buildings, that it's just a huge advantage. if you really think about the cost advantage of that with the downtime that other companies have to re-lease their projects and their buildings that it's just a huge advantage Downtime, TIs, leasing commissions, whereas that's significantly less on a renewal. 80% versus 42% retention, it's a huge advantage for us. downtime tis leasing commissions whereas that's significantly less on a renewal 80% versus 42% retention it's a huge advantage for us

Speaker 4: What about lease economics? You're renewing a lot of your leases. You're doing well on the vacancy leasing. What do rental rate economics look like? Do you typically have brokers involved in these deals? Is there a lot of TI? What happens on a lease deal in your portfolio that might be the same or different than a typical office asset? What about lease economics? what about lease economics You're renewing a lot of your leases. you're renewing a lot of your leases You're doing well on the vacancy leasing. you're doing well on the vacancy leasing What do rental rate economics look like? what do rental rate economics look like Do you typically have brokers involved in these deals? do you typically have brokers involved in these deals Is there a lot of TI? is there a lot of ti What happens on a lease deal in your portfolio that might be the same or different than a typical office asset? what happens on a lease deal in your portfolio that might be the same or different than a typical office asset

Speaker 2: Well, I would say from a lease economics perspective, our concessions are much more manageable, so the TIs, free rent, are significantly less than a typical deal. Also, I would say that the amount of investment that these tenants are making is significantly more. That creates alignment between us and the tenant, and actually it really speaks to the retention of why these tenants stick with us longer. Yeah, I would say our concessions are down 25% since 2023. Pretty significant ability for us to have additional pricing power when we're talking to tenants. Well, I would say from a lease economics perspective, our concessions are much more manageable, so the TIs, free rent, are significantly less than a typical deal. well i would say from a lease economics perspective our concessions are much more manageable so the tis free rent are significantly less than a typical deal Also, I would say that the amount of investment that these tenants are making is significantly more. also i would say that the amount of investment that these tenants are making is significantly more That creates alignment between us and the tenant, and actually it really speaks to the retention of why these tenants stick with us longer. that creates alignment between us and the tenant and actually it really speaks to the retention of why these tenants stick with us longer Yeah, I would say our concessions are down 25% since 2023. yeah i would say our concessions are down 25% since 2023 Pretty significant ability for us to have additional pricing power when we're talking to tenants. pretty significant ability for us to have additional pricing power when we're talking to tenants

Speaker 3: One more item I'd throw in. Our leases are unique in that, as I mentioned, they have annual escalators of growth. They tend to grow north of 3.5% over the term. For the last three years, our mark-to-markets have been positive, 1%-2%. The embedded growth is really an indicator of how strong our portfolio functions. One more item I'd throw in. one more item i'd throw in Our leases are unique in that, as I mentioned, they have annual escalators of growth. our leases are unique in that as i mentioned they have annual escalators of growth They tend to grow north of 3.5% over the term. they tend to grow north of 3.5% over the term For the last three years, our mark-to-markets have been positive, 1%-2%. for the last three years our mark-to-markets have been positive 1%-2% The embedded growth is really an indicator of how strong our portfolio functions. the embedded growth is really an indicator of how strong our portfolio functions

Speaker 4: One of the things we've seen lately is a lot of tech companies, quantum, some of these other AI buzzwords and things out there, doing work for the government and becoming effectively contractors. Are you seeing that in your portfolio? Do these folks want to be in certain areas? Can you comment on that? One of the things we've seen lately is a lot of tech companies, quantum, some of these other AI buzzwords and things out there, doing work for the government and becoming effectively contractors. one of the things we've seen lately is a lot of tech companies quantum some of these other ai buzzwords and things out there doing work for the government and becoming effectively contractors Are you seeing that in your portfolio? are you seeing that in your portfolio Do these folks want to be in certain areas? do these folks want to be in certain areas Can you comment on that? can you comment on that

Speaker 3: We have quite a bit of tech company leases embedded in our portfolio. We don't identify where, but some of the big, very big names that choose to be anonymous are in multiple locations serving the DoD client. When it comes to quantum, Britt can share with you some recent news that's pretty exciting. We have quite a bit of tech company leases embedded in our portfolio. we have quite a bit of tech company leases embedded in our portfolio We don't identify where, but some of the big, very big names that choose to be anonymous are in multiple locations serving the DoD client. we don't identify where but some of the big very big names that choose to be anonymous are in multiple locations serving the dod client When it comes to quantum, Britt can share with you some recent news that's pretty exciting. when it comes to quantum britt can share with you some recent news that's pretty exciting

Speaker 2: We recently just had a groundbreaking at the University of Maryland, a site that we control in College Park, Maryland, with a build to suit for ARLIS, which is the Applied Research Laboratory for Intelligence and Security. That is a very unique building. The ARLIS was already a tenant in our portfolio on one floor of an existing building there. Now they came to us wanting an HQ. Having them there, it's a partnership with the University of Maryland, with DoD, specifically DARPA. It actually will house the first quantum computer in the state of Maryland. It's a very unique build-out for us. We're excited about the project. Maryland is making a huge investment to become what they call the quantum capital of the United States. We recently just had a groundbreaking at the University of Maryland, a site that we control in College Park, Maryland, with a build to suit for ARLIS, which is the Applied Research Laboratory for Intelligence and Security. we recently just had a groundbreaking at the university of maryland a site that we control in college park maryland with a build to suit for arlis which is the applied research laboratory for intelligence and security That is a very unique building. that is a very unique building The ARLIS was already a tenant in our portfolio on one floor of an existing building there. the arlis was already a tenant in our portfolio on one floor of an existing building there Now they came to us wanting an HQ. now they came to us wanting an hq Having them there, it's a partnership with the University of Maryland, with DoD, specifically DARPA. having them there it's a partnership with the university of maryland with dod specifically darpa It actually will house the first quantum computer in the state of Maryland. it actually will house the first quantum computer in the state of maryland It's a very unique build-out for us. it's a very unique build-out for us We're excited about the project. we're excited about the project Maryland is making a huge investment to become what they call the quantum capital of the United States. maryland is making a huge investment to become what they call the quantum capital of the united states There's, I think, a total of $1 billion investment that's going in to create a quantum ecosystem in Maryland. We're excited to be a part of that. There's, I think, a total of $1 billion investment that's going in to create a quantum ecosystem in Maryland. there's i think a total of $1 billion investment that's going in to create a quantum ecosystem in maryland We're excited to be a part of that. we're excited to be a part of that

Speaker 4: I think it's a good pivot point into development here. Maybe with that, why don't you give us a little bit more detail on the development pipeline today, what you plan to spend on it over the course of this year, and just how you think about allocating to development over time, like your multi-year cadence of projects? I think it's a good pivot point into development here. i think it's a good pivot point into development here Maybe with that, why don't you give us a little bit more detail on the development pipeline today, what you plan to spend on it over the course of this year, and just how you think about allocating to development over time, like your multi-year cadence of projects? maybe with that why don't you give us a little bit more detail on the development pipeline today what you plan to spend on it over the course of this year and just how you think about allocating to development over time like your multi-year cadence of projects

Speaker 3: Sure. Currently, we have about 1 million square feet under development, seven separate projects. Combined, about 71% pre-leased, represents a little over a half a trillion dollars. Sure. sure Currently, we have about 1 million square feet under development, seven separate projects. currently we have about 1 million square feet under development seven separate projects Combined, about 71% pre-leased, represents a little over a half a trillion dollars. combined about 71% pre-leased represents a little over a half a trillion dollars

Speaker 2: Half a billion. Half a billion. half a billion

Speaker 3: Half a billion, sorry. Got a little carried away. We have been a regular developer for 15 years. If you look back the last 10 years, on average, we put about $275 million to work primarily in development. During the last 10 years, we've only found three assets that fit our portfolio criteria that we could acquire. It's an essential part of our company. It's an essential part of servicing our clients because as missions grow, they need new modern facilities to support the missions that we align with. It's right down the middle of our fairway. Half a billion, sorry. half a billion sorry Got a little carried away. got a little carried away We have been a regular developer for 15 years. we have been a regular developer for 15 years If you look back the last 10 years, on average, we put about $275 million to work primarily in development. if you look back the last 10 years on average we put about $275 million to work primarily in development During the last 10 years, we've only found three assets that fit our portfolio criteria that we could acquire. during the last 10 years we've only found three assets that fit our portfolio criteria that we could acquire It's an essential part of our company. it's an essential part of our company It's an essential part of servicing our clients because as missions grow, they need new modern facilities to support the missions that we align with. it's an essential part of servicing our clients because as missions grow they need new modern facilities to support the missions that we align with It's right down the middle of our fairway. it's right down the middle of our fairway

Speaker 4: Do you typically think about starting with a lease in hand, or how do you think about when to start projects? Do you typically think about starting with a lease in hand, or how do you think about when to start projects? do you typically think about starting with a lease in hand or how do you think about when to start projects

Speaker 3: The vast majority of our development has been either significantly pre-leased or built to suit. We have two locations, two of our most successful parks, where we have gotten to the point where we are so fully leased, we have no inventory left. We start a building because we need inventory. For instance, in Alabama right now, we have 2.5 million square feet. We have 24 buildings that are 99.6% leased. We have one 10,000 sq ft vacancy in 24 buildings, and we have a tenant who's negotiating to lease that. We started a building last year to create inventory to support the growth at Redstone Arsenal. That building's 150,000 sq ft. It's 41% leased right now. Active negotiations will consume, if successful, the rest of that vacancy. We're currently working to kick off our next inventory building to supply that. The vast majority of our development has been either significantly pre-leased or built to suit. the vast majority of our development has been either significantly pre-leased or built to suit We have two locations, two of our most successful parks, where we have gotten to the point where we are so fully leased, we have no inventory left. we have two locations two of our most successful parks where we have gotten to the point where we are so fully leased we have no inventory left We start a building because we need inventory. we start a building because we need inventory For instance, in Alabama right now, we have 2.5 million square feet. for instance in alabama right now we have 2.5 million square feet We have 24 buildings that are 99.6% leased. we have 24 buildings that are 99.6% leased We have one 10,000 sq ft vacancy in 24 buildings, and we have a tenant who's negotiating to lease that. we have one 10,000 sq ft vacancy in 24 buildings and we have a tenant who's negotiating to lease that We started a building last year to create inventory to support the growth at Redstone Arsenal. we started a building last year to create inventory to support the growth at redstone arsenal That building's 150,000 sq ft. that building's 150,000 sq ft It's 41% leased right now. it's 41% leased right now Active negotiations will consume, if successful, the rest of that vacancy. active negotiations will consume if successful the rest of that vacancy We're currently working to kick off our next inventory building to supply that. we're currently working to kick off our next inventory building to supply that We have similar characteristics at our National Business Park, where the last building we started, we were 4.5 million square feet. It was 99.5% leased, and our biggest vacancy was 7,000 sq ft. We built a building. We have similar characteristics at our National Business Park , where the last building we started, we were 4.5 million square feet. we have similar characteristics at our national business park where the last building we started we were 4.5 million square feet It was 99.5% leased, and our biggest vacancy was 7,000 sq ft. it was 99.5% leased and our biggest vacancy was 7,000 sq ft We built a building. we built a building

Speaker 4: Going back to Huntsville, how much runway do you have there? How much land, or how many years of projects do you think you could do there? Going back to Huntsville, how much runway do you have there? going back to huntsville how much runway do you have there How much land, or how many years of projects do you think you could do there? how much land or how many years of projects do you think you could do there

Speaker 3: Let me just share our development opportunity in Huntsville. We're literally partners with the United States Army in Huntsville. The land we control is owned by the U.S. Army. It's on the installation, but outside the secure perimeter, and we control it with what's essentially a perpetual land lease. By the way, we don't pay rent on land until we get a building and collect rent. We're built to 2.5 million square feet. We have over 3 million square feet of development capacity and the identified land under our lease right now, with opportunities to expand that in the future as our success merits it. Let me just share our development opportunity in Huntsville. let me just share our development opportunity in huntsville We're literally partners with the United States Army in Huntsville. we're literally partners with the united states army in huntsville The land we control is owned by the U.S. the land we control is owned by the u.s Army. army It's on the installation, but outside the secure perimeter, and we control it with what's essentially a perpetual land lease. it's on the installation but outside the secure perimeter and we control it with what's essentially a perpetual land lease By the way, we don't pay rent on land until we get a building and collect rent. by the way we don't pay rent on land until we get a building and collect rent We're built to 2.5 million square feet. we're built to 2.5 million square feet We have over 3 million square feet of development capacity and the identified land under our lease right now, with opportunities to expand that in the future as our success merits it. we have over 3 million square feet of development capacity and the identified land under our lease right now with opportunities to expand that in the future as our success merits it I might add, it's a pretty exciting market right now because if you pay attention to some of the activities that, the drone attack and missile activities that happened in the Middle East over the last couple of years, the U.S. government's response is the Golden Dome program, which is designed, or conceptually will bring anti-missile, anti-drone defense to the continental United States, and Alaska, and Hawaii. It's a pretty impressive program. Its initial earmark is $185 billion over five years to create new technology and then coordinate existing technologies in the United States. The first $21 billion got appropriated in July, and very little of that money has been actually allocated to contract awards. I might add, it's a pretty exciting market right now because if you pay attention to some of the activities that, the drone attack and missile activities that happened in the Middle East over the last couple of years, the U.S. government's response is the Golden Dome program, which is designed, or conceptually will bring anti-missile, anti-drone defense to the continental United States, and Alaska, and Hawaii. i might add it's a pretty exciting market right now because if you pay attention to some of the activities that the drone attack and missile activities that happened in the middle east over the last couple of years the u.s government's response is the golden dome program which is designed or conceptually will bring anti-missile anti-drone defense to the continental united states and alaska and hawaii It's a pretty impressive program. it's a pretty impressive program Its initial earmark is $185 billion over five years to create new technology and then coordinate existing technologies in the United States. its initial earmark is $185 billion over five years to create new technology and then coordinate existing technologies in the united states The first $21 billion got appropriated in July, and very little of that money has been actually allocated to contract awards. the first $21 billion got appropriated in july and very little of that money has been actually allocated to contract awards In our business, when money gets allocated, typically we see the demand from that program expansion 12-18 months later. That sets forth a pretty exciting runway for us in Huntsville. By the way, that program is being coordinated out of the Redstone Arsenal in Huntsville. Then there's another $17 billion requested for FY 2027. It's one program. It's a staggering amount of money for one program. In our business, when money gets allocated, typically we see the demand from that program expansion 12 -1 8 months later. in our business when money gets allocated typically we see the demand from that program expansion 12 -1 8 months later That sets forth a pretty exciting runway for us in Huntsville. that sets forth a pretty exciting runway for us in huntsville By the way, that program is being coordinated out of the Redstone Arsenal in Huntsville. by the way that program is being coordinated out of the redstone arsenal in huntsville Then there's another $17 billion requested for FY 2027. then there's another $17 billion requested for fy 2027 It's one program. it's one program It's a staggering amount of money for one program. it's a staggering amount of money for one program

Speaker 4: Yeah. Remind us, what did you tell the investment community that you would do in terms of starts this year on the development side and development leasing? Remind us. Where are you with that? Yeah. yeah Remind us, what did you tell the investment community that you would do in terms of starts this year on the development side and development leasing? remind us what did you tell the investment community that you would do in terms of starts this year on the development side and development leasing Remind us. remind us Where are you with that? where are you with that

Speaker 3: We put out a dollar value, the midpoint of our guidance was $250 million. On our last call, we elevated that to $290 million. We're basically at $250 right now. One additional start, which will clearly happen in Huntsville, if not more than one, would satisfy the midpoint of our guidance. We put out a dollar value, the midpoint of our guidance was $250 million. we put out a dollar value the midpoint of our guidance was $250 million On our last call, we elevated that to $290 million. on our last call we elevated that to $290 million We're basically at $250 right now. we're basically at $250 right now One additional start, which will clearly happen in Huntsville, if not more than one, would satisfy the midpoint of our guidance. one additional start which will clearly happen in huntsville if not more than one would satisfy the midpoint of our guidance

Speaker 4: Okay. What do you make on all these developments? Okay. okay What do you make on all these developments? what do you make on all these developments

Speaker 3: Money. Money. money

Speaker 4: All right, good answer. All right, good answer. all right good answer

Speaker 3: Our threshold cash on cash yield is 8.5% on the first year's cash rent. Sometimes we can do better than that. That's our threshold for approval. Our threshold cash on cash yield is 8.5% on the first year's cash rent. our threshold cash on cash yield is 8.5% on the first year's cash rent Sometimes we can do better than that. sometimes we can do better than that That's our threshold for approval. that's our threshold for approval

Speaker 4: Got it. I want to pivot for one minute because data centers. Talk about your data center business, just because it's such a hot topic, and I think you all were doing this way before many others were doing it, and I think you've had one of the best interesting data center businesses out there. Just give everybody a sense of where that is today. Got it. got it I want to pivot for one minute because data centers. i want to pivot for one minute because data centers Talk about your data center business, just because it's such a hot topic, and I think you all were doing this way before many others were doing it, and I think you've had one of the best interesting data center businesses out there. talk about your data center business just because it's such a hot topic and i think you all were doing this way before many others were doing it and i think you've had one of the best interesting data center businesses out there Just give everybody a sense of where that is today. just give everybody a sense of where that is today

Speaker 3: We've been developing data centers for a particular cloud computing customer for 13 years. In total, we've developed about 6.3 million square feet. All of that has been pre-leased in a structure that's very compatible with our business scenarios, in that we acquire land, build the shell, assist in securing the location for them, and they invest in the critical power and MEP to make it a tier three or four data center. We're co-invested in these assets in a significant way. Spend ratio traditionally has been 9:1 or 10:1. $9 or $10 of the tenants for every $1 that we put in. Currently, we've just completed two build-to-suits. We've got a couple of smaller infill locations that we're working on that are modest in size. We've been developing data centers for a particular cloud computing customer for 13 years. we've been developing data centers for a particular cloud computing customer for 13 years In total, we've developed about 6.3 million square feet. in total we've developed about 6.3 million square feet All of that has been pre-leased in a structure that's very compatible with our business scenarios, in that we acquire land, build the shell, assist in securing the location for them, and they invest in the critical power and MEP to make it a tier three or four data center. all of that has been pre-leased in a structure that's very compatible with our business scenarios in that we acquire land build the shell assist in securing the location for them and they invest in the critical power and mep to make it a tier three or four data center We're co-invested in these assets in a significant way. we're co-invested in these assets in a significant way Spend ratio traditionally has been 9:1 or 10:1 . $9 or $10 of the tenants for every $1 that we put in. spend ratio traditionally has been 9:1 or 10:1 $9 or $10 of the tenants for every $1 that we put in Currently, we've just completed two build-to-suits. currently we've just completed two build-to-suits We've got a couple of smaller infill locations that we're working on that are modest in size. we've got a couple of smaller infill locations that we're working on that are modest in size We acquired some land in Iowa, aspiring to do about maybe 3 million square feet of data centers in total, and a gigawatt of power. The conditions in the United States right now is that the demand for power exceeds the available supply in the distribution network. We're probably three to four years out from being able to start development on that project. We acquired some land in Iowa, aspiring to do about maybe 3 million square feet of data centers in total, and a gigawatt of power. we acquired some land in iowa aspiring to do about maybe 3 million square feet of data centers in total and a gigawatt of power The conditions in the United States right now is that the demand for power exceeds the available supply in the distribution network. the conditions in the united states right now is that the demand for power exceeds the available supply in the distribution network We're probably three to four years out from being able to start development on that project. we're probably three to four years out from being able to start development on that project

Speaker 4: Okay, right now, as you said, as a percentage of the company's NOI, how much is data centers? Okay, right now, as you said, as a percentage of the company's NOI, how much is data centers? okay right now as you said as a percentage of the company's noi how much is data centers

Speaker 3: About 9%. About 9%. about 9%

Speaker 4: 9%. 9 %. 9 %

Speaker 3: Yeah. Yeah. yeah

Speaker 4: Okay. You'd mentioned earlier that it's been very difficult to find acquisitions. You're a developer. You did make an interesting acquisition this past quarter, though, basically a covered land play. Can you talk about that for a minute? Okay. okay You'd mentioned earlier that it's been very difficult to find acquisitions. you'd mentioned earlier that it's been very difficult to find acquisitions You're a developer. you're a developer You did make an interesting acquisition this past quarter, though, basically a covered land play. you did make an interesting acquisition this past quarter though basically a covered land play Can you talk about that for a minute? can you talk about that for a minute

Speaker 3: Yeah. The market it's in is in Northern Virginia that serves the intelligence community. We're currently the largest landlord in that market, but we'd like to deepen our concentration. Another owner had a property that sits on a land lease, and they needed to refinance in 2024, and we looked to buy the asset and the land in a kind of a combined purchase, and it didn't work out from a pricing standpoint. The land became available and we stepped in, and we bought the land. Now we have the senior position, if you will, in the capital stack. The owner of the building is hoping to refinance a mortgage that's already matured. Long-term, we aspired to own the asset, but we aspired to own it with returns that are satisfactory to our objectives, similar to our development yields. We'll just sit and wait. Yeah. yeah The market it's in is in Northern Virginia that serves the intelligence community. the market it's in is in northern virginia that serves the intelligence community We're currently the largest landlord in that market, but we'd like to deepen our concentration. we're currently the largest landlord in that market but we'd like to deepen our concentration Another owner had a property that sits on a land lease, and they needed to refinance in 2024, and we looked to buy the asset and the land in a kind of a combined purchase, and it didn't work out from a pricing standpoint. another owner had a property that sits on a land lease and they needed to refinance in 2024 and we looked to buy the asset and the land in a kind of a combined purchase and it didn't work out from a pricing standpoint The land became available and we stepped in, and we bought the land. the land became available and we stepped in and we bought the land Now we have the senior position, if you will, in the capital stack. now we have the senior position if you will in the capital stack The owner of the building is hoping to refinance a mortgage that's already matured. the owner of the building is hoping to refinance a mortgage that's already matured Long-term, we aspired to own the asset, but we aspired to own it with returns that are satisfactory to our objectives, similar to our development yields. long-term we aspired to own the asset but we aspired to own it with returns that are satisfactory to our objectives similar to our development yields We'll just sit and wait. we'll just sit and wait

Speaker 4: Okay. Okay. okay

Speaker 3: The buildings are excellent buildings. First of all, they're pretty unusual, and they were built to ATFP standards without a pre-lease with the U.S. government tenant in it. The major tenant is the FBI Technology Division, which includes their cyber capabilities, and it is the COOP for the FBI headquarters, where the FBI director would displace in an event that the facility in the Reagan Building was compromised. The buildings are excellent buildings. the buildings are excellent buildings First of all, they're pretty unusual, and they were built to ATFP standards without a pre-lease with the U.S. government tenant in it. first of all they're pretty unusual and they were built to atfp standards without a pre-lease with the u.s government tenant in it The major tenant is the FBI Technology Division, which includes their cyber capabilities, and it is the COOP for the FBI headquarters, where the FBI director would displace in an event that the facility in the Reagan Building was compromised. the major tenant is the fbi technology division which includes their cyber capabilities and it is the coop for the fbi headquarters where the fbi director would displace in an event that the facility in the reagan building was compromised

Speaker 4: Okay. Excuse me. We touched on a number of parts of your business. I want to loop Anthony into this. Why don't you piece this together for us if you can? You've got internal growth on the leasing side. You've got developments. You did make an acquisition. You got a balance sheet. Tie this all together for us, and what are the components of growth, and how do you think about growth in earnings the next couple of years? Okay. okay Excuse me. excuse me We touched on a number of parts of your business. we touched on a number of parts of your business I want to loop Anthony into this. i want to loop anthony into this Why don't you piece this together for us if you can? why don't you piece this together for us if you can You've got internal growth on the leasing side. you've got internal growth on the leasing side You've got developments. you've got developments You did make an acquisition. you did make an acquisition You got a balance sheet. you got a balance sheet Tie this all together for us, and what are the components of growth, and how do you think about growth in earnings the next couple of years? tie this all together for us and what are the components of growth and how do you think about growth in earnings the next couple of years

Speaker 1: We've generated 4.5% compound annual growth in FFO per share from 2019 to the midpoint of our guidance for 2026. That is a combination of 2%-2.5% internal growth because of the escalators within our leases in our portfolio, and then the benefit of our developments placed into service throughout that period. Our expectation is that that platform will continue going forward with our operating portfolio continuing to generate that 2%-2.5% internal growth, and then external growth coming in that same kind of range, 2%-2.5%, as developments are placed into service. For 2026, the midpoint of our guidance that we updated in our last call is a 1.5% growth over 2025's results. That's a bit muted compared to what we've executed over the past several years because of the impact of a refinancing of a $400 million bond that matured in March. We've generated 4.5% compound annual growth in FFO per share from 2019 to the midpoint of our guidance for 2026. we've generated 4.5% compound annual growth in ffo per share from 2019 to the midpoint of our guidance for 2026 That is a combination of 2%-2.5% internal growth because of the escalators within our leases in our portfolio, and then the benefit of our developments placed into service throughout that period. that is a combination of 2%-2.5% internal growth because of the escalators within our leases in our portfolio and then the benefit of our developments placed into service throughout that period Our expectation is that that platform will continue going forward with our operating portfolio continuing to generate that 2%-2.5% internal growth, and then external growth coming in that same kind of range, 2%-2.5%, as developments are placed into service. our expectation is that that platform will continue going forward with our operating portfolio continuing to generate that 2%-2.5% internal growth and then external growth coming in that same kind of range 2%-2.5% as developments are placed into service For 2026, the midpoint of our guidance that we updated in our last call is a 1.5% growth over 2025's results. for 2026 the midpoint of our guidance that we updated in our last call is a 1.5% growth over 2025's results That's a bit muted compared to what we've executed over the past several years because of the impact of a refinancing of a $400 million bond that matured in March. that's a bit muted compared to what we've executed over the past several years because of the impact of a refinancing of a $400 million bond that matured in march That bond had an interest rate of 2.25%, was refinanced with the lowest credit spread in the office sector at 95 basis points for a five year bond. The rate went from 2.25% to 4.5%. That is about a $0.09 impact for 2026 FFO per share. Excluding the impact of that financing cost, FFO, that 1.5% would have been 4.8%. Again, in line with what we've produced over the last seven years. That bond had an interest rate of 2.25%, was refinanced with the lowest credit spread in the office sector at 95 basis points for a five year bond. that bond had an interest rate of 2.25% was refinanced with the lowest credit spread in the office sector at 95 basis points for a five year bond The rate went from 2.25% to 4.5%. the rate went from 2.25% to 4.5% That is about a $0.09 impact for 2026 FFO per share. that is about a $0.09 impact for 2026 ffo per share Excluding the impact of that financing cost, FFO, that 1.5% would have been 4.8%. excluding the impact of that financing cost ffo that 1.5% would have been 4.8% Again, in line with what we've produced over the last seven years. again in line with what we've produced over the last seven years

Speaker 4: Got it. To fund the development, walk us through where your target leverage is and what your source and uses look like. Got it. got it To fund the development, walk us through where your target leverage is and what your source and uses look like. to fund the development walk us through where your target leverage is and what your source and uses look like

Speaker 1: Sure. Our target leverage has been where we've maintained leverage over the past six to seven years, at ±6x as a developer. As Steve mentioned, having about a $500 million dollars worth of development for non-income-producing assets underway at any one time. Our portfolio generates about $100 million worth of free cash flow after our dividend and after the capital we invest in our operating portfolio. That, combined with the incremental EBITDA from our operating portfolio and from the developments placed into service, gives us the capacity to fund $250 million-$300 million worth of new development each year on a leverage-neutral basis. We've been in that position since 2024 with the ability to self-fund those development opportunities. That's really largely driven by what Steve and Britt mentioned with respect to our retention rate. Sure. sure Our target leverage has been where we've maintained leverage over the past six to seven years, at ±6x as a developer. our target leverage has been where we've maintained leverage over the past six to seven years at ±6x as a developer As Steve mentioned, having about a $500 million dollars worth of development for non-income-producing assets underway at any one time. as steve mentioned having about a $500 million dollars worth of development for non-income-producing assets underway at any one time Our portfolio generates about $100 million worth of free cash flow after our dividend and after the capital we invest in our operating portfolio. our portfolio generates about $100 million worth of free cash flow after our dividend and after the capital we invest in our operating portfolio That, combined with the incremental EBITDA from our operating portfolio and from the developments placed into service, gives us the capacity to fund $250 million-$300 million worth of new development each year on a leverage-neutral basis. that combined with the incremental ebitda from our operating portfolio and from the developments placed into service gives us the capacity to fund $250 million-$300 million worth of new development each year on a leverage-neutral basis We've been in that position since 2024 with the ability to self-fund those development opportunities. we've been in that position since 2024 with the ability to self-fund those development opportunities That's really largely driven by what Steve and Britt mentioned with respect to our retention rate. that's really largely driven by what steve and britt mentioned with respect to our retention rate Our capital can go to external growth as opposed to funding the re-leasing of non-renewals within the existing portfolio. Our very strong renewal rate supports that ability to self-fund. Our capital can go to external growth as opposed to funding the re-leasing of non-renewals within the existing portfolio. our capital can go to external growth as opposed to funding the re-leasing of non-renewals within the existing portfolio Our very strong renewal rate supports that ability to self-fund. our very strong renewal rate supports that ability to self-fund

Speaker 4: Got it. We got a question, so I'll let that happen because we're coming up on time. Got it. got it We got a question, so I'll let that happen because we're coming up on time. we got a question so i'll let that happen because we're coming up on time

Speaker 5: Yeah, that's okay, thanks. What's the useful life of these assets, and then what happens to the assets after they become obsolete and then to a purpose they have to [audio distortion]. Yeah, that's okay, thanks. yeah that's okay thanks What's the useful life of these assets, and then what happens to the assets after they become obsolete and then to a purpose they have to [audio distortion]. what's the useful life of these assets and then what happens to the assets after they become obsolete and then to a purpose they have to [audio distortion]

Speaker 4: Yeah. Let me just repeat it for the webcast. The question is just useful life of your assets and residual value, effectively. Yeah. yeah Let me just repeat it for the webcast. let me just repeat it for the webcast The question is just useful life of your assets and residual value, effectively. the question is just useful life of your assets and residual value effectively

Speaker 3: I don't think it normally in terms of useful life. When we develop a new asset, I would expect that the basic mechanicals are good for 25-30 years. Some of the assets that we have in the U.S. government have been fully leased for over 30 years. Over time, we routinely reinvest in those assets to keep them current and functioning. There's no shelf life, if you will. They are office buildings primarily. We have about 6 million square feet of data centers, but besides that, they're well-located office buildings. Their proximity to the mission is one of the key advantages to them, that the contractor or the government user is very proximate to the main mission. The interaction that's required between the contractor and the mission is a critical point of difference. I don't think it normally in terms of useful life. i don't think it normally in terms of useful life When we develop a new asset, I would expect that the basic mechanicals are good for 25 - 30 years. when we develop a new asset i would expect that the basic mechanicals are good for 25 - 30 years Some of the assets that we have in the U.S. government have been fully leased for over 30 years. some of the assets that we have in the u.s government have been fully leased for over 30 years Over time, we routinely reinvest in those assets to keep them current and functioning. over time we routinely reinvest in those assets to keep them current and functioning There's no shelf life, if you will. there's no shelf life if you will They are office buildings primarily. they are office buildings primarily We have about 6 million square feet of data centers, but besides that, they're well-located office buildings. we have about 6 million square feet of data centers but besides that they're well-located office buildings Their proximity to the mission is one of the key advantages to them, that the contractor or the government user is very proximate to the main mission. their proximity to the mission is one of the key advantages to them that the contractor or the government user is very proximate to the main mission The interaction that's required between the contractor and the mission is a critical point of difference. the interaction that's required between the contractor and the mission is a critical point of difference We have a building that's been leased every day, every square foot, for 32 years to the United States Government. That building will be leased for the next 10-20 at least. Find me another one of those. We have a building that's been leased every day, every square foot, for 32 years to the United States Government. we have a building that's been leased every day every square foot for 32 years to the united states government That building will be leased for the next 10-20 at least. that building will be leased for the next 10-20 at least Find me another one of those. find me another one of those

Speaker 4: All right. Well, we have one other question. Go ahead. All right. all right Well, we have one other question. well we have one other question Go ahead. go ahead

Speaker 6: [audio distortion] What share of your portfolio is SCIF? [audio distortion] W hat share of your portfolio is SCIF? [audio distortion] w hat share of your portfolio is scif

Speaker 3: ATFP, SCIF and ATFP, Anti-Terrorism Force Protection. ATFP, SCIF and ATFP, Anti-Terrorism Force Protection. atfp, scif and atfp anti-terrorism force protection

Speaker 6: What percentage? What percentage ? what percentage

Speaker 3: What percentage? 80% of the portfolio contains some form of high security measures. I went through that. It starts with the nine U.S. Government campuses that are about 4.5 million square feet, both ATFP and SCIF. ATFP is a requirement for the government, not necessarily the defense contractor. We have another million square feet that's SCIF, but not ATFP, where under certain rules, they can be in other buildings. We've got over 6 million square feet of defense contractor space that is SCIF. What percentage? 80% of the portfolio contains some form of high security measures. what percentage 80% of the portfolio contains some form of high security measures I went through that. i went through that It starts with the nine U.S. it starts with the nine u.s Government campuses that are about 4.5 million square feet, both ATFP and SCIF. government campuses that are about 4.5 million square feet both atfp and scif ATFP is a requirement for the government, not necessarily the defense contractor. atfp is a requirement for the government not necessarily the defense contractor We have another million square feet that's SCIF, but not ATFP, where under certain rules, they can be in other buildings. we have another million square feet that's scif but not atfp where under certain rules they can be in other buildings We've got over 6 million square feet of defense contractor space that is SCIF. we've got over 6 million square feet of defense contractor space that is scif

Speaker 6: Do those rules change, [audio distortion]. Do those rules change, [audio distortion]. do those rules change [audio distortion]

Speaker 3: What rules? SCIF? What rules? what rules SCIF? scif

Speaker 6: [audio distortion] [audio distortion] [audio distortion]

Speaker 3: Yeah. They have changed over time. There is a current standard that's more significant. It was really initiated about 2011. There are times when older SCIFs have to get upgraded to that current standard. That burden is really a tenant burden, not a landlord burden. It's one of the things that really drives our amazing retention rate, is the location, for one. You can't get closer to the mission. Two is the tenant co-investment. When we fund a lease, we give it a market tenant improvement allowance. To build new SCIF today is almost $300 a foot. It's well above our Tenant Improvement, the tenant is coming out of pocket to make the investment. Once they build the SCIF, it can't be relocated, it can't be breached. It takes a special authorization to be able to build one in the first place. Yeah. yeah They have changed over time. they have changed over time There is a current standard that's more significant. there is a current standard that's more significant It was really initiated about 2011. it was really initiated about 2011 There are times when older SCIFs have to get upgraded to that current standard. there are times when older scifs have to get upgraded to that current standard That burden is really a tenant burden, not a landlord burden. that burden is really a tenant burden not a landlord burden It's one of the things that really drives our amazing retention rate, is the location, for one. it's one of the things that really drives our amazing retention rate is the location for one You can't get closer to the mission. you can't get closer to the mission Two is the tenant co-investment. two is the tenant co-investment When we fund a lease, we give it a market tenant improvement allowance. when we fund a lease we give it a market tenant improvement allowance To build new SCIF today is almost $300 a foot. to build new scif today is almost $300 a foot It's well above our Tenant Improvement, the tenant is coming out of pocket to make the investment. it's well above our tenant improvement the tenant is coming out of pocket to make the investment Once they build the SCIF, it can't be relocated, it can't be breached. once they build the scif it can't be relocated it can't be breached It takes a special authorization to be able to build one in the first place. it takes a special authorization to be able to build one in the first place You can't just build one on spec. You have to be authorized by the government. It's a key component to our retention. You can't just build one on spec. you can't just build one on spec You have to be authorized by the government. you have to be authorized by the government It's a key component to our retention. it's a key component to our retention

Speaker 4: Great. Well, we're up on time. I want to thank you guys for doing this and appreciate the audience here today. Thanks, everybody. Great. great Well, we're up on time. well we're up on time I want to thank you guys for doing this and appreciate the audience here today. i want to thank you guys for doing this and appreciate the audience here today Thanks, everybody. thanks everybody

Speaker 3: Thanks again. Thanks again . thanks again

Speaker 4: Thank you. Thank you. thank you