COPT Defense Properties Q1 FY2026 earnings call

• Dividend increase: In February, recommended and Board approved a 4.9% increase in annual dividend, fourth consecutive year of increases. Since 2022, dividend increased 16.4% and FFO per share 15.3%. - Leasing activity: Executed 1.2 million sq ft renewal leasing with 91% retention, 92,000 sq ft vacancy leasing, 384,000 sq ft investment leasing. Renewed nearly million sq ft campus leased to US government near Lackland AFB. - Development: Commenced two projects, active pipeline over 1 million sq ft at 73% pre-lease. - Credit rating: Moody's upgraded investment grade rating to BAA2 in March with stable outlook. - Defense budget: FY2027 proposed defense budget is record $1.5T, significant increase in various areas like intelligence, DoD cyber funding, Golden Dome

For the first quarter, FFO per share was 69 cents, a 6.2% year-over-year increase. Same property cash NOI increased by 0.4% year over year, driven by a 70 basis point increase in average occupancy. Executed 1.2 million square feet of renewal leasing with a 91% retention rate, 92,000 square feet of vacancy leasing, and 384,000 square feet of investment leasing. Year-to-date, committed nearly $250 million of capital to new investments. Total portfolio occupancy was 94.4% and Defense IT portfolio occupancy was 95.6%

• Increased midpoint of FFO per share guidance by one cent to $2.76. - Increased midpoint of same property cash and OI growth by 50 basis points to 3%. - Increased midpoint of tenant retention guidance by 250 basis points to 82.5%. - Increased midpoint of capital committed to new investment guidance by $40 million to $290 million. - Second quarter guidance for FFO per share in range of 68 to 70 cents

Q: Seth Berkey of Citi asked about long-term FFO per share growth rate and acquisition in a sub-market.

A: Steve said growth muted this year due to additional interest expense but expect to return to growth path, and there are potential buildings to buy in the sub-market.

Q: Steve Sakwa of Evercore ISI asked about development pipeline and vacancy leasing.

A: Brett said not yet ready to start more inventory but prepared to move aggressively if demand ramps up, and prospects for vacancy leasing in Northern Virginia and BW Corridor.

Q: Blaine Heck of Wells Fargo asked about 2027 budget and development pipeline reduction.

A: Steve said 12-18 month lag still holds, and reduction due to harvesting deals and decision on a mission.

Q: Tom Catherwood of BTIG asked about net effective growth and concessions.

A: Britt said focused on NER, pulled back on concessions in Northern Virginia, mid single digits growth.

Q: Richard Anderson of Cantor Fitzgerald asked about Des Moines data centers and Huntsville leasing.

A: No update on Des Moines, Huntsville has potential to expand.

Q: Dylan Brzezinski of Green Street asked about Navy support vacancy leasing and acquisition pipeline.

A: Saw pickup in Pax River and D.C. Maritime Plaza, currently no acquisitions tracked.

Q: Anthony Pallone of JP Morgan asked about development leasing pipeline and regional office portfolio.

A: 25%-30% of pipeline for current buildings, team addressing expirations in regional office portfolio.

Q: Steve Sakwa of Evercore ISI asked about selling non-core office assets.

A: Benchmark rents support value but not yet time to market