CDP - Earnings call transcript Q2 2024 | COPT Defense Properties

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Operator

Welcome to the COPT Defense Properties Second Quarter 2024 Results Conference Call.

As a reminder, today's call is being recorded. At this time, I will turn the call over to Venkat Kommineni, COPT Defense's Vice President of Investor Relations.

Venkat Kommineni

Good afternoon, and welcome to COP Defenses conference call to discuss second quarter results. With me today are Steve Budorick, President and CEO; and Anthony Mifsud, Executive Vice President and CFO. information non-GAAP website that release in and our and available discusses and GAAP in our on the supplemental of financial management measures are presentation Reconciliations package. results, press

undertake made them. Steve? forward-looking As a risks uncertainties, company statements can Actual and are which differ today's filings. not are in SEC and subject the and our during the discussed events reminder, update to call materially duty statements to forward-looking results from does these

Stephen E. Budorick

us. joining afternoon, and for Good you thank

quick is new an that Britt a important meeting could rescheduled. in Just the company note, representing be for opportunity a not

will participating I'm he this quarter. covering call, So, and not be this his content on

our other since stand-alone The began in rate XX.X% portfolio in in growth. XX.X% in reporting is increased of and for the exceeded of strong the with portfolio. FFO XXX,XXX and leasing, of feet XXXX which or achievements, leasing. of square continue of This vacancy of adjusted vacancy rate years. square for and the per highest Defense/IT leasing portfolio of XX.X% on square produced level is retention in feet metrics second our the the as a and the same-property we we our outlook which occupancy, we exceeded fact on XX% $X.XX results consisted quarters, strong our XXX,XXX at X.X% either this comparability Overall, X past completed beginning total quarter have plan midpoint cash over enhance cash growth guidance portfolio an Same-property tenant year-over-year same-property retention we including guidance exceeded was again for to year-over-year XXX,XXX $X.XX, operating per and led key each feet With at to the total Defense/IT per $X.XX NOI growth, We portfolio implies XX.X% pool the to midpoint nearly increased FFO renewals XXXX. of for result leased, Defense/IT growth our the of same-property the we've year-end given outperformance and midpoint decade us X.X The our our $X.XX, that over quarter. midpoint share XXXX the XX growth. full total the year. XX% our is basis, highest our XX share year We've XX% impressive X. was Turning the guidance very segment total to by was adjusted our result, drive met FFO and share generated guidance. portfolio above We leased a as past quarter which comparability. reported X% and met in the the an metrics, for NOI

highest [ of is XXth for rates [indiscernible] the ] per the forecasted and in the XXXX office one sector. share REIT defined Our growth in REIT percentile entire the sector FFO growth ranks

Last $XX.X which month, the FY year-over-year line cyber Turning expect an budget. $XX approved funding, to NDA billion marks $XXX billion In increase growth settled, the year-over-year a the moving request, activities, approved XX% additional advanced roughly budget implying the a X left there a past XXXX bill, request the we this Notably, be are President's over Committee over House billion. to but Arm DOD the President's overall, increase Services pieces which Senate FY to XXXX in of for X% X.X% lot of request. years. a month, with a to the total X% defense to targets defense the

our we defense that tenant defense trend of high-priority we the given will both go national investment increased missions upcoming there's and continues, long election, the to way expect While and a in until fund support. the appropriation

focus strong, remains In especially we've Now global to space strong to great this our cybersecurity we results We're challenges had need renewals. to witnessing which demand given our for cash our contributing associated forecast, in the boost outlook lease economics is with outperforming in with reducing conflicts same-property success /IT by capabilities. concessions our assets and and the the the year. strong initial a NOI markets. environment, are Demand on Defense for full particular secured growth elevated improving

with generate portfolio in proximity offers location Looking Park, second defense and The at trailing San customer including connectivity performance. and at our contractors. our portfolio, our per Business advantages to rents average Antonio. strong operating These drive highest contractors, park advantages foot square XX.X% leased MVP's to interoperability operating and the other compelling defense the uniquely National is only

largest suite Columbia In defense X.X /IT dominant entire market outperform X,XXX to park. million with square given feet square only Gateway, foot a is our available Defense on overall Our in cyber continue franchise the focus requirements. we the

vacancy than leased, the during of over we is half Our accounted is Huntsville, the the of higher XX% In portfolio vacant XX,XXX square highly acquired remains our Gateway total the including Columbia XX%. rate with square XXX,XXX activity at occupancy for our XXX,XXX XXX%, portfolio market of and prospects and ratio XX.X%. is of of availability. X% feet leased leasing feet last quarter XX% achieved and our first year, square of space feet

continue the terms Virginia, as XX,XXX locations. XX,XXX concentrated XXX% primary levels, other Northern activity overall outperform feet feet of our have and Our missions and occupancy are These targeted South XX availability. with was market In markets is of rent driving square square Corridor and in Route defense our assets the to contractors in prospects and of ratio micro defense locations. in growth to traditionally advantaged

to point XX% [indiscernible]. marks is XX% basis overall market, is year-over-year which which only and favorably increase the an leased, XX compares portfolio extremely Our

in on of Our activity XX% other ratio is occupancy. square segment, square we're feet XXX,XXX focused feet our XXX,XXX with And prospects driving of availability. and

half and occupied times results executed we're leased rates square leased XX,XXX square remaining the during our This deal seeing year. feet sequentially by feet achieving encouraged first we is the XX,XXX with Towers in of and of XX,XXX leasing of in Pinnacle XXXX nearly While are Corner. uptick the at we're Street square level nice feet L we and included both now cycle in a vacancy Tyson's D.C., elongated, which of as XX% activity

Our and of of square XXX,XXX square activity is feet XXX,XXX ratio prospects feet XX% availability. with

Regarding second and Based of and year-to-date on the in executed We we XXX,XXX feet our year vacancy square our Vacancy of retention availability to square of executed our XXX,XXX leasing, total XXX,XXX full total the XX% square range the to during Defense/IT a the XX% quarter year-to-date. quarter. available basis a XX% within was feet year-to-date Tenant Virginia we've are inventory bringing exceptional exceed performance to feet. XX% impressive of the XX%. of leasing XXX,XXX year new beginning Northern Renewal our renewal target year-to-date, and points square achieved standout was portfolio. was the of and of on we at retention XX%. quarter, XXX increased feet, leasing midpoint both tenant guidance at was the during by an track

with average driven points, Our renewals weighted strategy, rent sector-leading by investment four spreads driven rent in X.X% spreads up term increases X.X%, retention of wrap-up. years. XX is were up further lease ] by our and almost my [ a rent annual gap of while basis discuss which were unique Cash I'll

will the full flat We at the be midpoint cash for spreads continue year. to expect rent

next strong. the remain over retention for several years outlook continues very to Our

leases, space. the to of of leases of lease five the leases feet the five disclosing feet, retention projection of in expect be When had retain the leases over modest renewed initial we XX%. XX tenants, of XX,XXX these in of foot XX began year-end Looking time, over but set we those X.X over quarter compared million leases expire large XXX% back, We had ratio. contractions. feet square we've pool, square that renewal as over second our XX X.X months of in view remaining following leaves the to totaling on square leases through At XXXX, our to will totaling million we with X.X our retention renewed, and feet XXX,XXX excess next two are pool XX.X% then, totaling all that million square That square XX% quarters. Since renewed that XX a the XXXX.

our we've XX large leases XX million nearly large government. had full include rate square United expirations history, large leases, disclosure XX from lease the X lease our XXX% of a XX% in we to So leases. totaling building months revenue feet. on Of our those of through annualized next year-end government comes of renewal the have full the we window, expanded on buildings XX-year And page expiring, XXXX. our for view book, recall, that In to rental States leased

and contractor leases. leases, is show the pool defense Beyond the government data center mostly

will overall of set this highly We retention through remain expect XX% XXXX, our expiring and rate retention year-end very confident we're over of strong. leases a large tenant

totals active XX% development $XXX million. and represents Our roughly pipeline total pre-leased is square It XXX,XXX a cost feet. of

continue and leasing of the towards expect weighted year the We back be the to negotiations. half activity development of based to timing those on acquisition

would activity in inventory to XXX,XXX to don't XXX%. and MVP feet Rideout our started XXX,XXX leased. XXX,XXX operating of Road, acquired on XX,XXX of in development we recently this we square of occupancy of We of XXXX, square availability. prospects our of square on the MVP XX% Advanced At feet square and acquired building an nearly XXX, buildings feet so have square and include be unleased we the feet In space at of For Franklin park. of feet to park square Center, progress have leasing equates of our we finally, nearly availability portfolio, available square the we due feet XXX,XXX feet over year. availability. ratio targeting in feet feet still XXX,XXX is square Center, availability. in At which combined building XX,XXX for XXXX of XXX,XXX next XXXX dearth until And three asset have we XXXX Franklin were XXX,XXX prospects prospects we The XX,XXX have square space. feet newly of the prospects available this the square demand prospects of and and If have expect Gateway, this

three quarters. these assets, we over X to the For progress next leasing expect report

development or about years or Our we less, X as win better likely leasing consider define stands opportunities within pipeline, feet. to XX% we XXX,XXX square currently which at

opportunities, that, a the feet which tracking hand Anthony square we're the to term. call And allow development Beyond million development potential maintain that, solid over X.X should medium near of to and pipeline us I'll in over with

Anthony Mifsud

the strong share portfolio portfolio. quarter and The you, our Thank guidance XX.X% burn a at lower NOI was year-over-year increased another of comparability the levels in real our expenses XX of driven and for for free of by net service free total estate concessions tax XX.X% cash in renewals, rent off by in increase occupancy, exceeding now quarter midpoint appeals lower We increase property FFO Defense/IT average successful basis per on developments $X.XX. primarily our of from reported rent Same with recent operating Steve. second Baltimore. resulting adjusted for $X.XX, as point

expenses. appeals flat same year stronger quarter year, achievement the resulting the the a to our midpoint operating and combined the As XXX from of renewals, the for guidance result of we and the for compared tax X%. points. occupancy volume is factors the which quarter. forecast weather-related is quarter, cash basis the real of estate year-to-date range, increased at lease and NOI with of expected by the driven our many net last midpoint combined increase XX.X%, namely growth first on quarter, basis at This elevated end reduced expenses remainder benefiting increase of ended lower the the to our with guidance XX economics same-property point Same-property of This by

property midpoint XXX increase expect year, to We raised of same points of occupancy expected occupancy end we basis guidance XX.XX%. the the the year-end towards to and by

to strong interest be positioned navigate and the future current to continues rate environment to Center. of sheet balance Franklin take Our well advantage opportunities similar and

of debt cash We on of had XX% and million our maturities end available capacity over March line XXXX. quarter, the on have $XXX $XXX hand. no until the of credit we of significant million At the

we off was maturity Redstone million that paid During by using cash three secured at hand. at the Gateway on a quarter, mortgage $XX properties

currently have Our portfolio We now rate operations. variable represents of unencumbered total debt exposure. from XX% NOI no real estate

balance the credit. capital will our of our from be after of operations XXXX component from funded We expect cash our debt cash and be as XXX% and the late component dividend fixed of the debt our will from subsequently investments from existing until equity line

of of that required developments Franklin the the first demonstrate to We XX% Year-to-date, Center. overall leverage invested the operations and to with remainder which acquisition months after The of X funded spend neutral on our hand. XXXX ability self-fund $XX for cash equity the investments. from and million with we in cash is dividend,

was has past ratio dividend each first in of half of Our below the the and payout year XX% XX% been the quarters. during X

this results. at to sector the the the XXXX our the $X.XX help we FFO NOI, per dividend fund strong $X.XX. is AFFO. strong for quarter guidance $X.XX investments. we primarily quarter These now our balances. X With our confidence full midpoint, million the payout the X from the which increase, share slightly was FFO ratio some of XX%. XXXX's in cash X are during of implying us have reduced and of flow to of million at guidance utilize the and X% raised cash offset by on by G&A to in increase We roughly as midpoint driven in $X.XX, the $XXX of we initial first during and With first development and the year, guidance, growth GAAP ratio will our share expenses. expect acquisition by increases We levels nearly only invested at to months achieved are of be Center allows our increase the timing to year the sits the Franklin $XX year as the million, cash REITs payout increased adjustments half respect the guidance $XXX capital higher-than-expected income the driven dividend new year per increased generate same-property for the partially second is items we first year This midpoint in interest over by by ability year. retained The to acquisitions expected investments have full for This last to which year demonstrates $X.XX NOI higher

which adjusted guidance increase FFO quarter fourth slight $ per quarter. Finally, X.XX the in we third share implies are $ comparability to for a X.XX, establishing of in as for range a

Looking forward, and X% Steve. between back share FFO at per call XXXX. With we the annual least continue to turn compound anticipate of growth that, I'll to XXXX

Stephen E. Budorick

average which rate. get to differentiators, and before of X the delivered remarks, our past XX%. years, to home key really So, is final one XX% retention delivered drive of we've sector-leading over my I want Year-to-date, retention, our I tenant an we've

office required immense delivers because company AFFO our shareholders, negative our are a is Our cash tenant. Vacancy That ratio new about which likely capital a space realized to tenant is elevated much a higher is renew expenses attract tenant or required as retention rents line. the Xx is for bottom lost record operating gateway to value as rates. the vacant diminishes event for capital and to downtime for

basis. strength a rents assuming component impact even ] delivering We free average periods exhibits our on that involves AFFO of dominates our negative to scenario, XX% positive a retention generates self-fund retention bottom partially to periods. XX on as change rent retention typically retention. our growth on with some re-tenanting cash rent compared a the of is but and is flow in exhibits cash leverage-neutral million equity rent million and on increases the XX% has X cash The scenario X industry $ XX page cash pretty included the XX% ability a and leasing drive incremental extend industry period. X renewals, of [ an in that on or the year flat line that XX% The retention XX These our rate rate XX% foot New renewal. the portfolio generates flow feet high flow high increase industry comparing more that and hypothetical on cash square optimistic investment with average scenario examined to book leasing, average explains portfolio

messages. I'll during We've the So, solid year. the first key close half by our summarizing of results achieved

portfolio square in executed and same-property is retention. the Year-to-date, Defense/IT leasing and segment growth Defense/IT guidance our midpoint year-end increased We Our our property generated vacancy We of XXX,XXX feet total XXXX same of leased. year-to-date. X.X% growth tenant NOI cash same-property XX.X% NOI occupancy, cash of X.X% portfolio. for in we

will years. are Our pre-leased $ over the million and developments NOI to of contribute few XXX active growth XX% next

we is of FFO XXXX planned capital per investments to X% our very to of which expect equity to midpoint another X.XX, $ And forward. and self-fund component liquidity growth. strong, continue the year-over-year Our we by the FFO share nearly guidance going X.XX $ increased implies

benefit shows clearly the strategy. quarter's unique investment This performance our of

up open that, for call questions. with operator, please So, the

Operator

you, Thank [Operator Budorick. Mr. Instructions].

Securities. first Our from Richard question the Anderson comes Wedbush of of line

Richard Anderson

if first, much job it the So, great something better-than-expected but achieved building a basically But on on lower the the half blocks that behind I'm that doesn't of in profile, there that renewal wrong, like occupancy little the past. it, options all precedence, there. seem year? correct and Is is I me in OpEx. it of bit said upside essentially and guess you same-store back growth at you've the

Stephen E. Budorick

correct. That's

Richard Anderson

side, an have So, component vacancy of at impact, you of get leasing much on don't same-store probably from Is really if sort the activity? leasing so doesn't there vacancy that as free a rent -- that the a impact all?

Stephen E. Budorick

deal year requires Typically, commencement hard months or X it's improvement with X a tenant maybe current scenario that a to really year current to and start even to NOI. a no rent, we free done and get in contribute vacancy cash in to even of get rent the a leasing

Richard Anderson

the internal I just sustainable of on your reiterating What I'm take long-term growth X% company? a going you firepower X%, disagree. do not FFO this maybe to maybe real you're of think growth know to a So, basis, flyer XXXX. sort

point look of growth expecting view should out? So, what be organic as an investors from we

Stephen E. Budorick

good development. is a then from internal rate contributions think and X% I run Well, additional

Richard Anderson

FY me time Directly with XXXX. to defense mentioned quick, expecting about into me, matriculate way for a the to with event. X% Is it the for to leasing? how that it's it I about pretty to leasing talked before. you contractors, look Talk and remind of takes think we've it? Steve, to but translates government, fair X% this budget at And kind a that

Stephen E. Budorick

Yes.

government the that budget, fiscal additional commit approved has if So, have year. leasing a to authority within the in typically they

delayed appropriations continuing happen to on As know, the we of all a resolutions. because tend basis

we it's months award typically executed. lease So once U.S. X again be X an time. Often, contracts capture contractors, quite An through With through that protests benefit to the government adjudicated. usually have experience process ability of commit following there's that to finalized, their space. that a business the is defense additional to that, contractor action would and then additional bit award appropriation, can to takes to contract need get that and

say lag we to tends to that months. So, XX XX

Richard Anderson

a on umbrella. Okay. things you you're And the acquisition, interesting, of your Center. like some development-oriented hidden kind then pipeline? well with eyes other similar at gems, there Do potentially few in Is last stuff you like It there there, least going under upside of for are story? terms out though things get Any really out looks your referenced even me. at Franklin is opportunities a that that

Anthony Mifsud

rich. That's I'll all looking say. still We're

Operator

Our next question comes from of Fargo. the line of Blaine Wells Heck

Blaine Heck

you to increased square quarter. potential X.X and pipeline? pipeline set last square little the the to square I was talk development million XXX,XXX up a from feet increased Can X leasing opportunity XXX,XXX the about from million more feet bit think feet

it demand? that tenant across curious are And are incremental the if Or areas? driving seeing specific relatively you just in profiles specific any there widespread portfolio? is geographic So, it are that

Stephen E. Budorick

there square pipeline, XX about total, there's square ins within average were always idea, in our quarter, But we XXX,XXX had and feet XX,XXX had feet. an list. on give around and Well, requirements, last they you that outs we to

or XXX,XXX new or square conversations consolidation we've by then and working construct an and requirements And that, within have greater. always averaging time have XX% less we expansions, to customers [indiscernible] a requirements they're there's quarter, with This new XX,XXX continually, feet. Within and mission those building X-year it's to frame, about to support. we're the X -- really discussions filter and years about that ability we got at

I all information. give that would you had we've And any really So, about profile want to pretty encouraging. say. some other that's could I discussions are not

Blaine Heck

same-store least like on increase, related. was most expense not up following if Just the looks it that NOI guidance at some, of increase

just on just there? weather-related the you potentially expenses, of in of change had half? want second what the budgeted through maybe, I'm half Are an appeals Anthony, on confirm more some could components the relative outlook for So not year, of is the this the any tax in kind expectation the expenses, And can to lower assuming significant savings again on I that you that? to talk there then first but

Anthony Mifsud

the But XX% X% the you appeal dollars on in points. because stronger is and combination if About of that million. We'll and gross first and the The renewals the our rent the first all weather-related our see free The of future. our leases. is were better lower tax will and the for into on reduction current correct benefit NOI year that second expenses terms experienced look total months. quarter X%, quarter X estate renewals, between You're continue going reported Baltimore in at it's those real a on came successful through in balance expense that related and $X same-property forward. results. some about results change through expense in economics through the of of original the cash guidance

Blaine Heck

have that of availability to maybe -- maybe roadblock about And just think you back potentially about about might any additional opportunities to power elsewhere? Can for you going And that in even have Northern of more. just kind limited the And in talk respect Steve program? forward? talk data resulted center do it that then one and with how resulted has expansion how a further you Virginia

Stephen E. Budorick

a be traffic might it but roadblock, a long it call wouldn't I Well, light.

about our land until tough would clarity today, it's we of solution. in available talked high prior forward in interested on customer without move and power that â€“ match we've have can to factoring calls, confidence and we extremely power, where have it's be and the clearly, this So price land

than as and we quarter, last of today to we that during ago, is develop think of into was and But market clarity we power, available current next year latter work I program clear year expect the no some calendar the of a on could So, the understand I pieces await and and said land what expansion could the half buy be year. power solutions. I situation don't it

Operator

from Griffin question of of the comes line Citi. Michael next Our

Michael Griffin

escalators, to back a going leasing is Just or vacancy rate for high of given outsized spreads given And the greater cash leasing expect just more have bit, push maybe favorable then supply/demand portfolio, lease your these backdrop? of fair lease future able it following government non-U.S. to for up your in to been kinds re-leasing maybe on kind limited for the leases, that tenants? you and

Stephen E. Budorick

and We what regard markets With don't we to positive our flowing stable. on before, get think of is company talked through about I our office metric in the in rent annual pretty reduced don't demand And market benefit same as it's is very way. seeing supply get that's year rent, you're are free peaks, So, we've results tighter renewal. recoveries. itself best manifesting a crashes judge not our because the with to this

with in we move tends our and the rent. internal to So, -- leases about growth market

we get and on cash rent growth. continued little And change then renewal so, very

most a it big we're wrap is seeing where lower advantage cash. is to concessions, rent free to up, the which So, boost

Michael Griffin

of kind impact the your that outage thoughts saw we curious cybersecurity And the Obviously, to just things. had get be industry. then recent on on I'd the CrowdStrike

cybersecurity? this a portfolio. in of to I to of your way more your And tenant event like portion growing know as base your that an in view invest a So, this tenants kind is would you catalyze

kind any outlook industry comment have be for that on the could So, of would you helpful.

Stephen E. Budorick

started Well, Fort for Command first co-located at Cyber of benefit realize we it's U.S. been since us performer great the a to Meade. being

and we not total where X they're our I portfolio. million leases expanding. the cyber very contracting have feet achieved And And those to they're square I we've can in tenancy Command coming to so, protect tie is say frequently, new Cyber because missions of nearing is our of innovate protection think that fundamental out portfolio tenants need The the to the that the innovation. think asymmetric [indiscernible] it's innovates just your I have of constantly threat a threat protectors environment to set threat. it's constantly in an to great to and constant tenants

you DOD for see $XX.X the about we think little earmarked $XX.X last being billion, in I that's cyber comment that made billion year. bit that a

So rate, be served that capture that's compound X.X%. a try about I'm to continue targeted satisfied well that $X On to tendency. long-term to basis, billion increase, pretty if that's we'll

Operator

Our from Sakwa of next Steve question line of ISI. comes the Evercore

Steve Sakwa

I some maybe development why good guess the good not demand. more so Steve, to starting finish like demand, and today. a closer what bit is pre-leasing? gets level activity I'm projects there's wanted to you're it existing seeing. has not you I'm I property development trying What new sounds to these sure guys robust. much on figure you're out circle that to getting Is the very it NBP in it like back clearly big the start It's Is of it's projects? projects And sounds to little pipeline the early line? It sign. but

Stephen E. Budorick

new pretty what to conservative tend be we opportunity satisfy to we already see to Well, immediate supply commitment on started. we've our until

vacancy, with inventory see that three we have demand. buildings We

and quickly. buildings those the subsequent we're nears as to market planning prepared leases, -- bring demand buildings already As to

up permit Redstone the Gateway, to the XX at ready prepared instance, building. go be we ready are For in, We're and improvements below next on to it, start on site. to call We've grade our inventory already months.

materializing. we year until to preparedness, demand too see much like capital out of at have that to past we we but put the risk want don't So

Steve Sakwa

create move Light isn't Price of building of some which Baltimore, of will are set turning T. there their noncore Baltimore just the how vacancy, assets, know just some I getting in out to buildings further is downtown too your east some to Pratt And you assets, of and far Street. then maybe some headquarters those? the which Rowe thinking move from and about more on

leasing about So either you then those and Street? L on how the disposition as ultimately, of thinking assets those are Baltimore as XXXX well

Stephen E. Budorick

Well, let reverse in take that me order.

support at that's to capital inherent really proper a that has need We for leased. a of buyer that the and XX% The will availability sell. building's stabilized. debt, market debt and cost not of a L It today. to value And speaks X,XXX So, valuation. environment just

And a potential get launch of not We So, very of valuation. news Rowe XXX But is are we're position like we the we've well have owners for buildings to our for building, to indeed, capitalized. -- a two getting today's of consider from at quite of when to kind lender. But Light get both on bit vacancy competing vacancy. that to their is significant building, significant proper that which has good good financing challenge leaving in kind don't we the looks Downtown interpreting to XXX a reestablished think it will a that in in I them well the the the T. vacate ready relative that just them. think in a compete environment. market, a going a them need vacancy. opportunities amount in building pretty market leases Baltimore, incremental With yes, regard to going other in own of win the what are we the deal, And micro they're laser-focused that's on market, the and heard Light. to market, then of demand

we proper before improve over the acquisition a got market. buyer see quarters. occupancies give value an a where I think X regard next it to again, bring markets, have us we With finance to capital their to to you'll can a market

Steve Sakwa

coming XXXX better financing do financing Obviously, down, on the sooner? getting are transaction and kind Would you effectuate do that? seller are L. to seller any but would you quick follow-up that of willing one markets on capital be on Just to a building rates

Stephen E. Budorick

significant a yes. With downstroke,

Operator

America. of of from of Our next Bank comes Camille question Bonnel the line

Camille Bonnel

remains but robust, closer decision-making in to in mindset tenants that to I'm you're be see appreciate a from that difference get the on curious development slowdown starting the elections, pipeline? just any or we or if pipeline vacancy your as whether your I

Stephen E. Budorick

win, of election more I've tenants really it's award confidence facility forward. for just verify don't planning contractors never But waiting tends have influence be is. get that lease so the inside into I've It as contractor's what's need really ready move for the to to their at we our It's as Well, more the tough because focused know seen from been at to the the an to result thinking head business. company, clarity viewpoint, what space. our to the on they're long

that I evidence election decisions. So, is influencing is no, no my answer have the

Camille Bonnel

Redstone towards mentioned lower much that development retention you as in quarter, there opportunities was as the few and have you Arsenal, this that looking new a And the projects market. under well

So, driving a you what's there? on more the could bit move-outs expand

Stephen E. Budorick

Yes.

one largest we buildings two a downsized the reported Redstone off was contractor the space gave in tenants our the temporary who small So, we but Gateway. of of got of non-renewals

a So, time to new and for space. they us back their building that took and building, them had into build we swing contractor new their moved

driver. at of amount the And you was small that bigger footage. square if look very volume, So the a it's

Camille Bonnel

you're anything seeing lastly, timing bit And changed you in expect market? acquisition more elaborate can you a what the close a of when deal? quarter? Okay. a this please more on in guidance has factor Is Or update the investment it on to

Anthony Mifsud

was update spend. our Our of development

the have we're anticipating the investing as forecast as the for it's well invested that's existing in ground in just So, in capital in new our development pipeline later projects the capital really we year.

Operator

next of the Peter Our Jefferies. of line Abramowitz from comes question

Peter Abramowitz

much quieter comment out, you but construction wondering start top this do and trending become a if yields? it's cost how capital are you to feel things conversation not how front, anymore there to your relative underwriting and much just of to on on can First, costs,

Stephen E. Budorick

few year-to-date, in the So, it has close that, pretty did costs increases say of to We're clearly rate would not like the increase big stable. we last years. said construction over Having I abated. seeing a costs the essentially this a improved hit has X capital as year, cost little maybe bit more of been build we And building did constant lot to than into midyear. it years today a ago.

But yet still in it's challenge had a generate costs competitive more ability some start to development to So, that impact decrease And think our a on support rents environment. have overall not to I we new get construction development. seen progress. to

Peter Abramowitz

build-to-suits, those of the for market your your assets. the defense you the give pricing assets overall or BW a you overall just sales market, particularly that on for Have corridor, in but cap portfolio? contract And in and sense transaction portfolio? particularly rates in sales seen then one government Any the any for

Stephen E. Budorick

where over would last to saw transaction There Nothing now. the were observed right we we what at prices paid. I could corridor, the a bid not year were and a looked opportunities we few speak level acquisition BW the to that below in have

involve buildings. pricing. aggressive contractor those pretty defense So And

And so, value I amount think if defense mission-oriented contractor, a you have those assets. of a good asset with still tremendous there's in a

Peter Abramowitz

that guess from precluded through kind pricing on going a with rate cap just from follow-up those? initial I And go the where you of following perspective that, an did up on

Stephen E. Budorick

Well, is below X%. recollection closer And X%. to my

Operator

Instructions]. [Operator

Dylan Our Green comes of line next the question of Burzinski Street. from

Dylan Burzinski

few occupancy you Just the are past, growth in do XX% XX%, can you call that we about thinking is it, approaching Or given mid-XX% think occupancy guys next today? occupancy are over vacancy of years? range? you sort the curious the I approaching, the mean, now portfolio frictional levels call range it, guys move how future

Stephen E. Budorick

try every satisfied as over Well, tougher demand gets where vacancy we're to square and going you're much with we're are, to fill to we to matching XX% never continue the But leased. foot. the

So, going we're some it's continue but to be going incremental say not easy. I'd to to progress, make to like

Dylan Burzinski

you And that the where then being given expect years? or today, bumps few you sort rent we over the as not where basis? should leases the on able outlined to last that, in on parallel envision a given call, demand that go-forward occupancy guys is that drivers all changed embedded to And of yourselves do a has push to go at

Stephen E. Budorick

to We're of couple bumps push the of profitability a those will bit. this quarter-to-quarter, of higher where there from a always quarters trying they move a are Well, the entirety on a had quarter. lease. We've than little

it push So, we where get trade-offs. and can. the I mean, some there's We'll across board

Operator

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

Stephen E. Budorick

for Well, our thank you call. all joining

offices, please joining for so call. We us. our in like again are a follow-up coordinate if Venkat, through Thanks you

Operator

Call. the for your in you Quarter Results today XXXX Second COPT Defense concludes participation presentation. This Properties Conference the Thank

You Good day. may disconnect. now

COPT Defense Properties (CDP) 30 Jul 242024 Q2 Earnings call transcript