管理層發言
Welcome to the COPT Defense Properties Second Quarter 2026 Results Conference Call. As a reminder, today's call is being recorded. At this time, I will turn the call over to Venkat Kommineni, COPT Defense's vice president of investor relations. Mr. Kommineni, please go ahead.
Thank you, Latif. Good afternoon, and welcome to COPT Defense's conference call to discuss second quarter results. With me today are Stephen E. Budorick, President and CEO; Britt A. Snider, Executive Vice President and COO; and Anthony Mifsud, Executive Vice President and CFO. Reconciliations of GAAP and non-GAAP financial measures that management discusses are available on our website in the results press release, presentation, and in our supplemental information package. As a reminder, forward-looking statements made during today's call are subject to risks and uncertainties, which are discussed in our SEC filings. Actual events and results can differ materially from these forward-looking statements and the company does not undertake a duty to update them. Steve?
Good afternoon, and thank you for joining us. The company delivered a strong first half of the year in all aspects of our financial and operating performance, and the defense economy we serve continues to be strong and benefits from increasing investment. For the second quarter, FFO per share was $0.71, which was $0.02 above the midpoint of guidance, represents a 4.4% increase year over year, and is the 24th consecutive quarter of year-over-year FFO per share growth for the company. Same property cash NOI increased 7.4% year over year, and we generated 6.4% growth in the first half of the year. This was favorably impacted by the timing of lease and rent commencements. We expect growth will moderate slightly in the back half of the year, which has been reflected in our annual guidance. Anthony will provide more detail. We executed 139 thousand square feet of vacancy leasing in the quarter and 231 thousand square feet during the first half of the year. This amounts to nearly 6% of our full year target and represents 20% of the unleased space we had at the beginning of the year. We invested $43 million to acquire 17 acres of land and a ground lease in the Westfield submarket in Chantilly, Virginia at a cap yield of roughly 7.5%, with some additional future upside. Turning to guidance. Based on our strong performance year to date and our outlook for the second half of the year, we increased the midpoint of 2026 guidance for four metrics. FFO per share increased by $0.02 to $2.78 per share. This implies 2.2% growth over 2025's results and is $0.03 above our initial guidance. This revised midpoint is even more impressive when you account for the $0.12 of higher financing costs year over year in our guidance, based on $0.08 of incremental net interest expense from our bond refinancing and $0.04 of dilution from our exchangeable notes resulting from our strong stock performance. Same property cash NOI growth increased by 100 basis points to 4%, which is 150 basis points above our initial guidance. Cash rent spreads on renewals increased by 100 basis points to 3% and our capital commitment to new investments increased by $45 million to $335 million. Additionally, our vacancy leasing target increased by nearly 20% from 400 thousand to 475 thousand square feet. Moving on to the defense budget. In April, the White House submitted the FY 2027 defense base budget request, which requested a 30% increase year over year to $1.1 trillion and amounts to a nearly 50% increase over the last five years. Last week, Congress made progress on the legislation and the House passed the National Defense Authorization Act, or NDAA, which matched the President's base budget request of $1.1 trillion. Reconciliation funding is expected to provide additional upside to FY 2027 spending and the estimates range between $73 billion at the low end based on the reconciliation framework passed by the House all the way to $350 billion at the high end which was the President's request. The NDAA calls for meaningful increases in funding in the priority missions that our portfolio supports, including a $16 billion or 14% increase for intelligence, a $4 billion or 25% increase for DoD cyber funding, and an additional $18 billion for Golden Dome. While the ultimate outcome is still being determined in Congress, our business is really driven off the base budget of $1.1 trillion, which is expected to be the new run rate for funded spending. Mike Rogers, chairman of the House Armed Services Committee, was recently quoted stating that trillion-dollar base budgets are going to be the new normal. Regarding our growth opportunities, things are getting even more exciting at Redstone Gateway in Huntsville. In the third quarter, we will start two new development projects totaling 240 thousand square feet because we have no contractor space left to lease. Our 2.4 million-square-foot operating portfolio is 99.6% leased and the only remaining availability is spoken for. Following the execution of this last 10 thousand-square-foot lease, all 24 buildings will be 100% leased. Interactive developments for defense contractors: one Advanced Gateway project is fully leased, and a current inventory development is 41% leased. We expect to sign a lease for 75 thousand square feet this week, and we are negotiating a lease for the remaining 15 thousand square feet which we expect to sign next month. Beyond these deals in progress, we have another 415 thousand square feet of demand from contractors for mission space related to Golden Dome and missile defense activities. Given our strong success in the quarter and the depth of demand we are seeing, we are commencing development on two inventory buildings, consisting of RG 6.3, a 180,000-square-foot building with 30,000-square-foot floor plates which we will deliver in early 2028, and RG 2.2, a 60,000-square-foot building with 20,000-square-foot floor plates which we will deliver in late 2027. These buildings will provide vital inventory to begin to meet the space and timing requirements of the current demand. Looking back, in 2011, we commenced our first development in Redstone Gateway — a 120,000-square-foot building — in order to create the initial inventory to seed the park. We leased that building to a defense contractor shortly thereafter, and it has been 100% leased ever since. Over the past 15 years, we have developed 2.4 million square feet that will be 100% leased in the coming weeks. Upon completion of the three projects under active development, the park will be 2.8 million square feet making Redstone Gateway our second largest market concentration. Following completion of the two planned starts, the park will exceed 3 million square feet. For context, it took 21 years for the National Business Park to reach 3 million square feet after commencing development in 2000. Anticipating only our current planned activity, we will achieve that milestone at Redstone Gateway in 16 years, or five years earlier than the National Business Park. Given the strength of the demand we are seeing in the market, we look forward to updating this projection in the next 24 months. And with that, I will turn the call over to Britt.
Thank you, Steve. Before I walk through our operating performance during the quarter, I would like to share three key highlights. First, we are outperforming on vacancy leasing, driven by demand in our Fort Meade/BW Corridor subsegment, materializing most significantly in Columbia Gateway. Second, we continue to deliver sector-leading tenant retention. We averaged 84% in the first half of the year and 79% over the past decade. This provides a material capital advantage over traditional office landlords and is the foundation for our unique ability to self-fund the equity required for external growth. And third, the government's massive investments in the missions that we support are providing not only current opportunities, but also long-term external growth potential. We finished the quarter with continued strength in both our leased and occupancy rates. Our total portfolio was 95.6% leased and 94.1% occupied. Our defense IT portfolio was 96.4% leased and 95.1% occupied. Two data points which demonstrate the strength of the demand we are seeing in our markets and our ability to convert that demand into lease executions are: first, our Northern Virginia portfolio ended the quarter at 95.2% leased, which is the highest lease rate in this subsegment in over a decade and compares very favorably to the overall Northern Virginia market occupancy rate of about 78%. Second, our Columbia Gateway portfolio has seen significant momentum in vacancy leasing over the past few years. In 2023, we executed 50 thousand square feet which increased to nearly 100 thousand square feet in 2024 and surpassed 160 thousand square feet last year. In 2026 to date, we have executed 110 thousand square feet. And with the additional activity in the pipeline, we are confident this will be the strongest year for vacancy leasing in Columbia Gateway in over five years. There were two temporary events in the quarter which caused total occupancy to decline by 30 basis points in aggregate, both of which will reverse next quarter. First, we placed MBP 400, a nearly 150 thousand square foot building, into service as vacant space. However, the building is fully leased to a leading defense contractor and the lease will commence in the third quarter. This delivery resulted in a 60 basis point decrease in occupancy in the second quarter that will reverse in the third quarter. Second, a law firm tenant relocated within 100 Light Street in Baltimore and downsized modestly; however, they continued to occupy their old space in the quarter, and this resulted in a temporary 30 basis point increase in both total and same property occupancy. The net impact of these two temporary events will be a 30 basis point increase in total occupancy in the third quarter. We executed 139 thousand square feet of vacancy leasing during the second quarter, nearly 70% of which was with existing tenants, further demonstrating the strength of our franchise and our deep relationships within the defense industry. Year to date, we have signed 290 thousand square feet of vacancy leasing, which amounts to roughly 25% of the unleased space in our total portfolio at the beginning of the year and equates to over 70% of our initial full year target of 400 thousand square feet. Approximately 125 thousand square feet are prospects in advanced negotiations, which we define as over 90% likely to execute. Taken together, we have over 415 thousand square feet of leases either executed or in advanced negotiations. This achievement and the continued strength of our demand gives us the confidence to raise our target to 475 thousand square feet for the year. Our leasing activity ratio is 69%, which equates to 770 thousand square feet of prospects on 1.1 million square feet of availability. Turning to renewal leasing, we executed nearly 350 thousand square feet in the quarter. Tenant retention on renewals was 68%, cash rent spreads were down 20 basis points, and GAAP rent spreads were up 4.4%. We continue to leverage the strength of demand for our defense IT portfolio by minimizing concessions on renewal leases. Year to date, our renewal concessions are down nearly 30% compared to 2025. Our relatively lower retention rate this quarter was driven by two strategic nonrenewals in the Fort Meade/BW Corridor. These nonrenewals occurred following strategic expansions of two tenants into new properties to accommodate the growth required for them to execute their priority missions. Net of these two deals, retention would have been 12 percentage points higher. Notably, we backfilled one of the nonrenewals immediately at a significant increase in rent, and the other provides the necessary growth capacity for a third tenant in our portfolio. These anomalies occur when you have the strong tenant relationships that we have and our commitment to accommodate tenant growth in our highly occupied portfolio. Our full year outlook for tenant retention is unchanged at 80% to 85%. Our outlook for retention over the next several years continues to remain strong. Looking back, as shown on page 18 of our flipbook, in the second quarter of 2024, we disclosed our view on the renewal of large leases — those in excess of 50 thousand square feet — over the next 10 quarters through year-end 2026. At the time, we had 32 large leases totaling 4 million square feet set to expire. Since then, we have renewed 24 of those leases and achieved a 97% retention rate on this 3 million square feet. The remaining eight leases in that pool are all full-building leases to the U.S. government, which total nearly 1 million square feet. We expect to retain 100% of that lease space with lease executions expected in 2027. When these eight leases renew, our retention on that 4 million-square-foot pool will be nearly 98%, which compares favorably with our initial projection of over 95%. On page 19 of our flipbook, we expanded this disclosure to include our view of large lease expirations for the next 10 quarters through year-end 2028. In this window, we have 39 large leases expiring totaling 4.1 million square feet, which account for nearly 60% of our total expiring annualized rental revenue during the period. We expect approximately 90% retention on this population. Roughly 70% of this large lease pool by square footage and 66% by annualized rental revenue is government and data center shell tenants for which we expect 100% retention. This pool includes two leases in our Other segment, which equates to roughly 5% or 160 thousand square feet of the total area, on which we expect approximately 50% retention. Looking back, since we provided this large lease retention disclosure four years ago, we have renewed 5 million square feet of large leases at a 98% retention rate. Importantly, over those four years, we have retained 100% of the tenants in our portfolio with only four modest downsizes that total less than 120 thousand square feet. We continue to provide this disclosure to reinforce the fact that our portfolio is not exposed to material nonrenewals which would impact occupancy, cash flow, and NOI. Moving on to development. Our active pipeline now totals nearly 900 thousand square feet. That is 73% preleased and amounts to nearly $450 million of capital commitment. Four of the six projects are 100% preleased. In Huntsville, 500 Advanced Gateway is 41% leased, and we are currently negotiating two leases that will bring this building to 100% leased this quarter. 410 Goss Road is our inventory building for the government, which is inside the fence. We are in active discussions with multiple government agencies related to missile defense and space activity, and we expect lease action for that building sometime in 2027. As Steve discussed, we will commence development of RG 6.3 and RG 2.2 later this summer which totals $91 million in capital commitments. Our development leasing pipeline, which we define as opportunities we consider 50% likely to win or better within two years or less, currently stands at nearly 1.2 million square feet — a 20% increase since last quarter. Beyond that, we are tracking an additional 900 thousand square feet of potential development opportunities, a nearly 60% increase since last quarter. Combined, the pipeline increased over 500 thousand square feet over the last quarter, and this acceleration further reinforces our confidence in achieving external growth in the coming years. With that, I will hand it over to Anthony.
Thank you, Britt. We reported second quarter FFO per share of $0.71, which was $0.02 above the midpoint of guidance and represents a 4.4% increase year over year. The quarter benefited primarily from effective operating expense and property management, resulting in lower net operating expenses as well as higher net development fees. Same property cash NOI for the quarter increased 7.4% year over year, driven by cash rent commencement on developments and acquisitions placed into service in prior years, cash rent increases on virtually all the leases in our portfolio, along with the benefits from the commencement of a large portion of the over half a million square feet of vacancy leasing executed last year. Same property occupancy ended the quarter at 94.5%, which is up 30 basis points from last quarter due to the temporary occupancy bump at 100 Light Street that Britt mentioned. We continue to expect same property occupancy will end the year at roughly 94%. With respect to guidance, we increased the midpoint for the following four key metrics. Regarding FFO per share, our assumed full year share count reflects roughly $0.04 of dilution from our exchangeable notes — the impact of which has doubled in each of the past two quarters. We will gladly manage through the impact of this dilution since it is a result of our 38% stock price appreciation year to date. Despite this impact, we increased the midpoint full year FFO per share guidance by $0.02 to $2.78. Our forecast for FFO has increased by $8 million since we established initial 2026 guidance, which is driven by $5 million of outperformance during the first half of the year and $3 million from the net impact from the acquisition of Mission Ridge, additional interest income, and the expected settlement agreement with a non-defense tenant to regain control of much-needed inventory in Columbia Gateway. We increased the midpoint of same property cash NOI growth by 100 basis points to 4%. This reflects the strong performance during the first half of the year and our expectation that growth will moderate in the back half of the year due to several known move-outs and contractions, along with non-recurring real estate tax refunds received in the back half of 2025, primarily in the third quarter. We increased the midpoint of the cash change in cash rents on renewals by 100 basis points to 3%, which is positively impacted by several early renewals we expect to sign later this year. Finally, we increased the target of capital committed to new investment by $40 million to $335 million which reflects the impact of an additional start at Redstone Gateway. We are establishing FFO per share guidance for the third and fourth quarters at a range of $0.68 to $0.70. With that, I will turn the call back to Steve.
Thank you. Summarizing the key themes of our call today: we outperformed our FFO objectives and raised our annual guidance, outpacing the incremental dilution resulting from our sector-leading 38% increase in share price year to date. We raised our guidance on three other metrics. Our tenant retention remains rock solid, providing the strong foundation to support continued growth in investment spending and FFO per share achievement. We continue to have the capacity to fund the equity component of roughly $300 million of investment on a leverage-neutral basis annually. We are committing another $91 million to new development in Redstone Gateway to begin to address the accelerating demand from space and missile programs our country is prioritizing. We continue to enjoy strong market fundamentals throughout our portfolio, supported by record increases in defense-based budget spending and growth in the priority missions we serve. We are benefiting from advancements in missile defense, cyber activities, quantum computing, military space activities, and intelligence programs, and this mission demand is durable and growing. National defense spending has entered the era of trillion-dollar base budgets to support the creation and development of advanced technology weapons programs and thereby creating current and growing opportunities throughout our markets. We look forward to sharing our third quarter progress on October. And with that, operator, please open the call for questions.
分析師問答
Thank you, Mr. Budorick. As a reminder, to ask a question, you will need to press 11 on your telephone. To remove yourself from the queue, you may press *1 again. Our first question comes from the line of Seth Bergey of Citi. Your line is open, Seth.
Hi. Thanks for taking my question. I guess just the first one on the increase in the base budget. It sounds like based off your commentary that the step up to a trillion-dollar base budget is structural. Does that change the way you think about the amount of capital you would like to deploy in future developments going forward?
No. Not really. We have positioned the company very well to deploy capital on a low-risk basis where we see incremental opportunities. To the extent this new elevated trillion-dollar level generates more activity, we are prepared and we have a strong balance sheet to support an increase in our investment on the same low-risk basis we have been running the company for the last 10 years. Thanks. And then just any changes on your expectations for development yields? And given the year-to-date movement in the stock price, has that changed the way you think about funding development with free cash flow versus potentially issuing equity off of the ATM? Well, let me take the first one first. We continue to achieve initial cash yields of roughly 8.5% on our new development target that we elevated from 8% a few years back. We have been able to hold that and I do not see that target changing. With regard to funding, no. We have no interest or intention of funding with equity issuance, and we are very satisfied to continue to fund with free cash flow. We worked very hard for several years to get us in a position where we can grow this company without going to the market, and we intend to keep it there.
Great. Thank you so much.
Thank you. Our next question comes from the line of Manus Ebbecke of Evercore. Your line is open.
Hey there, and thanks for taking the question. Just curious, in addition to the two new starts that you earmarked for Huntsville in Q3, if you look at the different regions you are in, where could you see additional starts coming up next, or which are the next markets on the list where it is getting really tight in supply versus strong demand?
Yeah, Manus, this is Britt. First, I do want to hit on Huntsville because we are taking a longer view on development there beyond these two projects, and investing in some predevelopment dollars for the next four buildings beyond these two and even looking at where we are going to site the next eight buildings beyond that. The demand in Huntsville is tangible. In addition to Huntsville, the Fort Meade market is still showing signs of strong demand, and there are a few areas that we like at National Business Park and also down around College Park that we like a lot for potential future development starts as well.
If I can add to that, Manus, we are starting two buildings, and our comments were carefully stated to begin to address the accelerating demand. We believe there is pretty strong potential to either add additional inventory or sign preleases beyond this initial two-building commitment we are making in the quarter.
Okay, makes sense. And then a quick follow-up: I know you always actively talk to your tenants and contractors. Any updated takes or stories you can share on Golden Dome or Space Command that you've been hearing over the last few months, and how that could potentially incrementally help you in the future? Obviously, we understand the positive impact these two big programs have for you overall.
I would say if you are looking at the near-term pipeline or higher-probability pipeline of 1.2 million square feet, about 83% of that higher-probability pipeline is in Huntsville, and 50% of that is Golden Dome related. So it's something that is steadily growing there.
All right, I appreciate it. Thank you so much.
Our next question comes from the line of Blaine. Please go ahead, Blaine.
Great. Thanks. Steve and Britt, not to beat a dead horse here, but it does sound like activity is picking up rapidly in Huntsville. Not to overlook the increased guidance, but do you think there is potential upside to the incremental $45 million of development starts in Huntsville in the second half of this year? Are those two starts truly speculative? Or do you have negotiations or letters of intent on those buildings such that you could actually start more on a spec basis this year? Or should we expect that ramp to be more in 2027 and beyond?
There is a lot of activity and timing is tough to predict. I would not like to overpromise that more can occur during the year. I can tell you we do not have any preleases on those buildings; we consider them inventory because we are working with tenants on specific space requirements. We picked those two sizes of buildings to match the floor plates with the kind of demand we are seeing. We certainly anticipate activity beyond these two and have every confidence we will get these leased quickly. Whether it happens this year or next, we will leave that for future calls.
Totally fair. Second question — I know it was a recent acquisition, but wanted to ask whether there was any update on the ground lease in Chantilly or any progress made towards potentially taking control of the assets there?
We have made no progress in taking control of the assets. The facts are that the owner of the property had a mortgage that matured and it has not been repaid. The mortgage has been transferred to a special servicer and I believe they are working to refinance it. That is all we really know. Long term, we would love to have those properties in our portfolio. They are a perfect fit with tenant presence, the nature of the construction, and the location, and we believe sometime we will be in a position to acquire those buildings.
Okay, great. Thanks, guys.
Thank you. Our next question comes from the line of Anthony Paolone of JPMorgan. Your line is open, Anthony.
Great, thanks. I am struck by how much Golden Dome has had an impact on your leasing. With midterms coming up, if control of the House or Senate changes, does that have any implications for Golden Dome or momentum anywhere else in the portfolio?
Let me regroup a little. Before this president got elected, we repeatedly said the one issue in the U.S. government that is bipartisan is increased defense spending. Under the prior administrations, the pattern was that the President may request a certain level, and Congress addressed the needs of the defense department by increasing those budgets in a bipartisan way. I truly believe irrespective of the outcome of the midterms that bipartisan recognition of the need to have the strongest military and to invest in new technologies will persist. So we are not fearing the midterm change. We know irrespective of what happens in the House and Senate, we have a President who is motivated to see increases in defense spending. I think it will still be a favorable environment.
Okay, thanks. And then a follow-up: a lot of participants in the data center industry have liquidity issues. I know you have the Des Moines land, but as you think about your positioning there and what you have done in the past, do you think you still have an opportunity there in the future? Do you see yourselves getting more active in that space, or has it become too crowded?
We have a customer and the customer has demand. The hard part right now is finding access to power. We continue to work with our customer on potential solutions. Long term, something's going to break in the power situation in Iowa, but I do not want to be the pioneer that breaks that. We are motivated to continue that development relationship, I just do not expect to see any leases for 12 to 24 months.
Okay, thanks.
Thank you. Our next question comes from the line of Richard Anderson of Cantor Fitzgerald. Please go ahead, Richard.
Alright, thanks. Good afternoon, everyone. Anthony, on your expectation of a moderating same-store growth profile in the second half, is there any circumstance where that may not happen? I know you mentioned known move-outs, but are they in the bag or is there anything that could happen where you may not moderate and instead sustain the higher growth?
No, I think both the increases that are contractual as well as the known move-outs are move-outs that either occurred late in the second quarter or will occur early in the third quarter. The real estate tax refunds that we had the benefit of in the back half of 2025 we know will not recur in 2026. So I think there is not a lot of variability in that math right now.
Okay. In terms of tenant investment — there has been a good environment for you with skiff exposure and tenant-funded costs. What is your expectation going forward? Is that going up in this environment given demand for skiff build-outs?
Unquestionably. Over the last several years, almost every requirement for space with defense contractors involves a skiff component. More and more programs are having elevated classification levels. All of the activity around Golden Dome, missile defense, and space command will have skiff requirements to support it. So the influence of skiffs has never been higher than it is right now.
And just so I have the math right, is it more like three or four times that the tenant pays for that versus your allowance?
It is more like three to four to one.
And on Huntsville — if Golden Dome was a person, might it be a bipartisan initiative? Is Golden Dome specifically an administration-driven program or broadly supported?
This is my view: the activities in Israel and Gaza, Ukraine, and other theaters have elevated the need for a robust, affordable anti-missile defense capability, and Golden Dome is focused on that. It is a long-term commitment to investing in space capabilities and broadening the capability to bring that protection to the homeland. I do not care who the President is; decision makers will see the asymmetric impacts of these conflicts and will continue to support the program.
And am I right in saying that you are paying a ground lease for virtually everything you have in Redstone Gateway?
Yes.
We pay ground rent on the operating assets. We only start to pay ground when cash rent commences on each of the development projects. There is ongoing discussion with the Army about potential to expand in the future, but we already control land to build over 3 million square feet. Land scarcity will not be what holds Redstone missions back.
Okay, fair enough. Thank you.
Our next question comes from the line of Tom Catherwood of BTIG. Please go ahead, Tom.
Thanks, and good afternoon, everybody. Britt, you may have partially answered this with your comments on planning ahead for future Redstone developments. But the completion timelines for RG 6.3 and RG 2.2 suggest roughly 15 to 18 months of construction. Is that correct, and do you think you can achieve similar timelines on future projects there?
Yeah. RG 2.2 timeline is really October 2027 and RG 6.3 is closer to early 2028. We think those timelines are very achievable, and they provide some nice staggered delivery timing between those two buildings. For duration of the projects, absolutely, we think similar durations are achievable.
We are advancing our planning and the next sequence of buildings with the intent of keeping those delivery times as tight as we can.
Got it, appreciate that. And the last one for me — you sold land in Aberdeen in Q2 and moved some land in Hanover into held-for-sale. Can you provide more color on those moves? Is there some portion of land in your portfolio you might consider non-core or look to monetize in the near term?
Both of those are probably the extent of it. The company started development in Aberdeen around 2010 and it never materialized as expected, so we had surplus land and saw a nice opportunity to transfer that land to the county. In Hanover, that particular parcel due to topography is better suited for residential than office, and it made sense to monetize that chunk of land because we could not envision a positive economic outcome from developing office on that topography. Beyond that, we are holding the land we want to hold.
That is great. Thanks for the answers.
As a reminder, to ask a question, please press 11 on your telephone. Our next question comes from the line of Dylan Burzinski of Green Street. Please go ahead, Dylan.
Hi, guys. Thanks for taking the question. You raised your capital committed to new investments guidance this quarter. How should we think about that on an ongoing basis in 2027 and beyond? Is the low-to-mid $300 million range a fair estimate as we look out to the future, or do you expect it to be different?
Well, that feels like guidance to me. The answer is yes. We have been saying $250 to $300 million and I think we will just stick with that with some ebb and flow. If our outlook supports an increase in the future, we will gladly do that, but we are not going to do that now.
Okay, thanks, guys.
I would now like to turn the call back to Mr. Budorick for closing remarks.
So thank you all for joining our call today. We are in our offices, so please coordinate through Venkat if you would like a follow-up call. Thank you again.
Thank you for your participation today in the COPT Defense Properties Second Quarter 2026 Results Conference Call. This concludes the presentation. You may now disconnect.