JP Morgan analyst Anthony Paolone maintained the Neutral rating on COPT Defense Properties (NYSE:CDP), lowering the price forecast to $29 from $31.

The analyst suggests that while COPT Defense Properties’ management execution and business trends offer good visibility for expected growth, some emerging risks have been identified.

The most significant risk is related to DOGE, as any potential reduction in the DOD’s budget or changes in contract awards by the Federal government could slow COPT Defense Properties’ leasing process. However, Paolone finds it unlikely that the core missions supported by COPT Defense Properties’ portfolio, such as cybersecurity and critical command functions, would suddenly become less relevant, though the way funds are allocated could change.

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The analyst writes, there is some anticipation surrounding COPT Defense Properties’ Huntsville market potentially being awarded the Space Command HQ, which has not yet occurred.

If another area becomes a contender for the command, it could reduce demand for build-to-suit projects.

Additionally, the analyst notes that a key part of the company’s future development growth involves data center shells for AWS in Des Moines, Iowa.

However, if the company cannot secure power or its tenant decides to proceed at a slower pace, it could impact the pipeline.

Finally, the analyst mentions that while COPT Defense Properties plans to sell its regional office assets, these sales could be dilutive to earnings growth and are not included in the company’s multi-year FFO CAGR forecast.

Price Action: CDP shares closed lower by 1.26% to $26.67 on Thursday.

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