OFC - Earnings call transcript Q3 2017 | COPT Defense Properties

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Operator

Welcome to the Corporate Office Properties Trust Third Quarter 2017 Earnings Conference Call.

As a reminder, today's call is being recorded. At this time, I will turn the call over to Stephanie Krewson-Kelly, COPT's Vice President of Investor Relations. Ms. Krewson-Kelly, please go ahead.

Stephanie Krewson-Kelly

Liz. you, Thank welcome third and conference to call Good XXXX to results. our quarter discuss afternoon, COPT's With are, EVP EVP and me Paul COO; CEO; today and Steve Budorick, Anthony Mifsud, and and CFO. President Adkins,

results, website the supplemental the press to slides In addition management's we of remarks. package posted our to have section accompany release and related our to Investors on

to website. of the As Reform of of of SEC uncertainties such reconciliation Securities call of remarks, risks, will of find press over to actual refer and a and open now Private other for management release a harbor the discusses conclusion I the factors. call GAAP due a made your the and today's non-GAAP for be XXXX, At on forward-looking will we our variety questions. Act and meaning the our statements. measures forward-looking press safe within management's release will during measures, Please in of the may results you Litigation discussion call and detailed the to financial filings materially this may Steve. differ Statements turn

Stephen Budorick

Thank you, Stephanie, afternoon. good and

third our expectations. excellent, were quarter results Our exceeding

second carry is into demand we XXXX and has should quarter on our operating end in the portfolio to expect As indicated begun to we leasing strong building that momentum our leasing Development and nicely. call, also accelerate year with beyond.

our of third in $X.XX on X.X% cash guidance the which grew was office share highlighted the FFO quarter, of in NOI per the high our Same As exceeded range. Slide X, at quarter end expectations. by

at at months, X.X particularly of renewed average for all XXX,XXX related of national of X first we to of for years. security. are the X.Xx open and total government the the is stronger remains as square first strong than to leverage government roll, the Our months feet at an EBITDA. balance for the undeniably year, leases In X Renewals XX% forecasted business, sheet term

government the we the leasing secured Paul That's would of for the into push as use. which are demand Continuing operated Recall exactly X for is under on XXXX also was leasing XXXX. we the quarter we seeing. the are said the would Development expected towards developments and the into that of to second We anticipated. held will with progress quarter completing pleased protracted fiscal and most federal first that second law. both calls government Resolution, and the solid the into what accelerate as accelerating detail, Additionally, passed at some up budget lease quarters year our after X within half we in

the XXX,XXX first feet months, of X square completed we leasing. development For

in XXX,XXX so XXX,XXX square in another projects, next in negotiations We're far couple the of the bringing feet square to feet, fourth active completed square quarter, feet. additional October XXX,XXX through total And which X on of our we've close weeks. should

XX my campus and the at that reconnaissance, intelligence, I'll the We expects remain days achieved, activities optimistic for square our to Maryland, to pace, that quarter, net ninth the for of place. plan we of a for in safe. at rest confidence to As environment the in leasing our square nation a our currently at the prospects consecutive expectation almost are build-to-suit value back a are 'XX a DoD in surprised which next our defense at in Virginia, and we is several is with The surpass note, tracking deals industry for surveillance spending further accelerate. pipeline development the little industry development throughout fact new opportunities downside Meade, that fiscal mid-single-digit December. in will illustrated government development spending shadow of on expectation robust gives on anticipate, our we that Alabama. X and, On shadow locations the low-risk defense our our budget million size coming same will least XXX,XXX square support the Defense years. will million started several view positive to emerging, degree developments mostly has defense to add, these square to our robust transactions. pipeline Last contingent, only deliberate can the and the spread pass fiscal with next northern annual X.X that the keep year in that defense enjoy shadow scenario X gives By development not high deals, to business are the mid-single-digit our in over No at government's development add We're growth demand the The Gateway budget us outlook we at shadow X spending with of XXX,XXX opportunities development Roughly contained the portfolio us no and continue confidence in velocity of legs. XXXX X/X feet October has Because pipeline result, one the million between token, see last that The our supports that of of cybersecurity that X X, least a adjusted years. budget without currently turn near Congress the pipeline, it feet feet. years. of development concur square goal by contingent. development defense of has managing million Long-term, shell normal annual that leasing fiscal industry recent the to pipeline our contractors of feet degree that of be leasing the our at as on million Slide data leasing that year momentum annual increasingly, Redstone budget X Bridging least secured doubled Continuing albeit high comments for center and about which defense and future budget growth. expect was a started Fort continue and, market federal government should feet to a this Resolution. and the are under demand Paul. current

Paul Adkins

Thank you, Steve.

we During square X.X rate. completed X-month we XXX,XXX equating leases, strengthen. Tenant the feet XX% feet retention to an In continued square of million quarter, renewal feet. to million X renewed square bringing to the quarter, our rates total

ended square For and quarters X.X XX, renewed retention an we XX% the feet X achieved rate. September million

to XX% to to Our increased XX%, we initial on guidance XXXX was XX% which XX% last renewal call. our

on raising rate renewal were are a again for September XX%. renewals our full X XX% based Cash months the to basis and and flat on range outperformance XX discussions, points we our quarter year in ended increased XX. to Given of the tenant rents

For minus the to full initial expected X%, we we than average year, guidance. flat slightly cash stronger now in result expect on renewals a rents to our

forecast Approximately leased that, XX in summarizes already discussions million the should to the renewal B/W the of year X months. square X.X supports square negotiations Slide rate and X few of Combined the improving Based square million with to the or leased of this longer-term We leases we square space and vacancy average, of renewal XX% tenants X/X leasing for forecast located are continue more on XXXX. large XXX,XXX U.S. in feet XXX,XXX of our leased. as of that the Corridor at government. large Our quarter quarter, expire vacancy the leases the leases, for development fourth feet on large in XX% XXX,XXX on we scheduled in square leases feet. and -- service of feet this is of next and XX,XXX underway, feet least were In these economics and between end of our square and X in expectation size, a composition feet the those placing projects years. define

leasing cash the gains in equally Same-office by point NoVA subsegment; X.X% This increased office same leased occupancy. has same-office XX% Segment Support retention and XX basis time of quarter our occupancy beginning since since portfolio's points XXXX. have strong XXXX. portfolio in rates, the the A crested and increase basis XX.X%. point to increased operating XXX a XX the supported basis third in the percentage our quarter highlights efficiencies Navy We first increase Defense/IT the include, Strong year is occupancy same-office results. NOI versus of core in

outperformed Additionally, is highly XX we opportunity approximately further the team our than expense and have savings end basis high improvement. points greater believe our guidance. the leased, third generated our there in Though operations for positive is an of realized quarter cash portfolio third expected. growth NOI variance upside quarter same-office of This

feet square of X our in feet for We another operating held of inventory. have XXX,XXX vacancy contain a and million be feet XXX,XXX X.X our total government square of projects leased, for use development portfolio to square

driving which buildings X New the own Navy of happy progress at priority. continues The lease space exact report segments difficult, timing solid prospect feet, to Support both reported operating move I'm in a our projects to government the processes feet occupancies are wheels vacant be compares Defense/IT the and for see square development we in activity in NoVA for We the favorably prospect toward pace, advancing. last that of XXX,XXX makes their sub both. which for totals strongest Leasing activity new to lease executions held XXX,XXX of the potential upside quarter. our portfolio and making forecasting square users but government are over

for the passed, year. the 'XX this smoothly our end expect As buildings prior call, that or stated the process we on of fiscal about and since lease we budget finalize one on the to was progressed has of calendar

procurement bringing Regarding we building accelerated building, X-month In leased Demand advance, this by XX days. new to in be completed our past XXX,XXX. government's total the for XX,XXX had to third we summer. developments and next continues the process square of the leasing, development noticeably quarter, feet second will anticipate the

already XXX,XXX square second is D.C. leasing XXXX Third the of XX% that XXXX. users XXXX square added XX,XXX press lease that Milestone last released Parkway of pre-leased is includes a preconstruction of leased night; Foerster Redstone feet square in at Washington, build-to-suit we additional foot CBD future primarily tenants leasing thus cybersecurity is Page end. schedule entrance, quarter we tenant feet existing quarter to of the other XX pre-lease, consisted and are Virginia; in Gateway, an floor top & anchor reflected foot could additional construction square square taken of building that transactions, Preserve. In for rich Note for space. feet XXX,XXX L in which and expired, a Morrison multitenant leasing with and XX,XXX development value XXX,XXX proximity of square Meade's year ideal before Arundel on and half Arundel October, Preserve and downtown encumbrance foot to square project a pre-lease quarter Fort far Northern we amenity high begin we the foot foot Preserve's XXX,XXX The The as in for square our transaction negotiations at the The X XXX,XXX tech recently single-story, development this to on who and in of This North of completed fourth a scheduled Street access at the are cybersecurity this has supplemental. location well development both immediate to in tenant Arundel close the the the as base. to already have an XX,XXX month our

the X, DCXX, we that year X also we in roughly D, in yet square XXX,XXX fully In and leased XXX% is quarter, our be for fourth Finally, I'll XX% July service. Manassas, foot that square secure X placed on center Virginia; importantly, leased. in million feet On project XXX,XXX the that data campus. leased. foot service XXX% a into XXX% This fenced leased, the our to in foot the total buildings place touch Office square will NoVA deliveries. government XXX,XXX is expect a bringing the DCXX U.S. to service facility development were square placed to

With higher the approach and us to low-risk Anthony. enables cash growth flows. fuel Our that, over NAV call provides to feasibility I'll development continuously hand the future at to our

Anthony Mifsud

operating FFO Thanks, Paul. better-than-expected of third to the $X.XX range, the efficiencies. in high-end of our per quarter share in guidance met due part

for continue our are year cash will XX.X% to between between same-office to and and forecast the X.X% occupancy XX%. forecast office for year X.X% increase NOI We narrowing end the same and

recycle million. based capital $XX.X select we X the into sale our In balance to the we opportunity year, During That for that opportunities. in asset of will programmatic last for positively our creation on the holdings sold transformed sales Marsh portfolio years completed sale and higher assets the White of future, sheet. value

be metrics quarter's to EBITDA strong, to ratio our debt consistent the Our balance preferred remain plus of ratio sheet X.Xx. we expect with and third year-end

for more In for as are to operating gains results. comparability. expenses XX, Slide the a XXXX, higher-than-expected in line adjusting adjusted for our of full level and time our by the recent exercise on $XXX shown summarizes credit have account debt our loan Slide to service quarter increase and the scheduled quarter the share no of FFO NOI guidance quarter, maturing until term as behind third our credit, Additionally, presentation extension we of assuming options million year third gains mature. we DCXX line per quarter, versus $X.XX. for which property from of offset our the fourth placing guidance into we occupancy portfolio, our partially modest at and major $X.XX assumptions fourth XX

we $X.XX call $X.XX to that, I'll range year, our With narrowing the to $X.XX a to Steve. range of turn the For full from new $X.XX. are to back

Stephen Budorick

Thank defense in recovery you, is a our the and region at Anthony. explosive. beginning is The of and industry computing cloud facilities demand multiyear for the expansion

excited the of our and by majority pipeline evidenced strong doubling about square as are about to quarter square equally as in We're contending excited from million feet last to much rapid development million shadow X.X the X transactions. today. win advantages competitive demand, feet of these We increase the our

quality Alabama from our are to control. and mission center and Virginia, and advantageously located business growth, Northern data properties Maryland, Our with Texas we land differentiate speed-to-market shell and ourselves the serve

to benefit record is success into Our open forefront the the and period to locations, credentialed in a our balance supported on We our sheet by disciplined a opportunities call risk-adjusted land deal to pursue personnel, in Defense/IT markets to With intend boom shareholders. flexibility demand up positions that, every to questions. for the strategic balance our and capitalize are of investors. these intend at track opportunity returns for translate we of sheet. please for maintain attractive We believe of we and the that operator, aggressively

Operator

[Operator Instructions].

comes Our first Korchman from question with the of line Manny Citi.

Emmanuel Korchman

think maybe pipeline. And through everything maybe if increased in? markets development in we same the pipeline pipeline, sort to then what Two about they related the which would that One about we other Steve, versus that. or the realizations my came the pipeline, of three, the, things. could that X, to that that historically, just, realize the size number of and to if of think successes pipeline, or be, be timing

Stephen Budorick

markets markets first Okay, what's pipeline so question, what would that affect? on different with Seven today. our

center have on at all of I haven't With of data what what regard market, put U.S. would what though the we generate on Gateway, Columbia is, campuses, question of going with or but the The million if to Washington, not we've hit we Government So XX% XX%. the of been to -- our we magnitude And of end, done rate, -- the confident Gateway. calculation, we're we the we X then campus, Redstone I realize realizing square do that, to better it. Maryland even University pretty handicap at say how and it almost rate it, feet, all it. over regard time much do low D.C.

Emmanuel Korchman

then one And the a quick development-- on

Stephen Budorick

'XX in So heavily XXXX, little with then, of and in 'XX. but it's it as that's and concentrated to think a and bit timing, There's 'XX regard 'XX.

Emmanuel Korchman

the word, Company? mentioned lack then, Perfect. a a Was last release Fortune a normal, contract just user or you of a just And more of Fortune developments on user. press government XXX XXX sort better that night, for

Stephen Budorick

the connection's repeat fuzzy, question? little a Our could you

Emmanuel Korchman

normal of announced customer contractor or that the last that question was, The government a user? XXX night, is sort you office just a Fortune

Stephen Budorick

It's user. center data shell a

Operator

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

Stephen Sakwa

get shorter the in I future? was the expect there guess, do renewals Were took term a some just quarter. I on? that place events more unusual into persist hoping to to little color you going the on And that the on

Paul Adkins

of X Paul the Boeing which is this shorter year renewals for we Hey was driven XXX,XXX term feet that an automatic the square buildings Gateway, Steve, renewal at X X by the has. had is Adkins. that Redstone on The

So that it's the then data automatic first XXX,XXX a of the at was add renewal center have in we X-year renewals. square second the Maryland. Annapolis, And for X feet

both are -- weighted being both that down on X-year overall brought average extensions, our those renewal a terms. So so basis,

Stephen Budorick

So that contract Boeing X deal country. with or comfort was extensions, structured X-year a prenegotiated to as firm the provide X priority automatic, for of

every those going now. years we're for year to So see X

Stephen Sakwa

about X them into you'll that the that sort discussion of at it there potentially Or to of think any goes is a turning and end just term? you deal longer-term it years And with with renewal?

Stephen Budorick

about Yes, year. really matters. we their buildings turned they're very to coming months it do in likely them and that it's to we the the attention a couple But in ago, could talked other happy

Operator

of Capital Our comes Craig next from question Mailman KeyBanc the with line Markets.

Craig Mailman

pipeline. given of Circling [indiscernible]. kind back to shadow Steve, helpful, the that the was market

million X and how of Just curious out of center feet, that million data that breaks kind between X office? shells square to

Stephen Budorick

X/X about So and X/X shell center currently, data it's office.

on it office an really I growth XX:XX, you think to important point If the down the broke exceeded data data But capital grew. data office But office. and to allocation, make growth. it's that the it's both

Craig Mailman

doing. the about kind of square give in to you -- they're of tenant, historically? have for X lower down X could obviously million your probably That's the XX talked center coming and helpful. to a million pushing And Can data come on to yields X yields sense that relative of feet primary could you been deals returns you're you where then, just us of kind

Stephen Budorick

be And location. you ratio, handicapped would the at to a the X would to X/X quarter, if of X be then in So the X/X on X/X north minimum. just X/X depending X

Craig Mailman

maybe this as for relates, is this then, Anthony. And

But next financing is the kind within in development this are leverage of comes years, preferred bring if your fruition to of to guys X of Kind targets. target? that your for leverage there what's to a lot stay You clearly, this on method this on.

Anthony Mifsud

Well, materialize. plan using we've about to equity, the talked for opportunities quite out those ATM, new through generally our some development new match fund time the as

Craig Mailman

expect a now? ramp in right to shouldn't we take the sales So environment maybe asset of advantage

Stephen Budorick

Well portfolio. with Craig. to have happy sell, left our we much We're don't

Craig Mailman

guys a you selling I there I maybe about own JV centers with the data guess, that you sell centers GI aren't would data remember Well -- the had talk that been other of or some shell? anymore

Stephen Budorick

So I'm that the first half in more an future consider need of JVs than question. of it's we if going to do option we the the fallback duck that the half, And second to liquidity. further a a strategy. priority But

Operator

Our line of next the BTIG. question comes Catherwood Tom from with

William Catherwood

something now even walking looks Marsh ducked, if is $XX held was complete, for what know look are like it's the higher last that it we into it you given than sale now, programmatic the maybe I but quarter, at sales that we just now that million disposition. but about White

So portfolio of recycling selling what's about And assets? the thoughts in right is in the any on thought process now? kind change there your

Stephen Budorick

Right.

down. in buildings we something. private investor building a can one-off office it, you shell a we're to pursuing approached I Fully we the no sell better complete program negotiation. that into defense-oriented do complete me are have that to the don't negotiating it's that data stabilized. the relationship the that, confidence were market. intention than northern creative we B/W the center any Corridor Besides We center have two partial have Virginia, with leased. private value have. that's great of a we if been a pinned in we've to data investor XX% building actually that a transfer capital But So recycling parts In longer we other negotiate by that single tenant of a

Paul Adkins

those to that just FFO that would the from of And in our aware, buildings within dilution the of X range within of sell I sort office/data one's guidance that those, sale which of southwestern quarter, probably add you're to current if our Virginia. accommodate are. in and -- we've that -- Both -- outside One's Tom, that, would Richmond range. of were

William Catherwood

as lease at you've your portfolio far Paul, now? it. in the looking right there Street, as or Got that XXXX for projects then is active either given investments development anchor L anything got, Office Regional And at else, or

Paul Adkins

L that as XXXX several pleased some of part of we're Well, we with with dialogues also to report the regard other on vacancy to that to going other regard Street, have building.

news. good that's So

as on actively on really make I off our -- posture now frankly want to until that right are pursuing XXXX construction mid-next mentioned, And in get the sure right with this not investment we're development and foot we that even to think, year. regard is I DC. just we I the additional L beginning not downtown Street we'll think,

Stephen Budorick

generally activity retail then pursuing And repositioning in Downtown we we're office inventory with Baltimore, our some some have minor enhancement.

Operator

comes Schiller Our Dick the line next Baird. question from of with

David Rodgers

are on you comment It forward. than challenged like forward? I just in expectations? going looks wanted XXXX, to Paul, the we how leased going It's guess, really question spread the little your great Dave thoughts so see better rent first been you is, a better and XX% going at the on on I here expected this look still what you, And with shouldn't to market Is we ask that time that point so year. wanted ask, you growth, around Dick. of since the have we're rent do you've came kind to first made growth your now right? I But have

Paul Adkins

that the square feet as -- think solid activity market or prospects begin think I Well, pipeline of possible. that for you against years. of to same of that has certainly firming pressure pricing square some XXX,XXX feet XXX,XXX our vacancy, is realizing handful either of advanced or I changes been the if mindset that research I the do broadly, almost mentioned read last you the

some more our parks have office select so demand in we than seeing supply. we're And of

answer you that we'll I the we but hopefully and -- So in have looking cautious, I rent very forward, is, growth. 'XX some to believe think short start to do be push

Operator

Reagan Jed Street with from comes question next Green Our Advisors.

Joseph Reagan

project? Can for that you follow-up on XXXX DC. L to yield provide expectations Just in

Paul Adkins

Xs project. have still upper There's to mid Xs on expect percent stabilized pieces. some that moving a at We to yield

for final the still seen. and the X be construction said, building. starting I that's that fair -- for will we're As leasing not looking balance of to some months, with the so conservative, underwriting we're of think GMPs have target another I the But on that's

Joseph Reagan

center And you development Okay, kind then a about about there strong with you'd as how just that's demand. of guys shell thinking data for much ceiling the of that Is comfortable talked helpful. remind that? a pipeline business, us of in be you're how percent concentration assets maybe

Stephen Budorick

The let's center And the It's -- strong shell X% of XX% of that comfortable to we're immensely currently heavy and reconsider revenue. operating. of growth co-investment industry, data very shells it to, customer of with business at point. the getting is surety only that and we're happy our to our because credit, think grow up up pretty the XX% that say, about immensely I

Joseph Reagan

you would that that to to to as get you'd a mean, XX%? I characterize that goal okay Or getting level? just be

Stephen Budorick

opportunity. we business is value there creation value We're it to getting level. to and And emerges. creating of be the in that okay it as of immense plan development that in We'd advantage take

Joseph Reagan

diversified What a tenant, the is percent or a concentration variety with same that tenants? of single, versus pipeline of amongst

Stephen Budorick

the tenant. shells So data a single of the was center bulk

in preliminary some with similar. other for the have industry something discussions people We

Operator

of Our comes Simone Rob ISI. next line the question Evercore from with

Robert Simone

development X so million square if joined it Sorry, But given the apologies, has it I if year, of call said, I of about, call feet been if and per square was me. it all. answered, implies think, million pipeline that foot And forgive late, X 'XX, million mute. it was to -- and seemed I you hit X 'XX you you already this on kind like,

foot annually, over are the or add developing is dollar the of you a which have Given kind a the current of size with to guys that there number to you like square comfortable infrastructure, might infrastructure?

Stephen Budorick

our being team? Our company? Infrastructure,

Robert Simone

Yes, that's right.

it's like of Just guys what's per ramp developing number capacity kind kind, in or dollar anticipated this like a your ahead footage of Defense/IT demand you of for the comfortable question, square feel [indiscernible] year a --

Stephen Budorick

depending great realization million we we another of our the skill strong we the our add been With or And But on I to with scale a program. like more of to year. mix regards generally. team, team. the $XXX pipeline, in and a think bit $XXX to on data little we've could the expect So million center if, body million, development ramp-up, have have more. may to be And guiding you that spend, $XXX possibly this

Operator

line the comes Crow Our of next Bill question Raymond with James. from

William Crow

just kind company refocus effort coverage I back start ago. guess you've applauding when the me back Let the its made XX by to to years of in, launched roots we

expanding interest? So just to Steve, the question for business, center then in is, the still can stock simply valuation back of the you're don't let why go proper data you pursuit. if kind get within put, alone that I know you that

Stephen Budorick

that transaction have program with that XX% point demonstrated immense at able we our we value we're valuations time, we particular in to, take with that Well, Since and retain the out flow. that X XX% we agreed -- cash the to creation our JV in pricing, capital those assets of that then, JV'd. in of And

Stephanie Krewson-Kelly

Fifty.

Stephen Budorick

did say? What I

Stephanie Krewson-Kelly

Fifteen.

Stephen Budorick

in computing well as here the many to that excess development respects, and missions, as is, have missions, point of it's U.S. maintained the valuations contractor, tightened, keep To then, program our in government Virginia. of customer government cloud that a is Since the that in sorry. the level. Northern Fifty, just customer discipline product, value a general industry serves but creation we've

it, the our cyber part Defense of fit world, And with and set a our so strategy. whole skill good consider IT we it's

Operator

America the Our Merrill of of Bank Jamie Lynch. question from comes next Feldman with line

James Feldman

of call. the the minutes first couple I missed I of apologize,

-- a we make you've through pickup So is What like, seen answered happened you I material this, budget versus the in mean, a bigger can But, discuss pickup now? budget demand decisions why it and if yet, picture, offline. just can but we gets once this passed passed you can leasing. talk in don't now who have

Stephen Budorick

is is on a all time. contractors defense it portfolio. have pickup contracts that of over really of better clarity dispersed Much the So the for longer period

in adjacent of in opportunities the contractors take tenant quarter methodically serving where And is Ridge product, Navy we where having, mission were growth we Navy toughest commitments from see pickup XX% XXXX, environments, of the short Corridor, had new getting group, tenant are quite growing, or the either attract We been had we've medium money small needs, companies, B/W personnel for the contracting executed fourth they the from contracts period deserve, the finally in to an need is been of industry improvement in, they our marry tenancy. property. bad a an And short-term of then, of I'll In that cyber new where that defense that that restricted since new the is facilities our what contractors. that to So overall of in support but term. is up some our one mission, to in big innovation of it in environment time. put support the tenants also growth to its of we've Patriot couldn't commitment and growth. for chunk leases cyber Year-to-date, -- kind with is

likely with pipeline grew by ones XX% our what portfolio. deals demand to our up number by metrics And around quarter. or give grew which kind pretty to So advance, we has the of advance, tracking we're call, how some the is working in actually since The to grew winning spread we're of advance, our by negotiating prospect it's XX% But the think to picked across we're you XXX%. last the just of better, XX%.

it's terms, activity my or released budget expected. exactly been out planned The system. I is passed points, basically The and what the funds in in have reiterate said to the to as got my we May. So building,

Stephen Sakwa

about just like happen? for fourth Okay. Can moving quarter. what pieces you're expecting same then, talk the that your looks store, you make to in thinking And especially are about guidance, moderation a it the

Anthony Mifsud

the versus sort onetime between of in of fourth Sure. XXXX the third incur quarter. of sort and that expect shift the some third we fourth be FFO relates the items repeated quarter then, XXXX, we quarter quarter that expenses In the for of of some had quarter operating $X.XX And quarter that timing increased fourth the the won't to fourth XXXX. in to quarter fourth

James Feldman

but the like center get data earnings? a or do these the year your you Okay. buildings And XX impact full said dilution what's range, in finally, on then if I what's X magnitude? know sold, you

Anthony Mifsud

were a value on today. buildings leases high yield cost, their sort and relative at those tenant. a Yes, with yield grown to of started have They high pretty XX-year fair relatively to

about dilution So reinvestment, is it's $X.XX. those about buildings on the of net timing the of annualized

James Feldman

And probability? said it's Okay. XX% a you

Stephen Budorick

No better than XX%, it's a fluid situation.

Paul Adkins

characterize we've and cautious it to giving as, wavering. We've being sort buyer's to And their them. would ability of confidence has been We the a ability range we're about got had expectations close, we're and our buyer. any handicapping just about execute

James Feldman

you wouldn't holding and assets are noncore anyway? consider But term be Okay. long these

Stephen Budorick

these let's this put just -- it So way.

It's wouldn't the team state Virginia. of really good Our current in in middle remote our fairway, they're have invested about today. the management think They level way company contract locations. these not we a serve down They're the assets, assets. in in the --

Operator

Our next with from Jefferies. of comes question the Petersen line Jon

Jonathan Petersen

shadow million X the on million to stick data X square pipeline, most X space. center you it X.X data Just to feet-ish, centers, million but the the sounds million questions, on of shadow pipeline, maybe answered like of

I So square about the future land looking right shells now, data feet XXX,XXX your at -- acres. supports center of bank on am XX

data stuff of So country market, kind Latin and just land prices on land the of your are quite center there thoughts up. -- be there's in a grab going been kind tends where recently, to curious, acquiring

are land that in, build aggressive to up. So be you to bank willing how

Stephen Budorick

we continuously conjunction that we for. land, with harmony what opportunities. will in that structure in land. they're will to, go the land us generally looking expect with multiple fulfill in give if on them primary for that customers campus work we needs in allow additional pre-lease acquiring locations, the We're their that we'll to ultimate identify land multiple the cost and So counties, be almost our to evaluating Indeed, meets appropriate

Jonathan Petersen

Okay, different all ways, but right. And you've then, I I kind think again. this in ask I'll of it answered mean,

that demand space out that sustainable So the of increase shadow just part, now? big Or pipeline, how that part on center pent-up demand? much level on is of needs new, the a is data Stripping and of the thinking kind just defense about increase. is much how

Stephen Budorick

hand, quarter, to contractors moving of to long-term quarter. well off over in that build-to-suit certainly short-term the discussions as -- view of last kind defense I don't have but it a in growth. mode percentage a that the regard side, a from, defensive the data And strategic increased are with last center So mode. the with grew cautious primarily that It with early-stage I stages as

Operator

Instructions]. [Operator

from We of Jed line with follow-up Reagan the question have a Green Advisors. Street

Joseph Reagan

It in or the the past years, at changed of getting of looks portfolio something overall in of this escalators Where are bumps kind average and the this negotiated? the like for has how range. do you in X.X% terms kind the things point average quarter stuff you signed call environment sit past

Paul Adkins

being This I'll what average X.X% than as bump. as basis, expect a more portfolio. this expect overall, is, annualized escalator normalized could to is is think, a I on a Paul. in Certainly weighted typical we quarter lower our say I'd X%

Anthony Mifsud

respect to existing with in X.X%. the portfolio, about And embedded average what's is the

Paul Adkins

the it data of shell. renewals was because center think down I X-year the watered at

Stephen Budorick

because they're no have escalation, they X-year Yes, Jed. deals,

Joseph Reagan

in So stuff hearing? is I'm that X.X% X% to you're sort what of portfolio maybe typically place, across and the more now, negotiating now, X.X%,

Paul Adkins

weighted to, I Yes, X%. think on average, X% low

X.X% deals, a get X% weighted to of is the we lot what more, is on range. a appropriate average the is So basis, but X.X% on

Anthony Mifsud

buildings, in the impact of were terms and center those the months the X in But average of they impact in data the the current Boeing the Annapolis, well as in ended, X.X% because with for is X Redstone, renewals buildings not year increases example, as X are for quarter it's series the X-year that the because and, a they're second therefore, increases of Boeing no average, But, annual there renewals. reflected increase but renewal, each year.

Stephen Budorick

contractual. not It's

Operator

at to I turn further from in this no back time. remarks. will call showing Mr. closing queue am the now I questions Budorick

Stephen Budorick

our We're for through if so all a our thanks later us. call in call like and you please today, today. offices you'd Thank follow-up coordinate afternoon, this Stephanie joining for joining

Operator

Thank you today for XXXX conference concludes call. the Properties Trust third in quarter the This earnings participation your presentation. Office Corporate

disconnect. now may Good day. You

COPT Defense Properties (CDP) 27 Oct 172017 Q3 Earnings call transcript