OFC - Earnings call transcript Q3 2019 | COPT Defense Properties

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Operator

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

As a reminder, today's conference call is being recorded.

At this time, I'd like to turn the conference over to Stephanie Krewson-Kelly, COPT's Vice President of Investor Relations. Ms. Krewson-Kelly, please go ahead.

Stephanie Krewson-Kelly

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

release. on package the non-GAAP and addition results, posted discusses financial remarks. website measures on slides Reconciliations the results our available In Investors of accompany press management we section to our the to related in to release of press website our and supplemental management's GAAP are and

turn over during differ reminder call not them. statements to forward-looking and call I release that as SEC forward-looking at company are undertake the risks as a and duty quick Before Steve, a press our discussed filings. the to to in from are statements today's Steve? update uncertainties does can Actual materially these our well results length events made which subject and

Steve Budorick

been results continue we Thank the Demands delivered the team We of year. translated third began volumes in build very excellent into you continued the leasing in opportunities and the into leasing the converting on XXXX. to and good throughout and anticipated budget capitalize increases XXXX in quarter has months defense achievements. set afternoon. when This record our and in quarter third has first it nine elevated for opportunity successful the to

our record feet; XX% of Year-to-date, square leasing our square it's quarterly feet. annual by of In million of XXX,XXX square vacancy XXX,XXX new guidance. development times we and records: leasing total feet leasing the leasing three almost exceeds X.X X.X set quarter, X.X million leasing prior initial our feet; development square and of

leasing XXX,XXX exceeds during nine executed our XX,XXX best-ever month, square achievement lease the vacancy square the feet portfolio we've new are earlier of leasing foot annual on the months we operating establish annual the government, record. executed full with of a leasing square to-date vacancy Including to feet we and our volume. completed year track XXX,XXX first XXXX's this In

government, Within we of new our our the portfolio, annual record. we operating And leased surpass development established the all-time volume XXX,XXX government completed is feet in record annual square The leasing XXXX. year-end we've may by with feet also a to second-highest our ever. XXX,XXX square

Furthermore, to broad-based categories of in healthy all demand defense spending continues generate five demand.

defense contractor First, our to of vacancy at third vacancy Defense/IT new XX% our expansions locations, accommodate leasing occurred continue require contractors In leasing. drive as space quarter, to business. incremental the

XX XXX,XXX contractor of we've leases representing totaling feet square defense vacancy of expansions, Year-to-date, leasing. completed XX%

lease deferred to as demand. satisfied continues government space additional U.S. agencies the Secondly,

we During square the of deferred XX the nine these XX% market. represented with were first months, Meade completed the leases government feet in XXX,XXX transactions Fort demand. totaling that

speculative leasing we Gateway inventory. have first of Accordingly, demand. space start square contractor Huntsville. have in to this completed continue Redstone broadly to to markets contractor XXX,XXX in the nine a and in We available. Third, no square At we amounts months spec development strong limited build XXX,XXX we defense we quarter foot accommodate and plan of is feet development demand where limited we’ve

in University XXXX inventory September the in market this XXX% we square left XXX,XXX have strong of at District Maryland, in Discovery spec XX,XXX construction that no building building. Road, XXXX demand, the At completed the commenced and We're on square-foot a tracking foot leased. is River

office transactions the totaling Northern contractors. million In and of shell feet defense with Virginia, major for build-to-suit major million completed is build-to-suit leases demand build-to-suit of category pre-lease square includes with five X.X first we nine facilities. fourth feet square a X.X XXX,XXX months, square in activity data feet The defense contractors. contractor This pre-leasing center pre-leases

protected pre-lease will government of long-term operational the campus square our feet completed is secured buildings XXX,XXX leased and square in XXX,XXX at XXXX, secured and campuses. this campuses, square the Year-to-date, feet government development. in square fully is Nova-C The government of force XXX,XXX foot to secured U.S. another feet demand contain When a Nova-C. returning XXX,XXX for can we've for facilities driver planning to for with accommodate up fifth new including anti-terrorist leases

As I foot XX,XXX XXX government secured month first we building Gateway, user with lease mentioned the this a campus. at earlier, completed initial Redstone Secured our square in

that precipitated. set We of on continue increases defense have execute past several to an the spending expanding leasing of years opportunities

also sales than additional asset responsibly more development FFO for for growth to XXXX. stage this leasing doubled in will doubled Having XXXX we asset fund and sales comp expectation growth. this our the These set FFO strong in growth initial year, our per

turn With the Paul. that, I'll call over to

Paul Adkins

Steve. Thanks,

of result XX.X% last XX leasing the basis the XX, points leased record at core a quarter. quarter, was than September in our vacancy higher As portfolio

Our from B/W now quarter. Fort Corridor XX.X% Meade leased, up basis last XXX subsegment is points

on At the quarter leased. the XX% we in park leasing and now National of Business vacancy square occupied and Park, executed XX,XXX feet is the

the remaining for park's We continue demand to inventory. track strong

leased, year-end. XXXX XX% at we negotiations would with redevelopment firm defense to and project advanced leased at is now XX% in Gateway by Columbia this the Our that technology are increase

major completed portfolio, of Defense/IT recent Northern leased. XXX,XXX with that at our government at pre-lease leasing Ridge. the the our in byproduct on In also quarter, the we campus. Intelligence square was National third secured a development lease of budget month, this And at XX,XXX square XX,XXX vacancy at foot is Geospatial a square direct which demand scored win earlier the square is NoVA Defense Ridge we Agency. building, we Virginia, XX,XXX leasing completed In Patriot feet a foot front, now feet in of increases another Patriot then which XX% executing

in completed first Huntsville. XXX,XXX of feet the XXX,XXX months, square including square leasing of development in feet projects. total Turning nine We a to

in that and building capture park spec zero starting anticipate quarter uncommitted demand. have space next contractor strong We our we to this

that the and tenant to month, this Secured XXX months. progressing completed bring building Gateway. government we leased XX,XXX with government first would with lease in foot second our are a the Earlier customer Negotiations XX% square at well coming

feet we square redevelopment are million projects, portfolio and will XX% that active XX%. nearly increase our core under X.X existing and have currently pre-leased, our by of which development terms In construction

XXX,XXX placed the leased. square of feet were into months, nine first the we've developments service XXX% In

expect to XXXX. properties into developments feet square XXXX place million between and at XXX,XXX support space strong Secured service end Gateway. growth should XXX% square plus We now approximately XXX X.X nine XX of pre-leased feet containing contractor leased in the another highly These FFO of

which X.X square shells are data In up terms development government of and are transactions, million deals. center shadow up two-thirds contains to future development of pipeline projects, our feet of potential to XX%

X.X leasing of XXX,XXX We expect on square feet square leases increasing goal and year-end million to feet. to at another are least before our execute development

call the hand I'll to over that, Anthony. With

Anthony Mifsud

Thanks, Paul.

share high FFO guidance, lease starts per quarter management. end expense Third accelerated by driven some met ongoing the of in part and

for late to slipping quarter a the guidance This to of months a terminating December and same-property change than the We lease into are reducing modestly on DC-X XX%. earlier new reflects first the its of impact starts expected. XX.X% of dates our few occupancy range impact at the of year-end three XXXX commencement tenant

of modest prior expenses. X.X%. abatements point again rent full new lower with same-property Even to decreases increase expected year-end operating XX.X to guidance, we to growth lower and our these midpoint at range basis a occupancy, are NOI versus on year property the early X.XX% cash guidance reflects The commencements, raising

the be in Tenant of excess consecutive year. between expect retention XX% XX% the to for and XX% in marking it and XX% full was quarter, the quarter we XXth

feet executed nine to market renewals and square down rents million current X.X the X% quarter X% the at rents, date Although renewals on months. of have rolled cash in been in

XXX,XXX guidance our of down date negative leases, original totaling rolled of leases expiring the three within X%. X%. to down XX% down To average feet of square brought The renewal expiring long-term to X.X%

larger roll-downs approximately of rents these a we market foot. new On still achieved $XX

roll-downs more growing slide effective AFFO growth with on modest high and achieving incurring cash on retenanting XX lower As is than and preserving a that reminder, costs. retention rent retention demonstrates FFO

around FFO tightening $X.XX and per Lastly, $X.XX -- or more December, guidance for share new equity a joint $X development. raising year range quarter in we fourth are we establishing the center to This of assumes full for fund to shells additional $X.XX. XX% to $X.XX to midpoint our are sell guidance of interest a BREIT to in venture $X.XX guidance our two data

turn I'll to that, With back the Steve. call

Steve Budorick

messages healthy investment We're activity. to The defense now FFO two, material development that growth; asset sales Anthony. beyond development of key of by increase funding budget XXXX. in one, three, record call XX drive first are: you, budgets; leasing the occurred record elevated and to of this appropriate May driven three months Thank assure defense

months XX set lag XX to opportunity has. it appropriation our and months expected We indeed dates the by to

gains remain strengthened have consistently look defense our deliver record achievements forward to continuing XXXX. locations strong throughout and leasing to for XXXX and levels, demand to Our we incremental new

questions. operator, up please open With for call that the

Operator

first Mr. you, comes Our Budorick. Thank Green Evercore. question Jason Instructions] from of [Operator

open. is line Your

Jason Green

any other OFC? able you're deal extent the awarded impact or positive does being for negative say To comment, morning. have versus JEDI Microsoft Good to the competitors

Microsoft moving utilize And is there forward? already a relationship place with to in

Steve Budorick

Tough question.

to So relationship to a our strong. Microsoft. remain tenant with with can't development our do never and anything it's discussed with regard development with our should of on contract matter in indifference. that I program, shell shell opportunities comment our We've

Jason Green

pressured? Okay. about was think you looking months but XX not months mid- XX leasing XXXX for single-digits? be little we unique And over necessarily in guidance, a spreads kind there to low to Or then about the that year expect I negative more bit those speaking do something guess for is to broadly as of spreads next the fiscal

Steve Budorick

hit leases lease really in the say think above the roll-down. of escalated higher large had Anthony where right minus the I in right to that -- percentage XX X.X% three leases rent to that market and on we long-term range. We to current rent total XX fell very drove where the market I had And guided that those We head. want X%. renewed

average of the market. five we have between If you that don't look imbalance place tend for years, have kind at we to in-place leases in and

expect that come to we X% X%. minus to into back So them

Jason Green

Got much. it. Thanks very

Operator

Thank you.

next of Korchman Citi. Our Manny from comes question

Your line is open.

Manny Korchman

that now a you I that you recent At good you? Did of XXXX sort Or consensus metric and just showed out it's you probably of? guidance at had were yet. go growth. you facts? about to closer growth. X% realize to given presentation growth are And If present How presenting a of I everyone. look X% off the XXXX as highlighted conference haven't put for consensus FFO a had you a midpoint Hey,

Steve Budorick

question. So we're a the little by confused

Anthony Mifsud

sure not your... I'm what

Manny Korchman

for growth off X% go is XXXX, FFO as our numbers X% an question The that to about next year? of is, baseline we for appropriate think to

Stephanie Krewson-Kelly

of is XXXX. was for where This Call actual presentation First

Anthony Mifsud

was.. That Yes.

Steve Budorick

number So guidance First That's was that and presenting. what our giving out Call not we're was not representing yet.

Stephanie Krewson-Kelly

And talking... we're not

Steve Budorick

I since data. First Call think we that reported has But changed

Manny Korchman

the and there is Or we anything helped your are those And that savings more numbers, then of about going should onetime expense sort highlighted forward? NOI them same-store Okay. you permanent that expect this?

Anthony Mifsud

management expense to and half about tax other and were real They related half we our work onetime to a ongoing. just related the operating that assessments. estate on of half refund received split ongoing onetime as The result ongoing changing a

Manny Korchman

Great. Thank you.

Steve Budorick

Emmanuel. Thanks,

Operator

comes Wells question of from next Fargo. Our Heck Blaine

Your open. is line

Blaine Heck

the Thanks. Paul portfolio Hey, just about guys. total thinking occupancy.

think past increased have of I as in as XX.X% the range. to recently XXXX, into XX% kind the you and guys occupancy

now you be that about the target? and operating where Or demand to there might stabilized portfolio portfolio achievable you and you now? guys changed As the something environment lower occupancy the in are an about are stabilization is a maybe little closer think guys that's and is

Paul Adkins

Right.

XXXX you into if points. almost I down pool NoVA the XXXX. referenced X, it But January basis think -- went knocked B XXX think and that XXX in I you

occupancy. in levels climbed the next XXXX into up driven now sustainable demand over yes, the of we've I the back And back think to get -- So the those then we've portfolio it's end and as to XXXX. by

see to So XX the gotten in for short, in demand that the point continue from XX the of that's beginning to months least. at next XXXX us we

Blaine Heck

then That's balance sheet. just helpful. Great. And on the

in the and haven't You guys ATM $XX you in while. the forward equity share used guys place last a you at have that a issued really

kind and of aren't context, quite but between $XX about if guess that sales just XXs issuing the performance I to of the helps. with back year's we versus the do JVs to how funding guys do levels? low closer mix You this get equity, yet think that certainly you

Anthony Mifsud

right us need capital. In on plus the needs capital of in position to of in the execute for execute XXXX plan the that's ground a relatively JV, development limited the that equity can next terms asset we years, on the puts see the sales we horizon increasing the several really what for we with where for the overequitizing now over XXXX,

demand I for think right and has the partner equity capital the the was leave sort we'll out leave through the that our there and future choices we The that there -- we now. know BREIT raised transactions. incredibly our of transaction price-effective

So, But look for we we'll I continue avenue that changes. see think, right now our that again, as year. price we at as go to the would next would

Blaine Heck

helpful. Thanks everyone. Very

Anthony Mifsud

Blaine. Thanks,

Operator

you. Thank

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

Your line open. is

Jamie Feldman

I the keeping just those Great. ones blocks. us on be and in the XXXX Thank on? it about if expirations, meaningful foot else thoughts should our but square talk missed for you. And XXX,XXX I talk apologize presentation Can eyes we your through larger you that's you I anything and which guess, your

Paul Adkins

of greater we blocks square our Right have that -- see. and all now, of we one out for XXX,XXX XXXX, non-renewal foot only we

Steve Budorick

Partial.

Paul Adkins

XXX,XXX And will the square bring feet expect Gateway. partial than it Columbia to other to that's foot all XXX,XXX of we Other a non-renewal, but in us renew leases. that back plus square

that haven't we known And not in we're about. space. that's backfill marketing So well underway our to efforts anything

Steve Budorick

with expiring almost who lease the clear a ago be to immediately. tenant years was executed it XX subleased And that's

it's subtenant some renew some but we for years. it by subtenants more occupied that the to one do will So maturity. have do than eight been of existing on And leasing

Paul Adkins

in building. floors Three one

Jamie Feldman

the of net is expect So the that's XXX,XXX the amount? total or you renewal

Steve Budorick

It's total amount.

Jamie Feldman

do think -- how how occupy? that tenant you currently So much your does much

Paul Adkins

say -- floors four term will building. one April beyond of of I'd keep It next year. floor They four-floor those currently long on out occupies

Steve Budorick

It's a XXXXXX. little over

Jamie Feldman

back? get That you'll

Paul Adkins

A the Yes. little whole XXX,XXX. building. over XXX,XXX was

Jamie Feldman

And really? sizable or larger still else like and that's Got it. XX,XXX not then anything

Paul Adkins

No.

retentions better. year's but obviously don't to you all Next we at this expect mid-XXs but be range, perform expect still hopefully the -- of to know yet in them we juncture,

Jamie Feldman

for using assets? prune additional your Okay. are kind more to traditional And just capital, if or thoughts the JV center you what know continuing had defense decide portfolio additional mentioned equity -- you then data want you but I on office of and the

Steve Budorick

value with increasing now composition we've our our the additional and we're buildings. throughout in to got happy create opportunity demand those Well, portfolio. defense right of very And segment,

preference. that The we would of our want probably strength there's center data pricing currently. would JV be sell extraordinary So first it nothing is to the that

Jamie Feldman

All Okay. right. Thank you.

Steve Budorick

Thanks, Jamie.

Operator

from question Catherwood comes next Our BTIG. of Tom

Your is open. line

Tom Catherwood

you. Thank

fiscal slip So a the commencement the also you that due put resolution will that in year a up lease the presentation but December, can you mentioned that XXXX resolutions. until to risk mentioned you through as funded budget out continuing expectations are be continuing

on some you business being under shutdowns how about in future yet again, impact that there of operating of now? kind of continuing With about right much kind resolutions D.C. potential the an in having talk forward? is do think your And going how

Steve Budorick

we're of the lag appropriations because fortunately through expect really resolution opportunities demand, profile. flowing currently based fundings to are and demand wouldn't I Most between the of continuing are Well on on the that year that materially affect our working system. the prior

this continue all believe through Currently, don't at November will I about us continuing to frankly. affect So resolution it's expected XX. year

rent With always to our government regard a gets shutdown, paid.

not traffic impact from some a is various than no shutdowns. and situations tenants real concern have ours areas that year. this We those Other some unhappy of in

Tom Catherwood

not related into kind or budget challenges? leases XXXX were any then to XXXX around continuing of resolutions from any the late moving So issues

Steve Budorick

volumes space delays just weeks set that leasing having up. built at all. are few record a We're and just timing of and It's months. not Not getting

Tom Catherwood

to then at Got of this driver moving of it. What was Got upsized And quarter. the Huntsville, you XXX design? Secured development it. kind kind Gateway kind guys that changing of behind the over

Steve Budorick

building. We the that growth. economical expansion but the needs made it, the expect anchor has do to expansion to incorporate we Well, current identify decision way to for to mission tenants as both into we able it to future the were with provide most a development

Tom Catherwood

that's Is pure this this think out in the mission kind the side? office by older obviously in that had of the I -- Huntsville. of the you When just from you the market this -- relocations talk in increase product some Or on What's new Huntsville of Paul is demand? about growth demand and contractors? mentioned expansions composition

Paul Adkins

It's going of defense relocations new new both. U.S. in as the expansions the Huntsville from It's is as older missions Redstone both. And from includes It's relocations contractors It's market Gateway. it market. at that well inventory and government. the on outside

Steve Budorick

Yes.

Tom Catherwood

you All guys. right. Thank

Steve Budorick

Tom. Thanks

Operator

Our Stifel. next Guinee of question comes from John

line open. Your is

John Guinee

guys. Guinee here. John Nice So quarter

of on risk deck, think slide enough XX your and nice DC-X Page addressed it outlined you I where Stephanie were then put the you also together DC-X. You

DC-X the with and DC-X Can you the in elaborate XXXX. wholesale DC-X? is both lease of to otherwise what center on about expiration the data I X/X happening think you center NOI wholesale data more as known see

Steve Budorick

identified I'll going through is as owned and So best legacy strategic DC-X use take years We back. many reallocation many, land. DC-X. asset plan. a is the raw company's with We're asset the an for this a highest

already a to profitable lease create land very that We've long-term leased additional a and lease it's full the building a through lease that to milked we user expiration. land was retail So value.

complete for you lease obligations we long-term on expires, for the land by to it and various take that delivering to do as So land demolishing want use doing prepare retail DC-X? user things very the our Anthony, lease. will it, their a

Anthony Mifsud

Okay. I'll it. take

the So first at is want that the this filled time DC-X just original where that of expiring. to were note -- XX% up are leases DC-X, I

we So right a of tenant Earlier megawatt. of expirations. the we year, second had to giving this that in one quarter flurry had back exercised the contract have a

for information that's now. in quarters been So two our

back lease We they did contractions and building X.X tenants of Xst we in two have megawatt commences megawatt a the of three years. that another X have extend one It's user, non-renewal October for existing who megawatt. their gave but

growth has frankly to in that that the larger then marketplace impact X.XX for is non-renewals these lease megawatt are gave was that out characterize block demand our factored all for the That's now. expires user have with news contiguous The -- that deployments remaining the we also the the serve modest givebacks, megawatt now and more of the into in of back year. a internal that and in a growth one is XXXX. contraction And of another next larger that under capacity lease And right marketplace -- can forecast make. good important point lease

highly fact, importantly, we a building I And think a as for In renew for are we occupancy. in is renew the and user discussions requirement we next X-megawatt pursuit year largest -- megawatts are the we speak in most of total to out their lease. are for in a have the lastly, and -- that that that the new of XX.XX at XX.XX, optimistic tenant

the... that's So

John Guinee

good megawatts that? XX.XX do the X-year And you feel But that's done about XXXX. lease in the

Steve Budorick

Very.

Anthony Mifsud

Yes.

John Guinee

roll-down? or a Is that a roll-up

Steve Budorick

determined. Yet be to

If it you're modeling, just model I'd flat. for

John Guinee

right. All you. Thank Perfect. Nice job.

Steve Budorick

John. Thanks.

Anthony Mifsud

Thanks.

Operator

Our SMBC. of next Rich question comes Anderson from

Your line is open.

Rich Anderson

Good afternoon folks.

as of Steve, So about in stuff becomes basically do real actually all on, I exciting to growth pie big mentioned Is the for and the is time that development get going -- a to as of funding FFO your into think portfolio growth. have point extend the but it it? enough while about one you can some correct it profile the is kind of think way is going things -- that of about market your and it's you this overwhelming leasing which FFO it kind on At to stuff XXXX like of some operating weighs the down development development? XXXX likes development the Is this FFO meaningful to that fair think the to effort continue stock you it growth that's growth.

Steve Budorick

Yes.

year spend it annual secured development we the capital. twice is. and opportunity the think to had I this raise We've

And the to Paul get And current XXXX And look building and some sheer saw kick-in the will earnings XXXX. we'll pretty we as in on it. portfolio. just have portfolio think add becomes XX% growth – magnitude So as I our we're if to and all impressive it that we've said, you get at – XXXX operating that through of mentioned, we in its capital accretive. growth have

Anthony Mifsud

the add Rich do that the lease-up the from order as operating one the needs but online benefit development forward is EBITDA of portfolio. over I as not our And execute going diminish development pipeline, capital to thing to the equity said just time also – the comes we to of the just pipeline earlier, in

does $XXX So a not capital, EBITDA we equity continue at we of we get but of where raising benefit a without the to need million can that two or forever $XXX kicking-in for – that, year and to go down. additional incremental the capital that point do million have

Rich Anderson

Right. profile? But current that's the XX% portfolio did growth on you operating say today the

Steve Budorick

a footage basis. on square Just

Rich Anderson

Yeah.

Okay.

Paul Adkins

development It's under construction now. right

Rich Anderson

Got you. Okay.

for following wrote in it situations and quarter of Now, I a like three you I is it your and the short-term in a last is three spend me little transactions. these it situation around it perhaps to a with re-leasing all as the roll-down why the popular, bulky people kind rent of the wasn't I I'm – the okay that pay And of the there which on okay But of I but earnings understand taking to to sort to you're part the current phone and of discount mentioned chance – rent benefits rent economics the note those why the most you and – economics, to a that couldn't of have was stuff. that have resolve in the to it not keep understand slap bit cases re-lease now that, place? capital those a

Steve Budorick

three in cases those Well, –

Rich Anderson

the term, looking just longer I'm term further short in – out not longer term. talking long

Steve Budorick

average we with family leases, the strong escalated three market $XX rent those on same was who's a is which a a lose tenants amount, over in where In value market us, of place market? strong been up thing have at we to lease are a achieved the a put time long really and re-tenant of to to point defense and be same lease capital on had all the at able why cases, the replace to achieved our wouldn't we period new shareholders in we And for for rent. When The the rent. three basis. the tenant relative good important very tenant

Rich Anderson

a avoid perhaps maybe $XX? at and you the rent not have been roll-down – gotten Could better able tenant you to have maybe than another but wouldn't

Steve Budorick

believe would have. don't we I

Rich Anderson

I have. That's Okay. Thanks. all

Steve Budorick

Thanks.

Operator

you. Thank

from comes Mailman Capital Our of KeyBanc Markets. Craig question

Your open. line is

Craig Mailman

the it's Could embedded for of commentary, budget to Could back guys. NOI contractions? be sense of we Hey, go a your know Paul? roll-down I will from give you the kind in you DC-X what said, next the year.

Paul Adkins

million XXXX. The $X roll-down for will annually Yeah. be about

Craig Mailman

include ultimately if where the the XX.XX-megawatt And potential they out rent renew? what that any settles doesn't do tenant, of depending from impact kind on --

Steve Budorick

That's doesn't any correct. and any doesn't It factor in it there leasing. new change in factor

Paul Adkins

That's right.

Craig Mailman

know, kind but I've this a times asset you you I of has here guys value past, up lot look in And asked guys future asset viewpoint tied on of many as the ultimately got in this it. to this Is development? fund there any monetizing

Steve Budorick

So, I And be it's makes to for It open would we'll options few to years diminished year for to the consider. hold say keep asset term. so. makes out, we it us sense a on us that's it. long sense But to income going that a reestablish now, that currently with something to what our for or do right for

Craig Mailman

foot there are locked that's or that And in tenant land of and kind new current piece of tenants back, square two-thirds data I pipeline X.X center you those going the who that leases are development is million And just -- your if tenants how your then, of said getting with of another JEDI kind you know curious, buying of that existing not demand Or that Herndon helpful. affect down That's Is standpoint? guys potential in about from do business rolled shell. just there? with? kind

Steve Budorick

that with development Well, that done We've tenant long. is for all our tenant. the relationship never

-- of a own, developments done square buying us. data land the we program they've fact as has so of development their X.X on pipeline, shell the some The the -- shell and have impact built. in foot center XX we that million byproduct land So no always their is

and those XX demand sites XX to over to months. we developments those We fully expect have for realize

Craig Mailman

that? little All back the $X.XX guys a right. that of DC-X just one, you with the at you Is And the beginning let came hook? quarter. And fourth the do them less fee associated bit to correct? lease drag? then a last that's term any Is than there just guess off Or I what

Paul Adkins

last No. the end They actually an the renewal had increments -- monthly they termination September. through that they of that year initial of then of date lease in some had and options exercised end

back to -- end thought And year going they quarter. initial beginning minus the of is through the the plus Our $XXX,XXX year. extend or was at were it about of that the a XXX

Craig Mailman

Great. Thank guys. you,

Paul Adkins

Thanks, Craig.

Operator

next Rodgers of from Thank Baird. Instructions] you. Dave [Operator Our question comes

line open. Your is

Dave Rodgers

a question three has demand, of can And your Yes, into deferred been U.S. afternoon first questions realize and second you dive kind or you and fits little that that U.S. much there's deferred how leasing all and guess, be, that then, there? a more of is, of kind perspective further you've around commenced the you But uptake this still and demand vacant guys. that that maybe bit are? commence feet I well basis? overlap. how square would what year, out on of XXX,XXX GAAP how last more Paul, much thanks. thoughts good much has question for I to just XXX as in The updated government from rent the a guys is is demand do some how as of government sense still

Paul Adkins

Thanks. Sure.

space on that been The we've years -- there's having still as was the identified by funding. deferred lack on first additional it there with captured need have demand deferred and demand or space a have or the question conversations we for two was the of we one for where that yet of been funding kind U.S. an define government going

Steve's leading been points our spicket amount record has of to about funding turned So, on that government leasing. now

sense this that we the where in lease demand of our So, having are demand expect government and into the through we end portfolio our to is is year. deferred continue next those conversations. There additional to year

Second question?

Steve Budorick

XXX.

Paul Adkins

with situation continues demand. deferred There to take such that one-third been the -- There's users and we that truth are the that is government. the leased hope that But by is the XXX is identified a that it's months. that matter are having but we I saga also space. The that is that great we coming the feel XXX. for discussions around resolved the in is think demand like building need while. of conversations is now are the is and met

Dave Rodgers

And of leasing you've is the then contributor was just how of and that revenues the to timing kind NOI forward. going the vacant deferred of done still lease be to incremental third the much going much on of commencements that's an commenced how

Steve Budorick

So, XX% the square of guess operating XXX,XXX maybe feet of I leasing would commenced.

So, we to get XXX,XXX commence XX,XXX it scheduled with later built or square call feet space so when out.

that date. quarter bigger target have the to that XXXX commencement a to commencement will month. leasing XX,XXX we're you to yet And includes record Alabama government XXXX in U.S. regard a prepared number a C be feet we then first give square that's not the With the NoVA and

Dave Rodgers

the quoted then that. And amount vacancy it you taken sorry maybe the of sounds and there's care would XXX,XXX still that components one leasing of Is in too that well? to last different as months that some on like the as remainder nine Or contribute? is kind in first there buckets other that a

Steve Budorick

yet That of that leasing quite defense commence. has bit XXX,XXX Anthony go all ahead. a to operating contractor is and

Anthony Mifsud

that through of excuse commenced leased That's going occupied our at going to a through -- -- of this in is the It's correct. is percentage There's the some flow of the year. and end results most that XXXX. between benefit quarter. of to And has that big XXXX me really the difference

Dave Rodgers

XXXX. In

guys. Okay. Thanks

Operator

Thank you.

Advisors. comes question Ismail Daniel next of Green Our from Street

is open. line Your

Daniel Ismail

with additional you into capital putting associated to but tenant? XX.XX-megawatt the any with discussions property? renewals there the back any free the of And it rents is any missed having you're or be DC-X. going Maybe I Just will

Steve Budorick

I now. no there's associated a consider owned capital minimal doing free routine capital rent. There's with for we've what a for Nothing than discussion decade. just property investment No, about would more we're

Daniel Ismail

are XX.XX-megawatt when expires lease And tenant? to share able with the Okay. you that

Paul Adkins

year. July next XXst

Daniel Ismail

just of And done additional expectation on by year-end? the, developments, any CBD Okay. any D.C. having pre-leasing

Paul Adkins

say test I'd doing high have feet -- Yeah. year. of are likelihood listed end we'll another for a of I D.C. fits. one XX,XXX options prospects by of the X,XXX chosen space have short And to likelihood as in their have square leased we a XX,XXX new handful that that, decent the that, L, the And

doesn't tenant feet. more occupy. XX,XXX commence And lease to square about But X lease feel until, our good January XX,XXX of Again, XXXX.

Daniel Ismail

guys. Thanks helpful. It's

Paul Adkins

You're welcome.

Operator

you. Thank

John Our Stifel. next from question comes of

open. is line Your

John Guinee

and between Oh! what's C? locational NoVA status the B, Great, hey what's and difference B the on

Steve Budorick

leased. NoVA commencing? it fully is B So When is

Paul Adkins

commenced. It's

Steve Budorick

C NoVA commenced. Sorry is...

Paul Adkins

much. Not

Steve Budorick

Right, door. next

John Guinee

secured facilities? Are Okay. both behind Defense they

Steve Budorick

Oh they are.

John Guinee

thank great, Okay, you.

Steve Budorick

campus entire is and The fenced. will be

John Guinee

right, all thank you. Perfect,

Operator

this the questions, at Mr. I'd back turn any Budorick, closing remarks. for like conference showing to Thank to no you. I'm over further time.

Steve Budorick

all for Thank you today. joining our call

We offices our are in this afternoon.

please So a through follow-up like if any information call. coordinate request for you'd Stephanie,

you Thank very much.

Paul Adkins

you. Thank

Operator

Thank presentation. This Trust, in concludes Call. participating Properties Conference Corporate Office Third the you for the Quarter today,

You may disconnect. now

COPT Defense Properties (CDP) 29 Oct 192019 Q3 Earnings call transcript