Government Properties Income Trust (NYSE:GOV) Q4 2014 Earnings Conference Call - Final Transcript

Feb 20, 2015 • 01:00 pm ET

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Government Properties Income Trust (NYSE:GOV) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Government Properties Income Trust's Fourth Quarter Financial Results Conference Call. This call is being recorded.

At this time, for opening remarks and introductions, I would now like to turn the conference over to Director of Investor Relations, Mr. Jason Fredette. Please go ahead, sir.

Executive
Jason Fredette

Thank you, Christy, and good afternoon, everyone.

Joining me on today's call are President, David Blackman, and Chief Financial Officer, Mark Kleifges. They will provide insight about our recent accomplishments and results, and we'll then take your questions. Please note that the transcription, recording, and re-transmission of today's conference call is prohibited without the prior written consent of the company. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws.

These forward-looking statements are based on GOV's present beliefs and expectations as of today, February 20, 2015. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call other than through filings with the Securities and Exchange Commission or SEC regarding this reporting period. Additional information concerning factors that could cause those differences is contained in our filings with the SEC, which can be accessed from the SEC's website or the Investors Section of our website at govreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements.

And finally, we will be discussing non-GAAP financial metrics during this call, including normalized funds from operations or normalized FFO. A reconciliation of these non-GAAP figures to net income and the components to calculate cash available for distribution or CAD are available in our supplemental operating and financial data package, which again can be found on our website.

And now, I'll turn the call over to David Blackman to begin our discussion. David?

Executive
David Blackman

Thank you, Jason. For those new to our story, Government Properties Income Trust is focused on owning and acquiring buildings that a majority are leased to government tenants. In aggregate, 93% of our rent is paid by government entities, which are comprised of the U.S. Government contributing nearly 70% of rent on behalf of 39 agencies, 12 state governments contributing nearly 20% of rent on behalf of 31 agencies, and the United Nations which contributes just over 4% of our rent.

We believe the strategy has distinct advantages. First and foremost, we believe the credit worthiness of our tenant base is unparalleled in the REIT space. Many of our peers would be proud to have 50% of their rents coming from investment grade tenants. We, at GOV, have well over 90% of our rents coming from investment grade tenants. In addition, government tenants have historically occupied space significantly longer than private sector tenants. In fact, the U.S. Government historically occupies the same space for more than 20 years on average, which adds to the security and stability of our income.

That being said, the U.S. Government leasing environment has become more challenging in