Corporate Office Properties Trust (NYSE:OFC) Q3 2016 Earnings Conference Call - Final Transcript
Oct 28, 2016 • 12:00 pm ET
Welcome to the Corporate Office Properties Trust Third Quarter 2016 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.
Thank you, [Shantelae]. Good afternoon and welcome to COPT's conference call to discuss the Company's third quarter results for 2016. With me today are Steve Budorick, President and CEO, and Anthony Mifsud, Executive Vice President and CFO. In addition to the supplemental package and press release related to our results, we have posted a flip-book to our website to accompany management's remarks.
As management discusses GAAP and non-GAAP measures, you'll find a reconciliation of such financial measures in the press release and on the Investors section of our website. At the conclusion of management's remarks, the call will be opened up for your questions.
(Forward-Looking Cautionary Statements)
With that, I'll turn the call over to Steve.
Thank you Stephanie, and good afternoon. As third quarter results demonstrate, we continue to execute on all three fundamental aspects of our 2016 plan. Same office cash NOI remains on track to increase by at least 3.5%. We have raised $304 million from asset sales so far and have another $111 million under contract. And based on the performance of our portfolio and deleveraging from asset sales, we will achieve our balance sheet goals.
The recovery among our defense IT customers continues to drive gradual broad-based occupancy gains. As an example, in our Navy support group, we accomplished 56,000 square feet of new leasing in the quarter and 89,000 square feet year-to-date. Progress at all our defense IT locations is encouraging with 89% of vacancy leasing achieved this year occurring in those segments. Based on the solid momentum and demand, we expect 2017 leasing progress to be delivered and steady.
During the quarter, we leased a total of 741,000 square feet comprised of 597,000 square feet of renewals, 118,000 square feet of new leases on vacant space, and 26,000 square feet in development projects. For the nine-month period, we completed 2.3 million square feet of leasing, which included 1.4 million square feet of renewals, 367,000 square feet of vacancy lease up, and 571,000 square feet of development leasing.
In the third quarter, we completed three large early renewals with non-defense tenants that we discussed on our last call and which are summarized on Slide 5. These proactive transactions eliminate significant role over exposure and 275,000 square feet or roughly 2% of our same office portfolio and ensure stability of same office growth. As a result and as detailed on Slide 7, we now have only 10% of annualized rents rolling in 2017 and 13% in 2018.
Most of these leases are in our Fort Meade/BW corridor submarket, where we expect very strong renewal rates. Consistent with our guidance, these three leases decreased cash rent spreads, which rolled down 11.9% in the third quarter and 5.7% for the nine months. Excluding these