Corporate Office Properties Trust (NYSE:OFC.PRL) Q4 2016 Earnings Conference Call - Final Transcript

Feb 10, 2017 • 12:00 pm ET

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Corporate Office Properties Trust (NYSE:OFC.PRL) Q4 2016 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] Your first question comes from the line of Emmanuel Korchman with Citi. Please proceed.

Analyst
Emmanuel Korchman

Hey. Good afternoon, everyone.

Executive
Anthony Mifsud

Good morning, Emma.

Analyst
Emmanuel Korchman

Could we just talk about the leasing and occupancy pace for a second? I think, Anthony, you mentioned that 60 basis points of occupancy gain is accounted for through executed leases. But at the same time, it looks like your lease-to-occupied rate or the gap between those two rates was also compressed, so is that to say that you're going to get an even bigger compression between those two rates by the end of 1Q?

Executive
Anthony Mifsud

No, not at all. It's just to say that the -- there's a significant amount of space that's leased but not occupied that will come online in the first quarter that accounts for the increase in same-office occupancy for the quarter that we're projecting, but we'll continue to execute leases that will maintain if not continue to increase the lease percentage.

Analyst
Emmanuel Korchman

Got it. And then, Paul, maybe a question for you. Welcome to your first call.

Executive
Paul Adkins

Thank you.

Analyst
Emmanuel Korchman

You mentioned that you're speaking to one contractor taking 11,000 square feet or looking to take 11,000 square feet with 40,000 -- with an option for 40,000 feet.

Executive
Paul Adkins

Of additional space, yes.

Analyst
Emmanuel Korchman

Of additional space. What would give them the clarity to take that big of an increase on sort of that incremental space?

Executive
Paul Adkins

I am sure it would be related to a contract with the US government.

Executive
Steve Budorick

That tenant is a NGA contractor, and they have elected to move their executive team into the building, and they're also seeking -- seriously considering consolidating other functions to the building because they're pretty excited about coming into it.

Analyst
Emmanuel Korchman

And then, one last one for me. Would you consider using your ATM to fund developments as well, or was that more one-time to take out the preferred?

Executive
Anthony Mifsud

In our guidance for 2017, we're assuming that balance of the proceeds from the dispositions will fund our development needs, and we'll maintain the balance sheet where it is with not only the proceeds from dispositions, but also the incremental EBITDA that's coming on from our development projects. So, we'll use the ATM to match fund development and to maintain the balance sheet over time. But for 2017, our plan is really based off of EBITDA from developments coming online, as well as proceeds from dispositions.

Analyst
Emmanuel Korchman

Great. Thanks everyone.

Executive
Steve Budorick

Thank you.

Operator
Operator

Your next question comes from the line of Craig Mailman with KeyBanc Capital Markets. Please proceed.

Analyst
Craig Mailman

Hi, guys. Just a question on some of the leases you were talking about. Just curious, were those kind of underway pre-election or those kind of ramp post-election? Then maybe on top of that, just could you give us a sense historically how it's kind of trended from the increasing defense budget to when contracts are actually awarded and then the delay when leasing actually comes through?

Executive
Steve Budorick

Sure. So, the activity that we've signed in the fourth quarter was all underway,