Corporate Office Properties Trust (NYSE:OFC) Q4 2018 Earnings Conference Call Transcript
Feb 08, 2019 • 12:00 pm ET
Welcome to the Corporate Office Properties Trust Fourth Quarter and Year-End 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, Corporate Office Properties Trust Vice President of Investor Relations. Ms. Krewson-Kelly, please go ahead.
Stephanie Krewson Kelly
Thank you, Heather. Good afternoon, and welcome to COPT's conference call to discuss fourth quarter and year-end 2018 results as well as our guidance for 2019.
With me today are Steve Budorick, President and CEO; Paul Adkins, Executive Vice President and COO; and Anthony Mifsud, EVP and CFO.
In addition to the supplemental package and press release related to our results, we issued a press -- a separate press release detailing our 2019 guidance, and we posted slides on the Investors section of our website to accompany management's remarks.
On our website, in the mid press release results, you will find reconciliations of GAAP to non-GAAP financial measures management discusses. At the conclusion of management's remarks, we will open the call for questions.
Statements made during this call may be forward-looking within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995 and actual results may differ materially due to a variety of risks, uncertainties and other factors. Please refer to yesterday's press release and our SEC filings for a detailed discussion of forward-looking statements.
With that, I'll turn the call over to Steve.
Thank you, and good afternoon. We had a very successful 2018. The results we achieved during the year solidify the foundation to support multiple years of growth and FFO. Leasing success in both the operating and development portfolios will contribute to FFO growth in 2019 accumulating into a fourth quarter run rate of 3% to 4% annualized growth over 2018 full year results. The healthy defense spending environment that is existing for the past few years, combined with continuing strong bipartisan support to fund National Defense initiatives, supported last year's record-setting leasing results. In total, we leased 4.2 million square feet, 94% of which was at Defense/IT locations, capitalizing on the demand created by the defense spending environment.
Leasing highlights include: We successfully negotiated the largest volume of lease expirations since 2011 and we renewed 2.5 million square feet, the most in our history, which resulted in a strong 78% retention rate. The 600,000 square feet of vacancy leasing, we achieved during the year, was 38% higher than 2017 levels. And development leasing of 1.1 million square feet ranked as the second best year in our 20-year history.
Last year, we outlined the five ways of demand recovery related to higher defense spending would manifest in our markets and benefit our company. At that time, we expected to realize progress in three of the five categories during 2018 and ended up achieving success in four of the five categories. The first category was incremental leasing by defense contractors rising from new contract awards. During 2018, we achieved 529,000 square feet of vacancy leasing at