COPT Defense Properties

Welcome to the Corporate Office Properties Trust Third Quarter 2021 Results Conference Call. As a reminder, today's conference call is being recorded. At this time, I will turn the call over to Stephanie Krusen-Kelly, COPT's Vice President of Investor Relations. Ms. Krusen-Kelly, please go ahead.

Thank you, Blue. Good afternoon and welcome to COP's conference call to discuss Third Quarter 2021 results and updated guidance. With me today are Steve Bedorek, President and CEO, Todd Hartman, Executive Vice President and COO, and Anthony Mifsud, EVP and CFO. Reconciliations of GAAP and non-GAAP financial measures that management discusses are available on our website, in the results press release and presentation, and in our supplemental information package. As a reminder, forward-looking statements made during today's call are subject to risks and uncertainties, which are discussed at length in our SEC filings. Actual events and results can differ materially from these forward-looking statements, and the company does not undertake a duty to update them. Steve?

Good afternoon, and thank you for joining us. The company delivered another fantastic quarter with better than expected results, another record-setting bond deal, and excellent achievement in all areas of leasing. Third quarter FFO is adjusted for comparability of 57 cents, outperformed the high end of guidance by one cent, and represented the sixth time in the past seven quarters that we outperformed expectations. We also exceeded our guidance for two of the last three quarters. For the third time this year, we're increasing the midpoint of our full year guidance for FFO per share as adjusted. The $2.27 midpoint of updated 2021 guidance is $0.08 above our original midpoint, and represents an increase of 7.1% over 2020 results. We completed another record bond financing in the quarter. In August, we issued $400 million of senior unsecured notes with a 2% coupon, which tied as the second lowest coupon ever issued among office REITs. Our growth strategy targets owning and developing specialized office, and data center shelves in mission-critical defense IT locations. And this strategy continues to deliver excellent results. In the quarter, we achieved a total of 1 million square foot of leasing, which included extremely strong vacancy leasing of 215,000 square feet. This vacancy leasing volume represented the highest achievement in two years and was 67% above the trailing eight-quarter average volume. Vacancy leasing also included the 68,000-square-foot lease with the United States government for two floors at 310 NBP. In the quarter, we also completed 274,000 square feet of development leasing all at Defense IT locations, including a full building lease with the U.S. government. Lastly, we renewed 553,000 square feet, delivering a 76% retention rate, at least economics that were consistent with our expectations. Leasing for the nine months indicates our fundamentals continue to strengthen, with customers making long-term commitments to new space. We completed 2.7 million square feet of total leasing, which included 420,000 square feet of vacancy leasing, and an average lease term of 8.6 years. We completed 1.4 million square feet of renewals, achieving a 75% retention rate, and we executed 915,000 square feet of development leasing with an average initial term of 14.1 years. After the quarter, we leased another 263,000 square feet, bringing our total development leasing for the year to just under 1.2 million square feet with an average lease term of 13.4 years. As a result of this transaction, our active developments total 1.8 million square feet that are 94% lease. Development leasing to date exceeds our 2021 goal by 18% and represents the fourth consecutive year we've achieved over 1 million square feet of development leasing. Our excellent leasing performance continues to translate into impressive operating results, including the impact of assets sold to fund development. For the nine-month period, NOI from real estate operations increased 7%, FFO per share as adjusted for comparability grew 10%, and AFFO is up 16% from one year ago. Our unique defense IT portfolio, strong balance sheet, and reliable low-risk development program continue to generate high-quality FFO per share and cash flow growth that are extremely durable because demand is driven by defense spending and national security requirements rather than traditional office fundamentals. As important, demand at our defense IT locations is not impacted by work-from-home and other trends that that may affect office demand in the future. We continue to have a strong set of leasing and development opportunities before us and the balance sheet to seize upon them. With that, I'll hand the call over to Todd.