COPT says tenant demand is increasing

COPT said demand picking up from defense tenants

A Columbia-based real estate firm that counts the government and government contractors as its largest tenant base said Thursday it is seeing demand for space pick-up, as preliminary federal budgets suggest increases in defense spending.

Corporate Office Properties Trust has placed about 1.1 million square feet into service so far this year, about half of it leased to government or contractor tenants. The firm said it is also competing for about 1.5 million more in development, including 150,000 square feet to 300,000 square feet in the Fort Meade area.

The firm is experiencing "defense demand at locations that have been soft for a number of years," CEO Roger Waesche told analysts Thursday on a conference call to discuss the firm's third quarter earnings. "We believe the momentum will continue."

The Maryland real estate investment trust reported net income for the June to September period of $86.2 million, or 91 cents per share, up from 22 cents per share in the same period last year.

Those gains were driven by eliminating debt from the company's balance sheet, after it transferred two properties to a lender. Adjusted for comparability, the real estate investment trust said its funds from operations per share rose four cents from the same period in 2014, to 52 cents per share.

The firm also narrowed its expectations for the end of the year, telling investors it anticipated closing the year with funds from operations per share between $2 and $2.02, instead of $2.04 as it said last quarter.

At the end of September, the company's 183 office properties were about 92 percent occupied.

The firm has sold $130 million worth of properties so far this year and expects another $145 million in the next few months. It announced a deal to sell One Dulles Tower in northern Virginia earlier this week for $84 million.

About three quarters of the firm's portfolio is focused on niche clients. It has also added urban buildings, including in Baltimore.

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