First Potomac Realty Trust (FPO)
Q1 2009 Earnings Call
April 29, 2009 10.00 AM ET
Joel Bonder - General Counsel
Doug Donatelli - Chairman and Chief Executive Officer
Skip Dawson - Executive Vice President and Chief Operating Officer
Barry H. Bass - Executive Vice President and Chief Financial Officer
Michael H. Comer - Senior Vice President and Chief Accounting Officer
Jordan Sadler - KeyBanc Capital Markets Inc.
Sheila McGrath - Keefe, Bruyette & Woods
Christopher Lucas - Robert W. Baird
William Crow - Raymond James
Carol Kemple - Hilliard Lyons
Brendan Maiorana - Wachovia Securities LLC
David B. Rodgers - RBC Capital Markets
Stephanie Krewson - Janney Montgomery Scott LLC
Previous Statements by FPO
» First Potomac Realty Trust Q2 2009 Earnings Call Transcript
» First Potomac Realty Trust Q4 2008 Earnings Call Transcript
» First Potomac Realty Trust Q3 2008 Earnings Call Transcript
Good morning. Welcome to First Potomac Realty Trust first quarter 2009 conference call. On the call today are Doug Donatelli, Chairman and CEO; Nick Smith, Chief Investment Officer; Barry Bass, Chief Financial Officer; Skip Dawson, Chief Operating Officer; and Mike Comer, Chief Accounting Officer.
After the market closed yesterday, our company issued it's earnings press release and we posted supplemental information relating to first quarter operating results and portfolio performance on our website. Many of you have signed up to receive this information automatically by email. If you did not receive it, please contact Brad Cohen of ICR at 203-682-8211.
During this call, we will discuss our anticipated operating results and future events, including our anticipated earnings, FFO, AFFO, dividend and our ability to identify additional acquisition and disposition candidates. These forward-looking statements are within the meaning of the Private Securities Litigation Reform Act of 1995. We believe the expectations reflected in these statements are based on reasonable assumptions. However, the company's actual results or events might differ materially from those projected in the forward-looking statements.
Additional information concerning factors that could cause actual results or events to differ is contained in our company's 2008 Annual Report on Form 10-K and described from time-to-time in the company's other filings with the SEC. Many of these factors are beyond our ability to control or predict.
Now, I'll turn the call over to our Chairman and CEO, Doug Donatelli. Doug?
Thanks Joel. Good morning everyone and thank you for joining us. To start this morning. I'll review the highlights of our first quarter 2009 and then I'll discuss our markets and overall outlook. Skip will then talk about leasing and Barry will add some color on our financials.
During the first quarter, we continued to build on the positive momentum that we delivered in 2008 in our two most critical areas, our operations and our capital position. In terms of operations, our Same-Property NOI increased 4.7% year-over-year, as we begin to realize the benefits of our successful leasing efforts last year.
In particular, our Same-Property NOI in our southern and northern Virginia markets was up 13% and 8% respectively due to increased occupancy and increased rental rates. Our Maryland region was softer as economic issues drove demand lower, with the downsizing of some of our tenants.
Continuing to grow on our occupancy level is a top priority for us and in this challenging economy we're keenly focused on tenant retention.
In the first quarter, our tenant retention rate was 80% and for the remainder of the year we have just over 10% of our portfolio coming up for renewal. Signing these renewals has been and will continue to be a priority for us and I'm pleased with our results so far.
During the first quarter, we executed 660,000 square feet of leases, possessing of 150,000 square feet of new leases and 510,000 square feet of renewal leases. As we look ahead to the remainder of the year we have some large leases rolling in the third and fourth quarters.
We're intensely focused on these expirations and are to continue to maximize our retention rates. We expect rents relatively flat, which is a win in this economic environment. While I'm pleased with what we're doing, we do recognize the headwinds that we, our tenants and almost all businesses are facing due to this challenging economy.
However, there are few factors that differentiate First Potomac and provide us with stability and give us confidence in these challenging times.
Importantly, First Potomac is well positioned with our concentration in the Greater Washington D.C. region. While our markets have been challenged along with the rest of country, we believe that the potential government expansion associated with the stimulus measures will have a positive impact on our core territory. Almost 20% of our revenue comes from government related tenants; either the federal government itself or through government contractors.
Prior recessionary cycles and employment (ph) in the region has typically outperformed national averages and to-date in this recession job loss in the Metro DC area has been less than in the rest of the country.
Federal Government expects to spend close to a trillion dollars over the next three years and historically the DC region has captured a disproportionate share of government spending.
History is an indication, the region share the current trend stimulus will knock about $50 billion. But whatever the exact amount, there is little doubt that there will be job growth in this region and we expect to start seeing the benefits of this job growth soon.
Since new supply is essentially non-existent, we're in an ideal position to capture some of this anticipated growth in demand. You might not see the impact right away, but it certainly has positive implications for our territory as it helps to maintain a more stable economic environment in the area.