WRE - Earnings call transcript Q2 2018

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Operator

Welcome to the Washington Real Estate Investment Trust Second Quarter 2018 Earnings Conference call.

As a reminder, today's call is being recorded.

Before I turn the call over to company's President and Chief Executive Officer, Paul McDermott; Tejal Engman, Vice President of Investor Relations, will provide introductory information. Mr. Engman, please go ahead.

Tejal Engman

morning, good and you, everyone. Thank non-GAAP our Please financial and today in are contain call such note adjusted G. as that FAD, that measures core FFO, will NOI, defined conference core as measures EBITDA Reg FFO, use SEC financial information periodic Please and these earnings reconciliation filed reports of on investor furnished to available regarding website, our the supplements page refer or both most our of measures release, for and financial our further and our them the to of our definitions GAAP recent and press to results. non-GAAP with our a to Please Private the Securities during also call the Act. Reform statements within some note Litigation that are statements forward-looking

we Vice Executive Financial through Chief Steve Pages events Accounting along uncertainties Vice Operating Paul XX-K Please them earnings risk to Hammond, in Forward-looking cause complete certain of President, undertake our unfold. statements SEC McDermott, materially. and duty our and Drew will in release, Vice our risks and to with as and our with factors refer involve other disclosure. of Chief Officer; Officer to Participating actual President Tom Chief to risks, Such Bakke, for factor today's update Executive filings. be Chief Form Riffee, unknown are results known refer call and differ in made XX President statements actual remarks, may the that no President and as X and today, me these Officer; Executive Officer; and of We Treasurer.

turn over to Paul. call the like I'd Now to

Paul McDermott

the on productively conference our will morning, this everyone. good earnings for remarks we'd interest bit opening second In to My as like it possible, of XXXX quarter as change up using today. Tejal, us joining time and call. you, trends and our and highlight provide leasing key performance a you Thank Steve that elements this second within up Starting national the main of informing call allocation real assumptions. further estate estate takeaway market with capital contractors. XXXX The a of our on a real then a its towards understanding the updated maximize improving potential strategy significance the are quarter on guidance relevance DC greater decisions. gaining the tenant's color office. focus like our will real DC to space of strategy. key that we'd ours. to of on Metro The to landlord's even dependent Today, expected the budget solid and depend ability estate is upside is regional large trend accelerate, the while federal government with will is portion in made where base leave is from region, of flexible Thanks demand is greater

contracts the quickly competitive national the years with anticipation of large rate nearly XXXX, of Omnibus fiscal of new in of contract region for of which wide Bill increases Metro the where these very are was unemployment greater to XXXX XX below has amenities. contractors the available With increases end the contractors points tenants federal rate. in awards, a talent spending at fiscal up range Some year authorized that awarded amenities or spending continue May many the demanding gearing following competitive the the X.X% national attract retain have and for importance and passage and best will flexible Similarly, large contracts March. basis DC to the of existing on in of space been Spending is trend fuel XXXX demand terms

feet increase asset to XXXX and available there around research, conducting our with in be we nearly worked research space are that contract with to recently in in proprietary in XX,XXX becoming data XXXX. performed have XXX an or and that around showed congressional Codes government of square year-over-year XXXX ZIP XX% The tower, for Arlington increased imminently expecting Arlington be work funding quarterly fiscal example, contract awards within been in a and to office For year than Tower. are contractors awarded funding greater in

market large located to wins just a a flexible trend, fact, a The XX,XXX Space square been this to Plus contractors amenities. half the Plus have leased small that block majority program branded the XX% recently delivered. Space of tenants' currently buildings. were program and in is growth tower. Wilson, for Arlington June The located flexibility, couple increasing meet XXXX program portfolio-wide feet XX remaining XX% are that designed demand in our and asset and already from space office by away contract In is structural across leased with of we XX a our speed currently developed has competitive having spaces space Anticipating

We rents X% achieved an at the are have premium XX% to market. that to

to premium and We Tower spaces buildings pipeline the X space XX have another XX,XXX across square of low-teens will X in expected available that floors X will This with Space at for our for some over of spaces. months. XXXX, XX feet premier include next be in will deliver Arlington a that the Plus lease more

able of leases. few there the twice TI spaces of the have dollars renewal the few to initial The improvements smaller an tenant are been and spend second-generation reutilize leased While long-term improvements. very capital the small for spaces standard additional within fraction a even flexible new leases we second-generation required Plus program, signed, fraction the tenant that have of and first-generation on approximately currently for the are Space been XX%

we Wilson, have a of the $X and average example, our slightly years the For the for of program XX% $XX that approximately a or released. footage been four over in tenant range improvements foot has XXXX second-generation on of an spent on out foot building term square renewed spent spec suites achieved at

itself available spec the and ways. two currently vast options from Our Space program significant of number Plus differentiates suite in co-working

still Plus around target successful a Whether shared of a customer and creates second, the suite's novel culture seen of the that Space in offers Targeting First, that one common corporate prioritize tenants, the options in of really fits it completely a much emphasizes to in that the Plus are way recognition it's identity in lease spaces achievable Space own ever co-working that level co-working companies space brand, design program coming flexibility not or And companies offers on spec suite terms, in private office, out the their and experience. those market. is spaces. office flexible with high-quality co-working the space, service but customizable of fact size all.

that months, is has decision region's space more or build tenant permitting less addition own existing move-in pre-build a ideal the tenants have for a out detailed, demand proactively DC process X embark immediate I one protracted. propelled that than long-term which can In flexible even the our the Metro achieve approximately macro become with to has space to Without program is our fact fastest to on program, now drivers factor space prospective to X requirements. is the

in I views. for views the replicated. on the that space retail, Before In I be office would cannot with strong amenities amenity move our to the race, region like mention office demand to remain one

XXX The desirability views. You thesis either with newly you waterfront on of is renovated our validating views assets have the Watergate or don't.

are now Blank have Rome XXXX. Following market half leased in them, nearly our renovations, that space for and become to are of trading the floors top of square currently XXX,XXX proposals active positive prospects and a predominantly very to with we available X of feet reaction

received as energy- associations interest providers. We as well and and have law-, from technology-focused co-working users

inventory online They online in-store by using their maximizing in-store are and multichannel We and and the retailers fulfillment. are retail, to assets brick-and-mortar online and In unifying operators share negotiations their for trend locations distribution footage floor are see of in and the also toward restaurant ground providers for working with sales square both of the beginning we service other space. retail, tools. between amenity productivity

of retail in development at new region Village Valley renewed stores approach sales the signing negative by to for approximately With of our that XX% are the that brick-and-mortar XXX% times, of drive retail exercising the faster As we and options, Nearly a preleased regards leases leasing and square have our floor to in retention. this at ground half proactive of of this retail, trend in To retained in renewal to tenants rest two Metro renewals a after submarket. quarter has the also closing impact first we opportunities end, where close continue exemplifies retail square operator footage our early today have delivery the feet service intent activity the we construction. DC that new resiliency the retail Spring X.XX strong close online for to driven been of expiring brands year. are to letter on a online of all our our and tenant a the location strong see of food million

LOI in create For the we rents the previous at a Hagerstown, LOI. optimal value XX,XXX vacancy interest XX,XXX square than XX,XXX in signed higher HHGregg entire foot to at receive interest and square we range, and an quality user continues vacancy to in prospects to our have effort with XX,XXX taking for of also retailer foot The asset, an have HHGregg the from space. showing discounters square at Frederick foot the single

continue and active re-leased We with commencing XXXX. leases expect this to year in to are vacancies both negotiations be in

multifamily. to on Moving

across lease were X.X%. remains portfolio's XX.X% A optimized the supply lease at a approximately growth of assets. as on Class trade-outs Class outpacing X% Renewal second trade-outs Class we basis flat our elevated multifamily potential. X.X% with In our strong occupancy new versus broadly board Class of at Ending achieved Class of X.X% was at achieving unit B the A quarter, A rental the trend Class and income a a achieving B we B new While levels, terms deliveries remain growth in at the rent strong. assets

development, the submarkets vacancy such the Arlington, to Trove, the as the in region. among multifamily home South rates with region is continue Our our the submarkets recording which Wellington XXX-unit to broader and outperform lowest

to end, XX% XXX XXX ramping despite have strong left we on-site units of Trove XXXX. the units unit The XX% development. and occupancy program left Wellington unit complete. renovation half program quarter Wellington second now renovation caused Wellington renovate very Riverside at the the complete, Riverside. the At the ending to Wellington had the while and at anticipate a of is by Riverside disruption XX% As We renovate result, maintained the at is up in at we

cost second on that return We mid-teens invested half the these programs are X been to continue on of date to and a assets expect renovation these have at generating XXXX. dollars to

the are schedule on of construction we with progressing Finally, the Trove.

to the will $XXX of XXXX We Columbia end with to Trove tight to submarket deliveries. expect limited Pike project, gap the at of our as spending the in achieve value propositions Trove jobs and its same eastern this renovated result on the offering quarter are B and $XXX of points believe the and We maintain region units A XXX that deliver creates in and A X the market in third increase The a Class XXXX. a highs. new of units a beneficiary Arlington, migration to with value anticipated price at be a previous Class Phase in Wellington of greatest the from multifamily the near-term South at should relative healthy consistent which Units will strategy offer XXXX labor the site. federal multiple help domestic the consists

committed While our unchanged. remain long-term, allocating criteria multifamily we our portfolio investment to to remain capital stringent

Class which exclusively density. to potential between rents, cost, A located submarkets with that room under-managed, trading that assets We multifamily discount replacement wider-than-average at add unit continue and renovation and have B greater to to a a leads in are consider gap value-add

and Let since Quarterly, XXXX me is spending, is Congressional expected in with in business the federal This $XX.X we growth DC implemented analyze the XXXX. research in region billion the is whose in years DC opportunity to largest Metro estate. combined. sequestration fiscal According the stimulus conclude increase track conducted has a region with to Metro experienced the and receive XXXX to was spending real federal

office, over providing result this the be award private to agencies a in stimulus of in this The a growth approximately time, immigration, to stimulus contractors, multifamily. in government continued provide to likely net will for next is generated as thereby which X.X our Assuming result outsourced jobs years. and should government sector significant increase support contracts retail likely region XX% of

from at Spending Although, positive year government and We XXXX the year, of net X.X north this to has of experienced of in Virginia square negative million feet only only compared feet at could was square more March awarded million end the believe half fiscal is to be federal contractor first year-to-date of absorption there come. X.X XXXX. -- the Omnibus passed heavy on contracts the April Bill

like quarter. I'd to the and discuss over operating turn to in Now second our call financial performance to the Steve

Stephen Riffee

as diluted multifamily share, to and We by of $X.XX share income higher basis, a year-over-year interest higher operating XXXX M with was points X.X% delivered by cash the Thanks, average the from operating driving year-over-year a Multifamily a revenues were and of GAAP per fee the basis points XXXX, same-store of cash Street compared sale and $XXX,XXX same-store income XXX revenues, provisions in Net or $X.XX $X.X due FFO XXX primarily mainly NOI GAAP everyone. earlier sales office year-over-year well expenses. occupancy core offset Beginning office Tower Walker the Metro due growth driven year-over-year outperformed same-store rental quarter X.X% retail gains flat and mentioned same-store reported finally, we a the House which was as of better-than-expected than to On increase expenses and which Arlington to to per growth gain occupancy Braddock $XX.X FFO per key of was of acquisitions same-store lower-than-expected million and in the $XXX,XXX fee year-over-year debt average XXXX. flat which as year-over-year NOI growth was million basis the Center, second and of year-over-year expense. revenues, attributable than of bad And on were quarter contribution retail expectations morning, core expected. Watergate the I diluted same-store as of good NOI variances due lower XXX delivered as and quarter and lower second income our originally to or share points termination controlling interest XXXX Paul, portfolio, approximately termination which $X.XX XX M Street. included by offset and higher NOI the basis second lower recognition related growth, for in offset basis nearly of to higher the an X.X% of gains.

and occupied focus Moving of and expirations, particularly the portfolio at rentable quarter With leasing XX.X% remainder year, of on XXXX Arlington office to the remains leasing. office our feet overall XXX. on expiring end X% of in the square at Tower Watergate only our

leasing opportunities. expect be We to leasing we as deliver on these volumes lumpy key

with feet X/X XX.X% year. Of expire We XX, annualized approximately have manageable square a feet in square expiring or rentable lease office XXX,XXX office expiration on XXX,XXX rent for XXXX approximately next therefore XXXX, of December number, essentially, or schedule this and XXXX expirations.

XX,XXX square Within premiums re-lease approximately program of place market. office Arlington where know be will spec lease part XXXX a feet the remaining of flexible move-outs XXX,XXX we expirations, we at Tower, feet at of nearly during which to the square of time, rent suites this of of healthy to expect half

sequential on and of our our than on we have leases exercise XX% totaling impacted square rates. prospects opportunities, the work were leases approximately grown office our office quarter flat renewal XXX,XXX under broadly we a their more or As retail, tripled renewal approximately negotiation by lease at In upcoming re-leasing options pipeline have by feet of LOI renewal X rental early second that large basis. spreads legacy leasing lease

XXXX. We than expiring square of the rent XX,XXX X% annualized our feet have approximately XX,XXX rent less or annualized year feet in expiring of or retail and X% square this in of approximately retail remainder

shopping retail lease our centers X,XXX size lease are our community in under of with All square neighborhood at expirations medium feet. XXXX and in anchored the

lease have our year-to-date. We of XXX% expirations renewed retail

Now to guidance. turning

M is our we is quarter now share $X.XX diluted range, from $X.XX of maintain $X.XX. $X.XX by Street We although, $X.XX approximately previous our our as XXXX guidance of the are range guidance FFO We earlier. per $X.XX contributing our less to original $X.XX guidance a midpoint than tightening core and sold to range it

have made changes three We to assumptions. guidance our

X%, range X.XX% to NOI $XX.X million NOI same-store multifamily office previously from million And X.X%. expect second, to to million the down NOI finally, now to between up X%. to project X.X% $XX.X million, from from same-store expect now range $XX expected. to X.XX% we non-same-store from growth up we to to retail from First, our growth And range X% $XX.X we to X%,

the Let delivering retail XXXX, After raised assumptions our with year. in me discuss multifamily Starting X.X% NOI we same-store twice change have and multifamily. this guidance in same-store NOI now detail. growth growth greater multifamily assumptions

midpoint a Our multifamily updated year XXXX assumes second of consecutive X.X% same-store growth. NOI

experienced We on an are our expected. On taking even as amount last that our expectations, more growth leases, than the third ability business due to same we the year our time and estimating period we retail, well acceleration a by assumptions we lease-up rental lease has we been when momentum new underpinning second as feel their Based growth are our quarter. sequential than grow same-store quarter, rents leasing find year. retailers our are occupancy comfortable greater-than-expected for did space. in we as stronger encouraged both to occupancy desire delayed that move-ins the current committed this as XX% in NOI to occupancy, lowered In the strategy to have primarily of they during sign

For HHGregg to vacancies mentioned, the to the lease-up we've in XXXX. lease be these commencement assumed of as timeframe. our Paul lease-up re-leased continue always And two with we XXXX in protracted expect however, vacancies,

that M to late our for XXXX is leases quarter to in instead primarily the Street forecast of in second the XXXX core deceleration certain expected XXXX. of core commence and year. as the remainder share implies per have the $X.XX $X.XX our core half the guidance half in FFO of of implied We the achieved midpoint diluted first The of for range due sale FFO updated XXXX now second of FFO are well as

improved and to annualized Street on adjusted debt balance on of an basis sale sheet. XX-month EBITDA on a X.Xx to XXXX X.Xx to our in net the has trailing M The basis. June Moving ratio

expect target We within X to range remain year-end. net X.Xx at EBITDA to of our debt-to-adjusted

gross unencumbered coverage is a and debt healthy ratio service sheet balance and of at Our secured debt to X% with assets X.Xx.

Let me XX% of distribution or for FAD ratio FAD payout second XXXX. for FAD. an payout full conclude core funds XX% core a targeting ratio quarter, of in the $XX.X We and million core with available core delivered year are representing approximately

approximately our XXXX. XXXX, asset year-end $XX We trailing on a programmatic FAD from XX-month June to core at grown began when XX, to basis recycling have million approximately $XXX million our

been that an incentives past years. One of the for biggest in tenant has four drivers reduction improvement annual every the of year

of capital allocation to is requirements second Our the Paul. decision Street future the shareholders. yet sale reduces we call over that, long-term back returns that supports to M with to another XXXX now our And capital turn I will and quarter deliver aimed

Paul McDermott

you, Thank Steve.

Following of job an we the the growth XXXX the increase second in X,XXX quarter in added experienced quarter XXXX on second fiscal eightfold appropriations is an than the of more when the basis. XXXX, added the at compared which March, a of jobs uptick jobs seasonally-adjusted year end has region in X,XXX to

service Second driven primarily second quarter scientific XXXX the technical of XXXX, professional higher in significantly and by quarter were jobs also than services. and professional, business

be contracts As growth further through to we fiscal accelerate. to government's year end XXXX, end of the awarded of federal the job continue government expect September the at

play continued DC support recovery REIT in for supply within With Our multifamily will this office. the cycle rental and result secular dynamics Metro with with a way believe likely occupancy that's on which Washington the capitalizing outperformed and stage the in-migration, provide expectations in and below a this retail region estate. portfolio has X%, platform demand we strategically hovering growth should to positioned quarter. real DC on growth our net strongest is already in at this the unemployment segments growth multifamily, in remains

questions. Now call to your like I open to please ahead. Operator, would the go answer

Operator

Instructions]. [Operator

from question Wells Fargo. Heck first Blaine is Our from

Blaine Heck

to side. on want Just multifamily the touch

growth X% have XX in First, several had in quarters, you year-over-year relatively guys rent looking healthy supplemental. the last just around the Page at

or Given we trending the the picture growth two? you're supply-demand seeing rate should next how that this at in about year point, think

Stephen Riffee

Well raised Steve. just this but obviously, giving we 'XX year. not we're guidance guidance is time start for off. the or for for I'll this XXXX our second Blaine, 'XX,

in-migration the is before. looked year coming have We've terms you where to is I we market waiver commented, it have the going will we very of supply center going net to not X, and in which think the of that were rental the now hopeful And compete heaviest in-migration the also where of which center it's think hopeful will population supply stimulus our have assets. help at directly that some rates. where we're X area, bring we and federal this we're to with some job

Paul McDermott

Yes. Blaine, it's Paul.

Northern When units Hill XX,XXX over supply what's on I'm the NoMA as add say, let's B of to about Street And to is other next we the where the deliver those bantered in, high units. now, last see, to well if number I A I are the look going riverfront that. think portfolio at in I look continue just we XX as aware think see rental And to that is the outpacing of you going months, at growth. quarter, our pipeline the at rental X/X southwest a percentage Just Virginia. right we to growth about H the say in market. the deliver continue market Capitol is seeing I'd thing are this

about quarter. basis think was XX by it points I this or XX

reflected our kind in what we've So led guidance. of to that's

Blaine Heck

you are actively Got I any looking pursuing mentioned you're market, for value-add this you you'd guess say it. projects helpful. Paul, And multifamily are at always guys or That's properties in there opportunities. the point?

Paul McDermott

Yes.

assets two the multifamily are that B type gaps in actively -- them of think that we And would value-add have both at to see. they We renovation of like a there. post also additional Clearly, potential. affordability -- we FAR looking have

Blaine Heck

maybe if of Okay. with there you preferred at to guys And kind well levels? source keeping leverage a the uncomfortable what's the point becoming investment guys And to you Steve, this without was have after, go capacity but financing? wanted you related guys deal of have significant would done leverage in that, what down be

Stephen Riffee

we sometimes sheet stuck and our selling, balance X happens X.X we, leverage to but Well, between have our I and want to debt-to-EBITDA. when buying the guns. the manage Timing think,

all of we say we'll asset always guidance additional at look our where think We've be got range in could I capital. there sources sales.

an it that For immediate instance, to had opportunity were we do. if something

Operator

[Operator Instructions].

next Our is Stifel. from Guinee question John from

John Guinee

Great. A a few clarifications. of questions couple Nice quarter. and

reasonably this particular Seems like First, you ATM Any good quarter. price. didn't stock reason? the access a

Paul McDermott

quarter and had Well, asset little lower a was we sale of John, bit the primary this off big to on at a point, which we as focus M our capital XXXX Street. started source

we So didn't right equity. it access the was to time think our

John Guinee

Okay. say think And Blank Space Rome at available then I that heard Isn't XXX Watergate you I right for it a availability. unoccupied? XXXX Isn't now?

Thomas Bakke

negotiated John, where Tom. That's on right. lease All the we for that had additional it's XX master a months. with seller the

John Guinee

now? I months, until become know. doesn't it but But if it's vacant been available why it's XXXX XX

Thomas Bakke

It's leased vacant master through the but it's XXXX. lease being under

John Guinee

Okay. someone it want to But right? could, they if rent now,

Thomas Bakke

where a structured the beneficial. deal would to Yes. deal deal mutually a we to was lessor with off if that and a And we let negotiate we've them able master were find

John Guinee

spaces on X,XXX XX,XXX Plus, space that Are square and some average, They're just I my an think, there then feet, different spaces. corner, bank building them are to around kind I average is Space assumption. of it? on tiny taking mentioned think. you the would something or elevator these dead not basically I more be XX the out and little And square feet, These on Okay. think,

Thomas Bakke

Yes.

vacant not out in quality space that we it leasing, will you're not Especially, going modeled to for some. build I'm probably the of we've you specs flexible -- that traditional rep well. the XX to John, think exactly the different the I and if you can I'm suburbs to a It's a downtown of market's going which pretty piece as back, the much tenant think for know not that too in XX% everyone's been looking running I a and offerings, so options. space at show space, see got it. you're X,XXX that, piece game many got you garage. parts is that don't of take And was lease is, have going years and if in market if market And done the I a okay,

to have better stand out. going you So space that's

You we to elevator better we're to that the with deliver probably are bank shared design, space high think quality, that concepts address you're amenities, now an putting this if is offering that spaces have place Arlington value more proposition program come a you high, delivering of And in good offering. allows going to are of have one great that I higher the we Tower visibility and flexible the innovative at up compete.

John Guinee

the Department clients? and Defense business rented own in when contracting And then facility. And great question. of space their Is the -- occupy unusual last that us with day, talking do By an not of the space, quick their other in way, and Defense number? of were answers. we space a housed defense they finally they contractor DoD third-party Department are grows, roughly very his area that told he the defense Is XX% Baltimore-Washington occupy to a the people actually space? do in Or

Thomas Bakke

I'm not I do DoD space. contractors sure about there the XX% in think but is plenty number, of

But of life they have private some maybe Quarterly previous color. the a with Steve are definitely demonstrated job be Congressional to research Our space. additional might at sector got a lot experience predicting going whose is creation that some that

Stephen Riffee

just -- to add to working Quarterly may research with Congressional working that, team, just with Well, be the that true.

going DoD may billion some locations, activity. be in indicates have what contractors 'XX we I back in and will a budget the pretty out they're of And $XX be about just -- to you, the spending place seen bigger of we're may this somewhat been XX% have above indication this good that's to the that was 'XX I'm key contracted in requirement. in see is new passed, our all but to work -- need they one and be before been another research if that about and to there's saturated. it's research it for throw you've Although, But they think third-parties. near And space to a to doing

Thomas Bakke

the Yes. Corridor. been borne activity and Rosslyn we're out the out in in Line Silver that's seeing Well certainly,

Operator

[Operator Instructions].

Securities. is from Capital next One Our Chris question Lucas from

Christopher Lucas

market else you. if the that are that for it not, put questions unchanged. curious acquisition triggers potentially I if it make guidance, this what trigger to the this Is or Disposition what it on is quick they of offset couple guess, play I'm that as would guess and the could to in them there? an point? at a year, are assets just would the Just And is I market? maybe something in into

Paul McDermott

if is on get market Chris. award. we There the Right potential trigger multifamily right acquisition lucky to would what now would the -- that value-add a be nothing now, but were enough

Christopher Lucas

view met what's on pricing ability and environment. where I -- guess, acquisition like with I were, what's just the to? months dynamic Are more And nature guess the a we know given feeling frustrated stock confident your the competitive prices the about marketplace. couple you moved the when you the Or then today? of your ago, I any

Paul McDermott

on talking that The of the Koreans too foreign all reflecting a really at we just were the thing is conversation, our think pull for Definitely, high. I changed their because back of about capital and out and are the people core. back was first I hedge in it, not have really I've were is there. only cost capital amount seen tremendous of that capital my think observations the amount terms

particularly, value-add, we domestic a the that think lot like multifamily employ. them of model creases chasing we more a and to oriented that value-add see I the capital lot the

about. funds XXX. and you up debt spreads is funds I debt I that culprit LIBOR see and think I the we these tightened mean on the -- points XXX talked are biggest basis that went

loan-to-value that XX% preferred. can and get easily as will the You to additional XX%, funds on go pricing XX% to same the XX% deals that, multifamily

say, no multifamily. there's So especially I'd of shortage for capital,

some just days. backing a team the bit XX XXXX now, XXXX Pennsylvania, was on pullback, downtown. New offers XXXX these off here. to the Pennsylvania, priced all have to York, of core we're Pennsylvania, of seeing XXXX I next commenting little going New I mean, in you're to XX and a plus Right Connecticut think Hampshire XXXX XXXX I

People is core data the that or uber really not where is points, near-term of are in seeing we're expirations. just you're going think the to with aggressive good office. show to kind I So the lease but as have capital, whole underwriting getting some really stuff core foreign plus starting some

Christopher Lucas

for And Space how and color. kind how Okay, to of reporting guess and the how as associated with that. last thinking cost just curious is I that just you'll we about that be the capital successful also about is be great. should Appreciate question then me on thinking Plus

Paul McDermott

in so been deals in change so achieving We're line in suburban out Well, it's of the far some more majority has deal almost line the term with we've it's the almost Virginia. typical in years to these have been -- DC. four starting and been add in

$XX call up of early two being the of X,XXX it, along of the At XXXX I'll built and burning show the give numbers and example. and for typical like capital required on that the square ended months an renewal, but you roughly, capital I we sort all feet, we rent sort think they downtime. are with Each in to sort still two up re-leasing with let's probably formulating leasing term numbers. was two of And achievement, said, the the of deal $X both off and -- only investment those initial we on think, work additional So of returns, came that That Wilson, and those. how I the we floor. additional communicate up -- we're a retention out script touched are

Christopher Lucas

Tom, And just, Okay, got you. I then great. while

described size on given hard been to it that couple the get new your the leasing Paul just space tenants through takes a smaller a leasing are permitting just just activity? what's having down quarters. process? -- Or it to the that as committing really Just it's slowed are earlier, leased last a just time front, time new light for Is on of that the function, of

Thomas Bakke

contracts say to there frankly, awards hoping our where? some vacancy but majority deal down hate I of and they're XXX,XXX feet there's are guess vacancies, that starting lot see Well, be It's there. it, a of that's our of our some of That best and Quantico there's the And chunk big just some activity. and in not activity. going said, which being we're vacancy, to to

aspect on get of it's line. over other leasing of it the we're lot the a leasing that and working So goal the is, volume to infill

again side, the a it's retail are bit bigger of little the I time. On just think, taking boxes

Operator

like over questions, to back I'd And for comments. if no closing turn further floor are any there the management to

Paul McDermott

for many and near that of to your very forward to like Good I Thank remainder We hope on time nondeal future. today, your afternoon. thank the look seeing you. upcoming everyone you in Again, would our we enjoy summer. of the you roadshows

Operator

today's teleconference. concludes This

you disconnect for may participation. lines time. your your You Thank this at

Elme Communities (ELME) 27 Jul 182018 Q2 Earnings call transcript