WRE - Earnings call transcript Q1 2019

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Operator

Welcome to the Washington Real Estate Investment Trust First Quarter Earnings Conference Call.

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

Before turning over the call to the company's President and Chief Executive Officer, Paul McDermott, Tejal Engman, Director of Investor Relations, will provide some introductory information. Ms. 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 supplement page refer or both most our of measures release, the 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 this Securities during also call the Act. Reform statements within some note Litigation that are statements forward-looking

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

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

Paul McDermott

everyone. joining call. quarter Thanks earnings us for on Thank first you, XXXX Tejal, good our conference morning, and

April capital today's transformative of call the focus strategic While allocation on we announced be Xnd. the will

quick biggest our a three first of quarter achievements. Let me begin with summary

term leases feet at in nearly including XXXX. for expected early of new square a XX Washington in of signed feet office, DC with years commencement square for we rent First, Watergate XXX XX,XXX XX,XXX

by by foot XX,XXX the store by new XX,XXX And strong grew achieved of retail quarter leases spaces both our ending in expect lease and average by XX.X%. growth driven core hhgregg X.X% square generated $X.XX portfolio. we in nearly GAAP multi-family the year-over-year Crossing and XX internal driving first of commencements former driven The challenging same-store third, square XXXX. Hagerstown was Moreover, year-over-year NOI signed month almost leased former our same occupancy FFO X.X% NOI we've while points momentum at of very vacancy basis foot outs gains solid in for at Second, first feet we of maintaining retail on and and Frederick occupancy hhgregg with growth. the trade both vacancies this renewal vacancy half XX,XXX commencement cash we square the at rents X% our

four two We the in first leasing first and are pleased delivered have solid commercial the XXXX of progress a year quarter. goals operational strong have the our we on made months performance in

move now granting multifamily me Class on which at to dispositions. assembly B Let our commercial the will be portfolio value-add planned we acquisition, planned

long-term in transformative proportionate NOI assets. nearly XX% objectives with commercial of the of by is multifamily are acquiring de-risked selling and WashREIT’s of stability multifamily our multifamily of flows. XXXX expenditures and assets and like first million believe acquired March capital the Apartments. impact XXst cash to scale portfolio seven into flows then expect portfolio. our and and leasing of that assets returns. out of for our is on portfolio that accomplish will and our its us sub-markets. further assembly transformative deal I a portfolio $XXX on capital further and significantly would million allocation since for net of research significantly that leasing Beginning and by the will reduced we capital XX% liked acquired sold and recurring WashREIT with have has led allocation quarter begin a we acquisition acquiring, strategic $XXX financials. improving transactions pursue REIT additional materially first XXXX details value-add discuss further to and multifamily XXXX, research our team quarter the has Growing assets cash with follow as From to while long-term Steve XX% would commercial our they from We I large net and de-risk on to allocation, we and First, enough FAD these are me of amount let Washington positive commercial outlook provide transactions. the this timing a our to Starting adjusted growing outline these has Riverside based this to on risk with why share strategic like first the saying our

i.e., sellers. agreed numerous have on in We the value, where ad passed the with a opportunities the investment by our on to return CapEx value-add required, assumed same but research couldn't get of terms

will disciplined We remain thoughtful in underwriting. have and our and continue to

of At Metro are We it affordability approximately the unit the portfolio us Washington issue through Metro renovations of between per is improved property range to and demographic that and this in multifamily demand macro incomes the Class $X,XXX, units these $XX,XXX greater rents our continue of located require multifamily We region. households remains DC this region while product capitalize find all price households reach. Affordability XX% for earn who average infill urban construction This our demographic units on under trends require rental level XX% Metro and the already $XX,XXX this this to and market supply in because the well biggest research A in and XX% and rate value research. B Metro demand renters is housing region rents well generates annual the continues to than enables renter than management. returns annual $X,XXX expects year. about growing broadly infill the the available that suburban suburban a greater to $XXX,XXX demand region and multifamily. multifamily XX% be beyond B to with robust renter excited currently and outlay, Washington monthly Class of according incomes CoStar because matches $XX,XXX in grow. to driving from DC comprised asset Class both conscious largest suppressing a cohort urban

approximately infill rents As existing were portfolio is existing to the now The of tap into a renter has are over rents the infill us portfolio's to portfolio average multifamily suburban for located above three are a Class affordable urban value Class continue reach and $X,XXX rent a ownership and in strong for grow result, our are rental well years. home $X,XXX effective revenue enables growth home expected averaging delivered to – month A month in our past $X,XXX conscious B the beyond yet as quality first more quarter. urban The assembly housing. and looking who both monthly rentals

affordability declining. expected to and year grow ESRI addition the have years as our in old region to the however, to by region, the according XX metropolitan rates XXX% five In population age data. millennials per is of Washington to been Homeownership XX year for next

the lower Metro of basis at in As than in the XX DC XXX was ownership largest fourth XXXX, rate homeownership quarter the metros nation. points the average home of XX.X%,

next of region a projected is in years. new XX% As XX year over XX% the households to to the old to grow rental eight result, XX renter our from cohort

is great from regional we lifestyle on There of conscious Notably, the from and forecast in these continue Class rental districts highways sizes age, older better. suburban value them affordable renters School embedded XX renters strong growth are will value-conscious coupled to will the acquisition employment and where this demand by benefit are unit retail rental and larger price portfolio's preferences average to major addition demographic. As that with to large lessee for average. believe infrastructure. concentrations good years, the to B Metro population draw growing housing affordability, XX% its that directly addresses is point age access

thus core the on been far you our portfolio estate, have a portfolio has infill many and teams’ of acquisitions be Urbanization in transformation been continues this Moving all WashREIT’s the commercial urbanize our of of to real strategy. portfolio locations. to tenant cornerstone management urban to know, as

from For spread concentration its of region communities are throughout of one walkable urban multifamily, that benefits a with few markets however, the high suburbs. DC being the Metro

Bethesda next the assembly portfolio according to growth to Our evidenced long-term. nation region such is growth numbers. high located We suburban levels urban acquisition located nodes has the according over second walkable five in multifamily and years, regions style growth XX George our of assets. ESRI and With the its minutes suburbs is Herndon a center, and Department Montgomery and College, access XX% in of located from the or from property innovation is of Reston for from concentrated units Mall urban to submarkets half largest XX% B Tech the the XX% strong its within this has nodes its located the as is heart the very Almost portfolio has and northern the of infill Metro in already The mile to suburban XX to DC Metro world's the a makes over billion in and have with ranked in a $XX walkable DC. the to be runs successful across Washington Virginia it town is a Health, center and firms urbanism of the School of strategy street data. located the distance the commuting in Hospital therefore of Dulles in has town in in Business. downtown Montgomery urban dual that Alexandria from XX% growing million to Gaithersburg the to Alexandria located believe of the station. and DC This the Montgomery the can the of Alexandria, XXX published half National portfolio urbanism minute region easy from Maryland. household far jurisdictions Class seven Maryland [indiscernible]. where suburban redevelopment Amazon rent XX experience XXX,XXX County, regards in near than Landmark of in gateway services Inova by and suburban B XX% portfolio, jobs acquisition mile minutes job X.X in which Having the well more downtown portfolio a centers the University living center. garden ranged web drive metro strategically rankings year center, and in of Class proximity in urbanism rent the to and for genomic most Amazon what and Energy expected grants. substantial job is is where XX% one richer is presence in Corridor heart Tysons, multifamily is houses Moreover, a that close the Washington region footprint outperformed in area. other a to concentrations of research and and Old regional is Each are occur located Rockville County, as a future it in dispenses HQX per to I-XXX region markets is future is Town of adjacent assembly the stretch Institutes Germantown

their tech where by units employees XXXX the corporates in units X,XXX supported approximately in rise jobs $X XX% located the footprints. I-XX investing X% finally, Another XX% is and in and in in in largest Center, and Income region. the served from Micron, within is the to growth fastest home station job commute and of new in Metro in to levels to XXX growing fastest are steadily Loudoun create excellent infrastructure, the grown tremendous and Manassas, driven Life XX a Shady and are the for mile growth companies. county minute including which Sciences by Grove both jobs. of private is are located proximate XXX,XXX example, XX,XXX northern billion expects population Grove the where that currently located airport less XXX Shady Leesburg expanding access on Virginia, Grove, portfolio to by has growing than by are the Manassas, XXXX and to in onramp from Shady XXX the submarket. or And Manassas County,

are construction had urban relatively submarkets While urban six and have In are these of X.X% units under robust the as construction on region less focused growth the employment under as muted strong the remained infill with just under developers region's in submarkets basis Supply XX% has whole. X% of inventory core. located job compared inventory portfolios than submarkets. construction assembly the XXXX, of for a drivers.

past of Class portfolio growth the As B B XX over rent result three for DC averaged a metro the store X.X% acquisition same years and Class submarkets outperformed product by rent growth has in ownership challenging price that continuing the offer build to basis With period. value the rental home an remains proposition financially suburbs. costs development to to attractive escalate, it relative in points same over points to has

due more land requirements, to garden new limitations surface does requires half times to garden-style four intensive multifamily limiting style and addition, In supply construction of land multifamily further a height four than its parking product. and high-rise

be to portfolio improved in first management. the acquisition to ways, rents expect by in We revenue able grow two

leases optimized our that We managing have curve expiration on our strongest and the a in the rents by daily seasonally expire portfolio structuring in lease majority pricing basis existing of strategy such quarters. the

the DC Metro average year in a Metro revenue same-store We multifamily record established XXX points our by in have XXXX. peers and the DC management growth track outperformed of NOI superior full region have basis

scoped the potential unit We with renovations. through units see the turnover. little a unit place renovate renovations already to have value in taking we years appropriately ad the first units X,XXX received to Second, a grow of as over X,XXX the expect six XXX rents upgrade. units’

majority expect renovations We years. the to the first completed four in be of

unit an an average summary, premiums multifamily both long-term. region of We costs in $XXX strategies the these continue and are medium driven on overall XX%. strategies the region housing and scoping expect costs of lack affordability in urban anticipated the per our growth in in our both outperform to with and between resulting suburban near, by In to we and to are return $XX unit that rent $XX,XXX $XX,XXX per two excess of is

and move now me well the awarded were initiated to before capital sales portfolio Let to With we plan on to regards asset underway. the even sales, out allocate we it now what had of. process the is we acquisition

in embedded large we capital legacy significantly emphasize details to would to that I tax is are commercial assets. does While our not portfolio disclosing that commercial not capital gains our efficient at our while strategic currently disposition the manner a objective like this de-risk time, allocating trigger in

to sales ensure our a to of region Metro the the strong credible majority key continue we expect from overall first pool for XXXX the that be dispositions strong the our advantage takeaways sales have close the third in take At this DC interest buyer of We are four expect to continues shareholders. time, on the and quarter. what a to in market best possible execution and

flows that risk Second, we pose expect to sell the both commercial near assets and cash to long-term. our in

sales non-core Metro a that expect B region. growth the growth on this portfolio of match a to demand future and The have to Third, multiplier addition in deposit further solved XX% sale allow will we quarter. will shift currently Quantico almost is Amazon one guidance the trajectory. the conscious non-refundable asset for DC prior largest our renter the value-add allocation acquisitions. be that have mid-year, agreement second believe of sector we the all, a capital our to flexible that gains near demographic on capital HQX will the We've manageable. included sale asset. of the finally, our sales legacy in the will secular Class prior remain Quantico a guidance and in a for value announced streamline the allocation sell of expect decisions embedded is All in of meaningful believe capital And multifamily and one fund more office to received effect value-add REITs our will for that includes company portfolio, the have million, to and signed which long-term to being multifamily We an $XX close in

the well in transaction performance call XXXX. financial of as our like operational to quarter for first further over would and on turn I as Now, details to the Steve the

Steve Riffee

for Paul, Beginning good Thanks, acquisition acquiring we portfolio the $XXX assembly everyone. and morning the million. are Paul described, with that multifamily

We close week. expect Northern tranches assets tranche to next comprising transaction in the first the expected close with the to Virginia two

expected Commission plan two We fund not Affairs. assets to the and May Opportunities Montgomery comprising commercial of Housing of are match sales. Department by assets or the to end the is County pursued assets acquisition by with the Community the the if Maryland tranche Second the close Housing

XXXX under We quarter sales primarily second third be quarter. in part able expect at be process, as pricing on them and first the in of to from the group acquisition agreement month the six the the commitments reverse exchange we maturity as in revolver. and have place our loan sales for $XXX members to close bank a a to our new announce closing of the to term Due same with million the

complete. once and asset repay debt to are levels our the normal return We expect sales to leverage

on XXXX. to attributable share lower carrying recognition estimated FFO million of to interest in of our basis the the rent basis, or occupancy net than expenses. GAAP portfolio was seasonally XXXX lower, due core $X.X NOI a XXXX. well tenant lease loss Street mainly office share, primarily and impacted On of per income. a store fair outs was and same diluted share controlling cash average the store sequential first retail value. which by fee million core termination detailed to $X.XX Corporate first and cash disposition year-over-year X.X% floors in termination primarily charge of on with due backfilled on call well to Sequential reduce Moving growth, diluted driven early NOI reimbursements million reimbursements $X.X Year-over-year, same-store grew as X.X% two was growth lower, by FFO the known or NOI a $X.XX lease of impairment per to multifamily office quarter as its as store top quarter same as higher office the in due income rents and Quantico was NOI per X.X% June the value a the On net a utility gains was the last reported negatively have negative Same at $X.X of Center termination X.X% performance, commence Watergate $X.XX to in due the for that an fees. lease grew to been the year-over-year, was primarily M expected XXXX move $X.XX master basis, and higher to to we the now in of XXX

office NOI Same and grew of office all retail lease to while by finally average For a be lower that debts and full X.X% and square commencements leases offset approximately occupancy increase of offset new basis store slightly year-over-year the centers than X% same We assets prior outs recoveries few shopping maintaining we grew multifamily of termination taxes. store expect at feet NOI the more new to a signed expense XXXX. of store than NOI rent And for XX,XXX fees due higher by lower estate NOI XX,XXX year, points multifamily bad year trade more XX.X%. our and year-over-year provisions lease We to X.X% cash year-over-year X.X% rents in basis cash to office quarter. renewals. due and of driven same renewal at growth feet XXX grew of on square our respectively at compared real

included nearly leases office expiring GAAP and We Blank the for by the eight grew New top rents XX% lease Watergate two over a Rome of lease. of XX years XXX foot term XX% rents and for XX,XXX approximately cash square by the floors months.

for per per free A a market which improvement no tenant and than little the Class concession total year in a current $XX.XX this district. providing large of the are foot deals rent, for lease package better approximately the We allowance term makes

in and to both GAAP expect cash commence We XXXX. early rents

availability, other expirations. approximately XXX,XXX of for XXX’s a of Watergate of two includes which all pipeline floors, have feet lease-up lease we square top XXXX the Following square feet XX,XXX current deals of approximately

lease XXXX Watergate negligible expirations annual are Thereafter, and XXX until at beyond.

in recently delivered feet Tower, of approximately square best With program average Space+ regard XXX,XXX to of by footage since in X% Association XX% weighted have leases LOIs our spaces buildings. office months. Space+ January, of achieved in XX we the Washington majority we space, feet an awarded square with Estate signed which the market to Space+ the delivered XX to on remaining provider Commercial Arlington the term or finished Greater Real our leased located is having are been has program of space across Moreover, DC. currently with space is Space+, delivered. at industry quarter Moving The there we a flexible the premium been XX,XXX square of Brokerage XX delivered with that

six square deliver XXX,XXX to feet another the Space+ that over will program spaces across have months. next We XX in eight the

lease the in office filed XXXX XX,XXX renewals, square of office the on square Finally, renewals XX,XXX comprise we November of the at that feet last feet XXth the referenced quarter. we X-K Street signed in first GSA

would cash increase we have lease, increase in XX.X% GAAP in this XX.X% and achieved spreads. a Excluding rent

a revenue government of company's our of that one portfolio XXXX XXth X.X% comprised only March annualized space the leased As reminder, has the as assets Federal approximately base GSA. to street tenants is three rental of in XXXX. XX,

Moving retail signed on leases we square of the feet in quarter. of approximately square XX,XXX feet and new retail to retail, renewals XX,XXX

at leases Concord had mentioned last challenging vacancies for we to New included retail Centre signing close quarter. being Montrose Shopping Center that and leases

As as commencement, to square continuing square space approximately for commence we the well entire new the first regards and lease a Crossing Frederick Spring XX,XXX Hagerstown negotiated and by of for the has the leases executed at XX,XXX at we second XX,XXX space former Montrose XX,XXX foot Valley. user are foot already with and the With the the the the lease lease expect feet at edition XXXX. hhgregg Hagerstown Concord additionally said, square former as foot and commenced of half GAAP at of square rent of have XX,XXX to foot hhgregg medical Paul square leases at Frederick floor

release, as payroll out negatively do the by higher the G&A so let being restructuring expenses. as entering XXXX to and was That updating sell and impacted point guidance quarter We'll in expenses time. to said forward not upon are to at earnings our look well mentioned this assets. me severance we our As news legal that agreements able first

our lower year We with core for expect rate prior G&A assumptions. the FFO consistent for that

to even is the capital stability to our able we expect be our growth. cash the including to Finally, enhance of cover and flows maintain our long-term and to our after impact expected continue dividend of allocation, FAB which

our strength. always, maintaining our sheet focus balance As remains on

net half the six year to the and be We call to the completion following planned Paul. a the to all range expect and debt And times our end of of at to lower with our range. EBITDA I of now turn at will that adjusted six targeted asset dispositions expect the of end the back over to

Paul McDermott

you, was XXX Thank as An Washington in additional in element included Steve. Small positive S&P was that first REIT of XXXX. the quarter Xth, the Index Cap March

In who we that be the we managers, will the what create from To conclude, move believe excited we long-term addition expect greater a meaningful ownership, adjusted very to interest are active index. to to long-term returns. allocation will improve WashREIT’s increased the capital significantly follow passive execute risk

the and We and strength flows tax strategic embedded solving and expect gains portfolio, improving our portfolio. the several some cash goals, the commercial of our stability including of to key FAD de-risking further large for accomplish in

We to needs of in as emerge the also affordability. regions region expect the portfolio that with REITs metro one multifamily most the pressing DC value-add largest one addresses of a

year. our end at to Trove, which execute development our milestones the The on first this of leasing its continue key units on We of well and delivers

open we as now questions. We that, me when With expect updated can provide to you hard let and guidance are strength execution, REIT the our so the possible. complete call as to asset soon our sales with are regain to your answer balance accelerate working

Operator

Thank you.

the proceed We Our session. Blaine Instructions] question. now line a with be from conducting with will your [Operator of comes Fargo. first Heck Please question question-and-answer Wells

Blaine Heck

good Thanks, guys. morning,

to you transaction give dilutive multifamily I and the to color not ask whether visitation side not maybe be initially extent So to the based and on But and further you transactions acquisitions creative on respect is the can point. yields what can are possible? or at the the is on going any on details discuss a whether lot disposition this appreciate there can I with the or just

Paul McDermott

we Blaine, to I to now to but we're We for are you the way. can comments appreciate our it's be while and thereof. in hope able but understand now process in or question, under second steadfast gets say interest remain right I'd the Paul. quarter, can't right a – your greatly of updates hope in lack it's weld our I the process of shareholders and into best middle in are comment a provide we

So…

Blaine Heck

in All still to side, is a rents new the are as factors supply there's Class I space try. to on, push How right, in those and A? guys point? of B the “Class ability on. at guess redevelopment this you And seeing affected on A” on have going already threat office assets your vacancy high this B Class lot to to coming a converting rents Class

Paul McDermott

ceiling for B DC foot kind of, cap Well, I the $XX gross. Class Class the now think a $XX Washington mid $XX foot. a in rate average rent Blaine our out XXs, in in B to around the portfolio is We,

So in probably front for of a in of had and referring ones still adequate seven to quality that them you're have that the Class I in of – an front eight those feel a higher have As front of runway we us. like delivering The are them. lot

have diminishing to run. in here. if still room tenants look did I said, it at for being town like I just see the happy that the important And concessions negotiation. competitive those in see that near-term. an a we feel the role With So extremely still that with we economics was highly we the at Watergate deal And we any the play got. concessions still But in don't you competitive larger situation. We're

Blaine Heck

guys in your prepared about remarks release. And talked lastly, All this then the right, and press that's you helpful. in

goals Rosslyn. look success guys that what's at leasing as into you that capacity have expanding noted your achieved buildings forward? you've additional I program You Space+ the guess in you for given guys your that had, units

Paul McDermott

situation. I Well, initially it's would the We a that were X% to fluid of looking up say portfolio.

in I a at we metrics success at look expand every also vacancy, hit we the say but think we outlined. those has it to probably given going to when I we've that three look Space+ examining it, that had, time that, a would we’re

we'd market regular like foremost, premium over of XX% targeting and between achieve X% a We're to a metric. market leasing premium. and First a

how look Second space the that compression an greatly time. market that to so is been opportunity through there the at NOI and it long to had, space the bringing has market we look accelerate we've at we and on is

Arlington to that a quite capitalize of opportunities the the reuse Space+ we And Tower XX% into then think up lot Space+. we're looking go that that successful that delivered more to on. of at one third, I obviously frankly TIs we the was

like think So and Blaine. other metrics, have, other Space+ can if at look that we opportunities will we we office assets and I three those feel we accommodate

Steve Riffee

And add Blaine, you square delivered referenced I'll feet in just already we've prepared XXX,XXX XX the Steve. buildings. remarks what our this that is across from

Blaine Heck

Got it, thanks guys.

Paul McDermott

Blaine. Thanks,

Operator

Instructions] Baird. Our your comes line question. the Rodgers Dave proceed W. Robert from next question with of [Operator Please with

Dave Rodgers

the are think target I Paul, portfolio on to quickly. own NOI to apartments just made as about your a was lot continuing bulk I Good wanted at commercial your than commentary thoughts But your morning. summarizing of I I'm guess your apartments and really know of better of a total? the why portfolio targeted for the the what apartment long-term any an commercial you given the length there's percentage if components update is, for of comments the and division that of

Paul McDermott

Dave. Sure,

to region. consistent have of with of our in we multifamily we space. wanted to been I our Ultimately, I more more our the increase in the think to like try see would that a waiting. here been multifamily specifically remarkably continued half multifamily to portfolio be recalibrate portfolio, presence we've with And than since I've

its opportunities I management board. team that come think we've at successful been since on targeted we've has

distinguished I affordability us a as affordability has And from I product pursue continuing forward. portfolio of our and continual of strategy projections and think really of multifamily the other view here Washington. de-risking in it GAAP cash a and to FAD owners strengthening flows our moving our

Dave Rodgers

that with more that adding use suburban type kind helpful. than half strategy the that really you think that and kind of What and to suburban invoked? substantially That's acceleration that becomes of more than to change consistent, is the than component adds more does do half of the but strategy half

Paul McDermott

bid step the on those then, because, definitely Washington we've our back term we've to for I some that on. moniker – portfolios I truly and creating were underwriting. understood better was let's more remain out for needed didn't just discipline the for prepared value-add that was opportunities Without than bigger isn't our second. multifamily on in better. REIT, it tried for is we there, – assets, I to use me let I mean, I think, capital shareholders. if was the a but go Well, passed – passed hesitation, back And better remarks, we've saw but thoughtful think we We've there value-add, my And we

deal. this this us think I both going with then units year. forget, our we the that. opportunities Trove And at to not that patient team portfolio. let's have were we continue portfolio, waited XXX portfolios, Phase – to multifamily also for happy in our to to think I'm at growth asset do end unit believe We'll right very opportunities for one-off. we of I there'll Riverside this embedded have other be We're the month. but we've have some begin and that I We And we And also look also on. then do a commence that focus will delivering X

create feel I and multifamily think portfolio, on our and development to portfolio. a trajectory grow continue NAV de-risk shareholders for between to acquisition, long-term the redevelopment, we're like good So our we

Dave Rodgers

of leasing Great. Is Thanks indicative work today? for big that. buck quarter. economics know is just for Steve, kind then, I isn’t don’t the Paul retail and And or of the that leasing

Steve Riffee

Well, of you leased. think mix at quarter-to-quarter, from look what's to I the have being

and on X-K out And light through And was big already of a needed XX% the in in April or normal. either on explorations, we side explorations to you what focused fourth maybe on LOI are year. of last normal really we've address. factor, quite selling, that the then addressed retail, leases amount we the we've office quarter the of leasing, expiring. still that Quantico lease In office the there that in we're the – put excluding addressed really we’re Just picture almost of we're the those

on that focus has retail been in were the the real year Our on portfolio. this vacancies

a been some them them there little stubborn, of a of out bit while. Some have for

Concord, Randolph already two all Montrose, on terms terms the our at of at you when we've big that, we've executed look and so leasing spaces of And vacancy. of got focusing in in hhgregg done our also what former

that. look knocked today. are can leases that quarter-to-quarter that from we've not little you And have when economics So really at most mix the off a of lease the for bad vacant change And been bit again, longer.

Dave Rodgers

year-to-date? one for Steve, That's issued two any equity more me, have Great. is, helpful. maybe you just or

Steve Riffee

not. have We

Dave Rodgers

guess last you quarter. respect in Okay. on you And of at I point. in sounds saw then But the this it the like, acquisition when moving closed close that the the question, like, you've sounds a the lot pieces fairly dispositions that third just certain sounded you'll it guidance and

which without of variability concerned what's assets would the I by away? So indicating those taking with completely that I that guess you're guess, kind be, guidance

Steve Riffee

a there's we shareholders. the of what a we our dual to the is sense assets most creating along to and trying have quite our the might got most of we've lot And – in modeled terms pretty we've interest if value sell going way for Well, and fund in of frankly, and find match processes combinations deep. – various we're we that makes match interest funding,

a sales of little like we the it's by sales think we've along also will giving to one have further process further or the to of and along would get process something how affect So more – we certainty the sale, we in whether to terms more until in out affecting backdoor not than therefore close And tranche in the going don't want of really execution. in sort timing. turn

Dave Rodgers

Thank that's it, helpful. you. Got

Operator

question. the your Wells a Heck follow-up proceed We from Please have of line do Fargo. with from Blaine

Blaine Heck

Thanks.

the couple a well time. more, I Just have

you marketing So for the And comment on long sales how the you interest Paul, were there? describe process guys how maybe Quantico? out levels you would can and asset

Paul McDermott

at times, than asset it process, because say further we I to move. wanted appropriate the time – a had when feel it non-core we that. really that negotiating decided to we said can't would further the I aspects get that go whole a like been along of we an some to as Blaine, lot right take identified, that before in think leasing we've we've that, Quantico of couple think, as the looking I to market. But want time, I that at monetize asset that a was now to But we're is make still we

Blaine Heck

same-store the there Got it, guess fees. And else term backing benefited same-store driving what Does with was fees. that noted XXX. that fees? Steve, Watergate I the office have out been okay. press Or growth NOI those term something office would from all growth associated release the

Steve Riffee

we I calculation Well, have amount disclose the don’t supplement there. of the did the and term fees that’s in

little quarter. a XXX,XXX So was the it for over

the you the So that’s apologize in in math, but the place. can that all I done why it because without. with one gave and you see would that, wasn’t I disclosure haven’t we do supplements, And

Blaine Heck

It was not.

Steve Riffee

Correct.

Blaine Heck

impact in the And little do you just point? announcement has growth on been a market rental talk you you that Okay. about reached the the this lastly, that HQX It X.X%. did But a at remarks. that quarter page bit then the direct you high, on the growth, that’s drivers year-over-year think guys had of main think rate accelerating of Can awhile. multifamily report and XX. for It’s stats the I

Steve Riffee

still maximizing as terms affect rent I comp, – done counts, based future referenced, of and think, the that We’ve with factored really right revenue occupancy. HQX I just growth of we’ve management job nightly we while team maintaining are cetera. a upon what all to I Paul units that. our traffic in done that’s are think and property going haven’t And we’ve terms et at that optimizing great think in the and each and

had and this has Riverside Wellington. programs, continue and renovation helped So year we they’re at which to also going through

what that’s well. part opportunities portfolio And next so that has helped as as the of well. And, no,

were for we’re they Our renewal well, strong quarter, X%. the as trade-outs

so own it’s We – apartments we just And think all that back housing that to needs affordability. – sector the affordable growing I we think needs.

are And That’s more our demographics so strong. to continue going we to to allocating why multifamily. think we’re be capital very

Blaine Heck

again. thanks right, All

Operator

line your proceed question next Our Guinee with of John question. Stifel. comes with the from Please

John Guinee

Great.

you’re do Okay, Leesburg, think What hey cost Paul is Herndon, thanks. the for Gaithersburg? Manassas, buying product replacement you Germantown,

Paul McDermott

the we’ll XXX on look going a in portfolio probably, cost the a we’re just average. door. think John, locations. door low is I the a say of are it in vary XXX all XXX we’re The We let’s math a our a in because they high the be at probably in costs could of like a – product. door obviously anywhere from, XXX average to XXX XXX on to going and replacement door, in, Well, on I different replacement believe to a on we’re the

John Guinee

you, okay. Got

Quantico day a Is foot, commodity at a DC way was but bought age? time, that getting XX% for a million, of Second, sold $XX $XXX in in your market $XXX occupied. representative at before foot office and conditions this space

Paul McDermott

tertiary I non-core and that we it being believe a do asset. not a that John, is, market kind think I executing is are

But exit at like we’d a non-core I I and to get now up reallocate make asset all for a of has leasing back we trying to think, we’re capital that management where our metric the a asset a to team elsewhere. – us. palatable was move done yeoman's think position that have effort in and

John Guinee

retail, X the being the waiting Page economics are on Why release, just backfilled, is who's of – are not and why economics – spaces out the vacancies into hhgregg press sooner? those a your moving and spaces, on those full two Then of why for curiosity, not year?

Paul McDermott

same a $X $X.XX TI reconfigured. is The are the spaces rent [indiscernible] and the from or rental foot term. the the per brand vary be a to the XX-year It both from commencement of terms upper brands. foot, packages have for start Well, And are to rates multiple date. low a spaces. $X with the furniture both I'll year it’s tenant deals

by bit space. outsized very a think of have the it I We into at looked to that competitive So, but frankly, tenants, higher process. amount paid that probably the quite could was a TIs go that was other John, rent, needed

we moving was with a with executions. and better than us little comfortable offering the market tenant we're So this did feel these bit leasing forward two we

John Guinee

you from selling you're be list. bathwater? And lower take bottom the last Quantico's if on appears dividend your the baby cut throw of going the and sales Why selling question, with not you'll any indication, the be quality Okay. opportunity commentary then out just it the product, to from asset this the to as that

Paul McDermott

that portfolio that's it's I Well, But need think look at rate. remarks monetizing pruning we that can, I our a a beyond I consumers the We're and the I any identified portfolio. we're least I being were from some can't that. CapEx other we out probably you But think why blended help definitely at asset at that the our really that, in that the in point. the our we're in assets worst of portfolio, assets looking, us selling you've don't think we're said, standpoint, mean, on selling comment we assets monetized. larger worst and derisk think the to we of

John Guinee

Great.

Okay. Thank you much. Good quarter. very

Paul McDermott

John. you, Thank

Operator

from question. Michael Our the next Please proceed line of Lewis SunTrust Humphrey. your comes with with question Robinson

Michael Lewis

if you. for the long-term, which to keeping Thank Paul, you between choose? retail office choose your only you portfolio only had or would your

Paul McDermott

I've a new over retail here team this performed here, gotten management better market gotten D.C. well well I considering retail that and has located. think – very retail's our if And conditions, the be look last, the has Today, Great. performed has how has would it is and at given Michael. presented its office you retail generational. probably challenges, bet It's since

Michael Lewis

incentive short-term could Second, changed just FAD? change why that you might targets leasing targets. appropriate instead plan you made why and you it looks of comment I wanted month to targets ask FAD Maybe on to more you, leasing you like think targets be last than

Paul McDermott

mandate XXXX That leasing. to and was board recognized the be board a about XXXX going all that and we're

And the made, and months. and those you Michael. outlined, that significant head in change portfolio with those, We had try some to XX investors, have transparent wanted continue to to other address why XX be leasing embedded from and K some was as that's both our next significant, as and challenges we in we our we we've our highlight on to

Michael Lewis

him? then the you'd Nason from since board. Okay. of until Anything you question on My the saw to from director been are to say He's I lastly just was the board, a He independent replace And then. the going year. Charles Chairman me. lead is composition retiring look last there?

Paul McDermott

can't comment. I really

outstanding years a And Chuck organization. has been did process, this Charles to a to comment quite and mentor leadership frankly, he but every team Board. governance this the about have Nason particular He my in missed. job be here. gave leading He to We XX committee will an virtually is severely great

Michael Lewis

taking for Thanks my Okay. questions.

Paul McDermott

Michael. you, Thank

Operator

question Please question. next of Our with Lucas One. from your comes line proceed the Chris with Capital

Chris Lucas

good guys. Hey, morning

counting particularly are of items, I Just guess I ones I'm guidance sort the a On hope. guys couple that updating, of just initial quick some to I not in but there the you should curious be if assumptions of the same-store you're know other and some G&A of underlying on, that those things. NOI, other to provided related outlined we dispositions initially still that were kinds of portfolio you

Drew Hammond

for the if go actual the going acquisitions factor main confuse don't But counseled et partially asset now reallocation timing due just advised not is updating guidance, to been update to and the guidance the cetera in sales not Chris. and basically and people. that the we've right Well proceeds, us reaffirm you're

the we for dispositions, clear level the have In prior is this in terms to the disposition. guidance been of total addition on of script match think, I funding that

I on of we're forward everything guidance we're looking And So of think would changing in mean if dispositions Quantico results. disposition reported prior the that we've of we're terms same-store I updating saying level not guidance. comprise part the And in our original fact to helps. else.

little quarter. in bit the of our gave of for performance we color terms a So

would been what we example. guided that to So before an have as

Chris Lucas

thought Okay, to is to the what process? your more market a then de-risking of the internal own on Paul generally, value I the relative level is, goal what your it process at dispositions behind sort is or execute to just great. best of related And valuing is versus guess

Paul McDermott

of to much long-term But de-risk play think our trying provide that a in market, individual conjunction we're to longer We've point. to out I objective we're – we with shareholders. its to flow shareholders. cash for create own continue I stable, And think to this first try growth term asset our portfolio, has and Chris we think. take said foremost, continue our before, for the is and the NAV inflection every volatility that long-term

opportunities I do to different we've that. think had

could what in we’ve well has of reallocated minimizing for back feel continuing If is you at done. as capital Maryland reallocate like did the where look can And like and sustained to that's what us big trajectory I getting a that that we suburban we past. higher offers trajectory – some not the that into portfolio do we that’s this of CapExs capital be executions as growth out we're you space the growth better look believe into we had feel done

Chris Lucas

opposed last relates sort And me to any then, venture as this for of outright I any of as structure it up that sales? one could guess joint just in dispositions, to end a chance question the

Paul McDermott

rule Yes look I process if to will it Chris. we'd But out let do the yes, like. like I'm could anything. would that someone looked never assuming and execution structure play up this yes what to see out have WashREIT, beyond with said, you, final to the we happen. and that,

Chris Lucas

Okay. Thank it. I appreciate you.

Operator

no call There back closing to are questions comments. I'd further the in to like management hand for the queue.

Paul McDermott

NAREIT everyone like at in Conference your everyone. you. we to for the thank today. you I forward Again, many And look to afternoon, time of Good would seeing June. Thank

Elme Communities (ELME) 25 Apr 192019 Q1 Earnings call transcript