CXP - Earnings call transcript Q1 2018 | Columbia Property Trust, Inc.

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Operator

Good afternoon and welcome to the Columbia Property Trust First Quarter 2018 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Matt Stover, Director of Finance and Investor Relations. ahead. go Please

Matt Stover

good XXXX and Welcome the to Thank Property afternoon Trust quarter Columbia investor first you everyone. conference call.

with Officer; Vice On and of our Officer; call me team. Nelson members are the management Mills, and Chief other Executive and Jim President Executive senior Fleming, Chief Financial today President

X-K. this and filed quarterly the of website and supplemental Relations results Investor which can Our section afternoon were package SEC on Form with released on our be found our

SEC this We our also with the filed afternoon. XX-Q

that of be website call we’ll also on materially audio prepared regarding in A involve risks results time copy our other remarks for those anticipated, section and the operating and call Additionally, this this will of factors to expected Form providing of shortly differ tomorrow. a cause today’s XXXX replay on statements Statements be number by actual from call results and those Risk our available Factor discussed including the XX-K. future made events after the forward-looking could uncertainties. are an

statements discussed current obligation and update as information as well undertakes conference this us expectations, available time. to made on to Forward-looking beliefs, information no at any assumptions this based call. on are Columbia

call Reconciliations the will over certain we I’ll financial to supplemental call, be Mills. this During found our turn GAAP non-GAAP Nelson to financial discuss financial measures. comparable in can that, measures data. now With

Nelson Mills

great tours many to and Thanks, Matt, and Francisco. York so and New recent to welcome in San see everyone was you It meetings at call. of today’s our property

transformation we’ve We’re accomplished. certainly portfolio excited about the

about the generating, now results energies pleased growth even We’re financial very with we’re we’re the opportunities ahead. and

portfolio, in the real office high-barrier have closer as City, SOMA a than of sector. the position the Francisco, growth gateway niche located with South best to Washington well we an such in of look sub-market of three one Manhattan D.C. Midtown Districts Let’s our Francisco. the markets of Drilling at are further, More San XX% New our York performing and assets in estate current start attractive and and Financial down San portfolios positioning

well other basis substantial have little is amenities growth a Our has and will rate competitive by from attractive months, accommodate nearly lease growth take and landlord in unique NOI we in their drive year, tenants. lease sheet, TAMI past operating now This commence financial can years. exploration for of of signed a We and tenants renovated XX%, we advantage move These free this highlighted a created we’re in few boutique and portfolio the and with another cash dynamic very and a flow XXX located leases efficient that’s over attractive Between space next properties A through as FFO pure-plays. and flexibility. up that and need growth recently dramatic the of number strength. solid have several truly and XXXX. same-store the position our balance next will points which

leasing way. in Our of beginning results to repositioning success quarterly efforts reflect the our substantial and are

FFO lease per West both normalized a share South. in at rental XXX increased South, Avenue ago. GAAP a XX% a rents with Ernst included increased rents. Young XX% XX,XXX-square-foot foot based XXX,XXX & on XX% and leasing $X.XX New York year expansion on lease XXth during During produced success Street Gemini from square diluted and feet with XX,XXX XXX a City cash year, with the leased rates quarter a This $X.XX, in the of square quarter the of first based we up at Midtown We Park

$XXX East Palo XXX San across joint Allianz, in million. Circle second Francisco and interest XX.X% partner Market Street interest University for venture to a During the quarter, we and our This in Alto transaction sold in releasing capital we've properties capital created investible was to to markets. more and we’ve improvements. desirable possible assembled the our us portfolio value attractive spread key and because the in our pricing of The helped

Our markets. months high and able And XXst me our in portfolio Manhattan we’re in Langone range. to our is the growth forward We the more most raise marketing these expecting process in also the the to the the outlook a growth in we’ve moving moment an tell this will derived proceeds Jim ahead. for conclude from at building that Street And But story. assembled $XXX is next embedded for accomplished believe cap in year. we’re and efforts, are efforts to quality XXX the you East a rate in created NYU due few the financial what’s trajectory, still million and net exciting low-Xs leasing as will we've desirable low guidance

see which not foremost, to but going gap is with our close Said it XX.X% is another our the NOI and same-store producing just will is percentage footage way, occupancy of This First to our rent rents, below lease I’ll We’ll of over economic square considerable yet abatements growth burn dramatic and XX.X%. off XX% refer. it. lease as soon.

XXX,XXX are another of positioning market Our nationwide. of and we our XX% from rents to a demonstrated. make feet no this this given consistently quarter to rates perspective of in rental our growth of will XXX,XXX is opportunities. leasing this and next lease current Columbia that place the At square rate, of our rent which brings some a they average mark-to-market opportunity strong is sense that spread as That that have attractive nearly of market Across heavy the and substantial developing most local expire feet on story, growth teams us. element next. much me the doubt year you net the rents our strong vacancy we still have the XX% the nearly pushing But gives a in means. and story lift portfolio, below what tenants most behind I pipeline square lifting have of gets our schedule

time San third purchased we in the set than modernizing of X within lease with was and more in the high-quality rate Street ups example, We’ve years. Francisco’s achieved about of and and an XXXX diverse of Financial XX% District roll California a of the to XXX triple mid XX% at set which quickly revitalizing leased with building, leases have rent the small digit set tenants. roster lease space expire a two-thirds the size to As

portfolio our outline. same-store Before of saying I’ll us cash I’ve handing attractive by opportunities expect over growth be we to growth with our the the summarize XXXX. confidence I’ll into and XX% Jim, Give to the buyers this NOI NYU that to see performance XX% Recognizing continue continuing our shares. hand opportunistic over of to excludes to strong Jim. which we call now year, favorable this along outlook,

Jim Fleming

everyone and with track XXXX you, meet our the outlook results first G&A. remain same-store It’s rest percentage today to Thank about nice strong corporate for Nelson. of our the expectations year. on and growth, a to quarter first quarter NOI and cash We stick for had leased

bit Our and ahead our is FFO as We And raising trending income FFO expectations. for well our we’re growth net place our a of original peers. operating guidance a both expectations FFO result, ahead us that. believe of our to

solid strong is sheet. foundation with the Our balance

sources. .We’re to and leased years with flow very Our down cash this foundation of on was has build next XX.X% limited growth, robust for excited portfolio multiple couple the rollover which

at economic that District another in result significant and year ahead and will Nelson to our occupancy XX% we in to Market economic of properties available Almost recent the during XX acquired year-end. Francisco, occupancy rising gap the in between also spread, already our of have this The versus growth full has we a is cash close significant year will reliable have South leasing from And D.C. Square the signed. XXX,XXX New to the field. will by the Midtown through tenant Currently around percentage leases of two Washington our Bay $XX created last lease, we quarter Boston closing growth this balance this York, mentioned, quarter This the October been to First, of SOMA annualized leasing success renovated a we with million of impact. recently most add square as and we percentage. that gap Chelsea our lease second progress first lease a point very expect and buildings in to Back San in buildings Financial less maximize space feet and all work have they year of but of contribute as space do XX% the

we feet given welcome have addition, which In the this of year and about potential. mark-to-market leases we next, XXX,XXX expiring square

more than line sheet strengthened the and to across going used loan quarter transaction billion and referenced unencumbered just entire balance pay ended of further million, of Nelson $XXX two Our enhancing We yield Allianz forward. mostly Bridge will our which with at flexibility quarter The the portfolio. credit. our our during properties down $X the mortgages

of Our assets net had a rate years from on floating debt XX% debt. on debt of weighted X.X a a March X.X maturity as year-end. down gross at rate of fixed stood at and And XX% years average we

This authorization. us to and stock times leverage cash strong allowed the and ratio a described. goals in sheet to current with end the debt have flows EBITDA our under range, of we still million quarter we balance to $XXX consistent in expect $XX worth We our X year million available that purchase below strong benefiting our the from

FFO the high increase Turning a to guidance end XX% new which of we’re to an low our XXXX. a both $X.XX of to our a updated year, expectations XX% to of for be will normalized the over $X.XX, raising and range

an expect will by We increase even percentage. AFFO greater

XX%, lease of percentage to expect year XX to to full million continue same corporate of growth the to and year-end we million. of the XX store For XX% XX% NOI G&A XX%,

open as of year this just assumed summary, I we And pleased the proud the estimated that, quarter’s XXX to weighted With please updating repurchases, the building share count you our for questions. for numbers and the of because of Langone performance, million. in outlook In to average New these of NYU further we’re York year forward the our the progresses. call share operator, sale looking with reduced All shared

Operator

question-and-answer Capital from first begin with now go We’ll question the Kim BMO Please Instructions] session. ahead. Markets. comes The [Operator John

John Kim

sales update of all? on an to provide XXX the if And sale progress impact you the the at on XXst Pfizer’s headquarters decision wonder, East or price Street? I their had nearby any Can sell

Nelson Mills

well, deal indication this course we for of next and good and very we're the long-term so pretty and know now lease going So, months four -- said is we your in call expecting with interest, particular some we probably. we this hopefully as have months, is was one this to to have NYU XXX you range Pricing low of field the in are couple the market, nice done outpacing so credit, you clear results. There as and mentioned few low range, process different some Langone’s other of million expected very the net buyers the obviously pricing, in coming that’s narrowing but been one think some as get of XXX is, situation the for products answer that deal, in cap in marketing revenue it terms and a competing unique basically bumps question. the

know don’t I direct we’ve that So, seen the impact.

on any in months, seen good the biggest the think but I impact last we the price probably last from a in We’ve a expected. rate interest bit is that months several the over few just if impact little has range lifts. still been

John Kim

proceeds? currently you do of What use And sale proceeds? with thinking the what you are

Jim Fleming

property, sell it, In pay we reinvest assuming But we’re assuming the our guidance, immediate we’ll down we it that half what Jim. won’t thirds proceeds debt. two of and be that of have except will some of some this to we’re is This -- an really We to repurchases that sell something there’ll use have is also at level debt, but buy do to the the estate. anything expecting that year. the share we'll this today. all And right, later point to don’t rest and the to pay of we’re real some then of some more another work this space use in pricing down downtime were

John Kim

construction from given high Avenue, costs the terms than have just portfolio ambitious be rate much the just your at plan spend today. impacted a your in asset? on this capital, to have Madison And give also provide you spend would project if all? How leased of At otherwise? Can little bit you you you updated can XXX more

Nelson Mills

Yes.

John. thanks So,

in for Just required back fall If ground the expired, it this land land expected on in remind leased the as the the is the everybody, we property back million. ground January. lease, XX acquired in is

It’s we now the in been on simple. very So several property. a XXX-year not really property, maintained decades. It it’s hasn't

hope a it's substantial So, on which capital. required a of we soon. options, decision of We're a to amount exploring make couple

full less single, probably delivered of couple shell of the building property. bit scenario, more a users, get we a in condition have they spend on with. little We little discussions that little We were less too. probably In a a in rate and

probably is up around very think, quite small And first and well on and we able those more so the project. or feel that about. give be alternatives in quarter, other Either lease pretty We can build capital in it's that still and good to rents we it are to the one. holding the $X,XXX update. alternatives, all-in in The the project. do maybe scenario, I think it we’ll in next process we well. be spec our costs, the basis But early But will in It’s a submarkets think the it. less specific

John Kim

that be a it’s looking timing, XXXX Is correct? delivery. as as But to far like

Nelson Mills

Yes.

with later right really of in ’XX that’s or terms probably flows, until forecast not ’XX taking your think concession. I

a user, mid-XX but some before and earlier that. it’s I sooner there probably quite that any would than flow count get cash I’d be in cash way. rent, full could say, free meaningful I any it wouldn’t bit building earlier. than to mean, flows a get we’ll Now, But to be

John Kim

the assets on And you acquire you you in Can about given leasing Okay. more about to markets in talk strong potential Cal. the those the [indiscernible] question final including my pricing? is talk XXX had then market

Nelson Mills

Sure, we'd do love it. to

SOMA very, you the I into District. active. market, for -- Our Districts, look can particularly but very expect maintain team is in We very where competitive Financial the, it’s as would that

look few a So, the properties in quarters. last few at we

We now, is very a there competition out There things continue but of heavy. too. couple is

at makes win sense. price hard a continue it’s difficult that to a we or to So, a but deal, to press that try do

market trying, So, us pricing others and to Those for and buildings keep continue the ferry look at. Cal work didn’t we at, it. sense are something we at in XX recently we’ll look some we’ll in they’re at coming make the but the market

Operator

with next The question Sheila ahead. comes McGrath Please go Evercore. from

Sheila McGrath

back much initiated the since back that bought how is you’ve remind how the share in shares is left brought You program? Can buyback on quarter. us you total in program? And much you

Jim Fleming

We so have the there in program. last bought I'd in just under total before, million we I that, to This had feel it’s just fine more we million million exactly, check period the and think reloaded current the restarted or the we is five the didn’t plus some six worked a than XXX fourth we did about program $XXX XXX year We liquidity. million year, the we quarter, last or over left, XX program a a buy a the Jim. but periods when have quarters. were some we program we did year and go back because bought numbers

and some a bit obviously the we’ve attractive pricing but And and we and quarter been got it’s authorization. more is very on left so, on off, bought this plenty the

Sheila McGrath

a driven the on drivers You more us you give it the were also NOI, just insight little drivers? on count the mention was the there? share did can but expense revisions, then And what guidance on

Nelson Mills

hard down don't term spent, money dilution accretive pay the It this some half was bit we pay of [indiscernible] portfolio. have our that. sell analyst bit and we use that we that immediate a of until was prevent of We a quarter So into there’ll provide do don’t longer we savings gets then the extent that -- to as little assuming a of new be expect we they’ll reinvested. we money leasing, for across and proceeds. say on XXX, in of but think invest a I get won't in we can’t will very money because that the the for did little -- to there’ve details strong, to an think some us terms two-third expense if that rest been we I the or debt debt. of down really expectations and when of savings, can’t that be to and pullback acquisition, some We some have the FFO result

math We out interest be well January. do market we of bit that, year. move may then that’s rates a to to But the going one of low little And a bit will later rate. us. after little that once sold month think think up know is XX% given don’t of We didn’t that forward. for Francisco cap the of work but San what the I tell properties will two very this one owning month we the really down XX.X% one have Allianz, the going

strong leasing us that have quarter, for you some we leases. we we a certainty to dates but some about now So got commencement have more the forward, take and on going done got

moving some we that's what feel range we so, repositioning taking account into And up did comfortable think. and the even

Sheila McGrath

activity, One space there? Is And Market at last more building. Avenue question Square? then leasing south leasing Park on there any update to activity on lease

Nelson Mills

you if South, ago. there’s three moving lot space. years were property we Suisse acquired recall, they about of XXX occupied Avenue XX Credit knew Park that at floors So, out. a We

of the -- floors have released those of them. XX XX, two floor have available XX expected. There’s XX Of become Xth rolled and it since been we’ve we’ve floor. the XXth the as So, remaining, owned now

can be the We talk later space on will which some about favorable could have retail be -- activity that on. also which we

achieving. the We’ve Market gone, to those the even achieving we at term. two the likely to floors is at the in between very that balance strike rate try strike few possibly that left Square, rates, so gone Square tenants. probably to property Market done in similar been continue really balance, existing well. go. next Again, So, months, it’s it's we’ll to We get or think

other in at there that the quite we’ve we’ve holding you if up and out most well know, got year. terms. of about and same of and to rate competing But We’re time, vacancy XX% product terms new committed knocking with trophy this

bit in aggressive of know tenants flexible work as you some larger to but done, terms in of of trying to smaller tenants. leasing we we’ve again the We've those. the lobbies the tenants some law is firms team and So just building to of continue and these the lot of and missed a type most being more a tend be win that

maintaining So that year to while still this we’re of least XX% knock-up return. determine bottom-line, at any vacancy, way to rate good half

it’s situation, lot manageable a a new it’s as we’ve of some market get So great and with prospects. in supply But got terrific lot great a looks to of a property you competition know. that

Operator

The next from with Please go [Adam comes Gabowski] Stanley. Morgan question ahead.

Unidentified Analyst

This is situation the weeks Adam There news just have wondering you for I’m if came you commentary on Woods. few update Cranberry wondering if out with from could on Energy I’m a the Westinghouse Vikram. us some was any there? Secretary. at just that additional ago

Jim Fleming

there Hi on, know We encouraged Adam, the Westinghouse Jim. the to but to have of number be conversations track what’s is this where tell with And with I appears inside you folks. that we’re we've with Brookfield exactly going. really will this don’t had way very going with along

didn’t approved know marketed of and we by on process as the that Reorganization you approved extend Bankruptcy extended be X of Court Fairly recently lease to Brookfield know, the lease And recently, agreed Company XX was you Brookfield the fairly with as As the years Bankruptcy during buyer sales was and Court. years. after and that Plan the bankruptcy approved. from was

are Regulatory Commission place. two get at Bankruptcy Investment, outside then Nuclear Court are Courts I’ll happen All need in U.S. is that strategic There name in and on so approvals sales We and pending, seems they been. told Those a least we Foreign of the on be third Commission in have know later that are the that, to that of the would you on little be to quarter, close possibly need happen, that to to track. process. than expect those it could Brookfield, it said bit assets in but Bankruptcy

it's positive to are meaningful we’re are there going. that direction. behind process that operational Obviously, where side good a whole that sponsor be business encouraged it, and in on going the a cash So in flows the seems so

Operator

Please The Mitch Instructions] next Germain question Securities. go comes ahead. from with [Operator JMP

Mitch Germain

down? just it’s a that rest like slow Back one of be really It’s to not going like of that, takes It's Nelson. to seems to Market any this just be really lobby tenant grind. Square, property It going small firms. kind

Nelson Mills

and Well, take one the all building. most don’t ninth and they probably want not available, one We do rest down. floor tenant, the the have of eight

have and there do we available then there. other some big space couple of So, is space smaller blocks a

We are trying.

block, to lot is to a XX we little trying bigger through new pretty because a of are We’re leases in to working of type X.X very be but strike We’ve But couple these that a have side. It’s near firm. think be as hard balance improves law user a heat going misses, on said, that to strong had that going wildly, full do to year next I demand we supply. get and market a floor, a market couple all tend to XX little the it’s years. take probably

as we at and same that we’ve that meet our to time market the user, So, cheat foot we’re time hoping successful we’re bigger future little it's users don't one but to than Probably at. the vacancy. not XX,XXX something typical in so race to a big want for X,XXX said, here. the ourselves But

Mitch Germain

for I core is seems What’s it this address a down to a mean candidate strategy probably guys not the road? potential market it’s point. like that Boston, the for you sales obviously Wanted at there,

Nelson Mills

improvements. Yes, the up brought so the have We’ve coffee nice and terrific top asset building some we and done done lobbying two are in a Bay, shows Back what’s very even We the available. one do retail Huntington, we’ve XXX other the floors it plus floor a well, there, shop. entrance,

activity some have do there. very decent So it shows well. We

right a prospects We’re working couple of now. through

leased is that’s done in that’s Bay Bay, done. -- the hopeful softness and Boston the supply happening, well, been Back months. next that there’s we’re get several has but has we overall Back There the in getting in So absorbent some been the

good looks rates. building at lease So great. get We’ll that is improving, market the

are Boston, is focused only the but and San Boston property DC. and in market, Francisco Manhattan, our terms really have we the we is a on of core Boston In three in terrific markets, strategy

we would and let's So it get leased about lot a get the of sell do Possibly, the do -- some get enquiries we we'll building. we property?

price, goes. but think we it that don’t for a So any urgent sell profit, plans no see Nothing at in could where Boston. doubt we that a we’ll have I but current good

Mitch Germain

And a remind me the the that’s correct? -- availability on assuming I higher floorage was

Nelson Mills

sixth is, top and the It two floors floor.

Mitch Germain

Seems is and this gone point, is like Shuman it finally that longer resolved be will being no at part of portfolio? the

Nelson Mills

it. really and it back lender, And some the that’s you quite Mitch, of some That’s one to ago been the it’s next tenant non-recourse and process it but that a sold haven’t in it loan -- But to you ended process focused the And no been to right, it’s really as initiated because headquarters lease time we Suburban that non-traded from on know of sell the assets we longer. may to rest was back, renewed, CMBS. the quarter, after there. cash legacy for loan, effect. the we Chicago mature, really sitting put into course just we've and Chicago had the that We tenant but REIT. the slow assets, weren’t the no time and hadn’t property was was able given finally Suburban -- because get going was agonizingly no of know the we gone the was as It’s that office and

Mitch Germain

accounting we say I that should know there any about the Jim fact of associated no that sort to is was was longer? with going

Jim Fleming

at had it’s not that a be and to Sure will down be going Mitch, that, it been something there’s it’s a operate actually bit quarter. gain won’t that will of recognizing depreciated to second gain. and generate proposes meaningful. be But think It you all I going really

Operator

like This question-and-answer session. closing conference to back for any concludes turn Mills remarks. our over to Nelson I the would

Nelson Mills

you you before. particularly today the all. again if Thank thank in appreciate to you spending not seeing all forward look June, in NAREIT soon and for much. We Well, really questions. we And you very on time

Operator

is conference for you attending Thank today’s The now concluded. presentation.

now disconnect. may You

Columbia Property Trust (CXP) 26 Apr 182018 Q1 Earnings call transcript