CXP - Earnings call transcript Q1 2019 | Columbia Property Trust, Inc.

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Operator

Good afternoon and welcome to the Columbia Property Trust First Quarter 2019 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 Investor Relations. sir. ahead go Please

Matt Stover

and investor the conference everyone Columbia quarter Property Trust call. welcome afternoon first to XXXX Good

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

XX-Q factors Our this the We site Statements Web tomorrow. cause and differ our to file with from afternoon the quarterly forward-looking time can X-K. Form package results which with that our section actual results and those found call section future materially on those discussed XXXX afternoon our call our audio anticipated made factor this XX-K. of of regarding on this released SEC risk statements filed Form expected uncertainties. of be replay by the operating in could will on today's of and the involve in and supplemental results Investor SEC are events Relations risks including other on number available be an this A

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

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

Nelson Mills

opportunities on shareholders. value reflect call. continuing the capitalizing welcome generate assembled, the and start everyone our We've and shareholder first the Matt for brand also to create creating we've portfolio value. quest our Columbia's a you, results new while had year to Thank interactive to to quarter We're strong

average. vacancy enhanced sector term. more average have of XX% recent we what across limited the with by and leased now we do physical portfolio with on renovations than further below space best Though office of is remaining six positioned Our location lease attractive near-term and We're and expiration, well is amenities. outstanding premier have entire market the one years

of So, spreads our continue. leasing we trend to expect strong

to unique sets a talented focus as most creation our some well-positioned of our each environments embedded on commitment of neighborhoods. disciplined a investment the with market focused performance of gateway attracted produced sector. tenants to boutique motivated highly that have the selected that We market Most in office exciting seeking substantial team created value approach results with and on importantly, and tenants have both and asset creation a performance us these lease that growth, of produce office shareholders. This value pipeline modernize for office and in a with leading strategy our stabilized incoming in value-add We're creating a offers apart record new opportunities investors space build our entire growth. our is top and strongest unique estate the of financial and in have compelling value producing rent. market, platform of reliable combination, some real We've to for markets

operating income net X.X%. During cash grew our the XXXX, of quarter first same-store

cash during initial GAAP We in feet roll with another leased strong market. a of per on and FFO York for and basis. and continued full we the our out normalized largest We leased XX,XXX leasing raising New Today also basis our we're of has square guidance overall on spreads XX.X% and XX.X% generated trend our XX% FFO. leased share are quarter XX% of $X.XX year

attractive in fewer, its focus capital This roster first a term. million redeploy the allowing Subsequent cash five Three it on an projects and end, another example into proceeds, for tenant at our way we us lease benefits creation When on has ownership. relative occupancy. Street sell and net [ph] drive tenants. Market below we efforts a our to with in focus in we achieving return Central this [reset] recent embedded of we Atlanta. excellent the created maximize value. in class value fundamentals approached accommodate come to value DC. XXX% can quarter and creation and to to that years I'd of our the the property creating the of for Main have to which improvements of is property Columbia. nearly XX% of a successfully rates but value and as core selective financial probably our value growth best expiration XX% a flow to $XXX property highlight the basis years in on combined will helped generated in this In of our highlight and undertook drive These nearly XXXX at Parkway helped South of Submarket to roll average have This higher benefits market leases resulted rents market. of XX% The us tenants increase like more at opportunities strong We and the portfolio. results we including Atlantis also with York of that New Francisco acquired us We vibrant strong leases quality creation success. investor to latest market larger We our sale of set affirm those in XXX in capital with repositioning XX% examples One property. the during in building estimate other location announced presentation, San Perimeter these we cost Glenlake to repositioned lease the

this process We will attractive on. replicate most taken ever going projects of the we've continue some forward with to

the about principle. years, and XXX a capital Once hear will disciplined we project a much to allocating this over remain take Broadway. you'll guiding in demonstrated is approach quarters As that such coming more

repositioning this the Avenue to venture We office is matters and and we tight the now Once a walk concentrated acquire take desirable terms XXX these the marketing tenant transit office TriBeCa. World and Strategy. from and just a building great our and Church announced upon at Normandy to sub-market. larger Park partner very options in Washington like portfolio of Manhattan another Headquarter. Broadway of market office new for foot Main terrific opened in result. all to immune The project development Francisco of to remains rents story small our project for as market our underserved looking which second multiple But begun be in than our an terrific limited and and progress and Square California. New compelling meet the is XXX substantial there a recently XXX on York San for below it absorbed. strong new XX-storey on both there of success to media especially new short the the York we're of with result strategy take summer, current City. availability Center Street, of agreement South, a in center boutique New office We're will the creative Midtown landlord's New on our portfolio. Church tenants improve Manhattan and we provide We're XX.X% broader With property Avenue Park is of joint while XXX improvements yet strong, to our have demand The to quick we'll development XXX Our excited success with and are three located, recent tenants. subway recently update one York space forces, there New become Quality York that that is real New our It's estate in building success are as as be we yielding we've neighborhoods. XXX probably effect differentiated real projects. a generated that successful across our transformative development. for in tenant to the a in location City's demand great I'd properties with have construction on how which a We've sharing illustrates opportunity and heels a still create South, details will property. Portfolio very This York. complete of returns to Normandy. positioned any with vacate Trade confident three-focused make highest market, rewarded. XXX stations results the In supply It ideal supply a DC this a on the we're is and more with to and amenity to will we leasing and in success We're demand more desirable QX. gathered, most transformation TriBeCa fit well we ability that's is and become Columbian build forward doing TriBeCa continues Park look office eighth grow is hub leased XXX,XXX-square building estate fintech of announcement midsize of DC ever currently heart space had at limited not Columbia's New South In caliber you

rosters cultivation key. been also intentional Our tenant of has top

For world-class value Fortune affairs These in office targeting community government and XXX snowball. lobbyists added example, been of and company. to momentum the to other at amenities our proximity Market this and the tenants Square Hill continues to we've with have diligent very

per Fortune XXX absorption outperforming tenants rents while Square we're of Now nearly where $XX full-service XX pushing net foot on basis. a half roughly to our in Market companies in and

Columbia same-store Looking relentless to while believe over highly to portfolio. existing growth finding well leading value long-term. due portfolio shareholder allow enhance NOOI This create the desirable opportunities in exceptionally substantial the and should focus we producing the to on sector us near-term ahead is continue continuing to positioned our new

believe expected we'll Lindbergh just in one and two in awarded are into been this buyer the opportunities growth exit Atlanta proceeds to a have to reinvest Center non-core Atlanta our optimize I for strive a would has in want and unique deliver NOI ever our for to and One we in for our interim. target creativity build remaining buildings Trust generating now Property work, to to in bankruptcy in position asset. and remaining with longer market. holding Westinghouse best a emerged we Pittsburgh, time We're some higher on buyer importantly, the has been markets. substantial new options closing will caused that And suspend among value Pittsburgh, We our has exploring portion value leasing maximize through With from wasting increase of leasing this an out proceeds through and They process for a order ownership we campus some in the the the decided what years marketing and to our Columbia our years trepidation later campus Brookfield. the today. entire that have under options team Westinghouse to collect it working bit are portfolio to in the and restructured is to efforts we'll nearly with this investors property quarter. working of of diligence thank In lease, XX hard being. attractive on dedication potential their recently by for come.

enables within detail and to opportunities have new seek Jim We our provide that, opportunities updated discuss and outlook growth With further enhance for the turn well financial immediate to a year. our the us into ample results it future. to diligently healthy I'll value over more position reach that shareholder in

Jim Fleming

is you guidance This you, which Thank us. growth net same-store for X% at us today. glad to of to Columbia. X.X% for the start XX%. reported of The thanks a can four-year income off strong we year within and is joining be Nelson, operating range with first everyone quarter our afternoon We're

which normalized also We of reported in line share, with $X.XX expectations. was per also FFO

our square leasing couple our XX,XXX years, feet. was for XX.X% next naturally activity at of and limited the rollover already rate high-leased of Given our modest

spreads quite on As Nelson basis. leasing robust nearly a XX% XX% basis cash were more mentioned a on our than and GAAP at

of Our March the two to estate we and with debt of assets next EBITDA debt XX.X% strong net sheet to no remains debt gross and real years. balance net adjusted for ended maturities X.Xx,

to per share still current has recent to strengthened further our under in mortgage both paid more venture. million dividend but our have resources available our development The us in than and the year quarterly provides share going our debt also of Glenlake opportunistic We authorization. repurchases which sale of only two attractive and balance with are continue $XXX with and of buyback forward. sheet we redevelopment the allows properties of quarter ended $X and We a joint properties billion unencumbered only $X.XX invest not properties projects,

Turning per raising to share. range high-end to the the for remainder both FFO range outlook $X.XX to our low of and our XXXX, of $X.XX by normalized a we're $X.XX new

XX%, year-end including D&A $XX million of to unchanged X% NOI remain XX%, percentage of ranges to corporate of lease to million. same-store outlook new other growth Our cash expense $XX XX%

on our cash projected last last NOI mentioned XX% [XX%] same-store year's growth [ph] in of I is nearly X% to growth. quarter As top

will in the as off again years up growth ever questions. with take opportunities over strong In ahead as opportunities. is continue due We accomplishments solid that roll to And Nelson year and in leasing your now the and digits growth you been with will value with see forward our that, XXXX to teams expect look We closing, for embedded I high experienced as portfolio to side and strongest the start single well our a to happy it's keeping lease Columbia creation with the our growth corporate each and progresses. posted of markets. to the year on be

Operator

of our first will ISI. come McGrath the now And Sheila will question We question-and-answer from Instructions] [Operator Evercore session. begin

Sheila McGrath

afternoon. the sale the cap detail rate expectations? bit Glenlake, to interest price Good of you compared the a Could us the type on give more and your of level, Yes. little buyers' how

Jim Fleming

Sure, Sheila. Hi. This is Nelson.

lot property. close So, including initial in team of process it and for great to a are was wide what Pricing ran that very a buyers in interest traded what very mid range. cap And reason. REITs. lot a were. get it's a lot get of submarket of public a the came that expectations process. in core you other we We Kevin about our stabilized it And of help expected CB. six obviously, our of fully with from had it a Hoover obviously range marketed And

about maybe it's mid-to-high we expected. what So rate cap and six

So, we've of so work pleased done very say result. were the leasing over couple of lot was overall and the process a the lot in years I with and great would that a of course last that with of property combination that we --

Sheila McGrath

one if missed is And leasing that was Was But, then, driving that? spreads. if primary this. particular great. – sorry, Okay, you what the there drivers large I the could of lease

Jim Fleming

This because don't Pretty don't we so Sheila. of and have this just have not Jim. is lot of -- Hey, leasing a vacancy, low quarter volume didn't we a lot roll obviously size few XXX XXX there guess, leases South it at a was but New a was sample San small primarily Avenue it Main. at were in and really Park Francisco I in York

Sheila McGrath

And last great. Okay, question.

that gut detail just a your a rehab at Church vision little is value-add? us what Street. Just curious Is future more that or full on give bit

Jim Fleming

Sure, Sheila.

is going will bones, But renovation. some risk in our end systems, mechanicals, there it'll a be gut of yes, new building expectation partner new located likelihood, would our Well with in So commensurate rents think leaning. our a achieve through that. hundred the with full the property, course, but I paid good all spend much the be we're Normandy. -- all we're that of $XXX that details likelihood, finished. couple of to be has we we've foot We to reported And almost we'll plus been expect by dollars again, potentially million for a the have a $XXXX foot that time of

few to more next yes, on in that quarters. come So the

We not in. more transaction and that the that late on summer, to we'll fall have be early happen closed provide glad details should

Sheila McGrath

Thank Great. you.

Jim Fleming

you. Thank

Operator

The Kim next question come BMO will of Markets. from Capital John

John Kim

you. Thank

So just the of to really sale? delay Pittsburgh sale the upgrade guidance clarify, for year based the and and of the the on the was timing

Jim Fleming

what and it lot like terms quarter there new explain where our say, potential do John. to are of share number best investments, buybacks that. in asset we're we of variables potential to out. would we things want give that We're just was come of yes, think is just going knowing in I estimate I we Hey, a sales, This each but Jim. quarter to and did last to try you the

Westinghouse call. months our since significant We Lindbergh plan. really say on it's the think expected. little with that only some according chalk The change we delayed sort something call to to couple moved be now. It's transaction still we timing. it I'd Glenlake to later process, of I'd on that on thing happens move And period when our would be then, wanted planned But got file thing say the Westinghouse. is till we around could. you so, up done view short as changed in is what the to only we course that more of to we still been from side could ultimately transaction depending would it we'll we that it's we that's decisions And and see we've a a that bit that will just final what happens the going if best sell do last really move a ahead biggest year. I tried of last that the but no up it's in say property, execution

John Kim

and $XXX or? were $XXX Glenlake, Westinghouse Lindbergh Is I expected get last assets, million to case And that you proceeds. call saying that between think you to the still the million in

Jim Fleming

Yes. -- and think thing. sell is get hoped. still at we pricing we out right maximize didn't properties. even to Westinghouse We're We're That to the though between actually chose trying really, the not trying come we to to still do now the really the even it's if what We'd believe had we fives mid three quite value. just probably that

each price Glenlake in about that's think So, start. to we for telegraphed good off a I XXX think proceeds three three. of And the of the for than and less that a little the -- net each range we same were XXX

John Kim

to that get you is your price see would don't Lindbergh what on want? And to hold appetite the you if you

Nelson Mills

longer lift, it's to discussed. good play. value term for the like for opportunity It's heavy a a reasons but we sell we'd optimistic it's the Well, buyer, it add,

of -- So, it's core our market, in markets. it's our not we not one would

to And pricing. we sale the with off our on and it's But, hold it need get move Westinghouse, we or pricing. expect pricing we get demonstrated So, don't get we'd to we to much closed. do to on. we get That our like think that we'll need to like very said, we'll if do

but So, prefer on to close. deliver to that's expectation close, we will And we the see need is we we'll there. value

John Kim

Okay. quarter, XXX an and that? another or At this was to West occupancy expiration reason due the for was that leasing XXrd,

Jim Fleming

Yes. that I tenant a was -- think floor That small there was a expired. half a

there little And bit York, of have vacancy, a so New all but little very vacancy little we a of we course of have bit throughout now.

John Kim

And what is that on would say the you re-leasing space? mark-to-market

Jim Fleming

look bought the but in I'd that that building lease, one was I when at this bit one go a John. little and there mark-to-market, particular to a we have look but have was at back and place, to positive of

John Kim

Sure.

Nelson Mills

exact John. don't the number I remember

I the tech when Mongo building one. Tammy building the one that regional was a as the think reconfigured tenants re-leased first the was of Blackstone -- building,

And a it's been so, while.

So.

there's there, roll a small think but it's I up relatively a [indiscernible].

John Kim

submarket And describe Manhattan. it's in tenants may of Broadway, then where XXX asset? that the a you Okay. at rents to you office for that building that attracted Can unique see sort and of just be type

Nelson Mills

Sure.

a also, at and space is any feet, XXth said you're unique design, So, just Broadway, beautiful with Corner it's not there that of as really live, terrific just location, comes play Square there. XXX,XXX you modern location. And really obviously, very new the unique for the [ph] Park that. and boutique there's new opportunity, competition right below Union work, Yes, [NYU] transportation just village

some very about the optimistic about there. things project, great we're excited achieving very So,

of probably throughout of asking We're the But a bit a ask, than that our lookers. interest. getting building better we're certain the XXX having spaces. rents lot on for average Our a lot range that's are in

and at there Avenue have base of and stop visit. now Park to marketing open We encouraging one you retail XXX South our a by center

early to few again rents. So, helpful those and quarters, we're more in next that be very fairly come It's that on I'm sure. will still achieving

John Kim

noticed, on kind is per or that? I to your XXX, dipped And is and reason or for weather due XXX spend that seasonality of this CapEx quarter for it the quarter, weather

Jim Fleming

shows invest about to we're how invested going we've much so the John schedule that how future? far the talking and in You're much

John Kim

XX. Page Exactly.

Jim Fleming

Oh. XX. at Page I'm looking

So Page XX…

Nelson Mills

you steam building give and Jim So, on that, update, building XXX pretty John, rework the there. general extensive just Madison, some looking at out they're is full I'll a renovations while is doing

vertical so quick on And And started the coming there. raised delivery along. existing Broadway, building that's XXX recently date that. Pretty on constructions and we

third expect quarter property completed We XXXX. late or to that by of be by fall

schedule well. on and everything's So, going

through In model, the terms flow Jim of the what? cash cash flowing

Jim Fleming

capital work projects, of both But lumpy how the be building spent that bulk it It remaining thing -- once bit Page capital looking be stand So, rework, shows from we right, what What gets XX the on XX, needs be John the much lumpy previous going and has you had the the to which where with for same it be spent to only the And capital XXX you're been capital more Broadway. is picture, quarter. to by Really for Page you when reimburse the spend at you're those down XXX to where depending all quarter. was would we'll refer on far to that is at and going during little capital done go. capital is will XXX I then, them. been -- stands what the that gives is shows for full where to projects. so the is which you advanced the the be needs true a

So, will start. ready but just We're we're that's along XXX starting construction that's -- ramp continue that'll the be building very and getting end, the to going lumpy so up. to at

John Kim

Thank Okay. you.

Jim Fleming

Thanks.

Nelson Mills

Thanks John.

Operator

comes Mitch Germain Securities. question next The of JMP from

Nelson Mills

Mitch. Hi,

Mitch Germain

you? are How guys. Hey,

Nelson Mills

Great.

Mitch Germain

that the correct? still of Church, economics XXX venture are under consideration, joint

Nelson Mills

The details, under I mean contract. obviously we're

so, we thorough bit So, to have good yes, to But we've diligence far for to our We design have think still is building how exactly cost a with that the and we exploring and and what project. the some pretty expectations project. going a architectural work we're with are marrying we the do. options go more underwriting what feel complete done on

Mitch Germain

investment that in stake still percentage your undetermined, But is right?

Nelson Mills

Well, that part, yes.

sharing we're together partnership and the on and all in effectively running and rest with a GP the Normandy. today -- that. these interest. we have And we're We're risk So, project sharing

limited If opportunity some That's as a interest But there'll syndicate interested capital that. the partner. confident we'll have that and to potential have some that be option to an we're of doing We in yet. do that that in we decided that majority the of project. so, yet term. likely has elect be that not not we'll been you're hasn't the right to capital But part

Mitch Germain

to single obviously, Madison, appear an to that be these ones that a the Got candidate tenant could down business. potentially XXX are to longer assets regard be that you. With asset your no sell core Is road?

Nelson Mills

Yes.

that's was from economic possibility. think I multi-tenants we discussions, most and for and compelling prior calls build prior the a and that us and so to you'll our rework try the discussed Mitch, that recall to that resale always risk gave all original lease intention it the to was the result and even reasons rest. forth considering out past, in

going have feel that tenant Midtown in well focus. other going which really South, be sell nice is on is But, certainly fully cost well. a our you're And we decision. property is right, yield to and focus. good we So, and a It's the it's hold but, it single could about it as the really and could to property hand, road. a we our not down renovated located beautiful on But

in that's burn short-term, and settle sure. be term the for option to consider we'll we of down road. renovated the And near to down In in then thing that the road. at let concessions we an let that's want the would kind it. rework yes, least before But so, But, consider So the building and nothing. something and

Mitch Germain

completely just at I to Pittsburgh in clarify want me for it was there one or Last is eliminated timeframe? Great. a later sale guidance, the

Jim Fleming

to we really provide a that guidance Mitch, number try scenarios. really covers of

flexibility. try but number of scenario, that kind to year. one I would pretty just it's as are year. variables, think would it's still easy unlikely say in But this it's other still this we sell some leave to of the early Pittsburgh ourselves of we think I there a

And leave number for of so, possibilities. tried ourselves a different we've to room some

Nelson Mills

Mitch, I right. agree That $X.XX. only share, $X.XX Mitch. bit than moved little We is change a more you a with

we going the some there. trying other year things of on as -- So, I early but, parts and That's be are to And guess look -- can best. it's we're of there one the we the to just not trying remainder be direct in year. that's be not the at moving

Mitch Germain

I that. you. appreciate Thank

Nelson Mills

Thanks.

Operator

And Gabalski Stanley. question from of next Adam the Morgan comes

Adam Gabalski

for taking little I the for Hey, a XXXX. guys. same-store Thanks question. about bit wanted talk just the trajectory to

Just more in you XQ of is guidance kind of rest given from Can the within XX to quarter, if moving 'XX talk there's this a X.X if which the XXXX bit going little going expected of XXXX range. inter-quarter trajectory little of a volatility and kind down you more the of for north to any be into be sort the or volatility and to normalized forward? bit about

Jim Fleming

Sure, Adam.

be renewed, It assets leasing couple it's it assets, legacy re-leased. going going what here. So, the I to those some and legacy just past. a if on very renewed and of XX% the get see this of mean If two and pretty depends you'll even that than that's is And very past on strong there up really half they've could the a They've all those be are a continue been bumpy. One leases spreads down. more years. seen been just for But, in we've it's on things And quarter. driving are average what's to be positive or volatile they're because this.

last of same-store XX% of terms we we've In NOI a of to year. shy XX% given were I X% this just as year, think range the

to little really just probably zip roll. a haven't starting function we've same pay a next bit additional next code But that a And commencing already We of of and that's range but it's year. signed in for next somewhere year, commencing think given that precise we year leases leases rent. really and into

good rent of drives commencements, So, that what is the we've free bit really burns from got visibility, once a off. quarter-to-quarter pretty lease but

full standpoint. we say in XX% that'll we do year to good cash -- bit good be And for year. about about look I going the would But think, it'll to was terms this got little a too So, still X% that number we're but like. what going pretty really to not of quarter-by-quarter, from what visibility the a we lumpy is, feel

Adam Gabalski

very one your for helpful. what That's about your of a talk me. it. guys and Can then you pricing appetite JVs opportunity level from you additional And acquisitions seeing key just sort bit sort and of any or more are markets? just Got across little of

Nelson Mills

Adam. Sure,

continued very But we deal. very we one in week, So, all the the a last active exploring one of wasn't at pipeline transaction, our for in the deals that lack have along. take three XXX only we did lot opportunities is four been disciplined to Broadway of a Even true markets. year, have a or looking looking of all three maintain approach. That's we're case we options, the of the Any other. place now, same given or at

same true the is So, now.

appetite with have going given asset we forward, given right strength the sales, recent but capital. we of capacity balance be have opportunity comes that the the of sheet, along, the capacity got we do terms In patient some can also some at

And of a to it's Westside then, So, in and of we're market, very are market. Midtown for so competing middle are reluctant terms taking that We again, more focus to win three properties key three sort It's softer on in But, there in two. South, the San great a doing we're take trying basis say that approach markets, But competitive our play I'd a strong deal are leased opportunities risk bit on and there. very little lot particularly Manhattan, a and leasing to other the quite that opportunities there well. of we're of little market-by-market, we're our opportunities And of we it's a the disciplined few a though Francisco. interest. think of for market. some markets. a are those a tough in even more in and reluctant regular in challenging very well there DC a find

So, I'd that maybe to say, had. always again, year sure, this we it's but for expect But hard would another disciplined know we've maybe approach two. continuing deal

I'd So, active but a very market, vague say a the know selective. we we're I bit we're that's being answer, in capital, but of have

Adam Gabalski

it. Thank you. Got

Nelson Mills

Adam. Thanks

Operator

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

Nelson Mills

on see start call to excited very you take with care, we us our continue for throughout We're and the and we Until the speak to upcoming about against to joining look progress Thank soon. our those the forward year. of pleased you. questions. thanks Well, thanks great everybody you And our we'll year. at We're [indiscernible]. to for strategy hope to you many then, update the obviously

Operator

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

may now disconnect. You

Columbia Property Trust (CXP) 25 Apr 192019 Q1 Earnings call transcript