CXP - Earnings call transcript Q3 2020 | Columbia Property Trust, Inc.

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Operator

Good afternoon, and welcome to the Columbia Property Trust Third Quarter 2020 Conference Call. [Operator Instructions]. I would now like to turn the call over to Matt Stover, Director of Investor Relations. Please go ahead, sir.

Matt Stover

Thank you, operator, and thank you, everyone, for joining us on our Third Quarter 2020 Columbia Property Trust Investor Conference Call.

Vice me Jim Nelson and of Fleming, Officer; Gronning, with Chief President Chief our call Investment Jeff Officer; Chief Executive Executive Executive senior the management today other Mills, are and Financial Officer; team. On and and members President Vice President supplemental Form file Investor released of Relations We quarterly our results X-K. with be can website afternoon this which our on the section on SEC found our and in package, in the

results with the replay and XX-Q call in this materially afternoon, those will We risks available statements audio Form includes our also risks operating anticipated, time other including today's pertaining Risk SEC those the and XX-K an to which are COVID-XX. differ our forward-looking and made that of number and cause uncertainties. A be most discussed results filed events regarding from specific expected on to section call involve this future tomorrow. of Factors of by factors XX-Q, recent Form actual could this Statements

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

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

Nelson Mills

call. to everyone, you, today's Matt, welcome, and Thank

operational quarter, to third has During the results. market to our team challenges unprecedented continued produce solid navigate and

this keeping safe both our and sharp raise our serving and tenants' performance, reflecting quarter. well guidance portfolio, to are for quite on needs, we again strong, been have year a financial able properties including focus We maintain collections our reentry. Columbia's rent Our on full positioned

of the on same-store a was $X.XX basis. quarter, a our year share, $X.XX of built increase share per third in record NOI per X% growth This supported up track by from we normalized year-over-year with a FFO upon During earlier. cash

occupancy collected physical portfolio is and tenant industry, roster. down impressive reflect rent. Columbia's we've remains we've the XX% already lease third nearly collections across quarter rate and premier our sector-leading While of the assembled above XX%, These

intermediate This of Real XXXX to Allianz fully modernized then to Main moment, South and limited the On and with is Francisco. that property include venture leased to District a terrific the our in some Estate Marketplace. to including the rent acquired negotiations XXX At continued term. the focused announced optimizing There Even prospective both able create Columbia walk demand been Property average, demand seeing conditions, available tenant this unprecedented Jeff Earlier believe during terms existing a Despite vacancy there leasing market to on challenging during to always of be our and leasing encouraging embedded strategically our we recent front, month, But transactions. capture tenants, shareholders. have expirations. we've to that, and activity couple and to this expansion I'd and we tell quarter. actively in Financial portfolio. have key joint a substantial In us and we San portfolio active, near-term Prosper on will pressure in we've in across we're minimal DocuSign group advance is space. for opportunity of Street our through up continue the near on the about the we a engage in we the you will certainly roll of like Trust, of value and for several tenants, year, were

$XXX above our at building book value XX% Our million. a sale $XXX of stake well of the valued million,

investment of we were at we line very credit expense. monetize this of our proceeds and its balance our strong and to terms. In down that to a Jim maximize reduce used sheet win and interest execute over to This the further dynamic appeal at our As close and pay opportunities. We properties appropriately poised we're pre-pandemic tenants essence, value future is on discuss, to so partially will strengthen to execution strategy attractive great able invest well-located capabilities. with affirmation potential, find

demonstrates, As turbulence. during and the of XXX our Main periods transaction discerning this approach market benefits focused shareholders even

in XX quarter, lease important, to strategically terms, Another the years. of at need had value-creating to win-win our state's for ground XXX that while well-leased smaller the but of owners, ground this cash to view We Bay the enhancement Massachusetts transaction $XX XX during Transportation, even This the as Huntington intact a navigating Department vision made ground lease significant this of neighborhood. a given the and is future for Columbia's the lease We our to a years. opportunistic the payment million lease extend term environment. remains a extension building property. the the value fully of dollar Boston's is Back Avenue, prepaid in remaining an challenging

As shareholder to reasons I Columbia's earlier are compelling create value. confidence ability on have calls, there in our described many for

the of portfolio these is modernized of the quality One we've assembled.

and We in markets. the assets vital most gateway unique have well-located

flexible social Our buildings permitting allow elevators, plans floor for accommodate greater distancing. crowded and less

by growth driven in success We whose attract culture dynamic continue some is collaboration. the financially-resilient the to of most their of company and world,

an meet powered demand impact work prosper. of suited home to nature these and from and level creative uniquely is well our our on team potential by committed could but and and positioned the course, have challenges Of trends other portfolio,

extended solid value capture to full-service high strong proven changing strength, sheet, on and balance creation to financial landscape. positions collections, from Our rate, a a platform equips capitalize And benefits durations our opportunities. us the us lease office lease which

our focused are we business. our and inclusion team's revised aspect environmental, advancing indicators of guidance prioritize to Our our work. positioning, performance, capabilities to results governance third favorable this strong and continue also quarter every social are investor and initiatives diversity, Always and and hard committed in of on equity

around dedication which more to value confidence and will But and important Jim we support forward very provide new published call I call, team. creation to teammates again With further acknowledge who To our for going Columbia our on to also and best approach and we'll much to of here our first, recently continued to in I last discuss want I'll over further want our an creation, year. have ESG business. that, accomplish long-term successful value call their our at D&I Jeff, why even what I'm the reflects then the my hand that hand demonstrate shareholders they're guidance on highlighted Jeff. to detail our the I Property our looking together. the progress to with our to opportunities, grown results thank report for I'm the in Trust, for over the As initiatives, emphasis continue

Jeffrey Gronning

value Thank is touched to Nelson to you, our with commitment a on, I'd today. everyone my pleasure and it's just speak like which to Nelson, on what remarks creation. focus

you under As projects five know, had development we the in or either predevelopment stage.

We construction of are New at the up and additional underway Broadway City with well in floors X construction XXX the XX ground of York Washington, D.C. Street in M

boutique Since regard health, Avenue, construction in Broadway following phase. options. to in neighborhood. the activity very Village XXX deal will call, July is and York best-in-class WeWork are We deliver The tour predevelopment termination and from to our brokers ground-up building's design City continued Franklin, building a location anticipate last in is its wellness are and currently or the has brand-new Warehouse creating specifically Terminal positive, initial re-tenanting the Greenwich for located space office XXX in outstanding features superb resumed. feedback and XXX other a negotiated with we tenants progress we has our Midtown and lease in development post-COVID Madison designed environment. lastly, at June both And South highly property XXXX. and New evaluating attractive prospective where are Additionally, the

prospects, and Given now tenant as to we will are that renewed discussions Broadway market of XXX with activity outperform effects interest, the look we confident emerge the COVID. from we are the touring having

great complete mass X that Capital environmentally-friendly of D.C. of a We expansion first across square floor M the timber make Riverfront in use the innovative working in XXX,XXX foot, and XX country very progress Street construction. few property to make will the office D.C. one also an vertical to Washington, District to at this Washington, We're only continue

forward the remaining up As previously of new and look the we leasing by space, soon. XX% construction completing the and already to pre-leased announced, availability we've XXXX of quarter second

office our I XXX deliver noted, for time projects right, previously Franklin and prudently the in that X we're environments and workspace As partners strategy creation we these are work to position with are differentiated creating Currently, that and drawings investments represent continue Manhattan the assets, ready product projects design proven working highly to company. development specifically that value at end our is plan To when on the Street of to near-term properties. so of about Terminal these seeking redevelopment execute next we Columbia's for long-term the tenants elaborate growth both Warehouse more and a for for our will high experience. phase towards finalizing for

is joint Warehouse the work, to of market Franklin have loan, on-site venture and Terminal leasing the predevelopment and project our step of necessary refinance XXX at leasing evaluate preconstruction for Meanwhile, construction have a time fundamentals earlier of each detailed on abatement. working quarter-to-quarter. an started process the to are existing loan there partners the Most next while and specifications being some marketing at from We marketing spent predevelopment. initiated design we we refining strategies stage in a We also and our a process. new with development including the in demolition the interior is continue

maintaining continued our levels lease our in volume and testament seeing ongoing pandemic, low a we're in remains leasing our in approach team's to neighborhood-based proven and overall strong the are high and to new success renovated projects our While integrated interest platform. the markets vertically rate at our a due

the the assets, relationships of and We to and investment the team, conditions emerging have opportunities. evolving most the the market make discipline

operate, new strength investments, transact participants, in or financial resources to situations markets traditional estate. to the across and As track sellers, Columbia opportunities where that active estate next have market the continue multiple position we on other invest to direct to real and capitalize it's we motivated the opportunities upcycle we distress with whether will real

that, assets existing we to portfolio I'll call With in opportunities In evaluating to additional capital Jim. higher to for growth hand recycle over continuously are or the return the identify order value-add situations. from low into addition,

James Fleming

Thank today. you, for and us joining Jeff, thanks, everyone,

a financially and As you of this team. meaningful progress as and takes Jeff, work and heard year Nelson market all And conditions. from hard difficult lot good make despite to focus we're you both a having continuing very from the know,

of $X.XX, quarter's in which beat second During normalized had the of FFO years. the the our X recent and This quarterly we XXXX, produced challenges been quarter, result dispositions despite obvious third highest $X.XX.

was million year's slightly $XX same-store at the same higher than for also period. last Our on based NOI cash rents number

slight As of average basis. renewed we years space, lease didn't feet leases during new Nelson up both and new although of with X mentioned, cash at the term a any roll expiring GAAP we XX,XXX an quarter on a square

Our lease stood September percentage at end at the of XX.X%.

total also date of have date very a strong, of September. in We've that resulting had of second collections write-offs to to as we deferred to the less remained achieved XX% date, collected over percentage October We've strong. the expect with in rents higher nearly XX% than And have for than we X%. same collections in future, the X.X% Our collected about quarter. receive also been

financial serve and to limited all base, Our limited lease support tenant performance. retail and to exposure street high-quality transient long strong rollover, durations, our parking

balance remains outlined. the sheet by driven Our part I solid, just performance financial in

from We our venture line interest joint going also the down and debt forward. XXX Main both expense to of pay proceeds Street reducing credit, used

in at under available We estate coverage fixed of cash, adjusted XX.X%, net today debt plus have were facility. to net charge $XXX credit of a the liquidity gross $XXX end last We debt our million real quarter with X.Xx financial to position in ratio EBITDA of of million just substantial X.Xx. a strong bank and with assets over

to net Our XX.X%. down latest real estate Allianz joint debt to sheet, assets our bringing our gross venture balance further strengthened

loans maturities before We properties have continue debt Terminal being of modest our $X at Broadway Warehouse. than XXX XXXX and more our with share on unencumbered billion to only

continue As capital the continue time sheet existing to maximum to and we'll we But will for balance for patient move and so are use about advantage, ahead, we to be opportunities. new to our being. we being projects. goal disciplined our We allocating active, looking remain is

compelling reason, consider refrain authorization. million value given recently. this to share certainly strong option, continue remain remaining from repurchase repurchasing shares buybacks under stock we our a We and For an our the liquidity $XXX our and

times our and on opportunities, balance strong Nelson an and future our view our creation. value during team advantage our expertise, As will that capitalize you heard us one both track record Jeff, from to sheet we leveraging and of investment uncertain as allow

I Before year's numbers a out want I not repeated this be driving next year. guidance, that discuss few point to things may

the received expect Madison Winton South These in and XXX we Capital any at XXX terminations termination First, a the in termination the Avenue from we Park second at significant the time, XXXX. happen WeWork fee currently fee time quarter. to in third don't space quarter ones on but from

XX% We down XXX,XXX back feet in to space debt. mid-XXXX. lower addition, will square Allianz take Main of XXX the Pershing City future a of used to since from earnings in in be also And pay we sold may Jersey and bit proceeds

to we this a payment produce income opportunity, working in and to will can the to Street we Nelson Broadway, space, we Jersey hopefully, as hard the City by of Of higher at XXX earnings. of our compelling we're mentioned, Madison, Furthermore, lease rent from Main remainder received including WeWork which D.C., should XX expect add Pershing when which And than termination course, XX other year. M capital in XXX the than we redeploy represented find a the more months yield Main. the re-lease XXX XXX space

So in just I longer our we term, growth, meaningful reasons FFO outlined. in expect for may lower earnings somewhat be the but the XXXX

range of to $X.XX to the solid year-end increasing performance, $X.XX raising back to to normalized due new of continued percentage. a to ranges year same-store from $X.XX. XXXX, for NOI our outlook our We're FFO, full Turning our guidance lease and range FFO $X.XX we're

same-store Our from year-end X% range cash up to XX%. on XX%. X% XX%, to And XX%, up XX% from occupancy basis, NOI moving XX% we're to to our a moves to to

G&A and for higher toward reduce confident our strong $XX are look $XX in what solid platform at the expectations. another we're range, Columbia years. forward. low while we're hard a our built Trust addition, further at trending Market volatile, we're we of corporate but of closing, challenges this end going new the reflecting taking the see keeping had despite range conditions may to In Property our remain we've In million, to anticipated quarter many over G&A XXXX, can million we

the the model our tenants, Along properties, the peers, foundation have business long financial year over has put We operating succeed the term. philosophy this the to all with our the to test. a and like

want all for of at and are proud work. add colleagues their if time, At this performance, open to could, hard to We Columbia our questions. especially I my operator, our please thanks for you line the

Operator

Instructions]. [Operator

McGrath first line question Sheila Evercore. Our cost the of from with

Sheila McGrath

that you I Nelson, Is wondering extension for lease Boston. consider in us give for marketing a insight you was a precursor little more ground if that asset sale? to that could on

Nelson Mills

at specifically, this time. Sheila, not no, not

are We net that value we transaction. convinced in added that substantial

of state it’s created the it $XX think that said, value value. years it the to some than the starts to down capital. that paid. the that impacts lease and a XX we we As get was much value under at was won't certainly even -- win-win, look more we're created sellers needed you confident that, We the is ground million When -- it term,

take open us So for it do and it. an was but opportunity an took window that transaction, -- and we to

So it directly in a preparing connection wasn't with sale. for

Sheila McGrath

asset that Okay. what just And then And you are post-COVID are the could active a to appeal that comment on have? characterize that in it What you might about XXX would discussions? tenants Great. if characteristics to Broadway, leasing might there world? on position

Nelson Mills

Sure. Sure.

actually We but can tours level and we're still a right? very mix we activity, We're of do -- level way of So of a predominantly from lease -- active -- and long the have by prospects getting by Jeff you we though. serious the activity encouraged it's as signed, do encouraged very And by active are mentioned, interest. discussions. led a tech

in interest of lot a property. So the

indoor and every property more over and space, enhanced post-COVID terms the extra in touchless things and other space, environment. went few the In interconnected destination went and But its of in for of the -- the outdoor doors obviously lot and enhanced appealing ways months with those modern in and building, back step -- air way. last design even sorts it’s fully But elevators a modern of features a an we filtration. it's provided and with very that's of original already,

COVID state the of really any So terms of addressing concerns. art in

that -- So being these the and -- and way, by that's prospective received well tenants. by very

Operator

Your Kim next Markets. question from BMO Capital the comes John line of with

Piljung Kim

look it does statement? lease it income your ground like It up has recorded show been payments, On doesn't yet. what on

Nelson Mills

Jim, you that want to take one?

James Fleming

talking But It are I an Yes. income a if it. It's item, an can on just share -- we the while it income was just It's not and investment. capital wasn't look was I'll it transaction. statement. yes, find

Nelson Mills

It's When bought had XX ground property. the essentially about the been just property, basis and sat we in years lease prepaid. the

we're This was onetime making So payment payments. not annual a also prepayment.

no ongoing payments, the sheet. a be just capital So there are item but balance would on this

Piljung Kim

a From cash perspective? Okay. flow

Nelson Mills

Yes.

James Fleming

John, look find flows, the $XX of if you'll statement at million. you the cash

Piljung Kim

did joint earlier market how impacted XXX this Francisco? that venture has The Okay. that you month at sale investment sales San in the Main,

Nelson Mills

mean well was other have a similar it received, with Well, there positive I been couple reaction. obviously. transactions of

a think a assets well bit a between this, a asset, of core you asset, leased, will. well-performing there's bifurcation like if I

hold long-term Columbia perspective -- we long-term that continue ventures, given about near-term our little a and to took assets tepid stretched. But long-term little bit would leases, it. worry for I -- valuing strategy of And and a that. to a more nature the anything that, roll, well. on But -- little types given I bit of or Obviously, of those trade little more the somewhat. quite it a with pricing little think those there's yes, think in substantial say bit a it’s opportunities demand a more more valuation was lease pre-COVID the the be Allianz it impacted was

So some on it. to -- anything feedback shocking don't it received But I on great if given of is I think don't the price. good add Jeff, was know it asset. was market I totally a we the the that? quality think

Jeffrey Gronning

properties add that you do No, just quality, average that or very or today. here in it Others And substantial higher what that feel held up to execution. assets price-wise with assets strong Nelson. sit would value-add to as more Francisco type San have lease acknowledged other bid-ask in rollover comparison there's longer term certainly very and I we weighted to a markets believe just well said. I vacancy us. We a pretty like where these was

Piljung Kim

then And Or downsizing. 'XX as are growth because you then on again, and through some now earnings earnings, there on growth to focus already and you're, XXXX, Pershing XXXX the is earnings including had I'm dispositions. my delivering as trough just you’ve far question and looking year, final to might and is gains wondering, very between some going this that solid cash earnings? at more same-store sales headwinds I'm looking delivering asset growth, beyond? be walked you're Jim, XXXX earnings to growth, on in dilute

Nelson Mills

and let Jim Yes. tack can me take then that John, generally, on.

So it's hard to know.

going We exactly system that extent hard X% the and year, it's of of expiring we're to new in have of is duration the know not a leases hurdle, about leases. terms the big in our have next of pressure to which but

development also 'XX in 'XX least at a these I mentioned, Jim expect we to be figure new the beyond. of can basis, there you 'XX see from things, trough. that including some on 'XX so could now, GAAP should out. delivering, as -- trying Jim But right are to lot 'XX. lower be mentioned said, a how And But start have We and would bit and what we're projects a that do all to

know less would year even year we're much this trough guidance after I So say -- that a yes, we fairly be to giving based not next that on now. that, safe on it's on to 'XX a But expect what call. obviously, we year, think

James Fleming

sure to I the anything really may -- people just that. to that's said, And call I what think did. make aware anyone that to but what don't wasn't I of with and been have have want I much add mentioned on John, mentioned agree don't I not I why Nelson focused exactly already I on.

I have to strong quarters. last so couple very the people our earnings just been realize wanted And of

couple of We of we'll have some may it had We some from those and fees. We see next got termination how see XXX goes. a income year. Madison,

us I these going is of for going getting to think key forward properties be some leased the up.

really make We good up. space have XXX a can available be big difference. to leased some Broadway, that

But give will to just early in that going help. said, re-leasing to agree Madison is Nelson on are guidance by time There's point, of we from get Jersey wanted then be year call, the focus to think and Certainly, help. but really and next space too that As very we're Nelson, XXX could And some growth it's to at guidance I have likely we this I people on. next we'll I say, lower solid quarter's not City. should with Those ones to some that. have all point.

Operator

Skidmore comes with of line Rick Our next from Sachs. question Goldman the

Richard Skidmore

Question back XXX the in you're just John asked discussions that just in the just to that XXXX. having about of question terms going

And that in where XXX XXX? we're at could on end in there lease up have Given show be in improvement tenant terms revenue where discussions of happening as in XXXX? GAAP are as could tenant well that a the feedback the and of XXX 'XX, at

Nelson Mills

certainly We Rick, happen. certainly that hope that could happens.

have building having income, the some and on live We commence. occupy-able having prospects a lease

that and income very XXX, that So beginning property, on GAAP XXX took we yes, middle it. summer. market Madison. property back just that -- -- I And we're work of it's the fourth around think property the around with could the the we've have to a to do to We same in of bit got ready possible of

thing. least, some part, one we leases would So in well. I our commence get on be mean year and next done at expectation as least same at that

down. to is start several to -- commit start to settles the of course, these of nail to we months, opportunities wildcard, the But and down hopefully, current next we that reluctance some leases get days. So market of anybody in the this conditions these and

Richard Skidmore

compared And the on an discussions then you thinking those discussions, having? those term in just in how underwriting maybe were perspective XXX, you're what leasing to does that from of

Nelson Mills

Yes. that's obviously. determined, be Well, to

Our a might digits, would much. hasn't mean off versus about our come ask I of come do deal of original ask really pre-COVID We single-digit single percentage off our today call sort we that negotiations. it maybe. At I'm wouldn't stage, of interest effective this location, more unique off rent. given the its net And of nature getting we're the level we the than the in property, talking that. come property, much

So obviously, what's rent the rate, get important how so have to get deal is and just forth. the -- but to the not done you and concession gross much free

to And going the so we’re of stage, looking discount be, bigger to yes, together, property, more buildings at effective we'd the I'd suffer a certainly say we'd this something close that nature of net pre-COVID. because Again, be looking unique commodity-type all for relatively that. rents, at are what than

we the Fortunately, nature, out we're of -- portfolio, should in we given okay. don't have come the but those a unique lot

Richard Skidmore

an that, out little maybe some bit raise question, In estate to talk topics seeing investment look those and other about Have the there Normandy completely. acquisition, there at look as you One what you're were you leverage Normandy and it. to funds. Normandy Got real from funds? there and shifting is the and -- return of -- opportunity be perspective in a in maybe funds an market

Nelson Mills

fund certainly active relationships I'll performance those that those to investor speak And more of with and really some Normandy I'll that. terrific say, like with And that, Jeff investors. just X -- speak active Sure. funds to and have X Jeff to. investors. we -- had do with reputation record do keep to all, can terrific a let first we

not our there’s and talking always and investors So on aren't you as of se certainly to works is discussed to we part possibility. today, that? we're to the plan, -- fund previous anything about that's add and calls, Jeff, a But want so right? the we next And per in opportunities, those

Jeffrey Gronning

Yes.

right, I think that's Nelson.

and couple so Estate we the to that Normandy that We expect Normandy include have were that's be as we be approach. potential company to would at active the interesting out capitalize come other Management, to of long making would profitable opportunity. Columbia we be active most type that trended Real style. those kind when used only value-add were in investments of look imminently will, weeks want and the the see deal types what at. we seeing I Trust here Columbia -- are to And very range the well. but we terms that We're been starting I who we the recent not as are sit build opportunistic called the got for Real pipeline or business and Normandy say that feel in would toward if we came real of Management a investment Property increasing, that as investors more focus. invest Management direct downturn stable investments Real today, It's our called interesting and Estate market, what anything see you we But the a Estate great months, that of of tell capital the of as estate with certainly -- of then last opportunities you And a look the would last deals now not like profile that very and of think would started future pipeline. of with, in the we to closely sort that and more doing we're over we to relationships have We've had we've of a a opportunities nature like opportunities of tracking own we expect term, line, of into could but high-yield they to situations is on flow. those

Nelson Mills

with add aligned Columbia promote of and capital shareholders for that that, just a Columbia investors, would fees. they fairly for totally generates in deals Yes. But obviously, opportunity projects, those is being opportunity. capital, modest to And those And invest be, partners. GP hope some Rick, those to amount we all the successful which

opportunity earnings we from So sheet, of capital there. it's can Columbia we balance the -- lot real without some think a create

said, it's done successfully for Jeff years. very As Normandy what several has

Operator

are there further you do time, Mills, remarks? this closing any questions. Mr. At have no

Nelson Mills

for great of for And us. and always, all appreciate us joining first But the Well, all, are questions thank No. times today. much all so and challenging your These we we you Columbia -- listening of Trust. as Property in today, Jeff as in updated is portfolio our a look always and to and storm, the have sheet working position from and discussed team We're hard you we the our I balance and quarter-to-quarter. forward great all to keeping is weather at in Jim interest available. in

to Otherwise, feel like directly, we much. to call you any look you to free forward soon. Thank talk to again to us very you'd talking If time.

Operator

for and participating Ladies call. you thank today's conference in gentlemen,

You may now disconnect.

Columbia Property Trust (CXP) 31 Oct 202020 Q3 Earnings call transcript