CXP - Earnings call transcript Q2 2021 | Columbia Property Trust, Inc.

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Operator

Good afternoon and welcome to the Columbia Property Trust Second Quarter 2021 Conference Call. [Operator Instructions] The company released its results this afternoon and its quarterly supplemental package, which can be found in the Investor Relations section of the company’s website and on file with the SEC on Form 8-K. Columbia has also filed its 10-Q with the SEC this afternoon. Statements made on today’s call regarding expected operating results and other future events, are forward-looking statements that involves risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated, including those discussed in the Risk Factors section of Columbia’s Form 10-K, which includes specific risks pertaining to COVID-19.

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

call, also and reconciliations be will note event measures found that this non-GAAP measures supplemental the GAAP its the discuss this to like also be During that, is certain turn available will this being audio financial recorded to With now financial and in financial time comparable can and Officer. over company I call data. replay Please would President Chief to an the tomorrow. Mills, by Nelson Executive

ahead, sir. go may You

Nelson Mills

near turning Thank QX, our the enable determination with for then I reflects After quarter Jim call and platform our second growth performance Columbia review our further of and of today. Gronning; class I will improving opportunities several CIO, our portfolio. and the we of of the see you, being accomplishments. Jeff operating right last for which team, strength the joined describe conditions value year, market continue quarter the the solid Real will meaningful quick thank growth industry Paul are Jim to begin in world over that experienced future. with everyone the discuss Teti, delivered our recent will challenges another our of encouraging creation Fleming; of details. before quality to in for Estate signs that I around and operator a Operations. Head us our of by and some you then am our CFO, Columbia drivers corner

and our as projects capitalize we is coming development opportunities lease-up as nearly square online. have active feet core working hard the on attractive Our million X team redevelopment portfolio of well to within

again second results impact lingering operational pandemic. generated the XXXX, and the solid For of financial of we quarter the despite

FFO NOI with of produced cash leased and down $X.XX per X.X%, XX.X% was share normalized ended June we diluted a our Although same-store rate.

each our deferred during remaining of the We term is rents continue than of rent to Only The collect average of of of rents X.X% by close off. X.X% under-girded XX% cash flows contracted an fewer our month. lease to X quarter than and were written stability more were years.

just feet was GAAP have differentiated, over strongest QX, leasing the slightly X% positive revenues annual X.X% at half nearly leasing this in limited, of our relatively leased able occurred properties We the and all year This in Portfolio-wide, desirability some We in in sought-after turn significant cash vacancy spreads lease leasing year. second to square our year. of only of our A neighborhoods. performance expiring XX,XXX leasing the this team remains next most with yet of amenity-rich and quarter’s in located portion with of Huntington Boston. the reflects Columbia’s XX%. leasing continued strategically XXX spreads success in at

XX% nearly collection feet As boasts together financial to totaling we secured and new healthcare diverse lease terrific feet, our another a which expansions tenant of of an have with services, week, X,XXX tenants impressive extensions Huntington and we signed XXX this Back leased Bay team earlier XX,XXX spanning a this series square bring announced month. this and square technology. property

additional to the to serve capture future existing market to near demand. We tenants new and further this operator announce also amenitizing in expect restaurant a building

strong demand of substantial ahead, recovering we and in indications see a activity. leasing Looking increase market

Manhattan. in available most across renovation number of are our conducting of XXX property We tours of Avenue Midtown XXX property our Broadway including ground-up building increasing and our space, an South full Madison

for are substantially terms believe could effective of in complete leases advanced schedule exceed XXX At Broadway, and with months. on net sign meaningful over expect a the be construction prospective we we rents activity, tenants. is several Based this number on to expectations discussions at to XX lease that remaining We attractive that next in than close multiple next month the pre-pandemic At are pre-pandemic new exceptional most space our yet reflecting of for average vertical this even are at this signing M pioneering we property. expansion. on stronger to Street a the believe Washington we status of rents expectations, DC, again our

amenity some project DC new XX to additional As of total square project a differentiated XXX,XXX feet exciting office will floors built reminder, mid-XXXX. by office this environmentally of appealing most construction. This using friendly the of remains with in space track to mass a and innovative deliver three space, M, all highly timber add on

taken near-term which also Amazon across foot are blended paying from At Palo core we portfolio. Circle opportunities of We back enthused Web recently Alto, XX,XXX space, is $XX have was feet AWS a square about our this Services. net other square below rate University per market. for in our well

prime Jersey this of Our at in Pershing. conveniently many have across just the addresses located to team the transit just property square one taken Hudson River This New a maximize York and so in already unparalleled premier to Valley’s also Silicon as access. spectacular XXX,XXX City, of Manhattan, office is West Columbus XX drive At considerable Coast rollup is views from before. the back times we feet with rent from potential and have space of they working

this of interest. in healthy being is marketing space with assertive attractive met Our block

We for that City desirable location. and this are series in just completing service in the high will of space, further tenants building’s seeking Jersey amenities appeal a strong improvements amplify capital

expirations the the of opportunities While recent move remainder cash we our on these the through excited about roll-up year. second half are as weigh will flow, compelling we

at amenity leasing [indiscernible] Another partner, the Avenue Pennsylvania retail our and centered the space. our Plaza capital. iconic nation’s pursuing the available ground lobby repositioning With to restaurant opportunity Market on in our level we and prime space Square Blackstone, are is the key and property enhancements

in as that a Across post-pandemic including growth space, Dynamic were achieving Oracle, same entire employees as seeing engaged in are with best and Affirm, service portfolio, trophy innovation within head modern evaluating actively of Twitter PitchBook, have to they and originally desirable tenants who in team. and and planning expect office needs expect are our and their newly needs to Snap, steady and range world, track for amenity-rich their the DocuSign, attracted we back rents We come locations office. the companies strong very properties all the by Amazon, our unique are now like Gemini market. constructed this workplace record but immediate our also activity leasing continue to ongoing properties from

safe attentive to take the prepare know new and technologies, our amenities, useful approach a As that reconfigure office. efficient they normal, they includes to state-of-the-art for on rely and comprehensive look return We and a tenants service. the Columbia for can and help highly to attractive systems them

the As newly our continuing continue optimistic At improving shareholders. delivering the we’re space. at drivers existing to to to time, new grow we Columbia’s leasing we highly our about from of are and environment, advance our both benefit same ability pace for value

team substantial marketing full-service developing, the energy few For implementing flex across in example, our option and a and time portfolio. investing is a select in locations

capture and with expect pre-built, the demand flexible services more offering for growing We terms. amenitized added space this to

premiums small associated we as we a segment complex our has construction historic to Last secured of this billion attractive relatively demand With involves which in the reported complex and When square construction portion companies West partners Terminal and spectacular office already mix growth-oriented attract in for Blackstone with redevelopment this replete of office of highly paves retail be for been a Manhattan’s earnest Chelsea way X.X exceptional that to initiative, our Columbia’s impressive in Group the million of you week, landmark Century new property. involves worth roster. and conversion neighborhood. We and portfolio. creative forward space, with architectural Led this financing this be today can pursuing. Goldman look Warehouse, $X.XX rent work higher by of explore and exciting the details of loan will be the but risk the same the Sachs, updated course, shorter the substantial effort type tenant the to that lease terms, historic this on a Of cost will and keeping begin XXth forward-thinking, complete dominate XXXX, property amenities. designed foot

our Franklin Tribeca. forward development in looking also commencing XXX unique are We opportunity at to

progress advance to to given the we’re XXX success the several shareholder at blocks continue where having substantial project the to north to in And eager through another generate planning the stages. Broadway We years. value this is coming

long key and term that We as recognize to the serve environmental, continue shareholder role in ability our social, grow play we communities. to over value factors our support the governance and

detail receive York. in In the We to strong social is and of promote climate very Best Partner address ISS. one advance latest continues Magazine’s rating of for to available and providers report. tenants all ESG well-being and equity last to in we’ve our as a alone, and health scores advanced our reported ESG Lease website. programming been recognized Department inclusion, Fortune Year, have which is and of quarter such of also STAR diversity, an in continued Glass, ENERGY on the Green justice, Energy Leader provide from and of our Lewis Columbia as Workplaces New team protocols the and This our change,

pipeline our I see for parties value note the of and shareholders. Board our platform of our by strong strategic all and the guided value goal our our will team over continues of portfolio of involved existing years. has actively embedded that Lastly, project management our maximizing that created and of process shared team review All Columbia the

In committed Columbia to the of mission. of this time. are due committed our and process to and and transparency summary, throughout Trust review are results the this in women optimistic the We’re about sharing men to future Property forward look

NOI of X near- are including opportunities and having square projects. numerous We position feet growth million enviable of creation, longer-term with stable and in nearly development incredibly drive to an portfolio unlock the value

the XX We talented growth I’ve I of leasing motivated team get on deliver all expect am deliver our to months, confident opportunities flow cash described. these the including next job to and done opportunities. will over the meaningful

back than several FFO availabilities. can additional expirations, approximately portfolio. quarters NOI although believe that of That’s due existing per we just our has by leasing $XX per more million our we few existing the pulled fact, our In year a just lease next to from over recently share generate $X.XX

capabilities I deliver leasing our track results, improving we and over details this are now strong based our quarterly in team’s demand in our outlook on that hand and updated levels our and space for position have will record year. incremental the the now provide we of available, of who markets. financial leasing to more the results call We quality the confident will our range can key Jim, on the

Jim Fleming

level and quarter normalized of second our and our again, dividend. $X.XX us the adjusted for Nelson you diluted of you, joining solid. quarterly generated quarterly FFO thank today. We share $X.XX were Once $X.XX Thank of everyone FFO results above per

As for FFO, in I FFO. for are our mentioned income calculate which review line but a quarter, are statement adjusted strategic back not being we added including normalized last costs, to

bit Our NOI the year. same-store quarter quarter was we partly of a lease the cash any because from in of termination this fees down have didn’t second second XXXX,

year, our we full be NOI in we still the however, originally range forecast. expect For cash the same-store will

Nelson lease. flows to a space As our more also but near-term discussed soon moment. attractive space have cash our given in move-outs opportunities, are this compelling online, near-term new recent Combined this affecting growth offers with coming us on highly

remained our XX% strong nearly for tenants. have overall at collections rent and XX% Our office

basis percentage and of the third We ended minimal, this and sequentially, XX.X%, has strength continued into our XX lease with Our June remain quarter. consistent down with expectations. write-offs a points deferrals

has activity to leasing pick up. Our begun

our through recently XX,XXX of in across quarter active second several large leased July, during number our square strongest in but not quarter, additional We’ve the currently since leases Boston, a a negotiation signed performance team feet Nelson remained last markets. our at Huntington As XXX year. including the mentioned, yet, with

economics embedded of lease favorable, potential in portfolio. the leasing remained spreads our with Our have reflecting GAAP XX.X%,

high-quality continued uptick most growth in we activity. include These in an have the drivers and our of despite to projects, we near-term are to FFO years. buildings space solid in the the While excited are seeing our desirable existing very pandemic, which NOI both coming development opportunities and are about produce results what grow

After As Nelson Warehouse drivers that, leasing just year XXX than mentioned, Franklin. we term earnings, this of longer per space anticipate including operating have generate income. will we further growth additional and to more Terminal $XX million that generate net

billion solid with than due are We We million $X million than revolving $XX ended access of strength of on of to at our of more and portfolio, to our position of a our and cash these in our June strength roster, funds quality the coming additional credit facility liquidity. through properties. $XXX the from sheet opportunities tenant hand, balance unencumbered our more strong

ratio coverage fixed XX.X% and debt stood our asset charge X.Xx. Our was ratio at estate net to real

is loan maturity has allows approach extension strength on next Our long-term XXX XXXX. creation. us financial take the This year to and prior disciplined options a shareholder which only value debt patient Broadway, to construction into to

XXXX guidance, leasing per $X.XX given to earnings. $X.XX and tightening to impact of year $X.XX normalized quarter fourth can the our range have the For FFO we’re our share prior third current limited to on for $X.XX,

seeing However, create strong momentum next new now, year. in significant leasing which should growth we’re into

XX% We’re prior X% macro continuation outlook same-store year-end growth NOI occupancy. conditions. reaffirming range XX% for of This negative for assumes our negative to X% to of cash a and current

around of challenges $XX opportunities beginning past next corporate In the XXXX provided, G&A still well corner summary, full expect significant million. outlook and to the We year I million year. year also continued $XX to the our perform upside the in to despite suggest we’ve the of just range

We to of, of team we’re that, please activity lines we seeing to if ready drive in cash markets. for Q&A. already all our much leasing our believe is advantage operator, that that of to increased we’re could, take opportunities you the open leasing flow have higher compelling levels With will and lead set

Operator

of first Sheila comes Instructions] [Operator line Our question the from McGrath.

Your line is open. now

Sheila McGrath

Hi, Nelson Broadway interest, on the update XX good expansion in if was you Street Washington an could I XXX M DC? give Yes. at leasing and level your wondering on also at us afternoon.

Nelson Mills

you for Thank for Sheila. for thank the Absolutely, you thank question. you the – joining,

Operations, Teti, our who both to is Real he answer mentioned, And here. think I Estate heads questions. best Paul is I those As

Paul Teti

Sheila. Nelson. Thanks, Hi, Sure.

the say Jim we’ve it’s around surprisingly, active our it’s really both is given as at been with XXX have vacancy, continued existing the most not As activity delivering mentioned, that vacancy, that encouraged products and would probably as of new where in building properties portfolio. those the well one just of I it’s the now. some few portfolio

sub right a square and process those of the leases highlight, legal, mentioned, we’ve think signed DC two A to across meaning leases have issued associated those some in you that appreciating the that always, we the and and property, an proposal little But Broadway feet. the also general, agreed now. XX,XXX lease a Square economics two mostly more spread through be encouraged hopefully, at of has to the moving legal activity process of what from market. in deals, square in near active smaller of properties real in little than XX market future. property in physical terms in of to between with been those as about terms good, a is that properties LOI seems three the will with We deals, feet in Washington remainder the Street XXX But space tour spread best been the is terms leases in out have to tenants. both the and via negotiated be been M Market the square half feet, Manhattan XXX,XXX in have XXX,XXX out Overall, portfolio. we over we’ve leases to

Nelson Mills

XX XXX, pre-pandemic Yes, meeting said, we mentioned Sheila, even feel Paul like even earlier, good at very pricing that. we’ve as in the – got M we maybe on a even least and at Street, of shot really exceeding feel or case and we

opened been have up tours the created. delivered, been have properties the as Just competition has

encouraged very by We’re economics. the

to reporting leases next some in highly so the we’re And forward looking I’m quarter. that. on confident

well. that – same more just those the Is on bit concessions time, Just a in quite to properties, base a a in but a of at leasing, dynamic little say bit fair? more more as the – Paul, a bit the fair on bit rate

Paul Teti

Yes.

like with perspective, for with markets, free York. of From I most appropriate think there form there happy said, should the right, tenant concessions premium real, be general, Nelson. a Nelson seem the are rents exceed increased are both pay market this said, in increased we’re particularly and across effective premium been results. some the In I space. flight has rent is all it’s and consistent expectations. think improvements. And together meet but quality some That with that’s attracted the still But to New concessions. the The end to of the highest to in net to or and willing additional tenants a so

Nelson Mills

of deals, remind the of everybody, XX-year of rate for And we’ve gross in above the those we we have on rent that to But at we’re not a though to ranges M – properties, on original expecting pre-lease. quite as – premium last years about for couple or terms leases property little the half XX – been the rental D.C. sort We mid-XXXs of talking a Street is significant seeing do in pre-leased space. are that out over

for Paul very more roll-up And Sheila. question, as Thanks significant the anyway, all positive. forward but have as said, well. We very do signs some various So portfolio, that’s across places encouraging to detail in on that, looking other reporting as seeing well. we’re the then elsewhere

Sheila McGrath

you. Okay, great. Thank

Nelson Mills

Thanks, Sheila.

Operator

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

now is line Your open.

John Kim

Good Thanks. In guidance $X.XX the cost for share. strategic the reduced review of to year, the your $X.XX per you evening. by

you’ve spent far, so $X.XXX. already And about

review. you. at indicates So pretty to of the that with wanted it you’re conclusion the I much clarify just that

Jim Fleming

is you. Jim. this Thank John,

created confusion. we any if Sorry

the strategic of not guidance review. cost about We’re providing the

the just We’re normalized – are from we FFO calculation. excluding that

normalized only really We are it including AFFO the doesn’t calculation. so really those giving factor in costs But on guidance FFO, we’re in.

so but about far numbers it’s I just million would quarter I read – anything to as in – You numbers, really there. on reported into caution no about not think We you that are spent $X second the correct. our

Nelson Mills

the say, color say can’t in or all I is more the I active do we will thorough continues. will we time, to about outcome process more I that. more will look that. or John. when process. and It’s the process why been little outcome though, a obviously on give really time, ultimate like get we bit and generally, that question, but would approach. That’s But very the due We and the a very a decision speak forward – clever to in But

So...

John Kim

quarter Maybe back you’re the follow-on, for review to now your last $X.XX. costs guidance, adding back adding was the first and $X.XX

are you... way So the you changing just

Jim Fleming

No.

million quarter, adding maybe we’re quarter adding not. normalized about but or million, don’t We’re but AFFO. back for – $X.XX. I whatever so And is, the John, this adding back it another got $X it confused, first in think, are remember We’ve $X.X for FFO, I I’m back which it we and not

don’t I So know was comment don’t I recall, the confusion. if apologize about was some maybe there $X.XX, there but that I

John Kim

timing, to But been Okay. on now continue? drag Or case? mind much as months, anticipate it’s that almost still Is too in know the you you I past, said longer. as don’t the X this do far the than may you this

Nelson Mills

Yes, definitely true.

senior you’re that. focused the concerned, operations the our and in important is there it of our amount But a of Fortunately, has investors part reiterate it about But fortunately, activity. of care the course, of very And buildings, going most Board talking course. caused distracting operations. right. distraction taking – team. all I with very the on and mean be not time well. that’s fair it but we the leasing of from that’s business, as it’s much us was spent analysts, That business, of We’ve not to

continue on forever. that want to don’t we So

this business up here, ends in We have great. plan And that. resulting we’re and transaction, execute continuing great that’s if a to

Obviously, do would we effort it want better it takes to right. to Sooner than time and be later, that. get but and

we’re continuing. So that’s –

advisory forth. the tied or of fees often so cost of know, much in read remember into are The too other to whatever. to thing as you terms and even transaction the Because you a legal banker pace and expenses can’t

with – clock ticking there I share So can rather But so it’s basis expenses on process. a correlation hopefully, conclusion it on that everybody. – is not the of we’re we we not progress sooner said, the advisory come like like direct the later, an than hourly continues, and of pace will those is back and and the reach that efforts between

John Kim

is and San you spaces leased New an with Okay. Francisco earnings, maybe York. Yesterday, of offices. rent closing any but guess, were Is side, had remind announced that to a from Twitter impact if expense us They part New not side, any retail they the from there and the building? there as York in I

Nelson Mills

were is the XX% only the the tenant some to they is. say to up that there had reentry where – process is building to There their in were reentry building started That’s building. or is come Room some but think unrelated Twitter everyday, Twitter were there, of Board not had back into XX%, that’s & to XX%. the in allowed – other where begun I there that up we to building

has affect Delta in So the they variant, then with expenses really And and any back. have others that the and concern won’t started. not meaningful It pulled think revenues I recent way. either of

news the bound now DC tenants these impact. all X disappointed those seen haven’t yet have and things, have today is that has delaying we’re by – may the in there. Again, we’re not it’s here impact The month that variant, or hearing we’re in to returned the Delta that You are they restated on but biggest months extending all that some impact, mandate. rise direct in a mask all a obviously

what all like see to watching we’re we’re it everybody So happens. else,

not it we’re on, communicating with keeping point, something our but We’re is too it concerned this about... tabs we’re about and tenants at

John Kim

contemplated Nelson, this don’t with I’m And had final doing like Industrious, more it space. if my or mentioned you sounds Okay. just doing wondering then you [indiscernible]? either a some WeWork, question, And flexible partner, lease you’ve

Nelson Mills

have they did their Hana had with. we Industrious, They good. with two and seem operators others, we to that’s quite rolling of relationship gotten been had They doing we’ve have WeWork. again, in still well, certainly are No, to talk our buildings. system a – conversations and

building, But the We space view give way, relative for one it’s the out. just more going just available, a suites. identified of prebuilt time buildings three we’re is, completely floors per This be out by on we being, is – ruled just do and than haven’t our step lot step a already that’s out to the It spectrum. this spec We – three two that. further that this shot. will one or

it Now concierge maybe probably lease And be would also be a for feature. of part services, would may term have shorter a it.

the at the – we’re we’re the – same plan. designing designing and time, So space

pre-marketing We prospective doing of feedback think there. is tenants, and some getting out customers. demand do from very also We’re thing there plenty this for

So fully location we’re it properties, definitely we’re that to But we’re carry well the going we the that’s on slow, it. terms And will capture of small and premiums suited the there make we make more our to we to it are we’ve going. after the rents. we will But relatively and on there got less And it that recycle to than more, shorter sure risk, again, lease of take is can got build-outs. spend you the goes, our quality how costs one we’ve how of percentage see demand. X%. portfolio, think report aware that next sure quarter think and segment on given And

talk So, other are But to factors all in to have anyway, operators. consideration. yes, we answer, long those

completely with our internal or ruled the on that But time of haven’t is focused management delivering, partnering offering. team out We agreements being, some for doing delivering them.

John Kim

Thank That’s very helpful. you.

Nelson Mills

John. you, Thank

Jim Fleming

John. Thanks,

Operator

to the over no are call now Mills. time, I’m Nelson further back turning There this questions continue. at please

Nelson Mills

and Sheila and you for you us joining interest questions. today. your Alright. Thank attention. great John, your very your Thank you thank all you much for and for thank

the We there very back we’ve here things ready to is a to that up. back bit road But together tenants optimistic bump to we through. As of – the are get our how opening with work know about buildings. going are we’re Delta variant all a we’re said,

We’ve them back. ready back. come to We’re for to come for prepared them been

We’re and focused advances area. that. really in that is to And report as over mentioned, quarters really improving, few meaningful on leasing the some activity on we expect we next

explaining talk we So outcome back about And you that the soon. we to anyway, But on John’s also, will process sharing process is to forward that at to when thank all question, time. again, more you we you will we the review strategic and and to look be that will complete.

Operator

conference Ladies concludes participating. today’s for Thank you and gentlemen, this call.

disconnect. You may now

Nelson Mills	President and Chief Executive Officer
Jim Fleming	Chief Financial Officer
Jeff Gronning	Chief Investment Officer
Paul Teti	Head, Real Estate Operations
Sheila McGrath	Evercore
John Kim	BMO Capital Markets

Columbia Property Trust (CXP) 31 Jul 212021 Q2 Earnings call transcript