EQC - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to Equity Commonwealth's Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Sarah Byrnes, Senior Vice President of Investor Relations. you. Thank

begin. may You

Sarah Byrnes

Good Equity thank quarter Commonwealth's XX, ending Rob. us and for to December discuss results XXXX. morning you, you and joining year Thank for the

today as in refer on supplement CFO. company the Please federal the statements statements any advised CEO; actual any titled call press On conference discussion no assumes President forward-looking that section annual titled from during matters meaning any you securities risk factors be update made today. as The well section David forward-looking statements call including cause forward-looking and Markman, COO; Form of of regarding may that obligation and constitute in to the our to the could release results report differ Adam statement, a to overall the David are materially XX-K impact yesterday's or discussed Weinberg, We for this certain laws. Helfand, forward-looking COVID-XX. factors within statements of

We our information on With also at our reconciliation non-GAAP be financial that supplemental website also yesterday's release post information I measures. the to results. and of material. remarks over non-GAAP certain turn to for press include measures call containing important refer eqcre.com, GAAP may to Today's financial results including Please that, these our will David Helfand.

David Helfand

pandemic Appreciate Story impact everything. on Good everyone. of to an we congratulate comments provide company's on XXXX and morning, it, you, the and brief market joining Senior Sarah. its the ring begin conditions your has President, and current everyone Vice well-deserved on nice Thanks, activities. course, was, on us. update with promotion. and a that Sarah, of I'll you

rallied attention that uncertain. down the of ahead, the late. the market Since particularly workers give there office. was of for time, March, S&P real sectors, year. of markets of [perhaps data a a The of And real driven life XX% sheet hope lot sciences, are the by these Fed's still start XX%, versus out-of-favor fiscal expansion some country, disproportionate gains, infrastructure, While is days consequences its at last this the lower market balance with across wage has attracted Despite mirrors In losses. low stock the vaccines for industry divide the others, and better the economy stress X:XX] stimulative ways, job among policy. estate significantly and who including industrial have share retail, lodging and borne amongst outperforming the

Stanley since the the XXXX, evaluating its portfolio with For Morgan capital. XXXX. assets, are we performance REIT deploy down declined Index to opportunities At EQC, X on worst X.X%, our to focused

we've post-COVID with targeting investment We've of than discussed a our asset expectations. not classes, we're that targeting relating approach, those to variety demand particularly have many individual you, in investor platforms assets. but by sentiment As been of rather portfolios, consistent been companies hard hit exclusively and

reviewing. friction if Given our successful of the transactions that than would optionality help future on billion it's dispositions, to rather one-off $X.X create will that focus we've believe earned we the of execution define prudent deals capital our through terms, general shareholders determine our the selling our right discussing, were returning we've we've is to been we assets even type later the and In transactions that of remaining in path. the avoided past, to

our now allocation. investments try to Given sense approach the EQR makes capital new share importance of to potential story, about and to more

formula, disciplined opportunities, group about evaluate work the to we're and of management. mindful be we rigorous Equity risk As patient,

doesn't as led and for complex transactions. in the we retail those before. we That First believe capability We things to herd our experience we're being Moreover, equal, of ask demonstrated edge prefer last superior our we thinking the us lodging, I to the paid is, results. with as we are about as all yield and office, try has every in evaluate as question be challenges and types generally risk taking? and deal contrarian an out-of-favor sectors operationally-intensive give mentioned other execution such us situations, going

the we're for platform value to looking In and right right other not looking Commonwealth asset sell operational asset levers the of new transaction, unique we assets has at to identify class, pursue the the to In creation collection retain and a trading position underwrote management us for also opportunities. original just of case a addition but enhancements. and to that beyond tax capital a assets discount allowed

go about you range for opportunity. with bring should and sectors, across underwriting wide team bear to work to of risk. an looking opportunities We of everyone's know investments perspective a real we we estate better and right assess collaboratively the strive and deals, As experience outstanding diligently experience day-to-day that vet to process have the

we create not the being challenge, team As year, almost David. risen despite past being the to the appropriate to -- as across that, have to able Despite pursue the we the from to down to for impairing employees We've work-from-home. not today, work the With years ability our value. right ago. sit turn EQC effectively to I'll XX costs reduce to over investments. XX endeavored continue long-term without call we opportunity And together identify has collaboratively the company

David Weinberg

everyone. morning, Thank you, David, and good

underwriting of As and are amount David spending we discussed, time sourcing investments. a considerable

estate competitive deal, an environment extremely While yet for the we supply. sign exceed persistent. we real remain demand a This investments have is where to

On down not other In With available competitive for today's respect in global billion amount there's in powder, are a $X for does record the were advantage, for better the $XXX financing assets near dry across By historical demand around estimates, supply, guarantee estate. is Interest our XXXX, looking deal XX% to it and a volumes search equity of a side, rates lows of real world, businesses. success. billion cash words, while there's is some yield. attractive board. of and

traded of of billion $XXX deals the Just each $XXX four to hands $XX prior the billion compared years. to of office billion

deals, limited looking looking most activity such and and there's larger challenging distress, were pricing the The be retail, all getting sales same, there and with underwrite forecast. however, and buyers is boxes, but on, disagree retail there for are flat, Lease-up down gaps hospitality XX%, are cautiously catalyst are for volumes down which were XX%. cases, backward, in In check deals. an optimistically demand there trades and were are sellers is the XX% to and and volumes resulted forward overcome. cannot Where one-off done. pricing risk. buyers difficult apartment easier. deals to industrial hospitality to when some is repositionings down While Risk-off fewer said forcing sell. sellers With leasing When was as large is no owner to rarely

as and can to we residential retail, is lenders most held has and such focus pennies group deals dollar. perfect and will of are We pricing the we not do story. may need one reckoning. resets. are might robust demand and susceptible been continues trade even pricing hospitality two stronger office together basis as getting taking. sectors, make higher risk continue with have themes: single-family find believe Keep day be we owners where We be for of or For we this a and are that future. we for and the distressed working where growth in be Against paid right believe the ways on access substantially backdrop, mind, there we into sense limiting Instead, investments part, yet such today. these investments to to are the visibility to industrial, to we assets to this is In not on the a the hopeful that type ourselves deal

industrial appealing The investments growth such other residential, profiles. due are life to their and group of as sciences single-family

to While of appropriate a them a have risk-adjusted can these cases, are story the open and the explored out. means of distress, elements to scale, generate deals believe attractive deal, which right seek execution. are In and display of we to unlikely returns. continue variety all includes we We

businesses at entities, looked including whole partial We and have purchases. and portfolios, buying

a have including an providing into folding growth or of capital the with business. We operators, EQC structures path proposed them a EQC-owned them to variety with different

capital different parts of opportunities the and We examined including structures different rescue and investing have recapitalization stack. in

investor explored of public concept real estate the EQC entity opportunities. Many a them to of the OP To the approached use larger to we've of looked have we pass. date, we such variety problems And sheet, our markets. chosen or have issues. stock as the access businesses with utilizing and private liquidity times, We at units leverage, balance solve tax have to

to time and our it the not we to elected over or to update Sometimes, capital. side I With other give an first finding remain turn to our that, alternative devote to financial Adam deal. and that access to on hopeful results. Nonetheless, will resources transact continue had

Adam Markman

in rather, position the we've by the release. cover a points undervalued Thank years that financial but highlight you, control that we few and NFFO FFO, and quarter emphasize Detailed are that over briefly for and won't the year-end. information, I NOI unique portfolio ago. monetizing the David. which six took results walks of I'll operating press key created we'll reiterate

basis these cash, average earning Following in the XXXX, lower points. on $XXX average earned $X.X than X.X%. less our had average deposits million important in below our $XX an factor was decrease sheet earned to in cash deposits. million current earnings the billion XXXX, cash interest due Despite The the trend to of asset our nearly is to rate has our balance below XXXX with $X average points. and billion on contributed earned falling basis more XX higher balance dispositions, on In the we most XX rate balance we of being income interest that largest in continued income interest

The declines of earnings remaining pay of cash the million revenue used contributed dispositions expense of $X of real contrast portion magnitude which parking for to two generating an same-store and lower of proceeds the a savings changes decline The from in A of down was which impacting to other sold occupancy million, portfolio, asset year. with billion were parking $X past order driver. over same-store sales these interest major years. to NOI over the stand these factor our the debt, $X.XX the of assets is in

X.X of portfolio, very there on four of remaining was feet other we Leasing QX, signed saw from a pickup collected to although experience. fourth recent We're our continues the the XX%. dispute. quarter. quarter Austin. quarter, and points we in contractual last Our was Capital property rents, litigating the XX,XXX-square-foot including their leases. Note be result of largely size new activity tenant who occupancy end square We January, square of leases Tower of from XX,XXX feet in million quarter. XX.X% more in modest at lease at The feet consistent February defaulted down the leased currently basis totaling the XXX portfolio of will and a the that be with XX% are our given third around small decline new slow, collected square In metrics. volatility we operating fourth collections XX,XXX this

terms debt-like generated properties convertible gross in half of million had prepaid we $XXX that of of The in debt proceeds in million The XXXX our three activity the and capital first significant In component we balance July, outstanding. of stack last taxable only is disposition the sheet of preferred. $XXX income.

a result, a of not responsibility declared to to billion. do special ago, We total taking special a properties expect share a distribution $XX.X this market weighted pay was price of have special XXX the per we repurchased As that prior the March, required $X.XX year. In not shares at for common XXX,XXX for six sale share million. years we be sold time and Since $X.X assets in October. EQC have at $XX.XX we do this any common for distribution in for average to distribution, per a paid $X.XX

debt share. and and you, $X of preferred, shareholders, common of call $XX billion to $X.X open your we now common per and or billion have $XXX $X.X a cash repaid have billion balance our will the repurchased stock distributions current paid questions. of to We million of Thank

Operator

Emmanuel [Operator Citi. question Instructions] from with proceed with first Please comes Our Korchman question. your

Emmanuel Korchman

Thank opportunity of that your set. deeper for sort look into you

future when landlords feel I more the probably sit aligned about you deals, the office. like this with of on call than there investors thinking underwriting other As you're

how views So to from about on just you deals. underwriting where office the think and home get you're especially was impact your topics office and like on when that goes, on usage that ultimate hoping working space office

David Helfand

of thought. an lot them announcement of the Obviously, Thanks, side one. opinions done interesting Yes. Salesforce's a a on and Obviously, leasing lot We've is years. over the business with Manny.

and home from a with forward. think going their of work I part team think landscape few clearly, people. years, to to the be looking for I is how And companies their going next to the manage are experiment

tend I want safe make company been will the think it's what still so, culture people and to agree has to term, pretty do at and inculcate achieve. be trying I longer it's Sam and to is what understand when with office, the outspoken, to people sure them about that to to

I markets. even And and trend, far. reflect this said few the the So gone may us, number high-quality on the the office would that, upward a have more in in so years it that's before we about an be bullish relatively past, having dislocation probably among fundamentals high-quality said

Emmanuel Korchman

you desire And don't really said then act? this mean looking deals portfolio. and your underwriting want that to just that not looking once a act you do single a deals those you're and deals? I or bigger single not David in which you're think but Does remember not I a you way is reiterated platform at Or at

David Helfand

want you to do take that? David,

David Weinberg

the on type set on investments of deals actual right we really execution in to or focus said larger we looking one-off one-offs, those future. But of with going as acquisition assets, the both real-time Well, transformative understand a a for not are to pricing and prepared Manny, you're at Well, buying but than in points. friction are the remarks, his couple just by more single what's looking markets. create David on actually, rather

Operator

Instructions] David turn over to Helfand At no call further to like the time, comments. back [Operator this closing There for are I'd questions.

David Helfand

well. us We joining for your Thanks Thanks. today. interest. appreciate Be

Operator

This concludes today's conference.

lines your your participation. thank time, disconnect you may this You for we and at

Equity Commonwealth (EQC) 11 Feb 212020 Q4 Earnings call transcript