HIW - Earnings call transcript Q3 2017 | Highwoods Properties, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Highwoods Properties' Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on the date October 25, 2017. It is now my pleasure to turn the conference over to Brendan Maiorana, Senior Vice President, Finance and Investor Relations. sir. ahead, go Please

Brendan Maiorana

and everyone. operator, good you, morning, Thank

Financial Joining Fritsch, Ted President the call Mulhern, Klinck are Ed this morning Chief Mark and and Operating Investment me and on Chief Officer; Officer. Chief Executive Officer;

NOI As yesterday's on of web. posted have our the IR or release at custom, supplemental, is not available If and website received section highwoods.com. on non-GAAP measures today's FFO, On directly the today's such our supplemental measures. and have marks will been prepared you our earnings measures any financial most they're these also both of non-GAAP include EBITDA including call, review the comparable of release GAAP the as reconciliation to

during uncertainties, turn the to Before the today's Quarterly these reminder and Ed, are call that filings. subject and discussed our risks Annual quick in to at statements SEC length and I a call are made any forward-looking

can The duty from any call actual you materially now turn these and to a undertake differ not the Ed. statements. results forward-looking to statements. does I'll As events forward-looking know, update Company

Edward Fritsch

last you, our morning, been side post the has and call, the the good business everyone. of Atlantic Since news this HQX. Brendan, of Amazon's office biggest Thank in earnings

contenders HQX, pick. been have by While our his may team metro and several Amazon on of cities area we're to which numerous to pundits speculate mentioned going as land not Jeff Bezos

ultimately a of access We're friendly thrilled attributes Amazon's to include with growing list growth their climate; with to life; us unique desired find our characteristics manner align for BBD quality Amazon be cost attention among see of desired Highwoods, BBD pay business criteria fundamentals centers; ground to HQX their workforce; Regardless long-term of we viewed well-educated close the as showing confidence will and as of markets, strategy. economy. high of is grocery However, story of The intended closely all a outlook attractive steady. population validation of list a living HQX on it posting a stable, Shifting to so the what of upon which they and are of our decides do, in good unfolds. to others. something remain the this proportion epic can the

see across our markets. We net positive to continue absorption

New less supply is highly rents. risk X% a pre-leased continued the net The total absorption which net office in mitigates has steady and backdrop supply than of fundamentals. modest and positive market, to increase of driven effective

a of about mostly the little was third higher of a delivered to share, quarter develop, but than per included over FFO Turning land $X.XX expect we quarter, $X.XX charges X% impairment a term related charge year. fee. The we this no last to longer by to that offset parcel

driven performance interest projects; delivered by Our lower was from same NOI, and continued property accretion development recently growth strong financial in expense.

XXXX increased positive and our our at penny results, a Given per implies have $X.XX the to FFO a increase outlook to mid-point. which $X.XX we share, half

XX.X%, positive markets positive office of square slightly positive of sixth across rent GAAP On front, cash We a growth second the gen NOI million QX. same-property X.X signed with rent while GAAP was X.X% feet leases operational in cash were of consecutive to led and spreads. fundamentals double-digit spreads minus rent negative has our quarter impact Strong X.X%. escalators beneficial annual our of at the spreads

returned to was already million the Atlanta we of Buckhead, heavy a XXX,XXX square where encompassing capture Morgan the the activity the Richmond, re-let by sales, another we the QX. move-outs XXX,XXX as user blocks and and end during to XX%. for already space. XXX,XXX balance joint have for third of in additional white-boxed a end and we $XX Our well-positioned the from the At Richmond. square previously we're third occupancy feet share the In is including foot to in HCA submarket the building limited. Towers closed demand of our former have XX% quarter, closed us sales prospects re-let in large of in square In by the on sale. venture strong and now these that expect Stanley third and feet million of in contiguous Nashville, vacated $XX QX, been dip in have SCI are quarter, known in prospects of the two second and availability was XX.X% quarter, close Watson quarter Disposition disclosed the large at a we're driven the space of XX% an blocks late Most sales quarter of

As we've previously FFO, share will disclosed, that quarter. dilutive fourth and virtually per the $X.XX affect of about be our all XXXX activity QX and will QX disposition to

As At these a to reasonable. non-core with routinely was keeping our reminder, properties for properties strategic disposition X.X%, evaluate regular continue weighted of our assets. a we for non-core to recyclers approximately and cap rate portfolio in of pricing plan, be expect average

in of we only JV revenues Following closed our ventures. we sale joint QX, from receive the X.X% now

the investing. few in in on this been continue the flips any closing recent and has for-sale assets acquisitions, we're to a improved the of modestly opportunities of while what The the opportunities and the off-market low. quality point calendar year, we of we're seeking. Regarding has been quiet preponderance at evaluate There relatively late, market than prudent monitoring, acquisition with year, a on is focus before likelihood lower acquisitions are thus but far

result, are revised assuming before outlook no table, As close we acquisitions building year-end. our will a in

program to high-end of of so At square original our this feet already be year, $XXX we NAV XXX,XXX announced development for of pre-leased exceeded million the of Our and meaningful outlook encompassing our starts flow far million Company. have a development for XX% continues earnings, driver XXXX. cash $XXX growth

for projects. We continue see opportunities to highly development pre-leased

a the difficult development, a by of and user While and encouraged it's always forecast level commit sizable activity. will to when we're if conversations to

XX% At quarter, XX% investment XXX,XXX in. square of up from of two Our still is we're $XXX pre-leased, million, our expected building, customers XX% pro markets have basis. total across complete square have Centre the five overall construction Green while on development pre-leased million, pipeline XXXX XX% Raleigh, XX% in now a as nearly over quarters. X.X rents feet delivered a sheet, and $XX million years spreading a development flow to foot cash project is of shell next in With prospects the a dollar-weighted our encompassing combination development forma The flow last and years. another of and strong from begun Again, we for cash stabilization first stabilization. We're in move average, represents projects engine development the the cash earnings on of increase and solid growth. is that $XXX well pre-leased million sets and XXXX commence for are, several of for solid a cash we for stabilize meaningful us flow development expect these competency core ongoing balance and growth Ted? an strengthening table projects and several operating strong fundamentals, next in leased,

Theodore Klinck

Thanks good morning. and Ed,

we Baird's As supports Richmond, should view This It's about in accolades growth fundamentals and in being by forecasts, job for of our XX of to fundamentals top job Raleigh. the report, six also that across other top scored Orlando XX. regional garnering Nashville nice the public Tampa to steady future. growth our noteworthy see often markets steady and REIT strong continue many in Ed noted, continue plus Atlanta, foreseeable markets It's We've in September. see nine our markets. spoken that terms in office-using

leasing we the second had volume average X.X to gen X.X of quarter, economics. attractive square space years. million an Turning with feet leased increased We with of term

sixth quarter As Ed XX.X%, of double-digit positive increases. the mentioned, GAAP consecutive were rent spreads

QX is foot the our end, in-place XXX,XXX X.X% until of improving is slightly the Bridgestone foot were reflected after middle spreads spread cash negative reduced in of our rate. of ago. higher than rent average which fourth includes face cash no recently cash negative year per renewals quarter occupied in for our we which footage the quarter. traded occupied rent While by This Americas doesn't tower, two consecutive five portfolio though delivered our rents attributable where Evidence a positive square commence the TIs at was were to spreads, rents even in cash rent a quarters square

previously on sizeable late leases hand, QX. down quarter. we portfolio portfolio was the points in recovery QX, a compared anticipate experienced Total to move-outs three signed As XX basis fourth in ending Based XX.X%. our forecasted, during occupancy at

outlook XX.X% at XX.X%. occupancy unchanged year-end to remains Our

we occupancy during same average Turning dip property to annual was the NOI rent commencing operational rents. cash performance, our by basis than third in point grew offset escalators leases quarter with more contribution X.X%. cash XX from The higher and the by

mid-point year X.XX% original is same X.XX%. basis The X.X% XXX for to than our Our points is property higher outlook. nearly of the updated outlook

year. market twice vacancy we mentioned compared X.X% quarter, Now office-using & basis of job re-leasing X.X% call, prior to In third average. the experienced According XXX at X.X%, Wakefield, Cushman down with vacated Richmond, that has steady year-over-year. our growth in increased the during quarter the Average rents market market points of SCI to than the the XXX,XXX quarter's On asking the the August. national last to markets. square of more end was feet growth, XX% already

XX%, expected year-end. of is rent mentioned, space. Richmond growth Ed with in the was XX% prospects of as deals the is square re-let second XXX,XXX We during percentage XX. in Richmond Occupancy at our Our to exceed by XX.X% gen now and portfolio for have It balance feet September up GAAP the we signed of XX.X%. quarter to

our deliver in pre-leased, in budget million on Urology XXX% Virginia build-to-suit on to $XX schedule QX'XX. Lastly we're for Richmond, and

employment the metro the to the Turning four quarters Atlanta, Atlanta's country. XX has the strongest been areas growth in among in last largest office

no growth see the was while in is the to Buckhead's construction a our vacancies. asking location in occurred its available lack As According large awaited that during quarter. plus the long to points. year move-outs of spaces our and Ed impacted in upbeat backfill last disclosed Buckhead Tampa ability quality mentioned, remain months. JLL, X.X% our market, previously prospects, Atlanta and in XXX basis during to the rents assets long-term these portfolio and past down by reawakening are XX across we has our on the spec strong Tampa occupancy of portfolio. known With up third delivered continue the in about We vacancy

Class and access Our A We In Per market X% are Young, GAAP quarter-end continues workforce. XX.X%, quarter to Raleigh, XXX,XXX square net rents the XX.X%. feet. signed up benefit to rent XXX,XXX occupancy office over of year-over-year. in year-over-year second square basis the was growth talented and QX absorption with points XXX of strong Avison was from up a gen growth leases economic feet

million competitive across our we feet X.X square is pre-leased. out to is feet is spread XXX,XXX there under BBD-located believe While XX% approximately construction square seven and portfolio submarkets,

from XX.X% in positive double Raleigh of X rent digit XX occupied, is quarter GAAP Our spreads up QX. in-service QX, basis portfolio We of points XX.X% rent solid the GAAP positive posted spreads. consecutive

ago, calls few of of our submarket XXXX XXX,XXX square foot the a exposures to scheduled mentioned we potential in one Cary's Weston is XXXX. of lease As approximate expire end an is that Raleigh November at

early, still we the event not fee. be does renew, would in entitled to customer the a While meaningful

Our X.X in square We in-service year-end. by should know more portfolio million is foot XXX% Weston occupied.

and Wakefield, aligned strong. remain at Finally, X.X%. Per market activity overall in rents Nashville, Cushman vacancy vacancy with A is leasing Class

New vacancy risk million With a pre-leased. construction to job the in square from is fundamentals. in major XX% steadily feet X.X down XXXX, as X.X - square supply we top don't growth million low XX feet, view nationally, and the Nashville's and new is

strong up development occupancy job conclusion, spreads markets. fundamentals support demographic during with current Our and XX.X%. low XX speculative our vacancy limited healthy Mark? we is from quarter combined of positive XX.X%, and GAAP posted across rent growth, and population trends, basis the solid In points QX, portfolio

Mark Mulhern

gains quarter which are property Thanks not $XX Ted. delivered share, income from or which per $X.XX We net $XX.X of included included dispositions, FFO. in of million million, third

quarter FFO a or $X.XX was for Our increase the $XX share, per million, year-over-year. X.X%

in we offset reported net submarket a we our more of by two exited penny one for termination was impairment $X.X that Watson $X.XX primarily making items primarily Ed, fees, received from land As clean in than in a another, essentially offset recently relatively noted which Towers number. Southwinds of FFO the These Atlanta, Memphis.

our with occupancy average basis with delivered rent quarter bumps commencing cash NOI of last is of burn on pleased The spreads operational X.X% several same performance. leases, cash and of in Ed We our NOI growth we rent year. improvement growth third lower the compared leases. As are solid achieved leases off free healthy contractual annual all mentioned, we property to points rent on driven nearly on where XX by

Turning turns. activities, the to debt-to-EBITDA and with of XX.X% and financing quarter balance sheet leverage of our ended we X.X

current remaining the the times. funding debt-to-EBITDA financing of While pipeline $XXX X.X development the million the on of of grow basis, X.X we transactions equity stated We several generally a maintaining of new range of are of mid-point spending comfort close to committed on our leverage-neutral we issuance without to still after and around had the important have flexibility our quarter. the end

First, we credit our revolving recast facility.

$XXX has It near-term We and new believe capacity facility XXX provides as from for $XXX to works fund the spread tapping if million million, XXX million, a Our is backstop that's from serves us LIBOR markets to prudent. not of we basis short-term Company. $XXX the a financing the up liquidity our size points. needs and enough reduced capital well

term loan November points. from January XXXX, to XXX the from Second, XXX to we extended LIBOR basis and $XXX borrowing XXXX our million reduced spread

XXX spread strong continued loan, from Third, which June our $XXX million Company. thank we XXXX of points. bank our matures group, We $XXX had a in of paid LIBOR and in for down the and million support interest lenders them their reception term our bears a basis at of

forward, we looking expect between from significant have a $XXX bond to and one opportunity this the matures X.X% forward savings that June namely only bond. now refinancing interest Looking maturity XXXX. a We're April with X.X% debt in we million coupon XXXX,

we that swaps million next a As with lock May the effectively year. of forward-starting you X.XX% of debt may at underlying before XX-year obtained XX recall, forecasted $XXX respect issuance treasury to

to XXXX capital. maturities bond be a for raise with maturities additional significant need we maturity would to April the would our schedule medium-dated years debt if and refinance have well-laddered we long-term two we Assuming bond, with no fill-in flexibility

our per original $X.XXX we range. Ed $X.XX when our to midpoint, above updated from contemplated FFO increase and original above dispositions As revised $X.XX excluding the the outlook, per The mid-point share share. is outlook to a in of our $X.XXX midpoint or that $X.XX $X.XXX of mentioned, weren't previous

approximately late by plus the the $X.XX As offset expect completed outlook quarter dilution through reported several from have predominantly revised driven G&A. closings in higher in items fourth improved third expected is than quarter, will to imputed we partially the we to performance, that year-to-date, that share $X.XX per is There operational share. we walk $X.XX per in The noted FFO last our dispositions QX outlook. help quarter expected are full-year for of fourth you QX. I slightly by better our Taking $X.XX quarter of outlook understand

$X.XX per dilution expect First, from of we share dispositions.

recast amortization FFO about of lower incur with the will extension. term we loan $X.XX Second, three-quarters and of fees associated from the facility credit accelerated

will Third, NOI, $X.XX. lower of will income about JV by by fee reduce three-quarters average primarily driven FFO $X.XX. FFO by And occupancy, lower lower reduce lastly,

the during are, we So million delivered NOI before recognition, earlier. average, I Due from they early to solid Year contributors. developments forma negligible was a made like periods possession that were would your that point Ed pre-leased. date, take NOI $XXX pro to questions, cash on lease-up of of GAAP QX, XX% we and but impact reinforce the properties these to revenue

obviously execution properties of delivery increase and in flow occurs the our and meaningfully. in ongoing in projects cash our from XXXX. flow A cash strengthens burn-off flow development XXXX cash these beyond. The these increases portion of As significant

for So operator, questions. your ready we are now

Operator

question And James Instructions] [Operator of first Lynch. go from ahead. with comes line Merrill Feldman the our Bank Please America of

James Feldman

online in Great. be NOI that not with XXXX you. guess, about GAAP comment, cash the that your can of in Thank coming you I just of the kind sticking magnitude will last talk that's numbers? Mark

Mark Mulhern

Jamie. Yes,

XXXX. of numbers XXXX around, again, so cash million or when biggest year-over-year the driver compare It's Bridgestone XXXX increased obviously, of you So $XX those or around rough dollars. to

James Feldman

we about us portfolio then And year, XXXX this have earnings as pieces like similar leasing, growth, you either on topic, the you then up like well, give or the making ramp kind building move-outs you're same-store - blocks can but just as about XXXX of I same-store a good progress the guys moving guess a think and in growth and things lot will quarters? how think of over that on just had Okay. of growth sticking we

Brendan Maiorana

Jamie, Hey Brendan. it's

think you there's I'd main as growth drive same-store So numbers. components you those just I generically, that about tell think would five

virtually that the get bump would leases place. we all that have be we in first the The rent

we've next get The year. on second then what rent what we year this spreads signed do are that and both we'll

operating NOI expenses. to of cash cash And rent, GAAP I'd the fifth Third if about that's Fourth is be conversion occupancy. growth. you're thinking would item probably, be would say same-store item

those any been probably we over So I and think those think think about not some then it's perspective, we something mentioned basis. given spreads, say, as last from there's I blocks, progress think but the a that's an talked a expirations bounce lot that really next quarters. we've forward made. are of generally we've kind number around been of we fairly that few change the the go I Rent consistent main over of we've We've between determined that rent And quarters. little building consistent of we've OpEx, would of on bit, I the but some be year-to-year bumps, the probably fairly occupancy a the year. to have, also

it's So backfill how and well a quickly I just some we combination the expirations. of how of think

get So about you that a little I respect but early into to how with to next bit few it's the think think over probably quarters. blocks building the specifics to same-store, gives

James Feldman

Are then you you Okay. you've are I deals the these or for XXXX reduced your me. part know pushed of working the early just off close still a potential finally acquisition And - table? on guidance. in

Edward Fritsch

number year-end that anything very a did the chances We're to are XXXX, close of for slim. think of looking things XXXX getting we at but prior

James Feldman

table? asking I'm you guess those going in do what were the still thought to I are you that the ones is on XXXX,

Edward Fritsch

some and sense? Does added. no, some yes, Some make that

James Feldman

you. right. All Thank

Edward Fritsch

at XXX right of we are makes different, but now. things that a pull number up looking the is certainly The

James Feldman

Okay. Great. Thanks a lot.

Edward Fritsch

Jamie. Thanks

Operator

Please Korchman ahead. line the comes question Citi. next from with Manny go of Our

Emmanuel Korchman

Ed, of of the best back more about had even sort approach approached do Amazon. maybe get you globally, guys. of we go? but think let's or with, wherever get is about and you cities just the the than sort using to not build-to-suits other you've that deal, nationally If let's Amazon Amazon, Or targeted morning, that? Good to of it going the been look Hey. we bid, then we'll specifically tenants sort conversation about see

Edward Fritsch

a I the I would been decades, of always not It's sole this. for but the that process driver. say would say part it's

in Amazon of tango see the first what letterhead. covered, a on of multi-state of significant be The is would the that explorations are and a component what we step that Governor's lot

So but living, that mosaic come sites et aspect into cetera, the be. available and But would these the the capable process, and that of pricing, infrastructure of and of plays decision that's include right work, to component significant a behind of incentives play tax multi-state usually quickly the cost into other coming then and things employment searches like pool what us. first

Emmanuel Korchman

comments for peers rising the your seen Great. also right up And a word. those then construction Have pressure I have costs? I because heard significantly second, constructions yields you that we've guess the guess is switching you to on of and cost guys going from been

Edward Fritsch

that from at to XX There increase the commodities it's learned during that's steady to think climbed back hasn't piece a I but and pricing even or bit any There's recession. been it's That limited fact, built banks it been through not last has talent the off shifted construction big a cycle. in pace. in have Well, talent and wasn't the withheld held commodities and lesson at recession been because to ourselves of we've years the to pretty because a they over continued or a been during into abatement continued and finally what our bay recession. the little overdevelopment, has speculative amount climb,

into of the storms a and only of go of lot think And named have, construction construction spending. of second-gen not think tradesperson, construction, in the but the Keys. So what and illustrate I impact, GI think at first-gen that, for kept obviously, any maybe the commodities to will how and will of it between I have Florida gap cost bay. BI it's what's that's in and into different be componentry know the these if don't versus woven level demand it's space space to I Houston there its a new way And you certainly but hot certain restoring that a much some but period short have time new

Emmanuel Korchman

you or feel on be pressure seeing sort helping future in-process you comfortable of yield quantify your So much us how would may developments? either

Edward Fritsch

the I new really think - you are building. willing to to it down for comes step up

And depending gen, and first argue gap call could as much argue XX% could on and let's where between as we I and it I XX%, XX% are. so the second

going is their just and they're upgrade. to for create pool the that on to the up, to efficiencies pricing want willing pay they or reason don't average, want they really going in the they restack spaces need really I go say, doesn't exist are consolidate drive guard decision a to the image? community X% want that to me, annum, space. think construction whatever to to new they one or that locations it's to and new more let's clients that? there and matter X% per employment that's think difference Do if a customer I to to it present Either up do So - it want the having and into a multiple for their synergies. they to into Do want to

Emmanuel Korchman

Thanks Ed.

Edward Fritsch

Sure, Manny.

Operator

the from Rodgers Dave your comes question ahead of with question. Baird. Please next Our with go line

David Rodgers

you. maybe here. guys. It morning nice into economics looks good Ed, a wanted settled spot to I like Yes, for big has just a picture question your ask a

the little of is? discussions With volume? point that and range, on you earlier, look talk do you're color a spreads a where like give of I that and leasing your at pretty you Are overall top lease You settling having of feel more volume into of terms leasing, in kind if kind you overall a having, we did the about market appreciate so as your economics guess detail. narrow bit on at would. But cash economic that's

Theodore Klinck

said, to - hang a at think at that. a economics we commensurate quarter-by-quarter. I of getting we're rates We're go What think with but of like seeing little you our rental Dave. range pretty to tight on lease again bit pressure sort TI, continue Sure, increase

I think supply strong. demand the are and fundamentals

As construction not control is and - job seeing slow Ed growth. so mentioned, steady we're of out

- has are showing through demand steady So our been across steady markets.

can of a stick So are where trends our seeing no they shock There couple stay two And with we is are. is have in things customers. markets I of or think we deals. mentioned hopefully, a some TI

many two the So than the that mentioned I I'll me on take that cash. we've done negative then just to space prepared I'll the are this. saying, the and more TI out my But just remarks of some in lowest that us put customers flipped are there or own rate give

So lately we markets seen past. some have seen in the we've more on

David Rodgers

Great. be what space a activity on you around in activity vacated for there But thoughts question this about The that. I just white-boxing leasing. might but that And in specific quarter. the Thanks the that, then early that on Buckhead any that talked maybe was phase. realize

Theodore Klinck

to Continue show it.

showings. weekly have We

any really Atlanta actively our on there's have basis, called really, point prospects say a the have weekly that talk about. We space. can't we team in nothing will but show strong I this

David Rodgers

Great. as the for or if comments, I your of. that you be should on mentioned Last it. to compensation that But higher pursuit there, in any anything in cost G&A, for such aware guidance Maybe missed up it in went G&A the number Mark, certainly me. written-off we

Mark Mulhern

will very incentive cost majority small the pursuit but of The be comp. is that higher Yes, a Dave.

David Rodgers

guys. Thanks Great. Okay.

Edward Fritsch

Dave. Thanks

Operator

with of Stifel. Guinee Please go comes ahead. Our line the next from John question

John Guinee

Great. questions, Two thanks.

GAAP much rent that we your about is First, in a get NAV? is how XQ? cash Brendan, think on in of should talked free free rent to XQ a your good You about development. versus uses sources and much But how lot

Brendan Maiorana

in call XXXX. Mark XXXX rough of project, kind of online mentioned mentioned earlier an or flow response So flows there's of so that I - so the he That's sort million an number. basis overtime to coming numbers on that's maybe versus it, rough that cash $XX in a think mentioned annualized respect somewhere, John, to question with development

a of to So rent we more many free think think the projects. maybe could specifics, but of associated to you back that's with way that's amount get with I about some reasonable development

John Guinee

within million to $X million rent? deduct it that was free say that is your $X-plus of straight So safe of line

Brendan Maiorana

not that yes, is versus cash call GAAP from, say I ballpark reasonable think for - it I a - rent. say I would let's that would rent

lot a a early of it's possession in rent. non-cash so that's rent not So there a there's really concession but

John Guinee

you job And of the relatively mark-to-market a your Okay. or then cash I second, usually low leasing quotes of fabulous statistics negative on do and guys your and sort GAAP. double-digits think on

And like might year foot me $X.XX spending that and that's Am or XX you're that me But good. think when present go GAAP people square to feels some that per to to per GAAP, cash very missing to weak up flat or to cash or. looks I something?

Theodore Klinck

getting of about our paid percentage, rents, in looking we're we're we think paid Well, XX% back XX.X% at John, stream capital. the over I term our rent and our think, when our at back get - payback supplemental, I look to of

think compared rents, too we you look competitors. all leased think rents, spending, bad if account investment. look creating Obviously, long into a really I take growing as things. and obviously, incremental as do the metrics when the we at deals, we're those few which effective creating we're net think mean we net when CapEx I to aren't as value value, we're capital effective So we some our our also at our on at I look we're looking at

too more on economics may a you an cases, aren't long-term bad. to customer in there's getting bit willing if we be lock we're little asset think a a basis, spend sell. to our ready Some Net-net we

John Guinee

you. Okay. Thank

Operator

the go ahead. comes Please Reagan of from question next Green Our line Street. Jed with

Joseph Reagan

guys. morning, good Hey,

Edward Fritsch

Joe. morning, Good

Joseph Reagan

recent in of location, sort Raleigh portfolios just age, give you average compare Can in any in markets sales thing? on color of terms and your those the that asset Memphis to how overall rents, building

Edward Fritsch

Sure.

two in So there. a Corridor. Memphis there's cities tale it's There's and Corridor of then the Poplar Poplar really not

at and And X-storey the by we're so in now which up assets, brick alike. and three the in to there the if of are Raleigh, line buildings And situation. solely then we with the side them same Raleigh. the sale Memphis, Poplar Poplar $X buildings look in next collection three much basically a had Southwinds. They institutional glass and of of on the very the best were will what far you Corridor concentrated buildings in is all that is versus quality were that West more billion tenant building, actually Southwinds there, This ABD Southwinds

quality fund non-core our lower, at and rents and quality recycle low, acquisitions. just development assets it's to was efforts the lower So the and money a to that were traditional use

Joseph Reagan

And can kind rate of within for but of each the you I kind Raleigh? within helpful. share portfolio? know That's and Memphis cap you gave aggregate, the individual a

Edward Fritsch

a And the the year-end, the would what closing in the also the in about same $XX X.X. have of for mentioned we before between code that zip have be tie It's we two. also that million Q

Joseph Reagan

Appreciate great. Okay, that.

previously. You that guys then XXXX, of or mentioned and you the kind FBI about the you've on if sizable into early carry exposure move-out even potential have other year visibility? Atlanta got Any you've in lease talked move-outs known next possible

Edward Fritsch

the Not really what on really That comments. we than other mentioned prepared call in the capitalizes it.

a four feet square really have there of we XXX,XXX XXXX, more. fifth. early or them at that it's look bit good on are leases we five the and for We about feel As

Joseph Reagan

We the Maybe work Perfect. of me. including obviously markets. your - you're for one just on some is others Okay. last and national co-working rise,

leases how your that leasing, with or with experiment sign flex you're thinking to potentially of Are some are own? - your to mean more Just you maybe with those more you likely kind concept leasing of about of co-working a looking I movement. companies? flex on curious

Edward Fritsch

some. We We've certainly done with signed both. little a bit of leases

of the I like and is industries, I industry in that Taylor leases the through and everybody It's had how would The and couple we've since one we've but what our will goes, & to exposure put a kind yet. conversions do they're it older to was type much and time. day. space. very see obviously, And a this we version monitoring of that of in modern towards haven't interest we'll about read Regus toe And certainly of we else more of signed is they're interest office for of they those are announcement it. how community, Lord we making So we closely their of downturn a how type so been long wondering think with entire of have know it,

level successful. second It's But of somebody we build the in see that space, be actually and have we have and with growth on the settings performance. of the significant scale. suites the play on as have a - that - granola as what bars. type only we've proven And at director part out [indiscernible] spaces in done be some urban growing then as larger fairly of and the seeing out leases actual we've a it far the that question, interesting will to So your to haven't into of of created plug done concierge we spaces,

Joseph Reagan

you willing more those are And to of of flexible do terms on kind deals? types

Edward Fritsch

we capital to grow hope of on it. Yes. and of a haven't space it. plug do out a so we put amount What significant of we and modest really its it's And customer we is space, type play

Joseph Reagan

Is thought you've the over done far? of amount of more like or there kind that you time of so doing a

Edward Fritsch

annualized we'll continue not of it would do at anyway. become don't near-term a our it I I a in component revenue, to the level. think modest significant be ever think

Joseph Reagan

X%-ish maybe a less? So little

Edward Fritsch

- would if X% say remarks. put less. we here a fair it tickler would in think to reach yes, a But on I prepared address that's cap. I fair a the We

Joseph Reagan

Appreciate great. Okay, you Thank all for it. color. the

Edward Fritsch

Thanks Jed.

Operator

Please comes [Operator line ahead. go the SunTrust. next of Our with Instructions] question from Lewis Michael

Michael Lewis

wondering operating is you. kind changing had increase dispositions in seen pool. than My question I've the think I it. maybe Hi, of is and the me piece, same-store first the remind for impact, was you miscellaneous that higher in And the Could two-parter, the in second any guidance. what's what's thank modeling? revenues, it if I just NOI other a run like this good looks a rate

Edward Fritsch

so as real in had dispositions is question, I taken that's thing out some own. some they I'm is in about really impact of been QX QX. upside Michael. to of cities we've the on slip the - maybe the on little little net think that in slight our QX, and had bit be then anticipated the no QX impacts sorry positive way impact to better control for our a will QX. And on beginning us so And urban that I that Sure, and the we think than our significant end, around in parking in in a negative things, revenue garages But the from fluctuation parking shown a and parking probably guidance, manage no I up one side other a year a and between that the the whole. the impact the negative and and helped first have quarters a little

We in having JVs we for this to And terms well. then the alluded that. numbers as year some same-store some gotten have of impact some on as

Michael Lewis

that I comment little Okay. said XXXX, if how Is wondering if more big square early color could you term? if Thanks. give XXX,XXX middle on lose you was foot like to that in - the I you that. entitled tenant about? second on an a question, My you you're a just that are think could could actually we fee. talking And

Edward Fritsch

the that Ed. Yes, it's it box] think November the late now, in were would to early to bit size if scale, fee for can't of back just us It's we meaningful early be of I quantify we to right us it more. say [bread they a Michael, out. I but but XXXX, It's - move and quantify would meaningful-sized get on

Michael Lewis

about little year? early a it proceeds could think special challenges is redeploying is maybe [XX next the My XXs]. a one you last Understood. may might be too into And bit Okay. about there of be talk to that

Mark Mulhern

Yes.

on we utilizing it's XXs] have on some little in interested into I of we that. to a if are point. think this too [XX dollars that little comment think early put early too but can it's a Obviously, and these at I that

Michael Lewis

Thanks. Okay.

Operator

There turn time. the to Mr. now questions back further are Fritsch. call no at I'll this

Edward Fritsch

always follow-up you, everyone any as you in operator. dialing Thank call and hesitate questions. Thank don't the for with

Operator

for and for participation We your lines. you your that conference thank call does conclude gentlemen, and today. Ladies the disconnect ask that please you

Highwoods Properties (HIW) 25 Oct 172017 Q3 Earnings call transcript