HIW - Earnings call transcript Q2 2019 | 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. [Operator instructions] As a reminder, this conference is being recorded, Wednesday, July 24, 2019.

I would now like to turn the conference over to Brendan Maiorana. Please go ahead, Mr. Maiorana.

Brendan Maiorana

good and operator, you, morning. Thank

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

the remarks is received not at Investors release both been As section today's they're earnings any prepared supplemental, on custom, posted you our yesterday's on highwoods.com. available web. or have of If of website have the our

a review FFO, release measures. our call, comparable will of include NOI and EBITDAre. today's measures directly as include measures On such non-GAAP the and Also, supplemental most to reconciliation these non-GAAP the financial GAAP

Forward-looking call length and in made as subject at uncertainties, releases press to filings. as well statements risks during today's our our discussed which are SEC are

differ does forward-looking statements. materially from know, you As these not update any a can Company duty statements. to actual events results undertake forward-looking and

I'll now to the call turn Ed.

Ed Fritsch

morning, good and Brendan, you, everyone. Thank

credit-worthy and with remain remains Long-term our healthy on growth. is stable As our support be across footprint, market fundamentals cycle, we've continues hugging earnings existing in available customers, this levels stated calls our and occupancy rent to healthy. readily markets. Demand check throughout across for combined back prospective many capital rates while business prior from in continued X%, are interest backdrop, to borrowers. This supply

experiencing additional expected FFO NOI, continue, in to which Based projects evidenced in will ground conditions are continued cash night, development we're the growth and on the what last and and we on "goldilocks" metrics we flow. these reported high-quality support increasing believe

feet, for was strong renewal Vanderbilt above plus largest and This support year-end. XX.X%, feet our foot, of and This rent of spreads outlook of delivered healthy leased per results of XXX,XXX feet reduce Center, GAAP helped spreads expansions. square million our for increased economics, We work square volume leasing It especially new of supports FFO XXX,XXX and square five Our the X% plus XXXX rent net with favorable per X.X% the this average. by volume rents University prior basis including square occupancy XXXX cash our leases XQ expirations, accompanied including share outlook. foot Medical square of X.X effective expiration. $X.XX $XX.XX of financial also quarter XXX,XXX our

quarter second representing for we at FFO have the our increase performance per and Given remainder a $X.XX outlook of $X.XX share, outlook our the $X.XX healthy revised to the year, to midpoint. XXXX

declined was where XX sequentially yet leased drop temporary points space attributable commence. Occupancy downtime XX.X%. occupancy basis Most to on the of has to to

occupancy points the increased to the June by our our our midpoint. XX XX level. end We of second where the higher above is XXX -- with We quarter, we basis outlook ended the I points mentioned, midpoint by improve we occupancy lower year-end. XX.X% expect points year-end basis As XX at basis the lowered

our At no Avion, year-end foot the Spine assumes square Laser this occupancy submarket. outlook property at XXXX backfill our Tampa's Westshore time, of in by space vacated XXX,XXX

run parallel the paths of continue to building. this We reletting for

a building are medical full building, we first The is path users. full or pursuing a near

use would much amount prospects prospects in the though downtime, medical have out-of-pocket limited. of the us building. the continue to of path for require need already shortest amount space the who This We cost dialogue who and number with this is the would FF&E least medical

to Our traditional building. convert a multi-customer property the second office is path to

at common several costs. from this have Here given prospects. projections the for priced negotiations to provide and out don't our We've We with cost conversion areas of specifics our projections prospects. too, time on detailed we have active ongoing interest lease-up want

possible multi-customer Our to pursuing before much a plan to is as fully or conversion to single vet medical retain prospects building. as office the a optionality

million leased, had and program we announced, comprised two that multi-customer of top-of-the-market $XXX now placed continues quarter, properties square in a XXX,XXX feet. pre-leased were total rents. is with deliver in was foot Atlanta, the service which square In $XXX leased development development XX% to XXX,XXX when Riverwood XX.X% XXX, Our investment results. million, strong a XX%

million, for schedule delivered and XXX% Mars In occupied square a Nashville XXX,XXX on headquarters in U.S. $XX Petcare foot on addition, we budget.

portion we XXX-unit announced XXX,XXX project the with Crescent by In pre-leased hotel foot, is the restaurant multifamily Whole Foods. XX-acre being the Tampa branded Communities. by Midtown dual is for foot in Tampa be Tampa. and development will Element being retail May, and XXX,XXX spec XX-XX portion developed XXX% square developer One is The XXX-key This Companies. an which now Concorde $XX underway developed Bromley Casto, master And the in will be Aloft BBD. XX% Westshore anchored is Midtown Bromley in by the Midtown within The million, and JV square developed mixed-use is Hospitality. approximately by

in for developers their the will committed of XXXX. One, Midtown project. and are multi-family, all All of the Midtown funded complete the retail and Tampa on portions substantially be hotel

an We first excited Bromley XXX,XXX square involved development. future in build be mixed-use office destined sizable partner being at Needless development. true about project, with two say, additional also to in to this we're rights to mixed-use buildings to have this feet vibrant Tampa's

we to XXXX after CentreGreen projected leased date XXX%, Raleigh, starting this XXX% X of project In spec. ahead quarter stabilization

in One our and has pipeline gone which Tampa, about Seven GlenLake Midtown only Given development yet. spec all in the I are current of neither program, with projects just our development space vertical Raleigh in said two

two In interest pleased and before early are addition, of the reaching forma level dates, we projects. both have both with well stabilization on pro years over

now is pre-leased. pipeline million XX% and development Our $XXX

Seven One far. so our a outlook the announced with up Midtown to development million million $XXX As $XXX XXXX reminder, is announcements making GlenLake now million $XXX and

should sustained to land to our attractive, believe of record, have with This depth some track remain the of across when several pre-lease prospects wins. interest markets. We combined demand level leads position, continue and with positions which, sheet capture conversations us us balance to strong

remains Raleigh, for in foot square suburban to $X.X sales property $XX.X Turning property we in building, a our million. to we anticipate office we acquired million. outlook Subsequent foot quarter a on Atlanta land closing Early two Subsequent million. sold noncore a X.X in XX,XXX second for industrial million. $XXX square in and for the therefore, site number acre in of for of also end, dispositions $XXX of non-core dispositions. end, during building a XXXX MetroCenter half the quarter, million Raleigh $X.X We sold $X.X XX quarter to development acres Dogwood to sold the year Orlando, XXX,XXX second for million CBD and

at unchanged We've to property outlook $XXX our kept acquisition million. $X

high-quality While a investing commitment in and on- portfolio attractive prudent and have while prime been locations we tenacious evaluation our off-market opportunities for to enhancement. maintaining in of sale, BBD search very available be continue to few properties and

X.X even the We Moving development the while the past our our ratio debt-to-EBITDA ATM to without fund below to of any reported continuing times, midpoint during balance years. of range sheet. issuing shares our two a times, of comfort pipeline X.X to on stated X.XX

with rents portfolio our well occupancy year. projected performing is and to continuing is by of increase Overall, to rise end the the

delivered recently will highly have FFO that increased and development pre-leased drive billion flow, approximately future we and pipeline help development. a Our of $X cash and bank can support land

a sheet focus improved avenues we balance with and carefully result a have continue to portfolio operating approach OpEx, in We and with have improvement, managing fund will multiple to strong combined on recycling Atop continued which, capital metrics. disciplined this, growth.

very series the XX I Ted, together conversations assume retire X. since we intellect, His our Board my adult role announced September Member that transaction with will to the as you to time. turn Chief entirety will in-depth Ted the management in XXXX. over XXXX. of July I of closely my passing Highwoods, After smooth Ted be know, role of skills initiated. succeeding Him baton. of X, we as life, our of effective experience, worked potentially CEO was Director aspect recruited real on at have Officer and back this a moves for estate I the and Before contacts and make CEO in succession and Investment industry an that leadership I basically him years as into the a of call

Brendan recruited add and communicate our balance Brendan, to in our our and will ample growth on has basis. who to leverage-neutral has of Finance a continue he sheet team, together terrific investors, maintain a liquidity preserve our EVP been Mark work fortress fund to to we promoted to and and Investor been Relations. with XXXX,

recruited closely average, development experienced Randy and architecture in Brian experience. Development. where he long-tenured, also to real team, Communities, from our on be Senior will as commercial to is well served work Leary divisions, suited by Robertson, company's With Brian by COO. his group estate with We next of estate our also real professionals of commercial Crescent a last of VP week the XX years having, highly background Brian development, and proven our led closely work its which us of unit. President joined He are led with business mixed-use

and the a that of advisers, Highwoods time you of dearly professional for comprised these In all sharing Highwoods these to your collection a I is work to to addition to is broad the supporting company's Wall all place on I days is prodding, yet here listening, our Highwoods' across people. and capable have for wonderful gotten expertise. from the NAREIT, industry, of our is team those and and right call, best you vendors have at believe fortunate moves, miss I come. I to The comprised challenging, for platform continued Street with from really candor will fully extremely to this right customers confident am in from people, and moves. good success. thank have Ted? to Highwoods of

Ted Klinck

strong occupancy morning. year-over-year. X.X% a good and XXX operating growth points basis even Ed, quarter. We Thanks, was average with performance the NOI had up during down Same-property

and robust future in leasing rent economics NOI. growth and support strong occupancy volume Our

economics stout. X.X rent feet higher leases were volume of X-quarter $XX.XX rent net foot the positive significant while of also XXX,XXX our new including square average. XXX,XXX X.X%, cash Second-gen office expansions. prior leasing positive volume, were feet were was XX.X% per were than X% rents of square and square rent spreads and square million spreads Atop effective GAAP feet,

our posted escalators, all rent virtually While we've of cash spreads. compounding leases consistently annual have positive

cash the net quarters, period XX%. of rents rents we've reported effective and positive XX cash in-place by the spreads rent and fact, by increased same past In over XX XX%

in dipped end before the occupancy the to our points As XX.X% basis at expected, XX later year. of portfolio projected improvement the quarter

to year-end the basis XXX XX.X% to Avion. outlook occupancy has higher the ended with occupancy this XX.X% assumes midpoint of year-end we quarter, points and XX.X%, of than second increased where XXXX Our no

square occupancy be increase approximately XXX,XXX signed but speculative leasing additional by expect have about leases we forecasted is completed, so new our be occupancy square renewals commenced. about on we the space of Specifically, feet the to vacant end of where by feet and XXX,XXX year, we're outlook. hasn't there we signed To to yet clear, along confident to have known be move-outs, year-end with but

In risk, quarters the spaces reducing addition future made we're some X% in to the remainder progress near-term about and expiring vacant past the activity expiration portfolio, XXXX which reducing progress XXXX, optimistic revenues near-term made several rollover outlook. on We of the of over expirations. good us of we for our leaves with only the meaningful

In renewal. XXX,XXX to square foot our square we only typical in confident this than and remain expire to and XXXX have FAA airport We in two in feet, build-to-suit XXX,XXX larger year. a adjacent expirations Atlanta review in XXXX. remaining the The is of scheduled later one is

in feet we Center renewed only square T-Mobile with University in with feet which an with XXX,XXX FBI, We Medical move-out. square T-Mobile, is the with Nashville Vanderbilt while in quarter, FBI, with leaves XXXX, the expected us the both square remain XXX,XXX confident renewal For feet Tampa. XXX,XXX in

markets. our foot. and Class per to tracking JLL, A Atlanta reported $XX by as overall X.X Now absorption square year-to-date square million square per at XXX,XXX $XX net of square with posted asking foot positive rents of has office feet, with underway, foot XXX,XXX activity represents multi-customer X% X feet under square square around under construction. XX% Midtown total the stock. construction, while million Buckhead pre-leased. is of project which feet This one of has most development We're

as and rent we the of XX.X% leases GAAP spreads signed year end by XX%. mentioned signed the expect the as XXX,XXX leases. of square second-generation with end during Occupancy positive on the quarter We was I of of improve earlier, this occupancy to commences the at quarter, feet

XXX, $XXX occupancy will place As XXXX. success over Ed million Riverwood Based foot, office at can mentioned, we XXX,XXX leases square bring XXX,XXX on foot building. we're early we where into have now multi-customer occupied, service at in placed Riverwood Riverwood XX% XXX, development, XX% to build XXX, that we square by our and a marketing our

pre-leased, at Class Turning A a to We submarkets approximately construction rent XX%. asking XX% Avison Raleigh. the leases X% under Currently, first-gen XXX,XXX increase. X.X second-generation per feet According six total the during $XX with rates during market feet square spread quarter to of square ended Young, there of XX%. spreads healthy is second GAAP square hit quarter million signed year-over-year occupancy stock. representing the X% of foot over that quarter, is

Our a this earlier lease XXX,XXX We for increase space in XQ we occupancy for square prospect month, which is largest will foot and opportunity additional signed the have square in building. to show up Weston feet stats, strong building. XXXXX leasing a XX,XXX our

occupancy as was in by portfolio end second was between commences to Similar we Raleigh to driven which signed and year-end Our at lower customers to space. improve temporary of their quarter, expect XX.X% leases. by Atlanta, the the on occupancy moving downtime occupancy out

Avison net Young. with second the quarter XXX,XXX reported finished year-to-date feet absorption square over by of Nashville as

vacancy X.X%. X.X and represents is stock. overall X.X% year-over-year X% total A under decreased of Asking square pre-leased rates million vacancy construction, feet to Class which remained tracking flat. We're XX% grew while

quarter, with XX.X%. the of feet second-generation rent XXX,XXX spreads signed GAAP During square we leases of

As square XXX,XXX renewal included Vanderbilt with expiration. this XXXX Medical our mentioned earlier, largest foot the Center, University

We with Mars for headquarters Petcare. rent commencing, service, million square foot, also $XX in the U.S. cash XXX,XXX placed

which construction square of of and in in in XXX,XXX feet Westshore. total in about increased located GAAP spreads feet pre-leased rates XX.X% Tampa, the and CBD, these signed Lastly, XX% new at Tampa rent of portfolio second-generation X% leases Westshore of tracking CBD A We're rental stock. our XX%. XX% and is square two X.X% BBDs. Class of in the is We XXX,XXX represents

on focus Preserve One and Westshore. X at differences in of opportunities: There price Midtown XXXX are point among in space the a to V Avion T-Mobile Tampa continue North number and geography, We timing. and these

portfolio. backfilling an making of rent rents. in had strong robust and progress excellent sizable vacancies volume, we the the future We're with expirations with good few healthy quarter and second-generation net conclusion, leasing In spreads effective

we XX% and is development two office second-gen and, in of before than availability pro Our well-located and million years product. The out has both demand environment first- square are X.X pre-leased, healthy $XXX only for leasing two foot cases, million, any with remains pipeline projects stabilization. forma indicative quality, more continued

retirements On Before Ed's XXX passion done professionalism I'd a for Ed, our quick thank at comment Highwoods. Highwoods. I over everything for about it after make like Highwoods. for you, your Directors, years team of and coworkers, Mark, to hand you've Thank for Board behalf XX and say, management everything to dedication, of at I you leadership,

Your presence be will you but won't forgotten. be missed, Mark?

Mark Mulhern

Amen or Ted. Spine. full to net that. delivered contribution quarter million Fidelity share, Thanks, or We second year's included NOI million although per FFO $XX.X a FFO $X.XX restoration income of million a the share year-over-year, of of -- final and last installment contribution $X.X Laser share. $X.XX flat $XX.X from and fee was

reported from sale two perspective. included a FFO Other was was items, Fortunately, fees. the healthy MetroCenter, offset disposition no on these our the our growth which business. meaningful charges has of of a gain a in quarter and term from which FFO, parcel impairment were clean there on the Memphis, not was in $X.XXX noncore illustrates fundamentals of land than There

losses MetLife Compared sudden the higher a and than III drivers higher adjusting Petcare; less to million. the the margins average improvement and with for primarily than from deliveries, of Laser and contribution a write-offs This little closure, the Spine's lower development driven first $X by rents, quarter by sequential G&A million. in associated improved less by little operating FFO NOI were: was Mars $X and credit

grants as normal years, annual this know is each for have in As expense long-term us we year. QX typically from equity pattern higher prior the from you

of following to be higher miscellaneous expense These partially delivery and the were to development year. projects roughly of stabilization levels over interest interest G&A net from capitalized higher QX the by attributable items reduced offset expect expenses. other remainder steady We and slightly the

seasonal expenses of share. the results We operating third pattern share, quarter The quarter the our to a a XXXX adjusted the to margin to traditionally year. normal the FFO being $X.XX operating in in per $X.XX $X.XX midpoint lowest increase for outlook implying $X.XX

of include for occur the similar will And unchanged improvement June were our likely acquisitions that the In expenses our Occupancy the with dispositions. at Ed kept acquisitions don't We will addition, quarter. as actually September to forecasted be quarter the know, by any the second originally mentioned. outlook we some impact for end year Ted XX in future as both there third in and operating we dispositions and you FFO outlook. of XX or

our growth plus NOI kept the cash X.X% plus outlook X.X%. We year for same-property at to

associated includes As a this Laser closure. Spine's outlook with negative impact reminder, the

We XXX where with would over isn't increased more year-end, million. as Avion, until rental the be a This flow to by higher. outlook income Excluding $X little cash occupancy XXXX our cash coincides basis contribution commence year-end points XXXX. meaningful NOI same-property its largely before occupancy expected straight-line outlook is improved expected

With XX.X%, net the helped excellent net Mars of in contribution our during shape. remains of debt-to-EBITDAre MetLife quarter leverage and quarter. The and drive ratio Petcare debt-to-EBITDAre of X.XX the sheet our in III turns balance lower

Our strong range times end lower stated leverage towards metrics X.X comfort the to of X.X put our of net us debt-to-EBITDAre.

additional development left our One Tampa, the million have to With on of $XXX Midtown $XXX we million pipeline. in fund

of fund development comfort stated growth have no stay to ladder. range. within Further, can our capital have until be and to improve opportunistic increase and well and further ample additional we We XXXX, pipeline maturities debt our raising and opportunities the additional middle liquidity therefore, flexibility our maturity

business to fund leverage-neutral continue our to on expect basis. We a

from turn ATM the development, upon half or debt-to-EBITDAre we fund the were would net we development any than levels. rise to of noncore if dispositions, less current estimate, a the our of remainder even stabilization However, pipeline issuance without

development the on the ATM our stated range comfort shares able during and to issuing leverage continuing no reminder, the our past As metrics lower we've of the in to fund eight quarters. while keep pipeline a half been

Before take to questions, item your one we other note.

strengthen years, As our past of of well our free development pipeline for our with the the we've pre-leased cash same-store continues to delivery signaled few performance portfolio. flow consistent and

While we cash flow trajectory cash timing good feel quarter will for company. long-term given year, any in impact very or about the flow the our

now Operator, we questions. are ready for your

Operator

John first with Our question comes Instructions] Stifel. [Operator from Guinee

John Guinee

quarter. few I a am family best were No the you. miss life and of and done. think for personally decades, everything CEOs to in a person, better one get and in I Ed, even Nice great done the your wanted I and you get to really you questions going more Great. hope business you me. have you

Ed Fritsch

you kind. Thank so John. Very much,

Operator

with The Korchman next from question Manny comes Citi.

Manny Korchman

Ed, of and so congratulations investors the the I the going creativity be your you've as inherit well the team, the missed. of Everything you've done company but company for in Edisms I book constituencies, to and also to wanted for on think, the you the want wish and to growing I building know stuff for and as is had. going terms also all the sort retirement. who's And industry analysts done of that you the to the

exist? events going customer really going great. that the keep take a all and have baton all alive? does that that the to book creativity with internally you've materials who's who's So built, all to spirit That's company and the the But those marketing culture to

Ed Fritsch

comments little, John's to marketing build, Highwoods in a the of lots if any perspective a very -- build-to-suit the something collaborative very I've or the Well, a pour I fortunate decisions yours or first, environment into people it's be pitch of and one as to be user is appreciate coffee well. anything, sweetener individual. it very whether going be done that by at sell been we're pricing tenure. or make, on buy here. here we able We this to for that to course, and And

to we're table. individual And that collaborative It's We're no that imagine the from so a is environment. thing autocratic fortunate that there one truly you a furthest would or team dictatorship effort. very brings the

the huge creativity is and the So amounts. here dedication in that the drive confident I'm and fully the intellect and

Manny Korchman

as how ago past? of from mind the takes you Ted mentioned, to been that would anything or And there you'd part over, Ed, is want that a I then, in was about over any the how differences that. Ted in of And on you taking occurring guess, run potentially years Ted, strategically when discussion you company have be different things of recruited the that terms number have

Ted Klinck

strategy. time. the is I really, no. Manny, answer a in is answer mean long been place It's short had -- we've for well-defined a

I going strategy. don't is a I to going going continue We've significant think keep to the great doing the to but expect thing. forward. company changes evolve, got any team, same great We're

Manny Korchman

Guys, the here Mark, guidance with of by like lift entirety We too. Michael. the here it's like rents. looks work GAAP it was higher driven team straight-line or Manny,

accelerated expire would? leasing there maybe I didn't You mentioned into this guess that or you highlight there or anything Is XXXX. specific you got or was that can expiration on that renewed felt

Mark Mulhern

lease Well, guidance we so But in rise right. the was expenses Vanderbilt as growth well. I a timing contributor. the Nashville, rent of obviously, was I that good did mean some early, you're think and just overall

heard into probably some versus you that QX talk So us QX. expenses about we had shifted

kind the Brendan be something would this. that so to is going to add of primary And driver.

Brendan Maiorana

I would that what comments signed about hundred couple but of is commenced are haven't leases vacant just a thousand space. say on yet Manny, of talked feet square Ted's

we quarter. that the I relative about number think up first to moved So talked what after has

drive that's carry free think candidly, And helping in that that's driver some improved which I biggest and year-end. number XXXX, probably So outlook up. the rent straight-line those is the driving by leases occupancy

XXXX So rent. drive is in to attributable is of FFO -- observation your in correct increase that most the straight-line

However, as into that XXXX. we into will cash translate move

run end good as So be forward. we ability the terms space of up, and at occupancy rate the that year the in portfolio then in of that terms go position does the what lease better of we about in feel to

Operator

with Our Montgomery Stevenson Scott. Rob from comes next Janney question

Rob Stevenson

but up a to tear let try others to couple over will continue questions. of I make Ed there,

hurdle forward? the guys what's of are starts pipeline, on the rate on development stabilized expected the you In development where new yield your terms going And pegging that current days? these

Ted Klinck

return percent that that. and We've been development achieve Rob, pro still able forma for It's on and been some steady GAAP rate pipeline. our X-plus to we're time, pretty with

Rob Stevenson

Okay.

And current terms in over so in the that bank require Just increase to such I last terms that, starts continues? years. maintain looking -- cost from the that trying the Does land in is few to basis control guys and forward, of rates mean, of needing to you guys levels or where been it go versus future think you land further? have about that

Ted Klinck

Well, to of a bank an to and an I land we that fee to certainly of it's a the and front say, has we infrastructure aid land us, is more in of ready piece prospect can and aid get think but where it's on have title -- look, simple utilities go. we

same a we advantage, much get track advantage. it's balance cost an that construction rising So some what of But with in more It's to is experiencing rental those obviously, developers regard the cases to sheet returns. our all as to that are rates more of the having the of latter it in and record opposed a you although advantage order But have the plus to cost said. price. be had sync modest in achieve

so think rise be in has rates the market in construction cost. rise to with continued this sync first-gen And I in

Rob Stevenson

Okay. for and goals, leasing to how your And before quarter, leasing a TIs expect then elevated occupancy normalized portfolio? your the you the and -- return level given aggressive this more long guys to given CapEx

Brendan Maiorana

expensed we what guess, you would referring via -- the think I Rob, So look say CAD statement. I to at TIs is, that the you're if I the probably

you look you're number, at if So that right.

what expensed number That between And first year-to-date versus about about think what we've of in correct. expensed, the quarters is we've we've and if elevated. you TIs two year. is the observation leasing commissions, million committed, $XX Your

$XX our are or million. about commitments, In numbers those terms $XX of million

What forward is in year. with that equal of expect which going of quarter level over level there. normally has impact there's So level the some will would an the any out given commitments or timing, of we the expense

things think, makes to I outlook cash us normalize, Mark confident going alluded as prepared in those pretty should flow remarks, So which, about forward. the his

of a we at basis, that good on to would quarter-to-quarter of I level in think the over you in I if given of So statement year. the via quarters, think past or expect run kind terms any commitments the what rate quarter CAD expense is look many a

Rob Stevenson

lastly then And for Okay. me.

of stuff range it dispositions where year, marketing guys terms remainder people is likely fall Or depending the driven In approaching on now? by are for currently you in of you the you? your

Ed Fritsch

Rob. question, Good

have talked completed that we the So XX we've about.

what of the a it'll and on working another put significant there the on gets we to guidance the We end Based mark. see later year, now affiliated year. XX. contract in that our achieving be so we're in to won't on have the Obviously, us to be in high with but proposing be XX dilution market, of the right amount that, later

Rob Stevenson

Okay. Ed, And you will be Thanks, guys. missed.

Ed Fritsch

miss well. Thanks so it much, Rob. I'll as

Operator

Wells comes Fargo. next question Our Heck with Blaine from

Blaine Heck

Mark same-store a I wanted to or Brendan, just touch little bit on NOI.

second expect meaningful lookout QX? into other any there cadence we expenses same-store nuances As quarter. And year? you of affect half are guys some a cause dip kind being in could mentioned, from the as we to you third had quarterly that the the a quarter Should the of benefit this that pushed in throughout

Brendan Maiorana

pattern, long-term Brendan. trend QX point you is we That's out, that points you in to for as just now that normally, expected us. dip shallow seasonal more QX. in to And expenses as from QX drop QX, year, XXX Last that. normal operating beyond incur to were we some to that go than expect there incur was correctly it's would say in I -- of about tend we to our terms so basis operating Blaine, margin. XXX

we've means pattern margin that that maybe would take incurred. that dip more the you in the if normal operating So comment, QX seasonal that a than little bit

and little quarter. quarter margin a there's bit of third the So movement second between

it. of aspect an that's So

recall, the of expiration third of the rent quarter November from an term to addition the Fidelity In as XX. that, five paid which took quarter, year, last was of entirety of the they you'll in we months in if third remainder their

So we third in in well. year quarter that that quarter of recorded numbers, our against this third the same-store comp of as all 'XX and we'll

what versus think little items of second couple quarter those XXXX. did as quarter for we a headwind third we bit So more about create in the the

Blaine Heck

can Ted, April just the you is more the bit having think the rest you out interest year. helpful. would space? little there I of next Is in a when That's T-Mobile? characterize T-Mobile talked on space in And give how guys a Okay. for in half about color you that still discussion? prospect

Ted Klinck

Sure.

otherwise end so. a doing may staying months three little up T-Mobile, they so we they what have, longer up or maybe with end may So than would

so discussions terms on now those that don't prospects In about of active we've I sort have right now. gone -- prospects, real think sort the one it's of quarter, of other we're us. hold quiet. talking on gone right But they've anywhere. -- the for No last landed

we're staying little give bit we and get then bit hopeful longer there a more So a can time. little T-Mobile us

Blaine Heck

Ed, you Ted talked of of spread about you some where your markets. end development across And have handful whether Okay. Great. it's Can potential those negotiations guys development of on you major the stand? for an give or a quarter, by prospects likely last the year? you think us update another announcement

Ed Fritsch

announced and we done we not that until hope It's million GlenLake have that's into But that an a $XXX to But conversations markets added of Seven why some in award. of One. are getting done. range Midtown number why maintain and cover guidance million. that We of that's we the and between properly mature anticipate maintain anticipate it's activity what would ongoing that do we I lucky. $XXX the would date have to to So still million $XX we the these

Blaine Heck

on Great. enjoy and Ed, a your great career, retirement. congrats Okay.

Ed Fritsch

Blaine. much, so Thanks

Operator

Merrill Jamie Our Lynch. with comes next from Feldman of question America Bank

Jamie Feldman

spend glad Ed, Ed, to time on long and thank Congratulations the to but luck you and in see all next Brian ago that we're turf accomplished, home best you've to we with your not chapter, of Ted, some get you. Brendan.

Ed Fritsch

Jamie. you, Thank

Jamie Feldman

the So I space. LSI on focusing just guess,

conversations user. You talk depth full for of decide had the do wait couple you how the this do you more that guys before mentioned then a next just you to And -- long route? medical building about take Can pool? of

Ed Fritsch

Yes. Great question, Jamie.

right. you're So

said prepared both, my full prospects a with obviously, are in We of some talking that those as we're not I the as or one them about conversation building full near other or in taking remarks. building, it,

going consummate at those the We to building. something see quality convert to we the make conversations are continue we before decision ahead And fully go run those want of on. given conversations to those And we the to to if so juncture, this rabbits. that's and would can those that want exhaust

deadlines haven't conversations to on wanted and with the having turns the other opportunities. twists any on because depends of put it ourselves We we're that these

So we to those. just want vet fully

right who those a a of would then contact make with If maintaining full full -- decision users hosting floor these we we're of out. side slow-walking if to unsuccessful on XX right in the we anticipate now we office that these with tours minus. other October. handful play be do office vet building of or the we're very multi-customer now But go and then agreement we have likely others estimate that kind then as plus within would are good And environment. decision don't from days, that, being in either certainly, did if convert expressed of the the and next sometime best able do would to we we ahead to have those plus a interest and reaching two. to the side, we conversations those, Our And

Jamie Feldman

there enough -- not not you the office is fill really? Do helpful. whole to use Or building? yet, traditional That's

Ed Fritsch

much of have would -- Well, on it that prospects depends make. we at how that all a handful just

we we've and building in went once with the anticipate and would good, decision very office demand to is then fill the those up the prospects. in in for made is Tampa of that pursuit early the them they able it's given know full-bore user interest suspects that obviously users and with single primary the So to a the But medical leasing the the our process building use. being

Jamie Feldman

those of And about One, gears shifting going pipeline And more a the project about it's kinds part it's sits of land to then prospects do of investments? unique types it larger kind those case, a the Okay. Midtown and see you do you think where that versus opportunities? that's forward, how of if you mixed-use When your the project. of think given of development bank

Ted Klinck

Ted. is Sure. This

certainly markets. looking in at various are opportunities We different

just is I way part the changing. office it's the think whole of market

increasingly and cool walk space space can workers think we look at office changing their we office and looking demands, I amenities. to amenitized to want they as walk are lunch, how companies at

of most our in that at looking markets. are we So

are were right our we In we the terms of what bank, always what rank supplement just -- bank is buildings, other our our see to location, land we at to always like looking at in as land looking well need we land for. that

middle we of So of But a get always we're I be would really, forward, some projects mixed-use these that can at that's type it. would -- of goal there there's that say, in some no change if ours. looking going

Jamie Feldman

project? of about think be constantly any you a of kind they handful and more part when other a of those And build-to-suits? talking where larger are of about similar guys projects, Or are stand-alone you Okay. -- are mixed-use you'd

Ted Klinck

conversations along scenarios. Really, both it's got We've both.

Operator

next Our Dave from Rodgers Baird. with comes question

Dave Rodgers

Ted, I wanted can. you, to with if start

kind as in haven't those then seeing one in. about ask wanted maybe enough it one more three Just I talked Tampa you're guess. of because on clearly sounded it, are not T-Mobile we I much. the submarkets buildings about different and demand to And like location

guess, the that So cetera? demand, to maybe each like overlapping is to I there it's what's demand one next? et And location from if in see sound doesn't driving the unique just

Ted Klinck

Sure, Dave.

point and it's that suburban maybe look, on extend part It's As that of if really I-XX you we really yet. the the Tampa. back in wouldn't into I and geography, before location. still there lack T-Mobile We've Starting in or of about, back-office -- timing more short much prospects so opportunities. alluded as I And mentioned T-Mobile, the a longer of we we read remarks, northern to, got months demand it's three prepared two it's up term. I differentiates corridor more talked too the along the with location price get or think

-- still other So but deals, the for versus of in two are price that market lower overall, us the so which Westshore. is strong it is a back-office more point

price be in XXXX XX% to is those, versus availability construction, in priced So its And XXXX. to timing. of won't now delivered the Midtown more than scratched those, till the barely we've those terms Tampa, XX% starting think regarding point be lower difference though I as and going are it surface Midtown Tampa well as

XXXX then. So we hope and get can backfilled before we up leased would

Dave Rodgers

maybe And then That's Buckhead. on helpful. Great.

there? You maybe you new Atlanta. at? kind of new anyway about feel construction about are Can where guys competition talked you in What And against there? you and you do underway point versus price how would Buckhead anticipate talk well positioned

Ted Klinck

Sure.

one of over of Plaza a Simon's street starting or it a portion spec. redevelopment doing under So as really Buckhead, mall. Phipps their just construction so. feet square at Buckhead. XXX,XXX all of across the part on that there's building It's They're

Asking are XXs. rates in the low

XXs. think, versus closer assets Alliance our are One and Two of we our to So and Buckhead low really all

So there's a a large delta price-point from standpoint. pretty

against should So we we compete that able that building. pretty be feel good to

Dave Rodgers

lastly if helpful. you great and for That's team that. building nothing else, And a should having on Okay. a company. really congratulations be rewarded Ed, great And for

luck. So congratulations. Good

Ed Fritsch

so Thanks much, Dave.

Operator

next Our Jefferies. from comes Jon with question Petersen

Jon Petersen

things for would I certainly Ed. have about years. Great. all over that help all echo the been said the Thanks, Ed, your

Ed Fritsch

Jon. Thanks,

Jon Petersen

Yes.

it's So places that the to. of in Nashville, one Amazon's going

that think, own foot XXX,XXX I square some recently office away. lease in about market. far think not know you I guys signed, it's too they land I

might a has now presence Nashville with other there if any having Just bigger Amazon out be market have the update you at tenants you're potential more that conversations on that looking curious there? maybe

Ed Fritsch

Amazon There's having is hood a Yes. in thing. doubt good no the that

Nashville in comes good each comes business. seems of it And to with next market, the I it name begets recruitment of the the that Tennessee and has good market. to done think state their that job name the a that phenomenal like

lots the Island the a on flying with people nothing based fallout rumors amount coming that number of more Amazon's than they'll that, but of certainly rumors could announcement City. growing be takedown and what Long there So initially, X,XXX it's now, material by in

towers our called We've support to million it's would of one two either X.X Broadway, two and XXXX support then presented towers number platform. our or of the -- would really obviously The these a about single feet feet on XXX,XXX square large a smaller both square And XXX,XXX for project plus. prospects.

we proximity we where I the to underway think are have the with Asurion. build-to-suit with

Nashville infrastructure immediate Yards, is in that just the going location, into optimistic improvements very other of made course, development but and it us will areas hotel being that area of by Nashville also in Amazon the serve that not land only we're and city well. are The and the excellent is neighboring the entertainment then,

Jon Petersen

how years? But this out? -- a how was further economic Do I is possibility cycle. you've of Nashville, guess think probably there given how this is I that you are land happening in long earmarked few things talked about one strong over something going and past, for is the think still next the there lasting Or next in the

Ed Fritsch

there I possibility, innings run. optimistic Southeast to particularly indicators we no comparison Nashville, we're reason would this in agree I that continue We rates expectations. U.S. and economic the in But say the all but this be maintain and or to also there's the interest see definitely to and site. a markets, the extra in not about relatively we they being is where want global with are to haven safe continue you to for

Jon Petersen

larger Great. go whatnot. you some growth M&A to term terms And goldilocks Southeast capital seen Kind think, some availability beginning, find then I the and used and the your of, is of appetite amongst office think given some curious in We've company. of grow scale the the where we're of economic in your cycle, the out to I markets. the public what and peers in portfolios on

Ed Fritsch

I whether answer for think that single buildings that pretty the or on constantly looking. single address, We're our look consistent along a is street a We board. in entity collection be -- a portfolio company. it of a opportunities,

and amount to expertise And that been of have acquisitions invest team it. a able time it pencil a we presents opportunity in many, and studying. and on that when over think of that done lot pursue So significant if we track sheet years. and we right many the for itself We've we're and it's make the the the have I the something and years good, think to we balance

Jon Petersen

in the And I'm you at Great. what portfolio this cycle, Ed, be? of more. of just curious, kind your think one should full occupancy point

Ed Fritsch

a leasing. we're based XX.X%. said And good XX.X% glad that on equilibrium I think think We headed was where to nowadays now to on trajectory XX.X% of based I range. I we right you on should. be current I'm would in think going the say

we XXX,XXX that's probability already square on feet of more that of expirations, that's available future XXXX, So for square that for high in we renewal high more XXXX probability very square footage. look if or in feet at XX% what's have than the we XXX,XXX have expiring

based one as basically three we Ted that a have feel, we -- we on mentioned stands to able on on now would So the we're months in good lease time if that have the yes, that. have year at if XXXXX from additional T-Mobile XXXX really but us we then we Weston, get this have T-Mobile to prospect and some make give XXXX, we and

into So the and XXXX rates it. from I trajectory a going to and exceedingly development a XXXX All continue to then think the see reasons about and good. cash appreciation robust. stays perspective very into rollover nice continuing Rental good on is pipeline GAAP feel

Operator

comes Our next with Green question Advisors. from Street Ismail Danny

Danny Ismail

the career in great to the all on on comments echo congratulating to the wanted just wishing future. I a Ed, you best and

Ed Fritsch

much, so Thanks that. Danny. appreciate I

You and all the we that. greatly to have throughout appreciate years, story good mighty understand been our

Danny Ismail

a few the Ovation on articles ownership few a at me. sites. for ones just changing quick And saw We

Just curious any on us the there. provide moving if pieces update of can some you

Ted Klinck

Sure. Ted. It's

the So the is back really took around possession -- foreclosed July lender on they it. site X of when

to default. guys it following you for former the years talked we've a So several last owner probably we've as about, as been within

it. on staying contact We're the to going following we've working been what's that them. with lender We and definitely the close -- certainly we're So situation. engaged their in They're certainly all on. has and strategy but

good a the the site. of So we telling for be interest that's it good lot today. us. They There's developers what lender would is where are of complementary, sort is believe

with So in to touch them. stay continue we

Ed Fritsch

XXX track underscore, to this is own just total is simple XX. Danny, reminder, We the And fee acres. a

the a it's XX-plus XXX, of clear what acres. went about the So those XX But versus owns. free was of if our you now residual the XX line lender own what demarcation foreclosure acres, between of and what of we into clear take

component to the -- speaking just so that's that that's clear, to. And be Ted's

Danny Ismail

some to GAAP and of helpful. BBD -- on suburban and growth effective the just performance just in maybe fundamental pricing And of of in That's terms your divergences as the I'm rent curious terms of terms in of suburban the markets some lastly some rates? Okay. seeing more net assets of dispositions. fundamental we're between in trends

Ted Klinck

submarket Certainly, it. and by it see even the to down continuing market level. to varies We're building and Sure.

effective company, seen our As we've rent of track the portfolio. buildings virtually on growth rent net a majority net really building. all by we way consistently growth And the down effective the building of throughout

we probably in grow. been a the the think robust wants still suburban suburban little effective not I growth freight net on of The urban wants everybody does to to and see continue has product, pay out it demand rent our assets slower some the but location. to be in the

So suburban has continued to perform pretty us. well for

Danny Ismail

dispositions, of And from in original underwriting proceeds? major changes of pricing terms no the in on terms

Ted Klinck

two there's last pricing of or what four years, But expect. that probably plenty number right we've Not make of probably years bidders in down really. ago. there's still a three three bidders we in market to the line call seen it, or -- with still a There's staying from, consistent

Ed Fritsch

suggesting certainly are interest a think help the and we hugging first And two some two come the that, of the below change of now with rates quarter.

the certainly the on on us non-core pricing sale that think I helps of versus trophy assets. the

Operator

Capital comes Our next question Securities. Chris with One from Lucas

Chris Lucas

you forward. congratulate with it career, Ed. questions, the continuing on any have help looking work wanted the and over to wonderful team to don't just as I I forward thank moves your for to you and years a

Ed Fritsch

much, Thanks your Chris. your Much professionalism comments. appreciated. and Appreciate so

Operator

There this time. at are no further questions

Ed Fritsch

if you so don't us please have as a All Thanks questions, call. give right. hesitate always, to any much. follow-up And everyone. Thank you,

Operator

That ask you disconnect you the does We please call great for for line. thank that conference participation, today. day, everyone. Have conclude your and your a

Highwoods Properties (HIW) 25 Jul 192019 Q2 Earnings call transcript