HIW - Earnings call transcript Q3 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, October 23, 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 everyone. Thank

on Chief Executive me Mark Chief the Operating call Klinck, Ted Mulhern, Officer. are morning Financial Officer; and this Officer; Joining Brian Chief Leary,

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

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

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

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

the Ted. I'll now to turn call

Ted Klinck

everyone. broke Virginia development a activity and to and million completed and us. in delivered had Brendan, leasing transitions good you, Nashville, offering, posted results. our Springs Thank rotation was announced morning million financial this for quarter on ground exit a Greensboro We Charlotte and roles, strong bond market all in at CEO busy $XXX the It our COO and inter and II excellent top Memphis, of $XX plan

BBDs, transparently on the and a attract and us unmatched plan Ed our of company, improve to over and the other estate phenomenal served that and beginning strong real portfolio his retain place throughout infill with the from At gone sheet, are but guide a focus for company. strategic firmly four month professionals, and and The in leader tenants stakeholders. years maintain balance Fritsch the well at continue at maybe the plan been our role of has mentor commercial clearly Highwoods. last of retired. remains will continuously communicate the long-standing with CEO, key our his has Ed Ed legacy a to Highwoods, many day-to-day us investors

market is strategy, quality in with we Tower cash entry the from market our Bank This into plan all improve Once the portfolio, X.XX%. further Also rotation strengthen Greensboro announced August. of Union. issued Consistent overall Legacy purchase of neutral. rotation completed, exit of XX-year the of America with being of the bonds leverage effective the the at an and our quarter Memphis Charlotte and will flows, at $XXX our while during million rate we our

debt-to-EBITDA of continues borrowed ratio sheet and under at nothing $XXX balance quarter-end. line, Our to at very with our X.X strong our times, million be cash on-hand

renewed of XXXX our exploration; our backfilled in positive positive quarter-end, two points square operationally were and in GAAP Subsequent XXX,XXX We cash square to feet feet expanded at XX.X% second markets years. at expiration; and also Raleigh, feet Sequential the gains improved spreads XX had in in feet Weston XXX,XXX square also Nashville. with a of XXX,XXX of rent XX,XXX significant square new feet footage. X.X%, portfolio Atlanta strong of rent XX largest occupancy and and basis renewed basis leased Tampa. X.X We a points spreads with weighted for financially. most term quarter largest overall average XXX,XXX We Raleigh leases, and we and XXXX XXX,XXX square XX.X%, to the by square office largest including

of which of impacted relating We of was to normalized by rotation costs per FFO our $X.XX $X.XX. market FFO plan, share equating primarily to delivered $X.XX

midpoint occupancy outlook high-end $X.XX from the XX solid and FFO occupancy at basis year-end rotation apples-to-apples to the an costs of of by performance quarter on down prior $X.XX excluding fourth basis revised have to of quarter, third with from $X.XX. growth $X.XX our but prior points market basis. outlook XX outlook after our low for is The outlook share is at per and XXXX narrowed were points implying our outlook year-end a we to Given our $X.XX up up XX.X% midpoint. The additional our XX.X% end the

no At occupied XXXX our occupancy Laser time, Avion Westshore Tampa's property Institute. square Spine this year-end foot outlook XXX,XXX submarket, backfill assumes at in formerly or by

continue becoming medical office. users, that medical to convert We is traditional likely will three have it to dialog but with floors increasingly we

office We portion backfill to this building. prospects strong have substantial multiple of a

billing estimate Laser XXXX line we in quality for with Avion's As be office market we've approximately rent. to of stated before, Spine's rents

specifics rent projections, provide negotiations While we we at have prospects. on or completed with time architectural have want cost this ongoing cost don't expectations detailed to our and drawings given

Our to XXXX quarter, CentreGreen continues XXX% in in we strong development service In was which the placed deliver Raleigh, program leased. results.

total investment building. $XX square XXX,XXX is million this Our foot for multi-customer

BBDs. As August, $XX X,XXX one a XXX,XXX II, announced a reminder, XXX% we CentreGreen started million in feet XXXX. spec Nashville's Springs Virginia In spec project Brentwood, we in of square

in may I pro Seven Raleigh and first have still a quarter years XXXX service availability remember, six estimated have XX% our GlenLake you occupancy, of were placed and the pre-leased and prospects we two projected XXX% ahead strong Virginia remaining Springs At the quarters we before in year As at stabilization. in before completion, forma. of for

and bank drive development announced to that million large land of is We've see support build-to-suits billion pipeline development located prospects XX% good of a overall $XXX we that further development. have interest $XXX can for future and Longer and $X well year-to-date could anchor continue million Our announcements. we pre-leased. term,

Charlotte. BoA assets in August sale Greensboro in approximate Tower, phase market offices. of acquisition the plan one Tower no Phase Memphis announced purchase happen BoA to the phases, mid-XXXX. plan; the two our in to the planned Turning on-track and totaling of rotation includes the completion timetable of Memphis. Greensboro we includes disposition two of complete remaining and with in and We're and Memphis price the properties our Greensboro closing by for Phase preset in The would of one

XX our long-term Queen BofA and Charlotte the entry scheduled in take about ownership potential are and November our to very City. We into Tower excited on of are

terms of Memphis, the Exit we're Greensboro X In market Phase and Planned the properties. with in of all

one that leverage metrics and will expectations and levels pricing complete mid-XXXX. conservative Phase our in by we our confident remain to current return We

upon additional As there flows will result a reminder, with roughly BofA Plus cash be upside is Phase in FFO increased neutral. CAD and we future completion one believe to lease-up Tower. at

to Turning our to at the was sheet; quarter-end of midpoint times. times. debt-to-EBITDA the ratio range balance our of X.X comfort Under stated X.X X.X

on issuing As a our our over ATM neutral we basis years. without development have two shares a pipeline reminder, leverage on in funded

Overall, our portfolio performing is well.

balance of a and increased our rents with and continue maintaining focus additional highly We cash growing avenues carefully trajectory continued This development OpEx. sheet of pipeline our rotation preleased FFO in plan on delivery occupancy a growth. to should multiple Brian? and market positive completion managing while combined to fund with flows strong drive

Brian Leary

Ted, Thanks, and morning. good

During the quarter we had strong performance. leasing

XXX,XXX leases Second was X.X%. of XXX,XXX of square generation GAAP including we feet square office rent new positive feet robust a spreads rents cash captured spread of and positive volume leasing XX.X% and

of annual While rent leases virtually bumps. had all our

have cash rent consistently posted We spread. positive

and XX past by positive the during over reported Specifically net spreads of period. the same XX% XX increased we've cash rents effective quarters rent

up excluding posted rent and NOI. same economics healthy volume or occupancy X.X% Avion support we the XXXX of in growth X.X% In Park. quarter, third property Our and NOI growth future leasing strong

occupancy increased sequentially basis to Our portfolio XX.X%. points XX

Our midpoint a to of XX%. year-end occupancy outlook with is now XX.X% XX.X%

risk. significant occupancy rollover signed, is several improved number of Our assumes Avion. outlook reducing driven where near outlook but have We yet this occupancy to quarters, a leases by occupancy term no in that for been made past meaningful has year-end progress XXXX year-end commence the

several of years. have We XXXX, is XX% points revenues which the basis approximately than expiring XXX past through lower

our feet. larger Bank rotation in diminish role average has In of disproportionate We America Tower a future as Charlotte, of than and than XXX,XXX a further as expect typical the of weighted rollover share we complete review square Memphis the our to Greensboro term more and carry XX our near-term years. expirations of market

We XXXX, remaining two in and in XXXX XXXX. one in have one only

For feet to International XXXX, building FAA the a Hartsville immediately optimistic build-to-suit with Atlanta's remain in adjacent we square Airport. for Jackson XXX,XXX located renewal

FBI feet third build-to-suit XXXX. while in XXX,XXX T-Mobile, for move-out the anticipated a a feet XXXX, of square expirations known For and is include Tampa the we both FBI the the with XXX,XXX are a remaining and renewal quarter T-Mobile square in anticipate with

our XXX,XXX XXX,XXX square a largest in expiration only Tampa. remaining to XXX,XXX International not a XXXX feet of quarter, square remaining renewed customer the square expanded we well. exploration we an largest feet as Subsequent this additional XXXX, renewed by For but our second customer feet

feet in higher net living as which low Now of denominator innovation of education unemployment square product Jones XX% and centers of of office of in in we In positive A Atlanta rents the which XXX,XXX to low of Midtown tracking market of conducting absorption cost underway, Class no our sale X.X is . a square of or feet. pre-leased, posted Lang per We're reported business, square competitive direct million markets, development have is have by rates. $XX common which half where feet year-to-date competitive growth, and

signed a points while at basis team quarter of positive sequentially and rent XXX,XXX increased XX% leases Atlanta during the with square of GAAP spreads the feet quarter Our XX.X%. XXX second-generation occupancy in

vacancy Davidson Turning to average rates Raleigh asking a square where the core foot buildings to office class have strong, up year-over-year have be A rates According demand to or driven $XX X% of in and new high while urban continue falling demographic trends higher. Young.

XX% competitive million and which construction spread X.X X.X% pre-lease stock. five of of We're is represents tracking approximately is square competitive submarkets feet over

quarter improvement robust signed XX.X% commence Our rent during XXX GAAP year-end spreads XXX,XXX additional Raleigh of sequentially occupancy, by basis leases. square XX%. as feet improved a points second-generation leases we occupancy signed the expect to will with team and on Portfolio of third positive

office are over Nashville the market pre-lease City competitive year-to-date. of tracking of in On of XX.X%, reported square posted stock. net absorption which XX% Overall and the we're Music represent at feet X.X Wakefield million we're Cushman feet square XX.X% vacancy competitive XXX,XXX under the construction end projects quarter of & has

and elevated concentrated is BBDs meaningful Midtown core, role the Gulch we it's CBD, in no XXXX. new urban have where On until supply Nashville the

in Springs six Virginia We first $XX quarters quarter started multi-customer speculative the Brentwood forma. million ahead pro we of our I leased Virginia XXX% projects. square this II noted Ted As in XXX,XXX foot year, a of Springs delivered

of in Virginia limited success interest, Springs I, competitive prospects we're the up Springs early Brentwood Virginia indications lease II. the confident in Given supply of and

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

Tampa where to busy, increased portfolio where the our to in According the to team Westshore CBD CBRE been submarket, the increase majority very Lastly in A rental Class rates is a XX.X%. Class X.X% represents and located. A the rents has continue office of our in of BBDs There, square of CBD combined we're CBD, Westshore Westshore the the stock. XX%, competitive construction competitive and occupancy tracking pre-leased feet and and in XXX,XXX is as the year-over-year X.X% which

second-generation of XX.X%, building of at feet the square XX%. which Portfolio the GAAP includes rent positive leases Avion. occupancy spreads During XXXX team at is our quarter, signed XXX,XXX a full vacancy

repositioning During past architectural XX the floors Park. days the for our we've of Avion XXXX plans advanced three

building is X, As a for thriving adjacent to office reminder X moving Airport Tampa Floors, this are and X submarket. in International users. ready Westshore the

good and ample strong bones, parking Given location, building's ratio from interest the prospects. strong

our this healthy confident with are building re-lease economics. team We will

our significant We've made spreads conclusion, future portfolio. an excellent In of backfilling net and with and quarter healthy leasing second-generation rents. vacancies few in expirations team progress remaining strong the sizable with the delivered effective

for we our has Our of second leasing $XXX stabilization. expect years environment two are BBDs. and million, well-located, which in three product demand X.X pipeline remains healthy out development million foot forma office all least availability, generation continued The projects XX% first pro and with Mark? from at quality, pre-leased square

Mark Mulhern

Thanks, FFO $XX.X per share. $X.XX or million million We of $XX.X $X.XX and share income or of delivered Brian. net per

of Fidelity primarily This the mentioned, As $X.XX $X.XX contribution to last relating FFO which and been at Weston per we the full XX,XXX Laser reported from have share $X.XX. Spine. Ted year from plan five favorably rotation included months share per of to excluding market would items per NOI share compares rent

backfilling us the business the given growth remainder leasing additional in the Weston. illustrates solid well the of growth and company the Fortunately, majority strength positions trends of offset these which XX,XXX has our for of diversified including two items,

sale clean FFO reported comprises provided the with included land a the term net we or Excluding second items the we fees. the was the significant previously. total no gain rotation to of plan $X.XX activity quarter market market the discussed items $X.XX from of felt was that was of FFO against There The items, an capital appropriate in rotation perspective recycling these outlook none quarter associated costs as XXXX our release. impact were in with unrelated $X.XX these

driven The of from share. to $X.XX narrowed plan midpoint items business. market improvement offset in We to revised the by net $X.XX at and outlook by impact is XXXX the per the per $X.XX our share $X.XX $X.XX rotation share the relating FFO reduction to per

share the Our at imputes updated XQ in outlook to per midpoint. $X.XX

press of share and release, by the additional be estimate and pre-funding acquisition we Tower As will additional last for detailed the which BOFA $X.XX we XQ, night's in funding severance of NOI $X.XX in interest offset accrued from a of $X.XX expense costs. of

in higher and normal revenue pattern driven Sequential occupancy seasonal third the by growth fourth the improvement will improved to margin of be fourth quarter quarter to the quarter. operating from the due

for outlook the by driven rotation and acquisitions Our dispositions is plan. market

which November is now on our except is impact outlook. FFO in our have the future expected include of XX. Tower, our to know is practice outlook we case acquisitions to from updated As or close not typical you scheduled This included any BOFA dispositions NOI the with

in all the mentioned, market. part are now Phase as and of properties Ted Greensboro sale for Memphis As in contemplated X the

We the and the confident to phase our Phase X sales in by X end quarter close complete timeline first the of to expect most by remain mid-XXXX. of

As may anticipate now both night's in XX, around XXXX. have you seen division closing release, we offices January last

X.X one-time incremental XXX,XXX January X.X fourth will recorded million quarter, of X.X announcement which anticipated costs XX the through the closing be offices, to XXXX. the required XXXX. be the totaled aggregate, the first accrued in from are be recorded of quarter in severance recorded million the was original August million result, a our in As of quarter will XX of date the third and remaining in

debt rental same is This BOFA X.X our Avion, property $X.XX million G&A hand, outlook million $XXX cash of leverage by is With increased -- XXXX X.X%. of excluding of our Spine's outlook associated NOI basis NOI primarily impact retirement and turns sheet nothing higher sudden property outlook shape. We in acquisition be million growth due credit cash would X.X% the to related with includes year plus in the cash of and to to straight-line outlook excellent at the kept outstanding costs. points plus higher. Tower, negative our same of $XXX the first approximately closure balance the net for quarter, We XXX income line severance our the to outlook obviously and one-time plus on XX.X% EBITDAR on Laser

rate and have during weighted We only XX-year of the maturities with issued of of an years until now debt X.XX%. maturity $XXX notes We $XXX quarter of a average effective debt. million floating million unsecured no mid-XXXX, X.X rate

in already million We to we've have and ample liquidity fund given million the total BOFA purchase reminder, an as at $XX price. the to fund million deposit; have $XXX purchase QX, XXX left funded Tower we a additional

the a closing X.X but BOFA of Our between debt-to-EBITDA sales. year-end, X elevated there at within be mismatch timing to temporarily still times X.X the will target Phase range will be our the and closing as Tower of of

provide comfortably range, ample inside our or Phase This will we our our if to our times of of don't ranges. fund any program pipeline. we our completion to as the Upon shares under issue ATM to flexibility continue X.X other Even sell development return metrics X.X non-core sheet to middle assets. X target balance will stay

With Virginia XXX II million million to fund the of Springs have announcement on development left pipeline. our we XXX

a term plan the to our leverage fund Over to our on business neutral basis. long continue

free our continue highly cash of our strengthen plan. performance your pipeline, and questions market of we the development portfolio to delivery with of our the as flow take we signaled same-store completion expect we consistent have Before to rotation preleased

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

are your ready questions. we for Operator, now

Operator

Emmanuel instructions] a Citi. Korchman have ahead. go Please question from with a you. Thank We [Operator

Emmanuel Korchman

morning Hey, guys. good

of couple I Just rotation the market in terms guess of questions. a plan.

was Is The first do there others is, specific time why markets those where now? or this you anything happening in to it? like felt the

Ted Klinck

sort Charlotte, the of Hi, market bull's-eye, of this a is Manny we've the at obviously by really lot asset a of opportunities for looking we And of rotation, market top spent it been terms time list of new it's in this Well, Charlotte. a chase wish for. driven Ted. in again, thought time look, was our is long and we're found we or been has what different there

standpoint, as of to terms our smaller into an this acquisition a and strategic an so maximize now out funding ideal time one we so and in goals, to was slower it, we an terms -- being of a growth you opportunity there. buy markets and from our a new portfolio, of saw generated of rotate obviously So of value it's market. asset know higher Obviously Charlotte growing markets, was the Greensboro industrial one in with -- we think -- just

it's well. buy asset really as driven So on the

of an growth time opportune Just our growth assets other to in sell the slower markets. some slower

Brendan Maiorana

it's And Brendan. Manny

that Just the bit, to to respect with little a outlook. add financial to specifically on

recycle into Greensboro Tower a BOFA mentioned the As Charlotte of Ted to acquisition, the not the company. there opportunity assets, those cycle to now of think looked disruptive gains think why regardless FFO those at in sell with over Memphis if Union is, big question exit that time, I another flow that the it's opportunities tax cash an we if of and to opportunity or that both opportunity have I whether into we driver at found and given Legacy just was capital we've you've highly the

be And to opportunity. to so we those opportunistic, timing some recycle growth find into good proceeds the of wanted right to a

Emmanuel Korchman

Thanks, near-term in those a guys is think How mentioned marketing impacting remarks the that of roles in disproportion Brendan. that process? markets. you there I prepared lease is And your amount

Brian Leary

we've at in It's markets, disproportionate point not those terms amount. a in over just general time. time. just comment time based was there think of this is just over the in in I primarily It's

average. markets below the is in significantly company term lease those below average Our

actual has of a the So function we're that's in market short-term just that leases.

Emmanuel Korchman

everyone. Thanks,

Operator

go question Jamie have We Lynch, Merrill of a Feldman with Bank from ahead. America please

Jamie Feldman

Can assets pretty sounded for like confident. you're you about Thanks. it there, appetite talk the more the

You'll more pool the little color timing? get maybe sales a of bit done, buyer and on the but depth

Ted Klinck

but market all amount the days. Phase assets XX it's trickle Sure. officially the various so X now, they Jamie, over stages in last the of sort -- at are we've are

I will assets on feel of got just initial are the early, opinions pretty the were the broker still of we in early value and the I think as market. we this you it's tell based confident analyzing that but So, feedback we out

confident we originally at execute think time and our that anticipated, really tell. the I in ability prices to we're will

so I the up at said dispo the think you'll majority in plan assets see of first year. that, and on the did a we close finally guidance in the this we included market just we our entire the do get we that, end. far. but high We in But pricing pretty dispo get couple on we've X based may We seen guidance. quarter the Phase rotation when next what all of anticipate will quarter having depending feel good

Jamie Feldman

how Okay. more much how Charlotte. grow soon to And and in do expect then you

Ted Klinck

question. a good It's

close -- we as November we 'XX. closed we So said,

We a spend We lot at looking of both development well opportunities. market. there time have as in had that people land as acquisitions

is So sense time development makes and quick takes it as I but looking us, the up. we fairly build development the are to at closely guess answer as for obviously

on So the by We're we not anything modestly going come. to where growing plan any force stretch. definitely opportunities it

Jamie Feldman

some X users, building? but maybe on the soon the leasing? about could demand think It have timing thoughts there. you for for profile pretty there's office more then office actually converted talk ready those LSI for like you can then floors And Okay. And sounds demand you how good

Ted Klinck

office. remarks, floors increasingly as X to we're medical our looks currently said prepared So that going are the obviously like convert we to in

we all go. said are X, X X ready to As and

medical still thought. a with calls mentioned, of we've that. going been we're just than It's dancing couple last the slower lot we've So doing user, but a we

side. we've result, really office a our and activity our tour As increased for marketing the

If by but now, the and with a quicker, one building And these timing, floor of you large and binary. doing chance think decisions good we as right So a we grind know, prospects in both full-building it's longer. cash we've users. going partial and rent got get a larger very be land take customers, could end occupancy if to there's up I it's a we floor terms

got but go We've early discussions very So which still good tell we're on, from it's to going hopeful. to standpoint. an way some going office too

Jamie Feldman

do occupied take offices? the long conversion how before can But will think be it's for Okay. you build even the as take

Ted Klinck

more X I X months think its done can X No than think we probably. but it get that. or I than quicker

Jamie Feldman

saw changed outlook I build-to-suit anything in development high you down year, terms and then you're the about end. the you the for And least Can that of your at talk has took Okay. guys looking at? starts

Ted Klinck

think don't I anything changed. has

hit. always this predict given X discussions certainly, I it's of it development the hard And months to and just high thought bring on. going -- that end several going It's when appropriate left we've just we timing got think new year to the is it's just to down guidance. the

Jamie Feldman

Okay, thank you.

Ted Klinck

Jamie. you, Thank

Operator

We a ahead. from Heck with question Please Wells go have Fargo. Blaine

Blaine Heck

with I'll same-store Thanks, Mark good and Year-to-date NOI. morning. start Brendan. cash

you've think got as you QX expecting said, you're And it's Mark are usually that better occupancy QX. in continued I And growth. margins X.X%. operating than plus

kind at NOI in I guidance? that same-store should guess in guidance increased. have Are we growth same might So there of that QX specific kept you store mind was headwinds that in any keep an and surprised we're

Brendan Maiorana

Blaine, Brendan. Hey, it's

I had in of QX of in is comparable last we So a guess, I first mention terms ramp thing occupancy year. would

had So to in XXXX occupancy QX from in the respect of with in XXXX. QX we ramp ramp to this it's that terms comparable

lower had XXXX. QX for in for also expense QX rent our in XXXX, expectations both versus We straight-line and QX

there line versus of to is in outlook the bit little a with the a headwind QX quarter. straight So prior year respect

for outlook raising guidance relative probably So in of range. the say I'd to the are of majority terms headwinds QX the those the

only are GAAP thing basis than Xrd on this a the cash quarter's activity, mention cash then were worth store is, a one higher I quarter last is, if little lower pool, basis. GAAP but range because from and the same to is and are of year The in development of In are NOI challenging. we the the a on you that look each flat rent from there. quarter assets a that is growth same-store which have aspect so our in this in were where over basis, bumps GAAP expected the drivers bit GAAP generally quarter, is we Typically, we signals can there than there basis, think year of cash raise on subsequent of the cash a other on were growth I'll quarters. for the And which NOI some basis a that a at be

Blaine Heck

very Charlotte America Switching gears or you Great, buildings Bank that's that of elsewhere acquisition the market? question helpful. and just think become focus Tower when have on do in acquiring Union an the follow active in up Do to you Legacy you'll at guys first Jamie's side? did you adjacent on to opportunity or decide look

Ted Klinck

a doesn't right have mean other do we not but have Sure. at any the buildings. at That all. them, first won't on We look rights additional contractual we don't

and Park. CBD think where grow our is still I markets to as South South one of end in we're preferred of terms going is Uptown So

I primary, sort looking of Midtown think our submarket that we're at. another

So are X X the really, those on. time submarkets spending we're or

Blaine Heck

your whether then you've for and last into a one years. within about the you talk number the numbers bigger has Ted topic as transparency helpful. risk recently into of within co-working me. to changed. the that's in we press guys X maybe view see and markets guys How any markets a Clearly, them and the tenant been you portfolio; tenants: two, the X other expansion your a and way as Okay, you a hot And going demand rapid come seen. we've in have number in driver given forward, last do co-working one, WeWork seen

Ted Klinck

questions lots Sure. of there. A in

if back, or come I may miss X. So X

do we I mention, any to have co-working WeWork. the don't to of exposure terms In want

Our less exposure of It's revenues. X is leases. reminder as just a than X%

what the the of to landlords we've done of last sort are our near So with more headlines the think and dipped term. going given cautious, couple terms sort into do to the WeWork. Again, toe co-working But go water chose in have operators. the in of other we just years, I of the probably be not

they're no going enhancement, to risk closely the different what really think of than all X years we I that last the is given credit these what X throughout leases They're focused Just or sort signed we've done profile and the which headlines. evaluate getting, on. we've

We folks walk well. through of our of look have our are all current very operating property full. all They ours like managers and and leases they're

feel we comfortable what I think So we have. with will

we're good. So I think feeling pretty

just becoming flexible here terms I I part I migrating to to space the business the as office space, market and a of co-working is is of stay. it's think In think continue it. over space, just going from grow. that enterprise term just bigger flexible more is co-working the And think to time flexible to

quicker companies they terms. think want I want flexible more and space

would that, be we a kind we're at a of is sure providing want. as look right way as constantly customers we or that we manned So -- of make our office our sort a like the co-working light-type won't the need space space amenities We but so and won't used landlords all and may have roll model to We're that we that out well snacks that lot spec be suites just we're working whatever program. of out on looking to put being that. is changing do

Blaine Heck

Great, thanks for the commentary.

Ted Klinck

Thank you.

Operator

We Montgomery question Rob have Janney a from ahead. go Scott. Please with Stevenson

Rob Stevenson

coming XXXX the of bank in is guys. in much markets bulk Tampa XXXX that The and currently is going to these morning, online is. where already buildings, with you your be seeing than new supply and pipeline your competing competing Good [indiscernible] are land which other are that's Raleigh, development How Nashville, leased?

Ted Klinck

Sure.

that meeting really, coming on, others. watching more Most Nashville. stick the significant I is call closely feel of than our or think we demand, that that XX comfortable we're there part supply so. where out a submarkets it that closely very markets most supply months is the next, really downtown is for of watch couple new the we Further ones over

So CBD Nashville any XXXX. ambient at have downtown is we one. don't rollover until meaningful What Nashville gives us night is

time in should it we So rollover. the about where before new hopefully today, and but is construction stays up assuming leased deliver any demand have get

a we but are Charlotte. in there's doubt. lot without So, a Obviously it watching

underway. radar. If feet stock new at and directly. compete percentage don't But one Midtown million product doesn't anything is pipeline. Midtown directly our square part. insulated Raleigh. we And has they Buckhead compete Midtown we're is, are in preleased pretty construction coming as a Atlanta but for new X you of construction pre-leased. a we do. look so. often. again that's online. And that of midtown Occasionally that's at most thing about our that on they nice amount most highly that amount that don't There or there new XX% Midtown significant is look percentage lastly have well Atlanta. from large a of stock Atlanta. fair The Then Historically product be The of feel the We competes But comfortable where of It

demand CBD markets continues Raleigh Other think pretty I we're really pre-leased. incredibly that but feel it's strong supply think to feet more got than so there. good. overall million we've Raleigh, market. risk our looked XX% huge about square Tampa that, meeting and and be We has is at, think not a we X it's tracking

well. as So about feel good that we pretty

Rob Stevenson

on Okay. demand you point at And seeing and in are projects this in Orlando Richmond, to significant cycle? Atlanta enough start the your any land

Ted Klinck

couple need. of to in-place a there pretty pitched to we've what relative rent Richmond, high but is a needed deals differential rents you build-to-suit still

Atlanta, start project Riverwood success certainly We River with we're want we before that site. of lot there. some a with had a I XXXs. out see narrow think marketing XXX So to our we

Orlando. always if but to that our folks our in been full. we'd same Orlando, CBD, deliver primary find Then So we've prospects do almost there the prospect. delivery out we got in in in design in pitching Atlanta for and be new have Orlando a love really is a which one There's to able the land we are building something market, its

So we're on several in We've well. that. that very active made as initial pitches marketing

can. done to So get we'd love if something we

Rob Stevenson

we various with lease other building a When about if a X elevated and think Spine now. of as the and leasing while normalization likely as lines factor sale new tenant extrapolate and at should And quite pretty you T-Mobile trailing look and and for a X trailing X portfolio, Okay. a the X XXXX? Memphis road or then and about they've normal we forward? going then to be in improvements, Greensboro this the those to or been part quarters thinking the much I ahead is there of in Is XXXX the coming re-tenanting Laser ahead commissions be of bucket, quarters how improvements of

Mark Mulhern

it's costs. Rob, higher Mark. seen Obviously, Yes, we've

So but here we gone in some has upwards there, have and remarks, Ted Brendan. trend and especially a there through did prepared his been has as

the of the the some of gotten out have exploration. way, explorations upcoming We

XX,XXX So and a historically. probably than cost refill us than more little to do Weston has maybe

So say trend. I new wouldn't it's a

think we're mentioned Laser I I those that optimistic and economics we of think opportunity. re-tenanting Spine on activity, you that have T-Mobile some can good

going say would that X last probably So quarters. maybe little I forward have a lower than the in X or we quarters

Rob Stevenson

could year. have one they me. that last mean, to we're expiring I then already do? possibly FAA I what And X they given mean the Okay. this needed from lease is to the Wouldn't lease almost to or for in bureaucracy there? move sign government exploration is point involved waiting at out to it sign is there this for or more something just XXXX a order November

Ted Klinck

No, just it's not unusual the government certainly incredibly Its totally We going you but we just with It's with said. just lot dealing than what longer confident to remain been government that's deal had hoped, get that the done. largely leases. taken slow. a

going feel still confident to FAA we So very done. get the is

Rob Stevenson

to two not them in move Okay. going it's right? Because truck it's guys pickup like a

Ted Klinck

exactly It's right.

Rob Stevenson

Thank you. Appreciate it. guys. right All

Operator

And John Please with we from ahead. have Stifel. Guinee a question go

John Guinee

you. thank Great,

need to XXXX, about good pesky rip lease the Memphis you sheet. the you to people a just these people can ever are up, Have get ask position continue ask to out is me just to and ask good where you off little delivering in balance about obvious towards economics, this. leased ripping to your you all And guys getting deals? get Greensboro get sold, band-aid of off Laser question. and and until ask Until and going band-aid Spine you what the Let thought development direct

Ted Klinck

have the to about value think buildings. create we've But haven't portfolio. love is It's Certainly, We it think that. John, Spine if a we'd had continue a on we to high-quality I you, Laser can that seen assets. building that on in thinking offers I'll XXXX. specifically building you vacant our tell

likely really hold building We once So long-term it. us no like get do a up. it. desire for to It's we it on that leased

continue Memphis going just look, In to I of the terms that we're all stuff and through it. to grind

on I from answered market and feel have that little to take of confident in the in both is very think we bit now plan. but time, rotation we'll what quarters going X plan our XXXX a is. hopefully It

need time, our going sale So some do take to just a opinion. no it's to in really fire but

John Guinee

luck. Good right. All Great.

Ted Klinck

Thank you.

Operator

We Rodgers ahead. with Baird. Dave go have a from question Please

Dave Rodgers

into those you continue the is of Avion quick you onto? a you're lease guys, process. begin Hey you to the kind bit floors to get for enough with have something a of had just to in hand convert holding that feel little me. Would before until office do just an your thought couple way follow-ups you building or confident At

Ted Klinck

pulling the go to up paths users. question. we different time Good We're be likely permit as down going the the just a with to speed parallel

We've just starts So to the pull soon. is that, but but see which them, done, to think done here least still they as need drawings Had could, permit with we we plans around will. some as at long lingering need all permit medical we're is probably likely a -- I but more a as which as and recently pull conversations last start don't is got and we so guy and we are. Friday

Dave Rodgers

to got building it Avion if be just straight today? What replacement was office

Brian Leary

Hey there, here. Dave. Brian Leary

at getting we're economics and build like to foot If from that buy it and re-lease submarket favorable replacement. at in a you're the to close so to scratch, XXX it you position we had below still where that

Dave Rodgers

go Okay, wanted to helpful. back I comments. that's your Ted, to

drive the of of billion activity from to more about all you on you hold to question that $X the the And kind talked that on earlier. down you related You of to of the land the bit path, little continue I land? XXXX you of similar a in get Rob own own. can got maybe land starts. potential then that having the you development discussions beyond the are you Would

Ted Klinck

Sure.

very it's make land what I multifamily sell if it. there our going of always we is process We're for sure we've we if terms for is to use similar right and for In the buildings. to land. our to do with the some don't land. evaluating of and look we a better If got our mean decide going we're higher reason if

that for several point one core last at sold hotel that the we uses, uses. sold land was land over multifamily years, we've So

whatever. not So land We'll sell We mixed-use we or are any to better wed or land. stretch. any rotate for married developments to by in some land

So we're it. looking constantly at

this some sold office quarter been some of we saw well, could which uses. that, as have You

going So land. evaluate continually not wed our We're it. to to

In of Couple terms than of a I of build-to-suit like going We've opportunities. development more got, said, prospects. handful on. discussions

even which hadn't the of city One chosen yet.

a these So we've deals. of pitched lot multi-market

handful So see it's when that And so own. pre-lease too tell be right start. partially just for a pre-lease be building where we've a we're a to also we'll But on the of pre-leased decent land got at hard to we time, they now. spec land, we pitching those just same

we've control. don't made of So no that up are our we we think tied It's virtually are owned pitches making or have that land. land I on all of

just these that pitches. for having land important is So we control incredibly

have. we're but to the any nothing like we by of amount again, ready So stretch, report activity we

Dave Rodgers

on Raleigh CBD. Great. the last And then maybe

an some heard where supply. just I you have think it's I more area maybe seen mentioned you

that. you a in that you how give of kind I bought and there pursue different of projects development Maybe plot that X sites you think the land of could just a on CBD. so Raleigh those sense give there parcels as separate would recently kind us You X the well and think about

Ted Klinck

Sure.

the Actually parcels, that two said. in got -- we've two parcels you center CBD. one one So

what's The or off you One feet. CBD is which we we X we X warehouse can blocks less users. that called a think in as build building away options totally or than can second have, to it's district, build so We a different X so. so about for said, X up the XXX,XXX in roughly products was different there

those actually maybe part both closed one more is closer second of one to other XXX,XXX symbol the in on one We've putting together. a we're we're a office. and But piece. district, of The the feet type creative that of -- a that's little warehouse

contract another need have closing piece that We that we'll we here be shortly. under

customers. I think we both deliver can like potential positions our for X we So and different products

Dave Rodgers

Thanks, Right. Ted.

Operator

have Jefferies. question a from ahead. Jon go with We Petersen Please

Jon Petersen

Great, thanks.

at looking new were markets On the enter, looked there coming-back-to-the-market besides other were to rotation you you Charlotte? plan, at when markets

Ted Klinck

some for time, time I years Austin spend actually Texas a Dallas mean of of we've and over I'm a most certainly sure, in, in in we've and long that markets time the recently, time markets, got fairly the list strict Houston. we spent

we've to Sunbelt. into. I decided that other want not markets it's Houston think go in that a similar is market we the we're are But the to ones very

Jon Petersen

Is in Okay. footprint company think to appetite have an the of terms mean, timing, expand the there you anything about do I we of overall? should

Ted Klinck

depends on it the think I opportunity.

before things I Charlotte the we're again, in a to we and right point. entry chasing time lot think we've, find of spend able in get

our want to we the So, national demographics in business outperform of markets. is evaluate Again, part markets strategy normal of it's be continually to our course normal just and other averages. where

markets typical period just owns assets to target have who [ph] of in we know who in it is an assets, with normal what that suffice the own course them, wish-list staying and business. ongoing those hold we we say, -- of our the constantly we basis So, their to we're most touch on know

Jon Petersen

any And versus should and are on guys will them, or the down rents where should [ph]. or you those renew about probably I up market, more you. where Got of in government terms we two leases FAA the movement think we then, those? coming significant expect FPI likely, guess, how up,

Ted Klinck

question, good we them of flat. to think Yes, going both roughly be are

Jon Petersen

few have any rates rates you last months, one, have in the You obviously any interest then, you of guys change? acquisition seen in and moved terms the have -- seen change how market, much buyer pool? cap with past disposition in and active one And the down are

Ted Klinck

our but ago, think years a down you enough certainly buyers it, call probably we'll the are market assets, market how out buoy capital should see there’s a probably bit. a rates and helped rotation do make expected enough pool our it from, think the market, capital there, is Again, number think a X X the in or we're I so there's If I and for pool process non-core a debt but pricing. a deep little of a bit. interest of is, low market in buoyed bit little financing, abundant equity rates, the buyer about market debt buyer certainly of to at little the still the be

Jon Petersen

Great, thanks for the color.

Operator

And Street ahead. Advisors. go we question Green Please a from have Ismail with Daniel

Daniel Ismail

Great, thanks. guys. Hi,

function cost cost there on than think higher few versus of is a a How rising that the our comment changes being earlier much in just construction tenant any I pieces was of of expected. backfilling a meaningful concessions?

Ted Klinck

but we there I so, great out, in XX,XXX the of were this back I year a line get term. a think as out biggest longer quarter average, did Mark you significantly make cause it's with to. deals, and stats and Weston, higher percentage term we versus much had think did We TIs the some really our we little bit, we're alluded historical the got over elevated new just those stick -- so pretty mix if of I quarter leases have think renewals, this of Brendan but

elevated in levels. So, with combined [ph] new what the called term leasing really mix is

Brendan Maiorana

Danny. Yes,

to effective The and but significant a in talked we way. about really pretty the before, other thing see up continued would this I move mention we've is, net

that, So, I rents while higher getting that think respect there to and shows back that of level higher that is some term. we're with TIs,

fairly generally square TIs have foot while few rents good the have even up a that basis. over felt moved our So, on think I years, net we moved per up past have effective significantly

Daniel Ismail

or many not currently from those those just how you on a in the follow-up in potential those maybe of are give land build-to-suit can town having tenants with have comments, currently in year-over-year, that discussions markets, a bank change you're tenants are who those out tenants then of And, versus been markets?

Ted Klinck

that, new Yes, [indiscernible] amount disproportionate Certainly, but I traffic and market. constantly we're markets, so took half inbound probably that, also half. were we and new a and all seeing to organic it's seeing our just of inbound calls us all and both

years. So, maybe half you half over of and -- a if number

Daniel Ismail

with pretty is And you guys historically? have typical that noticed what

Ted Klinck

think so, the activities. I good is good. is it's thing the mean again Overall, activity Yes, the I

that's probably overtime. been think I

Daniel Ismail

that's Okay, helpful, guys. thanks

Operator

Bank go And of with Merrill Jamie America question a please Feldman ahead. we from Lynch, have follow-up

Jamie Feldman

Just two do you're sustainable? quick follow-ups. are seeing think you leasing spreads One, the

Ted Klinck

growth had Again had was we've in XX we the So a Weston, quarter, cost TI the buoyed quarters. both cost in rent Jamie, XX% rent positive in this spreads cash of last XXXXX those as capital XX at leases. the

So, which did help growth. our cash rent

growth and If basis been those line capital you rent so points, hundred cash in would a would have would back out, been three-ish have our be range. our down of that couple

Absolutely, So continue do with can we X.X be high. little I cash growth? think this rent might quarter a bit

Brian Leary

spreads level reasonable? And next probably as I you year, of about leasing similar think guess is

Ted Klinck

our markets just I our really, fundamentals -- are good. really we Yes, continue to think in

is as the person to on we a have our Our leasing monthly activity in market. really tour activity tour basis, good a calls

markets groups Our our so inbound. both active well, economic are as organic in development and

it's sustainable. think I So

Jamie Feldman

where or weighing about excess Okay. rent? submarkets to you're mentioned the And markets couple supply you Are of push where it’s you had in a these then any of thinking ability seeing any on potentially supply. markets

Ted Klinck

delivered it leased lot seen under deliveries, Not construction, with up A of lot vacancy. a and haven't of a yet. but significant is still haven't so we amount of

as vacancy our lot a sub well. markets think XX% I So of are

most in markets. So it's still a of landlord our market

we yet. So any haven't just seen signs

Jamie Feldman

Atlanta, to that has I slowdown there tight it’s you there And there? just what some flagged weakness or around some as you been, know seems Perimeter Central but been a like, moves or Midtown, know as is -- too see market in starting that in I are guys

Ted Klinck

well submarket. road good couple clearly slow two it Yes, psyche things. I it's it's as think think so that is Perimeter, that I improvement I is now activity Central customers a a Central there and right but impacting the Perimeter question. dollar One think in could, -- gone of is -- as it's billion project

slower there. a So I activity contributed maybe think that's to

going there space going to buildings another They space they State vacating As vacate. which on of to completing continually the to excess couple as be are well Farm that is currently some is and market. going occupy, put they're

do Central the softening be Perimeter So I that think could some.

Jamie Feldman

see other your like markets demand that condition? or submarkets any moves putting of on there kind pressure you where some some Are on could across unique

Ted Klinck

there. the that's a Springs sublease top on the in there's as a bit. market Jamie, They couple But Off but sub don't head, think the a little in amount maybe got materially Nashville, other to think of one I put well. that a there. that's watch market I occupier space market, Cool Nissan we've of and fair big is my of leases the impacting

Jamie Feldman

Okay, all Thank you. great. right,

Ted Klinck

Thank you.

Operator

time. are there this no further And questions at

Ted Klinck

follow-up you All all in for you. interest right. out. Well to you your Highwoods. Thank feel any free please thank reach And if questions, have

Operator

participation. That does today. We conclude for your the thank for call you

you please disconnect your line. will Now,

Highwoods Properties (HIW) 23 Oct 192019 Q3 Earnings call transcript