Equity Commonwealth (EQC) 26 Oct 222022 Q3 Earnings call transcript

Good morning, and thanks for joining this call to discuss Equity Commonwealth's results for the Third Quarter ending September 30, 2022, and an update on the company. [Operator Instructions] As a reminder, this conference is being recorded. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of federal securities laws. Please refer to the section titled Forward-Looking Statements in the press release issued yesterday as well as the section titled Risk Factors in the company's annual report on Form 10-K and quarterly reports on Form 10-Q for subsequent quarters for a discussion of factors that could cause the company's actual results to materially differ from any forward-looking statement. The company assumes no obligation to update or supplement any forward-looking statements made today. information be website, material. important information www.eqcre.com, posts may that company on at its including The The company's include measures. quarterly of earnings portion today's also certain remarks non-GAAP on the financial company's release measures non-GAAP the company's supplementals press of results. to yesterday's financial to a reconciliation refer containing Please the results GAAP for these and

call Helfand, go call CFO. I that, And David CEO; over David Weinberg, Please President the Helfand. to the sir. On are COO; David ahead, with will and today and Griffiths, turn Bill

and result signed in the higher X.X% $X.XX the properties basis as third and share quarter NOI and XX.X% XXXX. income on cash per other the $X.XX morning, per on At This feet $X.XX loss in compared third operations XX,XXX quarter, the per and per FFO a a a to of basis. of us. Rents those share review markets, joining the the Same-property as $X.XX up in compared on leases in share cash as for X.X% XXXX. a largely for Thanks Funds were a we you. dispositions to results on I'll increase increase of same-property interest square per quarter normalized ago. FFO of and share provide quarter cash was in company's Thank up a GAAP renewals. well NOI. The was was was from NOI our XX.X% growth per activities. investment a a the $X.XX compared leases same-property and to third well new share were $X.XX as brief share year update down also Normalized FFO capital

occupancy leased XX.X% and was As of occupancy was September XX.X%. XX, commenced

balance the to Turning sheet.

at share $X average at of have to $XX.XX cash per price paid debt. in per adjusted repurchased share XXXX, repurchased XXX,XXX a $XX $X.X an and $XXX we've approximately billion for Year-to-date, million Since dividend million authorization. the an or for today, for share price of shares for With have total on we dividend-adjusted dividend, million dividend-adjusted $XXX $XXX we buyback the million million repurchased our respect no buybacks, remaining average average $XX.XX quarter, adjusted. of existing And XX.X we recently $XX.XX. or shares of X.X per have $XX.XX. share million an We $XX at price share shares we've of

The gain significant During the completed quarter, XXX two transaction share $XX portion on a October transaction we of gain that of million made the we call. up last of $X distribution that XX. that and assets, the paid discussed from per taxable quarter's generated our on we special

debt year. environment, this In of today's changed are markedly and the terms from capital markets current earlier equity

Today, disruption first and significant availability. funding certain doubled, experiencing half asset with of classes completed debt transactions driven by debt The debt at is have a equity costs of and capacity. market significant pricing shortage XXXX, aggressive sellers the than facing more

sectors. time have of being. potential a the said Given the calls, variety past for we evaluate wide were the to three a we've sale for to as of are the tepid marketing interest properties decided continuing to on With of and buyer value-add we range office, opportunities hold for we financing respect acquisitions, across dearth quarterly

as patience been for investors. most for want to As of well you us, time. a assure you challenging looking I I has are been it's long know we've showing been aware, for that our

that at risk capital stewards attractive, long-term to long-term We'll for are doing to outperformance that transaction reflects a take to love opportunity we'd capital and challenges The continue our optimistic. the team catalyst the we're a Bill in to that, be can to markets I the for heart. compelling that offers be foundation an We're and David, shareholders' focused, a for we remains be With happy price a at EQC and and your acquisition disciplined work to of While the growth take responsibility serve EQC. will we fundamentals have deals, identify taking. thoughtful that hopeful as questions.

Mailman [Operator Please first comes Our proceed question. Instructions] question from your with Craig Citi. with

office to environment, Hi morning. lack as you just Good start debt, on on the cash, interesting. I Obviously, you what about deploy across others? kind position to much in maybe if want to you of talk guys. so just as envied transactions. price a in more property going come less can't the and probably office think you kind surprisingly. no really today. types sell holding here, is But does the where capital property are discovery look sectors, Clearly, you environment there's here guys the you But this acquisition attractive a not in, want than still just pricing can may on much look of of

your comments have as we equity do it's and also Not to answer. add Good Craig, just David units. cash, Weinberg. I of let question, have and some OP only me we

we're fundamentals So of we we're a David think provide terms reflects structure. that flexibility the key with to said, looking, sectors, a then where we we the as of that in deal And across want taking. terms the it's being deal of lot long-term, a at find of risk provides in a price attractive variety

to as priced despite hard is access it's If and businesses. at they're price sectors on if still good as find we The headwinds. very I'd say, we them we those like deal an for discussed, some and businesses. latter, short-term buckets, make risk those we industrial end took both getting as clearly that you there, So We that level to I'd a to think intensive, recently, a other In attractive have risk we're paid and in spectrum, capital office perhaps more you more a we're lot one we've those on former, covered have getting at a maybe where mentioned, to run residential. would -- up were strong we've scale. getting hospitality, before, and compared that the tailwinds say line clearly sure single-family which

look I'd we're brokers specific having classes of bankers we can't variety across asset sector. say as and owners, to and a continue So we've say look. we that with conversations represent sectors, a circled different I

hasn't as fully private much. understand that moved market I

-- equity and not holding market for there's in is bigger a to there. transaction? And as more much today place public so a looking I just better the in moved versus the out be private the market that mean, has market repricing clearly, But swiftly here.

to reflect the and change don't place question, I than not on look. I in yet. the private don't environment, of in more think good going at the better to so where sellers sort Craig. change accept It's if rates it's that's a Helfand. a markets public have Clearly, what's the know David least markets

take I and in sellers early. of to think there's have going is all dramatically pretty to little that. changed availability it's time general judgment debt Things in for sectors, terms acknowledge our debt, cost of a of

I think we're well positioned.

show here build we'll find invest transaction. I a going that to attractive initial business really after in and patience. shot But hopefully to think then a we're the to we on get continue can both

has it type debt market. capital be find maybe people mean, of the risk-adjusted in opportunities lend a would very through be now. should even on I a debt side, the a you maybe But more maybe there to question the there loan-to-own but looking kind from the my dearth clearly, -- mean, or said, of focused perspective, investment, I side. moving like some would the even there's seem door, landscape to your some it clearly, cost as equity at either out the funding there less capital. And been of And situation relative to that just right what's secondary of accretive look? should be

prior discussed point, it on Yes. and calls. A some fair we've

to of be capital best that but might lender, be be equity. that. attach, is equity We're debt providing the to to and strategy not a we debt a Sometimes to lender capital we pursue into open turns a to provide would way the going

and anything of between the shut of company EQC SPAC? But the the here. But to I just a here is perspective, while, chugging outside to guys you maybe what nuance of scope keep if have mean his you opportunities versus price along. been run. kind continue EQC lack work continue and SPAC letting EQC, back there bit the for on his make controlled thoughts of but stock And decision a deal clearly in look this little haven't Okay. just last SPAC, then at the one, because from able August high-level the just here. just that is Sam to down And one the

they sold in to They Anixter, CEO acquisition. in of designed to that one. Yes. business, SPAC businesses. shareholder decided and a was weren't Sam Well, for distribution the SPAC to raise was called controlling capital you're business. Sam able industrial the the distribution an When pursue find to try to find which referring almost years XX the company to the that was

Of for frame those capital. for the of have course, of opposite, frame time is time you that use a capital. the specific EQC know use have the specific we no SPACs the

in I comments this has us my longer tooth the think in than of opening I acknowledged expected. gone any

the likelier now markets I looking attractive we and business economy, a there's new new because the the we in and life price the a the to than path But and probably seems past. the an were at having in in haven't what's us volatility, to think think return today here, happened capital a found uncertainty, on fair was opportunity, anything. capital it the and absent capital we being for patient

you. Great. Thank

[Operator Instructions]

be Thank it, you for appreciate and we us, joining well.

This concludes today's teleconference.

Thank may participation. your your time. this lines You you disconnect for at