Equity Commonwealth (EQC) 4 May 232023 Q1 Earnings call transcript

Good morning, and thanks for joining this call to discuss Equity Commonwealth's First Results for the Quarter ending March 31, 2023, 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 statements. obligation or no statements any assumes today. made company to supplement update forward-looking The important its information including posts company The on may material. information website be that www.eqcre.com, at

also on The the today's press company's measures a release the results. Please the reconciliation include containing yesterday's certain supplement GAAP results company's refer portion financial to non-GAAP remarks to quarterly company's of and of measures. financial non-GAAP earnings for these

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

Good Appreciate quarter review as you. our on joining the the provide as us. and an update Thank I'll morning, everyone. well capital for company's activities. results markets you investment

the from $X.XX NOI $X.XX were from and compared by per ago. a FFO share sold. same-property a quarter funds share The in result offset share normalized $X.XX first decrease the in share decrease in operations per share of $X.XX partially increase largely in Normalized to per in FFO per to a FFO XXXX. and was year growth income, a properties was compared per per $X.XX For the per other interest NOI share $X.XX share $X.XX quarter, and

Same-property last million NOI previously XXXX. receivable XX% year, decreased reserved the quarter was XX.X%, of to and $X.X a same-property the both compared to lower cash NOI collection primarily due in first

decreased receivable, NOI to NOI this X.X% of first X.X% collection same-property the same-property the XXXX. and compared Excluding increased quarter cash

up XX.X% GAAP basis Rents on feet a XXXX, X.X% signed were square renewals. new first basis. of leases quarter the in leases cash on and and on a properties we our At up those XX,XXX

occupancy occupancy XX, March of was XX%. was commenced leased As XX.X%,

back up as and a tour bit, give see to we has tenants well. looking to picked continue space activity While leasing

to the balance sheet. Turning

per share $X.X due and that balance common cash debt. $X.XX have is to X. on change since March primarily year-end cash share or per was no paid of $XX in the We approximately billion The our distribution

the we The X% moved earn a interest rates, and rate on compared as currently year basis ago. roughly cash we're to XX points has Fed has increased our earning

Our has we among with manage been years. so cash and dozen work large the actively minimize We a liquidity. conservative where maintaining risk them while or the managing approach consistent banks maximize to to our over daily balances yield

are not any in securities. We invested

first in $XX.X Fed's rate to continued With over from our past grown year, has quarter the the interest the the quarter XXXX million increases $X.X million XXXX. income first of in

interest test. qualified on As XX% income REIT not the on income we've cash calls, is previous for income discussed

Last to for year, we again completed an income option needed qualifying internal the us is similar A available restructuring XXXX. to in provide XXXX. we

to We we us also will requirements XXXX. the have to meet options in qualification REIT expect for available

Turning to buybacks. share

began our authorization. we Since an dividend-adjusted $XXX aggregate buying shares remaining average million currently we not repurchased on of $XXX million total $XX.XX. have XX.X of repurchased have of stock price million We an have any XXXX, share in We a year-to-date. back shares back for at

place. has debt maturities The on a with tightening a The value owners doubled values. the impact a have is of commercial think left difficult it's the Europe fundamentals more to and quite as I Fed's XX in past to estate and that determining Turning fair inflation twin costs real massive in as significant it's and while. over had borrowing market, months been in say market difficult war forces than

decelerating. classes conditions and some like strong relatively operating industrial remain For asset residential, though

availability lack classes. is the For issue. of sales are debt are challenging, a and volumes Predictably, significant asset down across fundamentals others, all

in likely the with 'XX $XX on XX% quarter second will market depressed. 'XX roughly total billion, sale fourth of First total quarter discussion participants, year-over-year. investment volumes quarter approximately 'XX down volume and was half be Based similarly

know find to invest. difficult an it's opportunity might we Against to this where backdrop,

evaluate estate remain real be We markets in hopeful We that the a the might wide of continue challenges classes. to compelling range transaction. credit asset across catalyst investments a for a

In and and and their take for but report, and a with to efforts. like EQC This meeting. it's optimism year annual demonstrate is easy. of a virtue, Patience busy focus, XX-K, meantime, our continues is doesn't moment a patience, to I'd our the the preparations often the recognize team mean time team annual that for proxy,

With that, to questions. over the here's continued the team EQC call discipline and the shout-out a your to operator I'll So commitment, for for turn excellence.

take We'll Citi. Instructions]. question Craig first our the from Mailman with [Operator line of

starting kind evaluating. you're here Maybe with Joseph Craig. on Nick currently of what actually just It's

the If then you slow And underwriting touch about kind at, volume hurdles thinking asset for you're on different you're recognize different looking deals talk of in about pretty the there. classes. how out of can current maybe pipeline, it's

Nick, it's To it's what say I would you still said still Weinberg. quiet. correct. David begin with, is It's early.

asset David we're classes. range of across said prepared As wide his in investments evaluating remarks, a

belief we specifically the and know about, opportunity and a of it's challenges the important find may REIT, of given you a late. as that said Having in that, the come other do just and growth, spending we're such as credit business sustainable never time office under in today, the to think as from. continue build-to-rent SFR, sectors that revisiting with good where the long-term markets so talked past, more been has we've public So a lot we've to industrial

structure billion Then of in or the exist, with than doesn't sectors, in to option a may this to on address And that the and large across more what environment, It public private in something. a even we're today, in control. option while of owners past. specifically a viable we lot should catalysts best we're of they having execute cash discussions the have I'd There's may it not soon of can we be terms flexibility your potentially deferred have option do debt. be lot recognize mean but company no more say $X.X question, a

have seeds, discussions taking of place, those to just it. are what So and becomes we'll planting see

it underwriting were single-family guess, office XX build-to-rent if about you today for versus how at IRRs think to even it I looking return ago? or, or of changed you you now, months you underwrite hurdles much XX industrial the kind when As of

Well, sense XX, of obviously, I should on yield we where just both cost the of returns. basis, make months say our pricing, trading, are that is, the into the ago, factors valuations. recognize public XX all-in-type couldn't REITs and we debt where so

on but risks So to I'd the perceive have always, accordingly, because, quantify the difficult hurdles raised based to we varies be it growth. say and as where it's

about investments you been the pricing cash between talked or the side, marketable REIT the that sense or you've there's sheet that and management potential pricing make disconnect at would market you public any doing Then equities security disconnect securities would no and into management and at private But as point? securities making look balance on marketable there.

Obviously, I in us we that. the we've about another not they know take so. do company, do shareholders, Well, they past, in want talked with can because public don't interest position a to of what if that's to our really small

So taking say a make pretty on sense without for be never. never maintain we to position especially liquid it have But to any as risk I'll to our compelling cash. us, try it to

that materialize, we execute should could deal that quickly. and So execute

here. Craig Guys, it's

know another in you I you can one David, 'XX. talked do the Just, restructuring internal about and

relative given assume coming X be in of of would interest the should the income the So a remaining off growth to kind similar special Or kind dividend? it we NOI bigger assets? need to

go the have to qualifying, think what was happen. is depending we about about choices answer need some that we I the of distributed an There are how we already we still $X.XX estimate whether would events some on certain distribute. variables,

large special $X.XX So it's hard a to necessary if dividend. taxable of expect wouldn't topping income. There predict, up based be may but I on it's the

the Instructions]. have over [Operator hand closing session. to the like you, conference Helfand sir. gentlemen, remarks. the Over Ladies I'd to question-and-answer of And and David reached to for we end back

joining us Thanks today. for

conference today's Thank gentlemen, you. and Ladies call. this concludes

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