Highwoods Properties (HIW) 5 Feb 202019 Q4 Earnings call transcript

Good morning, and welcome to the Highwoods Properties Earnings Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions].

As a reminder, this conference is being recorded, Wednesday, February 5, 2020.

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

operator, Thank good and you, morning.

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

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

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

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

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

Ted. now to I'll the turn call

eventful ended Thanks, productive leasing Brendan, and and high fourth FFO year with results Highwoods. the end for and quarter outlook. at year impressive good our morning. the strong, XXXX was of an We

and Our strengthen additional on team market portfolio, our plan, opportunities occupancy growth. is and drive the in to executing increasing further our and cash rents flow rotation long-term laser-focused finding

Our XX. our footprint, numerous continue across were ULI’s end, included and see three Watch, corporate Estate, demand we four markets for There that for top space to Trends eight wide real six in continue office office-using to To a relocations and to growth Emerging economic outperform in driving of is national top our the in cities estate the momentum of of as our and into array our averages is across great job listed markets. nationally metrics. were our Population portfolio XXXX in Real BBDs. in Markets

exits development, activity, of of this placing combined of making of transitioning Bank progress fundamentals. XX% toward Charlotte that and $XXX strong development XXXX of We namely, planned XXXX and accomplished of the were with CEO of $XXX our significant backfilling significant XXXXX roles million and Memphis, included entering and a portfolio in-service the Tower, while America leasing million a portion positive Greensboro lot announcing Avion, and million a acquisition and COO posting $XXX leased. Weston

with pleased XXXX. as momentum We’re this we start

XXXX Turning delivered to $X.XX share. our results, of per we FFO

quarter our were sheet results know, market from write-offs sudden by Spine’s our costs one-time you balance plan. Laser rotation As first associated the and impacted closure in with the the

would been Excluding half these of items, growth have our upper we at in provided of NOI the the outlook XXXX. FFO property range beginning and same the

NOI with consistent including was This X.X of to or costs During GAAP rent the leasing X.X%, outlook office million cash of up new Same property keeping our second rent X.X%. while cash growth space, and feet growth of LSI. gen excluding year, we X.X%, X.X% of leases, all growth of leased with compares trends. X.X X.X% feet prior to positive XX.X% the square combined million of original square impact

three totaling $XXX spec million. projects We announced development

release, of press XXX% will quarters is three night’s stabilize pro GlenLake pre-leased in As ahead we Seven last disclosed now forma. and

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

for These comprising be a We of to a growth continues feet, our XX% five million investment, square Development in projects also announced. that XX% $XXX XXX,XXX company. when developments representing combined placed are pre-leased occupied. key service, engine were

an America acquisition asset with expansion lease-up in second quarter. upside growth track remain of Charlotte, Tower completed of high one so Bank roughly The million to $XX million, one $XXX in plan, the to pending XX%, including these We with We’ve phase far, on a through potential. associated or the debt quarter used in down market and sale Knollwood. we’ve phase complete rotation Turning market our pay of dispositions proceeds the of to fourth

our As initial first in with flow August and thus FFO we Based to neutral and we on one expected expectations. cash outlook be accretive. track initially we’re our stated our on we plan, XXXX announced phase when execution far,

sheet ample our Our liquidity we remains and our growth investment continued prospects, excellent pipeline. including fund have development in to shape in balance

to of per increase. Turning share, year-over-year a FFO X.X% QX, we delivered $X.XX

$XX.XX prior XX.X% foot, We leasing of of growth higher space rent million Our XX.X% this than XX% We with Avion volume to of GAAP through feet of our XXXX, We rents backfilling five-quarter our the of performance second excellent. renewing XX.X%. the XX.X%, with expiration was growth in our outlook leasing average. with square remaining net leased of feet occupancy effective half XXXX includes quarter rent towards upper X.X%. of largest Nashville. X.X ended gen accomplished MedSolutions This square office per cash XXX,XXX of and square of and with and portfolio expanding end

well The up us volume years. accomplished of work the XXXX for sets in next several

rents, development rotation deliveries market our We strengthen impact bolstered the forward, expect to move cash plan. flow and improving as further by of we

As the of a result, fourth rate is the of our year per Since to XXXX, annualized our an up we’ve for consecutive beginning dividend XX%. increased share. dividend $X.XX

In initial earnings XXXX share. to last per night’s release, of $X.XX $X.XX FFO we outlook our provided

is I more but at the As by earlier, mentioned items, some FFO XXXX impacted even than when these, was growth midpoint. excluding up XXXX unusual X.X%

same to XX.X%. includes occupancy of XX.X% X.XX% property growth to cash X.XX% outlook and of NOI Our year-end

phase highlighted dispositions anticipated impact As included outlook. one release, XXXX press of the the in FFO in is our

XXX Our million outlook to additional XXX for is million. dispositions

our in is our not FFO been have included outlook. custom, these As

end a XXX of Our at has end. low million of acquisition placeholder the high a zero outlook and

million. announcement development million to Our outlook is XXX XXX

to spec anchor prospects we This gives conversations continued will product. drawing where new projects having for pipeline projects development we us on confidence likely add our that We’re XXXX. more large and demand see the board have in several with

their I applaud In dedication throughout and closing, our XXXX. team for focus

projects it continuously development improve that earlier, our quality. quality rent focused risk-adjusted I throughout provide and growth, leasing expenses, and effort attractive finding was and remained consistent to for an As assets space portfolio our achieving team eventful operating with year returns, Highwoods, on mentioned high strong controlling recycling

XXXX We growth ingredients few foundation improved enter a with next years. and solid the for the over

fund room growth XXXX growth. $XXX deliver portfolio we in excellent to Brian? potential Our our occupancy development with through balance and through our sheet upside will future is stabilize and rent have pipeline and organic in ample plans, shape million

We and from finished year good solid teams morning, capped Ted, in growth Thanks, and leasing strong everyone. our quarter. of the off the a fourth year

leasing rent of volume new a we mid-XXXX, leasing office of X.X of including generation captured since positive quarterly feet, cash XX.X% and GAAP X.X%. volume XXX,XXX a feet rent Second spreads was our million square over leases, new and highest spreads square positive

leasing higher; in rents is impressive quality, the even however, Our drive high improvement team enabled consistent BBD-located portfolio more effective our rents. net to has

These was healthy even especially quarter up rents square economics This above to foot, projected growth five-quarter financial per property effective be of noteworthy our in NOI with metrics, prior showing same we with are consistent our lease year-over-year. where expect occupancy $XX.XX XXXX net XX% strong average.

we the fourth XXXX same excluding In Avion up Tampa. NOI property growth quarter, posted of in or X.X%, X.X%

our occupancy were occupancy at points the year Tampa The occupancy XXXX the far and is sequentially Raleigh. XX.X% portfolio XX Fanatics sequential at upper range. gains XX,XXX the finishing end to basis towards to XX.X%, in biggest Our Tampa in with feet Cheers board on Tampa. Avion increased Included points some our to square in XXXX. of XX.X% so solid team in for getting year-end

lower Weston at benefit several XXXXX XX,XXX year-end. where XXXX getting the without believe that top Westshore three buildings improvement hadn’t to We’re was where underway by occupancy one will that of at the it Raleigh, medium-sized we in submarket. floors users square of office yet were drove be the traditional the in feet In but Avion converting occupancy, the office signed year-end commenced there

Reducing years at near-term our average Memphis this risk we in our plan expect past even further only the space XXXX share the in complete XXX during points have and Greensboro our the XXXX beyond. is expiring of a point approximately XXXX, constant disproportionate hard a with pay during which work dividends near-term will market of three basis and to carrying and lower XX% rollover diminish rotation revenues rollover as this future roll. is through our focus we than We and

feet additional them Specifically, and in mentioned quarter XXX,XXX expiration the Ted MedSolutions, and as an feet. square with renewed square we XXXX expanded by XX,XXX earlier, fourth a

feet XX,XXX in Nashville a Tampa MetLife renewed only in and earlier downsize Marsh rents XXX,XXX of with square Georgia Atlanta, expiring in after the left greater included in XXX,XXX Vanderbilt but XXXX. we’re And, feet of a feet State through which than signing also XXXX, renewing square where XXXX, extension early square market. three expirations and with XX,XXX square were We foot well with below in

in we square previously, Tampa to expect T-Mobile As we XXXX. in XXX,XXX vacate feet the middle of mentioned

they where FBI work a square of in one the Tampa building where the expirations as square The towards we’re other have Atlanta remain status feet we XXX,XXX and in long-term where other leases; build-to-suit on FAA we in the have and foot two in renewal. working where we are a renewal, terms in XXX,XXX holdover GSA

let’s thread growth, and education serving demographic wage here, living common job low of and of by centers robust population, as on where office and innovation. of drill strong, From driven a our higher fundamentals remain down conducting and markets trends; cost business

by the the and X.X% Class feet square rents reported the across absorption year In million for in average the positive Atlanta, square with CBRE, up quarter posted XXX,XXX feet of market as year-over-year. fourth X.X A net market

over pre-leased, of of competitive underway development is half and feet we in square million X.X where which direct tracking have is XX% office Midtown which exposure. no We’re

the XXX,XXX Our essentially a generation positive rent of spreads occupancy XX.X%. the Atlanta XX%, during team at quarter second while quarter feet leases was of GAAP unchanged ending square signed with

rates average square was second-best year-over-year have Emerging where Avison High in ULI’s United in the office in it ranked Turning Young. urban A now driven to according and core have Raleigh, or buildings the new to X.X% vacancy the Report. Class demand falling asking to of per States $XX foot Watch recently rates and as Trends higher up Market

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

of a finish signed rent XXX fourth the basis with team healthy improved Our quarter year at GAAP XX.X%. positive Portfolio XX%. of Raleigh feet sequentially leases second during occupancy generation the to square points XXX,XXX spreads

team square our our of Seven, $XX Additionally, has XXX% GlenLake XXX,XXX pre-leased development foot Raleigh million, project.

the building first quarter quarters will stabilize XXXX, of ahead this pleased forma. in three of pro We’re

Seven, are and CentreGreen, plus GlenLake now three color, For Raleigh, all XX% Corporate the leased. spec projects Center started last XXXX now in XXX

of of increased A a where CBD CBD in located. home the where the rents and the and majority in X.X% to the combined and Tampa to is office continue and Class Wakefield, According next Westshore submarkets, Class year-over-year BBDs Super is Westshore Bowl Cushman rates year’s A Finally, rental occupancy portfolio increase to our the in XX.X%.

which construction square competitive Westshore represents the tracking and and of stock. in We’re X.X% pre-leased million feet competitive X.X XX% CBD, of is

feet of traditional GAAP at rent occupancy building generation the XX%. square improved XXX,XXX to quarter, Fanatics Portfolio benefitted which At signed the second leases the three-floor basis the for underway During a XXXX positive XX.X%, Avion. our points team XXX office users. from spreads balance of prepare lease with Avion of we’re with to sequentially repositioning XXXX lower the

standard reminder, developments. flexibility design practice provide As long-term, development flexibility. to validates the lease our we We of a our purposely office include believe build-to-suits, the including is multi-customer Fanatics properties, all to in

past To volume of to I any excellent three-year with and enter prouder we’ve results the regard our leasing robust years. strong be a the with future goals team entering expiration advanced with forward total XXXX had wrap effective net with of quarter than of rents. lower our We’ve and delivered up, several couldn’t rollover, another

The markets our remains portfolio for well-located our quality provides. across options leasing and workplace environment high and BBDs the healthy

Finally, projects capture space two spec to XXXX. with growth and interest is the in where remaining, Mark? poised pipeline the XXXX XX% in with in good our development the million deliver pipeline projects $XXX as pre-leased, we’re and

Thanks, Brian.

of was XXXX at an FFO company. share outlined, revised of delivered productive and for high-end outlook. $X.XX year our Ted As We per our active the

the in As $X.XX sheet there first in Spine’s market non-operational and XXXX with that of the sudden unusual Most were you write-offs rotation associated plan. cost quarter know, the impacted balance closure notably, the associated FFO. items Laser with

at which right from NOI outlook, QX, midpoint Laser XXXX impact includes Excluding of these lost of by from sale and the as the our dilutive $X.XX been original in share. as XX months FFO the well our FFO items, reduced together would Spine per of have this MetroCenter

and income $X.XX per FFO In the $X.XX share net delivered of we share. quarter, fourth per of

the in offset by NOI As November acquisition Tower, of funding share of recorded of for of of the XXth expected, to per $X.XX share America additional pre-funding offices of with the was Greensboro a $X.XX our of and the interest severance expense associated Bank planned closures we acquisition and accrued which and due costs $X.XX additional Memphis.

initial $X.XX is In At release, midpoint, $X.XX approximately we the FFO share. year-over-year. of per night’s XXXX provided XX% up FFO last our outlook to

XXXX implies items the midpoint. X.X% XXXX, Excluding year-over-year outlook our impacted that at the one-time growth still

announced we As flow and rotation our in to we neutral mentioned FFO one plan, when market initially we August expected accretive. be cash phase

While to be and our meet to we’re to there track growth overall. phase Tower significant expectations, us is in still done and on confident for there we’re work Charlotte is BofA overall complete one, long-term at initial potential

straight to to XX our outstanding of shares items XXXX were G&A our some million million of growth X.XX% other X.XX%, million in million. to XXX.X then of rent million, FFO outlook, addition property of XX XX line XX.X% In outlook; that same million year-end positive average included of to XX.X%, and NOI to to XXX.X occupancy XX and

XXXX regarding note to items of couple a our So outlook.

few property the in and pool properties than exclusion same dispositions, which the one a phase significant aren’t of have same other a to meaningful changes were that there property our placed addition of weren’t numbers. projected expected impact development to First, on service

Avion in included XXXX pool. Second, the is property same

While we’ll revenue GAAP cash from Fanatics in XXXX XXXX. currently anticipate XXXX, NOI no we in from Avion record

and by impacted sale one negatively basis occupied industrial from phase in drop the expect dispositions, occupancy is first quarter will portfolio. points we XX the XX.X% thus occupancy our following Third, the of the

to straight-line and at at is XXXX XXXX XXXX the of associated be Greensboro closing XXXX outlook in Memphis compared of severance and expected includes G&A offices. QX Fifth, due with XXX,XXX our Fourth, leases rent to our in BofA the Avion. higher expense to Tower Fanatics primarily

have from in financings deliveries planned current Seventh, XXXX. not pipeline our is XXXX to and we aren’t shape. XXXX our XXXX, development projected balance contribute to excellent as $XXX for deliver until million earnings significantly pipeline no our Sixth, sheet will in as stabilize and major and finally,

project and our mix healthy from we our XXXX the of solid portfolio. growth This markets coupled fundamentals positions that portfolio over higher in operating summary, sustainable for primarily across long with a the driven business in stronger more and In growth us highlights organic quality growth term.

in dividend cash we an strengthening and to for longer increase needs in portfolio flow pipeline Last from announced will evaluating capital also per The our night, continue to levels. cash balance profile. $X.XX reinvestment dividend, rotation our When our to taxable we flow term development our annualized share. plan market the outlook, the our and income contribute $X.XX

to acquisition the phase BofA at of from Our of majority of rotation of plan. year-end levels leverage increased market following one proceeds the prior the Tower and receipt

However, at leverage, even with sheet balance temporarily debt-to-EBITDA elevated with our X.Xx. year-end was shape in of excellent

last is week’s After sale, our from $XXX facility million, receiving credit million at year-end. proceeds $XX industrial currently balance from down

XX After maturity plus complete million proceeds We issuing remainder in proceeds rate and XXX we outstanding. than million our of in The XXXX, unsecured debt long-term we shape notes XXX Knollwood, from of in one. expect the the as million another of ladder great less floating additional is have of phase sale

of the shares XXXX. We ATM on any quarter second since haven’t issued the

grow range the XXX ability flexibility the X.Xx issuing development initiatives operating X.Xx remaining without strong to to balance the within our on confident growth a of to and committed We’re remain in We fund sheet. maintain pipeline fund of to our our and have million shares. debt-to-EBITDA our prerequisite targeted

years as you noticed, made every three Finally, It’s since registration SEC shelf SEC shelf filing. been rules, statements three have last and routine this years. may morning. yesterday filings S-X sunset Under some we our

a future securities, and new indeterminate joint and of with markets transactions. by that As S-X common registers a partnership operating last This number REIT evening, was stock result, we preferred capital filed filing the shelf stock a the debt for SEC. the an

XXX(b) time to via in to program, ATM we million allows X.X% which a place, program new common With our filed up refresh prices, raise morning. This at time Form also to discount. equity market we us to this shelf from this needed new less of XXX

As ATM quiver. you we place to the an capital-raising many keeping program one of know, keep our is arrows in like in

ready now are your questions. for we Operator,

Instructions]. [Operator you. Thank

is of Guinee question first with Please Our ahead. John go the Stifel. from line

call, kept accretive. going flow question. Great. guys. One asset to but are that you. cash the neutral FFO AFFO I Thank recycling be hearing was Nice

you surprised there? little on a Any to see that dividend you Can expand process X%. I’m to raise thought bit? by only your So that chose a

Mulhern. Mark it’s John, Yes,

a As higher the little of the was last quarters. know, CapEx in you couple

high line have taxable profile is with confidence income. we’ve flow the cash to keep the that tried with continue to, going the improve we development with company that deliveries So some in close of of activities to done. We and it our leasing to

things, go we those all like felt was to we to that as evaluate balancing an so and of forward. And appropriate we continue move make

down. was I whole CapEx going come was But that to the thought deal

the believe we completing it will. assets. Yes, just those of Obviously we’re sales

decline we as go CapEx happen the question. will forward, So no

Great.

very Thank much. Okay. you

Sure.

you. Thank

of Our Bank is next question Jamie ahead. of Feldman from America. the Please with line go

Thank you.

how curious So this thoughts. comment feels on couple today of we’ve to a year. teams your last time management versus had just business I’m get

a very quarter. had You good

You had comparison. thoughts like kind spreads. some markets. seems supply big leasing is of picking up that your just Maybe on nice picture in It

Sure. Jamie, Ted. it’s

I good. think fundamentals business our feel really

with We where teams, calls we have to how activity is, on have our ground frequent boots space we sublease expansion. fairly monitor our local tour understand activity – the is,

last We compared I’d year. to So pretty equally good it’s as year, good. say last felt

our demand job growth. our to submarkets markets inbound, benefiting our be we’re really and a Tour a are good. across activity, seeing So from new markets lot lot continue of of companies all moving, of

say par. it’s So compared on last to I’d right year,

there last year? And feel different that certain time this are markets than

I Not one materially out. think where I’d call

good really the across board. it’s just demand think I

earnings I about moving in asset got potential in pieces? extent in you your think guidance. your but How with year, know match But should you’ve the the we think do And during might know acquisitions potential the you acquisitions? those didn’t then I you not to done guidance, think them Okay. guidance. do how get or two phase you impact your include that fund about sales we

Sure. I’ll in. start, maybe Brendan jump can

phase last opinions terms the within interested calls of obviously second that. We’ve quarter. we’ve one parties. In we value just a assets. inbound phase broker the had two, to regard we timeframe mentioned phase from XX% of We good about about the got feel completing in several good majority With the still two, feel hopefully on of

discussions we a on those assets, of are don’t but in timetable. So have few we a

going majority XXX that, you be said disposition there I we having put to that assets. out of is is two XXX Now million a likely would be to our going and phase guidance tell million to

in right the assets we again any don’t the terms timing, have of So now on market.

We discussions. are in

will earliest the it months activity. So any several at be see I before you’d think

Jamie, included Yes, not million add And then that of not have I’d thing dispositions to million the only XXX XXX for in outlook also in is is to of that million acquisition outlook. range the FFO that also we X million which XXX typical are pretty an that FFO included us. to is

it depend respect bit and funded suggested, range with within So little is roughly a between the acquisitions. where does of to dispositions. dispositions match as parameters things outlook the question your ultimately acquisitions out and shake included on But

you if neutral, FFO you do that fund? match And do you think could

point. was think we’ve plan, cap found with the we’ve XXX FFO I exhibited depends. I to ways typical rates neutral. only we rotation make Certainly for this think the – creative per the as four that over a one it million that I But years look at the we XXX than to million guess of acquisitions That past cap market the sales as year. past disposition rate roughly you lower over done done at

there think – depends. I’d I and say probably it So guess I is

you into acquired land talk the And interest is the or of build-to-suits land some already for Okay. the of bucket you then hold? might can about that just of fall finally quarter? this this And enrichment for in kind Pittsburgh longer-term is the me,

Hi, you here. Great question Jamie. and Brian asked glad I’m it. Leary

time. acquisition X that take X.X it for Richmond land of acres kind that So was quite first. surrounding and The unleashes we’ve the of some Richmond owned catalyzes acre

in support mixed that plan have at occupied office master of around there. the So market the Innsbrook million feet kind we and X.X XX an about you’re it use of acre unleashed can looking that square be

and of some to so office, square planning, master hundred plan And another likely there can strong about get and do inbound we keys mixed on and for use a tremendous a multifamily partners XXX been in create has who that come hotel environment that. would units our and develop retail that based really kind we in on and initial other And master interest of most couple a folks the feet XXX,XXX have living. of

So that’s where the Richmond story is.

allow major us very the way actually on East now. a this right interesting Warby Whole corner a from where target entry two present market. presence XXX to has can’t in it Google It’s sites So from Ace To and to Interstate is the land is new building Bonobos Phillips and acquisition out It’s Pittsburgh, Foods a that street well. a in Liberty down right Parker, across and as we barrier a high the build-to-suit. does brand build-to-suit Hotel,

So bullish market Duolingo. interesting on it’s opportunity, we’re the the locally in neighborhood, tremendous Unicorn for including minted of because but it really tech a very growth small

And either how would start of soon you projects? those on

the one, pricing. going on through Pittsburgh designs and So we’re

have we’ll to flexibility do master and own process. to timetable. planning at a that with really Richmond, And it’s our So some regard

of of to help and talking finish inbound a mix work parties And interested with so the we’ll think then uses to I us through that year time. be the end that during

very you Thank much. Great.

sir. Yes,

Stifel. have ahead. Guinee a question Please with follow-up John go We from

and One, for Two by your you. out, pad-ready dirt? entitled and square sort – Great. your the per time on questions. figured master of answered plan already. got Pittsburgh the Thank – you’re your What’s all half you basis foot what’s what’s Richmond,

to entitlement, Hi, Pittsburgh. a The a John. I’m things location you entitled, have with is thing big question. fully to is glad Thanks couple and it thought basically which the Liberty answer of didn’t triggered pretty for that East Pittsburgh I regard before. A in

a the adding It’s you a look development, FAR low Richmond, thinking It’s into from catalyzing basis for the mid not $X about flipped I we’re we’ve FAA time the had X low. quite that a pretty vertical where foot the if it probably points good it’s then even in change. if That’s there. acres. with that some high foot, started to case of XXs so value land so at including obviously you’re really on that the and buildable for that And it’s And basis, positive, And number. just for additional just building. or

of early as So we down process, a through that to we go really nail entry kind little our points. but the love

And XXXX next Brendan Okay. it’s raising raised meaning via was tick out ATM, when raise appropriate and where Mark to in the on Do you equity do XXXX? or equity the the 'XX? last then and think regarding you what top equity know go where you talked around, you

good under John, I is close it’s don’t – right way have the authorized shelf my kind to in but new have keep have $XX just that of number call filed able to at proceeds been obviously BofA I make been and about in the balance would with the I acquisition $XX, like disposition We thought to that and fund able so wouldn’t We’d it. flexibility. the all ATM. a the really very necessarily fingertips, on a $XX shape. We’ve to price. sheet

itching the something sense, like flexibility. do an And got fund. on but here So we have have opportunity, makes a if we’re if to chance to not we’d the it to we ATM,

of development capacity we have to We fund do XXX have which left the pipeline, plenty to here. on million

sure we’re our all to So, again, we just options have trying make open.

Great. you. Thank

Thank you.

Wells Heck with Blaine ahead. Please Our go line question of next Fargo. from the is

I to bit touch Good or if guidance. more you one little wanted Great. for see morning. into major a Mark on Brendan. to Thanks. of drivers. I dig could just some the another wanted Maybe same-store

As number. occupancy guidance the in occupancy think Brian not of is in uplift implied I there mentioned, year-end an much

that mostly rent by moderation playing an any you of is driven give or in can component some burn-off whether some on So there a I that’s guess there there of big midpoint detail uplift expense free just role? is rents, X.XX% in is

good Blaine. Hi, Brendan. It’s Yes. It’s question. a

is driven as mentioned, that Within up midpoint, bit. a is assets predominantly two X.XX% the number occupancy you little is by down is the the included remaining That average in that guidance. in Memphis. overall, So phase

little So the same markets, that excluding be for that bit. the phase we probably residual eight the it’s up last think assets, property XX same-store overall. two range would average points growth would higher those pool by growth a being driven occupancy the provided within up XX basis to excluding than core we night. probably Really revenue be And

on is bit overall the our pool. up than that. more little are Expenses revenue So a X% around growth up probably

So expense-driven increase. expense-driven metric being We’ve got more is it’s top biggest by and that same year. line. probably an not of overall it’s not driver taxes around this an on – X.X% for that growth driven the are are That balance up property expenses

think showing helping about So we think And fundamentals a it are past bit. lot been we shows – rent. quarters you within little in up the we’ve bit reporting leasing a asked and the that It’s that of straight-line I same positive also health little a the think many business over property growth. there is

major would say a guidance we number we but wouldn’t property than us. provided. I underlying be for a number XXXX, that pretty that’s cash the better same for little that typical driver of the to GAAP bit So expect the that’s

FFO cadence from And away phase going about very so it’s helpful. the to gears That’s that earlier question, then as for sales of it. done. in guys earnings of many this kind kind year got follow-up be You’ve given got the you FFO will pieces? should get how and you an on dispositions that over moving one those have Okay, NOI switching we the think

deliveries upside you’ve How interact headwinds have of first some year with additional a an of development quarter inflection have and you the a each quarterly the And side, rest throughout got you the possibly you us quarter, from FFO – from have G&A some sales in full or but other BofA give does you upside of bottom also idea occur? the You and that have any on little Tower, do maybe all drivers throughout year. sort of those other? can leasing where point the –

Brendan we to. if just I’ll add start can chime Blaine, in color need So, and and

in increase offset some as first – expect assets little our the way think phase the So we – going And the of of just contributing. guidance, having that’s incentive we to that’s still we get of FFO some two our you some treat the obviously G&A described, a payments. quarter by

So going year. toward we of an actually expect the that back FFO trajectory the half to on is upward be

– But OpEx in as our of expect end that’s is we kind in we FFO, Our year typical the some OpEx and trend quarter get guidance. the for QX. towards upward incorporated of highest in do

Great. Thanks, guys.

you. Thank

Scott. Please Rob question of the next go Our line Stevenson Janney Montgomery with ahead. is from

come Memphis/Greensboro expectations Good versus pricing morning, out process? heading dispositions guys. into completed Can the on you thus the your talk has about far where

Sure.

In combined X.X% so then industrial well. closed buildings. Knollwood, in And terms quarter here XX next and that’s of of sales roughly the GAAP a with the that far, we is about we cash million really and to was fourth where couple two announced close of the a weeks, cash GAAP The in We combined which yield. X.X% going portfolio and as are

we’ve one it’s thus very been So pleased our with phase far. expectations. met Certainly

And exit and the total closes, value rough between market then on once Greensboro? remaining the Knollwood what’s Memphis Okay. dollar

have So, one remaining XX% phase reminder, as do a of we done. still to get

something that in like mid-XXXs, somewhere it’s So probably that.

of Any may foot you about outs good and of have the then guys? square move foot that rents XXX,XXX here are impact And XX,XXX incremental the sort about guys note move always sitting an outs. in XXX,XXX Okay. square to talking higher you on today range have known

Sure.

talked the maybe let quarters. about just for now So three XXXXs we’ve a the run down first and few me

in quarter. month. year, the or fourth expired They’re last on First to now that third holdover month is actually is which FAA,

T-Mobile feet. of early. we’re We’re guys users, going vacating of a still there to but a second prospects And be got that’s quarter. And confident going the end renewal couple at got feet full with we’ve those at to XXX,XXX floor the that’s done XXX,XXX right get for we’ve very

We’re we’re touring, And those a and feel XXX,XXX starting with as guys so then feet talk to get FBI. going the in in those quarter fourth long-term renewal think confident FBI just about of towards to the – guys. discussions and we on is we’re well out the pretty to

confident very the a got that’s an foot be that first square going renewal. So end after we’ve we quarter and expires about your that, feel the to XX,XXX question at of customer

feel customer We’re after as deep to very being well. that. then close in about And negotiations down there, to XX,XXX that, dropped we is good renewed so that about foot we

very It’s just customer vacate. then prospects backfill to we So and those. XX,XXX that’s to that we and comfortable of good And that, it half building drops we another feel and downsized both bit, already. them after some pretty have to that moved with a we a little – down a

sub, we’ve we So one that XX,XXX after backfilled we’re really half that have that. more of do already but foot

good feel the we’ve So care we about lot we and taken ones think them. a of big

guys. I Thanks, it. appreciate Okay.

Our ahead. line next Gabalski go the Stanley. question is Adam Morgan with of from Please

guys. for the Hi, taking Thanks question.

Just on wanted Charlotte. to get in your incremental any growth for thoughts opportunities

underway, seeing plan of what a little a appetite as Now aggressive market what kind little getting is for the your pursuing the bit you’re more further deals rotation something? is in market, in

moment. City. Charlotte Good also facto morning, here. on de Brian Queen Leary on the Adam. for the of Thanks at lead the the question I’m kind division

time partners and in a development through quality are fruit. there story we’ve a with we acquisitions land feel spending But there’s bear kind of to lot aggressive to source think regard multi-pronged a to and that to. optimistic opportunities been Charlotte we’ve and our time, off if across in of and great friends multiple approach submarkets Charlotte. We I believe with that that be got going market need So

you. it. just more. And one then Got Thank

to develop small starting that previously you mentioned You sort are give of to spec co-working. tenants an suites to alternative

you get Just thoughts it’s think latest how wanted playing on of and kind to out. your project that

is Ted. playing It’s Sure. This really well. out

a So square vacant of all markets how the track to of couple ago, and it’s long think XXX,XXX feet and been velocity a in a of out made – metrics spec we effort years program little us. we’ve over I really how very long to prior date the long start were to space our built suite we And spec out, to concerted suites. a after have out. And building standpoint build it we attractive it how from a

want we’re of Certainly, well those out spaces space. with that plug working. a it’s as co-working pulling program and modern play customers that’s just an of as demand capturing some they immediate So existing

is So spec our suite pretty well. working program

you. Thank Great.

go The next with line Manny of Korchman Citi. the ahead. question from is Please

some developments. prepared you believe Hi, kicking in off Ted, about your remarks talked guys. new I

in? had to today, be those you If markets what developments new guess would

pitches building more users a markets, made we’ve full in very now right both different got a couple well I active We’ve as made those build-to-suit four Sure. of building think than partial as handful users for on. We’ve discussions on going and pitches the pitches multiple of markets.

hard now, of right it’s sort tell. So to

can a long on for discussions time. these go Sometimes

all. may to going hit So hit even we don’t at it’s or exactly know if something when

got our sort depends just So on again, the we’ve discussions the four active customer. on of and markets going timing of of it

hit, starts? does be If include those the that you were or for those possibility guidance all to four giving range would of you’re outside of the all of that

our Very all of we pitches. rarely hit

of – of one them Some multi-city at least still. is multi are these things

hit us. discussions them, a haven’t that’s our of if probably be We’ve So ever. we’d all and going always I on outside got sort typical we But lot we active for think of again, guidance. been of XXX%

Great. Thank you.

next America. from The Feldman with ahead. question Please is Bank Instructions]. line of go [Operator you. Jamie Thank from the

in Very and for your you. the strong year Thank about outlook the quarter. leasing spreads just mark-to-market maybe just talk you this portfolio of today? then the Can

Sure. Ted. Jamie, it’s

think continue go try market it’s not – as we our to to but the – definitely under mark-to-market it, cycle. we is through we’re I say

the the to next going optimistic the We’re just have, we’re rents activity capture have, the we in that to able increase market discussions be year. over we that continued

and going done what be we spreads roughly we got to should as pretty the think expiring well, healthy customers capture we’ve our quarters. we’ve of forward several similar think I to XX% able in last So

do markets, that growth XXXX? you of What about talked X.X% your I And past rent X%, in this kind then sounds different year. pretty it think the for like you looks Okay. like when markets typical think

call them I probably be Orlando a X% buckets. X% even to probably and then two at XX think And Yes, X%, and to end, might barometer higher Tampa, Charlotte I’d Pittsburgh, it put or end Atlanta. in that’s Nashville, The on last the it fair X% Raleigh, was and even different months. maybe X% Richmond the lower for the in or XX months X% next

then us pipeline? And through you leasing large just talk lease, blocks have to in you Okay. of just the terms can left

end of After there. largest say second We that. at full the Sure. T-Mobile quarter the it’s yet, backfilling similar wouldn’t in on discussions. toured floors We’ve prospects of Avion, block last they’ve the XXXX touched very be strong three and had floor I is that of couple The going briefly early a but to the prospects. we’re space and

the now as well tours the of right three We’re process as of doing white-boxing in lower building. floors

XX,XXX lot And that, really feet got or development. on a after that’s of and later and floors I about it’s of Virginia so. then until still delivers Those couple spec year our still II Midtown We’ve a XXs Springs with few So we a obviously building over space, Springs year. Tampa next year Midtown and then – buildings a think two got Virginia Tampa. this

to So there we seeing get some got of just them got still good both and prospects on some runway convert leases. activity We those. we’re to to

Okay. the them reposition And you CapEx final will the total you some and be? Avion, on visibility to do then leased think now have those cost get that what out last, plan floors at

pricing we’re it. we’re the on capital, still we’ve while – just So got – so again

I is the the it on depends the there of just what of a variability needs. prospect on – user think some

does it have the building, the staircase tour a you front. If right in

that then user can the somebody at And we’ll may may we an may money out There elevator extra is a floors they get first that not the take HVAC having there’s grand the not building not the staircase. of to couple floors, depending stay. or if of as on of one or may well take save end by on So some potential to want. extra the

improving the So million is you range CapEx there $X a building little million the tell – of probably $X is range. but bit some in a I’ll that of to the and there, between white-boxing

the Including to from conversion office? medical

Correct.

– those obviously would balance. the that do conversion pretty in think Yes, terms medical the what from over would of half sort then of you probably perspective, in and got I I then with right. leasing would commission, that to leasing Jamie, TI line be And a for office, have is a be. we’ve the deals handle the a costs leased think we’ll that is we capital expect building from market little and And good

What now? are market TIs right

Jamie, up can we’re to the TIs, rental on get. foot $XX a $XX rate market looking depending probably to we at

Generally a just $X per new lease. lease of for year years

great. right, All Thank Okay. you.

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

Thanks.

last and speculative potential go. that’s of have amount influx of one couple decent years a probably for to seems Just over to more the Atlanta Brian. there an seen of up teed supply be construction

is with market are. the of been not or properties do has of as kind concerned you But moving think concentrated I where the Midtown it the overall whole, a all which guys far, demand your of affecting in within rents to the growth keep construction you potential amount most at rent see market so are enough up?

We Blaine, talking It’s interesting. specifically. great were question. Atlanta about actually

in Atlanta. both Ted a career our know, I good I closely team it there and period you have been with our for probably As lived very of following and

into most those Google and be of while as speculative the occupancy some announced Station there. of if to headline And that Atlantic by as the Midtown, into there. they’re expand likes big the continues San Francisco So relocating rewarded the you jobs Macy’s to starting building of new saw XXX moves growth is of out even moves see in Midtown yesterday, you’re TX

about occupancy grow So has I if for to rents been just or the walkable you vacancy, we static kind will, office but best-located, product. talking of think were somewhat continue

continue we’re back, there standpoint. very little good looking Obviously Buckhead So tell from in we a about to feeling story of happening sitting by But optimistic where a to where continue love the fundamentals. Atlanta to really what’s Midtown, obviously move there continue in kind all Buckhead are people and different truckload. the grow I think at we’re rents and closely fairly about

color. Great. That’s helpful

turn this call back And I’ll you. no questions the time. other at there are to

morning. this Well, thanks everybody joining for us

any and not, here have you. quarter. Thank you available. we’ll questions, follow-up next you If we’re If to talk

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