Q1 2020 Earnings Call
[music].
Good afternoon, and welcome to the Columbia Property Trust first quarter 2020 conference call. All participants will be the listen only mode. After today's presentation will be an opportunity to ask questions. Please note that this event is being recorded I would now like to turn the call over tomorrow.
Over director Investor Relations. Please go ahead, Sir Thank you operator, and good afternoon everyone.
Welcome to the first quarter 2020, Columbia property Trust Investor Conference call.
On the call with me today are Nelson Mills, President and Chief Executive Officer, Jim Fleming, Executive Vice President and Chief Financial Officer.
First ever senior management team.
We released the results this afternoon, and our quarterly supplemental package, which can be found on the Investor Relations section of our website and on file with the FCC on form 8-K.
We filed our 10-Q with yet they see this afternoon and an audio replay of this call will be available by this time tomorrow.
Statements made on todays call regarding expected operating results in other future events are forward looking statements they involve risks and uncertainties.
A number of factors could cause actual results could differ materially from those anticipated, including those discussed in the risk factor section of our most recent form 10-K and form 10-Q, which has been updated to include cobot 19 specific risks.
Forward looking statements were made based on our current expectations assumptions and beliefs as well as information available to us at this time.
Columbia undertakes no obligation to update any information discussed on this conference call.
During this call. We'll also discuss certain non-GAAP financial measures reconciliations to comparable GAAP financial measures can be found in our supplemental financial data with that I'll turn the call over Nelson Mills.
Thank you, Matt and welcome everyone to todays call. We very much appreciate you joining us during these unprecedented times.
I want to begin by recognizing the outstanding efforts of the Columbia team, which has adapted and continued to execute during the challenges of the past couple of months.
Following another strong performance during the first quarter the men and women at Columbia have done an outstanding job, serving our tenants and managing our business during the ongoing cobot 19 crisis.
The health and well being of our people and everyone Easter had been our top priorities.
And I couldn't be more proud of our team's performance.
Before I share how we're navigating through the current environment, let's discuss our recent results.
We completed a very strong first quarter building on Columbia's terrific performance in 2019.
We further expanded and enhanced our platform.
Leveraged our unique value creation strategy and reap the benefits of the high quality portfolio, we've assembled and top submarket over the last several years.
From a strategic standpoint, the first quarter was pivotal in two respects first we completed the acquisition of the operating platform and real property interest of Normandy real estate management.
This accretive transaction enhanced our capabilities relationships and pipeline of opportunities in New York DC in Boston.
As a result, Columbia now has an even stronger platform from which to grow.
We now provide fully integrated construction development leasing and property management services.
And we have a complimentary fund management platform to augment our core portfolio operations.
These capabilities will be even more critical for managing challenges and capturing opportunities as the market evolves in a post cobot 19 world.
Second we accomplished a major milestone during the quarter with the sale of our last remaining non core asset.
Specifically, we completed the sale of the Westinghouse campus in suburban Pittsburgh.
Well as our Pasadena corporate park in Pasadena.
For combined gross proceeds of nearly $260 million.
In both cases, we proceed the sales with key leasing and other enhancement.
To maximize value creation for Columbia shareholders.
We're very pleased with the end result, and in retrospect, the timing was fortuitous given the situation, we all know face.
Today following a very successful repositioning Colombia has one of the highest quality portfolios in the entire office sector.
Located in the top sub markets in New York City, San Francisco, Washington, DC and Boston.
Our portfolio features fully modernize properties in the most desirable neighborhoods that appeal to today's done in a growth companies.
Many of these innovative companies such as Twitter Docusign snap and Amazon are finding new ways to prosper during todays rapidly evolving economy in Colombia is well positioned and committed to helping them thrive.
Our financial results demonstrate the appeal of our chosen submarkets properties and platform.
Well, the hard work and creativity of our team in attracting strong tenant demand.
For the first quarter, we produced normalized FFO of 39 cents per share.
Despite recent higher cap rate dispositions.
Our same store NOI was also very strong plumbing, 14.5% over the prior year period on a cash basis.
Our team least another 126000 square feet this quarter, which brings up 9% on a cash basis and 16% GAAP basis.
This was our ninth consecutive quarter of double digit leasing spreads on a GAAP basis.
We ended March with a leased rate of 97.6% matching Columbia's all time high.
And especially noteworthy achievements during the first quarter was our 35000 square foot lease of the top two floors at Threefifteen Park Avenue, South in New York.
The rate was well over $100 per square foot or record for the building.
While also improving the credit profile and lease term this attractive space.
I termination fee with the departing tenant more than covered the cost of analytics.
The Newton expects to take occupancy in the second quarter.
In addition, we just closed a 68000 square foot extension and expansion lease at 1800 industry are fully modernized class a property in DC Golden triangle, one of the city's most amenity rich neighborhoods.
The whole market Columbia's value creation strategy development and redevelopment of stated the art attractive office space in prime locations.
We've taken a highly disciplined approach and it's uncertain environment.
They very manageable project pipeline that we can modulation as we await clarity on economic conditions.
Construction continues on two projects subject to city mandated delays related to the covert 19 locked out.
It's 799 Broadway in New York, We have completed the slabs of all 12 floors for this booty lost style office building and.
And expect to announced delivery early next year.
Pre cobot 19 interest from prospective tenants had been running high.
And we expect demand remained strong for this magnificently design building ideally located at the convergence of Union square in Greenwich village.
Hey industry in Washington, DC is popular Capitol Riverfront district, we're working to complete a highly innovative three floor vertical expansion and we're pleased that preleased nearly two thirds of unused space.
This unique and modern expansion will make this the first office building in DC to utilize environmentally friendly mass timber construction.
We also have to other development projects in early stages, which allow us to easily press the pause button if needed into greater market clarity emerges.
One on one Franklin Street, and terminal warehouse in Manhattan, or both still on the design and planning stage along with our partners on these projects. We will continue to evaluate the timing design and cost of these projects as market conditions the ball.
At this time, we do not expect can commit substantial cost for these projects and the next several months.
Turning to operations our entire team has been highly focused on managing through the cold in 19 crisis.
Of course, the health and safety of our tenants and our employees has been our top priority.
In early March at the first cobot cases emerge in our markets, we commenced enhance cleaning procedures and communicated extensively with our tenants about the risk and precautions we were taking.
By mid to late March almost all of our tenants had vacated their space.
Since that time get maintain cleaning and security at the properties and they've been actively preparing for it the eventual reentry.
We have pulled all of our tenants on their concerns and needs for reentry and are conducting live virtual meetings to communicate our plans for Craig sake. This office environment possible.
As for our own team, we have had nearly everyone working from home since March 13th.
We have maintained effective communication and high productivity across the team.
I'm pleased to say, we see no disruption in our ability to function effectively with Columbia team members truly rising to the occasion to serve tenants and shareholders.
We were fortunate to have completed the integration of the Columbia Enormity teams before the crisis.
The entire team has remained positive and focus throughout and even more motivated by the challenges.
This crisis is certainly having a profound impact on our economy.
Depending on the depth and duration of the disruption.
Tenants will no doubt supper to varying degrees.
Jim will share we have collected a very high percentage of our April rent.
You tenants have inquired about the possibility of with the full and we thoughtfully considered those request.
Our retail tenants representing less than 5% of revenues in total makeup the vast majority of those requests.
Obviously, depending on the duration and after the crisis, we could see further risk to our rental revenue.
We will endeavor to work with internal then they.
Balancing their needs with our duty to protect the interest of our investors.
Fortunately over the years, we have focused on building a roster of growing and financially resilient tenants in particular, we've targeted properties and locations that attracts some of the most dynamic tenants in tech and media many of which had been holding up quite well financially because the early weeks or the crisis.
We also have extended lease durations with very limited near term role.
And we have limited street level retail and parking exposure.
I'll note that we have we work isn't tenet in San Francisco in DC as well as Eddie property under development in Manhattan.
Collectively they lease just under 250000 square feet.
We work is paid almost all of her April rent.
And we're having productive conversations with them regarding their future rent obligations.
Looking ahead, we are believers in the resiliency of this nation and we know that working together will overcome today's challenges.
We also see a bright future for Columbia Cropping Trust, which is now reaping the benefits of a highly qualified and motivated team.
Best in class portfolio, and a prudent capital allocation strategy.
This strategy has been corrected yet disciplined.
It has directly led to our strong cash flow in the enhancement of our net asset.
We know what will take time to emerge from this global crisis, but we have confidence in the abilities and the termination of our team.
And in the market demand for our proven core portfolio as well as our exciting value add projects.
Columbia's leadership team and board has experienced in navigating choppy sea and a balance sheet to weather the storm.
We are well positioned to protect our shareholders' investment and to meaningfully grow it overtime.
In closing I want to thank our dedicated team, especially for the fortitude and professionalism shown over these past two month.
Also wish to thank our shareholders for your trust and belief in both our capabilities and our commitment to protect your investment.
And to deliver the financial performance you deserve.
We will continue to work very hard during your confidence and trust.
I look forward to keep you informed on our progress as 2020 unfolds.
With that I'll turn the call over to Jim to walk us through our results and our financial position as we're managing through today's environment.
Thank you Nelson and I want to thank all of you for joining us on today's call is everyone is aware we've had to adapt over the last too much.
With no travel Orient push some meetings.
As always we'll participate in the June may read meetings.
Which will be held virtually this time.
But we very much appreciate the support of our analysts and shareholders and we're always glad to get on the phone, which you have a video conference feel free to reach out to Nelson, Matt will meet at anytime.
Lets Nelson pointed out we had a strong first quarter at Columbia with normalized FFO was 39 cents.
In line with our highest quarter last year. Despite recent dispositions.
Our same store NOI based on cash ranch, which $52 million.
14.5% year over year.
Reflecting some of the best growth and the industry.
And our team least another 126000 square feet during the quarter despite low rollover.
This solid performance brought our quarter end lease percentage to 97.6% up another 50 basis points.
And matching the highest level and Columbia's history.
Our leasing spreads were again very healthy at 9% on a cash basis and 16% on a GAAP basis.
Which will further support our financial performance in the quarters ahead.
During the quarter, we repurchased $23 million of our common stock.
I have 143 million remaining under our repurchase authorization.
As covered 19 spread we temporarily suspended the company buyback program.
However.
We consider Columbia shares an outstanding value and to that point multiple executive and board members have recently made purchases.
Colombia balance sheet, which is long facilitated the execution of our compelling growth initiatives is also a source of strength during difficult economic times.
Lets Nelson mentioned.
We completed the dispositions of two noncore properties during the quarter producing gross proceeds of nearly $260 million.
For the first time in many years, we no longer have any properties that were looking to sell.
In March as macroeconomic uncertainties, we're developing.
We decided to draw a $200 million on our line of credit.
And with the additional proceeds from the Pasadena sale in late March.
We ended the quarter with the cash balance of more than $290 million.
An additional availability under our line of credit of $149 million.
Our net debt to adjusted EBITDA ratio stood at 7.6 times.
With net debt to gross real estate assets at 34.9%.
Our fixed charge coverage ratio today is a very strong 3.4 times.
We have an acquisition loan and terminal stores due late this year and a modest construction loan on set of 99 Broadway due next year, but other than those.
No debt maturities until 2022, and we have more than $4 billion of unencumbered properties.
Our tenant roster is another source of strength with quality companies long lease durations and very limited rollover of only 2.3% this year.
We also benefit from the fact that two of our redevelopment projects have not yet commenced.
Making it relatively easy depressed pause for the time being.
For the month of April.
We've collected 97% of our office ranch.
And 95% of our total recurring ranch.
We have received requests for rent relief from a number of tenants primarily retail.
And as Nelson mentioned, we're working with the number of these.
However, our retail rents are less than 5% of our total revenues.
And we have collected more than half of those for the month of April.
Hi, rich from co working tenants for only 2% of revenues.
And our transient parking has been generating only about two thirds of a percent of our revenues.
Because our exposure to these revenue sources is limited.
And we had a strong roster of tenants with only 2.3% about leases expiring in 2020.
We believe unless economic conditions become materially worse.
The effect on our 2020 revenues will be limited.
And a lot of thought and.
And of course, no one knows exactly how economic conditions will play out in the months ahead.
However.
Do you two are tenet base.
And the quality of our buildings.
Based on the factors I mentioned earlier.
We've chosen to widen and lower the range is for a 2020 financial guidance.
Instead of withdrawing guidance.
In closing I want to emphasize that Columbia property trust as well positioned to address the current challenges.
Our portfolio and development pipeline consist of high quality appealing properties and exciting up and coming neighborhoods with compelling embedded value.
Thanks to the hard work of our team will continue to unlock this value for our shareholders.
And I share Nelson's confidence that file it will take time, we will emerge stronger than ever.
What's that operator, you can now open the call for questions.
Certainly thank you in order to ask a question that this time. Please press star tend to number one on your telephone keypad that is star one on your telephone keypad to ask a question.
Your first question comes from John Kim from B.M.O. capital markets.
Line is open.
Oh Ya afternoon.
Your April when collections can you provide any more color on when you expect in in many understand there's some tenants events for rental pearls and that that percentage collection may decrease.
But just wondering what's the range maybe for next month.
Yeah, it's it's difficult to say John.
I think is dragged on May June beyond it just depends on how how quick to have roots, obviously, but.
The longer the longer in deeper. This last then of course more vegetable they are more tennis will be in trouble, but so far from our conversations we've had extensive conversations.
It seems that are office tenants or and doing pretty good shape and and well suited to weather. The storm there are a couple of.
Significant office tendency, we're discussions about the furrow, maybe two or three months to furrow, which gets paid back pretty soon that's that's one option we're looking at.
From a gap basis with with a rent leveling straight straight line rents that really wouldn't affect gap earnings, but it could be could push some cash for a couple of months, we may do that with a couple of tenants.
And on the retail now which is again as Jim says a very small percentage there'll be some of that as well, we'll definitely be working with some of the retail tends to help them get through these next few months, but in terms of predicting the percentage I I do think it'll continue to be very high 97 for office rents as we said is extraordinarily.
I am Oh, certainly we hope it'll be in that range, but it's really difficult to say exactly where the team is you know working hard to.
To to keep it keep it as high as possible.
And where does we were a kitten, where they part of the 97%.
So we work has to two properties.
About six 160000, C. 170000 feet in San Francisco in D.C.
And they did pay 90%.
For the month of April we are in discussions with them about the the the future and I'm working with them to <unk>, yeah on on various options they pay that 90% in good faith.
<unk> discussions continue so we're very optimistic that will will maintain at least that number.
And the third property is in Manhattan, It's under development and that is not <unk> don't commit there until July that's part of the discussion as well.
So, we'll see where that goes but but so far per month vehicle and we expect in may.
We should do we should get to that value per cent plus number but more to come on that.
A couple of questions on guidance, you took down the occupant the assumption by 200 basis points.
At the mid point, which is you know about with expiring. This year is that the simple equation that you don't effective.
At least the remaining states that the firing.
Well, maybe some conservatism in that and number John but but again given you an uncertainty of where things are we do think.
The vast majority of our tennis or in great shape financially, but you know given an uncertain time, we thought it was putting the cold at back a little bit.
We work would come into that equation, Oh, but you know we hope not but.
Yeah, So it's not tied any specific.
Expects, an expiration and yes, we do hope to get some leasing done, but we thought it was more prudent at this time to to be more conservative on it from.
Gender, you won't add something to that.
Agree with that Nelson John This the Guy that's really what we've tried to do on all of these is to just provide some more room, obviously that ranges or wire.
Then they were before because there's more uncertainty out there but.
<unk> <unk> and this isn't really based on just one set of assumptions are one model we've done a lot of.
Thinking in autumn modeling around this we had a comment recently you know that you could just tie these together and.
Do the math between F., though and same story in a lie at least percentage and all that and you really can't some things affect one item you know one metric and other things were affecting other metrics are really what we've done is that Dan several different models tried to pull these back a bit to arrange that we feel pretty confident in.
And and so I would read too much into these except that we do think we we do feel good about our guidance at this point.
I'll just ask one more the management fee revenue and the expensive both came in higher than the original guidance. You provided late last year were there any one time item in this quarter's figures or it's it's a great runrate going forward.
<unk>.
Good good point, there's an additional page in our supplemental.
Which is page 13 that now shows those items and what we had what you have their is the.
<unk>.
What had been then the income we had from R.J.V. partners on a fee basis for the Oh, Yeah, It's J.V. and a Blackstone J.V. plus the.
The legacy Normandy business and you'll see we've got a profit of about $1.6 million. We did not it's not a full quarter for nobody saw this number will go up a bit.
But this is reflective of the all three of those businesses.
So that Normandy feast dream that provided last year that still.
That's still the the right figure going forward 2020.
Yeah, we still feel good about that John we when we did our render writing before obviously so dynamic business. It's every business is but when we did did or underwriting before we we assume that we would do some additional development.
Overtime and that that feast dream would taper off over time, it looks like now given.
What's going on the economy right now it'll probably be longer before we do the additional development for we pick up additional fees, but on the other hand, the the legacy business is probably going to be more sticky because assets are not gonna get so that might even sold.
If the economy were stronger and so we still feel really good about those numbers.
Great. Thank you.
Thanks don't thanks, John.
Yeah. Our next question comes from <unk> from Morgan Stanley airline is open.
Hey, guys just add them onto her vikram, just one Ohio about yeah I just wanted to talk a little bit about what what is going to look like when tenants reenter. The building kind of just high level what type of investment do you think you're going to have to make them what that could talk and sort of what you're saying you know property operating expenses.
Look like moving forward in in a reentry scenario.
Yeah and I'm. Good. Good question. So the team is spending a lot of time to both of our time. The last couple of weeks just preparing for that reentry and as we said communicating with tenants and you know making plans for operation standpoint.
So we're we're doing we're doing a lot from you know looking at air filtration systems to.
<unk>.
Operation standpoint, anything we can make touch list any any way we can direct travel just to minimize.
You know to to help with social doesn't thing, obviously cleaning protocols harping greatly enhanced expanded.
In terms of.
Cost operating cost I don't think it's really all that material. We're not doing you know we're not doing it doesn't involve extensive capital.
Improvement so Jim I don't know if you want to add to this but from from I don't think it's gonna really moved the needle in terms of an operating costs are now if overtime as we learn morin [noise].
And.
We adapt more permanent changes to the properties you know, maybe but I think in terms of reentry in preparing for safe clean.
Environment for these tennis to reenter.
Yeah, I don't I don't know what the cost of the difficult will be all that substantial.
<unk>.
I I agree with that Nelson I I'd say.
[noise] and Adam in the in the near term.
A whole lot of additional operating costs, we don't think.
In the longer term there maybe some capital costs. It may be a landlord question, maybe 10 it costs, it's hard to say, but obviously people are going to look at their office space a bit differently. There are a lot of factors there, but certainly one of them as cleaning and.
Making sure that it's configured properly and all that but really I'd say in the near term, we're not expecting a a big impact.
And very early days phase one we don't plan to open Jim was or.
Commonly used conference center or.
Other immunities things like that that will save that in over over the summer. So.
But but yeah. So staffing we could have it <unk>, we will have additional staffing for cleaning it possible for security, but I just I just don't think it's going to be all that meaningful of an increase in your world.
<unk>.
Got it that's really helpful. And then just one more just sort of high level I know, it's early and it's tough because the leasing volumes are way down, but <unk>. What do you guys think the impact of sort of Kobe 19 could be on and on rent growth across say t. market in sort of a post cobin world.
And just sort of what you're what you're seeing on the ground.
Well you know it is it is very early and it's bound to have an impact.
Both in terms of pay some policing, obviously, but even and that effective right. I mean, there is you know as we've all discuss countless times.
We have I'm sure you have to there are few dynamics going on here on the one hand, it is going to it is less comfortable to get back to an office environment.
And.
Density is it's going to be you know out of fashion crusher.
There will probably be some some work for you know more work from home for Awhile I I doubt that that is you know sustainable per most businesses on a long term, but in the short term it could be.
But on the other hand as I mentioned.
Employer employees, you're going to be in less dense environments, and so more room spread out so.
On the one hand, maybe yes, there is more work from home.
The other hand, maybe some companies need even more space.
I think there'll be a premium on new buildings newly renovated buildings well maintained buildings over.
Over older more commodity buildings, just from the safety security standpoint.
Anyway, So if you roll all that together.
Given the uncertainty of where the market is and where this is all going I think the leasing paces can definitely be slower for awhile.
And I would say generally in in the most markets or maybe all markets for a while they're probably will be a deterioration in in that affected wins, but again I think a widening the gap between.
[noise] the the top buildings.
New construction newly renovated modernize buildings versus.
Commodity buildings, I think you'll see that gap wide and.
It's a bit earlier will will we're we're getting more information about that over the over the coming weeks and we'll certainly keep keep your prize of our views on it.
Got it into just one more you have time, it's not working I know that you said your rent collections from we work have been strong to date and it doesn't move needle that much at 149 Madison because it hasn't really commenced yet, but just sort of on the identification topic.
How do you think about you know your exposure to co working and that's the ability to co working basic model overall, it's sort of a post cobin world.
In a world like like you just said where the justification pendulum is definitely going to be swinging in the opposite direction.
Well also in that whole sector. They hold industry I think there are puts and takes right. So on the one hand.
Companies are going to need more space, they're going to need to spread out and so those co working facilities, we work industrious others.
Or or options for that.
They also and this uncertain times or with where would lean would be less you know longterm leases to be less favorable so something temporary until employers figure out where this is all going.
With my push them toward more of a co working environment.
On the other hand, I think most employers and employees are going to want to control their own space.
And I shared work environment might not you know might not be as appealing.
And then one other aspect that might favor it might benefit co working operators is.
You know.
These these companies all have businesses Gerard right, they're not they're on the real estate business.
And are providing space and safe space and functional space for their employees is costly in time bins and.
And so to the extent they can outsource that.
<unk> to someone they trust, whether it's a traditional landlord or or really capable co working operator, I think we'll see more of that.
But it's got to be an environment and an operator or did they trust.
So again a lot of competing.
Issues, there and I think the operators, where there's two traditional landlord like us or more of the cold working operators I think the the ones, who step up and deliver and perform and provide that.
Safety security comforting creative structures in their leases I think I think there'll be the winters. So again, a lot to lots of digest and a lot to adjust for the next several months.
Got it thank you.
Thank you.
You are next question comes from like Louis from Sun Trust. Your line is open.
Hey, Michael Thank you.
Mark.
149, Madison It looks like you have another 15 to 20 million of Capitol to contribute their since we work have a capital commitment still to funds and and trying to you know so not only rid of they stand on her July commencement put to they have money to put in there.
So.
Well, so it's not entirely clear exactly what the total cost is going to be to build up at space. It depends on what.
You know, what we work does with it and and who and what tenants what <unk> clients. They bring.
Into the building, but our commitment is between 17 18 million dollar the remaining commitment.
Most of that is earmarked corn based building work you know lobbying.
Adding a third elevator and replacing windows that kind of thing and then the other portion of it can be used for 10 improvements so much of the basic building work's already been done.
Not much at all of the 10 improvements have been done I think that's that would happen is as identify customers I assume.
I couldn't believe they they have the Capitol.
To find that.
You know at the appropriate time, obviously, they like every other construction project or or or locked down right now, but you know from our standpoint, you know we have the release coming soon July.
We have <unk> current guarantee.
For you know for a couple of years plus for the rents in in a portion of that is covered by letter credit. So we we are in pretty good shape, there and again as I mentioned earlier, we are in discussions with we work on all three properties and looking at various options, but given the position where and what the guarantees.
And the the good quality in the state of the buildings I think we're in good shape there to come out with a good outcome, but more more to come on that we work.
San deep in his team or being very.
I think they're doing a great job of staying in touch with us another landlords and working through it and so we're we're very optimistic that will work out of something that's a good result for investors.
Okay Garner I want to to ask her about their stock repurchases see repurchase stocks are due to the last two corners. The stock right now is about 25% below where it was then so so you know have this isn't this is it just for you I guess you see this and other remotes and and other companies of course.
You know it's easier to tie back.
Until things get get tough and then the focus becomes on liquidity.
So you know where do you kind of standards you look at the buyback they'll ever too you know is up a little bit and you know you're just you're down your line, you're obviously focusing on liquidity you know how how do you kind of look at that now where the stock prices you know more attractive than where it looks attractive a few months or not.
Great question, Jim you want to take that one.
Oh, you're my best Nelson, but you're right Michael It's it's an interesting question.
<unk> as you can tell we felt that the stock was a compelling by in a high change and we bought it before all this happened in him when this did happen.
Just so much uncertainty out there we just decided as you said to focus on liquidate.
We we drew the 200 million owner line of credit we.
Held onto the proceeds from Pasadena, So we've got a really big cash balance right now.
And the question is what do we what are we going to choose to do with that.
And we haven't really fully resolved that yet we clearly thinks the stock is a compelling value.
When we could always you know take some of our cash and.
Down some debt and some other caching by shares back that we really just we've taken a pause because we want to see how things develop and I think it might be another couple of much before we come to any conclusions on that but.
As we said a lot of insiders have bought stock and it's possible. We may decide to go back out there and do some more that.
Okay, Great and then I have just one more it's actually a follow up on a question I was asked earlier about the guidance.
The the least percentage at the end of the year, 92% to 96% your comfortably over 97% now you've got about 2% rolling the rest of the year is that it's a low enter that that 92% is that just you know this is a conservative ranch I mean, you don't expect.
That seems to imply that we eat lisa's could be broken get down to to to that level.
Yeah, that's that that's right. It's <unk> again all of these we tried to just adjust them all the ranges to get some more room.
But you're right the math is pretty obvious it 97.6% with 2.3% rolling something would have to happen to get us down to 92%.
We don't think tennis won't have to write to walk away from basis, but you know maybe some leases there there who knows that could be some tennis that don't make it and we just tried to provide some room for that in the guidance we do have.
Very solid tenant fashion I think that's reflective in the grinch collections that we've seen so far and a number of the you know we focused on tech tenants and and a lot of those are doing really well, but we got should we have some retail we have.
Some others and shall we just trying to leave ourselves from room.
Okay. Thank you.
Thanks, Thanks, Michael.
You are next question comes from Rick Skidmore, Frank Goldman Sachs airline is open.
<unk>.
[noise] question just on terminal in Franklin, you mentioned not necessarily moving forward with that but as you look out into the future would there would you want to have that those opportunities preleased before moving forward or how should we be thinking about terminal in Franklin.
You know a good question rickets, it's difficult to say those two projects or a bit longer term anyway, seven nine on Broadway and in the 80 on the street or you know seven and I'm. Probably is is you know the shells most of the complete and.
<unk> 80, M., we have preleased.
The other two did you ask about or or a couple years away really from spending vehicle dollars and being ready to go anyway, but on both properties you know very preliminary marketing and discussions continue so I mean, ideally we'd end up with a substantial <unk>.
Use it at one or both.
And we may with our partners decide to.
To hold out for that but I think that's I think that's to be determined I think we'll we'll take a a breath or oh be careful not to spend more money or commit to more capital.
Then we have two in the next several months and just really absorb work, where this is going and what the demand it's gonna be and.
And the best use for the property. So we couldn't commit today to that we then we would hold out for prelease, but we what we can commit to is that we're going to press costs for a little while and.
And and see see where the market goes there, they're both really unique well situated properties.
They're going to do there are going to do quite well <unk> compared to you were compared to the market. We we just don't know where that market, it's gonna be and what you know, what we and that will affect the configuration and the design in the planning and the cost for the property. So.
It's just in a wait and see mode. At this point not very active wait and see mode.
Got it. Thank you <unk>, maybe one follow up Nelson now that you've had Normandy in a in the full for a few months.
Anything that's surprising to you given their sort of historical expertise with development and.
Perhaps being opportunistic how do you think about leveraging Normandy with regards to maybe being opportunistic out of this crisis in terms of actually I'm gross.
Yeah, absolutely so as I mentioned in the opening comments, we're very thankful, we we got the transaction or the integration done when when did I mean, the team has just been a terrific together. The two teams are the combination it's been great. It's it's hard to match that we're just going to give it a few months or working great gifts and team.
And sometimes I think there's a perception that we did the normally acquisition just for development me construction and they do have phenomenal development experience and and capabilities and reputation, but they're they're they're a lot more than that they manage a substantial number of.
Properties, we almost doubled R. square footage under management.
And and so many other things leasing property management asset management.
And even fund management, so it's an it's a nice.
Healthy book, a business, which is Jim said earlier is it's going to be around for awhile.
But I think more directly to your question I think this team gives us the.
The you know the relationships reputation, though no hell to really go out there and look for.
Petunias as they emerge Normandy.
The normally team has said it's been very successful.
Stressed that place for example.
Very impressive background that so it's too early really to look at that but I think if that's where this economy goes and those opportunities are presented I think bringing that experience to bear would be would be good. So all that to say I'm very.
Grateful that now knowing what we're in now where even more where even more exciting more pleased to have the two companies together I think it should spend equip us.
To to make the best of this situation with all those things in a question about that.
Thank you.
Thanks, <unk> Hi, Shrek.
Again, if you would like to ask a question. Please press start then the number one on your telephone keypad.
Your next question comes from Sheila Mcgrath from ever core.
Line is open.
I guess you afternoon.
Hey, I'm sorry I.
Hopped on a little bit made if you already touched on this but on 799 broad way any thoughts on activists active discussions are they like grinding to a hot there or perhaps do you envision that you know maybe some tenants wanting like a single building or.
Smaller more controlled building my kind of revisit the property it just update on activity yeah.
Yeah. She lost so I think almost everything in our World is you know hit the ground to halt and the last few weeks, but I would I would say first of all to go forward and finished the building with an easy decision. It's.
You know, we're well down the path, where we're on time or on budget Everything's looking great in the building.
Up until this this crisis hit.
As you know there were there were several active discussions about everything from cool building used to you know major anchor tenants news.
And.
And yes, it was a bit of a pause right now, but we're very confident that that those will continue and that this because of this very unique property in this modern property in that.
And location, we think it's gonna do quite well now have rents or if they asking or taping rent shifted a little bit we'll have to <unk>, we'll have to see I don't want to see what you know what the competition is what the market says about that but.
I think given that you need nature of the building were very comfortable get that one at least it could be full it could be one tenet.
Our belief is more likely a significant majority anchor tenants.
Supplemented with others, but so no it's.
We're we're we're very confident that that's going to have a great outcome.
Okay, Great and then on 149 Madison I know you've touch on it quite a bit but can you just remind us the protection that you have on that building with that I think a letter of credit.
Yes, hi, some small chance you were at <unk> have to take that building back or work something out.
Do you envision that you would have to put a lot more capital in to make it multitenant property.
Nelson if you want I can do you like I can answer the first part.
Yeah go ahead, just to be yeah. So so she but there's a 10 month letter letter of credit equal attain much rent in place at 6.4 million.
And then in addition to that there's also a parent guarantee for another 17 months of rent, which is 11.4 million. So combined it's what is that 17.8.
That's the first part of the question right, Yeah, and and yeah. Thanks.
So so first of all you have that in addition to that they're there is between Oh, I'm 17 $18 million unfunded.
Oh building allowance that we still hold that's not been funded.
And that's you know we we we monitor that we have we have rights controls over that but that's you know at the money we committed to the project so that hasn't been funded yet so if you took that money.
If you did if we did have the property back by the way, we we'd love to have the property in her portfolio and at the mid town South boutique building. That's what we do we bought it for that reason, it's just that the deal we struck with we work a couple of years ago for a number of reasons was with our best option at the time, but yeah, taking that building back with wood wood.
We'll be terrific.
We might have to fund a little more than what you know in in those two buckets, but again come up to the outcome would be good if that's what it came down to but we do have the protections. Jim described as I mentioned, we are indiscretion. When we work on all three properties for that very productive discussions about where the so I'll go so.
You know hopefully more to come on that.
Okay, Great and last question for me I thought that was good news on securing attendance at the top of 315 Park Avenue South I'm just wanted to clarify that Ah you didn't have to put any more capital in in at that transaction number one and number two I think you make you mentioned that.
It was.
Going to take bigger station that building just curious what where you stand on that transaction you know what you'll do with your old Columbia space.
Sure Okay, <unk> two two separate issues there.
One on the top for 10, you recall, they we we leave that to win capital for years ago for over 100 Bucks a foot great great great outcome. There if it turns out they just didn't need all the space ultimately.
So we do have a on a new.
Competent Joel 10, but great credit high profile tenet.
He's taken over this space at a roll up and rinse, so a little bit better rent then we had before and the <unk>. The the termination fee from the prior tenet more than covers all the cost of getting a new tenant end. So leasing commissions free rent all that was more than covered by.
<unk>, so we got slightly higher rents a longer term.
Credit at at no cost in fact, we actually we actually made a little bit on that so so that's great great outcome and we're very proud of habit 10 in the building in time, though will will reveal who that is but it's a study and then on our space. We have about 7000 feet before flip poor place at 315 or.
Or 17000 feet, we have about 7000 thing in the core floor with the <unk>.
Murder in Normandy, we we need more space, we're moving up to the fifth floor, we will lease out the for for space. It's it's it's nice space it's fully.
No.
Fit it out so we'll we'll get we'll get a good rent on that on the competent and then we're going to take the fifth floor and even there we didn't existing tenet.
That we we took a buyout arrangement with <unk> they continue to pay partial rett.
For several more years.
And then so we're getting that we're in effect, we're getting that they said discount as well. So anyway again that continues to be a terrific building in big demand and we continue to be very pleased with with with that building.
Also very glad to call it our our corporate headquarters.
Great. Thank you.
Thank you.
There are no further questions out this time will turn the call back over to Nelson males.
Alright. Thank you so much want to think everybody for joining us today, great questions and we really appreciate your your interest in Columbia.
The world's gonna surely be a bit different going forward and.
This new normal will take some time to emerge no question about that but I'm convinced that working together will.
Will overcome this and will eventually prosper we really appreciate your time today and please feel free to reach out with Oh to any of us with any questions. We hope you stay safe to stay healthy.
And we look forward to updating you in the months ahead.
Thank you again.
Ladies and gentlemen disk concludes today's conference call. Thank you for participating you may know disconnect.
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