AH Realty Trust, Inc (AHRT) 2016 Q4 法說會逐字稿

Welcome to Armada Hoffler's fourth-quarter 2016 earnings conference call.

歡迎參加 Armada Hoffler 2016 年第四季財報電話會議。

(Operator Instructions)

（接線員指示）

As a reminder, this conference call is being recorded today, Thursday, February 9, 2017. I will now turn the conference over to Michael O'Hara, Chief Financial Officer at Armada Hoffler. Please go ahead, sir.

提醒各位，本次電話會議將於今日（2017 年 2 月 9 日，星期四）錄音。現在我將把會議交給 Armada Hoffler 財務長 Michael O'Hara。先生，請開始。

Good morning. And thank you for joining Armada Hoffler's fourth-quarter 2016 earnings conference call and webcast. On the call this morning, in addition to myself, are Lou Haddad, CEO; and Eric Smith, our Chief Investment Officer, who will be available for questions.

各位早安。感謝各位參加 Armada Hoffler 2016 年第四季財報電話會議與網路直播。今天早上的電話會議中，除我之外，還有執行長 Lou Haddad，以及我們的投資長 Eric Smith；兩位將可回答提問。

The press release announcing our fourth-quarter earnings, along with our quarterly supplemental package and our 2017 guidance presentation, were distributed this morning. A replay of this call will be available shortly after the conclusion of the call through March 9, 2017. The numbers to access the replay are provided in the earnings press release. Those who listen to the rebroadcast of this presentation, we remind you that remarks made herein are as of today, February 9, 2017, and will not be updated subsequent to this initial earnings call.

本公司今早已發布宣布第四季盈餘的新聞稿，以及季度補充資料包與 2017 年財測指引簡報。本次電話會議的重播將於會議結束後不久提供，並可收聽至 2017 年 3 月 9 日。重播的撥入號碼載於盈餘新聞稿中。對於收聽本次簡報重播者，我們提醒：本次發言係截至今日（2017 年 2 月 9 日）之內容，且在本次初次財報電話會議後不會再更新。

During this call, we will make forward-looking statements. Including statements related to the future performance of our portfolio, our development pipeline, the impact of acquisitions and dispositions, our construction business, our portfolio performance, and financing activities, as well as comments on our outlook. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations, and we advise listeners to review the risk factors discussed in our press release this morning and in documents we have filed with or furnished to the SEC.

在本次電話會議中，我們將作出前瞻性陳述，包括與我們投資組合未來表現、開發管線、併購與處分之影響、營造業務、投資組合表現與融資活動相關之陳述，以及對前景的評論。提醒聽眾注意，這些陳述受若干風險與不確定性影響，其中許多難以預測且通常超出我們控制範圍。這些風險與不確定性可能導致實際結果與我們目前預期有重大差異；我們建議聽眾查閱今早新聞稿以及我們向 SEC 申報或提供之文件中所討論的風險因素。

We will also discuss certain non-GAAP financial measures, including but not limited to FFO and normalized FFO. Definitions of these non-GAAP measures, as well as reconciliations to the most comparable GAAP measures, are included in the quarterly supplemental package which is available at our website www.armadahoffler.com.

我們也將討論若干非 GAAP 財務衡量指標，包括但不限於 FFO 與標準化 FFO。這些非 GAAP 指標之定義，以及與最可比 GAAP 指標之調節表，均收錄於季度補充資料包中，可於我們網站 www.armadahoffler.com 取得。

We will start the call today by discussing current events and year ended 2016, after which Lou and I will discuss are 2017 guidance. Now I'll turn the call over to our Chief Executive Officer, Lou Haddad. Lou?

我們今天將先討論近期事件與截至 2016 年的年度表現，之後 Lou 與我將討論我們的 2017 年財測指引。現在我把電話交給我們的執行長 Lou Haddad。Lou？

Thanks, Mike. Good morning everyone. And thank you for joining us today.

謝謝你，Mike。各位早安。感謝各位今天加入我們。

Today we reported full-year 2016 results of $1.01 of normalized FFO per share, reaching the high end of our expected range. Our same-store portfolio produced another quarter of growth, while our overall portfolio remained leased in the mid-90s. Our construction business finished the year with profits well over $5 million and is carrying nearly $220 million of third-party backlog into 2017. While it's gratifying to report another year of solid financial results, I'm even more proud of what we've accomplished in the three-plus years since our IPO. Before I turn the call over to Mike, let's reflect on just how much our Company has achieved since the spring of 2013. Three years ago, we were a newly public Company with a market cap of some $350 million. Three years ago, we were talking about our identified development pipeline of projects, concentrated in the southeastern part of Virginia. And our expectation of $150 million to $175 million of new development every 18 to 24 months. And finally, three years ago, the management team and I talked about how the successful execution, delivery, and stabilization of the projects in our development pipeline would eventually lead to future growth, not only in NOI, but more importantly, in NAV.

今天我們公布 2016 年全年每股標準化 FFO 為 1.01 美元，達到我們預期區間的高端。我們的同店投資組合再度實現一季成長，而整體投資組合出租率仍維持在 90% 中段。我們的營造業務在年末的獲利遠超過 500 萬美元，並帶著近 2.2 億美元的第三方在手訂單（backlog）進入 2017 年。雖然能再度報告一年穩健的財務成果令人欣慰，但我更為我們在 IPO 以來三年多所完成的成就感到自豪。在我把電話交給 Mike 之前，讓我們回顧自 2013 年春季以來公司究竟達成了多少。三年前，我們是一家剛上市的公司，市值約 3.5 億美元。三年前，我們談到已識別的開發管線專案，主要集中在維吉尼亞州東南部；並預期每 18 至 24 個月新增 1.5 億至 1.75 億美元的新開發案。最後，三年前，我與管理團隊談到：成功執行、交付並使開發管線中的專案達到穩定營運，最終將帶來未來成長，不僅在 NOI，更重要的是在 NAV。

Today, each of the projects in that original pipeline has been delivered. Many have stabilized. And the healthy wholesale and retail spreads that we've created have been recognized. Today, after successfully executing our business plan, our market cap has more than doubled, our earnings, NAV, dividends, and share price have all grown meaningfully, and total return to shareholders has outpaced the REIT index by a significant margin. Today, we have leases out for signature for nearly 40,000 square feet of new tenants at 4525 Main.

今天，原始管線中的每一個專案都已交付；許多已達到穩定營運。我們所創造的健康批發與零售利差也已獲得認可。今天，在成功執行我們的商業計畫後，我們的市值已超過翻倍；我們的盈餘、NAV、股利與股價皆有顯著成長，股東總報酬也以顯著幅度超越 REIT 指數。今天，我們在 4525 Main 有近 40,000 平方英尺的新租戶租約正待簽署。

These commitments, when combined with the existing Town Center tenants, who relocated, upgraded, and expanded into the building will bring occupancy to well over 90%. We are very pleased that we are able to hold rents at this, the premier address in the region, and achieve our target returns. And with the relocations from lower price-point space, creating vacancy that appeals to a wider array of perspective tenants, we are poised to quickly bring occupancy at Town Center back to its historical levels in the mid to high 90%s. As you already know, our expansion of Town Center continues with the construction of basics currently underway, and the acquisition of the Columbus Village Shopping Center next door.

這些承諾若再加上既有的 Town Center 租戶（其已搬遷、升級並擴大進駐該大樓），將使入住率提升至遠高於 90%。我們非常高興能在此區域的頂級地址維持租金水準，並達成我們的目標報酬。同時，因租戶自較低租金水準的空間搬遷而釋出的空置面積，將吸引更廣泛的潛在租戶，使我們有望迅速將 Town Center 的入住率恢復至歷史水準的 90% 中段至高段。各位已知，我們對 Town Center 的擴建仍在持續進行，目前基礎工程正在施工中，且我們也收購了隔壁的 Columbus Village Shopping Center。

Today our predevelopment and development pipeline approaches $440 million and reaches as far north as the inner harbor of Baltimore, through the greater Washington, DC, Metro area, into Downtown Durham, to Midtown Charlotte, and some of the fastest-growing markets throughout the Carolinas. But not only the value, but the quality of locations and projects in our current pipeline have potential for value creation that has never been greater. So our message this morning is the same as it was three years ago, when we were promising successful execution of that original pipeline: efficient construction, delivery, and stabilization of our development projects [as] the primary path to future NOI and NAV growth.

目前我們的前期開發與開發管線接近 4.4 億美元，範圍北至巴爾的摩內港，穿越大華盛頓特區都會區，延伸至達勒姆市中心、夏洛特中城，以及卡羅萊納地區多個成長最快的市場。然而，不僅是價值規模，我們目前管線中的地點與專案品質，其潛在的價值創造能力也前所未有。因此，我們今天早上的訊息與三年前相同：當時我們承諾將成功執行原始管線——以高效率的施工、交付與穩定營運我們的開發專案，作為未來 NOI 與 NAV 成長的主要途徑。

Near-term per-share earnings growth will be largely offset by our continued ATM activity and asset dispositions, as we prepare our balance sheet for the delivery of several premier assets. But as we've said before, we've never managed our business on a quarterly or even yearly basis. Our goal has been and always will be, to build a portfolio of the highest quality real estate in order to create value over the long term and return that value to shareholders. Given our track record of success of nearly four decades, we have every reason to believe that the best is yet to come.

短期的每股盈餘成長，將在很大程度上被我們持續的 ATM 發行活動與資產處分所抵銷，因為我們正為數項頂級資產的交付而調整資產負債表。但如同我們先前所說，我們從未以季度、甚至年度的角度來經營業務。我們的目標一直是、也永遠會是：打造最高品質的不動產投資組合，以在長期創造價值並將該價值回饋給股東。憑藉近四十年的成功紀錄，我們有充分理由相信，最好的仍在後頭。

At this time, I'll turn the call over to Mike to review our fourth-quarter and full-year 2016 results, after which I'll comment on our 2017 guidance. Mike?

此時，我將把電話交給 Mike，請他回顧我們 2016 年第四季與全年業績，之後我將就 2017 年財測指引發表評論。Mike？

Thanks, Lou.

謝謝你，Lou。

Today I want to cover the highlights of the quarter, the full year, and thoughts on our balance sheet. This morning, we reported FFO of $0.27 per share and normalized FFO of $0.25 per share. For the full year, FFO was $0.96 per share and normalized FFO was $1.01 per share. This compares to FFO of $0.87 and normalized FFO of $0.93 in 2015. FFO excludes $30 million of gains on real estate sales, which equates to over $0.50 of earnings per share. Despite this treatment, as we have discussed in the past, asset sales and capital recycling will continue to be an element of future shareholder value creation. And we believe this past year's asset recycling can improve the quality of our portfolio and underlying cash flow. On a related note, because we structured these transactions as a 1031 tax-free exchange there are no taxable gains in 2016. Tax efficiency remains one of our corporate goals.

今天我想說明本季重點、全年重點，以及對我們資產負債表的看法。今早我們公布每股 FFO 為 0.27 美元、每股標準化 FFO 為 0.25 美元。全年而言，每股 FFO 為 0.96 美元、每股標準化 FFO 為 1.01 美元。相較之下，2015 年每股 FFO 為 0.87 美元、每股標準化 FFO 為 0.93 美元。FFO 排除不動產出售收益 3,000 萬美元，折合每股盈餘超過 0.50 美元。儘管如此，正如我們過去所討論，資產出售與資本循環（capital recycling）仍將是未來創造股東價值的一個要素。我們也相信，去年進行的資產循環可提升我們投資組合的品質與基礎現金流。相關地，由於我們將這些交易結構設計為 1031 免稅交換，2016 年並無應稅資本利得。稅務效率仍是我們的公司目標之一。

The fourth quarter represents the 10th consecutive quarter of same-store NOI growth. Same-store NOI was positive 1.3% and positive 1.8% on a cash basis as compared to the fourth quarter of 2015. For the full year, same store NOI was positive 1.2% and positive 1.7% on a cash basis as compared to 2015. At the end of the quarter, our core operating portfolio occupancy was 94%, with office at 90%, retail at 96%, and multifamily at 94%. The overall drop in portfolio occupancy was primarily due to a decline in office occupancy. As Lou discussed, two tenants are expanding and relocating into 4525 Main Street from other Town Center office buildings. Keep in mind that 4525 Main Street is not currently included in our core operating properties.

第四季為同店 NOI 連續第 10 季成長。同店 NOI 較 2015 年第四季成長 1.3%，以現金基礎計算成長 1.8%。全年而言，同店 NOI 較 2015 年成長 1.2%，以現金基礎計算成長 1.7%。截至本季末，我們核心營運投資組合的出租率為 94%，其中辦公為 90%、零售為 96%、多戶住宅為 94%。投資組合整體出租率下滑主要係因辦公出租率下降。如 Lou 所述，有兩位租戶正擴編並自其他 Town Center 辦公大樓搬遷至 4525 Main Street。請注意，4525 Main Street 目前尚未納入我們的核心營運資產。

On the construction front, we reported a segment gross profit in the fourth quarter of $1.4 million on revenue of $50 million. For the full year, we reported segment gross profit of $5.7 million on revenue of $159 million. At the end of fourth quarter, the Company had a third-party construction backlog of $218 million.

在營建方面，我們第四季營建事業部門於 5,000 萬美元營收下，認列部門毛利 140 萬美元。全年而言，我們於 1.59 億美元營收下，認列部門毛利 570 萬美元。截至第四季末，本公司第三方營建在手訂單（backlog）為 2.18 億美元。

To summarize our 2016 performance metrics, the Company excelled in all areas. Normalized FFO increased $0.08 per share or 9%, and AFFO increase $0.11 per share or 14%. The dividend was well covered with a 73% payout ratio in 2016. Additionally, total shareholder returns for AHH outperform the indexes. For 2016, total shareholder return was 47% versus 9% for the RMS and 21% for the Russell 2000. Since our IPO in May 2013 total shareholders return was 59% versus 27% for the RMS and 48% for the Russell 2000. We're obviously pleased with these returns and are grateful for the trust our shareholders have placed in the management team.

總結我們 2016 年的績效指標，本公司在各方面表現出色。標準化 FFO 每股增加 0.08 美元（或 9%），AFFO 每股增加 0.11 美元（或 14%）。2016 年股利以 73% 的配發率獲得良好覆蓋。此外，AHH 的股東總報酬優於各項指數。2016 年股東總報酬為 47%，相較之下 RMS 為 9%、Russell 2000 為 21%。自我們於 2013 年 5 月 IPO 以來，股東總報酬為 59%，相較之下 RMS 為 27%、Russell 2000 為 48%。我們對這些報酬當然感到欣慰，也感謝股東對管理團隊的信任。

Now turning to our balance sheet. We continue to take actions to enhance flexibility and strengthen our balance sheet, including increasing the capacity of our credit facility, hedging our interest rate exposure, and continued use of our ATM program. We used the ATM program last quarter to raise $17.4 million of gross proceeds at an average price of $14.10 per share. For 2016, we raised $68 million of gross proceeds at an average price of $12.89 per share. In addition, we issued $46 million in stock and OP units as part of acquiring $75 million worth of property acquisitions in 2016. During the year, our equity market cap increased by $322 million to $805 million. Our total enterprise value increased by $472 million to $1.3 billion. At the end of the quarter, we had total outstanding debt of $527 million including $107 million outstanding under the $150 billion revolving credit facility.

接著談資產負債表。我們持續採取行動以提升彈性並強化資產負債表，包括提高信用額度融資（credit facility）的可用額度、對利率曝險進行避險，以及持續使用我們的 ATM 計畫。我們在上一季透過 ATM 計畫以每股平均 14.10 美元的價格，募集 1,740 萬美元的總募資額。2016 年全年，我們以每股平均 12.89 美元的價格，募集 6,800 萬美元的總募資額。此外，作為 2016 年收購 7,500 萬美元資產的一部分，我們發行了 4,600 萬美元的股票與 OP 單位。年內，我們的股權市值增加 3.22 億美元至 8.05 億美元。我們的企業總價值增加 4.72 億美元至 13 億美元。截至本季末，我們未償還總負債為 5.27 億美元，其中包含在 1,500 億美元循環信用額度融資項下已動用的 1.07 億美元。

In January of 2017, we added two properties to the credit facility [borrowing days] to increase the capacity by $25 million to a total $275 million. We continue to evaluate our exposure to higher interest rates and look for opportune times to enter into hedges. At year end 97% of our debt was fixed or hedged. Subsequent to year end, we purchased a two-year $50 million interest rate cap at 1.5% to replace the cap maturing on March 1. During 2017, we intend to continue to position the balance sheet for the development pipeline and associated growth through opportunistic asset sales. In the first quarter of 2017, we sold a single-tenant asset at a 5% cap for $4.6 million. The proceeds will be used for balance sheet purposes. We continue to evaluate our portfolio for opportunistic sale candidates. Continued use of the ATM program, which we believe is the most efficient manner for us to fund our growth and development activities and increase from the capacity of our credit facility by $25 million to $275 million.

2017 年 1 月，我們將兩項資產加入信用額度融資的[borrowing days]，使可用額度增加 2,500 萬美元至合計 2.75 億美元。我們持續評估對利率上升的曝險，並尋找適當時點進行避險。截至年末，我們 97% 的債務為固定利率或已避險。年末後，我們購買了一筆兩年期、名目金額 5,000 萬美元、上限利率 1.5% 的利率上限（interest rate cap），以取代將於 3 月 1 日到期的上限。2017 年期間，我們擬透過把握性資產出售，持續為開發管線及其相關成長進行資產負債表配置。2017 年第一季，我們以 5% 的資本化率（cap rate）出售一項單一租戶資產，售價 460 萬美元。所得款項將用於資產負債表用途。我們持續評估投資組合中可把握性出售的標的。持續使用 ATM 計畫（我們認為這是為成長與開發活動籌資最有效率的方式），並將信用額度融資的可用額度提高 2,500 萬美元至 2.75 億美元。

At this time, I would like to draw your attention to our 2017 guidance presentation that we published this morning. I'll now turn the call back to Lou to begin the discussion on our 2017 guidance. Lou?

此時，我想請各位注意我們今天早上發布的 2017 年財測（guidance）簡報。接下來我把電話會議交回給 Lou，開始討論我們的 2017 年財測。Lou？

Thanks, Mike.

謝謝你，Mike。

Looking back over the last three years, you will see on page 3 of the 2017 guidance presentation, that we've successfully produced and delivered over $300 million of new real estate, creating over $50 million of equity in the process, some of which we've monetized, but all of which have manifested itself in healthy NOI and NAV growth. As I mentioned in my opening remarks, while we are pleased to report another quarter and year of bottom-line per-share growth, I'm much more excited about the opportunities in our development pipeline and the associated value creation and growth potential over the next few years. When we look at each of the development pipeline projects, and pre-development opportunities presented on page 4, you'll see that the quality of assets in our pipeline has never been higher. The locations and markets have never been better, and the potential value creation has never been greater.

回顧過去三年，您將在 2017 年財測簡報第 3 頁看到，我們已成功開發並交付超過 3 億美元的新不動產，過程中創造超過 5,000 萬美元的股權價值，其中部分已變現，但全部都反映在健康的 NOI 與 NAV 成長上。如我在開場致詞所提，雖然我們很高興再度呈報一季與一整年的每股盈餘（bottom-line）成長，但我對我們開發管線中的機會，以及未來幾年相關的價值創造與成長潛力更感到振奮。當我們檢視每一個開發管線專案，以及第 4 頁所列的前期開發（pre-development）機會時，您會看到我們管線中的資產品質從未如此之高；地點與市場從未如此之佳；潛在的價值創造也從未如此之大。

All told, the total cost of the projects in our current pipeline approaches $440 million. Given our history of delivering healthy wholesale to retail spreads of around 20%, we expect that these projects alone will add some $90 million to NAV or well over $1.00 per share on a fully diluted basis over the next few years. As you can see, we are forecasting deliveries to begin in less than 12 months. Remember, this does not include many other exciting development opportunities that we continue to explore as far west as Nashville, throughout the Southeast, and along the East Coast. However, I believe it is important to note that we continue to decline the vast majority of opportunities presented to us. The standards we use to evaluate whether to deploy our precious capital on new projects remain and will continue to be exceedingly strict.

總體而言，我們目前管線中各專案的總成本接近 4.4 億美元。鑑於我們過往交付約 20% 的健康批發到零售價差（wholesale to retail spreads），我們預期僅這些專案在未來幾年就將為 NAV 增加約 9,000 萬美元，或在完全稀釋基礎下每股增加遠超過 1.00 美元。如您所見，我們預估交付將在不到 12 個月內開始。請記得，這尚未包含我們持續探索的許多其他令人振奮的開發機會，範圍西至 Nashville、遍及美國東南部，並沿著東岸。然而，我認為重要的是要指出，我們仍然拒絕呈現在我們面前的絕大多數機會。我們用以評估是否在新專案上投入珍貴資本的標準，仍然且將持續極為嚴格。

As Mike and I have reported to you on many occasions, we have various mechanisms to fund and appropriately lever the projects in our pipeline in order to meet our corporate goals. We will continue to use a combination of our credit facility, construction loans, and our ATM program as our primary capital sources. Alternatively, as we have demonstrated before, we may choose to monetize and recycle the healthy spreads on some of these assets. However, even if we choose to retain all of these properties, we believe that continued and prudent use of the ATM program will be more than sufficient to fund the necessary equity to maintain our target debt metrics. So while we continue to forecast absolute growth in NOI and FFO over the short-term, we expect growth on a per-share basis to be muted in favor of long-term value creation, just as it was as we executed on our previous pipeline. The growth in NOI since our IPO is illustrated on page 6. As you can see, the successful execution of our prior $260 million pipeline was the primary driver. When we extrapolate this past success to our current $440 million pipeline, you can understand why we're so optimistic about the growth potential of our Company.

如同 Mike 與我多次向各位報告的，我們有多種機制可為管線中的專案籌資並適度加槓桿，以達成公司的目標。我們將持續以信用額度融資、建築貸款，以及 ATM 計畫的組合作為主要資金來源。或者，如同我們先前所示範的，我們也可能選擇將部分資產的健康價差變現並循環再投資。然而，即使我們選擇保留所有這些資產，我們相信持續且審慎地使用 ATM 計畫，將足以籌措必要的股權資金，以維持我們目標的負債指標。因此，雖然我們仍預期短期內 NOI 與 FFO 的絕對值成長，但我們預期每股基礎的成長將為了長期價值創造而趨於溫和，正如我們執行先前管線時一樣。自 IPO 以來的 NOI 成長如第 6 頁所示。如您所見，成功執行先前 2.6 億美元的管線是主要驅動因素。當我們將過去的成功外推至目前 4.4 億美元的管線時，您就能理解為何我們對公司的成長潛力如此樂觀。

At this time I will ask Mike to walk through the details and key assumptions underlining our 2017 guidance. Mike?

此時我將請 Mike 說明我們 2017 年財測的細節與關鍵假設。Mike？

Thanks, Lou.

謝謝你，Lou。

Today we introduce 2017 guidance of $0.99 to $1.03 per share. We believe that 2017 will be a year of execution and positioning the balance sheet to the development pipeline and future growth. In addition, with no NOI contribution from new development projects, the midpoint of the 2017 guidance is flat to 2016. This is similar to 2014 prior to the delivery of the IPO pipeline. Once the pipeline deliveries began in late 2014, normalized FFO per share increased by 23% over the subsequent 3 years.

今天我們提出 2017 年財測為每股 0.99 至 1.03 美元。我們相信 2017 年將是執行的一年，並將資產負債表定位以支援開發管線與未來成長。此外，在新開發專案沒有 NOI 貢獻的情況下，2017 年財測的中位數與 2016 年持平。這與 2014 年（IPO 管線交付前）相似。一旦管線於 2014 年底開始交付，標準化 FFO 每股在隨後 3 年增加了 23%。

I would like to go to the details of the 2017 guidance. Please turn to page 7 of the presentation. First, starting with our assumptions. Disposition of a single-tenant asset during the first quarter with proceeds being used for balance sheet purposes, raising $40 million through the ATM program or $10 million per quarter. Interest expense is calculated based on the [forward] LIBOR curve, which forecasts rates rising from 1.25% by year end, maintaining core debt and core EBITDA in mid 6-times range and no acquisitions in 2017.

我想進一步說明 2017 年的指引細節。請翻到簡報第 7 頁。首先，從我們的假設開始：第一季處分一項單一承租戶資產，所得款項用於資產負債表用途；透過 ATM 計畫籌資 4,000 萬美元，或每季 1,000 萬美元。利息費用係依據（[forward]）LIBOR 遠期曲線計算，該曲線預測利率將於年底升至 1.25%；同時維持核心負債與核心 EBITDA 於約 6 倍中段區間，且 2017 年不進行任何收購。

This 2017 guidance of $0.99 to $1.03 per share is predicated on the following: total NOI in a $73.8 million to $74.5 million range; third-party construction gross profit in the $5 million to $5.5 million range; general administrative expenses in the $10.2 million to $10.5 million range; interest income from our mezzanine financing program the $5.7 million to $5.9 million range. As of year end, the [aggregate] loan balance of these mezzanine loans was $59.6 million, interest expense in the $17.9 to $18.5 million range, and 56.8 million weighted average shares outstanding.

此 2017 年每股 0.99 至 1.03 美元的指引係基於以下假設：總 NOI 介於 7,380 萬至 7,450 萬美元；第三方營建毛利介於 500 萬至 550 萬美元；一般及行政費用介於 1,020 萬至 1,050 萬美元；來自我們夾層融資計畫的利息收入介於 570 萬至 590 萬美元。截至年底，這些夾層貸款的（[aggregate]）合計貸款餘額為 5,960 萬美元；利息費用介於 1,790 萬至 1,850 萬美元；加權平均流通股數為 5,680 萬股。

Now I will turn the call back to Lou.

現在我把電話交回給 Lou。

Thanks, Mike.

謝謝，Mike。

Before I open the call up for questions, I'm excited to reiterate that the Board of Directors has declared a cash dividend of $0.19 per share for the first quarter or $0.76 on an annualized basis. This represents a 5.6% increase over the prior quarters' dividend and the third increase in three years, totaling nearly 19% dividend growth during that period. This reflects the Board's confidence in our long-term strategy and our ability to execute, as well as the Board's commitment to returning value to our shareholders.

在我開放提問之前，我很高興再次強調，董事會已宣告第一季每股 0.19 美元的現金股利，換算年化為 0.76 美元。這較前幾季股利增加 5.6%，也是三年內的第三次調升，該期間股利成長合計接近 19%。這反映董事會對我們長期策略與執行能力的信心，以及董事會致力於為股東創造回報的承諾。

Thank you for your time this morning and your interest in Armada Hoffler. Operator, let's begin the question-and-answer session.

感謝各位今天早上的時間，以及對 Armada Hoffler 的關注。接線員，我們開始問答環節。

Thank you.

謝謝。

(Operator instructions)

（接線員指示）

Our first question comes line of Dave Rodgers with Robert W. Baird. Please proceed with your question.

我們的第一個問題來自 Robert W. Baird 的 Dave Rodgers。請提出您的問題。

Hey good morning guys.

嘿，各位早安。

Morning David.

早安，David。

Hey Lou just want to start with a big picture question. Trump seemingly is a little bit more pro-defense that may or not have helped with the Brooks Crossing transaction. But we really haven't seen a lot of government services job growth as of yet.

嘿 Lou，我想先從一個宏觀問題開始。川普看起來比較支持國防，這可能有、也可能沒有幫助到 Brooks Crossing 的交易。但我們到目前為止還沒有看到政府服務相關的就業有太多成長。

Maybe you can talk about how the region feels? Particularly given that historically people would view your region definitely government centric?

你能談談這個區域的感受嗎？特別是考量到歷史上大家會認為你們所在區域確實是以政府為核心？

Sure. Thanks Dave. Well as you know we really don't have any tenants that are directly involved with DOD.

當然。謝謝 Dave。嗯，如你所知，我們其實沒有任何承租戶是直接與國防部（DOD）相關。

However obviously several of our tenants benefit by job growth in the area. Whether it's related to the port or to tourism or general business or the military. There is a huge amount of optimism in the region regarding potential Trump policy.

不過，很明顯我們有幾個承租戶會受惠於當地的就業成長，不論是與港口、觀光、一般商業或軍方相關。對於川普政策的潛在影響，這個區域有非常高的樂觀情緒。

Obviously strengthened defense leads to more military spending. Which helps everything in this local economy. And perhaps more importantly, for us, is the infrastructure spending that they are talking about. You may know that our greatest concentration office tenant-wise is in architects and engineers. And I can tell you a lot of the leasing pressure -- upward pressure that we have seen over the last few months is related to those expanding which is great to see.

顯然，強化國防會帶來更多軍事支出，這有助於本地經濟的各個面向。而對我們而言，或許更重要的是他們所談到的基礎建設支出。你可能知道，就辦公室承租戶的集中度而言，我們最大的族群是建築師與工程師。我可以告訴你，過去幾個月我們看到的許多租賃壓力——向上的壓力——都與這些公司擴張有關，這很令人振奮。

So everything been talked about is positive for this region. We will see how much actually materializes. But I tell you, it really started the last six months of 2016. There's been a tremendous amount of wins in the region. ADP is locating a huge office here, hiring 1500 people. Job growth in the area is over 3000 jobs for the latter part of the year.

所以，所有被討論的事情對這個區域都是正面的。我們會看看實際上能落實多少。但我可以告訴你，這股趨勢其實從 2016 年下半年就開始了。這個區域出現了大量的利多。ADP 正在這裡設立一個大型辦公據點，將聘用 1,500 人。該地區在年底後段的就業成長超過 3,000 個職缺。

New convention center hotel is opening up in Norfolk and a new entertainment district. The Beach is talking about a new arena and a convention center hotel as well. So there's a lot of happening that we're excited about. And of course Town Center sits in the middle of all of it.

Norfolk 的新會展中心飯店以及新的娛樂區即將開幕。海灘那邊也在討論新的體育館以及會展中心飯店。所以有很多令人興奮的事情正在發生。當然，Town Center 正位於這一切的核心。

Good segue into the Town Center. So obviously the Columbus office building saw a dip in occupancy. It looked like maybe some of that was in your renewal leasing schedule.

很好地帶到 Town Center 的話題。很明顯 Columbus 辦公大樓的入住率出現下滑，看起來其中一部分可能與你們的續租排程有關。

But it didn't seem to be explained the entirety of the drop in occupancy there. So could you maybe dive a little deeper in some of your legacy assets of the Town Center to 4525 Main Street.

但似乎不足以解釋那邊入住率下滑的全部原因。你能否更深入談談 Town Center 的一些既有資產，尤其是 4525 Main Street？

Sure. I appreciate the question. We're very excited about all these developments.

當然。謝謝你的問題。我們對這些開發案都非常興奮。

The drop in occupancy is essentially 30,000 feet of tenants expanding into 40,000 square feet in 4525 Main. When you take that 30,000 feet out of the core portfolio it's a drop in and of itself of around 5% on the office occupancy. A better place to go -- as to why we are so excited, is, soon, when we sign these leases that are out for signature now on 4525 Main, that building's occupancy comes to 94% when you add that square footage to the Town Center office portfolio, we now have an office portfolio around 840,000 square feet.

入住率下滑主要是因為有 30,000 平方英尺的承租戶擴張到 4525 Main 的 40,000 平方英尺。當你把這 30,000 平方英尺從核心投資組合中移出，本身就會使辦公室入住率下降約 5%。而更值得關注、也是我們為何如此興奮的原因是：很快，當我們把目前已送簽的 4525 Main 租約簽妥後，該大樓入住率將達到 94%；當你把這些面積加入 Town Center 的辦公投資組合後，我們的辦公投資組合將約為 840,000 平方英尺。

That has about 75,000 feet of vacancy. And the good news is the vast majority that vacancy has a lower price point base that appeals to a much broader section of tenants. So as I said earlier, we're expecting to very quickly get back into the [mid-90%s] overall on a much bigger portfolio.

其中約有 75,000 平方英尺的空置。好消息是，絕大多數空置面積的基礎租金水準較低，能吸引更廣泛的承租戶群。如我先前所說，我們預期很快就能在更大的投資組合規模下，把整體入住率拉回到（[mid-90%s]）中段 90% 的水準。

And lastly just the same topic. You said about 3,000 square feet is out for signature at 4525. Are all those new entrants into the Town Center market for you guys with the sub market there?

最後還是同一個主題。你提到在 4525 有大約 3,000 平方英尺正在等待簽約。那些都是你們在 Town Center 這個次級市場的新進承租戶嗎？

Correct, they are new.

沒錯，都是新的。

Okay great thanks.

好的，很棒，謝謝。

Our next question comes line of Rob Stevenson with Janney Montgomery Scott. Please proceed with your question.

下一個問題來自 Janney Montgomery Scott 的 Rob Stevenson。請提出您的問題。

Morning guys. Can you talk a little bit about what the occupancy and same-store NOI growth expectations are embedded in your 2017 guidance?

各位早安。你們能談談 2017 年指引中所隱含的入住率與同店 NOI 成長預期嗎？

Sure. Rob as we have talked before, Mike and I and the Management team, we are thrilled that we have got 10 consecutive quarters of same store NOI growth. We've been running this portfolio in these markets for well into our fourth decade.

當然。Rob，如同我們之前談過的，我、Mike 以及管理團隊都非常高興我們已經連續 10 個季度同店 NOI 成長。我們在這些市場經營這個投資組合已進入第四個十年。

We look at things more on a, things can be lumpy on a year-to-year basis. We had some quarters where we were growing at 4% and 5%. But ultimately this thing resolved itself into the 1.5% to 2.5% range on a long-term basis. So once again, within the 2017 guidance is in the neighborhood 1.5% to 2%.

我們更傾向從較長期的角度看待，因為逐年表現可能會有波動。有些季度我們成長 4%、5%。但最終長期而言會回歸到 1.5% 到 2.5% 的區間。因此，2017 年指引同樣大約落在 1.5% 到 2% 左右。

Like I said, it's not going to vary a whole lot from that, over any type of a meaningful horizon. We don't have a tremendous amount of space to lease as you know, when you're occupancy is in the mid-90%s. So we're not going to see any significant variance from the mean.

如我所說，在任何有意義的期間內，這個數字不會偏離太多。你也知道，當入住率在 90% 中段時，我們可出租的空間並不多，所以不會看到相對於平均值有顯著的偏離。

Okay. And then call while we're on Town Center, with the construction of the new phase, you talked to people about expecting apartment occupancy to dip. It looks like, at least sequentially, that there still not really been any change in occupancy. Or any material change in occupancy in either the two apartment buildings at Town Center.

好的。那在談 Town Center 的同時，關於新一期工程的施工，你們之前提到預期公寓入住率會下滑。但看起來至少就季比而言，Town Center 的兩棟公寓大樓入住率仍然沒有太大變化，或沒有任何實質性的變化。

Is that still to come? Or are you basically expecting that this is going to be it? And how are you guys thinking about that these days?

那還會發生嗎？還是你們基本上預期這就是最終狀況？你們最近是怎麼看待這件事的？

It's great question Rob. And I want to make sure we don't throw a head fake out there. When we had construction on 4525 Main, we were forecasting a meaningful dip in occupancy at the Cosmo.

Rob，這是個很好的問題。我也想確保我們不會對外釋放誤導性的訊號。當我們在 4525 Main 進行施工時，我們原本預測 Cosmo 的入住率會出現明顯下滑。

That ended up not being the case. As part of the reason why that year, 2015, did as well as it did occupancy wise. This year we're forecasting that dip is yet to come.

結果並沒有發生。這也是為什麼那一年（2015 年）在入住率表現上能做得那麼好的部分原因。今年我們預測那個下滑還沒來，接下來才會出現。

We've been pummeling those people with pile drivers for the last several months. Pile driving is over now construction pours start with backup alarms and everything else starting around 3 AM or 4 AM. So the prudent side of us is forecasting that dip is going to occur.

過去幾個月我們一直用打樁機把那些住客折騰得夠嗆。現在打樁已經結束了，接下來開始澆置施工，會有倒車警示音等等，從凌晨 3 點或 4 點左右就開始。所以從審慎的角度，我們預測那個下滑會發生。

In fact to date we've seen a 1% 1.5% decrease from those year end numbers at Cosmo occupancy. So a long answer to a short question. We are forecasting a 3% or 4% dip in occupancy in those properties.

事實上，截至目前我們已經看到 Cosmo 的入住率相較於年末數字下降了 1% 到 1.5%。所以用長答案回答短問題：我們預測這些資產的入住率會下滑 3% 到 4%。

Okay. Mike, what is the thought around the adoption of the now being able to capitalize acquisition costs? You guys adopting that effective January 1. Is that a future adoption for you?

好的。Mike，關於現在可以將收購成本資本化的採用想法是什麼？你們在 1 月 1 日起生效採用。這對你們來說是未來才採用，還是已經採用了？

Good morning Rob. No we actually adopted it during the fourth quarter.

Rob，早安。不，我們其實在第四季就已經採用了。

Okay and then so, when you look forward, that's historically been a big chunk of the gap between NAREIT and normalized FFO. What's really out there in 2017 to bridge that gap?

好的，那麼往前看，這在歷史上一直是 NAREIT FFO 與標準化（normalized）FFO 之間差距的一大部分。2017 年到底還有什麼因素會去彌補那個差距？

The other big driver that really been pushing, you'll see this past quarter that FFO was higher than normalized, it's because of the mark to market adjustments. On our interest rate swap blocks.

另一個一直在推動的主要因素——你會看到本季 FFO 高於標準化 FFO——是因為按市價（mark-to-market）調整，針對我們的利率交換（interest rate swap）組合。

So I think we picked up about $1.3 million in income in the fourth quarter. So that will continue to fluctuate and be the big difference between the two in 2017.

所以我想我們在第四季大約認列了 130 萬美元的收益。這部分在 2017 年會持續波動，並成為兩者之間最大的差異來源。

Okay and then just lastly, Lou in terms of adding large-scale projects to the development pipeline. Where are you these days? Is the shadow pipeline the stuff that you're not yet able to announce? Is that backing up and piling up? And we're likely to see some stuff over the next couple of quarters? How is that trending versus the last three or four years when you think about stuff that's highly likely to be green lit but not yet announced?

好的，最後一個問題，Lou，關於把大型專案加入開發管線，你們目前進度如何？所謂的影子管線（shadow pipeline）——也就是你們還不能宣布的那些——是否正在累積、堆高？我們是否可能在接下來幾季看到一些消息？相較於過去三、四年，那些很可能會獲准（green lit）但尚未宣布的案子，趨勢如何？

Yes. So, what you see in our guidance presentation, we have a $98 million of unannounced projects. Those are getting close. So our expectations prior to the call for the next quarter, that those announcements will come out.

是的。所以在我們的財測（guidance）簡報裡，你會看到有 9,800 萬美元尚未宣布的專案。那些已經接近成熟。我們在電話會議前對下一季的預期是，這些公告會陸續發布。

The shadow pipeline beyond that, in a sense it's massive. I want to reiterate what I said earlier. The vast majority of what we see we reject. So out of every dozen or so that come our way that we investigate there might be one or two that merits going a little further and spending a little seed capital.

至於更後面的影子管線，某種意義上非常龐大。我想重申我先前說過的：我們看到的絕大多數案子都會拒絕。大概每十來個送到我們這裡、我們去調查的案子，可能只有一到兩個值得再往前走一點、投入一些種子資本（seed capital）。

Some of you might've seen the report that came out on the Nashville project. That's a great example. We really like the project, we really like the local partner.

你們有些人可能看過關於納什維爾（Nashville）專案的報導。那就是很好的例子。我們很喜歡那個專案，也很喜歡當地的合作夥伴。

We really like the market. And we will see if it comes together. The proof is in the pudding.

我們也很喜歡那個市場。接下來就看能不能成局。成敗見真章。

If the market is as good as advertised then we will not have any trouble getting leasing commitments. And then you'll see that move forward.

如果市場真的像宣傳的那麼好，那我們在取得租賃承諾（leasing commitments）方面就不會有任何困難。然後你就會看到它往前推進。

But Rob, in addition to that, we're already looking at the next projects with Duke and Downtown Durham. We're looking at the next projects here at Town Center with the City. And we're looking at the next projects at the inner harbor.

但 Rob，除此之外，我們已經在看與 Duke 以及 Durham 市中心（Downtown Durham）的下一批專案。我們也在和市政府一起看 Town Center 這裡的下一批專案。我們也在看內港（inner harbor）的下一批專案。

So, we just need to be careful, and not get out over our skis. We've been able to keep this ship in the middle the channel and chugging forward for well into our fourth decade. We're not going to vary from our principles. The pipeline gets bigger.

所以，我們必須小心，不要操之過急、超出能力範圍。我們能在第四個十年仍把這艘船穩穩地開在航道中央、持續前進。我們不會偏離我們的原則。管線會變大。

When we first became public we talked about that $150 million $175 million run rate that's now eeking up into the $200 millions -- every 18 months or so. So that's fine, that comfortable for us. Comfortable for our construction company, but we want to be really careful.

我們剛上市時談的是每年 1.5 億到 1.75 億美元的運行規模（run rate），現在大約每 18 個月就慢慢往 2 億美元以上爬升。所以這沒問題，對我們來說很舒適；對我們的營造公司也很舒適，但我們必須非常小心。

Development is a science. And a lot of people talk about the art, there's no art to it, it's science. It's getting in and doing the hard work, the heavy lifting. And unless you do that and do it for an extended period of time, you're not to create value.

開發是一門科學。很多人談藝術，但這裡沒有藝術，只有科學。就是要進去做苦工、做重活。而除非你這樣做、而且長期持續這樣做，否則你無法創造價值。

All you will do is [crack]. So we want to be really careful about loosening any of those standards going forward.

你只會「[crack]」。所以我們對於未來放鬆任何標準都會非常謹慎。

Okay. All right thanks guys.

好的。好，謝謝各位。

Thank you. Our next question comes from the line of John Guinee with Stifel. Please proceed with your question.

謝謝。下一個問題來自 Stifel 的 John Guinee。請提出您的問題。

Okay, great thank you. Just a few questions. First, flat FFO but continuing to increase the dividend $0.01 a quarter or $0.04 a year, do you think you need to be raising the dividend as much as you are when your value creation is via development and external growth versus internal growth?

好的，很棒，謝謝。幾個問題。第一，FFO 持平但股利仍持續提高，每季增加 0.01 美元或每年 0.04 美元；當你們的價值創造主要來自開發與外部成長，而非內生成長時，你覺得有必要把股利提高到現在這個幅度嗎？

Thanks John I appreciate that. Good morning. We've been telling our shareholders, both retail as well as unit holders, as well as institutions, that we're going to keep that dividend in the 70% to 80% range. So we're very comfortable with the raise. We think it's conservative and we promise to stay conservative with it and keep that below the 80% mark.

謝謝你，John，我很感謝。早安。我們一直告訴股東——不論是散戶、單位持有人（unit holders）或機構投資人——我們會把股利配發率維持在 70% 到 80% 的區間。所以我們對這次調升很有信心。我們認為這是保守的，也承諾會持續保守，並把它維持在 80% 以下。

So we're trying to serve all of our masters. One thing you have to remember, we've acquired tremendous amount of property with stock. And we intend on acquiring more property with stock and OP units.

所以我們試著兼顧各方需求。有一點你必須記得：我們用股票收購了大量資產。我們也打算用股票與 OP 單位（OP units）再收購更多資產。

But near and dear to those people is dividend growth. And while were not going to be slaves to that by any stretch of the imagination, we're going to continue to responsibly increase it when our metrics allow. Mike.

而對那些人來說，股利成長是非常重要的。雖然我們絕不會在任何程度上被它綁架，但當我們的指標允許時，我們會負責任地持續提高。Mike。

Yes good morning John one of things to add. Consider our payout ratio for 2016 was below 75%, the other thing that is happening in 2017 is our AFFO is going up. Even though at the midpoint, our normalized FFO is flat.

是的，John，早安，補充一點：考量我們 2016 年的配發率低於 75%；另外 2017 年正在發生的是，我們的 AFFO 會上升。即使在中位數情境下，我們的標準化 FFO 是持平的。

We're hitting some straight line run adjustments, and the GAAP adjustments that are going the other way in 2017. And we're modeling to get that payout ratio still well below 80%.

我們會遇到一些直線法租金（straight-line rent）調整，以及 2017 年朝相反方向變動的 GAAP 調整。我們的模型顯示配發率仍會遠低於 80%。

And then for the second question, is that if I'm looking at your same-store NOI page, basically you're about 57% retail, 23% multi family, 21% office. And I remember Lou you talking a couple years ago is you really liked food/drug anchored retail centers. You thought those had a lot of downside protection.

第二個問題，如果我看你們同店（same-store）NOI 的頁面，基本上你們約 57% 是零售、23% 是多戶住宅（multi-family）、21% 是辦公室。我記得 Lou 你幾年前提到你很喜歡以食品/藥妝（food/drug）為主力店（anchored）的零售中心，你認為那類產品有很強的下檔保護。

But maybe not a lot of upside potential. How do you feel about that product in today's ever-changing retail environment?

但也許上檔潛力不大。在今天這個不斷變化的零售環境中，你對這類產品的看法如何？

Another great question, John. The grocery sector is changing. More and more players are coming into it.

又是一個很好的問題，John。雜貨（grocery）產業正在改變，越來越多的玩家正在進入。

Both at the high end and at the low-end. We feel just as strongly as we always have. But the moderator to that is being cautious and cautious relates to location. It's no longer, and it never really was, all about just the credit behind the actual store.

不論是高端或低端。我們的看法依然一樣強烈。但需要加上一個調節因素：要謹慎，而謹慎主要體現在地點。現在已不再是——其實也從來不完全是——只看那家店背後的信用（credit）。

As I said on and discussed on numerous occasions, we really look at sales. Sales potential and actual sales of these grocery stores. Because that tells you that location is strong.

正如我在許多場合所說並討論過的，我們非常看重銷售額。這些雜貨店的銷售潛力與實際銷售額，因為那能告訴你這個地點很強。

One thing that we've seen again over a long period of time. Is if you have the strong location, even if it turns out that your grocer may end up not being one of the winners that location is leasable to the grocer who is a winner. So, we haven't seen anything that would change our opinion on that retail. I still disagree with your connotation of commodity retail.

我們長期以來反覆看到的一件事是：如果你擁有很強的區位，即使最後你的雜貨商可能不是贏家，那個位置仍然可以租給成為贏家的雜貨商。所以，我們沒有看到任何會改變我們對該零售類型看法的事情。我仍然不同意你把它暗示為大宗商品型零售的說法。

But it certainly has some of those characteristics that you exactly pointed out -- is a lot of downside protection there, upside is slower comp. But when you have a lot of development in your pipeline, I go to sleep at night a lot easier knowing that the vast majority of our metrics and dividend coverage and all the rest is related to people selling food and diapers and the like.

但它確實具備你剛剛指出的某些特徵——下行保護很強，上行則是較慢的同店成長。不過，當你的開發管線裡有很多案子時，我晚上會更安心，因為我們絕大多數的指標、股利覆蓋率以及其他一切，都與人們在賣食品、尿布之類的商品相關。

Great. Thank you.

很好，謝謝你。

Thank you.

謝謝。

Have a good day.

祝你今天愉快。

You too.

你也是。

Our next question comes from line of Laura Engel was Stonegate Capital Partners. Please proceed with your question.

下一個問題來自 Stonegate Capital Partners 的 Laura Engel。請提出你的問題。

Good morning. Thanks for taking my questions. First, I want to see if you could give us help a little bit about the Greentree disposition?

早安。謝謝讓我提問。首先，我想看看你們是否能協助我們多了解一下 Greentree 的處分？

And alongside that, give us an update on any the remaining properties from that initial 11 retail purchase that are out there. And your thoughts on timing on those.

另外，也請你們更新一下，最初那筆 11 個零售物件收購案中，還有哪些剩餘物件仍在市場上，以及你們對其時程的看法。

Sure, I'm going to turn over to Eric Smith, our CIO for that conversation. Eric.

當然，我把這部分交給我們的投資長 Eric Smith 來說明。Eric。

Thank you Lou. Good morning. First I will all your Greentree question. As you can see from the materials, we were able to sell that asset at a [5%] cap rate.

謝謝你，Lou。早安。首先我會回答你關於 Greentree 的問題。如你從資料中所見，我們以 [5%] 的資本化率（cap rate）出售了該資產。

And obviously I think it speaks for itself, when we have the opportunity to monetize an asset at that cap rate and use those proceeds on the balance sheet. As opposed to issuing equity, we believe that to be a prudent disposition. And so that was the driving force behind that decision.

而且很明顯，我認為這不言自明：當我們有機會以那樣的 cap rate 將資產變現，並把所得用在資產負債表上，而不是發行股權時，我們認為這是一項審慎的處分。因此，這就是該決策背後的主要驅動因素。

On the Cavalier portfolio, as you know, we've sold a few those assets. As we have said in previous calls, we were assessing a few other assets. That if we found the value in the market place could be potential disposition candidates.

至於 Cavalier 投資組合，如你所知，我們已經出售了其中幾項資產。正如我們在先前的電話會議中所說，我們也在評估另外幾項資產——如果我們認為市場上的估值合適，它們可能會成為潛在的處分標的。

Not because we were concerned about the quality of those remaining candidates. But because they were just somewhat outside our geographical footprint. With that said, not outside our historical footprint of our multi-decade ownership. And so we continue to ping the market.

這並不是因為我們擔心那些剩餘標的的品質，而是因為它們在地理位置上稍微超出我們目前的核心布局。不過話說回來，它們並未超出我們數十年持有的歷史布局範圍。因此我們仍持續向市場探詢。

We have not seen the opportunity to monetize those at a level that we think is appropriate. And so we're happy to hold that real estate again. The diligence we did during the acquisition of that portfolio got us comfortable with the real estate.

我們尚未看到能以我們認為合適的水準將其變現的機會，所以我們也樂於繼續持有這些不動產。我們在收購該投資組合時所做的盡職調查，讓我們對這些不動產感到放心。

And so we were happy with the optionality the back pattern has led us to decide to hold onto those. At least through this year and we will continue to look at those as time goes on.

因此，我們也很滿意這種選擇權所帶來的彈性，這也使我們決定至少在今年內先持有它們；未來我們也會隨時間推進持續檢視。

Okay great and one more question. The article in the National Business Journal. The SoBro Skyscraper, it's tagged. Is that strictly a development job? Or can you clarify your role in that initiative?

好的，很好，還有一個問題。《National Business Journal》那篇文章提到 SoBro Skyscraper，並且有標註。那是否純粹是一個開發案？或者你能否釐清你們在該計畫中的角色？

As I said that still way down the road in predevelopment. If the leasing comes together the entitlements come together, and it's certainly an asset that we would like to own.

如我所說，那仍然是在很後面的前期開發階段。如果招租能到位、各項許可（entitlements）能到位，那當然會是一項我們希望持有的資產。

But there's a lot of wood to chop there. We're excited about it, and we're excited about that market and hopefully we can report on it further. But it would be disingenuous of us to describe that as anything other than an opportunity that we're looking at.

但那裡還有很多工作要做。我們對此感到興奮，也對那個市場感到興奮，希望之後能進一步向各位報告。不過，如果把它描述成除了我們正在評估的一個機會之外的任何東西，都不太誠實。

Okay great, well I appreciate it congrats on the quarter and I will get back in the queue. Thank you.

好的，很好，我很感謝。恭喜本季表現，我回到等候隊列。謝謝。

Thanks very much.

非常感謝。

Our next question comes from the line of Craig Kucera with Wunderlich Securities. Please proceed with your question.

下一個問題來自 Wunderlich Securities 的 Craig Kucera。請提出你的問題。

Hey good morning guys. Mike I wanted to circle back with you on a comment I wanted to clarify. Did you say the NOI guidance was exclusive of any development in the wire or did I hear you incorrectly?

嗨，早安各位。Mike，我想回到你剛剛的一個評論再確認一下。你是說 NOI 指引不包含任何開發案的貢獻，還是我聽錯了？

No, what we're saying is there is no -- we're not putting in place any development project during 2017 that will generate any meaningful NOI. So in the past couple of years we have been bring on development projects that have been meaningful in increasing NOI.

不是，我們的意思是：在 2017 年，我們不會啟動任何能產生有意義 NOI 的開發專案。過去幾年我們確實有陸續交付一些開發案，對 NOI 的提升很有意義。

But that will not be the case in 2017. Certainly we will have more ramp up with Lightfoot and [Jay] during 2017.

但 2017 年不會是那樣的情況。當然，2017 年 Lightfoot 和 [Jay] 仍會有更多的爬坡（ramp up）。

Got it and so I know you've got a chunk that is 4525 that is expected to stabilize in the second quarter. I guess you're saying of the three that are stabilized in midyear there's not going to be meaningful impact to NOI this year?

了解。所以我知道你們有一個 4525 的案子，預計在第二季達到穩定。我想問的是，你的意思是：年中穩定的那三個案子，今年對 NOI 不會有顯著影響？

So first on 4525. The leasing activity that's happening certainly some of that will come online during the year. The new leases that Lou is talking about, those tenants will occupy until the end of 2017 best case.

先談 4525。今年正在進行的招租活動，確實有一部分會在年內上線。但 Lou 提到的新租約，那些租戶最理想的情況也是要到 2017 年底才會進駐。

We've got a lot of design and construction to go. So the impact from that building stabilizing is not going to be material in 2017. We are forecasting, and are really pleased with what's going on at Johns Hopkins, the retail is, if it's not 100% is getting really close. And we feel it will stabilize with students in August this coming year.

我們還有很多設計與施工要做。因此，該大樓達到穩定對 2017 年的影響不會是重大的。我們的預測是——而且我們對 Johns Hopkins 的進展非常滿意——零售部分即使不是 100%，也已非常接近；我們認為它會在明年 8 月隨著學生入住而達到穩定。

The other thing on the stabilization of 4525, Craig. That's going to going to the same store NOI pool come the third quarter. Because of the timing when that building develops not because it's going to be 80%-plus occupied at that point in time.

另外，關於 4525 的穩定化，Craig，它會在第三季納入同店 NOI 的範圍，這是因為該大樓開發時點的關係，而不是因為那時候它就會有 80% 以上的出租率。

Got it. And as we think about when the impact of those projects does become meaningful in 2018, what kind of yield should we be thinking about relative to what you developed?

了解。那當我們思考這些專案在 2018 年開始產生顯著影響時，相對於你們的開發成本，我們應該用什麼樣的收益率（yield）來看？

I am trying to think of the best way to answer that. So, 4525 Main has been leased up essentially at our pro forma rent. Pro forma rent would've had us creating well over 20% spread between our cost and where that ends up. So I think the way you need to think of it, is in terms of value creation.

我在想用什麼方式回答最好。4525 Main 的出租基本上已達到我們預估（pro forma）的租金水準。按 pro forma 租金來看，我們的成本與最終水準之間會形成超過 20% 的利差。所以我認為你應該用「價值創造」的角度來思考。

You've got 240,000 square foot high-rise that's stabilized in the high 20%s rental rate wise. And in a market where, as we said before, there's not a whole lot of comps, I can not imagine what someone would need to pay us to get us off of those buildings.

你有一棟 240,000 平方英尺的高樓，租金水準在高 20% 區間並已穩定；而且在一個如我們之前所說、可比案例（comps）不多的市場裡，我很難想像有人要出什麼價碼，才能讓我們願意把那些大樓賣掉。

Okay. With the acquisition of Columbus Village II, I know that the cap rate is little bit low. And it so going to be a big of a drag on earnings for a while. Is that a component of Town Center Phase VI?

好的。關於收購 Columbus Village II，我知道它的資本化率有點低，因此短期內會對盈餘造成一些拖累。那是 Town Center 第六期（Phase VI）的一部分嗎？

Or is that a separate component? I know you mentioned that along with another project that is adjacent to Town Center you could eventually redevelop.

還是那是另一個獨立的部分？我知道你提到它連同另一個緊鄰 Town Center 的專案，未來可能可以重新開發。

Craig I'm really glad you brought that up because it brings up another point. When we look at our flat guidance for the year, and somewhat similar to when we traded a bunch of NOI in [rich year] assets for a bit more stable NOI, which cost us a few cents.

Craig，我很高興你提到這點，因為這也帶出另一個重點。當我們看今年持平的指引時，有點類似於之前我們把一批 NOI 較高的資產換成更穩定的 NOI（雖然因此少了幾美分）的情況。

That property in and of itself is a significant drag on earnings. We purchased in low [$5 millions] and for all stock, 2 million shares. And so the impact to 2017 earnings is somewhere in the $0.03 or $0.04 range.

那個物件本身對盈餘有顯著拖累。我們以低於 [500 萬美元] 的價格收購，且是全股票交易，發行 200 萬股。因此對 2017 年盈餘的影響大約在 0.03 到 0.04 美元之間。

But it is absolutely the right move for us. It gives us all the flexibility in the world. It's not part of Phase VI. That's on the other side.

但這絕對是對我們正確的一步。它給了我們極大的彈性。它不是第六期的一部分；第六期在另一側。

Phase VI is the last piece of the core of Town Center. Is something were very excited about. What that represents, along with the Columbus Village I that we purchased earlier in the year, earlier I guess that was in 2015. Gives us 12 acres of developable property to expand Town Center and we get paid handsomely to wait.

第六期是城鎮中心（Town Center）核心的最後一塊拼圖。這是我們非常興奮的一件事。它所代表的意義，加上我們在年初、我想是在2015年稍早買下的 Columbus Village I，讓我們擁有12英畝可開發土地，可用來擴展城鎮中心，而且我們在等待期間也能獲得相當可觀的報酬。

Even if we were to do nothing but renew the tenants that are in those two shopping centers, the results in NOI puts us back into the 7% range on a cap rate basis. And trust me, that is plan C.

即使我們什麼都不做，只是續約那兩個購物中心裡的現有租戶，NOI 的結果也會讓我們在資本化率（cap rate）基礎上回到7%區間。相信我，那是方案C。

That is the worst that we will ever do there. So, we're positioning Town Center for the next decade, and that's going to be a big part of it.

那將是我們在那裡最差也就只能做到的情況。所以，我們正在為城鎮中心布局未來十年，而這會是其中很重要的一部分。

I got it. All right that's it for me thank you.

了解。好，那我就到這裡，謝謝。

Our next question comes from the line of Bill Crow with Raymond James. Please proceed with your question.

下一個問題來自 Raymond James 的 Bill Crow。請提出您的問題。

Good morning guys.

各位早安。

Good morning Bill.

早安，Bill。

Lou could you discuss the pressures on development and construction costs? And whether we're getting to the point where rental rate growth, as you projected going forward is not sufficient to justify the increasing costs of construction?

Lou，你能談談開發與營建成本的壓力嗎？以及我們是否已經接近一個點：你們對未來租金成長的預期，已不足以支撐不斷上升的建造成本？

Yes. Thanks, Bill. Unfortunately that's not a really short answer.

是的。謝謝你，Bill。很遺憾這不是一個很短的答案。

We've seen this cycle This will be the fourth time where we're looking at increasing rest, increasing interest rate environment, along with hopefully some decently robust growth in the economy. A couple other things happen when that becomes a scenario.

我們在這個循環中已經看過這種情況——這將是第四次：我們面對利率上升的環境，同時也希望經濟能有相當穩健的成長。當這成為一種情境時，還會發生幾件事。

Replacement cost goes up on our assets and that is good for real estate, in terms of resale. Tenants expand, that obviously is good for commercial real estate. Household formation goes up, and that's good for real estate as well.

我們資產的重置成本上升，這對不動產在轉售層面是好事。租戶擴張，這顯然對商用不動產是好事。家庭戶數形成增加，這對不動產也同樣是好事。

So when you take the whole basket, the whole question is whether you can mute the downside of higher rates and higher costs and take advantage of the upside, of the expansions going on in the economy. For that manifests itself in a couple of different ways. One is, we get even more selective about where we deploy our capital.

所以當你把整個籃子都放在一起看，問題就在於：你能否淡化高利率與高成本的下行影響，同時把握經濟擴張帶來的上行。對我們而言，這會以幾種不同方式呈現。其中之一是：我們在資本配置上會更加挑剔。

You hear all the time it's location, location, location. Secondly, when we do this public-private partnerships -- many of which we're looking at now. We put more pressure on the entity, the public entity -- with being an institution or a city or state or large-scale company.

你常聽到「地段、地段、地段」。第二，當我們做這些公私合夥（public-private partnerships）——我們目前正在評估其中許多案子——我們會對對方實體、也就是公共部門施加更大壓力——不論是機構、市政府或州政府，或大型企業。

So, in order for us to keep our metrics where we need them to be, we basically have to sell off the [REIT] side and take advantage of the upside. It's an exciting market for us. I would tell you this is exactly in our wheelhouse -- let's hope it all materializes.

因此，為了讓我們的指標維持在需要的水準，我們基本上必須把 [REIT] 那一側賣掉，並把握上行空間。這對我們來說是個令人振奮的市場。我會告訴你，這正是我們的強項——希望一切都能成真。

There's a lot of talk and a lot of noise now about all the great things that are yet to come. But if it does come, we're in a great position to take advantage of it. For the factors I just mentioned.

現在有很多討論、很多雜音，都在談未來將到來的各種好事。但如果真的到來，我們就處在一個非常有利的位置，可以加以利用。原因就是我剛提到的那些因素。

The second piece of that is, there is a related note. There is a lot of pressure right now on construction costs. Both from a commodity standpoint as far as labor standpoint.

第二部分是相關的一點：目前營建成本的壓力非常大，不論是原物料面，還是勞動力面。

And never recover from the 2008 recession in terms of the labor workforce of people entering the trade. So, subsequently subcontractors have much more pricing power than they did. Which again is healthy for the overall environment, but it's going to present challenges for us.

而且自2008年衰退以來，在進入技工行業的勞動力規模方面一直沒有恢復。因此分包商的議價能力比以前強得多。這對整體環境而言仍算健康，但對我們來說會帶來挑戰。

The good news is having a 40 year old construction company that has seen this -- our President has been here for, it's his 26th year I believe. He has seen all this before. We just work harder.

好消息是，我們有一家成立40年的營造公司，經歷過這些——我們的總裁在這裡，我記得是第26年了。他以前都見過。我們只是更努力地做。

I can tell you, it is a situation that we're well-versed in handling. And it makes us even more excited about what's going on in our pipeline.

我可以告訴你，這種情況我們很有經驗、也很擅長處理。這也讓我們對目前管線中的進展更加興奮。

Okay, and then the other question I had. If I missed your answer in this earlier I apologize. But the 30,000 square move out into your new project, how close are you to backfilling the 30,000 feet? And is that new tenants or is that expansion or existing tenants?

好的，然後我還有另一個問題。如果你之前已經回答過而我漏聽了，先說聲抱歉。關於那個3萬平方英尺搬到你們新案子的租戶，你們距離把這3萬平方英尺補租回來有多接近？而且那會是新租戶，還是既有租戶的擴張？

Thanks Bill, there's a lot of moving parts. As I mentioned on our last call, last quarter. We saw a significant uptake in leasing activity.

謝謝你，Bill，這裡面有很多變動因素。如同我在上次電話會議、上季提到的，我們看到租賃活動明顯升溫。

We're seeing more prospects now then we've seen in quite a while. Probably since the great recession. So those 30,000 feet of tenant that moved in 40,000 square feet. By the way, not only expanded and relocated but significantly upgraded rent-wise.

我們現在看到的潛在客戶比很長一段時間以來都多，可能是自金融海嘯以來最多。所以那個搬走的3萬平方英尺租戶搬進了4萬平方英尺。順帶一提，他們不只是擴張與搬遷，租金也大幅升級。

Like I said, we held rent in that building. It created vacancy in four of the Town Center buildings. Which again is great news for us.

如我所說，我們在那棟樓的租金是守住的。這在城鎮中心的四棟大樓裡造成了空置，對我們來說同樣是好消息。

So we've got some vacancy in the two high-rises. Although not much. We got some vacancy in the two mid-rises.

所以我們在兩棟高樓有一些空置，雖然不多；在兩棟中樓也有一些空置。

Which is a little bit more. But those price points are in the low [$20s]. I'd say right now we have a half-dozen prospects looking at those spaces.

那邊的空置稍微多一點。但那些價位大概在20多美元的低段。我想目前大約有六個潛在客戶在看那些空間。

All of which are new to Town Center. But we're not done juggling. We're actually talking to people about the expansion of other tenants. Talking about expanding, and so, we have some pieces moving around.

這些客戶全部都是城鎮中心的新客戶。但我們還沒停止調整。我們其實也在跟一些人談其他租戶的擴張，談擴租，所以有一些區塊正在移動。

2017 is a transition year for us here at Town Center. We have got construction the middle of it. We have got new tenants coming in.

2017年對我們在城鎮中心而言是過渡的一年。我們正處於施工的中段，也有新租戶進駐。

A lot of stuff going on. And I think it's really going to manifested itself very well in 2018. The effects on 2017, and a lot of people talk to us about being too conservative on what we throw out there.

很多事情同時在進行。我認為這些會在2018年非常好地呈現出來。至於2017年的影響，很多人也跟我們談到，我們對外給出的指引是否過於保守。

That's where we play. We want to set proper expectations and then work like hell to come up with the upside. And that's exactly where we're positioned now.

那就是我們的作風。我們希望先設定合理的預期，然後拼命把上行做出來。而這正是我們現在所處的位置。

Great. Thanks guys.

很好。謝謝各位。

Our next question is a follow-up from the line of John Guinee with Stifel. Please proceed with your question.

下一個問題是 Stifel 的 John Guinee 的追問。請提出您的問題。

Good morning guys, [Aaron Alderson] here. I think our question has been answered.

各位早安，我是 [Aaron Alderson]。我想我們的問題已經被回答了。

Thanks. Thanks Aaron.

謝謝。謝謝你，Aaron。

Thank you. Mr. Haddad, there no further questions. I will turn the floor back to you for final remarks.

謝謝。Haddad 先生，目前沒有其他問題。我把時間交回給您做最後結語。

Great, guys thanks again for your support and listening this morning. We look forward to updating you on some great stuff in the not too distant future. Take care.

很好，各位再次感謝你們的支持，以及今天早上撥空收聽。我們期待在不久的將來向各位更新一些很棒的進展。保重。

Thank you this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

謝謝，今天的電話會議到此結束。您現在可以掛斷電話線。感謝您的參與。