AH Realty Trust, Inc (AHRT) 2017 Q2 法說會逐字稿

Welcome to the Armada Hoffler's Second Quarter 2017 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded today, Tuesday, August 1, 2017.

歡迎參加 Armada Hoffler 2017 年第二季財報電話會議。(接線員指示) 提醒各位，本次電話會議將於今天（2017 年 8 月 1 日，星期二）錄音。

I will now turn the conference call over to Michael O'Hara, Chief Financial Officer at Armada Hoffler. Please go ahead.

現在我將把電話會議交給 Armada Hoffler 財務長 Michael O'Hara。請開始。

Good morning, and thank you for joining Armada Hoffler's Second Quarter 2017 Earnings Conference Call and Webcast.

各位早安，感謝您參加 Armada Hoffler 2017 年第二季財報電話會議與網路直播。

On the call this morning, in addition to myself, are Louis Haddad, CEO; and Eric Smith, our Chief Investment Officer, who'll be available for questions.

今天早上的電話會議，除我之外，還有執行長 Louis Haddad，以及我們的投資長 Eric Smith；他們將可回答提問。

The press release announcing our second quarter earnings, along with our quarterly supplemental package were distributed this morning. A replay of this call will be available shortly after the conclusion of the call through September 1, 2017. The numbers to access the replay are provided in the earnings press release. For those who listen to this rebroadcast of this presentation, remind you that remarks made herein are as of today, August 1, 2017, and will not be updated subsequent to this initial earnings call.

本公司公布第二季盈餘的新聞稿，以及季度補充資料包，已於今早發送。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 9 月 1 日。收聽重播的電話號碼已載於盈餘新聞稿中。對於收聽本次簡報重播的聽眾，提醒您：本簡報中的發言係截至今日（2017 年 8 月 1 日），且在本次初次財報電話會議之後不會更新。

During this call, we'll make forward-looking statements including statements related to the future performance of our portfolio, our development pipeline, impact of acquisitions and dispositions, our construction business, our portfolio performance in 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've filed with or furnished to the SEC.

在本次電話會議中，我們將發表前瞻性陳述，包括與我們投資組合未來表現、開發案儲備（pipeline）、收購與處分的影響、我們的營造業務、投資組合在融資活動中的表現，以及對前景的看法等相關陳述。提醒聽眾注意，這些陳述受某些風險與不確定性影響，其中許多難以預測且通常超出我們的控制範圍。這些風險與不確定性可能導致實際結果與我們目前的預期出現重大差異；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'll 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 on our website, 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（normalized FFO）。這些非 GAAP 指標的定義，以及與最可比 GAAP 指標的調節表，均收錄於季度補充資料包中，並可於我們的網站 armadahoffler.com 取得。

I'm now turning the call over to our Chief Executive Officer, Louis Haddad. Lou?

現在我把電話會議交給我們的執行長 Louis Haddad。Lou？

Thanks, Mike. Good morning, everyone, and thank you for joining us today. This morning, we reported second quarter results of $0.25 of normalized FFO per share, which was in line with our expectations. After successfully raising over $85 million in an overnight public offering in May, we have updated our first-year guidance for the remainder of 2017.

謝謝你，Mike。各位早安，感謝今天加入我們。今天早上，我們公布第二季每股標準化 FFO 為 0.25 美元，符合我們的預期。在 5 月成功透過隔夜公開發行募集超過 8,500 萬美元後，我們已更新 2017 年剩餘期間的全年指引。

Before Mike takes us through the quarterly results, capital markets activity and updated 2017 guidance in detail, I'll comment on our retail portfolio and the many exciting offers, multifamily and student housing projects in our development pipeline.

在 Mike 詳細帶領我們回顧季度結果、資本市場活動以及更新後的 2017 年指引之前，我將先就我們的零售投資組合，以及我們開發案儲備中多項令人振奮的辦公、多戶住宅與學生住宅專案發表一些看法。

As a diversified REIT, we invest in, develop and build several different product types: office, multifamily, student housing, mixed use and retail. And we also generate additional revenue through our operating divisions.

作為一家多元化的 REIT，我們投資、開發並興建多種不同產品類型：辦公、多戶住宅、學生住宅、複合式用途與零售。此外，我們也透過營運事業部門創造額外收入。

Due to our operating -- opportunistic rather than formulaic approach to development, over the course of our company's history, the segment mix in our portfolio has fluctuated and will continue to do so. For example, just 3 years ago, office assets generated nearly half of our portfolio NOI and retail assets made up less than 40%.

由於我們在開發上採取的是營運導向——偏機會型而非公式化的方法——在公司歷史進程中，我們投資組合的分部結構曾經波動，未來也將持續如此。例如，就在 3 年前，辦公資產貢獻了我們投資組合 NOI 的近一半，而零售資產占比不到 40%。

Through constant, proactive and strategic portfolio management, the retail portion of our portfolio today stands at over 60% of NOI, yet significantly less when combined with other income from our operating divisions. But it is important to point out, against the current backdrop of excessively broad concern regarding the retail segment, their current mix is merely a snapshot in time. In fact, this is the highest volume of retail we've had as a publicly traded company. Upon stabilization of the multifamily, student housing and office projects in our development pipeline, we expect that retail will represent less than half of our portfolio NOI, and even less as a percentage of our NOI and operating division income.

透過持續、主動且具策略性的投資組合管理，目前零售在我們投資組合 NOI 中的占比已超過 60%；然而，若將營運事業部門的其他收入合併計入，零售占比則顯著較低。但需要指出的是，在目前市場對零售板塊出現過度廣泛疑慮的背景下，當前的組合僅是某一時間點的快照。事實上，這是我們成為上市公司以來零售占比最高的時期。待我們開發案儲備中的多戶住宅、學生住宅與辦公專案達到穩定營運後，我們預期零售將占我們投資組合 NOI 的一半以下；若以 NOI 加上營運事業部門收入的比例衡量，零售占比將更低。

Irrespective of these metrics, we remain confident and bullish about the retail assets in our portfolio. These properties continue to perform with year-to-date same-store NOI up over last year. As you know, we don't own malls, we don't own department stores and we shy away from big-box centers. We own 3 types of retail properties: one, mixed-use destination assets; two, grocery-anchored centers; and three, power centers anchored by best-in-class retailers. The best example of our mixed-use destination retail is at our signature Town Center project in Virginia Beach. Town center is home to 800,000 square feet of office space, 800 residential units, 2 hotels and a performing arts center.

不論上述指標如何，我們對投資組合中的零售資產仍保持信心並看多。這些物件持續展現良好表現，今年截至目前的同店 NOI 較去年成長。如各位所知，我們不持有購物中心（malls）、不持有百貨公司，並且避免大型盒式（big-box）商場。我們持有三類零售物件：第一，複合式用途的目的地型資產；第二，以超市為主力店（grocery-anchored）的商場；第三，由同級最佳零售商作為主力店的 power center。我們複合式用途目的地型零售的最佳例子，是位於維吉尼亞海灘的旗艦 Town Center 專案。Town Center 擁有 80 萬平方英尺的辦公空間、800 戶住宅單位、2 間飯店，以及一座表演藝術中心。

Within the district, we own 460,000 square feet of mixed-use retail, comprised of 25 restaurants and cafés, professional services, higher-education facilities and boutiques that support and drive the live-work-play atmosphere. Mixed-use destination retail currently makes up about a quarter of our retail NOI.

在該區域內，我們擁有 46 萬平方英尺的複合式用途零售，包含 25 家餐廳與咖啡館、專業服務、高等教育設施與精品店，共同支撐並帶動「住—工—玩」的氛圍。複合式用途目的地型零售目前約占我們零售 NOI 的四分之一。

When it comes to grocery-anchored centers, we invest in superior locations in our geographical footprint with high-quality anchors, which we believe will continue to perform well in an increasingly competitive landscape. Roughly half our retail NOI comes from grocery-anchored assets. The remaining 25% is in our power centers, which are led by best-in-class retailers that are discount clothiers, pet-supply stores, home goods and service providers, along with typical out-parcel users.

在以超市為主力店的商場方面，我們在自身地理布局範圍內投資於優越地段，並配置高品質主力店；我們相信在競爭日益激烈的環境下，這些資產仍將持續表現良好。約有一半的零售 NOI 來自超市主力店資產。其餘 25% 來自我們的 power center，主力店為同級最佳零售商，包括折扣服飾商、寵物用品店、家居用品與服務提供者，並搭配典型的外圍獨立店鋪（out-parcel）使用者。

In summary, our philosophy and approach to retail is simple. We develop and invest in places where people want and need to shop. So despite the current perceptions facing the retail sector, we will continue to apply our methodical approach that has worked for almost 40 years. While we remain upbeat about our retail assets, as is the case with our other product types, we continue to actively manage our portfolio to divest or expand when and where it makes sense.

總結來說，我們對零售的理念與做法很簡單。我們開發並投資於人們想去、也需要去購物的地點。因此，儘管零售產業目前面臨一些觀感壓力，我們仍將持續採用這套近 40 年來行之有效、循序漸進的方法。在我們對零售資產保持正向看法的同時，如同其他產品類型一樣，我們也會持續積極管理投資組合，在合理之處與合理時點進行處分或擴張。

Along those lines, we may sell or repurpose a couple of our smaller retail centers in the coming quarters. With regard to active portfolio management, we recently closed on the sale of our 2 build-to-suit state office buildings at a nearly 40% profit margin over our development costs, which once again exceeds our target wholesale-to-retail spread, and demonstrates the value creation from our development platform. We used these proceeds to partially fund the acquisition of the out-parcel space at Wendover Village in Greensboro, North Carolina, for $14.3 million. This acquisition complements the primary phase of Wendover Village that we acquired a little over a year ago as part of our 11-property-portfolio purchase.

基於上述方向，我們可能在未來幾季出售或重新定位我們旗下幾個較小的零售中心。就積極的投資組合管理而言，我們近期完成出售兩棟為州政府量身打造（build-to-suit）的辦公大樓，出售價格相較開發成本的利潤率接近 40%；這再次超出我們目標的批發到零售利差（wholesale-to-retail spread），並展現我們開發平台所創造的價值。我們運用該等處分所得，部分資助以 1,430 萬美元收購北卡羅來納州格林斯伯勒 Wendover Village 的外圍獨立店鋪（out-parcel）空間。此項收購與我們在一年多前、作為 11 物件投資組合收購案一部分所取得的 Wendover Village 主要一期相互補強。

Moving on to the rest of the portfolio, as I previously mentioned, we anticipated that our 3-year streak of positive same-store NOI growth would come to an end this quarter and it has. The construction of Phase 6 of Town Center has impacted multifamily occupancy and The Cosmopolitan next door. And with a number of office tenant relocations within Town Center, we expect these impacts to continue until the end of the year. At the same time, we are confident about our ability to return Town Center occupancy to its historical levels and contribute to future growth in same-store NOI.

接著談投資組合的其餘部分，如我先前提到的，我們預期連續 3 年同店 NOI 正成長的走勢將在本季告一段落，而確實如此。Town Center 第 6 期的施工影響了多戶住宅入住率，以及隔壁的 The Cosmopolitan。此外，隨著 Town Center 內多家辦公租戶搬遷，我們預期這些影響將持續至年底。同時，我們對於將 Town Center 入住率恢復至歷史水準、並為未來同店 NOI 成長做出貢獻的能力充滿信心。

I'll now spend a few minutes on our projects currently under development and construction. By the end of the summer, we expect to begin construction on 2 student housing projects on a historic Charleston Peninsula, located within 1 mile of the College of Charleston, and in close proximity to 5 other schools in the area. We continue to evaluate and explore opportunities to grow our footprint in this market. Design progress on our new build-to-suit office building for Huntington Ingalls at Brooks Crossing is on track for an early 2018 construction start and 2019 delivery. This state-of-the-art facility is expected to house nearly 600 employees, and serve as a catalyst for further development in this public-private partnership with the city of Newport News.

我現在將花幾分鐘說明我們目前正在開發與興建中的專案。預計在夏季結束前，我們將開始在歷史悠久的查爾斯頓半島興建2個學生住宅專案，地點距離查爾斯頓學院（College of Charleston）1英里以內，且鄰近該區另外5所學校。我們持續評估並探索在此市場擴大布局的機會。我們在布魯克斯克羅辛（Brooks Crossing）為亨廷頓英格爾斯（Huntington Ingalls）量身打造的新辦公大樓設計進度如期，預計於2018年初動工，並於2019年交付。這座最先進的設施預計可容納近600名員工，並在與紐波特紐斯市（Newport News）進行的公私合營夥伴關係中，成為帶動進一步開發的催化劑。

Our Harding Place project in downtown Charlotte is well underway, and we are very pleased with the rent growth and absorption that this submarket continues to display.

我們位於夏洛特市中心的Harding Place專案進展順利，我們對該次級市場持續展現的租金成長與去化表現感到非常滿意。

The construction of Phase 6 of the Town Center at Virginia Beach is now in the vertical stage and is tracking for a delivery next summer. This infield block will have a variety of entertainment options as well as exciting new retailers and loft-style apartments. The initial units at Annapolis Junction will be delivered next month, and Point Street is on track to begin delivery in early next year. Given their prime locations and compelling market dynamics, we are excited about these projects and fully expect to exercise our at-cost purchase options.

維吉尼亞海灘（Virginia Beach）Town Center第6期工程目前已進入地上結構施工階段，並按計畫於明年夏季交付。此一街廓內填（infield）地塊將提供多元娛樂選項，並引進令人期待的新零售商與閣樓式公寓。Annapolis Junction的首批單位將於下月交付，而Point Street預計於明年初開始交付。鑑於其優越地段與具吸引力的市場動能，我們對這些專案感到振奮，並完全預期將行使我們的按成本（at-cost）購買選擇權。

Last quarter, we entered into an LOI for a significant block of the remaining office space at One City Center in downtown Durham. Lease negotiations continue in earnest and assuming lease execution, the office component will be 90% preleased in advance of our expected summer 2018 delivery. We've begun preliminary discussions with our joint-venture partner and Duke University about the next phase of this project. With almost $440 million of development in our current pipeline, and our target wholesale-to-retail spreads of around 20%, we expect that these projects alone will add well over $1 per share of NAV.

上季，我們就達勒姆（Durham）市中心One City Center剩餘辦公空間中的一大區塊簽署了意向書（LOI）。租約談判仍在積極進行中；若能完成簽約，則在我們預計於2018年夏季交付之前，辦公部分將可達到90%預租。我們已與合資夥伴及杜克大學（Duke University）就本專案下一期展開初步討論。在目前開發管線接近4.4億美元、且我們目標的批發轉零售價差（wholesale-to-retail spreads）約為20%的情況下，我們預期僅這些專案就將為每股淨資產價值（NAV）增加遠超過1美元。

We continue to explore a number of exciting development opportunities in our target markets. For the growing stable of trusted and like-minded development partners, we have been able to increase our development run rate without compromising our core underwriting criteria, premier locations, high-quality anchor tenants, accretive returns and healthy wholesale-to-retail spreads. As a result, we continue to be highly selective and decline the vast majority of opportunities presented to us. The standards we use to evaluate whether to deploy our precious capital on a new project will continue to be exceedingly rigorous .

我們持續在目標市場中探索多項令人振奮的開發機會。憑藉日益壯大的、值得信賴且理念相近的開發夥伴群，我們得以在不犧牲核心承作標準的前提下提升開發速度，包括：一流地段、高品質主力店租戶、具增益性的報酬，以及健康的批發轉零售價差。因此，我們仍然高度挑選，並婉拒絕大多數呈交給我們的機會。我們用以評估是否在新專案上投入珍貴資本的標準，將持續保持極為嚴格。

All of these decisions are considered in light of management's position as far and away the largest equity holder in the company. The sheer volume of opportunities allow us to select only the most attractive projects for evaluation. After which only a small fraction of those opportunities are pursued in earnest. As an example, this quarter we entered into an agreement with SJ Collins, a seasoned developer of high-quality grocery-anchored retail centers, to deliver a Whole Foods center in Decatur, Georgia. We are hopeful that this relationship will lead to more opportunities with both this developer and exclusive retailer.

所有這些決策，都是在管理層作為公司遙遙領先的最大股權持有人之立場下加以考量。龐大的機會量使我們能只挑選最具吸引力的專案進行評估。之後，真正積極推進的僅占其中一小部分。例如，本季我們與SJ Collins簽訂協議；SJ Collins是高品質、以生鮮雜貨為主力店之零售中心的資深開發商，將在喬治亞州迪凱特（Decatur, Georgia）交付一座Whole Foods中心。我們希望這段合作關係能為我們帶來更多機會，無論是與該開發商或與這家獨家零售商。

Lastly, our construction company continues to exceed expectations and is on track for one of its best years ever. This quarter, we substantially completed work on 3 new Leedle stores in Southeastern Virginia, and look to expand this new relationship as their rapid mid-Atlantic expansion continues.

最後，我們的營造公司持續超越預期，並有望迎來其史上表現最佳的年度之一。本季，我們基本完成了維吉尼亞州東南部3家新的Leedle門市工程，並期待隨著其在大西洋中部地區快速擴張，進一步擴大這段新合作關係。

Our successful execution across all areas of our business: investment, development, construction and asset management, and our rapid growth in both profits and market cap has led to our addition to the S&P SmallCap 600 Index. This will likely expose our company to an expanded institutional investor base and continue to solidify our identity and brand recognition.

我們在業務各領域——投資、開發、營造與資產管理——的成功執行，以及獲利與市值的快速成長，使我們獲納入標普SmallCap 600指數。這很可能讓公司接觸到更廣泛的機構投資人基礎，並持續鞏固我們的企業識別與品牌能見度。

At this time, I'll turn the call over to Mike to discuss our second quarter results and updated 2017 guidance in detail. Mike?

接下來，我將把電話會議交給Mike，請他詳細說明我們第二季業績與更新後的2017年指引。Mike？

Thanks, Lou. Today, I want to cover the highlights of the quarter, thoughts on our balance sheet and additional details on our 2017 guidance. This morning, we reported FFO of $0.24 per share and normalized FFO of $0.25 per share, which met our expectations. Our same-store NOI growth, which has been positive for 11 consecutive quarters came to an end this quarter as expected.

謝謝，Lou。今天我想說明本季重點、對資產負債表的看法，以及2017年指引的更多細節。今天早上，我們公布每股FFO為0.24美元、每股標準化FFO為0.25美元，符合我們的預期。我們的同店NOI成長在連續11個季度為正後，本季如預期告一段落。

Same-store NOI was negative 3.6% and negative 2.4% on a cash basis as compared to the second quarter of 2016. These results were expected because of the ongoing Town Center tenant changes and construction activity. Multifamily was negative this quarter due to the Cosmopolitan apartments. Occupancy dropped to a low of 84% this quarter as a result of the construction of the Town Center Phase 6 across the street. Office was negative primarily due to the relocating of a Town Center tenant to 4525 Main Street, which is not in our same-store NOI calculation combined with the lease execution, extension and downsizing of a law firm. Due to these disruptions, we expect this temporary impact to continue through the remainder of the year.

同店NOI較2016年第二季下降3.6%，以現金基礎計算則下降2.4%。由於Town Center持續進行租戶調整與施工活動，這些結果在預期之內。本季多戶住宅（multifamily）為負，主要受Cosmopolitan公寓影響。由於街對面正在興建Town Center第6期，本季入住率降至84%的低點。辦公為負主要是因Town Center的一位租戶搬遷至4525 Main Street（該物業不納入我們的同店NOI計算），再加上某家律師事務所的租約簽訂、延長與縮減面積。由於這些干擾，我們預期此一暫時性影響將持續到今年剩餘期間。

At the end of the quarter, our core operating portfolio occupancy was unchanged at 94%, with office at 90%, retail at 97% and multifamily at 92%.

截至本季末，我們核心營運資產組合的入住率維持不變為94%，其中辦公為90%、零售為97%、多戶住宅為92%。

On the construction front, we reported a segment gross profit in the second quarter of $2.7 million on revenue of $57 million. This is another strong quarter for this segment of our business. At the end of the second quarter, the company had a third-party construction backlog of $117 million.

在營造方面，我們第二季該部門營收為5,700萬美元，部門毛利為270萬美元。這是我們此業務部門又一個強勁的季度。截至第二季末，公司第三方營造在手訂單（backlog）為1.17億美元。

Now turning to our balance sheet. We continue to take actions to enhance flexibility and strengthen our balance sheet, including a large equity raise in the second quarter. Maintaining a strong balance sheet as a private company was instrumental in being successful for 34 years prior to going public in 2013. With the management team being the largest shareholder at 17%, this approach has not changed. The company is managed and positioned for the long term and not quarter-to-quarter. That said, in May, we completed an equity offering to raise $85 million to fund our $440 million development pipeline. With this equity need and the market uncertainty for REIT, we thought it was the right time to raise equity and take market-risk off the table. Alternately, we could have raised this equity to our ATM program over the next 12-plus months, but that would have left little capacity for additional development projects.

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，包括在第二季進行一筆大規模股權募資。在2013年上市之前，作為私人公司期間維持強健的資產負債表，是我們34年成功經營的關鍵。在管理團隊以17%持股成為最大股東的情況下，這一做法並未改變。公司以長期為導向進行管理與布局，而非逐季操作。話雖如此，我們於5月完成一項股權發行，募集8,500萬美元以支應我們4.4億美元的開發管線。考量此一股權需求以及REIT市場的不確定性，我們認為此時募資並將市場風險排除在外是適當的時機。或者，我們也可以在未來12個月以上透過ATM計畫逐步募集這筆股權，但那將使我們在新增開發專案方面的額度所剩無幾。

With this equity raise, we now have the capacity to complete and bring the current development projects on balance sheet. While this equity raise is diluted to earnings and NAV in the short term, we believe it will be accretive in the long term. We'll only move forward with development projects that are accretive to both earnings and NAV, inclusive of our cost of capital.

透過這次股權募資，我們現在有能力完成並將目前的開發專案納入資產負債表。雖然短期內這次募資會對盈餘與NAV造成稀釋，但我們相信長期將具增益性（accretive）。我們只會推進那些在納入資本成本後，對盈餘與NAV皆具增益性的開發專案。

Return on cost and the value creation of the projects must be higher than our cost of capital, including any equity requirements, which is the case with the current projects. As Lou said, we believe these development projects once stabilized will add in excess of $1 of NAV per share.

專案的成本報酬率（return on cost）與價值創造必須高於我們的資本成本（包含任何股權需求），目前的專案即符合此條件。如Lou所說，我們相信這些開發專案在達到穩定營運後，將為每股NAV增加超過1美元。

At the end of the quarter, we had total outstanding debt of $470 million, including $28 million outstanding under our $150 million revolving credit facility.

截至本季末，我們未償還總負債為4.7億美元，其中包含在我們1.5億美元循環信用額度下動用的2,800萬美元。

We continue to evaluate our exposure to higher interest rates and look for opportune times to hedge our interest-rate exposure. At quarter end, 100% of our debt was either fixed or hedged.

我們持續評估我們對較高利率的曝險，並尋找適當時機對我們的利率曝險進行避險。截至季度末，我們的債務有 100% 為固定利率或已避險。

During the quarter, we purchased a 2-year $50 million interest rate cap at 1.5%. Subsequent to quarter end, we continue with asset recycling. We sold the 2 Commonwealth Virginia single-tenant office buildings at a 6.8% cap rate with a gain of 38% over our development costs. The proceeds from this sale were used in the 1031 tax re-exchange to purchase the outparcels at our Wendover center.

本季度內，我們以 1.5% 的利率購買了一筆 2 年期、5,000 萬美元的利率上限（interest rate cap）。在季度結束後，我們持續進行資產汰換（asset recycling）。我們以 6.8% 的資本化率出售了位於維吉尼亞州聯邦（Commonwealth of Virginia）的 2 棟單一承租戶辦公大樓，較我們的開發成本實現 38% 的收益。本次出售所得款項用於 1031 稅務再交換，以購買我們 Wendover 中心的外圍地塊（outparcels）。

Now for an update on our full year 2017 guidance that we issued this morning. We expect 2017 normalized FFO in the range of $0.97 to $0.99 per share. This guidance is lower and the one we issued initially due to the capital raise in May. As we previously noted, 2017 is the year of execution and positioning the balance sheet to the development pipeline and future growth.

接下來更新我們今天早上發布的 2017 全年指引。我們預期 2017 年標準化 FFO 介於每股 0.97 美元至 0.99 美元。由於 5 月的資本募集，本次指引較我們最初發布的指引為低。如我們先前所述，2017 年是執行之年，並將資產負債表定位以支援開發管線與未來成長。

Now the details of our 2017 guidance. This updated guidance is predicated on the following assumptions: disposition of the Commonwealth of Virginia office buildings with proceeds being used to acquire the Wendover outparcels during the third quarter, no additional capital market activities including under the ATM program, interest expense calculated on the Forward LIBOR Curve.

以下為 2017 年指引的細節。本次更新指引係基於以下假設：於第三季處分維吉尼亞州聯邦辦公大樓，並將出售所得用於收購 Wendover 外圍地塊；不再進行任何額外的資本市場活動（包括 ATM 計畫）；利息費用依遠期 LIBOR 曲線（Forward LIBOR Curve）計算。

2017 guidance of $0.97 to $0.99 per share is also predicated on the following: total NOI in a $72.8 million to $73.3 million range, third-party construction company gross profits in a $6.9 million to $7.4 million range, general administrative expenses in $10.8 million to $11 million range, interest income for our mezzanine financing program in a $6.7 million to $6.9 million range. At the end of the quarter, the aggregate balance of these mezzanine loans was $73 million, interest expense in the $16.9 million to $17.4 million range and $60.3 million weighted-average shares outstanding.

每股 0.97 美元至 0.99 美元的 2017 年指引亦基於以下假設：總 NOI 介於 7,280 萬美元至 7,330 萬美元；第三方營造公司毛利介於 690 萬美元至 740 萬美元；一般及行政費用介於 1,080 萬美元至 1,100 萬美元；夾層融資計畫（mezzanine financing program）的利息收入介於 670 萬美元至 690 萬美元。截至季度末，這些夾層貸款的合計餘額為 7,300 萬美元；利息費用介於 1,690 萬美元至 1,740 萬美元；加權平均流通股數為 6,030 萬股。

Now I'll turn the call back to Lou.

現在我把電話交回給 Lou。

Thank you, Mike, and thank you for your time this morning, and your interest in Armada Hoffler.

謝謝你，Mike，也謝謝各位今天早上的時間，以及對 Armada Hoffler 的關注。

Operator, we would like to begin the question-and-answer session.

接線員，我們想開始問答環節。

(Operator Instructions) Our first question comes from the line of Dave Rodgers with Robert W. Baird.

(接線員指示) 我們的第一個問題來自 Robert W. Baird 的 Dave Rodgers。

Lou, in the spirit of retail and obviously, it remains in focus for your portfolio here in the near term, can you talk about any potential watch list you might have or pressure that you are seeing on lease economics as tenants might talk up kind of this retail environment and any additional color or any challenges that you may or may not be having?

Lou，從零售的角度來看，而且顯然短期內零售仍是你們投資組合的重點，你能談談你們是否有任何潛在的觀察名單（watch list），或是在租賃經濟條件上看到的壓力嗎？因為承租戶可能會提到目前這種零售環境。也請補充一些背景或你們可能有或沒有遇到的任何挑戰。

Great question, Dave. We're really not seeing any pressure in our centers. We're seeing re-leasing, we're seeing options taken, we're seeing sales remain steady or growing. We've got several centers where there are significant leases coming up in '18, '19 and '20. And right now, we don't foresee anybody doing anything other than renewing their options. As you've seen we're sitting somewhere around 97% full in the retail and we expect that to continue.

好問題，Dave。我們的商場確實沒有看到任何壓力。我們看到續租、看到承租戶行使選擇權，也看到銷售額維持穩定或成長。我們有幾個商場在 2018、2019 與 2020 年有相當重要的租約到期。而就目前而言，我們不預期有人會做出續租以外的選擇。如你所見，我們零售物業的出租率約在 97% 左右，我們預期將持續維持。

We really don't have exposure to the types of retail that are -- seem to be under pressure. We've got one tenant you see on our top-10 list, Bed Bath & Beyond, which I think has come under pressure, but we're look -- monitoring the sales in those units that we only own 4 of them. The one here at Town Center is amongst their best stores in the nation, and the other 3 are in line or a little above average. So we're really not seeing that pressure there and that's probably the biggest thing on our watch list.

我們確實沒有曝險於那些——看起來正承受壓力的零售類型。在我們前十大承租戶名單中，你會看到 Bed Bath & Beyond 這個承租戶，我認為它確實面臨壓力，但我們正——持續監控我們僅持有的 4 個店點的銷售表現。其中位於 Town Center 的那一家是他們全美表現最好的門市之一，另外 3 家則與平均水準相當或略高。因此我們在那裡並未真正看到壓力，而那大概是我們觀察名單上最主要的一項。

We do expect, when we bought the 11-property portfolio 1.5 year ago with primarily the Kroger, the last piece of that, the smallest center by far is in -- is a center in Western Virginia, where there is a 30-some-thousand-foot Kroger that we expect to repurpose probably in a next 18 months or so because I doubt they would stay in a footprint that small.

我們確實預期，當我們在約 1.5 年前收購那個 11 項物業的投資組合（主要承租戶為 Kroger）時，其中最後一塊——也是規模最小的商場——位於維吉尼亞州西部；那裡有一家約 3 萬多平方英尺的 Kroger，我們預期大概在未來 18 個月左右會將其重新規劃用途（repurpose），因為我不認為他們會繼續留在那麼小的店面規模。

And then maybe bigger picture, Mike, you had talked about issuing the equity to kind of free up some development capacity as opposed to using the ATM, which I think makes sense, but Lou, maybe you can provide a little additional commentary. You talked about some work down in Durham that maybe you're working on another phase with Duke. But can you handicap kind of the odds of the development portfolio being substantially larger as you move into 2018 and consistently seeing this high level of activity going forward? Talk a little bit more about that if you could, Lou.

另外從更宏觀的角度來看，Mike，你談到發行股權以釋放一些開發容量，而不是使用 ATM，我認為這很合理；但 Lou，也許你可以再補充一些評論。你提到在 Durham 那邊有一些工作，可能正在與 Duke 推進另一個階段。但你能否評估一下，隨著你們進入 2018 年，開發投資組合大幅擴大的可能性，以及未來是否會持續看到這種高水準的活動？如果可以的話，請再多談一點，Lou。

Sure. Again, as Mike said, we have got this tremendous pipeline marching its way through the company, and we're really excited about those properties coming online, beginning in a -- actually beginning next month and working all the way through 2018.

當然。再次如 Mike 所說，我們有一條非常龐大的管線正逐步在公司內推進，我們對這些物業陸續投入營運感到非常興奮，從——其實從下個月開始，一路延續到 2018 年。

We wanted to make sure that we had the equity set aside to fully absorb those properties. We believe they're top quality and are going to add substantially to both NAV and earnings. Taking that off the table gives us the opportunity to focus on potential equity needs for the next-generation pipeline. As you know, development is a slow game. So when we talk about our shadow pipeline, being in essence, probably about the same size as the current pipeline, that's a very slow bill. What we're working on now, be it the next phase in Durham, the next phase in Town Center, the next phase at the Inner Harbor in Baltimore, or Charlotte, or Charleston, all of these properties -- all of these projects you're looking at a fairly decent time frame for entitlement and design before there is any equity needs whatsoever.

我們希望確保已預留足夠的股權資金，以完全吸收這些物業。我們相信它們品質一流，並將在 NAV 與獲利兩方面帶來顯著提升。把這件事先處理好，讓我們有機會把重心放在下一代管線可能需要的股權資金上。如你所知，開發是一場慢工細活。因此當我們談到我們的影子管線（shadow pipeline）本質上可能與目前管線規模相當時，那是一個非常緩慢的累積。我們目前正在推進的，不論是 Durham 的下一期、Town Center 的下一期、巴爾的摩內港（Inner Harbor）的下一期，或是夏洛特、查爾斯頓，所有這些物業——所有這些專案，在任何股權需求出現之前，都需要相當一段時間來完成核准（entitlement）與設計。

So I don't think we're going to be in the market anytime soon, either as Mike said, with the ATM or obviously, an equity raise, but we do believe that, that shadow pipeline is developing very quickly, again, at the rate of development as it proceeds.

所以我不認為我們短期內會進入市場，不論是如 Mike 所說透過 ATM，或是顯然的股權募集；但我們確實相信，隨著開發推進，該影子管線正在非常快速地成形——再次強調，是以開發進度所允許的速度。

Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott.

我們的下一個問題來自 Janney Montgomery Scott 的 Rob Stevenson。

Lou, just sticking with the retail side of things, when you take a look at the strip-center portfolio, I mean, where you think value is? Because obviously, I mean, one of the overhangs on the stock is that you bought this thing 20 months or so ago roughly at 7% cap rate, and there are people out there that believe that today if you had to sell it, it's worth closer to an 8% cap rate and that there's been significant value diminishing here.

Lou，仍然聚焦在零售端，當你看街邊商場（strip-center）投資組合時，你認為價值落在哪裡？因為很明顯，股價的一個壓力來源是你們大約在 20 個月前以約 7% 的資本化率買下這個投資組合，而市場上有人認為，如果今天你們必須出售，它的價值更接近 8% 的資本化率，且這裡已出現顯著的價值減損。

When you take a look at that portfolio today and where things have been trading in the market -- in those various submarkets, et cetera, I mean, where do you think value is today?

當你看這個投資組合目前的狀況，以及市場上——在各個次級市場等——的成交情況時，你認為今天的價值在哪裡？

Our first take towards the question, Rob, it's -- we try not to pay a whole lot of attention to fluctuations in cap rates and what's in and out of vogue. In the not-too-distant past, people were talking about the types of centers that we had being able to fetch a low 6% cap rate. Today, people were talking about high 7s, low 8s. Lord knows what's going to happen in the fall.

Rob，我們對這個問題的第一個看法是——我們盡量不去過度關注資本化率的波動，以及哪些類型正流行或不流行。在不久之前，人們還在談論我們這類型的商場可以成交在 6% 出頭的資本化率。今天，人們又在談 7% 後段、8% 前段。天知道到了秋天會怎麼發展。

What we do pay attention to is increasing sales, increasing rents and increasing occupancy. As long as we stay focused on that, and it really doesn't matter a whole lot. And that's so -- that's what's happening in our portfolio as you can see by the results. As I said, as you guys know, we're not afraid to recycle this portfolio, we do it fairly regularly. And we do have a couple of smaller centers, I mentioned the one that might be repurposed.

我們真正關注的是提升銷售額、提高租金以及提高入住率。只要我們持續聚焦在這些事情上，其實其他因素影響不大。而這也正是——如你們從結果所見——正在我們投資組合中發生的情況。如我所說、各位也知道，我們不怕汰換（recycle）這個投資組合，我們相當定期地在做。我們確實也有幾個較小的中心，我提到其中一個可能會被重新定位用途（repurposed）。

We've got a couple of small grocery-anchored centers that we believe are at or near peak value, so you might see in the next 18 months that we trim the portfolio in that direction. But remember, we've been doing this, I've been in this chair for 33 years, our Chairman for nearly 40. We've seen a lot of these fluctuations in the past and it's real easy to get distracted over what matters. And what matters in real estate is location, credit, sales and escalating rents. And as long as you stay focused on those real estate principles, you really can't get yourself in trouble.

我們有幾個小型、以雜貨店為主力店（grocery-anchored）的中心，我們認為其價值已達或接近高峰，因此你們可能會在未來18個月看到我們朝那個方向精簡投資組合。但請記得，我們一直在做這件事——我坐在這個位子上33年了，我們的董事長也將近40年。過去我們見過很多這類波動，很容易被與關鍵無關的事情分心。而不動產真正重要的是地點、信用（租戶信用）、銷售以及租金的遞增。只要你專注於這些不動產原則，就不太可能讓自己陷入麻煩。

Okay. And then in terms of the Wendover outparcel, what's the plans there? And then, can you also talk a little bit about what drove the increasing guidance on the construction segment gross profit guidance? Is that more projects? Is that more profitability on certain projects, et cetera?

好的。那麼就Wendover的外圍地塊（outparcel）而言，那邊的計畫是什麼？另外，你也能談談是什麼驅動你們上調營建事業部門毛利指引嗎？是因為更多專案嗎？還是某些專案的獲利能力更高等等？

Okay. Okay, take those out of order, Rob, and I'll mention -- I'll talk about construction and I'm going to let Eric Smith talk a little about the Wendover outparcel. On construction, as you can see, this is a banner year for us and it's a confluence of several events.

好的。Rob，我先不按順序回答，我先提——我先談營建，然後我會讓Eric Smith談一下Wendover的外圍地塊。就營建而言，如你所見，這對我們來說是表現非常亮眼的一年，這是多個事件同時發生的結果。

We had a very large project that ended earlier in the year and delivered significant savings beyond our fee, nearly 7 figures of savings. We also have picked up a couple of clients along the way intra-year, one being this legal relationship that added substantially to our backlog, and those projects are starting and finishing essentially in the same year. So it may well be, based on our guidance, that this -- the construction company has a $7 million year. I do want to say that, as you guys have heard us say before, we're not looking to expand the construction company. It does high-quality work for people who want to negotiate projects with us. And as such, that stays fairly stable at the $200 million, $250 million range, and that typically yields profits. Where we started guidance in that $4.5 million to $6 million range I expect that, that construction will return to its norm next year and the years that follow.

我們有一個非常大型的專案在今年較早時結束，帶來了超出我們費用之外的顯著節省，節省金額接近七位數。我們也在年中陸續新增了幾個客戶，其中之一是這個法律關係（legal relationship），大幅增加了我們的在手訂單（backlog），而這些專案基本上在同一年內開工並完工。因此，依照我們的指引，營建公司今年很可能會有7百萬美元的一年。我也想說，如各位之前聽我們提過的，我們並不打算擴張營建公司。它為願意與我們協商專案的人提供高品質的工作。因此規模大致維持穩定在2億到2.5億美元區間，通常也能帶來利潤。我們起初給的指引在450萬到600萬美元區間；我預期明年以及之後幾年，營建業務會回到常態水準。

Eric, can you take the question about the Wendover outparcel?

Eric，你可以回答關於Wendover外圍地塊的問題嗎？

Sure. Happy to. Thanks, Lou, and good morning. As you'll recall, the primary portion of the Wendover Village asset was purchased when we did purchase that 11-property portfolio, and we purchased the entire portfolio in the 7.25% cap rate range on a cash basis and that has only increased over time as our asset management team has applied increased detention to that asset, both on a quality and leasing perspective maybe than it had prior to our ownership. And so we've enjoyed some nice bumps there.

當然。很樂意。謝謝你，Lou，大家早安。如各位所記得，Wendover Village資產的主要部分，是我們收購那個11項物業投資組合時一併買下的；我們以現金方式收購整個投資組合，資本化率（cap rate）約在7.25%區間，而隨著時間推移，這個數字只增不減，因為我們的資產管理團隊在品質與招商（leasing）面向上，對該資產投入了更多關注（detention應為attention）——可能比我們持有之前更用心。因此我們在那裡享受到一些不錯的提升。

Within those 11 assets, the Wendover Village asset was one of the premier assets, as you may know, it's located on the Southwest side of Greensboro, right off of 85 and 40 anchored -- shadow anchored by a Costco right at exit 214, and really good demographics around that retail center.

在那11項資產中，Wendover Village是其中的旗艦資產之一；如你們所知，它位於Greensboro西南側，緊鄰85號與40號公路，位在214號出口旁，並由Costco作為主力店——或說影子主力店（shadow anchored），而且該零售中心周邊的人口結構（demographics）非常好。

And so we felt very good about the primary center. The outparcels that we just purchased, that 7-7 cap rate, little bit of color commentary of why we were interested in buying retail in the backdrop of the -- that Lou mentioned about the retail segment that we currently face. We had the opportunity to buy these outparcels immediately after we acquired the 11-asset portfolio, and we turned them down based on the cap rate that the seller was asking for. It came back across our desk about a year later, and we said, no, again, based on the cap rate that was being asked for just because we didn't need the acquisition, we were interested in it given the health of the center, but we didn't need it.

因此我們對主要中心的狀況非常有信心。至於我們剛買下的外圍地塊，資本化率在7%上下（7-7 cap rate），我補充一些背景，說明為何在Lou提到我們目前面臨的零售業環境下，我們仍有興趣買入零售資產。我們在收購那個11項資產投資組合後不久，就有機會買下這些外圍地塊，但當時因賣方要求的資本化率，我們拒絕了。大約一年後這案子又回到我們桌上，我們又說不，仍是因為對方要求的資本化率——因為我們並不需要這筆收購；我們對它有興趣是因為中心本身很健康，但我們不需要它。

And a little color commentary, the seller came to us when they had another buyer under contract that wanted some REA changes that we were not willing to do, and so that deal fell apart, and we became really the only viable buyer given that it didn't make sense to another buyer to buy without the REA changes they were asking for, where they didn't -- obviously, you don't need the core center, not a concern for us, and so we put a very aggressive offer on the table that was accepted, so we think we're acquiring it at a nice cap rate relative to its value, especially when you consider that now we have the entire center without the whole of the outparcels. So we feel really good about that acquisition.

再補充一些背景：賣方來找我們時，他們其實已與另一位買方簽約，但對方希望修改一些REA（互惠地役權協議）條款，而我們不願意配合，因此那筆交易告吹；在那種情況下，我們幾乎成了唯一可行的買方，因為若沒有他們要求的REA變更，對其他買方而言就不合理；而對我們來說，因為我們已擁有核心中心，這不是問題。於是我們提出非常積極的報價並獲得接受，因此我們認為相對其價值，我們以不錯的資本化率買入，尤其考量到現在我們擁有整個中心，包含全部外圍地塊。所以我們對這筆收購感覺非常好。

And what do you plan to build on the outparcel?

那你們計畫在外圍地塊上興建什麼？

The outparcels are all developed and 100% occupied.

外圍地塊都已開發完成，且出租率為100%。

Okay. So it's not a develop play, it's just an income play. Okay.

好的。所以這不是開發案，而是收益型投資。好的。

All right, 30, 30 -- almost 36,000 square feet anchored by Panera and a number of other credit quality tenants.

好的，約3萬——接近3.6萬平方英尺，由Panera作為主力店，還有多家其他信用良好的租戶。

Our next question comes up from the line of John Guinee with Stifel.

下一個問題來自Stifel的John Guinee。

Oh great, okay. I had just a whole bunch of little questions. First, explain what you're doing in Decatur? How much are you investing? What kind of return are you expecting? How long would you have that investment in place?

喔太好了，好的。我有一堆小問題。首先，請解釋你們在Decatur做什麼？你們投資多少？預期什麼樣的報酬率？你們預計會持有那筆投資多久？

Sure. John, once again, that's a Whole Foods center, and that was the first step in the relationship that we're working on with SJ Collins as well as a Whole Foods. And I -- the specifics -- Mike, I am staring at Mike, I believe it's a $10 million investment.

當然。John，再次說明，那是一個Whole Foods中心，也是我們與SJ Collins以及Whole Foods正在建立合作關係的第一步。至於——具體細節——Mike，我正看著Mike，我相信那是一筆1,000萬美元的投資。

Yes, $10,750,000 mezz loan on that project. The -- our return on that is 15%. And the loan is the same maturity as the construction loan, I think it's 3 years.

是的，那個專案是一筆10,750,000美元的夾層貸款（mezz loan）。我們在那筆投資上的報酬率是15%。而該貸款的到期日與建築貸款相同，我想是3年。

This is the -- John, this is the largest developer of Whole Foods in the country and they have a pipeline of these things. When they came to us, this one was ripe. They have been -- they're predominantly a merchant builder, and they have been raising this kind of equity with these kinds of returns from third parties. So in order to initiate the relationship, we said we'll step into those shoes with an eye towards the rest of the pipeline.

John，這家公司是全美最大的Whole Foods開發商，他們有一整條這類案子的管線。他們來找我們時，這一案已經成熟可做。他們主要是商業建造商（merchant builder），過去一直向第三方募集這類股權資金，並提供這種水準的報酬。因此為了啟動合作關係，我們表示願意以同樣角色切入，並著眼於後續整個案源管線。

Okay. So -- and you -- they just are paying you the mezz out of the -- essentially the borrowing capacity -- 15%. Will you be able to record that currently? And how long do you expect to be in that loan?

好的。所以——他們基本上是用借款能力來支付你們的夾層利息——15%。你們能夠在目前就認列那個收益嗎？你們預期會在那筆貸款上停留多久？

Yes, we are recording it currently -- the center is 80% leased, and I know that [Tolbooth] Leasing because of demand, they think they can push the rates, so I suspect, I think it's a 1.5 year construction phase, I assume. Shortly after completion, they will be looking to take us out.

是的，我們目前正在記錄——該中心已出租 80%，而且我知道 [Tolbooth] 的租賃因需求帶動，他們認為可以把租金費率往上推，所以我猜想，我認為施工期大約是 1.5 年，我假設如此。在完工後不久，他們就會尋求把我們買出。

Okay, so just a 2-year $11 million loan. Second, student housing, the math here looks like $537,000 a unit, there's got to be more to it than that. Can you kind of talk about investing $100 million in this kind of product? What the appropriate unit costs are and what kind of yield you expect on this?

好的，所以就是一筆 2 年期、1,100 萬美元的貸款。第二，學生住宅，這裡的算法看起來是每戶 537,000 美元，這裡肯定不只如此。你能談談在這類產品上投資 1 億美元嗎？適當的單位成本應該是多少，以及你預期這項投資的收益率是多少？

Yes, John, the -- I'll give you the statistics, it's -- we've got $100 million invested on 2 properties representing 600...

是的，John——我給你一些統計數據——我們在 2 個物業上投資了 1 億美元，合計代表 600……

600 beds.

600 個床位。

600 beds. So we're looking at $150,000 or so a bed. We are programming this around a 7% return on costs, and properties, as you know, of this ilk, particularly in that location, are selling right around a 5% cap. But our intent is not to sell it, but to hold it long term as it's in an A position. I'm not sure where your math...

600 個床位。所以我們看的是每個床位大約 150,000 美元。我們以成本回報率約 7% 來規劃，而你也知道，這類型的物業，尤其在那個地點，成交大約就在 5% 的資本化率（cap rate）附近。但我們的意圖不是出售，而是長期持有，因為它位於 A 級地段。我不太確定你的算法……

Oh I'm just looking at your spreadsheet here and it says 188 units...

喔，我只是看你的試算表，上面寫著 188 戶……

I got you. Okay.

我懂了。好的。

Okay. And then Point Street apartments in Baltimore, Annapolis Junction purchase options, when would you exercise those purchase options and as of today, what sort of yield on costs or yield on purchase options should they generate?

好的。接著是巴爾的摩的 Point Street 公寓、Annapolis Junction 的購買選擇權，你們會在什麼時候行使這些購買選擇權？以及截至今天，這些選擇權應該帶來什麼樣的成本收益率或購買選擇權收益率？

So Annapolis Junction starts to deliver next month, and effectively, really, we think probably in -- starting in September. We're anticipating, and we always anticipate along these lines, of somewhere around an 18-month lease-up. Our option will be good through 2018, and so depending on how that lease-up proceeds, we expect to exercise during 2018, it's hard to say right now, how early in the year that would be. John, as you know, we advertise that we work off at least a 20% spread. We've monetized several of these assets, and I think 20% was probably the least that -- of any that we've monetized. I would say were we to monetize either of these assets, it'd be substantially higher than that based on the kind of cap rates people are paying at the Inner Harbor and Baltimore and in Fort Meade, but that's not our expectation. I mean, we're hoping to own these things for a long time.

Annapolis Junction 下個月開始交付，實際上我們認為大概會在——從 9 月開始。我們預期，而且我們一向都是這樣預期，大約需要 18 個月的出租爬坡期（lease-up）。我們的選擇權有效期到 2018 年，因此取決於出租爬坡的進度，我們預期會在 2018 年行使；至於會在當年多早行使，現在很難說。John，你也知道，我們對外宣稱我們至少以 20% 的價差來操作。我們已將其中幾項資產變現，我想 20% 可能是——我們變現過的任何一項裡面最低的。我會說，如果我們要把這兩項資產中的任何一項變現，基於人們在 Inner Harbor、巴爾的摩以及 Fort Meade 所支付的資本化率，會遠高於那個水準，但那不是我們的預期。我的意思是，我們希望長期持有這些資產。

But the question is on both of them, you're going to shift from earning an 8% and a 10% interest on mezz loans to essentially having those mezz loans repaid and then you'll exercise a $92 million and $102 million purchase option and then hold those. Are you going to be buying them at a 4 yield on cost or a 9 yield on cost?

但問題是，這兩項你們都會從賺取夾層貸款（mezz loans）8% 和 10% 的利息，轉為夾層貸款基本上被償還，然後你們會行使 9,200 萬美元與 1.02 億美元的購買選擇權並持有它們。你們買入時會是 4% 的成本收益率，還是 9% 的成本收益率？

Our expectation is that those are going to be in the high 6s, low 7s based on pro forma rents, and we expect that the transaction -- transition from mezzanine to wholly owned, it's going to be an accretive one, both on NAV as well as on earnings basis.

我們的預期是，根據預估（pro forma）租金，這些會落在高 6% 到低 7% 的區間；而且我們預期——從夾層轉為全資持有的交易／轉換——在淨資產價值（NAV）以及盈餘層面都會是增益性的（accretive）。

Our next question comes from the line of Craig Kucera with FBR Capital Markets.

下一個問題來自 FBR Capital Markets 的 Craig Kucera。

You had a meaningful decline in your development occupancy and a rent cut at the Johns Hopkins Village. Can you give us some color on how lease-up is trending, going into the school year and maybe what the supply situation is there?

你們的開發案入住率明顯下滑，而且 Johns Hopkins Village 的租金也下調了。你能否提供一些背景，說明在進入學年之際，出租爬坡的趨勢如何，以及那裡的供給狀況可能是什麼樣子？

Sure. I am going to let Mike talk to you about that decline. But I also again tell you that we are 100% leased starting next month with, I believe, one potential bay left in the retail. Mike?

當然。我會讓 Mike 跟你談談那個下滑。但我也再次告訴你，我們從下個月開始已經 100% 出租，我相信零售部分只剩下一個可能的店面空位。Mike？

Yes, Craig, what we've had is come May the students started moving out. We had 10-months leases at that property, so we dropped from 79% occupied to 50% occupied here during the summer. Like Lou said, we'll be at 100% leased on the beds come the end of next month. I mean the end of this month.

是的，Craig，我們遇到的是 5 月學生開始搬離。那個物業是 10 個月租約，所以夏季期間我們的入住率從 79% 掉到 50%。如 Lou 所說，到下個月底床位會達到 100% 出租。我是說這個月底。

Right. And just another question, this may be difficult to answer, but can you estimate what the impact of same store was from some of the movement going on at Town Center related to multifamily and the construction and your retail client moving to 4525?

了解。再一個問題，這可能不太好回答，但你能否估算一下，同店（same store）的影響有多少是來自 Town Center 那邊一些變動——包括多戶住宅與施工，以及你們的零售客戶搬到 4525？

We've got a couple of different pieces there. If you think about it at our -- at The Cosmopolitan you had occupancy go from the 90s to the mid- to low- 80s, and that represents in and of itself a couple hundred thousand dollars. On the office side, basically, we took a 14,000-foot tenant and moved him out of the pool. There are back-bill leases that are coming in place but are not producing yet. When you take those 2 factors as well as the down serve -- the downsizing of essentially the last law firm that cycled through a Town Center, I think it accounts for the entirety of the change.

那裡有幾個不同的部分。如果你看我們的——The Cosmopolitan，那裡的入住率從 90% 多降到 80% 中段到低段，單就這一項就代表幾十萬美元。在辦公室方面，基本上我們把一個 14,000 平方英尺的租戶移出那個池子。有一些回補租約（back-fill leases）正在到位，但尚未開始產生收入。把這兩個因素，再加上基本上最後一家在 Town Center 輪替過的律師事務所縮編，我認為就能解釋全部的變化。

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

下一個問題來自 Raymond James 的 Bill Crow。

Two questions. The first one on the multifamily at Town Center. Is it going to get worse as you look at the upcoming lease rollover trends?

兩個問題。第一個是關於 Town Center 的多戶住宅。從即將到來的租約到期／續租（lease rollover）趨勢來看，情況會不會更糟？

Bill, thanks for the question. Well, I told them somebody would ask that because the Cosmopolitan is as of today over 90% leased, so it's -- we saw the bottom, and as we've said last quarter, our expectation with that -- would be that it would return to normalcy around the end of the year. So we're on track for that.

Bill，謝謝你的問題。嗯，我跟他們說過一定會有人問這個，因為截至今天 The Cosmopolitan 的出租率已超過 90%，所以——我們已經看到谷底了；而且如同我們上季所說，我們對那邊的預期——是到年底左右會回到正常水準。所以我們正按計畫進行。

Okay, great. Second question, going back to retail. You talked about the sizable lease expirations in '18, '19 and '20, and that you were confident you could release the space or renew the tenants, I should say. Are you confident in the outlook for the rental rates as well? Are we going to see positive increases in rents or how do you feel about that part of it?

好的，很好。第二個問題回到零售。你提到 2018、2019 和 2020 年有相當多的租約到期，而且你有信心可以重新出租該空間或我應該說，讓租戶續約。你對租金費率的前景也有信心嗎？我們會看到租金正向成長嗎？或你對這部分的看法如何？

We feel really good about that. I don't see anything other than people renewing at their option rate.

我們對此感覺非常好。我看不到任何情況不是人們以其選擇權約定的租金費率續約。

There are no further questions at this time. I would like to turn the call back over to Mr. Haddad for closing remarks.

目前沒有其他問題。我想把電話交回給 Haddad 先生作結語。

Thanks, everybody. We appreciate your interest in our company and we look forward to updating you on our activities and results over the course of the year. Have a good day.

謝謝各位。感謝大家對我們公司的關注，我們也期待在今年接下來的時間裡，向各位更新我們的活動與成果。祝各位有美好的一天。

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

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，祝您有美好的一天。