AH Realty Trust, Inc (AHRT) 2019 Q2 法說會逐字稿

Greetings. Welcome to Armada Hoffler's Second Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded today, Thursday, August 1, 2019.

各位好。歡迎參加 Armada Hoffler 2019 年第二季財報電話會議。(接線員指示) 提醒各位，本次會議將於今天（2019 年 8 月 1 日，星期四）錄音。

I will now turn the conference call over to the speaker for today, Michael O'Hara, Chief Financial Officer at Armada Hoffler. Please proceed, sir.

現在我將把電話會議交給今天的講者——Armada Hoffler 財務長 Michael O'Hara。先生，請開始。

Good morning, and thank you for joining Armada Hoffler's Second Quarter 2019 Earnings Conference Call and Webcast. On the call this morning, in addition to myself, is Lou Haddad, CEO. 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, 2019. The numbers to access the replay are provided in the earnings press release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, August 1, 2019, and will not be updated subsequent to this initial earnings call.

各位早安，感謝各位參加 Armada Hoffler 2019 年第二季財報電話會議與網路直播。今天早上的電話會議，除了我之外，還有執行長 Lou Haddad。本公司今早已發布宣布第二季財報的新聞稿，以及季度補充資料包。本次電話會議的重播將於會議結束後不久提供，並可使用至 2019 年 9 月 1 日。存取重播的電話號碼已載於財報新聞稿中。對於收聽本次簡報重播的聽眾，我們提醒您：本次發言內容以今日（2019 年 8 月 1 日）為準，且在本次初次財報電話會議之後不會更新。

During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our development pipeline, impact of acquisitions and dispositions, our mezzanine program, our Construction business, our portfolio performance and financing activities as well as comments on our guidance and 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 forward-looking statement disclosure in our press release this morning and the risk factors disclosed and documents we have filed with or furnished to the SEC. We will also discuss certain non-GAAP financial measures, including, but not limited to, FFO and normalized FFO. Definition 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 at armadahoffler.com.

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、夾層融資計畫（mezzanine program）、營建業務、投資組合表現與融資活動，以及對我們的指引與展望之評論等相關陳述。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預期出現重大差異；我們建議聽眾查閱今早新聞稿中的前瞻性陳述揭露，以及我們向 SEC 申報或提供之文件中所揭露的風險因素。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；該資料包可於我們網站 armadahoffler.com 取得。

I will now turn over the call to our Chief Executive Officer, Lou Haddad. Lou?

現在我把電話會議交給我們的執行長 Lou Haddad。Lou？

Thanks, Mike. Good morning, everyone, and thank you for joining us today. Before we go over our operating results and update you on our other activities, I'll first comment on some macro level activities that are being undertaken at the company. As most of you know, our senior management team has been in place for many years. We also take much pride in the junior executives and middle managers who are tremendously important to our success and growth strategies. In the past several months we have augmented this strength with the addition of 2 executives with a wealth of prior REIT experience. First was the hiring of Finance Director, Mike Zalinski, and more recently the addition of Chief Investment Officer, Jonathan Morris. These 2 gentlemen expand an already top flight team of real estate professionals. Additionally, and perhaps most importantly, we will soon be issuing a press release welcoming a new COO to the Armada Hoffler family. While our expectation is that our current leadership will be in place for at least the next 5 years, between these new executives and a stellar group of rising professionals already in place, we are confident that our 40-year track record of growth, profitability and outperformance can continue for decades to come.

謝謝你，Mike。各位早安，感謝各位今天加入我們。在我們回顧營運成果並向各位更新其他活動之前，我先就公司正在推動的一些宏觀層面事項做些說明。如各位所知，我們的高階管理團隊已就位多年。我們也非常以公司內部的初階主管與中階經理為傲，他們對我們的成功與成長策略至關重要。過去幾個月，我們透過新增兩位具備豐富 REIT 經驗的主管，進一步強化這項優勢。首先是聘任財務總監 Mike Zalinski；近期則新增投資長（CIO）Jonathan Morris。這兩位先生讓我們原本就一流的不動產專業團隊更加完整。此外，也許最重要的是，我們即將發布新聞稿，歡迎一位新的營運長（COO）加入 Armada Hoffler 大家庭。雖然我們預期現任領導團隊至少在未來 5 年仍將持續任職，但憑藉這些新加入的主管，以及既有一群傑出的新銳專業人才，我們有信心公司 40 年來的成長、獲利與優於同業的紀錄，未來數十年仍可延續。

Another initiative that is underway is a strategic portfolio review being led by our CIO with support from our President of Asset Management, Shelly Hampton and her excellent team. While we've become well-known for routinely trimming noncore assets from our portfolio to keep it of the highest quality, this effort is more comprehensive and longer term in nature than our previous reviews. Early indications are that we will identify several properties over the next couple of months that will be slated for disposition over the course of 2020. We would expect these properties to total in the range of $75 million to $125 million worth of real estate. This group will probably include several of our older neighborhood centers as well as some office space. I'll emphasize here that this is not a repositioning effort. We are very comfortable with our current assets and our diversified platform. The multiyear performance of our portfolio has been stellar. This is simply a continuation of our long-established recycling strategy that we use to achieve the most advantageous allocation of capital to maximize the growth and stability of the company.

另一項正在進行的計畫，是由我們的投資長主導、並由資產管理總裁 Shelly Hampton 及其優秀團隊支援的策略性投資組合檢視。雖然我們一向以定期自投資組合中剔除非核心資產、以維持最高品質而聞名，但此次檢視相較以往更為全面，且屬於更長期的性質。初步跡象顯示，我們將在未來幾個月內辨識出數項資產，並計畫於 2020 年期間進行處分。我們預期這些資產合計的不動產價值約在 7,500 萬至 1.25 億美元之間。此組合可能包含我們部分較老的社區型購物中心，以及一些辦公空間。我在此強調，這並非資產重新定位（repositioning）行動。我們對目前資產與多元化平台感到非常放心。我們投資組合多年來的表現十分亮眼。這只是延續我們長期既有的資產循環（recycling）策略，以達成最有利的資本配置，最大化公司的成長與穩定性。

Some of the anticipated proceeds will be used to fund the next development pipeline. Some will be used to purchase higher growth assets through 1031 Tax-free Exchanges. And as usual, some may be rescinded if we don't feel they are receiving appropriate value from the market. We expect to be able to give you further clarification on the timing and breadth of this initiative with next quarter's results.

部分預期處分所得將用於資助下一波開發案儲備。部分將透過 1031 免稅交換（Tax-free Exchanges）購買成長性更高的資產。如同以往，若我們認為市場未能提供適當價值，部分交易也可能取消。我們預期在下季財報結果時，能就此計畫的時程與範圍提供更進一步的說明。

Moving onto our current earnings release. Most of you have seen that we reported $0.30 of normalized FFO per share this morning which was in line with our expectations. More importantly, we raised our full year guidance to $1.15 to $1.19 per share. This increase is primarily due to accretive acquisitions in the second quarter and very strong leasing metrics across the portfolio. Please note that the midpoint of the new range represents a 14% increase over our 2018 per share results. As we have said in the past and with regard to 2020, our expectation is for the mezzanine program income to decrease while portfolio NOI will continue to increase.

接著談我們本次的財報新聞稿。各位多數已看到，我們今早公布每股標準化 FFO 為 0.30 美元，符合我們的預期。更重要的是，我們將全年指引上調至每股 1.15 至 1.19 美元。這次上調主要來自第二季具增益性的收購（accretive acquisitions），以及整體投資組合非常強勁的租賃指標。請注意，新區間的中位數相較我們 2018 年每股結果增加 14%。如同我們過去所說，展望 2020 年，我們預期夾層融資計畫收入將下降，但投資組合 NOI 將持續增加。

This trend, along with the anticipated launch of a new development pipeline and disposition of noncore assets will most likely result in moderating next year's earnings per share growth into the mid-single digits. That said, we expect robust NAV expansion as we continue to enhance overall portfolio quality. Though Mike will expand on the important highlights of the quarter, I must emphasize the impressive increase in our same store NOI across the portfolio for the fifth consecutive quarter. Certainly, we do not expect multifamily to grow at 20% on a year-over-year basis. However, we expect healthy growth in the portfolio to continue.

此一趨勢，加上預期啟動新的開發案儲備以及處分非核心資產，最可能使明年每股盈餘成長放緩至中個位數。即便如此，隨著我們持續提升整體投資組合品質，我們預期淨資產價值（NAV）將強勁擴張。雖然 Mike 會進一步說明本季的重要亮點，但我必須強調：我們投資組合的同店 NOI 已連續第五季呈現令人印象深刻的成長。當然，我們不預期多戶住宅（multifamily）能以年增 20% 的速度持續成長。然而，我們預期投資組合仍將維持健康成長。

Let's move on to the development pipeline starting with the most recent deliveries. The Brooks Crossing office building in Newport News, Virginia, was delivered on time and rent has commenced on the entire 100,000 square feet. This asset is 85% occupied by Fortune 500 company Huntington Ingalls Industries with the remainder leased to the City of Newport News. The Market at Mill Creek near Charleston, South Carolina, was delivered on time and the early returns from the opening of the Lowes Foods were spectacular, with early sales amongst the best in the history of the chain. The center is now 93% leased.

接下來談開發案儲備，先從最新交付的專案開始。位於維吉尼亞州紐波特紐斯（Newport News）的 Brooks Crossing 辦公大樓如期交付，且全棟 100,000 平方英尺已開始計收租金。該資產 85% 由《財富》500 強企業 Huntington Ingalls Industries 承租，其餘則租給紐波特紐斯市政府。位於南卡羅來納州查爾斯頓（Charleston）附近的 Market at Mill Creek 亦如期交付；Lowes Foods 開幕後的初期回報極為亮眼，早期銷售表現名列該連鎖體系歷史最佳之列。該購物中心目前出租率為 93%。

The apartments at 1405 Point, which went from delivery to full occupancy in roughly 12 months, are now 95% occupied. The impressive performance of this project reaffirms our confidence in the entire Harbor Point development.

位於 1405 Point 的公寓自交付至滿租約 12 個月，目前入住率為 95%。該專案的亮眼表現再次強化我們對整體 Harbor Point 開發案的信心。

Construction continues on our adjacent Wills Wharf office building, and despite being several months from delivery, we continue to see robust leasing activity. Assuming final execution of leases in negotiation and letters of intent, the project will be 85% preleased and may achieve full occupancy during 2020. These 2 properties, along with our purchase of the adjacent Thames Street Wharf office building, give us a critical mass of trophy quality properties at Harbor Point on the Baltimore Waterfront. Essentially a high-end city within a city. We expect that the synergy and economy of scale that we can achieve through these 3 assets will lead to significant yield expansion in the years to come. In concert with our partner, the BD Development Group, we intend to continue building out this sought-after location into a world class mixed-use destination over the long term. For a glimpse of our vision for this development, take a look at page 22 in our supplemental.

我們相鄰的 Wills Wharf 辦公大樓仍在持續施工中，儘管距離交付尚有數月，我們仍持續看到強勁的租賃活動。假設目前洽談中的租約與意向書最終得以簽署，該專案將達到 85% 的預租率，並可能於 2020 年期間達成滿租。這兩項資產，加上我們收購相鄰的 Thames Street Wharf 辦公大樓，使我們在巴爾的摩海濱的 Harbor Point 擁有具關鍵規模的頂級地標級資產組合。本質上是一座高端的「城中之城」。我們預期，透過這三項資產所能實現的協同效應與規模經濟，將在未來數年帶來顯著的收益率擴張。我們將與合作夥伴 BD Development Group 攜手，長期持續將此炙手可熱的地點打造為世界級的複合式用途目的地。若想一窺我們對此開發案的願景，請參閱我們補充資料第 22 頁。

The Premier at the Virginia Beach Town Center is 100% leased on the multifamily side with the retail at 75%. The Greenside Apartments in midtown Charlotte continue to lease on track with our projections and stand at 92%. Construction has been completed on Hoffler Place, our Charleston student housing project, and move-ins will commence this weekend. Preleasing has topped 85% for the coming school year which is somewhat stronger than we anticipated. We have also come to preliminary terms with a national convenience retailer which we expect will occupy the vast majority of the ground floor retail space. We believe this retailer will give the facility a tremendous advantage over its peers in attracting students.

維吉尼亞海灘 Town Center 的 Premier 多戶住宅部分已 100% 出租，零售部分為 75%。位於夏洛特市中心（midtown Charlotte）的 Greenside Apartments 持續依照我們的預測進度出租，目前入住率為 92%。我們位於查爾斯頓的學生住宅專案 Hoffler Place 已完工，本週末將開始入住。針對即將到來的學年，預租率已超過 85%，略強於我們原先預期。我們也已與一家全國性便利零售商達成初步條款，預期其將承租一樓零售空間的絕大部分。我們相信該零售商將使本設施在吸引學生方面相較同業具備極大優勢。

As we reported last quarter, the second Charleston student housing project, Summit Place on Meeting Street, remains under construction as we gear up for the fall preleasing season while simultaneously researching how we might best take advantage of the site being located in an opportunity zone. In any event, the project will be open for the fall 2020 semester. We will keep you posted as this situation develops. We remain confident in our underwriting and the long-term value of this asset.

如同我們上季所報告，第二個查爾斯頓學生住宅專案——位於 Meeting Street 的 Summit Place——仍在施工中；我們一方面為秋季預租季做準備，同時也在研究如何最佳利用該基地位於機會區（opportunity zone）的優勢。無論如何，該專案將於 2020 年秋季學期開放。隨著情況發展，我們將持續向各位更新。我們對自身的承作評估（underwriting）以及該資產的長期價值仍具信心。

The final project in our development pipeline, Nexton Square, a lifestyle center where we hold the mezzanine loan and a discounted purchase option, is also in the greater Charleston market. Although final construction completion won't occur until early next year, the first handful of tenants opened this quarter and leasing stands at nearly 80%. Due to the mezzanine structure on this project and the discounted purchase option that we hold, we probably will use some disposition proceeds from the asset sales I mentioned earlier and a 1031 Tax-Free Exchange for this property.

我們開發案儲備中的最後一個專案 Nexton Square，為一座生活風格中心；我們持有其夾層貸款（mezzanine loan）以及折價購買選擇權，同樣位於大查爾斯頓市場。雖然最終完工要到明年初，但本季已有首批租戶開幕，出租率接近 80%。由於本專案的夾層結構以及我們持有的折價購買選擇權，我們很可能會使用先前提到的資產出售所得部分款項，以及針對該資產進行 1031 免稅交換（1031 Tax-Free Exchange）。

With the majority of our pipeline delivered or nearing completion, our team is hard at work underwriting our next generation of development projects. Although deal flow is at an all-time high, we remain committed to maintain our rigorous underwriting standards. This discipline helps to ensure that only the most promising projects are selected for development.

隨著我們的多數開發儲備專案已交付或接近完工，我們團隊正全力投入下一代開發專案的承作評估（underwriting）。儘管案源流量（deal flow）創下歷史新高，我們仍堅持維持嚴謹的承作標準。這項紀律有助於確保只有最具潛力的專案才會被選入開發。

This week we announced the first project in our new pipeline. The $80 million mixed-use development is located in Roswell, Georgia which is a fast-growing area within the Atlanta MSA. Positioned in the heart of a thriving downtown district, the complex named Southern Post will feature 80,000 square feet of office space, 40,000 feet of retail, and 125 apartments along with structured parking. We will be the majority partner in a joint venture with our long-term associates, SJ Collins, and will break ground early next year. We are in negotiations with several office and retail tenants and expect the commercial space to be significantly preleased by that time. Southern Post is indicative of the type of projects that will be the centerpieces of our new pipeline. Mixed-use, urban infill assets in high growth submarkets have been a hallmark of our company for a very long time and the trend towards walkability and live/work/play environments continues to strengthen. We intend to fully capitalize on these opportunities and expect to make additional new project announcements in the coming months.

本週我們宣布新開發儲備中的第一個專案。這項 8,000 萬美元的複合式用途開發案位於喬治亞州 Roswell，屬於亞特蘭大都會統計區（MSA）內快速成長的區域。該綜合體名為 Southern Post，坐落於繁榮的市中心核心地帶，將包含 80,000 平方英尺的辦公空間、40,000 平方英尺的零售空間、125 戶公寓以及結構式停車設施。我們將與長期合作夥伴 SJ Collins 成立合資企業並擔任控股方，預計於明年初動工。我們正與多家辦公與零售租戶洽談，並預期屆時商業空間將有相當比例完成預租。Southern Post 代表了我們新開發儲備中將成為核心代表作的專案類型。位於高成長次級市場的複合式用途、都市填充型資產，長期以來一直是本公司的特色，而市場對步行可達性以及「住/工/玩」環境的趨勢也持續增強。我們將充分把握這些機會，並預期在未來數月宣布更多新專案。

The core portfolio continues to show robust performance. Of particular note is the multifamily performance at the Town Center Virginia Beach. Recently both Encore and Premier Apartments reached full occupancy. Also, the upgrade to the units at the Cosmopolitan apartments continues to receive rave reviews from our tenants. Newly refreshed apartments are leasing at a 10% premium to the same unimproved units. With several new fast casual restaurants, including the region's first Shake Shack, retail services and new to market office tenants arriving over the next several months, Town Center remains a dynamic and growing destination in the region.

核心資產組合持續展現強勁表現。其中值得特別一提的是維吉尼亞海灘 Town Center 的多戶住宅表現。近期 Encore 與 Premier Apartments 皆已達成滿租。此外，Cosmopolitan 公寓的單位升級工程持續獲得租戶高度好評。新近翻新的公寓租金較同類未改善單位溢價 10%。隨著多家新的快速休閒餐廳（fast casual）進駐（包括該地區第一家 Shake Shack）、零售服務以及新進入市場的辦公租戶在未來數月陸續到位，Town Center 仍是區域內充滿活力且持續成長的目的地。

The construction group continues to perform at a very high level. On-time completion of the Brooks Crossing office building and the Market at Mill Creek highlighted the quarter. We also continue to track scheduled completion for Wills Wharf and the Interlock projects in Atlanta. The value of controlling construction of our development properties as well as our mezzanine investment projects cannot be overstated. Offering dependable delivery dates to demanding tenants and development partners gives us a meaningful advantage over our peer group. Similarly, control of the construction process gives us the confidence to pursue the mezzanine lending strategy that has led to significant cash generation, thereby reducing our reliance on the capital markets to fund our portfolio growth.

施工團隊持續維持極高水準的表現。Brooks Crossing 辦公大樓與 Market at Mill Creek 的如期完工成為本季亮點。我們也持續追蹤 Wills Wharf 以及亞特蘭大的 Interlock 專案，確保按計畫完工。掌控我們自有開發資產以及夾層投資專案的施工，其價值再怎麼強調都不為過。能向要求嚴格的租戶與開發合作夥伴提供可靠的交付日期，使我們相較同業具備實質優勢。同樣地，對施工流程的掌控也讓我們有信心推動夾層放款策略；該策略帶來可觀的現金創造能力，從而降低我們對資本市場為資產組合成長提供資金的依賴。

Reliable construction time frames are also a large factor in our team selection by third-party clients on a repeat basis which solidifies the steady fee income that we have enjoyed for a number of years. The ramp-up on several new construction starts have the profit from this division back-weighted towards the second half of the year. Third-party contract backlog stands at $179 million with several new potential engagements in the preconstruction phase.

可靠的施工時程也是第三方客戶反覆選擇我們團隊的重要因素，進一步鞏固了我們多年來享有的穩定費用收入。多個新開工案的加速推進，使該事業部門的利潤更偏向於在下半年實現。第三方承攬合約在手訂單（backlog）為 1.79 億美元，且仍有數個潛在新案正處於施工前期（preconstruction）階段。

Remember, Armada Hoffler is first and foremost an opportunistic real estate company that employs multiple strategies to enhance profitability and create value. These have been our essential tenants for 40 years and investors can count on this to remain our primary focus. As the company's largest equity holder, management will continue to operate a business model that includes a variety of deal structures as well as OP Unit acquisitions, disposition of development projects, at-cost purchase options and stable assets. We are extremely optimistic about the company's prospects for the rest of 2019 as well as our ability to deliver on our promises over a multiyear timeframe. As we begin to look toward 2020 and the number of initiatives that we intend to undertake, feel strongly that our investors will continue to realize great value creation well into the future.

請記住，Armada Hoffler 首先且最重要的是一家機會型不動產公司，運用多元策略以提升獲利能力並創造價值。這些是我們 40 年來的核心信條，投資人可期待這仍將是我們的主要焦點。作為公司最大的股權持有人，管理團隊將持續採行包含多種交易結構的商業模式，包括 OP Unit 收購、開發專案處分、按成本購買選擇權（at-cost purchase options）以及穩定型資產。我們對公司 2019 年剩餘期間的前景，以及在多年期時間框架內履行承諾的能力，感到極為樂觀。隨著我們開始展望 2020 年以及我們計畫推動的多項倡議，我們深信投資人將在未來很長一段時間內持續實現可觀的價值創造。

Now I will turn the call over to Mike.

現在我把電話會議交給 Mike。

Thanks, Lou. Today, I want to cover the highlights of the quarter, thoughts on our balance sheet, and our 2019 guidance.

謝謝，Lou。今天我想重點說明本季亮點、我們對資產負債表的看法，以及我們對 2019 年的指引。

This was a busy quarter. I have a lot to cover today. This morning we reported FFO of $0.27 and normalized FFO of $0.30 per share for the second quarter, which met our expectations. The largest difference between the 2 metrics is the noncash mark to market adjustments relating to our hedging activities.

這是一個忙碌的季度。我今天要涵蓋的內容很多。今天早上我們公布第二季每股 FFO 為 0.27 美元、每股標準化 FFO 為 0.30 美元，符合我們的預期。這兩項指標之間最大的差異在於與我們避險活動相關的非現金按市價評價調整。

Our core operating portfolio occupancy for the second quarter remained strong at 96% with office at 95%, retail at 97% and multifamily at 95%.

我們第二季核心營運投資組合的出租率維持強勁，達 96%；其中辦公為 95%、零售為 97%、多戶住宅為 95%。

Same-store NOI was strong this quarter with all property types positive. This is the fifth consecutive quarter of positive same-store NOI growth. GAAP NOI was positive 6.4% and cash NOI was positive 6%. More significantly, our multifamily same store NOI was positive 21%. The majority of the increase relates to our JHU student housing asset where rents were increased by nearly 15% and higher summer occupancy due to transitioning to 12-month leases. The retail increase includes a bad debt recovery of $200,000, but even with this large item, the metrics are still stellar.

本季同店 NOI 表現強勁，所有物業類型皆為正成長。這是連續第五個季度同店 NOI 成長為正。GAAP NOI 成長 6.4%，現金 NOI 成長 6%。更重要的是，我們多戶住宅同店 NOI 成長達 21%。增幅主要來自我們的 JHU 學生宿舍資產，租金上調近 15%，且因轉為 12 個月租約而在夏季提高入住率。零售的增幅包含 20 萬美元的壞帳回收，但即使扣除這個大項目，相關指標仍然非常亮眼。

The retail releasing spreads were strong again this quarter with cash positive 4.1% and GAAP positive 5.7%. The office releasing spreads are not good, but this metric only includes one tenant. As part of this renewal, we took back valuable ground floor space that we released to Fidelity Investments for substantially more rent which is not reflected in this metric.

本季零售續租價差再次表現強勁，現金口徑為正 4.1%，GAAP 口徑為正 5.7%。辦公續租價差不佳，但此指標僅包含一位租戶。作為此次續約的一部分，我們收回了具價值的一樓空間，並以顯著更高的租金出租給 Fidelity Investments，但這並未反映在此指標中。

We have been active on the acquisition front with 4 new high-quality properties being added to the portfolio this year. Last quarter, One City Center in Durham, which is anchored by Duke University and WeWork, was distributed out of the joint venture and added to our portfolio. During the second quarter, we added 3 large properties to our portfolio. The initial project in our mezzanine program was the 1405 Point Street apartments in Baltimore's Harbor Point. As part of the mezzanine structure, we have an at-cost purchase option for 100% ownership of the building, which can be exercised in 2 phases. We completed the first purchase option for 79% ownership and expect to exercise the second option next year, which will not require any additional capital.

在收購方面，我們相當積極，今年已有 4 項新的高品質物業納入投資組合。上季，位於 Durham 的 One City Center（由杜克大學與 WeWork 作為主力租戶）自合資企業分配出來並納入我們的投資組合。第二季期間，我們又將 3 項大型物業納入投資組合。我們夾層融資計畫的第一個專案是位於巴爾的摩 Harbor Point 的 1405 Point Street 公寓。依夾層結構安排，我們擁有以成本價購買該建物 100% 所有權的選擇權，可分兩階段行使。我們已完成第一階段選擇權，取得 79% 所有權，並預期明年行使第二階段選擇權，且不需要任何額外資本。

In May, we acquired retail centers Virginia Beach, Red Mill Commons and Marketplace at Hilltop. The aggregate purchase price was $105 million, representing a 7.7 cap rate. This acquisition was an OP Unit transaction with the owners receiving $64 million in OP Units. And lastly, we acquired the Thames Street Wharf office building located on Harbor Point in Baltimore. There is a slide about this property on page 21 of the supplemental package. Purchase price was $101 million, representing a 7.1 cap rate. As Lou mentioned, this property is adjacent to our other 2 buildings on Harbor Point. This waterfront Class A office building is 100% leased. Morgan Stanley and Johns Hopkins Medical are the anchors occupying 92% of the building. The leases had an average 7.4 years remaining and include 2.2% annual rent increases. The total acquisition cost of these 4 new properties is approximately $350 million. We believe these properties were acquired for below market value and with the high quality of these assets, adds to our overall net asset value. On the construction front, we reported segment gross profit in the second quarter $1.3 million on revenue of $21.4 million. At the end of the second quarter, the company had a third-party construction backlog of $179 million.

5 月，我們收購了位於 Virginia Beach 的零售中心 Red Mill Commons 與 Marketplace at Hilltop。合計購買價格為 1.05 億美元，對應 7.7% 的資本化率。此收購為 OP Unit 交易，原業主取得 6,400 萬美元的 OP Units。最後，我們收購了位於巴爾的摩 Harbor Point 的 Thames Street Wharf 辦公大樓。補充資料第 21 頁有一張關於該物業的投影片。購買價格為 1.01 億美元，對應 7.1% 的資本化率。如 Lou 所提，該物業緊鄰我們在 Harbor Point 的另外兩棟建物。這棟臨水的 A 級辦公大樓已 100% 出租。Morgan Stanley 與 Johns Hopkins Medical 為主力租戶，合計承租該建物 92% 的面積。租約平均剩餘年期為 7.4 年，並包含每年 2.2% 的租金調升。這 4 項新物業的總收購成本約為 3.5 億美元。我們認為這些物業的收購價格低於市價，且資產品質高，可提升我們整體的淨資產價值。在營造業務方面，我們第二季營運分部毛利為 130 萬美元，營收為 2,140 萬美元。截至第二季末，公司第三方工程在手訂單為 1.79 億美元。

Now for an update on our mezzanine program. The Decatur Whole Foods center loan was paid off last week as expected. This was a very successful project for all involved. The developer sold the asset at an attractive cap rate and we made a profit of $3.4 million on a loan that was outstanding for 26 months. Interlock projects in Atlanta began construction beginning of the year with activity now well underway. We anticipate fully funding these loans by the end of the third quarter and expect the balances to remain outstanding well into 2021. We are still expecting the Annapolis Junction loan to be paid off in the fourth quarter. Our partner is currently evaluating whether to market the property for sale or hold for the long term and refinance it. If the property is sold above a certain sales price, we could realize significant additional fees from this transaction.

接著更新我們的夾層融資計畫。如預期，Decatur Whole Foods center 貸款已於上週清償。這對所有參與方而言都是非常成功的專案。開發商以具吸引力的資本化率出售該資產，而我們在一筆存續 26 個月的貸款上獲利 340 萬美元。亞特蘭大的 Interlock 專案於年初開始施工，目前進度已全面展開。我們預期在第三季末前完成這些貸款的全額撥款，並預期餘額將持續未清償至 2021 年。我們仍預期 Annapolis Junction 貸款將於第四季清償。我們的合作夥伴目前正在評估是將該物業推向市場出售，或長期持有並進行再融資。若該物業以高於某一售價門檻出售，我們可能可自此交易實現可觀的額外費用收入。

We expect the total balance outstanding of this mezzanine program to be in the $150 million range, but may be temporarily higher depending on the timing of the Annapolis Junction payoff.

我們預期此夾層融資計畫的未償總餘額將落在 1.5 億美元左右，但依 Annapolis Junction 清償時點而定，可能會在短期內暫時更高。

Now turning to our balance sheet. Over the past quarter, we have continued to make good progress on our 2019 capital plan. Our 2019 guidance issued in February consisted of the following to achieve our leverage targets for the year. First, the disposition of a grocery-anchored shopping center for expected proceeds of approximately $25 million, which will be used to pay down debt. This month we executed a purchase and sale agreement for sale of the Lightfoot Harris Teeter for $30 million, representing a 5.8 cap rate. We anticipate closing during the third quarter.

接著談我們的資產負債表。過去一季，我們持續在 2019 年資本計畫上取得良好進展。我們在 2 月發布的 2019 年指引包含以下事項，以達成今年的槓桿目標。第一，處分一座以超市為主力店的購物中心，預期可取得約 2,500 萬美元的處分款項，用於償還債務。本月我們已簽署買賣協議，將 Lightfoot Harris Teeter 以 3,000 萬美元出售，對應 5.8% 的資本化率。我們預期將於第三季完成交割。

Second, we expect the Decatur Whole Foods center and Annapolis Junction loans to be paid off this year. The expected payments are approximately $60 million. As I just discussed, this is still the expectation. And third, we anticipate raising $50 million through the ATM program in 2019. Taking advantage of favorable market conditions during the quarter, we raised $7.6 million at an average price of $16.89 and $39 million year to date at an average price of $15.20. Early next week we will be filing an increase of $75 million to the ATM program. We think it's prudent to have optionality and flexibility to take advantage of market conditions.

第二，我們預期 Decatur Whole Foods center 與 Annapolis Junction 貸款將於今年清償。預期回收款項約為 6,000 萬美元。如我剛才所述，這仍是我們的預期。第三，我們預期 2019 年透過 ATM 計畫募集 5,000 萬美元。本季把握有利的市場條件，我們以平均價格 16.89 美元募集 760 萬美元；年初至今則以平均價格 15.20 美元募集 3,900 萬美元。下週初我們將申報把 ATM 計畫額度增加 7,500 萬美元。我們認為保有選擇性與彈性，以便把握市場條件，是審慎之舉。

During the quarter, the acquired the Virginia Beach retail centers which added to equity through issuing $64 million in OP Units which lowered our overall leverage ratios. In addition, we raised $63 million through our first preferred equity issuance of which $30 million was used to fund the Thames Street Wharf acquisition. We decided it was a good time to add preferred equity to our capital stack. We think preferred is a good source of capital while limited to 10% or so of our equity. We now have permanent capital at a fixed cost of 6.75% per year which we believe will be less expensive than our common over time. We also have a number of new well-respected institutional investors who invested in the company for the first time.

本季我們收購了 Virginia Beach 的零售中心，透過發行 6,400 萬美元的 OP Units 增加權益資本，並降低了整體槓桿比率。此外，我們透過首次發行優先股權融資募集 6,300 萬美元，其中 3,000 萬美元用於資助 Thames Street Wharf 的收購。我們認為現在是將優先股權納入資本結構的好時機。我們認為在優先股權占我們股權約 10% 或以下的前提下，優先股權是良好的資金來源。我們現在擁有固定成本為每年 6.75% 的永久資本，我們相信長期而言其成本將低於普通股。我們也迎來多位新的、備受尊敬的機構投資人首次投資本公司。

As Lou said, we are evaluating a number of new development opportunities. The first of these to be announced is Southern Post in Roswell, Georgia. We expect to close on the land this year with construction beginning in the first quarter of 2020. We do not expect any of the projects to break ground until next year, and therefore, we'll require little capital investments in 2019.

正如 Lou 所說，我們正在評估多項新的開發機會。其中第一個將對外宣布的是位於喬治亞州羅斯威爾（Roswell, Georgia）的 Southern Post。我們預期今年完成土地交割，並於 2020 年第一季開始施工。我們預期這些專案都要到明年才會動工，因此 2019 年所需的資本投入將很少。

We will continue to manage the balance sheet and leverage as we have in the past with core debt to EBITDA in the mid 6x range. We added several new metrics in the supplemental package reflecting preferred equity including additional leverage metrics and coverage ratios. Our calculations of core debt to core EBITDA will not include the preferred debt as we consider it equity. At the end of the quarter, we had total outstanding debt of $956 million including $122 million outstanding under the $150 million revolving credit facility.

我們將一如以往持續管理資產負債表與槓桿水準，核心負債對 EBITDA 維持在約 6 倍中段。我們在補充資料包中新增了數項指標以反映優先股權（preferred equity），包括額外的槓桿指標與覆蓋比率。我們計算核心負債對核心 EBITDA 時，不會納入優先股債務，因為我們將其視為權益。截至本季末，我們未償還總債務為 9.56 億美元，其中包括在 1.5 億美元循環信用額度下已動用的 1.22 億美元。

Now I'd like to go through the details of the updated 2019 guidance. The assumptions of the guidance are the sale of the Lightfoot Harris Teeter center for anticipated proceeds of approximately $28 million in the third quarter; the Annapolis Junction loan being paid off in the fourth quarter, raising an additional $11 million by yearend for a total of $50 million through the ATM program in 2019 assuming favorable market conditions. Interest expense is calculated based on the forward LIBOR curve, which forecasts LIBOR at 1.9% by year-end.

接下來我想說明更新後的 2019 年財測細節。財測假設包括：第三季出售 Lightfoot Harris Teeter 購物中心，預期所得約 2,800 萬美元；Annapolis Junction 貸款於第四季償還；並假設市場狀況有利，透過 ATM 計畫於 2019 年年底前再募集 1,100 萬美元，使 2019 年透過 ATM 計畫合計達 5,000 萬美元。利息費用係依據遠期 LIBOR 曲線計算，該曲線預測年底 LIBOR 為 1.9%。

Our updated 2019 normalized FFO per share guidance of $1.15 to $1.19 per share is predicated on the following updated components. Total NOI in the $101.6 million to $102.5 million range; third-party construction gross profit in the $4.9 million to $5.7 million range; interest income from mezzanine financing program in the $15.5 million to $16.1 million range, which is net of $5.4 million of interest expense and also includes $4.5 million recognized in the amortization of the Annapolis Junction apartments purchase option sale; general administrative expenses in the $11.8 million to $12.2 million range. G&A was increased this quarter due to adding new employees including the new officers Lou discussed. Interest expense in the $25 million to $26 million range, which does not include interest expense related to the mezz program; and 72 million weighted shares outstanding. With an expected 14% increase in earnings this year, our focus for 2020 will be concentrating on enhancing portfolio quality and increasing NAV.

我們更新後的 2019 年每股標準化 FFO 財測為每股 1.15 至 1.19 美元，係基於以下更新後的組成項目。總 NOI 介於 1.016 億至 1.025 億美元；第三方營建毛利介於 490 萬至 570 萬美元；夾層融資計畫（mezzanine financing program）的利息收入介於 1,550 萬至 1,610 萬美元（已扣除 540 萬美元利息費用，並包含因 Annapolis Junction 公寓購買選擇權出售之攤銷而認列的 450 萬美元）；一般及行政費用介於 1,180 萬至 1,220 萬美元。本季 G&A 增加，係因新增員工，包括 Lou 提到的新任主管。利息費用介於 2,500 萬至 2,600 萬美元（不包含與 mezz 計畫相關的利息費用）；加權流通股數為 7,200 萬股。在今年預期獲利成長 14% 的情況下，我們 2020 年的重點將放在提升投資組合品質並提高 NAV。

Now I will turn the call back to Lou.

現在我把電話交回給 Lou。

Thanks, Mike. Operator, we would now like to begin our question-and-answer session.

謝謝，Mike。接線員，我們現在想開始問答環節。

(Operator Instructions) Our first question comes from David Rodgers with Baird.

(接線員指示) 我們的第一個問題來自 Baird 的 David Rodgers。

Lou, wanted to start maybe on a high-level perspective at the macro level regarding defense in southern Virginia. Obviously that tide has now turned maybe back in your favor. Your portfolio is not completely tied to defense obviously, but just kind of the activity that you're seeing. Are you starting to see more of a pickup just in your region overall?

Lou，我想先從較高層次、宏觀角度談談維吉尼亞州南部的國防相關情勢。顯然這股趨勢現在可能已經轉向對你們有利。你們的投資組合當然不完全與國防綁在一起，但就你們所看到的活動而言，你們是否開始看到整個區域的景氣回升、活動增加？

Thanks, Dave. Yes. We are seeing a lot more activity in the region. It doesn't affect us directly as you mentioned, but we do see that it increases in the restaurants and retailers. I think that the region will continue to grow and hopefully take advantage of this little surge. But we're seeing a lot of positive results out there as a result of the buildup.

謝謝，Dave。是的。我們確實看到這個區域的活動明顯增加。如你所提，這不會直接影響我們，但我們確實看到餐廳與零售商的需求增加。我認為該區域將持續成長，並希望能把握這波小幅的上升動能。由於相關擴張帶動，我們在市場上看到許多正面的成果。

Good to hear. Wanted to move onto WeWork. Obviously now with the move-in in Durham, they move into kind of your top tenant list for office. You've got another lease or 2 pending with them as well for new construction projects. So can you talk about kind of your exposure there, whether you'd be comfortable adding even more and how you just kind of look at any tenant in the office space with regard to overall exposure?

很高興聽到。我想轉到 WeWork。顯然隨著他們在達勒姆（Durham）進駐，他們也進入你們辦公室類別的主要租戶名單。你們也還有 1 到 2 份與他們相關的新建案租約正在洽談中。所以你能談談你們在這方面的曝險、是否會願意再增加，以及你們如何看待辦公室租戶在整體曝險上的配置嗎？

Sure. With regard to WeWork in particular, we share the jury is out kind of attitude that the market has generally. We don't want to be too much vested in any particular tenant, particularly one that doesn't have the kind of long-term track record in credit that we all vie for. We most probably will end up having the Durham project up for sale, partially due to the fact that we don't want to have WeWork become one of our top tenants. At the same time though, we have no reason to believe they won't be successful. The space in Durham is nearly 100% leased, according to their numbers looks fantastic, and activity is really strong. But through an abundance of caution, we really don't what to get too well entrenched with that particular tenant

當然。就 WeWork 而言，我們也抱持著市場普遍那種「仍待觀察」的態度。我們不希望在任何單一租戶上投入過多，尤其是對於信用長期紀錄尚不如我們所追求者那般成熟的租戶。我們很可能會把達勒姆專案拿去出售，部分原因是我們不希望 WeWork 成為我們的主要租戶之一。但同時，我們也沒有理由認為他們不會成功。依他們提供的數據，達勒姆的空間幾乎已 100% 出租，表現非常亮眼，市場活動也很強勁。但出於更審慎的考量，我們確實不希望與該租戶綁得太深。

Dave, the other thing we're looking at on financings and certainly the feedback we're hearing from the lenders, that they're fine with WeWork as long as it's 25% or lower of the building which is something that we'll be looking at. We've also been keeping track of what's going on, on sales and there was a building in D.C. that was 100% leased by WeWork that recently sold for around $1,000 a foot. So certainly, the market is still positive, I guess at least on a cap rate basis.

Dave，另外我們在融資方面也在觀察，且我們從放款機構那邊聽到的回饋是：只要 WeWork 佔該棟建物的比例在 25% 或以下，他們就可以接受，這也是我們會關注的點。我們也一直在追蹤交易市場的情況；華盛頓特區有一棟由 WeWork 100% 承租的建物，近期以每平方英尺約 1,000 美元成交。所以可以說市場仍然偏正面，至少從資本化率（cap rate）的角度來看是如此。

Appreciate all that detail, guys. You talked about 2020 being kind of a mid-single digit FFO growth year. Lou, wanted to ask about the Dick's lease and that's still kind of outstanding. What's your plan for the Dick's space and have you come to a resolution on that lease?

感謝你們提供這麼多細節。你們提到 2020 年會是 FFO 中個位數成長的一年。Lou，我想問一下 Dick's 的租約，這件事似乎仍未完全定案。你們對 Dick's 的空間有什麼計畫？那份租約有達成解決方案了嗎？

Sure. As we had anticipated and somewhat hoped for, Dick's will not be renewing here at Town Center. So we'll get the space back at the first of the year. As I mentioned last quarter, this is a great opportunity for us to do something unique in Town Center that we haven't been able to do. It's kind of like 2 ends of a barbell. On one side we can convert the space to support style back office. We don't have an offering like that in Town Center right now because of the rent structure being as high as it is. So that could add some good quality office space and it certainly doesn't hurt the center to have a few hundred more daytime workers. At the other end of the spectrum, we're in conversations with a number of the experiential entertainment concepts that are out there now which also could bring another type of user to the Town Center. So we're going to take our time and evaluate all the options. With regard to 2020, the project is going to be under, one way or another it's going to be under redevelopment, so we don't expect any income coming from Dick's or coming from that building for 2020 which is somewhat a little greater than a penny drag on earnings.

當然。如我們先前預期、也某種程度上希望的，Dick's 將不會在 Town Center 續租。因此我們會在明年年初收回該空間。如我上季提到的，這對我們而言是個很好的機會，能在 Town Center 做一些過去無法做的獨特規劃。這有點像槓鈴的兩端。一端我們可以把空間改造成支援型後勤辦公（back office）。由於租金結構偏高，我們目前在 Town Center 還沒有這類產品。因此這可能增加一些高品質的辦公空間，而且多幾百位日間上班族進駐，對該中心也沒有壞處。在另一端，我們正與多個目前市場上的體驗式娛樂（experiential entertainment）概念業者洽談，這也可能為 Town Center 帶來另一種使用者。因此我們會放慢腳步，評估所有選項。至於 2020 年，無論採取哪種方案，該建物都將進入改造/重建（redevelopment）階段，因此我們預期 2020 年不會有來自 Dick's 或該建物的任何收入，對獲利的拖累略高於每股 0.01 美元。

Appreciate that. Then Mike, last question for me, on the guidance change with regard to NOI, how much of that was acquisition/disposition timing and volume relative to your expectations versus how much was better same store core portfolio performance than anticipated?

感謝。那麼 Mike，我最後一個問題是，關於 NOI 指引的變動，其中有多少是因收購/處分的時點與規模相較於你們原先預期所致，另外又有多少是同店核心投資組合表現優於預期所帶來的？

Certainly, the biggest piece is the acquisitions. The Thames Street was probably like $1.5 million -- I'm sorry, $1.5 million in earnings, NOI in the $2.5 million range. And obviously the 2 retail centers are adding. Point Street will add as the year goes on. Wasn't as much in that quarter as it ramps up.

當然，最大的一塊是收購。Thames Street 大概是 150 萬美元——抱歉，是 150 萬美元的獲利，NOI 約在 250 萬美元的區間。而且很明顯，那兩個零售中心也在貢獻增量。Point Street 會隨著年度推進而增加貢獻。那一季的貢獻沒有那麼多，因為還在爬坡。

Our next question comes from John Guinee with Stifel.

下一個問題來自 Stifel 的 John Guinee。

You guys have been busy. Roswell, Southern Point, I was actually in downtown Roswell for a while just a few months ago. When you are looking at 80,000 square feet of office, 40,000 of retail and I guess maybe 900 square feet per unit for the multifamily, it looks to me like you come out at about $350 a square foot. And that's a big number in a market, particularly for the multifamily which is a garden-oriented market. Does that strike you as being top picking the price point for Roswell?

你們最近很忙。Roswell、Southern Point，我其實幾個月前才在 Roswell 市中心待過一陣子。當你們看 8 萬平方英尺的辦公、4 萬平方英尺的零售，另外多戶住宅我猜每戶大概 900 平方英尺，照我算下來大概是每平方英尺 350 美元。在這個市場這是個很大的數字，尤其多戶住宅屬於偏花園式（garden-oriented）的市場。你覺得 Roswell 的定價是不是已經買在高點了？

Thanks, John. Remember, there's also structured parking in that project, so that kind of skews the numbers a bit higher. We expect the property is going to trade at the top of the market, but not significantly above what's in the surrounding market. It's a great small tenant market. If you were down at the downtown, you'd see all the activity there, particularly when they close the streets and thousands of people come for evening entertainment. So we're comfortable with the rents we're projecting. Like I say, they're at the high end of the market, but not meaningfully so.

謝謝你，John。請記得，那個案子還包含立體停車場（structured parking），所以會把數字拉得稍微高一些。我們預期這個資產會在市場高端成交，但不會顯著高於周邊市場的水準。那裡是很棒的小型租戶市場。如果你在市中心，你會看到那裡的各種活動，尤其是他們封街、成千上萬的人來參加晚間娛樂活動的時候。所以我們對我們預估的租金很有信心。如我所說，租金是在市場高端，但並沒有高得很誇張。

Okay. Then just a little bit more on your development/redevelopment pipeline. You mentioned that you will acquire Newton Square but you're going to put Durham up for sale next year. Is that correct?

好的。那再多問一點你們的開發/再開發管線。你提到你們會收購 Newton Square，但明年會把 Durham 拿去出售。是這樣嗎？

Yes.

是的。

And then the next question is, what do you think you do with the student housing in Charleston? Can you guys get out at your basis sometimes soon?

那下一個問題是，你們打算怎麼處理查爾斯頓（Charleston）的學生住宅？你們有機會在不久之後以成本（basis）退出嗎？

To your first question, like I said, the review that our Chief Investment Officer and President of Asset Management are doing is not complete yet. But as Mike mentioned and I seconded, most probably the Durham high-rise is going to be on that list. I believe it's going to trade as a trophy asset would. The Nexton Square, the intent would be one of the other sale candidates that we develop will be -- Nexton will be a 1031 Exchange recipient of those proceeds. And regarding Charleston, yes, I'm comfortable we would be able to get out for our basis, but we're not ready to give up the fight at this point. We're strong believers in that market, we're seeing great activity at the project that is open. Really want to go through this school year. Like I mentioned earlier, we're going to kick off the preleasing efforts here I guess it's next month and see how the building is received. That's a fantastic product. So we're not in a mode to simply cut our losses or come out even. We're still happy to own it long-term, same basis that we created it on, and I think we are only going to trade if it turns out that the opportunity zone funds have an appetite to get into a project such as that at a bit of a premium to our cost.

先回答第一個問題，如我所說，我們的投資長與資產管理總裁正在做的檢視還沒完成。但如 Mike 提到、我也附議，Durham 的高樓案很可能會在那份名單上。我相信它會像獎盃資產（trophy asset）那樣成交。至於 Nexton Square，我們的意圖是：我們開發的其他待售標的之一——Nexton——會作為 1031 交換的承接標的，來承接那些出售所得。至於 Charleston，是的，我有信心我們可以以成本退出，但我們目前還不打算放棄努力。我們非常看好那個市場，也看到已開放的案子有很好的動能。我們真的想先走完這個學年。如我先前提到的，我們將在我想是下個月啟動預租（preleasing）工作，看看市場對這棟樓的接受度。那是非常棒的產品。所以我們不是那種只想認賠或打平就退出的狀態。我們仍然樂於長期持有，以我們打造它時的同一個成本基礎來持有；我認為我們只有在機會區基金（opportunity zone funds）對這類案子有興趣、並願意以略高於我們成本的溢價進場時，才會考慮交易。

Great. Then last question, a little bit surprised to see that you were booking the loan modification fees while you've still got half of your original, or all of your debt, out on Annapolis Junction. Is there any chance that nothing happens with that deal and you continue to have a mezz debt position well into 2020?

很好。那最後一個問題：我有點意外看到你們在 Annapolis Junction 那筆案子上，明明還有一半的原始債權、或甚至全部的債務部位仍在，卻在認列貸款修改費用。有沒有可能那筆交易最後什麼都沒發生，而你們的夾層債（mezz）部位一路持有到 2020 年很後面？

So John, what we are booking is the amortization of the purchase option sale that we sold last year, last November for $5 million. That's what's being amortized. If the sale, if he sells it and it goes over a certain amount, we can make additional fees, but we won't recognize that until we know that the sale is going to happen if it does.

所以 John，我們現在入帳的是我們去年（去年 11 月）以 500 萬美元賣出的購買選擇權出售（purchase option sale）的攤銷。攤銷的就是那個。如果他把資產賣掉且成交價超過某個門檻，我們還可能取得額外費用，但在我們確定出售會發生之前（如果真的會發生），我們不會認列那部分。

Yes, and those fees are not in guidance. But either way, John, we're feeling really good about the project. It looks fantastic, it is the best product in that little submarket, and it's leasing well. So if it turns out on his refinance efforts that we stay in for a piece, we'd be happy to do so. So we're counting it as a win in either regard.

是的，而且那些費用沒有納入指引。但不管怎樣，John，我們對這個案子感覺非常好。它看起來非常棒，是那個小型次市場裡最好的產品，而且出租狀況也很好。所以如果他在再融資（refinance）的努力之下，最後我們仍保留一部分部位，我們也很樂意。因此不論結果如何，我們都把它視為一個勝利。

Thank you, John. I wanted to mention something else I didn't on Dave's question earlier with regard to what's going on in the market here in South Hampton Rhodes. I neglected to mention what's happening over on the peninsula and specifically Newport News. I mentioned the building that we opened at 100% full. What I didn't mention was the great activity at the Liberty Apartments. That project, there's been a considerable uptick in activity at the shipyard with the 2-carrier deal that people probably have read about. That, the Liberty Apartments have been getting some good rent increases as well as full occupancy for the last several months, so we're very pleased about that. We've also, Newport News was the recipient of a new $30 million HUD grant to continue their redevelopment of downtown and we hope to continue expanding our relationship with them. Next question?

謝謝你，John。我想補充一點，這是我剛才在回答 Dave 的問題、談到南漢普頓羅茲（South Hampton Rhodes）市場狀況時沒有提到的。我忽略了半島那邊、特別是 Newport News 的情況。我提到我們有一棟開幕時就 100% 滿租的建物。我沒提到的是 Liberty Apartments 的強勁動能。那個案子，因為大家可能讀過的「兩艘航母」合約，造船廠那邊的活動明顯升溫。因此 Liberty Apartments 過去幾個月不但滿租，租金也有不錯的調升，我們對此非常滿意。另外，Newport News 也獲得一筆新的 3,000 萬美元 HUD 補助，用於持續推動市中心再開發，我們也希望能持續擴大與他們的合作關係。下一個問題？

Our next question comes from Rob Stevenson with Janney.

下一個問題來自 Janney 的 Rob Stevenson。

Lou, you normally don't sell your public/private partnership assets. Does selling the Durham project impact your ability to do future deals with Duke?

Lou，你通常不會出售你們的公私合夥（public/private partnership）資產。出售 Durham 專案會影響你們未來與 Duke 進行交易的能力嗎？

I don't believe so. Duke is in the building at a market rent. We've succeeded in meeting their goals for the facility including putting a centerpiece into downtown Durham. We're hopeful that we can continue the relationship. They do have a number of new initiatives although they are a bit longer term, where we hope to be involved. So no, I feel good about -- we feel good about the building irrespective of whether we keep it or we end up transacting on it.

我不這麼認為。Duke 以市場租金在那棟樓裡承租。我們成功達成他們對該設施的目標，包括在 Durham 市中心打造一個地標性核心。我們希望能延續這段合作關係。他們確實有一些新的計畫，雖然時間軸較長期，我們希望能參與其中。所以不會，我對此很有信心——不論我們最後是持有這棟樓，或是最終把它交易出去，我們都對這棟樓的價值與表現感到很踏實。

Okay. Then Mike, does the ATM issuance at the back half of the year hold even if you sell all the assets that you guys are thinking about? Or is that variable depending on what the asset sales are?

好的。那麼 Mike，即使你們把正在考慮的資產全部出售，下半年 ATM 發行的規劃仍然成立嗎？還是會視資產出售的情況而變動？

It's going to be variable depending on the market. Generally, if the stock is trading well, we'll take advantage of it. If not, then we won't. The other thing is, we don't think that we're going to be bringing in that capital until 2020, by the time we go through the process evaluating the projects, getting them on the market and actually closing.

這會視市場狀況而變動。一般來說，如果股價交易表現良好，我們就會把握機會。如果不佳，那我們就不會。另外一點是，我們認為在 2020 年之前不會引入那筆資金，因為要走完評估專案、把它們推向市場並實際完成交割的流程。

Is there anything held for sale today?

目前有任何資產被列為待售嗎？

The only thing is the Lightfoot Marketplace. We've got this purchase and sale agreement, the deposit went hard on that last week.

唯一的是 Lightfoot Marketplace。我們已經有這份買賣協議，上週那筆訂金已經轉為不可退。

Okay. Then following up on Dave's question, you have just under 12% of your retail rent rolling next year. Other than the Dick's, is there any material likely or known non-renewals? And any color on other assets where you might have redevelopment plans?

了解。那接著追問 Dave 的問題，你們明年將有略低於 12% 的零售租金到期（續租/換約）。除了 Dick's 之外，是否有任何可能或已知的重大不續租？另外，對於其他你們可能有重建/改造計畫的資產，能否提供一些說明？

I don't think so at this time. This is one of those be careful what you ask for. We were hoping to get the Dick's building back and now we got it, so we'll figure out how best to utilize it. I've said in the past we're hopeful that we can get a Bed Bath & Beyond back or 2, but that does not look like it's going to happen. We have a few things coming up. We have 3 PetSmarts coming up, another Bed Bath & Beyond. Nothing of any real materiality at this point. We're expecting that they are going to renew, but these are small enough and in centers that are doing great sales, so if they don't renew, feel really good about what would happen in place. So no, I think Dick's was the only thing of any size that gives us concern right now. PetSmart, we're keeping a close eye on. With the IPO of Chewy, they are somewhat flush with cash. I would expect in the future that from everything that I've read and seen, that they may be downsizing but keeping the bricks and mortar. But that remains to be seen.

目前我不這麼認為。這有點像是「小心你問什麼」。我們原本希望把 Dick's 那棟建物收回來，現在確實拿回來了，所以我們會想辦法找出最佳的使用方式。我過去也提過，我們希望能收回一到兩家 Bed Bath & Beyond，但看起來不太可能發生。我們接下來有幾件事。有 3 家 PetSmart 到期，還有另一家 Bed Bath & Beyond。目前沒有任何真正具重大性的項目。我們預期他們會續租，但這些店面規模夠小，而且所在的商場銷售表現很好，所以即使不續租，我們也很有信心替代方案會很不錯。所以沒有，我認為 Dick's 是目前唯一規模較大、讓我們擔心的項目。PetSmart 我們會密切關注。隨著 Chewy 的 IPO，他們手上現金相對充裕。依我讀到與看到的資訊，我預期未來他們可能會縮小規模，但仍會保留實體門市。不過這仍有待觀察。

Okay. Then last one for me. Looking at the mezz program, how attractive are deals for you guys without a purchase option? And how are you sort of weighing doing deals that are just straight mezz lending versus the lend to own?

好的。那我最後一個問題。就夾層（mezz）計畫來看，對你們而言，沒有購買選擇權的案子吸引力如何？你們如何權衡純粹做夾層放款，與「放款以取得所有權（lend-to-own）」這類交易？

A couple of things on that that I want to reiterate. One, we're not looking to expand the program. It's a great line of business for us with partners that we know and trust. Secondly, we look at all of those projects as if we're going to own them. And the critical piece for us is whether or not we can essentially get the lion's share of the economics through our participation. And that can manifest itself in a couple of different ways. Where the product is going to trade at something substantially below our cost of capital, then a discount of purchase option won't work because that won't be fair to our partner. So they're going to be free to sell those on the open market and our participation will be simply in getting the mezz interest. Where it is a product that we feel comfortable with the return on cost and where that trade value would be, that's where we negotiate the discounted purchase option with the intent of bringing it on balance sheet. We're comfortable in either place. One because of the real estate that we're underwriting. We underwrite these just as if we were going to own them. And two, because of the strength and expertise of our partners. I hope that answers your question.

這裡有幾點我想再強調。第一，我們不打算擴大這個計畫。這對我們而言是一條很好的業務線，合作夥伴也都是我們認識且信任的。第二，我們看待所有這些專案時，都會以「我們將會持有/擁有它們」的角度來評估。對我們而言關鍵在於，我們是否能透過參與取得大部分的經濟利益。而這可以用幾種不同方式呈現。如果該產品的交易價格將顯著低於我們的資金成本，那麼折價購買選擇權就行不通，因為那對我們的合作夥伴不公平。因此他們可以自由在公開市場出售，而我們的參與就只是取得夾層利息。若是我們對成本報酬率（return on cost）以及可能的交易價值感到安心的產品，我們就會協商折價購買選擇權，並以把它納入資產負債表為目的。兩種情況我們都可以接受。第一是因為我們承作/審核的房地產本身。我們承作這些案子時，就像我們將要持有它們一樣來做承作（underwrite）。第二是因為我們合作夥伴的實力與專業。希望這回答了你的問題。

Our next question comes from Jamie Feldman with Bank of America.

下一個問題來自美國銀行（Bank of America）的 Jamie Feldman。

Great. I noticed the negative mark to market or leasing spreads on the office portfolio in the quarter. Can you just talk about what drove that and then just going forward, how do you think about the mark to market of your office assets?

很好。我注意到本季辦公室投資組合的按市價調整（mark-to-market）或租賃價差（leasing spreads）為負。你能談談是什麼原因造成的嗎？另外往前看，你們如何看待辦公室資產的按市價調整？

Sure. As Mike mentioned in that, Jamie, there is only one tenant in that pool. And that was basically the renewal of the Art Institute space. It's a 5-year renewal where part of the negotiation was getting back some valuable ground floor space that they had which we turned around and leased to Fidelity Investments at I want to say about a 75% rent increase to the rate that AI was paying. If I put it all together, the entire transaction was positive on a GAAP basis. The other piece of that puzzle is on the AI extension, we spent somewhere in the $3.00 a foot range on that. And so the choice was not to renew and spend considerably more dollars for higher rent on that upstairs space. So that transaction in itself is mentally positive for us. It's just that the metric can't show all that. With regard to the office spreads, it's mainly those are here at Town Center. What we've seen on the larger tenants is that the rents have escalated after a 10 or 15-year period somewhat above the current market. Not terribly so. And so when we renew, we're typically positive on a GAAP basis and slightly negative on a cash basis. But again, not materially so.

當然。如 Mike 提到的，Jamie，那個組合裡只有一個租戶。基本上是 Art Institute 空間的續約。這是一份 5 年期續約，談判的一部分是收回他們占用的一些很有價值的一樓空間；我們隨即把那部分租給 Fidelity Investments，我記得租金比 AI 原本支付的水準提高了大約 75%。如果把整體合在一起看，整筆交易在 GAAP 基礎上是正面的。另一個因素是，在 AI 的延長租約上，我們投入了每平方英尺約 3.00 美元左右的支出。因此當時的選擇是：不續租，然後為了樓上空間支付更高租金並投入更多資本支出。所以就這筆交易本身，我們在心理上是正向看待的。只是那個指標無法把這些都呈現出來。至於辦公室租賃價差，主要發生在 Town Center 這裡。我們看到較大型租戶的租金在 10 或 15 年後的調升幅度，會略高於目前市場水準。但也不算太離譜。因此在續約時，我們通常在 GAAP 基礎上是正的，但在現金基礎上略為負。不過同樣地，並不具重大性。

Okay. And then just bigger picture you continue to throw your weight in Baltimore. I mean is that, as you think about sales for next year, is that a market you'd be considering shrinking down either JVs or sales? Or do you actually like growing your position there?

好的。再從更宏觀的角度，你們持續加碼在巴爾的摩（Baltimore）。我的意思是，當你們思考明年的出售計畫時，這會是你們考慮透過合資（JV）或出售來縮減曝險的市場嗎？還是你們其實想在那裡擴大部位？

We really like our position there. And I appreciate the question. I want to try and explain this in a little bit more detail. The issues facing downtown Baltimore are well documented and they are pretty much like the issues facing a lot of inner cities in our country. I couldn't really comment on how that's going to turn out. We know a lot of great people in Baltimore that are passionate about their city and are determined to get it in the right direction and I wouldn't bet against them. But I am qualified to talk about the Inner Harbor East and Harbor Point. We've had a presence there since 1995. We've built what approaches $1.5 billion worth of real estate over the last quarter century. I can tell you that the 7 hotels that we've built, including the Four Seasons in the headquarters Marriott, are all growing on a rev par basis. I can tell you that the over a million square feet of office space that we built commands the highest rents and has the least amount of vacancy in the entire region. I can tell you that the 4 apartment buildings that we've built are stabilized, full, growing and renewal rates are approaching $3.00 a square foot. We feel very good about what's going on there at the Inner Harbor and Harbor Point. We intend to keep building it out. 25 years of growth we think establishes a really nice trend and we intend to be a part of that trend over the long haul.

我們非常喜歡我們在那裡的布局。也感謝你的提問。我想試著更詳細地解釋一下。巴爾的摩市中心所面臨的問題早有充分記錄，基本上也和我們國內許多內城所面臨的問題相似。我其實無法評論那會如何發展。我們在巴爾的摩認識很多很棒的人，他們對自己的城市充滿熱情，並決心把城市帶向正確的方向；我不會看衰他們。但我有資格談談內港東區（Inner Harbor East）和港點（Harbor Point）。我們自1995年起就在那裡有據點。在過去四分之一個世紀裡，我們已開發建造了接近15億美元的房地產。我可以告訴你，我們建造的7家飯店（包括四季酒店以及總部萬豪酒店）在RevPAR（每間可供出租客房收入）基礎上都在成長。我也可以告訴你，我們建造的超過100萬平方英尺的辦公空間，租金為全區最高、空置率為全區最低。我還可以告訴你，我們建造的4棟公寓大樓已穩定營運、滿租、持續成長，續租租金漲幅接近每平方英尺3.00美元。我們對內港與港點目前的發展非常有信心。我們打算持續把它建設完成。我們認為25年的成長已建立起非常良好的趨勢，而我們打算長期參與並成為這個趨勢的一部分。

Would you bring in capital partners though to hedge your interest a little bit? Or no, you think this will all be 100% owned as you grow?

不過你們會引入資本合作夥伴來稍微對沖一下你們的權益嗎？還是不會，你認為隨著成長這些都會維持100%持有？

Right now, it's 100% owned. And again, if it's advantageous to us, we can bring in a capital partner. A lot will depend on the pace of the remaining pieces of the puzzle to develop with our partner there. But with the way things are trading there, I don't think it will be much of an issue to bring in a partner. It's just a matter of whether we want to give up some of the upside. But like I said, we've seen it over the last 25 years, we don't see it stopping. We're seeing great activity on the Wills Wharf project that we're building now and we know that there is a few large tenants looking to relocate in the market in future buildings. The only thing that gives me a little bit of concern is that a lot of other people including Avalon Bay have discovered this gem and I'm concerned about people piling in more multifamily. But I believe our location trumps pretty much anything out there.

目前是100%持有。而且再說一次，如果對我們有利，我們可以引入資本合作夥伴。很大程度取決於我們與那邊的合作夥伴一起開發、把剩餘拼圖完成的進度。但以那邊目前的交易狀況來看，我不認為引入合作夥伴會是什麼大問題。只是取決於我們是否想放棄一部分上行空間。但如我所說，過去25年我們一直看到這樣的趨勢，我們不認為它會停止。我們正在興建的Wills Wharf專案活動非常熱絡，而且我們知道市場上有幾家大型租戶正考慮在未來的建築中搬遷進來。唯一讓我有點擔心的是，很多其他人（包括Avalon Bay）也發現了這顆寶石，我擔心會有更多人一窩蜂投入多戶住宅。但我相信我們的地點優勢幾乎勝過那裡的任何其他因素。

I appreciate your comments at the beginning of the call just about the hires you've done lately. Can you just talk more about whether the COO or some of the other hires, what will they be focused on? And then as you think about kind of the next, I know you said the management team will in place for 5 years, but as you think about even longer, do you envision this being a much larger company? Kind of what's the vision here?

我很感謝你在電話會議一開始提到你們最近的招募。你能否再多談談COO或其他一些新聘人員，他們會聚焦在哪些方面？另外，當你思考接下來的發展時，我知道你說管理團隊會在位5年，但如果看得更長遠，你是否設想公司會變得大得多？整體願景是什麼？

Good question, Jamie. Our initial vision when we became public 6 years ago was that if we did what we had been doing for the previous 3 decades and we stuck to our knitting, are honest with people and stayed as real estate people as opposed to REIT people, we could take that $300 million market cap and turn it into $1 billion in a 6 to 8-year period. And we were able to achieve that and still retain our position as the largest shareholder. Our goal incrementally is that we go from $1 billion to $2 billion. And we need some additional help in order to do that. We've got that externally in that we've got some great development partners that we're now in league with. And internally we felt that we needed some more REIT experience which we've added, and we need more management experience. We hope to have a press release out soon on our COO who is going to be more inwardly focused. He's a management expert. As far as the rest of us being around for 5 years, I wouldn't put a period on the end of that. I meant to say at least 5 years and hopefully it's going to be many more than that given good health. We're having a lot of fun, the market has been good to us, and we intend on keeping it going and making this team bigger and better. We've won several awards as Best Place to Work both on a state level as well as a local level. And it's all systems are go and feeling really good about the future. But I appreciate the comment, Jamie.

好問題，Jamie。我們在6年前上市時的初始願景是：如果我們延續過去30年一直在做的事、專注本業，對人誠實，並且保持自己是房地產人而不是REIT人，我們就能把3億美元的市值在6到8年內做到10億美元。而我們做到了，同時仍保有我們作為最大股東的地位。我們下一步的目標是循序漸進地從10億美元做到20億美元。而要做到這點，我們需要一些額外的協助。外部方面，我們已經有一些很棒的開發合作夥伴與我們並肩合作。內部方面，我們認為需要更多REIT經驗（我們已經補強），也需要更多管理經驗。我們希望很快就會發布新聞稿，介紹我們的COO；他將更偏向內部營運的聚焦。他是管理方面的專家。至於我們其他人會在位5年這件事，我不會把它當作句點。我的意思是至少5年；如果身體健康，希望會遠超過5年。我們做得很開心，市場也對我們很友善，我們打算持續推進，讓這個團隊更大、更強。我們曾在州級與地方層級獲得多項「最佳雇主／最佳工作場所」獎項。目前一切全速前進，對未來感覺非常好。不過也謝謝你的提問，Jamie。

At this time, I would like to turn the call back over to Mr. Haddad for closing comments.

此時，我想把電話會議交回給Haddad先生作結語。

Thanks, everybody. We really appreciate your interest in our company and we look forward to updating you on our activities and results in the coming quarters. Take care.

謝謝各位。我們非常感謝大家對我們公司的關注，也期待在接下來的幾個季度向各位更新我們的活動與成果。保重。

Thank you, this does conclude today's teleconference. You may disconnect your lines at this time and have a great day.

謝謝，今天的電話會議到此結束。您現在可以掛線，祝您有美好的一天。