Elme Communities (ELME) 2024 Q4 法說會逐字稿

Good day and welcome to the Elme Communities fourth-quarter 2024 earnings conference call. As a reminder, today's call is being recorded. And at this time, I would like to turn the call over to your host, Amy Hopkins, Vice President-Investor Relations. Amy, please go ahead.

大家好，歡迎參加 Elme Communities 2024 年第四季財報電話會議。提醒一下，今天的通話正在錄音。現在，我想將電話轉給主持人、投資者關係副總裁艾米霍普金斯 (Amy Hopkins)。艾米，請說。

Good morning and thank you for joining our fourth quarter earnings call. Today's event is being webcast with a slide presentation that is available on the Investors section of our website and will be available on our webcast replay.

早安，感謝您參加我們的第四季財報電話會議。今天的活動將透過幻燈片演示進行網路直播，您可以在我們網站的「投資者」部分查看該幻燈片，也可以在我們的網路直播重播中查看。

Statements made during this call may constitute forward-looking statements that involve known and unknown risks and uncertainties which may cause actual results to differ materially, and we undertake no duty to update them as actual events unfold. We refer to certain of these risks in our SEC filings. Reconciliations of the GAAP and non-GAAP financial measures discussed on this call are available in our most recent earnings press release and financial supplement which was distributed yesterday and can be found on the Investors page of our website.

本次電話會議中的陳述可能構成前瞻性陳述，涉及已知和未知的風險和不確定性，可能導致實際結果大不相同，我們不承擔隨著實際事件的發展而更新這些陳述的責任。我們在提交給美國證券交易委員會的文件中提到了其中一些風險。本次電話會議中討論的 GAAP 和非 GAAP 財務指標的對帳表可在我們昨天發布的最新收益新聞稿和財務補充文件中查閱，也可在我們網站的「投資者」頁面上查閱。

Presenting on the call today will be Paul McDermott, our CEO; Tiffany Butcher, our COO; and Steve Freishtat, our CFO.

今天出席電話會議的將是我們的執行長 Paul McDermott；我們的營運長 Tiffany Butcher；以及我們的財務長 Steve Freishtat。

And with that, I will turn the call over to Paul.

說完這些，我會把電話轉給保羅。

Thanks, Amy. Welcome, everyone, and thank you for joining us this morning. I'll start by addressing the announcement we made in conjunction with our earnings release. I will also cover our 2024 achievements and the impact of the new administration's focus on government efficiency. Tiffany will discuss our operating trends and platform initiatives. And Steve will discuss our 2025 outlook.

謝謝，艾米。歡迎大家，感謝大家今天早上加入我們。我首先要談談我們在發布收益報告時所宣布的消息。我還將介紹我們 2024 年的成就以及新政府關注政府效率的影響。蒂芙尼將討論我們的營運趨勢和平台計劃。史蒂夫將討論我們的 2025 年展望。

Yesterday, we announced that the Elme Board of Trustees has launched a review to evaluate strategic alternatives. This decision is consistent with our commitment to act in the best interests of the company and our shareholders and to focus on maximizing shareholder value. We remain very confident about the long term prospects of our portfolio and the continued success of our value-add renovation pipeline and platform initiatives. However, shares of Elme continue to trade at a discount to our estimate of the company's private market value.

昨天，我們宣布，Elme 董事會已啟動對策略替代方案的評估。這項決定符合我們以公司和股東的最大利益為出發點並致力於最大化股東價值的承諾。我們對我們的產品組合的長期前景以及我們的增值改造管道和平台計劃的持續成功仍然充滿信心。然而，Elme 的股價仍低於我們對該公司私人市場價值的估計。

While we regularly evaluate credible alternative opportunities to maximize value on behalf of our shareholders, after extensive Board-led strategic planning, the Board has decided that a formal proactive process is appropriate at this time. As such, the Elme Board of Trustees has initiated this formal review and retained financial and legal advisors.

雖然我們定期評估可靠的替代機會，以代表股東實現價值最大化，但經過董事會主導的廣泛策略規劃後，董事會決定此時採取正式的主動程序是適當的。因此，Elme 董事會啟動了正式審查，並聘請了財務和法律顧問。

As is always the case with this type of process, there is no guarantee the review will result in any transaction or specific outcome. And we don't intend to disclose developments unless and until the company determines that disclosure is appropriate or required. While there isn't more we can say about the process at this time, we are confident we are taking the right steps to maximize value for shareholders.

正如此類流程通常的情況一樣，沒有人能保證審查一定會產生任何交易或特定結果。除非公司確定披露是適當的或必要的，否則我們不會打算披露進展。雖然目前我們無法透露更多有關該過程的信息，但我們相信我們正在採取正確的步驟來為股東實現價值最大化。

For the rest of the call, we will focus on our financial results, other business initiatives, and outlook.

在電話會議的剩餘時間裡，我們將重點討論我們的財務表現、其他業務計劃和前景。

Turning to 2024 highlights, operationally, it was a significant year as we advanced our multi-year platform initiatives. We reached a key milestone with the successful launch of our shared services department, Elme Resident Services, which streamlined our resident account management, collections and renewal processes, and improved our operating efficiency. We also launched phase one of our managed Wi-Fi initiative, and the related NOI growth will be ramping up throughout 2025. I'm proud of the transformation efforts put in by our teams last year and look forward to continuing to progress our initiatives and platform efficiency this year.

回顧 2024 年的亮點，從營運角度來看，這是意義重大的一年，因為我們推進了多年平台計畫。我們的共享服務部門 Elme 居民服務成功啟動，這是我們的一個重要里程碑，它簡化了我們的居民帳戶管理、收款和續約流程，提高了我們的營運效率。我們也啟動了託管 Wi-Fi 計畫的第一階段，相關的 NOI 成長將在 2025 年持續加速。我為我們團隊去年所做的轉型努力感到自豪，並期待今年繼續推進我們的計劃和平台效率。

Turning to the priorities of the new administration, there has been plenty of speculation, so we'll stick to the facts and what's happening on the ground. The Washington Metro is widely recognized for its diverse and growing private sector economy. Approximately 97% of job growth over the last 12 months has been driven by industries other than the federal government. Federal jobs only represent about 11% of regional employment as over 80% of the 2.1 million civilian positions in the federal government across the country are located outside the DMV.

談到新政府的優先事項，已經有很多猜測，因此我們將堅持事實和實地發生的情況。華盛頓大都會區因其多元化和不斷發展的私人經濟而受到廣泛認可。在過去 12 個月中，約 97% 的就業成長是由聯邦政府以外的產業推動的。聯邦職位僅佔地區就業的 11% 左右，因為全國聯邦政府 210 萬個文職職位中有 80% 以上位於 DMV 之外。

Elme's direct exposure to federal jobs is limited. Of the two-thirds of our Washington Metro resident base for whom we have detailed job level data, only 6.2% work at non-Department of Defense federal government agencies in the Washington Metro area and 4% work at federal contractors.

埃爾姆與聯邦工作的直接接觸有限。在我們擁有詳細工作等級資料的華盛頓大都會地區三分之二居民中，只有 6.2％ 在華盛頓大都會地區非國防部聯邦政府機構工作，4％ 在聯邦承包商工作。

For community level exposure, slide 11 of our latest investor presentation maps the departments and agencies where we have the highest exposure and provides the concentrations at proximate communities. Overall, our highest direct exposure to non-DoD federal government jobs at the community level is in the low double digits.

對於社區層面的風險敞口，我們最新的投資者簡報的第 11 張投影片列出了我們風險敞口最高的部門和機構，並提供了鄰近社區的集中度。整體而言，我們在社區層級對非國防部聯邦政府職位的直接投資最高達到兩位數。

In terms of what we are seeing on the ground, our demand trends across the Washington Metro remain solid and in line with our expectations and seasonal norms. The Washington Metro area was a top performing market in 2024, and we believe it is positioned for another strong year in 2025. Net inventory ratios remain low and the high cost of housing creates sustained demand for value-oriented rental options.

就我們實地看到的情況而言，整個華盛頓大都會地區的需求趨勢仍然穩固，符合我們的預期和季節性規範。華盛頓大都會區是 2024 年表現最佳的市場，我們相信 2025 年它將再次表現強勁。淨庫存率仍然很低，而高昂的房屋成本使得對價值導向的租賃選擇的需求持續存在。

The region is positioned to continue to thrive, offering a highly skilled workforce, advanced technology infrastructure, an entrepreneurial atmosphere, and unmatched global connections. We are confident in the growth prospects of our Washington Metro portfolio and look forward to gaining more clarity soon and keeping you updated during future calls.

該地區擁有高技能的勞動力、先進的技術基礎設施、創業氛圍和無與倫比的全球聯繫，並有望繼續蓬勃發展。我們對華盛頓地鐵投資組合的成長前景充滿信心，並期待很快獲得更多清晰的信息，並在未來的電話會議中向您通報最新情況。

And with that I'll turn it over to Tiffany.

現在我將把話題交給蒂芬妮。

Thanks, Paul. Starting with supply/demand dynamics in our markets. Overall, we are well-positioned as we believe Elme submarkets will face less supply pressure than the U.S. and Sun Belt markets generally, with projected average annual net inventory growth of 2.2% over the next four quarters, while the U.S. and Sun Belt are expected to see 2.8% and 4.6% growth, respectively.

謝謝，保羅。從我們市場中的供需動態開始。總體而言，我們處於有利地位，因為我們相信埃爾姆子市場面臨的供應壓力將小於美國和陽光地帶市場，預計未來四個季度年均淨庫存增長率為 2.2%，而美國和陽光地帶預計將分別增長 2.8% 和 4.6%。

Our DMV portfolio remains very well-insulated from new supply with quarterly net inventory ratios averaging 1.7% in Elme submarkets this year, below the regional average of 2% based on current expectations.

我們的 DMV 投資組合仍然很好地抵禦新供應的影響，今年 Elme 子市場的季度淨庫存率平均為 1.7%，低於根據當前預期確定的區域平均水平 2%。

On the demand side, the trends are healthy and stable, supported by the limited availability of high-quality housing that is affordable to middle income residents. We anticipate another year of favorable supply/demand dynamics in the DMV.

需求方面，由於中等收入居民可負擔的優質住房供應有限，趨勢健康穩定。我們預計 DMV 的供需情勢又將保持良好態勢。

In Atlanta, we expect to see gradual improvement in the supply dynamics with a more significant improvement in 2026. The weighted average net inventory ratio peaked at 4.3% in the first half of 2024 across our Atlanta submarkets and is expected to remain relatively flat in 2025 compared to the 3.8% in the fourth quarter of 2024.

在亞特蘭大，我們預計供應動態將逐步改善，並在 2026 年出現更顯著的改善。2024 年上半年，我們亞特蘭大子市場的加權平均淨庫存率達到 4.3% 的峰值，預計 2025 年將保持相對平穩，而 2024 年第四季為 3.8%。

On a positive note, annual absorption has been very strong and is expected to be nearly 40% higher in 2025 compared to 2024 in Elme submarkets which should help to balance the impact of new deliveries as the year progresses.

從積極的一面來看，年度吸收量非常強勁，預計到 2025 年 Elme 子市場的吸收量將比 2024 年高出近 40%，這將有助於隨著時間的推移平衡新交付的影響。

Turning to operating trends, same-store blended lease rate growth averaged 1.3% in the fourth quarter and 1.8% in January for our 2025 same-store pool. Same-store occupancy averaged 95% during the fourth quarter, up 20 basis points sequentially. Retention rates remain above historical levels and our move-outs to own remained very low during the fourth quarter at 8.5% as there is limited existing inventory and home ownership remains unaffordable for many middle income renters.

談到營運趨勢，對於我們 2025 年同店數據而言，第四季同店混合租賃率平均成長率為 1.3%，1 月為 1.8%。第四季同店入住率平均為 95%，較上一季上升 20 個基點。留存率仍高於歷史水平，第四季度我們的購屋比例仍保持在 8.5% 的低水平，因為現有庫存有限，而且許多中等收入租屋者仍然無法承擔購屋成本。

On a year-to-date basis, same-store occupancy has trended up slightly, averaging 95.1%. We are targeting an average occupancy range of 95% to 95.5% for the year which reflects a more normalized year in the DMV compared to strong occupancy gains in 2024. We are expecting an improvement in our Atlanta portfolio in the second half of the year as delinquency-related occupancy pressure subsides and the supply/demand dynamic and imbalance improves.

從年初至今，同店入住率略有上升，平均為 95.1%。我們的目標是使今年的平均入住率達到 95% 至 95.5%，與 2024 年的強勁入住率成長相比，這將反映出 DMV 更正常化的一年。隨著違約相關的入住壓力消退以及供需動態和不平衡狀況的改善，我們預計今年下半年亞特蘭大的投資組合將有所改善。

Turning to renovations, we completed about 500 full-renovations in 2024 at an average cost of $17,000 per unit, achieving an average renovation ROI of approximately 17%. In 2025, we expect to complete another 500 full renovations at similar costs per unit, yielding a targeted 17% ROI. For our renovations program, we are targeting communities that have the greatest potential for outsized rent growth and maintain flexibility to adjust the pace of renovations as market demand shifts.

談到翻新，我們在 2024 年完成了約 500 次全面翻新，平均每套成本為 17,000 美元，平均翻新投資回報率約為 17%。2025 年，我們預計以相似的每單位成本完成另外 500 項全面翻新，目標投資回報率為 17%。對於我們的翻新計劃，我們的目標是那些最有可能實現大幅租金成長的社區，並能隨著市場需求的變化靈活地調整翻新步伐。

Lastly, I'll speak to our operating initiatives. In 2024, we captured approximately $1.8 million of additional NOI growth from these initiatives which is in line with expectations that we communicated at the start of the year. In 2025, we expect to capture $1.8 million of additional cumulative growth which will mark the achievement of our three-year target of $4.25 million to $4.75 million announced in early 2023.

最後，我將談談我們的營運舉措。2024 年，我們從這些措施中獲得了約 180 萬美元的額外淨營運收入成長，這符合我們在年初傳達的預期。到 2025 年，我們預計將獲得 180 萬美元的額外累積成長，這將標誌著我們實現 2023 年初宣布的 425 萬美元至 475 萬美元的三年目標。

Beyond our three-year target, we are in the process of rolling out managed Wi-Fi and expect to capture 300,000 to 600,000 of additional NOI in 2025 from phase one of our initiative which includes seven communities. Looking forward, once phase one of our managed Wi-Fi initiative has been fully integrated into our lease roll, which we expect to occur in mid-2026, we expect to capture approximately $1 million to $1.5 million of additional NOI per year with further upside from future phases.

除了我們的三年目標之外，我們還在推出託管 Wi-Fi，並預計到 2025 年，我們計劃的第一階段（包括七個社區）將吸引 300,000 至 600,000 個額外的 NOI。展望未來，一旦我們的託管 Wi-Fi 計畫第一階段完全融入我們的租賃名單（我們預計將於 2026 年中期完成），我們預計每年將獲得約 100 萬至 150 萬美元的額外淨營運收入，並且未來階段還將獲得進一步的上升空間。

And with that, I'll turn it over to Steve to cover our 2025 outlook.

接下來，我將把主題交給史蒂夫來介紹我們的 2025 年展望。

Thanks, Tiffany. Turning to our 2025 guidance and related assumptions, we expect same-store multi-family revenue growth to range from 2.1% to 3.6% in 2025. Embedded revenue growth or the growth that has already been captured based on 2024 leasing was about 70 basis points at the start of the year and 80 basis points at the end of January.

謝謝，蒂芙尼。談到我們的 2025 年指引和相關假設，我們預計 2025 年同店多戶型住宅收入成長率將在 2.1% 至 3.6% 之間。內含收入成長或基於 2024 年租賃已經實現的成長在年初約為 70 個基點，在 1 月底約為 80 個基點。

The building blocks that add up to the midpoint of our guidance range include approximately 1% of rent growth driven primarily by our Washington Metro portfolio, 0.7% of growth in fee income from our operational initiatives, approximately 25 basis points of bad debt improvement, and approximately 20 basis points of occupancy growth.

構成我們指導範圍中點的構成要素包括主要由華盛頓大都會投資組合推動的約 1% 的租金增長、來自我們運營計劃的費用收入增長 0.7%、約 25 個基點的壞賬改善以及約 20 個基點的入住率增長。

Moving on to expenses, same-store operating expenses are projected to range from 2.75% to 4.25% for the year. Non-controllable expenses are projected to grow 2% to 3%. And controllable expenses are projected to grow between 4% and 5%, which includes technology expenses related to our managed Wi-Fi and other ROI initiatives.

談到費用，預計今年同店營業費用將在 2.75% 至 4.25% 之間。不可控支出預計將成長2%至3%。可控費用預計將增加 4% 至 5%，其中包括與我們管理的 Wi-Fi 和其他投資回報率計劃相關的技術費用。

Watergate 600 NOI is expected to range from $11.5 million to $12.25 million, representing a decline of approximately 6% at the midpoint due to an anticipated decline in occupancy over the course of the year and higher utility expenses. We expect occupancy to end the year between 81% and 82%, representing a decline of approximately 3% compared to current occupancy of 84.7%. While the sale of Watergate 600 is not included in our guidance, we continue to look to opportunistically monetize the property.

Watergate 600 NOI 預計在 1,150 萬美元到 1,225 萬美元之間，中間值下降約 6%，原因是預計全年入住率將下降且公用事業費用增加。我們預計年底入住率將在 81% 至 82% 之間，與目前的 84.7% 入住率相比下降約 3%。雖然 Watergate 600 的出售不在我們的指導範圍內，但我們仍在繼續尋找機會將房產貨幣化。

Interest expense is expected to range from $37.35 million to $38.35 million for the year. In December, we executed the first of two one-year extension options on our $125 million term loan which is now set to expire in January 2026, and we have no other debt maturing before 2028.

預計全年利息支出將在 3,735 萬美元至 3,835 萬美元之間。12 月，我們執行了 1.25 億美元定期貸款的兩個一年期延期選擇權中的第一個，該貸款目前將於 2026 年 1 月到期，並且我們沒有其他在 2028 年之前到期的債務。

Our balance sheet remains in very good shape with annualized adjusted net debt-to-EBITDA of 5.7 times during the fourth quarter, over 60% of our total capacity available on our line of credit and no secured debt.

我們的資產負債表保持良好狀態，第四季度年化調整後淨債務與 EBITDA 比率為 5.7 倍，我們的信用額度可用容量超過總容量的 60%，且沒有擔保債務。

Turning to core FFO, the drivers of our 2025 core FFO per share at the midpoint include $0.04 of growth from our same-store multi-family portfolio offset in part by a $0.01 decline from Watergate 600, $0.01 decline from higher G&A, and a $0.05 decline from other items.

談到核心 FFO，我們 2025 年每股核心 FFO 的中點驅動因素包括同店多戶型投資組合增長 0.04 美元，但部分抵消了 Watergate 600 下降 0.01 美元、G&A 增加下降 0.01 美元以及其他項目下降 0.05 美元的影響。

And with that, I'll turn it back to Paul.

現在我將話題轉回給保羅。

To wrap it up, our 2025 outlook reflects another good year of performance from our Washington Metro portfolio and improving trends in Atlanta. Across Elme submarkets in the DMV, strong supply/demand dynamics, and limited value-oriented housing options create a favorable leasing environment. In Atlanta, we anticipate a gradual improvement in market dynamics, paving the way for a strong 2026.

總而言之，我們的 2025 年展望反映了華盛頓大都會投資組合的另一個良好表現以及亞特蘭大不斷改善的趨勢。在 DMV 的 Elme 子市場中，強勁的供需動態和有限的價值導向型住房選擇創造了有利的租賃環境。在亞特蘭大，我們預計市場動態將逐步改善，為 2026 年的強勁發展鋪路。

Before turning to Q&A, we'd like to reiterate that we do not have any additional information or updates to provide at this time regarding the strategic review beyond the information we've already provided. Therefore, we request that you focus your questions on our results, business initiatives, and outlook. We appreciate your cooperation.

在進入問答環節之前，我們想重申，除了我們已經提供的資訊之外，我們目前沒有關於策略審查的任何其他資訊或更新可提供。因此，我們要求您將問題集中在我們的業績、業務舉措和前景上。感謝您的合作。

And now, operator, I'd like to open it up for questions.

接線員，現在我想開始回答問題。

Thank you. At this time, we'll be conducting our question-and-answer session. (Operator Instructions) One moment, please, while we pull for questions.

謝謝。此時，我們將進行問答環節。（操作員指示）請稍等片刻，我們正在回答問題。

Anthony Paolone, JPMorgan.

摩根大通的 Anthony Paolone。

Great. Thank you. Good morning. I guess my first question revolves around just the potential impact of what's happening with the new administration in your market. You all have been effectively a pure-play in that market for a long, long time. And there have been changes in different agencies, moving people and doing things of that nature. What's been the experience in the past when there is, say, a big change in the government near a property? Is there a way to put some brackets around how that has affected leasing or rents? Any anecdotes there would be helpful.

偉大的。謝謝。早安.我想我的第一個問題是圍繞著新政府對貴市場可能產生的影響。長期以來，你們一直都是該市場的純粹參與者。不同機構也發生了變化，調動了人員，做了類似的事情。例如，當某處房產附近的政府發生重大變動時，過去的經驗是如何的？有沒有辦法說明這對租賃或租金有何影響？任何軼事都會有幫助。

Tony, it's Paul. Let's go back just in terms of regional impacts. I think the last event we probably would have had would have been sequestration. And that had a tremendous impact on the industry just in terms of really paralyzing some of the progress, some of the leasing, some of the growth. But I would say we're in a different time now. The federal government probably back then really was probably the central engine that drove our economy. I think now technology has really taken over, and we really are seeing still tremendous amount of growth, especially in the northern Virginia, where the bulk of our residential portfolio in the DMV is located. I think what's obviously different about this time is there appears to be a macro strategy of addressing government expenses. But it seems a little fractured right now, moving forward.

東尼，我是保羅。讓我們回顧一下區域影響。我認為我們可能經歷的最後一件事就是預算封存。這對行業產生了巨大的影響，確實阻礙了一些進步、一些租賃和一些成長。但我想說我們現在處於不同的時代。聯邦政府當時可能確實是推動我們經濟發展的核心引擎。我認為現在科技已經真正佔據了主導地位，我們確實仍然看到了巨大的成長，特別是在維吉尼亞州北部，DMV 的大部分住宅投資組合都位於那裡。我認為這次明顯的不同之處在於似乎有一個解決政府開支的宏觀策略。但就目前而言，進展似乎有些不順利。

So in terms of, we look back -- as I said in my remarks, we look back at the growth in the private sector, we look at where the growth is coming from, and it's not coming from the federal government and it really hasn't been coming from the federal government for the last decade. So we're very comfortable. And Grant can talk about our resident composition, some of the demographics associated with that. But we feel very comfortable about the businesses that are growing here in the private sector and its respective impact on our residential base. Grant, do you want to add any more color to that?

所以，正如我在演講中所說，我們回顧私部門的成長，我們看看成長來自哪裡，它不是來自聯邦政府，而且過去十年來確實不是來自聯邦政府。因此我們感到非常舒服。格蘭特可以談談我們的居民組成以及與之相關的一些人口統計。但我們對於私營部門的業務成長及其對我們住宅基礎的影響感到非常放心。格蘭特，你還想再添加點顏色看看嗎？

Sure. Speaking generally just to reiterate what was in the script on slide 11 that was referred to is that if you look at non-DOD federal jobs in the Washington region, our exposure is about 6.2%. And if you drill down to any single agency, we're sub-1% for any single agency. And so many times we're talking one, two, three, four, five people, sort of the typical exposure to any single agency once you get outside the (inaudible) adjacent agencies.

當然。一般來說，只是重申第 11 張投影片中提到的腳本內容，如果你看看華盛頓地區的非國防部聯邦工作，我們的曝光率約為 6.2%。如果你深入研究任何單一機構，我們在任何單一機構的佔比都低於 1%。很多時候我們談論的是 1、2、3、4、5 個人，這是當你走出（聽不清楚）相鄰的機構時，對任何單一機構的典型接觸。

Okay. Thank you for that. And then just my follow-up question, can you give us any update or thoughts on where market cap rates might be for the types of assets typically in your buy box?

好的。謝謝你。然後是我的後續問題，您能否向我們提供任何最新消息或想法，說明您購買框中通常包含的資產類型的市場資本化率可能是多少？

Tony, again, it's Paul. I'll just start off and kind of give you some macro observations on what we're seeing in the capital markets. For core deals, we're really seeing buyers -- today's buyer kind of looking for that 9% to 11% IRR and that's translating into a 4.5% to a 5% cap. For core-plus deals, we're seeing ranging in that 4.75% to 5.25%. Again, depending on the type of leverage folks shooting for, an 11% to a 13% IRR. And then value-add, more in that 5% to 5.5% space. We've seen it go up to a 6% or even a touch higher depending on the vintage of the product with those buyers looking for leverage 13% to 15%. For our type of product, we think we're in that value-add space and so we feel very comfortable about the strength of our portfolio moving forward.

東尼，再次強調，我是保羅。首先，我想提供給大家一些有關資本市場的宏觀觀察。對於核心交易，我們確實看到買家 - 今天的買家尋求 9％ 到 11％ 的 IRR，這轉化為 4.5％ 到 5％ 的上限。對於核心加交易，我們看到的範圍在 4.75% 到 5.25% 之間。同樣，這取決於人們追求的槓桿類型，IRR 為 11% 到 13%。然後增加價值，更多是在 5% 到 5.5% 的空間。我們已經看到，根據產品的年份，這個比例上升到 6% 甚至更高，因為那些買家尋求的槓桿為 13% 到 15%。對於我們的產品類型，我們認為我們處於增值領域，因此我們對我們的產品組合未來的實力感到非常有信心。

When we look around at the markets right now and the reason why we're optimistic about this year, there's just a tremendous amount of liquidity in the debt markets. The GSEs, both Fannie and Freddie, both have $73 billion in allocations for a total of $146 billion. Definitely seeing a pickup in the bridge market, especially on lease-up deals. And life companies are back and they're being pretty aggressive in those 50% to 55% LTV deals. A lot of seller, a lot of private equity sales coming to the market. We're seeing a tremendous amount of BOVs being conducted in this region. Some merchant builders, but I think the larger are PE firms that are looking at maybe opportunistically redeploying other capital and other asset classes and geographies.

當我們回顧當前的市場以及我們對今年感到樂觀的原因是，債務市場擁有巨大的流動性。房利美和房地美這兩家政府支持企業都獲得了 730 億美元的撥款，總計 1,460 億美元。確實看到橋樑市場的回暖，特別是租賃交易。人壽保險公司又回來了，而且它們在 50% 至 55% LTV 交易中表現得相當積極。許多賣家、許多私募股權銷售進入市場。我們看到該地區正在進行大量的 BOV。一些商業建築商，但我認為規模較大的是私募股權公司，他們可能正在考慮機會性地重新部署其他資本和其他資產類別和地區。

The other thing I note, Tony, is that we're definitely seeing bigger deals are coming back now. I think late '22, '23, and last year particularly, a lot of that 40% to 75% space. Even the deals we've seen come out since January 1, a couple of deals over $100 million, so people are definitely moving to the aisle. And a number of the originators that we talked to, really a term they use, just about getting out and getting in front of the market.

東尼，我注意到的另一件事是，我們現在確實看到更大的交易正在回歸。我認為在 2022 年末、2023 年以及去年，這部分空間很大，達到 40% 到 75%。甚至我們看到自 1 月 1 日以來達成的交易，也有幾筆交易的價值超過 1 億美元，因此人們肯定正在轉向這條通道。我們採訪過的許多發起人，他​​們使用的術語實際上是走出去並走在市場前沿。

The buying, we've just seen buyers all across the spectrum. And I think our big macro takeaway from this is we're continuing to see a tremendous amount of capital flow into the living sector, in general. And so we think that -- I think the numbers I saw -- in 2024, we saw about $137 billion being done in transaction volume. This year, I think the numbers people are forecasting are more towards like $150 billion.

從購買情況來看，我們看到買家來自各個領域。我認為我們從中得到的宏觀啟示是，整體而言，我們將繼續看到大量資本流入生活領域。因此，我們認為 — — 我認為看到的數字 — — 到 2024 年，交易量將達到約 1,370 億美元。今年，我認為人們預測的數字更接近 1500 億美元。

So another big year ahead. We think there are going to be a lot of recaps coming before some of these liquidations. But I would tell you, even going back to what we feel was a good acquisition of Druid Hills, the discounts and replacement costs are shrinking. And that was a key element for us and we think they're going to continue to decline as the year progresses.

未來又將是一個重要的一年。我們認為，在進行一些清算之前，將會有大量的回顧。但我想告訴你，即使回到我們認為對德魯伊山的一次正確收購，折扣和更換成本也在縮減。這對我們來說是一個關鍵因素，我們認為隨著時間的推移，這一比例將繼續下降。

Okay. Great context. Thank you.

好的。很棒的背景。謝謝。

Jamie Feldman, Wells Fargo.

富國銀行的傑米·費爾德曼。

Great. Thank you and good morning. Just a couple of follow-ups from some of the comments you made on the call. I guess to start, you mentioned your lease rates through the year, can you talk about your your view on seasonality? I mean, it just seems like there's a lot of moving pieces in the D.C. market this year. Do you think you'll see, acceleration into 2Q-3Q and then drop off? Are you thinking things get better in 4Q? Can you maybe talk through your outlook for new leases and blends?

偉大的。謝謝，早安。我只想對您在電話中提出的一些評論進行一些後續跟進。首先，您提到了全年的租賃率，您能談談對季節性的看法嗎？我的意思是，今年華盛頓市場似乎有很多變動。您認為會看到加速度進入第二季到第三季然後下降嗎？您認為第四季的情況會好轉嗎？您能否談談新租約和混合租約的展望？

Sure, I can absolutely, Jamie. This is Tiffany Butcher. Happy to walk through that. I would say if you are looking at just a Washington D.C. portfolio, we are expecting another normal year of seasonal growth in the Washington D.C. area with, obviously, peak leasing occurring during our spring and summer leasing season. In Atlanta, we expect to see gradual improvement throughout the year as we continue to see improvement in the supply/demand dynamics in that market.

當然，我完全可以，傑米。這是蒂芬妮·布徹。很高興能經歷這一切。我想說，如果你只看華盛頓特區的投資組合，我們預計華盛頓特區地區將迎來另一個正常的季節性增長年，顯然，租賃高峰期將出現在春季和夏季租賃季節。在亞特蘭大，隨著該市場供需動態的持續改善，我們預計全年將看到逐步改善。

If you want to look at the portfolio as a whole, we're projecting our newbie rate growth to be between a decline of 2% and a positive 0.5%. For the full year, we expect renewal lease rate growth of between 3% to 5.25%. Renewal lease rate growth continues to be a strong driver of growth for us. And then blended lease rate growth we're projecting between 1.25% and 3% for the portfolio overall.

如果您想從整體上看待投資組合，我們預計新手利率成長率將在下降 2% 至正 0.5% 之間。就全年而言，我們預計續租租賃率成長率將在 3% 至 5.25% 之間。續租率成長持續成為我們成長的強勁動力。然後，我們預計整個投資組合的混合租賃率成長率將在 1.25％ 至 3％ 之間。

Okay. Thank you for that. And then I guess just thinking about your outlook for the year. Are you on hold now trying to sell assets? Moving to other markets, Watergate, is that on hold? Or are you guys just going to continue with the plan you have and the strategic review is more of a sideshow?

好的。謝謝你。然後我想我只是在思考你對今年的展望。您現在是否正在嘗試出售資產？轉向其他市場，水門事件，是否暫停了？或者你們只是繼續執行你們的計劃，而戰略評估更像是一場雜耍？

Well, Jamie, we put out our 2025 guidance so all of the underlying assumptions are in there. And then as far as you know our operations go, we are -- in terms of -- you mentioned expansion markets, I think what we are most focused on is getting the best performance we can out of the assets that we currently own right now. And Tiffany and her team are doing an outstanding job in terms of the new initiatives, the renovations, other capital allocations that we think are going to be accretive for our shareholders as we want to keep our eye on the ball day to day and all of the operations that we have throughout the company as we undergo this strategic review process.

好吧，傑米，我們發布了 2025 年指引，因此所有基本假設都在其中。就您所知，我們的營運情況是這樣的，就您提到的擴張市場而言，我認為我們最關注的是從我們目前擁有的資產中獲得最佳表現。蒂芙尼和她的團隊在製定新舉措、進行翻新和其他資本配置方面做得非常出色，我們認為這些工作將為我們的股東帶來增值，因為我們希望在這一戰略審查過程中，每天密切關注整個公司的所有運營情況。

Okay. And then I guess thinking specifically about Watergate. I think we're getting a little more optimistic. You get some leasing done there. I think the Kennedy Center was out there as a potential option. Obviously, a lot of change going on there. Can you update us on conversations around the Kennedy Center specifically or just your leasing prospects there? And then I know you include a $0.01 drag in guidance for operating that for the full year. If you were to sell it, do you think that takes your numbers up or down further?

好的。然後我想我會特別想到水門事件。我想我們變得更加樂觀了。您可以在那裡完成一些租賃工作。我認為甘迺迪中心是一個潛在的選擇。顯然，那裡正在發生很多變化。您能否具體介紹一下有關甘迺迪中心的討論情況，或者只是介紹一下您在那裡的租賃前景？然後我知道你在全年營運指導中包含了 0.01 美元的拖累。如果您將其出售，您認為這會導致您的銷售額進一步上升還是下降？

Well, just right now, we have good walls on the property and I think there's a lot of good activity. We've had in place renewals that took place in 2024. As I mentioned, I believe, on the last call, we are in discussions with our largest tenant that is a '27 expiration, and we feel good about the prospects there. And we're also in discussions with some of the smaller tenants for renewal in place. And obviously, better for us, better from a TI standpoint, from a free rent standpoint. So collectively, I think, overall, we're feeling good.

嗯，現在，我們的土地上有很好的牆壁，我認為有很多好的活動。我們已經在 2024 年進行了續約。正如我所提到的，我相信，在上次電話會議上，我們正​​在與我們最大的租戶進行討論，該租戶的租期為 27 年，我們對那裡的前景感到樂觀。我們也正在與一些較小的租戶討論續約事宜。顯然，這對我們來說更好，從 TI 的角度來看更好，從免費租賃的角度來看更好。因此，我認為，總體而言，我們感覺良好。

Concurrently though, Jamie, as we said in the past, we will be opportunistic as we look at the capital markets. I would say not only has the D.C. market improved in terms of the type of activity that we're seeing in the marketplace from a leasing standpoint with tenants, the thaw seemed to take place in 2024. And so we're definitely seeing more activity now. I think even more -- another error in the quiver for a buyer is the liquidity in the debt markets. And we're actually seeing CMBS deals done on office product downtown.

但同時，傑米，正如我們過去所說的那樣，我們將在資本市場上尋找機會。我想說，從租戶租賃的角度來看，華盛頓特區的市場活動不僅有所改善，而且解凍似乎將在 2024 年發生。因此我們現在肯定看到了更多的活動。我認為更重要的是──買家可能犯的另一個錯誤是債務市場的流動性。我們實際上看到市中心的辦公產品上正在進行 CMBS 交易。

So we feel like the environment is coming towards us. We feel like we have some tailwinds instead of headwinds. And so we're going to try to be opportunistic. But we've got a job to do at Watergate and that is to get it to the highest leasing percentage we can get, and we're going to continue on that path.

所以我們感覺到環境正在走向我們。我們感覺我們面臨的是順風而不是逆風。因此，我們將盡力抓住機會。但我們在水門大廈還有一項任務要做，那就是盡可能地提高租賃率，我們會繼續朝著這個方向努力。

Okay. But I guess -- so if you were to sell it, do you think that's accretive or dilutive, the earnings?

好的。但我猜——如果你要賣掉它，你認為這會增加收益還是稀釋收益？

I'm not going to speculate on the type of pricing that we're going to get, Jamie. Right now, we haven't really tested the market. So we'll both move forward. And hopefully, we can have something positive to say in future calls.

傑米，我不會猜測我們將會得到什麼樣的定價。目前，我們還沒有真正測試市場。因此我們都會繼續前進。希望我們能在以後的通話中說一些正面的話。

Okay. And then, I know you said not to talk about the strategic review, but I guess this would have been a question even before you announced this. Can you talk about the frictional costs if you were to sell the company? Whether there's taxes that people need to factor in to NAVs or comps? Or just any other pieces? Because I think the market naturally goes to here's the NAV but then there's always a drag on that. Can you just talk through some of those moving pieces?

好的。然後，我知道您說過不要談論戰略評估，但我想這在您宣布這一消息之前就已經是一個問題了。如果您出售公司，可以談談摩擦成本嗎？人們是否需要將稅金計入資產淨值或可比較價格？或只是其他任何作品？因為我認為市場自然會走向淨值，但總是會有一個阻力。能簡單談談其中的一些動靜嗎？

Jamie, what I can say -- first off, thank you for the thoughtful question. What I can say is the Board and the management team are committed to acting in the best interests of the company and its shareholders. There's no timetable or deadline set for the completion of this Board-led strategic review. We'll provide an update if and when appropriate. But beyond the information in our release, we don't have any information to share or updates beyond that to provide at this time.

傑米，首先我要說的是，感謝您提出這個深思熟慮的問題。我可以說的是，董事會和管理團隊致力於為公司及其股東的最大利益行事。目前，董事會主導的這項策略審查尚未設定完成時間表或最後期限。如果合適，我們將提供更新資訊。但除了我們發布的信息之外，我們目前沒有任何資訊可以分享或提供更新。

Okay. So you can't get into the frictional cost?

好的。那你不能考慮摩擦成本嗎？

That's correct, Jamie.

沒錯，傑米。

Got it. Okay. And then just final question then. You talked about your composition of jobs in the portfolio, I think you said for two-thirds. If you were to just take a guess at the remaining one-third, would the numbers be pretty similar or is there something different we should be thinking about in terms of the employers?

知道了。好的。那就剩最後一個問題了。您談到了投資組合中的工作組成，我認為您說的是三分之二。如果您只是猜測剩下的三分之一，這些數字是否會非常相似，或者在雇主方面我們應該考慮一些不同的事情？

Jamie, this is Grant. I think you could extrapolate that out and say the composition would be similar.

傑米，這是格蘭特。我認為你可以推論出其組成成分會相似。

Okay. All right. Great. Thanks and good luck with everything.

好的。好的。偉大的。謝謝，祝一切順利。

Thank you, Jamie.

謝謝你，傑米。

John Pawlowski, Green Street.

約翰‧帕沃夫斯基 (John Pawlowski)，綠街。

Morning. Thanks for the time. Just a question with Tiffany. Your points are well taken on why D.C. is more insulated from potential shocks of federal employment. I'm just curious, on the ground and the considerable uncertainty, forget job losses and potential job losses, but the uncertainty swirling around the tenant base, pick your favorite leading indicator for traffic, your closing rates on tours. Are you seeing any kind of leading indicators to suggest that the uncertainty around employment's leading to a pause in leasing decisions and tenants in the market?

早晨。感謝您的時間。我只想問蒂芙尼一個問題。您關於為什麼華盛頓特區更能抵禦聯邦就業帶來的潛在衝擊的觀點非常正確。我只是很好奇，在實地和相當大的不確定性中，忘記失業和潛在的失業，但圍繞租戶群體的不確定性，選擇你最喜歡的流量領先指標，你的旅行成交率。您是否看到任何領先指標表明就業的不確定性導致市場租賃決策和租戶暫停？

John, thanks for the question. Year-to-date, we are seeing very normal seasonal leasing trends. We have not seen any atypical impacts on traffic or leasing across any of our key metrics. The outlook overall for the DMV in terms of supply/demand dynamics remains incredibly strong. And we think that our mid-market rent positions as well as Class B demand trends tend to be more consistent relative to other asset classes. Well, obviously, we continue to monitor all of the new developments very closely. We'll have to see how it plays out over the next few months. But based on what we're seeing on the ground today and our Class B position, we think we are positioned well to have another good year in the DMV.

約翰，謝謝你的提問。今年迄今為止，我們看到季節性租賃趨勢非常正常。我們沒有看到任何關鍵指標對流量或租賃產生任何異常影響。從供需動態來看，DMV 的整體前景依然十分強勁。我們認為，我們的中端市場租金地位以及 B 類需求趨勢相對於其他資產類別更加一致。嗯，顯然，我們會繼續密切關注所有新進展。我們將不得不觀察未來幾個月的情況如何。但根據我們今天的實地觀察和我們的 B 級地位，我們認為我們有能力在 DMV 再創輝煌一年。

Okay. Then last one for me, the Atlanta same story, the sequential growth rate was quite high. I know a few properties can really move the needle, but was this a function of bad debt improvement and volatility in bad debt? Well, I think there was about 6% sequential growth in Atlanta this quarter. Any color there would be helpful.

好的。對我來說最後一個是亞特蘭大，同樣的故事，連續成長率相當高。我知道有些房產確實可以起到作用，但這是壞帳改善和壞帳波動的作用嗎？嗯，我認為本季亞特蘭大的環比增長約為 6%。任何顏色都有幫助。

John, this is Steve. And you're right for about half of it, so we had 6% sequentially and about half of it was an improvement in bad debt that we saw in the quarter in Atlanta. The other portion of it was a business interruption insurance proceeds from a property down there that had a fire earlier in 2024.

約翰，這是史蒂夫。您說的對，大約有一半是這樣的，所以我們環比增長了 6%，其中大約一半是我們在亞特蘭大本季看到的壞帳改善。其中另一部分是 2024 年初在那裡發生火災的一處房產的業務中斷保險收益。

Okay. Thank you for your time.

好的。感謝您的時間。

(Operator Instructions)

（操作員指令）

Cole Bardawill, Wolfe Research.

巴達威爾（Cole Bardawill），沃爾夫研究公司（Wolfe Research）。

Hey guys. Thank you very much for the time. I just had one question on occupancy in D.C. You mentioned it was going to be more of a normalized year. Are you expecting any occupancy erosion this year in '25 or you're kind of expecting it to hold relatively flat?

嘿，大家好。非常感謝您抽出時間。我只有一個關於華盛頓特區入住率的問題。您提到今年將會是更正常化的一年。您預計今年 25 年的入住率會下降嗎？還是您預計入住率會保持相對穩定？

Obviously, we had a very strong year of occupancy in the DMV last year, being in the 96% range. And we expect the DMV to remain in that 96% range next year. And then we obviously are expecting a gradual improvement in occupancy in Atlanta.

顯然，去年我們在 DMV 的入住率非常高，達到了 96% 左右。我們預計明年 DMV 將保持在 96% 的範圍內。我們顯然預計亞特蘭大的入住率將逐步提高。

Okay. Got it. And then just one more that I noticed in D.C., Maryland, you had some pretty high property operating expenses this quarter. I was just curious if there are any big drivers for that.

好的。知道了。另外我注意到，在馬裡蘭州華盛頓特區，本季的房地產營運費用相當高。我只是好奇這是否有任何重大驅動因素。

It's a call in D.C. in the fourth quarter on the property for non-controllable that we saw in D.C. and it's on the utility side we saw a couple of true-ups at some properties that hit in the fourth quarter and really drove that in the DMV.

這是我們在第四季度在華盛頓特區看到的關於不可控房產的呼籲，在公用事業方面，我們看到第四季度一些房產出現了幾次真實上漲，這確實推動了 DMV 的上漲。

Okay. Awesome. Thank you.

好的。驚人的。謝謝。

Thank you. As we have no further questions on the line at this time, I will hand the call back over to Mr. McDermott for any closing remarks.

謝謝。由於我們目前沒有其他問題，我將把電話交還給麥克德莫特先生，讓他做最後發言。

We'd like to thank everyone for their time today. And we're looking forward to seeing many of you and talking to you in person over the coming weeks. Thank you, everyone.

我們感謝大家今天的寶貴時間。我們期待在接下來的幾週內見到你們並與你們親自交談。謝謝大家。

Thank you. This does conclude today's conference. You may disconnect your lines at this time. We thank you for your participation.

謝謝。今天的會議到此結束。現在您可以斷開您的線路。我們感謝您的參與。