Equity Commonwealth (EQC) 2024 Q1 法說會逐字稿

Good morning, and thanks for joining this call to discuss Equity Commonwealth's results for the quarter ending March 31st, 2024, and an update on the Company. So at this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

早安，感謝您參加本次電話會議，討論 Equity Commonwealth 截至 2024 年 3 月 31 日的季度業績以及公司的最新情況。所以此時所有參與者都處於只聽模式。正式演講後將舉行問答環節。（操作員指示）謹此提醒，本次會議正在錄製中。

Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of federal securities laws. Please refer to the section titled Forward-Looking Statements in the press release issued yesterday as well as the section titled Risk Factors in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q for subsequent quarters for a discussion of factors that could cause the company's actual results to materially differ from any forward looking statements.

請注意，本次電話會議中討論的某些事項可能構成聯邦證券法含義內的前瞻性陳述。有關因素的討論，請參閱昨天發布的新聞稿中“前瞻性陳述”部分以及公司 10-K 表年報和 10-Q 表季度報告中“風險因素”部分這可能導致公司的實際結果與任何前瞻性陳述存在重大差異。

The company assumes no obligation to update or supplement any forward-looking statements made today. The Company post important information on its website at w. w. w. dot EQCRE. dot com, including information that may mean may be material portion of today's remarks regarding the company's quarterly earnings also include certain non-GAAP financial measures. Please refer to yesterday's press release and supplemental containing the company's results for a reconciliation of these non-GAAP measures to the company's GAAP financial results.

該公司不承擔更新或補充今天所做的任何前瞻性陳述的義務。本公司在其網站 w 上發布重要資訊。 w。 w。點EQCRE。 .com，包括可能意味著今天關於公司季度收益的言論的重要部分的資訊還包括某些非公認會計準則財務指標。請參閱昨天的新聞稿和包含公司績效的補充資料，以了解這些非公認會計準則衡量指標與本公司公認會計準則財務表現的對帳。

On the call today are David Helfand, President and CEO, David Weinberg, COO, and Bill Griffiths, CFO. With that, I will turn the call over to David Helfand.

今天參加電話會議的有總裁兼執行長 David Helfand、營運長 David Weinberg 和財務長 Bill Griffiths。這樣，我會將電話轉給大衛·赫爾芬德。

Thank you, and good morning, everyone. Thanks for joining us. I'll review the Company's results for the quarter as well as provide an update on our business. For the quarter, funds from operation were $0.26 per share compared to $0.22 per share in the first quarter of 2023. Normalized FFO was $0.25 per share compared to $0.23 per share a year ago. Growth in FFO and normalized FFO was largely the result of a $0.01 per share increase in interest and other income and a $0.01 per share decrease in income tax expense.

謝謝大家，大家早安。感謝您加入我們。我將回顧公司本季的業績並提供我們業務的最新情況。本季營運資金為每股 0.26 美元，而 2023 年第一季為每股 0.22 美元。標準化 FFO 為每股 0.25 美元，而一年前為每股 0.23 美元。FFO 和標準化 FFO 的成長主要是由於利息和其他收入每股增加 0.01 美元以及所得稅費用每股減少 0.01 美元。

Same property NOI increased 4.3% compared to last year due to a decrease in pre-leasing demolition costs and an increase in lease termination fees, partially offset by a decrease in average commenced occupancy. Same property cash NOI grew 6.9% lower primarily due to the decrease in average commenced occupancy, partially offset by the decrease in pre-lease pre-leasing demolition costs. And as of March 31st, leased occupancy was 75.4% and commenced occupancy was 74.6%.

由於預租拆除成本下降和租賃終止費增加，同一房產 NOI 比去年增長 4.3%，但部分被平均入住率下降所抵消。同一房產現金 NOI 下降 6.9%，主要是由於平均開始入住率下降，但部分被預租拆除成本的下降所抵消。截至3月31日，租賃入住率為75.4%，開工入住率為74.6%。

Turning to the balance sheet, we have approximately $2.2 billion in cash at nearly $20 per share and no debt. Net of our preferred stock, our cash balance is just under $19 per share. Continue to earn 5.5% in our cash, resulting in $29.5 million in interest and other income for the quarter. We've not repurchased any shares year to date, and we currently have $93 million remaining on our share buyback authorization.

轉向資產負債表，我們擁有約 22 億美元現金，每股近 20 美元，並且沒有債務。扣除我們的優先股後，我們的現金餘額略低於每股 19 美元。繼續賺取 5.5% 的現金，本季利息和其他收入為 2,950 萬美元。今年迄今，我們尚未回購任何股票，目前我們的股票回購授權還剩 9,300 萬美元。

Thought I'd offer a few thoughts on what we've accomplished and where we go from here. Since assuming responsibility for the company, the EQC team has been focusing its efforts and has executed a disciplined strategy. We've completed $7.6 billion of dispositions, including the sale of 164 properties. Distributed $1.8 billion or $14.75 per share to our common shareholders.

我想就我們已經取得的成就以及下一步的發展提出一些想法。自接管公司以來，EQC 團隊一直集中精力並執行嚴格的策略。我們已完成價值 76 億美元的處置，包括出售 164 處房產。向普通股股東分配 18 億美元或每股 14.75 美元。

We've repurchased 652 million of our common shares at a dividend adjusted price of $17.63 per share. We've repaid debt preferred equity of $3.3 billion, and we've generated a cash balance of $2.2 billion.

我們以每股 17.63 美元的股息調整價格回購了 6.52 億股普通股。我們已經償還了 33 億美元的債務優先股，並產生了 22 億美元的現金餘額。

With respect to capital allocation, we've tried to be responsive to market conditions for the first six years that was straightforward. Valuations were at or near all-time highs, and we concluded that was in the company's interest to sell assets. We sold all but four of our office properties between 2015 and 2020 when the pandemic hit the office market froze the investment sale markets, continued weakness coming out of COVID and the spike in interest rates in early '22, stalled the office market recovery. Throughout this time, we've evaluated numerous investment opportunities across sectors. With the recent focus on industrial and residential, we have been seeking to acquire a business with strong fundamentals and a compelling risk reward profile that creates long-term value for our shareholders.

在資本配置方面，我們在前六年一直努力對市場狀況做出反應，這很簡單。估值處於或接近歷史高位，我們得出的結論是出售資產符合公司的利益。2015 年至2020 年間，大流行病襲擊辦公室市場，導致投資銷售市場凍結，我們出售了除四套辦公大樓以外的所有辦公室物業，而新冠疫情帶來的持續疲軟以及22 年初利率的飆升，阻礙了辦公室市場的復甦。在此期間，我們評估了許多跨產業的投資機會。隨著最近對工業和住宅的關注，我們一直在尋求收購一家具有強勁基本面和令人信服的風險回報狀況的企業，為我們的股東創造長期價值。

To date, we've not found the right investment. So while we're actively working on potential transactions in our pipeline, we're also preparing to sell our remaining properties. We expect at the two assets in Austin and the one in Washington, D.C. in the market later this month, our fourth asset 1225 17th Street and Denver is our largest and given that it will likely be the last to sell will require shareholder approval. If after working through our pipeline, we're unable to identify a compelling transaction. We intend by the end of the year to seek shareholder approval for the wind-down of our business and the return of our shareholders capital.

到目前為止，我們還沒有找到合適的投資。因此，在我們積極進行潛在交易的同時，我們也準備好出售剩餘的房產。我們預計，在本月稍後市場上位於奧斯汀的兩項資產和華盛頓特區的一項資產中，我們位於丹佛第17 街1225 號的第四項資產是我們最大的資產，考慮到它可能是最後出售的資產，需要股東批准。如果在完成我們的管道後，我們無法識別引人注目的交易。我們計劃在今年年底前尋求股東批准關閉我們的業務並返還股東資本。

Following shareholder approval, we expect to distribute most of our cash with subsequent distributions following the sale of any remaining assets. We estimate the first wind down to be $0.40 to $0.50 per share and that it will take approximately six months from the sale of the last asset to complete the wind-down.

經股東批​​准後，我們預計將分配大部分現金，並在出售任何剩餘資產後進行後續分配。我們估計首次縮減為每股 0.40 至 0.50 美元，從出售最後一項資產到完成縮減大約需要六個月的時間。

Looking ahead, we will continue to communicate ultimately with shareholders regarding the progress of our investment activities as well as the sale of our remaining office assets. The EQC team will continue to endeavor to create value for shareholders and to be responsible stewards of our investors' capital.

展望未來，我們將繼續與股東就投資活動的進度以及剩餘辦公資產的出售進行最終溝通。EQC團隊將繼續努力為股東創造價值，並成為投資者資本的負責任的管理者。

With that, David Bill and I are happy to take your questions.

大衛比爾和我很高興回答你們的問題。

Thank you. Craig Melman, Citi.

謝謝。克雷格‧梅爾曼，花旗銀行。

Hey, good morning, David. And I guess it sounds like the press release sounded more like you guys are still in the wait and see your commentary. Sounds like the wind down is is the highest probability. Is that sort of the way to take -- take your commentary from the reason you guys gave to year end is because you want to sell the assets first rather than redistribute the cash and then kind of sell them down as they come. Just trying to figure out the difference in the kind of the wording?

嘿，早上好，大衛。我想，新聞稿聽起來更像是你們仍在等待，看看你們的評論。聽起來風下來的可能性是最高的。這是一種採取的方式嗎——從你們對年底給出的理由來看，你們的評論是因為你們想先出售資產，而不是重新分配現金，然後在資產到來時將其出售。只是想找出措詞類型的差異？

Yes.

是的。

Well, thanks, Greg. I'm not sure about the wording. The intention was to convey to investors that we're going to do both. So we're going to continue to pursue some interesting opportunities we have in our pipeline and work those to see if they come to fruition while at the same time moving towards resolution by putting the remaining assets into the market.

嗯，謝謝，格雷格。我不確定措辭。目的是向投資者傳達我們將同時做這兩件事。因此，我們將繼續尋求我們管道中的一些有趣的機會，並研究它們是否能夠實現，同時透過將剩餘資產投入市場來解決問題。

So I mean for you guys, there's opportunities in the pipeline and is there anything that's even on the 50 yard line at this point? Or is it you know you're still dual passing it, but there's nothing imminent right now. I'm just trying to get a sense of probability weighting the outcome there.

所以我的意思是，對於你們來說，機會正在醞釀中，現在有什麼機會在 50 碼線上嗎？或者你知道你仍然在雙重通過它，但現在沒有什麼迫在眉睫的事情。我只是想獲得一種對結果進行加權的機率感。

It's David. I think it's hard to say what yard line we're on because we don't have perfect visibility into the counterparties perspective. But I would reiterate what David said, we're working on some transactions that we think could be a great fit. These are good businesses and they have stories as to why we're a better buyer than maybe an all-cash buyer.

是大衛。我認為很難說我們處於什麼標準線上，因為我們對交易對手的觀點沒有完全的了解。但我要重申大衛所說的，我們正在進行一些我們認為非常合適的交易。這些都是很好的企業，他們有故事說明為什麼我們是比全現金買家更好的買家。

And okay. I mean from a usability and shareholder approval to sell the last office asset, would you need shareholder approval to to put a significant amount of capital to work as well? Or is that you only need it for why not the others?

好吧。我的意思是，從出售最後一項辦公資產的可用性和股東批准來看，您是否也需要股東批准才能投入大量資金？還是你只是需要它，為什麼其他人不需要它？

Yes, Greg, it's Bill. It depends. We really only would need shareholder approval in a situation where we'd be issuing stock in excess of about 20% of our total shares. So we could deploy the cash, assuming no stock above that amount without shareholder approval.

是的，格雷格，是比爾。這取決於。實際上，只有在我們發行的股票超過總股本 20% 左右的情況下，我們才需要股東批准。因此，我們可以部署現金，假設沒有股東批准的情況下沒有超過該數量的股票。

And I apologize for getting into the technicals, but why do you need approval to sell Denver. Is it just because that would effectively give you no assets and trigger something? I'm just trying to understand.

我很抱歉進入技術問題，但為什麼你需要批准才能出售丹佛。難道只是因為這實際上不會給你任何資產並觸發一些東西嗎？我只是想理解。

Yes, just a thing in our charter that we did do third-party get shareholder approval to sell.

是的，在我們的章程中，我們確實做了第三方獲得股東批准出售的一件事。

And then I'm assuming you guys do find an acquisition -- go ahead.

然後我假設你們確實找到了收購——繼續吧。

No, no. Go ahead.

不，不。前進。

Okay. As I say, assuming you guys do find an acquisition in either residential or industrial. I'm just kind of curious on well that, for instance, some potential peers in the industrial space that are which are companies with big portfolios looking at their G&A load, they're somewhere in the low end of $20 million for EastGroup to closure high $30 million to $40 million for a terrain or an FR. I'm just kind of trying to get a sense of how scalable your current platform is today, just because you guys would already be in the middle of that range with a pretty high G&A load for a portfolio that would be at a arguably much smaller size than some of those companies today?

好的。正如我所說，假設你們確實在住宅或工業領域找到了收購。我只是有點好奇，例如，工業領域的一些潛在同行，這些公司擁有龐大的投資組合，正在考慮其 G&A 負擔，他們在 EastGroup 關閉時的價格處於 2000 萬美元的低端。萬至4000 萬美元。我只是想了解你們目前平台今天的可擴展性，只是因為你們已經處於這個範圍的中間，對於一個可以說要小得多的投資組合來說，G&A 負載相當高。嗎？

Well, I would think depending on the nature of the business, we're highly scalable if that were industrial, depending on how management intensive it is. I think we already have a fully staffed corporate office other than maybe adding some accountants and with some other people to supplement the team, but most of the lifting would be at the property level. And those costs I imagine would be carried at the properties.

嗯，我認為根據業務的性質，如果是工業的話，我們是高度可擴展的，這取決於管理的密集程度。我認為我們已經擁有一個人員齊全的公司辦公室，除了可能增加一些會計師和其他一些人來補充團隊之外，但大部分的提升將在財產層面。我想這些費用將由飯店承擔。

So when thinking about G&A. I don't think depending on the investment, there should be that much of an impact, right? We also manage $7 billion of assets with not much more G&A when we started this thing.

所以在考慮一般行政費用時。我認為根據投資情況，應該不會有那麼大的影響，對吧？當我們開始做這件事時，我們還管理著 70 億美元的資產，而管理費用並不多。

Okay. No, that's fair. And then just lastly, on the $0.40 to $0.50 to wind down the portfolio, what would that largely and include? And just one last technical one also, is there any change of control payments and to the management team that would be triggered and that would be included in that $0.40 to $0.50?

好的。不，這很公平。最後，關於縮減投資組合的 0.40 至 0.50 美元，這主要包括哪些內容？最後一個技術問題是，是否會觸發控制權付款和管理團隊的任何變更，這些變更將包含在 0.40 至 0.50 美元之間？

The answer is yes, change in control. Severance payments would be a part of that number. Professional service fees, legal accounting, Tom, other costs to wind down the business are included in the $0.40 to $0.50 this year.

答案是肯定的，控制權的改變。遣散費將成為該數字的一部分。今年的 0.40 至 0.50 美元包括專業服務費、法律會計費、Tom 以及其他關閉業務的費用。

Okay, perfect. Do you have a breakout of what the biggest pieces of that would be?

好的，完美。您是否知道其中最大的部分是什麼？

No, we don't.

不，我們不。

Okay. I mean, is there any chance you guys would forego the change of control payments just to from a shareholder friendliness perspective, since it's a wind down rather than a M&A merger?

好的。我的意思是，你們是否有可能只是為了股東友好的角度而放棄控制權變更付款，因為這是一個逐步結束而不是併購合併？

I don't think so.

我不這麼認為。

Okay, great. Appreciate the time.

好的，太好了。珍惜時間。

This concludes our question and answer session. I would like to turn the call back over to David Helfand for closing remarks.

我們的問答環節到此結束。我想將電話轉回給大衛‧赫爾芬德 (David Helfand) 致閉幕詞。

Thank you very much. Have a good day.

非常感謝。祝你有美好的一天。

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

今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。