Orion Properties Inc (ONL) 2024 Q2 法說會逐字稿

Greetings. Welcome to Orion Office REIT's second-quarter 2024 earnings call. As a reminder, this conference is being recorded.

問候。歡迎參加 Orion Office REIT 2024 年第二季財報電話會議。提醒一下，本次會議正在錄音。

I would now like to turn the call over to Paul Hughes, General Counsel for Orion. Thank you. You may begin.

現在我想將電話轉給 Orion 總法律顧問 Paul Hughes。謝謝。你可以開始了。

Thank you, and good morning, everyone. Yesterday, Orion released its financial results for the quarter ended June 30, 2024, filed its Form 10-Q with the Securities and Exchange Commission, and posted its earnings supplement to its website. These documents are available in the Investors section of the company's website at onlreit.com.

謝謝大家，早安。昨日，Orion 公佈了截至 2024 年 6 月 30 日的季度財務業績，向美國證券交易委員會提交了 10-Q 表，並在其網站上發布了收益補充報告。這些文件可在公司網站 onlreit.com 的投資者部分找到。

Certain statements made during the call today are not strictly historical information and constitute forward-looking statements. These statements include the company's guidance estimates for calendar year 2024, that are based on management's current expectations and are subject to certain risks that could cause actual results to differ materially from our estimates. The risks are discussed in our earnings release, as well as in our Form 10-Q and other SEC filings. Orion undertakes no duty to update any forward-looking statements made during this call.

今天電話會議中發表的某些聲明並非嚴格的歷史訊息，而是前瞻性聲明。這些聲明包括公司對 2024 年曆年的指導估計，這些估計是基於管理層當前的預期，並受某些風險的影響，可能導致實際結果與我們的估計有重大差異。我們在收益報告、10-Q 表和其他 SEC 文件中討論了這些風險。Orion 不承擔更新本次電話會議中任何前瞻性陳述的義務。

Today on the call, we will be discussing certain non-GAAP financial measures such as funds from operations, or FFO, and core funds from operations or core FFO. Orion's earnings release and supplement include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure. Our presentation of this information is not a substitute for the financial information presented in accordance with GAAP.

在今天的電話會議上，我們將討論某些非 GAAP 財務指標，例如營運資金或 FFO，以及核心營運資金或核心 FFO。Orion 的收益報告和補充報告包括這些非 GAAP 財務指標與最直接可比較的 GAAP 指標的調整表。我們提供的這些資訊不能取代依照 GAAP 提供的財務資訊。

Hosting the call today are Orion's Chief Executive Officer, Paul McDowell; and Chief Operating Officer, Chris Day. And joining us for the Q&A session are Gary Landriau, our Chief Investment Officer; and Gavin Brandon, our Chief Financial Officer.

今天主持電話會議的是 Orion 的執行長 Paul McDowell；和首席營運長克里斯·戴 (Chris Day)。參加問答環節的還有我們的首席投資長 Gary Landriau；以及我們的財務長 Gavin Brandon。

With that, I am now going to turn the call over to Paul McDowell.

說完這些，我現在將把電話轉給保羅·麥克道爾 (Paul McDowell)。

Good morning, everyone, and thank you for joining us on Orion Office REIT's second-quarter 2024 earnings call. Today, I will provide an update on our business and discuss our second-quarter performance and operations. Following my remarks, Chris Day will review our financial results and provide our outlook for the rest of the year. Chris is standing in for Gavin, who has temporarily lost his voice.

大家早安，感謝您參加 Orion Office REIT 2024 年第二季財報電話會議。今天，我將介紹我們的業務最新情況並討論我們第二季的業績和營運情況。在我發言之後，克里斯戴 (Chris Day) 將回顧我們的財務表現並對今年剩餘時間做出展望。克里斯代替暫時失聲的加文。

At the end of the second quarter, we own 69 operating properties and 6 unconsolidated joint venture properties, comprising 8.2 million rentable square feet that were 79.7% occupied. The lower property count as compared to last quarter reflects the classification of six properties that made up the former Walgreens campus as nonoperating properties, because the buildings are to be demolished in connection with the redevelopment of the property.

截至第二季末，我們擁有 69 間經營性物業和 6 處非合併合資物業，可出租面積達 820 萬平方英尺，入住率為 79.7%。與上一季相比，物業數量的減少反映了將組成前沃爾格林園區的六個物業歸類為非經營性物業，因為這些建築將在物業重建過程中被拆除。

Adjusted for one operating property that is currently under agreement to be sold, our occupancy rate was 80.9% at quarter end. The properties in our portfolio are predominantly either triple or double net leased to creditworthy tenants. As a percentage of annualized base rent as of June 30, 72.3% of our tenants were investment grade.

經調整目前正在協議出售的一處經營性物業後，本季末我們的入住率為 80.9％。我們投資組合中的物業主要以三倍或兩倍淨租金出租給信用良好的租戶。截至 6 月 30 日，以年化基本租金百分比計算，72.3% 的租戶屬於投資等級。

Our portfolio of assets remains well diversified by tenant, tenant industry, and geography. The United States government is our largest tenant by annualized base rent, and our two largest tenant industries are government and health care. Over 35% of our annualized base rent is derived from Sun Belt markets. Our portfolio's weighted average lease term is 4.2 years.

我們的資產組合仍然按租戶、租戶行業和地理保持良好多樣化。以年基本租金計算，美國政府是我們最大的租戶，我們最大的兩個租戶產業是政府和醫療保健。我們的年化基本租金有 35% 以上來自陽光地帶市場。我們投資組合的加權平均租賃期間為4.2年。

In the second quarter, we continued our leasing progress from the start of the year. To date, in 2024, we've completed 633,000 square feet of lease transactions, a more than twofold increase over all of 2023. During the quarter, we signed two large leases, a four-year renewal, which we discussed on our last call, for 413,000 square feet at our Covington, Kentucky Property; and importantly, a new 15.4-year lease for 56,000 square feet with a law firm tenant at our Parsippany, New Jersey property that represents over a third of the leasable square feet at that property.

第二季度，我們延續了年初以來的租賃進度。截至目前，我們在 2024 年已完成 633,000 平方英尺的租賃交易，比 2023 年全年增長了兩倍多。在本季度，我們簽署了兩份大型租約，一份是為期四年的續約，這是我們上次電話會議上討論過的，租約涉及我們位於肯塔基州卡溫頓的 413,000 平方英尺的房產；更重要的是，我們與律師事務所租戶簽訂了為期 15.4 年的新租約，租約涵蓋新澤西州帕西帕尼的 56,000 平方英尺物業，佔該物業可出租面積的三分之一以上。

As part of that lease-up effort, we intend to invest approximately $3 million in improvements, including to adapt the property to multi-tenant usage and upgraded amenities, such as a fitness center, conference center, and cafeteria.

作為租賃工作的一部分，我們打算投資約 300 萬美元用於改進，包括使該物業適合多租戶使用和升級設施，例如健身中心、會議中心和自助餐廳。

While undeniably expensive, these building upgrades will materially improve the long-term competitiveness of this class A asset, in a strong real estate location and are the reason we kept leverage low, so we can fund exactly these type of expenditures at the right time. Our commitment to make these upgrades has already resulted in increased interest, and we are in active discussions with additional potential tenants for the remaining vacant space.

雖然無可否認，這些建築升級成本昂貴，但將大大提高此類A 級資產在強大房地產位置的長期競爭力，這也是我們保持低槓桿率的原因，因此我們能夠在適當的時間為這些類型的支出提供資金。我們致力於進行這些升級，這已經引起了人們更多的關注，我們正在積極與更多潛在租戶討論剩餘空置空間的問題。

Subsequent to quarter end, our large health insurance company tenant at the company's 55,000 square foot property in Nashville, Tennessee, exercised a five-year renewal option extending their lease expiration until September 2030. Although we anticipate that leasing will remain choppy, we are pleased that our forward-leasing pipeline continues to show strength, with more than 1 million square feet in various stages of discussion, negotiation, and documentation. These signs of increased interest and traffic are positive, including seeing more interest in our vacant properties from new potential tenants.

季度末之後，我們位於田納西州納許維爾 55,000 平方英尺物業的大型健康保險公司租戶行使了五年續約選擇權，將其租約到期延長至 2030 年 9 月。儘管我們預計租賃仍將不穩定，但我們很高興看到我們的遠期租賃管道繼續展現強勁勢頭，其中有超過 100 萬平方英尺的空間處於討論、談判和文件記錄的不同階段。這些興趣和流量增加的跡像是積極的，包括看到更多新潛在租戶對我們空置房產的興趣。

However, the leasing environment remains very difficult. As we've discussed previously, it remains our expectation that we will continue to carry substantial vacancy for the foreseeable future, as the overall office market slowly recovers. We have made strong headway on our ongoing efforts to reposition our portfolio, and we remain focused on dispositions of vacant and soon-to-be vacant assets that we deem highly uncertain and/or expensive to release.

然而，租賃環境仍然非常困難。正如我們之前所討論過的，隨著整體辦公市場的緩慢復甦，我們預計在可預見的未來，我們將繼續保持大量空置。我們在重新定位投資組合的持續努力中取得了重大進展，我們仍然專注於處置我們認為高度不確定和/或釋放成本高的空置和即將空置的資產。

Since the spin, we have sold 18 properties totaling 1.9 million square feet, comprising more than 15% of the portfolio. 15 of these properties were vacant at the time of sale and the remainder had very short remaining leases. Much of the $60.6 million in gross proceeds from these sales was utilized to pay down debt, which has been reduced by $158 million over the same time period. These dispositions have resulted in a material reduction of carry costs and forward expected CapEx, and enabled our team to focus on the properties in the portfolio, where we believe we have strong long-term re-leasing prospects.

自分拆以來，我們已出售 18 處房產，總面積達 190 萬平方英尺，佔投資組合的 15% 以上。其中 15 處房產在出售時處於空置狀態，其餘房產的剩餘租期很短。這些銷售產生的 6,060 萬美元總收益中的大部分用於償還債務，同期債務減少了 1.58 億美元。這些處置導致持有成本和預期資本支出大幅減少，並使我們的團隊能夠專注於投資組合中的物業，我們相信這些物業具有強勁的長期轉租前景。

During the quarter, we closed the sale of a 96,000 square foot vacant property in Saint Charles, Missouri for $2.1 million. As of today, we have definitive agreements to sell one operating property and six nonoperating properties for $39 million. This pipeline is comprised of a vacant property in Denver, Colorado that the buyer intends to redevelop into residential and the former Walgreens campus in Deerfield, Illinois that the buyer intends to redevelop into experiential retail.

本季度，我們以 210 萬美元的價格完成了位於密蘇裡州聖查爾斯一處 96,000 平方英尺空置房產的出售。截至今天，我們已達成最終協議，以 3,900 萬美元的價格出售一處營運房地產和六處非營運房地產。該管道包括科羅拉多州丹佛的一處空置房產，買方打算將其重新開發為住宅區，以及伊利諾伊州迪爾菲爾德的前沃爾格林園區，買方打算將其重新開發為體驗式零售店。

The sale of the Denver, Colorado property is expected to close in the first half of 2025, though closing remains subject to the buyer's completion of due diligence and other conditions outside Orion's control. In addition, we have a 69,000 square foot property under letter of intent for sale. We expect to continue to identify additional properties to market as we move ahead.

科羅拉多州丹佛市的這處房產的出售預計將於 2025 年上半年完成，但交易仍取決於買方是否完成盡職調查以及 Orion 無法控制的其他條件。此外，我們還有一塊 69,000 平方英尺的房產正在出售中。我們期望在未來的發展中繼續尋找更多房產來推向市場。

During the quarter, we agreed to an amendment with the buyer of the Walgreens campus, including realized purchase price of $27 million, reflecting the adverse impact of market and financing conditions since we entered into the purchase and sale agreement with them in January 2023. The buyer continues to make significant progress with its redevelopment plans, including signing a letter of intent with a key tenant and has recently increased its at-risk deposits. However, there remains significant uncertainty as to whether and when this sale will close.

在本季度，我們與 Walgreens 校區的買家達成了一項修訂，包括 2,700 萬美元的實際購買價格，反映了自 2023 年 1 月我們與他們簽訂買賣協議以來市場和融資條件的不利影響。買家的重建計劃繼續取得重大進展，包括與主要租戶簽署意向書，並且最近增加了風險存款。然而，此次出售是否以及何時完成仍存在很大的不確定性。

As I mentioned earlier, given the delays and uncertainty, and consistent with the highest and best use of this 37.4 acre campus as a redevelopment play, and our desire to reduce carrying costs, we intend to commence demolition of the six buildings later this year. As part of the recent amendment, the buyer has agreed to reimburse us for the demolition costs if the sale closes.

正如我之前提到的，考慮到延誤和不確定性，並且為了最大限度地利用這座37.4 英畝的校園進行重建，以及為了降低持有成本，我們打算在今年晚些時候開始拆除這六座建築。作為最近修訂的一部分，買方同意在銷售結束後向我們償還拆除費用。

It continues to be worth noting that although asset sales reduced capital expenditure requirements and operating expense drag in the short term, our smaller asset base will reduce our ability to generate earnings in the future until we can find a path to growth or other strategic alternatives. We remain confident that in the current environment, this is the right approach to maximize the long-term value of Orion, as we continue working to build a core portfolio of well-leased properties in attractive long-term markets with stable cash flows.

值得注意的是，儘管資產出售在短期內減少了資本支出要求和營運費用拖累，但我們較小的資產基礎將降低我們未來的獲利能力，直到我們找到成長之路或其他策略替代方案。我們仍然相信，在當前環境下，這是最大化 Orion 長期價值的正確方法，因為我們將繼續致力於在具有穩定現金流的有吸引力的長期市場中建立租賃良好的核心物業組合。

Maintaining a strong capital structure remains essential to support the necessary investments in our buildings. Therefore, we continue to prioritize a low leverage balance sheet to retain the financial flexibility needed to invest in the remaining portfolio. It will require significant ongoing efforts to execute our repositioning plan and leverage will inevitably rise as we reinvest in our assets.

維持強大的資本結構對於支持我們建築的必要投資仍然至關重要。因此，我們繼續優先考慮低槓桿資產負債表，以保留投資剩餘投資組合所需的財務靈活性。執行我們的重新定位計劃需要持續付出巨大的努力，而且隨著我們對資產的再投資，槓桿率將不可避免地上升。

In light of our ongoing efforts, we will continue to evaluate our opportunities and all sources of capital. We are proud of the substantial progress made to date in a difficult operating environment, and our ability to accomplish this while maintaining FFO and core FFO profitability. As we continue to execute, we remain open and flexible in our approach, including continuing to evaluate strategic opportunities in pursuit of the best outcome for shareholders.

鑑於我們正在進行的努力，我們將繼續評估我們的機會和所有資金來源。我們為迄今為止在艱難的營運環境中取得的重大進展以及在保持 FFO 和核心 FFO 盈利能力的同時實現這一目標的能力感到自豪。在繼續執行的同時，我們仍保持開放和靈活的態度，包括繼續評估策略機遇，以尋求對股東最好的結果。

With that, I will now turn the call over to Chris. Chris?

說完這些，我現在將電話轉給克里斯。克里斯？

Thanks, Paul. I want to start off by highlighting some additional transparency we are providing in our financial disclosures this quarter. First, we have added a variety of property level detail to our supplemental, including occupancy rate, lease rate, weighted average lease term, and annualized base rent. We also commenced classifying certain of our properties that are being repositioned, redeveloped, developed, or held for sale as nonoperating properties rather than operating properties.

謝謝，保羅。首先我想強調一下我們在本季的財務揭露中提供的一些額外的透明度。首先，我們在補充資料中加入了各種房產層面的細節，包括入住率、租賃率、加權平均租賃期限和年化基本租金。我們也開始將某些正在重新定位、重新開發、開發或持有待售的物業歸類為非經營性物業而非經營性物業。

Our nonoperating properties are initially compromised of the six-property, former Walgreens' Campus in Deerfield, Illinois. We believe that separately classifying Nonoperating properties from operating properties provides better transparency into our portfolio.

我們的非經營性資產最初由位於伊利諾州迪爾菲爾德的六處前沃爾格林園區資產組成。我們相信，將非經營性資產與經營性資產分開分類，可以讓我們的投資組合更透明。

Moving now to our financial results, Orion generated total revenues of $40.1 million in the second quarter as compared to $52 million in the same quarter of the prior year. We reported a net loss attributable to common stockholders of $33.8 million or $0.60 per share, as compared to a net loss of $15.7 million or $0.28 per share reported in the second quarter of 2023.

現在來看看我們的財務業績，Orion 在第二季的總收入為 4,010 萬美元，而去年同期的總收入為 5,200 萬美元。我們報告歸屬於普通股股東的淨虧損為 3,380 萬美元或每股 0.60 美元，而 2023 年第二季報告的淨虧損為 1,570 萬美元或每股 0.28 美元。

Core funds from operations for the quarter was $14.2 million or $0.25 per share as compared to $26.9 million or $0.48 per share in the same quarter of 2023. Adjusted EBITDA was $20.5 million versus $32.7 million in the second quarter of 2023. Our lower results year over year, while expected, reflect lease expirations, the rightsizing our portfolio, and associated declining property count.

本季核心營運資金為 1,420 萬美元或每股 0.25 美元，而 2023 年同期為 2,690 萬美元或每股 0.48 美元。調整後 EBITDA 為 2,050 萬美元，而 2023 年第二季為 3,270 萬美元。儘管我們的業績同比下降在意料之中，但這反映了租約到期、投資組合調整以及相關的房產數量下降。

G&A in the second quarter was roughly flat at $4.5 million compared to $4.6 million in the same quarter of 2023. CapEx in the second quarter was $6.3 million compared to $2.2 million in the same quarter of 2023. As we have previously discussed, CapEx timing is dependent on when leases are signed and work is completed on properties. CapEx will likely increase over time as leases roll and tend to draw upon tenant improvement allowances and we upgrade our buildings.

第二季的 G&A 費用基本上持平於 450 萬美元，而 2023 年同期為 460 萬美元。第二季的資本支出為 630 萬美元，而 2023 年同期為 220 萬美元。正如我們之前所討論的，資本支出時間取決於簽署租約的時間以及房產完工的時間。隨著租約的延續、利用租戶改善津貼以及我們升級建築物，資本支出可能會隨著時間的推移而增加。

We ended the second quarter with $489.3 million of outstanding debt, including $355 million under the fixed rate nonrecourse CMBS loan, due in February 2027; $107 million of floating rate debt on the revolving credit facility; and $27.3 million, representing our share of the Arch Street joint venture debt, which is scheduled to mature on November 27, 2024.

截至第二季度，我們的未償還債務為 4.893 億美元，其中包括 3.55 億美元的固定利率無追索權 CMBS 貸款，將於 2027 年 2 月到期；循環信貸安排中的 1.07 億美元浮動利率債務；以及 2,730 萬美元，代表我們在 Arch Street 合資債務中的份額，該債務計劃於 2024 年 11 月 27 日到期。

At quarter end, our net debt to annualized year-to-date adjusted EBITDA was 4.92 times. We recently paid down our revolver by another $9 million, bringing the total since the spin to $158 million. During the quarter, we exercised our option on our revolving credit facility to extend the maturity 18 months to May 2026. As of the end of the quarter, we had strong total liquidity of $267.9 million comprised of $24.9 million of cash and cash equivalents, including the company's pro rata share of cash from the Arch Street joint venture, and $243 million of available capacity on the company's $350 million revolving credit facility. We intend to maintain significant liquidity on the balance sheet for the foreseeable future to provide the financial flexibility required to execute on our business plan over the next several years, including the funding of expected capital commitments to support our future leasing efforts.

截至季末，我們的淨負債與年初至今年度調整後 EBITDA 的比率為 4.92 倍。我們最近又償還了 900 萬美元的循環貸款，使循環貸款自償還以來的總額達到了 1.58 億美元。在本季度，我們行使了循環信貸安排的選擇權，將期限延長 18 個月至 2026 年 5 月。截至本季末，我們的總流動資金為 2.679 億美元，包括 2,490 萬美元的現金和現金等價物，包括公司從 Arch Street 合資企業按比例獲得的現金，以及公司 2.43 億美元的可用產能。的循環信貸額度。我們打算在可預見的未來保持資產負債表上的大量流動性，以提供未來幾年執行業務計劃所需的財務靈活性，包括為支持我們未來的租賃工作提供預期的資本承諾。

As it relates to the Arch Street joint venture debt, the joint venture has two successive, one-year options to extend the nonrecourse loan maturity date until November 27, 2026, subject to satisfaction of certain financial and operating covenants and other conditions. There remains some uncertainty as to whether the joint venture can satisfy the extension conditions, but it has reached a tentative agreement with the existing lenders to extend the loan for one year on mutually acceptable terms. We expect to complete the first one-year extension in the third quarter, although closing is subject to agreement with the lenders on definitive documentation and other contingencies.

就Arch Street 合資企業債務而言，合資企業有兩個連續的一年期選擇權，可以將無追索權貸款到期日延長至2026 年11 月27 日，但須滿足某些財務和營運契約及其他條件。合資企業是否能夠滿足延期條件仍存在一些不確定性，但已與現有貸款人達成初步協議，按照雙方均可接受的條款將貸款延長一年。我們預計將在第三季完成第一次為期一年的延期，但最終仍需與貸款人就最終文件和其他意外情況達成協議。

Turning to our dividend. Orion's Board of Directors declared a quarterly cash dividend of $0.10 per share for the third quarter of 2024, payable on October 15, 2024, to stockholders of record as of September 30, 2024. As it relates to our outlook for 2024, we are narrowing the range of our 2024 guidance expectations for core FFO and net debt to adjusted EBITDA and reaffirm our expectations for G&A. Core FFO is now anticipated to range from $0.97 to $1.01 per diluted share, up from $0.93 to $1.01 per diluted share. Our net debt to adjusted EBITDA is now anticipated to range from 6.2 times to 6.6 times, down from 6.2 times to 7.0 times. Our G&A range of $19.5 million to $20.5 million is unchanged.

談到我們的股利。Orion 董事會宣布 2024 年第三季的季度現金股利為每股 0.10 美元，將於 2024 年 10 月 15 日支付給截至 2024 年 9 月 30 日登記在冊的股東。與我們對 2024 年的展望相關，我們將 2024 年核心 FFO 和淨債務的指導預期範圍縮小至調整後的 EBITDA，並重申對 G&A 的預期。目前預計核心 FFO 範圍為每股稀釋後 0.97 美元至 1.01 美元，高於每股稀釋後 0.93 美元至 1.01 美元。我們預計淨債務與調整後 EBITDA 比率將在 6.2 倍至 6.6 倍之間，低於先前的 6.2 倍至 7.0 倍。我們的 G&A 範圍為 1950 萬美元至 2050 萬美元，保持不變。

With that, we will open up the line for questions. Operator?

現在，我們將開放問答熱線。操作員？

(Operator Instructions) Mitch Germain, Citizens JMP.

（操作員指示）Mitch Germain，公民 JMP。

Lot to digest there with Walgreens campus. And I'm curious what drove you to the decision to accelerate some of the work rather than delay.

沃爾格林園區有很多東西需要消化。我很好奇是什麼促使您決定加快而不是推遲一些工作。

There are a few things. One is, the project has taken longer than we initially expected. The developer has got some good momentum that's now signed an LOI with a key tenant. So one of the key things that was driving the desire to demolish the building was to reduce our carry costs and to eventually reduce taxes and so on, and so forth at the property. We didn't demolish them before because the developer was getting a TIF in place with the town. That TIF was put in place earlier in the spring and that required the buildings to still be standing. Now the TIF is in place, we are free to demolish the buildings. So we intend to do that this fall. And then obviously, if the developer closes, we expect they will, they'll reimburse us for that demolition costs. And if for some reason, the developer doesn't close, well, we will have taking down buildings that don't really have any functional use at the moment and we'll now just own raw land.

有幾件事。一是，該專案所花的時間比我們最初預期的要長。開發商目前發展勢頭良好，已經與主要租戶簽署了意向書。因此，推動拆除該建築的關鍵因素之一是為了減少我們的持有成本，並最終減少建築物的稅收等等。我們之前沒有拆除它們，因為開發商正在與鎮政府簽訂 TIF 協議。該 TIF 於春季早些時候實施，要求建築物必須屹立不倒。現在 TIF 已經到位，我們可以自由拆除這些建築物。因此我們打算今年秋天這樣做。顯然，如果開發商關閉，我們預計他們會向我們償還拆除費用。如果由於某種原因，開發商沒有關閉，那麼，我們將拆除那些目前沒有任何實際用途的建築物，現在我們只擁有未開發的土地。

Okay. You've been able to start some significant investment into your properties after signing leases. In this case, though, you highlighted a pretty significant capital project you're undertaking. Do you anticipate going forward that these capital projects will actually be more aligned with some of your leasing efforts? Now that you're selling some of the buildings that you consider to be non-core, and these buildings that you're leasing are now going to be kind of more core toward the portfolio on a forward basis?

好的。簽署租約後，您就可以開始對您的房產進行一些重大投資。不過，在這種情況下，您強調了您正在進行的一個非常重要的資本項目。您是否預期未來這些資本項目實際上會與您的一些租賃工作更加一致？現在您正在出售一些您認為是非核心的建築，而您租賃的這些建築現在是否會在未來成為投資組合中更核心的建築？

Yes. I think that's exactly right, Mitch. The property in Parsippany, New Jersey, we've had some good tenant interest in there. But what we found, as many other office companies have found, is that tenants are obviously attracted to amenities and having those amenities in place before they sign the lease. So we are upgrading some of our buildings, the building in Parsippany is one. We're looking at upgrading a few others with relatively modest upgrades that we think will have very significant impacts on demand. Doing it in Parsippany helped us get the lease signed with the law firm there for 56,000 feet. And we also have two or three other additional tenants that are now very interested in leasing the remaining square footage in that building, driven, we think, in large part by the investment we're making in the asset.

是的。我認為完全正確，米奇。我們位於新澤西州帕西帕尼的房產已經吸引了一些租戶的興趣。但我們發現，正如許多其他辦公大樓公司所發現的那樣，租戶顯然被便利設施所吸引，並且在他們簽署租約之前就已經擁有了這些便利設施。因此，我們正在升級一些建築，帕西帕尼的建築就是其中之一。我們正在考慮對其他一些產品進行相對適度的升級，我們認為這將對需求產生非常重大的影響。在帕西帕尼的這項做法幫助我們與那裡的律師事務所簽署了 56,000 英尺的租約。我們還有兩三個其他租戶現在非常有興趣租賃建築物的剩餘面積，我們認為，這很大程度上是受到我們對該資產的投資的推動。

Got you. Last one for me. As of these vacancies are absorbed, you have kind of built into your guidance an increase in net debt to EBITDA. What's the outlook there? I mean, it seems like as your operating income continues to dwindle, we could see that metric move into the 7 times area. Is that -- maybe towards the end part of next year. Is that aligned with your assumptions or might be a little too aggressive?

明白了。對我來說是最後一個。隨著這些空缺職位被填補，您已將淨債務與 EBITDA 的增加納入了指導範圍。那裡的前景怎麼樣？我的意思是，隨著您的營業收入持續減少，我們可以看到該指標進入 7 倍區域。是的——也許要到明年年底。這與您的假設一致嗎？

No. I mean, I think that's probably right. We haven't forecasted that far ahead yet, Mitch. But I think you correctly identified the two components of it. One is we do have some declining revenue as we've had tenants leave our buildings and we've absorbed some vacancy and had increased expenses. So obviously, that just by itself pushes debt-to-EBITDA up even though the debt itself isn't particularly rising. Also, there will be some pressure as we invest in new -- in our properties.

不。我的意思是，我認為那可能是對的。米奇，我們還沒有預測那麼遠。但我認為你正確地識別了它的兩個組成部分。一是我們的收入確實有所下降，因為一些租戶離開了我們的大樓，我們吸收了一些空置空間，並增加了開支。因此顯然，儘管債務本身並沒有特別增加，但這本身就推高了債務與 EBITDA 比率。此外，我們在投資新房產時也面臨一些壓力。

So we start putting in tenant improvement allowances, which will eventually generate revenue, or we put in upgrades to the building, which we believe will also generate revenue, but that will temporarily increase debt. That could be offset to some degree by additional sales of properties, which we can utilize, obviously, that capital to pay down debt. So we'll see how we go over the next year, but I think it's fair to say, and we did say in our prepared remarks, that we expect our debt-to-EBITDA ratio to rise in the coming periods.

因此，我們開始投入租戶改善津貼，最終會產生收入，或者我們對建築進行升級，我們相信這也會產生收入，但這會暫時增加債務。這可以在一定程度上透過額外的房產銷售來抵消，顯然我們可以利用這些資金來償還債務。因此，我們將看看明年的情況如何，但我認為可以公平地說，而且我們在準備好的評論中也說過，我們預計未來一段時間我們的債務與 EBITDA 比率將會上升。

Jyoti Yadav, Citizens JMP.

Jyoti Yadav，公民 JMP。

I just wanted to ask, what is the sensitivity to the top and the bottom end of your guidance here, the raised one?

我只是想問一下，您這裡指導的頂端和底端的敏感度是多少，凸起的那個？

Yes. I mean, the sensitivities for the top and the bottom of the guidance, really the honest review, are not that much. We're at that stage in the year where we sort of know where we think we're going to come out. If we get some tenant reimbursements that we don't expect sort of -- some more onetime items that will push us more towards the top of our guidance. And if we have somewhat more in the way of expenditures, then we expect that would push us towards the low end of the guidance. This, of course, all assumes no events that we don't expect, some credit event we don't expect, or some external event we don't expect. But as far as our guidance is concerned right now, we think we're in a relatively tight range of where we expect to come out.

是的。我的意思是，對於指導的頂部和底部的敏感性，實際上誠實的審查，並沒有那麼多。我們正處於一年中的這個階段，我們大概知道我們將會走向何方。如果我們獲得一些我們意想不到的租戶補償 - 一些更多的一次性項目將使我們更接近指導的最高點。如果我們的支出增加，那麼我們預計這將使我們接近指導值的低端。當然，這一切都假設沒有我們不期望的事件、我們沒有期望的某些信用事件或我們沒有期望的某些外在事件發生。但就我們目前的指導而言，我們認為我們處於預期範圍內相對較窄的範圍。

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

目前沒有其他問題。我想將電話轉回給管理階層，請他們作最後發言。

Thank you all for joining us today, and we look forward to updating you after our third-quarter results are published.

感謝大家今天的參與，我們期待在第三季業績公佈後向大家通報最新情況。

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

謝謝。今天的電話會議到此結束。我們感謝您的參與。現在您可以斷開您的線路。祝你剩餘的時光愉快。