Orion Properties Inc (ONL) 2024 Q3 法說會逐字稿

Greetings. Welcome to Orion Office REIT's third-quarter 2024 earnings conference call. As a reminder, this conference is being recorded. I would now like to turn the call over to Paul Hughes, General Counsel for Orion. Thank you may begin.

問候。歡迎參加 Orion Office REIT 2024 年第三季財報電話會議。提醒一下，本次會議正在錄音。現在我想將電話轉給 Orion 總法律顧問 Paul Hughes。謝謝您可以開始了。

Thank you, and good morning, everyone. Yesterday, Orion released its financial results for the quarter ended September 30, 2024, filed its Form 10-Q with the Securities and Exchange Commission and posted its earnings supplement to its website at onlreit.com.

謝謝大家，早安。昨日，Orion 公佈了截至 2024 年 9 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，並將其收益補充文件發佈在其網站 onlreit.com 上。

Certain statements made during this call today are not strictly historical information and constitute forward-looking statements. These statements include the company's guidance estimates for calendar year 2024 and 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，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 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，我們將討論非公認會計準則財務指標，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 Financial Officer, Gavin Brandon. Our Chief Operating Officer, Chris Day, will join us for the Q&A session. With that, I am now going to turn the call over to Paul McDowell.

今天主持電話會議的是 Orion 的執行長 Paul McDowell；和財務長加文·布蘭登（Gavin Brandon）。我們的營運長 Chris Day 將參加我們的問答環節。說完這些，我現在將把電話轉給保羅·麥克道爾 (Paul McDowell)。

Thank you, Paul. Good morning, everyone, and thank you for joining us on Orion Office REIT's third-quarter 2024 earnings Call. Today, I will provide an update on our business and discuss our third quarter performance and operations. Following my remarks, Gavin will review our financial results and provide our outlook for the rest of the year.

謝謝你，保羅。大家早安，感謝您參加 Orion Office REIT 2024 年第三季財報電話會議。今天，我將介紹我們的業務最新情況並討論我們第三季的業績和營運情況。在我發言之後，加文將回顧我們的財務表現並對今年剩餘時間做出展望。

With the completion of the third quarter, we have made strong progress against our key initiatives of extending existing leases and pushing out weighted average lease term. During the quarter, we signed 4 leases comprising 254,000 square feet including a 10-year renewal or 152,000 square feet at our Longmont, Colorado property. The other three leases were also renewals and all four lease renewals combined represent a weighted average lease term of 8.9 years. Our year-to-date leasing efforts have been successful. As we see our well-located properties benefiting from both new and renewal leases -- through last week, we have completed over 830,000 square feet of leasing so far this year, more than three times our full-year 2023 total.

隨著第三季的完成，我們在延長現有租約和延長加權平均租賃期限的關鍵舉措方面取得了重大進展。在本季度，我們簽署了 4 份租約，總面積為 254,000 平方英尺，其中包括一份為期 10 年的續約合同，佔地 152,000 平方英尺，位於科羅拉多州朗蒙特的房地產。其餘三筆租約也均為續約，四份租約續約的加權平均租約期限為 8.9 年。我們今年迄今的租賃工作取得了成功。我們看到，我們位置優越的物業受益於新租約和續約——截至上週，我們今年迄今已完成超過 830,000 平方英尺的租賃，是我們 2023 年全年總租賃面積的三倍多。

Overall, portfolio (inaudible) now stands at 5 years, up from 3.9 years at the same time one year ago. Rent spreads on leasing activity have also been positive so far this year at 3.2%. Tenant leasing sentiment continues to improve, which is another positive aspect of the third quarter. We are seeing increased traffic at our vacant properties as prospective tenants have become more active throughout 2024, and we are responding to more inquiries from both these prospects and our in-place tenants. Additionally, our forward leasing pipeline continues to be strong.

整體而言，投資組合（聽不清楚）期限目前為 5 年，高於一年前同期的 3.9 年。今年迄今為止，租賃活動的租金利差也為正值 3.2%。租戶租賃情緒持續改善，這是第三季的另一個積極方面。由於潛在租戶在 2024 年變得更加活躍，我們看到空置物業的流量增加，我們正在回應來自這些潛在客戶和現有租戶的更多詢問。此外，我們的遠期租賃通路持續強勁。

At quarter end, the pipeline stood at over 1 million square feet in various stages of discussion, negotiation and documentation. Our recent leasing successes while specific to Orion, do seem to be part of a slowly emerging broader trend. To that point, for the overall industry, net office absorption turned positive in the second quarter for the first time in two years. Interestingly, while new office deliveries are falling and are expected to settle at negligible levels soon, the amount of space available in the newest and highest quality buildings continues to decline rapidly and well below pre-pandemic levels.

截至本季末，處於討論、談判和文件記錄各階段的管道面積已超過 100 萬平方英尺。我們最近的租賃成功雖然僅限於獵戶座，但似乎是慢慢出現的更廣泛趨勢的一部分。至此，對於整個產業而言，第二季淨辦公室吸收量兩年來首次轉為正值。有趣的是，雖然新辦公室交付量正在下降並預計很快就會穩定在可以忽略不計的水平，但最新、質量最高的建築中的可用空間數量繼續迅速下降，遠低於大流行前的水平。

As super Class-A space is rapidly absorbed, Orion and owners like us should start to see a positive benefit in our portfolios as tenants by necessity begin to search for available space more widely. These fundamental industry dynamics are further strengthened by core management sentiment shifting dramatically with 79% of CEOs polled in September expecting full-time return to work over the next three years, up dramatically from 34% in April. Even with the macro positives and our own recent leasing progress, we still anticipate Orion's leasing activity will fluctuate and be quite lumpy between quarters. We also expect to continue carrying substantial vacancy for the foreseeable future, as the overall office market recovery will still be measured in years, not months.

隨著超 A 級空間被迅速吸收，Orion 和像我們這樣的業主應該會開始看到我們的投資組合帶來的積極效益，因為租戶出於需要開始更廣泛地尋找可用空間。核心管理層情緒的急劇轉變進一步加強了這些基本的行業動態，9 月份接受調查的首席執行官中有79％ 預計未來三年將全職重返工作崗位，這一數字較4 月份的34％ 大幅上升。即使有宏觀利好因素和我們自己最近的租賃進展，我們仍然預計 Orion 的租賃活動將會出現波動，並且在各個季度之間會相當不穩定。我們也預計，在可預見的未來，辦公大樓空置率仍將大幅上升，因為整體辦公大樓市場的復甦仍需要以年為單位，而不是以月為單位。

We also made further progress during the third quarter, transforming the portfolio through the sale of vacant assets and properties that we believe do not align with our focus on owning properties in (inaudible)growth markets around the country. Through the third quarter of 2024, we have sold over 15% of our portfolio or 18 properties, representing about 1.9 million square feet, and at quarter end, we owned 70 operating properties and six unconsolidated joint venture properties, comprising 8.3 million rentable square feet that were 74.6% occupied.

我們也在第三季取得了進一步的進展，透過出售空置資產和房產來轉變投資組合，我們認為這些資產和房產與我們在全國（聽不清楚）成長市場擁有房產的重點不符。截至2024 年第三季度，我們已售出投資組合中超過15% 的物業，即18 處物業，約190 萬平方英尺，截至季度末，我們擁有70 處營運物業和6 處非合併合資物業，可出租面積達830 萬平方英尺入住率為74.6％。

Adjusted for three operating properties that are currently under agreement to be sold or have been sold, our [occupancy rate] was 76.9% at quarter end. During November, we sold one, 68,000 square foot vacant property located in Dublin, Ohio, for a gross sales price of $3.2 million or approximately $47 per square foot. Bringing our total properties sold since the spin to 19. We also have an ongoing sales pipeline and expect to close on additional dispositions by year-end or in early 2025. Regarding our vacant properties, we decided to step away from the pending contract to sell our sixth building from our Walgreen Campus located in Deerfield, Illinois.

經調整目前正在協議出售或已出售的三處營運物業後，我們季度末的入住率為 76.9%。11 月份，我們出售了位於俄亥俄州都柏林的一處 68,000 平方英尺的空置房產，總售價為 320 萬美元，約合每平方英尺 47 美元。自分拆以來，我們售出的房產總數已增加到 19 處。我們也有正在進行的銷售管道，預計在年底或 2025 年初完成額外銷售。關於我們的空置房產，我們決定放棄出售位於伊利諾伊州迪爾菲爾德的沃爾格林園區第六棟建築的待決合約。

As we have been communicating in the past few quarters after almost two years under contract and some significant progress on a proposed redevelopment plan. There remain questions around when, whether and at what price a buyer would close?

正如我們在過去幾季所溝通的那樣，合約簽訂已近兩年，擬議的重建計劃也取得了一些重大進展。仍存在一些問題：買家何時成交、是否會成交、以及以什麼價格成交？

Given the persistent uncertainty with this buyer, we were unwilling to further extend their due diligence period without the buyer putting additional deposit funds at risk which they declined and the contract was terminated. We have already begun to remarket the property for sale and are talking with some potential interested parties. I want to again emphasize how important our disposition efforts have been for the long-term health of this company. We inherited a portfolio of assets that contained a relatively large number of less than ideal generic office buildings in often tough markets, made all the worse by the historic collapse of the office market in the past two years.

鑑於該買家持續存在的不確定性，我們不願意進一步延長他們的盡職調查期，除非買家承擔額外的保證金風險，但買家拒絕了，合約被終止。我們已經開始重新銷售該房產，並正在與一些潛在的利害關係人進行洽談。我想再次強調我們的處置工作對於公司的長期健康有多重要。我們繼承了一批資產，其中包含大量不太理想的普通辦公大樓，這些辦公大樓往往位於艱難的市場環境中，而過去兩年辦公大樓市場的歷史性崩潰使情況變得更糟。

Our sales have generated $63.8 million in gross proceeds. But far more important, these sales resulted in a very material reduction of carry costs and forward expected CapEx. The sold properties will no longer weigh us down and have allowed us to focus on those assets where we believe we achieve long-term leasing success in recovering market. In short, our overall portfolio while smaller, is far more attractive now. And although our disposition activities will continue, we believe one year from now, our revenues and earnings will flatten and then rise significantly in the out years as we re-tenant the vacant properties we decided to hold.

我們的銷售總收益已達 6,380 萬美元。但更重要的是，這些銷售導致持有成本和預期資本支出大幅減少。出售的房產將不再給我們帶來負擔，使我們能夠專注於那些我們相信能夠在復甦市場中實現長期租賃成功的資產。簡而言之，我們的整體投資組合雖然規模較小，但現在卻更具吸引力。儘管我們的處置活動仍將繼續，但我們相信，一年後，隨著我們重新出租我們決定持有的空置房產，我們的收入和收益將趨於平穩，然後在未來幾年大幅上升。

Since going public, we have devoted excess cash from operations and proceeds from asset sales to debt reduction to maintain maximum financial flexibility. We have consistently said that we intend to recycle some of that capital should the right opportunity arise. Such an opportunity came in September, when we purchased a 97,000 square foot mission-critical agricultural research and development lab located within the San Francisco Bay Area. The property is 100% leased to Valent USA. a wholly owned subsidiary of Sumitomo Chemical Company for a 15-year remaining net lease term through August 2039.

自上市以來，我們一直將營運產生的剩餘現金和資產出售所得用於減債，以保持最大的財務靈活性。我們一直表示，如果有合適的機會，我們打算回收部分資本。9 月份，這樣的機會來了，我們購買了位於舊金山灣區的一座 97,000 平方英尺的關鍵任務農業研究和開發實驗室。該房產 100% 租賃給 Valent USA。住友化學公司的全資子公司，剩餘淨租賃期限為 15 年，至 2039 年 8 月。

The tenant's parent company, Sumitomo Chemical, has an A+ credit rating in Japan. This location is strategic for Valent due to its proximity to graduate research talent throughout the Bay Area, particularly UC Davis, which has the largest agricultural technology program in the U.S. Furthermore, Valent has invested over $25 million or approximately $260 per square foot into the property since 2019. This includes various premium lab upgrades, supplemental HVAC and various other renovations that support Valence laboratory operations. We acquired the property at below market rents and at a significant discount to replacement cost.

該租戶的母公司住友化學在日本擁有 A+ 信用評級。這個位置對Valent 來說具有戰略意義，因為它靠近整個灣區的研究生人才，尤其是擁有美國最大農業技術項目的加州大學戴維斯分校。美元，即每平方英尺約260 美元自 2019 年起。這包括各種高級實驗室升級、補充 HVAC 和支援 Valence 實驗室運營的各種其他改造。我們以低於市場租金和大幅低於重置成本的價格收購了該房產。

The going-in cap rate is 7.4%, with an average cap rate of 9.2% over the term. We will finance the property with a low leverage seven-year nonrecourse mortgage at a rate below 6%, making a cash flow accretive. We believe that being selective and adding a property like this through capital recycling is a smart way to focus on complementing our ongoing asset sales and portfolio repositioning efforts by adding a very high-quality, long lease duration assets. While we intend to redeploy capital to strengthen our portfolio over time with very selective acquisitions like we did in September with this California property.

初始資本化率為 7.4%，期間平均資本化率為 9.2%。我們將以低於 6% 的利率透過低槓桿七年期無追索權抵押貸款為該房產融資，從而增加現金流。我們認為，透過資本循環選擇性地增加這樣的資產是一種明智的方式，透過增加高品質、長租賃期的資產，可以專注於補充我們正在進行的資產銷售和投資組合重新定位工作。同時，我們打算隨著時間的推移重新部署資本，透過選擇性的收購來加強我們的投資組合，就像我們9月份對這處加州房產所做的那樣。

Our first priority continues to be leasing our current properties, followed closely by asset sales of those properties that have poor future leasing prospects. As we have consistently discussed on previous calls, we are investing capital and adapting properties we want to keep in the portfolio, specifically those that are well located in our target growth markets. This strategy is the reason we have remained highly disciplined at at maintaining a low leverage balance sheet over the past two years so that we can appropriately fund capital expenditures, which will significantly enhance the long-term competitiveness of our assets.

我們的首要任務仍然是租賃現有的房產，其次是出售那些未來租賃前景不佳的房產的資產。正如我們在先前的電話會議上一直討論的那樣，我們正在投資資本並調整我們想要保留在投資組合中的資產，特別是那些位於我們目標成長市場的資產。這項策略是我們在過去兩年中保持高度自律、維持低槓桿資產負債表的原因，這樣我們就可以適當地資助資本支出，這將大大增強我們資產的長期競爭力。

Additionally, we are realizing the benefits of some of our past investments as they have resulted in increased showings and leasings. That work continues, and we expect the pace of our CapEx spending will increase over the next couple of years along with our leverage as we lease vacant space and build long-term revenues. We are increasingly confident that our recent leasing momentum will continue and that the stabilization of our portfolio and earnings are in sight. That said, as we enter the final quarter of the year and look ahead to 2025, we want to point out that the combination of the rise in interest rates, the significant number of properties we have sold and the vacancy we continue to carry that has resulted from the tremendous lease rollover over the last few years has had a cumulative negative impact and will be particularly pronounced in our 2025 results.

此外，我們也意識到了過去的一些投資所帶來的收益，因為它們帶來了展示和租賃的增加。這項工作仍在繼續，我們預計，隨著我們租賃空置空間並建立長期收入，我們的資本支出速度將在未來幾年內隨著我們的槓桿率的提高而增加。我們越來越有信心，我們最近的租賃勢頭將會持續下去，而且我們的投資組合和利潤即將穩定下來。儘管如此，當我們進入今年最後一個季度並展望 2025 年時，我們想指出的是，利率上升、我們售出的大量房產以及我們持續存在的空置率，這些因素共同導致了過去幾年大量租賃展期造成的負面影響已累積，並將在我們2025 年的業績中尤為明顯。

We have been consistently communicating these dynamics over the past few years and they are not a surprise. However, we continue to want to be as transparent to the market as we can be, and while we are not issuing formal guidance for 2025, we expect that these cumulative impacts on core FFO could be as much as $20 million to $24 million versus 2024.

過去幾年我們一直在傳達這些動態，這並不令人意外。然而，我們仍然希望盡可能地對市場保持透明，雖然我們還沒有發布 2025 年的正式指導意見，但我們預計，與 2024 年相比，這些對核心 FFO 的累積影響可能高達 2000 萬至 2400 萬美元。

Given our initial portfolio and the highly challenged office market conditions of the past few years, while we are disappointed, we could not overcome the earnings impact. We believe this lower expected earnings level in 2025 should be at the bottom for the business. We expect that level to stabilize and then start to grow as newly leased space comes online and associated vacancy costs received. This space should give us a solid platform from which we can start to grow meaningfully and potentially give us additional options from a strategic standpoint. As we continue to execute and build on our substantial progress year-to-date, repositioning the portfolio, I want to emphasize that the company remains profitable on an FFO and core FFO basis and we expect that to continue. With that, I will now turn the call over to Gavin.

考慮到我們最初的投資組合以及過去幾年嚴峻的辦公市場形勢，雖然我們感到失望，但我們無法克服獲利影響。我們認為，2025 年的預期獲利水準較低，應為該業務的最低水準。我們預計，隨著新租賃空間的投入和相關空置成本的支付，該水準將趨於穩定並開始成長。這個空間應該為我們提供一個堅實的平台，讓我們能夠開始有意義的發展，並有可能從策略角度為我們提供更多的選擇。隨著我們繼續執行並鞏固今年迄今的實質進展，重新定位投資組合，我想強調的是，公司在 FFO 和核心 FFO 基礎上仍然保持盈利，我們預計這種情況將持續下去。說完這些，我現在將電話轉給加文 (Gavin)。

Thanks, Paul. I will start by reviewing our third quarter financial results and provide an update on our outlook for the remainder of the year.

謝謝，保羅。我將首先回顧我們第三季度的財務業績，並對今年剩餘時間的前景做出更新展望。

Orion's 2024 third-quarter financial results compared to the third quarter of 2023 are as follows; revenues of $39.2 million compared to $49.1 million. Net loss attributable to common stockholders of $10.2 million or $0.18 per share compared to $16.5 million or $0.29 per share. Core Funds From Operations of $12 million or $0.21 per share compared to $24.1 million or $0.43 per share. Adjusted EBITDA of $19.1 million compared to $30 million.

Orion 2024 年第三季與 2023 年第三季相比的財務表現如下；營收為 3,920 萬美元，而去年同期為 4,910 萬美元。普通股股東淨虧損為 1,020 萬美元，即每股 0.18 美元，去年同期為 1,650 萬美元，即每股 0.29 美元。核心營運資金為 1,200 萬美元或每股 0.21 美元，而之前為 2,410 萬美元或每股 0.43 美元。調整後 EBITDA 為 1910 萬美元，而之前為 3000 萬美元。

As Paul mentioned, and as we have previously communicated, lease expirations and dispositions of noncore assets to rightsize our portfolio have negatively impacted the company's financial results quarter-over-quarter. SG&A was $4.5 million compared to $4.4 million in the third quarter of 2023. CapEx was $6.1 million compared to $8.4 million in the third quarter of 2023. CapEx timing is dependent on when leases are signed and when property and tenant improvements are completed. The timing of CapEx for tenant improvements is controlled by our tenants.

正如保羅所提到的，以及我們先前所傳達的，租賃到期和為調整投資組合而處置非核心資產對公司季度財務表現產生了負面影響。銷售、一般及行政費用為 450 萬美元，而 2023 年第三季為 440 萬美元。資本支出為 610 萬美元，而 2023 年第三季為 840 萬美元。資本支出時間取決於租約的簽署時間以及財產和租戶改善的完成時間。用於租戶改善的資本支出時間由我們的租戶控制。

And therefore, there is uncertainty and when it will be spent. However, we expect that CapEx will begin to accelerate as we move into next year.

因此，這筆錢何時花掉還存在不確定性。然而，我們預計，進入明年，資本支出將開始加速。

As of the end of the quarter, $512.1 million of debt was outstanding comprised of $355 million of nonrecourse fixed rate, CMBS loan that matures in February of 2027. $130 million of floating rate debt on the revolving credit facility that matures in May of 2026 and $27.1 million, representing our portion of the Arch Street joint venture debt, which is scheduled to mature on November 27, 2024. At quarter end, net debt to annualized year-to-date adjusted EBITDA was 5.6x and total liquidity was $237.3 million.

截至本季末，未償還債務為5.121 億美元，其中包括3.55 億美元的無追索權固定利率CMBS 貸款，該貸款將於2027 年2 月到期。 2026 年5 月到期，以及2,710 萬美元，代表我們在 Arch Street 合資企業債務中的份額，該債務計劃於 2024 年 11 月 27 日到期。截至季末，淨負債與年初至今年度化調整後 EBITDA 比率為 5.6 倍，總流動資金為 2.373 億美元。

Total liquidity is comprised of $17.3 million of cash and cash equivalents including the company's pro rata share of cash from the Arch Street joint venture and $220 million of available capacity on the company's $350 million revolving credit facility. As we have communicated, 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 expect capital commitments to support our continuing leasing efforts.

總流動資金包括 1,730 萬美元的現金和現金等價物，其中包括公司從 Arch Street 合資企業按比例獲得的現金份額，以及該公司 3.5 億美元循環信貸額度中的 2.2 億美元可用額度。正如我們已經傳達的那樣，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，包括為支持我們持續的租賃工作而提供的預期資本承諾的資金。

As it relates to the Arch Street joint venture debt, the joint venture has two successive one-year options to extend the nonrecourse loans maturity date until November 27, 2026, subject to satisfaction of certain financial and operating covenants and other conditions. In connection with the recent amendment of a loan agreement, the joint venture exercised the first extension option and is working with the lenders to satisfy all conditions to extend the maturity until November 27, 2025. We expect the joint venture will satisfy the conditions for the first extension. Turning to our dividend.

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。結合最近對貸款協議的修訂，合資企業行使了第一延期選擇權，並正在與貸款人合作以滿足所有條件，將貸款期限延長至 2025 年 11 月 27 日。我們預計合資公司將滿足第一次延期的條件。談到我們的股利。

Orion's Board of Directors declared a quarterly cash dividend of $0.10 per share for the fourth quarter of 2024, April January 15, 2025, to stockholders of record as of December 31, 2024. As it relates to our outlook for the remainder of 2024, we are narrowing the range of our 2024 guidance expectations for core FFO and reaffirming our expectations for net debt to adjusted EBITDA and G&A.

Orion 董事會宣布，2024 年第四季（2025 年 4 月至 1 月 15 日）向截至 2024 年 12 月 31 日登記在冊的股東派發每股 0.10 美元的季度現金股利。由於這與我們對 2024 年剩餘時間的展望有關，我們正在縮小 2024 年核心 FFO 指導預期範圍，並重申我們對淨債務與調整後 EBITDA 和 G&A 比率的預期。

Core FFO is now anticipated to range from $0.99 to $1.01 per diluted share, increasing to the low end of the range by $0.02 from $0.97. Our net debt to adjusted EBITDA range is unchanged and is anticipated to be 6.2 times to 6.6 times. Our G&A range of $19.5 million to $20.5 million is unchanged. With that, we will open the line for questions. Operator.

目前預計核心 FFO 範圍為每股攤薄 0.99 美元至 1.01 美元，從 0.97 美元增加至該範圍的低端 0.02 美元。我們的淨債務與調整後 EBITDA 比率保持不變，預計為 6.2 倍至 6.6 倍。我們的 G&A 範圍為 1950 萬美元至 2050 萬美元，保持不變。現在，我們將開放問答熱線。操作員。

(Operator Instructions) Mitchell Germain, JMP Securities.

（操作員指示）Mitchell Germain，JMP Securities。

Can a new buyer leverage the work done from the previous fire for the Walgreen property? Or do you think that now the whole process gets reset?

新買家能否利用上次火災後對沃爾格林房產所做的改進？還是您認為現在整個過程都重置了？

Mitch. No, the answer is the new buyer, we believe, can leverage the work that's been done by -- from the previous buyer. That buyer had -- did quite a bit of work for the redevelopment of the property, and we are the owner of all of those files. The buyer also got put in place a tax increment financing district with the city of Deerfield which is now owned by us. So there's a significant amount of work has been done, which would (inaudible)to the benefit of a new buyer, assuming they wanted to pursue a similar development plan.

米奇。不，答案是我們相信新買家可以利用之前的買家所做的工作。該買家為該房產的重建做了大量工作，我們是所有這些文件的所有者。買家還與迪爾菲爾德市建立了稅收增量融資區，迪爾菲爾德市現在歸我們所有。因此，已經完成了大量的工作，這將（聽不清楚）使新買家受益，假設他們想推行類似的開發計劃。

Just shifting over to the acquisition that you did in the quarter. Was there anything unique about the seller? Was there some distress? Or was there some impending debt? Was there anything that was unique on that deal?

只是轉向您在本季度進行的收購。賣家有什麼獨特之處嗎？是不是有些苦惱？或者是否存在一些即將到期的債務？這筆交易有什麼獨特之處嗎？

And I might have missed a yield -- though you talked about the debt. So obviously above that. But if any color you can provide there would be appreciative?

儘管你談到了債務，但我可能錯過了收益。顯然高於這個。但是如果您能提供任何顏色的話我們會很感激嗎？

Sure. I don't think the sale was -- I don't think the seller was under any particular distress. I will say that the market has been pretty thin. So our ability to purchase the property for an all-cash transaction was attractive, which we think gave us some additional pricing power when we negotiated the transaction with the seller. So we're very, very pleased with not only the cap rate that we were able to obtain, when we bought the property at way below replacement cost and the rents tenants are paying are significantly below market.

當然。我不認為銷售——我不認為賣家面臨任何特別的困擾。我想說的是，市場一直相當疲軟。因此，我們以全現金交易方式購買該房產的能力是有吸引力的，我們認為這在我們與賣家協商交易時給了我們一些額外的定價權力。因此，當我們以遠低於重置成本的價格購買房產時，我們不僅對能夠獲得的資本化率感到非常滿意，而且租戶支付的租金也遠低於市場價格。

So we feel very, very comfortable there.

因此我們在那裡感覺非常非常舒服。

We are enhancing the asset with -- as I mentioned in my prepared remarks, with the long-term debt at a rate below 6% a secondary loan -- a relatively low LTV loan of, call it, between 50% and 55%, which will -- the combined rate will make the transaction for us, very cash flow accretive.

我們正在透過——正如我在準備好的發言中提到的那樣——利率低於6% 的長期債務和二級貸款來增強資產——相對​​較低的LTV 貸款，介於50% 和55%之間，綜合利率將為我們的交易帶來極大的現金流增值。

And the yield is 7%. Is that the way to think about it?

收益率為7%。是這樣思考嗎？

Can you repeat that?

你能重複一遍嗎？

The cap rate -- going in cap rate. if I missed i apologize, is that north of 7%? Is that the way to think about the yield?

資本化率－進入資本化率。如果我錯過了我很抱歉，那是 7% 以上嗎？這就是思考收益的方式嗎？

Yes, the going cap rate is 7.24% and the average cap rate is 9.2%.

是的，目前資本化率為 7.24%，平均資本化率為 9.2%。

Great. Last one for me. How do you -- looking out I think you and also Gavin referenced, obviously, increasing debt levels, increasing CapEx spend. So how do you start to balance these unique investment opportunities against the potential requirement for cash related to CapEx, whether it be building improvements or leasing related? How does -- how do you start navigating that as you continue forward?

偉大的。對我來說是最後一個。我認為您和加文都提到過，您如何看待債務水準的提高和資本支出的增加？那麼，如何開始平衡這些獨特的投資機會與資本支出相關的現金潛在需求（無論是建築改進還是租賃相關）？當您繼續前進時，您如何開始駕馭它？

That's a terrific question, Mitch. And one we debate internally pretty much all of the time here. I think the best way to describe it is our first and foremost focus is on the assets we own already on the balance sheet. So our best use of capital for the most part is to put into the assets we already own. And when I say put capital into assets we already own.

這是一個非常棒的問題，米奇。我們內部幾乎一直都在就此進行討論。我認為最好的描述方式是，我們首先關注的是資產負債表上已有的資產。因此，在大多數情況下，我們對資本的最佳利用就是投入我們已經擁有的資產。當我說把資本投入到我們已經擁有的資產中。

And I mean by that, generally, it makes sense for us to lease up the vacancy and the capital we use to lease up that vacancy -- is the most accretive way that we can use that capital to generate returns -- rather than just using capital to try -- to fix up a building to attract investors. We are doing that -- but when you look at a vacant building, we look at what capital we would have to invest without a guaranteed return versus investing that capital in an acquisition opportunity.

我的意思是，一般來說，出租空置的辦公空間是合理的，我們用來出租空置辦公空間的資本是利用這些資本創造回報的最有效方式，而不是僅僅使用資本嘗試——修繕一棟建築來吸引投資者。我們正在這樣做——但是當你看到一棟空置的建築時，我們會考慮在沒有保證回報的情況下我們必須投資多少資本，而不是將這些資本投資於收購機會。

And that's where we try to make where we think is the best judgment. If we don't think it makes sense to invest capital in the building, we've been selling them. And utilizing that capital we might otherwise have invested to potentially buy new assets. But going forward from here, I think it's fair to say, and you should expect and investors should expect that we will focus most of our capital expenditures in the coming years on our existing portfolio.

這就是我們試圖做出我們認為最佳的判斷的地方。如果我們認為投資建造這棟建築沒有意義，我們就會將其出售。並利用我們原本可能投資的資本來購買新資產。但從現在開始，我認為可以公平地說，你應該預料到，投資者也應該預料到，我們將在未來幾年將大部分資本支出集中在我們現有的投資組合上。

(Operator Instructions) There are no further questions at this time. At this point, I'd like to turn the call back over to Mr. McDowell for closing comments.

（操作員指示）目前沒有其他問題。現在，我想將電話轉回給麥克道爾先生，請他發表最後評論。

Thank you all for joining us on our third quarter call, and we look forward to updating you further in the new year with our fourth quarter results. Thank you.

感謝大家參加我們的第三季電話會議，我們期待在新的一年進一步向您通報我們的第四季業績。謝謝。

This concludes today's conference call. You may disconnect your lines at this time, and we thank you for your participation.

今天的電話會議到此結束。您現在可以斷開您的線路，我們感謝您的參與。