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Franklin Street Properties (FSP)

Participants
Scott Carter General Counsel
George Carter Chief Executive Officer
John Demeritt Chief Financial Officer
Jeff Carter President & Chief Investment Officer
John Donahue President of FSP Property Management
Toby Daley Senior Vice President & Regional Director of Atlanta & Houston
Dave Rodgers Robert W. Baird
John Guinee Stifel
Rob Stevenson Janney
Craig Kucera B. Riley FBR
John Kim BMO Capital Markets
Call transcript
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Operator

Good morning and welcome to the Franklin Street Properties Corporation Fourth Quarter 2018 Year End Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Scott Carter, General Counsel. ahead go Please

Scott Carter

our Investment welcome and and and morning Franklin Regional Properties John me of are with and Street John George morning Jeff Good XXXX to Senior Friend earnings Directors. who are Toby Vice Carter, FSP Chief quarter Demeritt, Officer; Donahue, Management. Executive and Property year-end our this Financial our call. fourth Officer; Officer; President Carter, morning Will Presidents Chief Also the Chief this With are President Daley me and

on the Before I differ the Factors may I of of Act future result in important results remarks may John statements Harbor these by turn the from Private Actual of XXXX, for call the XXXX. under year indicated which of about section constitute may over as on that our Securities note to XX-K Demeritt the materially forward-looking file purposes those SEC. Litigation is expectations a statements make prospects Report with ended Safe December for factors, Today's Reform Form discussed Risk for the XX, including and the various those forward-looking plans following. the Annual we provisions

represent statements addition, these only today, as of XX, company’s In forward-looking XXXX. the expectations February

in release, is may of While Investor any as to any net relied or the A our upon views the FFO representing FFO. to at statements, call, obligation press company Relations GAAP this as operations, which forward-looking www.fspreit.com. or forward-looking may should subsequent we contained disclaims is elect website of reconciliation during to be not to company’s today. refer in section to from specifically Any it update these funds times available income statements do of so. date the At yesterday’s estimates

to over call the John. turn I'll Now

John Demeritt

discuss in activities. recent our CIO our overview be George After the Scott, our Donahue, results. our disposition of will a his John Carter, and remarks. will discuss questions. our activities, good call, President some provide investment and leasing quarter team CEO, Afterwards begin take detail On then discuss Carter morning, and our and that we'll and more fourth today's then of will everyone. Thank to happy performance Jeff brief I'll of you, asset and management year-end with President

we As We reminder with earnings filed the refer today funds our the the million of supplemental and for found comments Scott share or be reported a XX-K, from share. as XXXX. million mentioned will on per and FFO release, $X.XX were our or to $X.XX website. And can full $XX.X reported or SEC on package year, FFO which operation quarter $XXX.X of our for fourth per

had coverage balance above Turning to XX, $XXX was and million our of outstanding ratio XXXX, about debt sheet unsecured debt at December service times. X.X our we

debt November we at we have $XX.X capital structure year-end that rates. and maturities add on termed cash million a our We at standpoint, on sheet. our $XXX balance debt fixed, in XXXX From properties we With our our the have with mostly and until out markets. value XXth of liquidity available of fixed more our have long-term our revolver our we more rates XX% of and aligned no debt have believe is stack million

we the call So have of to I'll With over total at turn liquidity that, $XXX.X George? million about year-end. George.

George Carter

XXXX to more written everyone, Call. call provide Franklin color I'll Earnings and Street and Properties Quarter in yesterday's In morning, this welcome little Good Fourth John. again a try earnings my my morning's of segment Year-End you, commentary to release. Thank to

valued time will way as leases, assets both the growth about we the are plan, and The well property whatever to the part believe for maximize into office have We stabilized calls capability of this of five value believe we of XXXX best the success. value-add the highly and amenitized with the to three rent approximately vertical our effort would whole portfolio last a transitioned portfolio opportunity suburban track We and over was are are to strategy bulge The goal. have value-add in value talked strategy before strong this financial this the property a XXXX add we remaining square assets our occupancy on of equation part portfolio of foot, three-year buildings previous believe XX% Higher are this our users XXXX. lease per largest always on urban, space to of years about more bulk in this the and all XXXX, office through surrounding today's and strong infrastructure how a total that population at as get earnings our be significant between leased roll, going re-leasing. year value-add XX%. leasehold and with we significant year and encompasses potential locations resources and longer achieve updated for

that While metrics continue leasing feet. XXXX years momentum. that year measure XXX,XXX right we of record portfolio. The two continuing operating properties approximately record; to square XXXX, for leasing. into XX solid the XXXX and three to is XXXX which be square approximately last have X,XXX,XXX during with are we important contributed leasing X,XXX,XXX square year endeavor, the quarter. redevelopment in our previous as record XXXX leased of square making activity FSP within leased feet feet off leased in XXXX during we also this footage was more XX% the feet; go quarter during portfolio of This the now there leased Leasing fourth the at X,XXX,XXX none XXXX a with total comes success we of to a are And than activity year. many And help FSP our square property

the the important increased couple past will the oil obviously range and last characteristics longer-term over per to has that volatile quarter influence of in an certainly breakeven energy levels over XXXX be those Denver. But our that its particularly had increased their the products space a positive providing Ship dramatically both big U.S. that that energy also of energy effect The the market. has to Port and affecting from pricing for Houston last $XX maybe of Also office future market other drillers, various positive, factor energy of dramatically increased in absorption was we in the the The picked $XX barrel consequent leasing price energy continued and as oil of up during believe barrel and have in current jobs Houston We commodity is per U.S. activity over particularly markets on price see now many supply-demand years XXXX. field markets has new producers of of markets. in that couple the lowered export infrastructure, and the for Channel of years. range at activity dramatically of the the costs sort Houston in and participants

Virginia, occupancy Forest North for we quarter XXXX As Carolina Allen Cross SunTrust move-outs which overall Blue anticipated, planned leased in Glen including; Miami, Park Innsbrook fourth the known Burger experience of during tenant at in in Red did and Charlotte at property at and portfolio. Lagoon our reduced King in

XXXX. property approximately XX% approximately December at our lease-up which XXX we're as efforts redevelopment As XXXX leased of continuing square-foot XXX,XXX XX, was our as known Marquette begins, Minneapolis in

foot Blue to approximately redevelopment to we in our Park and Marquette, Florida XXX efforts are XX,XXX now property both approximately aggregate. approximately and addition, XXX,XXX North redeveloping Forest in prior tenants. square to In property single Lagoon of Miami Charlotte square Lagoon the square a for beginning term an had Similar total feet leased foot an of XXX redevelopment Forest Park space long in Carolina Blue been

that of for years excellent our and markets by locations are In single consistently anchored are their strong us tenant and excess meaningfully cash than these have We addition assets been both XX flows. an market the rents. current have assets for within higher owned rents expiring generated respective or affiliates believe in

us achieve We higher long-term rental a shareholders return value believe flows increased the properties cost our for our contribute of company. three significant strong these cash as rental income no redevelopment to we rate will redevelopment. capture opportunity also to provide Currently the to seek of our that through ongoing on efforts material

very and for capital invested that much X% returns in our of we confident so well square on redeveloped with. now can lease. these are total These have properties know strong is very being footage We redevelopments. are marketed being achieve Over actively history we and experience and

operating more As three-year value and retain properties increased significant roll in and flow during mark our results XXXX. XXXX three Property sustainable was operating rise the XXXX. in creation XX redevelopment company our operating more term, dividend longer XXXX ability planned and that in our of in fund our begins in to portfolio the expenditures our The lease these we in property successful leasing allows FSP to are XXXX be optimistic to the properties. portfolio To performance a believe to vacancy our for. reduction And cost portions will beginning clear, this capital within and bulge lease about anticipated of cash

between have and As to property out-facilitate leasing $XXX of cash available line redevelopment. this of year-end XXXX, and over million we liquidity credit of

between a this occupancy way strategy would our was financial value, XX%. the our XX% time total capability at value resources this our maximize with to portfolio, add of whatever to get always plan, believe to and the leased Our we in and of property stabilized

and our it's confident portfolio President will to potential of accelerating continue those that pace years. Company. of I XXXX John remarks, and the are our With the of We John? our proud two last call of over property Management can Donahue, Property leasing turn

John Donahue

everyone. the the of decrease was morning, This portfolio Good at calendar third of the end The XXXX. from FSP operating at represents XX% quarter. George. you, Thank a leased end XX.X%

Dallas tenants representing fourth Richmond square in As vacated Miami, three the expected, quarter. during and feet significant XXX,XXX

the leased XXXX feet. an The at for annual properties, achieved company result, the X.XX square including for million set was portfolio, a As total XX.X% three at the redevelopment leasing record total year-end.

two records As George million consecutive the leasing years total square two X.X FSP with annual feet for and had mentioned, a years. exceeding

quarters continue and progress from during finished occupancy the a improved XX% three as XXXX at in work of high leased. XXXX. the five-year remains While leased West and we increased to XX.X% occupancy XX.X% at Denver Houston to to occupancy their XX.X% Mountain make year also with markets reached and Sunbelt do, leased December consecutive of

and to our XXXX the occupancy during largest second that consistent consistent Dallas and has expect market, been continue expect We expect largest continue. has FSP's properties FSP's well. our leased market we occupancy Atlanta, performing we properties Dallas Denver, market, during portfolio. leased the most progress anchor in improve to strongest to XXXX again made in and

and to in progress leasing quarters XXXX. both over we of an have properties make Our markets lease expirations opportunity minimal the therefore, Minneapolis in those and next during few Houston have excellent

FSP's pleased at fundamentals forward barring will direction turn last any for and simultaneously. of however, in markets As to quarter, remains lining the appear during it slower over Sunbelt leasing same be the quarter year, strong quarter to seven the Jeff first that first but the surprises, has in been time FSP's move Carter. we typically leasing QX mentioned multiple the to has been past first portfolio relatively to XXXX. every years. with work results With Leasing best first up There we our Mountain activity six finish are total the do, we in I West weeks to report years, may in that, in

Jeff Carter

select everyone. strategy manage as within opportunistic the build value to to as long-term morning for shareholders. own Good John. and to Mountain West, you, our office high properties them FSP, and markets, our Sunbelt quality well is Thank At

to primary our within focus be on enhancing portfolio. continues value Our

U.S. Our quality high-quality of vacancies competitive sale terms that markets sales for data the highly relatively strong renewals with strength continuing available combined through display portfolio. and illustrate in existing is embedded We available supply office for of sales and aggregate leasing comp locations, employment data believe investment pricing. office remains available through value to of properties that, tenant our will by our our economic low newly from current properties in both led value-add be With high and efforts relationships. demand addressing within

a for as of sale approximately utilized recap two Wacker in the from and the XXXX in Boulevard. $XX Grand as XXX FSP East recycling received were properties total proceeds asset known of On and reduction. debt disposition managed The front million proceeds

portfolio to versus begin for this by to in and owned within Any market into broadly upside appropriate. quality, of such would FSP we for we an as views, through FSP properties shareholders interest higher in the one recast portfolio best the XXXX, we an economic make time and directly and success. our the orientation posted return for proceeds possessing be Sunbelt property located characterized targeted our anticipate leasing and worked cases of As disposition growth some received evaluated highest owned the continue potential and will our managed within potential has at our Mountain potential FSP West managed such our office dispositions as shareholders. higher infill portfolio with our portfolio as markets. significantly for more urban directly keep achievement

Our markets well XXX our under our redevelopments examples Charlotte serve in the Forest current three Park finalizing as Blue and in property Sunbelt Lagoon Minneapolis properties our of up at has at of downtown as Miami the lease of redevelopment Marquette. Property,

to monitor our track markets. and On within the acquisition front, opportunities FSP continues

to open-up We our term. the Thank to value credibly call this urban ability And you. possess call to and the you any that, markets conference we'd thank favor at continue that time, to for properties, the with I infill today. high-quality And earnings intermediate these short like listening within add for over questions.

Operator

Thank you.

begin question-and-answer [Operator Please first ahead. Baird. now comes session. Instructions] Dave The from Rodgers the will We with go question

Dave Rodgers

everyone. Yeah. question, I'll first start with Good morning, George. Maybe

redevelopment the bigger the you taking Blue given like deeper One to they and On question, were do spend work question maybe would take going is against the be, much out feel are redevelopment? second market? them redevelopment redevelopment in to a some of the and John more last around the Or do expense you side versus of made Or expect like have as quality kind on And to side continue is of Lagoon got OpEx then costs Demeritt assets? are the on to that questions Is it going on just these what for you just into you now of front just leasing capitalizing do you that. redevelopment higher seeing these? couple into you've you them interest redevelopment? will Maybe how you cost? leasing kind assets

George Carter

your I'll specific start to seeing properties. the Donahue levels answer here Dave and -- of Forest case I'm to But case, John to properties. Blue the the some about are rent only both is right are particularly mean, questions going Park I then, turn in we space the rents, -- to the and airport the over Latin next about surrounding much for areas questions door, getting tenant expiring particularly access there. Blue location at is well than single properties office America. to office well-suited better. to The higher park Lagoon suited Lagoon

larger is the on Donahue strong than bit tell about very a try upside. leasing of project to vision Lagoon, capture prior we So and those that properties little you Forest Blue to redeveloping that. John I'll On CapEx have a Park, let to much to

John Donahue

Dave. Sure. Good morning,

At on give in page, the the a guidance has you'll Red will Forest been a probably We're George the mentioned. seen of supplemental, be for needs Blue tenant on properties, For very find the and you some we our such. and as and be and that XX Cross Forest it you timing years Park, yet, anticipating many but have with refurbished. to we're interest -- added that single will redevelopment our interest in page Park seeing Lagoon, good what solid expectations haven't investment property

to Although, it's nine that to most wide we single We property, the And the regards could range repositioned size. can it to Lagoon, in that likely ideally very months higher building, first a be range six of XX% cash the will believe XXXX. and prospects be that tenant a be in of multi-tenanted. in that Blue XX% have rents

that need level if tenant we But an we may the to If with go, parking. that building or we anchored And the additional the don't to so or to single lease gone believe to XX tenants, need may the way on what a property for a a multi-tenant we to depending world add example, XX we has not route that we garage. add need with may to with tenant we level will densification, garage.

settlement pay through with We to process. which have going through for did King we're now. the So going we've that a restoration, been Burger

But the actively little that to to to over tenant tenancy activity floor. two. over which We single then in or here the take great. to quarter how market a expect the we could of a and on anywhere but that the next to months stack over way are the rents from quarters. complete the We're couple really down got coming longer. of we're a bit depending sharing We've is on decide half garage of more situation we that trying forward building, the go with making have been last And where encouraged progress and that look

John Demeritt

is David this Demeritt. John

the your but accounting when go Blue at obviously other expenses respond We'll on through redevelopment question. is and to we them Just literature more costs project, follow of interest want the Lagoon. to capitalizing significant

Dave Rodgers

Great, for that's It different the to guidance interest -- assets is helpful. terms Jeff sounds like two those assume and in income of side. the way what sales of on you a Monument kind the for sale and maybe anticipating Energy follow-up one And then Tower regarding were maybe potential the year of in assets? the or ask for

Jeff Carter

The in -- And guidance on process part. dispositions our specifically price excludes on Energy are front discovery that's Tower. Dave. and on that disposition Hi plans that a for we so

will we're comment midst on so market go. reasons that because keep of just the we for I'm going not process in but as And competitive posted to the we it,

Dave Rodgers

Okay, great. Thank you.

Jeff Carter

welcome. You're

Operator

with question next The John Stifel. from go Please Instructions] Guinee ahead. comes [Operator

John Guinee

Thank you very much. Great.

guidance, to the cash million midpoint FFO $X.XX was First XQ million. I and of $XX.X question, XXXX down you Demeritt, $XX.X guess, John at XQ drop

Can a touch quarter-to-quarter as major be? that the of what drop-off. is million components there base $X to So, you might

John Demeritt

Sure John.

amount quarter had won't year. from we obviously in Blue QX. we which in restoration move-outs most first next I significant a the We good income Lagoon have think fee the of is had

John Guinee

much? How

John Demeritt

head of the was or probably It off number my John. so top I I don't guess. would be $X million have

So, move-out was They Mae out. Fannie -- and The moved Innsbrook I a primary that be move-outs -- also Blue out. that's think in Forest the is and three at SunTrust Park is those factors. Innsbrook would had Lagoon SunTrust and right?

So, those move-outs hit QX. would

John Guinee

and you've then to what's got thoughts end like to Any Grumman looks the this year. Okay. And Grumman? and Petrobras year on Petrobras of going happen this Northrop expiring at Northrop

John Donahue

repositioning merger XXXX morning publicly -- year of downsize with in John the them expiring. significantly. calendar a to good They is that new November, end the yes, have We John, expect Hey it's they're Donahue. at perhaps Petrobras and we announced

space engaged looking it's secure be a it their for XXXX, the a renew property of still And last get a a on we're working minute don't and the the them have We're to pace Grumman will, any but they government if have to we year. contract whatnot and will really or extensions, don't skip we of of will and highly tended quarter repositioning first that downsize. it but Northrop and contractor, if news case be a first vacating at on so So, portion the of in specialized them but year yet. calendar won't planning hit that's if will you they vacate. space know they're the next so and that is

John Guinee

Forest excluded? and TIs what's -- a your include to on then $XXX foot and And leasing square square foot about me that Blue $XX spent at in spend commissions? will $XXXXXX Minneapolis, Park. like you looks in redevelopment that What's $XXX included about Marquette looking in and Does in Lagoon or number a Okay. here a budget

John Donahue

leasing stabilization. again, Donahue including costs. Yes all is John. that number is anticipated John all our all in repositioning, inclusive It's investment of to cost total That

John Guinee

also? expenses Are you operating capitalizing

John Demeritt

John Yes, this is Demeritt.

will We that. do

but that will would. accounting on literature follow the We John, we

John Guinee

will, You you. okay. Got

lot. Okay, thanks a

Operator

comes question go Please with from Janney. Rob next The Stevenson ahead.

Rob Stevenson

guys. morning Good

sort that improvement was sort on John's all-in that million, tenant is other that to low million this puts it to down $XX commissions and from XXXX Northrop of question, being -- the Petrobras hit other redevelopments of you follow-up $XX where CapEx you million stuff pull keep of going costs items? to back the other to does the in those at a in with Or AFFO all that line $XX and of sort elevated hit million with to non-investment leasing As you XXXX. stuff sort you and -- expect mid-XXs to combined Does were back and leasing number? AFFO $XX

John Demeritt

one AFFO to John is it next Rob where higher quote to really don't we can't of do we leasing. number the guidance, CapEx On be This so Demeritt. really expect but we expect give year, of a will that a lot I the

Rob Stevenson

Okay higher than XXXX?

John Demeritt

Yes.

John Donahue

would be it Donahue. that John I if we're a leasing. lot was very higher it's we Rob, means would because doing add pleased of that,

so... echo I said poised John and that just to we're what do So

Rob Stevenson

number Okay. that was didn't it of out so whether redevelopment just apples-to-apples not in to know though the rather going just high it's wanted that basis. on pull was the wrapped for hit it redevelopment and an than manner I bucket in It's even accounted the the -- AFFO just I wouldn't the enough or differently up be to cost because leasing clarify that same bucket straight in and would that?

John Demeritt

our investment But Some a that first we true. don't and number. generation stuff generation between of have call -- It through the run AFFO does. that that wouldn't doesn't is I capital second what distinction Rob

don't going that's really said I So I is We forecast to be. what AFFO forecast. why can't

Rob Stevenson

Northrop move-out the next point? from couple the or then of and additional portfolio than Petrobras likely Okay. And over also, the any at this the known other years

John Donahue

John Rob, Donahue. it's

XX major If tenants. it's at, for page you believe look our I

is likely expires them year slight and very in be move-outs. look out or further another IRS extending list you would for our at some announced to that XX next XXXX we we have at to expected and the downsizing are on are years XX don't say other happen. that If a any I Broadway that Page that major definitive so X. supplemental tenants, for close there that would over are of The downsizings tenants

with downsize but leases a couple on that to by floor vacate, of or been Denbury two out. that re-leased their we've that known list been others that a extend is that space last XXX% know also but a the will We is And there a working tenant WorldVentures. has then

we know keep what now. that's you We'll abreast. So

Rob Stevenson

the and Northrop probably at given Petrobras cash XXXX moved And do same-store properties, the the that then in for biggest that now how you Okay. end about of into the year, properties operational think you've same-store so the growth redevelopment should at operating are XX I -- sort to XXXX does this for being bucket? NOI the in is properties And mean, negative? the negative point, in anticipating because growth be wind XXXX are the you And thinking had we slightly hit of that? guys about the NOI up going positive how

John Donahue

that we Well likely will it incrementally quarter-to-quarter. I think be that make progress

So we the occupancy. QX been XXXX as viewing likely low of physical have point

compared quarter And that But believe year's prior accurate. look as year your is first so that to the think not whole probably improve on. We that a estimate goes I the may as will great.

Rob Stevenson

you Okay. for properties? occupancy Or operating do XX redevelopment take some that. the going the Is is just three as low is point, redevelopments And the that well? assets to XX that three leased that to time operating are the are to XX% clarify well, that that then including properties now because just the for as obviously roughly

John Donahue

Yes.

Rob Stevenson

course, is Of provocatively. this

John Donahue

I believe Yes. so.

Rob Stevenson

it. Appreciate Thanks Okay. guys.

Operator

ahead. Riley The from next Craig Kucera with B. Please question comes FBR. go

Craig Kucera

Hi, Marquette to context properties. move kind good which talk of back new morning want South XXX redeveloping I step in about the and forward these guys. to

to and about I year. it XXXX slipped I in XXXX to seems think XXXX you the you in finished now was stabilize it and last began have it would XXXX think and expectation talking in that

do XXXX. point they're you there that at projects that going about talking these or... anything confidence the new should gives we're different some and to XXXX Is in Now stabilize

John Donahue

Donahue. morning, John Good it's Craig

it's I think each redevelopment on own its different much a and stands story.

city. building you unique. know, middle timber the experience and the the very As in It's XXX X-story property a brick Marquette is of unique

are We on that property. very bullish

there's terrific and tenant in a two has in the been space The think been terrific activity. in finding which perfect floors which the signature one is fit. would the bit ideally be the leasing I elusive it's way top building

grow. but had room we the to activity as heavy bullish property. for is building That property so fast to have for quite tenant the our time to liked South single to that room have tenant right the in just got -- positioned. market. there and Charlotte very And long a hasn't is sister either on going liked multi-tenant some and have that live suburban We moving we as be different a that's parked do much are at happened Xth, want find with to it able for still we're a market or up Transitioning ideally that building. but and Park is is Forest Rents dense and we've in would

Waterford strong rents of we're And wouldn't great take compared And oranges of with seeing kinds it's building. Really the How progress all haven't but you think believe said building market, Office page Class Park is we different exceptionally at those expect help it's Again prospects will that the seen had. than we will look we I and of size and as -- and be to higher stabilize XX of the to so Blue what long just we XXXX. I So, very it long. an it that in and it to not in just Blue know then apples demand, guys lot properties. probably We'll a on a Marquette. time that on of give Lagoon in redevelopment Lagoon the make fundamental is see a XXXX, tenants A guidance supplemental takes? size yet you but we'll

Craig Kucera

lot circling Can just paying rents back a think and give most And Forest paying what you're putting your mentioned recently properties? on I that into market are us was return higher. Park is was want is? what a $X,XXX, expected the Right. rental sense you Or increase you to Lagoon those Blue investment about going $X,XXX incremental you to to of if differently be what's expected think it that, of for

John Donahue

I that believe GAAP we that Again, cases Lagoon some have higher we in were your paid on at The some believe some rents I We and Certainly with are a that, are or to improve and rents King, Burger cash Not basis, that the than by XX% I sure in that being can over Blue asking two. we'll buildings. XX% rents think newer if in even were they it's last than question higher in that. skewed But quarter well. can upon John exactly. that the the as net answer ended range, payments regards better Donahue. being we to the of that by termination $XX settlements do

the Park, believe I those cash in were Forest range. rents $XX

Speaking or all else? from answer if $XX Park. Craig, $XX looking we're your do Forest that not right. that's memory And questions for something exactly to you sure Do at have

Craig Kucera

assets, one tenant couple have did you a buildings of these buildings, so the the were for I impact the I -- too to to there be hang them? of FFO to much value projected likely what was just think such consider selling more. and Or guess to was them a did guess on there process I wouldn't your vacate, year? Yeah, you single significant in next

Jeff Carter

to properties we that the the in accrue embedded right that track We company is these leasing and that and think and the into is tenant Carter. that and we locations we when and take did shareholders. this of the can and we look Craig, demand rents assets thought achieve through on the the can the has look John value getting Jeff for at we -- to efforts shareholders. our considered portfolio that redevelopment we investment We these and was our at we think buildings across these that all we as Hi, for upside to in properties these look see think avenues alluded as we

Craig Kucera

thanks. Okay,

Jeff Carter

still for total it there available assets at going -- was replicate be compare to additionally, to acquisition very when versus Craig what's see as the at returns And redevelopment existing you on possible you difficult acquisition, we investments add returns the in would that the these look front, the and I if just assets. you're these

Craig Kucera

Thank you.

Operator

[Operator from Kim Instructions] question go with next The Markets. comes John ahead. BMO Capital Please

John Kim

Thank you. stabilized of XX%. achieving occupancy George your mentioned prepared to XX% you in remarks

couple time. achieve range to when years, year near-term XX% XX% I you think you think expiring gave a of of leases move XX% over to at you'll similar and next outs But this able target? be this do with last the

George Carter

percentage. see. we it will we because be a this is, don't that believe our Donahue Well, depends to trough year We said that what leased of honest, here. rise will be the from as And know we John on answer

from physical occupancy months between occupancy, physical you think -- to occupancy easily occupancy what returns. obviously generates leased the are the occupancy. versus versus leased view think physical And a leased six actual I of is I and occupancy XX occupancy FFO lagging

see occupancy will we our be steadily we So occupancy in rising think first trough the quarter. actually and

end deal of So XX% vacancy of think up start at How happen from the the be be know hope some the in We you of that were XXs certainly we it'll we at of end and XXs that end XXXX. pay up. we at will we XXXX the hope the XXXX, quickly can move with that in -- the XXXX. at how as they to well I

have So see. to we'll just

John Kim

more retain So another cut tight offsetting rising the occupancy your that you forward. and to dividend How you costs and have leasing then going to appetite costs redevelopment for are now you capital? have what's current levels

George Carter

the raised maintained it's level All listen our that or decided quarter. of be because Board right. have correct every or I by Directors that every to is Board and can say lowered of Directors the quarter by is dividend

However, this we're think from we and situation people put I can opportunity. other up where the tell in that lease to of in dividend lot thought set was work current it level is for at three-year you board our a roll for

have the think metrics believe moving the three tell the you we achieve start higher our with also increased achieve the level So and out we need capital on all much level to for leasing. Board XXXX the been achieve well-thought I that in after be is next tell should we the can we dividend is of fine we comfortable current needle the current level current the has I achieve our to what to we get are very we Directors achieve years. through as can comfortable at structure and can And that that, that you room dividend years Board current over But very and and coming what dividends this I consideration of

John Kim

in And Marquette On it's quarter? was that of I number a couple fourth then as follow-ups. quarter had Okay. of XX% the just what third XXX leased

John Donahue

it memory. was at fingertips speaking have but I quarter in don't XX% report John its third John, my the so my that I'm XX% teens Donahue. believe was I from or maybe.

George Carter

right? There late was I lease November in the one think signed big

John Kim

XX%, you. Thank

John Donahue

was it about think XX%. I

John Kim

Okay.

And quarter at the your XX% be that page third so on you leased on to based disclosure above XX year? new by expect or of this

John Donahue

Yes. That's we are targeting. what

John Kim

then for And John Demeritt.

Just capitalized on of questions capitalized like your your current interest interest XXXX? answer to guidance part few other of is for the

John Demeritt

factored would We that have Yeah. in.

John Kim

you. Thank Great. Okay.

John Demeritt

Great, Thank you.

John Kim

Okay.

Operator

Guinee Please John a is with Stifel. ahead. question from go next follow-up The

John Guinee

Great. Thank you.

first position million a looks Energy you about fully million? First $XX is it debt your $XXX foot. $XX to And risk is any not square Are a in repaid debt that? principal like on Tower on there getting at and

George Carter

George. is this John John, Hi,

the We mortgage of that and we building and substantially higher position believe only a is the mortgage. are value in than that first that on

John Guinee

Great.

they case a I'm firms as Okay. expect they? are years. square with And building then of XXX,XXX Jones downsize couple in? Day second there in you is a Which And assuming feet are law the Where to all

Toby Daley

to the that in today they that any And we've offerings Atlanta market. here. now Park would possible be Midtown they're had could been doing it's them timing they're the tight. extremely new construction John, Plaza is new but the right mostly should press And Pershing they Daley talks Hey, shopping And in appears what a They're their go looking with Toby -- development, it at doing there. at market. downsizing. in it's not involve be and it's They're would the Midtown

going they So are is do? question the to to decide what

John Guinee

guess… Okay. And then I

Toby Daley

we'll -- by time know this probably quarter. We'll know next

John Guinee

to further? be value. that debt-to-EBITDA a relative well any Then it back the is and over for current up your that times leverage leverage will XXXX of envelope above looks your at term enterprise share to willingness to total out Any XX% price or seven the net us

John Demeritt

is This Hi. John Demeritt, John.

I on now. variable think unlikely we at right debt We a debt the doing have some we our of of lever mature or may fixing rates up have when it's some pieces that swap of we further. would look

net over down you suddenly was debt-to-EBITDA that the on year-end, at popped in ratio because the think I QX. mentioned it is EBITDA -- it

year, does be or leasing, see we right Tower get on we'll I and think, the of get see and that when the next you're if we'll back repaid I of in year. the that into QX the think probably QX, some but half back does improvement a leasing how change would on Energy That's in depend half too.

John Guinee

Great. Thank you.

John Demeritt

Sure.

Operator

the Okay. This over for Carter turn concludes any I to our like session. would to George conference closing back remarks. question-and-answer

George Carter

look all Thank quarter. to with you all speaking for call. you We Thank you. next the earnings of in participating forward

Operator

Thank you conference attending presentation. The today's now concluded. for has

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