Columbia Property Trust, Inc.

Q2 2021 normalized FFO was $0.31 per diluted share and adjusted FFO was $0.23 per diluted share, compared with a $0.21 quarterly dividend. Same-store cash NOI was down 8.9% year over year, and ending leased rate was 93.5% (down 50 basis points sequentially). The company collected 98% of rent overall and nearly 99% from office tenants; 0.2% of rents were deferred and fewer than 0.3% were written off. For 2021, Columbia tightened normalized FFO guidance to $1.23-$1.27 per share from $1.23-$1.30, reaffirmed same-store cash NOI growth at negative 3% to negative 5%, reaffirmed year-end occupancy at 90% to 95%, and kept corporate G&A guidance at $33 million to $35 million.

Nelson Mills framed the quarter as solid despite lingering pandemic effects, emphasizing the quality of the portfolio, improving market conditions, and a growing pipeline of lease-up opportunities. He pointed to nearly 2 million square feet of development and redevelopment projects, strong activity at 799 Broadway and 80 M Street, and said Columbia could generate more than $40 million per year of incremental NOI just by leasing existing availability. His tone was optimistic but measured, with repeated reminders that the company is being patient while pursuing value creation through leasing, development, ESG execution, and the ongoing strategic review.

Jim Fleming said the quarter was solid financially, with normalized FFO of $0.31 per share and adjusted FFO of $0.23, and noted that adjusted FFO was above the $0.21 dividend. He said same-store cash NOI was pressured partly because there were no lease termination fees this quarter, but full-year same-store cash NOI is still expected to land in the originally forecast range. He highlighted a strong balance sheet: $58 million of cash, more than $500 million of availability under the revolver, more than $4 billion of unencumbered properties, a 32.5% net debt-to-real-estate-asset ratio, and an 8.1x fixed charge coverage ratio. He also narrowed 2021 normalized FFO guidance to $1.23-$1.27 because late-year leasing will have limited effect on current-year earnings.

Analysts focused on leasing momentum at 799 Broadway and 80 M Street, the strategic review, Twitter’s office closure announcement, and the company’s new flexible-space initiative. Management said 799 Broadway was the most active building in the portfolio, with three leases out in legal and more than 100,000 square feet of leases out in legal across the portfolio, and that 80 M Street and 799 Broadway could achieve rents meeting or exceeding pre-pandemic expectations, though with some added concessions. On the strategic review, management said the process continues and cautioned against reading too much into the pace of expenses or trying to infer timing from costs. Regarding Twitter and Delta variant concerns, management said there should be no meaningful impact to revenue or expenses at that building and acknowledged only that tenant return-to-office timing may be delayed. For flex space, management said it has talked with operators like WeWork and Industrious but is initially trying the concept internally at a small portion of the portfolio, less than 2%.