Oct 22, 2026 earnings call — Asset sales and debt reduction
Raised 2026 sales guidance to $681 million, driven by the $240 million sale of 3151 Market Street.
Revenue $0.1B (est $0.1B) · EPS $0.14 (est $-0.17)
Key quotes
"Quarterly highlights include we increased our 2026 sales guidance from $305 million to $681 million, highlighted by the sale of 3151 Market Street and our partnership interest in Solaris House in Austin, Texas."
"Our wholly owned portfolio is 90.5% leased and 89% occupied."
"As noted previously, in anticipation of our 2027 IBM lease expiration, that will have an impact of about $11 million of net NOI on us, we plan to commence the redevelopment of at least one of those existing buildings upon achieving pre-leasing activity."
Analyst Q&A 5
buybacks versus paying down debt
Q (Nick Joseph · Citi): Why keep a 5%-10% buyback target instead of using proceeds to pay down debt? Also, with One Uptown 97% leased, will you recapitalize that asset?
A: They keep the 5%-10% buyback target to preserve flexibility, but said the vast majority of proceeds are being used to reduce debt. They will take a hard look at recapping One Uptown, are talking to potential partners, and expect to vet a recap option in the first quarter.
"But the reality is that the vast majority, almost without exception, is being applied to reduce debt, whether that be some of the construction secured loans we have or continuing to get in the marketplace to retire bonds." — Jerry Sweeney (CEO)
Austin development and next-year asset sales
Q (Dylan Burzinski · Green Street): Are your Austin assets well positioned and what are the long-term plans there? Also, you mentioned about $200 million of dispositions — how should we think about additional proceeds over the next few quarters?
A: Their primary focus in Austin is the Uptown ATX development; the new train station is a major draw and they are even evaluating converting one River Place pod to residential. They said they do anticipate about another $200 million, maybe more in sales next year, coming from in-market assets, non-core markets, and land parcels to reduce leverage and improve flexibility.
"But as Tom and I both touched on, we do anticipate about another $200 million, maybe more in sales next year." — Jerry Sweeney (CEO)
2027 lease renewals and cap-rate trends
Q (Michael Lewis · Truist): Excluding IBM, do you expect occupancy to rise in 2027 or are there other large expirations? Also, any color on office cap rates for stabilized assets after recent cost-of-capital changes?
A: They are actively pursuing early renewals across 2027, 2028, and 2029 and have already completed a few, aiming to minimize rollover and de-risk the portfolio; they expect some continued absorption in 2027 and noted only two tenants over 30,000 sq ft expire next year and expect those to renew. On pricing, they said excluding 3151 their blended sales were around mid-8% cap rates, noted recent interest-rate volatility has changed short-term dynamics, and they will stay close to market feedback when planning 2027 sales.
"We are very actively going out into our forward maturity curve, for both 2027, 2028, and 2029, looking to kind of get some early renewals done across our portfolio." — Jerry Sweeney (CEO)
tenant demand and redevelopment returns
Q (Manus Ebbecke · Evercore): What types of tenants are showing demand for the IBM buildings — existing local firms or new entrants — and what returns do you target for those redevelopments? Any interest already for future ATX phases?
A: They said the pipeline for the IBM buildings is about 1.5 million sq ft, with tenants ranging from 20,000–30,000 sq ft to several hundred thousand, and a fairly good mix of technology and financial services, mostly in-market and many seeking expansion or consolidation. They plan to target roughly mid 8%-9% return on cost for the redevelopments, will only proceed once they have higher lease visibility and firm financial commitments, and are planning (but not yet committing to) future blocks B and D, which would be retail and multi-family subject to approvals and pre-leasing.
"we are planning to deliver these buildings somewhere in the mid 8%-9% return on cost." — Jerry Sweeney (CEO)
why sell 3151 and dividend coverage outlook
Q (Upal Rana · KeyBanc): Why did you decide to sell 3151 Market after earlier tenant talks, and what are current life-science leasing dynamics in Philadelphia CBD? Also, how are you assessing dividend coverage given dispositions and IBM moving out?
A: They said the life-science market changed and demand drivers are still present but much more muted than several years ago, which led them to pivot to a mixed life-science/office strategy. They described the sale as a financial decision to generate liquidity, avoid an $80 million forward capital spend, and redeploy proceeds to buy back higher-cost debt; on the dividend, they are finalizing 2027 planning, acknowledge coverage is higher than they want (they had targeted between 70% and 90%), and will review dividend decisions quarterly with the board as lease commencements and interest savings evolve.
"The life science market changed since we commenced construction of that project, where demand drivers are still there, but they are much more muted than the demand levels were several years ago." — Jerry Sweeney (CEO)