Oct 28, 2026 earnings call — Leasing strength, dispositions, and higher FFO outlook
Company raised its 2026 FFO outlook to $3.51-$3.70 per share.
Revenue $0.2B (est $0.2B) · EPS $0.29 (est $0.21)
Key quotes
"During the quarter, we posted GAAP rent growth of 29% and cash rent growth of 4% on over 1.2 million sq ft of second-gen leases, and delivered the second highest second-gen net effective rents in our company's history."
"As reflected in our outlook, we expect to sell an additional $100 million-$250 million of non-core assets by the end of the year."
"We expect to replenish our pipeline and have included $100 million-$400 million of new development announcements in our outlook for the remainder of the year."
Analyst Q&A 8
selling properties and leasing spending
Q (Seth Bergey · Citi): Analyst asked about doing more property sales and recycling that cash into higher quality buys given higher interest rates. He also asked how to think about leasing CapEx for Q4 and the path into 2027 versus 2026.
A: Management said they expect about $100 million-$250 million more of property sales this year and most deals are under contract but taking longer to close as capital stacks are lined up. They said acquisitions have slowed and return requirements are up a little, so they are shifting more toward development. On CapEx, they said year-to-date leasing CapEx is north of $140 million, it should moderate in Q4 but remain elevated for 2026, and normalize to about $110 million-$120 million going forward with normalized cash flow improvement in 2028.
"I will tell you every one of the deals is under contract and we're working through due diligence." — Ted Klinck (CEO)
building new offices vs buying
Q (Blaine Heck · Wells Fargo): Analyst asked what development yields they target now given higher construction and interest costs and whether rate volatility affects committing to development. He also asked how they weigh delayed NOI from development versus immediate NOI from acquisitions, and about the GAAP vs cash same-store NOI gap and free rent burn-off.
A: Management said higher rates are a consideration but strong fundamentals partly offset that headwind and many development opportunities are still attractive. They said some developments are build-to-suit with limited interest-rate risk and that development yields they can achieve are far in excess of acquisition cap rates. On near-term NOI, they look at risk-adjusted returns including carry, noted they have more disposition cash in hand, and said much of the GAAP/cash delta is from occupancy-related free rent that will burn off into cash pay in 2027 and 2028.
"Again, as we look at the yields, the development yields we can achieve relative are far in excess of acquisition cap rates." — Ted Klinck (CEO)
which properties to sell and leases waiting
Q (Rob Stevenson · Huntington): Analyst asked how much of the portfolio (outside core markets) is likely to be recycled over time. He asked whether they will exercise the option on Bloc83. He also asked the size of the signed-not-commenced lease backlog and whether there are any new known move-outs to be aware of for 2027.
A: Management said they are targeting roughly $250 million of sales, most of which is under contract, and after that the remaining assets are primarily at Century Center in Atlanta and some in Pittsburgh (PPG). They said they will exercise the Bloc83 option eventually; it's an ongoing option driven by timing and proceeds. Brendan said the signed-not-commenced backlog is about 800,000 sq ft and there are no major incremental move-outs; retention on remaining expirations is around 50% for the next five quarters.
"Then, once we get done with that, so that is $250 million, we will have still a few remaining assets in our Century Center, in Atlanta." — Ted Klinck (CEO)
sales cap rates and leasing targets
Q (Nick Thillman · Baird): Analyst asked what cap rates to expect on the $100 million-$250 million potential sales bucket and whether that is closer to 8% or higher. He also asked what quarterly new leasing target to drive occupancy and how rents on new build-to-suit deals compare to recent acquisitions.
A: Management said the $250 million is a mix across six markets and if they sold all $250 million the blended cap rate would be low to mid-9s, just below mid-9s. They said the quarterly new leasing bogey to hit next-year occupancy goals is about 250,000 sq ft per quarter. They also said recent acquisitions leased at well-above underwriting — one asset leased over 10% higher and another showed 23%-24% higher rents versus underwriting, with smaller increases in Raleigh.
"I think if we sold all $250 million, the cap rate would be, call it low to mid-9s, just a tick below mid-9s cap rate." — Ted Klinck (CEO)
rent increases and earnings impact
Q (Peter Abramowitz · Deutsche Bank): Analyst asked for updated mark-to-market thoughts across the portfolio and how that will affect lease decisions and earnings into 2027.
A: Management said market rents are up roughly 10% year-over-year and that with in-place escalators around 3% that implies about a +7% mark-to-market on a cash basis versus roughly flat a year ago. They noted GAAP spreads have accelerated faster than cash because of longer term deals, larger annual bumps, and less free rent, and that cash spreads will vary quarter to quarter.
"So you take that 3% off of kind of the in place that has gone up that much versus 10% of market rents, and you kind of get to about a +7% compared to roughly flat a year ago." — Brendan Maiorana (CFO)
rents needed to justify new builds
Q (Tom Catherwood · U.S. Bancorp): Analyst asked what rents are required in their strongest markets (Dallas, Charlotte, Nashville) to justify new development and what the gap is to current market rents. He also asked whether tenants are seeking earlier renewals and whether that helps cash flow.
A: Management said Dallas needs roughly an $85-$100 net rate, around $90-$100 net or call it $100 net in some comments, which supports new development today. They said Charlotte needs about $90-$95 on a gross basis and current highest achieved rents are in the low seventies, so those markets are roughly 20% below what would justify new development; Nashville is in a similar band. They also said tenants are proactively coming earlier to renew — often three to five years before expiration — and the firm can be proactive to secure and extend larger customers, which supports occupancy and cash flow.
"Dallas is currently getting market rents in that, call it $100 net, call it maybe $90-$100 net, or $85-$100 net rate, and that is what you need to justify new development today." — Ted Klinck (CEO)
where rent gains are strongest
Q (Dylan Burzinski · Green Street): Analyst asked how the roughly 10% portfolio-wide market rent increase is distributed across their markets. He also asked whether buyers are modeling that rent growth and how it affects pricing.
A: Management said the strongest rent growth is in Dallas and Charlotte, well in excess of 10%. They said Nashville and Tampa are also seeing good movement, while Atlanta, Raleigh, and Orlando have smaller rent increases but momentum is building in Raleigh. They added that buyers are indeed leaning into the rent growth story, and they have seen some aggressive pricing on high-quality assets.
"I think our strongest two markets where you've seen well in excess of 10%, again, it's Dallas and Charlotte." — Ted Klinck (CEO)
same-store cash NOI and deal timing
Q (Ronald Kamdem · Morgan Stanley): Analyst asked for high-level puts and takes on same-store NOI as occupancy builds and free rents convert, and for color on what caused the reduction in potential acquisitions.
A: Management said when GAAP is higher than cash that signals future cash conversion as free rent and straight-line rent convert to cash. They said straight-line rent guidance this year is mid $40 million versus a normal low-to-mid $20 million range, implying elevated non-cash rent that should roll into cash NOI as leases burn off. On acquisitions, management said the revision was driven by timing of the ongoing Bloc83 option — they currently own 10% and have an option to buy up to 50% — so the change reflects timing, not a decision not to buy.
"This year, I think our straight line guidance is mid $40 million range." — Brendan Maiorana (CFO)