- FFO Performance FFO per diluted share of $0.52, slightly above expectations.
- Office Portfolio 82% leased with same-store cash NOI flat for Q2 and up 2% year-to-date.
- Retail Portfolio 98% leased with same-store cash NOI growth of 4.5%.
- Multifamily Portfolio 94% leased with 7% rent increases on renewals and 4% on new leases.
- Liquidity and Dividend $544 million in liquidity, net debt-to-EBITDA of 6.3x, and $0.34 quarterly dividend.
Operational Performance
The company's office portfolio ended the quarter 82% leased, with same-store office cash NOI flat for the quarter and up over 2% year-to-date. The company completed approximately 102,000 square feet of leasing during the quarter, with cash basis rent spreads decreasing 2% and increasing 10% on a straight-line basis. The retail portfolio was 98% leased, with same-store cash NOI growth of 4.5%, while the multifamily portfolio was 94% leased. According to the company's management, "the office portfolio is seeing increased leasing interest, particularly in smaller space requirements" <cite></cite>.
Segmental Performance
In the multifamily portfolio, new lease spreads were below renewal spreads, which the company attributes to navigating different markets, with Portland struggling due to excess supply and San Diego experiencing a surge in growth. The hotel in Hawaii is seeing weak demand from Japan due to the yen's conversion rate, but the company expects more action next year. The company's pipeline of leasing upside is predominantly in office, with $0.30 of leasing upside expected.
Valuation and Outlook
The stock is trading at a P/E ratio of 15.11 and a P/B ratio of 1.02, indicating a relatively fair valuation. The dividend yield is attractive at 7.09%, with a free cash flow yield of 9.75%. The company's ROIC is impressive at 79.04%, and the net debt-to-EBITDA ratio is -0.58, indicating a healthy balance sheet. Analysts estimate next year's revenue growth at 4.0%, which is in line with the company's guidance. With a stable operating environment and a strong liquidity position, the company is well-positioned to drive occupancy and enhance the tenant experience.