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Columbia Property Trust Inc (NYSE:CXP)
Q1 2020 Earnings Call
Apr 30, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Columbia Property Trust First Quarter 2020 Conference Call. [Operator Instructions]

I would now like to turn the call over to Matt Stover, Director, Investor Relations. Please go ahead, sir.

Matt Stover -- Senior Director, Strategy & Finance

Thank you, operator, and good afternoon, everyone. Welcome to the first quarter 2020 Columbia Property Trust Investor Conference Call. On the call with me today are Nelson Mills, President and Chief Executive Officer; Jim Fleming, Executive Vice President and Chief Financial Officer; and other members of our senior management team.

We released our results this afternoon in our quarterly supplemental package, which can be found on the Investor Relations section of our website and on file with the SEC on Form 8-K. We filed our 10-Q with the SEC this afternoon, and an audio replay of this call will be available by this time tomorrow.

Statements made on today's call regarding expected operating results and other future events are forward-looking statements that involve risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated, including those discussed in the Risk Factors section of our most recent Form 10-K and Form 10-Q, which has been updated to include COVID-19 specific risks. Forward-looking statements are made based on our current expectations, assumptions and beliefs as well as information available to us at this time. Columbia undertakes no obligation to update any information discussed on this conference call.

During this call, we will also discuss certain non-GAAP financial measures, and reconciliations to comparable GAAP financial measures can be found in our supplemental financial data.

With that, I will turn the call over to Nelson Mills.

Nelson Mills -- President & Chief Executive Officer

Thank you, Matt, and welcome, everyone to today's call. We very much appreciate you joining us during these unprecedented times. I'm going to begin by recognizing the outstanding efforts of the Columbia team, which has adapted and continued to execute during the challenges of the past couple of months. Following another strong performance during the first quarter, the men and women of Columbia have done an outstanding job of serving our tenants and managing our business during the ongoing COVID-19 crisis. The health and well-being of our people and everyone we serve have been our top priorities, and I couldn't be more proud of our team's performance.

Before I share how we're navigating through the current environment, let's discuss our recent results. We completed a very strong first quarter, building on Columbia's terrific performance in 2019. We further expanded and enhanced our platform, leveraged our unique value creation strategy and reaped the benefits of the high-quality portfolio we've assembled in top submarkets over the last several years.

From a strategic standpoint, the first quarter was pivotal in two respects. First, we completed the acquisition of the operating platform and real property interest of Normandy Real Estate Management. This accretive transaction enhanced our capabilities, relationships and pipeline of opportunities in New York, DC and Boston. As a result, Columbia now has an even stronger platform on which to grow. We now provide fully integrated construction, development, leasing and property management services. And we have a complementary fund management platform to augment our core portfolio operations. These capabilities will be even more critical for managing challenges and capturing opportunities as the market evolves in a post-COVID-19 world.

Second, we accomplished a major milestone during the quarter with the sale of our last remaining noncore asset. Specifically, we completed the sale of the Westinghouse campus in suburban Pittsburgh as well as our Pasadena Corporate Park in Pasadena for combined gross proceeds of nearly $260 million. In both cases, we preceded the sales with key leasing and other enhancements to maximize value creation for Columbia's shareholders. We're very pleased with the end result. And in retrospect, the timing was fortuitous given the situation we all now face.

Today, following a very successful repositioning, Columbia has one of the highest-quality portfolios in the entire office sector, located in the top submarkets of New York City, San Francisco, Washington DC and Boston. Our portfolio features fully modernized properties in the most desirable neighborhoods that appeal to today's dynamic growth companies. Many of these innovative companies, such as Twitter, DocuSign, Snap and Amazon, are finding new ways to prosper during today's rapidly evolving economy, and Columbia is well positioned and committed to helping them thrive.

Our financial results demonstrate the appeal of our chosen submarkets, properties and platforms as well as the hard work and creativity of our team in attracting strong tenant demand. For the first quarter, we produced normalized FFO of $0.39 per share despite recent higher cap rate dispositions. Our same-store NOI was also very strong, climbing 14.5% over the prior year period on a cash basis. Our team leased another 126,000 square feet this quarter, with spreads up 9% on a cash basis and 16% on GAAP basis. This was our ninth consecutive quarter of double-digit leasing spreads on a GAAP basis. We ended March with a lease rate of 97.6%, matching Columbia's all-time high.

An especially noteworthy achievement during the first quarter was our 35,000 square foot lease of top two floors at 315 Park Avenue South in New York. The rate was well over $100 per square foot, a record for the building, while also improving the credit profile and lease term for this attractive space. A termination fee with a departing tenant more than covered the cost of new lease. The new tenant expects to take occupancy in the second quarter. In addition, we just closed a 68,000 square foot extension and expansion lease at 1800 M Street, our fully modernized Class A property in DC's Golden Triangle, one of the city's most amenity-rich neighborhoods.

A hallmark of Columbia's value creation strategy is the development and redevelopment of state-of-the-art attractive office space in prime locations. We've taken a highly disciplined approach in this uncertain environment with a very manageable project pipeline that we can modulate as we await clarity on economic conditions. Construction continues on two projects, subject to city-mandated delays related to the COVID-19 lockdown. At 799 Broadway in New York, we have completed the slabs of all 12 floors for this boutique loft-style office building and expect to announce delivery early next year.

Pre-COVID-19, interest from prospective tenants have been running high, and we expect demand to remain strong for this magnificently designed building ideally located at the convergence of Union Square and Greenwich Village. At 80 M Street in Washington DC's popular Capitol Riverfront District, we're working to complete a highly innovative, three floor vertical expansion, and we're pleased to have pre-leased nearly twoi-thirds of the new space. This unique and modern expansion will make this the first office building in DC to utilize environmentally friendly mass timber construction.

We also have two other development projects in early stages, which allow us to easily press the pause button if needed until greater market clarity emerges. 101 Franklin Street and Terminal Warehouse in Manhattan are both still in the design and planning stage. Along with our partners on these projects, we will continue to evaluate the timing, design and cost of these projects as market conditions evolve. At this time, we do not expect to commit substantial cost for these projects in the next several months.

Turning to operations. Our entire team has been highly focused on managing through the COVID-19 crisis. Of course, the health and safety of our tenants and our employees has been our top priority. In early March, as the first COVID cases emerged in our markets, we commenced enhanced cleaning procedures and communicated extensively with our tenants about the risks and precautions we were taking. By mid to late March, almost all of our tenants have vacated their space. Since that time, we have maintained cleaning and security of the properties and have been actively preparing for the eventual reentry. We have polled all of our tenants on their concerns and needs for reentry and are conducting live virtual meetings to communicate our plans for creating the safest office environment possible.

As for our own team, we have had nearly everyone working from home since March 13. We have maintained effective communication and high productivity across the team. I'm pleased to say we've seen no disruption in our ability to function effectively with Columbia team members truly rising to the occasion to serve tenants and shareholders. We were fortunate to have completed the integration of the Columbia and Normandy teams before the crisis. The entire team has remained positive and focused throughout and even more motivated by these challenges.

This crisis is certainly having a profound impact on our economy. Depending on the depth and duration of the disruption, our tenants will no doubt suffer to varying degrees. As Jim will share, we have collected a very high percentage of our April rent. A few tenants have inquired about the possibility of rent deferral, and we thoughtfully consider those requests. Our retail tenants, representing less than 5% of revenues in total, make up the vast majority of those requests. Obviously, depending on the duration and depth of the crisis, we could see further risk to our rental revenue.

We will endeavor to work with intent and need, balancing their needs with our duty to protect the interest of our investors. Fortunately, over the years, we have focused on building a roster of growing and financially resilient tenants. In particular, we've targeted properties and locations that attract some of the most dynamic tenants in tech and media, many of which have been holding up quite well financially in the early weeks of the crisis. We also had extended lease durations with very limited near-term roll, and we have limited street-level retail and parking exposure.

I'll note that we have WeWork as a tenant in San Francisco and DC as well as at a property under development in Manhattan. Collectively, they lease just under 250,000 square feet. WeWork has paid almost all of their April rent, and we're having productive conversations with them regarding their future rent obligations.

Looking ahead, we are believers in the resiliency of this nation, and we know that working together, we'll overcome today's challenges. We also see a bright future for Columbia Property Trust, which is now reaping the benefits of a highly qualified and motivated team, a best-in-class portfolio and a prudent capital allocation strategy. This strategy has been proactive yet disciplined and has directly led to our strong cash flow and the enhancement of our net asset value.

We know it will take time to emerge from this global crisis, but we have confidence in the abilities and determination of our team and in the market demand for our proven core portfolio as well as our exciting value-add projects. Columbia's leadership team and Board has the experience to navigate through choppy seas and a balance sheet to weather the storm. We are well positioned to protect our shareholders' investment and to meaningfully grow it over time.

In closing, I want to thank our dedicated team especially for the fortitude and professionalism shown over these past two months. I also wish to thank our shareholders for your trust and belief in both our capabilities and our commitment to protect your investment and to deliver the financial performance you deserve. We'll continue to work very hard to earn your confidence and trust. I look forward to keeping you informed on our progress as 2020 unfolds.

With that, I'll turn the call over to Jim to walk us through our results and our financial position as we're managing through today's environment.

James A. Fleming -- Executive Vice President & Chief Financial Officer

Thank you, Nelson, and I want to thank all of you for joining us on today's call. As everyone is aware and we've had to adapt over the last two months with no travel or in-person meetings. As always, we will participate in the June NAREIT meetings, which will be held virtually this time. But we very much appreciate the support of our analysts and shareholders, and we're always glad to get on the phone with you or have a video conference. Feel free to reach out to Nelson, Matt or me at any time.

As Nelson pointed out, we had a strong first quarter at Columbia with normalized FFO of $0.39, in line with our highest quarter last year despite recent dispositions. Our same-store NOI based on cash rents was $52 million, up 14.5% year-over-year, reflecting some of the best growth in the industry. And our team leased another 126,000 square feet during the quarter despite low rollover. This solid performance brought our quarter end lease percentage to 97.6%, up another 50 basis points and matching the highest level in Columbia's history. Our leasing spreads were again very healthy at 9% on a cash basis and 16% on a GAAP basis, which will further support our financial performance in the quarters ahead.

During the quarter, we repurchased $23 million of our common stock and have $143 million remaining under our repurchase authorization. As COVID-19 spread, we temporarily suspended the company buyback program. However, we consider Columbia shares an outstanding value, and to that point, multiple executives and Board members have recently made purchases. Columbia's balance sheet, which has long facilitated the execution of our compelling growth initiatives, is also a source of strength during difficult economic times. As Nelson mentioned, we completed the dispositions of two noncore properties during the quarter, producing gross proceeds of nearly $260 million. For the first time in many years, we no longer have any properties that we're looking to sell.

In March, as macroeconomic uncertainties were developing, we decided to draw $200 million on our line of credit. And with the additional proceeds from the Pasadena sale in late March, we ended the quarter with a cash balance of more than $290 million and additional availability under our line of credit of $149 million. Our net debt-to-adjusted EBITDA ratio stood at 7.6 times, with net debt to gross real estate assets of 34.9%. Our fixed charge coverage ratio today is a very strong 3.4 times. We have an acquisition loan on Terminal Stores due late this year and a modest construction loan on 799 Broadway due next year. But other than those, no debt maturities until 2022, and we have more than $4 billion of unencumbered properties. Our tenant roster is another source of strength with quality companies, long lease durations and very limited rollover of only 2.3% this year. We also benefit from the fact that two of our redevelopment projects have not yet commenced, making it relatively easy to press pause for the time being.

For the month of April, we've collected 97% of our office rents and 95% of our total recurring rents. We have received requests for rent relief from a number of tenants, primarily retail. And as Nelson mentioned, we're working with a number of these. However, our retail rents are less than 5% of our total revenues, and we have collected more than half of those for the month of April. Our rents from coworking tenants are only 2% of revenues, and our transient parking has been generating only about 0.6667% of our revenues. Because our exposure to these revenue sources is limited and we have a strong roster of tenants with only 2.3% of our leases expiring in 2020, we believe, unless economic conditions become materially worse, the effect on our 2020 revenues will be limited.

Moreover, our previously announced 2020 guidance relies on essentially no new leasing for the year. We're well aware that many public companies, including some of our peers, have withdrawn their financial guidance for 2020. We've given this question a lot of thought. And of course, no one knows exactly how economic conditions will play out in the months ahead. However, due to our tenant base and the quality of our buildings and based on the factors I mentioned earlier, we've chosen to widen and lower the ranges for our 2020 financial guidance instead of withdrawing guidance.

In closing, I want to emphasize that Columbia Property Trust is well positioned to address the current challenges. Our portfolio and development pipeline consists of high-quality appealing properties in exciting up-and-coming neighborhoods with compelling embedded value. Thanks to the hard work of our team, we'll continue to unlock this value for our shareholders. And I share Nelson's confidence that while it will take time, we will emerge stronger than ever.

With that, operator, you can now open the call for questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from John Kim from BMO Capital Markets. Your line is open.

Nelson Mills -- President & Chief Executive Officer

Hi John.

John Kim -- BMO Capital Markets -- Analyst

Good afternoon. Hi, Nelson. Your April rent collections, can you provide any more color on what you expect in May? I understand there's some tenants who have asked for rent deferrals and that percentage collection may decrease, but just wondering what the range may be for next month.

Nelson Mills -- President & Chief Executive Officer

Yes. It's difficult to say, John. I think as this drags on May, June and beyond, it just depends on how quick the recovery is obviously. But the longer and deeper this lasts, then, of course, more investors will be -- I mean more tenants will be in trouble. But so far, from our conversations, we've had extensive conversations. It seems that our office tenants are in pretty good shape and well suited to weather the storm. There are a couple of significant office tenants that were in discussions about a deferral, maybe two or three month deferral, which gets paid back pretty soon. That's one option we're looking at.

From a GAAP basis, with rent leveling, straight-line rents, that really wouldn't affect GAAP earnings, but it could push some cash for a couple of months. We may do that with a couple of tenants. And on the retail, which is, again, as Jim said, is a very small percentage, there will be some of that as well. We'll definitely be working with some of the retail tenants to help them get through these next few months. But in terms of predicting the percentage, I do think it will continue to be very high. 97% for office rents, as we said, is extraordinarily high, and certainly, we hope it will be in that range. But it's really difficult to say exactly. We're -- the team is now working hard to keep it as high as possible.

John Kim -- BMO Capital Markets -- Analyst

And where does WeWork fit in that? Were they part of the 97%?

Nelson Mills -- President & Chief Executive Officer

So WeWork has two properties. That's one at 60,000 feet, one at 70,000 feet in San Francisco and D.C. And they did pay 90% for the month of April. We are in discussions with them about the future and working with them just on various options. They paid that 90% in good faith as those discussions continue. So we're very optimistic that we'll maintain at least that number. And the third property is in Manhattan. It's under development. And it is not -- rents don't commence there until July. That's part of the discussion as well. So we'll see where that goes. But so far, for the month of April and we expect in May, we should do -- we should get to that 90% plus number. But more to come on that.

John Kim -- BMO Capital Markets -- Analyst

A couple of questions on guidance. You took down the occupancy assumption by 200 basis points at the midpoint, which is about what's expiring this year. Is that the simple equation, that you don't expect to lease the remaining space that's expiring?

Nelson Mills -- President & Chief Executive Officer

No. Maybe some conservatism in that number, John. But again, given the uncertainty of where things are, we do think the vast majority of our tenants are in great shape financially. But given the uncertain time, we thought it was prudent to pull that back a little bit. WeWork did come into that equation, but we hope not, but -- yes. So it's not tied to any specific expected expiration. And yes, we do hope to get some leasing done. We thought it was more prudent at this time to be more conservative on that front. Jim, do you want to add something to that?

James A. Fleming -- Executive Vice President & Chief Financial Officer

I agree with that, Nelson. John, this -- the guidance, really, what we've tried to do on all of these is to just provide some more room. Obviously, the ranges are wider than they were before because there's more uncertainty out there. But -- and this isn't really based on just one set of assumptions or one model. We've done a lot of thinking and a lot of modeling around this. We had a comment recently that you could just tie these together and do the math between FFO and same-store NOI and lease percentage and all that. And you really can't. Some things affect one item, one metric, and other things would affect another metric. So really, what we've done is done several different models, tried to pull these back a bit to a range that we feel pretty confident in. And so I wouldn't read too much into these, except that we do think -- we do feel good about our guidance at this point.

John Kim -- BMO Capital Markets -- Analyst

I'll just ask one more. The management fee revenue and the expenses both came in higher than the original guidance you provided late last year. Were there any one-time items in this quarter's figures? Or is it a good run rate going forward?

James A. Fleming -- Executive Vice President & Chief Financial Officer

John, that's a good point. There's an additional page in our supplemental, which is Page 13 that now shows those items. And what we have -- what you have there is the -- what had been the income we had from our JV partners on a fee basis for the Allianz JV and the Blackstone JV plus the legacy Normandy business. And you'll see we've got a profit of about $1.6 million. We did not -- it's not a full quarter for Normandy. So this number will go up a bit, but this is reflective of all three of those businesses.

John Kim -- BMO Capital Markets -- Analyst

So that Normandy fee stream that you provided last year, that's still the right figure going forward for 2020?

James A. Fleming -- Executive Vice President & Chief Financial Officer

Yes, we still feel good about that, John. When we did our underwriting before, obviously, it's a dynamic business as every business is. But when we did our underwriting before, we'd assume that we would do some additional development over time and that, that fee stream would taper off over time. It looks like now, given what's going on in the economy right now, it'll probably be longer before we do the additional development, before we pick up additional fees. But on the other hand, the legacy business is probably going to be more sticky because assets are not going to get sold that might have been sold if the economy were stronger. And so we still feel really good about those numbers.

John Kim -- BMO Capital Markets -- Analyst

Great. Thank you.

Nelson Mills -- President & Chief Executive Officer

Thanks John.

James A. Fleming -- Executive Vice President & Chief Financial Officer

Thanks John.

Operator

Your next question comes from Vikram Malhotra from Morgan Stanley. Your line is open.

Nelson Mills -- President & Chief Executive Officer

Hi, Vikram.

Adam Gabalski -- Morgan Stanley -- Analyst

Hey guys. This is Adam on for Vikram. Just wanted to talk a little bit about what it's going to look like when tenants reenter the building. Kind of just high level, what type of investments do you think you're going to have to make and what that could cost and sort of what you think property operating expenses could look like moving forward in a reentry scenario?

Nelson Mills -- President & Chief Executive Officer

Yes. Adam, good question. So the team is spending a lot of time, the bulk of our time in the last couple of weeks just preparing for that reentry and, as we said, communicating with tenants and making plans from an operational standpoint. So we're doing a lot, from looking at air filtration systems to -- from an operations standpoint, anything we can make touch list, any -- where we can direct travel just to minimize -- to help with social distancing. Obviously, cleaning protocols are being greatly enhanced, expanded.

But in terms of cost, operating cost, I don't think it's really all that material. We're not doing -- it doesn't involve extensive capital improvement. So Jim, I don't know if you want to add to this. But from a -- I don't think it's going to really move the needle in terms of an operating cost. Now if, over time, as we learn more and we adopt more permanent changes to the properties, maybe. But I think in terms of reentry and preparing for a safe, clean environment for these tenants to reenter, I don't know if the cost would -- the additional costs would be all that substantial. Jim, any thoughts on that?

James A. Fleming -- Executive Vice President & Chief Financial Officer

I agree with that, Nelson. I'd say, Adam, in the near term, it's not a whole lot of additional operating costs, we don't think. In the longer term, there may be some capital costs. They may be landlord costs, they may be tenant costs, it's hard to say. But obviously, people are going to look at their office space a bit differently. There are a lot of factors there, but certainly, one of them is cleaning and making sure that it's configured properly and all that. But really, I'd say in the near term, we're not expecting a big impact.

Nelson Mills -- President & Chief Executive Officer

In very early days, Phase 1, we don't plan to open gyms or commonly used conference centers, other amenities, things like that. We'll phase that in over the summer. So -- but yes, staffing, we could have -- we will have additional staffing for cleaning and possibly for security. But I just don't think it's going to be all that meaningful of an increase in the overall scheme.

Adam Gabalski -- Morgan Stanley -- Analyst

Got it. That's really helpful. And then just one more. Just at a high level, I know it's early and it's tough because the leasing volumes are way down. But just, what do you guys think the impact of sort of COVID-19 could be on rent growth across key markets in sort of a post-COVID world and just sort of what you're seeing on the ground?

Nelson Mills -- President & Chief Executive Officer

Well, it is very early, and it's bound to have an impact both in terms of the pace of leasing obviously but even in net effective rates. I mean there are -- as you know, as we've all discussed countless times, and I know we have -- I'm sure you have too, there are a few dynamics going on here. On the one hand, it is less comfortable to get back to an office environment, and density is going to be out of fashion for sure. There will probably be some work -- more work from home for a while. I doubt that that is sustainable for most businesses on the long-term, but in the short-term it could be.

But on the other hand, as I mentioned, employees are going to be in less dense environments, and so more room to spread out. So on the one hand, maybe yes, there's more work from home. On the other hand, maybe some companies need even more space. I think there'll be a premium on new buildings, newly renovated buildings, well-maintained buildings over older, more commodity buildings just from a safety security standpoint.

Anyway, so if you roll all that together, given the uncertainty of where the market is and where this is all going, I think the leasing pace is going to definitely be slower for a while. And I would say generally, in most markets or maybe all markets for a while, there probably will be a deterioration in net effective rents. But again, I think a widening of the gap between the top buildings, new construction, newly renovated, modernized buildings versus commodity buildings, I think you'll see that gap widen. But it's a bit early. We're gathering more information about that over the coming weeks, and we'll certainly keep you apprised of our views on it.

Adam Gabalski -- Morgan Stanley -- Analyst

Got it. And then just one more if you have time. Just on coworking, I know that you've said your rent collections from WeWork have been strong to date, and it doesn't move the needle that much at 149 Madison because it hasn't really commenced yet. But just sort of on the densification topic, how do you think about your exposure to coworking and the stability of the coworking business model overall in sort of a post-COVID world, in a world like you just said where the densification pendulum is definitely going to be swinging in the opposite direction?

Nelson Mills -- President & Chief Executive Officer

Well, also in that whole sector, that whole industry, I think there are puts and takes, right? So on the one hand, companies are going to need more space. They're going to need to spread out. And so those coworking facilities, WeWork, Industrious, others are options for that. They also in this uncertain times, would lean -- would be less -- long-term leases to be less favorable. So something temporary until employers figure out where this is all going would -- might push them toward more of a coworking environment.

On the other hand, I think most employers and the employees are going to want to control their own space, and a shared work environment might not be as appealing. And then one other aspect that might favor, that might benefit coworking operators is these companies all have businesses to run, right? They're not in the real estate business, and providing space and safe space and functional space for their employees is costly and time-consuming. And so to the extent they can outsource that and to someone they trust, whether it's a traditional landlord or a really capable coworking operator, I think we'll see more of that. But it's got to be an environment and an operator that they trust.

So again, a lot of competing issues there. And I think the operators, whether it's a traditional landlord like us or more of the coworking operators, I think the ones who step up and deliver and perform and provide that safety, security, comfort and creative structures in their leases, I think they'll be the winners. So again, a lot to digest and a lot to adjust for over the next several months.

Adam Gabalski -- Morgan Stanley -- Analyst

Got it. Thank you.

Nelson Mills -- President & Chief Executive Officer

Thank you.

Operator

Your next question comes from Michael Lewis from SunTrust. Your line is open.

Nelson Mills -- President & Chief Executive Officer

Hi, Michael.

Michael Lewis -- SunTrust Robinson Humphrey -- Analyst

Thank you. At 149 Madison, it looks like you have another $15 million to $20 million of capital to contribute there. Does WeWork have a capital commitment still to fund and kind of -- so not only where do they stand on their July commencement, but do they have money to put in there still?

Nelson Mills -- President & Chief Executive Officer

Well, so it's not entirely clear exactly what the total cost is going to be to build out that space. It depends on what WeWork does with it and who and what tenants, what clients they bring into the building. But our commitment is between $17 million and $18 million, our remaining commitment. Most of that is earmarked toward base building work, lobby and adding a third elevator and replacing windows, that kind of thing. And then the other portion of it can be used for tenant improvements. So much of the base building work has already been done. Not much at all of the tenant improvements have been done. I think that's -- that would happen as they identify customers. I assume -- I'd say I believe they have the capital to fund that at the appropriate time.

Obviously, they, like every other construction projects, are locked down right now. But from our standpoint, we have -- the lease commences in July. We have a parent guarantee for a couple of years plus for the rents, and a portion of that is covered by a letter of credit. So we are in pretty good shape there. And again, as I mentioned earlier, we are in discussions with WeWork on all three properties and looking at various options. But given the position we're in with the guarantees and the quality and the state of the buildings, I think we're in good shape there to come out with a good outcome. But more to come on that. WeWork -- Sandeep and his team are being very -- I think they're doing a great job of staying in touch with us and other landlords and working through it. And so we're very optimistic that we'll work out something that's a good result for our investors.

Michael Lewis -- SunTrust Robinson Humphrey -- Analyst

Okay. Got it. I wanted to ask about the stock repurchases. So you repurchased stock in each of the last two quarters. The stock price now is about 25% below where it was then. So -- and this isn't just for you. I guess you see this in other REITs and other companies, of course. It's easier to buy back until things get tough, and then the focus becomes on liquidity. So where do you kind of stand as you look at the buyback, the leverage is up a little bit, and -- you just drew down your line. You're obviously focusing on liquidity. How do you kind of look at that now where the stock price is more attractive than where it looked attractive a few months ago?

Nelson Mills -- President & Chief Executive Officer

Great question. Jim, do you want to take that one?

James A. Fleming -- Executive Vice President & Chief Financial Officer

I'll do my best, Nelson. But you're right, Michael. It's an interesting question. As you can tell, we felt that the stock was a compelling buy in the high teens, and we bought it before all this happened. And then when this did happen, there's just so much uncertainty out there, we just decided, as you said, to focus on liquidity. We drew the $200 million on our line of credit. We held on to the proceeds from Pasadena. So we've got a really big cash balance right now. And the question is, what are we going to choose to do with that? And we haven't really fully resolved that yet. We clearly think the stock is a compelling value, and we could always take some of our cash and pay down some debt and some other cash and buy shares back. But we really just -- we've taken a pause because we want to see how things develop. And I think it might be another couple of months before we come to any conclusions on that. But as we said, a lot of insiders have bought stock, and it's possible we may decide to go back out there and do some more of that.

Michael Lewis -- SunTrust Robinson Humphrey -- Analyst

Okay. Great. And then I have just one more. It's actually a follow-up on a question that was asked earlier about the guidance. The lease percentage at the end of the year, 92% to 96%, you're comfortably over 97% now. You've got about 2% rolling the rest of the year. Is that -- is the low end of that, that 92%, is that just -- this is a conservative range. I mean you don't expect -- that seems to imply that leases could be broken to get down to that level.

James A. Fleming -- Executive Vice President & Chief Financial Officer

Yes, that's right, Michael. It's -- again, all of these, we try to just adjust them, all the ranges to get some more room. But you're right, the math is pretty obvious. At 97.6% with 2.3% rolling, something would have to happen to get us down to 92%. And we don't think tenants will have the right to walk away from leases, but maybe some leases -- who knows, there could be some tenants that don't make it, and we just tried to provide some room for that in the guidance. We do have a very solid tenant base, and I think that's reflective in the rent collections that we've seen so far. And a number of the -- we focus on tech tenants, and a lot of those are doing really well. But we got -- we have some retail. We have some others. And so we just tried to leave ourselves some room.

Michael Lewis -- SunTrust Robinson Humphrey -- Analyst

Okay. Thank you.

Nelson Mills -- President & Chief Executive Officer

Thanks Michael.

James A. Fleming -- Executive Vice President & Chief Financial Officer

Thanks Michael.

Operator

Your next question comes from Rick Skidmore from Goldman Sachs. Your line is open.

Richard Skidmore -- Goldman Sachs -- Analyst

Gppd afternoon Nelson and Jim. Question just on Terminal and Franklin, you mentioned not necessarily moving forward with that. But as you look out into the future, would there -- would you want to have that -- those opportunities pre-leased before moving forward? Or how should we be thinking about Terminal and Franklin?

Nelson Mills -- President & Chief Executive Officer

Good question, Rick. It's difficult to say. Those two projects are a bit longer-term anyway. 799 Broadway and 80 M Street are -- 799 Broadway is -- the shell is mostly complete. And 80 M, we have pre-leased. The other two that you asked about are a couple of years away really from spending meaningful dollars and being ready to go anyway. But on both properties, very preliminary marketing and discussions continue. So I mean ideally, we'd end up with a substantial pre-lease at one or both. And we may, with our partners, decide to hold out for that. But I think that's to be determined. I think we'll take a breath, and we'll be careful not to spend more money or commit to more capital than we have to in the next several months and just really absorb where this is going and what the demand is going to be and the best use for the property.

So we couldn't commit today that we would hold out for a pre-lease. But what we can commit to is that we're going to press pause for a little while and see where the market goes. They're both really unique well-situated properties. They're going to do quite well compared to the market. We just don't know where that market is going to be and what we -- and that will affect the configuration and the design and the planning and the cost for the property. So it's just in a wait-and-see mode at this point, a very active wait-and-see mode.

Richard Skidmore -- Goldman Sachs -- Analyst

Got it. Thank you. One -- maybe one follow-up, Nelson. Now that you've had Normandy in the fold for a few months, anything that's surprising to you given their sort of historical expertise with development and perhaps being opportunistic? How do you think about leveraging Normandy with regards to maybe being opportunistic out of this crisis in terms of external growth?

Nelson Mills -- President & Chief Executive Officer

Yes, absolutely. So as I mentioned in the opening comments, we're very thankful we got the transaction and the integration done when we did. I mean the team has just been terrific together. The two teams, the combination has been great. It's hard to imagine we've just been together a few months. We're working great together as a team. And sometimes I think there's a perception that we did the Normandy acquisition just for development and construction. And they do have phenomenal development experience and capabilities and reputation, but they're a lot more than that. They manage a substantial number of properties. We almost doubled our square footage under management and so many other things, leasing, property management, asset management and even fund management. So it's a nice healthy book of business, which, as Jim said earlier, is going to be around for a while.

But I think more directly to your question, I think this team gives us the relationships, reputation, the know-how to really go out there and look for opportunities as they emerge. The Normandy team has had -- has been very successful in distressed debt plays, for example, and some very impressive background on that. So it's too early really to look at that. But I think if that's where this economy goes and those opportunities are presented, I think bringing that experience to bear would be good. So all that to say I am very grateful that now knowing what we're in now, we're even more excited, more pleased to have the two companies together. I think it's just going to equip us to make the best of this situation going forward. I don't think there's any question about that.

Richard Skidmore -- Goldman Sachs -- Analyst

Thank you.

Nelson Mills -- President & Chief Executive Officer

Thanks Rick.

James A. Fleming -- Executive Vice President & Chief Financial Officer

Thanks Rick.

Operator

[Operator Instructions] Your next question comes from Sheila McGrath from Evercore. Your line is open.

Sheila McGrath -- Evercore ISI -- Analyst

Yes. Good afternoon. I'm sorry, I hopped on a little bit late, if you already touched on this. But on 799 Broadway, any thoughts on active discussions? Are they like grinding to a halt there? Or perhaps do you envision that maybe some tenants wanting like a single building or a smaller, more controlled building might kind of revisit the property? Just update on activity there.

Nelson Mills -- President & Chief Executive Officer

Yes, Sheila. So I think almost everything in our world, as you know, has ground to a halt in the last few weeks. But I would say, first of all, to go forward and finish the building was an easy decision. It's -- we're well down the path. We're on time. We're on budget. Everything is looking great in the building. Up until this crisis hit, as you know, there were several active discussions about everything from full building use to major anchor tenant use. And yes, it's a bit of a pause right now, but we're very confident that those will continue and that this -- because of this very unique property, this modern property in the amazing location, we think it's going to do quite well.

Now have rents -- or are they asking or taking rents, shifted a little bit, we'll have to see. And we'll have to see what the competition is, what the market says about that. I think given the unique nature of the building, we're very confident we'll get that one leased. It could be full -- it could be one tenant. Our belief is it's more likely a significant majority anchor tenant supplemented with others. But -- so no, it's -- we're very confident that that's going to have a great outcome.

Sheila McGrath -- Evercore ISI -- Analyst

Okay. Great. And then on 149 Madison, I know you've touched on it quite a bit. But can you just remind us, the protection that you have on that building with, I think, a letter of credit and if by some small chance, you were -- have to take that building back or work something out, do you envision that you would have to put a lot more capital in to make it multi-tenant property?

James A. Fleming -- Executive Vice President & Chief Financial Officer

Nelson if you want, I can answer the first part.

Nelson Mills -- President & Chief Executive Officer

Yes, go ahead.

James A. Fleming -- Executive Vice President & Chief Financial Officer

Just to be -- yes. So Sheila, there's a 10-month letter of credit equal to 10 months rent in place at $6.4 million. And then in addition to that, there's also a parent guarantee for another 17 months of rent, which is $11.4 million. So combined, it's -- what is that? $17.8 million. That's the first part of the question.

Nelson Mills -- President & Chief Executive Officer

Right, yes. And yes, thanks, Jim. And that -- so first of all, you have that. In addition to that, there is between -- on the $17 million to $18 million of unfunded building allowance that we still hold that has not been funded. And that's -- we monitor that, and we have rights and controls over that. But that's the money we committed to the project. So that hasn't been funded yet.

So if you took that money, if you did -- if we did have the property back -- and by the way, we'd love to have the property in our portfolio, and it's a Midtown South boutique building. That's what we do. We bought it for that reason. It's just that the deal we struck with WeWork a couple of years ago, for a number of reasons, was our best option at the time. But yes, taking that building back would be terrific. We might have to fund a little more than what's in those two buckets. But again, I'm confident the outcome would be good if that's what it came down to. But we do have the protection, as Jim described. As I mentioned, we are in discussion with WeWork on all three properties. We have very productive discussions about where this all goes. So hopefully, more to come on that.

Sheila McGrath -- Evercore ISI -- Analyst

Okay. Great. And last question for me. I thought that was good news on securing a tenant at the top of 315 Park Avenue South. Just wanted to clarify that you didn't have to put any more capital in at that transaction, number one. And number two, I think you mentioned that Columbia was going to take bigger space in that building. Just curious where you stand on that transaction and what you'll do with your old Columbia space.

Nelson Mills -- President & Chief Executive Officer

Sure, OK. Two separate issues there. One, on the top-floor tenant, you recall that we leased that to Winton Capital a few years ago for over $100 a foot. Great tenant, great outcome there. As it turns out, they just didn't need all the space ultimately. So we do have a new confidential tenant but great-credit, high-profile tenant who's taken over that space at a roll-up in rents, so it's a little bit better rents than we had before. And the termination fee from the prior tenant more than covers all the cost of getting the new tenant in. So leasing commissions, free rent, all that was more than covered by termination fee. So we got slightly higher rents, a longer-term great credit at no cost. In fact, we actually made a little bit on that. So that's great, great outcome, and we're very proud to have that tenant in the building. And in time, we'll reveal who that is, but it's exciting.

And then on our space, we have about 7,000 feet. The full place at 315 are 17,000 feet. We have about 7,000 feet on the fourth floor. With the merger with Normandy, we need more space. We're moving up to the fifth floor. We will lease out the fourth floor space. It's a nice space. It's fully fitted out. So we'll get a good rent on that, I'm confident. And then we're going to take the fifth floor. And even there, we had an existing tenant that we took a buyout arrangement with. They continue to pay partial rents for several more years. And then -- so we're getting that -- in effect, we're getting that space at a discount as well. So anyway, again, that continues to be a terrific building in big demand, and we continue to be very pleased with that building. And we're also very glad to call it our corporate headquarters.

Sheila McGrath -- Evercore ISI -- Analyst

Great. Thank you.

Nelson Mills -- President & Chief Executive Officer

Thanks Sheila.

James A. Fleming -- Executive Vice President & Chief Financial Officer

Thanks Sheila.

Operator

There are no further questions at this time. I'll turn the call back over to Nelson Mills.

Nelson Mills -- President & Chief Executive Officer

All right. Thank you so much. I want to thank everybody for joining us today. Great questions, and we really appreciate your interest in Columbia. The world is going to surely be a bit different going forward. And this new normal will take some time to emerge, no question about that. But I'm convinced that working together, we'll overcome this and we'll eventually prosper. We really appreciate your time today, and please feel free to reach out with -- to any of us with any questions. We hope you stay safe and stay healthy, and we look forward to updating you in the months ahead. Thank you again.

Operator

[Operator Closing Remarks]

Duration: 54 minutes

Call participants:

Matt Stover -- Senior Director, Strategy & Finance

Nelson Mills -- President & Chief Executive Officer

James A. Fleming -- Executive Vice President & Chief Financial Officer

John Kim -- BMO Capital Markets -- Analyst

Adam Gabalski -- Morgan Stanley -- Analyst

Michael Lewis -- SunTrust Robinson Humphrey -- Analyst

Richard Skidmore -- Goldman Sachs -- Analyst

Sheila McGrath -- Evercore ISI -- Analyst

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