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Columbia Property Trust Inc (NYSE:CXP)
Q3 2020 Earnings Call
Oct 30, 2020, 9:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to the Columbia Property Trust Third Quarter 2020 Conference Call. [Operator Instructions] After today's presentation, there will be a question -- opportunity to ask questions. [Operator Instructions]

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

Matt Stover -- Senior Director, Finance and Investor Relations

Thank you, operator and thank you everyone for joining us on our third 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; Jeff Gronning, Executive Vice President and Chief Investment 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 also 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 includes specific risks pertaining to COVID-19.

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'll turn the call over to Nelson Mills.

Nelson Mills -- President, Chief Executive Officer and Director

Thank you, Matt and welcome everyone to today's call. During the third quarter, our team has continued to navigate unprecedented market and operational challenges to produce solid results. Our rent collections have been quite strong, reflecting Columbia's well positioned portfolio and we are again able to raise our full year guidance this quarter. We maintain a sharp focus on both financial performance, and on serving our tenants' needs, including keeping our properties safe for reentry.

During the third quarter, we built upon our track record of year-over-year growth with normalized FFO of $0.42 per share, up from $0.39 per share a year earlier. This was supported by 2% increase in same-store NOI on a cash basis. While physical occupancy is down across the industry, Columbia's leased rate remains above 96% and we've already collected nearly 98% of third quarter rent. These sector-leading collections reflect the premier portfolio we've assembled and our impressive tenant roster.

On the leasing front, we continue to have minimal vacancy and limited near-term expirations. Despite the challenging market conditions, we have continued to actively engage both existing and prospective tenant, and were able to advance several key leasing negotiations during the quarter. There will certainly be pressure on tenant demand in the near to intermediate term. But we believe that on average, there is substantial embedded rent roll-up opportunity across the portfolio. In a moment, Jeff will tell us about some of the encouraging activity we're seeing in terms of demand for our available space.

At Columbia Property Trust, we've always focused on optimizing our portfolio to create and capture value for our shareholders. Even during this unprecedented year, we've been strategically active and I'd like to walk you through a couple of recent transactions. Earlier this month, we announced the expansion of our joint venture with Allianz Real Estate to include 221 Main Street in San Francisco. This is a property in the South Financial District that we acquired in 2014 and then fully modernized and leased to a terrific group of tenants, including DocuSign and Prosper Marketplace.

Our sale of a 45% stake value the building at $400 million, well above our book value of $250 million. As Jim will discuss, we used the proceeds to pay down our line of credit and reduced interest expense. In essence, we were able to partially monetize this investment at very close to its pre-pandemic value and further strengthen our balance sheet. So that we're poised to execute on future opportunities. It's a strong affirmation of our strategy and execution capabilities. We find well-located properties with great potential, invest appropriately to maximize appeal and win over dynamic tenants at attractive terms.

As the 221 Main transaction demonstrates, this focused and discerning approach benefits our shareholders even during periods of market turbulence. Another value creating transaction during the quarter, smaller in dollar terms, but strategically important is the extension of our ground lease at 116 Huntington Avenue, our well-leased building in Boston's Back Bay neighborhood. This is a prepaid ground lease that had remain lease term of 58 years. We made a $10 million payment to the ground owners, the Massachusetts Department of Transportation, to extend the lease to 99 years. We view this as an opportunistic win-win, given the states need for cash and a significant enhancement to the value of the property.

Columbia's vision for the future remains fully intact. Even while navigating this challenging environment. As I have described on earlier calls, there are many compelling reasons for our confidence in Columbia's ability to create shareholder value. One of these is the quality of the modernized portfolio we've assembled. We have well-located and unique assets in the most vital gateway markets.

Our buildings accommodate flexible floor plans and allow for less crowded elevators, permitting greater social distancing. We continue to attract some of the most dynamic and financially resilient growth companies in the world, whose success is driven by their culture of collaboration. Of course work from home and other potential trends could have an impact on the level and nature of demand, but our uniquely positioned portfolio powered by our creative and committed team is well suited to meet these challenges and prosper.

Our proven full-service platform positions us to capitalize on the changing office landscape. And our financial strength, which benefits from a high lease rate, strong collections, extended lease durations and a solid balance sheet equips us to capture value creation opportunities. Our third quarter results and revised guidance are strong indicators of this favorable positioning, our team's capabilities and our hard work. Always focused on investor performance, we also continue to prioritize environmental, social and governance initiatives and are committed to advancing diversity, equity and inclusion in every aspect of our business.

As I highlighted on our last call, we recently published an ESG report that reflects our emphasis on D&I initiatives, which have grown even more important for our team. to further discuss our progress with new value creation opportunities, I'm going to hand the call over to Jeff. And then Jim will provide further detail around our results and our guidance for the year. But first, I want to again acknowledge the dedication of my teammates here at Columbia Property Trust, who continue to demonstrate why they're the best in the business. I also want to thank our shareholders for their continued support and confidence in our successful approach to long-term value creation. And I'm very much looking forward to what we'll accomplish together.

With that, I'll hand the call over to Jeff.

Jeff Gronning -- Executive Vice President and Chief Investment Officer

Thank you, Nelson. And it's a pleasure to speak with everyone today. I'd like to focus my remarks and what Nelson just touched on, which is our commitment to value creation. As you know, we have five projects either under development or in the pre-development stage. We are well under way with the ground up construction of 799 Broadway in New York City and the construction of three additional floors at 80 M Street in Washington D.C. Additionally, Terminal Warehouse and 101 Franklin both located in New York City are in the pre-development phase.

And lastly, following our negotiated lease termination deal with WeWork at 149 Madison Avenue, we are evaluating retenanting options. 799 Broadway is the best-in-class ground-up development where we are creating highly attractive boutique office space in the superb Greenwich Village Midtown South neighborhood. Since our last call, construction has continued to progress and tour activity has resumed. We currently anticipate the property will deliver in June or July 2021. The initial feedback from prospective tenants and brokers is very positive. Specifically, in regard to the building to outstanding design and location and it's brand new health, wellness and other building features designed for a post-COVID environment.

Given the renewed tenant interest touring activity and discussions, we are now having with prospects, we are confident that 799 Broadway will outperform the market as we look to emerge from the effects of COVID. We also continue to make great progress at 80 M Street in the Capital Riverfront District of Washington D.C. We're working to complete an innovative 105,000 square foot, three floor vertical expansion that will make this office property the first in Washington D.C. and one of only a very few across the country to use environmentally friendly mass timber construction.

As previously announced, we've already pre-leased 60% of the new space, and we look forward to completing construction by the second quarter of 2022 in leasing up the remaining availability soon. As I previously noted, our projects at 101 Franklin Street and Terminal Warehouse in Manhattan represent the next phase of investments that will deliver long-term growth and value creation for our company. Currently, we're working with our partners to prudently position these projects for redevelopment, so that when the time is right, we are ready to execute on Columbia's proven strategy of creating high end workspace environments for tenants that are seeking a highly differentiated product and office experience.

To elaborate more specifically about the near-term plan for these two assets, we continue to work toward finalizing the design and development drawings for both properties. We are working on the detailed marketing and leasing strategy at each and we have started some of the onsite preconstruction work including interior demolition and abatement. We and our joint venture partners at Terminal Warehouse have also initiated in marketing process to refinance the existing pre-development loan for the project with the new construction loan, a necessary next step in the development process.

Meanwhile 101 Franklin is in an earlier stage of pre-development. Most of our time there is being spent refining the design specifications while we continue to evaluate leasing market fundamentals from quarter-to-quarter. While overall leasing volume in our markets remains at low levels due to the pandemic, the ongoing interest we're seeing in our new and renovated neighborhood-based projects and our team's continued success in maintaining a high leased rate are a strong testament to our proven approach in our vertically integrated platform. We have the team, the assets, the relationships in the discipline to make the most of evolving market conditions in emerging investment opportunities.

As active market participants, we continue to attract new opportunities across the multiple real estate markets where we invest and operate, whether it's traditional direct investments distress or other opportunities to transact with motivated sellers, we have the financial strength and resources to capitalize on situations that will position Columbia to the next up cycle in real estate. In addition, we are continuously evaluating the existing portfolio in order to identify opportunities for additional value add or to recycle capital from low-return assets into higher growth situations.

With that, I'll hand the call over to Jim.

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

Thank you, Jeff and thanks everyone for joining us today. As you heard from both Nelson and Jeff, we're having a very good year financially and continuing to make meaningful progress despite difficult market conditions. And as you all know, this takes a lot of focus and hard work from the team. During the third quarter, despite recent dispositions and the obvious challenges of 2020, we produced normalized FFO of $0.42. This beat the second quarter's $0.40, which had been our highest quarterly result in two years.

Our same-store NOI based on cash rents at $49 million was also slightly higher than last year's number for the same period. As Nelson mentioned, although, we didn't lease any new space, we renewed 15,000 square feet of expiring leases during the quarter, with an average new term of five years at a slight roll up on both a cash and GAAP basis. Our lease percentage at the end of September stood at 96.3%. Our collections have remained very strong. We've collected nearly 98% of total rents for the second quarter.

We've also deferred about 1.5% that we expect to receive in the future, resulting in write-offs to date of less than 1% and October collections have also been strong with over 96% collected to-date, a higher percentage than we had achieved as of the same date in September. Our high-quality tenant base, long lease durations, limited exposure to street retail, and transient parking and limited rollover, all serve to support our strong financial performance. Our balance sheet remains solid, driven in part by the financial performance I just outlined. We also used proceeds from the 221 Main Street joint venture to pay down our line of credit, reducing both debt and interest expense going forward.

We have substantial liquidity today with just over $300 million in cash, plus $325 million available under our bank credit facility. We were in a strong financial position at the end of last quarter with net debt-to-gross real estate assets of 35%, net debt to adjusted EBITDA of 6.7 times and a fixed charge coverage ratio of 3.6 times. Our latest Allianz joint venture further strengthened our balance sheet, bringing our net debt-to-gross real estate assets down to 31.5%. We continue to have more than $4 billion of unencumbered properties with our only debt maturities before 2022 being modest loans at our share on 799 Broadway and Terminal Warehouse.

As we move ahead, we will continue to be disciplined about allocating capital to existing and new projects. We remain active and we'll continue looking for opportunities. But our goal is to use our balance sheet to maximum advantage, so we are being patient for the time being. For this reason, we continue to refrain from repurchasing shares recently. We consider our stock a compelling value and share buybacks certainly remain an option, given our strong liquidity and the $143 million remaining under our repurchase authorization.

As you heard from both Nelson and Jeff, we view our strong balance sheet as an advantage during uncertain times, and one that will allow us to capitalize on future investment opportunities, leveraging our expertise, our team and our track record of value creation. Before I discuss guidance, I want to point out a few things driving this year's numbers that may not be repeated next year. First, we received the termination fee on the Winton Capital space at 315 Park Avenue South in the second quarter and a termination fee from WeWork at 149 Madison in the third quarter.

Terminations happen from time to time, but we don't currently expect any significant ones in 2021. We will also take back 174,000 square feet of space from Pershing in Jersey City in mid 2021. And in addition, future earnings may be a bit lower since we sold 45% of 221 Main to Allianz and used the proceeds to pay down debt. Of course, we can redeploy the capital from 221 Main, when we find a compelling opportunity, hopefully at a higher yield than 221 Main. And we expect to release 149 Madison, which should produce more income than the 10 months of rent represented by the WeWork termination payment we received this year. Furthermore, as Nelson mentioned, we are working hard to lease other space, including 799 Broadway, the Pershing space in Jersey City and the remainder of 80 M Street in D.C., which will add to our earnings. So in the longer term, we expect meaningful earnings growth, but our FFO in 2021 maybe somewhat lower for the reasons I just outlined.

Turning back to 2020, due to our continued solid performance, we're increasing our full year guidance ranges for FFO, same-store NOI and year-end leased percentage. We're raising our normalized FFO outlook from a range of $1.46 to $1.51 to a new range of $1.51 to $1.54. Our same-store NOI on a cash basis, we're moving from 7% to 10%, up to 8% to 10% and our year-end occupancy range moves from 94% to 97%, up to 95% to 97%. In addition, while we are keeping our anticipated range for corporate G&A at $35 million to $37 million, we are trending toward the low end of this range, and we're taking a hard look at our G&A to see what we can further reduce going forward. Market conditions may remain volatile, but we're confident in our new higher expectations.

In closing, Columbia Property Trust had another solid quarter, despite the challenges of 2020, reflecting the strong platform we've built over many years. We have the properties, the tenants, the financial foundation and the business model to succeed over the long term. Along with all our peers, a year like this has put our operating philosophy to the test. We are proud of our performance and I especially want to add my thanks to all our colleagues at Columbia for their hard work.

At this time, operator, if you could please open the line for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Sheila McGrath with Evercore.

Sheila McGrath -- Evercore -- Analyst

Yes. Good afternoon. Nelson, I was wondering, if you could give us a little more insight on that ground lease extension in Boston. Is that a precursor for you to consider marketing that asset for sale.

Nelson Mills -- President, Chief Executive Officer and Director

Hi, Sheila. No, not specifically, not at this time. We are convinced that we added substantial net value in that transaction. As we said, it was a win-win. Yeah, that's the state needed capital. We think the value that was created -- we are confident that the value is created it's much more than the $10 million we paid. When you get down to under 60 years of ground lease term, it starts to -- some sellers won't even to look at that, and it's certainly impacts the value. So it was an open window for us to take an opportunity and do that transaction. But, -- and we took it, so it wasn't directly in connection with preparing for sale.

Sheila McGrath -- Evercore -- Analyst

Okay. Great. And then, on 799 Broadway, would you characterize that there are active leasing discussions? And if you could just comment on what about that asset might position it to appeal to tenant in a post-COVID world? What are the characteristics that might have?

Nelson Mills -- President, Chief Executive Officer and Director

Sure. So, as Jeff mentioned, we do -- we are very encouraged by the level of interest and we do have active tours and active discussions. We're still a long way from, actually getting a lease signed, but we're very encouraged by the level of activity and serious activity, right, led by a mix of prospects predominantly tech though. So a lot of interest in the property. In terms of the features of the building, already, its original design provided for -- it's obviously very modern and a lot of outdoor space interconnected with indoor space that's even more appealing in a post-COVID environment, but -- and it's fully modern in every way, but we went to an extra step and went back over the last few months and enhance the property in other ways with touchless doors and destination elevators and those sorts of things, enhanced air filtration. So really, really state-of-the-art in terms of addressing any COVID concerns. So, and that's another way, that's being received very well by these prospective tenants.

Sheila McGrath -- Evercore -- Analyst

Okay. Great. Thank you.

Nelson Mills -- President, Chief Executive Officer and Director

Thanks, Sheila.

Operator

Your next question comes from the line of John Kim with BMO Capital Markets.

Nelson Mills -- President, Chief Executive Officer and Director

Hi, John.

John Kim -- BMO Capital Markets -- Analyst

Good afternoon. Hey, Nelson. On ground lease payments, what does it show up on your income statement? It doesn't look like it has been recorded yet?

Nelson Mills -- President, Chief Executive Officer and Director

Jim, you want to take that one.

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

Yeah. It's not on the income statement. It's a capital transaction. It was -- I'll look while we're talking and share, if I can find it. But, yeah, it wasn't an income item, it was just investment.

John Kim -- BMO Capital Markets -- Analyst

It's essentially just basis in the property. When we bought the property, the ground lease had about 63 years and has been prepaid. So we're not making annual payments. This was a one-time payment also prepayment. So there are no ongoing payments, but this would just be a capital item on the balance sheet.

Nelson Mills -- President, Chief Executive Officer and Director

Okay. From a cash perspective.

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

Yeah. John, if you at the statement of cash flows, you'll find the $10 million.

John Kim -- BMO Capital Markets -- Analyst

Okay. The joint venture sale that you did earlier this month at 221 Main, how has it impacted the investment sales market in San Francisco?

Nelson Mills -- President, Chief Executive Officer and Director

Well, it was well received, obviously, I mean there have been a couple of other transactions with similar positive reaction. I think there is a bit of a bifurcation between assets like this, well leased, well performing asset, a core asset, if you will. I think those opportunities -- those types of assets continue to trade quite well. And I think, anything with substantial lease or near term roll there's a little bit more demand for that, it's a little more worry about that. But yeah, it was -- to say it was pre-COVID pricing would be a little bit stretched. Obviously, that impacted the valuation somewhat, but given the long-term nature of the leases, given the long-term hold strategy of Allianz and Columbia in our ventures. We took a long-term perspective on valuing it. So I think it was a great price. But I don't know, it's the market is we received some good feedback on it. I don't think it was a totally shocking, given the quality of the asset. Jeff, anything to add on that?

Jeff Gronning -- Executive Vice President and Chief Investment Officer

No, Nelson. I would just add to what you just said. We feel like it was a very strong execution. Others had acknowledge that to us and I do believe that these higher-quality longer weighted average lease term assets in San Francisco and other markets that held up price wise very well, certainly, in comparison to assets with vacancy or rollover or more value add type properties where there is a pretty substantial bid ask as we sit here today.

Nelson Mills -- President, Chief Executive Officer and Director

Yeah.

John Kim -- BMO Capital Markets -- Analyst

And then my final question is on earnings growth because this year again delivering very solid same-store growth and you've had some cash gains on dispositions, but looking at 2021, Jim, you've already walk through some headwinds to earnings growth, including purchasing downsizing. I'm just wondering is 2020 the trough as far as earnings and you're looking to focus on delivering earnings growth in 2022 and beyond? Or are there going to be more asset sales between now and then that might dilute '22 earnings?

Nelson Mills -- President, Chief Executive Officer and Director

Yeah. John, let me take that generally and then, Jim can tack on. So it's hard to know, we have about 8% of our leases expiring next year, which is not that big of a hurdle, but it's hard to know exactly the extent and the duration of pressure we're going to have in the system in terms of new leases and so we're all trying to figure that out. But from what we can see right now, I would expect '21 to be the trough. We do have some -- Jim mentioned as you said Jim mentioned how '21 could be a bit lower than '20, but there are also a lot of things including these new development projects that should start delivering at least on a GAAP basis in '22 and beyond. So yeah, obviously, we're not giving guidance on even next year much less that you're after that just on this call. But I think it's fairly safe to say that we expect '21 to be a trough year based on what we know now.

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

And John, I don't have much to add to that, I agree exactly what Nelson said and that's really why I mentioned what I did. I just want to make sure people -- I don't think I mentioned anything that anyone on the call wasn't already aware, but may not have been focused on. And so I just wanted people to realize our earnings have been very strong the last couple of quarters, we have had a couple of termination fees. We may see some of those next year. We got some income from 149 Madison and we'll see how it goes. I think the key for us going forward is going to be getting some of these properties leased up. We have some good space available to be leased up 799 Broadway that can really make a big difference. As Nelson said we're not going to give guidance at this point. It's too early to say, but that could really help certainly releasing 149 Madison will help. There's some space in Jersey City. Those are ones, I just want to people to focus on it. By the time, we get to next quarter's call, we will have some guidance on all of that. But I agree with Nelson, I think next year is likely to be lower and then we should have very solid growth from that point.

John Kim -- BMO Capital Markets -- Analyst

Very helpful. Thank you.

Nelson Mills -- President, Chief Executive Officer and Director

Thanks, John.

Operator

Your next question comes from the line of Rick Skidmore with Goldman Sachs.

Nelson Mills -- President, Chief Executive Officer and Director

Hi, Rick.

Rick Skidmore -- Goldman Sachs -- Analyst

Good afternoon, Nelson. How are you doing? Question, just going back to 799, in terms of just the discussions that you're having in the question that John just asked about 2021. Given where we're at in the end of '20, could there be a tenant that could lease 799 and have that tenant improvement happening and GAAP revenue show up in 2021? And where are the discussions at in terms of feedback on 799 as well as 149?

Nelson Mills -- President, Chief Executive Officer and Director

Yeah. Rick, that could certainly happen. We certainly hope that happens. We have some live prospects on 799. We're likely months away from nail anything down, but we are optimistic that we could get a deal done, hopefully the first half of '21 would be our hope. And then in commencement -- the build -- fiscally the building will be ready by the end. And so those are the clear end for dealing to start GAAP income having the building occupy-able and having a lease commenced. So yeah, I think it's very possible that we could have GAAP income on that property of 799.

Same with 149 Madison. We took the property back in -- around the fourth -- around the middle of summer. And we've got a bit of work to do to ready that property and we're just beginning to market it. So, same thing, I mean our expectation would be, at least in part, we get some leases done and commence next year on that one as well. So the wild card of course, is this, the current market conditions and the reluctance of -- can you buy the commit to leases these days, but hopefully, that settles down in the next several months, and we start to get -- we start to nail some of these opportunities down.

Rick Skidmore -- Goldman Sachs -- Analyst

And then just maybe on 799 in those discussions, how does the leasing term compare to what you were thinking from an underwriting perspective, those discussions that you're having?

Nelson Mills -- President, Chief Executive Officer and Director

Yeah. Well, that's -- to be determined, obviously, our ask really hasn't come off that much. I mean, call it, single digits, a deal we would do today versus our pre-COVID sort of negotiations. We might come off of our original ask about single-digit percentage maybe. At this stage, given the unique nature of the property is location, the level of interest we're getting in the property. We wouldn't come up much more than that. And I'm talking net effective rents. So obviously, what's important is not just to gross rate, but how much concession, you have to get the deal done and free rent and so forth.

And so, yeah, I'd say all that together, net effective rents we'd be -- at this stage, we'd be looking for something relatively close to what we were looking at pre-COVID. Again because of the unique nature of the property, more commodity-type buildings are certainly going to suffer bigger discounts in that. Fortunately, we don't have a lot of those in the portfolio, but giving you unique nature where we should come out, OK.

Rick Skidmore -- Goldman Sachs -- Analyst

Got it. Thanks. One other question maybe shifting topics completely. In the Normandy acquisition, there were some real estate funds, have you -- as you look at Normandy and look to leverage that. Is there an opportunity there to raise funds and be out in the market, and maybe talk about a little bit of what you're seeing from an investment return perspective in those Normandy funds?

Nelson Mills -- President, Chief Executive Officer and Director

Sure. I'll let Jeff speak to that. I'll just say, first of all, we do have two active -- three active funds, Jeff can speak to. And with that, some really terrific investor relationships and normally had a terrific performance record and reputation with those investors. And we certainly like to keep -- to do more with those investors. And so -- as we've discussed on previous calls, our next fund per se is not in the works today, I mean, that's always a possibility, but we certainly are talking to those investors about opportunities and we are -- and that's part of the plan, right. So Jeff, anything you want to add to that.

Jeff Gronning -- Executive Vice President and Chief Investment Officer

Yeah. I think that's right, Nelson. We have a great stable of investors who are very active with Normandy Real Estate management that we would expect to be active with in the future as well. I would tell you that the nature of most of those capital relationships trended more toward value add and opportunistic, sort of investment style and we have the opportunity. We've got a pipeline and I would say that in recent weeks and over the last couple of months, we've started to see the pipeline build in terms of what we think are interesting opportunities to look at.

We're not doing anything imminently as we sit here today, but we have been closely tracking the market and we're starting to see a range of opportunities that include not only direct to real estate deals that are of the profile that a company like Columbia Property Trust would want to invest in and own long term, but other high-yield situations that look and feel like the type of investments that we were making at Normandy, when we came out of the last downturn that could be very profitable potential investments for -- what we used to be called Normandy Real Estate management is now called the Columbia Real Estate management as a business line, if you will. So that's kind of our approach, but we are seeing interesting deal flow, it's increasing and we would certainly expect to capitalize on those types of opportunities that they come more into focus.

Nelson Mills -- President, Chief Executive Officer and Director

Yeah. And just to add to that, Rick, the opportunity for Columbia shareholders and Columbia is to invest a fairly modest amount of capital, GP capital in those deals being totally aligned with those investors -- those partners, but obviously that generate some fees and for successful projects, which we hope they all would be promote opportunity. So without a lot of capital from the Columbia balance sheet, we think we can create some real earnings opportunity there. As Jeff said it's what Normandy has done very successfully for several years.

Rick Skidmore -- Goldman Sachs -- Analyst

Thanks, Nelson. Thanks, Jeff.

Nelson Mills -- President, Chief Executive Officer and Director

Thank you.

Operator

At this time, there are no further questions Mr. Mills, do you have any closing remarks.

Nelson Mills -- President, Chief Executive Officer and Director

No. Well, first of all, I thank you all so much for listening in and joining us today and as always, we really appreciate the great questions and your interest in Columbia Property Trust. These are challenging times for all of us, but as Jim and Jeff and I have discussed today, the team is working hard and our portfolio and our balance sheet and all is in great position to weather the storm. And we look forward to keeping you updated from quarter-to-quarter. We're always available, if you'd like to talk to us directly, feel free to call anytime. Otherwise, we look forward to talking to you again soon. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 39 minutes

Call participants:

Matt Stover -- Senior Director, Finance and Investor Relations

Nelson Mills -- President, Chief Executive Officer and Director

Jeff Gronning -- Executive Vice President and Chief Investment Officer

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

Sheila McGrath -- Evercore -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Rick Skidmore -- Goldman Sachs -- Analyst

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