Columbia Property Trust reported a 5.9 percent decline in its normalized funds from operation during the fourth quarter, a reversal from the third quarter when the real estate investment trust managed to increase its year-over-year earnings.
Revenue from the REIT’s operation during the fourth quarter was $62.9 million, down 8.6 percent from a year ago, and down by 23 percent from the third quarter. Part of the revenue drop was attributed to a write-off of delinquencies from nine tenants in retail and service sectors.
“2020 was undeniably a transformative year that brought about many challenges, new perspectives, and greater awareness for our society and our industry,” said Columbia’s president and CEO Nelson Mills.
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Mills emphasized that the firm withstood the challenge thanks to the “stability of our portfolio and resiliency, our platform.”
In fact, the REIT increased its 2020 normalized funds from operations by 2 percent compared to 2019, from $174.3 million to $177.9 million.
As of December, Columbia’s portfolio is 95.6 percent leased and occupied, while the rent collection rate in the fourth quarter was 97.9 percent. Office tenants, which account for about 95 percent of the REIT’s tenant mix, the rate was even higher, at 98.8 percent.
Despite the uncertainty facing the office market, Columbia is expanding its portfolio this year. Work is progressing at 799 Broadway, the company’s new building that’s expected to open in July. Executives said that because of its location in Greenwich Village, and amenities like a new ventilation system — particularly attractive to prospective tenants in the wake of the pandemic — they were confident that the 12-story, 182,000-square-foot project would attract tenants.
Prospective tenants, mainly from the tech sector, have been touring the new property, they said.
“We’re the only new construction option, and the most expensive option,” Mills said, noting that the building’s annual rent is in the range of $130 per square feet. “It’s a testament to the desirability of the neighborhood.”