Equity Commonwealth

Greetings and welcome to Equity Commonwealth's fourth quarter 2020 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Sarah Burns, Senior Vice President of Investor Relations. Thank you. You may begin.

Thank you, Rob. Good morning, and thank you for joining us to discuss Equity Commonwealth's results for the quarter-year ending, December 31, 2020. On the call today are David Helfand, President and CEO, David Weinberg, COO, and Adam Markman, CFO. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of federal securities laws. We refer you to the section titled Forward-Looking Statements in yesterday's press release, as well as the section titled Risk Factors in our annual report on Form 10-K for a discussion of factors that could cause actual results to materially differ from any forward-looking statement, including any statements regarding the overall impact of COVID-19. The company assumes no obligation to update or supplement any forward-looking statements made today. We also post important information on our website at eqcre.com. including information that may be material. Today's remarks also include certain non-GAAP financial measures. Please refer to yesterday's press release and supplemental containing our results for reconciliation of these non-GAAP measures to our GAAP financial results. With that, I will turn the call over to David Helfand.

Thanks, Sarah. Senior Vice President, that has a nice ring to it. And we congratulate you, Sarah, on your well-deserved promotion. Good morning, everyone. Appreciate you joining us. I'll begin with brief comments on market conditions and provide an update on the company's current activities. Story of 2020 was, of course, the pandemic and its impact on everyone and everything. While vaccines give hope for better days ahead, consequences for the economy are still uncertain. The stock market has attracted a lot of attention of late, and at its low last March, the S&P was down 31% versus the start of the year. Since that time, the market's rallied 75% driven by expansion of the Fed's balance sheet and stimulative fiscal policy. Despite these market gains, there is real stress across the country, particularly amongst lower wage workers who have borne a disproportionate share of job losses. In some ways, the real estate industry mirrors this divide with the haves, data infrastructure, industrial and life sciences, among others, significantly outperforming out-of-favor sectors, including retail, lodging, and office. For 2020, the Morgan Stanley Reed Index declined 7.6%, its worst performance since 2008. At EQC, with the portfolio down to four assets, we are focused on evaluating opportunities to deploy our capital. As we've discussed with many of you, we're targeting a variety of asset classes, particularly but not exclusively those that have been hit hard by investor sentiment relating to post-COVID demand expectations. We've been consistent in our investment approach, targeting portfolios, platforms, and companies rather than individual assets. Given the optionality we've earned through the successful execution of our $7.6 billion of dispositions, we believe it's prudent to focus on transactions that will help define our future rather than one-off deals that would create friction if we were to determine later that selling our remaining assets and returning capital to our shareholders is the right path. In the past, we've avoided discussing, even in general terms, the type of transactions we've been reviewing. Given the importance of potential new investments to EQR's story, it makes sense now to try and share more about our approach to capital allocation. As we work to evaluate opportunities, we're mindful of the equity group formula. Be patient, disciplined, and rigorous about risk management. First question we ask about every deal, and the last is, Are we being paid for the risk we're taking? Moreover, we try to be contrarian in our thinking as going with the herd generally doesn't yield superior results. That has led us to evaluate out-of-favor sectors such as lodging, retail, and office, as I mentioned before. We prefer operationally intensive challenges and complex situations, all other things equal, as we believe our experience and demonstrated execution capability give us an edge in those types of transactions. In addition to looking for the right platform and the right asset class, we're looking to identify other levers for value creation beyond asset management and operational enhancements. In the case of the original Commonwealth transaction, we underwrote not just a collection of assets trading at a discount, but also a unique tax position that has allowed us to sell assets and retain capital pursue new opportunities. As we go about the day-to-day process of underwriting deals, you should know that we have an outstanding investments team with experience across a wide range of real estate sectors, diligently looking for the right opportunity. We work collaboratively and strive to bring to bear everyone's perspective and experience to better vet opportunities and assess risk. As we sit today, we have 28 employees down from almost 75 years ago. We've endeavored to reduce costs as appropriate across the company without impairing our ability to effectively pursue investments. Despite not being together for the past year, the EQC team has risen to the challenge of work from home, and we continue to work collaboratively to identify the right opportunity to create long-term value. With that, I'll turn the call over to David.