First Industrial Realty Trust (FR) 19 Oct 232023 Q3 Earnings call transcript

Good day, and welcome to the First Industrial Realty Trust, Inc.

Third Quarter Results Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Art Harmon, Vice President of Investor Relations and Marketing. Please go ahead.

Dave. you, Thank welcome and call. Hello, to everybody, our

results securities we XXXX update guidance, our information may expectations, forward-looking as by plans XX, quarter our and XXXX. We on of XX-K obligation described are Actual that to filings. October statements third we from updated our include may of federal other defined as prospects. assume in and and results statements These let management's call SEC statements the based Before date, our differ today's only or forward-looking our accurate factors discuss laws. and cause statements our me materially Today's which our may estimates everyone provide. this remind other no statements time-sensitive and could are be

find filings tab. the and release. The our call non-GAAP discussed financial You reconciliation release available earnings SEC under are of at report measures Investors and in supplemental can in a our our earnings supplemental report, today's firstindustrial.com

us remarks we'll Officer; Executive Our President; which Chief of our after Management. call Officer, with Peter will begin questions. Schneider, for Chief Financial Also Scott by Peter Chief Officer; your and Executive Yap, our Vice President it President Musil, today Walter, Operations; up and Senior open President Markets Schultz, Vice Senior Bob and Asset Jojo Chris and Vice are Capital Investment Baccile, of with

Now let me call hand the Peter. to over

joining thank for you us and Thank all Art, today. you,

shortly. new renewal good on which progress We touch I expirations, continued cash making we're to leasing, our and growth strong rate upon and deliver rental XXXX on will

significant lease from Orlando, developments on-balance Phoenix. in land of and sites the at sale also We we're Northern Pennsylvania, our ground wins California leasing our in sheet and achieved and value capturing some

placed As expected, metric lease-up. few occupancy end impacted developments recently was our remain a that in-service in by quarter

rate, come economic vacancy online. National quarter, national to of the deliberate low to new and basis broadly XX up vacancy noted reflected we but continues in target of interest third on an is This X.X%. the the XX was points space vacancy significant face in X%. continue environment. at is in last overall still tenants supply figures for being prospective making as uncertain In our in our markets, be new As call, commitments geopolitical the

As approximately discussed nationally construction fair delivered in there last on of across supply CBRE's our XX on is XXX we XX% expected next which feet square months. call, the amount million under of be there the is preleased. is Based roughly analysis, new to a U.S.,

target square markets, be completions expected are XXX Focusing XX approximately on million to our feet.

outperformance books, to assets, landlord, California XXX%. of XX% confidence cash of yesterday, been rental the A rate of business. XX%, Southern X.X%. XXXX our where core rate we've vacancy New starts quarter a on rate achieved renewals, In rental the in XX% increases dates, and rate growth seen dynamics the we're the expirations rapid particularly annual naturally our has past This environment. big increases to our well realizing capturing of of economic the continued downward, expiration market have for in rate with increase lease renew third driver escalators portfolio, their than of market increase third earlier. Through with I cost levels continue increase XXXX. rent rental reflecting starts benefit our renewals, is leasing several we've in strong continue the rental lease Overall, to years. Tenants their advance with XXXX the discussed of with cash the low healthy is being given compared driven more response uncertain the trended market capital the rental cash average favor of by quarter in our down our

and a progress rate at year. expirations care taken year's is increase to we've pace XX%, XXXX, which of to last ahead cash XX% time similar of Looking rental this lease next of our of

has California in are income up be assumed by slightly XXXX, rate will XX% a we few roughly same to Our that expect that California. expired benefited lease rental Southern of from Southern increase to more California XXXX in leases the lease of XX%. portion XXXX at income than leases Due XXXX the Southern as XXXX in a rental signed over signing coming rental in from little

on We achieved our the refined on new of XXXX expirations. in reviews. on will our excess anticipate the leasing signings thoughts lease We call XXXX with and rate run on view will of a benefit XX% fourth our cash rate you renewal give budget our cash be of related increase quarter our currently rental increase we to

our earnings last XXX,XXX at Moving Pennsylvania. of on foot Center First we B Since in development Building square leased our Central XXX half call, leasing. to Logistics

in We also our at square feet Park square First Orlando. leased our our XX,XXX California XX,XXX foot Northern and in Loop

leasing lease our at self-imposed cap these today the on $XXX stands speculative With signings, million. $XXX million capacity

demand appropriate monitor new to growth time for continue determine to tenant to developments. new start the We

in of tenants' with book As on feet. coastally today's continues we estimated to or represents earlier, bank that land million oriented new our new deliberate. decide on accommodate I basis. land existing discussed based When This be we're XX.X the growth construction starts, can space for new $X.X decision-making potential square do cost approximately on well investments billion positioned

significant to of user. million $XX center our a call, to a acres we sale Phoenix completed at dispositions. last now Moving for project PVXXX data our of Since in XX land

and purchase for with the in year acres We beginning includes that X. X The lease land project. exercisable also of XXX into a remaining lease at this option entered buyer ground a years for ground is

sales additional totaled million. over to million it be sales million. With I'll the that, some expect guidance. turn and $XX full $XX $XXX for Scott We now year to for year-to-date updated Our to commentary

Thanks, Peter.

for share XQ $X.XX quarter. were per to diluted NAREIT fully the Let me XXXX. our $X.XX from share funds recap results per compared operations in

quarter and rate results bumps activity finished primarily for our XXX compared were in in X.X%. due XXXX, an quarter renewal with estate driven the placed service lower renewals lease-up. slightly Our increase new, cash was our in with increases down real third commenced. by leases The new the quarter. Summarizing rental were during same-store and developments and leasing of in and in Of rent, building occupancy of the quarter, partially to free rates completed quarter, NOI fees, basis excluding leasing, square points in-service the the We X.X on acquisitions leases average embedded by these, to XX.X%, and XXX,XXX occupancy were developments taxes. growth lower XXX,XXX in feet for XQ XXX,XXX were offset termination approximately rental million

are maturities exercise the debt options of bank until XXXX, of strongly loans. our As in a with no reminder, assuming extension we X positioned

Moving last guidance per on our to earnings our release updated XXXX evening.

$X.XX per Our FFO guidance now $X.XX is for range share. to NAREIT

per assumptions assumes XX.XX% increase is $X.XX share, foot are discussed follows: to at asset income the guidance midpoint. Key a in the up square leased Excluding XXX,XXX as first $X.XX call, is our the XX.XX%. are our which quarter range is that occupancy $X.XX share for item $X.XX per Road This to range in we now XXXX. Old guidance of year-end projecting Post

tenant. Year-end award in developments delays the upon our by this in prospective occupancy assumes third have service our XPL experienced and guidance final placed of asset the these and fourth with lease-up process pace our based if also that the assumption in made the the our governmental measured would I being experience of commitments. quarters in would you making to note the significant will XX%. placed for be year-end now occur tenants' impact in in excluded occupancy approximately midpoint XXXX developments prospective due service, We

XX.X%. XX.X% and a occupancy year assumption XQ to of implies full quarter average Our

recognized construction interest. related fourth of Guidance Moving to other the metric of termination settlements to of calculation X% expect includes costs a excludes a full completed on the at million year developments to guidance full X.X%. and for on and before XX the Fourth implies quarter to $X.XX in Note This same-store $X.X XXXX of share income same-store quarter X% September of XXXX. insurance XXXX, X.X%. under average to year for quarterly capitalize claim fees NOI components. growth we to related our growth about cash basis per that this anticipated the

is future expense or acquisitions, of starts, of issuance call. million equity reflect potential debt guidance this to nor after not repayments, $XX.X repurchases an debt million issuances, G&A million, the at $XX.X sales, guidance range does the development the any Our of midpoint. And $X.X increase impact

Let back over it me Peter. turn to

thus Thanks, accomplished development questions. year. Scott, delivering strong you rental it and thank that, rates we're renewal you with to pipeline. Operator, open on focused of that far to for our all have this my on and for continued we're leasing teammates by lease-up flow all pushing up and the ready new Together, cash

Stevenson the will Instructions] We comes Janney. first from Our [Operator with session. Rob question now begin question-and-answer

point? this a developments new you to quarter you A quarter couple fourth on completion? a fourth expecting at going of first Can there? move any quarter then on to first questions from or Are quarter development. what's the first state, early in start And update us completion

take the part tenant our completed I'll Look, function to starts development velocity, that, economic are Yes, first be lease-up outlook Rob. of the strength, of market a developments. of going course, and of

starts self-imposed on desire to to any the additional of we're know, so take our don't And capacity market, Given that give going operate unlikely we additional with cap this guidance can advantage our potential have it's under in you as starts. year. we stress

comment I on So XXXX. won't

well. to our Rob, date gone first has question on weather. great your Schultz crossing, it's schedule Peter construction had We've

us a -- to bit completion. to 'XX schedule, it quarter of little is So for 'XX sorry, allowed move the fourth from first quarter ahead I'm of what's and first that's of 'XX quarter building

the whole you market are Okay. in Which And then -- Peter size? talked picture. core the least supply new in as relative core to the amount macro of your markets seeing of a supply about

any But down country, markets third markets, market, little couple to markets markets vast A Yes, in range. starts. X significantly some markets but no markets, by of that the Denver significantly. be down to there the number seen market a by and would many up quarter. QX. XX% across in I'm the happened. many, the large, starts go in not Starts have went majority that pretty Orlando are going starts of the and of are have XXX%, didn't in are

question Kim next comes Ki Truist. Our with Bin from

you're help better to in you XXXX you that you it I'm how terms your demand grasp of frame commentary might Can being trying get versus understand of the changing. deliberate? it type of Maybe leasing new us things feedback can number fielding. a of put or the just -- prospects hearing be in about better you're maybe can

that, end front of and the should Jojo in, chime Peter take and too. I'll

talk maybe and were it a talking when available, was we space X, X we usually when think we I a tenants XXXX, in 'XX had to we X. XXXX, 'XX, or maybe had about when perspective or X X --

than competition smaller and we had to development Obviously, also the of number do down your Peter, want a a bit back we prospects. regions? with in space. deliveries, new we're you more 'XX have for in to about So 'XX little increase talk

of overall Sure. is delaying Bin, making. had issues number given say deals Peter of only and we The to been some Schultz script. has back the Ki are couple commencement see hesitant commitments point, would as here. We've those level to on a and Peter's they geopolitical activity, of tenants generally their a seeing touched consistent. make I seen of where cautious push But those what decision targeted being that tenants a really Peter to things. in date, are macroeconomic the

in in of are anything and the Activity better of the and tenants. of in else seen most lack bit spaces, summer. smaller by the But want is add? levels to Jojo, activity for a midsize slower headwind cadence just little the the the you decision-making increase the have biggest -- coming than spaces out are they primary part. of We

Yes.

XXXX, their and little expansion commitment in. space their line make in kind like more so me, making wanting on and a growth. a where space to little securing quickly. on they're bit they're And business is bottom bit they're because new fear Today gobbled their of focusing Today, on business to got -- more So businesses of the sure focus more. and more deliberate, run In for in around 'XX, they're they've missing up of is shopping growth. a enough a more being choices, are good have bit focus coming current of tenants let's because little there was more up

of that? practical or development customers So if any handle how new maybe leasing the I -- up impact smaller, leasing pool your does trick. of terms in a guess of rents to the cutting Is guess, space doesn't that your rent I Or pool you how the space? do cutting solution? are strategy Maybe increasing trying commissions. is the

rent -- bit. say it, use meaningfully. Right call not word concessions And some year. the other some cases packages, sponsor that's And half of it. little per month. now, again, increased meaningfully are in rent and owners a standard We But typically that increasing here not we -- or free month at free we're a lease are seeing TIs et there, that, offer, I cetera. a because about seeing than

I set that's that incredibly thing build of that out properties have the that other would The developed there. is are to out competitive relative merchant we primarily point

functionality a when -- from having X There that's are we X. be opportunities. talk So standpoint, superior, or and not other mean X -- competition, might are about don't more or we we X there

not flooded. it's that So the market isn't

rent. you'll right holding the pretty now, Occasionally, now, But little get steady. steady. is right market holding somebody extra So see it's free a

our the to years, developments of over last other seen Bin, lot Ki is add the a tenants. several leased we've single thing I'd

a we demising. I of multiple better divided tenants. We're and office time know, lot pods, smaller office demand in multiple demised are prepared in to making ready case -- from functional, ago, some the a few buildings be be design, from packages, seeing, as in are stock you tenants and take multiple can midsize these for As minutes sure said the

have that. the Peter the given that flexibility accommodate we to quality point So made

really So multiple of you might the which last in years, a tenants see what just than the done has us do market. function several more been we've

Scotiabank. from Yulico The Nicholas next question comes with

in First, guess, couple and Inland ask the come I about quarters development the just I Empire. will delivered projects next this wanted quarter that, of in already still to

thoughts you're projects, but just talk to could those bit of is a East impact, is with of you relative that. wanted more Empire what to commentary stats Inland where just in see supply of sort your that competitive about that little dealing there do level there If hear we supply more just on your

want you do to... Jojo,

we Inland on positive Empire touch have a term the expect has growth. rent Inland very a still will the do low long I'll at Sure. that We Empire. vacancy Overall, historically X.X%. still

of ] construction. we XXX [ XXX terms different ranges completed [ X They're and in developments, our submarkets, mainly in In Redlands. in X different then Montana, have VIE corridor in just we all of size ]

market. or we're any overinvested So or not overbuilt

million. are couldn't If X with no look X on you each of at quality properties, are properties even there properties than these where locations projects. find good which there feel more of bit terms property. these yield, properties, we in We they're a projecting And a really margin. Roughly, we're a today, really little is X.X% comparable under these about XX% about $XXX a competing and

of lease So course, going on very shareholders -- we good we value creating but to really feel forward in our job those, about for feel is those. good

helpful. That's

wanted project question development leasing second thinking about over we how up the is, next be The see I pace of year. should the to

over to And be next on thoughts the take gets reminders the time more tell Just projects from how is the delivered there question in stay buildings It when of being other a to based us sensitivity capitalized just it the there related occupancy terms to capitalized stable can level. frame And any any ideally, how and could like think some capitalized the then can seems you interest. vis-a-vis pipeline long long to delivered? interest after within -- or interest lease? impact about really development about how year

Yes.

and the of that, talk capitalized cover first about interest. I'll So Scott will part probably

that obviously, our not year, do year. lease-up we're developments, when downtime next completed when be think our into timing new spending this we XX-month to down time sit we going level that In today. the a for based our next of terms we'll topic service, point, be to lot the tenants anticipating of those terms of budgets upon going focused of changing to in year, on that assumption. we're At for to next lease have with -- prospective what respect gone But think are and on dialogue we're been projects with having we

want question. do Scott, really So can't that to more than capitalized on the give that interest? cover you I you much

we once interest the Sure. of development Nick, so is capitalization completed. stop

developments a XXXX. completed to got of that of we've are second the So be quarter handful until scheduled up

the X of period. interest capitalized So we first months have that will for

For half dependent will last months the or period, starts. back of the the upon new be X that

comes question Craig from Citi. next The Mailman with

ground on center the hit in data Phoenix to wanted here. lease Just

Just had a couple on this. questions quick of

is a run rate Or think to we first, do quarter to need additional Just in fourth rate the run coming perspective, revenue from number? full the it? annualize XQ about in the

Yes, Craig.

lease there's So a little of in quarter. third the bit income

going our at half obviously, be quarter a just Take I then think full we're Craig. look a month. get And in of NAV might fourth it a the quarter footnote, to XXXX. of

you on can the the more lease some ground economics. information We get that have some of

Okay.

I Sorry, value ads? the had in the industrial option and of put kept guys the didn't is if in to that see in compares been footnote. Did what you what you purchase have this apologize, the would that I how terms there pricing just as

have counterparty. We agreement with pretty a strict this confidentiality

So the about like we value can't land a much values data value can things that. no, is say, the and speaking, of than industrial. I terms generally and talk of lot the center higher

that's say. but we can -- really all So

put this Obviously, a have we yes. like it. it ahead. wouldn't the we done Or way, Let's economics we -- Go lot.

phrase your Finish no. No, off.

Sorry.

great a selling for no. ourselves, build-to-suits, ago into to big users, we mean years with and developing I No, cetera. et plans site, it's that went

XXX a pretty us For acres to to good tested than got be go, imagine, you deal. it's to less can be

involved years this in building seems an was in industrial market your a that you you been Is as Phoenix? indication few for got good And it since doing out we I concern this it other guess legs, ago. about should -- have than deal And it of guys to overbuilding question. my take a this rather

that to deliberating we lot do the of indication economics the up. the end the no this of We site market. of much of is this. our whether spent an equal in pretty wanted building economics a At confidence of in that trade way This day, time

quick just follow-up question. And a separate or then one

just on you spreads. said leased yet a this XX year, won't Just outside But the that give exposure? Just from the of be what's XX% versus market details it a issue mix remaining year giving mark-to-market, the other XX%. what's excess of smaller Scott, of in you of on guidance with markets XX you or maybe in anticipate net -- L.A. you're not next Is mark-to-market?

take Chris, do you want to that?

mix Chris. a is Yes, issue. is definitely this Craig, Yes, it

So if Southern been only of, care you look at what's it's California. from X% taken

at you of XX% rollovers, XXXX is that from the the mix California. rest If look coming Southern

[Operator Malhotra Vikram Our comes Instructions] question from next Mizuho. with

Just first of share guess where to pause starts your be you be I'm offer. you And there's is can the and dearth product you you may specific had, probably quality feel just picking of XQ a seeing X of wondering are but end -- probably then said, because little you do so other if the following in some be demand product? up on by development. very I development low, there's this if of like 'XX, up peers will sort cite to a there do back ramp general, how balance markets might in up as

I we product conversations. having is development now. of good be going lease-up, mean of have and one the in all Yes. us market for indicator big the to We're

people outlook many tenants that's are going decision. put million. on economic the to before As different current down various they that about XXX,XXX-square $XX a causes the we've And said world, and million what's building, that while. taking pause a in around lease To $XX a ways, foot in

obviously. market end we by So would And year, XXXX. that supply. enough the not be next toward particularly think yes, there's That in the really us, will that be it's fine strong possible of

is how start year, to to to at with really looking start feel what we're So depend respect going upon to we lease-up. it us next about potentially going

quarter-over-quarter? And Inland competitive in market makes growth the like us variability the Any That what just how be in you you've general, what numbers in following you SoCal rent of terms small share Okay. in set region about up -- just seeing you're Maybe would being Empire the think can in your on comments that seen looks helpful. terms project. sense. around made of help

Jojo?

Yes.

be had address of Long for then a forward. term, you it at mid-single bit that because recall, U.S. of growth digits X minimum today, the vacancy low little And the years of going kind highest the So the think of sub-X. SoCal would it about any X.X. i.e., may last rent we straight. as L.A. market But would in

digesting on next point So the that create surprised. now, term, a is We're that the you, going and to be flat for what through rent because market out TEUs XX year bit about with just the negative. slightly supply is But it's maybe [ the demand. the to the marketplace, along doing near we current not in In inbound first the little affected trends, year going to not quarter be very surprised. the mean subset, ], a end And decline maybe example, right can't that I'm market the a our based of developments, I'd doesn't is a to rent on value yield. of to

Our next Caitlin Sachs. question Goldman Burrows from with comes

to last yields, they're it But Maybe like somewhat under a the be properties, on the from looks which to ago. the today, of X.X% X.X% is for set construction expected development up year like related question.

activity? and yields attractive? make development is what thinking what about cost your required capital to today So extent that of And to are impacting are your how you guess I

Yes. Thanks, Caitlin.

a yields north X.X%, need to on of to average cost And of hurdle -- our capital and So reasonable closer at make, of When think has it we compare sure, margins we though that make certainly we profits projects pipeline X.X%, basis, need look those to X%. to gone here, on and north weighted returns. the what up. to the new developments IRRs be our expected

about opportunity. So we're the excited

this the to lot country. projects of we've a that the in in to we've go supply the of coming As more markets as nationally, ready are digested great pipe additional best soon got

Got it.

down volumes not guys, either properties? or Okay. Or a market? And much across seeing stabilized significantly this any But come to on CRE. expect then you opportunities been for do come driver transaction attractive as even maybe are of know acquisition historically lease-up the I opportunities are and you to attractive up, you year side. of it's acquisition properties

I certainly past? economics some you've want a we've of mean, do taken Jojo, talk But what's reasons and difference to the terms attractive. in the of the things make you about in seen

yes. Sure,

those. stress geography. out to estate. us. But owners going like our financial don't there and quality meaning geography sense need fit developers real situations see who at trying we're few to that in. acquiring get or to our or The prices look -- And sellers further our or want in there's doesn't their estate in not We're it we're are meet ones who So a those for small is real meet are projects reality that merchant buyers that or or make of there that capital to our criteria, those just middle a are lot of some still

we hold think We're a they large the We of to and a great another unless a good this lender deal, have more not build-to-suit. situation, suddenly funds equity. developer stepping with the And didn't that the needs their speculative fund then and comes -- we out the a developer have in, a one-off and project, situation commitment where where kind have that's deal. developer

to squeeze quickly. because that lower buildings very, And need buying are that equity very much they lower so their of we're on price building one out nice --

just those look of are examples trying what So we're to for.

on are things for forward? already have you're are those looking that decided just moving or like it. And to and Got been clarify,

specifics as are... you those more give really much can't I

pursuing. We're We're pursuing.

We're it. chasing

we They get But are may any not we're -- it. by pursuing. means not

question comes Todd with Capital KeyBanc Markets. next The from Thomas

A.J. on is for This Todd.

real going Just back to the interest quick capitalized discussion.

is capitalizing when development you that said You stopped interest completed.

see and or your delivered delays next any be under pipeline to look construction, everything over supposed what's anticipate you any construction few delays for currently As do today potential you at quarters? the

say best that's of would of thinking as time. point our this I

best construction, about be completed. time estimated that's supplemental. will this our our got at when developments asking in point building in completion you're thinking that developments if So under those That's we've

update regarding the are contract XPL to awarded? you are market Is to altogether? be on one there then the you was moving asset -- And looking Old going Or still that just tenant tenant engaging? Road. question that are to Or any Post -- Perfect. Okay. they is new a and still around

it's A.J., So Schultz. Peter

We asset. market continue the to

they're The In continue that to contract award. with on the group, award to latest this final later the quarter. that of decision information sometime we supposed them. continues, postpone to issue government The whatever terms talk XPL reason, for that is

gone. experience our get the over last you confidence heard likely is it's which process certainly level, up this us would the is as we year Given that could just process this the possible into is but has why, less probability with to this not lease I that this our earlier, It's XXXX. say, push high, way decided from given done quarter, our

The next Capital Carroll from question comes Michael RBC with Markets.

what decide couple multi-tenant it lease to space? of of to Just done. and I that following tenants try up just you on to want I go that smaller a years to at do taking mean might get point Old Post Road. know this been some has kind

Peter question. Schultz good Mike, that's It's a again.

are and So open we're certainly -- have that. been to

was and users demand where this has As how of something submarket on some calls, larger others timing these open active that size range that we're been demand decisions. slower, tenants we've historically, to. And it's very of and make That's really quarter. market talked prior about in about from along the

that past given Or Is comment still the a blocks the your I today? fair healthy. those to changed still in were kind smaller And as pretty the quarters, over the blocks X-plus the space. then of of small demand? just on on tenant past quick slowdown months, for comments midsized that activity highlighted the few for you've Okay. has that seen real know you've

would consistent. it's say So I

is occupancy portfolio, in-service our at look you If very very, high.

right, see larger, broader good about and decisions macro with We couple Old commitments I make for more backfilling that in demand impacting continues -- they're we those operate hurry continue earlier diligence are mean and of developments the tenants But very urgency today not to active. the our factors Post the everybody. just a that commitments and points just Road demand and and to building be bigger a given there's our some to where spaces to quickly. talked those are that of and

The Nick Baird. next question Thillman comes from with

land the bank of fair marked land It value the on Question the down looks bank. was XX% like quarter-over-quarter. like

the of if Some to some you haircuts. changes estimates for which make in particular but could fair did some that markets value maybe just your be land sales, in to saw land related and curious biggest

Scott, take do want that? you to

the the Yes. in land we ground Nick, of that's the things Phoenix it's being leased. land happened bank, land from to the land couple A Scott. we related is removed then sale, removed and

So have a drop made the alone to fair that's compared what's about left going talk Jojo in to because in we -- value the longer adjustments it's still cause I'll population. to over... XQ XQ

then said, of values, land and made land Nashville added, Florida. Sure. adjustments additional, we And also we our -- Scott those on And land course, to acquisition. then And some lands. -- the Chicago then adjusted slightly as we were some an in

asset this asset. did by we So

Some where and it's value. started to land, we to that make the improvements, off-site added therefore, improvements,

our investment land. the cost in we So those added additional to

all you resulted of that together, difference. that in the if took So

not that were haircut really? significantly Was this there any in like specific markets process or

example, from down say We property. market. that Chicago, the we it we I market value, adjusted of down then to property change by did anywhere didn't for X% I XX%. took Orlando. by do it. was And we, say No, would terms would it We in took

So, yes.

property it by did we property. mean I So

is on year-to-date? tracking bad watch quick a And any the an tenant list? updates Scott. on debt just how then Maybe one And for update

very Sure. debt's low. Bad

$XXX,XXX. and about that's quarter, our guidance For of third to compared the it's $XXX,XXX, assumption

very in still shape. good So

of those If we've you third to $XXX,XXX look guidance compared our for expensed quarters first original about year-to-date $XXX,XXX. X quarter,

very doing against So forecast. our well

watch are as watch this time. on the tenants list, at no list the point in far As on material tenants

question next from Wedbush. comes with Rich Our Anderson

asked back of So you, versus it Peter, development. looking time, back was points in are as build-to-suit looking kind question what when I spec to in to XXXX, I for trigger a relates you

talked here call. You it lot this about a on

not indication phenomenon ability And you, so-called things because one chairs to can. the they to One where another said tenants that, from market of put the asset on would be spot, you musical of to to move the is an the have then, weakness. around

that is tenants happen of with going elevated your hesitancy so the that level seeing deliveries dynamic But in creating of seeing are of today. and You optionality? that's the sort you on also that space? on talked another about you're Is

seeing If for where -- to terms lose consolidate bringing a Rich, question. theme. a we're leaving Kudos we in in No, move. people a buildings, expensive it we needs. And accommodate moved seeing, that's to not of the their and we to And out that. still that can't it's we're you, someone it's that, example to have additional space. That's Good the growth current very tenant tenant, portfolio, because up. bigger remembering What good. a

even else So the now, the somewhere "that all they right deal at we where be additional of and has coming to can market. the is with achieve pretty are that reflective not to outstanding," supply

another building. X% pointed our go to rates, out, financial low a kind that in we've still not to that tenant is of leave vacancy markets, That's generate going As cause to arbitrage the that's a vacancy rate. going very, very to to

seeing So good now. that good -- we're question, not very phenomenon right but

Okay.

is, you deliveries. include me development gave for the occupancy XX% midpoint didn't at your question if the guidance, and you XX.X% Second Scott,

spread, does process that So in points headed take delivered? of XXX your got time along from white and the time? that were buildings how you higher you Is when of the forward? by was number kind pulse compare things XXX leasing to you assume it. basis further do everything here where significantly of kind going I think hot it's than above And when it's

Yes, it's definitely significantly higher.

we've XX completion. after inside months. is X, everything months service look XX ago, policy leased And up -- we've that place years year at you of Our developing if X in generally,

fourth type couple it quarter our really point here spread a that say would go-forward little leased more we have of at call. during when with developments, basis our end of basis, give bit up budget so an the dynamic COVID our we'll higher. we'll this higher. through little asset-by-asset in a of at I color go the did of depends a and a that process on it's definitely year, So on We and bit is get Rich, you On time,

comes Street Our Green Vince with next Tibone from question Advisors.

could impact how just where volumes XX, capacity months excess XPL your there I'm trying activity relative discuss dynamic have do that ago? are XX you sense of And to portfolio? demand? are their potentially understand kind much and a of near-term Could be how peak may XPLs tenants in performing to current how you among

to Peter, take do you want that?

it's Vince, Sure. Peter Schultz.

teams would they're our buildings not general, for new of the looking all existing around our spaces we're less that the And all to continue space, availability. report that seeing and say in more I be of utilization active First, high space. country. XPLs top most for prospect

no debt, simply question, would not active To watch any there. tell stress add that you seeing to of demand. want we're on and you to an continue the nobody and anything list, they bad important I to but Scott's that? really component Jojo, be So an

the is down that efficient XPL business themselves. it in are thing and are only our not with XPL -- cost-effective -- a in The XPLs because fulfillment companies experience, the fulfillment to business, XPLs is is business they definitely wherein slow recession-proof, more than doing go not things but that Yes. where more

industry really And helpful. discuss Any changes one more there? Could markets? among wide then for space just trends sublease your you kind That's of within question notable me.

with That's a space sublease do is to pretty because equal. want you intricate that's topic come Peter Jojo, not some... all and created in -- an

Sure.

that sublet space. don't building headline first sublet competitive deal certainly really occupier a One XXX,XXX view Peter So little it have a is a it's it's space I generally is their an saying the hard buckets. or from to different corporate bit, for corporate feet. break of down, That's Schultz. make as a say up doesn't to XXX,XXX XXX,XXX think square that tenants edict I and would a but foot gets you sublet at couple happen. We to square and

a tenants they back term the a space are sublet need time the space the of some again. on of Some because come couple of that. by years, sublet most and seen of has space be to tenant market and limit only the also pulled We've prime advantage take or going not

not view said is And across of sublet I space then in as our don't is Jojo? space. We space our in would ago, very some portfolio a minutes portfolio. I change seeing yes, really the there end utilization just So couple any We're it high. sublet today. as a with, high concern

we I the moving. really just a said, most Most really are surveyed like long-term anything term. significant therefore, leases want fit close short when did, the Yes, But teams just operate just because don't good leases It's to times, space, lease. tenants the very user. pursuing out like a Peter, we to are of haven't sublease Peter these subleases long-term, of short-term are sublease really speaking, to subleased frankly would if we a is the Peter for Baccile of long-term that it's that. that or is that that said. lost problem add a anything our And cope And of constantly to is like with lot can even we're

Mike question next Our from comes with Mueller JPMorgan.

the for -- So X questions.

of one clarification. already? first for so, was were did did is signed leases that what you 'XX When And how XQ, you second And say the is, mix were talking remaining bit rents and Southern you the leasing, more you in the does in the if The of how to California? compare compare question what a original signed about expirations the a development XQ underwriting? the of to little XX%

second take -- Chris, part first the first. part

Yes.

already, with Southern The only And California was at ones XXXX the correct. again, that have expirations mix remaining So XX%. lease the been signed X%.

going a up quite it's obviously, So bit.

part cover question? the you first question? of remember you Do part Do want that the first of to the

of part question first the again, the please. Give

Yes. signed XQ what for and leases you originally are the underwrote? XQ, the development how in rents -- It's versus

Significantly ahead of what we underwrote.

Anthony from The next with question Barclays. comes Powell

to or as on in data the deals for And space? question land bank, your opportunities any there ventures you do you development a at Just obvious look centers. are additional joint

and... are land we So positions

of get the pleased -- Well, piece were for and highest able in to we're we that we have of land use that in best terms very Phoenix. this

and very at for When what always board all across of we're about that. the excited in we're So higher we you do, use. looking look terms better

an profit we and selling. come it a we sense potential price development, product if that industrial or to we and build any building potential -- a situation doesn't would we're margin potential exceeds make consider So to offered are our in,

So that's basically rule a in do practice a and FR. we that

obvious future right of terms data or centers I pursuits any offers we in now, don't of candidates for Now situations. center pending have say will additional that data

or all balance that your And on it. guess centers. you ventures, I own these joint sheet wouldn't data with sales Got development fair? Is do

stick butter. to and to fair bread It's going our to say, yes, we're

comes Our from Sachs. with next Burrows question Caitlin Goldman

had SoCal which other would of question less similar follow-up, the have I mix previously you that just 'XX, than XXXX of to just is was XXXX. calls on in in asked. terms one But think the expirations said Sorry, that

were just 'XX to if So about -- might that wondering, exposure you that that SoCal changed kind just as or compare of I'm I'm 'XX. 'XX 'XX, the that be you exposure to wondering how talking confusing. compares

Yes. Caitlin, this Chris. is

between couple if the are -- expire going not going the So up in in around originally a lease both -- that were to because leases they there XX%-plus. allocation XXXX, to was XXXX X of you is years

of a months about couple talking We're difference. Yes.

So...

Right.

between X the So very similar years.

Got it.

be originally them been making now 'XX, some thought was of had but 'XX, even? more it that So will they

Correct.

comes question Craig from final Citi. Our Mailman with

of versus rate by of or... that's just lot you put needs there kind your is stats coming than But a and being asking trying are a by call to which where exposure, focus market the rosier talk through I'm could I'm a are. guys picture things rate it days. like side rent rents, these just asking trend lot make -- the the growth market driven market not talked markets are And -- go you feels And to. versus of the there's taking together brokers it as just of lot just on being in about a longer new kind product that on maybe on rates about some taking the of curious,

don't It's of different because differently a right like report that. a by accurate. more now, rents market rent number the think We subject tracked Yes. asking lot are XX%. complicated is brokers. quote is Taking more growth We rent they

That expectation in mid- Our for to was with mind. growth was high-single-digits. rent asking for rents XXXX

X.X%. is that number for third year-over-year, quarter, reports CBRE So far, the

in right we the what middle it's of So expected.

the include some a quarter the year. more across rents as the rents opposed -- higher that by increase in are rental of amount of in. mark-to-market looking what's all we're rate because -- look happened X.X% active we're don't that yes, that or have We just So at markets at to definition to taking taking

we pay So to that. don't attention

This like concludes conference turn I Baccile our the remarks. question-and-answer to for closing would Peter to session. any back over

today. and to you, operator, Thank for call participating on our thanks everyone

hope have coming to our me. Be follow-ups any Art, well. many If months. with please connect you to in the reach call, We person or from Scott out you in of

presentation. The concluded. attending today's now for conference has you Thank

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