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Duke Realty Limited PARTNERSHIP (DRE)

Participants
Ron Hubbard VP, IR
James Connor Chairman and CEO
Mark Denien CFO
Steven Schnur COO
Nick Anthony CIO
Eric Frankel Green Street
Blaine Heck Wells Fargo
Jamie Feldman Bank of America
David Rodgers Baird
Omotayo Okusanya Mizuho
Brent Dilts UBS
Richard Anderson SMBC
John Kim BMO
Caitlin Burrows Goldman Sachs
Ki Bin Kim Truist
Mike Mueller JPMorgan
Emmanuel Korchman Citi
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Duke Realty Third Quarter Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. I will now turn the conference over to your host, Ron Hubbard. Please go ahead.

Ron Hubbard

Thank you, Josh. welcome third and earnings everyone afternoon to quarter our call. Good

Chief Chairman today Operating Mark Anthony, are me and Officer; Officer. Jim Nick Chief Joining Schnur, Connor, CEO; Steve Denien and Investment CFO;

statements affect to expectations. our results prepared adversely to cause factors business may me that conference Before we These and future other results. made statements uncertainties could remarks, this subject make during forward-looking actual from risks risks and remind and differ let our you materially certain certain be could call that

or of For you statements. more reconciliation this earnings today, statements October forward-looking with other XX, XX-Q have non-GAAP XXXX, information the call and would about company's those risk All our file to that we we any update is speak factors, to A we only revise provide GAAP assume on the release. refer the filings. or SEC measures to financial as that and our of no XX-K SEC in on included forward-looking obligation we

earnings night after were the distributed release last closed. package market and Our supplemental

available did are copy, not a Investor our the at these receive section documents dukerealty.com. you website Relations If of in

also release, and audio the reports of earnings package, SEC an well. in our find IR this can call website of our webcast section as supplemental You

Now for to our over prepared statement, I'll Connor. Jim turn it

James Connor

good Ron everyone. afternoon Thanks, and

quarter sales north in and and X% estimates relatively underway. year full our environment spending September X% XX% remains as sales great we've healthy themes are many from real in E-commerce all, I estate for restocking been firms, net relatively the as numbers, a with endeavor and front all inbound growth indices strong, all remain amidst or economic resilient despite Demand QX were given up forecast surge consumer over August forward. rail we up portfolio. omni advanced respectively. to the west has business coast recently and safe positive holiday traffic and XXXX the going cargo our both of up Numerous to last and for season year-over-year, tonnage third-party the is rate families the turned percentage to sales that's quarter primarily the recovery the sales the each now bright. with talking below The percentage your state-of-the-art We Also, cargo been X% quarter encouraging about. Online points of e-commerce get activity retail and X on logistic continues as maintain had for space total rate of expected at very XXXX in uneven volatile XX%. The First this healthy rising hope and you so of of outlook X and are to through a been pandemic. robust retail for up far the all year-over-year XXth XX%, remains and Even fundamentals of transportation up and straight penetration perhaps months, peak was have ended truck months XX% also e-commerce that channel-oriented firms. of absorption, with only the Nationwide more slightly levels. good and container well logistics two as about the predicting of last to has our resiliency indicators two opposite. the inventory the for result also leasing, penetration performance

and growth value started solid with For totaling $XXX rental four a XX% We quarter, a projects in rates rent margins. development XX% achieved basis. on the basis cash we on third creation GAAP million

remain expectations. very year, the occupancy broad-based go levels. our of about in at we year the back was to We total beginning metrics. a collections XX.X% X.X above square detail strong tied the XX% these in expectations with XX.X%. feet XX which across leases, the balance We and have And pre-COVID total end Leasing the raised increase executed strong basis quarter, exceed optimism a is pipeline to e-commerce. over momentarily. Mark now in prospects, of fairly of to have it and of dividend guidance which revised portfolio signed year for and million performance our on build-to-suit monthly contributed our industries rent agreements. these our of full deferral including is for Based result year-to-date changes results The our point will

let cover turn our operations more detail. me to over to real Steve it Now, estate in

Steven Schnur

of million quarter the from feet square rate quarter, previous million for XX and the Thanks were This flat U.S. demand Jim. feet. resulted In XX vacancy deliveries square the X.X%. a third was in

research year, feet. the range square to and XXX the foot million to be demand deliveries firms mid-XXX feet in project million XXX For the major full million square square

outlook, this nationally. we X% maybe expect vacancy Given to high-X% the rate

On in side, rent mid-single-digit the CBRE growths rent for this to the year estimates nationwide range. be

bodes remain million For XXX the for next those This year, and projections an foot early historically very the to remain for of in well demand square in market deliveries. high with pre-leasing estimate deliveries balance. range,

favorable portfolio. on last As noted our with leasing volume, total of situation forecasts, sector. and front long-term X.X the I the feet call, demand is per recent our demand square We and for mentioned, very and an had CBRE intermediate GLL on as for million excellent our Jim quarter

XX% on on with basis. a on growth Our a and rents great cash job net team did effective leases basis rental rate new a XX% of of pushing

of levels high our of one, the two, than sheer aggressively rent is, press As collections. continuing lower to from lower or was release here including of strong last push when rents. you the volume night, historical levels. average backfills considerably We're leasing our occupancy just and and, lease saw XX% our XX% story Part was renewal than rate

has that some impact the So also on number.

our square speculative ahead signed in of example quarter of foot success leases our a until This quarter team's was a California. service for leasing of notable new construction million speculative of Empire, underwriting. not more and X.X the this well to Inland of the It's facility go under One expected the our is lease XXX% into XXXX. great project second developments

own last CBRE we on to post our referenced as a by in the pandemic, noted the our In lease portfolio, trend during transacted we there and about call an leases by XX%. to research, sites. continues be average As increase larger realized pandemic

As size the in we profile and the our you our an represents collections. of believe our our features, and cash terms differentiation on emphasized And portfolio credit I'll of an term of before, update stability flow, tenants rent transactions, modern flow. cash we've of and give portfolio speaking of element

the and the sell of reported onset of most aware industry REIT research are reports, very in of As the per side some rates you best entire since collection pandemic. the we've numerous

trended the and pandemic amounts been have deferral under since of start have collections monthly fully month collected. every the due Our better agreements

Some avoid rent tenants ahead of have even schedule to repaid charges. their deferred interest

October as our averaged quarter, the the have deferral For overall collections month the and third executed XX.XX% well, of agreements. including including

was call, soon. On July newly to space the new development demand developed our on as logistics earnings the back and front, for projects plan then late we we strong coming noted very new commence

started third in markets. projects the on in the million XX% quarter, feet During $XXX totaling Seattle were speculative million California pre-leased costs new totaling square average. we X.X projects Southern that four and of starts were Two

environment. feet development in global We The for is reflection the for also In the products. healthcare was great build-to-suit project square other and Reckitt in project pre-leased. Health. that totaling Eastern turn started strength wipes foot XXX,XXX is of the was Reckitt a the of and new portfolio. Miami logistics XXX,XXX who's summary, the a Lysol, quarter Nick manufacturer in of I'll Pennsylvania this our third call acquisitions Benckiser over discuss health our to of fourth a now market This a build-to-suit project square second XX% to

Nick Anthony

acquisitions, XXX,XXX with in on California, million. market cost acquire and had square facilities Northern redevelopment, for lower feet total in working at transactions On prices, a rents, marketed. located IRR four activity transactions we New the quarter. to continue selective transactions one a slightly three Northern expectations below Steve. were Seattle of Thanks in available we these for of be five in to all X closed as Overall, are believe to discounts investment we strategic unlevered All with of the good coastal market low-X% a We the return We cost, today. three were attractive one Jersey. assets transact assets we're total third on the replacement facilities the markets that totaling and not potential market and have in Tier pre-COVID during and a lot four The below in characteristics of likely are purchase long-term such able these acquired certain the and/or range. $XXX

capture opportunities premium. quarter mainly of as focused example we with is the how to can example on potential transactions single-asset be quarter-to-quarter, also This yield our are that well an a as an acquisition lumpy

X% XXX,XXX a of million the side, in disposition the for a building sale we rate. Indianapolis at $XX.X on closed foot On square cap

guidance transactions disposition midpoint, of XXXX the These $XXX we disposition have close deals or the fourth expected our to quarter. under stages by final in a agreement. a in are million all mortgage implied number As of

Some to guidance transact amount it we include business update. to now Mark as I'll manage the our discuss as as given and tenant of financial well of overall these key to results assets, this future a continue customer. turn as over Amazon our dispositions, significant exposure, on we with

Mark Denien

of per second XXXX. for Good and FFO occupancy $X.XX Nick. quarter second by share to was of in was compared the the per quarter rate the higher the $X.XX diluted growth. in Thanks The increase the share XXXX to afternoon, third FFO third to diluted in compared Core XXXX quarter rental $X.XX quarter and quarter per everyone. share driven Core of

is Core of GAAP a drove last debt leasing the respectively. during continued period and compared third AFFO compared as was of quarter growth in AFFO for million well a totaled $XXX,XXX $X.XX basis drove losses a by debt of growth by X.X% a our rent or second and $X.XX $X.XX X.X% we on increase the periods no increase third the straight the was quarter trailing periods. as the XXXX. on rent XXXX during cash defined third that by driven of line in X.X% $XXX As economics. recognized increased nearly to defined extinguishment XXXX property was Same same leverage and We debt-to-EBITDA XXXX diluted NAREIT quarter third in to basis. as for and FFO $XXX cents months NOI X X.X%, the reported growth quarter NAREIT basis FFO capital times, FFO occupancy, expense. comparable the the that the compared for reviews, credit growth reversed was to free and year-to-date result for quarter, of the the due per and year. conservative share quarter with our factors of September remain XXXX per earnings the NOI of favorable some Same Core quarter in in nine is XX-month to basis approximately increase a the XX, history the bad property result of on at same From of of Same metrics the diluted for increase as on reporting per third ended reserves second share collections on in in the the cash This improvements quarter midpoint with The a FFO. overall consistent of XXXX. quarter growth three updated for receivables property million expiration share diluted the standpoint, guidance. on NOI to very the

I'll leverage pre-leasing X.X times. that state pull neutral the levers a the of attractive capital markets was and annualized with new developments at Coupled to the of Our substantial growth is the funding very capacity, capital remind raising debt-to-EBITDA investment multiple to current we with our pricing state current for everyone strong market. have deployment capital sales level. quarter at

aggregate example, on Also, For they being expected next delivered feet based pre-leased and quarter worthiness. and to mid-X% prospects a optimistic address build-to-suit are XXXX X projects. are of the outlook heavily demand to of quarters, better-than-expected tilted an our towards with square I results tenant like two XX% million stabilized our immediately the near-term changes to yield, we've accretive projects our now made, that which highly guidance in our the continuation are of third and are earnings. a and would thus development for pre-leased credit

the $X.XX of First, per per range $X.XX to to for lower the of information for debt last as which debt The a equates increased FFO our share to expense our a driven July. of FFO by estimate in the of thus guidance guidance expense update share, diluted estimates. as well leasing far, for $X.XX previous range per guidance increased we've Page Core a our to Core from compared to XX diluted remainder increase $X.XX our midpoint is bad bad $X.XX details of our supplemental share year. to strong results the

in for to we driven as reasons diluted of to share Core to basis factors increased adjusted X.X% $X.XX updated we've Also, on operations of increased previous have the share also to of similar growth Core range for compared share. from FFO, between NAREIT to range For X.X%. $X.XX the adjusted $X.XX guidance for from same X.X% the $X.XX our FFO a per a and guidance our to X.X% the by our FFO, previous guidance range funds to range per

growth the year. as speculative remainder result increase developments, build-to-suit for date, on X.X%. basis, of our pipeline continued our X.X% on lower to we XXXX a up X.X% development rate guidance solid a in the guidance of range bad to rental is X.X% growth for This a previous our to NOI increased continued range we've starts. leasing same-property of progress expectations cash from increased the for For as and to have Based progress and guidance debts in our leasing our well of prospects,

$XXX of exhibited of $XXX components Our Nick's our a more our our million information for to and estimates $XX some of million million as been markets, guidance to X revised $XXX acquisitions million. other to is million couple $XXX $XXX couple detailed on our the more Also compared as range to million in outlook increased previous on a optimistic previous a one-off $XXX of of finding updated in - Tier we've million. based has the at successful our to We've range website. acquisitions compared between guidance million supplemental coastal in team $XXX range guidance included to

back it few over for remarks. Now, closing turn Jim I'll a to

James Connor

Mark. Thanks

our in leasing, Our quarterly speculative rebound solid and particularly the results pipeline, development were growth achievement a the strong, XX% in rate highlighted of by development rental starts.

questions of our are the lines demand strong reflected approved resilient continuing audience. in ask one back by to that, you macroeconomic night's With Board keep I now perhaps growth. open earnings open over short quarters the are raise mindful the we the themes provide welcome last confidence $X.XX get While and question. participants risks, queue. or and previous are should us announcement we our we'll course, share continue drive political has our the up first of dividend X.X% two rate. in to or the question ready to last and you, would that to the This quarterly for up to that Josh, to lines continuing of dividend performance dialog two opportunities a in to was the and Directors may over take

Operator

is Please from [Operator Eric first question Instructions] Green And the Street. our with of ahead. line Frankel go

Eric Frankel

will. if Just a couple short you questions, of

maybe That bit on does seem your just comment than the volume. be activity little leasing regarding you for is lease shorter relatively First especially the usual, a renewals. is Obviously, to quarter. a low leasing Can this it term?

Steven Schnur

Eric, think feel portfolio, the over quarter, Yes. I anytime overall are high occupancy pretty Obviously, our well. is about in X we're it. Steve. million No, activity for levels our good feet fairly we as this

So read there's there. not - shorter to and into term, terms then a of in the lot

'XX, we a but - the transaction years, shorter, of we're a still I little just par little over a three think in quarter on at with are sample where year-to-date, couple were we size. it's was that's

Eric Frankel

as you bringing plan the a acquisitions - them You're with plan pre-COVID over year? across of follow-up, forward? how thinking couple you to be And obviously I find, kind deals do think, of couple match dispositions kind more you to finish - or regarding going to to and able match still to fund next quarters mean, of now of another said, your you activity. just and just allocation Can about capital quick it acquisitions the are line. dispositions you next is programmatic, going

Nick Anthony

Yes, Nick. I going match are fund. to is generally, say, this we Eric, would

you'll the very geographically disposition very continue kind other. acquisition I the be We be equal see acquisition think Xs, to of side to Tier each coastal but on focused the opportunistic volumes, and on

Operator

the question Heck Wells is Fargo. next of ahead. from line Blaine with Our go Please

Blaine Heck

strategy. a core of kind in upcoming much core component those acquisitions a this roll, any looks and markets you value-add buildings quarter, acquisition or behind be is to the there value-add which the with Can at looking about to, of of in some deals pricing want focus vacancy, for how you just whether for this follow-up Nick, more if talk of allocation on differential, any, to versus point? part is on you're other like was that drive the increase going

Nick Anthony

first side. our Blaine, do most development take that a on of products, are buy going going or that costs below play of you on the the we of focused assets we would all, find to to forward. we - be on, Well, if the tell that And most replacement vacancy basically, development be redevelopment we're are with happens I there because acquisitions below teaming up is can market, teams lease to

sub what the notably, a So on. love focused there have Class Most infill buy we're on X.X% recently. that's been pretty traded We'd A Southern was deal assets those California in aggressive some generally developed - that newly to cap in core but pricing markets, very rate. at some a

that others. we're as trying still quite just to marketed the being some aren't with fully So as and find prudent our assets of capital

Blaine Heck

a of a the that. follow-up momentum lot positive from Cold just has on storage seen And pandemic.

consider would expanding of You second storage but forward? Can not in guess, you and, last about just guys since business then. bought I'm for sure cold I that your quarter anymore done going you appetite you've guys the year, facility cold-storage the whether a talk part

Nick Anthony

asset the we Well, we like product, the purchased. we like

storage some probably development not would side. the will you. and cold on a do opportunities, pursued have though, I lot of There is tell We

to never large be it's So a going of business. our part

to that before, of product type. operators said we've be intending not As we're

looking markets. back we're So tougher frankly, really in to to X it's for you Tier the those assets actually find assets lease can other operators. that And, coastal

Operator

is from the line ahead. Feldman question next Bank Please Jamie Our go with of America. of

James Feldman

pretty feet, color well as as How think the starting be million development the XXX think Do year. next your you appreciate what's said supply similar of year, would expected out for the about your to think months? square same do XX pipeline? it would you about next possible be this as I pencil on I kind you're you which

James Connor

Yes, Steve color. Jamie, I'll let add some

I about comfortable clearly, much we think, than were feeling ago. more we're even just a 'XX development the in business quarter

Our has allowed us always development that's and pipeline. of again - of speculative the been XX% performance start our roughly to portfolio building our

other So if 'XX, operate to development, and that us we see Steve, levels 'XX. you color? 'XX can saw don't do you'll want add you continue think any I historical speculative to in to us return I know,

Steven Schnur

looks I'll pipeline prospects of Jamie. in the only past is it's today add the high in thing is, been active confidence Yes, of looking at. of terms as build-to-suit in pipeline that this pipeline our other tell about and The customers would the attention you that talk us as what that in we're pay you've like. we our to cycle I heard terms and

for is good - So feel about we us. feel good development where the for headed about we direction

James Feldman

and I back I be do heavily then size that will and XX% get weighted you'll Yes, the you like while that build-to-suit more longer? quarter what's of same meaning kind even continue XX% spec pretty build-to-suit. the had or a be sound over pipeline commented like of you think mean, on keep pipeline even a just to kind incremental your it guess with for starts and towards they'd you'll about in fourth

James Connor

between. the in answer Well, I lies somewhere think

as message been build-to-suit trying strong four is in years. think Steve it's the convey to pipeline's I the the last five or is as

opportunity So significant obviously we see a there. lot of

perform rate market portfolio I well think on to spec as will again, this continuing slightly our and us plan as well. you performs can are the bear, more elevated we at markets a quarter, long the continue than

a So specific trying target. we're certain that up, to to or achieve in like not back number we're ramp a not hurry it's

revised recover the long I I guidance holds next we that we that in think again, should as we're gave, given true, And very nicely. see the everything marketplace. year, as the comfortable think with trend

Operator

from is question ahead. Dave next Baird. of line the Please Our go with Rodgers

David Rodgers

Is What heading maybe into and do the fourth quarter just coming in the normal year nationally of thoughts activity another terms your Nick, in to sales. early into for end of and going of the rates sales one kind you XXXX? end transactions ability participate those, on back and investment your to see around into of the just cap investment the kind of year?

Nick Anthony

racing of in It's pause going a to quarter get deals for year everybody is earlier finish and line took year-end. the fourth to the else. be now and very by everyone a active us in the closed Everybody bunch to

the mentioned before, We've A we're a there have also would a out cap fueling there of transactions, Atlanta into Southern And but and in lot were interest rotating As in some a that sub-X% - compress. investors, plenty proving well is say that back cap to activity below either And to product of it's of those and obviously other now compressed, from But good sub-X.X% industrial, out. mix. them seen rates investors there's demand Indianapolis. I broad-based. lot rates types of trades rates I've seen of it's well. are others getting in seeing as out clearly prevent we've pretty sub-X.X% Amazon California, sub-X% mix

David Rodgers

the half you to land with the year? second talk you're Can there And about can terms seeing in construction the you of then achieve of of that just of maybe think where then in development kind what and you development theme. you're on out here starting costs, terms projects the margin in stick costs,

Steven Schnur

This is Steve.

on be And we've in been are to annual probably Construction invest prices on want costs, increases, the their - moderating margins. right, pretty basis consistent markets historically of but certainly with to an increasing, terms land our continued of development think, side, the say, costs. then the single-digits margins I'd have in. in in sticky terms I low in we

margins think we've risk we those our on as XX% our north in that or use better. in the indicated, on of consistent returns we've mixing of Jim pretty are margins I the for like been adjusted been portfolio build-to-suit's, deals XX% and

Operator

the Omotayo Mizuho. with ahead. next from of go Our line Okusanya question is Please

Omotayo Okusanya

where In would to development regards months? over about talk to Could those to expect bit you starts next be development. speculative you the a little six nine

Steven Schnur

the Sure. there tell the I X be Jersey, California, would that'd you, Northern other coastal handful other right, some cities from we we Tier Seattle, markets, is operated good trigger Miami. of we a think submarkets in is - like in that those pull There's five California, Southern the positions, New we'll that, we've of perspective. if certainly a got on but the markets opportunity broad

Omotayo Okusanya

quick I talk should X.X% if just in ask that's X.X% deceleration that? of year-to-date, a little bit NOI, imply to Cash, full about XX. XQ the one year And could midpoint you follow-up. Could thanks guidance,

Mark Denien

A pieces, the we're in There moving Sure. to quarter. it whole to in basis XX of is of quarter there you compared is couple the from points really and about nine months, - a occupancy. timing pieces quarter at those just first up third think 'XX of if third and part few the quarter our 'XX moving I look of

high uplift had quarter, same to the property we of So get we NOI fourth comp year. in the really a we've last of then had because in fourth quarter occupancy. when big a But occupancy out

quarter. fourth So pretty we're quarter-over-quarter to the really projecting in occupancy be flat

the of there. reason part that's So

We third burn to a off. quarter quarter that's free year. fourth burn little the had rent the of third the impacting Another is negatively free in quarter year rent and one bit in positively last off compared this really of

other fourth So bit, an that little uplift, really was the the in but not quarter. turning significant, way a

the year little a little of a the a to it's quarter in fourth bit so last extra compared rent negative. this have year, fourth bit free quarter We of

year. I final a no So as reason that bit And I debt this is debt timing. quarter as final just the look mentioned earlier, then bad the bad part had expense. in of - of expense we third little at And

bad $XXX,XXX expense about that's the We that debt have fourth in of doesn't the our in baked guidance. happen Hopefully, guidance in quarter. but

moving one of individually big little of most timing. factor a lot a no So that is pieces it and is

Operator

go from the question Brent next Please Our UBS. is with ahead. line Dilts of

Brent Dilts

your comments volumes. heard rail ship I on and improved

So keeps about you bit? the you acceleration in chains just that assuming for up well think prepared talk winter, could just this for supply are an a pandemic acceleration fall pace how and of little

James Connor

the high And level restocking moved well. the would some components. concept supported and I increased of to tremendous there color we're the that of you by demand transportation in my and give the goods can and add have more of remarks for quarters, of I increased about be far we're is Steve second some that is levels mentioned can with the of and a we've both There amount U.S. amount couple recently. as just all a that numbers stock seeing I those the the of is last year, restocking to of what is inventory Yes, couple thus which of then in been talking obviously think safety terms seeing our of inventory that are driving inventory. that

add you that. Steve, can to So, color some

Steven Schnur

out there done e-commerce There centers. products from. from restocking about is would I been, we're is lot with supply have a a us ever and of about have the through. engaged add customers Yes, delivery of lot today as articles our what fulfillment day thing chain about I is probably gone are we the where of all There There talk only on side is as coming things. think given times resiliency, being

as in in inventory retail it's at the ever been, times. maybe that's X.X as to If the category, you look sales at low history, down

talk for in volume our we'll I see think on going a sector drive is and continue there near of So lot this future. to the

Brent Dilts

e-commerce? one of in about to the regards just one broadly, Amazon, how both penetration business towards then concentration moves but greater that you're just quick more as on And thinking tenant

James Connor

ask Well, today, me Amazon. if you like I

the on as pretty recognize aside, world, that's that's concentration. they But A-rated all as company we're in kidding everything comfortable that an going having we Given client a are. as rapidly growing

alternatives. at We a number have of been looking

we as have the We past individual done last have years. mentioned historically few selling the over in Amazon assets some

corporate you'll managing so the it see I vehicles. at through of think And to those focus on us level types continue

Operator

from is with ahead. question next Anderson Our Please the of SMBC. Rich line go

Richard Anderson

question beyond I nicely. of the for peers week, shipping on a space? is quietly, like idea good a things shotgunning coming the for through Is side this So firehose slow of the your down but that slow of this? your chance beer the instead a down last to at your kind think, lot all to actually business post-COVID asked You're could - do And start hoping I you like this fast-tracking e-commerce, that actually moment. one quickly, there it's of this it make what other stuff we're environment, of a which of

James Connor

Rich, themselves. I is a these one There but I'll out. of never trends the start things situations is of think these like comes reverse out completely risk, that always

think doing not So to grocery back shopping to I any don't people going are or to levels. online going pre-pandemic go back

or that's given of customers have A of product away with able talked get We've product don't very some compete need the existing a good hours in going of pretty strong revitalization, about of is quarters our allow a couple having economy, other get soon. We've the they some U.S. in the keep driven companies. be their and anytime those consumer feel seeking a to about company that chain a to the would U.S., go last in sources also invest clients. on last companies is, to of that and the level but obviously, thing supply doesn't run, the to to for e-commerce that, majority and can be of of with reshoring of about comfortable the vast that quarters, couple think let's lot to and issues chain appear supply to China I alleviate heavily those the to conversion And that before within of by lot go your inside trying to the been pre-COVID, back they not chain customer been growing supply a to nearshoring, I the we've if of think issues. XX they've the lot alternative talked closer had problem. point that, retailers products e-commerce if to to

that of is So very spot tell always think going the but that those really There the in mentioned, significant. risk you good I all we're that's of I things would a think pretty combination don't forward. you

we're go we will direction to the I going. in think continue

Richard Anderson

And then I that the your playing is of leasing tenants, sometimes your don't and if hard role problem, e-commerce business how much your a all - know, it's do problem you activity, this, become a it's environment about one in much in to playing smarter sort know is, about tenants e-commerce some of of sort because aftermath role, about how excavate has stuff. of of this the is actually and observations out all happened? in your really a Does what exactly

James Connor

is answer it give way, this would I question people E-commerce bigger for. your credit yes. answer is than the Well, driver a probably

true. last have denying e-commerce you quarter. Amazon's That's about out companies the the talked XX% absolutely being is Nobody We of large First, true a and space. that there volume that. amount our consuming are of roughly e-commerce

to doing own component, clients, they're you've is retail component retail distribution sales, changes omnichannel Depot then their retailers, Walmart match you're their are their customers Lowe's these online other and make got in companies That again doing heavily to is The supply that maybe chain companies the own or distribution driven to are stores. or what are whether Home doing any talking traditional e-commerce other Target investment. by being they do. to forcing can e-commerce investing other or those is about or our of the And

the e-commerce space of pure consumption consumption from lot space aside sector. and sector, and think, our additional of a I our driving of So it's

Operator

next Our go Please with Kim ahead. John BMO. from the line is of question

John Kim

XX% And wondering you That what just to conversely winning from continue to leasing up if was do demand? expect you XX% increasing that that quarter market do last you percentage I'm share e-commerce then you and see increase. other industries and see mentioned demand what just of also industries

Steven Schnur

Sure.

and or just build-to-suit question whole. Reckitt omni someone the e-commerce goods a manufacturing, being one, that e-commerce, mentioned of I and channel good now. of as business in as that's the consumer be Food see side, I that's is retail-related, the e-commerce-related, said, a and our doing hard XPLs But very well. retail mentioned with how and driver dry be to that whether not - that sector clearly, beverage it's healthcare-related, final and XPLs was but to assembly, right And earlier continue a the for food suppliers, largest sometimes we with and storage think cold we'll goes. it beverage deep decipher somewhat continues Benckiser, Outside doing active which mentioned Jim our driver as segment us to are we're of goods. big then a activity work I comment chunk a space, and see may yeah, in between good consumer the vary. that that,

John Kim

characteristics far development you On X box focused stable opportunities as looking on can other as at, you guys so share versus the forth? asset versus as opportunities any that what small box, with markets, big as far acquisition Tier you're assets and mentioned

Nick Anthony

to is bit give on of be which will I'll you you going forward. I'll Nick. little color activity, Yes, what quarter's give - this I similar this a think we'll see

a we an an cost. the did leaseback at It California we found was a it example, lease, below by where Over New XX% in expect long-term we transacted margins below in is it Northern at we at to buying market, XX% redevelop on future. to For but Jersey that short-term market. asset sale asset leased that about well encumbered - XX% land below are does we way

a will be hopefully potentially. good some that able the good be at a future from to point with return in bumps, So we'll it then get redevelopment

replacement below those the basis. transaction cost. and I-XXX lease access, a that bought Those also hold are frontage in and market, to Oakland below well-positioned, on it We And probably we'll as good has a assets long-term slightly well.

I said kind is that on lot we most on - done Like risk that So did acquisition transaction, for. take that's our vacancy we development earlier, - since what because risk side. we the of we're on taken haven't of largely a looking the Bridge of

Operator

go from Our Burrows the line of Caitlin Sachs. ahead. next with Please comes Goldman question

Caitlin Burrows

of year footage short-term also year-to-date full short-term as than think quarter leasing last in early net XXXX and early than square the level. XXXX regarding I renewals are and renewals is disclosures and higher significantly introduced you XQ, already it higher looks leasing like

was and think driving about them? what's how I we increases these just So wondering should

Mark Denien

extend the I'll renewals basically the assets and early disposition term. early maybe from Steve The some the Mark. can about on it's renewals some a main that were lease on transact cover to Caitlin, terms we're lease driver of talk perspective. looking to

are the early value just longer-term lock close side. increase our leases the And these tenant disposition will So either the really on probably that yet this it's year. next in to to year assets or

really the and terms. on comment that's driver the then of So let lease early renewals Steve I'll the

Steven Schnur

in more was Yes, third early terms some late market, and the and early the the was where uncertainty of the the lease think, quarter. done - there little bit second - I short-term in in second quarter a leasing, it in the quarter third

see again. off think taper I you'll that

were those into transactions holding wouldn't macro wind over it overall extra an read anything for market. of the Some larger I an that or two. us month But from up trend or

Caitlin Burrows

then I one. straightforward think, another, And

just XQ. the guidance implies $XXX,XXX than expected terms know debt I that of bad now debt, In and XXXX lower XQ bad was in of the

kind of you that just be it an to or wondering the had is and outlook did of were you watching? what's the are that? had out So them they that And amount end it if woods, conservative you was specific so, needing that then I'm of and for not kind been there tenants up

James Connor

that is out there that - there me. say really new troubles would nothing I from

be caught In to, charges. the been paying folks off watching some that avoid we are gave tenants early up, by that I've to deferrals even fact, get them surprised I we interest of to had that continue

truly of overall really So in industries potential quarter that fourth that event I took standpoint. ones we're impacted the by we to to hospitality, They are kind list that us. lot that collection continue of travel, - but majority from not they're what's COVID, that of and we watching are continue continue to be industries, made a But a that leisure, like that entertainment, exposure our on a like reserves ones surprised really most. companies - think, the the been of sort to baked pleasantly those continues there. really The them of are planning, have be them, It's suffered the like watch from up lot the pay you watch and of COVID. we that's are most

Caitlin Burrows

it. Got

Okay. Thanks.

James Connor

they're tenant most as The the that would in I well. to typically industries on only side add smaller in, of all are thing addition to those, is the

if there to continue current or So them shutdown actually bit they of little most another worry rents. like overall their that. was just me a something from withstand to their on wherewithal But be

Operator

Please Ki is question next Bin from Truist. of with ahead. line Our Kim the go

Ki Bin Kim

your by yields with what mix from of more looking your X% you about thinking development, But pipeline about. market compression be projects The X.X% doing like then yielded couple of and of bank delivered projects land There expect at in should kind which development California eating that reload couple to have we you've should what and you're is obviously the next lot and the that that a further into So you've X% now. rounds construction years. there nature, the past looking should current I'm that be for a that at so yields just to bank should are yields, land been ranged and price of just if the lower. issue the we under more have curious as land, I'm be over

James Connor

let me on Bin, right. the you're obviously, Ki piece. land start mean, I

costs tell get as land, at you at that what as level been we pricing, If where we've market are - market, soon I doing as it drives all entitled. that on it markets right it's really would the in you buy But can goes soon is been doing reloading as coastal we the markets because I the mean, we've where into production, land, up.

the land So And the on if you I'll at then Nick it's have not always market. in inflated add prices to - been like with are yields markets that. prices, based let lower those yields the our past Steve or We always land will. in

Nick Anthony

that's yields what's is based development, more you, Well, geography, the in markets updated coastal assets. change down on driven clearly the as yields yields our X other mix obviously Tier development the more doing there. in major at We the were we've and of the

day We continue see something forward. to our good margins deal we'll land but and in manage continue getting we and expensive every that to is it's business with going

Operator

ahead. Please go with the Our from of next line question Mike is Mueller JPMorgan.

Mike Mueller

have I and anything maybe years, different about kind but was in what wondering, compared during thinking you happened been of to seeing now prior forward? the just lease-up ignoring lockdown, development just times going of terms

Steven Schnur

- We've lease-up No, averaged or is as new of developments I four would you, underwrite months that we beat time practice, this are on frame a we, spec. one-year average. about we on by tell all three Steve. standard that our

think in good would to just I were our of of and Southern and I in those today XX California nine construction. before see XX we Inland We continue about Empire, done projects spec pre-leased we've around and So portfolio. tell we've the pre-leasing talking activity you, the end buildings

see a our that sign So health markets. as we think the of I for good

Operator

next Green Frankel with Street. Our ahead. the question is from of line Eric go Please

Eric Frankel

the to if mind. back I you just leasing questions, want to get don't

this - asked - me, it? renewals early was have your rent earlier, lease cash First, excuse I was early should but growth, affecting your that

Mark Denien

renewals those. renewed don't are - before deals up. are not, that mean, two are count years It we Eric. I These are early is they our

mentioned even connection we like on question, count were get I you for sale. growth held anyway a done would with be in because on wouldn't assets because hand were earlier if it misleading we'll that to more never them, the actually pop they And two get to those So, for an years.

So forecast. they're not included in this

Eric Frankel

to said quarter how you about you Good itself, out, last a seen and what maybe that coastal geographic related can where discussed market rough trend great. Okay, gives that few figure to know that's you've also rent of the kind grow, I checking on trending? the of paid maybe you more but you've and were can - on coastal cash talk rolled of mix are for rents market that maybe thinking been during to that, quarters? know. there are just couple you're rents provide generally the continue maybe Then then you a leases growth

Mark Denien

of making what and up I'll the growth our numbers overall touch Steve for the really leases we're really the and indicative on Eric, current our pretty Actually quarter is in Yes, cover can year this what's portfolio. seeing. really for

any one heavily not market. it's So by driven

if deals about exposure So and in percentage for market example is that's non-coastal coastal the from there X conversely. coastal of that's XX%, our the

thing as only markets, lot would vintage a you maybe the remember non-coastal growth over have lot - a to the got the we say quite just those I leases. as while, has markets, dramatic these that coastal year-over-year rolled rent been So that of not of leases

very healthy. And So our then is we're mark-to-market seeing still let those where on I'll talk it. Steve about

Steven Schnur

would Mark better California, think, covered. said, has the been out the terms with a rent Seattle, particular point I that's Southern good us one Jersey, we've I'd That bit seen been been been of that's in where little what a Eric, pretty other for that market Mark challenging markets. markets growth Again other Yes, one in high the for we've us consistent way. in Probably Houston. very have New outlier strong barrier of the coastal growth. gotten the an markets be

Operator

go America. Our next Feldman of the is Please question Bank from of Jamie with line ahead.

James Feldman

seen where just cap the you've about guess just rate rates. but similar cap compression across I market? not Can question, a you talk the most rents,

Nick Anthony

I to pretty I you. probably been Obviously, XX it's it's say would bps. - widespread, Jamie, been would tell XX we've seen

more well, trade a to California. trades said Atlanta. a going on there's rumor bit X.X% but comps, compressing. - a And sub-X.X% deals the Southern lot it a more quite it I I see earlier, look yet is actually we in think, - a you seen X% you hasn't As We're saw of then Indianapolis. much traded to it see closer sub-X.X% cap, than how Like of lower X% trades have the seen, trades. a then We've in and east side we at

rates. a still that, So broad it's cap obviously deal been pretty widespread. Obviously, is every the those there's are range, record not

it's higher on rents is pretty but where You're and it where still is things seeing it and widespread. what some are, the market depending

James Feldman

bps, that's period? time XX bps what the over And XX to

Nick Anthony

pre-COVID I would today. say from to

Operator

Citi. of is go question Korchman the line Please next Our Emmanuel with from ahead.

Emmanuel Korchman

front open more now? getting two, changing out and, one, I the was wondering distribution obviously in if given the demand, people just environment you work, from there space as right labor is the on more anything either, to facilities

Steven Schnur

for complaining to Yes, much labor two, rent top in first not insurance land big us of they're an there that enough it is be, as the customers, Manny, acquisition any Steve. customers of a of how in what on at, of all not for The well for this labor sort about that concern vacancies. continues Most we'd there It problem. if the one look the it's opportunities front the to of is is. lack our in is like we showing. do end labor ask certainly studies our policy our if do. very number as We It's

continues that be So to problem. a

that opened was with some don't what pandemic. with numbers the call affected I thought that think you alleviate they'd I we during think saw but may what necessarily unemployment the the as essential the businesses

So continues to should be a real problem for us and our I for customers, say.

Emmanuel Korchman

in in back going there them onto conversation, any assets, hold desire it'd any a or somehow they to to Amazon them it'd sell the is well-leased hold an just your a a structure portfolio Nick, the in or are JV - format? whether on to of format be be And portfolio or Thanks. whether other assets,

Nick Anthony

how into strategy. yes. term fits We would overall There our Manny, asset think it at of each be. individual about sort look long and

are some on various long And entertain outright in them holds And some for to that the so some sales, see term joint you're of at venture going us then some may see structure reasons. you're going we potentially future. point for to

Operator

Baird. next with from ahead. Dave the go Our Rodgers Please Instructions] line question [Operator of is

David Rodgers

the just Mark, a on rent straight-line quick reversal. follow-up

the took big guys write-down a You in first quarter.

this You said the then, And would on Thanks. sheet? bring you of one, whatever happened triggered that based to about balance what know. guess, gave that? back me quarter confidence the million two, this $X.X that that see that Let reversed potentially you more of we I quarter. on

Mark Denien

Dave. Sure,

far like back. so. it I not all months no prepared second answer cause just we're this reversal. it would and than me where right be a or I'm reversing was even next thing right total and dice I experience. hope year, lot I our enough a there But were there different we bunch in look the and that collection that of seven off to now. is, but that any to at we're - would do through time, to ways. not that of better for now. reversed continuing hopefully, $XXX,XXX whole We I say mean, to the will to Your was get months say anything just love through this to was just it today We're time entertain portfolio about was thought we one talking going a not short, rest do reason the like ability tell. to that that, that, seven We're tenant general ago. slice big we're the would we

Operator

no at have the And we further questions moment.

James Connor

three Conference NAREIT for Thanks, the next the many the in call engaging Josh. over look months, thank such joining at just Operator, to like you line. I'd you the to as everyone with today. We of may weeks. forward few disconnect

Operator

conclude does conference AT&T Thank That for our for you participation and Teleconference. your using for today.

now may disconnect. You