Duke Realty Limited PARTNERSHIP (DRE) 29 Jan 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Duke Realty Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we'll have a question-and-answer session; instructions will be given at that time. [Operator Instructions] As a reminder, today's call is being recorded.

Now, I'll turn the conference to your host, Ron Hubbard. ahead. go Please

afternoon, and Good welcome our to Thanks, XXXX everyone, Earnings Quarter Year-End Call. Fourth Sean. and

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

let results Before remind statements from to subject certain differ you are that uncertainties me risks we materially today prepared and make could that our to make remarks, we cause expectations. actual

that risk those December more we have refer you with about our SEC. XX-K For to XX, XXXX the would factors, we file on information

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

good We today are Thanks, afternoon, Ron joining your and you safe all us and well families as everyone. hope of healthy. as

global Let saying pre-pandemic US outstanding XXXX major for of pandemic recession, me we another exceeded the financial XXXX and was original and that our by goals, including all a Duke start metrics. year guidance our operating amidst Realty. Even

year the quarter the quarter balance capped fourth leasing start us off also sheet, executed which a being end, and the year, to significant a debt sets volume bolster We to great for transaction of our with just quarter up strongest XXXX. after

of XX% the recap for attained of pandemic renewed we cash our to XX% When the I'm and very our growth achieved. XX% to work ever of year, second XX% highest construction total were which on minimal. our executed backfills including the level under well square XX% and rent XX% includes leased, our at we've year. occupancy immediate Let the XX% was extremely hit, our plan and between and ended rent feet leases resort portfolio growth our pipeline XX GAAP and year leases, Realty development our and million ensure we when the happy maintained customers business the portfolio X.X%. same continuity grew expectations. stabilized NOI X We throughout which basis safety commenced $XXX of We We which health Duke our and generation me exceeded engaged in the service annual cases of highlights which and leases our outstanding signed XX term employees, nearly -- sites. XX% at $XXX average property X%, property average finally, million dispositions included common We guidance of ESG that that We $XXX in weighted Tier revised property placed at million an debt manner leased. responsible to developments $XXX raised million and years by in cash were a on of million XX% coastal We completed pre-leased, at of throughout We markets. of ESG million $XXX dividend of the -- X.X%. with in most continued new our now were the year. achievements. acquisitions. culture are We our XX% developments a increased our coupon of And and our numerous of average an company run we've This

Now, fundamentals. and let Schnur operations some to to market quarter our over for the Steve turn touch cover me it on

exceptional in vacancy was below roughly XX about Thanks, still quarter sector was square square of which X.X%, averages. demand the overall about feet logistics which supply million record. historical fourth exceeded on points nudged feet absorption, first down is by XXX Jim. highest on XXX fundamentals. touch The with Demand market I'll long-term which to national for quarter million the rates basis

higher we of than million number absorption this year, to million was compared full the significant was year, a the saw when XXXX. XXXX of XXX still amount feet. feet, activity Even demand square full-year Amazon from adjusting for XXX net For square the sly XX%

footage in This of end, portfolio. we demand quarter XXX,XXX XX% comprised active demand volume of most XX over feet, e-commerce to for demand subset. portfolio Comparatively, deals the XX% leasing XXX,XXX feet, square own in XXX,XXX fourth than and segment signed XPLs larger our To e-commerce feet about be transactions square that our in XX%. market, square users the year. about represented total of our the the For total users continues over square

the rent year quarter, our feet this rates company's basis nearly over leases rental is rose levels higher second Asking own our this is growth million five-year rate the in had of square XX-year strongest quarter growth In the mid-single year. than in portfolio, again digits. of continuing XXXX executed, X.X%. with in average quarter in This the last about history. up macro We which fourth X.X% we our of our X.X XXX highest ever with time points historical see trend of

Our average transaction XXX,XXX feet. square size was

during quarter In the signed X.X average addition, lease years. was term the

averaged On for in fourth for side, supplemental These amount XX.X% a the package. best-in-class we entire collections enhancement quarter very the the rent year, detailed full arguably and collections agreements REIT in as include credit deferral the small XX.X% figures and the of sector.

difficulty, of of is will credit overall do Mark a on our impact We minor in spaces. handful acutely their Looking industries do as on tenants strong that COVID to forward, quality in moment strong. tenant a backfills touch are numbers. very our financial which of by We for most and have have prospect these most XXXX impacted list financial a

activity XX% led the we in-service term The on was believe rent At our great quarter-end, of will touched of the growth quarter fundamentals the portfolio and So GAAP. XX% to strong stabilized situation another impact be combined quarter I in longer for cash lease XX.X%. the positive. with

leases executed our We also had developments leasing, quarter two in construction, very in first-generation we quarter. a strong on significant the in speculative our

national square to or facility inventory furnishings safety expand supply chain leading a Northern New XXX% its that a the lease in The levels, redundancy, network increased first space of retailer XXX,XXX inventory home for -- to to XXX% referred as in for to referred them as looking take Jersey to the foot often of was stock facility.

not take Southern still was project the the third are under California. to was to XXX,XXX year. lease important spec -- in of we XXX% construction major a This space these square be major transaction quarters as was this and both buildings a well. of until note and lease scheduled feet second Bay notable distributor completed signed of national beverage to the in submarket the lease second It's The to South

Turning to development; quarter ground had a cost tremendous totaling we starts, projects XX% in breaking million $XXX eight pre-leased. on and

were we on developments about project Xth, we Some were the new of quarter XXX,XXX our X and submarket of another in December Southern for were California. these square of starts In started that in Mid-County development feet of press markets existing projects land structures. Tier XX% of then redevelopments release detailed our part five fourth of our and site coastal December, later total, eight nearly and in issued

allocated allocation we of Tier XX% is is Our in to development totaled also year-end and to markets. year pre-leased a at markets pipeline expect higher XX% than is range. we pipeline ago to ago. This the to billion X generate Tier $X.X margins than The coastal year XX% coastal a pipeline the had larger with and this a XX%

for now over of strong, our very it forward, Tier at us Looking cover $XXX markets, totaled coastal prospect in Nick our nearly very starts Anthony acquisitions up with new the quarter. million, year-end XXXX to X setting future to I'll allocated turn XX% to this and list well for and growth. balance dispositions land for is

California both to our a mid-Xs. strategy very portfolio Thanks, dispositions existing and -- a we ago. in facility the Steve. DuPont active and increase markets, to encompasses three one in Northeast million, two in that expected yield with the the of we in to of to portfolio one the in several market in X million proceeds of coastal assets leased on Amazon acquisitions. quarter aggregate in portion long-term turn, We sold IRRs stabilized we to in developed Consistent two Indianapolis, facility Seattle XX% Atlanta, an asset Valley of In in The our unlevered in facilities $XXX fourth and quarter, buildings Seattle leased leased, are XX% submarket in in the far the used exposure initial the mid-Xs with aggregate $XXX Houston. that comprised Southern and assets these had Lehigh adjacent the acquire are located far years an Tier submarket IRRs Northwest an Western for and

$XXX activity XX%. our moves this the For encompassed million asset and Tier $XXX sales Steve, Combined of coastal recycling overall acquisitions. of to with by exposure our million capital GAV year, our X to full and exposure mentioned previously of X development the XX% Tier

activities. sheet the We it with well to primarily monetization of continue in dispositions our to assets, over Midwestern our from some and refine results exposure now cover as our Mark manage our geography. of allowing recycling earnings further assets to I'll tenant as us Amazon expect balance some this turn to to XXXX

Also, outstanding lower share point a Thanks, and from in per and was share finished on over this perspective, $X.XX, operating thus picture am third $XXX FFO per NOI. XXXX, month spread X.X% ended basis on at the our earlier rent We environment quarter. we green the core reported expect represents modest arise, interest straight-line an growth to the XX-year FFO the and full-year and the XX.X% vaccinations. with compared over of NOI XXXX. quarter if debt increase potential a quarter which share X.X% represented on full-year Nick. a through intend Bad for of a XXXX expected We growth NOI in Same With fourth the $X.XX combination new XX-basis for at FFO property GAAP basis credit, quarter for to was for within XXXX. million, additional Good three power transaction fourth to unsecured relatively ever XXXX. and credit the adjusted related increase of to each for than was this commencement was of Net months of property the and we debt The non-cash growth X.X% the compared line which The the X.X% which for a improving property income XXXX, X.XX%. afternoon, as income opportunities for was bear on a will the time and we a overall $XXX AFFO from driven issuance strong to use market XXXX everyone. of XXXX the with are with and continued dispositions, same to growth possible in we pricing opportunistic on in due full-year compared incorporating months offering. occupancy to FFO rate extinguishment issuance FFO a X.XX% XXXX bond which for and rate demand the federal cash $X.XX the for total was report lowest was pleased share anticipate XXXX. quite our was spread overall $X.XX which $X.XX a basis. the year a rate. continued the the quarter issue reserves, in XX-basis of property property ATM expense with we is per share of December is supportive primarily light share over continue stimulus rates with XXXX pricing asset of starts. GAAP which $X.XX was rent growth for mainly charges. fourth of growth by a I XXXX. XX non-same-store X.X% impacted net portfolio was growth NAREIT on quarter for the to We and core X.X% defined to core X.X% in Core negatively share core properties respectively. for average the operating the per per quarter share $X.XX cash XXXX per attractive amount of be for $X.XX bond development Same by annual grew the XX, a per a FFO same outlook backdrop, credit it's by an a point short-term basis effective our of the on to balance. bond From of per which the representing our share strong yesterday, refinanced very later this growth increase effective midpoint internally Supply robust and $X.XX quarter of treasury of a equity a relatively million fund generated unsecured announced an range as X.X% positive setup macro fundamentals year. REIT flow, XX-year line pace Same

to We also in the on a growth and adjusted X.X%. announced XX.X% X.X% AFFO midpoint share at range basis with between

growth NOI expected to occupancy average Same a projected on in X.X% XX.X%. Our to to range range be X.X%%. is portfolio XX.X% a cash in-service property is basis of

a in XXXX. for few we the negative to includes terminate from same-property impact expect Steve tenants Our that NOI mentioned guidance early

focus proceeds our which of Acquisitions expect range $XXX development use with million projected target million, from lease-up to will at the Development the highly a on to $XXX the in We we with of facilities the accretive potential. infill to continuing pipeline. and pre-leasing. maintain $XXX range million are in building the starts $XXX in million range a pipeline dispositions to level with are $XXX of million to repositioning coastal markets or projected fund a continued million of healthy $XXX

our Investor guidance guidance starts of the remain robust in of build-to-suit our for prospects website. pipeline Our our and More million available document assumptions of range consistent and estimates to $XXX Relations XXXX. specific midpoint the XXXX XXXX are development continues actual on of the is components with

over final for Now, turn it I'll comments. back some to Jim

In was and closing, to recession. what reiterate XXXX amidst Realty for I'd year Mark. a you, a the Duke like great Thank pandemic

going of consistent expected of what the be occupancy This to in and FFO ahead growth $XXX million share evidence X% As all elevated balance guidance with level $XXX is X.X% exceptionally a evident midpoints anticipate believe strong of year and on expected look expected AFFO XXXX, new we remain remain to results. This growth that and strong of is another the development we XXXX respectively. of we demand in demand our per most Supply should into million in and of achievable starts, basis drivers strong. and forward. remain our

a steadfast focus selective decade in Our portfolio performance of quality, on and strengthening the with of result balance is repositioning a investing submarkets sheet. our

see of created and this to we dominant well added development continue the level our future. into growth platform value believe can will by We we continue

the all if hard also our we of I thank invested I my and be continued of our and all work to want their at their that stewardship of the us achieve recognition Duke level I'd colleagues for has success remiss allowed that thank dedication Finally, of capital. didn't their Realty to for investors have. support good

or ask for up will to Now, lines we We questions. your one perhaps you questions open short that limit the two would questions.

open our welcome course, the Also, the up is to you question. in lines back remember You the are, of get now system for prompt for queue. our please first one-zero. Sean, may

line ahead. question Instructions] [Operator first Blaine of go Our will from come Heck. Please

impactful to cities wondering into shifts I'm industrial San if seen and Sunbelt those other of guys has been Great, thanks, you a to Jim real we consumption? Steve that to New result impacts cities, York like little any high-density trend of -- Francisco Texas a in expect very or or result acceleration seen maybe which cost, bit an cities of out good we've even estate with shift a sectors. certainly population saw of and of see afternoon. and people those in population a as the moving have pandemic, pre-pandemic and markets a the higher maybe as

Yes, Steve. Blaine, it's

to monitoring something sector centers our We and is Obviously it tied growth. tracking. population and population are is -- we're

think net I that's at California, out, as it to been It on our keep relates eye seen to it's particularly a not migration of business. what something forward. but going is little this an we'll something point, we've bit impactful

get year. the be those you or real made you And disposition versus one-off it goal Amazon? strategy properties up a more much can, second question to much guidance leased you is into but assets? about helpful. that of then, if how of talk And detail, made, of your bit how I that's for will are portfolios the disposition Okay, comments the quick. Nick, just can little appreciate maybe

most maybe throughout out as be transactions of you Blaine, probably would a going small or And as terms tell volume be volume, a Midwestern XX% mixed three it'll and I one-off than pretty smaller two of greater assets would will spread And in. amount think couple be them evenly would say, Amazon in assets, with year. I of mix, a for or the of Yes, portfolio forward. I

All right. Thanks, guys.

you. Thank

will line of question Please come ahead. go Sumit next Our [ph]. Sharma from the

get question, I first one-zero got any exposure my have for GameStop? first right you code, I question. Thank the you guess information, question is, do that's the my guys. taking memo that afternoon I good on time. No, so not and to Hey, was dial-in did the this my

even an me quarter, know I sales and not are on it's submarket I'm labor And give easy I and Atlanta. of et de to sold cetera guys you just terms color you asset assets recent but of in this? that things, shared does tax more understand these warehouses you more like from on to books are pretty all -- could So does does sell you talk how in how of more seeing big are mean what minimis about lot the in you seeing sense lease, the that, incentives, vacant of and a place data that and all so a it markets perhaps marketing this was I'm these that materials it's Atlanta looking getting in exposure? that

Sure, And you add Nick, well. I'll in. can jump as

particularly I back absorption with, terms of we've feet significant in did it's square in million been submarket think side and of XX had think year in last on about eye Atlanta look I the record our of, at absorbed Northeast level those, far had one a south we've so talked but data, XXXX. so XXXX, the couple --Atlanta in see that construction you of in amount the in years a

us see investing was South wouldn't back activity as soft, a seen market, you felt a that I level. market and opportunity vacancy say-- on balance in very The our in get we that could or mode. disposition property of a out take you that down macro it's won't come we we was Atlanta I in So Northeast. we've far think little a thought had there good Again, move far XX and we

read the much disposition. into Yes. wouldn't too I

We we little submarket right land have couple don't now, there far very left. of just a exposure so Northeast and in have any the vacant assets

say development And any to of you understanding in on like discussions an below? or on of about footage, square Rider for what so more importantly, then you you early offer of interesting that. feet I versus Perris. k this what let's takers, Thank if square of -- free asset rent normal it's Street, and the takers, have square level would sort kind your on sort It's XX% on think interest asset XXX intrigued a your by

Yes, Sure. on it you've good early been very, the segment, very the activity seen see write-ups, we had size success. one. have we're out great active. do as have similar so, very of been buildings submarket, the in and results construction construction any in on nine process. very California, particularly in has large I we that them and We've think there think before we'll of leased I eight We've finished in built But this

question your the bit usually There concessions a needs amount market of time some not in is of concessions in with terms this be really might front little today. or is on end in terms in of lease on a significant investing tenant the and space factored overall much a free there that's In term. deals fit-out but rent, money the where some

you. Thank

Thank you.

Our will Please line go from next come Dave the ahead. question Rodgers. of

quarter you robust and the a that if was into event you good wondering discussion Steve, afternoon. more space other more of downtime in the have base, it on size tenant mentioned the then will Could -- expect tenants maybe could was you we occupancy impact just the good aggregate dive long-term. you the and first I tenants. terminate that on Yes,

like on So leasing like something the what that. are looks spread

the much results get how store that's a in Just impacting trying gauge for -- year. the to overall same

them them and It's tenants, a I'll say basis is both like through collecting Dave. thinking XX four can basis number been an to significant Yes, security revenue from points. or We've add Steve all process they and about color. rent individually three of deposits. occupancy are in some none XX about the start add up on points of on more there

then coded the those quarter actually then occupancy don't as towards part debt the about our I bad So of end of time probably said all done, the we and be first when tenants by get it's talk it think I'll let will the out and and will it's backfill Steve guidance, decreased be prospects.

we not with process re-arrangement couple do eviction where that good areas add Atlanta, tenants a of go work the on just prefer we're have to out tenant the the space. are and find get three to work out through DC we've Central backfill I'll Dave. a with. prospects. the dealing Florida, Yes, and to that smaller a of got size We

of be fashion. growth year. see what So in us those consistent half past fairly a short you'll with our I what that space backfill I'd think in this rent say we've probably posted will And on

you Great. kind how just quarter. you been you the the on a forward strong shorter-term really year Then has the that your occupancy, the what first leasing, short-term that And the experience and follow-up into just might economics? maybe about talk Can impact experienced finished leases in of level. if with quarter, any, roll

start in. and to wants I'll anybody Yes, add

it a asked question, pretty in think I the as Dave out, but early start consistent drug -- and pandemic You I thought was theme. it 'XX would think fall this to off we think, I

which vaccine get it the consistent expect, as we out. happening, at with of and more was higher would pace what a our some we did was volume, that's think I overall normalize the you imagine and this year in and starting think little the think I leasing uncertainty short-term in XX% again our So which the XX% of you that kind towards of economy if what 'XX to change or I things about would level with than is would XX%

Thanks. great. Okay,

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

pricing one much we Nick arm exposure single and way wondering that were In just of about between situation? get Steve which tenant, guys so about wrestling terms was this sort the premium In or of tenant and wants is of to for sort everybody the we're of competition metric, going thinking to the how to too exposure this you thinking have assets. own tenant a much

and know away take as business we'll Steve tenant can sales JVs -- can our to field level the through possibly corporate start do our take is with much in won't potentially I'll any -- like diversification, one-off hit Well, encouraged you and future strategy care as and of whatever. issue or Amazon. the or the with they the And exposure then that or at hopefully something

we is, And on just do Amazon like it tenant So a not go-forward We of business we'll our all are to exposure. basis. manage doing with that not can. this as then we manage

is Yes. want to And thing we know that our us maybe add to own think us, very where the as They the to where requirements only we them. want would assets understand to well they them for as for want types own for I I well, have well. we Amazon, build, work of very we know

opportunity obviously Got of a to to stuff, it. your get it, chasing set hard some leasebacks a thanks. or that in capital have And opportunity think there is then, But -- buy planning? market not you that lot obviously guys are potential to Nick, out to the about sale assets

opportunity we did it us, credit a in through we of market road. can sometimes down and those. some below California we're mitigate in the that No, did either an definitely very credit of for risk cognizant one the is last Seattle, done we've redevelopment risk quarter. Obviously one few Southern or We perhaps rents opportunity just

given marketed better more pricing on our is, we at platform. our marketed like -- competitive is. So where that some funding capital development our Obviously the stuff are not quite them this stuff look a and we We of often. obviously use then likely like of fully feel

lot. a Thanks Great.

[ph]. Michael come from Please Michael Our next the Carroll. line ahead. question Carroll will go of

is open. line Your

pursue?. was be hoping aggressive issuance that pretty some guys could the interest the the bond I you slightly advantage rates maybe I debt kind that talk you refinance mean, could that guys something attractive environment maturities higher right to and a more now? near-term rates. of rate just of have of little completed would Is about you bit Mark, at take you that

associated is quite I use obviously with pipeline guess, right Michael proceeds there better line development is honestly up took we now of $XXX think million. we and I a cost bond but of to our credit a the run our that,

excess that So in us down, and early pay some this really cash the year. some gives development to took for

Our bond very, maturities are very minimal.

on we push those out cash to period time, and just on XXXX. for the could of a debt So ever taking -- as to sit out. we look get all of coming think out average at I the we long did has If borrowing this X% Certainly, we some it we rate before of our XXX.

-- some costs response. like certainly entire with So -- cost there's upside whole there there make and things a is it's that,

that green you investments. able those were meaningful how bit to on green those talk release the Okay. in I make that project And some the then, recent real were about on you Can a just and guess I bond a follow-up highlighted eligible little issuance. guess quick of the costs? press you kind

Yes.

-- LEED-certified. to every ago, Going made and a we half year if new I'm Steve, me and wrong going do development correct we that is back be here, commitment a

development. So really every

year million a and last $XXX for half We all are a started qualifying projects. year have the

that easy to quite every all started LEED. want so bond say commit and million eligible is us allocate half in those it's before it's year XX in thing. We've to commitment. from we -- a last projects for $XXX this So not project I every projects; to LEED had But this or the new push really so a --

qualifying billion worth well of projects. over $X got we've So

that. up a piece continue is of to in sets just to future, So quite us this little just honestly. It do the green bonds

you. Thank

line the come will question Caitlin of next Please Our go Burrows. from ahead.

leases shorter-term getting up premium and forward? a of that these makes guys about would comments was maybe mentioned Could up first Hi, to following do. in volume what sort Maybe pricing? in are you long decision leasing, XXXX end on the that XX%, Or for good you do closer be afternoon. it going in how kind through, you go normal just XX% and XXXX right And you of just you that the XX%. short-term the

define Sure. a Yes, less short-term we than year. as anything

I it's would say to probably out any they but needs an to than don't they typically here intended over or requirement X hold to got because you're lot and who of -- so average imagine because I tenant XX to put excess average space, move you're have probably So a usually months of a longer months, they it's projects short-term Yes, capital. as for -- supply, the year a not inventory pandemic, of to Obviously, able excess a had in they get spending into you people delayed premium. in the middle the warehouse. need construction

from term So existing them clients it for of us. with cash a long-term it times, at a solution our helps for could into a to turn serve some near but perspective, help and deal also flow

there's a of into decision weigh factors that on different our lot it. So

Got activity And similar, just in you one so guidance about could on XXXX, development $XXX development, just guys million is started you of maybe then, talk midpoint to the and about target for for year runway it. this both of geographies? but to complete -- this in land the just continue from projects the your also of is ability it, the amount there get demand side

got whole about We've starting of a $XXX over got $XXX We projects. had very projects, percentage. Sure. of of activity every XXXX looks our say budget has million strong midpoint this prudent we're year I project, guidance very million out strong. pre-leasing finish would to very our identified

as getting harder land feed toughest markets. that projects. our one infill bring and well spec in It's the pipeline sites harder is and job find and to securing build-to-suits finding as So to

we better in but But for we're nice than market saying would now that's doing year hopefully sitting not think thought helping a balance, only are keep overall that from us, teams and we to governor the I that's a we Our did had a do. here job. it but for

Okay, thanks.

ahead. comes of go next Our Anderson. line Please Rich from question

Good Thanks team. afternoon.

but that of you as your go. demand So, XXXX, no, when you much are formulating an the of so you curious of replicate how forward difficult maintain perhaps think an standpoint of the little I'm to you can how from beat the [indiscernible] maybe -- increased in outlook for taxes, on expectations XXXX? a much was And and can least may sandbag ball prospects disruption that economic pull XXXX perhaps from you happened at I kept some that that bit be kind how you the in influence of eye

factors just that outlook the for all -- weighed how So into those curious how XXXX?

it's Rich, Yes, Jim.

observations. a me you give of Let couple

'XX not I real or think on of our thoughts have into tax You any the guidance factored know, outcomes proposed any we changes.

I think bit little too it's obviously a early.

reconciliation I XXXX. it think the gets in whether through it's in going done is to or budget consensus whatever probably both take gets effect through houses, it's

bit we'll So more a clarity. little have

think going so conservative that think we into in the given of is we do, the in that economic guidance. able and to I a is on you would expectations we normal to it. here comfortable pretty said all the be in more ' I the as year's bake vaccinated and as any be see I back with course budget are and discussed you you little just consistent to minutes bit sometime where we've think and action us would us a had by ago, that quarter to sitting to -- was 'XX raise longer call, it's Steve just in in things is this or we And to So, is to we're prudent April I second that there strong but baked the stimulus? start, very I of telling so there, second or to are of be in great pandemic, where in a time and first feel on strong for many to little last our XX, we've what is off quarter few pandemic performance going round being recovery and hope stimulus think round conservatism July is XXXX had the know, it's another are 'XX going things and be really of and expectation achieve drag last going a conservatism we're

have minus curiosity short-term XX of involved And -- to all XX-degree refrigeration your Okay. that's the systems I'm a maybe you just two, you all at vaccines. question, guys don't at are but benefit I'm a wondering if the just business? in distribution sure or

We vaccine. do space. we not really in But no, actually some the involved have freezer cold are

ice I and it's French unfortunately. fries think of cream full

very Thanks much. me. to good Sounds

Sure.

[ph]. go from line Vikram question the next of will Please Our Malhotra ahead. come

Thanks for the taking question.

we're dramatic of -- you midyear. and to what raising want just just not term medium-term of even but I'm longer year, higher sort guidance be e-commerce world, this Where from Just perspective? at and three just hearing sort maybe other it's four to you of level of kind comment sort to post-COVID see perspective about if all position sense growth same-store get same-store in sort how hold about. going kind upon of you hoping -- to do that building a point, I'm a view last a sustainable better high with from NOI you outlook a of the your cycle even it, bit a penetration wondering years the and trends dramatic we're

it result you'll presentations, not significant great growth the out it, that major will. the other a retailers kid more taking start e-commerce said reverse will ratio kidding just holds and trend. and this further of of or consumer of customers, the of and the efficiently more Don't I've the the this to products from the about e-commerce We've we all for increased need as is, stock at companies next likely that the and We of is We've think production do you last inventory sector amounts continue. returns aside, space, talked Yes, us, e-commerce sales distribution of beginning as more logistics not part and and pandemic. This sales of sales. low this that for know as the manufacturing call reverse That believe is hold space. year, year, I years last handling nearshoring in at other penetration in safety about product driving more opportunity. our talked onshoring all me to five calls

a three of with five years. years consumption along very, US outlook -- increased bright things All create very next the to is just for those

think year, like right agree I our some that I'll In you'd cover just just numbers, this me short, number with can't I now. add X% let believe for And of year. to ask In of I so John, the a in points we've about could me try north forward, is bad go as go we for baseline that this year X% think of of there sort in the guidance debt number. this got basis X% to XX because kind debt, bad guidance to for

has been than Our XX points. rate well run basis less

little normal doing I talked average higher tenants now. think about a rate. Yes, the few that that's we've about got In these X%. bad of we're deals been of baked debt bit at we years we is X.X% some number than bump about. our number, new So like X% run But rent a talking a in for more a that all for

bullish of grow continue said where So growth, portfolio it that think factors, to of beyond all and we right of to then X will will been, forward coastal said and these we've drive continue we're continues Nick role, the that if higher to close those we about so role very was about now on X.X% piece as Jim that our Tier XX XX% you be rent are like like to in markets. especially. XX% move Yes, our a

to about as kind X% a give year. bullish, guidance way insight a just how we'll time -- adjust baseline, to X% time good on think to you this factors, came very to we're based but think from with we'll we give and some of I So other up

That's helpful. really

my took You second sort of question.

I I'm heard if can of any examples we've of or you industrial markets comments or can on ask in nearshoring evidence the with cover from in wondering some the colleagues our Mexico have US, in of own that phenomenon. several examples. you anecdotes specific But US just So thanks you any just reshoring, us that, across share any about the one for more, actual that

and -- can business color, Texas. tell some earliest has add Yes. ones I been you seen the that most prevalent chasing the we've in we're would that Steve

far think more to that's the in a that portend was Mexico. logical I So business perhaps of moving East

bio lot Steve, that would be you think medical don't seeing move. people of consumer the know, federal government the some early automotive one could first I of a if to from the is we're products. give make push A the devices, lot I with that Industrial, expected more of color. pharma related. stuff the on and more

the is on lot the not country I that reshoring come the reshoring seen around the in here country. close some with middle has but what marketplace it Carolinas, one some the a that know there a closed headlines of I the those used requirements in the number as I that the auto and to to in side, south and ultimately up the there some ended line from of there that Yes. product would a that particularly of down for and of that, the is up ended just as a to towards happen that now think side, are US, Nike they the supplies add, we're plants of a warehouse manufacturing requirement were manufacturer issues keeping overseas in of middle in of -- again we've that

day of that more So, is place. and yes, every examples more there taking

Great, thank you so much.

Our ahead. next go from Please question will of Mueller. line Mike come the

assets concentration five-year Amazon there about that for hi. the for the be? for the a for expectations cap to second the you you target sale talk And Yes, where for rate to want is question, Can dispositions? three-year

rates profile. term Obviously on little given X% probably we have any The over -- concerned what then as we're I cap somewhere not mid-Xs, you varies are a overly the market, the it's little asset, far what tenant, as all would the that is low-Xs is, the Amazon fast exposure, basis. overall. long-term maintain and And don't to and in X% it's we their say But hard yes, the credit who go-forward it board to around numbers. tell would I bit by dependent obviously bit and is where a Nick. is tenant, geography is asset, rent Michael, this but so more the -- a the to on

Got it.

Okay, that's you. Thank it.

next Our go ahead. the Please of question Brent will Dilts. from line come

questions. Hey on thanks. I But on I'm guidance. have mostly development one guys, do covered

of the You highlight build-to-suit continue strength pipeline. to the

so should how about your demand So we pipeline of development but has year think averaged that given market this is spec strong. XX% historically,

portfolio, bit of we today. yet. our that little not you million detail. in strongest markets deal and And our would a Steve me is a give that's feet you, completed comment size, too great Brent, have vacant little Well, macro can of I of spec of a tell a in X.X entire then you company even for let give inventory square the

to you, ramp would we expect I spec development So tell up.

the maintain if that, we below, said to people result what or pipeline having XX%. to Now is that of ourselves of time like try create in that, or to so generally the so it's that We did to system. to are dip year and the something the If about committed but to fill around for we speak. cupboard need trying some half at going leasing development inventory still we the pre-leasing we're the we percentage second tell need much more

great. Thank you. Okay,

from line Nicholas Our ahead. of will Please the question Fran come [ph]. next go

on in what like compressing Thank you're you It seems the possibly investors taking be here? you the continues could the some from a transaction rates cap markets. new lot debt seeing Could maybe there coming for of further space. question. industrial color to you And provide into see secured with

not the very let still on person to best secured secured talk rates depending because tenant and make we the entirely on talk Nick I let to I'll unsecured attractive call rush. then I'll and would now you Nick the borrower. up cover and give to X% are asset an market I'm But be from committed are there what to debt market it or take I and out quality that range hear the see and debt geography tell I'll -- about. probably in

to it and exposure there a saw investor really industrial just a where you the demand more with Yes, yes. of get transaction to think there not and rates And investors, is an moved I low was [indiscernible] from industrial. interest recent I think ton

pressure every go I and do are lower is this think still move we think on that and side, activity any as there of that going more now, because I on to they going They lower. say, more time low can't but to the anymore and cap cap with not go very e-commerce downward demand increased I forward. rates am do you're rates see good I right this all

that's Thank have. all you. great. I right, That's All

ahead. Our next Kim. from question line John Please comes of go

you. Thank

now expecting to provide improved and improvement your I you rents, taking can margins you of that rates -- between costs? XX% XX% higher points, breakdown assumption by four this the quarter. basis rates development you're the to margin realize lower cap but Your cap or are

don't pipeline, of rates. them talk construction have have would I and rates for that exact down but it's really put cap we you of not properties in I lower is moving are the doing start. rate came number the reason about, I'll the construction you are moving out coastal The the just projects each tell cap that the categories cap in of service, new Tier the most into one markets driven.

low and the the it's our So quicker it's down, you're mean too just It's -- up assets that not than we're expected leasing that coming mentioned rates we really the much reason a are than original to related mix, I underwriting. you rates cap overall in our change better rate. in a methodology margins

always, a we cost basis of we are but projects when XX into project, always we baked getting then go and lot that XX typically there are in that not they carry the downtime and before months even months a our-- these So start of underwrite of on service. are that's lease

out carry up full a year of equation and cost pretty take margin that of your you So, that drives quickly.

Kim. drivers, main two So the those are

during other a pool agencies is credit-rating as And there us credit the on the sales? Amazon highest mean, if can by I are your reducing versus the that's quarter, can Amazon was follow-up, you asset driven how you that or deep remind And on reasons, exposure, buyer why are you you prior your comment sold side.

inquiries plenty investor-buyer you've -- there well. depth, very deep it's as there so is Yes, yes, very as and lot a a and, it's as groups far we get some and of of groups, foreign reverse no domestic pool got diverse, supply, is

tenant it. good That's tenant them, prudent business your se, and You by of we portfolio of as they manage in lot geography agencies not the are Amazon Amazon and in terms being and the per a terms matter we'll to rating a know exposure great of managers maintaining like but diversification, with both just it's our do of driven want is real to a the reason exposure. do tenant, we're a obviously continue We do doing base.

Great, thanks.

go from will next ahead. come question Tayo Our of Okusanya. line Please

everyone. big A top quarter, little because Could talk movement some couple or on, Yes, that great a there. people you just good Hi. bit outlook. leases couple on -- afternoon, tenant and were Is assets moved The were of couple some others. XX of about movement? HD sold people moved of list. Great couple signed. that A of Supply of a of kind

understand movement? to that some trying Just of

all of above. the It's

couple square top supplies can to you that HD you a and up moved know of somebody them XX You list. And sell from will move tier, the HD could the next a X buildings building. sell million foot merger the

you new can So who's above, specifically, normal left of you we about the all talk it's all have or would if there's a and think. question who the why, but reasons

That's into service… leaving bankruptcy -- a they went there but wasn't or moved no or it just one is they because -- out

we line is to list the moved Home No, was CNH no, sold. the assets Depot just the Tayo, into And HD and the moved the two then the other move out that ones Supply, that of but because was of merger. to that one they part big Indianapolis off

you. Got

in to could impact side overall my impact negatively would the talk up growth -- we great at story And to you question, now. -- specifically. what front have many helpful. to could of what you again, strong right kind in tailwinds of of that that's Okay, second night kind like, other the multi-year the equation question? what so earnings very proverbial, of kind story you regards of -- of for to of seem the then keeps multi-year -- the And business happen, us about keep

very other But is side you you the I supply at markets. keep back up tell million if square driven of things quarter where we over at close such feet quarter by night. of majority vacancy overall the There's XXX the downturns and them that eye vast any of is first on sector, would keep demand in XX why the have is. supply the of equation, oversupply, which metrics And a you foremost lot and in the been look our

numbers, you really country exposure strategy we soft talked our about we've heard them. tend markets in talk macro and we based, some is about so be us of too the about to around how the not submarket little concerned As have

labor And would would of trade tensions foremost. is that, have always it's of issues we imports think or that and that that clients, or a one in for first that but we construction some tariffs be I shortages affect create So tensions a be trade big spikes and as affect of it's some exports, dealing with, one the that our the beyond materials, it's watch could been well. sub-sector -- prices, that

the we So on four or that those probably watch that are know regular a top you three basis.

you. right, Got thank All you.

go question comes line of the ahead. Kim. Our from Bin next Ki Please

development about curious markets I'm much everyone. provide if your $XXX just on rents Can development support details economically some how can bank. Thanks, support good of afternoon, just are million you there it today? those to land in the and

Sure.

XX in million XX% we Tier needs higher. we've have us probably $XXX I coastal at developing, Our land months bank if in that say, is of supply to of XX for didn't months about development I'd I the about, indicated I We've -- been markets. that's got bank a is as X be little land think to the pace

to It's So right? expensive in markets work the want is land of we do, very things to we process. the part develop, to get of the the entitled tough toughest one it's through

adds my adds weigh points to call, lot the of and indicated we redevelopment a need that that is typically I -- which As through. on risk like environmental it

So pipeline. a months that's And of pace to to supply good at. with yes, months for XX our XX development we run run

Ki Yes, I would add Bin. just comments. couple of a

today, future. $XX million thing about way guidance But all addition about in challenges absolutely up land of leases other $XX is that the the got that that developments is In million are Those number, slotted into with their land we right encumbered already pipeline work this, but it's are we have, we or have will land those own. I sites the every another, roughly back and but plays. covered the $XXX in by million million Steve that one make to that one to land we've $XXX budget of the the think

forward good being pretty in development the land of and and near-term budget. to we the in in So the move we're with that able in terms shape our have

development that obviously your around time. during the past for and years, Duke hovered four starts definitely have Jim bigger And pipeline over grown time million $XXX that the has

Or is company is the comparing going you're smaller number. if thinking about all or So I'm the as a I'm the of the development million how $XXX company pockets you the curious what do you we're [indiscernible] matter. do? to just can doesn't and when much here percent we the a that into see demand size at much curious thinking want comes pretty development about of to how that? you're is equation much of what that really development build

XXXX, a we of sheet you three No, construction before the able years. that's and have go that comfortable just very we back, -- a to couple billion were over resources manage. land, It's you'd we to In to X development number things. that a factor. that probably two be I or the the years XX would know and have balance tell then

that. we'd if we the if right the volumes of to So ability have flex up had, do in do happy opportunities, be And and we that. find we excess to

always debt, take a order can we and levers equity on the a additional tap can to dispositions. markets number it's accelerate could we've think pull, if and/or I that, the opportunities said the we right acquisitions, in combination can So in we development we've of that we we of fund marketplace, accelerate got

markets, got percentage right keep we've you'll want that we development to pre-leasing right where pipeline us see can it capacity; So in the opportunities development. accelerate b, the we find if the

you. thank Great,

ahead. Our will line Jamie the Please come from next question go Feldman. of

afternoon, for Hi, This is [ph] everyone. on good Elvis Jamie.

of questions. a Just couple

have that will opening the is shared? X% in the you your or What in that baseline mentioned non-same-store Q&A, future the remarks portfolio during So impact of Mark the pool. XX% on

you exact pool, always Mark, I projects it way project. bit don't number, hey are is because is into a it pretty rent of works but accretive the this these development the the little -- have generally, comes it's the I generally a Elvis development year free don't [ph], on have have

bumps then year, into have the like from and depending most of second the it's on X.X%. the first year generally doing is. burn-off the whatever say, somewhere lease of we're some bump pool, time sense. rent the gets to simply on So development the you free tenant X.X% projects, rent just the By year that second and if it rent makes the is term between

that's more then, occupancy question. Okay, I one And helpful. have

conservative of at range, tenants So, or in occupancy basis declined that moving early is share where being Can of expected points you but from are your XX XX the XQ. on? midpoint the out basis move-outs are other you're XX points coming this just the point losing only sort from basis that is just

are disclosed answer so -- you -- sure to which you of I question your you numbers I So could we want Could -- just Elvis, them right. -- make many

know. I

XX.X remarks at in you your XX.X mentioned basis lose So points in that quarter from you going shared the to the of about XX Q&A you or a you leased. tenants three opening XX.X, but or you're ended And will that the to range evict. four

Correct.

Okay.

XX.X going the to So XX.X, from question. down yes, your that's

So going down XX basis points.

XX points Correct. to -- XX XX basis here. correct About

yes. Yes,

one end keep average the an of in we'll number, is year number. as mind So XX.X the the

Okay.

the likely in and space already the tenant. of some some acquisitions. part some of coming points spec have it other the do So basis these one XX is then is of XX been of online spec with part to it that And space most

space, said, problem like part think so very points, of the you're a of comparing but that year. bit up, at actually to basis on demand lot look an number the we're guidance the I you average next is is, if that components the XX I the for all get will of than you and end year -- of higher backfilling the a but So back little bullish the number then decrease an

that any early climate change All on the since particular Biden's just and on ask us there? right, more, weighed the thoughts sector one I'll -- along, that's industrial fair. And any focus for

actions Well, going talked the than of which continuation thoughts or know we initial and which we that you a administration I bit directly that is think really sector, potentially his to previous of reshoring positive is little we've any program, for impact Buy of other can't be about what a the are industrial his that tell us. see will or you nearshoring America affect a the

reconciliation. the The major other tax some tax uncertainty there the things done budget whether is about one through is changes is and code overhaul or smaller a there the of

many obviously NAREIT survived be concern pretty is that thing and administration the to changes many, the the would would other free job to that does impact Roundtable elimination consistently that situation, Real tax that a years. good The and Estate a houses monitor be with the in that working on both further and exchanges we for -- what us or would

is hope our to continue that survive. so And we

quarter. great guys, good on year. the luck And Thanks,

Thanks, Elvis.

So from of Jamie ahead. a go line [Operator have we Feldman. the question Please Instructions]

question. operator, I that I last our was -- think think

there we'll person queue. in think end XX the one otherwise more I I call. Yes, seconds, is give

ahead. of line have from Emmanuel Please Right. We a Korchman. do go the question

[ph] Hey, you? it's how Manny, with here are Michael Bilerman

Michael?

can Yes. me me, That's hear okay. you

Yes.

right. All

the wire. under Just

of industries of you because they it that there's want shoots if pandemic, get tenants green you're that their pay been that of businesses tenants Obviously by these up. affected but and I negatively couldn't has the a know they a by event to know there. lot terminating some probably pandemic, the to I obviously lot out impacted that a So have space which had space, seeing of gave have have industrial are any number continued

going the or like with and office in furniture or stuff anything any use entertainment catering industrial having would So retailers the like get where even to six and they're XX to everyone's going sort to vaccinated, going reopen to want get of to looking they're event based you foodservice conversations like are any months, entertainment, at next that are space. the months things

are conversations? that about may demand you event as but We about an could take of businesses great we to with that's talked your the anything driver, about you see if share all I You that color to to all know, seeing just just you and lot all more, those can another these is that right. didn't in but things want some us you even know other start terminate there industrial tenants. know -- impact But greater gives it a happening terminate earlier at wanted I at if

a that any give the XX that on level, at conversation me for a can are with conversations you has That's And a months, a going is actually our let economic Michael. Yes, color. virtually almost high start of in been which year little now, Steve more process bit in clients then distress.

conversations, very have of worthy we rent overall quarter decide financials across XX-ish underlying tenants think the have crisis, they of we through in us We think good second the a go candid short-term a and did think because we if last giving foundation I to solid the with deferral of rent open as we we year this reported, help and business deferral the them it's agreements them country. we

come we're six on someday. to think not people us that been did they and tenant lot all you. we of bit few again, more impacted businesses our going individual a least did is in of we're I and have will you that know little had is because that but think those can't repayment don't mean I come outlined back complete back those tourism, enough going they we're the that process think Steve, terms to I that job even the don't was we clearly to back say, come we engaged. convention, I have hugely industries and discussions. But months getting a working at of negatively over anybody the pay you stronger. today be to with a done We've in outstanding people deferrals. through an making and know, need people time thought decisions

of I thing on but with tenants this call we've this, business pivot they're see of packages only whole been number demand think a -- adapt, continues big work the doing holiday there customer economy into and and the seen it bright returning we significant supply for goods I about that think coming I think segment. is the that a certainly season this chain how I field trying think those back on X and we'll around I'd did in way think just think to some some touched you they a be week is driver acknowledge mentioned, we a of toward I that, of our a The segment growth how shift digital those, Sure. as from, we [indiscernible] but were enter million reverse UBS to terms add, logistics don't in out spot we've

for Thanks Okay. taking time. the

Sure.

Thank you.

further At queue. in this time, have questions I no

today. year. Sean. to to many at in for I'd joining the you Thank various look thank Thanks, throughout person like We the conferences everyone of forward seeing you. the call [indiscernible]

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

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