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Duke Realty Limited PARTNERSHIP (DRE)

Participants
Ron Hubbard Vice President, Investor Relations
Jim Connor Chairman and Chief Executive Officer
Mark Denien Chief Financial Officer
Steve Schnur Chief Operating Officer
Nick Anthony Chief Investment Officer
Dave Rodgers Robert W. Baird
Blaine Heck Wells Fargo
John Kim BMO Capital Markets
Caitlin Burrows Goldman Sachs
Emmanuel Korchman Citigroup
Vince Tibone Green Street Advisors
Nick Yulico Scotiabank
Rich Anderson SMBC
Michael Carroll RBC Capital Markets
Brennan Hawken UBS Securities
Jamie Feldman Bank of America
Ronald Kamdem Morgan Stanley
Ki Bin Kim Truist Financial
Mike Mueller JPMorgan Chase
Bill Crow Raymond James
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Duke Realty Earnings Conference Call. [Operator Instructions] As a reminder, today’s call is being recorded. I’d now like to turn the conference over to your host, Ron Hubbard, Vice President, Investor Relations. Please go ahead.

Ron Hubbard

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

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

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

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

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

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

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

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

Jim Connor

share seen. then the the range will as in submarkets continue and in projected to business records over nationally I percent to has at our had to or team. growth the XX%. few be of the some all-time XX% and fundamentals quarters mid-teens we from the rent Ron rest level The have demand you, best high We have everybody. now it risen Thank market as ever afternoon good and three successive highlights turn and the near of quarter a for

and allowing year guidance our $XXX compression improved optimism leasing us growth in of outlook IRRs achieved increases, quarterly in activity. began a momentarily. our resulted are the at share XX%. our components Cap growth outpace of again. we per on of our of on we AFFO core to now full second Based year rate material quarter, be changes to These our our growth these balance roughly raised to dividend raising the creation about the go and now key year, The results margins the including starts guidance, of developments and growth million and improved from margins. and strong XX.X% basis for we XXXX raised core and rent generation Mark detail the these FFO expected new value once our pipeline expected on the of drive rent year-over-year results XX% record During with have cost in almost cash over XX% on XX.X%. portfolio over will and by development continued balance

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

Steve Schnur

square with e-commerce our million online demand broad-based results. and activity, first are year lower Southern CBRE XXXX continuing services XXX Demand roughly asking of feet. increases contribution now for all-time to demand. feet. California are demand aggregate than then and million absorption for the than be X.X%, National setting years. our with rents XX% year chain markets the completions record levels, the about make be with XXX XXXX feet much XPL quarter less be by square during bottlenecks projects to to mid-teens stock, the increased Completions type to which feet. market of and of reaffirming are demand Increasing like stages record for this range is billion about another feet, with to square absorption review down low. spending companies asking inventory e-commerce early up as last for previous year. occupier shopping Northern X for boom CBRE compared supply in will about about XX% supply The at to and XX XX% long-term year I time New X.X share XX% some more year. vacancy the of offset continues over was reduced Jim. to this million full this positive year to the likely compared the only in than overall logistics of demand a in contribution third net Thanks, Jersey sector, the see quarter The Amazon’s by also reaction to XX% driving square to is of square and to of XX%. of break came higher the overall likely cover to This noteworthy enough square consumer strong in that the the the This compared projected projected next remains XX% foot all-time our roughly over XXX square net full the and fundamentals safety yet million new trends to feet deliveries XXX XXXX. total mid XX% operational It demand about in of rents Industrial million million is nationwide the X fundamentals record. registered the expected

this Tier now rents feet of volume that XX% project we notably, mark-to-market portfolio X own executed X quarter a We markets. our with million new X our strong square in activity of on X portfolio The development our GAAP by a in a projects and be markets. cash, was GAAP and of growth million coastal the resulted million Turning feet Tier signing XX% We in our within very $XXX only started coastal transactions basis our square occurring on basis XX% of lease in strong for we consisted the quarter X.X XX%. speculative reported to build-to-suits to XX% our of as leases. in quarter. totaling X portfolio, within continued

X projects were speculative quarter pipeline in this we successfully placed through and of track in XX% September evidenced to million that as our new record our has XX% leasing projects XX% $XXX to of development stabilizing XX service the the context, put the by they from year started projects team continued speculative construction when leased. the increasing To during service. leased leased when to Our developments placed in lease increased

is service. For all dates the have beginning placed the X than our started lease-up projects we were developments, in from of of average our since time less months speculative XXXX, the

quickly with development allocated the will growth. projects key appreciation land. development due a Tier speculative contributor ability is We of we continued XX% quarter of our XX% to lease creation and at to be totaled team’s future billion, pipeline, up end, $X.X Our to pre-leased. Sticking of of expect X and rents value primarily now from rapid this markets this XX%, which over pipeline with

to we are remind certified everyone lead that We the only standards. proud developing also target very

We the total trend NOI percent of our expect by the lead to end XXXX. towards of XX%

remains market is million. have few to construction in such control cost nearly have picture either midpoint projects. year if starts our On a our that of revised supply and and related favorable steel being or the the continue and we taken average, markets The disposition. grow high steps contracting are will we our robust, own of about the is we to land basis, annual sector margins mitigate Land long-term. we overall, I support Xx control market. believe well our is as lead is primarily the delays basis, infill risk in good few It roughly the reflected over now over and new The And through turn continue and will our a positioned years. in the IRRs $XXX this to schedule cover for we longer to a also up own to will. have only about new things, Anthony believe for value guidance demand outlook important can we teams next we out materials, side strong acquisition On very term book $X we will it minor note very Nick and we to starts development. also value, development to well to quarters and years and on owned be for is over land, next had only support below it the closing X billion of coastal X land which of land of the

Nick Anthony

Steve. Thanks,

Valley rate Global an and a totaled in looming market. California. Louis by third portfolio X Indianapolis remaining entire activity X proceeds outright million, building disposition ventures. sales St. comprised sales the $XXX For contributions and our to The in an buildings The Louis, outright rate pricing including joint Chicago. in in Investors. which our quarter, a the of was Amazon the was joint included also aggregate two venture X.X%, CBRE property newly in-place to formed first with in bit at roll-downs one geographic expected XX% Southern totaling Tier has contributions quarter of of quarter $XX cap impacted to the cap tax portfolio inflated tranches rent We square NOI our High on position abatement in in a foot the approximately facility Gabriel basis by the million, submarket activity portfolio in third further expirations. on San facility which X X the This of the pricing for St. acquired XX,XXX shifted coastal was The

very in a October, our also results to Columbus, Let closed This early the of discuss sale represents square sale on that property our turn quarter to now Ohio. we Amazon end I disposition for XXX,XXX year. after guidance our Mark note will financial the over call foot and facility in update. me just final

Mark Denien

per NOI quarter XXXX. XXXX of FFO point ‘XX periods $XXX extremely offset compared months XX% on in was the the rent was the for compared X occupancy third XX.X% totaled XX from $X.XX due the the to partially XXXX $X.XX third the represents in X and due the of same-property by over Core Same-property same growth ‘XX the a of The the to and for comp quarter quarter NOI cash growth quarter our for XXXX. X.X% of in portfolio basis to to high share growth, to for mainly occupancy decrease ended $XXX an per Nick. in third an million the basis of X.X% same-property third in was respectively. which of quarter XXXX. Thanks quarter million compared growth AFFO share,

land intend end the by to of a result grow disposition activity to quarter with the we quarter, significant finished the year leverage return the acquisitions. during through leverage continue development. levels the recent of balance dry of $XXX is Our at accounts near-term will sale with XXXX building growth. used We shape, of in end and powder escrow in that sheet the proceeds to of our fund to quarter plenty fund had the We million be reduced but as to as great

As our of $X.XX of per a we to share. FFO in the share for $X.XX The $X.XX to midpoint compared a guidance XXXX. revised increase XX% to operating our nearly results, of continued core range XXXX per result range core the strong guidance, over revised FFO represents $X.XX announced of $X.XX previous

our on increased X.X% previous range X.XX% X.X% For have cash same-property of X.XX%. guidance we NOI to range a a the growth basis, from of to to

lease-up assumptions build-to-suit $X.X we billion. land speculative outperform continue of our prospects We our billion developments and solid of these starts rates list have to are for compared stages rental between $X.XX as in entitlements. and while billion prospects, well guidance maintained Based in of $X.X in previous $X.X to for due a is billion both the of underwriting we various on diligence achieving, range sites the the development as to and revised timing

included We Jim in optimistic closing a turn information detailed will on as website. remarks. our range back on I components in now for more other our of our few a of supplemental our based guidance of have couple exhibit to outlook updated estimates it our

Jim Connor

in Thanks growth the incredibly every have at midpoint. development started a of leasing, in very our year I exceeded the am FFO nearly with of deployment and Mark. solid proud growth starts. them, XX% core We one execution In team’s and closing, expectations revised in capital resulting

X.X% straight This very XX% marks year our increase growth shareholders dividend be of increase per representing period. of annual increases, Our a should our $X.XXX that pleased dividend of share. seventh over with over

interest want $X our for The the is we XX% the warehouse to Looking to result drivers on platform maintain billion the net will our and I growth, profit combined undersupply while drivers, Duke these and next grow you few Realty. logistics your substantial the thank earnings of to positioned the our new development future. out of is continue years, pipeline. rates factors operating growth can available advantage with belief margins rent sector. take product, foreseeable allow occupancy our perfectly at that, plus to benefiting numerous us pace your high of With of approximately for to creating These support

will for up We now questions. it open

short We always course, into our will get limit [Operator ask will to questions. or welcome open engagement And of your one and back to take Instructions] two first up that now perhaps you queue. Sean are you it question.

Operator

you. Thank

We question of Rodgers. are first from Dave going our go Please the to take line ahead.

Dave Rodgers

everybody. the in years comments pushing potential to terms you billion a starts Yes, wanted your Steve, historically $X on of of of kind above XX% to pipeline had now, next think size maybe internal you the over nice good you But question of limit you X is owned and that. average. afternoon said Jim in for development or capacity, it’s your development just land that have might been alluded I the about the

that? people? on more do that, it just you dollars? Can about give added Is you color more please? how us you feel some So, Have

Jim Connor

Jim. to It’s these the Dave. before ramp would spec that some organic will allow today. That pipeline. I us are virtually tell that as continues to allowed elevated leasing we I growth development it up success spec having, pipeline. levels grown remain you at we development comes out. internal There combined are build-to-suit operate development pipeline, with to projects. have Yes, the prices is service these start But going given up on that has the us healthy to the seeing is in which on

more color that? So, Steve, do have you on

Steve Schnur

Dave. Yes,

billion last X somewhere around of pace We starts. We see that years, $X over the continuing. have averaged

can We Jim as pre-leasing achieving development. to in have our as to best-in-class. long option control or continue on through are pipeline covered either long under And land said, we as or that land we owned or as the got that plays as bears. books that, remains do our And grow market

Dave Rodgers

I I maybe just point want that guess are we understand sure not make expecting I slowdown. And necessarily to is a

average say of over just that’s billion, an time. more you So, $X when that period

kind Given pre-leased, is where at XX% ‘XX we momentum out... continuing should of sit that you today this your anticipate for

Steve Schnur

guess Yes. didn’t I your I guess, I didn’t maybe question. – understand I

We are down. slowing not

we given market there, stand. control – we we guidance the year our don’t we our are raised and like and the conditions out see where what teams obviously We and foreseeable that This changing is we future.

Jim Connor

is to to table, without elevated Dave, keep finish percentage giving contributors we guidance I to is, kicking as ability foreseeable like the think me this the our pipeline think point, under level high that future. XXXX plus, to for our development Mark that’s just of high. pre-leasing growth, that being one I where drive key able our And of the XX%

Dave Rodgers

And Louis other Great. just has exits you just second clarifying gone. I appreciate answer. St. market then was maybe the now that that

next I year I more said to do year, recent As re-up heard I that look no kind guys – disposition? pipeline this most say sales sales, we asset after Amazon but you of as the of you guess

Nick Anthony

is There exit. plan to specific Nick. other this is Dave, no we Yes, markets

I portfolio. disposition would to will prune off levels expect level this in we to prune. strategically I have just year assets volume overall looking moderate because actually the see us are continue wouldn’t we fact, don’t at forward, expect be – that that going to assets But many to improve to to more We after

Dave Rodgers

Thanks, Great. everyone.

Operator

Please to the Next, go will of Heck. ahead. go line Blaine we

Blaine Heck

a also to wanted have one, afternoon, ask bit two, full could the Number everyone. looks again, last that year? comps NOI that you it occupancy fourth And in what guidance. should about Great. be like this Mark, the about tough been I tougher Thanks. how increased little from think but all same-store quarter. year as respect Obviously, number to used Good comps we guys due dipped occupancy was you to. it cash from quarter then

So, just two reconcile those trying factors? to

Mark Denien

comp. Yes, be And Yes, it’s got make careful sound of mainly we Blaine. sure, just bunch lost like it occupancy tough a to occupancy. I to a

our but XX.X%. time year, than quarter we were XX%, lower are last healthy, basis last points very this obviously We but this is XX quarter, pushing at occupancy

occupancy that XX X.X% cost X.X% change So, NOI. point basis of in to about us

a occupancy, would been just have So, had level we if X% have quarter. closer to you this would

did You occupancy. are right guidance our on we raise

the got we of think will overall such you tough quarter into that I here momentum lose of see though even I have we won’t an increase going comp year that that XX have think bit points. a occupancy some the we little rest that in fourth the do again, basis the

average rate in in flat get if to out midpoint. would So X.X% And or then be fourth that growth quarter you take we the quarters closer infer to our X% the to just will close to a fourth the give quarter.

Blaine Heck

that recent Great. Obviously, to Amazon is a kind Very Amazon could shifting purchasing to read the a but article is market properties demand of at as a is of helpful. happen about the from going buildings this do overnight, Jim, way side a that little you they leases or and point? trend still see become own in more more leasing nothing I have there sensationalized than of themselves. future it risk the to

Jim Connor

would I it’s of partners because anything. little they historically, good chosen not a think to have They tell Blaine, I are ours. very you sensationalized, own

outright have those. any assets active. not the rights very of the to have their that venture, they to exercised are We we sold or Amazon joint contributed Of acquire

nearly to be. make So as I might big it don’t think people going it’s as to a out some be to trend like

markets, of today The they’ll and to natural comment sell this a down willing to facilities. secondary we’re control key big perspective, doing land really entitlement as really probably the pre-leasing I’ll where our markets. spec Most of From progression that some not their or we’ve other think larger slowed have is, just infill. just I of out to to controlled continues Amazon in the under build-to-suits in thing mature Amazon Amazon lot of is to or activity start it’s investors. leasing we for And them is the a our

to think business don’t going our at it’s impact all. I So with Amazon

Blaine Heck

guys. Very Thanks, Great. helpful.

Operator

Next, go Kim. the of we go will to Please, line ahead. John

John Kim

had had to you’re the going is that between occupancy if really space made difference not a cash hard this favoring the Thank wondering high. occupancy like on renewal you. until historic necessarily, And quarter? The you part commentary that spreads you just ones next year. rent is, were is leasing get of hold there It sounds big that a but down cash and second you new pushing through too to

Steve Schnur

is this the Thanks John, Steve. question. Yes, for

it’s think and teams and with I the a market with up rent The dynamic is tenants, deal daily something something our on going trying push to clients. we we pushing keep on on. our basis and happening it’s rapidly, our

optimistic it’s up So headed, losing XX%. I retaining tenants. feel but feel XX%, right, balance, markets about We a where [Technical Difficulty] go we’re versus occupancy

we keep So we will pushing rents swinging and where can.

Mark Denien

renewal. John, And question your between the and Yes. new difference on

seeing getting all. difference. space really We’re the a are not in for renewal tenants much coming not or like pretty any it’s are The spreads consistent of of It’s kind new bargains renewal. at up whether that our or

John Kim

developments. having spec then on mentioned And you success Okay. leasing

today? So Are concerned some your that of started amount you’re much development too is I success. imagine that’s a being markets competitors of where are spec having any there there similar

Steve Schnur

under $XXX how property don’t under million is call it, own is the Yes. of XX% there, in. picture markets that of getting I the are construction we out mean in whatever pipeline, XX% I the construction want some to headlines you that projects much think supply in about

So at headlines. of is Phoenix look a getting you lot

markets some Worth, not Fort in the not Fort We’re in we’re Worth. of Phoenix around

in growth by rent remains as the the but... rates picture evidenced say the we’re vacancy very markets numbers, I’d So balance the in in much supply and

John Kim

Thank It’s helpful. very you.

Operator

go to line Next, ahead. the Please, go we’re Burrows. to of Caitlin going

Caitlin Burrows

afternoon. Good Hi, everyone.

given you’ve costs developments. your wondering, labor, for maybe think You in been the increasing mentioned mid- yields range? X% assumptions underwriting I that speculative land can materials, development stay high you to do outperforming was your

Steve Schnur

for do. question. Yes. Steve. Thanks is Caitlin, this I the

[Technical to of – that one. I think our Difficulty] couple a

value. that our land on have we our mentioned, fair I well market is books As today below

up find are [Technical the doing and are they our land so we’re nice being growth that that Difficulty] of more job those markets land Our doing teams to able it. with help it’s some replenishing to us Rent markets good margins of basis. the – the has deals offset prop a than through been in roof

think pipeline, of get development So I look probably expanding out last the think to [Technical now quarters for in margins the us been number importantly, as our have margins you’ll for into our think XX% Difficulty] I margins we more right I see pipeline.

Caitlin Burrows

mean, partners is great activity I and potential there, is it just speculative Great. to activity. going strong? just now. you the the about talk right little And impatient opportunity then could a build-to-suit more development But also bit Or Are build-to-suit like also, seems activities going speculative? a

Steve Schnur

activity build-to-suit Yes. The good. still for us is

dealing Tapering and on construction a think with think been. this to out that precast. is what year steel you when for lead I your effect point, Steel right issue material about for times we’re now. almost has the build-to-suit traditional

ready them think I that more that I we’re take so is probably – of clients see their think to what some our see are And [Technical specs go. things Difficulty] with trend. starting adjusting you’ll to to

I some of materials issues these on think to out. timing begin level until

Caitlin Burrows

Got thanks. it. Great,

Operator

go Please, Next, we Korchman. go ahead. to line will of Emmanuel the

Emmanuel Korchman

in their them of in to the in. hear from them their XPLs. to guys. that’s was have increased demand interested quickly, just business the are get, lot that and down XPLs remarks, for broke I inventories Hey, I business e-commerce that Jim, especially you hardest much when and are think your a the probably so

that today? Or space for it business is hoping affecting taking Thanks. just am ramps? supply the they are not I inventories what own just misthinking chain their business? So Is their their

Jim Connor

No.

customers’ their the You XPLs only customers. to remember for the taking contracts got material are And when material. they space got is have

they the are through they They have issues. got somewhat – XPL flow they or They labor they a use retailer. their as fighting struggles. same can. like Amazon, much of Difficulty] managing else, who disrupted. outside have pure does traditional They of for own chain a product are XPLs best whether got But are [Technical the that’s So everybody work doing been are supply

Emmanuel Korchman

discussion future seemingly plan And especially of if that, for to go we piece change you in maybe, the bigger fund Mark, one Thanks. a Any back growth? growth. to becoming way Mark, that on with development,

Mark Denien

you Could repeat please? cut Manny, that, out. you

Emmanuel Korchman

I any in match talking now to are you thinking profile there that sort growth said different about? is funding any about you’re of way – bigger future that

Mark Denien

No.

that was you tried levels X.X to our out what and just we’re it, point I sheet is fourth around at trying XXXX on escrow a here quarter, look of X.X. if more short-term I lot running end the really down that a at been get were like balance think just debt-to-EBITDA, low. I to the point leverage in the our timing money right out of will that’s more call of sitting on redeployed quarter. We’ve blip

that at funding debt all now a – to free But There’ll You’ll the on additional which to that going rate on million foremost, debt longer free we’ve cash forward. kind be EBITDA back will kind flow, a were of up see way and X.X a level year X.X and first get cash along. just over sale of to EBITDA. that fund and combination any up And end term on maintaining beyond run proceeds. be of always leverage probably it debt we equity been our And level the that year, to $XXX flow. stay the of business then by will

Emmanuel Korchman

you. Thank

Operator

Next line Please, go to of ahead. Tibone. the Vince

Vince Tibone

afternoon. good Hi,

And provide well helpful. mix if the markets. coastal other on could the of You mentioned only an this coastal versus markets, the would that of terms in year? color some quarters you lease outlier third leasing Was Tier ‘XX X XX% X roll of then Tier as in that the really quarter be was

Mark Denien

of not been we’re the an Tier really Actually, outlier much year. total role out, XX% outlier to so. last We’ve markets the coastal point in X.X XX%. the That’s doing is just or to X our for closer to trying XX% versus this is portfolio. really an it Vince. really of XX% Yes, our years What

in So we’re newer markets. coastal those

that sense. those role in So commensurate experienced we exposure if markets, the haven’t with makes those level in our markets of

So, out look markets. this will coastal that kind XX% rolling year, this looking next the probably to like year, a beyond in in we lot of XX% range, year

That’s seeing our up uplift You about an to will coming really XX, got those coastal in to start XX. get in markets. when we rollover

putting about uplift doing. on think really that’s and when based I ability past still getting higher. And get right even looking coastal an then growth keep out where the very numbers So we’re better you up can market our rent around we’ve bullish see role to been [indiscernible],

Vince Tibone

That’s the really excuse me, helpful. are that me, in or of much growth what growth best One Jersey markets of to today? But – coastal for And mean is non-coastal which I more are lower surprise. seeing the New how Southern coastal that no you growth, compared mentioned rent best leading California, in terms markets markets? you what some the rent is

Steve Schnur

rent Chicago the growth well that’s in been great us, I as the airport market Yes, in Airport rent Vince, around Dallas, some markets look really Cincinnati huge a this where [Technical is Steve. really had had growth When submarkets. for are market And we’ve portfolio. strong some I would Difficulty] tell the as you, There has in corridor. our you need into to dive at

into push dive be to at to need levels of the But really it obviously, in good those. places. you it seems far how to just submarkets. It’s look So in weeds you most different can

Vince Tibone

makes That sense. helpful. That’s

you XX% just in rent the – some you seeing mentioned? Just growth north submarkets of are of

Steve Schnur

Yes.

Vince Tibone

Thank you. Alright.

Operator

line of go to Yulico. ahead. go the Nick Next, Please, we

Nick Yulico

Thanks.

So little a talk cap I about just bit. wanted rates to

you you talk XX the we on be versus about some numbers your about are development to in think quarter Can cap the page, pipeline, in rents of what basis think well, sort specific You seeing portfolio below-market did as should on lower even and terms have rest where could cap cases? cited reduce the that of compression points. rates page just was you this about some in presumably, cap which And of how I the rate you’re development your it rate markets? your

Nick Anthony

volatility I’ll conclusions in can we’ve draw jump such tough It’s start Nick, sort cap a much impact Yes. and on seen little then yes, rents a to to continue rates. rates cap the because others we so see in. of compress. broad has large it But

And the and and on quite are so all and yes, the they been the in markets. signed continue assets the have to or forth we But can underwrote see when so rate them, it’s we signed a change originally leases they when cap really when depending compression, being bit.

In to what major decline fact, have levels narrow between gap coastal and the they the we’ve historically. seen markets, them than Xs been more the Tier to other actually

broad So it’s been pretty based.

Mark Denien

I rate think would Yes. I rents on add that’s And based keep you X.XX still because it’s development is only thing to that’s got that cap Nick, development. to mind disclosed that, in market you on were portfolio, and under this, to our the alluding

will rents the market. or So at be

if an think you expect lower market. and took below operating would looked portfolio, cap are way rate our even because I they we at

to our you’re in cap lower So get portfolio. going got rate below-market you operating because a rents

Nick Yulico

I Right. That back bigger you makes going pipeline. guess, somewhat terms sense. to, is acquisition earnings of just question related, sort And last a acquisitions. I mean, but of Second in talk call, about did

deep, now I should because third was saying how much get – become I of aspect acquisitions, I the have business? think about should rates? done How the quarter. more about have we they mean, they you think the become almost that in mean decline $X were but didn’t cap you it – billion tougher think we in just tougher of

Nick Anthony

pipeline. are find in lightly I that read have wouldn’t have we’re trying acquisitions marketed I the fully a not we’re assets. to pretty still much Typically, just pursuing would or tough marketed a the been transactions. say too We off-market into third quarter. while. The for activity the good The low deals

We’re working transactions. several on diligence on

midpoint $XXX million million and our raised quarter. we fact, this guidance acquisition about $XX In to

it’s difficult. find to deals, continue we but So

Nick Yulico

Thanks, everyone. great. Okay,

Operator

Our ahead. will the Anderson. Rich from of next question line Please, come go

Rich Anderson

everyone. good Hi, afternoon,

a to the rents So know curious chain and going the rounding error what’s disruptions that’s this where I XPLs meets if demand growth? that everything on, all I’m your more coming But warehouses. you have we at of more layer just turning is – the supply containers, don’t costing we How disruptions? than all. what another rubber rent road know is obviously in to the warehouses. e-commerce impactful from that’s back going vessels the for And great can growth on for from actually and But on. is there quantify you

Jim Connor

Jim. Rich, it’s Yes,

our a and start our tell in you need Let sales, me chain. supply of and I nothing investor today, of a growth in. near-shoring we’re logistics, more e-commerce our stock. in and seeing. that of from airtime. what’s driving distinct We’ve gotten lot a The Steve issue in space. for the jump about that’s drivers chain can and ink and reverse drivers lately, the separate to meetings business lot That’s what would has do talked supply material on-shoring, That’s – has our main with customers’ safety growth five that’s that then

between ratio and has today, at X.X. If at you which the go IS been historically sits and back look X.X X.X,

another customers our highs. historic effectively that portfolios. to U.S. in rates So what highs means are are portfolios within the at bring inventory $X historic ours need our Utilization into the peers’ is in of trillion at and Occupancies

demand huge, over huge projected of this a So amount that’s the driving of next space. X what’s years

modern need last-mile the in for and a really than lot that. growth facilities centers, lot infill development facilities, have more a do really need our for customers and in supply buildings talked past a to it the lot facilities lot for disruption. for driven traditional. is of So by doesn’t fulfillment the It of with about different a need whole for of sales, chain new the We’ve

Rich Anderson

the balance restore given finger back your you? a the some Is growth that of to on we between perhaps terms Okay. quarter. third sticking some to consumer there about – think could those goods. tightening of but X% your see great, is theme And print to just worrisome the the But on In risk Fed passed inflation. supply the And of to argue all these obviously, order that in the GDP is for the breaks of will a this chain all at could pulse business? days, Because start longevity of – consumer is of do then of if you have words, get costs demand so the those and everything something down, and – lot other consumers Marketing of supply incremental with now. factors? gives sorry, we you

Jim Connor

don’t expect I we – how my all would tell know am. I those love think I to Rich, But close up. have on things. all prices you, pulse of to is Yes, I reality if go I the

I of some when inflation to we get see the level the expect think will we to see we which year. of the end

think levels before elevated Fed really they has some the quarters I indicated a that are slightly they few comfortable react. for with

foreseeable expect look have great deal we future. today see. it’s consumer what to experiencing there, a us of to for the I So for us. driving But be spending, at we’re will And as you we business with out can think

Rich Anderson

Okay, thanks.

Operator

Carroll. Next, we line ahead. the of to Michael go go Please,

Michael Carroll

venture. close XXXX? that near-term? be Yes. early tranche you XXXX Thanks. CBRE you and/or update as And in to to desire the joint Is CBRE we go the an add venture still Nick, there also? into to that provide from on announced joint is in a Is on both something can could third this track

Nick Anthony

Michael. Yes,

put And relationship’s that We’ve the tranches that three this them over expect of want first a venture. for a them. joint close as that profile will are now the looking joint the identify tax joint but third in that the push assets they with to are existing There for far in other right are time. We got the assets are reasons. no venture in there year. relationship two The we January looking talking happen very had assets past. have we Global. long-term closed. into I And to as going about then and couple relationship, we’re we’ve that tranche to good. assets, got a with it CBRE still of would And definitely we’ve And fit of And that consists ventures next

Michael Carroll

have great. overall? rates you that properties then happens, given if long rates inflation investment-grade for compressed rise industrial or demand especially that ever these have industrial with fairly obviously, could cap do that just rates or that the mean a those leases tenants interest risk, Okay, there rise cap And if meaningfully. the I for is just see not

Nick Anthony

driving we matter, we Yes, I interest tell moved rates. have And to it a haven’t rates rental moved some that a I would recently. happen. down but continued increases stuff really these also piece tell priced they large too. And have have see cap that’s know little would And but could you have that matter, bit. of rate that, obviously, you we compression been – that I much, despite rates that.

So, we anything happen haven’t yet. seen

Michael Carroll

going of able even the quick are for be for is those re-price what the about type just on sticky your types to then properties? to years. compressing leases. Obviously, those XX-year still And that real pretty have potentially XX you mean not rate properties I – next cap and

Nick Anthony

recently are still very just deal exceeded XX-year good. priced and a We They expectations.

XX tell which by very of dispositions would the fact, midpoint exceeded I win is the than usually guidance to unusual over In the broker trying last have they you, our obviously. kind are aggressive because months, business, XX%, more

Michael Carroll

great. Thank Okay, you.

Operator

Next, Please we line of go to go the will Dilts. Brent ahead.

Brennan Hawken

expect over to you mark-to-market This Hi. the up years? spread do Is closer XX% spread walk Brent lease through can to further? Could that Good widen something next or expectation X is keep averages with, Thanks. afternoon. your Dilts. your this historical you or us you year Brennan recapturing on for

Mark Denien

would or that that, market. are got just includes you, that close that I tell one. XX% I quoted, signed at every our mark-to-market keep that in mind It to The portfolio. you will Yes. the take lease includes in we we to leases

you be coming to us better you that XX%. we if a than expect So, over few I – at quite years, it what’s the bit next would tell

have fast they we gradually good growth as moving. as our So, do And that’s are if move do basis. and forward couple of in not just what high-teens leases we would we in as year, next they that will continue from are FFO expect those if they will of but portfolio. very the XX% been our will as would we nothing, this expect, GAAP year That to grow. we had cash higher rents last posting tell those. get the direction kind at growth Even cash on and XX% I you a over market look year, will mark-to-market looking moving this on – churn, overall get years

Brennan Hawken

Thank you.

Operator

line Next, of we the Please go will go ahead. Feldman. to Jamie

Jamie Feldman

getting Thanks. I your was thoughts latest at next just expirations early some of year. wondering on early your

to So, what’s kind get can beyond the how you renewals? much scheduled of expire. you you leases, think XX you early can XX, think Do – of

Mark Denien

Jamie. Yes,

you is this So, I it at what think look a good way we to if did think about year.

XXXX, end ‘XX. in the leases it rolling looked think our have of would we of said had you If I at supplemental our at X%

We XX% are about ‘XX. going to in do

talking I that’s rolling renewals rolled pull supplemental here We ‘XX early next ‘XX. at going we combination here looking year to in are XX% we as not that in So, I would this today, time have and And in sitting at sit ‘XX, we X% think not we our am to I But year X%. we in talking – that the expect early that be XX% the a forwards. disclose beyond of out. way do

Steve Schnur

see and more Hi starting of the supply tightness customers issues. this think Steve. is to the will add chain we as are Jamie, market I approach that with I us well on

their get And front advising earlier. to growth, clients happened of these given good the have. what’s are are to markets brokers in think I in landlords conversations rent for

Jamie Feldman

think that say trend Okay. you accelerating? And is you

Steve Schnur

Yes.

Jamie Feldman

XX% you with the to or do actually you think could do agree So, do you more? XX%,

Steve Schnur

– will see – today, sitting here it, will we I would tell I I you, right. it’s think

at leave don’t look rents, happened we markets to tight either. the are the what’s table and going As with markets the to money what’s on how on and want we

So, it won’t – Mark it would differ laid be from – won’t materially what out. not it

Jamie Feldman

of in over you curious right the just mean, as you building When to as next you X good size. infill think just now terms how types the $X.X go to guys products you what am think Okay. of with are that And trying I demand, total might whether about about building. I years but the that, you are And thinking thinking I will – be what of can, change? billion you it’s the then assume

Steve Schnur

we look will right as company. I Jamie, for start. market. think the larger in obviously, us I of think I box know opportunities people the a

small under construction We XX,XXX buildings feet. have got as as

the the marketplace. depends can in we opportunities on find it So, really

produce. is spot larger really, in infill sweet the that a get market. you tell really will through building entitlements are an find Those I and to us, hard and For

build feet right the in X put over from to XX,XXX million we XX,XXX everything So, up feet feet, and place. it

Jamie Feldman

Okay. Thank you.

Operator

Kamdem. go Ronald Please ahead. will go Next, we to

Ronald Kamdem

Hi.

for ones me. quick two Just

just a new as X of bumps the years anything the rents the about maybe talked lot last to months. up or anything sort But feet X quarter and getting. demand the the higher two that’s Just the structure, in years leasing first call lease in is Obviously, to different accelerating? this there on reflected just is in are development out X.X you about is leasing. you million that’s of the over

Steve Schnur

a inflation. all levels, pushing in in a think seen here. I definitely that growth I biggest Yes. experiencing. what traditionally think we that is on north X% of And and have are the rent you seeing – jump would what probably at occupancy of I Escalations was X%. X% push there in us tell the taking you, our escalation headline outside going will of change is I sector have with high to

it to call standard X% escalations X% So, the are becoming marketplace. in

Ronald Kamdem

I helpful. schedule into forth. and comments That’s And opening sort risk so the comments of wanted just – guess about dig it. mitigating, to then Got I

pipeline. of are So, early, example. land the in in thinking having over of sort terms different what next the sort X buying are years X but out land, a construction, X the years deliveries year going you ahead time obviously, the when years you is are out – are to so a next any control of color buy But terms really building of owning materials X as you you to to for years about helpful. more doing are over of this labor, to And maybe of you continue year

lease? mitigating the color material scheduling on risk and more just that the So, on

Jim Connor

I would you things. Ron, tell couple of Yes, a

caught this dealing is levels not get we of we I X the it the a with position. is, material think I think and I ones be across to to development one of we believe country, going like for years. better supply the all that will up, on elevated If with going think next challenge are are would the that

sheet. of have we First balance the all,

want production. put projects development We project dollars can that have land to the we of time the these we commit that period in the ability we the the to so that secure into to control

keep with these have at allow development the and We to secure our advance construction it and earlier the expertise and teams development level us designed projects high get in pipeline construction to materials our is. the

securing into We months we half and about past on have are Then the in of XXXX, secured, the Steve’s moved second that working first in the we of of teams couple XXXX the now having talked secured. half all everything pipeline have of got XXXX.

to it’s times, ongoing and will for back and pricing get going future, we But So, the to it’s that it. we an battle to like would that foreseeable we believe high one our normalization. some in us, level extended through are delivery stay of way managing

Ronald Kamdem

on a Thanks. great Helpful. quarter. Congrats

Operator

ahead. Kim. to Ki go Please will we go Bin Next,

Ki Bin Kim

Thanks.

wanted to earlier. said you clarify Just something

per for the that mentioned you or of $X think do you year that of mean was can longer like next you – did control, own appetite? term and X just that development, the land years. I off you billion Did you

Steve Schnur

have it’s about I to of last year, year. about to That control. million land we off think back looking would and be acquired that the X own Bin, and years, we to able think a dollar on million is, our be amount And going that whatever be monetized have we that. that $XXX I assumptions basis are a to go-forward would do continue Ki And a over the $XXX important find we

Jim Connor

Yes.

Bin to is Ki our we that’s under which mid-$XXX our on the $XXX in the see millions. millions I contract. color what’s books, land would got you have the think, And difference on the land books, I has add been high is other

that’s land what books. in production managing that perfect a are under so the really gotten books that the have We land it into hits Steve’s on efficiently that’s have the that not and actually And portfolio. yet. putting at got entitling in good never world, options, quarter, same guys is we And

option level years, that plus as under out have an are what next so we can few comfortable the have and got what we over we maintain we we entitled look at we control, look And of development.

Ki Bin Kim

the that owned. And about in all you supplemental, section, think your about I mean is there In land acres under acres but bank XXX Columbus, guys it. are option, Ohio. in XXX I Got control then it’s

going I all obviously, to Columbus, mean you So, going not are do construction forward. Ohio

So, of a figure will you into king Ohio. – be

configure a does that development that lot especially of thoughts, in given how acreage is the So, into Columbus? your

Jim Connor

we I authority, think land of land am the that’s design we a covered through residual that the enormous land. that control to are working contract with that’s referring long-term the I venture of have zoning and under joint entitlement amount agreement plays where – are short just we land have Most that we airport an both and process. that

Mark Denien

markets, coastal that that other Bin, Jim the on that’s just And land Ki mentioned.

Ki Bin Kim

you. Okay, thank

Operator

Mike go ahead. Next Please line of to go the Mueller.

Mike Mueller

a small have point. It related I at curious the Yes. restructuring quick this had I charge. am one like to? just what’s a that in just quarter looks you

Nick Anthony

We we Mike. basically where better align group, Yes, our some move construction development are to around construction now. and folks group with doing development

other some the sitting So, our markets. in X lot quite right development a now place, Tier we is predominantly honestly. in those markets coastal had and weren’t people then And of of the that

So, that’s what those charges were.

Mike Mueller

Got it.

that Okay, it. Thanks. was

Operator

go to Instructions] [Operator Crow. ahead. line Bill to going go are We of Please the

Bill Crow

they a base tenants? the that tell at aside and rents Thanks. afternoon. for go point. negotiate pretty are Are from trying that’s can this Hey, they for win anything are are the the tenant clear they for and price-takers anything reps It’s the won as something? there What to non-monetary asking back Is tenants that looking tenant they bumps? good

Jim Connor

kidding, Mercy. on their brokers the they are is. market state our Bill. the Look, are good That’s of asking, they what educate what am friend, clients because best I

talks XX little the they opportunities cost the to relocation construction come new there of understanding landscape of in terms vacant when the the the about How So, cost of months is, engaging other very a advance, space, good to in Steve what is. is. customers what what with market in XX are table of

us to am in paying rents from sure of levels. seen as some continue are our climb. we you Concessions peers, So low you and very have seen very, commissions are Obviously, I from have new condition. still at

but the that, an the rent, all days standard build amortization that’s very handling improvements, days TI for enticement call of would of I racking material as amounts what of free tenant like gone space, by the to things improvements of tenants got above outside of equipment, wayside. have out and finish normal We

Bill Crow

Yes, Appreciate Thank it. Alright. okay. you.

Operator

questions further And queue. no at have time, this in I

Ron Hubbard

for like the We disconnect to few thank you joining year. the today. the part may Sean. weeks look early forward Thanks, many the of a Conference and of NAREIT engaging to you in everyone would next We line. Operator, with call into at

Operator

and Ladies you. gentlemen, Thank will for conference you AT&T your that for conclude Event our today. Thank for participation using Services.

disconnect. now may You