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First Industrial (FR)

Participants
Art Harmon Vice President, Investor Relations and Marketing
Peter Baccile President and Chief Executive Officer
Scott Musil Chief Financial Officer
Jojo Yap Chief Investment Officer
Peter Schultz Executive Vice President
Chris Schneider Senior Vice President, Operations
Bob Walter Senior Vice President, Capital Markets and Asset Management
Craig Mailman KeyBanc Capital Markets
Ki Bin Kim Truist
Rob Stevenson Janney
Anthony Powell Barclays
Rich Anderson SMBC
Michael Carroll RBC Capital Markets
Dave Rodgers Baird
Greg McGinniss Scotiabank
Connor Siversky Berenberg
Bill Crow Raymond James
Mike Mueller JPMorgan
Caitlin Burrows Goldman Sachs
Tayo Okusanya Credit Suisse
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by and welcome to the First Industrial 3Q ‘21 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Art Harmon, Vice President of Investor Relations and Marketing. Thank you. Please go ahead.

Art Harmon

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

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

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

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

to the Peter. over turn me call let Now

Peter Baccile

Thanks, joining Art and you thank all for us.

new in performance development on and and highlighted increased new by team rates in leasing leasing. by quarter, great growth strong in-service continued XXXX renewal Our its delivering strong another continued occupancy, rental

land of feet our healthy successes In square with first came net significantly quarter update grew our were net quarter, acquisitions. absorption a in million in will the strategic and cash pipeline finish and development strength million. was at those you market. shortly, XX.X%. we completions starts to of new million CBRE U.S. rates third also was Cash absorption up were me at third for XXX As discuss XX overall outpacing Per while points X.X% quarters let the million leases feet, of on square same-store successful industrial XX.X%. feet. the XXX EA, detail NOI land basis for I in more new XXX the but in readying the importantly, supply portfolio, we rental first this XX occupancy and year, three increased new Through renewal square replenishing

expirations have full puts year, which roughly Looking at with in XX% top cash signed a our for increase previous a rate of start, we With of of our on us today, as cash to the rate new rental off growth rental leasing, respect record XX% XX.X%, the of XXXX. to is rate company overall great XXXX and at rental are to we expirations, pace of signed renewals increase XXXX XX.X% including XX%.

primary Let driver our me growth, program. now to development our the move external of

leasing speculative discipline, know, self-imposed strength market, underwriting increased and total to and opportunities create the industrial the Due new part million. cap. with process bringing significant leasing you the to our shareholder of sheet million, our our balance $XXX most value we continued have operate As portfolio by in in we risk as investments, growth through cap our have $XXX and speculative management we fundamentals to robust of of a the

the put recent some as acquisitions of starts through Now, let incremental that will exciting to well me three walk good use. new capacity cap you development land our as

million, we sites, the our one During can of Inland million these a are up in X X.X first At acres Logistics square Empire XXX,XXX square sites of the Pioneer feet cross-dock sites accommodate Empire new foot third XXX we East new facility. starting development. and the are quarter, East total, to Inland Denver. Center, the closed X totaling development is $XX third on In in for

since total Empire logistics investment significant in estate U.S., asset Southern the XXXX. Our XX% $XX to grown projected yield of of absorption Empire portfolio, more market is our two We cash which California Inland vacancy in continues adding to this Market represents largest of net early The income look is the strongest end real activity the one third markets quarter. and went prime of under the sub-X% be in million, forward targeted rents we America. helped the the site to related have our of Inland X.X%. with than by on North contract from ports to approximately a rental in as XX% this

we starting East serve have First are leasing Florida Center. XX development we tenant strong with to the our First the there another to recent at experienced South in Coast, Distribution Moving Park and successes Miami demand

Coral First Gate have Broward County facility to XX% foot grown the of Commerce rents Center end Market the XXX,XXX in infill Springs distribution XXXX. submarket. be since will a Class square in XX% A

Central In were New XXX,XXX this build is versus report investment of Logistics CBRE. we XX% estimated just completion. total the Center, look Bordentown cash strong Jersey exceptionally our developments square and million Our acquired off is construction last started year, to of first Exit on our where leased foot rents a construction million. X a immediately market for Jersey two to market facility. prior past quarter, X.X%. location, Jersey fourth up site upon has from in according a targeted The turnpike We the New $XX yield with $X recent near in successes been asking our We Bordentown,

discussed, X.X%. in investment is X.X%. summary, an projected fourth with a $XXX and million total square process Including planned million developments yield feet At yield totaled approximately these cash X.X cash With driver of our starts a of I primary In also starts, Northern total square a development the an approximately we margin the yield for million. the external just three of estimated our X%, of overall with on $XX planned are quarter In investment million. our projects XX our Jersey to-date, quarter land feet, of growth, with replenishing $XXX approximately California and focused totaled a development cash XXX,XXX million, on in of Our expected in these we addition Empire fourth a as estimated acres investment Inland total also to these site is XX%. $XX acquired total New holdings. of of

acquisitions, our fourth our for of XX.X starts million adjusted today, planned of sheet development. can feet and balance support aforementioned land the As land square approximately quarter new

XX $X.X new billion venture and feet In investment square approximately of feet. share the X.X an joint square total, represents activity. million is potential additional Our Phoenix of north Camelback of that’s million

Park me PVXXX leasing a on square in to just leased omni-channel at completion successes. let the Phoenix our you Now update XXX,XXX at retailer. recent First entire footer leading development at We

cash quarter feet. part square yield is As XXX,XXX estimated occupancy by the take including XXX,XXX of feet total completed of square The X%. to of the building space lease, another a use this expansion we also just total investment and expanding expected XXXX. tenant year-end in for second the is is project, ready for the million of are the estimated for The with the $XX expansion the

yield. of Empire will our Inland rate showcases XXX,XXX our Inland first XXXX. I that square This we We XXX% of underwritten in lease the rental the the completed leased cash X.X%, discussed be Center of foot substantially Empire earlier. With quarter rapid Wilson that in growth outperformed also further yield in Logistics first a the

land We feet are sites market of pleased high-growth that square have X.X million can development. this that we in support another

project the and in Southern This strength leased the of another well after platform, for users for California use. of is port-centric South As location the warehouse distribution yard example sought Bay. surface just we and Park our great highly Laurel property its redevelopment very market given suited our

X.X% Our $XX represents first around million a of investment, is on which XXX%. year margin yield our

X the on year-to-date X we the to for million. quarter, sales, Moving buildings our million. totaling X in bringing Detroit sold And and $X have $XXX additional during million, fourth to total we $XX units sold quarter, in properties

million, to through details from it $XX pipeline, of prior million on Given for With updated expect a on disposition quarter to the year walk increase million to current now guidance. visibility $XXX the and $XXX turn me the let our to Scott total we that, additional $XXX over million. sales midpoint

Scott Musil

Thanks Peter.

NAREIT per share $X.XX Let summarizing and stats the quarter. XXXX. leasing third to were for XQ results operations from $X.XX compared me funds our start in by share diluted fully per

Excluding income share. claim, approximately $X.XX of insurance related of $X.XX per share to final an was the XQ FFO settlement per XXXX

of feet was Cash Our an quarter, Of renewal rent. termination X.X%, primarily growth for excluding commenced in occupancy XXX,XXX increase new, rate higher fees, due million bad X.X new offset We and XX.X% debt free and rental rates XX.X%. expense, to and an same-store quarter XXX,XXX approximately were these, lower bumps and slightly on leasing, with XX.X% XX% increase average rental were cash square rates retention rental basis up square rates by acquisitions new in NOI the up leases. lease-up. renewals was overall, up developments million Tenant X.X straight-line XX%. XX.X% were and XX.X%. leasing for by and were And rental up up with renewals renewals a on new basis, the overall for were footage leasing with increasing

some to markets activity. capital Moving on

As previously in transactions. early closed announced financing July, on X we

X The points years, we plus prior XX.X pricing million compared improved maturity reduction XXX options. line basis LIBOR to $XXX our our points, including our expanded now our a X pushed extension First, to is basis of facility. out credit and of X-month to

XX also our our interest LIBOR reduction the With interest and term basis prior of interest spread new loan We fixed $XXX the in compared loan refinanced points, rate is new July matures XXXX on to has rate swaps plus place, rate X.XX%. loan. in in XX The an million term the of a points basis term facility. our

help our share through new of a average $XX million total On about. the $XX.XX price Peter equity for shares issued at the weighted million of fund per side, we to spoke X.X net investments ATM, common proceeds

to is to in NAREIT per to in-service our starts. updated as capitalized the midpoint, evening, on to development announced $X.XX guidance range points earnings our gain in the per increase from due performance to the from share guidance guidance of increase XXXX third of note our of quarter for fourth at follows: our occupancy to and impact for of This reflecting at $X.XX midpoint, implies fees XX.X%, year our to an NOI XXXX last XX.XX%. basis growth FFO which a the This XX.XX% of per growth XX.X% before basis occupancy an a increase on X.X% guidance same-store year end release quarterly X.X%, full $X our Key insurance NOI our same-store NOI at for an service year increase a now are quarter midpoint performance. year-end full million assumptions average cash that full the interest excludes at same-store implies average X.X%. Please is XX the termination XX X% due share, $X.XX quarter quarter to approximately an points basis a of of third Moving settlement.

now $XX Center, or midpoint G&A any potential our share the fourth year issuances, and and guidance costs $X and completed this million Our acquisitions Logistics quarter than full impact to development related and any capitalize anticipated Pioneer to issuance new for an first after expected or after the Center. call, expect excludes first repurchases does of the construction we expense $XX debt sales, previously the XX, not at is impact the Logistics guidance under equity. plus to of about also In future guidance discussed, reflect guidance debt includes of at of the this Center, increase the our interest. first call per of million $X.XX starts repayments Other XXXX Commerce XXXX, future million, of total, September Bordentown starts developments Gate

Let me Peter. over turn it back to

Peter Baccile

Thanks, Scott.

me Before your thank for quarter. questions, take great team another we let our

XX We’re support as growth our to currently square value-creating developments. of landholdings excited production put that than feet continue we million about into can our prospects more

We markets. replenishing in our also on barrier are with focused higher new sites pipeline

from We that open occupancy and for you operator, robust in up With levels fundamentals please that absorption, net continue would questions? to sector rents. strong it high increasing benefit are reflected

Operator

Craig from is of [Operator Capital Instructions] Markets. Your question KeyBanc Mailman first

Craig Mailman

guys. morning you. maybe good one’s Hey, Scott, this for

through year-to-date a implies the walk of your to Just kind to quarter range, that? of FFO in the just fourth could get the at midpoint looking decel you

Scott Musil

fourth Craig. in debt the drivers I are: say bad the one, would forecasted of we there two Sure, expense $XXX,XXX quarter. is

is in better related fourth third Our a than dilution being And the do quarter the our quarter with can quarter the we was full Hopefully, was also actual $XX,XXX. quarter in fourth $XXX,XXX. issuance, to the third where equity partial. only quarter the hit

the So I two would say drivers. those are

Craig Mailman

going guidance is there equities you in Or you? forward? included that equity Okay. – say And more did did the mishear I

Scott Musil

back what the third no equity, was issued quarter more saying the third that in No, quarter. in I’m the future but end is equity

for the quarter, the fourth quarter. it’s So in entire

So compared have quarter a fourth count you third higher to share quarter.

Craig Mailman

just you the gets up separately, to we – what’s of use bigger you set it. then metric cap? what balance sheet your the noted just Got Like most to Peter, kind could you as Kind million. maybe through, And walk track that over the important this? guys can is spec of how time, cap you upside $XXX –

Peter Baccile

Sure.

the was So a we market place very different a we the will to give formula total very in straightforward. in and sheet. little company. the We XXXX of balance of portfolio put had the context cap a answer XXXX. pretty Obviously, in here the And is then, place cap back X% and because put the different in more answer, very, back history

has time cap adjusted the have on passed, based we formula. As that

‘XX in and at beginning this we it and So the year. then again adjusted ‘XX of

not We X%, changed and sheet. notwithstanding still the improved have It’s the multiplier. portfolio balance dramatically

So even you it’s than can more was say back XXXX. in it today conservative

Craig, the company. So X% it’s it’s total of traded pretty value debt the plus simple, of just

Craig Mailman

you. Thank it. Got

Operator

is from Ki Truist. of Your next Kim question Bin

Ki Bin Kim

with your wasn’t I line vacancy that Good existing you’ve how also you sure in the questioning, Thanks. much of cap Sticking portfolio. how calculated you the the consider morning. speculative same eaten because – into

or how I use cap? value you So your question, I you that have And first that eat get speculation? guess, book to remember into can’t value to the for – assets like do much you market

Peter Baccile

dollars. committed So

we pro And we any that a the in. has forward – new to start were with tenant, works. development go less cap those do that’s leasing dollars in rata those basis. that than If on we dollars how XX% no go So a

We we’ve on to largely today that have $XXX our new leasing the developments completed. million great of due just capacity

answer $XXX question, $XXX million that So Bin? of is the Ki million, your Does available.

Ki Bin Kim

Yes.

Scott Musil

based on Yes, Ki Bin. too it’s value book

Peter Baccile

goes Also, acquire the into empty risk cap. an we Ki treat it building, Bin, spec as if that development. as acquisition vacancy, We so the same

off, the off. lease And an it comes comes list. we when XX% so any all it is leased, it asset comes once vacancy, acquisition And finally, off

Ki Bin Kim

Got it.

that in practical I that for the your guidance, provide development don’t So type a done just good amount What you when about an figure. typically think annual for of know basis? you’ve portfolio. looking of starts some leasing range guys ongoing and on is you ballpark

Peter Baccile

Right.

current spec profitability, at going determine which the strength a So pace profit cap forward, of new developments not land lease we and a the given ultimately and to subject the scale going shop. our we position, always say, of are volume to we’re as volume the course, shop, development

see assuming be in levels fundamentals past should than higher going going hold. to you again, are the So levels forward at several years, development

Ki Bin Kim

should dispositions, expect And that’s as that up ratchet a Okay. grows about think or million pipeline the that you different we of development should contribution as growing, a steady-state from funding sources? like kind pipeline $XXX so

Peter Baccile

dispose offers want where unsolicited That’s get assets markets what those our pop that just volumes few and are often be we similar years from are do increased, guided going really we more assets going lot will we to of has think forward. dispositions, on to to you to will guidance. that I original see quite in up a we with the Obviously, take With we we’ve last when and offers. that to respect the

been the think giving. similar I will what So forward guidance keep lines be into going we’ve

Ki Bin Kim

it Okay. That’s you. for me. Thank

Peter Baccile

we a get the percentage lower that’s – the as overall obviously, of size company. of And much dwindling percentage bigger,

Ki Bin Kim

Great. Thank you.

Operator

Stevenson is of Your next Rob from question Janney.

Rob Stevenson

guys. Good morning

any million meaningful increase Ki on to the quarter need the in source? a you I of change $XX guidance follow-up there? guess, of $XXX guidance. is disposition funding to question. full reflection Are increases The dispositions that attractiveness the given roughly, fourth asset seeing of fund year million a Bin’s now the more Just development pipeline the and Or and the pricing to a that as is

Peter Baccile

again, of really XX mean those growth, that I we’re assets very are good outside getting And target to the the is very, pricing. lower of in what strong. going I and drives market And submarkets – market is markets, and No. it. the disposing that where you markets these in for assets. all are assets for find really markets the line those be bottom markets know our more the we’re That’s we think

looking We’re to real Obviously, to That’s but fund key estate it’s really sell the development. not driver. not key a the benefit, not it’s driver.

Rob Stevenson

be in And the fourth exiting to – will be you million you are that? markets $XXX a any million as result going $XX these of to quarter, with

Peter Baccile

Wholesale so. don’t think exit, I

Rob Stevenson

the impact of off days? on down these is think? industrial and Okay. expect, And many your space sitting What tenants Peter, the incremental on their through ships continued the supply there your continues that as press the XXXX issues cargo a demand this lot business, having then then, and chain impact been what’s And is if for coast. to you

Peter Baccile

that their give to Peter to going I’m thoughts that. Jojo on to give and

Jojo Yap

Sure, Basically, imported impact the the having they who hard nor need ascertain the and is products our that tenants product, business a the a sure. have getting availability of in timing. lot is net cannot really time

the they it’s bigger more So loss effect issues have net know they don’t And is hard. if really more. to certainly. to on our they is put more, to because that have that The product. inventory the that sell timing stop so order They based

more getting space the been they have of So what’s The the effect net happening towards And – start now out. wanting is are going less they take we year. to space. are that than

now demand. right terms supply of happens And know. so been the is and there strong because many are There in issues XXXX, don’t that have And so that. we what rents in chain rising is the of now

the will off. don’t for is this is reality So think that level that we our off I hope tenants, but level it

and issues continue, – because pressure increased supply I rent chain the the of of lack looks think and space will the will continue demand. it

Peter Schultz

Peter Rob, it’s Hey, Schultz.

activity a third-party lot have. thing I’d and logistics companies tenants our help with The that marked of seeing of we’re the companies add to from the looking constraints increase other to capacity space a that is for

Joe So for, as they said, are today. very amount looking finite declining just active very, space a of and

Rob Stevenson

this actually Should XXXX, time forward. that then and about be be period of sort some it’s increased as rental thinking whether at a there will lull elevated sticking XXXX, a we reluctant Or some happens? as that the knows for pull demand procedures? period winds previous go catch-up as you of this this around time the who winds prolonged of people up inventory rates think point, is of And demand, – time up level of to sort back to elevated are just

Jojo Yap

– In will That’s to a the to to be X driver X, sales And question. question, don’t order in answer than the even e-commerce market. as have next where of we then going percentage e-commerce in chain all very, total be bigger a very the that that’s know, years, supply good a to predict XX%, goes issues. I in

supply the that chain to driver. issues be compared So long-term very, minimal will very

thing. the now first that’s So

of chain, predict have The have when you issues. really going offshore have you issues, you issues, it’s issues, terms labor second it’s is thing hard to because that in have shipper supply you inshore

efficiency You the a you have driver issues little bit. have COVID issues ports. It’s lessening still chocolate related in

fixed. that’s when know going don’t to we So all get

Rob Stevenson

Okay.

Peter Baccile

up catalyst Don’t issues then where all forget everything and supply is COVID shut chain to primary once. it down opened the at was these

forward more catching you’re than me. you’re follow you up if anything, if selling so And

Rob Stevenson

Okay. Alright, it. thanks guys, appreciate

Operator

of Anthony from Powell Instructions] next question Your [Operator Barclays. is

Anthony Powell

of the and on the relative the at the where market of of of I free you used said the given conservative portfolio. to company to Question cap, company of be morning. the good increase it’s you the the and at guess, that size that spec Hi, value total, quality X%

spec bit a fundamentals, a given increase the more you’re why that Given aggressive what the not bit be just more, seeing in market? strong cap and

Peter Baccile

plan is Yes. it that through to what going we’ve that on Well, we’re working creating are hard, margins for to really this, fundamental do portfolio the while me, thing Trust going of sky. always developments terms tempting have just that of we’ve can strategy one there. and what we just outperform And grow is lot that business land, going the a you the to And a be cap new at think we’re see, if making the we as to leasing and you in great discipline trees a in but day, we don’t very focused not mindful sure the cycle. to off structure said. our that like had. business only times And replenishing we’re the We better for like demands. said. forward, And discussed that’s you’ve new the current we pipeline, end stick

Anthony Powell

land, out it. And What side, now. guess land for there? Thanks. in pricing the are environment right Got just seeing said land competitive you replenishing of on terms I our industrial on you you competitive bank land the

Peter Baccile

Jojo?

Jojo Yap

reason are Very competitive on continue bigger has there rent more than the been markets increase. prices the part but coastal increase higher and that a the because of middle country, the a coast for to growth as increasing lot well. the They to

So we increase. land continue prices project will to that

Anthony Powell

Thank Alright. you.

Operator

Anderson of is question next Rich from SMBC. Your

Rich Anderson

Hi, thanks. Good morning.

Is So said? small got a that and with kind chain e-commerce you that that that about pressure did in rent on the very Cory, commentary the upwards are say demand? broader follow-up question you Rob’s what terms talking issues the about of just we’re of versus now started supply

Peter Baccile

was was really what you the long-term total the chain go. know sales e-commerce if supply I impact that of if to issues as is don’t percentage as percent that And actually that look chain will go of the what said supply of No, then I make you a saying minimal. XX at issues you is e-commerce total what where when kind don’t will a sales know would today,

goes and pleased. am XXXX, why anything seeing. that’s And for else a to that’s big bigger it I than think we’re as that driver XX, today that I

Rich Anderson

for you understand. I Okay. that. Thank

there but if much would but that answer, way that to know of much quantify of is chain any if basic – is related? to Is is I of How you how be you much don’t say – that there how just able if this, question? related? rent, – demand a to So it’s but is that probably of – it you’re would answer impossible able to question supply $XX

Peter Baccile

not pressure just there is isn’t that for answer space from the anyway. supply way demand is would with chain demand I has say It’s the fact an vastly – building the the that year enough X exceeds A the lot A challenge, but X commodity to lot side stopped for that There of it difficult inputs. or of this no it, that to challenge. do But that do difficult has everybody with is it’s fact very now last and months. some the chain but get to current strong. of the it’s is just demand to a very, supply

heard absorption we’re driver the You saw very to deliveries, new very, you experiencing. what’s – of and primary rent the strong the that relative that’s numbers that really growth earlier net

Peter Schultz

Rich, And Peter. it’s

operation. the that So a X%, add X%, company’s is, thing X%, costs I’d range to other X% remember, are in the of occupancy only

transportation we’re are rents up and while going labor seeing up, even So go more.

very of small So a the cost occupancy is total. the percentage still

Rich Anderson

it. Got

of here. how talk something’s for impacting your going good that’s don’t about You bad mentioned those does drivers it if of into some drivers moving shortage things just that that they counter to as are more. stresses the around? these But and can shortage that the how play I I decisions? of of but like And mean stockpiling is you types truck a burst sounds or to way know truck business,

Peter Baccile

Jojo?

Jojo Yap

they of actually very, because are the you they there prefloat, very one are than and very they now, when at LTL, operations less right the are successful look busy rates more raising profitable. Well, and

a and their are bids getting are And they their so lot the businesses, lot businesses of price transportation and a are they of naming prices. getting their in industry

of doing really are lot a mean, I fulfillment the in So business well. people

– customers, and lot So a of them are – some and too.

be So to feeling is to I of my it that the increased industry? costs question think going that is I passed to guess the affect businesses. an There is are by some consumers. cost the is how going

and are the to affect – going margins, going those And some be some of to their are fast but to consumers.

top they store year’s the are going wanting – right is change is next more to but want thing make And already So to importing some sales. they there for because their season. the to now, not of

how that’s is. So bad it

Rich Anderson

Great. up? me, And development that in How Thanks seeing And do lastly XXXX for that think see how of that. $X.XX interest you’ve the trending trended? into I numbers. it capitalized your for activity with has you got all

Scott Musil

say, over higher going larger. and would say to last more. look the hard be this year, we development because years, because starts at – guess just in it’s today the would point leased to our I pipeline what up. several if got trended time, it’s next best My say gets I I not at $X.XX, is at to it’s least

Rich Anderson

Okay, very much. thanks

Operator

question next Capital is Your from RBC of Michael Carroll Markets.

Michael Carroll

Yes, thanks.

to right looking of that? short-term and you kind that behind the mean, can that. land, short sizable. add going little to mean kind markets these a Can attractive to you’re be land to you higher view for a do I bank? end sites to it’s currently guys still that I how what’s that your of of that that’s reasoning buy away? that right land So of about you’re now, fairly I know you bit some it that do talk start you hold is you want buy in, you if in some be indicated

Peter Baccile

Sure.

that We’re our But months particular, remember, of again, last our some some positions – periods never to about core our out. inputs current Entitlement of The the we developable. steel. are of like always more current to estimate would in earlier the land the few bit getting a looking changed land commodity years. has delays for respect are take build certainly But static. definition X landholdings, new we with And are opportunities to now. years about X talked near-term little over near-term XX

in We’re sites, land to users Phoenix. in and land as JV always of always some sourcing sales have entitling such our the will we some new out

Michael Carroll

are you aggressively land others more short that guess now? that are trying focused markets to on markets on any that right are there you than Are I acquire, you there any is

Peter Baccile

our in Those on Day markets on Well, year interested new Investor investment always new higher are a coastal in we focuses the course, are barrier in ago. that markets. the the of And opportunities markets. about XX talked focused we we about are

Michael Carroll

then the update XXXX. space? former been, on all? don’t to this similar X know you the activity call And has about not. has what that Great. it I Okay. or out leasing is the But Pier at that pushed remember leasing to on provide changed can I we an or talked expectations that if

Peter Baccile

Peter?

Peter Schultz

we for So, a to look Baltimore. the referring along building for square of the Road on XXX,XXX you single With right our Post fit are Old tenant foot long-term for North cross-dock building. I-XX continue over our occupancy XX%, to basis a at portfolio

of two buildings available are one are in that that We submarket.

being building this square the update that, that growth earlier but that market provides, other we and today. delivered further rent see we in XXX,XXX no upside have continue building an The was foot to And the year.

Michael Carroll

Thank great. Okay, you.

Operator

Your next question is of Baird. Rodgers from Dave

Dave Rodgers

everybody. morning Good

addressed the guys starts. already. a You But on about your to guess margins I lot wanted ask I have just development

I think last year, were what your XXX% around margin. XXXX stabilizations

would you land I into land inefficiently kind starts maybe about that next mean, of land margin. And guess sneeze guys to that, able margin. what purchases that…? do utilization how of up, are what mean in pipeline buy quarter priced development are prices the put margin. going the That – about a the in land, XX% first half quickly But at more How curious growth? is you just I the to if despite is service question for what’s saying the in on and prices in I that you rent But are land we to entirely it a second are at year XXX% driver today? fourth XX% is? is, round this Are question. of having Your differences XXX% the want to be fact

Peter Baccile

that, off Peter with I start and add thoughts. will their and Jojo can

prices little As – far mean are especially as I rents up land are we but growing far to buy so bit where it, want quicker. going rapidly, a

and in have thought the cost referring that And at quicker that rents margins land. to. never the than of would a prices growing looking of And to square are foot you to We are cap rates, contributes basis Jojo? impact, we continued that down on again, we per obviously big the land are terms margin come see.

Jojo Yap

trifecta don’t just I say, really basically, really a all basis. So marketed we yes, kudos FR. the assemblies. result is deals, – yields field land the in highly We bid that to for hard on platform of on is just One I it and work is – bought the for higher the and direct me would that they would off-market we

So, basically we market. hit below the basis. buy We

yield. So, the the basis helps

we is second we that almost underwrote The every thing conservatively. in deals did, that

grew we projected. So, the their than rent projection, more actually rent

you year points. alone know well. So, that lastly, up compression been And XX has yield helps cap our basis to there then this as rate Dave as

So, a those if you put three together, for returns. formula that’s high

Dave Rodgers

when the quarter, a of land? When in-process that function at at of relative you of a the the is lower you just end the right third on here look that margins function that bought that, just Is location?

Jojo Yap

recently under function lower kind a are look you Well, some a of market, acquired average. than have of developments you a do it’s that’s when at correct. markets And the our you site construction, like Seattle

would a then one other at a function be example. the that pricing, large recent PA. Central So, That’s be development example land And too. of a Yes. would

Peter Baccile

immediately. that started bought we On project, and

Jojo Yap

Yes.

Peter Baccile

Where tremendously about compressed. some remarks, that of these big in up in cap margin tied we the our projects, in XXXX we and that rents market land spoke and project that like the rates grew

margin saw you that’s huge why the there. So,

Jojo Yap

Yes.

Dave Rodgers

what – about from saying? been pretty of Is Land you consistent. of have of XX% are building construction holding total XX% is we helpful. to like It costs. that told running kind That’s sounds

Jojo Yap

now, Dave. I points XX would percentage about that. higher it’s to Overall, add

Dave Rodgers

That’s helpful. Thank you.

Peter Baccile

you. Thank

Operator

of is Scotiabank. Yulico Your next from question Nick

Greg McGinniss

Hey. I answered, been questions my actually. All Greg have This with am is Nick. McGinniss.

So, thank very much. you

Operator

Your is from Berenberg. Connor next of question Siversky

Connor Siversky

having Thanks all. me. for Hey

all signed. markets be what at what seeing maybe you a are comment XX% spread ‘XX and you assume that leases already are on the particular bounds strength On I and on of where average upper to what weighted Can the lower figure?

Scott Musil

mentioned in the representative on well. markets are in. XXXX, Q&A, you rental debt we rate at the of those talking we markets expirations representative in But the some that pretty as when seeing the script, comment of really will I growth have portfolio in portfolio about we that look XX% have the been strong of entire It’s been signed. the overall pretty it’s Well, company. all of And the

Connor Siversky

been Has XXXX? kind then there in what And what are the from leases. baked escalators helps. new change That XXXX have any Okay. or signed would into of meaningful you

Scott Musil

that the range. our to seeing are all in across definitely We escalators markets X% X%

or to next definitely in So, year up are going you going the escalators see those X years.

Connor Siversky

Okay. in per And this, the difference? price I Inland quarter. on any acre you sorry provide last parcels a during what as the for Can am one but I in there color was big pretty the the me. already acquired Empire if to you guys explains on noticed the delta commented

Jojo Yap

submarkets increased and has last different a therefore basis, all are rents and they different we in but project Well, those. profitability Sure. different from year,

and well still the those. we we think below post are But to market market course, have definitely Of entitle entitlement. below well we

Connor Siversky

Okay. helpful. It’s you. Thank been

Operator

James. is Your of next from question Bill Crow Raymond

Bill Crow

Good and morning Peter team.

wondering your We past expectations your And are there? and $XXX really that some the AFFO current XXXX specifically, impact throughout received. of November offered am a Day, and now towards kind year’s were the the past well million maybe results view how year XXXX almost just Investor target fundamentals XXXX? you And I actualized

Peter Baccile

Scott? Sure.

Scott Musil

Bill, it’s Scott.

First rental renewal thing growth and on in rental mention will new is rates I or rate leasing. increase

be in And be, year, the going we think XX% You we this about question conservative. going projection Case XX% year. I assume the really remember case I or this to in in think a Investor time, the X% at had ‘XX. are believe XX% is today. said to and minus Day. I plus think that’s point, X% I I ‘XX, at I really,

So, I that. upside think there in is

two higher we drivers to would about development the XXXX. $XXX that will cost minus, going think our goal, be $XXX and in far AFFO is Keep the be plus As this refinancing mind more that progress in around The lease-up the or XXXX, spoke we of that of of million on year, goal. impact million as debt. is

I rental due to in So, say Investor rates on And I be leasing. is growth definitely there in Day some are on upside would we say to would going track. new and renewal

Bill Crow

the for Thanks color. Perfect.

Operator

next Mueller Your Mike of is question from JPMorgan.

Mike Mueller

hi. Yes,

starts, here, quick the Just of all they are couple quarter a in completed be to expected fourth ones three XXXX? development

Peter Baccile

Yes.

Mike Mueller

Yes.

Okay.

a this few of years like of that, anomaly out bit kind to looks big beyond something quite we next to you are XXXX. think side, as the or going in should we close it or XXXX you on can do thinking you So, If deliveries have that? kind deliveries being think of the are of replicate

Peter Baccile

Well, we yes. should see –

Okay.

run year new or rate, stopped months. you So all if has been we last for changed will, projects the because many truncated

this into Is and lot consistent you we of you completions time, as where a see see development new or are we volumes earn so the a lot do at starts on And time. to of completions that… deliveries of kind have Over over phenomenon once. delivering ought more that

Mike Mueller

Yes.

out answered I think it without putting kind of numbers you there.

So, that you. Thank it. was

Peter Baccile

Okay.

Operator

next of Burrows Goldman Sachs. is from Your Caitlin question

Caitlin Burrows

morning. Hi. Good

Just one, you dispositions estate weren’t asked I looking sell to development. to think about earlier, somebody that you real mentioned when fund

was I think that…? you retained that going you forward, thinking about where then equity and how just fund needed, are it So, it that about incremental that development activity just wondering, is or as with cash you

Peter Baccile

we decision our sell or huge will that sales $XXX take not groups is of only the value our how raise prices to we But What when have million particular the a execute those because the sit saying I case It fund of as of you we we and proceeds. benefit you don’t than we we decisions was to and sell you that development to here development to added fund maximizing really that, pipeline. do go just using or lower the relate that Because be development. proceeds to should to assets might forward, better going pipeline. volume say, oh, tend have assets

Caitlin Burrows

That makes sense.

equity in forward, isn’t guidance it mentioned options I up forward, in XXXX So, you but end assumed you know development? funding the one I going going how guess be that your equity assume? to will would that be of reasonable issue the for beginning

Peter Baccile

Certainly, will are at table. the be one the based on that of looking volumes options the we today, that on

Caitlin Burrows

Great. all. Thanks. That’s

Operator

Your from Credit of Tayo final is Suisse. question Okusanya

Tayo Okusanya

around really demand everyone. Again, I not the morning that’s around still just year Questions guys Yes. the curve is issues should industrial Good of did, and of like or a by supply mean formal you everyone chain kind space increased of not from need it about the lot versus how is has some demand still for probably to causing sounds XXX% all to running out development Great have good me seen out. that we until it clear the the there actually because could demand be real extent fixed? supply kind driven these Is so exactly an think lot of still estate. chain is type impacting still really that are occupancy solid been supply of whole of chain quarter. some collapse companies pretty maybe there the issues. I saying, in past the a increases and way

Jojo Yap

way product costs. capital has that me, we ship can today, So, product time, the in to simplest to get is an companies order, to meaning to operate operate And try they do inventory I guess warehouse best for just have minimize and way. the think inventory they that the carrying in they try it because about warehouse

case. are And in on just coming. So, is everybody basically product they the coming. the is coming, and sure not what Why cost and when operating in adjusting they know know product don’t case, they some, is is don’t

increased rather they and the to So, the because front inventory due sales order ratio demand, load more to dropped. remember, also has

now increase So, inventory. more trying are inventory. on case to now And call space are when you carrying simplest go just they back in impact, the more their basically to inventory. that to They just requires

more and – in the creating demand warehouse what’s that’s way, U.S. space. simplest the industry to at happening is for that of way by looking So, in today, the the

Peter Schultz

good companies Jojo’s the of They country. increase around to lot to for food of product consumer particularly and growing demand, the just a from in really inventory a across variety add not said have in and as we said. though, industries only larger in would to we earlier, traditional the just are is addition are trying point, case, field, companies, seeing I growth retailers. all beverage Jojo Demand net their inventories, as transportation but logistics

Tayo Okusanya

companies saying of just inventory a guess lot I It’s don’t again, helpful. that’s mean of at just kind have even they I all. it. Got still

this that driving demand, really whole many increase the in So, I other of wonder overblown the space, just and one kind it’s issue of not interesting factor? just to is in things are me. kind it’s kind of this if necessarily sometimes

Peter Baccile

is highest they earlier, as is solid due that are been. have primary household Household primary, demand. happening The driver the debt consumption in good, country this levels to COVID been, mentioned is savings ever largely the just The low. are it’s I than higher

for celebrate right the the life of but to you to year have they capital got course all so do after off, it. a have fundamentals to people and And also try go out

a work that wrinkles you what flat demand delivery seeing. the the in of It’s of to that’s demand chains. we strong supply lot a and in exploding have all are to lot chain out fully back aren’t when So, these do with

Jojo Yap

good up Peter fairly the with because we Also customers industry capitalized have and what very finish customers. to in our were yield just expect really got said, we well

getting small example, getting notice good. give big Amazon. suppliers the out there larger because got To you them expect to capital you will the have to We more that they supplied with be they marginally competitive have got relationships. And in spend, are users

for will small order get quicker shipment from a probably today, you company. If than it Amazon you

and I today. having So, good mean well tenants like ours is in customers boding the industry

Peter Baccile

have people being of all can are that as utilized. our inventory tell far from not, fully whether as And as you concerned our portfolio are you just spaces or we

Tayo Okusanya

That’s it. helpful. Thank Got you.

Operator

to questions comments. any turn to other queue. in no closing I are like Peter for the over would There call back Baccile

Peter Baccile

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

look As reach Be or during forward Scott a the NAREIT’s well. many follow-up talking you to Virtual always, Art please feel meet We in weeks. Conference with free any few questions. to of out with to

Operator

participation. this your call. conference Thank today’s for Ladies you and concludes gentlemen,

now disconnect. may You