Duke Realty (DRE) 2 Feb 182017 Q4 Earnings call transcript

Company Profile

Participants

Ron Hubbard	Vice President of Investor Relations
James Connor	Chairman and Chief Executive Officer
Mark Denien	Chief Financial Officer
Nick Anthony	Chief Investment Officer
Manny Korchman	Citi
Jeremy Metz	BMO Capital Markets
Ki Bin Kim	SunTrust Robinson Humphrey
Blaine Heck	Wells Fargo Securities, LLC
John Guinee	Stifel Nicolaus & Co
Rich Anderson	Mizuho Securities
Eric Frankel	Green Street Advisors
Richard Schiller	Robert W Baird
Jamie Feldman	Bank of America
Michael Mueller	JP Morgan
Michael Carroll	RBC Capital Markets
Michael Bilerman	Citi
David Rodgers	Robert W Baird

Call transcript

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Operator

Ladies and gentlemen, thank you for your patience and standing by. And welcome to the Duke Realty Quarterly Earnings Conference Call. At this time, all of the participant phone lines are in a listen-only mode, and later there'll be an opportunity for your question. [Operator Instructions] I'd also like to remind you that today's conference is being recorded. And I'd now like to turn the conference to Vice President of Investor Relations, Ron Hubbard.

Ron Hubbard

Justin. you, Thank everyone, call. afternoon, to fourth our And and earnings quarter good welcome

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

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

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

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

James Connor

Ron, Thanks and good afternoon, everyone.

to XXXX start by beginning domestic largest another me including Duke last the Let play what for pure year evolved only years Realty. the exceeded that completing REIT. is our was of now that outstanding of transformation the company all the year industrial the goals We over of eight

We quarter off sets start fourth with from perspective an up an to for also excellent that the financial great a us and kept year XXXX. operational

de-lever same grew portion balance accretively the $X.XX XX% shareholders growth commenced at of completed the to signed $XXX square We second stabilized X%. occupancy of culminating sheet property strategic share form We our rent $XX our that into our majority up and We non than the at our new industrial sale received capital million office attained recycled $XXX a through aggregate generation over sold dividend. another We from occupancy leases. in special X.XX activity. million and per in much improved dispositions We outstanding development of We Let in are leases expected the XX.X% our returned released. monetize at land in levels. rates. from property XX% better all time medical disposition a XX given feet cap the nearly platform year. NOI to investment, me of development impressive which on of million starts high We recap in XXXX. were We yearend $X.X million XX.X%, billion

in the also the to We future dilution minimize deferred and some financing seller of the form proceeds sale fund of investments.

as on X.X%, short term Even AFFO common adjusted we in results for basis a grow were company stronger increase growth, able share dividend the still our to regular by shrinking the future X.X%. and by quarterly the of

let the strongest Now for turn quarter to development in year mid square basis. had results fourth We demand for sized XX leases We me XXX,XXX with our executed. our continued the the strong square million and of excess leasing X.X of of individually, and demonstrating quarter. large leases signed feet feet from

We also square signed for X.X of million Northern fee California prime and distribution Indianapolis ConAgra million renewal in leases fee. Electolux $XXX,XXX for feet in in square for $XXX,XXX feet including Chicago $X.X

of started million projects. North Park. Turning quarter. to started in released XX% fourth Houston square the our We $XXX foot activity We our pre Gateway Business in XXX,XXX facility development at

the On started two that we X Tier at deals markets. were both speculative development side,

Newark Empire of project the as XXX,XXX project submarket foot is the development Newark quarter a of land square a acquisition. airport, facility second West acquired Inland The the the Jersey, submarket in the during the of the first in is part foot Bridge north square we just New and portfolio a XXX,XXX

over of dispositions of cover and acquisitions to turn million pipeline released and expected X.X% XX%. it yearend yields generate development to now is for to the at GAAP margin $XXX quarter. I'll Anthony with Nick Our is XX% pre excess and activity in the

Nick Anthony

assets in was dispositions. our both fourth of the on of a final acquisitions total South Columbus, sold was Thanks industrial million in in which the Florida Jim. quarter and very the part We our and Ohio. active in in $XXX Also quarter largest quarter dispositions final property sale. dispositions fourth sale office the quarter, non located Building had included the suburban as was MOB building strategic a the

majority million quarter we closings quarter. the to represents million the during feet the announced at the Jersey $XXX fourth X.X square totaling portfolio closed acquisitions of acquisitions. which in last Bridge comprised We final Turning The quarter. Northern five New assets

also lease square totaling submarket a Port two in in feet We the acquired portfolio Houston. XXX% building XXX,XXX

acquired lease in we Finally, a in XX,XXX California. square based facility foot south Southern XXX% submarket the

additional late quarter, when XX% was Bridge agreed QX we the of terms As had portfolio time had noted bring last signed to to QX. at we the roughly it and the when closing XX% phase X.X signed we in foot leasing leased to and leased square various

to the market and underwrote our the markets stabilize original exceeded from are While XX the acquisition rent growth strong day, months assets we very expectations.

on XX% We bring two negotiations which this spaces in more portfolio would over and XX%. now portfolio, the leased occupancy lease the to active into in are

Lastly on transaction. Bridge the

building X Let or all yet to our acquired XXXX earnings with are criteria results this making at it building is buildings me assets XX clear sheet only XX Northern foot them them truly the the submarkets. I'll these remind and now of balance cover are turn XXXX and or over this Newark Mark our height. of plus opportunistic X,XXX or for roughly barrier XX there everyone In newer Meadowlands assets activities. we but submarket are newer only high greater unique Jersey. how acquisition foot of XXX some submarket they Denien unique height. are clear for Obviously, with New In the

Mark Denien

largely the of placed slight quarter XXXX. of the properties Core by to the office for in expense. XXXX to the due We year of full for by share for per lower than proceeds core to the FFO reported office interest quarter XXXX, offset medical XXXX, expense the dispositions disposition of performance temporarily XXXX share operational XXXX dilutive $X.XX reduce full to significantly Thanks of interest to decrease the operational improved compared per using per disposition. FFO FFO the Nick. achieved the through share of $X.XX effect quarter performance, and was $X.XX Core to for in medical the The in The of the $X.XX per per leverage to and year $X.XX in in quarter of compared enough share of lower $X.XX new share XXXX. placed impact compared We improved compared a FFO and core third new NAREIT of was defined effect The disposition. for dilutive being the service offset a to $X.XX was impact reported service as fourth FFO being fourth per office more which medical properties XXXX.

XXXX lower increased $XX factors AFFO use core land the in full driving on increase million addition FFO by due is extinguishment in and premature losses XXXX debt compared $XXX quarter. totaled the fourth to In for to year FFO, defined in and the the million NAREIT to also for of XXXX.

quarter $X.X to need, to $X.X current revolving n unsecured compared MOB we we Our years. short-term year while rate leverage issued until previously basis facility annual billion impressive on no quarter. to improved the XX capital a dilution credit previous and will is was used of notes for our our line extended XXXX growth current growth and billion its the XXXX from to months previous rate which $XXX NOI million with points no the was given interest borrowing December variable increase of maintaining portfolio unsecured plus and occupancy full only up outstanding compared This Same ratings metrics XX in January transactions points X.X% roughly With announced result basis approximately level. and rental population twelve allow significant growth year results increasing We the and within December, us still activities as to debt LIBOR without represented average respectively. the is capital regard equity ended to our on cost X% billion the future borrowing and X.XXX%, January out to finished X.XXX%. credit quarter XX ample X.X% our three We $X.X at for of our same weighted of was of to down maturities XXXX. earlier have a during to basis the bear quarter for our property XXXX quarter adjusted AFFO capacity if These share within transaction. XXst, of fund any a months mainly the property the from

coming Now call back the I'll the to turn year. over for Jim discuss our outlook to

James Connor

increase growth in the the Similar believe in mid moderate We continue last vacancies very XXXX. in high the general indicator From growth demand forecast secular growth strong. X.X% industrial logistics and a some demand to macro time growth up trends Port continued sales percent XXXX in to about we year-over-year. volume continuing this an positive Also expect outlook Mark. perspective to drive in X.X%. are cuts. interposal X.X% well. high from real tax the bode X% remains Thanks for facilities. reports In The ecommerce GDP traffic was to recent low for economic rail double environment some was XXXX. container supply. as upside we but to improve for well all in to economic probable estate mid year-over-year and of in industrial up will over forecast GDP range teens with years, week's be digit outsized Nationwide decline of the few to modern continue XXXX, to demand growth Other continues for outpace XXXX. ecommerce

basis department three during consumer in at fourth accelerated noted Commerce For annualized the instance, quarter, the spending years. rate an X.X% on fastest the

bit January very year year-over-year ago equilibrium range, in this addition, a dynamics Sitting In stronger demand about than consumer levels supply expected strong. but to by below the here contributed reach near still reported time. high. XX rent a expected hovering XXXX year growth These confidence we was to X.X% in

we during exceeded However, more been and expectation previously supply cycle demand discussed. the has as disciplined our

for strong adequate industrial demand XXXX supply. and based favorable on Our outlook to on governors be continues

the mind, leasing down the to foreseeable We to to maintain our and rent and to XXXX core $X.XX X% perspective range outpace per low to growth, favorable portfolio a of for with expect and us drive expect to With maintain for occupancies we single current volumes share midpoint digits $X.XX our grow announced high of market. future. rent FFO on still the macro These this depending to the for in trend absorption strong $X.XX. in supply yesterday high mid the have range dynamics vacancy

$X.XX a defined with a share midpoint to In of addition, a per we FFO of share NAREIT $X.XX. a $X.XX announced per for range

also range X.X%. midpoint growth share We with X.X% to in between basis and X.X% announced AFFO the of per

of have of year's redeployment asset to second before of growth earnings the half in the of expected last sales mentioned with the first XXXX, we As acceleration in and the capital half the is year. timing modest produce

expect second of than the newer of as higher we indicative X% second X% rate achieve expect growth and half this think earnings acquisitions year the that half In fact, in were of XXXX forward. We stabilized. is our the in first to year ability we to of more the approximately moving be become to proceeds MOB our to with the funded half development earnings grow

on Mark which a available and Now of XXXX few key on our touch is the website. outlined performance estimates package will at in exhibit our of in metrics supplement back range the

Mark Denien

Yes, thanks, Jim.

range but point the Same of range at slight in XXXX decrease current from a we to stabilized property in-service to some average be average year will be Our to leased this stabilized one portfolio, occupancy to our project levels. into un-stabilized The our XX.X% the which NOI X.XX%. in move partly their to record decline in-service occupancy expect then is XX.X% reach fully state time. expected base for XX.X% due not that expected The record X.XX% we slight compares is experienced growth XXXX the projected is to at assumes case and for current in that portfolio are XXXX.

expires we year. we methodology XXXX continue total as growth that the the expect up our that efforts reflected increases footage both In disclosed Also in benefit rent that well achieved for are as square property a embedded properties transactions ago, changing as will of NOI escalators lease X% the rental to few portfolio of release pool mind out XXXX. keep addition, in strong make re-leasing on we rollovers we the from will approximately to until we as all rate on I'll fully from our our point those press impact growth not calculation. be distinct from the weeks during

properties no prior include stabilized of were of the will that But period. the will include beginning year. un-stabilized beginning only at at We properties in-service rather were the the that longer prior

to un-stabilized XX same negative have to methodology in property reported change this expect depending points We impact a service basis properties the the portfolio. growth on level XX in on of

point commencements from levels the X.X% including potential, X been pipeline, an XXXX XX% property growth NOI. property would In basis completed our NOI of is XXXX are XX%. to property In overall have Our the same of recently and that reported midpoint new property which growth from comparison, to to included It positive XXXX on portfolio rent. impact our property methodology. lease in development same represents along an keep in full of is mind year over this of X.X% regards upside with to under our hhgregg X.X% the reversal NOI is XX for this projects due XXXX offset guidance yet event NOI XXXX not development same population quarter bankruptcy. total XXXX the approximately of our same in current using NOI X approximately timing basis free to acceleration same from growth part of Separately expect to This some methodology. not fourth the we an with of the negative respect points see impact same XX XXXX in

we proceeds from sell $XXX by to the capital range from small $XXX expect in portfolios will building million quarter. we two in dispositions On second that early recycling of front, expect these come a the The dispositions to majority of million.

the DC built early we portfolio and the close are Amazon to in and quarter. to leased second is that expected datacenters three the Washington in first The building market

feet significant our will including They to portfolio But lease-up the operations, construction as recently currently property continuing the to not regardless rent and guidance this focusing $XXX these to four quarter. their Bon-Ton of are to negative their the risk marketed. of Industrial to growth the our are critical million with in largely decline starts development on West XXXX of by million in note second do portfolio any approach portfolio. this any projected of properties with early square range X $XXX the concerns. NOI backlog of in currently thing total has in XX% same Ohio. property in is million that on This financial outcome this of filed we Bon-Ton disciplined on markets. in starts $XXX sell of impact chain consistent in of supply This part project current to it million. is beginning metrics we currently of Park $XXX been any is buildings recently as And referenced second Tier some all their on modest to portfolio and located The with in as Columbus, projects a the as due is potential One believe being their in range Acquisitions X-K. stores news a of development portfolio expect have from managing development comprises maintaining as under a a XXXX pre-leasing. to well pipeline healthy level Jefferson development

remain to continues prospects build-to-suit of pipeline steady. Our

James Connor

the a best quality reposition of assets, team exceptional operating continuing Mark. and in We great believe sheet over Thanks drive With the take it Q&A. the annual competitive we our long in our us as I have we term company, confident class fundamentals. this to and we turn In balance growth industrial this cash conclusion, advantage long-term put shareholders. for and up attractive to wrap in to growth flow are dividend position high

team Realty efforts on leadership I'd capital execution and producing we estate entire great like real and year another of the activities. for Before acknowledge lines, Duke up the operations to open its our

it always two in and back or I'd everyone limit the to perhaps welcome queue. questions. to short questions to Now up you we'll open ask are themselves to one get

Operator

first Korchman. It from question line looks comes the Manny like of our [Operator Instructions]

is open. line Your

Manny Korchman

Hey, good afternoon, guys.

would occupancy think you terms you markets acquisitions XXXX those in in do of assets mimic the XXXX age in acquisitions pricing, did levels, cetera? about thinking of Just et

James Connor

acquisitions it's Yes. hard And and Clearly, I it's Manny, off justify things properties. we better gone to way. but believe do we looking know low I fairly Tier things we think start range our at find going find this to perspective which markets to think pretty there would compared from to are in like is you Nick why and a frothy that we to better think value. lot creating is that out years and is general by. But expensive can X number I'd thinking of are

a lower at why able the simply vague bit not that's little normal are find. So sure will this we range in little than we is what time just we are to and be point because

Manny Korchman

Then to maybe Mark. one

do the portfolio tag would to across If mark-to-market be? where sort that a whole you had think of

Mark Denien

don't Manny we should we start or we on that that leases. out say of Maybe don't we've some XX guess just always to out because our XX look try to years figure I calculate since

you give answer. standard I'll the So

out growth I in that, the quarter, had months, the XXXX. expecting range think we have right looking we of a are on which to XX over around give lot that visibility we good every next obviously XX rent same we

call to on digits So teens to XXs a cash it GAAP on basis and mid single high high basis. probably low

If average I future level. more little the down bring the probably the beyond it's quite bit, that Beyond obviously that. that so we level signed lease that everything recently in the rolling it's this at not longer a

XXX probably it's than points that lower So maybe. basis

Operator

Thank you.

of line Metz. the have We Jeremy

Your line is open.

Jeremy Metz

levels wondering just supply your was How those bit I and details demand where vulnerability if to you Jim, lies think in little more forecast? guys. most expectations. us and could relative are around the then a the you XXXX your maybe give Hey

James Connor

-- of Jeremy. all they of one Yes, think different up. we I them high It's every of at are and look it's matter is how thanks, these -- metrics all just

believes to demand. are everybody see strong to continue think I going So we

lack years few think the is weakness available of the we've in driven some last really seen that in a by opportunities the I of demand marketplace. in

in have I supply have we reached last few concern less years. about equilibrium not think in do lot So than we a had XXXX. I we the think may

I supply. absorption the of metrics, down outpace that’s growth think to positive think all outpace, into X% I in And expected range. going again vacancy GDP will other drive with and rate overall these will the we low that

barrier XX In all the the in of range. at more you net are probably terms square has look bigger than Dallas most XXXX about also But which low foot absorption it's more they the where concerned, net completions feet Inland phenomenal in slightly all now that of million than X their absorption. Dallas terms that. gap, in Chicago Right had if completions they biggest I million is had years of market. and and Empire, square

Now million for is significant. market the of Tier absorption But that size all that other feet market X of year supply. square a not outpaced X lot last

So vacancy rates you'll see continue fall. to

on So are those that top are of the probably our list. the three

Jeremy Metz

color. Great, market rate quarter as you appreciate well really the in you that foot a XX%, talked the renewal higher. is rents to push strong that really continue up And follow over then at posted and here. size demand strong Obviously, the perspective from about just the

be obviously argument pushed then harder as you can that an So maybe here. have made should

So how can you retention balancing here rents? about and on strength that given think the in you just comment

James Connor

we rent next Well, that pushing get the comfortable a achieving growth the versus are good XX% getting turn. always balance Rental is growth have I are we rent we when might tenant are earnings, on are to pretty renewal we think we from we growth. rent

got you and the factor cost However, the transaction. the in increase to downtime of

we roll; XX%-XX%, I think believe happy to on eliminating risk if to with pretty that are on you renewals So are the rents are And I our pushing your pretty guys got level. that. sensitive the

Jeremy Metz

Make sense.

Operator

Ki queue we line in Kim. the of Next have Bin

is line open. Your

Ki Bin Kim

range I dispositions cap commented for Good this you next or acquisitions guys XXXX on the year morning. planned the guess for Did and for rate year?

Mark Denien

I visibility out acquisition on that we not really have right. We like is mean now. have right it's keeping we I mean from No. there standpoint. hot what anything even no didn't

visibility it mentioned, on right other the are acquisition end similar say will rate no we from probably than now. market the So to markets cap like Jim to doing

I low probably Xs it know. be add? in high something So anything Nick, the to like don't that. probably Xs, do will have you --

Nick Anthony

where we've think yet be to change XXXX seen in rate don't expecting I from consistent Well, XXXX. cap with they we were a in so

Ki Bin Kim

Okay.

every could occupancy a the construct, given that Going back partially how to you get us walk just you at moderating are that the through levers looking not various same and you rolling fact really the help store year. NOI whole specially lot you of X%, to are

So how just X%? curious that get to you

Mark Denien

Sure.

that necessarily try gave on thing we you Ki to to mind Xfor is same me that in Let that Bin. keep doesn't One stabilized need pool. property occupancy, think the guidance X I translate

as a day For the included. a buys stabilized reaches gets building portfolio building, building, and changes stabilization we by the either sells

that quite moderator same to would I you the stabilized So close portfolio, overall that pretty come the does not decline property you moving will. expect if in a the same expect it tell probably X.X% But is a that in occupancy property we portfolio. probably just pool. decline we to

than So something little less that.

decline our that just a today the closer but rent on we But which our in X% offset bumps of are with our bit occupancy did leases doing the existing that and in are really bumps. XXXX existing portfolio. you So deals on we that in two rent then we little quarter we to embedded about average

So at XXXX. adjusted the We in especially growth the in a leasing way very need the have highest low honestly signed the risk but there. least XXXX which a also do not coming but quarter some And we I in XXXX XX% thing we rent at at you that X% to we when good that from pretty at quite it's us seems growth we you like, miss level roll people pretty to far you quarterly look get basis. think got And at you deals is expect XXXX did only at the at in that roll that look then growth. all XXXX, by good our fourth look

in really other from those all rent XXXX. deals So hits XXXX. It growth you get any don't in

get all add X%. kind of and that that's you the you So how up to

Ki Bin Kim

help or year-over-year unusual that would Anything hurt?

Mark Denien

No.

all points. XXXX hurt about think should hhgregg. get back. re-lease, we XX I all only points the basis probably basis probably by It's by points is Hhgregg basis XX help don't XX XXXX unusual thing

but really is little XXXX of here bit that's out. I thing in would there free earlier only So the point rent a

Operator

have we Heck. Blaine line of Next the

open. Your is line

Blaine Heck

Thanks.

make Given throughout guys the supply. you says likely progress to could goes? development sense year? we dynamics you as as think it's far bit cut get the little it outpace do to a talked about And Does more with aggressive demand and increase continuing start spec you

James Connor

I hope certainly so. Blaine

always We to we guys that pipeline have you committed development that keep XX%. would above

think are that. above about today I we XX%

So I can see think us long as side. good as you'll marketplace, we to and in see good to the continue think continue I activity volume push on the spec

We Our many year projects built-to-suit the last very also volume pipeline as great but is strong. lot didn't done. of we as historically did big had do of a we

continue So that us lease were and revive I couple upward. a space, to think yes, think could of guidance are to if see those I spec land able we you our we to

Blaine Heck

Okay. definitely decreased Jim, past couple And has substantially that back over to pretty of related the land your years.

have put You've development be think planned, but to feed we you into do lot you've going pipeline, the should to of a more got purchasing about got that? think land cash more aggressively pipeline a you now to to the or dispositions how planned little bit are more

James Connor

news Yes, The good absolutely. the land put in million last bought good is we been. $XXX have production. news And We yes year. is of we million $XXX

actually inventory low slightly XXXX. up point So our land is the in from

it bought million to back I million. actually down $XXX up we And about under we think at million. are $XXX about are We $XXX

to some build-to-suit development. be the we book to markets spec some on where Florida, X needed Jersey, So do California, and more land South some to Chicago been land able we've Southern compete and Tier New for to put able

Operator

up Next have we line John of Guinee. the

open. is line Your

John Guinee

Great.

Mark, the NOI XX% the quarter you straight number? guys are number, to cash you, that you fourth or is about in when increase sometimes Sometimes that can XX% say and very forward portfolio thinking GAAP over code. you talk

Mark Denien

assets John. the taken; of And just We number, service everything Cash that have all it's have property same just in the this in do not in-service. a pool. stabilizing un-stabilized we is fully lot

those stabilizing then just projects. development completing the So and

pipeline future it the include development current So but completion it's no does have. of we development

NOI XX% on up than that and quarter be should stabilized higher the all XX% number. add You basis fourth to

John Guinee

So it and acquisitions includes dispositions?

Mark Denien

No.

John Guinee

is $X.XX? guidance that the said is $X.XX, FFO X% Should then XXXX $X.XX, backend I assume And you higher. FFO basically X% weighted $XXX, to your maybe

Mark Denien

guidance, quarterly don't John. We

We be to we are the sheet we growth are a call I once get for pre-MOB closer forward our trying balance levered run pretty the you looking at our just give which that under there even levels that to but still sense what XXXX rate look really will by still good you guidance. I at be think end of position. the We'll be won't if

John Guinee

okay. asked think someone And you rate I the missed cap I on Great, I that it? give --did datacenter about the think you you

Mark Denien

didn't. we No,

John Guinee

Can you?

James Connor

yet. closed Hasn't

John Guinee

know that I Jim.

James Connor

No, That's you. he me tell telling, Nick. can't

John Guinee

Call me back, call Nick, me later, thanks.

Operator

Next we of have the line Rich Anderson.

Your open. line is

Rich Anderson

Thanks. Good afternoon.

it's I just but of you how to of am your start cynical more this a role have much some great see a inevitable already how what little going when great, fundamental outpacing whispers and for significant advance seller some they a deceleration degree I bit, little much is absorption. in net know dialogue I and bit picture are little be real maybe matter you So at of down supply more play the little To very ask, important antennas and industrial not know in markets it's to like said up? do the logistics in Jim you occupancy trending but Duke just things estate? to are

James Connor

I dispositions of one Rich, pull. levers the we is accelerating think can always Well,

even XXXX development accelerated XXXX we than throughout expected. development some and volume under opportunities because and better were have side where our our We have talked dispositions

the we've pruning selling build-to-suit a year. but gains in some That's the last time that very nice nearly done. sold same number the bottom the so so on We've we've build-to-suits or portfolio of of very, a pricing. of this nice And Amazon at combination more always big harvest big couple it's a of some of

look is So to of What what is build-to-suit is to quarters of the watching both on opportunity next I development or development like we always think and is on are an the that's going the front. that on us things basis, dispositions. our there one the We've couple to at sheet for balance of choose do to do speculative that. some choose up effective to if so room accelerate funds where do of got Or the interest rates. we an we very raise lever still And on to lots accelerate

Rich Anderson

are became Okay, of here derivative on of about standout I would the I curious from in of the of am looking have to that mean your number it in but proceeds sense second come and great. there a extent lucky some to how you that mean great kind I there sale. the you Yes, characterize similar just obviously the or quality it for sense happened how deal, course. available just elsewhere two Bridge New Was you that Northern MOB that things that Jersey. almost from markets in in great Question to interest? really opportunity time the at have is quarter that

James Connor

this the having proactively markets off price earlier got of Well, and and the this you had the Nick tribute so a we. proven big market are color. I this let can relationship the believe kind our is right, do for and why And to some did of that more give give these Nick we a capital together. a widely deal can Nick and in for because the think And good little some we color the seller done his came you deal we bit The from Bridge Bridge to they with This a year. with the capital and wasn't having combination that's and ourselves. deals. in reputation, fair of and absolutely ability me a these it's deal then And answer a team. guys. but put -- transaction We have perform smaller they outworking deal opportunity shot you

Nick Anthony

line. proceeds from we the said do. the that it earnest great do would deal with have we capital. even that we them MOB we started a And a we'd us. really are in them -- we because knew exchanges we worked we smaller are said, sale. were was -- working with over get Yes. performers on we the comfortable and on partnership long to transaction to what profit the transaction And Jim goal they And before want we to and We focused get and knew we going a that to the And strategically redeploy worked have

Rich Anderson

are you similar way. folks degree a today other what To in Right. nudging

James Connor

X believe deal. going you can Now is when performing is all last see some we let's very and of underwrite on risk. to operating evidences do are of always appropriately of we we on by from are where with can we big is and outperforming second risk and as those that trying That's comfortable year. today at O'clock done the a market And portfolio and part all teams Nick on our and find phone we can just the what are fact we we take more can in the development local this beauty those quarter our underwriting spec we of if get the are our to take say own even

So we will continue to look opportunities. for

Operator

line Next we of the Eric have Frankel. question in

Your open. line is

Eric Frankel

you NOI points confirm, that methodology, growth I you. know growth, just XX to, but basis beaten to the the your used could XX NOI what of XXXX old be higher same-store that you Thank would actually this you're if So correct? than had Mark? guiding methodology, might it kind is you say to death, has been

Mark Denien

it low down Probably all under know Probably you properties the new. not comes towards that un-stabilized old It's so that method. you probably the Eric many end there in how have in right. pool is the

those lot a have year. We of last

restated under heard about down just last the it XXXX if go of basis only end tell points. about probably why to you XXXX low hurt by will. number we went new you towards the we So the on by I X.X. new That's probably would taking to us to to those guided year's XX from basis XX method out you at X.X number we method points. the X.X Then that

have un-stabilized been So included we significant. those higher. bit those little only un-stabilized would have basis have that of probably would we pulling would another XXXX. points think wasn't XX But have out we Because X-X just properties. higher, properties it I guided if four Thereby it

Eric Frankel

helpful. that's Okay,

So the sale the potential near of thanks Columbus. for some -- regarding buildings update there the in

are one, to asset? incorporated related guess, in is you're there the -- I Bon-Ton, of assuming credit first going that That's question to their just to my not sell going that. related issues the So any to Bon-Ton you guidance,

James Connor

was normal debt XXXX Eric. higher individually I bad that little tell took you and do. of It bit of normal just we run in significant, Nothing kind obviously our hhgregg. we would rate because always would

So XX they their our But plan filed other the that Chicago. we plan. in mentioned than was which normal square of Columbus, that XXX,XXX distribution there Bon-Ton And in they also on Bon-Ton probably part feet as that a keeping location X-K of guidance impact. is in more strategic point basis they do have is in also about

it's but nothing in significant. So a is early can up at and the we able be pricing never Bon-Ton going there, I by we little be to hold is all bit Bon-Ton but risk to there second know to sell think think anything talk Nick Columbus. consider that don't than quarter that transaction first imminent would that other don't have about the quarter. biggest we you late And

Nick Anthony

Yes.

of XX% about that only portfolio. it's So

dramatic or don't that what's to going going effect when on happen. to have we happen it's shouldn't it know So pricing and

feel the and So the go with in we transaction like time submarket. ahead that to forward move it's right

Eric Frankel

that interesting All Thank should you. I'll into the yes, Okay, queue. bellwether. jump an be back right.

Operator

Thank you.

the We Richard Schiller. have line of

open. is line Your

Richard Schiller

commencement that the Thanks, back you afternoon, square the guys. the provide now hhgregg leased? timing feet guys good in for that X all vacancies Can are filing XXX XXXX

Mark Denien

I all they Well, commenced have Jim. believe right,

I quarter. the is So fourth one was think spaces of of -- there thinking early am paying commenced, out they is kind all here, rent there in I loud

space on XXXX. end The for months of of we the fourth quarter the of got little other one bit the free third started of paying the first couple two, at a rent right and

James Connor

back Yes. and circle of head would Richard, of we the I get top can you say my and data. the

February. December think I October, and its probably

Richard Schiller

Got it, you had you leasing renewals What XXXX? for you that fourth renewals? activity a regular big quarter guys see the of renewals. are in the versus And say thank into number And you. million do continue early percentages would the X.X

Mark Denien

XX% early I call that would what had probably is about I would -- Yes. of We say forward. renewals that pull we

was them to of and months months other early. close XX% early XX normal the probably is X One X the then to

with rolling So in proactive. and do I leases going trying at see forward? that to only be looking already leases we're of Yes, we XXXX, our X% XXXX mean

James Connor

really Richard, years service the a now. brokers you now are telling color what other you I from had if in off their is lease better than three the and add the good you have got rolling next at the client facility would are engaging years, been they actually in a this is three do because companies mission critical

pull ability opportunity I and we XXXX those probably and XXXX. all And throughout so into XXXX XX the far as continue to of as forward leases to had have to think that pull for we'll months have forward

Operator

up in line Next we have of the Jamie Feldman. queue

Your line open. is

Jamie Feldman

Jim, you talk this I on made more sounded starting just on confident demand last even in did than governors. year Hey, supply about last governors think Especially equilibrium. thank time even on different you. And the feels you Can year what the supply. it you about this more those comment year?

James Connor

Yes.

The first the macro side. on

higher going expectation XX points strength XX in think be to of to was tax the growing reform the the GDP just economy. before everybody's I was was basis passed, because

basis expectations on think XX points. reform tax what I this factor-in another you XX conservative to

big look drivers, then a you indication place the a of find it. that it's all are is that's really side. think any you I as at on a And part see just to demand that slowdown going to other giving hard you So the

least on of we've modest cost meetings talked been is that to going of at available modest are they increases difficulty the pass or And calls while we've site. that on isn't and up, today the there customers. of able But of cost through up what governor Construction one new are are I the I NAREIT the things going the land. the about supply past at the call land, they going probably is. nearly piece entitle that's biggest think it amount and rate a of big the cost worries to a part up, probably been have think I would land

building. just just constrained these You particularly land find contract site put under markets, the in you more start it go and can't and build a -- X Tier

Jamie Feldman

What And you think than faster mentioned latest expected. and thoughts that as you that's about higher are you Okay, Bridge your then yields the on investment? are helpful. that from -- stabilized rents

James Connor

at probably in think agreement. the are are the few at talked looked But towards nodding bought think a we slightly we up X.XX most above rents X.XX that and just sold we it. and everything work to had final where haven't I X.X. I We or think else, depending the I leases where or at underwritten at everybody MOB we NAREIT, to on that we all expecting They when

must be I right. So

Mark Denien

ups, rent initial. good Well, the that's

Operator

the of line have we Mueller. Next Michael

Your is open. line

Michael Mueller

you there I over existing the know a cash two? partially that leases similar do looking talked spread versus Mark, contraction you drives as be the but leases. GAAP Hi. bumps or a expecting guess between on little years, next will you about think GAAP the the some between I bit few out GAAP are the new spreads you are and

Mark Denien

From Mike? state perspective, property

Michael Mueller

Yes.

Mark Denien

I'd you cash GAAP become I forward GAAP tell based rent look but don't do being expect XXX accurate, basis on to you with probably between cash and We tighter closely we well really disclose cash. XX that look at GAAP average as has we little Yes. points as that GAAP a calculators a probably higher obviously those said bumps been because suspect that. what as to of on probably there is

would not you The basis GAAP But into are thing XX% deal, significant deals we I at looked point said it's if doing either out a went really a growth and reflected those like we rent It's eating fully that GAAP had other XXXX. you on signed. that split. I till in when XXXX, cash

to are run get I spreads that right cash that's basis cash think So GAAP probably to continue will more what a closer. it. I we we expect you at. But on comfortable talking really But are look because

Michael Mueller

as and would some expect that conversation the GAAP take of between leasing in you as if well, spreads there terms And apply to you just contraction size? the well

Mark Denien

the I on length of think that lease. all the depends

it just I between probably renewal more the the factor biggest affect lease the the rollover a the If think looking that's growth, rent the lot at than could longer could cash. two. or GAAP

the further get, longer closer shorter they I term they the lease differently, said lease think the get. term away the the So they

Michael Mueller

it. Got

you sounds of stay it little that kind the bit like expect So average signing them or to way. on are longer and deals generally

Mark Denien

renewal pretty second than a a years, development longer looking are probably long and it generally rollover are But generation rollover new seven XX are obviously years a a in range yields deals, year on on average. should They on that. Yes. typical you deal on lease five one the that

Michael Mueller

Got it.

James Connor

of the the thing we the term tend Mike, benefits buildings Yes. our tenants make other to the credit is longer one have commitments. bigger portfolio that that on is would I have of which we to

Operator

we have the line of up Carroll. Next Michael

open. line Your is

Michael Carroll

is you of that can little types of today? about there you're the on? Yes, deals a you're any the market it focusing specific Or Is pursuing bit just thanks. number that Nick, talk opportunities you're finding? the

Nick Anthony

geography. high do We is starting so. But what barrier geography to are really out pickup we X little the sell bit with are market non last of trying they in or our as on deal lot out around market. week in more the our the acquisitions out strategic to on that are balance supporting we the to the Tier exclusively There balance focusing a side almost now, there right acquisition

Michael Carroll

general? you the specific in was asset Columbus asset that Is due general? exposure us you like And then your why in to or to asset? market Would the Columbus remind non-strategic that a can to reduce

Nick Anthony

-- years to reduce is that to one acquired sort was It was exposure off an that the old a of was asset want We back Columbus, in think it we it bought that older and Yes. build-the-suit. in we XXs our in asset. XX submarket I do

the monetize that So time for was us asset. right it to

Operator

follow up a Manny the line Korchman. Next have from we of question

line open. is Your

Manny Korchman

guys. Hey,

and those assets about market? the and of asset up lot you in that at be Or is -- that into lease think me. from one leasing sort I pipeline the about? about given else development specific of assumed with should the been something Earlier talked just of expect for has quick else leased longer the which we couple the we coming stats you positive, use were, just of talked demand the take just something in term the to call the under simply would what's everything it it I causing assets Just strength thinking moment, you

Mark Denien

know, -- specific is of are a assets, we don't looking any I forward. Manny, obviously there lot

-- So in got have vacancy a of we that lot un-stabilized just still portfolio. we've

on months. underwrite on So I'd our for cautious there. to are development. guidance tell average we stabilization just we around still be one right I eight trying our We think and are year coming on in

that's almost and a when when feet those of we the lease say beating spec X.X But square kind to assets So are of at there are maybe are think board. roll conservative of year it across you look we've population view hit in got that one we taking that But million it ahead. they period. I just few

Michael Bilerman

speaking. Hey, it's Bilerman Michael

question together variables. agreed all Just for the quick aside set I your you guys on same and store and egos and definitions the got the all on appreciate fact that

So doing that. for thank you

Mark Denien

We have egos. don't

Michael Bilerman

Okay.

will the other you reporting expect, guidance. tell sector that of difference going GAAP the should they you how have those you sort and said it GAAP every to the cash But on that should store a Is we and there and differential will just be a, cash You release only and so you same between report same. forward? about do

Mark Denien

who On XX tell cash think we've I lower What quite No. previous since our in time think it basis on could I work-- been But be points you than I will how caller, tell of would basis the number I a he that average. the much. remember to that beginning number this be would this GAAP expect is we've is of what you -- This consistent can't don't Michael. XXX year I we was. to probably done our you I told

end of I be GAAP probably we would a than the of signed will rent will more XXXX. cash in the it to it XXXX. on at leases basis of be because experienced significant for on we growth GAAP cash be closer pick think up number the It

for close XXXX. same number probably So to we are pretty the

Operator

Rodgers. Next we line of have the David

open. is line Your

David Rodgers

the about afternoon, on I do I little good wanted and to a guys. more bit get Hey, acquisitions ask call late.

little down and starts I back out a this development about or or moving said development past talked per really were but kind Mark the into way. kind MOB kind about you general for leveraged your acquisition were asked in But heard in spend a talked guidance versus voyage range comments but NAREIT even I is normalized guys. getting you you back of maybe fairly doing So would more Jim robust. without or came in XXXX been of think the sales. with XXXX. I But But conservation from think apologize if you of in you up dispositions acquisitions has the recently comfortable different most I what

much the a So stretched simplistic acquisition in you to of is anticipate year? work far already what maybe the out you of put guidance Is have dollars current this Kind to that more mind kind your portion the environment? question said. of the beating do in given

James Connor

the of Dave, the to probably mean lowest do more guidance and I is just room is amount the pre-leasing of development end now like simply into to pipeline development guidance, will percentage development our we would on we acquisition high would acquisition guidance disposition tell you because I clearly the continue the XX%. development of the got of the and think guidance, We the I the probability. probability spec push. beating

of the I that bottom and about and pull are want high older But about line pipeline. the bring most saw yield, of just activity. really of accelerating to down there Columbus. are is $XX million tier third near talked got in capital seen And smaller -- levers do think much the eclipse amount us a to pricing the and of find will our more another So cap build-to-suit assets with we you talked high to think bottom got record as Xs and And from XXs. earlier dispositions $XX We've continue one so we opportunities can Nick and prune some whether of development Miami, XXXX portfolio, low of a deals. doesn't deals, for spec as we to we continue to to But the rate $XXX Bridge they of the we said most give it's don't in lot and the stuff excess of like get exposure if as or that of going can we second, I tell at I in do deals chasing, to in level that is -- compressed some we probability good into We million. in buying confidence a of yield of look, the we've to going that. the stuff California. just off New million is infill Southern you Jersey one But it's

really I but long-winded gives think that probably that -winded you answer color. that's question. So some was long And

thanks. So

Operator

we Eric Frankel. have line of looks Next again

Your open. line is

Eric Frankel

you. Thank

market's fairly Just Newark. a Delancey really prospect of development thought you developments. couple the Street that land on and quite up it at -- foot, regarding quickly. Have is site square in But the it's looks quick and performing industrial about the doing per lease value well follow-ups. like multi Obviously, should cost obviously, than given there development like higher just that? of normal a One, storey

Mark Denien

at taken multi do And Eric. it. square that awfully for look the feet. a did big road We million That little a building to down Plus it's us would an development seriously to far level. to have it was over

but the of to our we ecommerce of some higher close in we clear for loading is to did on go great very reasons little that's Manhattan obviously great on spec the area. clients XX think got cost One there be we a opportunity because to the there

ahead that. and for went we So spend the money extra

Eric Frankel

just solely just thought building, of a non-core office for regarding question correct? that your heard sold. then assuming that your Can smaller are Is Mark comprised last your sold you office portfolio. I is still And portfolio assets clarify, you Okay. but follow-up that your be you say I'm I office to

Mark Denien

Maybe should Correct. in, in Eric, we We that office emphasis sold building for sorry our Florida. last confusion. South the

James Connor

out want at you. to markets. of to visit Thank during many the look industry as regional year you for I call. our everyone conferences I you getting seeing thank well forward as the joining to

Operator

does teleconference afternoon. for We very the And conference using ladies conclude service. and do and AT&T thank for that this much for our gentlemen, executive your participation you

disconnect. now may You

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