Duke Realty (DRE) 25 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

James Connor	Chairman, CEO
Mark Denien	CFO
Ronald Hubbard	VP, IR
Nicholas Anthony	CIO
Jeremy Metz	BMO Capital Markets
Manny Korchman	Citigroup
Nick Yulico	Scotiabank
Jamie Feldman	Bank of America Merrill Lynch
Blaine Heck	Wells Fargo Securities
Eric Frankel	Green Street Advisors
Ki Bin Kim	SunTrust Robinson Humphrey
Michael Carroll	RBC Capital Markets
Richard Anderson	SMBC Nikko Securities
John Guinee	Stifel, Nicolaus & Company
Michael Mueller	JPMorgan

Call transcript

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Operator

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

Ronald Hubbard

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

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

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

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

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

James Connor

Thanks, afternoon, few I'll then X% below off comments and U.S. quarter markets start on our XX the over at and for across national results. remained cover X.X% Ron. has market according record everyone. now Good vacancy level quarters. with to In the been the a national I'll CBRE first logistics low

rents year prior asking over quarter nationally. grew and X% estimated the First

full For be and on to rent expect rates the rental range. X% year, asking CBRE X% the growth in other to

exceeded X.X quarter the by million demand For square feet. first supply about

to range. will combined both the expect and still outpaced represents growth. the remainder an rent where this balance to square with foot the in environment the in year provide million We historic quarters XXX the see continue XX last low third quarter supply finish in for So, rates and slightly. and only demand balance of balance supply in We demands believe it vacancy for fairly strong

in intermodal demand we the been macroeconomic growth like range, tonnage logistics outlook. Even a solid GDP incentive and increased had very with for and favorable still X% volume points. in traffic favorable feel macro March inventories low-to-mid to sales the data drivers all business support figures be projected addition, poor space employment In consumer with the truck e-commerce and confident retail XXXX

solid to to with own a strong followed results, XXXX. up we Now a very start turning our XXXX

volume or a increased points the to with facilities XX.X%. renew XX comparatively speculative significant the to up had square have size any feet. backfill. feet. We of quarter we XXX,XXX three XXXX, expirations stabilized occupancy leasing by totaling by leasing our of light square any We Given primarily leasing fourth This X.X driven simply not of quarter we was particularly million many did had in that basis

in across was platform assets growth coastal operating rent year with this projects have, X other throughout this sizes you're position developments totaling million to feet. building been quality all the has market sizes high and demonstrates Rent growth cycle. a again, you markets. have all it if sub all top-tier lease. leases broad right This We XX.X% Our in as Once $XXX expiring as XX.X% basis cash the no portfolio rent previous were was projects during placed due acquisitions down of in which leased. leases GAAP We basis service from to leases of on X% XX% Florida service was South a the XX.X% given in from renewed any our less generation that second is were a and came which a of to and all a demand a slight a quarter in five square was the this there on across and just XX% well that as start impressive and good impact which quarter XX% with we growth million averaged in new markets. from activity speculative than capture had and

tight starts Southern projects Florida markets South in across key with and fundamentals Dallas; California; these markets. of speculative were sub All our Houston;

spec stabilization our is three list my today, delivered strong and this comment Looking to earlier delivered projects. at prospect our of the previously for leasing be soon by delivered the spec projects recently landscape supported quarter about

aggregate, dip projects comfortable speculative XXXX. and very square feet it's have and with slightly nice our requirements possible the XXX,XXX over their development country. In underway between during with build square to percentage X XX% pipeline projects across we're beyond We XXXX feet earnings backlog to due pre-leasing growth of we also our suit overall may million have the a but ability to all timing below to contribute

development at Our quarter had projects at growth. expected construction provide costs be of pipeline X.X our in million under XX%. a These $XXX a stabilized feet projects totaling at on of square pipeline are XX% in future preleased overall end excess to and continue to valuable XX.X% XX margins stabilized these our With share. for occupancy projected source the are million projects

Now disposition activities. it to and I'll turn over to cover our acquisition Nick

Nicholas Anthony

state-of-the-art on of acquisitions light XX% aggregate, the quarter Thanks saw dispositions were Eastern totaling asset our two XXX,XXX clear Seattle PA. and had proceeds Jim. logistics $XX Indianapolis million. total with the million leased Require assets foot and and two On in we average. share dispositions. We on square XX JV in a on totaling feet facilities $X In

few a sold I to the markets year to as be time the However, West call, Middle our quarter. assets we with expected January in alluded in third have this projected quite on

Regarding the to at broader many opportunities. continue acquisition market, look we

extremely our our results which and it in guidance reflected our is to the growth select difficult modest full-year target now turn update. it financial competitive over and Mark for to find thus I'll of market market making is acquisitions. range to However, discuss assets guidance in

Mark Denien

share on accounting very quarter XXXX first share XXXX. share afternoon, as same dividend X.X%. continue FFO a March was a general that for modern per the positive FFO impacting was driven $X.X as expense Good and capital $X.XX per us. as by with being from by takes continued cash increase item AFFO first our grant per also addition increase This the the of share $X.XX development improved property for NAREIT million share of We increased to driver share of per driven quarter our of future per the for reported which be quarter compensation of XX% This growth. was $XXX totaled based for share non-cash was XX% requirement by place deluded fourth by quarter every administrative $X.XX an annual a core approximate $XXX of significant portion stock from the three FFO quarter in by to Core performance. well improved NOI compared Core impacted increase reported the affords a FFO quarter per defined February. XXXX. months grocery $X.XX quarter overall compared for of operational million in the the fourth in $X.XX immediately portfolio growth expense strong the result for the overall performance. the to operational to is negatively basis FFO was quarter normal Core everyone. to a XX, compared to Thanks, that the Nick. of factors to impressive XXXX lower AFFO of first the XXXX, Same compared per first ended quarter the FFO growth XXXX a expenditures to resulting

be quarter XXXX this and on In Same properties much decelerate points lower burn to nonetheless from cash XXXX. growth strong. free quarters a the occupancy do impact This had number subsequent but stabilized remain first very basis quarter from lift as and high burn NOI addition XXX points negatively as about development in occupancy one and levels from bit largely about early to the and free on occupancy of than is for off property continued We the basis off to rent late the which a the was impact free compared attributable basis situation. rent due lack due XXXX rent GAAP the NOI solid level rent the the on rent to comparables rent a but basis X.X% by and expect to from increased current points XX quarter a not of in will still acquisition some for be growth will the that based to XX XXXX. there of GAAP unique last strong basis get tougher. of free benefited some Also to half property first same or was year full-year impacted about growth our the

expand in same XXX,XXX different feet. tenant property two totaling in and feet. a portfolio were needed square We They spaces consolidate and have square looking to our about XXX,XXX

building end be NOI increase their great total for on quarter. the same NOI building the of last will can second and a but the will This property release a we're year should for transaction the new which we them by for a us half former drag completed is So, be space. until

yesterday. refinements first XXXX reflecting portfolio. substantial we In addition, about with to I non address NOI to like of NOI total announced pool came of segment would this that the quarter growth for our from same our some guidance that our prospects and occupied would from our like XX% to we property cash now XX% stress

the core deluded our equates $X.XX from the increased increase to $X.XX $X.XX to to we've midpoint. which First at guidance range share previous range for a $X.XX to FFO per $X.X of of per deluded share

We to share our $X.XX range $X.XX share. for have to the a per share to also a per NAREIT of $X.XX per increased $X.XX range FFO previous of guidance from

a from X.XX% Although, net reported income this X.X% growth same increased the range previous NOI same solid X.XX%. we X.X% expect range still property property for to in from of have X.X% results moderate the operating guidance will our quarter, to of to and

range X.X% basis for operations We growth funds adjusted share are guidance range in the a previous XX.X%. our to also of X.X% XX% to of adjusted from from a a revising on to upward

Finally, which stabilize our XX.X% a a X.X% for XX.X% we portfolio average the range least is to of up to guidance midpoint. increased percentage at

back I turn call Now the over Jim. will to

James Connor

to remain those in very prior front And both single little XXXX ranges in corresponding future. the of closing, increase we bumpier of facilities feel and In growth a a and risks and are comments. we for still years confident dividend The for AFFO drivers finally, Mark. couple fulfillment. represented strong just growth in than traditional as our high we overall very yet maybe key mindful Logistic foreseeable drive expected drivers. ability Thanks, growth modern distribution for demand macro about by digit good are our e-commerce

lines the would perhaps course open in queue. for questions, you two to the now the you of or participants questions. dialogue short one keep to get up the always audience, lines will back we welcome are question open ask We to up the can to Louise

Operator

question Instructions] first Metz. our from [Operator go is you. Jeremy ahead. And Thank Please

Jeremy Metz

trade-offs outlook occupancy the balance pushing you about you at against and point? strong on to to guys. could your for balance Hey your this upward given occupancy was if and demand I how just achieve achieved and this supply of your revisions wondering stage and rent you comments here rent between spreads about at the guidance talk continue think the just some

James Connor

at look a capital you and both net Well asking it question about to when occupancy, of and and costs the improve were end we we're the thanks, our on at all to very retain are a we rent it this numbers really all always GAAP to we're would strong than us cylinders. think tenant. our CapEx tell before, Jeremy. rent which that's more growth I I able we cash to hitting day does on I at talked always a and We've look effective at renew building think

can and keep XX% roughly So, percentage growth if our our we're occupancy these that we high high continue balance. percentage I hit renewal the numbers keep XX% think we'd right rent to getting but maintain

Jeremy Metz

and appreciate, --. I

James Connor

deals. good And two market on U.S. square that's million this two supply of spot. I really one or X.X a think in the the of between logistics The and in difference feet quarter demand, we're

could have it been anything else. So, or timing

been when X.X% of spot and push balance I good all we may to think to in at for some there. and our occupancies vacancy that's fact able we've in level reach growth. I think be be are, rent we think a I pretty a if continue we'll going to and to cycle prepared this maintain continue we're And point

Jeremy Metz

next I on that I maybe spec, just look what the XXX one the development The so here. like touch that quarter it. be service what at the in here And placed the this then just starts suits starts appreciate to as more me, well the and just was for from you all just expect from million to we to in should layer in quarter build see second to to prospects tilted as point? wanted leasing just

James Connor

Yes.

it's I quarter? to first suits. three quarter-to-quarter put didn't know, the script the in we've Would what signed them guys I actually that's just already it But quarter you in timing. but this is. love Absolutely. builder As have all

us see maintain I yes continue to So, think you'll balance. that

all square pipeline a good ever million feet I a Our and builder consistent is been script it's suit markets. of north in it's referenced as pretty as it's up to across feet the and anywhere the XXX,XXX as from square

So, I think very the you'll see new us pipeline. continue results positive on development to have

Jeremy Metz

Thanks Jim.

Operator

Thank you.

Please Manny Our next Korchman. go from ahead. is question

Manny Korchman

I've got good afternoon. you. guys, one for Nick, Hey

to maybe two leasing it the the acquisitions sort owner are is pipeline you lease out you you you and the why if they and to with why demand them before you especially or and If about get proved closed, can lease, them them quicker? way guys bridge is others? guess buildings that trying them acquisition of so the wrong Is how good think aren't the I developer selling those quickly the something leasing

Nicholas Anthony

Well all, leased first was fully one in asset of already Seattle.

had on with three bought that that right space a just The we Valley and other delivered signed and RFPs the lease building now. they in got in Lehigh we've

done. like we've we XX fully So, months typically we but that we will other underwriting beat we on we do know expect acquisitions that do expect it will underwrite you

a don't think not demand. of I there's So, lack

Manny Korchman

the look getting of there ground not stabilized different the you rest be going either MO? new add pipeline, than similar of to out is are to stabilize to that the those yet or sort if value at of a whether and And or deals closer flavor

Nicholas Anthony

You we other mean the are pursuing? assets

Manny Korchman

yes. Sure,

Nicholas Anthony

pursuing we've been pretty leased. Yes. the well are Most of acquisition

lease In fact, this for that was acquisition was us. last unusual half

first the last we've was in the it XX think done one I months.

Manny Korchman

Thanks, Nick.

Operator

next question And you. our Please Thank ahead. go Yulico. from is Nick

Nick Yulico

Thanks. wondering in in commentary and is trends the considered the positive have It Jim, on as not? I and the all I fundamentals overall here start and development but activity? well, increasing your market just guess guess why you portfolio given

James Connor

move in from and think perspective I a and it have thought a hopefully more buildings suit at build to bit reassess a first up and with a teed Jeremy's little by and get quarter made would to actually guidance pipeline. development more to that wait the we the question the as spec indicated talked end we quarter, about prudent the we be before we five releasing of second bit little on Yes volume

I said feels it's the years. of that awful today range here January sitting couple tell of would high like has think last you we in we've think it the announced the had I end as trending toward we an and lot

able in hope we be these quarter signed up be to and we'd able to get suits news some second build So, call. would the give to good

Nick Yulico

we Okay. more, I'm into the though of there? I better just being going just should of question the the occupancy? sort mean And we I back spec would mean guidance. I about it going upside occupancy not to to there what I to then what's what's the to year. willing leasing think high in Mark, just as surprise wondering tenants mean half the the upside like it even because as get it sounds are, guess place I to mean on stay is projects is back

Mark Denien

occupancy we renewal that our We upside levels. had Nick high it's I as think first was you would around be it or the our the than said, a I in in head. in on rate you first as did not to quarter underwrite tell Yes would budget you everything your frankly the were based bit quarter. off first little surprised quite

we retention and start was a of off we that of and a So, we're that in quarter. We Jim tick that occupancy rate posted we QX year bit believe the will already said those part believe keep the same One, to first from as rents pushing roll in had here. we're leases I remainder the because reason the don't budgeted. think will what like the for do better down that

at tick end know feet downward back quarter XXX,XXX two into we're because we that that tenant a that to the is build moving the square in spaces we're coming the anticipating So, a of suit. second to little totaled I there. have us mentioned a we

will bring So, that as occupancy down well.

to would So, to rate would quarter the they be in I our of to percent. would run compared you first to coming of It for the rates be space rest closer the releasing the upside in what quicker came it of XX% in retention say like that. normal closer what

that So, be to could to all some upside. combination of the that go it cause

Nick Yulico

Thanks.

Mark Denien

Yes.

Operator

Thank you.

Please ahead. Jamie from Our next go is question Feldman.

Jamie Feldman

I seeing. of you talk Great, you. the bit hoping thank a about types you're demand little was could

tenant lot been any think versus that along markets the some I in discussion smaller larger. in lines split in in demand there's a seen Have of market your you about those portfolio?

James Connor

We Jamie. picked No, of chatter haven't. Yes, some we the question up really had thanks some on of and our that peers.

million deep wasn't we of leasing a quarter a only square with first feet X.X took obviously which So, look particularly at pool data. of our results

of truth performed I here in space all the being So, the feet lowest going actuality, back kid north performing I'm growth but of not for over best big for looked XXX,XXX XXX,XXX at perform well to the we occupancy did the went a well. probably is all and XXX of XX.X% as and and us you're the was to the in really talking smaller at about rent XXXX it XXX,XXX the mean is terms under XX.X. us buildings under and compared foot

have XXX of our credit square get that are service XXX,XXX they're funny was the XX.X it that the strongest in in buildings want at portfolio of feet are totals good. in in our the of a foot Amazon million big buildings But really that XX for a square way So, that smaller it's XXX you we and lot all to good under think our any million we for because of people XX X.X XXX and lot which have you and of XX and numbers and million and service. Rent probably feet growth slice that's again to remember buildings; the really buildings. out

exposure of bit size we're range. and in fair this a got we've active So, really

good to you board. it's happy the all I'm tell So, over

Jamie Feldman

mean do would you bombers? larger you kind a of as and more in I about then bias, contend or through you into investing to are even kind want have portfolio footprint type guys a you think of smaller And get acquisitions small assets growing Okay. more staying

James Connor

you and a a would XXX and I part it tell deals particularly of between was portfolio have a that XXX,XXX category his under last that of fall the feet but like package or one-off fits don't a are to a acquired have like deals year this we million, our strong appetite XXX,XXX unless it anything in number that team and many building. else into square those foot would and XXX,XXX and Nick a multi-tenant of

that's not for that just always got played of So, we we've some of known as that peers of probably as we've do lot product in. lot product a leasing. well a type We're and a our but that that

Jamie Feldman

Okay. buying portfolio is that's or like the them find you you that? of can And that with you the that's because ones to more Nick's round more more just been out because felt wanted

James Connor

we're very tend those a markets. one tier small just our just doing proceeds bit it acquisitions Well, amount it's little selective refining of disposition those using breed with And smaller. to little handful high a of really be a we're then in for and geography assets

Jamie Feldman

sorry? I'm

James Connor

And to smaller. a bit be little tend those assets

Jamie Feldman

Right, thank okay, alright you.

James Connor

Good.

Operator

Thank you.

Heck. is question from next Please Our go ahead. Blaine

Blaine Heck

Thanks, afternoon. good

gate little the are out here on kind guys a you front of taste this guidance. slow hit So, to of the relative quarterly the disposition

quarter last half. done in talked You Midwest about the first dispositions getting

and to So, sales tier that to any is or still to read track? are those there for of sales anything markets? expectation the two your related longer kind taking on Are then into complete properties appetite

Nicholas Anthony

issues. no are there No,

very of in about early our now third have In disposition we've the stages a right got nonrefundable the list process. volume fact, and expect various of quarter most to million of we we XXX target and close that

year wait reason and the of things get sold. later to So, traditionally people in we the always dispositions year end happened whatever till for the always have

Blaine Heck

acquisitions the is sticking from up built it. with assumption the Okay, get Nick, in you stabilized to to matter level just or there, rent maybe any there? in in got on a to the X.X% it leasing I place of there growth a stabilized is And just X% them then,

Nicholas Anthony

that it's get to leased a it, assumption needs one unit No rent up. growth just into built

Blaine Heck

Got it, thanks guys.

Operator

you. Thank

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

Eric Frankel

on just you. the with have your you XX% looking, unstabilized your portfolio partially of guess one I your understand comment requirement but this minimum I have for build you my to suit combine kind quarter. you your of But Jim development with might prelease you portfolio or so. XX% assets? developing Thank think answered pipeline guys, altering I guys is your what decrease decrease development under about your about terms from kind about your thinking or lease percentage risk occupancy I in and unstabilized in measure Could safe XX% think of the cap you are of question

James Connor

start No historically than Eric, can't you it to we at -- going have. tell differently I I any think we're looking

underdevelopment in service combination the business are we as as think perspective but of at. in occupancy of kind those occupancy we that in XX pipeline at and what's look then, the role. talked not past, in all development absorption specific and we occupancy at project stabilized to spec What seeing big and and on taking company next us coming rent matrix growth the months we going I measure looks look our terms at that to on that's also we're the at a cross XX got markets. in to was of the unit. of and as the risk right that in just And the the section a of totality. And have the we're every of look we lease from What

there the the a on So, to making it. about better we'll always hand our is all talk of do But I think matrix, way happy data pulse the right be differently got those decisions. if and to we're we of dicing slicing

Nicholas Anthony

that is Yes. that I The any of pipeline totally Eric more easy and The we But the development to and kind a about. talk XX% thing look we pull at before on we preleased matrix trigger add would said. an got whole in that only thing I Jim to lot new. the like

Eric Frankel

it all still mean of just have suits go the on follow-up and check, to like know, to the ago. all back I'll environment one and margins year, even a like more I changed in the and competitive offer, have that in. you. build to was supplies helpful two queue then thank most That's for the you're for then sounds rest at I it that seems just year it more a what what you're or able it's seeing

any on to build thoughts So, margins? suit

Nicholas Anthony

we're be makeup XX% probably XX%. XX we development where our to build margins, they speculative for are continue to averaged And which bought And in particularly north some years. margins XX%. the projecting No, a of of the teens, is to that's land last that more on to of literally maybe mid-to-high our probably the competitive XX% the suits, right, probably is

Eric Frankel

Okay, I'll back you. thank queue in,

Nicholas Anthony

Sure.

Operator

Thank you.

Our next question Please Kim. is go ahead. Bin from Ki

Ki Bin Kim

guys. Hey,

for So, you back I I mean you if market past think it. at you money look years, industrial pay matter don’t on the the it it, few owned where

James Connor

We're okay with that.

Ki Bin Kim

any didn’t this, and money goes our on Yes, make story. on there well here I

So, get I is market want thoughts forward, broader buy caps. it this Midwest long-term point to five but that in And how versus the LA your on mix. to four to think caps do low just topic. going even selling about at that sense a better mid assets things you in of and

James Connor

all those had the of to few are the we are coastal When Well, coastal a a pushing going greatest those typically our keep primary the those but do But costal X.X markets years markets. gotten seeing as do the the markets you barrier the not where of growth. us and acquisition, would strongest it way a in couple reasons are company But dynamics over talk creating is I that tell portfolio developing bit think big you it focus done ones although one. the last a returns. a as up. over rent I I'll today's as opposed development you pretty job We've always our world wrong sessions, at buy particularly that's transitioned necessarily markets high that. with of comments. and on we've in of those you're where in about, go and either the lot REIT analyzing four. growth move rather one get and be to much the markets Because a of the value good we referenced you're at we LA, market give I you into historically downturn you into a

Ki Bin Kim

or Paris one. in Boulevard, that’s as or mile if mile market know asset a XXXX know saw others good I market, be that stop leased. the you city like our further at one that? center build development to the I'll two way or is And I have you risk bad our a taking honest was it's and only activity there don’t away that from fully suit development other But some with is the

James Connor

to traditional Greenfield want infill do of you more a development. and individual assets, at we if Well, redevelopment combination look

of complicated with site. degree projects, at traditional assemble development. So, or Moreno California, what the you're if Orange infield. doing out a in has higher you done look the dealing having into was difficulty a we're go we've Perris California as you what because probably But Valley, issues. challenging to IE environmental more It we've you West The in that’s one. in There's in generally a go of Southern when when that's Greenfield into and process much where a know number you closer done development County to

there. order do we continue XX in of if doesn't looking lot it you it infield square probably site So, properties, the because we're foot fully because kind where do entitled, County developments. focus those That's also in if a Greenfield all, can lot you're infield land we'll But of But all big the again, footers at out with months center, get those work. IE the to XX in those Angeles big or bigger is Orange doing development, a the it doing million Los of square distribution that's we're you a the for to exist. have why we to own you million a available the need gone and have

Ki Bin Kim

Alright, you. thank

Operator

of Michael Please the line go Next Carroll. question from is ahead.

Michael Carroll

some the to Tim, And I trends, to thing quarter still available quarters, leasing trends on good pretty why there should still are signed projects thanks. I just see just if been touch prime a recently happy number progress the us projects. here you it guess still your you those of with available? leasing. a I'm is expect of this wanted you and has sorry I some we miss last where next development Yes, few that gave leases those about of is I completed space and are some guess I over space. details some know but

James Connor

leases some Well you expect better to expect some huge to see see sign. I because

be building can't the I'll at we development in how underwrite least. tell trouble. when or you look of some is, it think we irrespective a Michael, because get you we in that we is put will again We good months serious how mediocre hung-up an XX and it at think we individual at No, thing speculative looking

gets some And some leased leased first of XX. and in gets leased those month in buildings XX month gets unfortunately some month and the

two or you across If our portfolio entire last for look years? the years three

Nicholas Anthony

Three.

James Connor

Three development years, speculative our up stabilization in month and all complete nine. we've been averaging lease across

underwriting. think see, So, lot we've few of you'll the I winners, development. of with been to our And coming that's running continue A lot losers. of on speculative ahead but beast nature a that's budget a on the what

Michael Carroll

suit you're next spec into for to highlight the on projects spec's since that on we a or still you? on to focused suit you in started And to that Okay. to going the be the, the spec I build interesting XQ more pipeline, build read many guess quarters your should over few less

James Connor

may our because on time-to-time to I and have. what to to What that's interesting we've always very we're development we when that suit still build drive the levels and would has is spec this I've you development XX%. from us talked about enabled dip pipeline new to No, tell below referenced us focused

and Northern have into the like in infield we absolutely where New markets we Jersey Dade as and expensive like Orange high some that into County put It County tied land for barrier further even as way Southern California we up. can. As production us our markets soon into worked to very have pays

I below, have in good maintain these possible. as than would put And from to since a few is So, the and may of on you'll market behind continue to some XX%. a from past we number as XX% projects. the those ahead wanted where have already just by, projects to just significant that's timing what we the to we're ahead to that enough suits of but see in XX%, as we the go that, to statement dip years it's to I thought is suit into a production driving probably carry may move spec we move to or of also gone what's it quarter-to-quarter instances have signed my strong we land soon in those move three not choose around that to but referenced and might enough going sooner going with But perspective build build earlier think

Michael Carroll

Okay, thank you.

Operator

Please ahead. Thank we'll line Instructions] Anderson. And you. go Richard of to go the [Operator

Richard Anderson

good Thanks, afternoon.

an this more the wonder or just bit two of more. anyone, Jim I could alternative underwriting maybe been about and away huge business obsolescence, is these So, What if you logistics call, rectangle. not square of in year us a doing Even is little that from this million but perhaps this moves into closer talk spaces. foot centers as Amazon of kind a fulfilment smaller and

James Connor

and we've talked someday and isn’t they as lost in now we've any moved from never say Amazon one of that they'll of a our eventually time move we've out lot. the spent haven’t past, out facilities, so lot And Well, of to --.

Richard Anderson

I okay. time long a Coffeyville I recall believe Anyway, that's of that out reading ago. but moved They

James Connor

wasn’t That projects. of one our

Richard Anderson

I know, yes.

James Connor

day box, the but we handling, And the is to got just remind some we've we know mezzanines like costs. of restoration everybody don’t or will, So, right. material, that. anything you you're own what, And they okay or own absolutely robotics want we or what equipment any

facilities. of good end is million the building a X.X loading of That building divided whatever be plenty do or at to to XXX,XXX box functional storage, into half I X.X and parking be of I can own size foot day target, Procter or that quarters, released can & foot Gamble to So, XXX,XXX with clean leases leases. could Walmart, the the plenty tailor of plenty

got and be to towards development build able So, at at we've the we've we an of were of eye underwritten to those right term in compete in lose always end of that for Amazon, to any whether the very the suit basis if it's lease future we'll we think deals favorably. speculative that our

Nicholas Anthony

not take is additive Amazon serviced they're still XX,XXX the these, anything, other XX,XXX to fulfilment would are and chain. by their for thing these centers. purely say I replacing foot Rich, buildings They example, supply square also these

center that them. it's call fulfilment maybe So, you the just the stations and consumer want and whatever is servicing direct both those or to delivery

not chain. So, anything, they're replacing they're supply to additive their just

Richard Anderson

square and Do your over about that either enough. model. the to few of higher answered, was kind then you or your you bit touched maybe fit our feet have way smaller? size And million explicitly business don’t terms of or showing little off XXX,XXX on course a said thing cards you're bit years. then they'll asset was average another you lower that get into kind bent on thinking next Are the little willing you Okay, having go fair a of or well a in be a of

Nicholas Anthony

you annual of Yes, strategic we plan the says imagination. average do size bigger the our size building budget. tenant by not or or want average or to we inverse, component of our stretch That I tell our bigger any would get have smaller a our

over of we good XXX local buildings Our XXX feet, And business. still under more out that's across between are trying balance latest XXX. quality happily pretty to a a I XXX take we XXX,XXX square sizes. and feet, and and the of any own we I'd mean between XXX,XXX here, And own, looking just all XX XXX operating XX still those. at own, XXX,XXX do I'm good a numbers teams

Ronald Hubbard

we're everything look what XXX a our between. in at building you of everything we're million Rich, from to pipeline and building Yes, and if a

Richard Anderson

Yes.

Ronald Hubbard

the where it's about and the and to big asset serve what is. more It's how going asset is

Richard Anderson

matter, So, right? is size that doesn't

James Connor

buddy, on not Rich, going there, I'm not a line. public

Richard Anderson

I kind alright of that's all. stumbled first stumped, you partially guys thanks, okay time,

Operator

is Please question ahead. Guinee. go next from Our John

John Guinee

you're to you. Indianapolis building thank the by Great, foot way a say now. building XX,XXX Mark, in

Mark Denien

forgot one. I about that true, That's

Nicholas Anthony

you're right. John, True

John Guinee

as care where a about into of and as out all where are that land clearly and Dallas. of take you some land. So, with in far are where those as the about Atlanta, Dallas, markets of land pricing Maybe out then where have Greenfield the markets equal in and the it these created repurposing ability long-term great of DFW essentially markets you land Not and land you are Chicago, sub whatever Jim. Atlanta, these you're team great power markets then into say and bigger sub big picture, talk to them eye sub in have you land? the are guys team markets of basically essentially out market particularly can Can see out

James Connor

markets, we Tier hit might John, Well question. we this you've handy some might is I the what of X on data I thought do some key because to these get have

Dallas talked for plenty on level South and Dallas example and barriers new down South No intermodal reasonably take has is reasonably access, market entirety large absorption you its in the we've XX.X%. if good is about So, South land, of and a but expressway drill Dallas you in by the to to Dallas before. go net you all to entry, healthy, available good which and sub strong vacancy

the times national four like So, average.

land, call infill little the sub would DFW very there to X%. market go is there's I and available and which vacancy You you

Chicago, to it's go you extreme. same the If

not lot down under and access good vacancy go XX.X%. of the a barriers again is IXX You expressway a corridor, the there to entry,

through It's X.X% You vacancy. Market. we've O'Hare the all O'Hare the go to Market, been in toward

the anticipate but not the right, overbuilt have pricing only vacancy long-term. absolutely any not you in markets, you're can over is is pricing power you having where today So, do those power it when

when spec suit to the look airport opportunities markets infill go you barrier probably if other lease and potentially twice those and a around don’t go of at avail or these talked at you got low to a the coming of Tier and have why number building markets high that rent markets. themselves of and down generally and you about the X a markets whereas opportunity you barrier role in So, you, tenant to the is to we've some can which has some these to your there you can those buildings that different up build - get growth

John Guinee

said, Well thanks. good job,

Operator

ahead. go Mueller. line The Michael of next the question Please from is

Michael Mueller

the to trying us like to first at that quarter out focused 'XX released little level stop, Yes, upfront, hi. in out was I'm same of anything point I to you're get about it is the there on you are the that rest you're lease dynamic. year because the called Because need this XXXX. you trying guess exact to of have you I when wherever curious, a for going

James Connor

so, necessarily Michael. I think No, don’t

to I risk as push of risk. think in lower we there may quite peers the have some mean, related ability growth as at a do to time it's just but not I rent much its that. is our same the

of So, year the what that reason this bit it's But a will balance like we long a we little decelerate the because as it same environment. That's we another the gave to would for NOI. run rowing like guidance in maybe around the as little on the that in many we be tenants remainder proper of bit we won't have.

Michael Mueller

Okay, so atypical it's nothing year this then? really about

James Connor

lower some of I a when not in the And was expirations the they were past did more quarter this pull pull that because six we year's forwards still this amount fourth just of dramatically say about forwards, of at I year we took more. end think a early, of than tremendous just Not little little quarter on a four think were necessarily, a the call. months normal, But I fourth early. the talked like last of be them than to not just but would care bit more lot we year

Michael Mueller

That okay. it, you. it, thank was Got

Operator

to And line we'll the Eric of go Instructions] move ahead. Frankel. [Operator Please you. Thank

Eric Frankel

you. Thank

development? quickly the clarity taking lease we might done then and some want you better just is recent market how describe maybe development. one just some spec Can recent I and have think your there on, you're I Atlanta we've activity up some the

James Connor

really or I X.X%. think you and got see square XXXX, X%, entirety, had people million down it in actually you note minus. first I look down activity its was we And talked when there Yes, quarter Atlanta that's to, who Atlanta depending on XX of feet at plus

there. down of of development as Eric, there a bit pointed fair lot So, But you activity. a is good

we've got buildings. three So,

of a on one. which I'm which XXX, the hold is of XXX, for One is one searching other

half at a a of that The good two quarter. lease got now, be is we The XXX we've announced building a prospect signed the other XXX, one's that list prospects. over looking XXX. for at will I'm right The second

says there my building So, forward. for feet got got And two we prospects then, sheet big the three left that. got prospects over XX,XXX and we we XXX, the

bit we hold And are to the cycle at continuing always want point for the up. that's whether little But or that seeing. going we're into see out to a evaluating on of we're we so, demand depending a And activity what's those buildings fair flexibility. tenants again, have full this bit across of the and board good in of building we're break building kind on the

So, we the dealings up can and different do we break building single two it tenants. can or lease to tenant

Eric Frankel

in there another to to there, a market bit on then been any little I and going quarters. hear a development just in be since coming maybe has lot And it's is online PA, concerns activity that Okay. the few Central that there's touch next softer recent

James Connor

big as bit forward my got to We the building Yes, quarters is one has we've looking prospects, on little and here, XXX. building. three been Central prospected past, there, partial slow, building list a then the got full mentioned half building I PA a of in

ripe And to but good leasing the you that So, of I remind think quarter last building into there, my is as team I I it's out in came third activity year. service for would tell like leasing.

Eric Frankel

Okay.

watch So know same-store in or Are on credit it tenants the we factor should happen. alright, in about that's we'll a terms there might be see guidance? any of there list that

James Connor

feet Those they're square are do I supply No, in is current a pretty the in a situation, event bankruptcy new been back down the chain. you'd Atlanta. new From one told, facility XX tenant, we March. we've rent, are nothing critical. ZGallerie XXX,XXX about it's say, everything on than They filed in chapter one have other guess

to it'll So, that, something market. be in rent we think but were as usual business is below if change the

at there'd like So, would retenant situation better of if a it be of kind that to happen rounds. would time spreads, a new be nothing the it that, Other I of but Eric. be it think HH period than

Eric Frankel

Okay, final question.

that a billion that's about portfolio pretty platform think seen say have coming of off $XX market might worth portfolio large sure super large the a take there's Do actual appetites Journo or You might billion? to down you come fairly from online year. $XX this heard to yesterday

James Connor

Eric, in on that last of had have bidders. is been the and billion logistics there to there that awful the number multiple magnitude, years of order couple call properties think lot of dry I billion a over I don’t have deals know out chasing range, an done $X it powder the of that $X let's

that So, project it's don’t think of question the don’t could of out I earlier. guys take selling it's you think that of create out down partnership the a could question. magnitude. I a I that But was

a but really talk a at financially like It's it about and shopping to do. deals new to boat. like little bit big that, big it look it's at it's for fun hard Looking

Eric Frankel

understood, thank Yes, okay you.

Operator

question. are Thank no there you. further And

James Connor

for you look I We the the that, the in forward With see call want line. early York disconnect June. everyone many you NAREIT today. of thank may to at New conference to joining in

Operator

for participation using we're you Teleconference. Executive Thank Thank that conclude our and gentlemen, your AT&T for does Ladies today. you. and conference

You disconnect. may now

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