Duke Realty (DRE) 31 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

Ronald Hubbard	VP of IR
James Connor	Chairman & CEO
Steven Schnur	EVP & COO
Nicholas Anthony	EVP & CIO
Mark Denien	EVP & CFO
Emmanuel Korchman	Citigroup
Blaine Heck	Wells Fargo Securities
James Feldman	Bank of America Merrill Lynch
Eric Frankel	Green Street Advisors
Vikram Malhotra	Morgan Stanley
Ki Bin Kim	SunTrust Robinson Humphrey
Michael Carroll	RBC Capital Markets
John Guinee	Stifel, Nicolaus & Company
Caitlin Burrows	Goldman Sachs Group
Richard Anderson	SMBC
Robert Metz	BMO Capital Markets
Michael Mueller	JPMorgan Chase & Co.

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Duke Realty quarterly earnings conference call. [Operator Instructions]. Also as a reminder, this teleconference is being recorded. At this time, I'd like to turn the call over to your host, VP, Investor Relations, Mr. Hubbard. Ron sir. ahead, go Please

Ronald Hubbard

Tony. Good quarter to third and afternoon, call. everyone, earnings welcome our Thanks,

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

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

I For XX-Q more information would file the about refer have we SEC to those with or risk XX-K other SEC and factors, company's our on the you that filings.

XXXX, any assume or call our non-GAAP on forward-looking to update is statements. obligation forward-looking financial and provide in we GAAP only statements measures October All speak of revise no this included reconciliation as A to of we the release. that XX, earnings today,

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

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

You audio of call can package, the release, earnings website. in our section webcast IR of this and reports also find SEC our an supplemental

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

James Connor

to rent outstanding everybody. and space for to driving our logistics are value development Ron, continues and Thanks, opportunity, good creation. afternoon, creative key growth continues in our fundamentals platform strong, Demand provide for still submarkets well-located, clients state-of-the-art remain Overall and solutions robust. and

results X% Yesterday, down announced quarter will expand the X.X%, then still slightly was bit and Let above quarter operational but me team in rest and consensus. the at from off of of strategic macro our activity. GDP the the second preliminary capital our and pace a with third start on front,

in we've the weaken annualized impact spending on bit, monitoring to report closely which possible We're also bright was recent other up the but Initially, grown the in of spots appear basis, up a business the continues XX.X%, some the which indicators. spending, sales an be to seen year-over-year consumer, was the issue trend it this sales up While consumer any report have inventories GDP X.X% retail for and to this were The continue brick-and-mortar year. through an of third half retail time. first the by to X.X% quarter. at doesn't at the X.X% for e-commerce indicates

combined in previously, to supply consumer investments not and their drive noted we've consumer only company into times products we're well-located As e-commerce improve will seeing chains significant but continue for spending, increases also with companies continued real efficiency. This, to delivery by and estate. retail logistics demand

about million about less XX a of XX the of the full turning to real deliveries square feet by square fundamentals. On absorption million up points million data the demand XX U.S. about the shows year third square feet. preliminary markets than projected deliveries third XX estate quarter by quarter exceeding Vacancy to across basis year-to-date CBRE basis, XXXX feet. trailed X.X%. Now gap square XX ticked feet, in million is with

XX.X to a year the beginning stock U.S., will in XX gap this across about levels. billion perspective, in square the of approximate rise this point put To from vacancy basis foot in a the

the United end long-term average during asking historical looking vacancy below of growth X.X% reporting vacancies also rents points CBRE we're above by is XXXX. quarter since points average third X.X% increased more have than basis nationwide range States. X still So roughly annual the rate the the year. at XXX percentage is the year-over-year, This in

high-quality, demand portfolio. So growth well-located for buildings at level, to a rent we're vacancies, high low continuing positive good in see and

operational a Steve at well the our fundamentals submarket level third over turn Schnur quarter now to as more as market it bit touch I'll on performance.

Steven Schnur

bit on been a the Thanks, it by Jim. the the several in start that to supply last importantly, markets, headlines the I'd data more submarkets points pertains quarters. have and as market expanding for certain like to

Let on supply, the geographic X can in first Tier of to larger of me say diameter miles. particularly that data that MSA looking to level you metro areas some when be XX have have careful a up at

So NOI look NOI. comprises level our our Dallas, XX% at of of about Chicago, total the exposure if Atlanta, you at total city it

our of However, Dallas in our South of X only the heavier is X.X% Atlanta, NOI. Northeast would exposure just Chicago, I-XX of supply and total contribute company assets pockets

three XXX,XXX our XXXX. I outside the vacant, Furthermore, submarkets, submarkets mentioned end X.X% occupancy in assets through XXX%. is of market feet yet those those the only and XX% about portfolio comparatively, three our submarkets vacancy across three are standpoint, and a square cities of three about From the expires NOI, or is remaining of these other X%, between the our XX% vacancy

focused basis The large our as testament growth Finally, on cash in rent regional figures data a our and growth MSA. metros, strategy have to performance top what and a each our distribution basis. these on points been XX.X% at within is supply XX% submarket these level portfolio the three location logistics the on heavily GAAP that for corridors a support emphasizing, cities three we has rent averaged in local risk and year-to-date

are of in only submarkets. submarkets. case XXX our XX our result, total these across those point, a submarkets, XXX XX Of there As roughly as XXX touch properties a markets,

have some So see to will to be out again, regional our get this with you of of data, and hopefully, opportunity firsthand. this an markets careful to to you have each

an and XX XXX,XXX X square on XXX,XXX signed leases signed leases move the feet square feet. third markets portfolio includes feet over to highlights for XXX,XXX at our quarter. over in X This XX over leases of feet. we Now size executed of We square average the across million

such XPO Paper, Logistics. of Some notable the lease were and International Foods, with customers more transactions Coca-Cola, Walmart as Snyder's-Lance

At stabilized leased. quarter end, XX.X% was our portfolio

square and stabilize spec over over that facilities. of XX.X% Our recently in-service completed quarter, third feet million helps increased of gen We speculative during us the X.X leases XX.X% primarily X from developments. occupancy project lease-up the through to first completed signed recently

is growth NOI drive going As in impact but leasing results everyone this aware, term, it will significant first-generation forward. near overall same-store not the will

with California, building combined lease it our The on New of with respectively, markets and from stats another basis, XX% building some Florida. GAAP to to and lot Jersey rent solid quarter of by share with tenant There's a and be discussion this recently growth of X% only a also activity strong led about derived cash thought of XX% been coastal activity, important of year-to-date you so our by size. demand I of size, would fundamentals,

size XXX,XXX for and growth than out. XXX,XXX; XXX,XXX buildings echoes under fundamentals rent XXX,XXX buildings This GAAP feet XX% buildings concentrated of XX% for spectrum, to and focus laid XX% feet; for feet. strategic XXX,XXX realized our between we've also buildings across square I submarket XX%; and XXX,XXX for strong it and rent Year-to-date, growth just reflects the greater

continues side strong. very development the momentum the to of be On business,

quarter, the of X development third of for USA Northeast. XXX,XXX-foot starts included for During build-to-suit $XXX in Eastern Pennsylvania the wholesalers are million a in build-to-suit submarket the largest generated XXX,XXX-foot preleased. airport X.X one The Atlanta projects, we the in tire million new totaling that starts across XX% the and a feet Porsche

in the project feet XXX,XXX-foot On started California. and speculative Bay a in totaling submarket the a East side, Inland Northern XXX,XXX the project we development Empire in square

These a XX square costs. under are feet overall construction, projects totaling pipeline preleased, $XXX remain X.X Our projected development million end quarter at margins XX%. in estimated had our pipeline XX% stabilized projects on million at the over and

development Our is this very remainder of outlook for the year solid.

later year-to-date our prospects outstanding We development, to Nick entire platform. results, This, I'll is on. combined it of have Anthony a will with turn transaction our activity. increased cover over for cover guidance Mark capital now across healthy driving our pipeline to which

Nicholas Anthony

Thanks, Steve.

self-funding purpose achieving Tier for our our X strategic objective capital exposure. We both strategic continue development, to of be geographic in recycling the for

The the During this this on transactions foot one-off $XXX were believe sale years, in closed of $XXX Cincinnati for Washington, remaining small XX-building, we activity that bulk and an across average located and across totaling properties. our D.C. portfolio an square The sales in XX buildings of Indianapolis comprised primarily of have X.X sale assets and Atlanta, of The return portfolios these Columbus million on age the X we portfolio Minneapolis, Indianapolis, sold the maximized million. Midwest quarter, million. the

recycled portion into these Miami a of square during in proceeds third facility a quarter foot the In located Park. XXX,XXX turn, at we Countyline Corporate

we our this facilities feet most in feet of believe Miami. together park nearby, in square million and for addition, quarter, October, in at In acquisition XXX,XXX square completed late million. second what Miami now million square XXX,XXX acquired a own over totaling industrial square desirable submarket We are the the aggregate, X.X In from XXX,XXX we we after with own we park, Medley about of the $XX Countyline also third feet. -- feet X.X logistics

Tier The XXXX. have year-to-date up a our and $XXX Tier path at acquisitions goal with to and, from coupled at on is Countyline XX/XX/XX bring acquisitions This X exposure the end to total our XX% basis of strategic of approximately the GAV our development, XX% on by million X reach to XX%. increased

Denien sheet it activities. earnings balance Mark over turn now and to I'll our cover to result

Mark Denien

Core the and up AFFO FFO a basis core similar On on the right of the is per to share and year-to-date share per third up quarter period compared quarter $X.XX Nick. second XXXX, Thanks, basis, Good in XX% compared to share-adjusted was XXXX. year-over-year. X% FFO afternoon, about $X.XX of year-to-date share XXXX for per everyone. share quarter the is in over percentage per of $X.XX a

down cash the Same-property X.X% for basis the quarter. quarter, on in from NOI third second growth was a X.X%

discussed to of an of comparable off extensively XX.X% in due call, earnings was extremely occupancy we coming NOI in quarter moderation third this the As of growth level XXXX. our expected last same-property high

backfilled negatively our end begin which from third of X properties but of not quarter one from developments. the same-property build-to-suit the our was year of a newly was and In immediately announced tenant NOI of until tenant also previously by bankruptcy will completed impacted the rent paying to relocation existing addition,

will revised same-property basis points again, of the XX on turn positive the of same-property for XX Once guidance from was and in The this cover growth to a this NOI as the XXXX combined X points to impact impact of tenant commences our modestly are XX third half fourth the the and do quarter fourth basis leased. situations expect points second which about in in negative other NOI expect about considered We quarter. these in and is we be to basis minute. XXXX I'll rent backfill a spaces to bankruptcy in quarter, accelerate the

ATM basis and as our was part X.XXX% growth unsecured GAAP the of program X.X% of October, issued bonds coupon $XXX NOI an year-to-date we we issuing very of some effective advantage at $XXX a of X basis. a I'll of average notes thoughtful shares and million and August our price at low proceeds Between early August, net the took deliberate million. a XXXX environment third of and we're interest quarter through generating interest on reopening issued given Same-property million rate X.X% $XX.XX, add on for equity. context on the In X.X% rate.

was since it our of a With competitive increased year, the a significantly prudent sheet of to felt prospects these to the maintain strong issue development investments. balance to we beginning fund equity bit

we equity In markets accretive are very that overall significantly estimate is our addition, to a the providing returns. competitive investment cost

other While from metrics delevering debt with for levels, This portion view from development pipeline activity. prefunding than rather sources. this and development improved is our funding unsecured We leverage temporary. will a future this along strong our issuances come a of this current prospects already future capital the as quarter

As a in area previously area into from towards discussed. the anticipate ratio the I This Xx we range currently. in low head mid-Xs is debt-to-EBITDA the gradual we level path a XXXX,

no The NAREIT issuance unsecured impact future. anticipate come redemption quarter which connection February source in of this week, debt had for as $XXX FFO. a we from by in million approximately the scheduled The of with redeemed unsecured funds this will defined $X with in of maturity a new impact we million incurred in prepayment XXXX redemption will notes of Last interest XXXX. core ultimately FFO fourth X.X% near to the

an is on Let our me our range of well which as to expected website. XXXX back now at as of our the exhibit quarterly supplement address revisions estimates,

factors midpoint. previous $X.XX the other As per increased end our from the a guidance the starts $X.XX Revisions We've to X.X% same-property to Investor X.X%. and net income the per we X.X% in to increased can XXXX, of certain the also we of to for to $X We range at our to website. section million our which year. a share a of growth our the guidance to X.X% development for over core X.X% $X.XX $XX equates to midpoint an for billion at operating range range have billion, guidance of guidance prior also increase range additional near increase of share, found to narrowed FFO of representing a Relations $X.XX be

back Now turn call the I'll over to Jim.

James Connor

we're closing, development very exceeded on expectations capital the for the starts. all team's In out and laid Mark. leasing We those with execution year, performance, of redeployment Thanks, expectations. growth have we pleased solid and

In addition, and on AFFO executing to Tier in on to environment with XXXX by very execute our goal exposure growth XX% focus. we're generate strategic economic geographic our X modest single-digit targeted high achieve long-term a goal submarket a

to trade and we're sentiment. early for optimistic course, But we demand and negotiations about Of the continuing customer for a remainder XXXX. trends, for solid continue finish drivers intact watching to start carefully macroeconomic our a data of year the good now, be

$X.XX allowed us rate, while raise conservative increase reflective share year-to-date payout X.X% or very of The maintaining ratio. the by over our I'm our that the and has execution dividend our to also very quarterly previous performance strong outstanding dividend team's a strong overall is pleased results.

to free now during to [Operator of there will static of the you to line Steve's any and was so the feel remarks up audience. and -- need any my notified numbers we open lines comments, address will ask, us the I've been remarks, some the Instructions]. also those that We those if them. up open or on result readdress

the can our you question. first lines Tony, open for up

Operator

from We'll question take Korchman. first Instructions]. [Operator our Manny

Emmanuel Korchman

talk or sales was pool you're whether them? for looking focus those second, about that we that -- that at on you Can assets sell other the and didn't marketed at to buyer you looking assets the asset a

Nicholas Anthony

Yes.

we significant we pool. most of portfolio on final was of offering the buyer rounds bidding Manny, believe sale, final And or were field that. Midwest It a very deep. So X think, one low the the was I double-digit and process. It I pleased very was bidders with a with had, X number bid

Emmanuel Korchman

your of of secondary limits using sort about think that we Do portfolio into improvement is out markets, as from the it selling like it Is and sales? then And what these those you more further properties? other for you the you get rest of do do you And think that as sales goal development? XX% more that buying do think there you think that to mentioned, you your portfolio? and about? we that should are gains Or

Nicholas Anthony

sell. portfolio, is it's assets so are we and very happy do with tell to harder would harder we I very our that you find existing that -- it getting to want

through So gradually partially been to development. doing forward, will the into the growth fund our the we've going Tier sales But be bulk of our development. X

Operator

Our next queue come the from Heck. will line of Blaine question in

Blaine Heck

of implications So you Tier leasing in forward? markets, Tier up very Can I spreads that you put we of are the us volume and that that are as guys X% was highlighted able the spreads. you're And provide rent to your markets? with only rents fact look for still percentage XXXX rent X X what guess strong in

Mark Denien

that. to try address Blaine, I'll Yes.

make was to in not clear, there It where actually was markets. made was X% part the X static, sure all, coastal that we're markets. just the First of Tier and I

New So that Dallas South as and Jersey Tier count X. Atlanta, Florida. We was California, obviously and Chicago

So coastal that not X% was the just was markets that number, in X%.

from we as be XX lumpy about next X% look forward XX%. So be XX could the for It is to going quarter-to-quarter. months, to that

markets coastal in get that to done -- deals But For of fourth actually. XX% likely say, couple the XXXX. we it's made to here are want XX% example, in in quarter I we've those about got, expiring a

from but we've forward, you results to similar be So like XX average, if months, way quarter-to-quarter, that the we some average, growth for swings year. I and said, we translates expectations this tell on expect on there XX to rent shown would may I what into look the overall next

be around to range high a at close GAAP, on look we that it we've XX%, an call to basis. we're GAAP total then our on that high on to a cash for would what a somewhere right So the And to think basis double XX% low low analysis whole to mid-XXs on digits mark-to-market -- basis done a -- single and GAAP tried do a in on to basis. and portfolio,

Blaine Heck

Very at is break some ideal Tier what's and between X? all you're it Jim, by of secondary helpful. Tier and what's Is maybe have the out for XXXX in exposure your markets? it those so this the X for still to the Or And then want X And point? exposure portfolio? to Tier Tier then targeted that XX% X, looking do you

James Connor

let the Xs you XX. I'll our remainder. the of get to give the at But this point, Xs, trying breakdown and Well, target high-barrier just between Nick we're to the Tier Tier

see think reach and we think also substantially we haven't to we're set beyond Tier New opportunities represent long-term targets. in but still would that Southern high-barrier continue us new California Plus relatively specific before I target we We've markets. pretty that, those we and our long but to Jersey, way size. Those have grown go for Northern in number X grow, in good growth you'll a California Seattle.

Nicholas Anthony

Yes. And value XX%. around X Tier gross in just XX%, over our X low terms of is asset on high-barrier the right a barrier and Tier basis is the composition,

we we've ones Going are high-barrier what forward, really historically, The that go X is rather XX%. the moving the staying the that's moving low-barrier and X repositioning. Tier is to us Tier most, through static seen this as

Operator

The Feldman. queue Jamie next question from in will come

James Feldman

larger your with larger space idea thoughts a that and on and combined your a you for sector get there's just we the compete. guys? see the to getting week as doing your Prologis need business more this in changes synergies you larger what entity from kind in So you real I about to as competitor, is player get the to And thoughts, I now wanted get Liberty. have and in to pitching this consolidation of want that just just that's think that.

James Connor

the changes. I'll first. second Jamie, Well, one take don't anything think I

Our some a additional of convincing changes or of and big. to had are, friends time, proverbial enterprise advantages in gorilla and leadership XXX-pound $XX fact, been we $XX But billion, get this would for this hard get about for don't in scale an of really the value. a I the landscape. our in We've senior if we at with time value to believers the we weren't Board Prologis sake don't big creating billion talked our have all have big think and sector, big I that. getting

frothy, So and at when we're impact we growth, we're looking at the at to we portfolios sector growth is bit couple probably NAV. bought look at little years that we larger expensive And of a the creation haven't but obviously very Bridge value look FFO today and we M&A, ago. top seen Portfolio opportunity looking also line that AFFO since and and the a

the So in future that's -- think realistic foreseeable terms a for our I and pricing. of outlook in fairly the probably sector

James Feldman

close take did -- at strategically, would've fit? a good Okay. been And I It mean pricing, you a Liberty? sounds did it not. maybe you you look like think did

James Connor

portfolio the the lot for years, Liberty Bill But our we're think and the that underwriting do we of and would what assume amount at depends think respect at friends we putting be. we've look deal every and fit enough PLD had and together. applaud The good the private we a that company, over we large and can and substantial detailed I you it's of a guys for public. both their opportunity, on

Operator

queue from in Eric question come next Frankel. will The

Eric Frankel

that I'm for Midwest disclosed I a year. you supplemental, it further. dispositions occupied and The the would guys is for that, just little year, to that that cap last your that the should fully this be And wanted apply assuming portfolio? drill in to bit was down portfolio,

that correct? is So

Nicholas Anthony

more was equates leased portfolio another that -- building. actually, to though of reason roughly building highly out that that of The sold spun and buyer Yes, was portfolio. that is value a to we transaction, that vacant portfolio it as that was part to ascribing so that

Eric Frankel

of was that part feet? square then X.X And that million

Nicholas Anthony

The X.X. was No, of the X.X that Midwest was the outside portfolio.

Eric Frankel

Got you. Got you. Okay.

where anywhere had is has in values coastal the What be noncoastal broadly, seeing how bid, for bit I the are of gone Okay. good think for the public What X actually different And recycling markets Have and Tier market are where sense. been? softer. a bit makes views they supply That really different U.S. up maybe pretty a probably been like? good ground, markets rents fundamentals and think then your markets on the to more of the you else look I kind are seem on last markets fundamentals getting so a year? little some has and with in Have you're out? flat

Steven Schnur

I Eric, we Yes. submarkets is you we operate good the tell would in this Steve. demand Yes. see in. all

we're choosy pretty we're I hopefully to static, out pretty through I and submarket our choosy try lay I with think came focus. as on the it but think

terms the on Jim beverage. demand consumer, retail, food e-commerce, touched In and nondurables, of but this, drivers,

in -- pipeline. I I we're So track and be been for the seems we development is prospects guess to health of indicator us consistent and number our good point that that here out would closely a pretty our but that build-to-suit the chasing, the of of pretty of publish thing clients. And one that we don't terms has pipeline

out indicator we for I pretty that that's good looking a we're us. months for and a XX think closely, XX space, So so new to watch

James Connor

year, is coastal be numbers, fact strong. continued been of our as are And the on noncoastal earlier, I add X% in you based Mark pretty markets. Eric, to leases quarter have of good if rolled rent were would which thing pretty good the the for only for our high-barrier growth only this markets, that look our alluded and occupancy to at the very those it's

country. look, Vacancies There's we strong The at in shape all at still well. there's that as really still So this rent said see sizes are and and demand, good the really along. we've growth, low. all sector record is great all across

Operator

from is question next Malhotra. The Vikram

Vikram Malhotra

I two quick ones. have

bigger your or to year? part spreads expect rent being on commentary in similar just based Would cash accelerating you expirations spreads rent actually forward, the this markets. So now a cash going around being coastal --

Mark Denien

let's But be shorter-term be of on I years. future. X-year were I to are in leases, build-to-suit kind average, that are would leases that noncoastal leases some in longer-term the call just rolling of the markets probably part legacy leases deals, while to of got call Vik, remember, fairly the in XX going what you generally will it rolling near say, the that, markets coastal of It's similar, would the

So of you have just rent because term the as markets as length growth some embedded the good those that's up. non-high-barrier of coming of of lease

Vikram Malhotra

fair. And I then Okay. to kind want you you just know to range, narrow clarify, top That's what narrowed I but caused of the understand, the same-store growth just NOI end. to

Mark Denien

narrowed we raised the to at Well, I we think. year. and to ends, end, We end, top get just both where the are end we closer bottom the the of lowered

So But narrowing, math, the at you that expected in to if XX% quarter just up the you'll total I X.X, number, you to think growth the have at keep our compare X.X% from X.X, that's we're a would simple do X.X. then just that year-to-date imply, the we better X.X NOI, went year, to in fourth new in that mind X.X. now. And our data where if midpoint the hit of that later see year

Vikram Malhotra

at decel you what called And point XX basis impact. essentially is out the

Mark Denien

held in X new moved third spaces I the in the and X of moving tenant tenant X the them in of third for Yes. in be new it's tenants spaces tenant development. the fourth out they'll we that basis we bankruptcy for from the over while had in quarter. both sort quarter X Cincinnati, quarter then situations, of The building, that in a of they quarter XX were X their X most third in -- Cincinnati into in Atlanta into and spaces Well, the points X then mentioned --

So X the points to what out be spaces. of those because basis XX had point the quarter fourth situations, that you grow in quarter impact have will with they will third of XX in those you basis all a negative

do a third more offsetting the X.X% is But we part quarter, of reacceleration. growth expect that for because than the that,

So fourth more on growth we that a continual less to rent in XXXX we've of plus be little the will compared pop all than the get offsetting XXXX. the signing bit rent from been leases the free side, quarter

that, the continued of So be a in bit all even elsewhere. because those than quarter situations, down positive probably should fourth momentum occupancy though more more offset dip little will by

Operator

Next is question Bin Kim. from Ki

Ki Bin Kim

over back Tier to a basis. about I $XXX think going growth your million XX% time, So comments on asset that's goal about the X value

how to you there buying? way Is want by curious there. Just more get it or your building

Nicholas Anthony

is The through of But development, markets and X majority will it land little the a majority current The selling Tier majority vast it that in will Tier redeploying of we and markets be bank the Yes. development our out of bit -- Tier will the X. in on side. be focused land obviously, high-barrier be of X right now.

Mark Denien

now, those if over markets example, And our $XXX in Tier that's XX% already. you pipeline development of Bin, for million at just Ki Yes. look X

Ki Bin Kim

pricing why getting assets less reason Is you're I strong where demand the than full particular stabilized? kind demand the any the sold, falls? that that just even though And of were you Okay. some think, of

Nicholas Anthony

vacant that population, portfolio. we building on kind the are, got lot X then that legacy A there too, we're the unusual buildings always if of a more was at The times, There's that office -- of some occupancy. carved then of out X lower than the in buildings that. were had That's Yes. is a one way office underwriting seller. like optimistic it. circumstances the look And we buyer

Operator

from come that Michael will Carroll. The question, next

Michael Carroll

ground been Steve development to fair your some start XXXX, hoping color break beginning pace pipeline the going going a you had guidance forward? was about strategy. on to be is like to that the you of can there's most it of projects your that provide year? guidance. year increasing start billion pretty stabilized in assume know at more I I X Or I commented a big of mean that the ongoing build-to-suits, you've through is it of and

James Connor

I always because conservative more little building maybe to bit budgets we effectively we're the start out. year with think out guidance XX Mike, want a months

if year. I we've with in deals alluded it's as to, January little if bit XXXX our in number consistent as of replicate is seen of surprised pipeline, in can the stay terms be So I the size conservative. in build-to-suit was pretty prospects, XXXX, market coverage. and we strong geographic the in dynamics of as The more But been X Steve what wouldn't years, absolutely the a guidance think the last

mixed guidance year levels. next to country, be spec raised conversation we with where to that, the selected certainly this development spec we've So of developments, having these around hope same kind

Michael Carroll

then there Are about can And one-off acquisitions behind question, your couple talk a doing little adjacent markets? acquisition opportunities? low seems some to those top-tier I guess deals? guess of see you land you strategy? value-add you've you been makes in is these I cap it like pursue good I second I parcels? a Great. markets. know rate Okay. they existing those mean in deals Do those anything what your bit

Nicholas Anthony

on California. a in buildings that are market assets one-off high-barrier ones buildings, We offer like you Tier current We've And South basis. Northern on X where first exclusively a -- several which our of some in obviously focused then $X California we evaluate provide there that diversity we billion future primarily bought largest the is where a and Southern saw to base on as greater transaction actually those -- we right our That's of now. Florida markets in exposure. where want part have in California,

Operator

come will John Guinee. from question in next queue The

John Guinee

John Guinee submarkets. stats some assets you I Steve, the XXX Hey, think, of XX in own had here. great about, you

have of submarkets supply. key go of your that no do And peers of your to guys no more level about Some track Do detail? you to and there more increase actually information portfolio? ability land sort is of any you that where the simply

Steven Schnur

would number say to guess But less like in opportunities sort information it projects. I'd I say, you're for certainly We there's of do -- of development. wouldn't redevelopment on depend available what fair all a where markets, referring I exactly. we submarkets our

old we've plant buildings in now, a or currently projects pipeline, building I office taken of be think building redevelopments right existing we're half where an it manufacturing our will our half XX plant we facility, be projects steel have considered those down an something. either or of or about

a our So time of effort. spending that's what and we're lot

that long I know a there's that So there a answer out your on focused stat we're to that tracks though. it's of markets. those I availability guess question way obviously sites don't

James Connor

state-of-the-art mean around those varies people we're it I obsolete effectively to for facilities doing out in South logistics that in it doing it And And think opportunities California even the buildings California. X in New looking always office Florida. functionally We're We're we it can our cost turn I to logistics doing Chicago, East Steve new just facilities. torn out Jersey. pointed Well, in find down into develop are Bay. redevelop in Northern we quarter-to-quarter. and Southern

and So continuing vacant not they opportunities, find to be good out land, out of of we're but they're may ones.

Operator

Our will Burrows. next Caitlin question come from

Caitlin Burrows

be you able that volumes reached buying guess development about think strong you've already, land development you is little from talked you know a pipeline saying were and advance year? a we've as that as that I in in up wouldn't seeing the terms the getting but anything bit of of to keep ever, entitlements, this I terms there side high as the makes you are

Steven Schnur

other people commented this on I as have think well.

through I does those that think think more duration with length of info go some opportunities it's I projects. process, entitlement the and to certainly pursuing and to markets added get it difficult, overall we're the the

X- XX, to out to maybe or a months. drag So project be XX-month XX may what used

assuming build-to-suits could the we today, think that for similar that opportunities. up, as can the have our said, you'll I what lingering effect. guess I lot And and results a I forward. we see But going spec right now, keep preleasing think here of have projects So of some Jim see sitting

James Connor

to Yes. XXXX portfolio XXXX have will pipeline. in not on are add the land out buildings in very the the and our going and or we have contract find. we the XXXX That to development to build The next would that is least haven't go to site under pipeline. already identified year process we're our be the that at to I that Caitlin, going thing that's feed

our So for think to XXXX. being the Steve's that needs land got I comfortable he's development he's that meet very he -- needs

Caitlin Burrows

power you also your one And given a kind sense. on growing it positive of large and maybe development it's your pricing terms largest are of again needs But their hand, thoughts looks guess, makes with definitely tenant? do Amazon, I then like your what tenant. have in risk kind a That also concentration such grew services. on of what they on and

James Connor

of partnership a great, to a lot continue had long-term We've story we do and told this with Amazon, them. I've business with before.

Our makes around we'll sense the direction much our financial think teams country. to of in that the we take the business as Amazon is team and that field

with be. dispositions, them, to fulfillment our however case bonds, well And we'll for in exposure here level facilities last-mile X.X% facilities at as as the manage ventures, through may developing they're sortation delivery I group Nick's think we're either range. today, the joint the corporate centers. Amazon Sitting So

number that activity we do up maybe X% X.X%. exposure. that I But had works that don't think prune way or we the look its we'll some that we as address to XXXX probably anything, Given if to of in

Nicholas Anthony

to earlier to Jim's $XXX million this facility point, our And we sold manage in Yes. year Ohio Columbus, exposure.

Mark Denien

keep And -- to Caitlin. on pricing far around here, then as power jumping as finally sorry

power, X far the up in would As last we in each the come renewals was months. achieved growth than that XX leases we average as for you market market those I the particular better And had on pricing we've market. in achieved renewal had tell Amazon rent

So pretty good.

Operator

will Rich The Anderson. come next that question, from

Richard Anderson

Liberty do any future forward? portfolio number that in going better? for this of ability it number, Liberty and So the point of can is that creation there kind the to of think And topping at selling. from the deal you EOP and see XXXX makes anything the What sort X.X X.X cap the rate recall circa about get you about that value context

James Connor

for at and get lower, we've is Liberty portfolios, cap capital and be the our conferences Well, there amount years. for seen every of I've the flowing years, that for there I all can't X been and Rich, and and make to significant at, rate, sector. I'll the the into year of see cap literally last cap guess. the the year, shareholders, and that And for rates that's Relative about a other I comments. couple each said, projections good Every we our cap a wants of -- being any U.S. foreign still throughout rates several seeing for And we've are premiums both this think to rates we're last year continue consistently industrial. And amount domestic in to capital, paid today, lower. quite candidly capital, that get asked

the sector. capital sitting me in to put wants cap to the here So more compress in and surprise wouldn't to work continue it least more sector as be today, this industrial that we have if rates

get So better. it could I think

Richard Anderson

call? a Right. out the comment And on in made about side of being just gate? the that you much how so was you coming of of made are was hairs, thought influencing in some any you Perhaps forth. the development sort of but spending own forward? when of perhaps and the simply it XXXX, out And not these about of that on down, your conservatively hero those coming earlier development GDP conservative Are much observations going how observations splitting so process being and

James Connor

I that third react when Well, disappoint Rich, under and is experience my my you deliver. well guys thought quarters. over to don't the promise second, been in you process first It's

all our areas. January are instances in So in they been a is we as here number we macro of of Sitting couple of the recognize sector term look a for today, at that a think decelerating have a We've of in the not lot I that the good thing. these in as drivers past years. strong little bit conservative heard

caution wrong warranted, the as optimistic So saying, is XXXX want on their think I'm about clients our to tenants I we've I existing certain a what but and to grow. of message, in that don't our send probably terms everything we're said, need based seeing are pretty drivers today and the and amount of

some about we good is us, that going catastrophic XXXX today. for think year I absent not know may pretty large So really to be thing a

Richard Anderson

that to XX% portfolio last make said is years it to about X sure of I mark-to-market logically the or horizon to the re-leasing call existence kind that and and of benefit Is that. the The expire that when you're re-let stuff over I And was Mark is question, a that got GAAP market Is has then the like stuff GAAP full giving Right. middle? to of and in or in the somewhere think is average re-leasing spread you're you're earlier next spreads XX that the think end And had want X% I saying that from point the all that from XX-year to time that's the so XXs, XX rent way somebody, months, have XX%. other of perspective. year mark-to-market just effectively it XX the the that this about the correct. that at over spectrum, -- a math? of then of kind at next get it just -- you for growth the of is at looking what I the

James Connor

Yes.

Mark It's the not -- XX%, think course, XX%. clarify, and make XX% right I that's to first, XX% this will to to need nervous. I of

Richard Anderson

Oh, then. it forget forget it,

James Connor

New Northern of I strong right ago You're under markets, deals markets right. Jersey our tell now. some months Orange Southern like are we did some market that mean of you, are. infill that's those absolutely X in California, how would I and in County

week, are You presentation Board our talk and vacancies a about talking out not about X% under Orange are on earlier County, lot we there. new supply we of a had that this

So to continues developers allow that landlords to rents. and push

So things it's out execute the on ability combination those our and go and to of all of it.

Mark Denien

is. deals is at we of Yes. mean it I the I what the in the frankly, XX generally logic just lot coming roll but closest signed or deals. think whole are on, But necessarily numbers won't The put a is your is why older XX us don't stock to Rich. are deals right obviously quite just that it I that we for years, which quoted,

up be be and the lot the deals X, just have to to going that. that coming that term are close may of So than we signed more years are to XX a deals higher

Operator

come in that will Jeremy The from Metz. queue, next question

Robert Metz

a Jim, little high-level question. of just bit a

other advantage take shift markets. times where geographically market's beyond of a create Is in ways to You able there be to is continue a mix at guys at. size and a markets? roll to more the portfolio the of also focus and sell tenant annual Tier of there into and the shift to multitenants, more shift go into shift been to the on build ahead the And those desire desire kind be just it'd little continue buy in as you to whether X also

James Connor

square brought I'm Yes. smaller. or buildings our because are portfolio million you foot is foot buildings. Jeremy, glad our square our XXX,XXX people XXX,XXX and And a is buildings portfolio you multitenant. good lot up actually XX% that square is of feet a question. all the XXX,XXX as reality that's think of But described, exactly

the and, is in needs driven tenant acquisition by the buildings drives markets of what cases, in those markets. in those development those many So decisions decisions

factors. not So Central when square been Florida and you million even foot, more And size on active Steve can go in always or the an reasonable Florida to a player give Houston, it's more much some color And or South that little size bit you our we've it's other average buildings. average tenant of marketplace.

Steven Schnur

deal And what XX,XXX now, is you average indicated X over building right at think if size XXX,XXX million. and new opening our mean feet. my building is remarks, largest our feet, in I've Jeremy, look construction smallest upward Yes. with under then I I our pipeline, we're is development our

So said, on the that really it depends after. the terms we're in, going in what as submarket of demand Jim is we're

Operator

Michael The next question, that Mueller. will come from

Michael Mueller

looking the what have, them growing? you of actively at In question. quick JVs are portion various A that

Nicholas Anthony

for hasn't one Nick. portfolio this and going forward. is focused on that growth years. really and a there is we've it only several had joint of venture that We've point, primarily at been this lot significant in Well, got It's Dallas,

that couple are assets those are of the stabilization. Now we on upon most ventures do side, of have development development joint sold but a active

Michael Mueller

doing a do partners find bring there? is land, site, up the you something it there, And and I you they for to it end you'll guess

Nicholas Anthony

we no. selling those land's Well, and projects then are already been codeveloping The established, and them.

Michael Mueller

Okay.

pretty perspective, like. sounds it to from stay it's like sounds small everything's it that to So going -- going

Nicholas Anthony

Correct. Correct.

a exposure, JV a years, now. cleaned Our over quite part and it's it business right small the we've up very our of bit

Operator

Kim. We That's from Ki follow-up queue. a do Bin in have

Ki Bin Kim

excluding expanding one. shuffling new lost of is the demand, but leasing development tenants quick tenant one Just new that development you a leasing to pipeline the would How just you seats? your in say one. versus much net or pipeline, know maybe I

Steven Schnur

seeing the of new there -- I'd he a when add the say, got there we're to tenant not benefiting of would drivers, I the lot so think, consolidation, the that some was case we're build-to-suit moved us. a demand out guess demand our there's total talking is most in a of I And seeing, in -- we're We've net was that of I'd some of of of of from. the investment supply larger is majority the consolidation indicated, buildings into say Jim are the But on be chain, net through the going two deals demand. outside demand. net business new

Ki Bin Kim

in -- the you tenants bet Okay. per that curious real of And but I of cost the your on foot. is I I at would a to terms Could was know this looked actually basis, cubic cubic not foot I always foot been like estate square ever bad. square business just square if a has cost

rent as the what maybe high growth to think. we maybe not a is So tenant as

James Connor

those and the XX-foot that cost occupancy where it's coastal Yes. tenants quoted opposed rent markets height. are the Bin, comments. on that not their of you using cubic would using It's minority, to full have a are monthly annual Ki clear that XX- clients basis. small on a or do at as a looking the But unlike clear. make tell I some They're would of basis I is are couple of number the the We a an basis.

are going beyond in of that, markets. the infill particularly Some them exploring

to it's a foot go to out. starting be to math look some cubic as just or you and have tenants whether opposed us, are use or seen, the at of But finding you as the foot. closely to probably that more to square that heard So advantageous up

Ki Bin Kim

I just not more meant implicitly verbatim.

Operator

this time, additional At the no Thank much. questions in you there's queue. very

Ronald Hubbard

tentatively you. everyone, scheduled quarter Thanks, our XXXX. January same We call, reconvening Thank for Tony. on look the for fourth the today. Thursday, during XX, forward year-end time call to and joining Thanks,

Operator

interest gentlemen, do in today. We for conference and your ladies your AT&T and And you. Thank TeleConference. that you for thank does Executive participation your conclude

disconnect. now may You

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