DRE - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Duke Realty Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Ron Hubbard. Please go ahead.

Ronald Hubbard

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

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

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

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

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

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

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

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

James Connor

of as I all-time now by to are be as X fundamentals saying opportunity records. ever. good everyone. open our The always, you will have good breaking quarters healthy, and had continue safe families of afternoon, and and vaccinated. We've to successive hope Thanks, your Ron, that as demand and be business the we you

to top quarter had portfolio a and at record of the Our perform starts, core of class. development platform first our the continues

attractively capture debt liquidity to position including capital of execution green sources priced opportunities, transactions. our X are very and of Our

FFO and in guidance to midpoints. growth AFFO XXXX core drivers that us components with key these double-digit of in roll up result the expected All raising of our

me turn over Steve it to operations. to cover let our Now

Steven Schnur

back feet. down million X% high will near than asking This and to operational Thanks, XXXX of Jim. supply million to net feet net of in surpass The the well. to XX square deliveries I'll project as which million They first absorption in another XXX to cover demand overall more feet square positive growth CBRE XXX quarters. enough balance, million our nationally. fourth by to remain deliveries to was demand completions the record XXXX. for of XXX increased in time overall asking over XXXX. mix compared The the million vacancy first square dipped This continues digits levels even impressive feet, which much feet, according quarter record perhaps consecutive in new for from we be square very as feet of first square of offset market year down is the registered single feet exceeded in an breaking million absorption rents about square X.X%, XX has year XXX to then produce quarter results. Industrial year. million CBRE review the rents now square reduced saw XXX projects the over sector about previous throughout the marking full the that fundamentals to most fundamentals, quarter strong

be of the in we growth XXXX, points into in of year estate. and X-month prepandemic. This And well and retail and measured demand nonpandemic intact addition, projected business. of were X% bodes that to that is and and being time significant stronger logistics has perhaps point, vaccinations, February weather business the were in than in the remain U.S. To the the firmly in On to a against recent respectively. sales near spring pumped more our up arrival the X% real March very range The confidence across pre drivers and recent secular March growth consumer the have the is range. data for notably, - and up our in sales the when the and XXXX back XX%, XX%, indicative XX% stimulus the GDP frame, and rating And XXXX generated February recent the strong very XX% increasing respectively. March period macroeconomic pace figures the front, e-commerce some economy of

near inventory sales experience the it addition, of e-commerce, expected push omnichannel to redundancy by pure chain inventory the now the In historic supply companies to the business above very food supply yet and care low with to for Demand and type levels. ratio retail is occupier retailers, broad-based greater beverage active, response leading and record sits health and bottlenecks way. levels, firms XPLs, remains

square XX.X% we pools, Now leasing, first-generation stabilize a our XXX% California, I'll submarket and new a signing reported as on of transactions Southern in in at The XX% the the strong The feet lease is for GAAP XXX,XXX-square-foot space. leases turn below rent strong in-service market continued million XX.X% to rates, of supportive solid On quarter, including our portfolio in We fundamentals own signed basis. I were by a we mark-to-market growth Mid-Counties led for portfolio leases. first X.X portfolio. in rents very development which on assets is spec mentioned, growth. development lease to cash, to that on rental of with quarter unstabilized previously executed the combined activity continued X spec our

starts. exceptional quarter an We also development of had

we X initially We're build-to-suit square million signed very also during the $XXX which top quarter signed we XX%. was $XXX million during we that the last the in end, near starts of on reported - project press another retailer. press of In XX% projects started very million X.X build-to-suits in As Tampa's the repeat value in million totaling e-commerce $XX we creation projects at for quarter, month, market, cost. quarter were release, and the we're proud an XX total, reflected estimated in the release our customers. feet is X of with preleased These

quarter Our The development this of allocated - markets. was pipeline coastal end preleased pipeline our March to pipeline XX. XX% $X.X totaled as with billion XX% Tier at X

original to fundamentals guidance ever consistent note, forward I and best-in-class our is the I'll with and projects as put potentially I'll drop are percentage we disposition. Nick to and Anthony XX% Tier assets submarkets our we in future by as teams, leased quarters revised where over as of fundamentals new do high-barrier cover strong. Looking from preleasing turn starts fully strong expect pipeline discussed it development X start service it's bit a reflected also now for local outlook very speculative development strong operating as over our our midpoint. our and in in been, to acquisitions more

Nicholas Anthony

Thanks, Steve.

to buildings West facilities as the part feet $XX used Southern of asset including square assets as submarket. comprised For X Indianapolis X million, Northern $XX X Jersey's facilities these of in we XXX,XXX turn, proceeds well XX-XX for Houston of Meadowlands million totaling X New in IE we submarket acquire owned in In and in California's in a X sold quarter, joint venture.

assets few submarket buildings long-term market IRRs the venture. marketing acquisition effect of rent Airport expect a to contribute may sold. X of of venture standpoint, positioning leased activity asset joint our third GAV. our the moves markets liquidation outright The development, begun other all in to certain XX% markets and that to over Indianapolis These to of Tier in sold assets We've to where outright a XXX% contributed quarter for the in leased growth will and noncoastal were was either coastal Midwestern be disposition strong this net Amazon was well X within or while a and Amazon swap. facility acquired exposure strategic excess sale, part we leased joint a we Tier From assets

exposure objective to funds assets; coastal and increase pipeline. last addition, our that the the will accelerates press disposition X advantage Tier release, of development more are demand sale million-square-foot the for our on X.X portfolio recent In rationale is two, St. three, taking The in logistics of portfolio. increased now source a sale our for increasing One, on marketing threefold. investor are our we to provide news for strategic it Louis entire we night's markets;

full disposition activity XXXX and we will As now over middle midpoint dispositions raised result, have planned discuss update. guidance we the financial of I to Mark results be toward the our expected by year weighted $XXX of a to our our million. turn call expect to year. the our Altogether,

Mark Denien

saying our represents rates. growth and core begin afternoon, Good AFFO million FFO certainly $X.XX our the totaled the revised share, per We've Nick. our FFO approach The quarter first XXXX. of from few which quarters XX% this. already for growth AFFO accelerate quarter that and was everyone. current the last Thanks, to guidance expected the quarter the for for over to been we results growth quarter. reflect $XXX strong Core rates

Our low level NOI into to business. our the significant along to continues growth, capital with reinvest of best-in-class strong expenditures, AFFO growth generate

the XX.X% of rent XXXX than in best-in-sector rents continued Our more collections of quarter first collected. with

growth was this X.X%. and renewed quarter first reduced arrangements to than now strong to do XXXX comps the to collected cash was line collected basis XX XXXX we the the a compared same-property previous rent including extended quarter also had XX.X% first and on options. based basis in We to the rent due our on remain have points remainder but borrowing and effectively first bad which extension the We quarter. $XX,XXX first increased We of free in expect of facility. NOI well of as the of under our and XXXX, be XXXX. as Same-property burn-off of own have to in no for on rent NOI expense the compared credit, more quarter outstanding burn-off, remaining debt only of occupancy our no to deferral of finished growth the We with of moderate for we free quarter And borrowings April rents. less March through growth rate March secured by The compared growth to tougher year nonetheless. the occupancy

commitment reduction sustainability-linked responsibility, an As borrowing part each costs in credit year. to includes our facility the certain incremental of are corporate metrics achieved also as

the well total scheduled our X% debt of are to of sequenced maturities XXXX. than debt less future with to outstanding Our mature prior end being

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

considering share a midpoint with when range announced XX.X%, compared X.X% projects to we of increasing impressive AFFO XX.X%. growth current-year that guidance is the to not expectations We and earnings will in adjusted also of are on This revised and increased to beyond. basis million previous a for range $XXX XX.X% XXXX until development between X.X% disposition to fund growth expectation by contribute to earnings

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

will is of starts and of development key increase $X.X speculative of on this, our underwriting in rates between our list of source outperform beyond. compared range starts achieved, continue to XXXX and build-to-suit in development growth solid in to the a to and the provide $XXX continue $XXX revised assumptions million maintain guidance We million. rental lease-up $XXX for developments, to for billion This Based previous million timing both in and projects. a

of prefund pipeline with As Nick in portion we investment to our dispositions. development of sales increase mentioned, advantage take significant an to market intend a the pricing

more dispositions for of We've range based Jim compared initial million. of the back detailed updated our $XXX website. and revised billion million supplemental of $XXX guidance a couple to closing it in other $XXX I'll $X.X information million been optimistic on our Our components has our guidance now exhibit, our remarks. of to few for outlook a between range our as turn including on estimates to to

James Connor

rates, capital team's in first execution a double-digit you, create platform expected growth pleased Thank high-margin cost. growth numerous at and for unparalleled AFFO. rental our development core economic quarter from opportunities strong to drivers very our in our Mark. In secular with and are opportunities very FFO and capture continuing from recovery is raising We're unfolding, low to now closing, the and with a rising

that and and optimistic you tailwinds the we'll achieve long are support, questions. can we're in Thank up recover, long growth as As lines, future, economy will open open these lead sustain multiple and corresponding your Don, continues annual increases quarterly our similar can the now you it dividend. for as interest of it should and your Instructions]. to we we [Operator up take now for to levels for can the hopeful foreseeable as questions.

Operator

[Operator Instructions].

First, we Blaine Heck. on line of to go the

Blaine Heck

with Nick. start I'll

how raised pretty Or St. Louis, and rest significantly mentioned, the you of more year, And sense then disposition of of I'm guys you has secondary kind any much in most assuming of one-off the selling Outside other markets especially portfolios? Amazon dispositions facilities? those of you this us pricing any are guys this actually where As guidance be? quarter. kind the can changed the will sale you be of will give

Nicholas Anthony

Yes, Blaine.

most Class credit of Amazon. deals, of B, a the leased other a one-offs, assets So them sort of of lot but long-term are mostly to couple

that it. portfolio. no portfolios St. So of really guidance outside that Louis makes up in number the the of There's rest

markets markets. compressed that well. Amazon secondary we as pricing coastal assets, we've see those on to seeing But we're very goes, these pleased of than the with far especially the been as cap As compression. - recently more pricing transactions the rate some continue have It's

So another compression. last probably bps I'd say, XX days, over XX there's the been on

Blaine Heck

That's then Can Great. you And land you also elevated? Several Or are helpful. steady? materials. talk cost, to raw expect increase how think the as maybe just your enough construction from temporary dealing you really should the about competitors rising guys yields costs temporarily maybe of just talked but a cost in are yields we material fast have not increasing of whether rising now, with about Jim. are that the and cost in dip keep for rents

James Connor

years give color. been little We've you I'll Blaine. of for prices land and a can start escalating dealing number with then Steve now. Thanks, a Yes.

that's not are of is people Steel latest So the ordinary. out anything lot and about a the of one, that. talking

and go of we national of leverage of advantages we a, to and being accelerate some the One the out team's that is, ability our have and number a procurement. that design have, the developer of relationships the

need So the color tell are doing. we that finish year. for to a little today, teams some that's give of sitting balance of comfortably local more we here everything Steve think can we the I in have what pipeline the you the And the steel development can on

Steven Schnur

one. Jim would Blaine. years. another gaining Cap rates been headlines, keeping lumber tell lot are is just you, Land is of for pace. as number - has of Rents a Sure, up helping. I indicated, has certainly a steel significantly obviously, are

time pay is thing XX bigger XX Steel to to the to pushed attention guess, from think or I I concern, XX probably weeks cautious weeks. that to we the is frames. XX

So architects started more time. make on can upfront cooperation with projects and to sure tenants to get deliver you

Operator

And next, go line John we of the Kim. to on

John Kim

where are On concerned development spec are from your increasing there's any and your public markets also spec developers? spec markets developments, And escalating in you sensing you're the is there private quickly? that that

James Connor

think larger active the I Kim, the front. competition we're everywhere. John been private particularly I on tell Sure. merchant I'll the - players, you, players, do have development there's think private

indicated coastal XX% many the of in The markets. less land X%. I in now focus we the think is Our Tier the where release there, competition got X our there our landholdings in vacancy are we've rates markets, our high-barrier than and times that

any terms projects I a no think that one you, shore I we're tell - itself in always going be Houston about scattered needs but monitoring But intentions starting market we're a markets would So handful comfortable supply, of we of the have of that. to is our around. with submarkets we to that concerned bit. up Houston, in there's

John Kim

some since you why your to markets? be routes that exiting go the Louis, joint not strategy that seems excuses know in the on other you're I gave St. with of the why venture market but

Nicholas Anthony

kept don't joint I The assets? venture Generally, some JV how there would them you Louis do instances sense would other forward. don't model in what make was, our where as going much with it. you maybe We keep Nick. the work. a And St. to strategically, question why This simplistic. more and grow you have know could - just think, tried we not we is it

Operator

And to Korchman. line Manny next, we of on go the

Emmanuel Korchman

for this Mark. one Maybe

selling markets and common assets Just for the the for What's growing funding of an developments those about using dispositions equity exiting attractive versus through more stock about thinking raise? sort capital just than here. issuing

Mark Denien

we're using bit of road we'll first do little guess Manny. what of to issue exit up I to a I down little did everything a on as of we're say, something quarter. really we would sort a can And just some on forward But been going our bit long Well, I bit acceleration, an this, a anyway. follow everything, for of is things of the the as our more while. ATM on priced. guess use we development probably our and in It's mean, I the Louis capital St. continue do little going Nick kind has a that we pipeline were ramped pulled attractively as opportunities anyway. list to up,

Nicholas Anthony

Yes. to What - opportunity improve our was future. an help and improve our to performance forward make forward I going would to in add is just profile basically this going improve growth also geography the

Emmanuel Korchman

so, if don't difference? about other? a can there little I you differential the pricing know portfolios? while, pricing this one at a about Is just Nick, the assets or than single and but you larger if And more in are between looking And talk single we've talked assets

Nicholas Anthony

there depends deals assets, are rents lot the A of lot are relation of it see a A a Class out in of to the that as are where B garnering of It's certainly of A are lot mixed rates. credit cap - not as and think. a low long-term they're it's you them Obviously, sort very new blend development. the on and portfolio white Well, bag. brand-new, you Class and might black deals market.

and But sort higher hands is little they're necessarily on get And underwrite So around. types. your those not buyer it is harder a deep of as there X on they because pool generally apples rates. oranges and trade comparing the to those different cap at

Emmanuel Korchman

the now So some buying part picking up more - assets and right of single in you in then a question, are interested markets versus portfolio? second the varied

Nicholas Anthony

We X we want to focus the - a assets on yes. on what we focused to it. we side, we Typically, at X time because want acquisition where buying on want,

locations So we lucky happens we years done Bridge when several with what these friction typically, that all of our get portfolios, reposition to creates lot the you of get we've it's after and Typically, But to got and trying where noise and assets of normally some those want portfolios is a portfolios it strategy. ago wouldn't larger wanted a on you be it. because it lot them. in, transaction complements you

Operator

next, And the we're going of to Jamie line Feldman.

James Feldman

Great.

it? a And I into I mentioned of you you Or is earlier talk right. in your had think heard that of about to about as there? sales that sell, and something this JV, the perpetual you would is keep one-off? comments a kind plans if grow this more Can continue more kind structure

Nicholas Anthony

Yes. different far assets. I all the monetizing levers mean, looking we're as as at

talked One forward range And on them. going be of managing of X% quarter in forward continue around the about business do Amazon we'd exposure things think - prudent our that amount exposure that. right And because is significant I our with is about this rather managing going probably end X%. being the X% at a to the to we of we've their

that And to what similar are there take don't advantage we might forward. future because are. case. then that they assets be that type sell that something asset they a in some maybe of JV are we may use structure want or to And where So of going to monetize assets can that we of outright

James Feldman

on like thoughts partner's terms potential a in magnitude? and of stake stake structure versus your Okay. Any

Nicholas Anthony

No.

to a to stuff. decent Obviously, numbers But Amazon I something sense that exposure. of think in hard we any the we evaluating do manage to all make need have amount don't monetization mind. - we're

James Feldman

you started Have talking Okay. partners? to

Nicholas Anthony

Yes.

on but a existing have always our this - with regular the had over partners We we've whole we of We a had basis. talked partners to discussions concept discussions, about time. lot

James Feldman

a more like consider structure? of is... fund you Or Will Okay. this

Nicholas Anthony

I mean No. no. -

a more the used But Maybe. historically, be it we've with partners? of think structure. not JV JV fund necessarily multiple structure. a I Could

James Feldman

than kind And Any then economy out things the - here new of just picking in where Anything about time kind of unique that at that of as of space? leasing a we from might kind Okay. about tenants the up. what you've in the be quarter different stands anecdotes past? talked are are types

Steven Schnur

don't think so. No, Jamie, this is Steve. I

redundancy. think XPLs I very, I theme be And centered hearing also e-commerce. for around continue around think centered the you've about while a active. very It's to inventory been that's with

probably margin the over they've XPLs I that's right a have lead always taken active, over So anyone active. the think else. by is sort now but wide of most been

Operator

to And next, line Nick of we the go on Yulico.

Nicholas Yulico

bit thing like now. a occupancy, of It's right this just your kind for guidance. to how kind Just vacancy question there on Because you're But obviously it discussions approaching with in versus retention I of guess renewals, frictional raise pricing with pricing picked has last tenant deal I'm up pricing whether a willing strategy more looks your little year portfolio. that year. good wondering push you're your a to

Steven Schnur

- it's is are we pushing certainly but Nick. We're the Yes. Sure, Steve. a case-by-case envelope. This basis,

this have the not think did on quarter, I role coasts. much very we

rents. results, some the we're some So conversations. continuing but were if the We're happy side, push upward do which need with They to. on aren't of there's We're difficult what rent willing growth back we'll to having take I we year. space to our the some conversations, to trajectory easy rest think we

Nicholas Yulico

Okay.

substantially. of on on could your - is a question give much us perspective XX% sort land, I I we that how second basis, as just here development - Maybe the prices Just being keep of book going are where markets. Tier know hearing in give X but you have is up listing coastal land some know you

big a of market held bit a of development. just land think you all where Southern bank. perspective for worth on basis land California the land your little have really for a on Maybe very You is

Steven Schnur

that. at Yes. looked low just We in It's the mark-to-market. XXs

upside of in our quite we a So bit landholdings. have

Nicholas Yulico

value? sorry, said, higher You book the XX% about than it's

Steven Schnur

is, value. Correct. value market our book yes, The over

Operator

line the of Caitlin to Burrows. on go we next, And

Caitlin Burrows

now. in very So you're active obviously development

XXXX, is for You XXXX billion midpoint. $X million started over the guidance in at $XXX and

believe volumes and and a get wondering, both just do is for the complete to continue runway So ability from was the projects I you target in your and to that's also there 'XX land demand markets? perspective

James Connor

second would tried has, in as it remarks, Caitlin, of kind I if continues growth kind a year the of economy level most is the my projecting, is think to ample banks next of very, to we're certainly as of volume. tell Yes, be it able yes, and good year. going do to closing indicating the of leading very recover, achieve I reference to half the you, opportunity comparable that year are in we And to we should have the GDP a

Caitlin Burrows

I willing yet spread. that occupancy, the play expense out high leasing of But rents the key Okay. given mention to think makes It that I the does in one think Great. occupancy. push have which following end at seen up you're the at sense And questions the on supplement. of the guys some then on we recent of you haven't just assumptions that

So a high, ago, last as obviously, high. they're even not or but year versus quarter

So should future? expect that a longer play just out? the wondering, leasing we do spreads in to see take the to Or near would little you bit rise think

Mark Denien

are our that, about lot where One been markets. we've thing we Let have talking where the are that XX% rolling This Mark. is leases of located, coastal NOI now they're me over a start in the Caitlin.

happened quarter, XX% about just This that markets. only roll of coastal the it was so our in

or markets. plus in XX% roll with were almost that noncoastal cash happy XX% and very XX still we're that when gap of minus think I So

see XX% a to get years see our of down that portfolio roll. us to few pushing You XX% will But for roll the looks XX% road. us to you the our think I won't like closer

in be coastal X.X those to year, we'll start next the For years, more markets.

when where we - on roll our the rates And know the to of think noncoastal with that. opportunity that. those markets numbers, higher point know what we're achieve where even just pretty to I But So this a it's they XX% does to up don't get quarter. those important give I still little wants were anything add than Steve happy us that to was. if the

Operator

And to we're next, line of Vince going the Tibone.

Vince Tibone

year rent growth noncoastal differ discuss you of Could remainder your X, portfolio? your how markets market, coastal Tier this the market and expectations between

James Connor

think clearly, you, Sure. Vince, I'll tell I'll a there's - numbers I basis. on macro that get published take stab. a are the

You individual to into submarkets. need the really dig

infill of coastal are I if double not high-barrier think rent some the growth, markets digit. high pushing single-digit

I probably X% supply, probably in country, That think the have averages where barriers you you're in that single the rent the out to from we've seeing to digits. that center less growth CBRE. part lower X% of to been

I know that answers - your that availability if by discrepancy is So There obviously don't supply. of hopefully, question.

Vince Tibone

helpful. And standing SoCal, New like similar some difference in markets the of between coastal just Or high really versus single-digit That's any anyone Jersey range? they out? this are kind of

James Connor

extremely the supply little low being rates, two think vacancy are new I markets you very that's being indicated very added not active, absorbed quickly.

two those so And markets are doing well. really

bit There of well. I say Northern a was a had slowdown. continues perform California I'd to think Seattle -

COVID-related, it but coming strong what think to with back we there. have pretty affected, was more seems be I

Vince Tibone

Got it.

that's of in more that other process given of differ you're challenges color that think could curious, on does a the little dispositions? the market, just I one the marketing from the some Houston really Just how I provide some in. squeeze If Can helpful. marketing? and you pricing dispositions on

Nicholas Anthony

Nick. is this Vic,

You Houston dispositions? said

Vince Tibone

Yes.

there, Just curious if weaker pricing - of the that we've seen weaker compared other regions. demand some to

Nicholas Anthony

were for was a we're buyer deep, country. very leases pricing and the like seeing the long-term good, they The very with Amazon, Fortunately so across us, pools were experience. great it was

So that the well went those reason why obviously us. for was

Vince Tibone

could as to something a Houston is And that you? for potentially long-term Or St. hold is exiting consider Got well Louis? similar it. you

Nicholas Anthony

No.

Houston we're the in cognizant think of to I our future. exposure plans there, have we no but exit

keep eye just it we and an on So it. manage

Operator

Mueller. Mike on line of the next, And to go we

Michael Mueller

Two quick ones here.

outright development level max JV? in-process assets what second, or First, a what's the want would of you're put cap looking some your consider when is thinking the pipeline, you you're under? there to about And that difference Amazon in versus between sort then stay sell that to you the to

Nicholas Anthony

is and take sure I'm the first Steve the second this will Mike, I'll take Nick. part. part,

most the we're outright what sell looking Generally, venture, for it's of joint location-driven asset. growth profile part. terms the of versus In to it's the primarily

So if versus rent likely has in embedded that growth the it it's good we're a going sell outright. market put a it asset prospective to JV and good growth that probably more rent has an forward,

So it. your that's second generally how question... we've looked of And the at part then

Steven Schnur

Yes.

part development are, the the obviously, can the question margins we we the The better. of your opportunities, do, at second developing more on

we relative I we're what roughly pay attention size overall is at think the now. exposure of and our X% to our company, to

were think get start that. XX%, I we XX%, to something like we'd if nervous

Operator

to on go the of we next, And line Rodgers. Dave

David Rodgers

rate growth. Steve, on maybe a lease question

maybe geography, it just in the terms talked what you're but rate the by or the portfolio some size growth core last quarter color You and about in of so. across seeing on

Steven Schnur

Yes, Steve. is Dave, this

You're by would broken past tell to we size asked but you, for up, about rates I I the again, and operate, quarter XXX million. portfolio this a our you maybe segment location. size best-performing million think that little us, was lease XXX

be I going I the back X size. it's - call think last, X would historically, better it'd or quarters, it, larger on to be you, tell tended

segment that for into continues this demand So to hard It's based that. to the year with year the us, read quarter into to I large-size the the on seeing. the would expect most we're active. But case be be X much

David Rodgers

stepping first successful those any the Or into in second But coming Do just you guys of year? have at that quarter? some I we start lot coming quarter? had tenants of think that a I connection, talked of out. the to have then little roll on that. into into bad but of and year, backfilling a would a sorry, all the do did bit losing I fairly moving to hit think you - And you leases early were expect Obviously, that in see Great. and the guys quickly kind about

Mark Denien

year is guess, re-tenant I call, X space. Yes, Yes, end last X the I'd were of talked tenants, this the X tenants. January say Dave, were Mark. to significant but or of that I on in at there or get not and process And trying we the basically first were we X, about guess, these off, evicted

So that the space been all of backfilled. news is good has

to going Got M&A the actually themselves. of those couple a in got after they're rent through stay fact, all. some on and In their tenants went transactions space current current,

space. back now other Another should downtime will leases to quarter, full say, in and couple all in the probably and better rents it. but better be We've credit QX. up be the out the would running of of rent leases come them, are half, got here signed, backfill signed some with we've There got second we obviously I the

Operator

And next, on we of Anderson. go line Rich the to

Richard Anderson

to be, kind that Amazon have think is decision? who to just participants could it about know part Is your XX% concentration? tenants a a I driving Or whether your - it just don't the Realty or in part? you What the XX% about intuitive scary commentary, some to coming what's that decision outside be want of are lose of natural agencies, ask of sort too. mean, it worse could - Duke wanted observation to get that about rating of I your Amazon? who's a on is mean, of is a down. I obviously, to exposure, I selling - I - percentage lot So driving that

James Connor

Well, the their I'll and their growth. rating agencies with active it input at Part alluded of and my sleep with it the chime start have, have is a and and pipeline well we of part give Rich, leasing in. very amount is, Nick it's to night perspective. can of managing I Steve from Amazon. given profile Amazon earlier, you out credit as Jim. we But very that. development exposure

probably And able is guys questions, at earlier So he to just detailed pace. is to the of continue left as one a in the what of select that pull assets the those to outright speak, some to rapid for joint so are upside, unfettered, to we the amount the least that number for venture. grow very where lowest sales have the and are and going markets Nick's escalations, out have very, do,

infill really those some term. And in we hold valuable hold long really, of. that and to to a the markets are get incredibly assets, hard for want And we are work the those

So you Nick, [indiscernible]. add can

Nicholas Anthony

and we're we're And trying of terms be assets, right. Yes, overall portfolio just I to of that's our tenant diversification our prudent - think geography exposure. in in

good to a just we're So trying maintain balance.

Richard Anderson

understand. Yes, just I'm [indiscernible]. I being

Nicholas Anthony

Yes. We're not afraid of it.

Richard Anderson

Yes.

on just know second any there the events was done, from wonder of necessary at don't a what reaction really I just FedEx peers. then your anything. just one there the or the security if you enhanced question facility. And is in somber estate community if real response perhaps I industrial was of have little with about Indianapolis part curious any you, owners the not could I'm but but Okay.

James Connor

year Rich, our well manage in the starting enhancing over our the with that tenants, make safety operating them associates. helping a local had a tell for I'll that and of protocols have Yes, COVID couple of the of their comments. you high-level interaction ago I teams amount environment will

done the building. that we're work a of in building the people the buildings because with we've our our development we site have that own when on of Second, number people

in So those general. increased and safety protocols

any say those But horrible saw is amount the subjects reaction interaction what with of it all is to our I the you, So today that it months I at tell FedEx tenants ago. events what from won't we like facility. of of on probably in XX double will was

Operator

[Operator Instructions].

go of on Brent we the line Next, Dilts. to

Brent Dilts

remarks, prepared inventory comments Great. levels. made sales the In some you on to

you buffer built large could in? safety get a is about talk to stock frequently XX% ultimately So might thrown about. X% how

I'm curious just you think. guys what So

Steven Schnur

Yes.

more it's to do, I seeing back lot America which costs, going that costs. I the everyone the around you here. distribution square to Central And distribution in production a are I administration e-commerce costs translates space think some offset - of new going and read points to whether we're you're I on. every the rise country needing the of and feet where we - X.X of see of you, activity. somewhere well, reports day talks the what cases research lot be same I think about, seems neighborhood XX% X% tell guys retailers, talking demand. billion We to it think groups, to XPL would to of now, lead to We're to North things a to transportation the of move suppliers more will and to start going with offset America, see Transportation think more transportation significantly which

indicated, of now. lot a as So our back tailwinds in right Jim

James Connor

impact the the reinforces the have safety just need given to I point. Canal, add just these just logistics Yes, while major have, and incidents anywhere in the Suez can Brent, of happen additional one for necessarily all shipping the the at it U.S., doesn't of we other and companies Even that vulnerability stock impact that to because incident would the globe.

This X that So X to years. very sector, next obviously, not something for positive a but this is we're trend. the is with, to deal for going our passing

Brent Dilts

Yes.

talked firms other you versus could talk about I but as Okay. international seeing dispositions. on things far peers, like in or like investment one versus pricing, you buyer about types anything one that? as And know a then market? you already the just in Are interesting domestic shift

Nicholas Anthony

Yes. Nick. This is

change a the But we seen names there. up. lot the Obviously, of suspects seen in of usual pop we've bidder have normal new We pools. see also a a lot

Some of them are net offices. high family worth

sovereign-based, Some of America, them what are Spanish, have Latin you.

are of Some other - these of out of classes rotating rotating or a them into class. asset lot are asset our

sure. So there assets these base for an pools, in that's increased investor for bidder looking is these

Operator

line Idoine. on And of the to go next, we Jason

Jason Idoine

that points the you of one on touching up. Just brought just

Is back trending been of recently? the and picking repatriation States, people I and that significantly? more that happen some Or that bringing some how you to could So manufacturing United activity talked up the about with has guess. that production of

Steven Schnur

production talking Walmart way to But Yes. manufacture see bring to assembled, announcement production headlines. I we're from some see not the other reshoring. that. some trying some recent you're the starting that Jason, think There's Obviously, a back, the be I a time to changing coming back. of locations. takes way but may this goods, of goods And about long are they're had packaged, of is they're it Steve. China about - to starting when know you're

we in That there. our significant. folks Mexico, folks activity obviously, from But operate pretty deal and So Texas coming don't there. been I with goods has know California Northern

You Northern talked and folks in hit to markets, in that the those activity now. starting some right to is of Mexico

Operator

Instructions]. no And questions are there [Operator queue. more in

James Connor

I'd line. today. joining year. forward thank with engaging Don. Don, the like look many the Thanks, rest for of may of you the We throughout call disconnect everyone you the to to

Operator

Thank Service. that your Thank conclude does our conference you And AT&T Conferencing today. participation you. and using for for for

disconnect. now may You

Ronald Hubbard	VP, IR
James Connor	Chairman & CEO
Steven Schnur	EVP & COO
Nicholas Anthony	EVP & CIO
Mark Denien	EVP & CFO
Blaine Heck	Wells Fargo Securities
John Kim	BMO Capital Markets
Emmanuel Korchman	Citigroup
James Feldman	Bank of America Merrill Lynch
Nicholas Yulico	Scotiabank
Caitlin Burrows	Goldman Sachs Group
Vince Tibone	Green Street Advisors
Michael Mueller	JPMorgan Chase & Co.
David Rodgers	Robert W. Baird & Co.
Richard Anderson	SMBC
Brent Dilts	UBS
Jason Idoine	RBC Capital Markets

Duke Realty (DRE) 30 Apr 212021 Q1 Earnings call transcript