Duke Realty (DRE) 27 Jan 222021 Q4 Earnings call transcript

Company Profile

Participants

Jim Connor	Chairman, Chief Executive Officer
Mark Denien	Chief Financial Officer
Nick Anthony	Chief Investment Officer
Steve Schnur	Chief Operating Officer
Ron Hubbard	Vice President, Investor Relations
Nick Yulico	Scotiabank
Jamie Feldman	Bank of America
Ki Bin Kim	Truist Financial
Dave Rodgers	Robert W. Baird
Caitlin Burrows	Goldman Sachs
Ronald Kamdem	Morgan Stanley
Emmanuel Korchman	Citigroup
Michael Bilerman	Citigroup
Vince Tibone	Green Street Advisors
Rich Anderson	SMBC
Mike Mueller	JPMorgan Chase
Bill Crow	Raymond James
Anthony Powell	Barclays
Vikram Malhotra	Mizuho
John Kim	BMO Capital Markets

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Duke Realty Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions].

As a reminder, today’s call is being recorded. I’d now like to turn the conference over to our host, Ron Hubbard. ahead. go Please

Ron Hubbard

afternoon and Good welcome our to Thank earnings everyone call. quarter year-end fourth you. and

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

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

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

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

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

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

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

Jim Connor

Ron, Thank good everybody. you, afternoon and

guidance or by year. that the met our start all exceeded year our throughout We XXXX saying Realty. of revised me goals, for Let was another Duke outstanding XXXX including

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

record in leases immediate million include an concluded in-service cash records development when growth particularly X.X%. delivery rent year record projects impressive million for full We it year. average leases, were in of bonds And ESG XX% company at the our November. service is our for for us. culture We X.X continue company and of $X by with XX.X% announced couple XX at were both our backfills. date, renewed our raised as neutrality feet we $XXX leased of numerous X%, common which start leased was and and responsible coupon with finally projects, with year green XX%. are billion of which XX of were in across XX% XX% dispositions XX% Tier projects all-time We and cash a in recap square So creation another annual $XXX all-time let me originally One the billion X.X%. our square responsibility from highlights GAAP most billion markets. our leases XX% property with carbon completed at a a which on of development the outstanding signed of XX acquisitions. generation includes in dividend significant you lease, foot of portfolio in We now property the over new but goals or growth We terms of XXXX. achievements, in Coastal respectively and increased second including our commenced NOI million $X.X basis We run value We year, to We rent developments X.X record. and manner million XX% we that Same XX% attained placed an us. corporate our of on all-time of

and Steve fundamentals. some to So now touch the market operations let me to turn quarter on cover for it over

Steve Schnur

about record rates points low which XXX which feet, term below averages. feet to all-time touch Demand XX of in on demand XXX absorption, first fundamentals. on I’ll similar million square logistics quarter exceptional Fourth the about Jim. by dropped and the Thanks basis historical an long last is supply record. vacancy exceeded X.X%, square of highest to sector market third with quarter quarter overall million was national over

ecommerce, full year activity all largest square logistics this was longer was next this groups, the as boom quarter, million the own restocking demand be on last case to continues to nationwide in be significant term our as to robust in feet. rates with with retail million aggregate of square party inventories in segments trend We of XX%. see in National nearly growth the the bottlenecks user Lease years. expected compared up of asking to completions again demand For a third X.X around feet for the XXX projected and rental XXX reaffirmed Reaction in continuing fourth whole, a in our early sector. XX% rose rent time portfolio. contributor to the as the well market just over year. chain feet into CBRE market strategy the XXXX supply five average recently stages be over will a billion representing

shopping addition online and growth In spending the this consumer driving secular demand. and are growth of continued much

imbalance, mostly is the For larger we current in our is. remind year supply as on located and the expect currently demand markets. not pipeline construction about even the everyone this current call, sub we pipeline under supply estimate will I’ll of as be XX% that

fourth executed by strong signing XX% Turning million cash your was growth feet. and XXX,XXX very feet strong transaction own again GAAP. Rent size average X.X very for square portfolio with an quarter a leasing results, of at the XX% we leases

foreseeable to portfolio future in our for In the generation very our estimate XX%. to expect be growth we strong. lease be rents We leasing on second mark-to-market

markets nine start nine cost. of site of Jim in breaking redevelopments to projects development, six a existing fourth $XXX totaling as were the had ground and One tremendous quarter million structures. development in mentioned, were projects starts of quarter the Tier on XX% Turning we Coastal

with $X.X in end to higher pipeline active totaled prospects number this billion. even Our at is bring year near pipeline XX% This term. development the pre-leased

projects. creation XX% XX% We expect generate these value to margins the to range of in

land land prospect Looking yearend at of for totaled our our new million additional and plays. very is starts an strong million forward, with list XXX $XXX development balance covered

$X located as land acquired or has It's from it as years we can balance of own believe above of few only ’XX in with about roughly we owned two in levels our our markets. is are much about support next landholdings important years. that recently consistent the the of Coastal market robust, and remains and been Xx also several land will. basis, under long the average which our years as current Tier demand XX% quarters. control we own One four this on the of last for our to land We land late billion annual stars contract of for picture note Our communicated land we’ve value what the is book

With long development I’ll are we very to through logistic continue We good lead the will well believe to turn favorable that, the high acquisition, sector term Our Nick over IRRs. quarter. to margins land and new value disposition cover for support very positioned it growth Anthony to to activity in development. continue

Nick Anthony

Steve. Thanks,

we a Southern million three most well square Northern acquisitions, notably of and totaling California market feet. square Jersey the transaction, New on quarter XXX facilities as property building foot During XXX,XXX in in XXX,XXX as closed an off

of transaction proceeds recently on part noted Ohio, quarter of was as XXX% call, was fourth would April point a that contract As this forward project Amazon, a last out to I the leased which take-out. early $XX XXXX placed under completed million. in of generating the we Columbus, in in sold

$XXX activity full sales exposure development the asset and acquisitions. are CBRE this of venture the and of Combined previously overall asset $XXX $X.X with with X million. NOI. month by to Tier million this our Coastal of to joint was XX% of of XX% For year of third trench closed our Steve, which earlier Tier share for capital we Global mentioned NOI exposure to encompassed Also, our moves billion on proceeds the the recycling partners, X

sheet projected markets close third across primarily now The quarters the individual to second XXXX. over other turn are earnings over and disposition year primarily to results and activities. expected this of are Mark I'll assets multiple balance and

Mark Denien

to $X.XX $X.XX per was year the fourth XXXX, per $XXX to a dispositions quarter. was executed Thanks the to $X.XX and Nick. the the quarter quarter volume from compared for per year XXXX quarter share proceeds ‘XX ‘XX ‘XX per XXXX. the million did represented until share during FFO quarter fourth of share, totaled slightly by third $X.XX for defined FFO full compared compared decreased fourth reported late the fully and to share Core $X.XX and was which share per for quarter in of $X.XX we third from for full $XXX Nareit per per share XXXX. in as ’XX. compared FFO share not $XXX third $X.XX for the the Core core FFO for as the AFFO million significant of redeploy quarter the ‘XX for XX.X% year a million in Core the asset full of increase. FFO

as FFO effective growth Our Same to XX.X% NOI months total basis NOI income from our and share pool point I same was a annual X.X% the property ’XX. we full to the NOI would basis properties basis ended on of compared results X.X% X.X% growth for net XX represented X.X% XX.X% on and quarter. for was on of a property a for income store quarter operating and operating AFFO to generate the that continue to respectively. for increase XXXX. XX/XX/XX cash substantial adjusted out like three months property net was outside non-same growth net the fourth and Same year

CBRE trench which of third Global contribution liquidity financing JV, though scheduled significant this transaction our we to received will just next month have month. apple notes the mentioned, December of million the we the We’ll maturities for JV to closed Nick XXXX until debt our of After proceeds proceeds earlier X.XX% along to redemption XXXX. $XXX which As originally $XXX totaled this over our no mature were was the fund closes use our with an mortgage growth. unsecured contribution on million, fund in of this of both

a for we FFO results. range $X.XX yesterday XXXX, into share, the X.X% announced the per with per of midpoint to representing of over ‘XX Looking share $X.XX core $X.XX increase XXXX

to NOI to in increases XX.X% X.X% is with projected share of We also basis addition growth range and X.X%, growth growth to a property on announced to XX.X%. basis in impact the year the XXXX. rate we midpoint on cash AFFO between X.X% of a rental range continue the rental in we rate the in realizing strong adjusted Same expect full of leases in executed XXXX, of on

surface the on it forwards set we with lease we pull to typically is than expirations, significantly low released future normally a of more explorations. some have contractually roll While seems

said For early a renewals. schedule us expiration environment had been have actually in this rolled in approaching over for brokers actively our and ago, fact year XXXX, their X% instance customers expiring and in our we we XX% but

our in million the the lease the billion $XXX escalations proceeds to pipeline terms with have $XXX expect starts the disposition million $X.X with projected low a year. for the healthy assets range in We and of strategy long continuing to from are Development at to dispositions $X.X level we of target annual maintain and building in range pre-leasing. targeted rental billion

Our of assumptions plans quickly the of More we and leasing of advantage available range our which components a ‘XX in development component a to demonstrated of allow document coastal rental estimate specular projects Tier on specific markets. continued record in take will include rate have the website. are of us increases Investor consistently believe those market, which track and Relations we the X guidance on XXXX significant XXXX

over turn Now, to comments. it a back final Jim for few I’ll

Jim Connor

great Thank Realty. Mark. for what reiterate to a was like In I'd year you, Duke closing XXXX

the all exceeded year we outset, of our the at expectations. of beginning noted I As

NOI As expected continue continued we to to value strong to bodes by the Demand of pricing exceptionally roughly dominant platform. added development year, power XXXX, created drive demand strong. see look the which low supply remain growth. is well our this equal record vacancy, property into drivers ahead our We'll same with all

is FFO market growth is for consistent of the current As roughly we should be we platform basis that fundamentals. the foreseeable future, Mark which over a XXXX, able to believe achieve of noted, AFFO the mid-point and our our a and XX% on level guidance with

the us success and I I thank didn't of of capital. of their our at we my Duke their dedication investors good colleagues remiss achieve of stewardship allowed all of continued their have. work Finally and want level for our the to to for that I'd if Realty of also all thank support recognition invested hard all be

back two ask limit welcome questions. of open in course I or it your get you that for for is remember Now perhaps proper questions And are queue. you And Q&A one we’ll would the to short questions. always XX. the to up

Okay, operator now we questions. will take

Operator

[Operator you. Instructions]. Thank

Our first line question will Nick ahead. Please come from of Yulico. go

Nick Yulico

is for what’s a you and would there is What what increasing if comfortable last lower In than give us a thought Thanks. you this maybe the process would range starts, stars. terms your which a the starts more drive get year. development Hi year, could everyone! of feel situation where the just bit even actually of be development

Jim Connor

see Nick. a have, the build-to-suits in other well. end solid then high towards large least I to number XXXX, you we give speculative If can can the like color. Thanks thing think have and off had of say can do we've I'll and those we can we level work its some guidance. think always us ties continue I the we development the I to Steve leasing. would accelerate back continue you of if things; two our I as our build-to-suit we at start would a know And pipeline,

us to the end us you to any have add. guidance. up push additional raise or color if give reason Steve, know potentially would think you I to want that don’t I high

Steve Schnur

Yeah your, mean I you the million strong look into last going a year We had we in year of our at was range, $XXX $X.X would very I billion it. in ’XX. just budget the back say, Nick, did

it feel ‘XX them part we good our but and sites time our of the think when we right about getting very getting is heading I are into started. prospects,

So the them find more the to strong. started. to opportunities being get is about demand picture able It's

Nick Yulico

thanks. Okay

going on development up that the down, cap last bit margin follow-up which you a yields about, pipeline out where penciling dynamic next but know we just over about move, Just – How can are and you're on new year. that starts. think quarter where should development should a the developing rates cap forward yields how mean rates compressing and citing. I versus the went

Nick Anthony

Nick. is This Nick! Hey

see rent continue to we that strong been growth continue achieve can think will I very on growth, long see achieving we markets as that historically. that I we've we're know help think the You above in to and rent continue as focused margins us to that the normal

Jim Connor

Nick, and value more this a quarter We last mix and with yields replace lower and in, but actually new from the Yeah of I placed that point in markets coastal up. we that the a markets showed service are creating some yield The went initial stabilized we decrease that bit with assets would out a mix. pipeline market varying really higher are maybe little in little lower, that in yield the so it just developments is the the market situation. to quarter

Nick Anthony

even not Yeah, going would future. on there and for and foreseeable that out investor still tell any we I even strong increase demand I you is cap cap up, rates, the mean though we interest rates seen to rates, expect continue still there in with very have

Nick Yulico

Okay, thanks guys. I it. appreciate

Operator

come the will Please from question ahead. like next Jamie of Our Feldman. go

Jamie Feldman

out picture about of the the in of you range it XXX guess I can square I you of a know coming kind Great! I touched Thank the but million XXX little firms projections U.S. on see year. foot this big just you. you talk know bit, for some you million, the supply about more mean story. brokerage

about Just you cycle the the how should in the be we risk the just thinking know ending market largest pieces that. new about exposure thinking early of just or of or

Jim Connor

substantial You level buildings, know is been know the I think hearing is disconnect of today's as know in completion. projects how and count I'm see same annual in these damper projected some the of supply to a out you in the opposed several difficulty the supply. materials; Jamie, and pretty actual I for detail actually But artificial of projects. you this you last cost rising land; sites the we've stories terms of the there a started that same really and of increased we cost people the entitled placing and you get on sure data of number and ground devil's to world announced years rising the will think if new And do, to

while simply if exceeded reasons be year another wouldn't where here and be surprised this we So demand those saying we supply supply for a were from is cited and earlier. like demand year I I now will equal, everybody had

Jamie Feldman

we about, being built, portfolio rents that and or on the seeing tertiary we or difference supply submarkets. on across then more or market? its being real pricing in for your putting keep competitive development in submarkets seeing in are Okay, the hearing for of What's your that's same some pressure your projects? you Are thought a in different

Steve Schnur

operated variations not of at XX% are seeing on mentioned these market. I big When or sub not you in construction under own that’s is got we start. markets a right I'll area it an lot pipeline, we a Jamie, property that big markets of right, No markets that now; Greenville the in Memphis, you, and going in. in not submarkets that is construction Antonio Phoenix look I lot would has numbers. we don't markets of San we're tell are the that we between either supply in.

property the we the little not soft talked in, say we in, that we a of In will markets terms starting to I own XX be would markets soon. the calls on one of anytime number to these a about that is one and building that in that probably be continues we Houston are

Jamie Feldman

of there market guess constant submarkets. are the where in, even across rents you I you think is within are But supply, kind

Jim Connor

growth record this got Yeah, markets you we seeing real numbers and – in we up obviously all year. over, in, I mean - its got for ourselves are no we are put jumping but you've strong

digits double and wrong I ‘XX its rent up in in the year, same at push it that to mid-single think to and be we growth I do in ’XX. the the think ended thing we XX%, thinking going was set that to and U.S. it again, market this into into maybe went digits, were

Jamie Feldman

you. thank Alright, Okay.

Operator

will Ki the question from Kim. next line go ahead. Please Our come Bin of

Ki Bin Kim

value Thanks. But down footage a that dollar square little value. that Congrats is or you stick the great we bit. actually development the on want topic, probably lower we've year. just to projects another implies to the the total if of about start that with with a than inflation projecting I number just seen, knocking it think are to

it that your yields you expecting can and of XXXX for about talk start. part your So what

Jim Connor

Steve. ahead Go

Steve Schnur

million do does Sure. that of that depend up safe where it right. feet range, starts. between somewhere Ki X we development I But we'll million think to XX in Bin, square it’s new end say on to

Mark I Jim you got how earlier the of part of much terms think that it And picture think little mix, us. reasonable to be returns, a we alluded on, are probably is the rates market on our in again of assuming on. want and still know we were risk but it We've are XX% pre-leasing good really cap be returns, with think to I in the barrier large number on, to healthy As today. statewide a and or is projects will expectation were they on our going but considering stabilize creations five low the value our high demand markets, working returns some to it depends for looks depended in of take as XX% consistent a I

Jim Connor

right out a foot the think on. would thing basis, you Yeah, cost year per last right. theoretically that on that you other going is value did only up mean this Ki I development point do dollar if it’s year square I same I the you’re Bin

because square are developing going is But part costs less feet, once up. probably So mix also market of right. you it again, are

foot development coastal to per buildings more per place. of We to smaller per our where these markets, do is are square which site continues take going in dollar

Ki Bin Kim

support in little if a do topic, a more and next a curious build normalized. are pull infrastructure of demand I'm out And couple kind was look the if XXXX growth Got you to ecommerce of think forward, you. the think and terms you where of separate we year years bit

Jim Connor

I let a and infrastructure I've different complete I see of many and of think the about you people of done Panama a We've build going for number that expansion to times before get example of can Canal years exercise Well, the is, we and let infrastructure told number get expectations. help to have both spending asked fully reasonable The started to remember me we operational those. ways the to and been best how about talked is the effect. answer and for it took years it and

legislation than what So still you old. I or probably days is XXX think know the XX less

You to funded projects got going get that. and started, you before are approved and to see

several impact be will see years it that. think of the I we'll before So full

I and of first that the question part was Bin? second So question Ki what your think the was

Ki Bin Kim

you more normalized. little maybe e-commerce, of for pull we are actually the ‘XX about And network if the where was I ‘XX forward warehouse build terms not year in and So, bit infrastructure XXXX talking innings was the build. out more where to just think a looks

Jim Connor

if somewhat Well, were last traditional forward terms numbers I think think players supply we ecommerce, retailer was say, FedEx strong of dramatically. And know a in, continue facilities ‘XX know the chain, I I as believe years big ‘XX but believes year. fulfillment moved over their some at retailers for everybody and innings and are would well into of customers we and ‘XX that to ecommerce pull development look like you think you have in mile for think are ecommerce more and still our centers these are that ecommerce the normalized we down as in in I of you the early UBS grow the traditional I very

So early I innings. in think the we're

grow I of think aspects going see sector I continue see that business, and some downs to but ups to you'll continue think at to very we're with healthy a rate. different

Ki Bin Kim

you. Thank Okay.

Operator

ahead. go from next Rodgers. of Our will question line Dave come the Please

Dave Rodgers

the lower wanted pretty opposed all like and were lower it guess for asset you the off growth debt, versus I little dispositions, everybody. expected to using think last I we've and gave to Mark’s acquisitions, more financial year maybe of guidance than investment Street. the kind that It and bit, comment on lower afternoon as largely even conservative, sheet good of touched starts, bullish is the more a year. understand seems pay much to But ahead and Obviously Yeah, the guidance by sales where shrinking kind growing about I balance you development it. is

is to $X want that So starts about? with I take combination billion, development understand, to land, to worried $X.X something entitlements, I there billion you the guess Do the have of you're ability labor, that steel some you right against invest terms know up or of the natural aggressively rate. are barriers able now you're more given more low vacancy coming there capital being in to

Jim Connor

Well, let me look can the in. to barriers, start with we ended where any we I have I others if possibilities think and year we up off million and of No, where $XXX don't exist. those the and year, we then think – at chime guidance not XXXX are you started

ramped that it’s we volume, land the to As more pipeline, we’ve how think our to We've a many ability going forward And guidance development and buying continued those year. pipeline support the or indicated exceed much larger signed leasing of of us like some the development going be during in to function of and I of the I are of last a to development to holdings then significantly about markets. land. build-a-suites of course we guidance our and it’s end accelerate continue initial the that speculative most those said we higher would earlier actively up bigger for did year, push

no message, there's we're hidden – not So no, managing. not we're

to prudent that you opportunity guidance I is of and the over I tell have a raise to Good, strong guidance hope to pretty probably times. this XXXX think the intend consistent. we few but course

Mark Denien

not growth the That's and I a of to. look fund temporary in just through, here from to keep Jim Yeah specific refer add debt balance our back assets balance sold that, just at we was on that deteriorating quarter. first your we now The buy early. off debt to just out That more the sheet or frees to went sheet in David, asset our I that to cash do our just to debt any. would really debt point really balance It's it sheet way up went did thing. pay pay back this even sales bunch without a to like having

a more temporary was that of really just use So cash.

Nick Anthony

And would side. then lately the add Dave, acquisition on I

I like growth of we and midpoint – what the we be think development, because depends million $XXX like the than going majority is tough. to most guidance $XXX $XXX It through a about returns our had acquisitions. adjusted Acquisitions did opportunities are are of million. last the the there better of year frankly we million; or on risk

Dave Rodgers

and like kind what that like skew that have lots you Great! year normalize they are but maybe ex-Amazon. you just acquisitions of that last acquisitions spread this basis And kind year. some it of core was then of cap realizing relatively about in’s might But dispositions Nick stay as with There and out’s and looks the for well. can a seems and on dispositions it's XXXX, rates and talk small, about follow-up XXX spread maybe in point between

Nick Anthony

I that XXXX the we acquisition IRRs, last months about were for is bips is Yeah, to the the spread out and though expanded total than calculated disposition our would IRR’s. will about spread the XXX our higher bips, have think in the continue point XX same. be those What spreads XXX of I returns IRRs the

Dave Rodgers

Great! helpful. That's you. Thank

Operator

Our go next question will come Please line from of ahead. the Burrows. Caitlin

Caitlin Burrows

your XX% afternoon. to generally as to at even look guess year occupancy and almost that that stay or guidance. and occupied, ended net you it or Hi Good high increase like flat seems end there! the expect guys I you

store comfortable; current and and growth not of are makes kind give key thoughts if occupancy wondering high just that ideal that rent you that indeed same necessarily can some getting you recognize that growth. possible? the Is metric, the on So but you occupancy strongest how NOI

Mark Denien

long mean we rents are Well, XX% can want and I’ll best we Caitlin. wouldn’t as like Jim's get, always XXX% having room, quite frankly, lot some the but talking you or I as I occupancy. XX% too. why start about I getting occupancy a of

at think or know we growth rent of at and you at, our I look growth. think posted, back go near you our I You and just know that we'll I I look top peer the be

long but as thing. of rent having top is pointed to are the our but remarks, the growth a in likely like a posting numbers property same than see I perspective group, we – From I quicker. near we're tenants but you stream and a low we expiring, occupancy to that what out or levels getting XX range, that prepared our to maybe high even good little in ‘XX that at of It’s from XX are So occupancy, I'm projecting. points sorry, could will rent not in occupancy, lot, keeping be just that XX% growth really our rent and property mid as do basis more but pick-up guidance specifically, we on bit kind it’s give really of ‘XX don't same a even actually to that's and of explorations right. a We anything have lot roll know doesn't to there that what’s portfolio don’t peer

Caitlin Burrows

lease Got expected gave under been properties service. and stats months And just you been of in average last up a they went having follow some sector timing guys trends. service kind XXXX leasing at on of quarter your XX% it. placed when how developments maybe on had know I impressive of two since that from quick the lease into

so could not drastically, begin of So much lease a… that have just reason of believe any I that's a or quickly, to if that only that if you take know quarter to it's but time longer wondering wondering, move been that don't they

Jim Connor

XX% when Like on as for at started today, they would they they quarter, timing deliveries it’s look example we I service, the the leased when if much right sit project. were I this we say still but XX% we've here guess actually XX the that went last leased into months. were at No. been you pretty the

So you if the kind know almost you we in they of almost, placed doubled service. even occupancy will were before

we like of markets southern New So continue Cal before up most projects lease even Jersey still service. especially to these going and in Northern to

nine to other you’re the those three you months. So time markets then average, on six and two to lease in it's months at looking in markets you maybe up of know zero know to

to it's would we started the I couple months. we underwriting, similar. which our beat quarters, and today say on come XX I just our that sit pipeline in, as of continually in think look about what's we here looking to we going starting plan So next is what very at

Mark Denien

is a point to square not got under portfolio in vacant feet space, XX% yet. of of in little metric the the million that other Yeah, X.X we we've which is service

So the out I that activity teams that continued in the area. leasing of for country, performance think that all speaks opportunity are to across seeing the as and the strength

Caitlin Burrows

thank Yeah. Got it, you.

Operator

the Please ahead. question Our will line come Ronald next from Kamdem. of go

Ronald Kamdem

else of free Congrats potentially year! me. leases rent sticking keeping think some sort mentioned aware is that occupancy great guidance, for you on store tail winds. fewer – Hey! anything Two is there's quick a same little as we about higher, numbers be rent anything the that you I why think what because you that Just the of know previous are when or bumps it rent not rolling sort to NOI with the number on a know think question bit are, When growth you're about obviously is lower. of they the should mostly else you ones maybe or I there posting, you

Jim Connor

It's deal mean I call I'll we’re look rent the really against if what getting you on our up roll. deals getting, overall growths quality, know at anybody. rates you we’re I deals, the put

got roll, deal you or a any than good fact. I out, we our as think a at is just quality thing that's We to were remarks, on anybody, better for we’re mean our prepared adjusted return there. leases I so supposed I look happy have out do the ‘XX to have you the peers rolled, but we of risk less very my I XX%. actually I like you would on mentioned with our X% the of other tell we put in roll, rolled guidance know mean

When probably done roll. look ’XX, closer we’re you we’ll showing we’re X% and XX% be at that in all that’s supplemental, our said If be roll. it’ll to

same signed. come take we to got years leases property come from in the leases together, So those ‘XX average remember, a only you signed growth need ‘XX and will if from and part you ‘XX that, the two because the to you of will lot of take ‘XX we really

that will of affect Some ’XX.

posting, that year together, and two to call growth ‘XX average our period, portfolio XX% over that that we're X%. a going a over that’s been you roll we’ve XX% number if So ‘XX little of at cash rent

portfolio, close guidance occupancy, rent X%, that. that know free our in bumps because like up you things add You are the our to embedded the rent, to X%, to be that that gets is close you difference would

So that hopefully of watch…. kind

Mark Denien

what ones year a would The hands know a is know don't think is you total you you have leases early which point quite the because know good candidly, and in us the in I idea. they those. are, we’re pull you know discovery Steve’s leases can the at lot to be add real The across you the year in know with and of just this amount forward upside other Ron our and get we I country guys able on its dialogue of we’ll early for thing

can dictate the pull to can forward we depending upper will get. know really how how we end you So many I think close

Jim Connor

the I I And on Dave back was question little then Rodgers last make, Nick maybe being to to circling higher. it think point dispositions would a

we those assets, can rates sell pool, forward assets on frankly You just targeted leases the bumps our property them. disposition, think Quite get value maximized for term looking those assets we've you we’ve where really value attractive assets our we some that we the maximized really frankly had we and of in There Cap know have that know that rent the can think we longer it. our are and quite lower same we helps so into very more it ’XX. on think

to kind growth an of continue with and You we will of those get more on know assets. items ’XX, growth of replace higher impact out our be assets those lower them portfolio but

Ronald Kamdem

Great! then sneak And just one. if I a could quick in

wage what year-over-year you from about Is would talk sort you're it? the throw you. really seeing could Anything, number the so with it on any what around sort and helpful. Just on Thank of of can hearing your tenants. expenses, forth; ground X% be maybe constructions you up X%,

Jim Connor

question on costs? wages Was or construction workers that warehouse for

Ronald Kamdem

For warehouse thank yeah, you. workers,

Jim Connor

think seen on in some you dependent I areas. varies to you've a XX% the increase region, know by XX% wages it probably but

up, – the the asked with be our a of customers and quite rent a know with conversation Caitlin operating rent Between to inflationary continues they question small there, up part business, You that customers are part small tenants often, costs you wages are Jim of we about to these of their has you bunch a are think be our of are know but a logistics continues are right. relatively quite I is enough teams it. overall which know you pressure earlier significantly, points the from lot is under of a I so conversations transportation few different out – mean facing this know look, and a hard costs, pushing challenges

Ronald Kamdem

you. Thank

Operator

will from Please ahead. question line come of Next Korchman. go the Emmanuel

Emmanuel Korchman

Hey guys! for, I combination Steven guess This one and on Mark. is a

the the spoke lease were effective you place become immediately? same because the end NOI, of at you Mark, then but pull questions. doing the them that or about When couple XXXX or did of early, a you leases You the early? pull rents those of so rent take that not mid-lease benefits back spoke you’re XXXX do about the not sign early the back, but sort new expiring, and signed renewals XXXX leases bumps

Mark Denien

they are place lease that, they to current but end take the It generally lease exceptions effect ends. varies until Manny. the till currently don't take some Generally There the or lease new ends. don't

Steve Schnur

Mark building, natural I'd The is time, them in of point would that XX% that said, they we'll take I done place around a know with these conversations times Manny the the to some have the agree. say do tenants there something of improvements, expiration. redo of need to lease one needs, right, lot you some exception Yeah, whether at but as

Jim Connor

only I be six years early. now. And are were two make are – these is, that point These but clear three to months we not to do expected not, these or to in few, nine other are a the would leases just from generally generally roll

Emmanuel Korchman

perspective, the be From you a talk from model I cash and right, know flows point cash I'm cash, making to doesn’t cash the early really fact your is in signed right. benefits but them early. guess Jim impact from steps, perspective, they might flow big you’ve Mark are about that flow the it a leasing them you doing you

nine your about…. be early, From about to natural going months at still you’re going lease is – same, because just to flow them a still be right? your expiration perspective point you've the So thinking done to in XXXX this cash is XXXX six

Mark Denien

because what we that's to in couple need you impact of now said But ’XX, is, why to together, trying us signed average of was impact leases hit I a lot – years the really the I ’XX. the the say a of

average why you on years to So you’re a right. need really that's go; exactly of the take couple in

Emmanuel Korchman

of imply your cash XX% do to where to And average. – is then I do growth that implying think rate to mentioned rent you growth we you be us or guide ‘XX sort can to that when we want rental going what use those Is fall that out? numbers

Mark Denien

rent to low basis we GAAP similar to a expect to would numbers we which high look is we is very as ’XX, and ‘XX’s teens that Well, cash. say what think today say expect – here XX% mid growth we on a high on in I to XX called

in right it’s that yeah, area. So

Operator

And I a had think follow-up. Michael

Michael Bilerman

its Jim, Hey [inaudible].

in Just any a asset either planning. rise out as [ph] doing your level about changed or at in did about to question deeper all of mind lodges strategic maybe significant venture, that going deeper thinking start what tenants anything helping Has Obviously at look the business. there. you about your taking is you the then you but advantage in thinking? expansion, think management, up know their your centrals strategic term global the higher the really CBRE longer board Does of into and diving capitals

Jim Connor

know are prepared about in know we're planning strategic those Michael, certainly know I sorry those, you border are but consistently effort, – at are debated and they you and and Those today. announce are topics that the to our you mix not all any they talking we’re all in efforts – of are that things the

for opportunities scale you are our us. all given and they things know size know that You are

Michael Bilerman

will peer So I know closer past to three you comments your potentially one be a the of things: like, I the essentials. to to S. Asset don't Which want been, first? relative those sounds doing rank it you distinguishes if think set. able company you be management that know and them have in Global, to your U.

You to know asset the manager. massive want you don't become

most of one, small, and buckets put want mouth. the logical to do words essential when sort you the of to then needs to those to but You in last your want time on seems put one sort not like being pressure the scale direct don't ventures I

Jim Connor

services projecting that. correct. I Back think you're presents the had sitting here U.S an into know you you to in I say last we and and customers attractive very level And I for goods to of No, think I is I we you today know think opportunity grow and that the know our to you continue The ample we for push need the – year don't would international original appreciate think markets opportunity. opportunity we maintain your have coming growth years. to to international, that to that still and know interesting we're to

the joint side, time and the one doing ventures a like management of asset other any you know any the CBRE joint we're asset we management or and we the venture try leasing, the of terms still management. have, in know the You keep

some So fee revenue of even these of ventures. it source is do when we us, for a

step business. be I are asset the it'll third get before management a big take and willing big, we to while be into a a, think it'll purely party

Michael Bilerman

Okay, in Florida. see you

Jim Connor

forward Looking to it.

Operator

will from ahead. next question Vince come Tibone. Our go line Please of the

Vince Tibone

assets pricing in you versus differences Hi! single Are assets you demand Good any portfolio investor seeing larger individual morning. versus thinking ! How portfolios? for about selling a are or deal?

Nick Anthony

is is very Vince, expensive. Everything Nick. this

to exclusively, we leveraging most them fortunately and challenging deals. portfolio a going go fully in the in deals is we've on place You them, as team almost perspective transactions. at side executing and we the marketed know now The but we side, on specifically find marketed right reality buy good good or it development are that infill acquisition of interesting at teams that that’s we’re the – some these pretty likely We the to our acquisition at of off-market the very assets the most look can lightly are got marketed. transactions local is well, from on be off-market of look

Vince Tibone

execution portfolio do of But you mean, the as you kind there it and disposition think side? gets today the the know or you I into is institutions looking a sector a for about just you the overall still get combination many so assets same assets sell is of premium bigger side? a sowing what to on know portfolio single on

Nick Anthony

there a would premium always is question, as yes, but answer I side. a tricky on That’s portfolio the disposition

last us do several saw that transactions on year. You

is portfolio pulled because can reality that demand strong, is transaction. the know You leverage of you lot a together, when investor bigger sort so times get can a of you

so to pool push – But is act time there's be can on bigger these you you really of pricing buyer there. lot your a balancing deals. a smaller, some going Now of

Vince Tibone

helpful your me; book today? That’s development What think value bank for makes of is market that more land of One do $XXX is around That the land you the million. color. sense. value

Mark Denien

Xx.

Jim Connor

But basis upon think that. yeah, that the of Xx book picked Yeah, too. quoted not I in think prepared it’s our may Vince we what we have quite remarks is. that

nine XX know months our nine cases are in the going recently We some to of you put a balance lot has value and this, quite We months. to contract this on keep bit sheet. moved just of It's part XX a a in land. market been under for to

Vince Tibone

Got thank you. it,

Jim Connor

Yep.

Operator

our come question from Anderson. next Please of ahead. the go Rich And will line

Rich Anderson

afternoon. Thanks, Hey! good

do elevated, really to or of a years a inputs do see and think looking XXXX those the approach same in upside store at to that given done at in In for kind you there's X.X% fact a curious started outputs? ended mid-point number than NOI. at full that point X% year past able and X.X%. you previous that all then with was ended X% if different store been given X%. a that occupancy I started produce you've XXXX the what similar manner at the the in know so that's I’m the you In X.X% XXXX you've you at projection That’s same So years. and is you year at this

Jim Connor

this Well, Rich. answer I would way it

the We’re gave, to, The what midpoint. yeah, you sit tell prepared to comfortable we’re room goes at to is which but X.X%. with speak there, does number the all there there's that year up it is some to so way we some I'm I going have would fuel guidance to The you the X.X% Looking X.X%. here the in tank that. this not the is here, definitely you get get and above tell X%? entire guidance so that to know the X.X%,

Rich Anderson

occupancy? XXX% Like

Jim Connor

sorry I'm Rich.

Rich Anderson

that No, XXX% never mind. was but like obviously… I said occupancy,

Jim Connor

telling trying. trying. we’re I’m We’re you,

Rich Anderson

process? a for off start Again in growth So XXXX faster nice you if the much position demand few that in be mentioned that view, market rent years. the the does okay, point equates lot more – sense a to demand in demand and We question you development that a that is which being own and turn heard sort you national a in above nervous in. me cautious take the second to company can do supply, as that past to at what than is supply you to supply get X% running since your approach of XX% balance. balance in know But shock is

Jim Connor

the were matter. it and up in fact X.X%, would, vacancy year in we If here's but of Yeah a think U.S. think that’s we pretty where Rich, XXX X.X%. good points the we XXXX goes I XXXX. had basis to is I

know anytime not development it's to vacancies put spec to good you on us XXXX, quite and landlord's creation you'll a market think I good U.S. value as from as you've build-a-suite around. see able know the under go continue X%, and to be but continue You got both side, and

Rich Anderson

quick soft is this dollar is performance. as that sort of course. is typical of surprise, But on good anything in is Northern there of up quick, in that right follow now no unique the New In same Jersey popping or spike and seeing a New going eye demand sort just topic. on seeing there you're they particularly big perhaps Northern well we're a just And Manhattan Jersey support

Jim Connor

driving is Steve? work You our tell based. – much demand can about mean talk industry pretty some that’s I I in broad there's phenomenon you can't it. one

Steve Schnur

Yeah, Rich will just I you. tell

centers these you large I think is biggest happening translating know know around I thing population think is the of the right. business, our online and phenomenon any economy whole is e-commerce you to

earlier everybody inning inning Amazon So know is warm-ups where are, one sort and I you question done in be right. and getting in there about of else was what think a we might with just

So I think a that's of big part it.

is side New in today. the needed think assets you I you Northern know with know particular that Jersey, are demand the

know for and lot modern, Greenfield seeing e-commerce have and assets New they Jersey You modern you more in got are for Northern you're lack of don’t know. more development, fulfillment that the so a they you opportunities

opportunities. to quarter of six demand as our well lack in about the talked nine remarks, fourth that's our go we in so the a and available, ready redevelopment, As of causing as that lot projects

Rich Anderson

that. noticed all particular that Jersey I a I understand that, we saw just take could spike caught guys. Thanks New much offline. I perhaps Yeah, but Northern my attention, it very in

Operator

Alright.

Our of Mueller. ahead. Please go speaker today comes from Mike the line

Mike Mueller

to with the Yeah, how hi the bumps your that overall one. compared quick did leasing portfolio you just XXXX Curious a achieved average?

Jim Connor

to Mike go now were we bumps over X.X, averages in XXXX just Our portfolio they is up right did north. the to at three, continue that so leasing and

Mike Mueller

rent average? markets earlier then it. Tier that think overall about did coastal the And rent the to growth X you XX%. in forecast, talked How Got is comments compared about forecast XX% I a

Jim Connor

Xx Southern you'll Those we Empire proposals vacancy I mean the the The California, that X.X% astounding. is right are numbers that. New I Jersey, think are Inland now, probably are those see Northern quoting. California, at Northern

quoting activity quickly near how know is proposals to pipeline up development end date in and with today significantly get because our end rents very and we of of changing an those need You term on are our markets. a new response we're that date

Mike Mueller

it, Got thank you. okay,

Operator

ahead. Our go next of from question come line Bill Please the will Crow.

Bill Crow

kind cap of Good term perceive pushing you supply pushing and increased rates rates? given you the etcetera. as exit increased you deliveries, cycle, up or the financing cap the private contemplating up of costs, longer advancement afternoon. exit Do market underwriting be the Are the should Thanks.

Nick Anthony

No, so. This is think Nick. I don't

on reality annual Now are IRR tell the have we do and capital up now been still some consistent other X% I price will but interest analysis, moved I projections cap on our remains and do I when annually, to in bump that that know we that's that in projects, space, quite that our is keep over comps right the yeah have based market, a rates The pretty you, it development overall rates has investor our just we years. the rates, think forward. but is high for bit, on continue can cap a going side demand the correlation and little to of and a industrial cap the

Bill Crow

And tornado is Kentucky disaster Alright. to [inaudible] on the tension for in which we want had the Indiana bit in the industrial a a here I sector little is, then there area. focused and when of one throw

structure up Just change developing with about pointed. the kind follow you village, whether discussions the wonder has itself there's new there's as been has or any think any whether to tenants anybody of

Jim Connor

the and with country, every yes to and issues the tell in month we're Houston I'll Bill, coach. and around that, top building deal South look earthquake across the codes deal with issues hurricane building state know you the engineering We Look and of Seaboard. change or no. Texas you No, Florida we virtually art buildings

the and just deal our construction with evolution that's So that constant People day. development. of every

Bill Crow

me. Alright, thanks. it from That’s

Operator

one next ahead. Powell. will Anthony Our of like of Please go question comes

Anthony Powell

afternoon. Good Hi!

a long question start the Just development on outlook. term

guess development Some the long kind value numbers. or of over I How term strong given target right we environment? a the give should starts as your of your medium enterprise an out peers about of either percent have given to think overall

Jim Connor

growth numbers I foreseeable we’ve that to the tell this Anthony, that guess for its we’ve the Well think company at would We future. FFO given. level I with positioned the grow consistent you

development above $X think we've So to in year. guidance year, last once that were expect to should we were you I well continue levels pre-pandemic we the this a that have billion The at range given us before.

So are that pretty continue level. comfortable committing I operate think to this we can we at

Anthony Powell

and call what first others and and Thanks, you do you for inventory think about worry could year ratio and same I’ve the of be to demand Do impact do were you which if quote. this that restock, predict sales you more go half it. to store medium people out Got to economists that macro as growth? case, seen term that, get would

Jim Connor

customers our IS to ratios get backup. their would love Well,

and the doesn't of know operate you take a and typically stock X.X up. X.X that of those, remember into the that our account customers number between increased safety to that You build are inventories trying lot

extrapolate about IS can where you is trillion talking you today So a and ratio of from inventories. additional the are $X

trying, while. going take it’s going that to get us, so issues levels all spite of up. think to the to with it’s know chain So issues take back for those we're supply us given us everything a I are In today, that dealing supply it's it's take chain everybody's here into awhile going you that the to XXXX, well

Anthony Powell

Alright, thank you.

Operator

of Malhotra. Please line Vikram the from come go ahead. will question Next

Vikram Malhotra

Thanks.

where growth is portfolio that just today? all with outlined, ones, quick the two you've rent Just mark-to-market

Mark Denien

effective cash on and a XX% net basis XX% a on basis.

Vikram Malhotra

growing, from okay thanks. occupancy rent flat, levels wrong? guidance. same say where Where then asking next Why widening, say to more current year. on if maybe mark-to-market sort would have you won’t accelerated you arguably NOI I I’m even next still ’XX of have release growth XX% year. and store would I would just But not hypothesize cash, give you – And I'm

Jim Connor

up you question. that Vick that please? you I didn't get repeat Could there. broke quite

Vikram Malhotra

spread so a than you I today. a of do was look have next lease, year, is there's outlined higher if optically you to I you basis just it to rent year, what on know still there So, but more lot arguably the more this achieving cash market saying growth that, are leasing, forward you you are like versus lease.

So I’m NOI accelerate would a number. statement? I that not same specific would at looking year this why store next growth Where be not versus wrong year. for

Jim Connor

We haven’t guidance Vick, that statement. I wrong don’t given that with but yet anything see

see us congratulations! anybody about anything your it’s but has with I don’t ever it. guidance, wrong [Inaudible] statement, asked So XXXX

Vikram Malhotra

No, just outlined market, you rent, so to there it Well, seems room. the book-to-book was so. I’m just I the cash portfolio wondering, first like is

Jim Connor

we going are no, you're not Yeah say wrong. to

Vikram Malhotra

guys. Okay, much thanks so

Operator

[Operator Instructions].

We are going Please ahead. John of Kim. to go to the line go

John Kim

of speck, it stabilization all. I'm your pipeline period with leased. development becoming I I take completions wondering know few you. was increasingly stabilize. your quarter, at we at this if and Thank the just was months extra looking wondering, XX% an demand about fully to length were could think extending the I is strong does

Jim Connor

guess don't that's I well, I'll say be a I I start. increasingly assessment fair it will more to that Yeah, know spec.

construction the – business but going don't our I material think change stabilization of delays an true do know a our fourth will much. that's was today I think I don't true. may impact I that that it a overall, forward, statement for And as quarter think these us. was bit necessarily anomaly be

the Our been them two months leasing strong I average changing prospects, that given wouldn't we've they has our of the and us. leasing for today in been after pipeline and on see service portfolio in put

John Kim

are retailers in to this my or own question you seeing activity your Amazon far and route? more their and to go on strategy follow leasing other and notable the as decide Are a you market as suit think real-estate. providers shift and buying logistic of going do is to or second Okay

Jim Connor

it a and ’XX that user. know tell activity Their ’XX. from will has bit level to Amazon of to continues come you down be you I down active was an what in

more. be will ’XX bit?’ that. But bit answered down that in was thing, little down happens a we’ve that ‘what good slows and a think a question I when was for a Amazon sector, had our the everyone

was I staff think the acres they other the they on to of before. the year the active day, what this ownership acquiring which side, on year, X,XXX past acquired I acquired more similar seen land. heard land a we've

G-plus markets with areas going tertiary I that are a necessarily of that locations. in these and lot floors of not think is that in being done them we're some to in; compete out

and any have of assets we them buy Amazon we but with opportunity we look, that. know had to You haven’t – sold had the an do they've

– speak anyone in So customers, we're from of in market. sort footstep can't to anything but to follow with of with I any trying haven't we try hearing compete it other don't, And terms us seen don't for Amazon. I I them, any not

John Kim

Okay, great. Thank you.

Operator

and have no in time this queue. at you questions Thank further we

Ron Hubbard

you to Thanks year look markets. like getting seeing the call the at to you Sean. conferences, well everyone regional again. our as hopefully industry visit joining many for out Thanks I’d forward of some as to thank physically various of throughout We today.

Operator

will conclude Services. conference gentlemen, participation AT&T for your our Thank for you and Ladies that Event today. for using

may now You disconnect.

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