FR - Earnings call transcript Q2 2018 | First Industrial Realty Trust, Inc.

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Operator

Good morning. My name is Sia, and I will be the conference operator today. At this time, I would like to welcome everyone to the First Industrial Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. President Relations Vice Marketing. of Harmon, and Investor Art Please sir. go ahead,

Art Harmon

to everyone, Hello, Sia. our and Thanks, welcome call.

call statements discuss be statements results our Laws. plans me our and and accurate assume we of These time or today’s July no in statements, forward-looking guidance, date, information include Before could obligation described our on provide. our the statements other let sensitive We this remind XX-K which cause second statements we differ update are estimates as everyone and other SEC only materially management’s may Federal XX, of to defined and Thursday, may by as results quarter based XXXX filings. and factors, may Securities our forward-looking expectations, that Today’s prospects. are XXXX. our Actual from

our You discussed measures earnings and earnings non-GAAP release. can The supplemental at Investors in tab. today’s and filings of a report, report find in our firstindustrial.com, under our SEC financial supplement the are available reconciliation call release

and your call will Peter we and and Also, Baccile, to call Executive Management. Officer; Executive Chief Investment our Chief Musil, call up the begin the and Jojo by our Chief it Markets for Officer; Officer, President open With President; our on turn Operations Scott Yap, after with will Senior today that, Financial which are President me over Peter Vice Asset Our President questions. Vice Schneider, remarks Capital of of Schultz, let Vice Chris Bob Peter. Senior Walter,

Peter Baccile

good and everyone. Art, you, morning, Thank

XX.X%, and rental X.X%. quarter-end, strong. in fundamentals grew rates were our at our X.X% delivered remain cash team Our as NOI quarter occupancy at stood same-store good At up cash another sector

rental have As change of for rate weighted signed of cash average our XXXX of XX% X%. rollovers at a today, approximately we leases

completions clinometric reflective trend portfolio advisors, to health According to some market. growth of feet. positive our the Our CBRE, XX strong continues. quarter million XX absorption report numbers rent net team and feet, million Nationally, deliver the was by preliminary square exceeding the second for continue of square

For of absorption feet. XX net year, the XXX exceeding square completions feet, first half million of square the million was

of Our policy real the impacting today Most space and new last in evident as available six part in needs West, customers completed is activity markets. don’t remains as decision-making serve watching. logistics in We and generate options, is offensive to strategy Industrial the Empire This trade very all remain month. it demand limited of in headlines tenant space critical our their some renewal With bears their revenue leasing Inland both estate building recent where see construction wins tenants we and of leasing much a of mind. their strong better view the growth. project at our our top Ranch,

signed and good and the of the feet the lease we to square have total, also the service quarter. will Ranch of just there, and see feet. to more the leased two continue the announced, quarter. fourth XXX,XXX square-foot interest. the buildings and XX% we summary, XX,XXX XXX,XXX square In leaves with was approximating That for footers square us XXX,XXX expected have cash up developments second have and three in previously a California we yield feet we X.X million X.X%. with an Phoenix are lease of and lease XX, currently at Since placed building full XX% June quarter projects These in and at leased. entire Southern completed square in in The last call, As footer XXX,XXX our long-term leases commence in commenced building, for third more signed XXX,XXX park. commence which the square will leases we XX,XXX In

at scheduled Houston Southern second yield of group square-foot feet had expected fourth of includes project second the X.X%. million our of Estimated Pennsylvania is X.X in cash an to third This be the of X.X%. start XXX,XXX quarter California, our yield completed of developments in in I-XX/XX markets also million the the Chicago, square quarter investment and We Pennsylvania. $XX.X and Central building with with total

In also some about growth We our pipeline, efforts. can the while in to support these our May to equity strong where opportunities the addition in developments, we further are enhancing we deliver acquisitions relative margins to early portfolio. excited leased raised

second $XX our the Aurora million fade and approximately XXX-acre we We Center our will the of first and out up $X.X square the at feet for and starts We in X.X weeks will million have there. five new include Commerce building coming new buildings acquired site four in Denver’s million. a build First quarter totaling They sub-market. to I-XX/E execute

at be center. park building with distribution yield investment this Total $XX.X building will of for estimated first XXX,XXX The is a cash X.X%. the square-foot million targeted at

footer. Plano. which and will Frisco also will fast-growing of the submarket serves buildings, XXX,XXX First Louisville, a We comprised start of XXX Phase-X Dallas cities our two of two Park North be and the Phase-X XXX,XXX with of the West the in square at that feet square future, buildings cash In a totaling XXX,XXX yield projected can million we park. investment is $XX.X Total X.X%. estimated build another

Center we’ll Logistics begin first East. Given the success the the our the Perry Empire and market, construction Southern strength of leasing in Inland also California of

million estimated be will yield investment will targeted be bought a a is total we a X.X%. the Also, million X.X%. Center. of West quarter, with Glacier estimated and the of and site the $XX.X square-foot XX,XXX in second Perry Seattle’s square in Coast First yield we Valley, where start investment Logistics Kent on XXX,XXX First feet $X.X will the Total

million facility. can added $X.X site During for also we accommodate in the that XXX,XXX Dallas a square-foot quarter,

center the Southern front, bought vacant square-foot for million in a submarket. acquisition we the XXX,XXX distribution On Clarita in California $XX.X Santa

and redeveloping upon building X.X%. targeted currently this is interior are We for our yield the property lease-up of the

had an We sales. in-place dispositions with totaling cap million to quarter X.X%. $XX of successful Moving rate a with

smaller, quarter we the two have finished of multi-building both XXX,XXX sales largest additional assets portfolio in in $XX In for square-foot Worth higher Our to-date, sale third Indianapolis. Fort a million. was

million. first, a those Including million vacant square-foot and year-to-date for dispositions, total for The our a $XXX also two $X.X XX,XXX second, is $X.X land the million. building sales site

year Our guidance of the we for share on top Phoenix prior corporate the million. $X.X site I of million XX-acre be and user, was that proceeds our that we million based $XXX expect end now venture range. at pipeline, would our to was sold sales in a to the a $XXX joint note our to also

quarter good my first details additional and thanks teammates our guidance. to you walk for of that, will the all So, some Scott aspects and half quarter With across our through business. good a and on

Scott Musil

diluted XQ in Peter. quarter, versus $X.XX to our one $X.XX XXXX. In EPS from of was per equity diluted per early second share were funds offering fully impact quarter completed second $X.XX results ago. property year and share $X.XX in the total a reflect to $X.XX dilution XQ compared temporary share you, million $X.X related per May from share, NAREIT Thank sales. company’s approximately operations the

basis noted, and XXX As from year Peter XX basis quarter prior XX.X%, points was up the points occupancy down a ago. from

and points, quarter XX Sales for project in-service, seeing now a Our portfolio. had was occupancy but change activity held about We in in impact versus while at lease offsetting we basis placing in-service contributed with the XX by Leasing points. occupied to XXX,XXX in impacted the are outs XXXX. basis by like square Kenosha. feet basis XX% points assuming we are some and about Park placed will XX portfolio building developments due primarily project, this XX the the first First up B we in-service ins our

X.X comparable feet fees, approximately basis, was a basis, X.X%. by and volume, million rental leasing equity term we’re today fees, up At giving XXX,XXX our renewals facility. leasing quarter to square up and square higher reflecting rental XX.X%. versus average X.X debt At X.X%. northeastern driven the increase weighted announced offset straight-line renewals overall, June XX, changed of NOI up Lease square-foot renewals and rates leases is the EBITDA including rent. figures and increasing adjusted Amazon an for prior increase the development given X.X us in average powder the quarter. and quarter. totaled Cash Regarding to in overall the offerings, in Quickly by On of rate leasing with new gives slightly commenced This was were excluding occupancy, versus long-term of loans up newly a landlord were Pennsylvania termination times, termination sheet limited of metrics. and few stock which second cash XX.X%, rates by moving weighted dry bumps, plenty were on an square secured X.X fees notes, feet expenses. net NOI up leases. QX, exclude is investments the the our financings including the rates which our on difference higher maturity was XXX,XXX balance same-store years X.X% X.X was the for property retention straight-line growth our termination than These XX.X%, cash plus square of the The renew, during interest million rent credit that commenced Of footage renewal X.XX%. were typical, starts. Same-store rate preferred these, lower Tenant new average feet free development. leasing with XX.X% large growth on is was free unsecured end a to million rent cash rental the and X.X%, $XXX,XX X.X% with during attributable

to our second quarter, to at S&P pleased also BaaX, range debt Fitch report the that unsecured flat We’re and upgraded BBB rating. the Moody’s joining

for our guidance to on our moving evening. updated Now press last XXXX release

Our $X.XX $X.XX NAREIT to FFO share. guidance is per now

additional The Same-store to by point capitalized NOI growth XX.X%. X.X% quarter range quarter, is X.X% slightly results. $X.XX Excluding This equity to to and to $X.XX related due less quarter share. follows: in and interest $X.XX in per and basis the a key starts. the driven first leasing development quarter-end second guidance impairment which due guidance service with of the new are XX share from as now recognized our offset temporary the $X.XX midpoint than for with occupancy to charge offering NOI per is what second sales, assumptions FFO discussed we our dilution of is an our quarter to the call, share in Average first is property development severance by additional per XX.X% the increase

million completed First year $X.XX In Aurora expect to we total, about developments. related in interest Denver, for and California, share XXXX, $X.X the capitalize First quarter. Our Center $XX includes construction to in in G&A full Southern Commerce developments unchanged our the anticipated Glacier at the and third in to guidance First million of is to our First June planned in which related quarter Dallas, starts XXXX Perry recognized Seattle. XXth, XXX $XX under severance the costs million, our charge and range Guidance first excludes at per

related Our damaged acquisitions me future not guidance from guidance impact of we NAREIT what the future settlement, than properties compliant new Peter. issuances, or the development or let impact claims does any issuance to losses, our excludes over debt the equity. any repayments, any The the after and insurance or back future reflect this other just potential of two debt call, and of the discussed. gains that, gains turn impairments any it to sales final future repurchases of impact of also starts With impact earnings

Peter Baccile

Scott. Thanks,

have the questions. where we remain under and strong it our throughout business. pipeline. are we're for and at that, please midway excited in We’re Fundamentals the pleased operator, our we point construction about profitable up open the of year opportunities With about

Operator

the And KeyBanc come Instructions] Capital Mailman Craig from with first will [Operator question Markets.

Craig Mailman

go Hey into guys, just by more Ranch the Congrats leasing. maybe little on depth way that. the to

types those? where came of also maybe on the more of expansion timing some on space is that – there expectations? the on previous Just the the in and give relative the can where just expectations that to if any color rent of to you relative took kind tenants relative and kind

Jojo Yap

the And use serve solutions via vitamin the ability lot Jojo. supplement Sure, logistics Coast, machines. one a is equipment the provider last you is one – of tenants mid for customers one stores third-party focusing the large is nationally. sure, West The the decisive and to industrial Craig. company, This in an who size solutions get and is will active serves to a on specifically power another industry, very named businesses international to give power these related and

In it did bit. terms quite a perform overall of rates, our

our modeling And expectations about so lease we're pleased exceeded downtime. very expectations have our it the on And post it. Because is typically downtime completion. we course, our of one-year exceeded standard

Craig Mailman

the sounds it side leasing two interest. buildings, And look as competition is up What's you good those guys the look submarket for like like next there that at spaces? in

Jojo Yap

XXX,XXX in few footer. today, market There remaining Chino are and choices Craig. Hill So, square [ph] the East foot what’s is XXX,XXX

Craig Mailman

right. Could little the XX at you a what was Scott, was the same-store drove All in went you biggest of second through And kind the those upside bad it comment spread, occupancy, quarter rent lastly, then bit points? of most debt, basis NOI guidance. driver in kind

Scott Musil

a was expense we it pieces, under the Craig, per was in $XXX,XXX debt bad recognized quarter, of expense couple bad one of them, of compared debt $XXX,XXX our guidance. to

that was So, being in by was a and had positive. then portfolio landlord we taken positive sales expenses. the that property sales slightly to out also a of an due offset of increase

pieces outperformance. are those of three major So, the

Craig Mailman

How much was pool? the change in

Scott Musil

points. basis about was It XX

Craig Mailman

just whole almost was increase the the change? pool So,

Scott Musil

Yes.

helped landlord that as then change much in expenses was had XX related basis by You increase basis XX and expense, bad debt pool the pretty by the points well. offset points to

Craig Mailman

great. Okay, Thanks.

Scott Musil

one minus. in This

Operator

will from Bin SunTrust. The Ki Kim with come question next

Ki Bin Kim

Thanks. Good morning there. all

So, retention really you Can the quarter? understand a just us higher a little and very lease had just at some what happened obviously look hood that tenant in spread. you bit help high under

Scott Musil

that, – we retention. Ki noted, did high rental our rates able With to had and the push we still you we’re Yes, Overall, renewals. Bin. have

quarter the So renewals for X.X%. are up

So retention we’re the rents. get in to really pleased pushing high

Jojo Yap

retention I million Amazon as the square percentage about during the leasing about, that high XX% was Bin, I was renewal lease, driven the think, that Ki the mentioned by And our lease. quarter. foot comments of in That X.X was

that retention a was driver level. up big in pushing that So

Ki Bin Kim

you see may are the where own have any rents building preferred versus gone these and tenants lease from starting to see, I to as change be up?

Peter Baccile

it’s Bin, Peter. Ki

and we way say to one lease the wouldn't part I other. sales of I would or a changed primarily continuing So, to certainly, something space see our to that's say, no, tenants to users users continue or look it's happen. the and

Ki Bin Kim

XX% one the next the is How pipeline? that like? you of margins one which showed of just develop your development, I do in think NAREIT have that sector. in I developed And last does on Investor you're the look those Day, think, about Okay. you think, How last I highest the round looking profit margins, assets

Peter Baccile

it’s So, Peter. Ki Bin, Yeah.

are the targeting between XXX kind still that always assets margins downtime range. points the are the in that been we very basis to I achieve range announced of up XXX growth spread, projects the to assets The of were start. XX% over right. we and the The underwriting our points can You’re to generate our average able we’ve margins the margins. more well to that you leasing And just think, basis now, the doing high in XX% that assumed we XX that. rent past several within mentioned We're about months leasing years as we’ve

Ki Bin Kim

Thank Okay. you.

Operator

question will with Anderson [Operator from Securities. next The Instructions] come Rich Mizuho

Zack Silverberg

Rich. Zack Hi, with Silverberg here

offering? used that from of the the generally be couple dilution to will to Just fund quick ones, recover proceeds timeline What equity development. temporary is the since

Scott Musil

Scott, that $XXX there. of We're starts we the have using is Zack. million fund to the proceeds of new This $XX million

probably So we going construction it's year cycle. put then months be our for nine lease-up. to of underwriting, another And

years. stabilize acquisition in up. we year did quarter that, So of property of That's California $XX ourselves we was these also to was to half it million, rate more that given redevelopment that quickly that could X.X%. second lion's underwriting. that the a developments on Having That's the year what lease cap share we've a we've proceeds Southern been we said think about be some acquisitions can and of in leasing than we're equity the that, use that we two

middle get the in XXXX door. of probably those dollars more when that's a we So

year be that, a over delay on to Zack. So there is going

Zack Silverberg

as any make future? cost are being great. on the to an continue an issue? cost land where land progress you Okay, And do insists foresee development, Or you in issue

Peter Baccile

Well, grow. land have cost to continued

in total will land so investment growth to replacement And per justified cost. rents or cost the foot the square have but total continue grow,

rents cost if – cost to continue land expect to expect we proportionally as rise, well. rise we so And to continue land

Rich Anderson

it’s just mean, chime question. that Hey, last here. I on Rich

how So what compared in of how is exceeding the growing hearing are might the rising and that cost, in math been maybe is about markets? you're your generally seeing NOIs favor NOIs and there to instances, general still across that costs construction we've are construction

Peter Baccile

Yes, that. exactly

in offsets more increase and One is the cost. construction bit. market increase to thing, in a – rent have have So cost rent consider to rates cap land you that compressed

because the the in And rate so there is the a if you more factor it's that to entrance market, little spread the or in, primarily help market, bit. comparable kind cap compression of spread maintain to more although

Rich Anderson

cost in Have and impact you? what like terms material tariffs, you NOIs of seen any from have

Peter Baccile

steel prices, component of increases. fact, the building large Sub-contractors increase. a Yes, the on industrial a the that cost rest profit construction is – is steel bigger construction. margins not of – bear the today steel components but are land of yes, components materials. in are And the in Those

Rich Anderson

Got you all with for That’s us. that.

Operator

The Frankel Green Street Advisors. next from with come question will Eric

Eric Frankel

growth Thank the just increase? you. can you expense Scott, explain

Scott Musil

you same-store What period increase Are talking did Are pool? talking you quarter? talking here? you

Eric Frankel

same-store like? Call board guess but of the across the seems it pool, I

Scott Musil

Okay.

same-store they increase up quite pool, taxes. a real were So bit, estate in

me there, the then out area there expenses is common landlord. let So and break

so real for we area in real as there. estate was almost some mentioned landlord have common for leakage I in there, driven increase side were tax the recovered were the expenses. expenses any estate did increases on then part, snow recovery primarily as the the the one the taxes And landlord one most same-store, big expenses, very well. additional removal with That minimal and and So come, if expenses by

Eric Frankel

going is to Okay. of an affect that forward issue the being foresee that going terms actually line? bottom Do how you in

Scott Musil

the the going leakage line have XX.X%. where not it's impact much on to area, That's Eric. landlord, at the to common occupancy much level the because bottom going just Well, not

a handful taxes We XXXX we a jurisdictions of which means rears, we're XXXX. in paying have pay in taxes that

to to So what do we expense have think we're going we pay.

that look as So non-cash. I at

what hard will So say, that forward a basis. to impact go is that have on

Eric Frankel

Okay. Thanks.

guys of of tariff are that your bit, volume customers their touched or imported of the upon I some supply little expressed tariffs chains? of business concern You zone callers – respective larger to a a are affect going in bit about other touched none think have the the threat goods but their have have some and any of affect how

Scott Musil

haven’t cared base our we an that down portfolio, threat tariff our Especially, heard goods. far answer tenant the concern complaint. being lot So, or a items so more is of tenants general the that And anything things that the across like of have that In after the from impact. under way short there change. would if stores, of could, in consumer course, tariffs are on are

a I think us actually negatively big we GDP, the to or factor. going a here have consumption that biggest is, would are to be does focus that something policy for impact significantly

– evolution do and you e-commerce You mitigating have growth and of there. somewhat that, despite have of all supply factor the the chain do the the

of on that’s far heard more seen now, magnitude of anything of tariff question for so But a or really negative the order front. it’s right haven’t we tenants. So, the

Eric Frankel

Great.

in and Just how much I that how queue. you understand a dollar Certainly to be I balance is with it better to want want a to if a hold want from I parameter in million, bank you development final around land correct risk terms surrounding risk you I’m need land I’ll limit to volume; much so any you $XXX support if that perspective, the sheet? your know in have you’ve question, But me make sure I’ll of think a at back framed wrong.

Peter Baccile

is near-term focus is as to what really acquire we you developable. know that Well, on land trying

lot productive not sheet. we’re balance of a the on So that drag we’re and creating

the land to have couple a forward, of years like would Going of inventory. we in

place be. buy than I higher we The hard the think a if – it to number, it a prudent on that’s and going if it’s it that’s number it’s if probably to isn’t. to it’s say, dollar course, be where depends certainly,

looking to say the way we’re I couple answer the think at best of inventory. So, years is that, Eric just of to

Scott Musil

$XXX is just Eric, And relative today. the cap spike of clear development million to be

Eric Frankel

Okay, you. fantastic. Thank

Operator

Crow next Raymond with [Operator Instructions]. from question The James. will Bill come

Bill Crow

to morning, to situation, sectors Peter, you. but more the of tariff for questions Good maybe And XX do I auto Would today. Are in more space tenants. two expand relates one guys. economy parts among guess space auto think, today? exposure the or presence are, top autos you it your there? some you the and And have you vulnerable trade anything seeing like your the it I seems be in reluctant

Peter Baccile

the proportion low tenants in are the tenants of We far some auto tire are our amount have in so single-digit but that the been that in do but hasn’t the do leases We business. impacted, low, of percentages. space. parts Yeah. that space really have

good and – don’t at be point, especially it, a stay I credit but, in I we’d certainly look business. strong would this that se be at draw they think don’t that avoiding So tenants We’d think I to the then there. it space, avoiding if we’ll per in have and line

Bill Crow

All right.

redev The you the a think, in fit of those to going that’s the I capital the really strategic mid-X. X.X. low of alternative about about California, of allocation, second First curious I’m is assets kind yields? be X% the just development And and these Southern X.X versus talked or question about Glacier,

Peter Baccile

Right.

be medium-term. And try in near- we is over those don’t think beyond to growth and going we rent we So significant predict to the markets, that.

at that of some like markets are to interesting looks we assuming a analysis when the percentage us well, And build that like assets for other see. investments, up so be X-plus yes, of Denver, can look on competitive to us total the And and can those we we return as shows there Dallas yield what when long-term. you in those the cash grounds

of And our you’re obviously, money flow cash terms create a the can growth. to time, rent growth over that growing put that capital a we’re trying lot a into of if works, standpoint, in from assets really So, we allocation creating highest to for value long-term shareholders.

Scott Musil

are these And prime add want markets. I to stuff that just

Seattle, is which market is the and First And market the of First vacancy Glacier that the our in heart has is Valley, Perry Kent submarket. industrial that’s the rates. the right largest in Moreno lowest right the success off one deepest Valley on in

lease may developed Michele at before we recall, Dallas San completion. you As and XXX,XXX feet square

also square that XXX,XXX feet, lease forma. successful of We built XXX,XXX pro also our first was and

that And so continuing success. now just we’re

Bill Crow

the three or guess, and you’ve I years up thinking four the I got come. that opportunity to rent just or to Okay. growth. raise get rent five stabilization leased of before I’m means next are the

looking So, out the to north up of you’re ways X, get X.X? right really Is quite in that… or the

Peter Baccile

bumps We in leases as you those also have know. rent

Bill Crow

right. Sure. That’s

Peter Baccile

Generally, there’s X%. and long-term. with a to total going markets – return, again, create. they’re over on withstand And in those they’re trying going assets the is over to that’s to going to pressures be strong. we’re that asset really the And what be

Bill Crow

it. Fair guys. Thanks enough. Appreciate

Operator

with The Mueller next JPMorgan. come Michael will question from

Michael Mueller

on vacant lot competition? mean, seeing how it Just curious, are building, to you seeing something to last, when what I a sort cap you competition sort that? – Is out stabilized, you that you of would question I’m of maybe a fully compared what just of a Are acquire occupied? characterize go acquisition. more

Scott Musil

building significant Michael, a this add, We’ve quality been in significant, owner. to that The and there competition this outgrew for built they and was leased. acquisition owner fully contact with for this building deal. facility amount the off-market this is We’ve been an of it, there tracking Yes. This while. in is had value move. history is deals the vacant, and both,

If deal. made market, expensive. be through more have – offer an unsolicited it we a our this and in the so one's got we gone that's would And relationship how

Bill Crow

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

Operator

Jon is question with from next Petersen Jefferies. The

Jon Petersen

thank Great, you.

now, the what got So bit. a development to leased. are just right on wanted little Obviously, touch that underway five projects pipeline you've X%

leasing-up you have the appetite start to to spec do guess, cap, I But curious, you're exactly extent more in that I'm of what then, know You forget development to new the like to feel realizing, looking guess, the have need kind pipeline guys which is But they're at guys the ground? track have project, a shovels a I amount there, of you given level? completed. what market of great I once that just development expand you record

Scott Musil

that. in So is the about are again million. vacant capacity we million-ish Today, That we as acquisitions. cap $XXX on have or developments lease changes completed $XX

every number moving two. a that's So month or

We sites see a are builder, largely Atlanta us in in capital we you'll Dallas, we’re also spec and most been continue in. are Kenosha, to markets – And could some in we we build-to-suit. focusing developed build-to-suit, piece with the invest develop responding in to that on build-to-suit. also in have for we've where our example, And active focused

So the thinking around South Chicagoland, Dallas, our market's a the again, don't kind through walk Houston, it's answers West I Coast, that's right. that its but if when question, know your of Florida, development.

Jon Petersen

do I the the mean you Well the I guess about how different think spreading out markets. in development

Huston? be there? don't a So in now Atlanta, would the think, I projects to two Southern in now guess, in [ph] more in Pennsylvania of inclined you got to be more get right you're small right more see ready guess anything you and amount inclined anything now, I looking you Or opportunities I thing have that's I Would Dallas question. in something still a you've California. fair for don't new start to there? start

Scott Musil

all in we markets, target We're though in going on even there. We’re continue activity. the have to opportunities obviously, California, continue look going a lot looking there. development Pennsylvania We'll at going lot to even great of look a notwithstanding on though for we have

want make but we're we unmet active wouldn't look looking in by or is, you because to something? can just we're a the think Yes, risks, we So want there. add one money. Jojo submarket we're how we doesn't we not submarket at we up understand demand mean analysis, we do market our – round opportunity really at more

Jojo Yap

our me let don't just realize we add. development. do on thing is Yes One don't we

So your case in point.

First to in So complete Inland we're our Empire. the on X.X Nandina, feet in track million

we're rate, build And go not going wild a spec so million and to no.

we are we why now different sizes to activity in just that's going size building, that XXX,XXX range square-foot as because there's So an example, continued start range.

you – that So will see strategy. that

with So, because XXX,XXX for our current you Seattle, footer, developments, Denver. just see one-off us the Chicago have you of rest a if a XXX, XXX, market, one-off compete build XX,XXX square the won't footer then in we at example, our And in look current where in space. new the like I'll XXX,XXX

grow our So space you'll trying spreading to but really see, same that time after we're at investments, the size range.

know You that tight.

turn me for over PA. the Let it Peter to

Peter Baccile

buildings Pennsylvania, was John, two buildings site and where time to when our site bought service on so time the growth. plan demand frame was the the that are is back in same both roughly those great it roughly and they at Right, there Peter's our because plan ranges and size both and it and to develop at develop point, on market developing buildings focused same same to different the we rent we're

Jojo Yap

And last Louisville, in in load in load. buildings basically a example a our is that one one shallow a and front deeper front two is load bay the

that? in depending want they for of that why load. of tenants submarket, So And what is exposure looking front there the load are or street. a rear Because on kind

So these the based on buildings market think what needs. we are designed

Jon Petersen

that’s really Great helpful. Thank you.

Operator

we And Frankel Advisors. Instructions] [Operator Green Eric follow-up do Street have with a from

Eric Frankel

you. Thank

exactly question, can explain what that happened transaction, how just Just you on one you with S up? quick Compton came XXXX

Jojo Yap

Eric. Sure

we We should we down, the the sell. burned should nobody it luckily, and down building destruction. building and So or substantial got saw back sat When decided then whether burned some hurt. build

use And market, actually better we there at and higher a looked that and residential. so when was for the primarily

ended up So, residential to our buyer. we Eric, selling it

plus which industrial we're because the we've the that fire land If it something seeing price, proceeds the per approximates foot, even $XXX to insurance, that very insurance very, land add about is not happy close sale. we got you the sale expected in from

Eric Frankel

do Right. the – How insurance does fulfill your financial they proceeds how statements?

Scott Musil

Scott. it's Eric,

periods. is impact bled that of Some prior in through

we could that to recognize go we mentioned FFO. that. I related basis, on our that comments dollar We this get to guidance, to out there anything core related it other If embedded do in a guidance have we'll not to recoverable my amounts back get insurance As of to claim. some and do be forward

recovery So we'll does there impact could there if same-store. not know, is, let you that, be future in

forward that will handled how be our that's anyway, So go a on base.

Eric Frankel

for cost to larger like facilitating of levels. be I automated centers really actually in quite the I've those It final more bidding buildings is are in on in even you a still helpful. noticed – have and market they're Amazon That’s are looks guys question. just that what their becoming of types one take is seemed active steep active of Do that economics more Thanks. with building developers. now? that the pretty mezzanine thought

Peter Baccile

it's Schultz. Eric, Peter

of they think are As a more landlords. tight of under what becoming and next with continue those to they're all is, yes, know you evolution buildings about they as their partners doing. confidentially agreement very operate their But our development expensive view

Eric Frankel

just they or eating kind issue they're really by risk? financed getting is And are an taking the that of developer not or having on additional developer,

Peter Baccile

give color not No to Eric, doing couldn't the can't answer they that any had certainly, we're I of I awarding But developers. success, you any new deals because But economics. those today. have on

Eric Frankel

That’s got. thanks. all I’ve Okay

Operator

questions. there would no time over the I this turn for further are like Baccile comments. At to to Peter any conference back closing

Peter Baccile

follow-up thank me questions. or out Well call operator you feel with to a on Have reach any today. Art day. all and to for Scott, participating thank you great Please free

Operator

conference thank you in gentlemen, today’s and for Ladies participating call.

now disconnect. may You

First Industrial Realty Trust (FR) 26 Jul 182018 Q2 Earnings call transcript