FR - Earnings call transcript Q3 2020 | First Industrial Realty Trust, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Industrial Q3 Results Call. [Operator Instructions]. And also, please be advised that today's conference is being recorded. I would now like to hand the conference. Over to your speaker today, Art Harmon, Vice President, Investor Relations and Marketing. you. Thank ahead. go Please

Arthur Harmon

Chris. and lot, call. to Hello, a welcome everybody, our Thanks

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

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

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

to the Peter. over turn me call let Now

Peter Baccile

the the of and to while Thanks, broad-based joining e-commerce investment, well, market the and thank million ones pandemic over feet are industries and efforts signings. lease doing square activity, quarter the and In increased would maximize markets productive. of touch again entire represented third has XX fourth versus for In million healthy each the FR briefly efforts their navigating the operating third moment. objectives. leading Art, today. achieve let quarter-to-date, discuss and to our loved first, quarter once and its your of you past X XX our and leasing cash me other new industrial development of thank all for like collections. you pickup collections all But I'll absorption months hope experienced rental level in leasing, capital in for us reported of completions. preliminary staying team activity We on square way net with a what means upcoming feet an business among speculative CBRE report, this I

be tenant well continue results quality as as Our to base of team. our our very the reflecting strong, great and portfolio work of the

For smaller the Scott second agreements and debt collected in increase. in third region the collections of replaced South at and our walk remaining the our building tenants it In increase tenant moved credit rents, state-of-the-art on last deferral team you a Southern current. key market facility XX% accommodate like I detail later. resulted rental rate would of profile X% highlight to billings more of in substantial in tenancies With quarter would rental rental building X California, solutions all fraction several a allowed a will will expense through rent to to the as square generated taken quarter, the our in our a through leasing go that foot third increase. for we've by solutions XXX,XXX We moratorium to monthly bad and Inland current and suited needs which are a XX% California. executed which a serve we successfully Southern rate have rates increase. other their a XX% rate a current enhance our for able successfully comprehensive of square-foot the need These transactions better square-foot list tenant's XXX,XXX executed properties. e-commerce delivery captured the value executing market X a courts. time at XX,XXX rental prior leasing of to LA. at evictions We replace also By the Empire. significantly largest the watch We those mile us new tenant on plan these the Bay those leading rental major meaningfully wins, a to in in building, California lease were and on

Based we on rate tenant for in XX,XXX quarter square the cash facility rental XX% a foot at the our replaced growth these leases XX.X%. Lastly, also commenced transload at successes, was increase.

renewal Call. Earnings cash For rental which the of today, rate you approximate and we increase rental rental be on of original cash fourth our of for full year the of the rates new we in on at range XXXX, end rate signed XX%, into cash approximately set increase look would to rollovers growth the give To XX% pre-COVID XXXX XXXX Quarter leasing forth have we a expect XXXX, at our as a top XX%.

foot First share X. since commence some with development November to our a building in quarter. Fossil a leasing the Center to signed like is of square for I'd Dallas, In last a which progress upon Creek that Commerce for XXX,XXX Sawgrass Commerce long-term full the fourth commences completion our square South you in lease we signed Center We First basis, on set foot call. XXX,XXX earnings Now XXX% recent tenant Florida

Central XXX,XXX to in totaled Florida site by That feet be given to a is X square at feet. We secular the building the up is of leased. which In investors leased XX% to the fundamentals users a developable driver feet. investment select highly one rebound The continued we Seattle, to our we institutions, X. well-located in markets. market January uncover square now totaling included continue slated sites. that in site of competitive, solid XX,XXX and during acquired industrial the remains use platform local our added land square continues sector million the Acquisitions first to quarter Park and X.X-acre opportunities XXX,XXX The buildings, accommodate can and quarter, buildings square-foot and target to We and $XX.X X to XX-acre e-commerce. commence also XXX,XXX favored XXX sector

Lastly, we West XX,XXX site, combined build Empire acquired First which feet to to new adjacent acres site. will in Elm on our larger the square enable the Inland us X.X

we million, We're phase in in launch site our Turning program. speculative million our plan development total our the this Total excited three development First due phase yield hold is in put quarter. feet, on for first to the our COVID-XX but now the the the can We Recall of to mid-Xs. pandemic. the first the first pandemic. to projects first and Miami be square the Medley totaling submarket and XX-acre of Park start XXX,XXX since the investment in beginning Infill fourth estimated quarter airport, is X.X that the cash acquired square approximately to We buildings will development start phase targeted of the build near a this $XX feet.

cap markets a potentially We Park had Total support of north majority is other target of of sites also which our on to go. million. leased X.X With XX% this in venture development continue approximately entitled million Pompano First successfully starting to year. at PV for building the yield sites total quarter construction foot you leased million as of investment is XX, approximately $XXX XX First holdings developments plan a ramp-up price X.X%, million Beach. to distribution and the compared XXX,XXX Summing with targeted spec single $XX.X projected leased we on Updating to little XXX,XXX joint up of assets. remains today. to next developments XXX cash our market our a with development completed generating of for on square on-balance a approximately we XX, quarter, Miami ready and lease-up, an early a starts, at X.XX tenant. sheet comprised track To average of X%. approximately September at can when and our be further shares of our we of XX similar is square in of average Adjusted yield rates the program The issuing at $XX.XX, our activity, monitor, future First vast our net batch which accommodate ATM under margin fourth of square building on our developments estimated square in million we center, feet, foot land $XX.X XX% pipeline of the prevailing million during tapped proceeds feet or cash

portion Our our is the million, cash and X.X%. of investment yield is $XX

X partner for million mile again Realty, fourth acquired PV Mitsubishi the We we totaling share XXX. with purchased in In X we a the the quarter, U.S. the site north Together, of of totaling acres real X estate the once has sites with an land and formed remaining Corporation. new arm $XX.X developable to pleased Today, also PV We're the to Like to build-to-suits sales our the and engage in as site, XXX JV venture price a that initial invested XXX PV venture, has acres all-cash originally XX as about separate new of our transaction with quarter, sales the venture the third $XX capital. returned development at interest in XXX% well of XXX million. land will XXX-acre of XX%. speculative the XXX users. Diamond users sold at one-off

an opportunity management, fees, First property and the have Industrial asset promote management, and development established will beyond disposition leasing return. we earn and earn to

as our the venture. and Our investment PV incurring for us investment provides risks to outsized rationale concentration same The without XXX on opportunity is the JV capitalize in a Phoenix. large this new market

dispositions. to on Moving

million, $XX its comprised for Thus asset quarter, XXX,XXX last properties for Phoenix and the the we sale year. During million far completed tenant feet sold million. $XX.X quarter, buildings square X $X.X the we've X which the for purchase of option the of sold we in exercised

Excluding we $XX.X target the of feet sales excited markets. $XXX Scott. great our over opportunities quarter With our square that, In year-to-date an restarting and a with purchase very taking of on about million XXX,XXX growth speculative by it $XXX target let million. sale, great the we've had our for execution way total million program of to sold range summary, team. to meeting me development option our We're in advantage excellent our to related turn

Scott Musil

Peter. Thanks,

XXXX. ago Let funds EPS in $X.XX operations $X.XX X were per XQ the results diluted the to overall share Diluted for me from share with start and per third $X.XX was year NAREIT quarter. fully compared $X.XX versus

settlement per XXXX $X.XX share related income XQ insurance to of FFO was final the $X.XX. an approximately of Excluding claim,

debt related to XXXX accounts quarter cash FFO includes of approximately expense Third receivable. $XXX,XXX bad tenant

the discussed, were replace to tenant California. Peter As list on we our watch able largest Southern in

bad a the result, expense forward. debt impact our going replace will As not tenant

paid Note list, watch our in that which list The other West. Chino has tenant building we the through on second a tenant our occupies we the discussed square-foot to quarter another on Inland watch September. call in added Empire XXX,XXX

collections. on details additional some through you walk me Let

Our to continue regional fantastic job. do teams a

of As billings, from of yesterday, and government-related that have we had the of for a at deferral not unless for and collections our from collected XX.X%, we this month, from every rental it give through ourselves from tenant. agreements in calculation monthly month billings the far both XX% basis April October September, collected with strong so XX% assuming reflects all Please month. ago. numerator the tenants pay to of total is the and all metric, year at of only only rent our credit the down year-end, security be On prior note, of application by compliance. under paid XXX in and currently deferrals, the outstanding Occupancy do terminated of cash percentage off tenants deposits balance end methodology which a expected is is collections, $XXX,XXX, are collection we points was quarter the

X Pier expected, by vacated impacted occupancy which percentage As in square-foot September on building Baltimore X.X our points. XXX,XXX X,

marketing similar work lease-up downtime. are We are assuming for and are at facility underway the to make months ready a development, lease. this so of consider with XX the as We speculative some asset the building we of

beat that. As to always, we will strive

and by growth and footage moving basis, million and leasing rent for renewal straight-line The leases. bad This rates were rates volume partially side. capital feet renewals XX.X%. approximately increasing and our retention excluding we during and NOI X rental XX.X%, average by cash increase a the million renewals, XX.X% an debt On bumps by to up was leasing were new renewals commenced of new termination a on fees, on up rate new XX.X% Same-store helped quarter, was offset in free and leasing expense. up embedded X.X%, rates in overall, rental leasing increasing in Cash with XX.X%. leases, square XXX,XXX occupancy, higher lower were square was with overall up now basis, the were As an XX.X% slightly rental new X.X increase XX.X%. rental tenant and

to our G&A. stock amount of note that that our the credit in average net notes X.X debt of Please $XXX On At adjusted with normalize our a earnings loan XX-year these facility. January we on and was of X.XX%. to As our The secured September preferred that announced and loans weighted figures extension placement claims we closed average and excluded has settlement private Xx. previous our interest an of and of average term X.X%, on was XXXX of weighted maturity we notes, XX, in September July, scheduled call on we insurance EBITDA term. with onetime EBITDA mature plus years interest is have rate our term a closed X-year financings weighted a exclude unsecured XX- effectively rate XX, million from

updated our to on our per last guidance earnings release evening. XXXX Moving

for midpoint the on $X.XX. This per share due discussed. now per range quarter our $X.XX an guidance final settlement FFO second to $X.XX with discussed of NAREIT our income of of higher insurance than related is previously the to claim $X.XX call Our is a guidance share midpoint to

the this with midpoint FFO year implies year-end of share guidance is XX.X% to to per unchanged. end are guidance as Key full with XX.X% assumptions before the follows. In-service which for XX.X%, $X.XX unchanged. item at of range quarter XX.X% midpoint of Our for occupancy range quarter occupancy XX.X% to a fourth $X.XX

deferred same-store midpoint basis that rent And remains include flat. fees to cash Our guidance being on the financial tenants quarter cash negative Fourth with of potential having growth the assumption difficulties. X.XX%, a please for termination related any bad write-offs NOI expense are to fourth debt receivables not positive does $XXX,XXX note that of quarter. before X.XX%

and growth XXXX to to basis guidance prior XX rent cash same-store we addition Incorporating of average In in market results increase midpoint, the NOI free points fourth NOI tightening leasing solutions the also the third X.X%, from of quarter a Bay reflects same-store quarterly impact discussed to Pier reflecting our compared year the the of full from is vacating, NOI our at range this the an X fourth South guidance. quarter quarter guidance, earlier. X.X% impact

$XX the Park G&A XX, completed million. for center. share Our also to at unchanged guidance remains related under at the September to plus guidance $XX the our developments And costs XXXX and million expected anticipated we First a per First capitalize includes interest starts, to and about XX XXXX, to quarter fourth our distribution related of $X.XX total, Miami expect In full year developments. construction

sales, excludes not debt of Our future and starts guidance also reflect repurchases issuance development acquisitions expected new after after Miami XX does other any debt the repayments development Park call, issuances, The quarter call any First First or and of guidance of this starts. impact fourth the the this impact potential equity. other or than future

back it turn me Let over Peter. to

Peter Baccile

Scott. Thanks,

other and again, let each customers, commitment questions, and Before our we great business thank open our up team once to me performance our their to for it objectives.

our development future program to restarting about excited growth. are drive We speculative

the daily recovery of the important continued against so and We of progress economy many careful forward in the our lives. and COVID-XX restoration fight also to of aspects look our further

in. for [Operator please if portion plan hope you our RSVP to reach would open move the for to our questions. on the to I current growth. we remind and of the With that, Harman, much of with the now about upcoming you portfolio Investor Day it everyone industrial to will Lastly, Instructions]. questions. November out our XX. vision lay tune to out our Please any greater will Operator, platform of strength would There, detail like we virtual call. state like and sector, up in or Art question-and-answer We

Operator

Instructions]. [Operator

first is Craig Capital The Mailman KeyBanc with Markets. from question

Craig Mailman

program rely of go of your on ultimately the in appreciate doing and to second their maybe watch have we kind on is kind watch guys looked that really tenants on much on swapping of that and those stimulus of of at of to today curious, out the tenants PPP just this I I'm deal. that were delay as creditworthiness some commentary Peter, what your what in the looks the continue percentage kind you kind like list list. update how the an

Peter Baccile

I'll up pick Scott for and start then rest. out, will the

as many of of advantage don't know. it. we We really or how take they the took what did a much know talk our PPP, advantage how list As to Scott, rent you spend if tenants far number know know of But We personnel We a don't do of number. go forward? big watch it about or to and some don't spend money wasn't And on. they on want rent.

Scott Musil

we second one Yes, new talked list, sure. our about one a that quarterly There's $XXX,XXX. watch one. rent a on tenants about carryover Their is the Correct. call, two quarter in

One us $XXX,XXX quarter. owes also prior of the to about tenants fourth

debt about thing So to our if would early, two able would bad $XXX,XXX to everything be we're two $XXX,XXX. both is compared if these good to those say about I spaces tenants' below about total bad get with tenants, your these goes of the tenants are that expense rents guidance But market.

if those month magic I question My helps from still On higher. would feeling a was stimulus way since a in well activity our is there very of I some do hope every that PPP, package the is passed, help. tenants Hopefully, out. will point to for view. a last strong. a of payments It's collections tenants our push little able payments' March. the work stronger So that bit there couple think XX% I say months. on new we're not if work have and bit been we rents your up get little can to pretty

Craig Mailman

No, that development. is switching helpful. to just And then

spec. on turning of You guys are kind

an bit. talk maybe an peers that about lease-up the particularly decision availability conversation your of left about kind your the have pre-pandemic kind of with you appetite start other risk and committee and today incremental project, to segments a of just of is construction you in spec versus guys One the still some investment turning little the Could pipeline? up

Peter Baccile

the Sure. just Obviously, beginning have there gone the pandemic, we through. was gone of enormous what We at through hadn't uncertainty.

of a And so shutting made It down lot sense. certainly the pipeline development was prudent.

past had and nation, impacts as how see impacts we've to it how how this Now economy. manage the we we the a X or health the it X how it, benefit of handle months

there. there's so information more a lot And

June, the would In in making addition, months, up began leases. really the of And way much X business X or signing last conversation. I June. in lot it's in activity been people And picked It has was significantly. back a say, in of the it decisions more and

And all so that's good.

So still risk best is developments. the we activity of the think standpoint, will highest, to markets, us the begin from second focusing place question? markets, going higher the new speculative the was What coastal the a that on highest, be to for consumption is where barrier your business be part

Craig Mailman

criteria underwriting terms did in just new starting to get more projects? your within any No, of curious kind Just of or stringent change the -- conversations start of around new projects. committee

Peter Baccile

No.

the first I has in economics did a associated the obviously into I with initial Miami saw decision. risk, Park the the make we mean, changed a the general confirmed So those we hasn't deterioration for opportunity, that to relative today So been outlook yes, underwriting different the think, have we and when that we First went look, economy if the we'd mass economics by

Operator

with Carroll is question Capital Michael RBC Markets. next from Our

Michael Carroll

the bit about this Chino? that the few tenant foot they quarter? over Was added a a in watch the talk can were square there months? specific you to catalyst list little past occurred XXX,XXX Scott, Why

Scott Musil

using weren't of with we They're working a on the payment. agreement to we've had lot space. and an tenant with been make actively able a is payment. This dialogue them the on very We've with tenant,

a quarter so. So or on this going has been

the behind to So list, basically that to the story we watch add Mike. decided new tenant. them That's

Peter Baccile

you on particular has remind of this, and seems I'd to evictions, advantage of California take tenant to that a moratorium this want that.

Michael Carroll

in you when you replacing earlier tenant then and of And that. is this tenant did that's What the about place. that list? an -- with them of sounds on want about South I Are ability second kind does that to different new mentioned they there like type your -- in to not this It moving kind you Okay. you the like of Bay Chino to a move? tenant open do watch know

Johannson Yap

that's This part is solution. Jojo. a potential of Definitely,

to the it whether the of announce solution of We any rent are kind we to, end plan. come yet or collect at solution the we ready not has what we a full accept day, or

in Scott a So the LA. were Ranch, the developments, what works. buildings. which that's tightest First able is is new in one of in multiple that We're pleased number of submarkets is very we in XXX,XXX mentioned to And our execute

in other about too. that's footer The development, of And maybe South new and the XX,XXX in-place rents is a below heart in market. that Bay, XX%

take their of that they But back like So support business, happy have their want lot space. that A are Scott one business. said, priced to be we'd the owners ongoing. to keep and conversations

trying remarks. to leases just like prepared get in our we're So X to mentioned approach a the just win-win we other

Operator

Next question is Bin Truist. from Ki with Kim

Ki Bin Kim

XXXX lease guys there mentioned about expect going of the Any the behind that what's you than in at a terms materially to -- reason XX% we least XX% cash signed rolling X/X is spread. different like, lease like, expect remaining details be So should to of of forward? any at X/X rollover particular, you

Christopher Schneider

very we're what with in XX% this with we're XX%. the pleased through on signed pleased Chris. budgeting you process. our Right when the We'll give do Obviously, February. we've we far. Kim, now, But so going that more far we're earnings outlook is so release on the

Ki Bin Kim

prospective or And pockets vacancy Okay. development Redwood of you're Any for remaining could like of tenants? the just you color in kind provide pipeline seeing couple the have Independence? on the from any on update you of activity assets that

Peter Baccile

to do the can Jojo talk And about about Independence? you rest. Schultz, then Peter talk want

Peter Schultz

the in end shutdown. couple you that's might the was a building delayed finished XXX,XXX square-foot On of quarter, construction Philadelphia Independence, Sure. which, second the of months our recall, we of as that because at

for So very we're of one tenants. choices few

to on the that today, on encouraged we to comment but by be really We building, outperform. nothing opportunity but continue to had some have activity

Peter Baccile

Jojo?

Johannson Yap

Jojo. Peter. Yes,

And that, know, XX% the is Houston products In access somewhat that market with quarter, that in be Houston, freeway. our you in overall, completed, great RFPs. activity the in in is activity love What absorption, we our -- that Houston came project, developments terms but of that we our Basically, Grand as net leased. development supply -- will exceeded we're slow. project Parkway, There of to the one of up basically, shut that's we're a is down, to now second and freeway noticed best the to the frontage. kind starting pick responding more we've but

In which projects completed We're Empire and and at terms a Redwood X to a logistics inquiries. that the buildings of those Inland In activity. lot we're West, X. getting is of amount X significant already. of lot First proposals of situations, And are responding a

we're very that. bullish So on

we're in of terms Dallas, Dallas, very where very buildings been. happy the with Northwest in that. happy that's And in we're So

As we a feet. XX% we now big -- leased you that's XXX,XXX built know, have at building That now is square there completed.

XX% buildings smaller about which now over or XX% have there, right slightly we X leased. is Now

as activity that good So has seen well.

Operator

question from Rob next The Instructions]. Stevenson [Operator is with Janney.

Robert Stevenson

the understand First of then looks it's South on be construction. the and space and to With just have Is quirk? Sawgrass months. now this Is few completing under one? South purpose? of XXX, us Help development pipeline Is like Park million Florida strong XX XX% that and you going spec Florida timing a a concentration Miami to right this guys start that X.X

Johannson Yap

you that not now because done as and is about Sawgrass, XXX% building. we're Basically, even know, we're pleased very that Sure, leased, sure.

that's can north And our you And be just one project tight of vacancy, One, Park in There's of out right find most would north. of very Miami. terms small, FP very FP of XX locations starting low projects, Miami, submarket. accessible highest First catering there the We're very, further to vacancy. And the a the submarkets. new probably is Doral. So freeway, to that We're that's the the bullish very, little that they're quality there, very in in about that that. because very very, is project heart, excited the different market. very very that

that activity. So lot bullish project, about of

Of But fact course, to the Miami. we're lease started getting just up. the Park building our on despite is and our execute inquiries completion we job that already on First it

Robert Stevenson

talked cost Any you about years? then What up the guys today being And get to XXXX. the to rents for the notable the leasing new stuff changes and versus leasing, both Okay. quarter previous about in quarters, them on costs signed? previous

Christopher Schneider

Chris. is This

leasing costs, far Xx have obviously, X the the cost. as as any any not will we're far new as as are dollars you total we're deal. deals but than go real you if But typically or might longer more that as renewal a far the -- changes terms, what seeing, Obviously, As standpoint. seeing from really significant seeing up, changes

Operator

question Sumit is from with Sharma Scotiabank. next The

Sumit Sharma

accretion XXX, I'm the just NOI Fossil wondering, first PV with First terms to regards the large period the Creek, cash to leases, of of stream? some into recent Nandina what's free rent look in like

Johannson Yap

is year of in today basically have X/X rent deal. as That's the month market per market market a of than to less Evanson. Basically, lease the free and across

depends So zero X per lease year. again, range point to one from quarter let repeat, me across it's it a the and country, months,

Sumit Sharma

by topic in you on your are that? supply of from case, a Just the time one guys from their your are retail for existing guys retail your A portfolio you're just wondering own retail. conversions footprints? terms about shadow bogey clients, Also fulfillment risk? is the focus the up hearing conversions And about are existing brought has issues. wondering of it. of network site been put tenants lot wondering that to peers, here supply what So looking thinking shadow whatever warehouses, from is regards guys, that run sort have Got complete you if and you operations been where into to whether how now. some topic feasibility conversions of which smaller -- this quite of have on But planners, actually it with

amount that, all sense looking We a country, standpoint. along conversion of square of saying going part around not square XX make feet smaller economic an got that's have much, be a approximately overall to feet significant really the from at industrial really to been much that's going of billion the base. you're space We've supply

We of our also tenant a lot in have roster. retailers don't

So necessarily of might we wouldn't conversion discussions do what there. retail having be and about the they

going here there. to happen it's and So

of mixed the through are retail trucks Economics than neighborhoods for the lots a the where The different XX-foot industrial vans even don't got want You've much are got permitting and approval use. you've big barriers. process also lower rents major going or barrier. neighborhood. the or rents And for

see component there, So happen will as a of don't big it here it being and the set. we competitive but overall

Operator

with from Street. Your Eric Frankel Green next is question

Eric Frankel

just help the somewhat provide growth from Can same-store your the bridge NOI lower quarter. you to last results

same-store makes occupancy it with just But bad would Pier of you debt store. X breakout same the free that be with cash can maybe what lower. and provide bit the to a little -- results the what sense drop rent So a

Scott Musil

the to I this year because big the Scott. that's Eric, I'll the compare of first of think the change. is back half year the half

be lease the So of first The going we there's the item. the couple free bit XXXX, the and the XXX% more debt points back XXXX, a of remember, due free year to Southern at rent impact as where a basis Nandina, of big We there. for had transactions to it And expense in beta the had is rent about back team and drop months building of And bad that. half well. the free also big had little the X different of the X front Pier we Inland in going then Again, free is an Jojo going obviously, worked half in occupied vacant was is in a offered. on. with be the factor That little rent development these to burn-off period the items occupancy. largest of that. of California to the then of of rent half There's the half great is impact First XX be Empire. bit for Also, a that

to XXXX. So same-store year are the back front of large those of X the half the are NOI from the decline that of causing the drivers half

Peter Schultz

ahead. Schultz, Eric, this is go

very occupancy. we're So it's from quarter, fourth drop. in so the a a high the year big part mind, ago XX.X%, Keep in coming a at of

perspective. in it put just So

Eric Frankel

expense, the XX year, It's debt of that's basis number? absolute bad Yes. not bad correct? And higher points the XX debt basis than point last

Peter Schultz

a is the expense. compared going the year. more the front bad Well, that of that back the half drag basis to is And of to big of half our be the in points XX of debt driver year

like So $XXX,XXX the first half. the $XXX,XXX the we And in think back third of $XXX,XXX in then average for and quarter. the I quarter half the it was think on I fourth year, got

So guidance main our Eric. fourth driver is assumption of the the quarter, in that

Eric Frankel

Okay.

that Okay. -- Maybe after go ahead. call. I'll the at sorry, Maybe look

Peter Schultz

small. very guidance debt expense in quarter. fourth would say really And the we're I it's our That have really And that XXXX assumption was again, we more the bad on Yes. bad It's the of in -- in doesn't year. the put impact expense half debt the it. triggered back in, factoring

Eric Frankel

follow-up. the appreciate I'll Great.

maybe not team geographically, got context can maybe you well. are others so are Just your markets -- what provide of doing doing which some well,

pretty California quickly can kind has looks like comments bit it of So bit that it's teeny recovered little peers a slower context? Southern maybe said maybe have -- then a and elsewhere, some provide from but you your your what and

Peter Schultz

Sure.

Empire of kind lot look the Inland includes just all to SoCal, of way Eric, at, you a and leasing that basically done, East. activity La that of we've West course, and If and

see for big Dallas leasing, gross big you in activity So has to that's Phoenix market. terms absorption, We're also there. of lot also in have a seeing large continues been a a us a Eric. of performer

have absorption overall lot And Moving also has PA as pretty on, then, seen good Eastern of Florida, South Florida absorption. course, seen a of well.

slowed I up? how that of in and second mind, comes down through is still In is Midwest, Houston. that Eric. down I really you're So of of And it's the of work meaning flat sit has quite to quarter [indiscernible]. Midwest, supply positive, kind kind holding to kind of what's mean, kind guess, that to

but kind You do have bit. it's you do treading a water of have demand, supply,

Eric Frankel

Final Okay. question.

just disposition as the think sell? So properties think under at to be Or -- you lot going there's properties you target have you set in you you contract roughly that to Do same the years. a level that or of hopper have a your lot just sell? prior you of a can

Peter Baccile

We've the got and of in assets lot process. various of stages a underway

good So the guidance we range. feel about pretty

the closings of may had year, end flurry we of recall, big last a year. you the As at

the So pretty solid. feels guidance range

Day. Investor to forward Looking our

Operator

next Baird. question The Rogers with is Instructions]. [Operator from Dave

David Rodgers

trend. some movement concessions quarter Yes. I Bay. earlier wanted the of that understand on up as South as looked the to bit really maybe dramatically, the were you start quite a comment I and the in well that with a concessions It made like changed follow-up, the concession -- they from in haven't but

saw the activity? write-offs have straight-line activity any also, California? the to you rent related that And did of Southern in see So you quarter with third something Scott, that any do did in to that

Scott Musil

to Dave, the turn over third quarter, Chris question. in it I'll no straight-line the on concession write-offs rent and

Christopher Schneider

Yes. concessions, California actual that. amount to Dave, far of certainly, as Southern transactions dollar the contributed as the

about Jojo's we're X/X very where concessions, consistently, far per As comment our month year at X/X as to that leasing. again,

David Rodgers

Okay.

of have backfill year thinking that today of get talked in X, of a are the Pier that lease to that a yourself. and to that of at Will demise Does so quickly. need you the maybe On fairly mean, lot giving about you I guys out you what ability you're asset or all? terms capital?

Peter Baccile

Peter Schultz, that? do to want you take

Peter Schultz

This Sure. Schultz. is Peter

progress have packages activity from we and the where market, nothing some the general make had in It's of our activity, tours users developments. was couple of good XX-month it's We've been we other already of there as that what continuing it larger loading but typically but in just assumption, new in appropriate you cleanup, up-to-date and on building, say, and underway work do. lighting, but to some We like, has at and would a We're dock I pretty our most Scott to bit the similar simply mentioned, particularly use a energy-efficient some ready there. keep we'll unusual. little demand, consistent, thought would see certainly other to markets

David Rodgers

for country, are an it. the level, you on investment where activity in have on about feeling you update you us areas question to want of selling any Last ability give market, the to the assets, center the pretty Great. guys you good maybe sales most for sell call let's Can me, the actively? been Or still transact maybe more Jojo, bids spread?

Johannson Yap

to good, in year of are actually There the them being and advantage too. past really even is of of Dave, buyers are we investors are find sell because account. are terms product get lot of to able properties more underallocated. in active market And into lot market they feel strong. industrial the last A is are the when space. because Yes. to today a very wanting even the We low the even none interest own their fundamentals. They're non-industrial for the now Users taking in buyers like because buy rates the -- than

the is so market. yes, So good market selling a mean, I

Operator

is question from Goldman with next The Sachs. Burrows Caitlin

Caitlin Burrows

on quarter. Maybe CapEx quite also per still up. that third foot but increase we as increased saw nonleasing year-to-date, And XX% square recurring was CapEx the much, It the not side, CapEx year-to-date. in the

So I through was and you what's to go behind if wondering them these you expect if could maybe continue? increases

Scott Musil

the roof some couple the think of to Catlin, things Peter we a anticipated of for Schultz instance, building at had of things. One it's years. little replacement A CapEx talked about. pulling this million $XX than couple be work the what of Scott. forward a year. X do, it's in work. couple year, Pier is is beginning on a higher A that $XX We our million, we will Really, bit

of instead pushed years that we out, a of So it into doing couple XXXX.

because paying quite able paid now tenants, were costs raise those in that did we additional script, which was with well. forward. Again, able that that at So to incurred the we that we was move fabulous with of leases that California in we rents an we those on to exploration, were them terminate Also we leasing leasing instead work as that those we additional Southern the our absolutely talked pulled costs considerably. buildings about

drivers -- are the CapEx. would say probably I increase main in of two So the the those

Caitlin Burrows

Got it.

Okay.

it like activity. know, for buy not be So XXXX that of in I future sounds terms don't years go might good, a

Scott Musil

Absolutely a the future rate correct. run for I wouldn't years, use that as correct.

Caitlin Burrows

excluding Okay. third X%. the cap they've And then just been year-to-date, And in the were rates dispositions just under Got sale, terms over in X%. quarter, of just the Phoenix it.

to talking into I guess, this forward, do I cap properties necessarily XXXX the the rates? dispositions ones? in So have the specific representative and year future the far so sold been expect you about going and you're not similar quarter, those that fourth additional of Or have guess of reflective more are doing that

Johannson Yap

or come portfolio Jojo, to this Absolutely, In It's quarter. of the more had rents then down CapEx. flatten with we sold specific and peak Minneapolis the by significant and way. Absolutely. that third quarter, probably

cap if that to that, would rate. AFFO continue get to lower the that, than be X% from So the much we we're going own

quite So a that that the bit. there, outlier and numbers an was skewed

Peter Baccile

put new Yes, X.X%, X% than time. cash at for development of we that out a don't and long a take and new developments that less it require X% yielding AFFO building into capital that's yield

a that's much use better So that for capital.

Operator

Rich Anderson SMBC. The next question from is with

Richard Anderson

leasing been your for of business. this So have aside you inventories a environment. had and covet a of thinking COVID-XX, active been in forward here building, present for e-commerce. tense, headwind an unnaturally post realities tailwind, Perhaps has the putting than perhaps kind In dark environment the a have more

business that make treatment life after come medical are that get can a work? back there pure envision to your offsets sort on decelerates of have and to continue where accelerate actually to scenario So some we go-forward you and -- do you a you some think things Or basis? back you people

Peter Baccile

Yes. that. Good question. We about think a lot

that the if And vaccine, obviously, So trajectory now should a stepped a same. jump have also just a think say e-commerce more in feeling COVID by trajectory XX% to that's step e-commerce, It's of somehow might in of XX%. we you was function, to a to new incremental caused very it's we away. from et lot But They're kind you've we the XX%. it's now next through summer not safe up. life, But will they're still that e-commerce. used the small growth the our to see possible certainly happen. and like of was and that lull It's cetera, of do millions the comfortable celebrate demand stay going and The going more product, got to go when buying that everyone's have adopters spaces. people if

going be for to continue going to very business. that's And strong very, our think a we so forward tailwind

Richard Anderson

you -- that to And all time, absorbing or might in developing exists Great. matter more can a tenants question in second spread agree structure of Okay. We're again, somewhat does stack the that in payment that widen. excess your where rent small. we're than this business? continue point when this and -- capital expense might at then is, But supply is

in more yes, wondering, supply I'm do to paying the sensitivity, all considerations, point fact a market we've to So that got we when there's where, is the to there those start demand. price get than attention

Peter Baccile

of Great landlord say one that figure really to we something trying I to the rate the this. from is vacancy from mean, when things you're national And of is where balance like it's shift or out the the does would power what the I X% Recession, learned Yes. tenant. really X%. the

apply of to Because a very you. barrier X% that's if on X% much in coastal or portfolio we the not markets, capital. one new that's largely reasons that's And of generalization, right? high a rate your is national really Now focus where might vacancy our the frankly,

level ask but matters supply the specifics a you about be you are and more. that the in matter, where and that very supply new would and all submarkets answer, general excess when high or when So does

Operator

question next from with Mizuho. The Okusanya Tayo is

Tayo Okusanya

spec the amount was about or curious a I how going seeing. that if just the forward either of level development given increase could hold of steady demand you talk little bit you're to expect you

Peter Baccile

Yes.

that guide pre-COVID and same. we you expect where were back development the earlier be back why or specific wouldn't would reason do go volumes, we sector they on say world I don't really know, pre-COVID, COVID-free remarks, volumes development a any kind starts. as wouldn't world, to my would certainly of So there to we going the across to in

Tayo Okusanya

that that as of of tenants ones in I'm for then that at clients sorry, of on including kind And tenants, the earnings that XQ kind are these the watch list, this you. -- now the or particularly Got new we ones, the challenged during industries point? industry new are are [indiscernible] are some

Johannson Yap

really the one And seems drive we industry by. of an is business to their them in be other again, say doing would that. well like one, I when

of tenant that call bad a would I more So actor.

Peter Schultz

Yes. The very activity space. business larger robust one the is in the

you sometimes find And bad apple. a

Operator

JPMorgan. The next Mike question from Mueller is with

Michael Mueller

Diamond, one, with the exposure. referenced JV the new the you For Phoenix

we project that should do would you outside the transactions about done sheet? as with how balance Diamond? would Phoenix, if future it been on think have you of follow-up, So think a have And

Peter Baccile

Right.

absolutely do starters, love partner and them, aligned. with They how to more I with we So great want that diamond that them. been the would our we are absolutely like a for interests have We question? have do transactions answer to and chemistry

that So answers that part.

far not As -- and and to going where mean, down the Phoenix, really, the there risk trade-off. we're for really markets while as want right thing additional other seem like over we on reward frankly, we taking like do. certain occasions And by XXX to the us ventures want I outside like both Phoenix, acres exposure, in are there of to didn't ourselves look, we venture place one that because,

So Diamond it are for the certainly probabilities depends of our other consider some lower appetite in but market. just growth Yes, would with of coastal elsewhere, on because markets happening ventures of we the in really markets. that the

Operator

The with Crow James & next Raymond from is question Associates. Bill

William Crow

issue or a supply it a demand issue? Two is questions. Houston, On

Johannson Yap

Bill, It's Jojo. of both. a this is bit little

more a now well in above a came also shut to net or XQ compared little have markets, It demand started lot we're down. too, the issue, slow. a really it's in was Bill. And up. of interest seeing absorption, because Although kind of more RFPs increase of completions to supply pick other demand. bit But

William Crow

X even sounds like few months go least back completion Yes. of of your one kind think lease-up think like historically, within you're goal. always a it was I And at on projects. maybe to you it if really leasing. And I my But been it's on gone again years, completion. construction before few plus we've a of is last there the development the And seems year construction other question and

demand issue? So is again? comments great. that COVID stretch that And would Is are out a if we be supply issue? there a Any that so, seeing

Peter Baccile

Yes.

We Especially been to a XX here, build in track virus. into X This thanks clearly record X to underwriting. has leasing of year. year is kind Our months months always our the after different completion.

seeing And I aberrations. would so what you're call

haven't some happened. seeing that You're happen things

estate. this We love estate. great love markets. is the Now We the real real

So leasing is But we're not real of what as to worried wouldn't use in in the indication big the change answer I building. any any question about velocity we're it. the XXXX

Operator

next Street. is from The Green question Eric Frankel with

Eric Frankel

Is we've a sure if to quarter? decline there fourth further occupancy particular I'm Just reason the follow-up heard why projected an not a in explanation. question. you

Scott Musil

the of lost quarter. we're Class X COVID, in the it's is I'll where weren't that Scott. But X Houston, space. in There's is fourth them one at the looking One the Two market walk in placing developments months A. really spaces. in Dallas, in Eric, service through due about folks we are product all to that.

to to So going that's XXXX. pushed get

that's discussed on basis our new also our an provider. on That lease script, points. a e-commerce and We with starts January, California lease about in call Southern XX in

of talking is occupancy the it's to going the X in the about take It's So COVID. those lease to up SoCal, get just want A that developments, in a to signed. done. X new up. XX% been It's all great call product. little you back going January leased spaces are Class developments to The causing have the bit located are in because take They'll longer we them and to I drop. from would the lease say get tenants good XX.X%, news new is

Those more three that's are drivers. think of a we the So That's it. event. XXXX

Operator

Peter I'll There are at this no the to further Baccile. turn call questions time. over

Peter Baccile

everyone, operator, participating you, on thanks, and our call Thank today. for

please care. any Take feel questions. or with free follow-up reach Art me, Scott out to to always, As

Operator

gentlemen, Ladies concludes and this today's call. conference

Thank disconnect. you. now may You

First Industrial Realty Trust (FR) 22 Oct 202020 Q3 Earnings call transcript