First Industrial Realty Trust, Inc.

Good morning and welcome to the first Industrial Realty Trust Inc. third quarter results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star then one. Please note that this event is being recorded. I would now like to turn the conference over to Art Harmon, Vice President of Investor Relations and Marketing. Please go ahead, sir.

Thank you, Cole. And hello, everybody, and welcome to our call. Before we discuss our third quarter 2022 results and our updated guidance for the year, let me remind everyone that our call may include forward-looking statements as defined by federal securities laws. These statements are based on management's expectations, plans, and estimates of our prospects. Today's statements may be time-sensitive and accurate only as of today's date, October 20, 2022. We assume no obligation to update our statements, or the other information we provide. Actual results may differ materially from our forward-looking statements, and factors which could cause this are described in our 10-K and other SEC filings. You can find a reconciliation of non-GAAP financial measures discussed in today's call in our supplemental report and our earnings release. The supplemental report, earnings release, and our SEC filings are available at firstindustrial.com under the Investors tab. Our call will begin with remarks by Peter Basile, our President and Chief Executive Officer, and Scott Musil, our Chief Financial Officer. After that, we'll open it up for your questions. Also on the call today are Jojo Yap, our Chief Investment Officer, Peter Schultz, Executive Vice President, Chris Schneider, Senior Vice President of Operations, and Bob Walter, Senior Vice President of Capital Markets and Asset Management. Now let me turn the call over to Peter.

Thank you, Art, and thank you all for joining us today. Our team delivered another strong quarter highlighted by continued leasing success in our portfolio, including the exceptional rental rate growth we are capturing on lease signings related to 2023 expirations, which I will discuss in more detail shortly. We also started several new developments, including three buildings at our Phoenix joint venture, where we continue to build upon our success in the 303 logistics corridor. Due to our strong operating results, we're increasing the midpoint of our full year FFO per share guidance for the third consecutive quarter. Scott will walk you through the details during his remarks. Fundamentals in the industrial real estate market continue to support further market rent growth. According to CBRE, industrial vacancy was just 2.9% at the end of the third quarter. Third quarter net absorption was 81 million square feet versus completions of 101 million. For the first nine months of 2022, net absorption was 319 million square feet, exceeding completions of 255 million square feet. In our core portfolio, we finished the quarter with an occupancy rate of 98.3% and cash same-store NOI growth of 8.5%. we continue to achieve strong overall rental rate increases on our new and renewal leasing. Through yesterday, we have taken care of approximately 98% of our 2022 rollovers, and when combined with our new leases signed with 2022 commencements, our overall cash rental rate change is 25%. With just a handful of 2022 rollovers remaining, we are set to achieve an annual company rental rate growth record for the third time in four years. Given the strong fundamentals in our business, our regional teams continue to push rental rates on new and renewal leasing for 2023 expirations. As of last night, we have taken care of 38% of next year's lease expirations and a cash rental rate increase of 28%. Our current outlook for the remainder of the 2023 rollovers is even better. For the remaining 2023 lease expirations, approximately 36% of net rent is from Southern California versus a 24% net rent waiting for SoCal in our overall portfolio. We'll give you an updated view of our projected 2023 cash rental rate change on our fourth quarter call. when we have completed our budget review. We have also been successful in pushing contractual rental rate escalators in our leases. Our new and renewal leases with 2023 commencements, our average annual escalator is 3.6%. With respect to new development leasing, our tenant at the 219,000 square foot building one at First Park Miami is doubling their space and will occupy the entire building which will deliver in the first quarter. We also pre-leased 43,000 square feet at one of the four buildings at our 344,000 square foot First Loop Logistics Park in Orlando. Moving to our new development investments. In the Inland Empire, we started the 155,000 square foot First Wilson Logistics Center II, which is adjacent to our first development there that we successfully leased in advance of completion. Our estimated investment for the sister building is $29 million, with a projected cash yield of 10.5%, reflecting our attractive basis and the extraordinary rent growth in Southern California since we sourced this site. Including this start, our developments in process total 3.7 million square feet with an investment of $571 million. The projected cash yield for these investments is 7.4%, which represents an expected overall development margin of approximately 78%. The margin calculation now reflects a cap rate adjustment of approximately 100 basis points relative to our assumptions prior to the end of Q1. As I mentioned in my opening remarks, we are launching a new project in our Camelback 303 joint venture in Phoenix. This follows the land sale we completed last quarter that netted us north of $100 million in gain and promote. The JV is developing three speculative distribution facilities totaling 1.8 million square feet. The total projected gap cost of all three buildings is approximately $210 million and the targeted cash yield is approximately 5.7%. The venture is using construction financing for a portion of the total project cost, so our share of incremental cash out-of-pocket spend for these developments is only about $20 million. On the acquisition side, in the third quarter, we acquired a relatively even proportion of land sites and existing buildings totaling $84 million. All were in coastal markets, including Southern California, Miami, and Seattle. With these new development site additions, we continue to be well-positioned to support future growth with land holdings that can accommodate an additional 14 million square feet. This represents approximately $2 billion of potential new investments based on today's estimated construction costs and the land at our book basis. Lastly, consistent with our strategic objective to derive 95% of rental income from 15 key logistics markets by the end of 2023, we sold the remainder of our holdings in Cleveland. The sale price was $107 million, which equates to approximately a 6.4% in-place cap rate on the sale. With that, I'll turn it over to Scott to provide additional details on third quarter performance and update you on guidance.