First Industrial Realty Trust, Inc.

Good day, and welcome to the Industrial Realty Trust, Inc. second quarter results call. All participants will be in 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, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Art Harmon, Senior Vice President of Investor Relations and Marketing. Please go ahead.

Thank you very much, Dave. Hello, everybody, and welcome to our call. Before we discuss our second quarter 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, July 18, 2024. 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, Chief Financial Officer, after which we'll open it up for your questions. Also with us today are Jojo Yap, Chief Investment Officer, Peter Schultz, Executive Vice President, Chris Schneider, Executive Vice President of Operations, and Bob Walter, Executive Vice President of Capital Markets and Asset Management. Now let me hand the call over to Peter.

Thank you, Art, and thank you all for joining us today. As we discussed on our last earnings call, 2024 is all about leasing. Since that call, our team has delivered some big leasing wins, both in our core portfolio and within our development projects. We're also excited to discuss the three new development starts that we kicked off in the second quarter. More on all of this shortly. Looking at the industrial market broadly, fundamentals are slowly improving, although, as expected, U.S. industrial market vacancy ticked up by 40 basis points to 5.7% as last year's starts continue to come online. New starts remain disciplined, totaling 50 million square feet in the second quarter, down 55% from the peak in the third quarter of 2022. With respect to demand, the market saw an uptick in tenant requirements being converted into leased spaces. Year-to-date net absorption nationally was 70 million square feet, with 48 million within our target markets. If the pace of demand continues to improve and new starts remain muted, we could see slower increases in vacancy near term and potential declines in 2025. Turning now to our leasing wins. For 2024, we're now through 88% of our expirations by net rent with a cash rental rate change of 45%. This population now includes the renewal of the 221,000 square footer in the Inland Empire West we spoke about on prior earnings calls. Our 2024 guidance range for the increase in cash rental rates on new and renewal leasing remains 40 to 52%. The lease extension for the other significant Inland Empire West rollover, the 300,000 square footer, is still in progress. Note that the midpoints of our FFO and cash same-store NOI guidance do not include any benefit from this potential renewal. We're also beginning to see some early decision-making on our 2025 lease expirations. I'm pleased to report that we recently inked the renewal of our largest 2025 exploration, a 1.3 million square footer in Pennsylvania. We'll provide you an update on our progress for next year's rollovers on our third quarter call as we have done in prior years, but we're off to a strong start. As I mentioned at the beginning of my remarks, in the second quarter and third quarter to date, we signed six speculative development leases across several markets, including Southern California, which total approximately 1.1 million square feet. This is almost half of the 2.3 million square feet of speculative development leasing that was included in our updated 2024 FFO guidance provided on our first quarter call in April. In the third quarter, we inked a full building lease for our 461,000 square foot first pioneer project in the Inland Empire East to a 3PO. We also just signed a 61,000-square-foot lease at our first 76 project in Denver. In the second quarter, we signed a lease for the entire 359,000-square-foot first state crossing project in the Philadelphia airport market to a leading food and beverage company. We also leased the remaining 64,000 square feet at our first steel asset in Seattle and the 120,000 square feet at First Park 94 in the Kenosha Submarket of Chicago. In South Florida, at First Park Miami Building 12 that we just completed in the second quarter, we've already leased a third of the 136,000 square foot building. The South Florida market continues to outperform, and given our success there, we are starting two new projects. First Park Miami building three is now underway. This is the latest phase of the 13 building, two and a half million square foot park, where since 2021, we have successfully leased and placed in service 1.1 million square feet of building that on average leased up well within our pro forma. Building 3 will be a 198,000 square footer to serve one or multiple customers, and the total investment is estimated at $50 million. In a highly infill location in Pompano Beach in Broward County, we started a 60,000 square footer with an estimated investment of $15 million. The site is located directly between I-95 and the Florida Turnpike, an attractive location for businesses serving the Tri-County area of Broward, Palm Beach, and Miami-Dade. Our combined estimated yield of these two South Florida projects is approximately 7%. We're also starting a 425,000 square foot development in the northeast side of Houston at our infill site with frontage on Interstate 610, the first loop beltway. Total investment is expected to be approximately $44 million. with a cash yield of 7%. Prior to beginning construction, we inked a lease for 50% of this building. Moving to dispositions in the second quarter and third quarter to date, we sold an incremental 90 million of assets to bring our year-to-date total to 138 million. With that, I'll turn it over to Scott.