First Industrial Realty Trust, Inc.

Good day, and welcome to the first Industrial Realty Trust, Inc. third 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, sir.

Art Harmon All right. Thank you, Dave. Hello, everybody, and welcome to our call. Before we discuss our third 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, October 17, 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 turn the call over to Peter.

Thank you, Art, and thank you all for joining us today. The FIRST industrial team delivered another great quarter with solid operating metrics, along with some important new leases and capital deployment activity. We continue to drive cash flow growth from our portfolio via contractual escalations in our leases, capturing embedded rent growth, on rollovers, and continued development leasing, all of which position us to deliver strong growth in funds from operations. Before getting into specifics, let me update you on the industrial market broadly. According to CBRE EA, U.S. industrial market vacancy increased a modest 10 basis points to 5.8 percent, reflecting that most of last year's development starts have now come online. Completions for third quarter totaled 87 million square feet. This is down approximately 30% compared to last quarter and the lowest quarterly completion number since the third quarter of 2021. For our target markets, completions were 45 million square feet, down 40% from the prior quarter. New starts remain disciplined, totaling 36 million square feet in the third quarter, down 68% from the peak in the third quarter of 2022. On the demand side, the third quarter was active with net absorption nationally of 54 million square feet. This brought the year-to-date total to approximately 125 million square feet, of which 75 million were in our target markets. Renewal leasing, in particular, remained strong. Since our last call, we successfully renewed the last of the three large 2024 Southern California expirations with a cash rental rate change of more than 150%. As of the date of this call, we're now through 97% of our 2024 lease expirations by square feet. Our cash rental rate increase is 51%, which is a strong follow up to the 58% cash rental rate growth we delivered on our 2023 commencement. Congratulations to our leasing teams for back to back years of outstanding performance on this metric. Looking at our 2025 lease expirations, we're making good progress and are now through 37% by square footage, which is similar to our pace of progress last year. Together with new leasing, Our cash rental rate increase for leases signed with 2025 commencement date is 33%. More than half of this population is comprised of the 1.3 million square foot fixed rate renewal in central PA we discussed on our last call. We will give you a refined view of our thoughts on our estimated 2025 cash rental rate increase on our fourth quarter call with the benefit of budget reviews and incremental signings. Regarding development leasing, as we highlighted on our last call, 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 3PL plus a 61,000 square foot lease at our first 76 project in Denver. Turning now to capital deployment, we continue to closely monitor demand and competing supply in our target investment markets determine potential incremental starts as we wrap up 2024. Since our last call, we launched a 542,000 square foot development at our first Rockdale Park in Nashville. Our total projected investment is $54 million with an expected cash yield of approximately 7%. The current supply-demand dynamic in Nashville is attractive, and we like the long-term drivers of this market. Current vacancy stands at just 2.7%, and unleashed new supply represents about 2% of the total stock. We also acquired a four-building, 211,000-square-foot park in Houston's southeast sub-market with close proximity to the port. The buildings are 100% leased on a long-term basis. Our total investment is $29 million, and the in-place cash yield is approximately 6%. Moving now to dispositions. As discussed on our last call, we sold a portfolio in New Jersey for $82 million. In the fourth quarter to date, we sold three buildings in Pennsylvania, totaling 163,000 square feet for a total of $19 million. This brings our year-to-date total to $157 million. With that, let me turn it over to Scott to walk you through further details on our results and guidance.