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spk11: Greetings and welcome to the STAG Industrial, Inc. First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Zaros. Thank you, Mr. Zaros. You may begin.
spk09: Thank you.
spk16: Welcome to Stagg Industrial's conference call covering the first quarter 2024 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at www.staggindustrial.com under the investor relations section. On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasts of core FFO, same-store NOI, G&A, acquisition and disposition volumes, retention rates and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters. We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC, and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website. As a reminder, forward-looking statements represent management's estimates as of today. Stag Industrial assumes no obligation to update any forward-looking statements. On today's call, you'll hear from Bill Crooker, our Chief Executive Officer, and Matt Spenard, our Chief Financial Officer. Also here with us today is Mike Chase, our Chief Investment Officer, and Steve Kimble, EVP of Real Estate Operations. who are available to answer questions specific to the areas of focus. I'll now turn the call over to Bill.
spk15: Thank you, Steve. Good morning, everybody, and welcome to the first quarter earnings call for Stagg Industrial. We're pleased to have you join us and look forward to telling you about the first quarter 2024 results. The first quarter reflects the continuation of our strong operating results achieved last year. Our view on the business remains consistent with our fourth quarter call. As anticipated, There are pockets of softness in certain markets, which is driven by increased supply coming online. Additionally, tenants are taking longer to make leasing decisions, which is impacting market occupancy. These dynamics were incorporated in our initial view for the year. We continue to expect market rent growth in the mid-single digits for our portfolio. Primarily driven by the volatile interest rate environment, Forecasted deliveries for 2024 and 2025 are expected to decrease to just 2.1% and 1.6% of stock, respectively. This is a decrease as compared to the forecast 90 days ago. Interest rate volatility has reemerged today after stability in the first three months of the year. This will likely pressure the transaction market, which saw increased activity earlier in the year. In the first quarter, we closed on a 700,000 square foot Class A cross-stocked warehouse for $50.1 million. This building was acquired at cash and straight line cap rates of 6.1% and 6.8% respectively. Located in the Westchester Submarket of Northern Cincinnati, the building benefits from its multiple access points in proximity to I-75. The building is leased to a tenant with an internal credit rating of double D. The lease has 6.8 years of remaining term and weighted average rent escalators of 4.1%, providing stable NOI growth throughout the term. These rents were also 13% below market at acquisition. Subsequent to quarter end, we acquired three buildings for $85 million at a 6.4% cash cap rate. On the development front, we have over 1.2 million square feet of activity across three projects located in the southeastern U.S. Two projects are in the Greenville Spartanburg, South Carolina market. The first is our two building, 715,000 square foot development project in Greer, located next to the airport, BMW manufacturing facility, inland port, and I-85. The remaining construction, including four offices for multi-tenant use, was completed in February 2024. Stabilization is projected to occur and Q2 2025. The second project is a 233,000 square foot development in Spartanburg. The building was purchased during construction in Q4 2023 with a Q2 2024 estimated delivery date. Stabilization is projected to occur in Q2 2025. The third development project is our two building, 298,000 square foot project in Tampa, Florida. These buildings are under construction with a Q4 2024 estimated delivery date and stabilization in late 2025. The suite sizes of approximately 50,000 square feet align well with demand in this high barrier to entry, low vacancy market. With that, I will turn it over to Matt who will cover our remaining results and updates to guidance.
spk12: Thank you, Bill, and good morning, everyone. Core FFO per share was 59 cents for the quarter, an increase of 7.3% as compared to last year. Cash available for distribution totaled $98.1 million, an increase of 8.9% as compared to the prior period. We retained approximately $29.5 million of cash flow after dividends paid through March 31st. These dollars are available for incremental investment opportunities, debt repayment, and other general corporate purposes. Average remains low with net debt to annualized run rate adjusted EBITDA equal to 4.9 times. Liquidity stood at $1.1 billion at quarter end, inclusive of available forward ATM proceeds and committed private placement debt proceeds. During the quarter, we commenced 29 leases totaling 4.3 million square feet, which generated cash and straight line leasing spreads of 30.5% and 43.6% respectively. Retention was 84.2%. ITU's same-store cash and oil growth is 7.1% for the quarter. The two primary drivers include the impact of substantial leasing spreads achieved at two Burlington, New Jersey assets in the second half of 2023. This contributed to same-store growth in the beginning of 2024 versus the comparison period. We also benefited this quarter from free rent provided in the first quarter of 2023. Moving to capital market activity, year-to-date, we've issued 794,000 shares on a forward basis on our ATM program, a gross average share price of $38.94. resulting in gross proceeds of $31 million. As of today, we have approximately $72 million of forward equity proceeds available to fund at our discretion. Equity will be used to pay down the revolver and match funder acquisition and development pipeline. On March 13th, the company entered into a note purchase agreement to issue $450 million of fixed rate senior unsecured notes in a private placement offering. The notes consisted of five, seven, and 10-year tenors with a weighted average fixed interest rate of 6.17%. The notes will be funded on May 28th. On March 25th, the company refinanced the $200 million term loan F, which was scheduled to mature in January 2025. The term loan now matures March 25th, 2027 with two one-year extension options. The term loan bears an aggregate fixed interest rate inclusive of interest rate swaps of 2.94%, until January 15, 2025, and will bear an aggregate fixed interest rate inclusive of interest rate swaps of 4.83% from January 15, 2025 through maturity of March 25, 2027. We experienced nine basis points of credit loss in the first quarter, which is in line with our initial guidance of 50 basis points. Given the relative health of our portfolio described by Bill and reflecting our quarterly results, we are maintaining guidance at this time. I will now turn it back over to Bill.
spk15: Thank you, Matt. I want to thank our team for the continued hard work and achievement towards our 2024 goals. Our team continues to drive value in all macro environments. We are well positioned for sustained growth through our operating and acquisition platform. We'll now turn it back to the operator for questions.
spk11: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. At this time, we are limiting participants to one question and one follow-up question. One moment please while we poll for questions. Our first question comes from Craig Mailman from Citi. Please proceed.
spk05: Good morning, guys. Phil, I just want to go back to your commentary that you guys maintained guidance. Basically, you had what you thought was more prudent outlook here, pockets of softness from your supply, longer decision-making timeframe embedded. As you guys saw the first quarter play out, were there any surprises across individual markets or size or, you know, perceived A versus B in a given market that would, you know, maybe have pushed you towards things trending a little bit better or is everything kind of just on budget at this point?
spk09: our initial guidance.
spk15: Everything is tracking in line with that. In terms of surprises to the upside or downside for this year, none to date. I mean, we've maintained all of our guidance, so everything is pretty steady. Just macro trends, the only thing that we're starting to see across some markets doesn't really impact us as much. It's just a little bit more of that big box trend. supply is starting to get leased, which is, I think, a good sign for the overall economy and the industrial market as a whole, but that's just the early beginnings there.
spk05: Okay. Then from a rent spread perspective, the spreads on new leases commenced this quarter were a little bit below average versus prior quarters. If we look at the incremental 12% of the kind of the target you guys achieved this quarter, it looked like kind of low double-digit spreads versus closer to 29.5% for the closer to 69%. Can you just talk a little about what you're seeing on those two things?
spk15: Yeah, a couple things there. The new leasing activity was pretty light in the first quarter, as expected. We've signed five leases for 700,000 square feet. When we look at the full year, which is what our guidance is related to, those leasing spreads for new leases and renewal leases should be pretty consistent, all in the high 20s. I would think our guidance right now is 25% to 30% cash leasing spreads. We'll probably be on the higher end of that range. With respect to the incremental leasing from our last update to this quarterly report, We had a number of fixed rate renewal options that just hit in this quarter. We fully expected that. That happened. That is incorporated in our leasing spread guidance for the year. So everything is in line with initial expectations and I would say no takeaways from some of the smaller leasing spreads, incremental leasing spreads in the back half of the first quarter.
spk05: If I could slip a third one in, I know I'm cheating, but your investment pipeline looks pretty robust and kind of picked up sequentially. I know there's been a little bit of volatility in the macro side of things. Should we expect that that's kind of a sustainable pickup here, or what's your view on kind of deploying more capital in this kind of higher rate environment?
spk15: Yeah, I mean, the pipeline picked up primarily because of some of the activity in the first quarter. I'll let Mike Chase talk a little bit more of the pipeline, and then I can come back and answer some of our expectations for acquisitions and return thresholds.
spk10: Yeah, thanks, Bill. So the pipeline grew immediately out of the gate in the beginning of the first quarter, and it accelerated and gained momentum throughout the quarter. Anecdotally, we underwrote four times the number of deals in Q1 of 24 than we did in Q1 of 23. So there was plenty of momentum during the quarter. That was indicative of the increase in the pipeline. At the end of the quarter and in April, when the 10-year spiked, interest rates rose, volatility crept back into the market. We don't know if that's going to be permanent Whether that's going to be short-term, we don't know what the effect will be on the pipeline going forward, but that's where the increase in the pipeline came from.
spk15: Yeah, typically when you see a spike like this, either deals sit on the pipeline for longer, maybe they get retraded, maybe it just takes a little bit longer to close the deal, and sometimes deals get pulled off the market. It's too early to tell whether this is entering into a new price discovery phase. We're pretty nimble when it comes to this. We've shown that over the past several years. So we'll continue to be nimble at this point where our underwriting thresholds, especially for going in cash cap rates, have increased due to the cost of capital increasing. So we'll continue to evaluate that and see the impacts. With respect to our guidance, The guidance was a wider range than a normal year. We expect to be within that guidance this year. And if this higher for longer rate environment continues and seller expectations don't change, then I would expect in that situation that we might be at the lower end of our acquisition guidance. I just do want to remind everybody that our acquisition guidance is heavily back-end weighted in the year. So there's not a lot of NOI impact from acquisitions in our 2024 guidance.
spk09: Perfect. Thank you. Thank you. Our next question comes from Vince Tibone from Green Street.
spk11: Please proceed.
spk14: Hi, good morning. Just wanted to follow up again a little bit more on kind of the private transaction markets since rates have moved higher. Just to maybe ask directly, like, are you seeing and hearing, you know, a lot of retrading activity in the market today? And do you get a sense, like, you know, bids are going to get, you know, adjusted lower in real time just due to a higher cost of debt? Or, you know, as you alluded to, is it, you know, kind of still a little early to see those signs?
spk15: Yeah, you just nailed it. It's a little early. OK, we'll probably get a little bit more feedback and data on that in the next four to six weeks. I mean, it's it, you know, spiked 20, 30 basis points in the 10 years. So some sellers, some buyers will just absorb that if they really like the transactions. And, you know, some may may look for a retrade price a little bit. So we'll we'll see how that shakes out. Got it.
spk14: And then are you seeing any more products come to market that's like vacant merchant builds, you know, speculative projects? And I'm just curious, like, is that an area where you would potentially, you know, move to on the acquisition side, you know, a little more on the value add, taking on some leasing risk? Just kind of curious how you guys would think about, you know, the right spread to take on leasing risk versus, you know, a stabilized acquisition like you did in the first quarter and sounds like the deals, you know, subsequent to quarter end.
spk15: Yeah, we're certainly open to taking on immediate leasing risk. If you look at the acquisition, in one of the acquisitions in the fourth quarter, we acquired the one vacant building in Welford, South Carolina, that we underwrote a 12-month downtime. And at that point, we're underwriting a 7% cash cap rate within a couple weeks of acquiring the deal, we leased it up at a seven and a half cap rate, right? So that was a great return. One where we took a little bit more risk, but we got a much bigger return. So those are opportunities we'll certainly evaluate. But if we're going to take leasing risks, we want to really understand the leasing environment, understand how that building fits that sub-market, and require additional return. With respect to the pipeline, Mike, I don't know if you have any additional comments, but the pipeline today as it compares to The fourth quarter, in my understanding, the amount of vacant assets, value-add assets, is pretty consistent. I think the growth in the pipeline is primarily due to just more transactions coming to market as the market opened up in the first quarter. Mike, I don't know if you have anything else to add.
spk10: Yeah, I mean, I think if there was any tilt, it tilted a little bit towards stabilized transactions, and there were a few mid-transactions. small to medium-sized portfolios that came out on the market, which we hadn't seen at the end of 2023. But in general, it's pretty consistent with the makeup of the pipelines in the past.
spk15: Yeah, I mean, the first quarter certainly felt like the market was opening up with the stability of interest rates. I mean, we saw in a market that was very active with a strong portfolio, it was 250 $34 million that traded. You weren't seeing that at the back half of last year. So it felt like a pretty healthy environment. And I don't know if it's just a quick pause here with this spike. We'll certainly hear more this afternoon with the Fed. But if the Fed comments skew negative, it could be a longer pause.
spk09: Makes sense. Thanks for the time. Thank you.
spk11: Our next question comes from Eric Borden from BMO Capital Markets. Please proceed.
spk17: Hey, good morning, everyone. Just sticking with the acquisition theme, just noticed the acquisitions closed post the first quarter. Those boxes, they just appear to be a little bit on the larger side versus your in-place portfolio. Just curious about what is the strategy in terms of external growth? Are you looking for, you know, more larger sized boxes, or was that just in relation to what was available in the transaction market at that time that you saw attractive? Thank you.
spk15: Yeah, we just look for the best risk-adjusted returns, Eric, and sometimes that's a vacant asset, as I just mentioned with Vince, or it could be a longer stabilized asset that produces really strong cash flow with great escalators and the building fits the sub market. With respect to the acquisitions that were acquired subsequent to quarter end, it was one large one. We acquired a 590,000 square foot facility in Louisville, Kentucky, a market that we know really well, but that skewed those three acquisitions. The other two acquisitions was 150,000 square foot facility and 100,000 square foot facility. On average, it looks a little higher, but it was just skewed by one. But it was in a larger building, was a market that we're very comfortable with. We own in. We just did some leasing activity in that market and an asset that we think is a long-term, strong long-term fit for the portfolio.
spk17: Is that a single-tenant user or is that more multi-tenant?
spk15: That was a single-tenant user.
spk17: Okay, that's helpful. And then... My follow-up, Matt, just to clarify, you said that there was nine basis points of credit loss in the first quarter?
spk12: Eric, that's correct. Nine basis points of credit loss in the quarter. Our guidance is 50 basis points for the year. And, you know, we've been maintaining that guidance. I know, obviously, if you want to annualize the nine basis points, it looks like it's less than the 50. But, you know, just given where we are in the calendar, given, you know, some of the uncertainty that you're seeing in the headlines, you know, 50 basis points is the right number for us. And we'll continue to update the market, you know, as we progress through the year.
spk09: All right. That's helpful. Thanks, everyone.
spk11: Our next question comes from Nick Philman from Baird. Please proceed.
spk02: Hey, good morning, guys. You guys reaffirmed kind of that market rent growth forecast in mid-single digits, but maybe just a little curious on kind of the markets where you're seeing like the most weakness. I know last quarter you kind of called out Columbus, Indianapolis, and select areas of Dallas, but just curious on some market commentary there.
spk15: Yeah, the market rent growth guidance we affirmed, as you noted, with respect to markets, weaker markets, you know, still seeing some weakness in India and Columbus. seeing weakness in Phoenix, seeing some weakness in some of the more historical, you know, higher growth markets, Southern California, some parts of New Jersey. But then the other end, there's a lot of strong markets out there that we operate in that are seeing, you know, vacancy rates, you know, sub 5%, some 4%, some 3%. Tampa's a market. That's right around 3%. Sacramento is doing really well. Chicago is right around 5%, I think, a little bit sub-5% vacancy. Milwaukee is strong. Detroit, Nashville, Reno, El Paso, all these markets that we're operating in are really strong fundamentals and balanced supply and demand. They didn't have that excess supply coming online. There's still strong demand drivers there. And those markets are just really steady right now.
spk02: helpful and then maybe Matt touching a little bit on credit maybe any changes to your sort of tenant watch list and are there any industries you're kind of watching out for you feel there might be a little bit of softness there and you're kind of monitoring a little bit more thanks for the question you know simply put our watch list is almost identical very similar to the last time we're on on the phone in February
spk12: We're not seeing anything thematic, you know, in terms of distress across the portfolio or tenancy. You know, we ask the questions. There's nothing, you know, specific to a sector or geography. It really is, you know, kind of just unique situations. You know, the nine basis points is great. The 50 basis points, again, we believe is the right guidance in April for 2024.
spk09: Thank you.
spk11: Our next question comes from Jason Belcher from Wells Fargo. Please proceed.
spk08: Yeah, hi. I was wondering if you all could talk about any pockets of strength or weakness you're seeing across your different tenant industries. Are there groups that are being more aggressive than others and taking space, and the flip side, are some pulling back more than others?
spk15: I would say there's no themes we're seeing This year, with respect to industries, we're still seeing demand from logistics companies. 3PL demand is still holding up. So no major themes. Let's say if you want an answer for some theme, it's just what I said earlier on the call. We're seeing a little bit more big box leasing in some of those big box markets. South Dallas had some leasing there. We saw some leasing in Phoenix and some in Atlanta, some of the bigger boxes. But it feels like that's a little early, so I don't want folks to extrapolate too much on that. But if you're going to have one theme, that's kind of the small theme that we're seeing right now.
spk08: Got it. Thanks. And then secondly, can you just talk a little bit about your contractual rent increases or rent bumps and what you're incorporating into newly signed leases there and you know, what kind of pushback, if any, you're getting on that part of the lease agreement. And maybe if you could just remind us what your average escalator is across the portfolio, that'd be helpful.
spk15: Yeah, I'll start off with what we're seeing in new leasing. Rental rates are holding up and escalators are holding up. So we're seeing, you know, average escalators being signed in the three and a half range. You know, we signed one this last quarter that had a four on it. So we're still seeing some strong escalators and strong, you know, face rental rates. Matt, do you want to talk on the average for the portfolio?
spk12: Absolutely. Hey, Jason. The weighted average escalator across the portfolio continues to increase. You know, there is upward pressure. It's really just math, as Bill explained. Our weighted average escalator right now is a tick above 2.7%. But again, as Bill mentioned, you continue to sign those leases with the three, three and a half, 4% escalators, that number. will increase mathematically. You know, and that's the biggest, I would say, building block to our sustainable same-store growth.
spk09: Got it. Thanks, guys. Really helpful.
spk11: Our next question comes from Sameer Kanal from Evercore ISI. Please proceed.
spk04: Hey, Bill. Just one for me here. I mean, you made the comment about tenants taking longer to make decisions. That's been playing out for a while now, but just trying to understand, was there sort of a sudden shift in timelines that you saw maybe at the end of March or even April?
spk15: No, I wouldn't say a sudden shift. It continues to be, and this is a theme that kind of started at the end of last year, middle to end of last year, where the decision-making capabilities were pushed to corporates right, into the C-suites. So instead of the local teams being able to make a decision, it's being pushed to corporates. And it's just taking a little bit more time to make sure that, you know, and this is, it depends on the market, right? So if you've got a market that has a little bit more supply, tenants aren't pushed to make a decision quicker, right? Because there's more options available to them. As I mentioned, as I went through, you know, some of the markets that we're in, there's a lot of, you know, steady, in those markets and balance supply and demand. So in those markets, you're seeing tenants make decisions probably in line with what they have been. And some of these markets have oversupply and their bigger box decisions are taking a little bit longer. When you compare decision-making timelines to 21, 22, yeah, they're definitely pushed out one to three months. And when you compare it to last year, depending on the market, maybe they're pushed out you know, a couple, few weeks, depending on the market. Some markets might be a little bit longer, and some markets there's no change at all.
spk04: So it doesn't look like, given the rate spike we had sort of at the end of March or April, we've seen there's been any sort of significant change, right?
spk15: Yeah, I don't think it was a reaction to a 30 basis point increase in the 10-year.
spk09: Yeah, yeah, no, got it. Okay, just making sure. All right, thank you. Thanks.
spk11: Our next question comes from Michael Carroll from RBC. Please proceed.
spk01: Thanks. Bill, you highlighted a number of development projects in your prepared remarks that the company is committed to. I'm sorry if I missed this, but did you mention how much capital Stagg has committed to build those projects, and what's the target initial yield on those projects also?
spk15: Yeah, in terms of, yeah, I'll walk through, you know, quickly the yields and Steve Kimball can walk through kind of the progress and the remaining capital committed. I mean, the first project is the one in Greer that I mentioned. That started back in April, March or April of 2022. Those buildings, great, well-located. They have excess power. One of the buildings has 2,500 amps. The other one has 5,000 amps. So they cater both to logistics tenants, light manufacturing tenants, and that's the demand in that market. These buildings, as I mentioned, the prepared remarks, close to the BMW plant that's increasing capacity, especially for EV vehicles, close to the Inland Port that's growing in Greer, I-85, And so a lot of demand drivers and a lot of light manufacturing there. So those assets we expect to stabilize in the mid-five range. Part of that is when you put these projects under contract back in March and April of 2022. The asset in Spartanburg, if you recall, that's the one we acquired partially developed in Q4 of last year. really required one that was just recently completed called the sister building. That's the one we leased almost immediately. We underwrote a seven yield at least for a seven and a half, about 11 months ahead of schedule. So that building is coming online. We anticipate a seven cap for that. We're underwriting a 12-month downtime. Hopefully we We have a similar outcome as a sister building, but again, we're prudent with terms of how we underwrite these assets. So that's a seven cap. And then with respect to the Tampa market, I touched on the suite sizes there. Tampa market, sub-3%, vacancy rate, a really strong market. That one is probably going to stabilize in the mid-sixes. It all depends. That's at the current market rent, so we'll see what market rent does there, but the fundamentals in the market are really strong. Steve, I mean, generally, do you want to just touch on kind of where we are on a total basis on committed capital and what's remaining?
spk13: Yeah, and committed capital, we're at about $118 million, and I think that makes sense, Michael, because The Greenville-Spartanburg market, where we talked about the two projects we have going, those are generally completed for construction. So the majority of the money has been spent, and we're switching to the lease-up period for those. At Tampa, we're about 50% done with that project. So in the Greenville-Spartanburg, those projects are around 92% funded, and we're about 50% for Tampa. So overall committed is about 118 has been spent of a little over $150 million of projected capital for those projects. Yeah, so another 30 or so million, Mike, to be spent.
spk01: Okay, great. No, that's helpful. And then, I guess, how do you think about pursuing new starts? I mean, does this recent slowdown, does that make you want to slow down in making these decisions and waiting for these assets to get leased up? I guess, how do you kind of underwrite those new projects?
spk15: Yeah, I mean, it's market-by-market specific and return specific. So if there's a market that we see really healthy supply-demand and we like the return profile, we'll certainly start a project in one of those markets. What I like about us phasing into this development platform is that we're not buying the raw land and going through all the entitlement work and having, call it, a three-year horizon between day one and day finishing the project. So our time horizons are much shorter, usually 12 months or a little bit longer. So the outlook is clearer, I think. The returns, expected returns are a little lower because there's less risk. So if the market is strong and the returns are adequate for what we expect for developments, which are obviously much higher than a stabilized acquisition, that would be fine entering into more projects. As we said, we only have another $30 million left to spend on these projects. The Greenville project, the vacant asset leased immediately, and that sister building should do really well. So I think we're balanced with our approach here. I think we're probably a little bit conservative, and to the extent we see a good opportunity, we'll execute on it.
spk09: Okay, great. Thank you. Thank you.
spk11: Our next question comes from Mike Miller from JP Morgan. Please proceed.
spk06: Yeah, hi. Just a quick one on cap rates and guidance. And Bill, I know you talked a little bit about acquisition volumes being wider range and back-end loaded. Just if we're in this world where the 10-year is, you know, in the 4.6s, you know, 4.7 or so for some period of time, do you think your cap rate guidance holds?
spk09: Well, if...
spk15: Our cap rate guidance holds if, you know, considering what we've already closed and put under contract, that kind of weights it down. It was a different interest rate period. But in terms of new acquisitions putting in under contract, those are going to be higher yields at the high end of the range and maybe even a little bit higher.
spk06: Got it.
spk09: Okay. That was it. I appreciate it. Thank you. Thanks.
spk11: Our next question comes from Bill Crow from Raymond James. Please proceed.
spk07: Yeah, good morning. Most of my questions have been answered, but you alluded to stronger leasing and some big box space. I'm wondering if that's e-commerce tenants or whether there's any theme in the demand that you're seeing there.
spk15: Yeah, I mean, there's one very large e-commerce tenant that we're all you know, household name, that's at least some of the space. Some big retailers took some space. And I think, I think another one was a, was a large e-commerce tenant too. Yeah. So I was just looking over at Steve and he was shaking and said, yes. So I got that one. Right. But I, I just want to, you know, caution those comments in that, you know, this is the start of it. Right. So I don't want it to, I don't want my comments to be extrapolated, like, you know, big boxes back where, everything's healthy there. But it's starting, we're seeing some positive signs there, which is great. I just, I don't want to oversell that.
spk09: Yeah, fair enough. All right, that was it for me. Thank you. All right, thanks, Bill.
spk11: Our next question comes from Camille Bonnell from Bank of America. Please proceed.
spk03: Hi, good morning. This is Andrew Berger on for Camille Bonnell. Appreciate your outlook on market rent growth. Just curious if you have a view on when we'll see peak vacancy.
spk15: It's market by market specific. The markets that have, you know, oversupplied right now, you could see peak vacancy at the end of this year and start, you know, it could take all of next year to kind of wind that down to, you know, more normalized levels and then steadier markets, you know, I think they're going to continue to be steady. So maybe you see a little bit of a spike in vacancy as we move through the year, but it won't be as material as some of those other markets. It really is a market-by-market answer, and so it's hard to generalize it.
spk03: Okay, that makes sense. And just circling back to the earlier comments around slower decision-making and the decision shifting maybe from a real estate manager to – C-suite. Just curious, what do you think it'll take to shift that decision back to the real estate manager? Is it really a matter of supply, interest rates, or something else?
spk15: It could be one or both of those. As tenants are required to make quicker decisions, and that's kind of on the supply side of it, They have to push that decision-making capabilities down to the regional teams. Otherwise, deals won't get done and they'll miss space. I think if you've got interest rates coming down and there's more confidence with some of the C-suites in these companies, then they may just say, let's take down space. We're projecting more demand, higher revenues. Let's build out our supply chain and to get ahead of that. So, I think it could be one or both or some combination.
spk09: Okay, great. Thank you. Thank you.
spk11: This concludes our question and answer session. I would like to turn the floor back over to Bill Crooker for closing comments.
spk15: Thanks everyone for participating in the call this morning. As always, we appreciate the thoughtful questions, and we look forward to seeing many of you at the upcoming conferences. Thank you.
spk11: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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