Financial Data and Key Metrics Changes - Funds from operations (FFO) per share for Q1 2025 were $2.12, up 7.1% from the same quarter last year, marking over a decade of quarterly FFO per share exceeding the prior year's same quarter [9][17] - Quarter-end leasing was at 97.3% with occupancy at 96.5%, while average quarterly occupancy was 95.8%, down 170 basis points from Q1 2024 [9][10] - Cash same-store net operating income (NOI) rose 5.2% for the quarter despite lower occupancy [10][22] - The company’s debt to total market capitalization was 13.7%, with an unadjusted debt to EBITDA ratio of 3 times and interest coverage at 15 times [20] Business Line Data and Key Metrics Changes - Quarterly releasing spreads were 47% on a GAAP basis and 31% on a cash basis [10] - The top ten tenants now account for 7.1% of rents, down 70 basis points from a year ago, indicating a more diversified rent roll [10] Market Data and Key Metrics Changes - The leasing market showed improvement, but trade talks created uncertainty, particularly affecting the Los Angeles and Orange County markets [11][36] - Other markets, such as the Carolinas, Atlanta, and Florida, have shown stronger leasing volumes compared to Texas [36] Company Strategy and Development Direction - The company is focusing on leasing to maintain occupancy and has raised its threshold for new investments and development starts until there is better economic visibility [12][14] - Development starts for 2025 are reforecasted to $250 million, with expectations for the majority in the second half of the year [14][21] - The company aims to capitalize on development opportunities earlier than private peers due to its balance sheet strength and existing tenant expansion needs [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating through periods of uncertainty, emphasizing the importance of financial strength and portfolio quality [23][25] - The company remains optimistic about long-term trends such as population migration and evolving logistics chains, despite current macroeconomic uncertainties [26][121] Other Important Information - The company has maintained healthy tenant collections, with bad debt as a percentage of revenue lower in Q1 compared to 2024 [22] - The company is experiencing upward pressure on rents due to limited availability and higher development costs [15] Q&A Session Summary Question: Leasing pace in the second quarter and market pullback - Management reported strong leasing volume, with Q1 being the third-best quarter historically, but noted some tenants are putting decisions on hold due to uncertainty [30][32] Question: Urgency in leasing and flexibility with tenants - Management emphasized the need for quick lease completions but maintained standards without significantly lowering rents [42][46] Question: Dominguez building redevelopment plans - The building was scheduled for redevelopment due to its aging condition, with expectations for leasing activity to pick up after improvements are completed [54][62] Question: Development starts and market conditions - Management indicated that uncertainty around tariffs and potential recession led to a cautious approach in development starts, with a focus on market demand [69][75] Question: Leasing spreads in Los Angeles - Management acknowledged that the 5% leasing spread in LA was low and not representative of the overall portfolio, attributing it to negative absorption in that market [80][82] Question: Construction costs and tenant space utilization - Construction costs have decreased by 10-12%, but demand remains a concern; tenants are looking to utilize space more efficiently due to economic uncertainty [97][100] Question: Acquisition strategy and market changes - The company has adjusted its acquisition strategy to be more conservative, increasing return thresholds due to changes in capital markets [106][110] Question: Onshoring and manufacturing trends - Management expressed hope for increased US-based manufacturing, which could benefit the company, particularly in Sunbelt markets [117][121]