Financial Data and Key Metrics Changes - Funds from operations (FFO) were $2.21 per share, up 7.8% for the quarter compared to the prior year, excluding involuntary conversions [8][15] - Quarter-end leasing was 97.1% with occupancy at 96%, while average quarterly occupancy was 95.9%, down 110 basis points from Q2 2024 [8][9] - Cash same store NOI rose 6.4% for the quarter despite lower occupancy [9] - The company’s debt to total market capitalization was 14.2%, with an unadjusted debt to EBITDA ratio of 3.0 times and interest and fixed charge coverage increased to 16 times [16] Business Line Data and Key Metrics Changes - Quarterly re-leasing spreads were 44% GAAP and 30% cash, with year-to-date results at 46% GAAP and 31% cash respectively [8] - The company has the most diversified rent roll in its sector, with the top 10 tenants accounting for only 6.9% of rents, down 90 basis points from last year [9] Market Data and Key Metrics Changes - The market has bifurcated, with smaller spaces (50,000 square feet and below) seeing continued conversion while larger spaces experience elongated decision-making times [11][25] - The company is re-forecasting 2025 starts to $215 million, leaning towards the back end of the year due to current demand levels [12] Company Strategy and Development Direction - The company is focusing on leasing to maintain occupancy and is making quick leasing decisions to adapt to market conditions [10] - The strategy includes targeting geographic and revenue diversity to stabilize earnings regardless of economic conditions [9] - The company aims to capitalize on development opportunities earlier than private peers, leveraging its balance sheet strength and existing tenant expansion needs [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's quality and the resilience of the industrial market despite macroeconomic uncertainties [7][18] - The company anticipates upward pressure on rents as demand stabilizes due to limited availability of modern facilities [14] - Management noted that the current economic environment is expected to improve, leading to potential rent growth as demand picks up [66] Other Important Information - The company invested $61 million in two new properties, increasing its market ownership in Raleigh to approximately 600,000 square feet [10] - The management team has a proven track record and is focused on driving FFO per share growth and enhancing portfolio quality [19] Q&A Session Summary Question: Can you talk about the cadence of leasing through the second quarter and any color you can provide for July? - Management noted that leasing activity was strong in the first quarter and late last year, but the tariff news has caused some hesitation among tenants, leading to slower decision-making [25][28] Question: Can you discuss the expected downside to average month-end occupancy in the third quarter? - Management clarified that the decrease in occupancy is primarily due to under-leased development properties coming online, impacting overall portfolio occupancy [34][35] Question: How are you focusing on occupancy and what mechanisms are you using? - Management indicated that they are not dropping rents significantly but are maintaining yields on projects, with some concessions noted in specific markets like California [43] Question: What are your thoughts on rent growth in the next 12 to 24 months? - Management expressed optimism for continued rent growth, citing low vacancy rates and a strong demand outlook in their key markets [66][105] Question: How do you view the cost of your credit facility versus equity in the back half of the year? - Management highlighted the flexibility of their balance sheet and the potential to utilize their credit facility as needed, while monitoring market conditions closely [72][76] Question: Are you expecting to be active in further supplementing your land bank? - Management acknowledged the challenges in finding good land sites but indicated they would continue to seek opportunities in various markets [88][90]

Financial Data and Key Metrics Changes - Funds from operations (FFO) were $2.21 per share, up 7.8% for the quarter compared to the prior year, excluding involuntary conversions [6][13] - Quarter-end leasing was 97.1% with occupancy at 96%, while average quarterly occupancy was 95.9%, down 110 basis points from Q2 2024 [6][7] - Cash same store NOI rose 6.4% for the quarter despite lower occupancy [7] - The debt to total market capitalization was 14.2%, with an unadjusted debt to EBITDA ratio of 3.0 times and interest and fixed charge coverage increased to 16 times [14] Business Line Data and Key Metrics Changes - Quarterly re-leasing spreads were 44% GAAP and 30% cash, with year-to-date results at 46% GAAP and 31% cash respectively [6] - The company has the most diversified rent roll in its sector, with the top 10 tenants accounting for only 6.9% of rents, down 90 basis points from last year [7] Market Data and Key Metrics Changes - The market has bifurcated, with smaller spaces (50,000 square feet and below) seeing continued conversions, while larger spaces are experiencing elongated decision-making times [9][24] - The company expects new starts to be re-forecasted to $215 million for 2025, leaning towards the back end of the year due to current demand levels [10] Company Strategy and Development Direction - The company is focusing on leasing to maintain occupancy and is making quick leasing decisions to adapt to market conditions [8] - The strategy includes targeting geographic and revenue diversity to stabilize earnings regardless of economic conditions [7] - The company aims to capitalize on development opportunities earlier than private peers, leveraging its balance sheet strength and existing tenant expansion needs [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the portfolio benefiting from long-term trends such as population migration and evolving logistics chains [17] - The management team is navigating through periods of uncertainty and is focused on driving FFO per share growth and raising portfolio quality [16] - There is an expectation that limited availability of modern facilities will put upward pressure on rents as demand stabilizes [12] Other Important Information - The company has invested $61 million in two new properties, increasing its market ownership in Raleigh to approximately 600,000 square feet [8] - Tenant collections remain healthy, with uncollectible rents estimated to be in the 35 to 45 basis point range as a percentage of revenues [15] Q&A Session Summary Question: Can you talk about the cadence of leasing through the second quarter and any color you can provide for July? - Management noted that leasing activity was strong in the first quarter and tail end of last year, but the tariff news has caused some hesitation among tenants, leading to slower decision-making [21][22] Question: Can you discuss the expected downside to average month-end occupancy in the third quarter? - Management clarified that the decrease in occupancy is primarily due to under-leased development properties coming online, impacting overall portfolio occupancy [30][32] Question: How is the company focusing on occupancy and what mechanisms are being used? - The company is focusing on getting deals done without significant concessions, although some markets like Los Angeles are seeing aggressive rent and free rent offers due to negative absorption [38][40] Question: What are the expectations for rent growth over the next twelve to twenty-four months? - Management anticipates continued rent growth, particularly in infill locations, as demand is expected to pick up faster than supply due to low construction levels [62][63] Question: How does the company view its land bank and development activity? - The company is actively looking to supplement its land bank but faces challenges in finding suitable land due to zoning issues and market dynamics [83][85]

Financial Data and Key Metrics Changes - Core FFO per share was $0.61 for the first quarter, an increase of 3.4% compared to the previous year [15] - Cash available for distribution totaled $106.5 million, an increase of 8.5% compared to the prior period [15] - Leverage remains low with net debt to annualized run rate adjusted EBITDA equal to 5.2 times [15] - Same store cash NOI growth was 3.4% for the quarter, driven by leasing spreads of 27.3% and annual escalators of 2.8% [17] Business Line Data and Key Metrics Changes - The company signed 36 leases totaling 5 million square feet during the quarter, generating cash and straight line leasing spreads of 27.3% and 42.1% respectively [16] - Retention for the quarter was 85.3%, with 78.5% of the operating portfolio square feet expected to lease in 2025 already leased [16][19] - The company achieved cash leasing spreads of 25.1% for the leases commencing in 2025 [8][16] Market Data and Key Metrics Changes - The national under construction pipeline decreased more than 16% sequentially since the fourth quarter [11] - The company noted healthy tenant activity in various markets, with strong demand in the Midwest and Sunbelt regions, while some weakness was observed in Atlanta and San Diego [9][28] Company Strategy and Development Direction - The company aims to benefit from geographic diversity and focus on CBRE Tier one markets, viewing tenant supply chain diversification as a net positive [9] - The company has a strong balance sheet and ample liquidity, positioning itself for sustainable growth in 2025 [20] - The company is evaluating a broad mix of assets for acquisition, including long-term and short-term leases, and is open to opportunities in the current market environment [58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about leasing activity despite macroeconomic uncertainties, noting that tenants are still making decisions albeit at a slower pace [27][36] - The company maintains its 2025 credit loss guidance of 75 basis points, with minimal credit loss experienced in the first quarter [19][60] - Management highlighted ongoing discussions with tenants for early lease renewals, indicating strong demand in the system [29][34] Other Important Information - The company completed acquisitions totaling $43 million in the first quarter, with cash cap rates averaging 6.87% [11] - A significant lease of 500,000 square feet was executed in the Savannah market with zero downtime and a 25% cash leasing spread [10] - The company has approximately 2.5 million square feet of development activity across 11 buildings, with 50% under construction and 16% pre-leased [14] Q&A Session Summary Question: Clarification on new leasing activity - Management confirmed that 1 million square feet of new leases were signed in the last 30 to 60 days, with a mix of new and renewal leases [25][26] Question: Demand across different submarkets - Management noted healthy demand in Midwest markets and the Sunbelt, with some weakness in Atlanta and San Diego, but overall tenant activity remains strong [27][28] Question: Trends in the private transactions market - Management observed that while the private market remains strong, some portfolios have been pulled from the market due to pricing volatility [42][44] Question: Update on credit loss and American Tire - Management stated that American Tire is current on rent, and the guidance for credit loss remains unchanged at 75 basis points [60][61] Question: Insights into leasing activity and concessions - Management indicated that while some concessions may be offered, they are generally holding out for the best net effective rent [106] Question: Update on development pipeline demand - Management reported good activity in development projects, although new leasing for new developments is slower due to macroeconomic factors [72][74]

Financial Data and Key Metrics Changes - Core FFO per share was $0.61 for the quarter, an increase of 3.4% compared to last year [13] - Cash available for distribution totaled $106.5 million, an increase of 8.5% compared to the prior period [13] - Leverage remains low with net debt to annualized run rate adjusted EBITDA equal to 5.2 times [13] - Liquidity stood at $1 billion at quarter end [13] Business Line Data and Key Metrics Changes - 36 leases totaling 5 million square feet were commenced during the quarter, generating cash and straight line leasing spreads of 27.3% and 42.1% respectively [14] - Retention for the quarter was 85.3% [14] - The company has signed 3.6 million square feet of leases commencing in the second quarter, with 1 million being new leasing [21][22] Market Data and Key Metrics Changes - The national under construction pipeline decreased more than 16% sequentially since the fourth quarter [9] - Weaker economic growth may negatively impact warehouse space demand, but this would be partially offset by increased near shoring and on shoring activity [9] Company Strategy and Development Direction - The company views the diversification of supply chains by tenants as a net positive due to its geographic diversity and focus on CBRE Tier one markets [7] - The company is maintaining its acquisition guidance, which is back-end weighted, with minimal impact to core FFO from acquisitions [46] - The company is focused on a broad mix of assets for acquisitions, evaluating both long-term and short-term leases [56] Management's Comments on Operating Environment and Future Outlook - Management noted that while tenant activity was healthy, the escalation of the global trade war continues to create uncertainty [7] - The company is optimistic about the demand for new leasing, with a strong start in the second quarter [34] - Management is cautious about the macroeconomic environment but remains confident in achieving its leasing targets for 2025 [78] Other Important Information - The company sold one building in Nashua, New Hampshire for gross proceeds of $67 million, representing a cash cap rate of 4.9% [11] - The company has approximately 2.5 million square feet of activity across 11 buildings in the U.S., with 50% under construction and 16% pre-leased [12] Q&A Session Summary Question: Clarification on new leasing activity - Management confirmed that 1 million square feet of new leases were signed in the last 30 to 60 days, with a mix of new and renewal leases [21][23] Question: Demand across different submarkets - Management noted healthy demand in Midwest markets and the Sunbelt, with some weakness in Atlanta and San Diego [25][26] Question: Trends in the private transactions market - Management observed that while there is still buyer interest, some portfolios have been pulled from the market due to pricing volatility [42][43] Question: Insights on credit loss - Management indicated minimal credit loss in the first quarter, with American Tire Distributors current on their 2025 rents [60][61] Question: Update on leasing activity and concessions - Management stated that while they are holding out for the best net effective rent, some markets may see increased free rent offers [108]