Financial Data and Key Metrics Changes - Funds from Operations (FFO) per share for Q2 2025 was $0.33, down from $0.36 in Q2 2024, while Core FFO per share was $0.35 compared to $0.36 in the same period [13][14] - Total operating revenues increased to $39.5 million in Q2 2025 from $37.1 million in Q2 2024, while operating expenses decreased to $25.1 million from $26 million [14] - Net assets rose from $1.16 billion to $1.2 billion due to acquisitions made during the quarter [15] Business Line Data and Key Metrics Changes - The company acquired two industrial facilities totaling 519,093 square feet for approximately $79 million, increasing the industrial concentration in the portfolio to 67% of annualized straight-line rents [9][10] - Portfolio occupancy remained high at 98.7% as of June 30, 2025 [9][13] Market Data and Key Metrics Changes - The industrial real estate sector showed steady performance with net absorption of 29.6 million square feet in 2025, while the vacancy rate rose slightly to 7.1% [7][8] - New construction completions declined to the lowest level since 2019, indicating a slowdown in the development pipeline [8] Company Strategy and Development Direction - The company aims to acquire high-quality industrial assets that are mission-critical to tenants while selectively disposing of non-core assets [12] - The focus remains on maintaining a disciplined underwriting approach, emphasizing credit quality, location, and long-term value [11] Management's Comments on Operating Environment and Future Outlook - Management noted continued uncertainty in the economic environment but expressed confidence in the industrial real estate sector's resilience [6][9] - The company anticipates upward pressure on industrial rental rates due to a slowdown in new construction and increasing competition for space [9] Other Important Information - The company maintained a common stock dividend of $0.30 per share per quarter [18] - As of June 30, 2025, the company had $94.4 million in revolver borrowings outstanding and approximately $6 million in cash [17] Q&A Session Summary Question: Can you talk about the acquisition pipeline? - The company currently has six Letters of Intent (LOIs) out and is reviewing around 20 transactions, expecting to finalize a $50 million transaction soon [25][27] Question: Can you provide details on the industrial property sold? - The sold property was located in Georgia, where the tenant exercised a purchase option within the lease [29] Question: How is the incentive fee waiver determined? - The waiver is discussed quarterly with management, considering the alignment with shareholder interests and employee retention [30] Question: What are the plans regarding the revolver borrowings? - The company is considering options such as sales under the ATM program and refinancing discussions with lenders [57] Question: Are you seeing any changes in cap rates? - Management does not expect cap rates to reach the 9% range, with average cap rates projected to be around 8.5% [47][48] Question: How is the company managing tenant quality amid macro uncertainties? - The company has not seen significant impacts on tenant quality and maintains its underwriting criteria [49]

Financial Data and Key Metrics Changes - Adjusted company FFO for Q1 2025 was $0.16 per diluted common share, totaling approximately $46 million, consistent with expectations [13] - Same store NOI growth was 5.2% during the quarter, with the same store portfolio 99.2% leased at quarter end [13] - The company maintains its 2025 same store NOI growth range of 3% to 4% and adjusted company FFO range of $0.61 to $0.65 per diluted common share [13] Business Line Data and Key Metrics Changes - The company leased approximately 1,100,000 square feet in Q1 2025, including two lease extensions with an average annual escalator of 3.6% [14] - Significant lease renewals included a five-year renewal in Phoenix with a 59% cash rental increase and a two-year extension in Atlanta with 4% escalators [14] Market Data and Key Metrics Changes - US net absorption was 23 million square feet in Q1 2025, with 19 million square feet in the company's 12 target markets [8] - The construction pipeline in the 12 target markets is approximately 87 million square feet, down nearly 75% from the 2022 peak of 330 million square feet [8] Company Strategy and Development Direction - The company focuses on increasing occupancy, enhancing returns, and executing a 12-market investment strategy in the Sunbelt and Lower Midwest [7] - The investment strategy is concentrated in markets with favorable demographics, employment, and population growth exceeding the national average [10] - The company has opportunistically sold two industrial assets for approximately $75 million at an average cash capitalization rate of 4.1% [11] Management's Comments on Operating Environment and Future Outlook - Management remains cautious in the near term due to trade policy uncertainties affecting tenant decisions, but leasing outcomes have been favorable [9] - The company believes its asset quality, tenant credit strength, and portfolio footprint align with onshoring initiatives, positioning it well for future growth [19] Other Important Information - The company repaid $50 million of the unswapped portion of a $300 million term loan, with a net debt to adjusted EBITDA ratio of 5.9 times at quarter end [16] - Approximately 47% of the company's ABR comes from tenants with investment-grade rated parent companies, indicating high credit quality [17] Q&A Session Summary Question: Known move outs and headwinds for future expirations - Management indicated it is too early to tell about known move outs for 2026 and 2027, but they are optimistic about tenant renewals due to high-quality properties [21][22] Question: Current yields and rents for large boxes - There has been slight markdown in market rents, but overall, face rates have remained stable with increased tenant improvements and concessions [24][26] Question: Future disposition plans - The company is currently on pause regarding disposition activity due to market uncertainty but has a long-term objective to concentrate on the 12 target markets [27][28] Question: Impact of redevelopment on guidance - The redevelopment project was anticipated and excluded from same store NOI growth guidance, with no impact on Q1 results [32][33] Question: Expected yield following redevelopment - The expected yield on the redevelopment is projected to be in the mid-teens, with significant incremental rent anticipated [36] Question: Market excitement for leasing spreads - Management expressed optimism about the Sunbelt markets, particularly in Dallas and Phoenix, for potential mark-to-market opportunities [41] Question: Demand from larger e-commerce players - There is increased activity from major retailers, including Amazon, which could positively impact leasing for the company's large boxes [46]