Q1 2020 Earnings Call

Police which can be found on the investor relations section of our website along with our form 10-q and supplemental filed with the SEC replay. This call will be available shortly after the conclusion of the call through May 15th, 2020 the numbers to access the replay are provided and earnings press release those who listen to the replay of this call May remind you that the remarks made here in as of today May 8th 2020 will not be updated subsequent to this call during this call certain comments and statements. We may may be deemed forward-looking statements within the meaning prescribed by the Securities laws including statements related to the Future performance of our portfolio. Our pipeline of potential acquisition wage and other Investments teacher dividends and financing activities all forward-looking statements represent Plymouth judgment, as of the date of this conference, call and are subject to risk and a phone number.

These that can cause actual results to differ materially from our current expectations investors are urged to carefully review various disclosures made by the company including a risk and other information disclosed in the company's filings with the SEC. We also will discuss certain non-gaap measures including but not limited to f f o a f f o m just to be with the definitions of these non-gaap measures and reconciliations to the most comparable gaap measures are included in our filings with the SEC on now turn the call over to Jeff with Jeff, please go ahead.

Thank you.

Good. Thanks everyone for joining us today. Please bear with us as we are conducting this call in separate locations virtually.

Let's hope it goes well, our thoughts and prayers are with those both directly and indirectly impacted by this crisis.

I've heard it described already a few times but this really was a tale of two quarters January February and into the first few weeks of March. We were on track to present an outstanding quarter of results. We had sourced and completed new acquisitions in our Target markets all back by strong fundamentals and strong yields. We secured new leases and renewals that resulted in double cash rent increases. We had success on vacant space and strong staying same store noi as well. We've also had a jump on our 2020 lease expirations.

We improve the balance sheet with discipline access to debt and equity in the capital markets and we protected our culture with an emphasis on recruiting and training our people to deliver outstanding service to our Tenenbaum. The end result had us right on track with our full-year expectations in Prior guidance, since mid-march. Our primary focus has pivoted to the health and safety of our team our customer and on preserving liquidity as real estate operators. We are highly focused on the day-to-day operational priorities that Focus has intensified over the last several weeks and I'm proud of how our people have responded. You'll hear more about some specific results in a moment from the rest of the team.

First I want to touch on some of these areas.

Asset and Property Management people kept up a strong pace of leasing through the quarter and we have even completed some leases as recently as last week. We are now up to 75% of our initial 20/20 expirations to taking care of with double-digit rent increases this group along with our finance team has done a great job of working through our rent collections as well.

One of the primary topics this quarter has been rent Collections and our experience in March. The first quarter was consistent with past quarters. We collected a total of ninety-nine percent of our rent which included recurring monthly Billings in the quarter marches collection rate alone was 99% for April. We've collected 93% of our scheduled rent and expect to receive the majority of the uncollected balance as our tenants we cover with the number of Doc was in we've completed over the last several years. We've been having a range of different payment dates are standard leases are for the first of the month, but there is something to do at all times during the month in many of our tenants that are GSA or government-related pay in arrears.

For me the analysis is a little trickier. We were only six business days into the quarter. And the first day was a Friday that usually means more of the first of the month rent show up the following week off the first five or six days of the month compared with April. We don't see any material difference in Trends, but I will place a strong disclaimer here that is way too early to call this a definite trend.

You're watching.

A very closely in June as well for any indications of deviation from that Norm. Our acquisition activity was in line with what we anticipated with the completion of one transaction on March 1st. I brought us to our full-year guidance number of 88 million. We obviously had more plan for later in the year and has pain will describe in a moment. We paused a number of guys in March. We are currently taking a fresh look at the the range of investment opportunities that are going to be available.

We took some initial steps to improve our balance sheet as well with the initiation of a new ATM offering in late February. We were active through that program into early March selling 44,000 shares and bringing up to ten point eight million in net proceeds raised during the quarter. We have not utilized the program since

You took preemptive steps to preserve our liquidity as well by drawing on our credit facility in Term Loan to the quarter. Additionally. We put a pause on non-essential Capital expenditures and we are taking a hard look at them Capital expenditures through the end of the year.

Due to the lack of visibility created by the ongoing impact and disruption from covid-19. We believe it is prudent to withdraw our our full-year guidance for 2020 while I rent collections have been strong today and we continue to renew expiring leases and Lease up space. We're not going to pretend that we have a crystal ball clear enough to actually predict beyond the near-term.

Concurrent with the release of our first quarter numbers this morning. We have announced that our board anticipates that it will revise our common stock dividend policy to bring it more in line with that of our peers Although our first choice f f o n a f f o numbers were indicative of the full year results. We were guiding to which would provide coverage ratios of seventy and 80% respectively review. This decision favorably wage particularly in light of the sustained this location and the implied Public Market valuation of our portfolio a decision to right-size the dividend provides us the flexibility to grow the company over the long term while being responsive to recent Dynamics in the capital markets commencing with the second quarter dividend that is expected to be cleared in mid-june. The board anticipates adjusting the quarterly dividend to twenty cents per diluted share off or an annualized rate of $0.80 per diluted share.

It can be no Assurance as to the timing amount or Declaration of future dividends.

Our team has been heavily engaged throughout the crisis and our board has as well. They all have a tremendous amount of real estate experience and have seen many real Cycles come and go you all share in common with Ensure limit takes the right steps to benefit from what we believe is another golden age of Industrial investing on the horizon.

Let me explain. Well, it was much overcoming the interim and the timing of when the economy stabilizes and begins to grow again is beyond our ability to predict but we have a very strong conviction in the number of theme that provide competitive advantage to Plymouth. We believe that this pandemic be on the negative Public Health implications has accelerated the three themes that I've shared on previous calls off the protection of intellectual property to the protection of the supply chain in three reduction of the environmental impact of global Shipping with the uncertainty in recent weeks caused by our country's Reliance on a far-flung supply chain. There's much talk of onshoring or near Sharon. I continue to highlight these themes because I think they get lost somewhat behind the elephant in the room, which is of course the phone numbers in the dislocation and Retail. Phenomenon Israel. It is accelerating. We are actively participating in that structural change the location of our properties in markets that are historically. Yep.

Created with access to large concentrations of skilled, blue-collar labor pools reasonable cost of living and Major Distribution Network.

She provide us the ability to benefit from all of these drivers in closing. I'd like to emphasize that the next few months will require our continued concentration on each of our buildings and tenants off but that over the next three to five years. We think that there will be significant opportunity for Plymouth to participate in another strong. Of industrial investment without alternate over to pain to walk us through the Acquisitions extra. Good morning everybody.

I'd like to briefly touch on the Acquisitions. We completed our thoughts on the current pricing for New Deals and how we are approaching the future in this new environment. We're encountering that's mentioned earlier. We were executing well on our Acquisitions during the quarter. Our pipeline of New Opportunities was robust and the Senate panels in our Target markets worked on as of February when we held our Q4 call. We had completed $78 million dollars of Acquisitions and our full-year Outlook assumed at least another ten million to invest by the end of the first quarter which we accomplished via a 10.1 million dollar acquisition in Peachtree City suburb of Atlanta as you'll see in the transaction summary and our supplemental this process to eighty eight point $1,000 for the quarter at a weighted average initial yield of 8.0%

We had a number of additional properties under a lot of intent in our Target markets as well as multiple joint venture opportunities. We were pursuing as you might expect in mid-march. However, we press the pause button on most of these opportunities. We are actively monitoring all the deals with under written to date as well as others in our pipeline while it is a little early to predict how the current environment will impact the long-term. I can share some anecdotal evidence that we've seen over the last few weeks and how we think about the overall Market going forward both short-term and long-term firstly wage or strategy over the last five years or so to acquire properties and markets generally in the center of the country whose tenants manufacturer assemble and distribute domestically Source materials domestically and generally our less reliant on overseas. Supply chains has held up. Well, we will continue to focus our acquisition activities close to highly populated areas wage.

especially where there is an abundance of skilled blue-collar workers over the long term we anticipate strong mental growth stable occupancies and steady tenant demand driven by we serve and resilience of Americans small and medium-sized businesses growth in e-commerce and a limited Supply with strong and increasing Logistics demand secondly off the coronavirus Health Emergency had placed greater emphasis on just six warehouse and distribution centers to meet the needs of millions of Americans under stay-at-home orders and their daily needs like would be altered by this experience posts Coronavirus

this work

Their supply chains be reworked to accommodate a search and online orders are not just books and electronics but also groceries Leisure entertainment Home Fitness Home Improvement products and apps like further. The market is already seen signs of D globalization and that means more demand for domestic warehouses and Logistics facilities. Were you already got it? Took this when the US China trade War hindered the movement of goods to and from China.

The coronavirus shutdown exacerbated. That's the nomenon consider that free coronavirus the US pharmaceutical supply chain had over ninety percent of antibiotics come from China that will change going forward Corporate America will likely focus on ensuring that the manufacturing assembling and distribution of goods and products Pharmaceuticals and others wage would be satisfied a domestic supply chain We Believe Plymouth has benefited from these Dynamics and will continue to do so more specifically we plan to increase our focus on a certainly important segment of the industrial sector as Logistics Trends continue to drive a need for last-mile properties to pursue opportunities in middle-market industrial properties and Council locations near major urban areas.

The demand for light industrial remains strong and will likely get stronger as National and Regional businesses and Last Mile Logistics bottles Drive the need for well-located small to mid-sized industrial properties further. There is a limited Supply and new construction represents less than 2% of the national inventory and virtually no new Supply and in film industry life. Therefore, we see a solid opportunity in this segment that should ultimately achieve higher occupancy levels and drive strong rental growth. Furthermore. The market is still highly fragmented limited institutional competition resulting. We believe in significant buying opportunities the last long term for us.

In the short term we've seen some pricing dislocations and select the deals that seller expectations have changed a bit since the buyer pool has temporarily shrunk but the Vestige remains robust and there is still a fair amount of capital earmarked for industrial assets from both private and Institutional Investor types our pipeline remains robust, and we're keeping a close eye on opportunities and all of our markets as well as looking at favorable entry points into new markets.

Hopefully sharing some of our go forward approach will give you a sense of how bullish we are on the industrial sector long-term. I agree with Jess earlier sentiments that once the economy reopens and stay packages. We could be entering a new period for the industrial sector that Rivals the last five plus years we've experienced for right now. We are focused on preserving our liquidity for what I believe will be even better opportunities to come.

I'll now turn it over to Jim.

The walks to the leasing activity and portfolio operations. Good morning. We have continued at leasing momentum established last year and have already addressed 75% wage leases that were due to expire in 2020 during the first quarter 23 lease has commenced totaling 426000 square feet of lease space of this amount to be a hundred thousand two thousand square feet was related to Lisa's six months or longer and that lease space was comprised of a hundred five thousand square feet of renewal leases and 287000 square feet of new leases significant lease is included the 10 year 164000 sqft new lease with Kruger Plastics and South Bend and a 5 year 59 thousand square foot extension in an option with the best, Columbus.

Overall, we had a 19.6% increase in rental rates on a cash basis of a prior leases with adoration over 6 months portfolio wide occupancy at March 31st was ninety 6.3% down 30 basis points from Q4 mainly due to an early termination of seventy-five thousand square feet burn D at our 440 South McLane location in Chicago the 10th. No move out in February twenty Twenty-One, but paid us a termination fee for the balance of the year to be able to move out by quarter rent occupancy has lowered to 95.3% during April two the two thousand votes World chemical in Cleveland for fifty six thousand square feet in Colony displays in Chicago four hundred eighteen thousand square feet. We have had no vacancies related to covid-19 and don't expect much of an impact strong tenant-based, which is expressed that they intend to continue their businesses plans in our facilities going forward.

The majority of our remaining twenty twenty scheduled expirations, which only represent 2.4% of our space are expected to renew the fact that we've collected 93% of our rents to date for April and didn't have to apply any security deposits for those payments shows. We've been able to work with our tenants thus far

turning to our leasing activity for all of 2020 Explorations and Beyond I remind you that we had two point eight million square feet initially scheduled to expire in 2020 or approximately 14% of our total portfolio prior to urine 2019. You already addressed one point four million square feet with new or renewal leases to date and twenty20. We are brought that running total of 2 million square feet with renewal or a new leases or 75% of the initial twenty-twenty expirations. In addition. We have leased out a hundred thousand square feet of previously vacant a space that leasing continues to be in the range of double-digit increases in cash rent significantly signings during q1 include a six year 250000 sqft. We knew it was Superior mailing at the 6571 Sayre Avenue building in Chicago and a four-year 70,000 square-foot renewal at the 36 Thursday.

Negril building in Memphis

We have also renewed three hundred square feet that was expiring after 20 20, including a two hundred square foot renewal for six years that was signed as recently as last week long discussions with tenants regarding upcoming renewals pause briefly at the end of March but activity has picked up again. The only foreseeable impact from covid-19. That's far. It's been a slight decrease in the time for back filling vacancies do to reduce showings during March and April interesting wide new construction starts are expected to decrease which will help existing industrial space longer-term both both occupancy in with the way perspective the effect. This effect will also help offset any potential rental rate reductions that may occur short-term due to covid-19 at this point. I took it over to Dan to discuss a financial results.

Thank you. Jim. Our first quarter results were tracking right in line with our full-year Outlook. Our operating metrics were once again up on a year-over-year and sequential basis with contributions from new acquisitions strong same store in both leasing spreads and in line occupancy. I'll Focus my remarks this morning on a few highlights and walk through our balance sheet a few items of note that I would like to emphasize significant year-over-year acquisition activity drove revenues and oh I have a. F f o n a f f o we had a full quarter contribution from the hundred and 1 million dollars in Acquisitions completed during the fourth quarter. And for the first quarter, we received approximately 63% of the benefits off from the $88 of Acquisitions completed during the quarter.

F f o n a f f o available per share and unit holder. We're ahead of expectations at $0.53 and $0.45 respectively or the quarter same excluding and Lease terminations increased year-over-year on a gaap basis by 6.8% and by 7.5% on a cash. Basis are sequential basis. We were

1% and 2.8% respectively, the lease termination was received this quarter for a one-time Revenue receive approximately $300,000 for 440 South of the gym referenced earlier that was partially offset by the application of fast be 8:40 to 4 accounts that were evaluated to determine to be below probability for receipt and therefore under such guidance of 842. The rent revenue is recorded as received this amount of to approximately $250,000 for a quarter.

CNA in the first quarter was in line with our previous guidance and includes approximately 349000 of non-cash expense representing amortization of stock compensation. That is an adjustment to a f f o

during the quarter. We raised approximately 10.8 million in net proceeds from ratm issuing five hundred fifty thousand shares through the initial ATM and 44000 shares from our newly ATM put in place during the quarter. We have not utilized the program since mid-march.

Regarding our balance sheet at quarter-end. We had 64% of our debt in place with fixed interest rates at approximately 4.15% for the next two to eight years the other 36% represents borrowings outstanding on our credit facilities and the subsequent term loans was put in place in January.

A quarter round. Our leverage was 50.9% on a gross asset value in our total debt to annualize first quarter ever thought was 8.5 times compared to forty 8.5% and 8.1 times respectively at your end. We have expected that are leveraged would settle in the mid fifty percent range over time barring any Capital markets activity.

The increase from two four reflects the timing of the Acquisitions completed during the quarter and our decision to draw down our full availability on a credit facility and $81 of the new age million-dollar Term Loan from KeyBank as of May 7th. We had approximately 25.1 million in cash excluding operating escrows for real estate taxes and insurance off of approximately eight million dollars. We have no material debt maturities until 2023 with the exception of the new term loan with KeyBank that matures in October of this year.

Recall that we put this in place in lieu of exercising the accordion option on our credit facility. The equity secured Term Loan was a more flexible option and it was purposefully short in order of wrap in this one for the new expanded credit facility that we expected to enter into later in the year. We have been in regular discussions with two bank about this loan and we believe that we we will be concluded before maturity in the absolute worst case we could reverse course and replace it with the accordion feature on the credit facility which matures in over three years.

In closing I would like to read write are strong.

First-quarter results that the company has taken two steps to address the uncertainty and potential needs of the company as a result of the current challenges presented by covid-19 month. We have a solid liquidity base with working capital on hand to respond to the potential fluctuations that may occur as our tenants work through this as well. Our asset management team is working diligently home checked our assets into work with our tenants to mutually beneficial outcomes. Lastly. I went to recognize the effort the dedication of the Finance and Accounting team that are at the underpinning of the information presented in our financial statements and related violence including this call. They stepped up and met the timelines for filing in spite of the unfamiliar environment of a virgin.

I'll be happy to answer any questions on this commentary and the Q&A operator. We are now ready to take questions. Thank you.

We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at anytime your question has been addressed and you would like to withdraw it, please press * then two at this time. We will pause momentarily to assemble our roster.

Today's first question comes from Henry coffee with wedbush. Please proceed.

Good morning, and thank you for taking my question. I know you kind of stepped away from guidance, but how much negative pressure are we seeing rent delays, which seemed to be small? I mean, they're they're but they're small additional requests for deferrals.

You know the whole equation, I mean how much negative pressure is there really on the business?

Or is it just more as the cutting the dividend more? Just a question if you wanting to right-size the yield and retain more capital and liquidity for growth.

Hi Henry. Thanks. Thanks for the question. It's kind of a big question. I could talk for an hour on on that question. But I think I think you're heading towards the dividend which is which is important first off as you know, a couple of things. I wanted to stay one. You know, we we value the dividend. I think I've said that a bunch on on calls and what have you that you know, we think is a part of being a Reit secondly our board I think collectively are independent members have over a hundred years of experience not just real estate experience and re-experience. We've seen a lot of this month and then we got a lot of good guidance coming from from from several places. So I guess hypothetically we can go back and say if you know, if if this if if the pandemic didn't happen and we had raised some additional Equity, you know.

right-sizing our dividend

Would would been probably a harder decision quite frankly. I mean our payout ratios as I referenced before were seventy, you know at that phone a half of it was seventy to eighty percent the pretty good payout ratios and wage are on the way coming down. So, you know, we've had a lot of discussions with our board we've had you know advice comes in from obviously institutional investors over the years that took right size our dividend.

We can use that cash to pay down debt, you know maintain the liquidity. So the pandemic did bring it on but it really wasn't because of pressure from rents. I think I think the information we provide Thursday so far shows that so I mean, there's building pressure everywhere and then in a totally I'll just give you go off tangent here for a minute. Like I usually do you know off so initially when they started I mean we had fortune five hundred companies, you know have their you know, their real estate departments pretty much go out to every landlord and say we're not paying rent em, and then we push back and say but these a mission-critical locations, we know you're in there using and there's 12 Vans parked out front.

You know and then the rent comes in so you actually think right now the pressure has been alleviated a little bit. So we feel pretty good. Hopefully that that that answers your question.

So there's a lot of testing.

By your by your tenants and then a little discussion and some negotiation and back to business. The other issue is you know, where what are your thoughts maybe not today, but on increasing the investments in your existing properties are there, you know other advantages to maybe you don't have to go to full certification, but other advantages either to your tenant or to you or to your to your rent rate from from upping the investment in the existing properties instead of focusing, you know, all your all your capital on expansion.

Yes, I mean, I think that is a that's a fair statement, but I will say that I mean our our car facts is is driven through Jim and his team and it's driven right down to the property level. It's live time. You know, we don't use generalizations. I mean generalizations are there for a reason in the sense that if you look out your portfolio over time, you can put in percentage towards it. But again our our point is that in our portfolio. It's live time where we account for everything and not our capex plan is was is really solid especially coming in from last year into this year. So, you know, we like to give away the secret sauce but you know a lot of times your cat facts can be rolled into you know, ten and renewals and things like that.

So you're you're there's a benefit at that time, too.

Do some added capex and get the benefit of a lease renewal.

Great. Thank you very much.

Next question comes from Alexander Goldfarb with Sandler O'Neill, please proceed.

Hey, good morning, and now Piper Sandler, but hey, good morning, Jeff in pain. So just you know a few questions from us just you know, continuing Henry's Club on the dividend, you know, you know, you guys are first and foremost and acquisition vehicle. Obviously, you delivered great results this quarter clearly a need for distribution am curious where you stand on the taxable income cuz I think previously you actually weren't required to pay a dividend because you didn't you know, because you were a new company you didn't have any taxable income. So I am given, you know, you guys are really Acquisitions. Was there any thought to curtailing, you know, suspending the dividend entirely and devoting that Capital to continue to acquire, you know, the fact that you've been able to source

Yeah, I mean it's certainly that that was you know part of the decision. But so what that equates to is about $11 11 and 1/2 million dollars a year off where we put the where we put the the dividend at $0.80 anticipated. So again, it's it's eleven million dollars. It's not all the all the money in the world. So how many deals can we really buy off? Right. So I think if we were four billion dollar market cap, you could you could really probably maybe move the needle and then I'll let Danny answer the the taxable I said this damn you got some insight on that wage. Yeah, Alex, you're right given the the carryover looking at our tax pro forma taxable income for the current year we would be but we distribute it virtually as you know through the dividend that was just paid at the same time. Obviously there was discussions and and rationality dead.

Target something closer to the sense that makes sense and being able to continue to retain liquidity going forward and have cash additional cash available by that reduction. Okay. And then and then the second question is you we noticed the release you guys talked about twenty-five million in cash. You also said that you're fully drawn on the term loan and the line of credit. Do you have any anything else that you can Source Capital internally? I mean clearly you guys have done a great job at simplifying the balance sheet, you know eliminating some of the original faith in you know, I think that's been great. Are there other things that you can do to Source cash internally or your view is if the stock remains where it is then you know, we should expect to see various. You guys wouldn't be acquiring right now. You would just wait for the stock to recover before resuming Acquisitions. So basically trying to understand our Acquisitions fully on pause now or you guys dead

I have two plating other Capital sources to try and continue the acquisition the acquisition pace.

Hey Alex, I mean as we've mentioned on on on previous calls we have.

You know a large.

You know pipeline if you will have deals this pain mentioned and and some of those deals fit the read some don't but we're active in the markets as you know, we have boots on the ground. So we we certainly can do value adds if you will and the said putting on new roofs. I think you saw that with the one building we transformed that building from, you know, be -2 probably 8 - so we certainly have that capability and we have you know, we're in discussions all the time with potential JV Partners. So again, we're going to selectively choose to do something like that when it's the right time. It's the right deal but there's there's we have access to a lot of capital from that perspective. But you know from from our Point. Yeah, everything's on pause as we sit here right now. We see some great deals, but we're going to focus on current operations. We're going to maintain a crack pipe line and we have had I have a call this afternoon for a potential up read. So don't forget the units right and you know, so there's that that's a big source of cap.

For us at some point at the right price. Okay, great. Thank you Jeff. Thank you Alex.

The next question comes from Craig milman with keybanc capital markets, please proceed. Hey guys, Jeff, maybe just to follow up on that last point about the upgrade. I mean forgiven where the stock is trading here. I mean how accretive is that to use that source of capital here? I mean, it's still an equity raise, right? It's just both units. It's just a decision there to kind of essentially issue Equity at these levels. I mean are the yields kind of high enough on on the acquisition to justify it. Thursday could be this is initial. I mean, so what what I was alluding to was that

You know, we have all of the units. So even if the stock is at the right price and we can't tack tap the capital markets, you know, we have all units and we have significant amount of when that we could use em, you know, what's what what you have to focus in in when you do an upgrade transaction is that you know, you have to look out. The sellers motivation is they're trying to avoid taxes that can be substantial, you know, 30% tax rate or whatever. It might be. You know, we in the past transactions in pain, correct me if I'm wrong on this but we had we had some of those sellers were facing 2 and 1/2 to 3 million dollars a tax bill that they got to you and it's for so it's not always dollar a dollar right? You know, I it's it's you know, you you have to put it into the equation. It's not complicated but it's not just you know, we're issuing a $13 it could make sense for instance a day the issue or four units at $15 depending on what the cell phone number.

Right, okay.

We will be disciplined when we do it. We understand the dilution where shareholders everybody in the companies are older. So we don't we don't like dilution as much as much as the next person but these are just, you know, I'm on going to college for conversations. These are these are sellers that are reached out to us that are interested in any transaction will see where it goes, you know.

Tell them that makes sense and then just turn it back to to April collection. Just so on the 7% that has it come in the door yet. I know you said that could part Porsche that could be timing relates. It sounds like you guys at least Road off some rent in 1 Q. I don't know if that was relate to April or just collections. You didn't get March but could you just talk about do you have deferral agreements on the balance their kind of what's the conversation like with tenants? You just haven't paid or they just going radio silent or you in conversations with them?

Right. So a couple of questions there a Dan's going to address quickly the the right off okay, or allowing the bad debt Jimmy get into the nuances of the conversations but a couple of points. I want to make sure that they don't miss them is we have not entered into any deferral agreements as we sit here today. We don't anticipate offering any free rent as well. I think that's been consistent across our our with our peer groups and our tenants are taking advantage of the PPP program and you know, the Main Street lending program, I think some of them benefits of that as well. So that's where we are today and in in gym, you know, I'm going to put him on the spot here Craig because he's he's been leading the charge and he's been talking to you know, multiple is every day 7 days a week. So Jim, why don't you just give him a little color if he could

Sure, the most important thing that that we've done today is communicate with tenants right when this started we send out a communication that if they had any concerns thoughts. I refused to give us a call. So we've been receiving a lot of calls at the beginning a lot of tenants called, you know, looking for deferments or Thursday and wanted to know what our plan was and we told them well, you know, this thing's just starting and you have no idea how your business is going to be impacted and let's let's see where this goes. Most of the most of them, you know weren't as impacted as they thought they would, you know, testing the waters and they paid the rent and they're going to continue to pay the rent. I mean, there's some that are having difficulties and I we've we've been flexible we told you know, if you can't pay at the beginning of the month, you know, wait to your stimulus money comes in or wait till your receivable comes in and wage.

Pay us and and that's that's they've appreciated that and they've made the payments and and they've made multiple month payments once once they money did come in. So I think most of it's been positive wage. Obviously. We're not at 100% rent collected. So there may be some deferral agreements established with with with with some tenants, but we we don't expect a lot of those

Right, but I mean are you are you in conversation with everyone or people just kind of gone radio silent? How are you guys treating those tenants anybody who's gone radio silent home has gotten phone calls and letters and and we've spoken with them most of our large tenants. We we contact them on a regular basis anyway, and we've sent communication out about how the buildings are still going to be maintained and we're there for them and they've you know, they've worked with us back. So I I we pretty much in in contact with everybody.

And then I know it's it's a little early here to declare a pattern here on May but just where are you in May versus where you were in April at this time?

I don't remember the exact amount in April this date, but it certainly we're not behind in May.

We're sitting over 70% right now. And I think that's a pretty good number and a lot of our comes in at the middle of the month.

Okay, that's helpful. Then just turning topics here Penny and mentioned you're seeing some selective dislocation. Could you just kind of give us a sense of how much you think pricing has moved on those deals? And is there anything kind of unique about them that you'd say that that's not kind of indicative of where the market is actually going to go off or do you think that it's kind of trending to be more in line with where those are kind of potentially pricing?

Yeah, I think what what we're seeing on the ground and this is kind of a I think we we do somewhat of a short-term phenomenon, but um deals that we we have been working on up through mid-march and then afterwards we're still monitoring. We're we're seeing some some pricing, uh dislocation. I'm going to kind of varies from from deal to deal not to generalize but some we seen, you know, four or five percent some or ten to fifteen percent decrease wage and that obviously it has to do with sellers readjusting their expectations or they might be have some type of you know, Outer Outer forces at play or or different reasons to sell they must sell or or whatever the whatever their incentives are to sell might also birth.

Some of the pricing dislocation but I do think you know, we want to be in a position to to obviously take advantage of some of these situations and I think that that this type of seeing if you will that were encountering right now will be will be short-term think there's still there's still a fair amount of capital on the sidelines, um, both from from private and public institutions that have earmarked the industrial asset class in a class that they want to be invested in over the long term. So I do but like I said not to repeat myself. I think this this pricing dislocation is going to be a short-term phenomenon over the Long Haul we have plenty of what we call green arrows that are pointed in the right direction for the overall asset class.

Not sure.

I guess high level though, you know the spread between A's and B's is kind of narrowed the cycle. Do you think that you know, I know the debt markets are functioning okay today, but Abu spreads of Gap data low, but I mean do you think that that spread could widen even just in the more normal as environment as kind of people want to a higher risk premium for them? You know these versus A's, you know, even with that Capital could be a flight to Quality or whatever the case may be.

You know, I hate to be back with somebody yes or no answer. I think yes. There are some investors that want to use this as maybe a flight to Quality, although I haven't seen a tremendous amount of movement in in the class a space, but but this time today just as we saw in 2008/2009 the spreads widened a little bit there were I think a lot of investors look at the fact that some of his class the sets their pricing might be a little bit more flexible. And for these time investors might be stretching for more yield per se anyway, and so more real than they would it might be more to feel that. They can probably achieve and a Class B type of investment home as opposed to class A if that that makes sense know it's helpful. Thank you.

Sure.

As a final reminder, please press * then 1 to ask a question.

Our next question comes from guava meta with national Securities, please proceed.

No, thanks. Good morning. So bring back to your comments on the rent collections. I was wondering if you have any color on auto now. I know people that paid rent in April what person did the people paid the rents themselves and what percentage of the people you have to work or make them pay the rents?

that that that that's a complicated question because a lot of people call just to see

you know, they didn't really know how their businesses are going to be impacted. So they thought they weren't going to be able to pay rent and they paid them whether we made them pay them or not is is is a question but

I would say, you know.

Most of them would have would have paid paid in their own. I I think we just reminded them that you know, where they're we the money is, you know keeps the buildings wage a great shape and helped helps us operate their businesses that the facilities and helps their businesses long-term. So

I mean, we certainly worked with them. I can't give a percentage number on that.

Okay, and I guess you know by it and by regions or by markets, have you guys seen anybody? Do you know where your tenants are struggling more than others?

No, it's it's it's been.

It's been in several different locations.

But it's not it's not hasn't been a large percentage of the of the tenants, but it's been in different areas.

I guess I guess lastly just interested clarified. Did you guys say April occupancy was 95%

Correct.

Okay. All right. Thank you.

This time we are showing no further questions in the queue and this ends our question-and-answer session. I would now like to turn the conference back over to Jeff with Israel for any closing remarks.

Yes, thank you. Thanks. Everyone for joining us. This morning is always we are available for follow-up questions. You know, that's the send emails out as we are all in various locations. Thanks again.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Dead dead dead dead.

Dead dead dead dead.

Dead dead dead dead dead.