Q2 2020 Plymouth Industrial REIT Inc Earnings Call
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Good morning, welcome to the premise that show rate second quarter Twentytwenty earnings Conference call.
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After today's presentation, there will be an opportunity to ask questions.
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Please note. This event is being recorded I would now like to attend the conference over to Mr. Tripp Sullivan Investor Relations. Please go ahead.
Thank you good morning, welcome to the permits industry conference call to review the company's results for the second quarter of 2020.
On the call today will be Jeff, where the rail chairman and Chief Executive Officer, Penn White, President and Chief Investment Officer, Dan Right Executive Vice President and Chief Financial Officer, and Jim Connolly Executive Vice President of asset management in Hayward General Counsel.
Results were released this morning at our earnings press release, which can be found on the best Relations section of our website, along with our form 10-Q and supplemental filed with the FCC.
A replay of this call will be available shortly after the conclusion of the coal through August 13 2020.
The numbers to access the replay are provided in the earnings press release, but those who listen to the replay of this call. We remind you that the remarks made here as far as of today August six 2020, it will not be updated subsequent to this call.
During this call certain comments and statements we make 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 acquisitions, and other investments future dividends and financing activities.
All forward looking statements represent plan with judgment as of the date of this conference call and are subject to risks and uncertainties that can cause actual results to differ materially from our current expectations.
Lessors are urged to carefully review various disclosures made by the company, including the risk and other information disclosed in the company's filings with that said.
We will also discuss certain non-GAAP measures, including but not limited to FFO AFFO and adjusted EBITDA Ari.
In addition to these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in our filings with the SEC I'll now turn the call over to Jeff with a row. Please go ahead.
Vicki trips a good morning, everyone. Thanks for joining us today.
The global pandemic has presented all of us with a number of challenges over the past several months.
We used to note that our team has been able to stay focused on the things we do best here, Plenet, which combined a long heritage as real estate operators with the insight to make some enhancements to our long term strategy.
So some key notes here, we worked closely with our tenants providing them great service responsiveness as a result, well be able to collect 99% of our expected rent for the quarter and have already collected at 97% for July.
We continue to lease our properties with attractive cash rent increases and have a strong start on our 2021 expirations.
We also maintained an active pipeline of new opportunities with a particular emphasis on the markets that have large pools of skilled blue collar workers in light industrial product in infill markets.
We also improved our liquidity in the greater confidence in our outlook freed us up to pay down some borrowings on our credit facility.
I will let the T. walk through some highlights from each area of their responsibility, but let me first reiterate our point of emphasis for the balance of the year.
Red collections were obviously front and center for us and for the entire sector. We continue to do very well on this front.
Collected 94% of our recurring monthly billings in Q2.
After factoring in some select rent deferral agreements that accounted for only 1.6% of our annualized base rent being deferred until the end of year. We have collected 99% for the second quarter. We have already collected 97% for July which is right on pace with if not ahead of where we were a quarter ago.
No.
All right and property management team continued to take care of our renewals as well as vacancy in the portfolio. We've addressed 78% of our original 2020 expirations and have only 280000 square feet left that is scheduled to expire by yearend. We do have some vacancy that has been an.
Sure in Jim will break that down for us a bit later most of this was expected and within our original occupancy assumptions are somewhat unexpected all things considered the disruption that has taken place in the economy. We are in very great shape.
Our acquisition activity during the quarter was focused on taking a fresh look at a range of investment opportunities that line up.
Where we believe new demand is coming from for our industrial space in within our targeted markets.
The other week.
It seems there is a new industry report highlighting what we believed for some time.
We're entering an historic period of incremental demand for industrial space in this country for instance, a few weeks ago JLL was out with a forecast for in need of 1 billion square feet of industrial space by 2025.
The consistent theme across these predictions that there isn't enough space to currently serve the demand.
New supply is likely to be fairly limited for slow in taking up the swap, particularly in infill locations.
We also believe that properties and locations such as ours with access to large pools of skilled blue collar workers in the main industrial distribution and logistics quarters of the country can have an outsized benefit from this demand overtime not just from the growth of ecommerce, but from trimming and the alignment of the supply chains around.
Around the world.
While we are certainly benefiting from that demand for E commerce and last mile locations. We believe the themes that I mentioned before about the protection of intellectual property protection of the supply chain and the reduction of the environmental impact of global shipping will have as much if not more of a positive impact on demand for our.
Properties.
Another point of emphasis for us was on preserving our liquidity with the rent collections coming in as expected muted acquisition activity and prioritizing our capital expenditures. We ended the quarter with 13.6 million in operating cash after paying down $28 million on our credit facility.
We were not that active on the capital markets front during the quarter, but we did utilized the ATM a few times during the quarter. We raised a total of 12.5 million in net proceeds.
As expected the board revised the common stock dividend policy in June Rightsizing, the dividend provided us the flexibility to grow the company over the long term, while being responsive to the recent dynamics in the capital markets. There was an important step in ensuring we're better positioned to benefit from an historic opportunity Canyon.
Industrial investing.
On the surface. It seems like we played a lot of defense this quarter.
That's expected given the circumstances, we focused on liquidity leasing collecting rents ensuring the safety of our people and tenant intending to our pipeline, but we also took a hard look at a lot of things we've been doing to see if we needed to change in tactics as strategy. We made we made a change in what was the appropriate level of our dividend as well as fine too.
And our existing strategy for acquisitions to focus on the type of assets the benefit even more from the tremendous industrial demand drivers that are underway. We've also made a commitment to balancing that growth similar to where we were pre coven, which was to do so in a fashion that enables us to continue to grow but gradually reduce our leverage over time.
Embedded demonstrate just how much value we have created in our portfolio.
I'll turn this over to Penn.
Talked about our acquisitions.
Thanks, Jeff Good morning, everyone.
Last quarter I outline our thoughts on the future of the new environment, we are encountering how well our portfolio and target markets can fit into demand for industrial space and where pricing could be.
Over the past few months, we saw some good indications of how that future could play out but before I get into that let me touch in our pipeline.
Consistent with expectations, we laid out last quarter, we have not completed any transaction since March.
Even though we pressed the pause button on a number of acquisition contracts and letters of intent.
As well as joint venture opportunities.
We have been quite active every deal we had previously underwritten as well as pursuing new opportunities.
There isn't any real change in the overall size of that pipeline, but we have seen a number of potential acquisition opportunities come back to us of late with motivated sellers and our partners.
Pricing throughout the industrial sector has held up fairly well during the pandemic.
There haven't been as many deals that haven't transacted for obvious reasons, but there have been some.
Pricing dislocations inflect deals due to the buyer pool temporarily shrinking.
This is Mike give us the opportunity to replicate what we've accomplished in the past.
Sourcing attractive entry points to new markets, even the ability to acquire some select class a or a minus assets a class b pricing.
I would attribute much of the lack of long term pricing disruption to the trends we discussed at length last quarter.
Such as the resurgence and resilience of American businesses.
The growth in ecommerce and limited supply with strong and increasing logistics demand.
All of these dynamics continue to attract substantial capital earmarked for industrial assets from private and institutional owners and that is reinforcing the value of our portfolio and our type of assets.
Our strategy to acquire properties in highly populated markets generally in the center of the country has us focused on tenants that manufacturer assemble and distribute domestically.
Sourced raw materials domestically generally are less reliant on overseas supply chains.
And who overwhelmingly desire access to large pools of skilled blue collar workers.
This strategy has put us squarely in front of some very favorable trends and as most of you know we have the proven platform to accumulate these properties over time, whether in one off transactions were portfolio type acquisitions.
Where we have been spending a significant amount of time lately is on an increasingly important segment of the industrial sector.
The need for last mile properties.
While we have a large number of these properties in our portfolio already we are specifically targeting new opportunities in middle market industrial properties and infill locations near major scenarios.
The demand for light industrial remains strong and it's getting stronger as national and regional businesses and last mile Logistics models drive the need for well located small to midsized industrial properties.
Even with all the research reports predicting tremendous potential demand for industrial space.
Fly is limited and west under construction already has a small fraction of existing national inventory.
More importantly, there's virtually no new supply and infill industrial as we've said many times over nobody intentionally bills new class B product in these markets.
And with few exceptions, new class a product that is generally out on the interstates, where suburbs with a ceiling heights best fit for racks and robots.
We believe there is a solid opportunity to focus on this segment that should ultimately achieve higher occupancy levels and continue to drive strong rental growth.
Furthermore, the market is still highly fragmented from the seller pool standpoint.
And the remains limited institutional competition.
So we're all still seen many buying opportunities in our target markets, which enhances our ability to consolidate numerous acquisitions with our existing portfolio, thereby maximizing our operating efficiencies and growth potential.
I'll now turn it over to Jim to walk through the leasing activity and portfolio operations.
Good morning.
Leasing activities remained at a high level continuing the leasing momentum we established last year.
At the end of Q2, we had already addressed 70% about leases that were due to expire in 2020.
During the second quarter, 21 leases commence totaling 1.398 million square feet.
This amount 1 million through and 49000 square feet was Felice is six months a longer which is comprised of 1.286 million square feet of renewal leases in 112000 square feet of new leases.
Significant leases, including a seven year 638000 square foot renewal with Ingram publishing services, and Jackson, Tennessee, and a five year 225000 square foot renewal with sappy in Chicago overall, we had a 9%.
The increase in rental rates on a cash basis over prior leases with a duration over six months.
Portfolio wide occupancy at June 30 was 95.1% down 90 basis points from Q1, mainly due to an exploration of 118000 square feet with colony at 39, 40 stirring location in Chicago, the tenant had been month to month with us for a couple of years.
We're not we're in the process of multi tenant thing that building and 36000 square feet.
Space has already been released effective eight one.
Occupancy increased to 95.4% during July with several small leases being executed we have had minimal impact related to covert 19, and don't expect much further have an impact due to a strong tenant base, which has expressed that they intend to continue that business plans and our facilities going forward.
The majority of our remaining 2020 scheduled expirations, which only represent 1.5% of our space are expected to be no.
To date, we have collected 94% of our rents build during Q2 and if you factor when they are executed rent deferrals.
Our expected rent collection is at 99% for the quarter July has seen a 97% rent collection rate today.
We monitor our collection efforts daily and keep regular communication with our tenants to deal with occupancy issues and to help them meet their lease requirements.
Turning to our leasing activity for all of the 2020 explorations and beyond I remind you that we had 2.8 million square feet. Initially scheduled to expire in 2020 or approximately 14% about total portfolio.
Another 100000 square feet was terminated early during 2020 as part of a deal transferring space between two Chicago tenants that brought the total amount of space, we needed to address in 2020 up to 2.9 million square feet. Prior to year end 2019, we had already addressed 1.4 million square feet of this space.
New or renewal leases to date and 2020, we are brought they're running total up to 2.3 million square feet leased with renewal on new leases or 80%.
On the 2020 requirement. In addition, we have leased out 100000 square feet space that was previously vacant the leasing continues to be perform with an average cash rent increases of 10% over prior rent.
With 2020 requirements wrapping up we had been focusing on upcoming 2021 expirations. Initially we had 3.85 million square feet or 19.3% of the portfolio slated to expire in 2021, but we have already addressed.
700000 square feet and have several other deals in the works.
Significant deals signed to date include a five year 500000 square foot renewal with corporate services in South Bend, and a 50000 square foot three year renewal with like a plant in Chicago.
Currently we have.
Approximately 925000 square feet, a vacant space, which makes up 4.6% of the total portfolio.
This is a little higher than.
What we've experienced in the past few quarters, so, it's what breaking down a bit more.
First off we have 325000 square feet a vacancy that was added due to move outs mentioned earlier on this in last quarter's call and our largest market Chicago.
We feel good about releasing that space and already have a number of opportunities and prospects also official POC in Cincinnati, We created 100000 square feet of leasable space that was not factored into our acquisition underwriting is incremental value that we that we can.
We added at this property, we have the opportunity to create even more space official product. Once this current vacancy is filled.
Across the portfolio. There was also an additional 100000 square feet in a couple of properties in Memphis, and Indianapolis that was acquired Bacon. It was factored into our underwriting as space that would take some time to lease up we continue to market these spaces and identify potential deals.
Yep.
We'll add bonus and NOI to our results in the future.
That leaves approximately 400000 square feet, which is about the normal amount of vacancy we have at any given time.
We have had a good amount of success in our leasing and we are working hard to maintain that momentum.
At this point I will turn a little bit the Dan to discuss our financial results.
Thank you Jim good morning.
Our second quarter results were in line with our expectations operating metrics will once again on a year over year basis with contributions from new acquisitions.
Same store NOI on both a GAAP and cash basis, excluding the early termination income for the quarter was impacted by the vacancy that Jim referred to it that is being actively addressed along with the timing impact of new leases, which in certain cases have initial period to free rent impacting your early months of the term.
A few other items of note in the quarter.
Yes, again year over year acquisition activity drove revenues and a lie EBITDA Ari F FFO and AFFO, we had a full quarter contributions from the $88 million of acquisitions that were completed in Q1.
FF Oh and after all available per share and unit holder were 51 cents and 45 cents respectively. After the impact of the additional shares was offset by reduced interest costs as rates continue at historic lows.
DNA in the quarter increased reflect additional professional fees as we transition to the audit services Pricewaterhousecoopers and also for occupancy costs costs as we were delayed and completing the transition to our new office at 20 custom house right.
The flood what sublet agreement that was to be executed for our prior space did not get finalized due to the grown the virus concerns of the sub tenant.
In a includes approximately 383000, a noncash expense representing amortization of stock compensation that is an adjustment to anti FFO.
And approximately 154000 of noncash expense related to the occupancy timing.
During the quarter, we raised approximately 12.5 million and net proceeds from our ATM.
Regarding our balance sheet at quarter end, we had 67.9% of our debt in place with fixed at interest rates at approximately 4.15% when the next to the eight years.
The balance of 32.1% represents borrowings outstanding on our credit facility and the term loan we put in place in January.
We're going applicable interest rate at June thirtyth of 2.44%.
At quarter end leverage was 49.7% on gross asset value and our total depth to annualize second quarter EBITDA Ari was 8.1 times compared to 48.3, and 8.1 times, respectively at year end.
We had expected that are leveraged et cetera, when the mid 50% range over time, we're continuing efforts to decrease leveraged to 50% or Wes.
Logical manner as the opportunity arises.
As of August Smith, we had approximately 4.5 million in cash plus operating expense Escrows real estate taxes and insurance of approximately 9.1 million.
And availability on our line of credit of 29.9 million.
We have no material debt maturities until 2023 with the exception as a term loan with Keybanc 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 with a more flexible auction option.
It was purposely short in order to wrap this loan with a new expanded credit facility that we expect to enter into later this year, we had been in regular discussions with Keybanc about this long and we believe there will be completed before maturity.
As noted earlier, we have continued to collect our rents over the past few quarters with 99% corporate for both Q1 and Q2 for July we've corrected 97%.
However, at this time, we're not able to predict whether and to what extent our level of rental should we be seats may change in future months and as a result, we're continuing to withhold formal guidance since we have a better understanding of the duration of the covered 19 pandemic and its impact on our business and the business of our Cana.
That being said I would point to the results of the past two quarters and our overall historical performance as we set expectations for the balance of 2020.
The primary factors to consider it would be the run rate for collections in Capex as well is the level of leasing activity and the fact that the lower interest costs from historically low rates is offsetting to higher GSK investments and higher share count.
In closing I'd like to reiterate that the portfolio is performing well we are taking the necessary steps to address the uncertainty and potential needs of the company and we have a solid base of liquidity to fund working capital needs.
Lastly, I want to recognize the effort and dedication of the finance and accounting that had the underpinnings of the information presented in our financial statements and related filings, including this call. They continue to step up each quarter.
I'll be happy to address any additional questions on this commentary during questions and answers to.
Operator, we're now ready to take questions. Thank you.
We will now begin the question answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset the full pressing the keys.
Joe Your question. Please press Star then to your first question comes from Barry said They Davidson. Please go ahead.
Great. Thanks, guys. Maybe this is for you know either Jeff for Pan to the extent that you guys are able to know this what percentage of attendance I imagine it's a low that are getting PPP money and using that to pay rent do you guys haven't a sensor that number.
Hey.
I don't know that off the top ahead, Jim you, whereas I know for track I don't have the I. I think there's a way to track. Its yapping you All's defense see it you know just you know just kind of what you're hearing.
So that it does not that many but we have have had conversations with a few tenants that did have said they've been waiting for the P. P P money and.
Yes, I you know, it's less than 5%.
Okay. Okay, that's what I thought that's what I thought.
It just changing gears a little bit you guys mentioned JV partners. What are you seeing as far as JV appetite out there in the marketplace right now and then if you call. It. If you could characterize says is it coming from Institutionals or is it coming from p. or sovereign wealth or <unk> or maybe the answers de all the above.
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Yeah, I mean buried its kind of the same story, we've always had there was on theres a lot of demand.
I mean investor side, some of them are kind of.
Touching on now believe it or not they're the underweight industrial and we continue to have serious conversations with people.
In our world, we want to work with someone who is a good partner.
It's a win win situation.
So it's you know it's coming it's coming from over for a variety of sources have discussions with but into the day you know as much as everybody wants to execute very few people do execute in the JV world, There's lot dissolve wishing going on.
So we continue to have a meaningful conversations.
Okay perfect I appreciate the color Jeff Thanks, guys.
Thanks Barry.
Yep Yep.
Your next question comes from Craig Mailman from Keybanc capital markets. Please go ahead.
Hey, good morning, guys I know, it's it's still relatively early in a in this whole situation, but just curious if you guys have started to see any leasing inquiries.
Either from kind of tenants looking to add space for restocking initiatives are you, adding safety stock and door you know the onshoring.
Initiatives you know we saw Kodak is.
Re imagining what they are and just wondering if there's any other tenants out there like that that are.
You may start to see pharma come back or any other industries.
Yes, Craig so.
Jim might have a little more color on it I know you know from my perspective.
Just want to make sure. This gets out there we've actually had a direct during the pandemic. We've had two tenants that you know I called us about rent and what have you simply because they were open for business, but they were having a hard time getting.
Raw material from overseas. So their supply chain was affected if you will they're they continued to pay the rent there wasn't as much a disruption from our side today, they were and both of those tenants have.
You know are looking for additional space with us.
And at somebody anecdotal I mean, I don't think we have a big enough sample size, but we we have seen a couple of tenants that have indicated that they need to start stocking product more product here in the U.S.
From that perspective and into one last thing I would say I'll call. It reassuring, but we did have a tenant.
We do have a prospective tenant looking to relocate from some other parts of a United States to Chicago.
And what the the catalyst was was the skill blue collar workers, where they were now was somewhat remote it just didnt have the skilled blue collar workers, so believe it or not.
They were they were heading to Chicago to tap the pool.
So I'm, Jim can you add some color to that.
Yes, I would say that one thing we've seen.
Obviously early on there was a lot of doubt and people that know how their businesses, we're gonna be impacted but.
Most of our tenants and in like the high like 80, 90% are doing better than they didn't they did prior to cover 19 logistics companies are looking for more more space they move more product and several of our.
Like manufacturing type tenants producing more product than they ever did before so it did they are looking to expand into buildings that they're looking for temporary space.
To fulfill their needs and.
But the with the attention of making a permanent long term.
But that's helpful. And then just going back to the capital situation here I mean, the the resigns dividend clearly gives you some more liquidity as the year goes on but you know I know you guys had thought maybe back in April you would have had an opportunity to.
I'm trying to reload from a a dry powder perspective, I guess, you know we've talked about jvs in the past you know could you give a a timeline on how close you are to that or whether these are just kind of Korea that also.
I I know pen you said the prices kind of rebounded are there any larger portfolios out there work I was just need the liquidity and maybe the pricing it makes sense to do a little bit of a larger offering and mixed in with some lower cost that to be able to give you guys a little bit more breathing room.
Yeah, that's it I think credit it's a two part question. So I think 10 can get ready to answer.
The portfolio part of it I mean, I think from our perspective.
You know we've got a few resources out there on the Jvs. We we are we are close we continue to talk to the right people and we have a good pipeline in Penn can talk about that again, we're we're kinda always close with the right players. If you can lineup the right deals at the right time.
But we're making some progress with that they'll feel confident about that and secondly, yeah I mean, when we will.
You know the equity markets are starting to recover you know I think.
I think today is a big day for us to show the resiliency of our portfolio and our ability of the team to to operate in this environment.
Oh, so I think not that side, and then I think Penn might not be able to add something to that I'm going to grow and just some color. You know, we we've always maintained a a pretty robust pipeline.
But especially for throughout the last few months, but.
We have you know somewhere between 90 and $100 million worth of deals that are kind of an active either letter of intent.
Issuance type stage or or close to CNS and probably twice, we're trying to have times that much and preliminary underwriting stage.
And it's all kinds of you know there's one off deals are smart small portfolios to your specific question about any large portfolios that had been sold off or maybe cobot related reasons, we really.
I haven't seen too many others, there's there's there's one or two I know that.
At work that were sold off.
Probably because of some related dynamics regarding the Coca 19 issues, but.
By and large pricing is though there's been some dislocation as I mentioned, but by and large there's still you know.
<unk> for a fair amount of capital I'm on the sidelines that is I'm very interested in place in it and the in the industrial sector and that's had a positive effect on our on our portfolio.
Okay, just one follow up on the the JV because it sounds like you said you guys are closer kinda hypothetically what would this looks like what it would you guys contribute existing assets to this to kick it off with the with the a understanding that it would be used for maybe value add or or what have you acquisitions.
Going forward and how big of a exposure to the JV would you guys want just given your smaller market cap.
Yeah.
You know it is somewhat hypothetical here obviously.
Again, we we've reiterated well continue to that we have.
All types of deals some that the re can't do.
Which you know what does that mean it means that they may have maybe.
May be more value add and dig deeper that maybe there's some vacancy and then possibly.
You know one of the ones we looked at in the past that is come back the sellers, bringing back to the market is a deal that just has extensive capex.
And as a smaller cap read you kind of get dinged by investors, a and maybe analysts you can you can answer that great. If we're going to buy something I didn't need heavy capex, a and then we're putting the money that property and it affects our numbers on the short term I mean as real estate.
The operators long term those other deals we should be doing but we might get didn't get the market for that so we would look to do value added you know opportunistic type deals in a JV, where where it fits into our platform.
We will not do it unless we're going to make money doing it right. We're not we're not in the business of Ah of hope is this strategy. So we're not we're not going to go into this you know solely focused on some sort of.
Promote so if you know we can make money on property management, we can make money on asset management I think we can we we've proven that we can bring deals structure and we can close them efficiently with our team of lawyers.
And and due diligence providers.
So there is lot of value in that.
A lot of people I guess don't see but being able to actually get deals closed efficiently in accurately it's hard not something that we accella. So it's far size is concerned.
I don't think Thats, a big issue from a market cap perspective, I think you know the more product that's out there that we can be involved in you use our platform and generate fees I think is a great thing for the read I mean, as a shareholder I'm I'm very excited about that.
And.
No I think that you'll also see if we do something new will have right of first refusal right of first offer in there again its doesn't benefit the re we're not going to do it.
Okay, and just taken advantage of our platform or to do things that the read you know most like it is not able to two to take it to do.
Okay. So hypothetically doesn't sound like you would see that with anything would just be a vehicle for acquisitions other road.
The things, though I mean does it say never I mean, we don't really have any assets that we think we want to see we like our assets. We've sold off one asset you know we continue to look at the market and see what other assets makes sense to sell.
You know maybe things that don't fit that or you know we use it user centric.
Okay and promote case, our portfolios utilitarian can be used for distribution can use the light manufacturing Oh, we don't really have any.
Single use buildings, if you will.
And when you do you guys have value added would you do something as.
Kind of value add as a retail conversion in your markets or is that just outside the scope of what you guys are looking at.
I would say, it's probably outside the scope, although I think if you look at the resumes of the people involved in Poland. This its very dynamic I mean, we've built my background. He started as a survey or in a civil engineers. So I certainly designs. Many many commerce parks and so forth and if you bring pen and everybody.
To Yeltsin two at our ability to to build would be there and our ability to renovate certainly they're winning we've proven yeah, I think Jim and his team have proven that their ability to put new roofs on at age back into do tenant build outs are guys on the ground in our markets a very skilled at that lot of experience.
So.
It's really take care of that I, just don't think that.
You know.
I don't think that heavily of of a retrofit is probably something we would do never say never but that's something we're actively looking for.
Okay, great. Thank you.
Thank you.
Your next question comes from Graz May test from National Securities. Please go ahead.
Yeah. Thanks, Good morning doesn't follow up on your comments HM.
I think you mentioned 90 to 100 million dollar than I can be ozone and or under and Hawaii. All those deals for your wholly owned portfolio. What you were talking about babies.
Yeah, I know those are for four we read only not not jvs.
Okay, and I guess im in terms of Oh funding those acquisitions.
Well, how should we think about the that's spread between equity.
And then if you want to close on deals.
Well, we have we'd be a combination of of capital and that we're not right now we're well we can close some some we're going to probably push off a little bit but.
A lot about depends on on on our they'll go down or line.
Dan can probably give you some more insight into that if need be but.
We've resumes the main message is that we have.
We have deals that are we are working and can close in a in short order and so we're prepared to do that.
Okay. Yeah. I think you also are also talking about some pricing that's because the market or and then pricing holding up pretty then or on the span somebody for quite some color on on where you're seeing dislocation what sort of driving that disposition borrow on.
No doubt that particular outside or I guess and a enough people to mark and talking about.
It's hard to generalize I'm. So each geos is its specific but oftentimes it has to do with the with each other on needing to a two due to selling assets, maybe before the quarter ends or maybe because he has partners that want to.
Liquidate and focus and other things I'm sorry.
I don't mean to you to avoid a question, but as the different reasons for different for different sellers, but we have had.
A number of deals that we were working on in the first quarter early part of the first quarter.
That were kind of put on hold and have recently come back and and there's been some some repricing, but the repricing is not.
I believe me it's not.
It's not it's not significant it's as if it's marginal.
And I think a I think that is indicative of the the demand for or putting putting capital into the industrial space, Iran.
Okay and nothing for the for the rent for old maybe provide some color on what kind of arms you have seen for the rents that you're deferring.
I'll, let Jim here, Yeah, I referrals are.
So all of them, we pay back with an eight months so.
There is covered started in some was outside of that May does one that went into August and they're all going to pay back by the end of February.
Okay, and I guess.
Let the 94% other end 1.6, a person was done fraud, and overall collection of 9% plenty of how does that adds up.
Like nine for 1.6, a 99.
[noise] its 1.6% on an annual basis.
Oh, sorry, I didn't talk total monthly.
Yeah. So is it total annual basis so.
The the rent you know some tenants were two months somewhat three in the maximum was for and if you added that up it's 1.6% of of the 10, who went.
Okay got it sounds like the pull ahead. Thanks, so much.
Okay.
Your final question comes from Henry Coffey from Wedbush. Please go ahead.
Good morning, and thanks for taking my question.
I'd hate to sound stupid, but why not can we go over the some of those deferral numbers again, how how many tenants are into for all right now.
[noise] 11.
11, and its you said it was six to eight months of of of deferral no. It was two to four months a deferral, but the payment is over.
Over.
Three to eight months.
Okay, and then I mean, just just thank you that's helpful and and then in terms of.
The cross winds on industrial space seem to be really interesting, particularly anybody listening to this call. It because you have opportunities to reposition properties you have rising demand you have.
You know sort of out on the horizon, a real serious kinda reshift probably in the economy.
I think regardless of who is president the theme is gonna be onshoring.
Encouraging businesses too.
Develop and build more in the U.S. build manufacture more in the U.S., if it doesn't matter who the partner who's in charge.
So we have some very positive <unk> wins here.
But then you have the more near term disruptive affects how long do you think this really takes to play a win win when we can have all the negative issues sort of in the rear view mirror and all the positive things ahead of us.
Yeah, Hi, Henry Ian.
Don't really have a great answer for you I mean, we.
Yeah. It caught I feel like everyone else in the end the day to day in the week to week I mean, I don't think I'd love to the Johns Hopkins Web site and two months now I was just overwhelming try to predict what the future was gonna do.
I think I just as I mentioned in his prepared remarks, the report out JLL put it out about three weeks ago now I guess.
Were they.
They put out a report that I that if you're in the if you're in the business you know your job dropped when they when they put out a billion square foot of demand by 2025.
That's a staggering amount of real estate.
In any.
In any way shape or form so we even if there.
Correct, right 500 million and demand I mean that that's about where predictions were a couple of months ago from.
The likes of like CB, Ari and Hum Pro Loges is out there with you know four to 500 million square feet of demand.
So.
We're just not I don't know I mean, if you look at our rent collections and you look where we are right now things are going pretty well. So I don't know how to predict when were so called out of it and what how does that even means where we're focused on the next three to five years and that next three to five year should.
Be should be just should be fantastic.
And so.
We're focused on doing what we can now to position to read to take advantage of that so no. It does apple interesting save for me when I listen to.
Big pension plans Oaklawn say over the next three years, they're going to reallocate the real estate.
And means the time to reallocate to industrial real estate is right now [laughter] not until right, though were around where positioning the right for that we've got the talent for a we've got certainly have the the credit facility for it and you know we will access the capital as we've talked about either through the public markets was to the JV market. So.
One way or another way the re will be participating.
In the resurgence here of a of industrial truly just an acceleration.
'cause a little long winded answer hopefully I've I've added some color for you know I I. It's just really like you said you know you get caught up in the mute minutiae of a 1.6% of your annual rents are under deferral.
And then you look at the other ended the equation and you look at the JLL reporter or other indicators.
And you know the world's changing and it's probably moving your way.
And it's just a matter of of time there. The other question that we've talked about in the in the past what are what are tenets, either current or perspective really demanding from you.
In terms of today's weren't great rents great locations B properties, let's not get too crazy here or <unk> or are they talking to you about.
Different needs different I mean, we know everything's changing in office, but is it what's going on in the industrial space on that front.
Yeah. This is again, we can do a long winded answer I'll say, one thing and maybe you know Jim's on the front line with some of these tenants, but I'm. The one thing I'll just make I'll make a point of is that it just maybe contradictory when I say these but.
Think about it like we do everyday it will make sense and number one is that.
The real estate component in the supply chain right is about number six on the expense.
You know.
The extension right. So yeah as opposed to other types of real estate, maybe office for instance, you know behind personnel office is number two.
But in industrial space.
It was number six so it's it's not that expensive guy.
I've have an item. There's this five other things that they need to pay attention to decide besides the real estate now again 100000 square feet, whether its 50 cents a square foot or a dollar it's not huge money now.
The contradictory part of what I always say is but we have tenants that are on the margin.
We feel lot, where we talk to the owners of the business.
And they leased 100000 square feet from us so although it's number six you know for them to move across town to.
To say 50 cents.
And $50000 as lot of money to them you know, it's going to cost them more than that to move now in the same thing. It. It. This is the one asset class where people aren't moving on up like the Jefferson's right. They just you know you have industrial space its class B, it's whatever the hide it is you get to floors dirty everyday.
Okay, and you clean them at night. So those tenants are not usually looking you know Sunday were going to move to a class eight facility in pay twice as much in rent.
That's what I mean by the margin right. So if that hundred thousand $200000 years coming out of someone's pocket.
Its meaningful.
So that's one of my contradictory hopefully that makes sense.
No I I get I think most figure tenets are fairly entrepreneurial and making small businesses work.
I would say a couple of the trends that we've seen is for for companies to want to be near there.
[noise] suppliers or sister companies are.
So there's some co locating.
So we see that people like in their space. They want to have their supplier next to them. So that's something we've been seeing plus they are they want to consolidate a little bit more.
We'll see some tenants.
Move other locations into our facilities.
Plus we've seen a lot of a lot of tenants are looking for expansion space. They they feel that business is gonna grow so when they when they signing a lease they're looking for you know rights of first opportunity on on it on space that's.
Jason to theirs or in the same building.
Alright, thank you.
This concludes our question and answer session I'd like turn the conference back over to Mr., Jeff with Ralph for any closing remarks.
Yes. Thank you. So thanks, everyone for joining us we appreciate the the input and if there any follow up questions. Please reach out to us start to Tripp Sullivan and I'm happy to happy to discuss it. Thanks so much.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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