Q2 2021 Lexington Realty Trust Earnings Call
Really bright spot for us and it is further evidence of the quality of our industrial portfolio and strong fundamentals in the industrial sector.
We leased roughly 1.1 million square feet in the quarter with industrial base and cash base rents, increasing approximately 13% and 7% respectively on for lease extensions.
July proved to be another exceptionally strong month of leasing with over 2 million square feet of activity.
We have secured a 5 year lease with a new tenant at our previously vacant 640000 square foot warehouse distribution facility in Statesville, North Carolina, with a 3.4% cash base rent increase over the prior lease and 3% annual Escalations.
We also secured a 3 year lease term with a new tenant at our 1.2 million square foot industrial facility and Olive branch Mississippi.
The new cash base rent represents a 1.7% increase over the prior rents with 2.25% annual bumps.
With little downtime to lease a lot of square footage and a competitive market. This transaction is a big win and a testament to our asset management capabilities.
We continue to proactively create leasing opportunities as we address forward lease rollover.
With 1 of our 2000 and twenty-three explorations, we just signed a 10 and a half year lease with a new tenant at 1 of our warehouse distribution facilities and the Cincinnati market.
This was a great outcome as we replaced the tenant that was a move out risk increase the cash base rent approximately 27% and extended the overall lease term.
In addition, we had a great outcome with respect to our first quarter industrial purchase and Lakeland, Florida.
<unk> was acquired with a 105000 square feet of vacancy as part of our strategy to take advantage of industrial demand and rising rents and provide more attractive stabilized yields compared to investing and fully leased buildings.
In July we leased roughly 68000 square feet of vacant space for a 5 year term to a new tenant with a starting rent of $5.70 a foot with 3% annual bumps, representing and occupancy increased from 53 per cent to 84%.
Our strong leasing outcomes are a primary driver behind increasing both the low and high end of our 2021 adjusted company <unk> guidance range by a penny to a new range of 74 to 77 cents per diluted common share.
Moving to dispositions during the quarter, we sold 3 properties for approximately $125 million.
And as dispositions included 2 office sales and our Laurens South Carolina legacy industrial assets.
At June 30th total consolidated sales volume totaled $183 million at GAAP and cash cap rates of 7.3 per cent and 7.9% respectively.
Subsequent to quarter and we disposed of 3 non industrial properties valued at $35 million, leaving just 11 office and other properties remaining excluding our ground lease Palo Alto property.
These 11 assets generated net operating income of approximately $8 million. During the first 6 months of 2021, and we currently value these assets within a range of $150 million to $190 million.
Investment activity has been robust to date with $275 million closed as of June 30 at GAAP and cash estimated stabilized cap rates of 5.1% and 5% respectively.
And the start of the third quarter has also been active with $106 million closed in July and another $106 million currently under contract that is expected to close later in the quarter.
And a competitive industrial market, we continue to view development projects and the purchase of vacancy as compelling opportunities to capture attractive stabilized yields for quality product and our target markets.
Construction is fully underway at our development projects and sub markets of Indianapolis, and Central Florida, and our Atlanta project achieved substantial completion of the base building during the second quarter.
We have strong leasing prospects at this facility and are currently responding to rfps.
Subsequent to the quarter, we committed to a development opportunity and Greenville, Spartanburg, our development projects and progress are expected to require funding of approximately $271 million and our forward equity sales match up well for the funding of these projects.
We've nearly completed our portfolio transition with our industrial portfolio now representing 94 per cent of our gross real estate assets, excluding held for sale assets.
The work we've done on the portfolio and has paid off and we're extremely pleased with how the portfolio continues to perform and be shaped through the purchase and development of modern high quality class, a warehouse distribution product and our target markets.
With that I'll turn the call over to Brendan to discuss recent investments and our development pipeline.
Thanks will.
Second quarter acquisitions included 7 industrial facility for $205 million at GAAP and cash estimated stabilized cap rate of 4.8% and 4.7% respectively.
During the quarter, we added to our portfolio holdings and southeast Houston with the purchase of a 3 property stabilized portfolio totaling 739000 square feet.
All 3 properties were built in 2019 to modern specs with 2 other facilities located in the Bay Parc North Industrial Park and.
And a third facility close by.
We like this area of Houston and due to its close proximity to the port of Houston, and the barbers cut and day part container terminals.
This portfolio acquisition and also complements our 2 distribution centers located in the Bay for South business Park.
Additionally, we acquired a recently constructed 195000 square foot stabilized facility and northwest Cincinnati.
The property is in a master plan business parks right on I, 75, where we own and an additional $2.4 million square feet of class a distribution space.
Adding to our presence in central Florida, We purchased a 510000 square foot shell and Lakeland that we're currently marketing per lease.
The property is located at Cross County line Road from the Lakeman facility, we acquired and the first quarter.
As will noted earlier leasing activity has been positive at that partially stabilize facility and we have begun to see promising activity at dislocation.
We are working towards a stabilized cash yield forecast it to be approximately 5%.
Our 2 new acquisitions, and the Greenville Spartanburg market.
Located and the Smith's Barnes Industrial Park and Greer.
1 of these facilities is approximately 80000 square feet of vacancy providing us the opportunity to fully stabilize the property and a rising rental rate environment.
The buildings are located off highway 101, and Greenville, Spartanburg, and primary and largest sub market and Spartanburg west.
With proximity to IL 5.
And when port.
And <unk> largest and most productive manufacturing plant.
And the Greenville, Spartanburg International Airport.
Additionally, the market strategic location allows for ease of access to both supportive Charleston, and the port of Savannah.
And it's within 2 hours of the major metropolitan markets and then.
Hannah and Charlotte.
Our conviction about this market is further evidenced by the purchase of a nearby 4 property portfolio and Greer debt, we closed subsequent to quarter and.
The approximately 1 million square foot portfolio consists of 3 stabilized properties and 1 vacant property.
All of the facilities have been built within the last 2 years with a vacant facility the newest before bill earlier this year.
We have had considerable tenant interest and the space and are currently responding to several rfps per foot.
Full and partial building users.
Turning to our development activity. We currently have 4 active spec deals and progress and we expect our build to suit and the Phoenix Submarket of Goodyear to be completed later this year.
And we'll highlight at our 910000 square foot Atlanta project debt.
Reached substantial completion on the base building from the second quarter has seen strong leasing activity with multiple active prospects interested in the full building.
Atlanta as well as the Submarket and the facility is located.
Continued to post.
Record positive absorption rates.
As mentioned on last quarter's call we commenced development.
And the second quarter of a $1.1 million square foot facility and the Indianapolis sub market of MAU comfort.
The project is still expected to reach substantial completion and the second quarter of 2022.
And an estimated cost of roughly $60 million.
Subsequent to the quarter, we began funding our projects and Greenville Spartanburg.
We're excited to further expand our footprint and in this market with this 234 acre site.
That is also located and the Smith Barnes Industrial Park.
The project will consist of 3 class a warehouse distribution facilities.
Totaling $1.9 million square feet.
The facilities will have staggered deliveries over the course of the first half of 2022.
The estimated development cost is approximately $133 million.
Like our spec projects, and Atlanta, Indianapolis, and Central Florida, The Greenville, Spartanburg development for future market, leading specs with respect to clear heights efficient site plans trustcorp depth building depth and column spacing.
And ample trailer and car parking to meet the demands of a host of logistics and users.
Our estimated stabilized cash yield and our stack projects are projected to be and a low to mid 5% range, which assumes 100% occupancy and payment of our partner promote.
We will continue to provide regular updates on the progress of these projects.
With that I'll turn the call over to Beth to discuss financial results.
Thanks, Brendan and the second quarter, we generated adjusted company <unk> of approximately $52 million on.
And our 18 cents per diluted common share.
Revenues were $81.5 million with property operating expenses of approximately $12 million of which roughly 86% was attributable to tenant reimbursements.
G&A for the quarter was $7.9 million and.
And we now expect our 2021 G&A to be within a range of $32 million to $34 million.
Our same store portfolio was 97, 4% leased at quarter and with our overall same store NOI increasing 9%.
Which would have been approximately 2.1% excluding single tenant vacancy.
Industrial same store NOI increased 1.7% and would have been 3% excluding single tenant vacancy.
And at quarter, and approximately 89% on our industrial portfolio leases had escalation with an average rate of 2.4%.
On the capital markets front during the quarter, we entered into contracts for the sale of 16 million common shares for initial settlement amount of approximately $194 million and a forward equity race day.
Shares have not yet settled and the contracts mature in May 2022.
As of June 30, we had $285 million on $24.6 million common shares of unsettled forward common share sales contracts, including those under our ATM program.
Subsequent to the quarter, we redeemed approximately $1.6 million operating partnership units and connection with the disposition of the 3 properties subsequent to the quarter debt will referenced.
This transaction further reduced our non core holdings and gave US full control of our legacy operating partnership and the flexibility to further simplify our stock share.
Our balance sheet remains strong with leverage at 4.9 times net debt to adjusted EBITDA at quarter end.
At quarter, and we had $125 million outstanding on our unsecured revolving credit facility and currently have $215 million outstanding.
Unencumbered NOI remains high at approximately 91%.
Our consolidated debt outstanding was approximately 1.5 billion with a weighted average interest rate of approximately 3.1% and a weighted average term of 6 years with that I'll turn the call back over to will.
Thanks Beth.
I will now turn the call over to the operator, who will conduct the question and answer portion of the call.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone.
You are using a speaker phone please pick up your handset before pressing the key to withdraw from the question queue. Please press Star then 2.
The first question is from Elvis Rodriguez of Bank of America. Please go ahead.
Good morning, and thanks for taking the question.
Are you able to share some details on how the acquisition pipeline is looking today versus prior quarters, and maybe an update on yields.
Sure and then the.
Acquisition pipeline with respect to the number of transactions, we're working on and and dollar value and sort of and the $1 billion area, which is.
Alright, very substantial most of the opportunity set that we see at the moment is sort of in this kind of 3 and a half to 4 and a half area and so theres been.
You know quite a bit of cap rate compression, obviously, this year and and sort of over the last 12 months.
So we're very very happy with the body of work that.
And now we've sort of got on on the books for the first 7 months of the year.
And our posture and the acquisition market is as I would say a little bit cautious.
And that's not to say that a low cap rate transactions don't you know sort of work from a mathematical standpoint, and the context of the total return.
Some of that is driven by financing costs were probably have.
We have 10 year financing cost of 2 and a quarter.
And if you're you know if you're looking at a high quality building and in a market and location that we really like if you have below market rents and and conviction that rents may grow for a considerable period of time sort of in this and the mid single digits.
And now we all have a little bit of sticker shock about cap rates, but the total return and basket still worked pretty well.
And you bring up a good point on low cap rates today relative to last year, how are you underwriting sort of exit yields.
Today relative to maybe 6 months ago, and then also how do you on the right. So for example, you acquired a vacant asset like what are you underwriting 12 months lease up 6 month lease up.
What are you underwriting and get to your target yields.
Sure Brendan do you want to jump in on that 1.
Yes sure.
Well in terms of the underwriting and residuals I guess first.
Say that.
We are.
Long term holders.
And so we're very focused on where we see.
The rental basis, and the rental basis going forward.
We do too.
Our our analysis as well.
Historically, I would say that.
And I think most of the market typically you would add.
Some day anywhere 50 basis points to go.
And and going out and today, that's probably more likely something like.
25 basis points, but we really.
Focus on on a whole host of.
And of the factors and.
Including our basis and rental basis, when we evaluate those total returns.
Great and then just 1 more for Bath on maintenance a modeling question. So and your supplemental you added that you're going to receive a $2.6 million.
Lease termination income payment for an office building in Dallas Fort Worth and January of 'twenty..2 just wanted to highlight and just wanted to bring up.
Is there any reason or are you going to sell that building before how should we think about modeling this payment for next year.
So the payment actually occurred in and.
The first quarter.
Received the payment then.
So the termination income for that will be recognized over that year. So at the end.
On January day will be out in 2022.
Thank you that's very helpful.
The next question is from Anthony <unk> of J P. Morgan. Please go ahead.
Okay. Thanks, and good morning was looking at your 3 spec.
And square foot of warehouses, and the development pipeline and you talked about.
The activity from maybe a full building lease and Atlanta.
Can you just talk about just how those were underwritten and the expectation was it always for single tenant and each of these properties.
Long term leases multi tenant like what and whats your underwriting on those.
This is Bryan and then so the base underwriting on and on all of those projects is for with the anticipation of the single tenant users for them.
That is and as we approach the spec developments, we look at it from.
And we can start with the demand side.
And we are just continuing to see over the last couple of years very significant demand for large modern bulk distribution facilities and we're building and.
Markets that are very very attractive attributes for that kind of views.
When we go into.
On designing the building.
What I just said said.
We are very careful to.
And sure that the building could be multi tenant did.
It needed to be low typically.
As we are marketing these projects.
There is off and interest.
From users to take portions of the building and opportunities too.
<unk>.
Divide them.
Our preference.
2.
To keep and single tenant in many cases.
And I spoke about the demand side, but as we analyze the supply side as well.
We often see that.
Our buildings have been very competitive.
Position because of the lack of competing large buildings that could satisfy that tenant me and that gives us some.
Competitive advantages and negotiating so our bias is towards.
Holding for a single tenancy.
And.
And I think that did I Miss anything of your questions on.
And the debt that.
Coverage and just curious, though and then if you if you get single tenant in there and presumably that would be a longer duration lease given the size like where would that market cap rate do you think b. When you talked about that 3.5 to 4 and a half.
On a level and the market and just try and get a sense of you know development spread against the low to mid fives yield debt.
Got you outlined.
Yeah. So.
But what we're seeing and our and our markets.
The values on those buildings are are in those same ranges and.
So and.
Asset and in Atlanta, like our project and Atlanta.
And would be certainly below.
Okay.
And <unk>.
Indianapolis at this point is.
As.
Breaking 4 it appears right now today.
And.
And central Florida as well.
Got it okay. Thanks, and then just my only other question.
I think it was either last quarter, maybe perhaps 1 before.
You mentioned debt to 2022 should really be the earnings trough as you clear out the last of the non core stuff you bumped up guidance here, a little bit today and it sounds like your deal activities pretty good do you still think 'twenty 2 is a trough or you think there's prospects.
Maybe just having some growth next year.
I I still view it as a as a trough.
The 1 other real questions is how how quickly some of the development stuff leases up.
But right now I think we would just have you know a conservative posture until we have some visibility around those outcomes.
Okay, great. Thank you.
Thanks, Tony.
The next question is from Craig Mailman Keybanc capital markets. Please go ahead.
Hey, good morning, everybody.
Maybe just a clarification on the 1.6 million op units redeemed.
Were those tie specifically to those assets could you just give a little bit more color about the transaction kind of the mechanics of that.
Sure Good morning, Craig its Bob.
This is a great great transaction flora and.
Our operating partnership we had certain limited partners there that had consent rights over certain transaction.
So the 1.6 million shares and op units represents.
And about 65% of those O P unit that we had.
And everything was consolidated of course.
And with those consent rights, although we could structure around those concerned right now what we've done is because we we deem these unit for the 3 property.
The consent rights are no longer there. So we no longer have to get their consensus or any kind of merger or sale.
Nah I'm asked amount at the property.
It will simplify our structure because we can merge the operating partnership and to us.
And we still have some 10.31 that are ongoing and so on each 1.
1 of those things that.
We'll take maybe to the end of 'twenty, 2 but it's not tied to any particular assets and you know the other positive thing is it will free up our people and it'll be less time consuming and there was a lot of management.
Once the market in between Ky on distribution checks and that sort of thing.
And what like should we this is basically just a stock buyback right. So what price was it done it.
Well it was an arm's length. It was on like pricing on the the 3 assets had a value.
Value of $35 million.
And Craig that was about a 7 and 70 cap rate and and included and that links golf course, just to put it and perspective.
So we with <unk>.
Overall, we're very happy with with the outcome.
Okay.
And then and I apologize for the question I mean, it was a $1.6 million and the share count or was this kind of a different kind of op unit.
No no it is and our diluted count.
Okay Alright.
And then just moving onto the same.
Same store. So you guys did 1.7% for the first 6 quarters I get 3% if you back out the vacancy, but youre always going on some vacancy at this point go and industrial with the shorter lease terms.
It seems like the escalators are getting better and you guys are and what to 4 now and now you're kind of getting 3% on some of these.
On a kind of as you look out longer term what do you think the growth potential is internally from the industrial portfolio.
Like what would be the target relative to maybe where peers are.
Okay.
Well I think Craig you just have to have to start with the escalations that we have to and have built into our lease structures right with close to 90% of our leases have have escalators in them and we've started to.
As you've noticed quarter to quarter and now we're putting up quite good mark to market our numbers, but I think it's still a tiny bit speculative to sort of forecast, where we where we might land on a quarter to quarter basis.
And I'm talking about same store rent growth for a quarter or 2 and advance.
You know and sort of an easy easier thing for us to see.
And so you know directionally everything is going extremely well on and you're correct to point out that vacancy.
Vacancy.
As a disproportionate impact.
On on same store, but given now given what the occupancy rate was was this quarter. The fact that we were able to to landed where we did was a good outcome.
Yeah.
I mean do you think this could be a 4% to 5% growth portfolio kind of with what you guys are building and.
The mark to market potential embedded and and stuff that hasnt rolled yet or is this going to be.
And a more 3% to 4% grower I'm, just kind of trying to get a sense of.
Because there are some disparate kind of marks that you guys have and here you have some bigger assets like the Mississippi assay and a 1.7%.
Rent spread there, but others you know you had 7% from this quarter. So I'm just kind of trying to get a sense of of where you think this portfolio would fit in to the landscape of the industrial group on the <unk>.
Longer term basis.
Well, we we would tend to be more conservative at the moment.
And you know part part of that just reflects that.
And sort of modern warehouse distribution and portfolio of ours, which you know may represent sort of 60 per cent or so of enterprise value.
Now that's the part of the portfolio that has it Brent and the best prospects from market rent growth.
And on a lot of the new underwriting and the context of 4 or 5 per cent is if there is very sensible.
We also have and and the portfolio.
Still a portion of assets and manufacturing light manufacturing and and cold storage.
Okay.
Now, let's say you just start buying and the mid force.
On some of these yeah, but I I think the the way we've been looking at it is is.
Yeah, we we've been okay issuing some equity to fund development right, where we have both the best opportunity to produce.
<unk>, Hi, F F O and and growth and we're right, we're making a good net asset value trade, where upon stabilization right, there's a lotta spread compression and and what we know and.
So that's sort of been our thought around around equity and and the acquisition side of the business has really been more about you know match funding capital you know capital recycling from from retain cash flow and and and dispositions. So it's it's not really 1 of the other Craig you know both both are important to us.
Great. Thanks.
And next question is from John Peterson of Jeffrey Please go ahead and.
Great. Thanks, I, just wanted to get a little more color on where cap rates are trying to the office sales that you have left to do I think and a pass on the last word and the 1 before you guys talked about 12% khafre on what's remaining but it seems like you guys or try and do more towards the high single digits and some numbers will you gave on the alive and remaining properties and.
Also seem kind of high single digit range. So just curious if that's like you know since I guess kind of bridge that gap is that conservatism on on your part historically or abused and cap rates, you know to impress and in the past.
A few months for that for those office properties.
I I think we've tended to be.
Serve it is when we've talked about the overall outcome on on the office disposition effort as the pool gets smaller you know, we we gave a pretty wide wide range of of outcomes, just because you'd have a small pool of assets and the probability of disparate outcomes is is you know sort of higher once that port.
Total you'll get smaller.
So the the mid point from a cap rate standpoint is around 9% you know and.
Which is less than than sort of the 11 ish area that we've been talking about so you know as it gets smaller.
And some cases much better visibility, but but also and I was sort of more and more random outcomes and.
As a portfolio shrinks will be able to tighten up that that gap and and whatever the range of outcomes are.
Okay, I think I would look at it this way and did you have any sense on your industrial portfolio of what the Mark to market is.
On right.
[laughter].
You know, we we do a fair amount of work looking at our rents and in relation to to market and.
We don't you know sort of talk publicly about what what we think it is I think we're quite cautious about trying to talk about mark to market. The on sort of 12 or 18 months forward were clearly and a position and and and you know it says talking about it before the the modern part of our warehouse distribution.
Portfolio, you know, there's I think very very strong mark to market opportunities, but they're you know, they're they're less so and the legacy portfolio.
So I think we'd we'd I guess, rather just continue to produce good outcomes and then try to you know predict so far into the future you know when we're in a portfolio that has longer weighted average lease term your ability to mark to market is less and others. So I think it's it's and and in our mind just to be.
A little bit cautious and not try to be overly predictive at this point.
Okay last question for me on the acquisitions and a couple of and 1 of them was bacon and 1 of them was only partially least I'm just kind of curious as you think going forward for your acquisition strategy like you know what per cent are you willing to you know I guess, maybe do more you know value add type deals, yes, and stuck with some hair.
On it and versus you know more stabilized.
Income streams.
Sure Brenda and do you want to offer commentary on it [noise].
Yeah sure I wouldn't say that we have a.
Percentage that we have identified but rather a day that we would just look at the opportunities Opportunistically, where where we see them, making sense as we do.
Deep and our concentrations and our target market.
And and started that.
The spec development projects as well, we're just far more comfortable underwriting at least that opportunity and.
And with fake and say and and we had previously and and his cap rate environment and that we're seeing currently per stabilized.
Fully leased assets.
The opportunity to buy shall where you're comfortable with the underwriting can be very compelling.
Okay. Thank you.
Extra on [laughter].
And next question is from John and the soccer on Ladenburg Thalmann. Please go ahead.
Good morning.
Hey, John.
Maybe kind of sticking with the the belt and the pipeline and kind of attention and you look at potential future development transaction and you work with your partners and what are you seeing on and I kind of price per square foot and development cost basis vs earlier and here I have some of the inflationary pressures on cost stabilize there and they still putting and kind of.
Upper and pressure on on gross pricing and he's types of deals.
I would say that there is continued.
Upward pressure and you and there's.
There's 2 elements to it there's both price thing and there's also the availability of the material. So so increased pricing and.
And.
Has the potential of course to impact your development and yields Fortunately.
What we've been seeing across markets is very healthy rent growth continued bright growth, which has helped offset.
Some of that costs and inflation and then and an addition, and as we've been discussing on this call and you also been seeing a significant cafe compression.
On stabilize assets the the the the value is it still compelling even with increased cost and.
With respect to the the other element of it the availability of materials 1 of the things that that we like about our setups with the projects that we're working on and if you are.
Able to secure other materials.
And and a pricing that makes sense for you at all and underwriting that puts US ahead of competing supply. So I think a lot of supply will be slowed down and the market in some cases, it could be a function of pricing, but and now there is and it just be a matter and the availability of materials, which.
Which should allow us to deliver a head of other competing supply and we had a better day system and those I've started later that.
But I mean, I guess and do you think about it and you can you can talk about his earlier this year to kind of fell through and the first time out for training first of all perfect.
Certainly and upward trend and kind of input costs for development that hasn't abated and it all kind of maybe since you know some of these initial spikes and steal and.
Roofing and other kind of input costs.
I would say, it's moderated it it has and ceased and and it's tended to it's it's shifted around and a little bit and it started.
With steel and then you know and then it's roofing insulation materials and then it's dark package and it. It's it's it hasn't been 1 single item and and so some some components moderate and and and even pull back but overall.
And we we still see.
Cost pressures, which which sounds negative, but again I'll I'll say that at the same time, we've seen healthy rent growth and we think that that those those dynamics should be helpful for for the rental outcomes on.
Our spec projects, where you've locked and our our our pricing and our material.
But also for our existing portfolio.
Where where we where we don't have those day suspicious from a competitive standpoint and rent growth.
Understood and then apologize if I missed this earlier and the call, but it takes plenty update maybe on the expectations for pad and and improvement and leasing conditions and.
And it feels like it's kind of.
I feel like maybe earlier and the year and the expectation was for somewhere if I'm remembering correctly, you know $15 million or so and potential spend and I think that you're coming in and pretty much below that so.
And just any update there would be helpful.
Hey, John you know it it's not our timing really and 2 and projects are getting done. So you know, we still could come in and <unk> and the 15 to 25 million dollar range for the year and yeah based on what we think when things are gonna happen, but you know sometimes tenant to take longer at T. T T.
And some of the tenant and proven that Saturday It may laps and 2 next year, but you know and I'm still forecasting will have heavier second half.
Okay understood and then just 1 last 1 on the O T unit transaction and just to kind of make sure I fully understand what was going on there essentially when you purchased those assets you issued O P. As part of that so the the the spelling of those assets and just essentially and kind of the reversal of those O T like as part of.
Yep selling those assets you basically repurchase T O PS and you had issued originally when you had purchased those properties.
No no. These were these on a different poverty.
Yeah, and he's O P units are our legacy day, thanks in and our portfolio sorry for several years these assets where assets that what parking at different times and.
Uhm along the way they were just selected to be part of the transaction that makes sense for and the value of the units that were being <unk>.
And they were non core.
Okay. That's very helpful. Thank you very much and that's it for me.
Thanks, John.
Okay and if you have a question. Please get started on mine and next question is from Wendy MA and Evercore. Please go ahead.
I go Martin and thank you. Thank you for taking my question. So in Turkey, and you spelled light industrial property and do we're just curious what's the reason that you sell and industrial assets and also what's a T drive I got the cap right for a day <unk> <unk> hi, Thank you.
Sure Yeah, when they've just from and and.
And sort of spec standpoint, and and location standpoint that as it really didn't doesn't fit with.
What we're investing and now so it it was and older facility, which you know had had some obsolescence and further obsolescence risk and it.
So from the standpoint of of looking at it has a sale price per square foot. It was I think a really really good outcome.
But just as is and if it just didn't didn't fit with our our current investment strategy.
Okay. Okay. Thank you and just sorry, if I missed this before but the Ah pregame spacebar to Tuesdays and like the higher compared to Ah nausea, and compared to 1 T is so and whether any special special reason behind that.
Hi, Wendy it's it's really a function of the on the new leases that we are we are entering into a lot of tennis now we are responsible for the property operating expenses and then we get reimbursed from them. So it's you know and.
And the past we had a lot of net lease deals where the tenants would pay directly for operating expenses and we would just get a check for the right now we're paying for operating expenses and that reimbursing on that what is presented and as a growth spaces on on the income statement. So that's that's the primary driver.
Okay. Thank you that's my question.
The next question is a follow up from Elvis Rodriguez of Bank of America. Please go ahead.
Just a couple of quick more for me so.
On the legacy portfolio, the industrial assets well, how much of the 94 per cent. If would you categorize this legacy twenty-five percent and 50 per cent just trying to get on understanding of where the industrial portfolio sits today relative to the legacy assets.
Yeah, I'm and the the cold storage manufacturing and and light manufacturing is all Oh legacy that's what I think about 919 per cent or so.
And then and the warehouse distribution portfolio.
There, there's some things and weird characterize as is.
Legacy is as well so you.
You know, maybe thinking and the context of of.
20th.
25 to 30 per cent of the portfolio being sort of old you know old older vintage added to the portfolios or you know over 5 years ago [noise].
And should we consider these assets could be potential sort of funding source for.
Newer acquisitions and developments going forward.
[noise], we would view the cold storage manufacturing and and light manufacturing is and as a source of liquidity and and alternative to capital markets from from that standpoint, you know the legacy warehouse and distribution and not not necessarily.
We we <unk>.
Like the buildings a lot they just have a little bit different characteristics and would be a little bit more high yielding and maybe with a little bit less rent growth and things that we're adding to the portfolio now there's a handful of cases, where we have building sort of outside of our regional market footprint that we might look at it as as opportunities to you know turn those.
Into into liquidity and right in the context of of how we are shaping and the portfolio longer term.
But I don't I don't think that that would be you know a heavy amount of disposition activity in terms of aggregate dollars.
<unk>.
Great and then just 1 more for Beth are you able to share how you plan to deploy the phone and equity obviously the line of credit increased from corner and and just trying to get an understanding of how you plan.
The ploy that equity throughout the year.
Sure. So the contacts that that we have on a 4 day says they're they're good for Ya.
So you know when.
When we look at that will will be funding our development and I think all along so the first tracks will be coming to this August and a few weeks. So we'll be bringing no shares and at that point, but the lion's share of it is good and tell out today and 2022 and you know when you when you think about it and you know when when you're borrowing on the low.
And our line right now and 1 month LIBOR 90 day complaint switch and it's really attractive financing right now where you're bringing in the share count.
And into our errands, earning chair and until looting Ernie and.
And it's about that really.
That makes sense and can you remind us how many shares will you be deploying and August. Thanks.
Alright, so so in August it's it's the first time and and that's about 3.6 million.
Thank you so much.
This concludes our question and answer session I would like to turn the conference back over to well Eglin for closing remarks.
[noise], we appreciate everyone joining us this morning and.
Please visit our website or contact Heather gentry, if you would like to receive our quarterly materials and and addition is always.
And we hope you'll feel free to reach out to any 1 of us and our senior management team with any questions. Thanks again for joining us and have a great day.
And the conference has now concluded. Thank you for attending today's presentation you may not.
[noise].