Q3 2022 STAG Industrial Inc Earnings Call
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Okay.
Greetings and welcome to Stag Industrial's third quarter 2022 earnings conference call. At this time, all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
It's now my pleasure to introduce your host Steven.
Capital markets and Investor Relations. Thank you Sir you may begin.
Welcome to Stag Industrials conference call covering the third quarter 2022 results. In addition to the press release distributed yesterday.
There's an unaudited quarterly supplemental information presentation on the company's website at Www Dot stag industrial dot com under the Investor Relations section.
On today's call.
In his prepared remarks and answers to your questions will contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995.
Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today.
Examples of forward looking statements include forecasts of course about same store NOI G&A.
<unk> and disposition volumes retention rates in our guidance.
Leasing prospects rent collections industry, and economic trends and other matters.
We encourage all our listeners to review the more detailed discussion related to these forward looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website.
Reminder, forward looking statements represent managements estimates as of today Stag industrial assumes no obligation to update any forward looking statements.
On today's call you'll hear from Bill Crooker, our Chief Executive Officer, and Mastercard, Our Chief Financial Officer also here with US today is Steve Mackey, our Chief operating Officer, and Mike Chase, Our Chief investment Officer, who are available to answer questions specific to their area of focus I'll now turn the call over to Bill.
Thank you Steve Good morning, everybody and welcome to the third quarter earnings call for Stag industrial.
We were pleased to have you join us and look forward to telling you about this quarter's results.
That continues to have an extremely strong year operationally.
These results are flowing through our bottom line corvo and cash available for distribution.
Recent headlines have pointed to a declining industrial fundamentals.
Bus construction pipelines and building deliveries applying upward pressure to availability rates.
Despite these trends the industrial sector continues to benefit from extremely low vacancy relative to history.
As a result, we are still forecasting strong market rent growth for both our portfolio and for the market generally.
The ongoing capital market volatility continues to weigh on the asset transaction market as sellers continue to seek pricing stability.
Those sellers, who are not forced to transact have taking a wait and see approach.
Potential acquirers have reset return expectations to reflect current market conditions are fairly wide bid ask spread has been the result.
We expect attractive opportunities to develop best sellers become motivated by capital needs and upcoming debt maturities.
These market dynamics have resulted in a more tempered acquisition and disposition guidance range for the remainder of the year.
We now expect to acquire between 460 and $525 million this year with.
With acquisition cash cap rates, ranging between five two and five 4%.
We expect disposition volume to range between 135 and $150 million this year.
The reduction in disposition guidance was also impacted by the ongoing price discovery.
For the year, we expect that aggregate disposition cash cap rate range of approximately five 4%.
That was successful in closing attractive opportunities in the third quarter.
These opportunities were sourced earlier in the year.
We acquired these assets at a five 4% cash cap rate and expect to stabilize them at a 6.6% cash cap rate within the next few years.
Over the past several years, we have purposely transitioned the platform to generate greater and more sustainable cash flow from our in place portfolio.
Same store growth has meaningfully accelerated including increasing our 2022 guidance each quarter this year.
We also generate a material amount of retained earnings which further supplements our cash flow growth profile.
We are in position to take advantage of investment opportunities with less reliance on the debt and equity capital markets.
We are also seeing great opportunities to grow our cash flows next year.
We've addressed 45% of next year's expected leasing.
<unk> 6 million square feet, achieving 27% cash re leasing spreads.
This is a material acceleration of our leasing spreads achieved this year.
There is also upward pressure on a weighted average annual contractual rental escalators as we're signing leases with 3% to 4% annual escalators today.
With that I will turn it over to Matt who will cover my name yourselves for the quarter and provide an update to our 2022 guidance.
Thank you Bill and good morning, everyone core <unk> per share was 57 cents for the quarter, an increase of seven 5% as compared to the third quarter of last year included in court for photos of $1 $3 million settlement payment associated with the previous tenant which was received this quarter.
It's available for distributions totaled $87 million for the quarter, an increase of 22% as compared to the prior period.
Year to date through September 30, we have retained approximately $57 million of free cash flow after dividends paid.
These dollars are available for incremental investment opportunities debt repayment and other general corporate purposes leverage remains at the low end of our range with net debt to run rate adjusted EBITDA equal to five times.
During the quarter, we commenced 23 leases totaling $2 8 million square feet, which generated cash and straight line leasing spreads of 13, 6%.
25, 1%, respectively retention was 63% for the quarter and $86, 1% when adjusted for instances minimal downtime and immediate back those.
Cash same store NOI grew five 6% for the quarter and 5% year to date same store growth continues to be driven by higher cash leasing spread shorter downtime and increases in same store occupancy.
On July 26, we refinanced our $150 million term loan B, which was scheduled to mature in January 2023, and a $175 million term loan E, which was scheduled to mature in January of 'twenty 'twenty four with new term loans totaling $375 million. These new term loans mature in January 2028 can bear a fixed interest rate inclusive.
Of interest rate swaps of $3 three 2%.
As a result of this transaction, we have minimal debt maturities through 2024.
In addition to the term loan refinance we upsized, our revolving credit facility to a notional amount of $1 billion, which improved our liquidity profile. This represents an increase in revolver capacity of $250 million.
On September 1st we fully repaid our legacy C. M. D. S alone the last material secured debt instrument on our balance sheet. We've made the following updates towards 2022 guidance.
The current uncertain macro environment, we've reduced our expectation for acquisition and disposition volume for the remainder of the year.
We have narrowed the range of expected acquisition volume from a range of 700 to $1 $1 billion to a range of 460 million to $525 million Act.
Acquisition cap rates for the year are now expected to range between five two and five 4%.
This range is driven by the material reduction in additional acquisition volume this year and largely reflective of acquisitions made year to date.
Disposition volume decreased from a range of $200 million to $300 million to a range of $135 million to $150 million.
Given the strength of our portfolio, we have once again raised our cash same store guidance to another historical high watermark, we've increased our cash same store guidance from a range of $4, two 5% to 475% to a range of 5% to 5.25%.
This increase is driven by the robust demand we're experiencing for our buildings and leasing results have exceeded our initial expectations.
We've reduced our 2022 G&A guidance from a range of $48 million to $50 million to a range of $47 million to $48 million.
We have narrowed and decreased our leverage guidance to a new range of five to 5.25 times net debt to annualized run rate adjusted EBITDA.
As a result of these revised guidance ranges, we now project core for vote per share to be between $2 19, and $3.21 an increase to the midpoint of two patents I will now turn it back over to Bill.
Thank you mats.
Cross the stag platform, our employees are performing at a high level.
This includes our leasing and other business operations as well as execution of our ESG initiatives.
We recently received an a on our ESG public disclosures from grasp the leading evaluate or of ESG efforts and the real estate industry.
This a is an improvement from our earlier score reflects our commitment to appropriate sustainability strategies in our operations.
I am enormously proud of our entire team and the determination to deliver best in class results on a variety of fronts.
Now I'll turn it back to the operator for questions.
Yeah.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue.
You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary your handset before pressing the starkey.
Moment, while we poll for questions.
Hum.
Our first question is from Craig Mailman with Citi. Please proceed with your question.
Hey, good morning, guys Mats, maybe on guidance I know you pointed out the $1.3 million settlement that seems like about a penny of the beat in <unk> that that's maybe nonrecurring, but could you just walk through the D cell from three Q4 Q that's implied in guidance.
Yeah, absolutely good morning, Craig you're right, we benefited from $1 $3 million settlement payment this quarter, which had a one penny impact I'm going to point you to the G&A. The mid point of our G&A guidance is $47 $5 million.
An increase in G&A in Q4, this is driven by seasonality.
Finally, we also have a modest amount of credit loss budget in Q4 to be prudent.
Although it's worth noting we've not experienced any credit loss this year through to that.
On a on a per share basis, how much is that credit loss.
Oh, it happens a penny it's roughly $500000.
Okay.
So there's been again I do want to reiterate we haven't experienced any credit loss, it's not associated with any individual tenant if you recall at the beginning of the year, we had 40 basis points of credit loss baked into our preliminary budget.
I think as we sit here today with the volatility removing all credit loss from our from our guidance.
Okay. No. That's helpful. And then just maybe moving on to the transaction market. I know you guys are slowing things down a bit and you highlighted some of the moving in fundamentals, which are still strong liquidity, there's a little bit of a boom in the underlying fundamentals I'm just kind of curious as you guys have look back.
That kind of cycles in your markets and your asset types. It just seems like kind of A's and B's. This cycle have really compressed from a cap rate perspective, and I'm just curious you know it.
Do you think that that puts your assets at more risk for kind of it.
Spreads to blow out here, maybe more than people have thought or do you feel like the rent growth that you have baked in maybe insulates you have to just kind of big picture thoughts.
Yeah. Thanks, Craig.
I think the rank growth certainly insulates us a bit when.
When we think about our portfolio we are in a lot of markets I'm not.
Some super private some primary markets some secondary markets, but we think about how our assets fit within those submarkets, we're really happy with how we constructed the portfolio.
And our assets generally are in the markets. They operate in outperform those particular markets. So we really like our portfolio, we're seeing strong fundamentals.
The rent growth as I said will insulate us.
From some of that and it's not just what we're seeing today in the portfolio in terms of what we delivered this quarter, but as we mentioned in the prepared remarks, I mean leasing 45% of our projected leasing 6 million square feet out of approximately $13 million for next year at 27% cash roll over leasing spreads I mean, that's.
Pretty strong fundamentals. So we're really excited where the portfolio is today.
And you know it seemed like when the when the Gateway markets really got you know sub four sub three in some markets some of that capital kind of migrated to some of the secondary markets, where there's better opportunity are you guys still seeing that in the kind of the competitive landscape there or some of that cash.
Oh kind of pulled back a bit.
Yeah. It was similar to last quarter at the transaction market is pretty quiet right. Now so it's hard for me to say, whether its pulled back a bit or not I mean, there's just.
The market in general is it isn't a price discovery mode. Here, we continue to evaluate transactions in <unk> and.
And bid on transactions, but at pricing that we view as extremely attractive and on a positive leverage basis.
So for for those for a number of reasons the transaction market overall is quiet. So it's hard for me to answer that question directly.
I guess, maybe you guys are still a little bit active in the disposition market are you seeing less NDA signed less people kind of just showing up to put final bids and what's the what's your experience been in the last six months relative to maybe a year ago.
Yeah, I mean that market is also price discovery, we are executing some transactions.
But we're not like a lot of investors in todays market when it went out a distressed seller.
So because the market isn't price discovery.
We did reduce our disposition volume this year because.
Because of the the market fundamentals today.
Great. Thank you.
Thanks, Greg.
Yeah.
Our next question comes from Blaine Heck with Wells Fargo. Please proceed with your question.
Great. Thanks, Good morning, Bill just following up on the transaction market just wanted to ask how much do you think pricing has changed since the beginning of the year in general and then more specifically have you seen any markets or building types or even lease durations that have changed significantly more than others.
Yeah, I mean from the beginning of the year type cap rates have certainly expanded last quarter, we mentioned cap rates, we're seeing 25 to 75 basis points.
Increase in cap rates, depending on the characteristics of the transaction, including lease term mark to market geographies et cetera, I would say today, we're seeing 50 to 100 basis points of cap rate expansion from that time period.
And that's the primary driver of that is increased cost of capital for buyers are 10 years at or a little bit north of 4%.
And as I said transaction characteristics really drive some of that cap rate expansion.
Okay. That's helpful.
Thanks for the additional disclosure on 2023 leasing I guess, how should we think about that in the context of the same store growth for next year is the cash rent spreads as you pointed out seem to be almost double what you guys have done this year I guess its occupancy holds up and the spreads are consistent is it feasible that you guys could see an acceleration in same store growth.
For next year, not asking for guidance, but just you know directionally.
Yeah, well, there's a there's a lot of factors in components of same store. One is is average occupancy we had some average occupancy increases in our same store pool this year.
And the other component is credit loss as Matt said, we have not experienced any credit loss. This year as we budget at the beginning of the year as we always bake in some credit loss.
And then lastly, the big driver is the leasing spreads. So as you noted the leasing spreads are almost double what they are this year, that's going to be a key driver and we're not giving same store guidance today for next year, but when you when you look at all of those components.
You can pencil out some pretty strong same store growth for next year.
Okay. That's helpful last one for me are there any markets that you guys have a presence in a I know you guys are very geographically diversified, but any markets that are or could be challenged due to oversupply.
I.
I mean, there there there are there's one market that you know we're seeing some additional supply come online that's Kansas City market, we have a small amount of exposure to that market.
No material near term lease rolls.
But generally the portfolio is holding up quite quite well. So if I was the point to any one market, that's probably what I'd point to them, but we feel really good about where the portfolio is today.
Great. Thanks, guys.
Our next question comes from Dave Rodgers with Baird. Please proceed with your question.
Hey, good morning, Matt I wanted to follow up on that line of questioning about 2023, I think that's new and renewal leasing so kind of the total leasing plan I think in the third quarter you had spreads of 19, 9% for new and renewal next year is kind of 27% blended do you have that on a break out basis. So we can kind of even do apples.
The apples on new versus renewal and see how those are trending.
Yeah, absolutely and you're referencing the 6 million square feet associated 2023 at the 27% cash leasing spreads you know as you would expect about 90% of that leasing is renewal leasing given the strength of the industrial market tenants continue to engage the community space well in advance of lease maturity in terms of leasing spreads the.
The 90% is roughly 20% on renewal, but the remaining 10% the new leasing we have a handful of leases there those spreads are in and around 70% to the positive.
I appreciate the added detail there and then maybe on the acquisitions Bill. Maybe this is for you you still have a pretty large pipeline I think it was $2 7 billion that you're underwriting looking at it looked like in the third quarter, you had a little bit more of a value add then that allowed you to get those returns youre talking about stabilized at about 200 basis.
Better or so or 150 better than going in depending but.
I guess, maybe the question is is do you have a more targeted value add strategy is that pipeline full of assets, where you can do shorter term lease role get to returns faster still deploy capital, but that kind of goes those returns are a bit more.
Oh, we certainly like the value add transactions.
As you noted we went from a five four stay in place and we're going to stabilize that at what we're looking at today. The six six and generally our market rent growth assumptions have been we've been outperforming those over the years.
We look across all of these terms look at value add we just spend a little bit more successful in the value add lately and certainly like those assets the $2 7 billion dollar pipeline.
A fair amount of assets that pipeline I think got up to around 4 billion at one point historically, we closed about 10% of that pipeline and its dynamic pipeline. Obviously those numbers are a lot lower today.
And given.
Given the uncertainty with the debt capital markets, our underwriting is a little bit more conservative.
And we're trying to find the most attractive opportunities of that pipeline.
Alright, Thank you guys.
Thanks, Dave.
Our next question comes from Vince to Bone with Green Street. Please proceed with your question.
Hi, good morning.
You wouldn't see side are there any material known move outs in 'twenty three we should be aware of just how long do you think occupancy could remain in this remarkable 90, 899% range.
No large move outs.
That that we should note.
Yeah. When we've had those move outs are in the past we've communicated to the market well in advance of lease roll. So if there is anything material, we will make sure to communicate it to the market.
How long the occupancy levels can stay stay where they are.
It's a really good question demand continues to be there for industrial are there is a fair amount of supply coming online.
Three and a half 4%.
Where that supply is coming online.
It's focused on some key markets, but are really spread across the U S. When we think about our portfolio and where our buildings fit in their respective submarkets, we like how those how our buildings in our portfolio matches up against the new supply.
New supply will will obviously.
Impact.
Occupancy.
But then after that theres not a lot of new supply starting now so when you think about absorbing that new supply.
And then the next stage, we feel like the fundamentals are going to be continue continued to be really strong.
And there's incremental demand drivers above just GDP for industrial AR E. Commerce continues to be a demand driver, we're starting to see and hear from tenants.
Near shoring is as a demand driver as well as where inventory levels are so net net occupancy levels high we think it can remain pretty high.
For the for at least the near to medium term.
No. Thank you that's all really helpful color and then just you know with releasing spreads accelerating are you having profitability.
With some of your tenants are more pushback around these.
Much higher.
Cash rents, especially in this environment I'm curious to see how those conversations are trending are you think Penn centrally retention could tick down here as you are pushing rate more successfully.
Yes retention has ticked down this year, but those are part of the reason is is right and we've been back filling those spaces pretty quickly.
Our relationships with our tenants and we refer to them as customers are internally is strong.
The buildings that are coming to market or the buildings that are coming up for lease renewal.
Those buildings are in markets, where both sides have a pretty good understanding of where market rent is so it's not in.
In an adverse or or contagious, Oh ori are tough.
The negotiation between us and our and our customers.
Okay.
Great. Thank you.
Thank you.
Our next question comes from Mike Mueller with Jpmorgan. Please proceed with your question.
Yeah, Hi to two questions here first on the 23 leasing spreads match do you happen to have the GAAP equivalent for that 27% and the second question is.
Are we where do you see your 10 year debt cost today, and then just you know over multi year period do you think the industrial cap rates can be below your debt costs.
Hey, Mike Thanks for the questions I don't have the GAAP equivalent on hand, what I can say is the rental escalators associated with that 6 million square feet that we've done for 2023 in and around the 3% range.
To give you a sense.
In terms of if we were to originate 10 year debt today, it's in the 6% area I'd know.
That we did fund our private placement notes, which were the last time that we originate longterm debt now has 175 basis points cheaper. So there's been a pretty material move into cost of long term debt, but with that being said I do want to point us back to the July debt transaction that we did part of the rationale the strategic reason for that that transaction.
Was to take care of near term maturities.
Don't have any material maturities to a year end 2024, and we have minimal balances on the revolver. So our need for long term debt as we look at 2023 is effectively zero as we sit here today.
And Mike I'll take the I'll take the last one in terms of.
Our thoughts where cap rates can stabilize as it relates to stabilize 10 year debt rates.
Over a long period of time, if youre thinking about a lease with a 10 year lease as compared with 10 year debt rates are you going to need positive leverage in that situation.
Lot of the discussions of negative leverage come with shorter term leases or leases that have a strong mark to market opportunity so effectively stabilize.
Above the cost of debt.
Got it okay.
Ah Okay. That's it thank you.
Thanks, Mike.
Our next question comes from Wendy map with Evercore. Please proceed with your question.
Hi, Good morning, everyone and thank you for taking my question.
So given your updated guidance for 2020, we know that spark you acquisition could be minimal that given that you still have a big acquisition plan.
Pipeline, so should we assume like given the current market uncertainties really still.
I like the you put ambitious.
Should we assume.
We'll continue to see a little like early 2023 and also Andrew.
Hence we you are like if you go to rethink you are.
External growth plan.
Thanks.
Yes.
Hey, Wendy I would just Oh I'll pass it over to Matt just kind of walk through how we're positioned.
To take advantage of some opportunities in the future, but before I do that is it.
He said we are in a in a price discovery phase that's continued through the summer and so with bid ask spreads being so wide it's tough to forecast.
When the acquisition market is going to open up which is why we dropped our acquisition volume with the low end of that range being effectively what we've acquired to date and maybe Matt you can walk through kind of what we have from a capacity and cash flow standpoint, absolutely can good morning Wendy.
When we're really well positioned to grow cash flow without incremental capital the balance sheets defensively positioned leverages, where we wanted at the low end of our range going back to that that transaction again, you know minimal debt maturities and significant amount of liquidity, we don't have to raise long term debt and we're not interested in issuing equity in this market you know cash same store growth is expected.
Sustained at these levels, we're retaining between $75 million to $80 million of free cash flow. After dividends every year and we have the ability to recycle capital Opportunistically. So long story short, we're very well capitalized to take advantage of investment opportunities that make sense, we anticipate attractive investment opportunities next year, and we arent necessarily relying on incremental cap.
Cool.
Okay, Great. Thanks, and then my second question is do you have any specific tenants.
Tenants that I'll go watch it or you have concerns about.
I went I'll take this one as well we read the same headlines, but the headlines are not consistent with what we're experiencing you know call. It boots on the ground across our portfolio no material increase in our in our watch list at all and again I just want to reiterate we have not experienced any credit loss side through today for this year.
Okay, great. Thanks.
Our next question comes from James Allen with Ladenburg Thalmann. Please proceed with your question.
Good morning, Josh.
Good morning.
Yeah, just to kind of follow up on previous questions is the 5% same store NOI the new normal.
It kind of in the kind of what you're seeing in in place rents versus the market and is that number sustainable kind of.
On the long run or do you or could it possibly go up even more just kind of as in the world We live in today.
Yeah. Thanks for the question I would say we're.
We're really happy where our same stores coming in this year.
There's a lot of components with respect to same store.
Including average down times.
Average occupancy.
Rollover rents, which we've noted and talked about on the call today are being taken care of 45% of our rents next year at 27% rollover as.
As well as tenant credit and credit loss, we haven't incurred any credit loss this year.
Next year as we budget, we typically budget for.
Or or some sort of credit loss. So as you think about all of those components I mean, we're really happy where things stand today, and we will give formal same store guidance.
In our February call.
Yeah, that's great color. Thank you.
Thank you that's it.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
Our next question comes from Michael Carroll with RBC capital markets. Please proceed with your question.
Yeah. Thanks, I wanted to touch on the leasing spreads with renewal spreads at about 20% and I believe I heard you correctly, you're saying that the new spreads was about 70% can you provide some color on why the new leasing spreads are so high I guess, what's going on with that number.
Yeah. It was I mean, there is.
Five leases that represented the 70% for next year.
Obviously, the waiting of the leasing spreads next year, so far more highly weighted 90% weighted to renewals and that's normal if you're leasing is so far in advance it's going to be more renewal leasing the new leasing.
Is it just really a mix of what's rolling in.
In the market and in the markets, where they are rolling.
So with the new spreads that 70% is there something unique with those buildings or I guess, what markets are there and we know where there is a lot of downtime. So the prior rent was not representative of what the new rent is just seems like a fairly sizable number yeah theres not there. It's it's not a lot of downtime.
I think they ranged from 70 per se. It was one that was 30 70 and a couple in the eighties.
It was just strong demand for the warehouses, we had one lease that was.
<unk> expected to role next year, I think in may or and we leased it two months earlier for a 70% roll up in that was that was a big chunk of this space in the and the new leasing it really is just strong demand for those buildings.
And are there certain markets that those buildings were in I mean were they in my kind of some of those coastal California type markets.
One was in Longmont, one was in Portland, and one was in Burlington two are in Portland, one was at Burlington.
Okay.
And then I think last quarter Bill I think in the Q&A, you mentioned that the mark to market within your entire portfolio was about 15%.
Have an updated number now I mean is it closer to 20% kind of reflecting your current renewal spreads I guess, where is that number standing yesterday.
I did say that and I and I tried to correct. It later on in the call.
We don't give the mark to market on the entire portfolio I think theres a mix with our with our peers of who gives it and who does not.
We personally I personally view.
View.
The Mark to market is as a number that's that's helpful and indicative, but not not as informative as whats rolling this year and next year and if you think about where the trend is and what we're experiencing today.
Renewal rents are doubling so far for next year, a new rents are are much higher than they are in next year.
So it's certainly an acceleration.
What where we can mark our leases to market from this year to next year.
What we're experiencing right now.
Okay, Great and then just last one for me I mean, how long do you think will be in this price discovery mode. I mean, do we need to see interest rates kind of stabilize before cap.
Cap rates for industrial assets start to kind of stabilize because how long does that typically take.
Yeah. It's a really good question. If you asked me in July I thought things were going to stabilize in the fourth quarter and then.
We saw that CPI print in September and then the fed lifted but if the rates are I think more than what the market expected. So.
Typically there's a six to nine months lag with a <unk>.
The material increase in rates to where it starts to impact cap rates.
Part of the lag is you've got 10 31 buyers that are in the market that hold the pricing up for a period of time.
And then it takes a little bit of time for seller expectations to change.
This market, it's a little different from now because a lot of the 10 31 buyers are gone.
They're already there already through their capital.
And I think sellers are our our understanding where the market has changed so what I think is got to open up the market is deferred.
Saying, where they're gonna stopped raising rates.
And then that will help the banks lend a little bit more and and then that should open up the market. So I can't give you a time frame of that but that's what we're looking for.
Great that's helpful. Thanks.
Thanks, Mike.
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Our next question comes from Danielle <unk> Bank.
Bank of America. Please proceed with your question.
Good morning, following up on the leasing side, how cause spreads do you have any children are they relatively even across your more core versus secondary market locations.
Are we so far for this year.
There is.
A large number of square feet whats the told US with we've got about a 9 million square feet. So it's pretty representative across the portfolio and next year.
So far it's 6 million so.
Yeah, It's fair to say, it's pretty representative on a portfolio basis.
Okay and I just wanted to ask you about your G&A.
For several years he has been able to improve cross well you scale. The business. This year in particular theres been good improvement whether you're looking at it based on NOI on revenues can you talk about how you've managed to control. These conference your business moves away from that single tenant exposure and becomes more operationally intensive.
Yeah, we've messaged four years the platform is is scalable.
And and we continue to make improvements there.
We also continue to invest in the business and invest in initiatives that are going to pay dividends in the future.
We believe our G&A scalability, we can scale it even further as we grow our platform grow the business and grow the portfolio.
Okay. Thank you.
Thank you.
Yeah.
There are no further questions at this time I would now like to turn the floor back over to Bill.
Closing comments.
Just wanted to say thank you all for joining the call today.
We look forward to seeing you all soon it are some of the upcoming conferences and have a great weekend. Thank you everyone.
Yeah.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Okay.
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