Q3 2022 Indus Realty Trust Inc Earnings Call
Good morning, and welcome to induce Realty Trust 2022 third quarter earnings Conference call.
This call will be followed by a question and answer session.
You may ask yourself into the queue for questions during any time over the course of this call by dialing star one on your keypad.
It is now my pleasure to turn the program over to Ashley Pizzo, Vice President of capital markets and Investor Relations at <unk>. Please go ahead.
Thank you and good morning, everyone welcome to our 2022 third quarter earnings call.
It isn't a regularly available earnings materials and this is also published a supplemental presentation, which is available on its website at www Dot index, Archie Dot com under the investors tab.
Conference call will contain forward looking statements under federal securities laws, including statements regarding future financial results.
These statements are based on current expectations estimates and projections as well as management's beliefs and assumptions.
We're looking statements are not guarantees of performance and actual operating results may be affected by a variety of factors for a list of those factors. Please refer to the risks listed in the company's most recent 10-K filing as updated by its quarterly report on Form 10-Q and subsequent quarters.
Additionally, the second quarter I'm, sorry, the third quarter results press release, and supplemental presentation contain additional financial measures such as NOI SFO core F. F. L. I F F O in EBITDA.
These are all non-GAAP financial measures. The company has provided a reconciliation to those measures in accordance with regulation G and item 10 E of regulation S. K.
The company's speakers. This morning are Michael Gambon and does the CEO , who will cover our recent activity market conditions and updates on our pipeline. He will be followed by John Clarke, The company's CFO , who will cover the third quarter results in detail. After the prepared remarks, the lines will be opened up for your questions with that I'll turn the call over to Michael.
Thanks, Ashley good morning, everyone and thank you for joining us today.
The operating fundamentals in the industrial market remain quite good tenants are active in our markets and supply remains relatively in check due to strong absorption and the continuing delays in the delivery of new buildings.
With that said, we recognize the overall macroeconomic economic environment remains uncertain with inflation running high and interest rates significantly above the levels at the start of the year.
The resulting increase in the cost and availability of capital has impacted the investment sales market with very few transactions occurring and also started to slow down new development starts.
Within this backdrop, we believe in this is well positioned and prepared for a changing market environment.
We effectively pre funded the majority of our upcoming acquisition and development pipelines, which includes having all fixed rate debt at well below current market rates.
Also we'll continue to look to recycle capital, notably undeveloped land, we're focused on maintaining high occupancy and actively leasing upcoming deliveries.
And we generate cash flow from our portfolio, which we expect to grow significantly as recent and upcoming developments and acquisitions roll into our NOI.
Speaking to our current results in the third quarter, we continued to deliver strong internal and external growth.
Our portfolio is well leased at 97, 6% with the only vacancy in the recently delivered two building development in Orlando we.
We have no bad debt expense in 2022 to date and all of our leases are triple net.
We have effectively addressed most of our lease rollover through the end of 2023 with leases accounting for only approximately 2% of our total portfolio square footage expiring before 2024.
The upcoming role we do have one vacancy expected in the near term.
Tenants at least our 234000 square foot delivery in Connecticut has been able to get fully operational in the new space quicker than expected and therefore will be vacating its existing 70 373000 square feet in short order.
Since last quarter, we successfully re tenanted property in Charlotte that we acquired earlier this year.
This new lease to an investment grade rated retailer was that was that a rent 39% above the previous about paid by the short term in place tenants.
And resulted in a yield 50 basis points above what we had originally forecasted we would achieve at the time of the acquisition earlier this year.
We also completed a renewal and extension in Hartford with a global delivery company.
This company exercised the last of its existing one year fixed renewal rates in September and during that process. They start to secure their access to the space for longer term as.
As a result, a few weeks ago, we executed an additional two year extension with this tenant with a 16% increase in starting rental rate over the recent renewal rent.
We're making good progress on leasing up the recent Orlando delivery and feel good about the current tenant activity and the very strong rental rates and recent recent proposals, which we believe will result in us exceeding our most current underwriting.
We continued to experience strong rent growth across our markets and we currently estimate the mark to market rent in our portfolio at 26% on a cash basis and 31% on a GAAP basis.
We believe we are conservative in our estimates typically using known lease comps rather than quoted rates or the levels on current proposals. Additionally.
Additionally, our portfolio is relatively young and has grown significantly this quarter as mark to market calculation was impacted by an unusually large number of newly added developments and sign leases amounting to nearly one sixth of our estimated rent on a go forward basis.
Given how recent these leases are they have a lower mark to market mark to market opportunity.
Also had very little impact on our third quarter cash NOI, we estimate that this group of leases lowered our mark to market calculation this quarter by several hundred basis points.
With respect to our pipeline, we have leased 60% of the remaining vacancy in Nashville, leaving this project with one vacant space of 42000 square feet for which we have good tenant interest.
We have pushed the closing on this acquisition to the latter half of the first quarter of 2023. The buildings are essentially complete but theres been a delay in completing the connection to public sewer, which we required to close on this acquisition.
Since the start of the year, we have added over 900000 square feet, representing an 18% increase to our in service portfolio.
We expect our three most recent developments chatman driving the Lehigh Valley, one to entry reporting, Connecticut, and Landstar logistics in Orlando to generate an initial stabilized yield of around 7% using the actual in place rent at Chapman and trade port and our current estimates for Landstar at a 95% occupancy level. This.
Is well above our initial underwriting at the time, we put the land sites under agreement or even when we commence construction.
As we continue to evaluate land for future development opportunities. We believe we believe we remain conservative in our budgeting.
Our initial underwriting assumes our view of today's market rents and construction costs.
Even if the deliveries two or more years away and we initially assume a 95% occupancy at stabilization.
Our current development pipeline includes one project of 206000 square feet in the Lehigh Valley, which we expect to complete late in the second quarter of 2023.
The Lehigh Valley market remains very tight with asking rents above $10 per square foot and supply in core locations remaining in check given few remaining development opportunities.
We have a very well located project at an attractive basis that we feel will deliver a strong return.
Since we do not have construction commencement dates for several of our other land sites, where now listen these as land for potential future development, rather than rather than including them in our active development pipeline.
This quarter, we disclose one new land site under agreement in the Charlotte market, where we expect we can build four buildings totaling just under 600000 square feet.
Sorry approvals for this site, including the Army Corps permit which extends the time to complete the entitlements.
Therefore, we do not expect to close on the purchase of this land until later in 2023, so any significant investment remains a bit far off.
Overall construction is continuing to experience certain challenges, including ongoing permitting delays by understaffed municipalities and shortages of key certain key materials, which are somewhat exacerbated by hurricane Ian.
That said, we are starting to see improvements both in cost and lead times in some areas such as structural steel.
And we expect these trends to continue to improve.
We have a number of first generation leases signed or expected in our pipeline and we expect some of these near term construction matters to continue to push out the lease and rent commencement dates.
And what we've typically experienced we continue to proactively order materials building more improvements into the base development designs.
With our tenants earlier in the process on their needs to try to mitigate all of these impacts.
Yeah.
We continue to believe the long term outlook for logistics properties remains strong and we will continue a very targeted pursuit of land and building acquisitions.
The current uncertain environment, we believe will produce good opportunities.
As an example, we already are seeing a slowdown in certain proposed development starts as developers that rely heavily on debt financing are reevaluating opportunities and dropping some land sites.
You have the financial flexibility to pursue select opportunities, while maintaining conservative leverage ratios using the capital on our balance sheet undrawn lines of credit and asset recycling.
On that last point, we have our small flex office portfolio under contract for $11 million and the closing is expected later this quarter as.
As a reminder, this portfolio is carried in discontinued operations. So it was not included in our reported NOI or core <unk> metrics.
The sale remains subject to typical closing conditions.
Additionally, we have several undeveloped land sites under agreement for a total of approximately $25 million, which we've put on a schedule in our supplement.
The largest is a $15 5 million dollar potential sale of 48 acres of industrial land.
Goodwin drive in Connecticut.
Buyer intends to build a 450000 square foot manufacturing facility for its own use on the site.
Their parcels.
At present, the sale of non industrial land in Connecticut in Southern Massachusetts.
All of these sales.
Including the office flex portfolio are subject to a number of contingencies, including receipt of necessary approvals for the buyers intended uses.
And note the potential closings will take place over the course of 2023.
In aggregate if all these sales were to close we generate over $35 million of proceeds or about $3 50 per share with no impact to our existing NOI, while providing dry powder for future investment.
I'll conclude with thanking the <unk> team for their continued hard work and exceptional performance.
Take great pride in our very low employee turnover.
Through our team's effort that we achieve our strong results and are in a position for future future success with that I'll turn it over to Jon for a financial review.
Thanks, Michael.
We are pleased to report strong performance again this quarter.
Core <unk> for the 2022 third quarter was $5 7 million or 52% increase over the comparable quarter of the prior year and up.
15% from the second quarter of this year.
Core <unk> benefited the most from the growth in NOI NOI from continuing operations was $10 2 million for the third quarter, that's up 34% from the prior year's third quarter.
The largest contributor to that growth was the net addition of $1 2 million square feet to our portfolio over that time period.
Growth was also driven to a lesser extent by leasing activity and Escalations.
Additionally, the 2022 third quarter included a onetime lease termination fee of just under 400000, which we mentioned last quarter and that was included in our prior guidance provided.
<unk> for the 2022 third quarter was $3 8 million compared to $3 million for the prior year period.
Maintenance capital expenditures were 810000, this quarter, which were primarily related to seasonal repaving projects.
We also incurred 513000 in second generation leasing cost mostly related to Ti work on recent renewals and new leases.
Cash same property NOI for the 2022 third quarter was up 13, 7% versus the comparable 2021 period.
About 8% of this increase in same property NOI as it related to the burn off of free rent on tenant leases comprising about 348000 square feet.
The remainder of the increase is related to the commencement of leases on previously vacant first generation space.
And standard lease Escalations.
Our same property portfolio of about 100% leased for the last several quarters and while our leasing spreads have been strong we have only had a few leases expire. This year are expected next year, all of which may impact same property NOI growth in future quarters.
Wrapping up just a few things on the income statement interest expense of $1 5 million for the third quarter. This is net of 430000 of capitalized interest, which is largely unchanged from the second quarter's numbers.
We would expect that capitalized interest for Q4 will be lower given the recent deliveries of 110 trade port and Landstar.
General and administrative expenses were $2 9 million in the third quarter or $3 million. If you exclude the benefit of the noncash mark to market charge related to the nonqualified deferred compensation plan.
One item to add for future consideration on G&A.
The sale of the office Flex portfolio that Michael mentioned includes office space that we occupy in Connecticut.
Going forward. Our G&A will include approximately 200000 annually for occupancy costs related to leasing that space from the new owner of the portfolio.
Finishing up here on liquidity and debt at the end of August we repaid our $226 3 million floating rate construction loan with cash on hand.
Where do you think our outstanding debt balance to be $141 3 million.
Right now 100% of our debt is fixed rate or swapped to fixed at an overall weighted average interest rate of 413%.
That's a third quarter annualized EBITDA was four six times or three eight times net of cash.
Our $150 million delayed draw term loan, which we completed and swapped into a fixed rate in early April was well timed as we believe the term loan market has become more difficult to access.
Many of the larger banks have pulled back on financing due to their own capital requirements and rates have moved considerably since then.
With our current facility our liquidity at the end of the third quarter was $216 million, which reflects a $26 million of cash.
$90 million of available draws on the term loan and $100 million of borrowing capacity under the revolving credit facility, which is undrawn.
We expect to draw approximately $30 million on the term loan in the fourth quarter with an expectation that the balance will be drawn in the first half of 2023.
Again, all of which has been hedged at an effective rate of four 5%.
With the term loan fully drawn we expect to remain a conservative debt to enterprise value ratios.
Further we effectively have no debt outstanding that matures before 2027.
With our current credit facilities cash position income from the portfolio and capital recycling that Michael discussed, we are well positioned to complete our pipeline and pursue select opportunities.
Our new term loan includes an accordion feature that could grow this bank facility from its current $250 million up to $500 million.
We also will continue to look for diverse and attractive sources of capital to fund future growth.
But importantly, we are well capitalized to fund our current activities, which will add another one 2 million square feet or nearly 20% of the portfolio in 2023.
Okay.
Lastly in this quarter's release, we provided some additional earnings guidance information for the fourth quarter.
We estimate NOI from continuing ops of between $10 million and $10 3 million for the fourth quarter.
Results in our full year NOI estimate of $38 1 million to $38 4 million.
This is up from our prior guidance of $36 5 million to 38.0 million last quarter.
This forecast reflects our expectation that no new additions to our portfolio and no significant new lease commencements will occur in the fourth quarter.
We estimate G&A for the fourth quarter, excluding the mark to market charge for the nonqualified deferred comp plan to be three 1% to $3 3 million.
This will bring the full year G&A forecast to between 11, three and $11 5 million, which is down slightly from last quarter's full year guidance.
The full year forecast includes the benefit.
Year to date from the noncash mark to market of our nonqualified deferred compensation plan, which overall has lower G&A for 2022.
Without this benefit our G&A for the nine month period would have been about $9 1 million as opposed to $8 2 million.
As a reminder, we typically typically forecast this amount of zero and exclude the amount from our core <unk> calculation.
Finally, we estimate interest expense to be one seven to $1 8 million for the fourth quarter. This interest expense reflects the benefit of the paydown from the construction loan in August .
And is partially offset by the scheduled draw on our term loan a little later this quarter.
<unk> also assumes a lower level of capitalized interest in the fourth quarter as compared to a year to date level due to the completion of several projects in the third quarter.
Michael that's all I have with that.
Thanks, John .
Thank all of you today on today all of you here today on today's call and all of our stockholders for their continued support.
Our business is performing well and we are optimistic that despite the current macroeconomic and capital market environments that we are well positioned to grow our cash flow net asset value.
Importantly shareholder value over the long term.
That concludes our prepared remarks, and I'll turn it back over to the operator for your questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question is from Dave Rodgers with Baird. Please go ahead.
Yes, good morning, everybody Michael I wanted to go back to the acquisitions that you've got under contract that forward purchases that you have done a while ago, maybe give us your comfort level with those today I know that you quote a five 1% to 55 average underwritten yield I'm wondering what that might be on today's rents.
But also kind of your comfort with stepping more into land acquisitions or forward purchases, just kind of given where the capital markets are.
Yeah, Thanks, Dave for the question.
I think as we disclose the underwritten yields kind of in that low to mid five range at 95% occupancy and thats using our estimate of of rents as of today Dawn upon delivery. So we're just using our best guess of market rents I mean, a couple of those.
I expect it to deliver in the first quarter a couple of them are a little bit later towards the second or third quarter.
Yeah, we're seeing really good activity on the on the two obviously the Nashville one is.
The bulk of it is leased the one in Charleston, we're seeing very good tenant activity.
At rates right in line with where you.
Our most recent forecasts are or better.
So we still think really like all of those projects. We think there's really well located really good quality buildings are really perfect for the markets. They are in so we're excited to have those deliver.
I think we'll be really successful leasing them up.
And generating good returns.
Well in terms of future forward.
They still are out there I think today, we're probably a little more focus on trying to find land land opportunities ourselves.
Yes, I think as I mentioned earlier in the call.
We're starting to see a number of deals sort of fall apart that others have.
Have have land sites under control I think that's a mixture of capital availability, both on the equity and debt side cost of debt.
And probably some more uncertainty as to where exit cap rates are for merchant builders.
But we think that creates really good opportunity on land land sellers typically are a little bit sticky on price.
Principally because often they don't really have any debt.
It may be farmland they've owned forever.
But that said there are some motivated sellers out there there are people who had land under agreement.
That's getting dropped and if we can find the right parcels.
We think that's a good opportunity we think.
It takes a while to entitle it took us some time to work through the land evaluate the costs.
You make a good judgment going forward. So we're focused on land do you have the right forward opportunity came along we certainly still look at that and we continue to look at acquisitions and again, we don't typically do long term single net stabilized.
Everything almost falls into the value add bucket and we think we will increasingly see some opportunities there.
Neither is that needs to get refinanced as people adjust to the new normal in the capital markets or what have you. So.
Kind of looking at looking at everything, but that's that's how we think about what we have today and where we're looking.
Yeah.
I appreciate all that color Michael and then maybe just one more for me on the leasing front, obviously, maybe it focuses on the same kind of bucket of assets under acquisition are under contract but.
Are you seeing any slowdown in terms of the conversations that you're having with tenants taking longer fewer tenants kind of coming to the assets putting things on hold is that part of what's happening or is it you just have the time to complete just a little more conversations or color on the conversations around leasing would be helpful as well.
Sure.
And then as I've always said our portfolio is growing but it's still not huge and we certainly other than typically on the new <unk>.
Properties, we've either developed or are buying we're not.
We're not leasing doing 10 leases a month, but we are leasing properties and obviously, we're speaking to brokers and all the markets. We're in weekly if not more and give me a sense of the environment. So overall activity still remains really good.
The projects, we're actively leasing such as Florida, Nashville, Charleston in particular.
I would say tender activity is really good in terms of tenant decision making.
I think it's always been a mixed bag typically when you deal with big multinationals, they're slower they just have many levels of approval to go through.
And that's still consistent.
Is there a little bit less urgency maybe in.
Some part because five months ago, when they were looking for space or eight months ago.
If they didn't a greater weight within the first week. It was gone or the price went up 50 cents per foot and it was leased ahead of them.
Maybe but I don't.
Honestly in Florida, we're seeing tenants moved very quickly considering they realize they need the space.
Additionally, I think tenants are realized it just takes longer and longer to get their permits and approvals to build out their space.
Some are eager to sign space up earlier, when they need it. So I'd say, it's a mixed bag I don't think I can say, we've really seen from our view a real trend that things have slowed in any material way or companies have become a lot more cautious or a lot slower.
Yes, we may have a company that pushes off their plan for six months, but then two more.
Proposals come in from other companies that need the space immediately so.
Thanks, Dave.
The next question is from Christy Mcelroy with Citi. Please go ahead.
To kind of take the development risk on on yourself versus buying out a partner.
We have a lot of experience doing it it's something more.
So we feel very comfortable having developed through several cycles, whether it's 2000 2008.
I think we've mentioned today that the three recent deliveries kind of are at a seven or seven plus overall yield.
But if there isn't rent growth, we would expect that that's because demand has cooled off significantly and if thats. The case, we sort of view there is some likely the fact that that construction costs are going to come down right. There is a supply and demand element to cost of construction as well as input costs and an example of that is structural steel structural steel is.
In the last year its down call it $14 today, but that was purely supply and demand driven if demand cools off that that could come down and it could double and go down to <unk>, but that's still a pretty material cost savings. So we think there's some moving parts there that give us some room on the development side.
On the land so we try to get returns on it as quickly as we can that said, we do like that land gives us some flexibility that if we find a great land site entitled late in a year from now the market conditions aren't great. It's not a huge amount of capital tied up in something that isn't generating income.
And we think in todays market, having really good land sites and I mentioned potentially if the market is getting more conducive to finding that in the near term is really valuable right in certain markets. It's just very very difficult to find well located land sites.
Recycling, our noncore land holdings in Connecticut, which effectively are zero income sitting kind of in our balance sheet at a very low basis and putting that into other land for development in markets. We plan to develop is a good use of recycling those proceeds for.
Also cognizant of trying to build up our cash flow.
You guys have the $216 million of liquidity of the other $35 million of assets that are under contract and will eventually be sold so you're somewhere in.
The range of $250 million of liquidity.
So I think as we look at leverage we really think about.
Where are the peer ranges and we don't want to be too far out of line on the pier and the peer group, but we still see incremental capacity there for us.
Some additional leverage as the capital recycling.
And we will see what other opportunities present themselves as John alluded to in his remarks I think our goal is to keep the business somewhat simple from a balance sheet point of view, but if we get down the road.
We don't think equity capitals, and appealing Avenue somewhere down the road, we want to be mindful of our leverage we've put our capital recycling to use we'll have to think about potential other structures, whether it's a JV or something else, but today, we feel really good about our balance sheet.
But we're focused on being pretty reasonable here.
Okay, and then the accordion feature on the term loan what would be the pricing. If you guys were to kind of exercise the incremental $250 million.
The pricing would be whatever pricing would be prevalent at the time.
But we didn't we didn't set pricing.
Yes.
At any given moment, a particular bank might not want to do a term loan.
Alright, great. Thank you.
Your next question is from Tom Catherwood with <unk>. Please go ahead.
For pursuing opportunistic investments versus kind of funding developments on owned land right now.
We think we have capacity to do some of each again on development.
<unk> discussed between land and future development. So it's really not significant capital for that other than finishing the one deal in our pipeline for quite a while so in some ways.
Inside obviously, if we're looking at buildings or acquisitions in the market today, we obviously need that capital much more immediately.
So we think theres capacity for both again, the land and development is going to be a much more longer tailed.
But we think we have capacity to add incremental acquisitions today, if we find the right opportunities and again, it's kind of an interesting market theres very little trading.
From our point our point of view most of the things that we've seen that have closed.
I appreciate that Michael and then kind of sticking with that cap rate comment that you made obviously youre in a select targeted set of markets, but with.
Yes, I think okay.
To that comment, it's really hard to pick a number because it's sort of there's so few deals. They just feel almost your cherry picking.
I can give you. An example in Charlotte there was a nice portfolio located near the airport.
We've heard that's been awarded went through kind of a multiple round process and so this is real time last month, and we've heard it's kind of a 4243 cap rate.
Which I think feels pretty low I'd say at peak of the market, maybe I would have guessed that would be a kind of a three eight.
But that's where that stated we know theres been a closed deal in Savannah with not a lot of mark to market in five years of lease term that traded at a four and a quarter again, it's not a market where and we've mentioned the past we look at it we track it a little bit.
That feels pretty low there is a deal kind of in the <unk>.
<unk> County, which is kind of the western Submarket of the Lehigh Valley, we feel the core the two eastern counties, but this is further west. So we think it's not as good a location typically is treated wide of the Lehigh Valley and that closed I think two months ago at four in a quarter.
So you know, it's really hard to say exactly how much things have moved.
Some things that are going to have a very very long 15, or 20 year single tenant net lease with not a lot of bumps that's going to be typically wider probably 100 to 125 basis points wider. These other deals are anywhere from call. It 25 to 75, but it's really hard to put a pin on it.
Really really appreciate that color Michael Thank you and then last one for me John .
It seems like some of that boost was from early development stabilization in the quarter, but kind of by our back of the envelope math. It still seems like there's two cents a share or so.
Kind of higher run rate.
Did your <unk> expectations.
Is that Directionally, correct, and if so kind of what's driving this higher base run rate.
That's true, there's a slightly higher base run rate.
As Michael had mentioned too.
And investment grade retailer, but yes, you are likely seeing a run rate.
Got it that's it for me thanks, everyone.
The next question is from Mitch Germain with JMP Securities. Please go ahead.
Thank you very much.
So the Paragon asset did that I know that that's leases that commenced as well at this point.
Yes that lease has commenced.
Fast moving.
Okay got you and I am just curious.
I think John's commentary you talked about same store.
Potentially some.
Leasing that you guys have to do next year I'm, just trying to understand the cadence of.
The delivery of the two Orlando properties, not being fully occupied but I'm just trying to understand kind of.
Cadence of occupancy as we as we kind of move forward over the next couple of quarters.
Yes, I'll start and John or actually can chime in I think yes, I think in my remarks, I mentioned, we have the one tenant.
Tripled in size in our Connecticut Park.
They are leaving and probably earlier than we expected their existing facility I think the good news is we sort of delivered the new facility a little earlier.
And we had sort of <unk>.
Expected and they were able to get operational quicker than they had thought so theyre moving a little bit earlier out of the other facility.
So I think we're saying that.
That likely probably doesn't get back filled in the fourth quarter.
Now there's not a whole lot that comes up in 2020.
Three but even just having one vacancy that's less than 1% of our portfolio is still kind of impact same property NOI when we weren't 100% in the same property pool I think for the last five quarters or four or five quarters. So I think that theres not a lot of vacancy coming up but we think theres kind of this one that we obviously youre going to work to lease and feel good about.
The opportunities there.
A couple of small leases coming up in 2023.
Okay.
No I think that covers it Michael.
Great I appreciate it and so I'm trying to understand Michael about your.
Willingness to develop in this market.
We've got a couple that delivered we have one underway we have some land.
That's being Kraft or secured so is the goal as that land becomes available to commence or are you likely to begin some pre leasing efforts before you put.
Any real capital behind the development here.
Yeah, I think as we disclosed we have one project under development in a couple of the forward is coming next year, and we feel great about that portfolio.
On the other land sites, we've disclosed and land sites, we're looking at today in the market.
Our view is we'll just going to evaluate market conditions and decide if we move forward or not.
Yes.
One other landside, we currently own today that that's entitled is also in the Lehigh Valley I think our view is let's let's get the one building we have.
Further along and then consider that other building and the other thing with that land site is we're looking to see if there is.
Atlanta, that's adjacent to it that we may be able to purchase and combined to make the site plan grow that bill has been a little and changed the site plan. So we're sort of working on that as well. So every every land site. We have that's either close to entitlements or entitle, we're going to market as a pre lease or build to suit for sure. If we haven't started.
Spec, but I think on spec.
<unk>.
And we think land continues to be as I mentioned earlier really hard to find good land sites.
When something is built on that land site. It's a building in buildings kind of trade and it just becomes really a price question, but there's there's built into every market. You can you can buy a building and you just have to pay the price there just isn't going to be land and all the markets. We're looking at is located in the locations. We like if we can find a really good strategic land site that we think is going to generate.
We're sort of motivated to try to figure out a way assuming they've returns pencil out to be certainly better than if we acquired something.
We're going to look to do that.
Great last one from me and I have to apologize I had some ic's used.
The asset sales $35 million I think pregnant.
I asked about it.
How much of that is.
Land versus occupied properties, just trying to understand.
So it's it's $11 million of that is the office flex portfolio, that's in our discontinued operations. So.
And our NOI numbers and our core <unk> numbers.
Stripped out already and it's discontinued up on our balance sheet, So theres really no.
And the metrics sort of.
We generally sort of report and talk to that income is not in any of that.
And that's $11 million, the other 25 million or three separate land parcels, none of which produce any income they're all effectively unimproved.
Land.
Yeah.
Perfect. Thanks Mitch.
With no more questions. This concludes Indus Realty Trust's 2022 third quarter earnings call. Thank you for joining us and enjoy your week you may now disconnect.
Okay.
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