Q4 2024 Plymouth Industrial REIT Inc Earnings Call
Good morning, and welcome to the Plymouth Industrial REIT Conference call to review the company's results for the fourth quarter of 2020 for all participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the Starkey followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.
I would now like to turn the conference over to John Wilfong of Investor Relations. Please go ahead.
John Wilfong: Thank you good morning, welcome to the Plymouth Industrial REIT Conference call to review the company's results for the fourth quarter of 'twenty 'twenty four yesterday afternoon, we issued our earnings release and posted a copy of our prepared commentary and the supplemental deck on the quarterly results section of our Investor Relations Page. In addition to these earning.
John Wilfong: Documents a copy of our 10-K when filed can be found on the SEC filings page of the IR site.
John Wilfong: Our supplemental deck includes our full year 'twenty 25 guidance assumptions detailed information on our operations portfolio on balance sheet and definitions of non-GAAP measures and reconciliations to the most comparable GAAP measures.
John Wilfong: Ill referenced this information in our remarks with me today is Jeff Witherell, Chairman and Chief Executive Officer.
Salvino: Salvino, President and Chief Financial Officer, Jim Connolly, Executive Vice President of asset management, and Anne Hayward General Counsel.
Salvino: I would like to point out everyone to our forward booking statement on page one of our supplemental presentation and encourage you to read them carefully.
Speaker Change: Applied to statements made in this call our press release, our prepared commentary and in our supplemental financial information and now I would like to turn the call over to Jeff.
Jeff Witherell: Thanks, John Good morning, and thank you for joining us today.
Speaker Change: A few highlights first and then we'll go to Q&A.
Speaker Change: We've made some big announcements this past few months relating to securing capital that can propel our accretive growth.
Speaker Change: In late August we announced the strategic transaction with sixth Street.
Speaker Change: I view this as transformative for us in several respects.
Most notably we put a valuation marker on our largest portfolio with the Chicago recap JV and source of capital for up to 500 million in acquisitions.
Speaker Change: We secured a tremendous partner and sixth Street, who has continued to build out their real estate platform.
Speaker Change: We also significantly enhance our borrowing capacity with the refinancing and upsizing of our unsecured credit facilities to $1.5 billion.
Speaker Change: With this increase in the revolver and recasting one of the term loans, we've extended our maturities and enhanced the ability to pursue other unsecured debt.
Speaker Change: Yeah.
Speaker Change: The combination of sixth streets investment and expanded borrowing capacity fully addresses our current capital needs.
Speaker Change: Our focus for 2025 will be on leasing opportunities and capital deployment, both of which will be key themes in the coming quarters.
Speaker Change: Our earnings release and prepared commentary also discussed leasing and deployment as well as some tenant challenges we faced in the prior quarter that we didn't anticipate however, we are confident in our ability to navigate these challenges and lease the remaining spaces.
Speaker Change: Yeah.
Speaker Change: Market conditions remain favorable, particularly in buildings under 250000 square feet, where over 95% of our leases and 67% of our wholly owned portfolio was rentable square footage as concentrated as.
Speaker Change: As we address our remaining lease expirations, we expect a tightening supply in this segment to support our mark to market leasing effort.
Speaker Change: Historically, we've maintained high occupancy across our portfolio and we anticipate strong momentum as we take care of the balance of 2025 explorations.
Speaker Change: We've also made solid progress on capital deployment, the Cincinnati acquisitions totaled approximately 762000 square feet for $61.3 million and we continue to unlock value for recycling and value added activities in our newly acquired Memphis portfolio.
Speaker Change: Our pipeline now exceeds 11 million square feet and $1 billion in potential acquisitions with nearly all of these opportunities located in our existing markets.
Speaker Change: No these markets well and with the capital now in place we are strategically positioned to expand our scale.
Speaker Change: I look forward to providing further updates in the coming months as we execute on our leasing and capital deployment strategies.
Speaker Change: I would now like to turn it over to the operator for questions.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys if at anytime. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And the first question is from Eric Borden from BMO capital markets. Please go ahead.
Eric Borden: Good morning, everyone.
Eric Borden: Just on that last comment around the $1 billion potential acquisitions it sounds like.
Eric Borden: Based on your guidance up to about half of that could be on balance sheet. So could you talk about the other $500 million. Joe you know whether that would be a potential balance sheet acquisition or would that be under the JV.
Eric Borden: Yeah.
Eric Borden: Hey, Eric Thanks for the question.
That's just that's just our total pipeline right. So how are we going to able to execute all billion dollar is probably not.
I mean, we're focused on on balance sheet I will say that there was $150 million portfolio within that $1 billion that would most likely be JV material.
Eric Borden: So we're working it where we are in the bid process on it right now, we'll see how that develops but the majority is on the on balance sheet and majority of it is in two or three of our top markets.
Eric Borden: Yeah.
Eric Borden: Okay. That's helpful and then.
Eric Borden: With the acquisitions in guidance you know how are you thinking about the timing of acquisitions and the cap the initial cap rates on those.
Eric Borden: At the mid point, Eric we assume $360 million of acquisitions.
Eric Borden: Of which about $70 million is already banked with the remainder to be deployed somewhat evenly over the coming quarters.
Eric Borden: In terms of.
Eric Borden: But going in yield I I would.
Eric Borden: You know strike that at about six and three quarters, it could tighten up a bit.
Eric Borden: As we continue to navigate the bid process, but I think those are good parameters in terms of how to view our deployment and our initial yields.
Speaker Change: I appreciate that and then one more if I may just on the guidance bridge on page 10 of the prepared remarks, you know I. Appreciate all the detailed color there, but I was just hoping that you could talk about the puts and takes to get to.
Speaker Change: The low end of your guidance and to reach the high end of your guidance.
Speaker Change: Well listen.
Speaker Change: At the midpoint.
Speaker Change: We have reset the same store portfolio. It's now 168 buildings encompassing about $26 million.
Speaker Change: Square feet, which now represents I think 89% of the total in place portfolio as of as of February.
Speaker Change: If we think about the same store a driver we do have to look back to Q4 2020 for occupancy, which I believe stood at about 92% for this particular subset of the portfolio. So at the midpoint, we're assuming about 380 bps of occupancy improvement, which.
Speaker Change: Equates to lease up of just over 1 million square feet.
Speaker Change: And a lot of that is.
Speaker Change: Comprised of the three buildings that we've been talking a lot about the two in Cleveland and the one in St. Louis and so if you think beyond the mid point.
Speaker Change: To the extent that we have accelerated deployment or some surprises to the upside on some of the transitory vacancy we can you know.
Speaker Change: Realize a result better than mid point to the extent that we.
Speaker Change: We don't deploy as as anticipated there could be a little drag and then to the extent that some of the leasing is a bit more protracted you'll have.
Speaker Change: A bit of a muting with respect to the outcome.
Speaker Change: Alright, well, thank you very much I'll leave it there.
Speaker Change: Thanks, Andrew.
Speaker Change: And the next question is from Todd Thomas from Keybanc Capital markets. Please go ahead.
Todd Thomas: Hi, Thanks, good morning.
Todd Thomas: I just wanted to follow up on on that a little bit as it pertains to sort of the guidance and in some of the.
Todd Thomas: The leasing and I wanted to ask about the timing specifically of the 740000 square feet of leases signed.
Todd Thomas: Which includes 600000 of the former Fedex logistics site in St. Louis that so that seven cents per share impact on the full year I forgot what's the timing like for that what's commenced versus you know what is still.
Todd Thomas: To commence them going forward and can you talk a little bit about the leasing environment as it pertains to the remaining vacancies whether and whether there is any speculative leasing for vacant space included in the guidance.
Todd Thomas: Yeah.
Todd Thomas: Okay.
Todd Thomas: Yeah.
Todd Thomas: All of that carryover.
I can space that has been leased up is all commenced already so all 700000.
Todd Thomas: Already commenced.
Todd Thomas: As far as our projections on leasing we are focused on the vacancy that came in through the year, you'll see that vacancy has gone up from.
Todd Thomas: $92 five I mean occupancy has gone up from $92 five up to $94 three already this year.
Todd Thomas: It shows the space that's been leased.
Todd Thomas: We do have a lot of prospects for.
Todd Thomas: Our existing.
Speaker Change: Okay I can see.
Todd Thomas: It's been a big pick up.
Todd Thomas: And leasing activity.
Todd Thomas: Towards the end of January and February.
Todd Thomas: So we expect including big lease break bulk leasing.
Todd Thomas: Hum.
Todd Thomas: Base as well.
Todd Thomas: Okay that does is there any additional or any speculative leasing.
Todd Thomas: For vacant space included in the guidance at the high end of the range.
Todd Thomas: So of the 1 million that I, just spoke up to Jim's point.
Todd Thomas: About 700000 has already addressed so there's there's the balance of that that is speculative.
Todd Thomas: Okay.
Todd Thomas: And then.
Todd Thomas: Can you provide a little bit more detail on the remaining 25 explorations I appreciate some of the the notes around that you know including that the.
Todd Thomas: Big box, the 625000 and in St. Louis that it sounds like you expect that tenant to renew but can you provide a little bit more detail there and also discuss that the Columbus downsize or vacate that you noted the timeline in and sort of what's embedded around those assumptions within the guidance.
Todd Thomas: Sure.
Todd Thomas: A little bit of the overall market.
Todd Thomas: Analysis for us so basically in our markets as shown in our prepared comments.
Todd Thomas: No.
Todd Thomas: Rental growth rate is normalized between three and 4%.
Todd Thomas: But we still expect to see.
Todd Thomas: Mid to low 20%.
Todd Thomas: Growth.
Todd Thomas: Uh huh.
Todd Thomas: Rent spreads on small to mid sized space anything under.
Todd Thomas: 50000 square feet and on a larger spaces.
Todd Thomas: We're kind of getting.
Todd Thomas: Tenants are looking to take space as is to keep the rents down and.
Todd Thomas: So no ti.
Todd Thomas: So from a net effect of a point.
Todd Thomas: They are still pretty high now, let's say St. Louis.
Todd Thomas: That lease.
Todd Thomas: It's fairly short term, but the tenant has expressed.
Todd Thomas: Interest in expanding in the rest of the space and and continuing that lease on afterwards as well as exploring vacancy in our other locations as well.
Todd Thomas: And Columbus.
Todd Thomas: Yeah OTW is is planning on leaving they have expressed.
Todd Thomas: Some interest in potentially staying on it.
Todd Thomas: Contract extension and part of the building we have two prospects that would fill the entire building that were working with at the moment and they would.
Todd Thomas: It would be immediately after OTW left so that we can see.
Todd Thomas: Little to minimal downtime.
Todd Thomas: Okay.
Todd Thomas: Alright, thank you.
Speaker Change: Thanks, Todd and the next question will be from Rich Anderson from Wedbush. Please go ahead, hi, thanks, good morning.
Speaker Change: So on the St. Louis lease I guess I want to understand why you're optimistic if it's going from 600000 square feet to $4 50. The following year, yeah, Yeah, I'm I'm I'm I'm wondering why are there. The the tenant is sort of got a funny cadence too.
Speaker Change: But in terms of the space, it's taking even though you you have a feeling that it's going to sort of commit longer term could you can you kind of give the backstory there a little bit.
Speaker Change: On that on that transaction.
Speaker Change: Yes, so that space.
Speaker Change: At the current.
Speaker Change: Configuration that lease is based off of I think like one contract. This this is a large international distributor.
Speaker Change: Headquartered in Europe and they.
Speaker Change: They told us when they as soon as they sign the lease.
Speaker Change: We usually.
Speaker Change: Stay on like we usually we plan on finding additional contracts and move them into this building.
Speaker Change: Feedback so far from the tenant has been.
Speaker Change: Really like the building and.
Speaker Change: They are looking at looking for more space to come in.
Speaker Change: Okay.
Speaker Change: Turning to Cleveland I don't know if I. If you said this I apologize, but what's the expectation to putting those situations to bed in and if you can give the also the back story because I thought you know I'm, a quarter or two or a quarter ago, you kind of thought it would be a faster turnaround than it then it's turning out to be.
Speaker Change: Can you sort of give me some color on that as well thanks.
Speaker Change: Yes.
Speaker Change: We had.
Speaker Change: One potential candidates lined up to take.
Speaker Change: One of the buildings right away, but we.
Speaker Change: Scott.
Speaker Change: Slowed down a little bit but.
Speaker Change: Cleveland is a very tight market I mean, the vacancy rate is 3% or less.
Speaker Change: And there's really nothing in the market over a 100000 square feet. So we feel really good about leasing this up we've already leased up 120000 of the vacancy.
Speaker Change: We expect over the next couple of months to have deals inked on the balance.
Speaker Change: And then lastly for me I know the guidance.
Speaker Change: Has you at $360 million in terms of acquisitions.
Speaker Change: Mid point.
Speaker Change: With that I I I'm trying to do the math, but would that sort of fully address the redeployment of the entire $500 million from the 60 Street transaction or would there still be more.
Speaker Change: Meat on the bone to tourists.
Speaker Change: Rich it gets us close because remember we deployed 100, when we acquired the Memphis portfolio.
Speaker Change:
Speaker Change: Mid year of 2024.
Speaker Change: Okay sounds good thanks, very much thanks rich.
Speaker Change: The next question is from Nick Thielman from Baird. Please go ahead.
Nick Thielman: Hey, Good morning, guys, maybe just point of clarification, the $2 2 million square feet of availability in the core portfolio that includes the St. Louis and Cleveland around like.
Nick Thielman: Over half of that space, So it's kind of spoken for.
Nick Thielman: Spoken for but in that bucket and then Anthony if you could just elaborate on changes to the same store pool. It sounds like that St. Louis asset that wasn't format Fedex space is moving into the pool. Just wondering if <unk>. If any of those are moved in or out of the cool off a 25%.
Nick Thielman: Right so yeah, the additional space.
Nick Thielman: It has been taken out that space. That's been leased up is taken off of the available pool.
Nick Thielman: So just to note at the end of the year and this was.
Nick Thielman: Unusual for us.
Nick Thielman: Only.
Nick Thielman: 71 for the <unk>.
Nick Thielman: For explorations were addressed but that numbers are already up to 80 over 80 and.
Nick Thielman: If you include the transactions that occurred between the end of the year end in February 24. So.
Nick Thielman: We expect that to be.
Nick Thielman: 90 <unk>.
Nick Thielman: A month or two.
Nick Thielman: Yeah.
Nick Thielman: With respect to same store Nick.
Nick Thielman: The composition has changed as we as we said and provided for them and the materials to your point Fedex is in the same store pool.
Nick Thielman: As as is Geotus OTW was not.
Nick Thielman: And the other kind of key driver in that pause the the reintroduction of the ladder building to 142000 square foot building in St. Louis that was previously in the repositioning pool. So that has come into the same store portfolio in 2025, and I believe thats contributing.
Nick Thielman: Approximately seven bps to the year over year growth.
Speaker Change: That's helpful. Maybe for Jeff I mean, I guess, what do you think the disconnect is between your guys' view of the <unk> transaction and kind of the market's view and as the board you guys, obviously announced the buyback, but I guess, how patient are you guys going to be if the stock continues to kind of linger at these levels like are you guys.
Speaker Change: Pursue alternative strategies.
Speaker Change: Just kind of your views there.
Speaker Change: I mean, yes, I mean, nobody likes complication I think thats the biggest feedback we have.
Speaker Change: I think the biggest thing that we look at is.
Speaker Change: Our equity in 'twenty, three and 'twenty four I mean, the street, telling us we're not going to give you any more equity because they're not pricing your stock correctly. So.
Speaker Change:
Speaker Change: We did what we thought was in the best interest of shareholders and that is a transformative transaction plenty of capital and put it we can get into all the details on Chicago, which we which we've talked about AD nauseum of why that was a good move to take that entire 6 million square feet and put it into a JV.
Speaker Change: I mean, we've been patient for seven years, Nick we continue to do our blocking and tackling.
Speaker Change: I guess I guess, we look at where our stock price is versus where we believe the value where our NAV is and I think I think your NAV is around.
Speaker Change: And then you know.
Speaker Change: Mid to high twenties.
Speaker Change: And we're in the market everyday bidding on per hour type property. So property in Columbus, We're bidding right now on a building across the street from our property. So it's identical.
Speaker Change: And Theres 10 bidders on it and I can tell you, we're not going to be the winning better on it so.
Speaker Change: So if somebody is using a cap rate value plummet, and it's anything north of six and three quarters, they're totally off the mark.
Speaker Change: We're getting outbid and all of our markets.
Speaker Change: 10, 11, 12 bid so what we need to do is we need to find a good property the shorter walls like we did in Cincinnati.
Speaker Change: And we've got some deals that are teed up that are going to work out really well for <unk>.
Speaker Change: So we have a lot of patients.
Speaker Change: And I think the sixth Street deal is going to work out fantastic.
Speaker Change: I think everything is priced correctly for us so we're going to get this money deployed.
Speaker Change: Did put a buyback and as you mentioned I'm glad you brought that up.
Speaker Change: We will see how the stock performs over the next few months.
Speaker Change: But I think if you look at where our stock price is and what we can buy it back at.
Speaker Change: It's kind of a no brainer.
Speaker Change: For us to do that but that's going to be based on whether we can put the capital to work in properties that we believe in.
Speaker Change: So right now that's how pipeline looks pipeline looks good so we feel good about that but it's just another option for us.
Speaker Change: That's helpful and just last one Anthony with the new title I'm, Jeff you could speak to this as well is there any additional areas of focus youre kind of looking on as president or areas that are different than your current responsibilities as CFO.
Speaker Change: Yeah.
Speaker Change: Oh <unk>.
Speaker Change: To that no its really just.
Speaker Change: I mean, Anthony has expertise obviously as CFO is proven out over the last couple of years, but beyond that he has got a handle on acquisitions.
Speaker Change:
Speaker Change: Processes that go into making the company better overall, so I think I think it's a great move for us.
Speaker Change: It's a great move for him.
Speaker Change: Helpful. That's it for me thanks, guys. Thank you.
Speaker Change: The next question is from Mitch Germain from citizens JMP. Please go ahead.
Speaker Change: Thanks.
Speaker Change: Jeff since you were just mentioning the sixth Street.
Speaker Change: Relationship I'm curious.
Speaker Change: How engaged are they with you to grow.
Speaker Change: Their relationship with you guys.
Mitch: Hey, Mitch.
Speaker Change: Yes, so so.
Speaker Change: Across our platform.
Speaker Change: Different levels or engage with sixth street.
Speaker Change: Somewhat on a daily basis.
Speaker Change: I am engaged with.
Speaker Change: With their lead on this.
Speaker Change: And we talk regularly so.
Speaker Change: This was this is supposed to be transformative, it's going to take time.
Speaker Change: As you know we've done several JV that it worked out really well for <unk>.
Speaker Change: And so I think we're pretty smart about that.
Speaker Change: And we are looking at some JV with them.
Speaker Change: And I think that's probably.
Speaker Change: The real basis of the relationship. This is the sixth street deal as a JV.
Speaker Change: They are they are very focused on us growing.
Speaker Change: The REIT balance sheet, because theyre going to win on their warrant position, which is why we did the deal. So if the stock moves.
Speaker Change: As they anticipate and we anticipate they'll make some money and we will do well as well so.
Speaker Change: Outside of that I can't speculate on it there a growing platform they have announced some core money 17 billion of core money just came into sixth Street.
Speaker Change: So we're talking to them about industrial on a daily basis.
Speaker Change: And I think that's going to prove out really well for the shareholders long term.
Speaker Change: Okay, that's super helpful.
Speaker Change: I'm curious about some of the pricing trends.
Speaker Change: In the market today.
Speaker Change: I think you talked about how cap rates, six and three quarters or maybe even lower obviously Memphis was acquired and one of the more.
Speaker Change: More recent deals were a little bit higher so I mean is it safe to say that we're seeing contraction across the board.
Speaker Change: I think thats correct as we sit here today, we are seeing.
Speaker Change: We're still seeing negative leverage in the marketplace, which again baffled us I've never been a negative leverage person and how that works.
Speaker Change: But we're seeing we're seeing a lot of capital into industrial we're starting to see it in our markets.
Speaker Change: That being said.
Speaker Change: And I've said this before about about the Memphis transaction.
Speaker Change: There are a lot of moving parts on Memphis, and there was a.
Speaker Change: $100 million portfolio 80, plus tenants.
Speaker Change: You have an office building that needed to be sold the small one we have.
Speaker Change: Call Center that we are.
Speaker Change: Our construction team is in the process of converting back to industrial as we speak and then there is a.
Speaker Change: A vacant parcel of land that we can build a 120000 square feet, let's say on so all of those are.
Speaker Change: Components that need people that know what they're doing we can do all that in house, which is what we're doing and we think thats going to add a lot of value to the Memphis portfolio. So that's why there weren't as many bidders and Thats why if you have an office in Memphis with people on the ground.
Speaker Change: You can attack a portfolio like that and get those changes accomplished.
Speaker Change: Accretively and I think that's why we were the winning bidder on it so what I don't want people to take away is aided that.
Memphis is an eight cap market because that's not the case there is a special situation and Cincinnati is the same thing we have work to do in Cincinnati <unk> got some small tenants were going to renew them. We'll move some of them out will expand tenants again, we have a eight person office in Ohio, So for us to do that it doesn't cost us much time and money to do.
Speaker Change: It like we're equipped to do it others are so I think that's where you get into it and as I mentioned in Columbus.
Speaker Change: There is a building with a one on one asset deal.
Speaker Change: Three tenants, but theres 10 bidders on it and the pricing the pricing is going to get out of whack on that.
Speaker Change: So we have to continue to fight for deal.
Speaker Change:
Speaker Change: Which which are good for <unk>.
Speaker Change: And we will do it but it is.
Speaker Change: I don't think anybody is going to sit here and think that.
Speaker Change: Cap rates are going to continue to rise in the industrial space.
Speaker Change: So that's helpful.
Speaker Change: It's tough but.
Speaker Change: We proved we proven that we can buy them, we will continue to.
Speaker Change: Execute.
Speaker Change: Thank you for that and one more for me if I might.
Speaker Change: Just there's clearly situations that on the leasing front that you guys have discussed.
Speaker Change: And it just seems based on that commentary that.
Speaker Change: There is a preference to do more of these kind of strategic or co value enhancing value add type of investments. So talk about maybe Jeff. If you can just talk about factoring in.
Speaker Change: The.
Speaker Change: Weighing the existing situations versus doing more value add in.
Speaker Change: You guys have the capabilities to handle all of that.
Speaker Change: All at once.
Speaker Change: Yes the.
Speaker Change: The acquisition, we didn't win.
Speaker Change: <unk> put a lot of information out on it yet, but we just closed on a deal in Cincinnati.
Speaker Change: This year.
Speaker Change: Hum.
Speaker Change: Kind of a single asset deal 260000 square feet that doesn't need a lot of value add component work to it but.
Speaker Change: The portfolio that we bought.
Speaker Change: For.
Speaker Change: For $20 million and the other balance of that is going to closure in the next couple of weeks. There's a lot of small tenants and I said, we will do the Plymouth work on that.
Speaker Change: So we're built for it.
Speaker Change: We should do more value add.
Speaker Change: We are real estate people, we have been for 30 years, and we understand how to buy real estate correctly at the right basis, we're not afraid of short wallets.
Speaker Change: I don't think we missed too many things when it comes to buying a piece of real estate. So we should be doing more of it you got to balance that with <unk>.
Speaker Change: We're in the cash flow growth business as a public REIT, but it's a real is a real estate group, who should be buying more value add.
Speaker Change: So thats the balance that we tried that we try to look at on each acquisition.
Speaker Change: You know.
Speaker Change: It is not an easy answer for it we should be doing more value add that's how you create value in real estate.
Speaker Change: We've said 100 times were not a net lease REIT.
Speaker Change: But I think a lot of times, we're looked at as you've just got a smooth out your <unk>.
Speaker Change: So theres a balance there.
Speaker Change: Thank you.
Speaker Change: Mitch.
Speaker Change: And the next question is from Brendan Lynch from Barclays. Please go ahead.
Brendan Lynch: Great. Thanks for taking my questions.
Speaker Change: Jeff You mentioned that there is a lot of capital coming into your markets is that specifically for acquisitions or are you also seeing an increase in development spending.
Brendan Lynch: Okay.
Brendan Lynch: No we're seeing it mostly Brendan just in acquisitions.
Brendan Lynch: It's coming from all sides.
Brendan Lynch: And you said there'll be 10, bidders and it's going to it's going to.
Brendan Lynch: Run the gamut of who those who those buyers are.
Brendan Lynch: I mean, there's still a lot of money out there I think they would they would get into development, but I think that thats been.
Brendan Lynch: We're starting to see a lot of absorption I mean, I think if you look at a market like Cleveland that we continue to focus on there is a I think.
Brendan Lynch: It's about a $1 2 million square feet of.
Brendan Lynch: Product under construction in 90% of it is leased.
Brendan Lynch: So.
I think we're at that point, where.
Brendan Lynch: Someone's going to start to go into Cleveland and start to build spec.
Brendan Lynch: Because there is only 100000 square feet available.
Brendan Lynch: Of new product.
Brendan Lynch: Now there's places like Dallas and there is some parts of Columbus that.
Brendan Lynch: Our severely overbuilt I mean, if you look at Columbus.
Brendan Lynch: Class, a 17% vacancy and obviously by by definition, a new 32 foot clear building would be designated class a.
But the balance outside of class eight it's a five 2% vacancy.
Brendan Lynch: So I don't think in Colombia, she can be building any new product anytime soon there's just a lot of vacancy so I think it depends on the market.
But I think theres, a lot of capital and I think once.
Brendan Lynch: In certain markets I think you'll start to see some spec development.
Brendan Lynch: That's helpful.
Speaker Change: Maybe also just talking at a high level any impact that youre seeing from.
Speaker Change: The tariffs or potential for tariffs and.
Speaker Change: Re shoring initiatives.
Speaker Change: Obviously, you have more heartland exposure than a lot of your peers with a more coastal exposure, maybe anything that youre seeing in terms of.
Speaker Change: Your customer base and the conversations you're having with them.
Speaker Change: Yes.
Speaker Change: Tariffs. So we're seeing a significant increase from various PPL companies of bulk storage requirements.
Speaker Change: Short and midterm.
Speaker Change: These.
Speaker Change: We have actively in negotiations, but it seems to be like a rush to get product into the country and in warehouses as soon as possible. So there is definitely picked up demand.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: The next question is from Michael Mueller from J P. Morgan. Please go ahead.
Michael Mueller: Yeah, Hi, apologize if I missed this but what what is the I guess Columbus rent on the two new prospects compared to the move out rent.
Speaker Change: <unk>.
Speaker Change: The timing during the year on that.
Speaker Change: Well we're talking.
Speaker Change: The move out is.
Speaker Change: At the end of June and the timing on the leases would be.
Speaker Change: July or August and then the other one would be between July probably September.
Speaker Change: The actual rents.
Speaker Change: The rents because we subdivide and building.
Speaker Change: It may go to a gross lease versus a triple net lease, but the net effective rent would be.
Speaker Change: Slightly higher.
Speaker Change: Okay.
Speaker Change: And then last question when Youre looking at that 26 explorations are there any similar chunky known move outs at this point.
Speaker Change: No <unk>.
Speaker Change: Six.
Speaker Change: 2016.
Speaker Change: Fine.
No no.
Speaker Change: Jackson from move outs at this point.
Speaker Change: Okay. Thank you.
Speaker Change: Thanks.
Speaker Change: And ladies and gentlemen, this concludes our question and answer session and thus concludes today's call. We thank you very much for attending today's presentation. At this time you may disconnect your lines take care.
Speaker Change: [music].
Yes.
Speaker Change: [music].