Q3 2025 First Industrial Realty Trust Inc Earnings Call

Operator: Good day and welcome to the First Industrial Realty Trust, Inc. Third Quarter 2025 Results Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Art Harmon, Senior Vice President, Investor Relations and Marketing. Please go ahead.

Scott Musil: Thank you, Dave. Hello everybody and welcome to our call. Before we discuss our third quarter 2025 results and our updated guidance for the year, please note that our call may include forward-looking statements as defined by federal securities laws. These statements are based on management's expectations, plans, and estimates of our prospects. Today's statements may be time-sensitive and accurate only as of today's date, October 16, 2025. We assume no obligation to update our statements or the other information we provide. Actual results may differ materially from our forward-looking statements, and factors which could cause this are described in our 10-K and other SEC filings. You can find a reconciliation of non-GAAP financial measures discussed in today's call on our supplemental report and our earnings release. Supplemental, our earnings release, and our SEC filings are available at firstindustrial.com under the Investors tab.

Thank you Dave. Hello everybody and welcome to our call. Before we discuss, our third quarter, 2025 results and are updated guidance for the year, please note that our call may include forward-looking statements as defined by federal Securities laws. These statements are based on Management's expectations, plans, and estimates of our prospects, today's statements may be time-sensitive and accurate only, as of today's date, October 16th 2025. We assume no obligation to update our statements or the other information. We provide

Scott Musil: Our call will begin with remarks by Peter Baccile, our President and Chief Executive Officer, and Scott Musil, our Chief Financial Officer, after which we'll open it up for your questions. Also with us today are Jojo Yap, Chief Investment Officer, Peter Schultz, Executive Vice President, Chris Schneider, Executive Vice President of Operations, and Bob Walter, Executive Vice President of Capital Markets and Asset Management. Now let me hand the call over to Peter.

Actual results may differ materially from our forward-looking statements, and factors which could cause this are described in our 10-K and other SEC filings. You can find a reconciliation of non-GAAP financial measures discussed in today's call on our supplemental report and our earnings release. The supplemental report, our earnings release, and our SEC filings are available at firstindustrial.com under the investors tab.

Our call Will begin with remarks by Peter bacilli, our president and chief executive officer and Scott musil, our Chief Financial Officer after which we'll open it up for your questions. Also with us today are JoJo, Yap Chief investment officer Peter Schultz, Executive Vice President, Chris Schneider, Executive Vice President of Operations. And Bob Walter Executive Vice President of capital markets and asset management. Now, let me hand the call over to Peter

Art Harmon: Thank you, Art, and thank you all for joining us today. Our team delivered another solid quarter, highlighted by several development lease signings in the third quarter and fourth quarter to date, including a key win in the Inland Empire that contributed to our FFO guidance increase. Scott will provide additional details during his remarks. We also captured strong cash rental rate growth from leasing activity. The renewal side of our business is exceptionally healthy, and we have now largely taken care of all our rollovers for 2025. Moreover, our pace for 2026 is consistent with prior years, and we're producing good early results. Moving on to the leasing market, touring activity related to new leasing picked up in the third quarter. Notwithstanding our development leasing successes, tenant decision-making on the whole remains deliberate as the uncertainty around tariffs continues to weigh on some prospects. The fundamental picture is improving.

Thank you, art, and thank you all for joining us today.

Including a key win in the Inland Empire that contributed to our ffo guidance increase.

Scott will provide additional details during his remarks.

We also captured strong cash rental rate growth from leasing activity.

The renewal side of our business is exceptionally healthy, and we have now largely taken care of all our rollovers for 2025.

Moreover, our pace for 2026 is consistent with prior Years, and we're producing good early results.

Moving on to the leasing Market.

Touring activity related to new leasing picked up in the third quarter.

Notwithstanding our development leasing successes tenant decision-making. On the whole remains deliberate as the uncertainty around tariffs continues to weigh on some prospects.

Art Harmon: Based on CoStar data, vacancy in Tier 1 U.S. industrial markets was 6.3% at the end of the third quarter, which was flat compared to Q2. We view this as a potential sign that fundamentals nationally are stabilizing. In our 15 target markets, net absorption in the third quarter was 11 million square feet, bringing the total for the first three quarters of the year to 22 million. With demand showing signs of strengthening, total leasing nationally is expected to approach near record levels this year. CBRE is projecting 900 million square feet of total leasing in 2025, which would be the second largest year on record, second only to 2021. New starts within our 15 target markets remained measured at 41 million square feet, with completions of 37 million. Space under construction now totals 212 million square feet, and that pipeline is 47% pre-leased. Moving now to our portfolio.

The fundamental picture is improving based on co-star data, vacancy and Tier 1 US markets with 6.3%. At the end of the third quarter which was flat compared to 2 Q, we viewed this as a potential sign that fundamentals, nationally are stabilizing.

In our 15 Target markets, net absorption. In the third quarter was 11 million square feet. Bringing the total for the first 3 quarters of the year to 22 million.

With the man showing signs of strengthening total, leasing nationally is expected to approach near-record levels this year.

CBRE is projecting 900 million square feet of total leasing in 2025.

Which would be the second largest year on record second, only to 2021.

New starts within our 15 target markets remained measured at 41 million square feet, with completions of 37 million.

Space under construction now totals 212 million square feet, and that pipeline is 47% pre-leased.

Art Harmon: Results were in line with our expectations, with in-service occupancy of 94% at quarter end. Regarding our 2025 rollovers, we've now taken care of 95% by square footage, and our overall cash rental rate increase for new and renewal leasing is 32%. If you exclude the large fixed-rate renewal in Central Pennsylvania we previously discussed, the cash rental rate increase is 37%, and the straight line increase is 59%. As I mentioned, we're making good headway on our 2026 rollovers. Through yesterday, we'd taken care of approximately 31% of our rollovers at a cash rental rate change of 31%. We'll provide our full-year 2026 cash rental rate increase guidance on our fourth quarter earnings call, but we're off to a good start. Moving now to development leasing.

Moving now to our portfolio.

Results were in line with our expectations within service occupancy of 94% at quarter end.

Regarding our 2025 rollovers we've now taken care of 95% by square footage and our overall cash rental rate, increase for new and renewal leasing is 32%.

If you exclude the large fixed rate renewal in central Pennsylvania, we previously discussed the cash. Ren rate increase is 37% and the straight line increase is 59%.

As I mentioned, we're making good Headway on our 2026 rollovers.

Through yesterday, we taken care of approximately 31% of our rollovers at a cash, rental rate change of 31%.

We will provide our full year 2026 cash runner rate. We'll increase guidance on our fourth quarter earnings call, but we're off to a good start.

Art Harmon: As announced on our last call, we leased the remaining 501,000 square feet of the 968,000 square foot building in our Camelback 303 joint venture. The three-building 1.8 million square foot project, comprised of this building and the two we acquired from the venture earlier this year, is now 100% leased. We also leased 56,000 square feet at our FirstPark Miami Building 3. In the Inland Empire, we leased our industrial outdoor storage asset in Fontana, and in the fourth quarter to date, we leased 100% of our 159,000 square foot First Harley Knox Logistics Center. We also signed another lease at FirstPark Miami for 57,000 square feet at Building 12. In sum, we're excited about the future cash flow growth opportunities ahead, and with that, I'll hand it over to Scott.

Moving now to development leasing, as announced on our last call, we leased the remaining 501,000 square feet of the 9680 square foot building in our Camelback 303 joint venture.

The 3 building 1.8 million square foot project comprised of this building and the 2. We acquired from The Venture earlier this year is now 100% leased.

We also leased 56,000 square feet at our first park, Miami Building 3.

In the Inland Empire, we released our industrial outdoor storage asset in Fontana.

And in the fourth quarter to date, we least 100% of our 159,000 square foot. First, Harley Knox Logistics Center

We also signed another lease at first Park. Miami for 57,000 square feet at building 12.

Scott Musil: Thanks, Peter. Let me recap our results for the quarter. Daily funds from operations were $0.76 per fully diluted share, compared to $0.68 per share in Q3 2024. Third quarter 2025 FFO was positively impacted by a penny per share related to an insurance claim recovery. Our cash same-store rental growth for the quarter, excluding termination fees, was 6.1%, primarily driven by increases in rental rates on new and renewal leasing, contractual rent bumps, and the aforementioned insurance claim recovery, partially offset by lower average occupancy and higher free rent. Excluding the insurance recovery, cash same-store NOI growth was 5.4%. Please also note that third quarter 2024 same-store NOI excludes $4.5 million of income related to the accelerated recognition of a tenant improvement reimbursement associated with a tenant in Central Pennsylvania. We finished the quarter with in-service occupancy of 94%, down 20 basis points from the second quarter.

In some were excited, about the future, cash flow, growth opportunities ahead. And with that, I'll hand it over to Scott. Thanks Peter, let me recap our results for the quarter.

The refunds from operations were 76 cents per fully diluted share compared to 68 cents per share in Q3 2024.

Third quarter, 2025 ffo was positively impacted by a penny per share related to an insurance claim recovery.

Our cash same-store growth for the quarter, excluding termination fees, was 6.1%, primarily driven by increases in rental rates on new and renewal leasing, contractual rent bumps, and the aforementioned insurance claim recovery.

Partially offset by lower average occupancy and Higher free rent.

Growth was 5.4%.

Please also note that the third quarter of 2024 same-store NOI excludes $4.5 million of income related to the accelerated recognition of a tenant improvement reimbursement associated with the tenant in Central Pennsylvania.

Scott Musil: Summarizing our balance sheet leasing activity during the quarter, approximately 2.2 million square feet of leases commenced. Of these, approximately 400,000 were new, 900,000 were renewals, and 800,000 were for developments and acquisitions with lease-up. Before I review our overall guidance, let me quickly update you on our bad debt expense and our credit watch list. Bad debt expense was $245,000 for the quarter, bringing our year-to-date total to approximately $750,000, which is right on top of our original guidance. Our forecast for the fourth quarter remains $250,000. Two additional credit-related points: one, Debenhams Group, formerly Boohoo, remains current; and two, we have added one 3PL tenant to our watch list, for which we are collecting rent directly from the subtenant of the property. We are currently working through the collection process related to the lease obligation, and due to confidentiality, we will not discuss further details of this matter.

We finished the quarter with in-service occupancy of 94% down 20 basis points from the second quarter.

Summarizing our balance sheet, leasing activity during the quarter, approximately 2.2 million square. Ft of leases commenced.

Of these approximately 400,000. Renew 900,000 were renewals and 800,000 were for developments and Acquisitions with Lisa.

Before I review our overall guidance. Let me quickly update you on our bad debt expense and our credit watch list.

Bad debt expense was $245,000 for the quarter, bringing our year-to-date total to approximately $750,000, which is right on top of our original guidance. Our forecast for the fourth quarter remains $250,000.

2 additional credit related points, 1 Debs group formerly boohoo, remains current and 2. We have added 1, 130 to our watch list for which we are collecting rent, directly from the subtenant of the property. We are currently working through the collection process related to the lease obligation and due to confidentiality.

Will not discuss further details of this matter.

Scott Musil: Now moving on to our guidance. We increased our 2025 NAIRRIET FFO midpoint by $0.04 to $2.96 per share. The $0.04 per share increase is primarily due to the development leasing successes, lower interest expense, and the aforementioned insurance claim recovery. The tightened range is now $2.94 to $2.98 per share. Our key assumptions are as follows. End of fourth quarter in-service occupancy of 94% to 96%. This implies an average quarter-end in-service occupancy for the year of 94.4% to 94.9%. Our midpoint assumes we will lease an additional 300,000 square feet of our in-service developments at December 31. This lease-up assumption has no impact on our midpoint FFO guidance, given the December 31 date. Fourth quarter cash same-store NOI growth before termination fees of 3% to 5%. This implies a 2025 quarterly average same-store NOI growth of 7% to 7.5%, a 75 basis point increase at the midpoint.

Now, moving on to our guidance, we increased our 2025 nayre ffo midpoint by Ford cents to 2.96 cents per share.

The 4-cent per share increase is primarily due to the development, leasing successes, lower interest expense, and the aforementioned insurance claim recovery.

The Titan range is now $2.94 to $2.98 per share.

Our key assumptions are as follows and of course, quarter inservice occupancy of 94% to 96% this implies, an average quarter end inservice occupancy, for the year of 94.4%, to 94.9%.

Our midpoint assumes, we will lease an additional 300,000 square feet of our inservice, developments at the December 31st.

This lease-up assumption has no impact on our midpoint FFO guidance, given the December 31st date.

Scott Musil: As a reminder, our same-store guidance excludes the impact of the aforementioned accelerated recognition of a tenant improvement reimbursement in 2024. Guidance includes the anticipated 2025 costs related to our completed and under-construction developments at September 30. For the full year 2025, we expect to capitalize about $0.09 per share of interest. Our G&A expense guidance range is $40.5 million to $41.5 million. Now let me turn it back over to Peter.

Fourth quarter cash, same store. Noi growth before termination fees of 3% to 5% this. Implies a 2025 quarterly average same store. Noi growth of 7% to 7.5% a 75 basis point increase at the midpoint,

as a reminder, our same store guidance, excludes the impact of the A4 mentioned, accelerated recognition of a tenant Improvement reimbursement in 2024,

Guidance includes the anticipated 2025 costs related to our completed and under construction developments at September 30th.

For the full year 2025, we expect to capitalize about $0.09 per share of interest.

And our GNA expense guidance range is 40.5 to 41.5 million. Now, let me turn it back over to Peter.

Art Harmon: Thanks, Scott. We're energized about our recent development leasing wins and encouraged by the overall increase in foot traffic for our availabilities. We expect that as the topic of tariffs moves out of the global headlines, we will see prospective tenant requirements commit to making investments in additional space to accommodate future growth. Every day, our teams are working hard to convert prospects into tenants that drive cash flow growth and value for shareholders. Operator, with that, we're ready to open it up for questions.

Thanks Scott.

For energizing about our recent development, leasing wins, and increases in foot traffic for our availabilities.

We expect that as the topic of tariffs moves out of the global headlines.

We will see prospective tenant requirements. Commit to making investments in additional space to accommodate future growth.

Every day, our teams are working hard to convert prospects into tenants that drive cash flow growth and value for shareholders.

Operator with that, we're ready to open it up for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Also, please limit yourself to one question and one follow-up. Re-queue to ask additional questions. Our first question comes from Rob Stevenson with Janney. Please go ahead.

We will now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone, if you are using a speaker-phone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2

Also, please limit yourself to 1 question and 1 follow-up req to ask additional questions.

Our first question comes from Rob Stevenson with Janie. Please go ahead.

[Analyst 1]: Good morning, guys. Scott, with 75 days left in the quarter, what's the delta between the $0.04 FFO range? How do you get to the low end? How do you get to the high end? What's the key thing that can move on you?

Good morning, guys. Um, Scott, with 75 days left in the quarter. What's the Delta between the $0.04 FFO range? How do you get to the low end? How do you get to the high end? What's the key thing that can move on you?

Scott Musil: If you look at development leasing, we have 300,000 square feet of in-service development, and that's scheduled to lease up, Rob, on December 31, so that has no impact on the midpoint guidance. I would say the only other thing that we could think of are unanticipated credit challenges that could cause us to hit on the low end. I would say on the upside, leasing more than 300,000 square feet of our in-service development portfolio would push us up to the top.

Scheduled to lease up Rob on December 31st, so that has no impact on the midpoint guidance. I would say the only other thing that we could think of are unanticipated credit challenges that could cause us to hit on the low end. And I would say in the upside, leasing more than 300,000 square feet of our in-service development portfolio would push us up to the top.

[Analyst 1]: Okay, that's helpful. Can you guys talk a little bit about the transaction market today, both in terms of the market for buying assets as well as selling assets? How much product you're seeing on the marketplace and what pricing looks like and how deep that buyer and seller pools are today? And pricing?

Okay, that's helpful. And then can you?

Talk a little bit about the transaction market today, both in terms of the market for buying assets as well as selling assets. Um, how much product you're seeing on the marketplace and what pricing looks like and how deep that buyer and seller pools are today.

Jojo Yap: Does anyone want to take that? Yes. Yes, Rob Hines, Jojo. In terms of the market for leased assets, it is very, very competitive. The capital in the market wants to get invested, and it's a little bit of a risk-off. If you have a leased asset, there's a lot of capital from every kind of buyer looking at it. The market for, in terms of just staying on that, in terms of valuation, I would say a product like we have leased at market would be in the low to mid-5s. Depending upon market, it would be sub, if you have markets like Nashville, Dallas, or South Florida, where it's a kind of market rent growth is outpacing the whole market, the cap rates could fall below 5.

And I know you want to take that. Yes, yes. So Rob hides dojo in terms of the market for leased assets. It is very, very competitive, um, Market the capital and the market, uh, wants to get invested and, uh, it's a little bit of, uh, risk off. So if you have a leased asset, there's a lot of capital from every kind of buyer looking at it, uh, the uh, the market for, in terms of that just staying on that. In terms of valuation, I would say uh, 8 brought up like we have at least that market would be in the low to mid fives and depending upon Market, it would be sub if you have markets, like, Nashville, Dallas and South Florida, where it's a kind of Market, rent growth is outpacing, the whole Market to cap rates could fall.

Jojo Yap: In terms of vacant property and land, it is a little bit less robust, and the reason is that it's riskier for a lot of investors to go in. There are some markets where land is continuing to be very competitive, and they basically get sold and compute to a probably a sub-6 equal yield and a sub-7.5 IRRs. Those markets, again, include the markets I just mentioned because rent growth is expected to be higher, like a Nashville or a Dallas and a South Florida. Does that give you a sense?

Below 5 in terms of vacant property and land, it is a little bit less robust. And the reason is that, you know, riskier for a lot of investors to go in, but there are some markets who are in land is continue to be very competitive and they basically get sold and compute to a, probably a sub-6 equally yield, and a sub 7 and a half IRS and those markets again, include the markets. I just mentioned because rent growth is expected to be higher like a national or Dallas and a South Florida.

[Analyst 1]: Yeah, any difference that you're seeing pricing-wise, either on the buy or sell side in terms of size for, you know, $100,000 plus assets versus $250,000, $500,000, etc., the bigger assets?

Does that give you a sense?

Jojo Yap: No, no material difference, Rob.

yeah and any I guess any difference that you're seeing pricing wise either on the buy or sell side in terms of size for you know 100,000 plus assets versus 250 500 Etc, the bigger assets

[Analyst 1]: Okay, thanks, guys. Appreciate the time this morning.

No, no, no material difference, right?

Okay, thanks, guys. I appreciate the time this morning.

Operator: The next question comes from Nick Yulico with Baird. Please go ahead.

And the next question comes from Nick filmon with beard. Please go ahead.

Nick Yulico: Hey, good morning, guys. Maybe wanted to touch a little bit on 2026. Good progress there. Spreads are pretty stable year on year, but as we look at kind of 2026 expirations, is there anything we should, that's worth calling out, whether it be size of tenants or like fixed-rate renewals that could really swing the numbers? Chris?

Hey, good morning guys. Maybe you wanted to touch a little bit on 2026 with good progress. There, spreads are pretty stable year on year, but as we look at kind of 26, expirations is there anything we should that's worth calling out, whether it be size of tenants or like fixed rate renewals. So I could really swing the numbers

Jojo Yap: Yeah, if we look at 2026, you know, like you said, we're in pretty good shape. We've already renewed 31%. Our largest remaining rollover today is a 550,000 square foot expiration in Southern California. That rolls in the third quarter of 2026. Right now we're in discussions with them about a renewal.

Yeah, sorry. If you look at 2026, you know, like I said, we're in pretty good shape. We've already renewed 31%. Our largest remaining rollover today is a 550,000 square foot expiration in Southern California, which rolls in the third quarter of 2026. And, you know, right now we're in discussions with them about a renewal.

Nick Yulico: That's helpful. Maybe Peter Baccile, when you're talking to Peter Schultz or Jojo, what markets or who do you like hearing from more right now? I guess who's been a little bit more active here in the last 90 days?

That's helpful. And then maybe Peter bacilli when you're talking to Peter Schultz or JoJo like What markets or or who do you like hearing from more right now. Like I guess who has been a little bit more active here in the last 90 days.

Peter Baccile: I love hearing from both of them. Are you kidding? I mean, as far as market performance, South Florida and Nashville, Houston, Dallas, actually the Greater Philadelphia area, continue to be, I'll say, outperformers nationally. Atlanta is doing pretty well also. That doesn't mean I don't love to hear from Jojo about what's going on in Phoenix and SoCal. In particular, I ping Jojo quite a bit about what's going on in SoCal. We're encouraged by the new lease for Harley Knox, 159,000. We do have good foot traffic around our other availabilities. You know, not everyone is that tariff-sensitive. We're getting to see some, beginning to see some of those players begin to act.

I love hearing from both of them, I think.

I I mean, as far as market performance, South Florida and Nashville. Uh, Houston Dallas.

Actually the greater Philly area.

Continue to be. I'll say outperforms nationally Atlanta's doing pretty uh well also

Um, that doesn't mean I don't love to hear from JoJo about what's going on in Phoenix and in SoCal. In particular, I ping JoJo quite a bit about what's going on in SoCal. So, we're encouraged by...

The new lease for Harley Knox 159,000, uh, we do have good foot traffic around our other availabilities and um, you know, not everyone. Is that tariff sensitive and so um, we're getting to see some beginning to see some of those players. Uh, begin to act.

Nick Yulico: That's helpful. Thank you.

That's helpful. Thank you.

Operator: The next question comes from Todd Thomas with KeyBank Capital Markets. Please go ahead.

And the next question comes from Todd Thomas with KeyBanc Capital Markets. Please go ahead.

Nick Yulico: Hi, thanks. First, I wanted to ask if you could discuss the company's appetite for future developments, how you're thinking about new starts today, and can you talk about the mix between spec and build-to-suits as you think about adding more product to the pipeline and what the yield expectations between the two are like today?

Hi thanks. Um first I wanted to ask if you could discuss the company's appetite for future developments, how you're thinking about new starts today and can you talk about the mix between spec and build the suits? As as you think about adding more product to the pipeline? And what the yield expectations between the 2 are like today?

Peter Baccile: Sure. We don't give guidance on volumes, but I don't mind talking about directionally what we're thinking about in terms of development. As I mentioned a second ago, we do continue to like the markets of South Florida and Greater Philadelphia, Dallas, Houston, Nashville. Where we have land in those markets, we will be considering starts in 2026. Where we don't have land, like Nashville, in those markets, we're working very hard to change that. We have some great sites today available in some of those markets that are entitled and ready to go. We'll be thinking about that. In terms of yield, on a portfolio basis, our available opportunities are going to yield close to 7%. Some will be higher than that. With IRRs, nine or north of nine. Is that, was that, you asked about returns, didn't you?

um,

As I mentioned a second ago, we do continue to like the markets of South Florida and greater Philly, uh, Dallas, Houston, and Nashville. Where we have land in those markets, we will be considering starts in 2026. Where we don't have land, like Nashville in those markets, we're working very hard to change that.

Um, but we have some, uh, great sites today available in some of those markets that are entitled and ready to go. So we'll be thinking about that in terms of um, yields.

On a portfolio basis are available opportunities are going to yield close to 7%, some will be higher than that. Um,

With IRS 9 or north of 9. Is that is that was that?

You asked about returns, didn't you?

Nick Yulico: Yeah, between sort of, you know, spec and build-to-suit projects.

Peter Baccile: Build-to-suit projects are going to be a little bit less than that. You know, where we try to get 100 to 125 basis points spread on spec development relative to market cap rates, you're probably looking at more like 50 to 60 basis point spreads for build-to-suits. In terms of mix, as you know, most of our development volumes over the years have been spec. I don't think that that mix is going to change much for us going forward.

Yeah, between, um, sort of, you know, spec and build the suit, build the suits build, the suits are going to be a little bit less than that, you know, where we try to get a 100 to 125 basis points, spread on spec development, relative to um, market cap rates. You're probably looking at more like 50 to 60 basis points. Spreads uh, for Bill to suits, and in terms of mix as you know, most of our

Development volumes over the years has been spec. I don't think that that mix is going to change much for us going forward.

Nick Yulico: Okay. That's helpful. I just wanted to follow up, I guess, on SoCal. Can you elaborate a little bit on current market conditions there and maybe discuss rent trends, you know, and what the latest is in terms of concessions and free rent in the market?

Okay, um, that's helpful. And then I just wanted to follow up I guess on uh, on SoCal. Um, can you can you elaborate a little bit on current market conditions there and maybe discuss rent Trends? Um, you know, and sort of uh, you know what the the latest is in terms of concessions and free rent in the market?

Peter Baccile: Yep, Jojo.

Jojo Yap: Sure. Thanks. A couple of things. Top level, you know, on the demand side, if you look at Q2Q, growth in net absorption was higher from Q3 to Q2. That's, and then, you know, that was also a result of increased traffic. Now there's more inquiries, tours, and RFPs. As Peter noted, in terms of the market, you know, there are tenants just like the recent lease that we did where the tenant had to make a decision quickly because they need it and they're not kind of tariff-related. The tenant pays for committing and signing leases were about flat Q2Q. On the supply side, that's where we're continuing to be having good supply metrics. Under construction was basically flat and starts were actually much lower Q2Q again. Just top level, all in all, the fundamentals are pointing to the bottoming out of the market.

Jojo Yap: You know, on overlay with that, you have improving supply metrics and signs of increasing demand. Overall, we see Q2Q rents were about flat. Vacancy was about flat, again, reflective of bottoming out of the market. In terms of going forward, we think it's going to be flattish still because, you know, the whole SoCal market still has space to digest. It really, we feel like it's stabilized.

Yep. JoJo sure. Uh, thanks uh well, a couple things uh, top level, you know, the demand side. If you look at Q to Q, uh, gross and net absorption was higher from 3 to 2 Q. So, uh, and that's and then, you know, that was also a, a result of increased traffic. You know, there's more inquiries tours in rfps, um, as Peter noted in terms of the market, you know, there are tenants just like the recent lease, the, uh, that we did where the tenants had to make a decision quickly, because they needed and, uh, they're not kind of tireless related, but the tenant base, we're committing and signing leases were about flat queue to queue. But the supply side, uh, that's where we're continuing to be, uh, having good Supply metrics under construction was basically flat and starts, we're actually much lower with Q to Q again. So just top level, all in all the fundamentals are pointing to the bottoming up the market.

And you know on overlay with that you have improving Supply metrics and uh signs of increasing demand. So uh overall we we see rents due to queue uh rents were about flat vacancy was about flat, again reflective bottoming out on the market in terms of going forward. We think it's going to be flattish still because, you know, the whole the so-called Market still has space to digest but uh it it really uh we feel like it's stabilized.

Nick Yulico: Okay. All right. Thank you.

Okay.

All right. Thank you.

Operator: The next question comes from Craig Mailman with Citi. Please go ahead.

In the next question comes from Craig Mailman with City. Please go ahead.

Craig Mailman: Hey guys, just thinking about 2026, you guys still have Aurora and your asset in New York to backfill. Can you talk through the kind of the competitive landscape in each of those markets and what the prospects you guys have to address those vacancies?

Hey guys um just thinking about 26 you guys still have Aurora and um your asset in in New York to back fill. Um can you talk through the kind of the competitive landscape in each of those markets and and what the prospects you guys have uh to kind of address those those vacancies

Peter Baccile: Peter.

Peter Schultz: Sure. Good morning, Craig. It's Peter. Starting in Denver, we're one of two buildings in that size. The supply picture in Denver has improved. We continue to see and work with prospects for all or portions of the building. As we've talked about on prior calls, the larger deals tend to move a little bit slower than the smaller mid-sized deals. We continue to see good activity there. As I said, not a lot of options for full building users. In Pennsylvania, for the 708 New York, there are three or four other buildings of similar size. Pennsylvania saw some positive absorption in the third quarter. More importantly, there's almost 9 million square feet of deals that are already signed in Pennsylvania that'll be taking occupancy in the fourth quarter of this year and the first half of next year.

Peter: Sure, good morning, Craig. It's Peter, starting in Denver. We're one of two buildings in that size. The supply picture in Denver has improved.

Uh, we continue to see and work with prospects for all or portions of the building.

As we've talked about on prior calls, the larger deals tend to move a little bit slower, uh, than the smaller mid-size deals. Uh, but we continue to see uh, good activity there. And as I said,

Uh, not a lot of options for full building users.

In Pennsylvania for the 708 New York. Uh there are 3 or 4 other buildings of similar size Pennsylvania's, saw some positive absorption.

Peter Schultz: As Peter said in his remarks, you know, activity is up. We're seeing more tours and interest. We are talking to a couple of prospects, particularly on the 3PL side for our building in New York. That size, I would say, has been good, but smaller and bigger has been better. We're encouraged by the level of activity and the lease signings that we've seen to date that are going to occupy, as I said, in the fourth quarter and the first half of next year.

Uh, in the third quarter, more importantly, there's almost 9 million square feet of deals that are already signed in Pennsylvania. That'll be taking occupancy in the fourth quarter of this year and the first half of next year.

Uh, we're seeing more tours and interest. Uh, we are talking to a couple of prospects, particularly on the 3PL side for our building in York.

You know, that size I would say has been uh good but smaller and bigger has been better.

Uh, but we're encouraged by the level of activity and the lease signings that we've seen to date that are going to occupy.

As I mentioned in the fourth quarter, in the first half of next year,

Craig Mailman: That's helpful, Carter. I know it's not embedded in your 2025 guidance, but at this point, just given the dynamics of the market and the activity that you're seeing, how should we think realistically about kind of commencement timing potentially for those two assets over the next 12 months?

No that that's helpful caller and listen. I know it's not embedded in your 25 guidelines, just given the Dynamics of the market and um the activity that you're seeing, how should we think realistically about kind of commencement timing potentially for those 2 assets, uh, over the next 12 months.

Peter Schultz: No, I think we'll update you on that on our fourth quarter call. We're encouraged by some of what we're seeing at this point.

No, I think we'll update you on that, on our fourth quarter call, uh but we're encouraged by some of what we're seeing at this point.

Craig Mailman: Okay. Still doing one more. Scott, on the 3PL that just got added to the watch list, I know you can't give too many details, but is that subtenant kind of talking to you about potentially going direct if the primary tenant does default? What's the, can you give anything on the magnitude of the rent there or what market it's in? Just anything incremental?

Okay. And then slipping 1 more in um, Scott on the on the 3pl that just got added to the watch list. Um,

I know you can't give too many details, but um, is that subtenant kind of talking to you about potentially going direct? If the primary tenant does default, like, what's the—can you give anything on the magnitude of the rent there or what market it's in? Just anything incremental.

Scott Musil: We're not going to get into the magnitude of the rent, Craig, but there are some potential conversations we're having with the subtenant to take over. Yes.

We're not going to get into the magnitude of the of the rent Craig but um there are some potential um conversations or conversations. We're having with the subtenant to take over. So yes.

Craig Mailman: Great. Thank you.

Great. Thank you.

Operator: The next question comes from Nick Yulico with Scotiabank. Please go ahead.

Nick Yulico: Hi everyone, this is Nick Yulico with Victor Fedevon. Just a quick question on your development leasing assumption. On the previous call, you mentioned 1.5 million square feet by the end of this quarter. Obviously, it got pushed a bit. Just trying to understand whether it's end of first quarter or end of second quarter of 2026. Do you have a perspective on that?

And the next question comes from Nicholas ulo with Scotia Bank. Please go ahead.

Hello, everyone. This is Victor Fede 1 with Nico silico. So uh, just a quick question on your uh, development, leasing assumption. So on the previous call, you mentioned 1 and 5 1.5%. Be just trying to understand whether it's and the first quarter or end of second quarter or 2026. Do I have a a perspective on that?

Scott Musil: Peter talked about two of the leases that we're talking about, but we're not going to, we're having our budget process coming up in December fourth quarter, and in our fourth quarter call, which is in early February, we'll give you a better idea of what our thoughts are on lease-up on that remaining pool.

We're um, you know, Peter talked about 2 of the 2 of the leases that were talking about. But um we're we're not going to um

We're having our budget process coming up in December, fourth quarter. In our fourth quarter call, which is in early February, we'll give you a better idea of what our thoughts are on lease-up for that remaining pool.

Nick Yulico: Got it. Thank you. A quick follow-up on market trends. Just trying to understand from boots on the ground what you are seeing in terms of best-performing markets and worst-performing markets within your portfolio in terms of market trends.

Got it. Uh thank you. And then uh quick follow up on um Market rents just trying to understand from boots on the ground. What you are seeing in terms of uh best performing markets and worst performing markets within your portfolio. In terms of Market rents

Jojo Yap: Yeah, to start with, just kind of say, our leading markets in 2025, I'll highlight four of the markets. Atlanta, we had cash rental rate increases of 113%. Baltimore, Washington was up 86%. South Florida was up 62%. Finally, Dallas and Fort Worth have been a strong market for us. They're up 61% in 2025. That's going to give you an idea on the leading markets. I think Peter and Jojo can comment a little bit more on what they see.

Peter Baccile: Want to talk about market rent growth?

Jojo Yap: Sure. In terms of market rent growth, in terms of the west part of the market, I think Dallas would be the strongest market. We expect Southern California to be flattish, and Phoenix has been a slight increase, a lot of supply, but outperforming in terms of growth and net absorption. Peter?

Yeah. If you know, to start with, uh, just kind of say, you know, our leading markets in 2025 highlight four of the markets: Atlanta, we had cash going, already increases of 113%. Baltimore-Washington was up 86%. South Florida was up 62%, and then finally, Dallas and Fort Worth has been a strong market for us; they're up 61% in 2025. So, it's going to give you the idea and the leading markets, uh, with Peter and Joseph can comment a little bit more on what they see. I want to talk about market rent growth. Sure, in terms of market rent growth, I mean, uh, in terms of the West part of the market, I think Dallas, uh, you know, is, is would be the strongest market, and then we expect, uh, SoCal to be flattish, uh, and Phoenix, uh, has been a slight increase, a lot of supply, but.

Peter Schultz: I would say the other markets around the country are flat-ish to slightly up, and it's really a submarket by submarket call.

Outperforming in terms of gross and net absorption, Peter.

I would say that the other markets around the country are flat, uh, ish to slightly up, and it's really a submarket by submarket call.

Nick Yulico: Got it. Thank you.

Got it. Thank you.

Operator: The next question comes from Blaine Heck with Wells Fargo. Please go ahead.

And the next question comes from Blaine. Heck with Wells Fargo; please go ahead.

Blaine Heck: Okay, great. Good morning. Can you just clarify and walk us through the ins and outs related to the 1.5 million square feet of development leasing discussed last quarter? Just wondering, you know, some of those specific adjustments that might have been made to that lease timeframe and whether any of the development leasing that you guys did this quarter was part of that 1.5 million square feet, or was that expectation reduced by the full 1.2 million square feet?

Okay, great. Uh, good morning. Um, not to pile on but can you just clarify and and walk us through the ins and outs related to the 1.5 million square feet of development leasing discussed? Last last quarter just wondering you know some of the specific adjustments that might have been made to that lease of time frame and whether any of the the development leasing that you guys did this quarter was part of that 1.5 million square feet or was that expect expectation reduced by the full 1.2 million square feet.

Scott Musil: Here's the math that we talked about on the second quarter call. We had the 1.5 million square feet of projected in-service development leasing, and that was going to happen on December 31. We had the 708,000 square foot on Central Pennsylvania that Peter talked about. That's the 2.2 million square feet that we referenced on the second quarter call. We signed 200,000 square feet of leases in the in-service development pool, one in Miami, one in Southern California. That leaves us with 2 million square feet remaining. In our forecast, our guidance forecast, we have 300,000 square feet, and that's a macro assumption of in-service development. It could be a multitude of different options assumed. That leaves us 1.7 million square feet, and that's now slated to lease up in 2026.

so here, here's the math that we talked about on the second quarter, call, we had the 1.5 million square feet

8,000 square feet in Central PA that Peter talked about. So that's the 2.2 million square feet that we referenced on the second quarter call.

We signed 200,000 square feet of leases in the in-service development pool—one in Miami and one in Southern California.

That leaves us with 2 million square feet remaining. We are in our guidance forecast; we have 300,000 square feet, and that's a macro assumption of in-service development. It could be a multitude of different options.

Scott Musil: As we've said, we're going to go through our budget process here in the next couple of months, and when we have our fourth quarter call in early February, we'll give you an idea of when we think lease up will occur.

Assumed so, that leaves us with 1.7 million square feet, and that's now slated to lease up in 2026.

And as we've said, we're going to go through our budget process here in the next couple of months. When we have our fourth quarter call in early February, we'll give you an idea of when we think lease-up will occur.

Blaine Heck: Okay, great. That's really helpful. Second question, Asian 3PL tenants have been a significant part of the leasing activity we've seen over the last year or so. Can you give us any color on how demand from that group has trended more recently? How much additional demand is behind that group over the longer term? Maybe also how you're thinking about credit for those tenants?

Okay, great. That's really helpful. Uh, second question. Asian 3PLs have been a significant part of the leasing activity we've seen over the last year or so. Can you give us any color on how demand from that group has trended more recently? How much additional demand is behind that group over the longer term? And maybe also how you're thinking about the credit for those tenants?

Peter Baccile: Yeah, they've definitely been very active, following up on a lot of the, I'll say, pull forward of imports, trying to get ahead of the tariffs. We kind of look at that as a bit of a short-term thing. From a credit standpoint, we'd prefer not to be in discussions a year or two or three from now about, you know, trying to get rent that we couldn't collect. We have generally stayed away from that demand. It has been pretty strong, though, and been a pretty significant percentage of the space that's been leased.

Yeah, that has definitely been very active, following up on a lot of the, I'll say, pull-forward of imports, trying to get ahead of the tariffs.

Um, we kind of look at that as a bit of a short-term thing and from a credit standpoint, would prefer not to be in discussions a year or two or three from now about, you know, trying to get rent that we couldn't collect. So, we have generally stayed away from that demand. It has been pretty strong though and been a pretty significant percentage of the space that's been leased.

Blaine Heck: Great. Thank you, guys.

Great. Thank you guys.

Operator: The next question comes from Vikram Malhotra with Mizuho. Please go ahead.

In the next question, it comes from the crumb Malhotra with Meizuo. Please go ahead.

Vikram Malhotra: Thanks, guys, for taking the question. I'm wondering if you can maybe give us a little bit more color on some of the large lease-ups, in particular, like the Federal Mogul space, some of the other large lease-ups, not just timing, but what sort of demand are you seeing relative to what you typically see in the submarket? Anything unique you may be seeing? Any need to subdivide or, I guess, redevelop those assets? You can walk through some of the bigger pieces you're trying to lease up and what sort of demand and what the strategy is behind those. Thanks.

Thanks guys sitting in the questions. Um maybe just I'm wondering if you can maybe give us a little bit more color on some of the large lease UPS. In particular like the Federal Mogul space, uh, some of the other large lease UPS more and more not just not timing but what sort of demand are you seeing relative to you know kind of what you typically see in the submarket. Uh anything unique you may be seeing any need to subdivide or uh I guess redevelop those assets. If you can walk through some of the bigger pieces you're trying to

Uh, Lisa, and what sort of demand and what the strategy is behind those. Thanks.

Peter Schultz: Yeah, Vikram, it's Peter Schultz. I answered that question a couple of questions ago, but I will say that both of the buildings are designed to be multi-tenanted. That's something we always incorporate in our new developments. Certainly, flexible activity is good. As we've commented on a couple of times, the larger deals tend to move a little slower and more deliberately, but we're encouraged by the activity we're seeing today.

Peter Schultz, I answered that question a couple of questions ago.

Uh but I will say that both of the buildings are designed uh to be multi-tenanted. Uh that's something we always incorporate in our new developments. So certainly flexible, you know, activity is is good as we've commented on a couple times. The larger deals tend to move a little slower uh and more deliberately. Uh but we're encouraged by the activity we're seeing today.

Vikram Malhotra: Okay, great. Maybe just to follow on to the, I guess, the 26 sort of, you mentioned good progress on expirations. I'm just wondering if you have some high-level math. You've done a lot of leasing this year, which will flow into next. For whatever reason, if you were to do all the additional leasing that you've pushed out into next year, if that were to occur right at the end of next year, is there like a rough impact to earnings next year you would have?

Okay, great. And then maybe just a follow-on to the, I guess, the 26th of you mentioned, good progress on expiration. I'm just wondering if you have some.

You know, high level math, you've done a lot of leasing this year, which will flow into next. Um, for whatever reason if you have, if you were to do all the additional leasing that you pushed out into next year, if that were to occur at right? At the end of next year, is there like a rough impact uh, to earnings next year you would have

Peter Baccile: I mean, the later in the year that we complete that leasing, the less impact it has on 2026 results. That timing, you know, when we sit down and do our budgets, we're going to talk about where we are in discussions on these assets, and that'll inform our decisions around when during the year that we think we can get those leases signed. That's work that we have yet to do, and you'll hear a lot more from us on that subject in February.

I mean, uh, the later in the year that we complete leasing, the less impact it has on 2026 results. Um,

And that timing, you know, when we sit down and do our budgets, we're going to talk about where we are in discussions on these assets, and that'll inform our decisions around when during the year we think we can get those leases signed. So, uh, that's work that we have yet to do, and you'll hear a lot more from us on that subject in February.

Vikram Malhotra: Okay. I guess what I was just saying is it seems like you have a lot of the growth baked in for next year through the leasing you've done, through the expirations. Obviously, the renewal activity has been good. It just, to me, it felt like there's less risk whether you do it at the beginning of the year or the end of the year. A lot of the growth that I guess the street's anticipating seems to be locked in. I don't know if you agree or disagree with that.

Okay. No, I, I guess what I was just saying is it seems like you have a lot of the growth baked in for next year, through the leasing, you've done through the expiration, uh, of the renewal activities been good. So it just it to me, it felt like, uh, there's less risk whether you do it.

Peter Baccile: Yeah, I mean, when you look at what we're trending right now on cash rent growth, the 31% on, call it, 31% of the rollovers, that's obviously a very strong number and helps 2026 considerably. Also, for next year, our portfolio-wide bumps now on average are going to be 3.45%. That obviously contributes to the proportion of the portfolio that doesn't roll. Yeah, we're in a pretty good position.

At the beginning of the year or the end of the year, a lot of the growth that I guess the street is anticipating seems to be locked in. I don't know if you agree or disagree with that.

Yeah, I mean, when you look at, um, what we're trending right now on cash rent growth.

the 31% on call 31% of of the rollovers that's obviously a very strong number and

so, um,

You know that obviously contributes to the proportion of the portfolio that doesn't roll. So,

Yeah. Uh, we're in pretty good position.

Vikram Malhotra: Thank you.

Thank you.

Operator: The next question comes from Rich Anderson with RBC Capital Markets. Please go ahead.

[Analyst 2]: Hey, thanks. Good morning, everyone. I was just reading your sort of tone on this call.

And the next question comes from Rich Anderson with Cantor Fitzgerald, please go ahead.

Scott Musil: Hey, Rich, we're having a hard time hearing you.

Reading your, your, your sort of tone on this call. Hey, Rich. I'm having a hard time hearing you.

Nick Yulico: How about now?

[Analyst 2]: That's better.

Peter Baccile: That's much better.

Scott Musil: Is that better? Okay, sorry about that. Just listening to your body language on the call and just sort of the level of confidence that you're, you know, you're expressing doesn't necessarily jump off the screen as much as it did for PLD yesterday. I was sort of mentioning deliberate tenants and all that sort of stuff, but, you know, good tone nonetheless. How would you describe the interplay between tenants? I mean, to what degree are they sort of watching one another and someone takes the leap and the others are following? Do you think that that's sort of a perhaps an oversimplification, but how the market may ultimately recover, there'll be more of a herd event of some sort, or do you think it'll be more like a, you know, a slow and steady recovery type of process?

How about, how about now? That's better the better. Okay, sorry about that just um listening to your body language on the call and just sort of the level of confidence that you're

Peter Baccile: Yeah, there's definitely linkages from a competitive standpoint between certain businesses and certain sectors, and you do see that when a bigger player moves quickly and moves significantly, it does tend to act as a catalyst for others to get off the sidelines. We saw that certainly during COVID with Amazon getting way ahead of its competitors, and you know, pretty much if you sell anything today, you're competing with Amazon. What they do definitely has a playthrough to the rest of the business. That's kind of a higher-level observation. To get too focused on details on that is probably not constructive. Yes, there is a little bit of a follow you, follow me that happens.

You know, you're expressing is, doesn't necessarily jump off the screen as much as it did for pld yesterday. But but, you know, sort of mentioning deliberate tenants and all that sort of stuff, but, you know, good, good tone nonetheless, but how would you describe the interplay between tenants? I mean, to to what degree are they sort of watching? 1 another and someone takes the leap and the others are following, do you think that that's sort of a, perhaps, an oversimplification, but how the market May, uh, ultimately recover. There would be more of a herd event of some sort or do you think it'll be more like a, you know, a slow and steady recovery type of process. Yeah, there's definitely linkages from a competitive standpoint between certain businesses and certain sectors. And

You do see that um, when a bigger player moves quickly and moves significantly, it does tend to act as a catalyst for others to get off the sidelines. Um, we saw that certainly in

During Q3 with Amazon, getting way ahead of its competitors, and you know, pretty much if you sell anything today, you're competing with Amazon. So what they do definitely has a playthrough to the rest of the business.

You know, but that's kind of a higher level observation. To get to focusing on details on that is probably not constructive. But yes, there is a little bit of a...

Peter Baccile: The more leases that get signed now, if you're a tenant rep and your attitude toward your client's needs goes from you can wait a couple of months to you better sign now, it's the best deal you're ever going to get. When the Chinese 3PL tenants lease up all the competitive space and all that's left is, say, ours and maybe one other, people start to move a lot more quickly. That dynamic hasn't happened, but it's certainly trending toward that.

Follow you, follow me. That happens, and the more leases that get signed now, it...

You know, if you're a tenant rep and your attitude toward your client's needs goes from, "You can wait a couple of months till you better sign," now it's "the best deal you're ever going to get."

Scott Musil: I wonder if the pull forward of demand in the early COVID era, if that's something like that could materialize, and if perhaps you don't even want that, but it may be the fact of the matter nonetheless.

And when the Chinese 3PLs lease up all the competitive space, and all that's left to say ours, and maybe one other, people start to move a lot more quickly. So that dynamic hasn't happened, but it's certainly trending toward that.

Peter Baccile: Yeah, I wouldn't call it pull forward. I would call it now all of a sudden there's a cost to waiting. For the last two years, there's been no cost to waiting. When there becomes a cost to wait, that's when people act, and that does not mean that we're oversigning leases like we did during COVID. That's a completely different phenomenon.

Scott Musil: Okay, fair enough. Second, you talked about taking advantage of the land positions in some of your better markets and considering development next year. What about monetizing some land elsewhere? You know, the data center movement, AI, all that. Is that something that could be on the horizon for you guys as well to some degree?

Peter Baccile: Yeah, I mean, we're looking at everything we have, not just land, but even all the income-producing assets we have to see if from an economic standpoint and from a feasibility standpoint, it would make sense to convert those assets to a higher and better use. From a value standpoint, data centers are a higher and better use. We're looking at that. There are a lot of hurdles and a lot of challenges involved in trying to do something like that, but we're tearing into it, and we'll see if we can dig up any opportunities.

Yeah. I wonder if the the pull forward of demand and the, you know, early Co error, if if that's something like that, could materialize. And if if perhaps you don't even want that but it may be the the fact of the matter nonetheless. Yeah I wouldn't, I wouldn't call it pull forward. I would call it. Now all of a sudden there's a cost to waiting. Yeah. And for the last 2 years, there's been no cost to waiting. And when there becomes a cost to wait, that's when people act and that does not mean that we're over signing leases like we did during Co. That's a completely different, uh, phenomenon. Okay, fair enough. Um second, um, any any you talked about uh, taking advantage of the land positions and some of your better markets and considering, uh, development next year, what about monetizing some land elsewhere? You know, the data center movement, AI all that, uh, is that something that could be on the horizon for you guys as well to some to some degree? Yeah, I mean we're, we're looking at everything, we have not just land but even all the income producing assets, we have to

See if, from an economic standpoint and from a feasibility standpoint, it would make sense to convert those assets to a higher and better use.

From a value standpoint, data centers are a higher and better use. So, we're looking at that. There are a lot of hurdles and a lot of challenges.

Scott Musil: Great. Last for me, we've done some work on this sort of, you know, the ultimate recovery of industrial, and it seems to me that larger boxes may be the leaders in the inevitable recovery of the business if it's not already, you know, recovered or getting recovered. Do you agree with that, that perhaps the, you know, the larger boxes will lead the pack, or do you have a, you know, sort of a different view based on size category?

Uh, we are involved in trying to do something like that, but we're tearing into it. We'll see if, uh, we can dig up any opportunities.

Peter Baccile: Certainly, that impacts the volume and capacity, and one of the reasons that volume's been down is that there haven't been that many 1 million footers leased like there were in 2021, 2022, and 2023. From that standpoint, that impacts the capacity or the large numbers. What we really need is a group of tenant requirements that begin to sign consistently, new development leases and invest in growth. It's beginning to happen. Some of it is from tenants who aren't that tariff-sensitive. Some of it is from tenants who kind of say they can't wait anymore. There's definitely been some pent-up demand. I would say this is the, you know, we're getting back to a feeling like we had pre-April 2nd. We're not there yet, but it's feeling like we're getting back to that time period.

Great last for me. Um, you know, we did we've done some work on this, uh, sort of, uh, you know, the ultimate recovery of industrial and seems to me that larger boxes may be the leaders in the, in the inevitable recovery of the business. If it's not already, you know, recovered or getting recovered. Uh, do do you agree with that that perhaps that, you know, the the larger boxes are the the will lead the pack or do you have a, you know, sort of a different view based on size category?

Certainly, that impacts the volume and capacity, and that is one of the reasons.

Uh, but what we really need is a, as a group of.

Uh, tenant requirements that begin to sign, consistently, uh, new development, leases and invest in growth, and it's beginning to happen.

Some of it is from tenants.

Who uh aren't that tariff sensitive. Some of it is from tenant to kind of say they can't wait anymore. So there's definitely been some pent-up demand. And um,

Peter Schultz: Hey, Rich, it's Peter Schultz. The other thing I'd add to Peter's comments is we continue to see a flight to quality. As you think about the quality and location of our assets and activity, certainly we're seeing activity a million and more, but we're also seeing strength and breadth of activity across a variety of sizes. I wouldn't say it's in one size, but we focus, as you know, on delivering new product in unmet pockets of size in our target market. We feel pretty good about the broad range of square footage requirements.

Peter Baccile: I just want to emphasize that movement to quality favors us because we've built now so much of what we own, and that's another reason that our foot traffic's way up.

You know, I would say this is the, you know, we're we're getting back to a feeling like we had free. April 2nd. We're not there yet, but it's, it's feeling like we're getting back to that time period. Hey Richard, it's Peter Schultz. The other thing I'd add to Peter's comments, is we? We continue to see a flight to Quality. Uh, so as you think about the quality and location of our assets, uh, and activity, certainly we're seeing activity a million and more, but we're also seeing strength and breadth of activity across a variety of sizes. So I wouldn't say it's in 1 size but we focus as you know on on delivering new products uh In unmet Pockets of size in in our target market. So we feel pretty good about the broad range of square footage requirements and I just want to emphasize that movement to Quality favors us because we've built now so much of what we own and um

That's another reason that we're our foot traffic is way up.

Scott Musil: Great color. Thanks, everybody.

Great caller. Thanks everybody.

Operator: The next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

And the next question comes from Caitlyn Burroughs with Goldman Sachs. Please go ahead.

Caitlin Burrows: Hi, good morning. I was wondering if you guys could go through today how you're balancing the rate versus occupancy equation. How does it vary maybe by first-generation development properties versus the existing portfolio and then renewals?

Hi, good morning. I was wondering if you could walk us through today how you're balancing the rate versus occupancy equation. How does it vary, maybe by first-generation development properties versus the existing portfolio and then renewals?

Peter Baccile: Sure. I mean, the whole thing is all about net present value. We're constantly trying to maximize the net present value with respect to those inputs. Base rate is most important and near and dear to our hearts. Giving up another month or two of free rent's not the end of the world, although we'd rather not. On the TI front, you know, we've typically been standard TI packages. Do you guys want to add some color on what you're seeing in your markets?

Sure. I mean the whole thing is all about npv or constantly trying to maximize the npv.

With respect to those inputs.

uh base rate is most important in near and dear to our hearts uh giving up another month or 2 of free rents, not the end of the world although we'd rather not

Um, and on the TI front, you know, with typically been standard TI packages, um,

Peter Schultz: Caitlin, the other thing I'd point to is, as we talked about in the script, our renewals in 2026 are really strong to date, and you're seeing good pricing pressure there. I think you've asked us about this before. It's not really about price. It's about the demand and the right product in the right place. We clearly see an improvement in traffic, particularly among those tenants who are not tariff-centric, as we've commented about a couple of times today. Certainly, there are assets where we have work to do, and some of those may be in more competitive pockets like Jojo's talked about, and we're going to meet the market and do what we need to do to lease the space.

You guys want to add some color and what you're seeing in your markets? So, Caitlin the other thing I'd point to is, as we talked about in the script our renewals in 26 are really strong, uh, to date and you're seeing good pricing pressure there. So it's, uh, I think you've asked us about this before. It's not really about price. It's about the demand and the right product and the right place, uh, and we clearly see an improvement in traffic, uh, particularly among those tenants who are not tenant, I'm sorry, not tariff Centric. Uh, as we've commented about a couple of times today certainly, there are assets.

Where, uh, we have work to do, and some of those may be more competitive pockets, like JoJo's talked about. We're going to meet the market and do what we need to do to lead this space.

Caitlin Burrows: Got it. I guess I was wondering if the willingness for you guys to wait that extra month to get the better rate has changed, but it sounds like it probably hasn't. Got it. On the point you made on the progress you guys have made on 2026, I would have generally thought that spreads would decline over time as comps get tougher, but you have essentially maintained the 31% or 32% spread in 2026 from 2025. I was just wondering if you could give more detail on how that was possible, what the drivers were, if it could continue. Is it just lease-specific, or is there something else going on to kind of sustain the same level of spreads?

Got it. Yeah, I guess I was wondering if like the willingness for you guys to wait that extra month to get the better rate has changed but it sounds like it probably hasn't, so got it. Um and then on the point you made on the progress, you guys have made on 26. Um, I would have generally thought that spreads would decline over time as TomSka. Uh, comps get tougher. Um, but you have essentially maintained the 31 or 32% spread uh in 26 from 2025. So I was just wondering if you could give more detail on how that was.

Possible with the drivers were if it could continue. Is it just like least specific? Or is there something else going on to kind of sustain the same level of spreads?

Peter Baccile: We have said over time that we thought that math had some running room, some duration. When we look at the mix of our leases and when they were signed, you know, don't forget, if you signed a lease in 2019 for seven years, you signed at a very, very cheap rate relative to even today coming off the highs. That is going to be driving that cash rental rate number for some time.

um, we have said, over time that we thought that

That math had some running room, some duration.

Um, when we look at the mix of our leases and when they were signed, don’t forget if you signed a lease in 2019 for 7 years.

um,

You signed in at a very, very cheap rate relative to even today, coming off the highs.

And that is going to be driving that.

um,

Cash rental rates for some time.

Caitlin Burrows: Got it. Okay, thanks.

Got it, okay. Thanks.

Operator: The next question comes from Vince Tibone with Green Street. Please go ahead.

And the next question comes from Vince Toboni with Green Street. Please go ahead.

[Analyst 2]: Hi, good morning. The stock has been trading at a significant discount to NAV for several quarters now. Have you given consideration to selling assets and buying back shares as a way to create shareholder value?

Hi, good morning. The stock has been trading at a significant discount in asset value for several quarters. Now, have you given consideration to selling assets and buying back shares as a way to create shareholder value?

Peter Baccile: Hey, Vince. We have looked at that. You know, selling assets and buying stock has not turned out to be, from a mathematical standpoint, that accretive. We have also looked at borrowing and buying back stock, and that doesn't look very accretive. Given that we're in a capital-intensive business in a very volatile market, as this has been, in March, I think we were at $58. The sector was trading a lot better. It's now obviously coming up from the lows. Speculating in our stock is probably not what investors invest in us to do. What I have said in the past is if we had some opportunity, for example, to convert some of our properties to data centers and create significant additional value beyond industrial value, that could be capital that could be used to buy back some stock.

And we've also looked at borrowing and buying back stock, and that doesn't look very accretive. Given that we're in a capital-intensive business, um,

Uh, in a very volatile market as this has been, you know,

In March, I think we're at $58. The sector was trading a lot better. It's now, uh, obviously coming up from the lows, um, but speculating in our stock is probably not what investors, uh, invest in us to do.

um, what I have said in the past is, if we, uh, add some

uh, opportunity for example to

Peter Baccile: In the absence of that, the math doesn't really move much, Vince.

Uh, convert some of our properties to data centers and create significant additional value beyond industrial value. That could be capital that could be used to buy back some stuff. But in the absence of that, the math doesn't really move much, Vince.

[Analyst 2]: No, thank you. Switching gears, I was hoping to drill down a little bit on the supply landscape in your markets. Are there any markets where you're starting to see a pickup in development starts activity, or is it still pretty quiet out there across the board?

No, thank you. Um, and then switching gears, I was hoping to drill down a little bit on the supply landscape in your markets. Are there any markets where you're starting to see a pickup in development starts activity? Or is it still pretty quiet out there, you know, across the board?

Peter Baccile: Peter and Jojo, you want to talk about starts?

Vikram Malhotra: No, there's really, we don't see a pickup. In fact, starts are on a decline. If there's a pickup, there would be a little bit on the builders of activity, but by and large, we don't see a pickup. In fact, there's a decline in starts.

Peter Schultz: In Central Pennsylvania, I would say there's anticipated to be a couple of starts for $1 million square foot plus buildings in the next couple of quarters. Other than that, pretty flattish.

Peter and Judy, you want to talk about starts? Sure. Uh know, there's we don't see pick up, in fact, stars are on a decline. So, uh, so, uh, there is some. Um, if there's pick up there would be a little bit on the bill to do the activity, but by and large we don't see sign pick up. In fact, there's a decline starts

Peter Baccile: You know, we don't know what everybody's math looks like. Obviously, most of the space, Vince, is developed by the private players with private capital. A lot of that land we've competed for over the years, and we think that it's very possible that the underwriting assumptions that were used at that time were pretty aggressive. Not to mention the cost of debt is a lot higher than it was in 2022 and 2023. It's possible those deals don't pencil that well. We think there's a natural drag to new supply ramping up.

In Pennsylvania. I would say there's uh, anticipated to be a couple of starts for million square foot plus buildings, uh, in the next couple of quarters. But other than that, uh, pretty flattish.

You know, we don't know what everybody's math looks like. Obviously most of the space vents is developed by

Uh, the private players with private capital. But a lot of that land, uh, we've competed for over the years, and we think that it's very possible that the underwriting assumptions that were used at that time, uh, were pretty aggressive, not to mention the cost of debt is a lot higher than it was, you know, in 2022 and 2023.

So, um, it's possible. Those deals don't pencil that well. So, we think there's a natural

Drag to a new supply ramping up.

Vikram Malhotra: No, that makes sense, and it's good to hear. Thank you.

No, that makes sense since it's good to hear. Thank you.

Operator: Again, if you have a question, please press star and then one. Our next question comes from Michael Mueller with JPMorgan. Please go ahead.

[Analyst 2]: Hi. I guess for Scott, can you help connect the dots a little bit? I think you said earlier part of the guidance increase was due to development leasing success, but it looks like you pushed off some of the anticipated 2025 leasing into 2026. I know it sounds like that component was at year-end anyway, so it may not be a lot of impact there. What was the portion of development leasing success that is pushing the numbers higher?

Again, if you have a question, please press star. And then 1, our next question comes from Michael Muller with JP Morgan. Please go ahead.

Yeah. Hi, um, I guess, I guess for Scott, can you help connect the dots a little bit? I think you said earlier part of the, um, part of the guidance increase was due to development leasing success, but it looks like you pushed off some of the, I guess, anticipated 25 leases into 2026. And now I know it sounds like that component was a year-end anyway, so it may not be a lot of impact there. But, um, I guess, what was the portion of development leasing success that is pushing the numbers higher?

Scott Musil: I would say, Mike, it's about $0.01. Keep in mind, all development leasing, this is what we assumed in our Q2 call, was assumed to happen on 12/31. All of the leasing that we announced on the call helped us by about $0.01 a share.

I would say, Mike, it's about a penny. And keep in mind all development leasing. This is what we assume that our second quarter call was assumed to happen on 12/31.

[Analyst 2]: Okay, it's this stuff just earlier than what was expected. That was it. Got it.

So all of the leasing that we announced on the call helped us by about a penny a share.

Scott Musil: Yeah. Yeah. Again, from an FFO guidance point of view, we assumed at lease-up on December 31 and at lease-up earlier than that.

[Analyst 2]: Okay, that was about a penny of it. Okay, and then just as it relates to escalators, 3.45% or something in place bumps for next year. On the 2026 signings thus far, have there been any notable changes one way or the other in terms of lease escalators compared to what you were getting in 2025?

Okay, so it's this stuff just earlier than what was expected. That was it, got it. Yeah. Yeah. Again from an ffo guidance point of view, we assume at least up on December 31st and at least up earlier than that.

Peter Baccile: It's interesting. We got 3.6% in 2024, 3.6% in 2025, including the big fixed-rate renewal. So far in 2026, about 3.6%. Our team is doing a really good job dealing with significant pushback, as you can imagine, since that's a number that's above inflation. They've been successful in keeping that number about 3.6%.

Okay. So that was that was about a penny of it, okay? Uh, and then just as it relates to escalators, um, you know, 3 4 5, 3.45 percent or something in place bumps for next year on on the 26th 2026 signings thus far, have there been any notable changes 1 way or the other in terms of lease escalators, compared to what you were getting in 25.

It's interesting. We got 3.6% in 24.

Uh 3.6% uh, in 25, uh, including there's a big uh fixed rate of the goal and so far in 26, about 3.6%. So our team is doing a really good job.

Um, uh, dealing with significant pushback, as you can imagine, since that's a number that's above inflation. So.

[Analyst 2]: Okay. Great. Thank you.

Uh, they've been successful in keeping that number about 3.6%.

Okay, great. Thank you.

Operator: The next question comes from Michael Carroll with RBC Capital Markets. Please go ahead.

In the next question comes from Michael Carroll with RBC Capital Markets. Please go ahead.

[Analyst 2]: Yep, thanks. I guess, Scott, I know that the guidance range doesn't include leasing within the recently completed or in-process development projects, but I know that you guys continue to highlight some of your best markets, and a lot of these buildings are in those markets. Can you talk a little bit about the activity that's happening at those specific properties and what are the near-term leasing prospects of getting those leased up?

Um, or in process development projects. Um, but I know that you guys continue to highlight some of your best markets, and a lot of these buildings are in those markets. So can you talk a little bit about the activity that's happening at those specific properties and what are the near-term leasing prospects of getting those leased up?

Peter Baccile: Yeah. I mean, the stuff that's under construction, there's not really much activity around that. You know, our business has always been a build-it-first, and then they will come. That was a little bit different during COVID when, I'll call it, we had the gold rush to go lease up in logistics space. It's a little premature to try to talk about activity around the current construction pipeline. The assets that have been recently completed, there's really good foot traffic around those. Again, we hope to have leases on some of those buildings sooner rather than later.

Yeah, I mean the stuff that's under construction there's not really much activity around that. You know, our business has always been a build at first and then they will come and that was a little bit different during Co when I'm calling we had the gold rush to go to go lease up uh and Logistics base. But um

So, it's a little premature to try to talk about activity around the current construction pipeline. Um, the assets that have been recently completed, there's really good foot traffic around those. And again, we hope to, uh, to have leases on some of those buildings sooner rather than later.

[Analyst 2]: Okay, great. Lastly, can we talk a little bit about the 3PL tenant? I know that there's not much that you want to say, but is the issue with the subtenant, or is the issue with the direct tenant at that specific site?

Okay, great. And then just lastly, can we talk a little bit about the, the 3pl tenant? I know that there's not much that you want to say, but is the issue with the subtenant, or is the issue with the, the direct tenant at that specific site.

Scott Musil: The issue is with the direct tenant, the 3PL tenants.

The issues with the direct tenant, the 3pl.

[Analyst 2]: Okay. Assuming that there is an opportunity for the subtenant to take that space, and you're just kind of working through the process on that?

Okay.

So then assuming that there is an opportunity from the subtenant to take that space, and you're just kind of working through the process on that.

Scott Musil: Yeah, that's something that we're thinking about and having conversations about. We can't give you a definitive view of what's going to happen at this point in time, but that's something we're working on.

Yeah, that's something that we're thinking about and having conversations about. We can't give you a definitive view of what's going to happen at this point in time, but that's something we're working on.

[Analyst 2]: Okay. Great. Thank you.

Operator: The next question comes from John Peterson with Jefferies. Please go ahead.

[Analyst 2]: Oh, great. Thank you. I guess in the saga of the 10-year treasury throughout this year, it definitely seems to be trending downward, at least today, let's say. Spreads have been tightening a bit. I'm just curious what impact that's been having on cap rates for warehouses across your market and how you've seen those trend.

Next question comes from John. Peterson with Jeffrey's. Please go ahead.

Oh, great. Uh, thank you. I guess in the, uh, The Saga, the 10-year Treasury throughout the year definitely seems to be trending downward, at least today. Let's say, uh, and spreads have been tightening. But I'm just curious what impact that's been having on cap rates for warehouses across your market and how you've seen those trends.

Peter Baccile: You guys want to cover that?

Vikram Malhotra: Yeah. No material change from Q2 to Q3. I would just say that the demand for, like I said earlier, demand for lease assets and quality buildings have increased from Q2 to Q3.

You guys want to cover that? Yeah. Uh, no material change from Q2 to Q3. I would just say that the demand for, like I said earlier, demand for lease assets and quality buildings has increased from Q2 to Q3.

[Analyst 2]: Okay. All right. That's all for me. Thank you.

Okay. All right. That's all for me. Thank you.

Operator: The next question comes from Brendan Lynch with Barclays. Please go ahead.

And the next question comes from Brandon Lynch with Barkley's. Please go ahead.

[Analyst 2]: Great. Thank you for taking my question. You mentioned that there are some tenants out there that are still quite sensitive to tariffs. Can you describe their thought process? Is it that they're just out of the market while tariffs are in place, or they're just waiting for tariffs to kind of settle into a final rate, or are there any other considerations that might be keeping them on the sidelines but might be able to move them off in the future?

Great. Thank you for taking my question. Um, you mentioned that there are some tenants out there that are still quite sensitive to tariffs? Can you describe their thought process? Is it that they're just out of the market while tariffs are in place? Or they're just waiting for tariffs to kind of settle into a final rate or or any other considerations? That might be keeping them on the sidelines, but might be able to move them off in the future.

Peter Baccile: There are two things. One is the cost to them. Without knowing the cost, they don't know what the impact on their margins might be. Secondly, to protect those margins, can they put some or all of that additional cost through to the end buyer, the consumer? They're looking perhaps at investing in growth and, say, a 500,000 square foot building. That's a $60 million investment when you consider the lease and the equipment and the racking and the material, the product, and then hiring all the people. If your EBITDA multiple is eight times, that's almost a half a billion dollar decision. They don't want to make that decision unless they know what the cost of their inputs is and what's going to be the outcome for their margins. That's really it.

There are two things. One is the cost to them.

Um, without knowing the cost, they don't know what the impact on their margins is.

Uh, might be and then secondly to protect those margins. Can they put some or all of that additional cost through to the end buyer? The consumer.

And so, they're looking perhaps at investing in growth and, say, a 500,000 square foot building.

That's a $60 million investment when you consider the lease, the equipment, the racking, and the material for the product.

And then hiring all the people.

Um, and you know, if your EBITDA multiple is 8 times, that's almost a half a billion dollar decision.

And so they don't want to make that decision unless they know what the cost of their inputs.

Peter Baccile: I think over time, the subject is becoming, I'll say, more commonplace, but digested a little bit like interest rates. When interest rates started to move much higher, that caused people to pause for a while. Now pretty much everyone's built into their business plans, their models, their P&Ls, higher interest rates, and they are now moving ahead, and it's kind of not an issue anymore. That's where we need to get with the tariff subject.

Is, uh, what's going to be the outcome for their margins? And that's really it.

I think, over time, the subject is becoming.

uh, more, I'll say more common place but digested a little bit like

Uh, interest rates, you know, when interest rates started to move much higher, that caused people to pause for a while. Now pretty much everyone's built into their business plans, their models, their P&Ls, you know, higher interest rates, and they are now moving ahead.

Peter Schultz: Brendan and I would add that we're seeing some of those companies are actively looking at RFPs and discussions, but they're not making decisions and continuing to push off their target occupancy dates for all the reasons Peter just said. That's what's happening on the ground.

and it's kind of not an issue anymore. So that's a that's where we need to get with the Tariff subject.

But Brandon and I would add that we're seeing some of those companies are actively looking.

Uh, RFPs and discussions, but they're not making decisions and continuing to push off their target occupancy dates for all the reasons Peter just said. That's what's happening on the ground.

[Analyst 2]: Okay, great. Thanks. That's helpful. A related question. We've seen some weakening consumer data, jobs growth a little bit weaker. To what extent are prospective tenants factoring in this, you know, kind of the change in the macro environment?

Operator: kind of waiting on the sidelines because of that as well.

Environment, and I'm just kind of waiting on the sidelines because of that as well.

[Company Representative]: I think it's different depending on the sector and the business that they're in. Notwithstanding all of the shocks and the projections of doom and gloom, the economy has done pretty well through it all. We haven't seen massive increases in inflation from the tariff subjects so far, and it doesn't mean it won't come. Right now, I think most of the prospects are pretty confident in the base business. It's really just this question about when and how and how much to invest in growth.

I think it's different depending on the sector and the business that they're in. And.

Peter Baccile: I just want to add that the 3PL activity continues to be good. In fact, it's increased from Q to Q. Food and beverage, RPs, and tours have increased as well. That sector seems to be doing good. Manufacturing activity is higher from Q to Q. We see some softness in the home-related, like furniture. There's some weakness in that. By and large, overall, I think demand activity has increased, offset by a slight decrease from other sectors.

And notwithstanding all of the shocks and the projections of Doom and Gloom, the economy has done pretty well through it. All we haven't seen, uh, massive increases in inflation from the Tariff subjects so far, and doesn't mean it won't come. But, uh, right now, things, I think, I think me, most of the prospects are pretty confident, they're based business and its really. This, just this question about when and how and how much to invest in growth. Can I just want to add that the 3pl activity continues to be? Uh, good. In fact, it's increased from Q to Q food, and beverage, uh, rfps and tours have increased as well. So that, you know, uh, sector seems to be doing good manufacturing activity is higher from Q to Q. Uh, we, we saw we see some softness in the home, uh, related like Furniture. There's some weakness in that. So, uh, by and large overall, I think, uh, the the man activity has increased

Offset by a slight decrease from other sectors.

Operator: Great. Thank you for the call.

Great, thank you for the caller.

Scott Musil: Our final question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

Our final question comes from Caitlyn Burroughs with Goldman Sachs. Please go ahead.

Art Harmon: Maybe just to follow up to that last point on where is stronger, where is weaker. Yesterday, Prologis reported they had a record leasing volume in Q3, and you mentioned that CBRE is forecasting 2025 will be second only to 2021. Could you put your own leasing volume in Q3 into the context of your past and if you have a view on the future of how that should be trending, realizing that you might be more weighted to development, which makes it lumpier, but trying to figure out a trend there if there is one? Yeah.

Maybe just to follow up to that last point on like where is stronger? Where is weaker? I mean yesterday, um, prologis reported they had a, a record leasing volume in 3 q. And you mentioned that CBRE is forecasting. 25 will be second only to 2021. Could you put your own leasing volume in 3, Q into context of your past? And if you have a view on the future of like, how that should be trending, realizing that you might be a more weighted to development which makes it lumpier but trying to figure out a trend there, if there is 1

[Company Representative]: It's hard to see a trend. I mean, last year, we leased 4.7 million square feet, and this year, it's less. Some of that has to do with what we have available and what's rolling and what's renewing. I'm not sure we have enough volume, given the scale of our company, to identify trends like that, Caitlin.

It's hard to see a trend. I think last year we released 4.7 million square feet, and this year it's less. Some of that has to do with what we have available.

Um, um, and what's rolling and what's renewing?

Art Harmon: Okay, yeah, makes sense. Thanks.

I'm not sure we can, as we don't have enough volume, given the scale of our company, to identify trends like that, Kaylin.

Okay, yeah, makes sense. Thanks.

Scott Musil: Okay. This concludes our question and answer session. I would like to turn the conference back over to Peter Baccile for any closing remarks.

This concludes our question-and-answer session. I would like to turn the conference back over to Peter Baccile for any closing remarks.

[Company Representative]: Thank you, operator, and thanks to everyone for participating on the call today. If you have any follow-ups from our call, please reach out to Art, Scott, or me, and have a great day.

Uh, thank you, operator. And thanks to everyone for participating on the call today. If you have any follow-ups from our call, please reach out to Art, Scott, or me. Have a great day.

Scott Musil: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.