First Industrial Realty Trust, Inc. (NYSE:FR) Q1 2023 Earnings Call Transcript - Page 5 of 5 - InvestingChannel

First Industrial Realty Trust, Inc. (NYSE:FR) Q1 2023 Earnings Call Transcript

The large building tenants, a format tenants are looking a little bit further to save on rent.Vikram Malhotra Okay. So — but the core sort of Inland Empire than, I guess, East-West, are there any specific inflections you’re seeing maybe still very, very strong. But I’m wondering if there are any inflections in terms of those two specific markets around either rent growth or the type of demand or just maybe as you’re watching some of the supply come in. Is there anything you’re sort of thinking about changing or seeing any signs of inflection?Johannson Yap No, no, no change. I’m not seeing really any big infection. In U.S., there’s not much opportunity to build like in IE East. So if you look at the total gross leasing absorption, IE East because of the ability to build a little bit more there to a lot of activity.

And then IE East rent growth actually now was higher than our IE West, but that doesn’t mean, IE West is lagging. IE West does not have enough products to really compete with IE East. So…Vikram Malhotra And then just in terms of the last question, just on the development side, assuming there are more opportunities. Sorry, I missed this. I joined later. But just in terms of funding, if you think about further divesting properties to raise capital for additional funding. Can you just remind us sort of where are we in that process and your appetite for that versus other forms of capital?Scott Musil Sure. The spend that we’re forecasting in 2023 related to our developments is about $180 million. Property sales is going to be a big piece of that.

The midpoint of our guidance for sales is about $100 million. We’re going to generate excess cash flow after CapEx and dividend of about $60 million. And then the remaining $20 million will be funded by cash on hand or our line of credit. So we’re in pretty good shape from a funding point of view.Operator We now have a question from Anthony Powell from Barclays. Anthony, please go ahead. Anthony Powell Thank you. Just one for me on Dallas, where we’ve seen some deliveries and availability in please. What’s your role in Dallas for the next 12 months? And do you expect to see any guess rent growth pressure there given the supply?Johannson Yap Well, in Dallas, our portfolio is primarily infill markets. We have good investment in the Great Southwest which infill market you’re absolutely correct that when you look at deliveries in Dallas, there’s three markets that have the influx of most products, which we don’t have either ownership in or not planning to develop.

The South Dallas, East, Dallas and North Forth worth. If you combine all of the new buildings in those markets, that comprise about 80%, I think, of the products coming in. So we’re not in those markets. So — we — in those markets, if you have a product, you expect the competition, but we’re not in those markets.Anthony Powell Thank you.Operator Next question comes now from Nick Thillman from Baird. Nick, please go ahead. Nick Thillman Good morning. Maybe just touching on demand a little bit. Peter usually mentioned lease renewals or the time line on that as a good indicator of demand in the market. Have you seen any shift in the time line of tenants going to discuss renewal options with you?Peter Baccile Not really. That time line has stayed pretty consistent over the past year, two years.

Not a big change.Nick Thillman And then the last one for me. Maybe just on 2023 role, you said there was a little bit more outside exposure to Southern California. As we’re looking at ’24, is that going to be more in line with your current portfolio? Or is there anything — any markets that are a little bit more exposed there?Peter Baccile The — from a rollover standpoint, as you know, in ’23, California was disproportionately high, meaning disproportionate to its share of our portfolio. In 2024, it is slightly lower than its share of our portfolio.Nick Thillman Okay, all that’s it for me. Thanks. Operator And this concludes our question-and-answer session. I would like to turn the conference back over to Peter Baccile from — for any closing remarks.

Go ahead.Peter Baccile Thank you, operator, and thanks to everyone for participating on our call today. We look forward to connecting with many of you in June in New York.Operator The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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