EastGroup Properties, Inc. (EGP) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the 11:15 a.m. session at Citi's 2022 Global Property CEO Conference. I'm Manny Korchman joined by Chris McCurry with Research. We're pleased to have with us EastGroup Properties CEO, Marshall Loeb. This session is for Citi clients only, if media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. For those joining here in person, you're welcome to use the mics in the room, and any one listening can use LiveQA through either the link or the question box. Marshall, hopefully, they'll have a feed of maybe you don't have to sit backwards, but we're going to get that fixed. Marshall, I'll turn it over to you to introduce the company and the gentleman on stage with you, and then we'll turn it over to Q&A.

Okay. Manny, good to see you. Actually -- over my shoulder. I wish you were here, but I know we're in good hands and good to see your face. With me, as Manny mentioned, I'm Marshall Loeb, I'm the CEO at EastGroup, but with me on the stage Brent Wood, who is our CFO; and John Coleman is our EVP and really runs our Eastern region, which in starts in Miami and runs up through the [ Carolinas ]. So that's the team. As you think about EastGroup, my kind of elevator description is we're obviously an industrial REIT, where Sunbelt or [indiscernible] states kind of running from California, Arizona, Texas, Florida up through the Carolinas. And the reason we're in the major cities in those states. And the reason we picked those states is that's where we're shallow bay, so we're a little bit closer in smaller buildings, our average building is going to average 80,000 to 200,000 square feet. Our average tenant size is probably in the low 30s -- 30,000 square feet. And in those cities, that's where so much of the growth has occurred over the last couple of decades and has really accelerated in the last couple of years during the COVID kind of transformation.

What are the top 3 reasons that investors should buy EastGroup's stock today instead of any other listed property company?

Okay. That's a pretty strong statement because I think we have some good peers here at the conference. But why us and no one else. There's at least 3 good reasons, but I'll start with the 3. I would pick if depending on your hold period and your capital structure, if you owned EastGroup, fortunately, last year, your total shareholder return would have been 68%. But you could say -- and again, that was a great year for us. We're thankful for how things played out in 2021. But whether it's -- if you pick your time period, 1, 3, 5, 10, 15 or 20, actually, the lowest if you'd owned EastGroup over any of those periods would have been a little over 14% kind of in our 15 year with the great financial crisis. So we have a long-term proven model that's weathered through the great financial crisis, through COVID, the tech bubble, you name it. So I think with that, we're proud of our track record, and it's really the same management team, our officer team, the 3 of us have all probably been at EastGroup average right at 20 years. If you went through even down on a Vice President level, things like that. So a proven track record. We like where -- I've said kind of when I mentioned we're shallow bay infill sub -- infill markets within fast-growing cities. We like where we fit on the playground and that if you pick one of our major cities: Atlanta, Dallas, Phoenix, Houston. Usually, when you read really what's going on in terms of construction, say, Atlanta, for example, at the end of the year, there's about 35 million square feet of industrial construction underway. But within Shallow Bay, what we build, because so many of our competitors are larger and will put more capital out and look, their model is working. But of those deliveries, probably 10% to 15% will actually compete with us. So we like where we fit if there's really not that much competition or significantly less competition. We are usually the high-cost provider. Our development yields is the other model where I would say the -- to pick EastGroup. Last year, we -- for example, we delivered $280 million worth of buildings kind of came through our pipeline, spread out across our markets across the country. At the end of the year, we were 98% leased on those, and we averaged a [ 7% ] to yield on our cost. And just, again, kind of current markets and where our yields are shaking out. If I use a conservative cap rate because I can do the math of a [ 3.6% ], that basically means that $280 million is worth 2x. So what we do is really make a lot of small calculated bets within a park setting, building 1 or 2 buildings after the other, but the development yields are higher than our peers, and it's really those smaller buildings, infill set, and that's where if you're delivering goods within our metro market, that's what we focus on. It's not people getting goods from China to New York or Miami, it's really deliveries within Orlando, Tampa, Austin, Texas, within our markets. It's kind of where our [ tenants ] niche is.

Cool. Marshall, looking at that track record that you brought up, had you not been shallow bay, had you been bigger box, do you think that, that would have been any different? Or you think that it's work, so we're not going to change it, but it might not have been so bad or any different however you want to categorize it, had we -- had more [indiscernible]?

Yes. I don't know -- again, this is hypothetical part of the -- I guess not say anything disparaging on our peers. When I think of the bigger box peers, they really had issues during the great financial crisis, where thankfully, we never had to issue. We were -- had a balance sheet that was in good shape, and it's actually improved over the last few years. So Manny, when I think of what -- it's probably the tail end of that 15 to 20 years is when our peers ran into trouble and it was really more balance sheet, probably more than product type. I do think with our product type, I love that there's less competition. And really, the difference between us and our peers on product type has gotten wider over that 20-year time period because before, a 300,000-foot building may have been a big bomber, but now it's 800,000 or 1 million square feet, things like that. So I'd like to think we would have done well. I don't know, it's hard to say we would have done as well. And then the reason our longer-term track records are better than our peers. I don't know that it was as much what they were building is where their balance sheet stood when the music stopped, kind of when the housing bubble burst back when.

Is there an element that your competition is, I don't want to frame it this way, but maybe easier competition and that is less professionally managed given that smaller property type? Or is that a wrong assumption?

I think they're good -- I think they're good competitors. It's usually the local regional developers who've partnered rather than as one developer has described -- it used to, you would have the land, you contribute the land and you go get a bank loan to build it. Those days are kind of gone. And now it's you have AEW, Clarion, LaSalle, some equity partner, and they're working -- they'll get a development fee and a promote to work off of. So they've been -- the market has been surprisingly to us disciplined when things have wobbled in a market where new supply will shut down. I think where it helps us maybe -- and we've had more and more -- it's, hey, it's hard to say, hey, our development profits were 100% last year. There's more entrants into the development or the industrial side of development. But with our long-standing track record with some of our construction companies and things like that, where right now, it's awfully hard to get building materials to finished buildings, and that's hard on our development model, but it sure helps our existing portfolio. Having those long-standing relationships with contractors in our markets around the country, when there is a steel order that gets canceled, we've been able to jump up in the batting order and things like that or get those materials. And that in my mind is probably where we have an advantage over some of our competition. It's newer to the market where we've worked with. Some of our San Antonio, Houston developers are John and Tampa and Orlando for 10, 15 years, and they know we've been pretty steady development partners for them. And I think that's helping us now get those materials. It's still it's more expensive than it used to be, but at least you're getting them delivered.

Right. Can you talk about where your land bank currently sits and how much development you can do on it?

Our land bank and thankfully, we added room for about 2.4 million square feet just in the fourth quarter, but looking at our supplement, we could build right at -- check my eyes, right at 7 million square feet. I wasn't trying to find the answer. I was just trying to read. So we could add 7 million square feet of land. And then as you think about us or developer too, I've always -- in my mind, it's always a little bit of an iceberg. So what we've closed on, we could build another 7 million square feet, but there's also sites and one of the tricky parts of building these infill business park settings, our zoning is probably, as you think about naturally harder or a little longer to work our way through than if we were southwest side of Phoenix, where we're more East Valley of Phoenix or Inland Empire East or Central Tampa or Orlando. So kind of an iceberg. There's 7 million square feet on the balance sheet today. And there's any number of parcels that we have tied up and we're trying to work our way to zoning and [ permeating ] because ideally, if we close on the land on Tuesday, you'd love to be able to start construction on Wednesday, and we'll put that closing off as long as the sellers will let us. And usually, that's as we work our way through zoning and [ permeating ].

Do you think it's easier or harder for your specific shallow bay property type to get that zoning and entitlement versus if you were building those 600 million, 800 million square footers?

I would say harder, and I may look to John, who lives it every day in some of our markets, if you are comfortable?

Manny, good to see you. Yes, it is harder because it's more infill-type locations. So we're looking at established markets where we may have to roll our sleeves up and do an assembly, a lot of rezoning applications and also a brownfield, but it's worth the extra effort. One thing we have seen, though, recently is there is a bit of a pushback on some of the bigger distribution uses in some of the towns and cities we're doing rezoning. So our use has actually been more embraced when we have a Class A building that has basically single-story office look across the front and then that has less of the heavy truck traffic associated with it. We have more of an office build out of 5% to 10%. So because of that, we're actually being embraced more recently than the bigger distribution and the truck traffic associated with that.

John, what are the -- just remind us, what are the average, whether it be suite or user sizes, however you want to define that on the new developments?

My average is about 30,000 to 50,000 square feet. And then our -- of those suites, will range from 5% to 15% office that will vary from company to company.

Right. And then what are the -- when you're underwriting those new land sites, what type of yields are you targeting on the new land versus sort of the, I'll call it, aged inventory, although that's not what I mean at all?

Yes. our historical model, we've always said 150 basis point premium over market cap rates, and those continue to be compressed and really other markets have caught up with the larger national markets in terms of cap rates going down. So that would get you in the high 4s today. Again, last year, we were fortunate to deliver just north of 7 what's in our pipeline today. There's a little over 500 million, that probably averages about -- I think that's probably about a 6.7, 6.8. And we underwrite to current market rents, too. So the other thing that when our development yields have been thankfully maybe a little bit surprisingly sticky to us in terms of we keep thinking costs are rising, land costs are up, construction costs are up, but yield rents have continued to rise. So -- but if we can keep developing in the 6s, high 5s, even with cap rates in the mid- to lower 3s in our markets, that's certainly well above that kind of -- when we would view 150 basis points is kind of the margin to justify the construction risk and the leasing risk. As an aside, Manny, I can, you've also seen us, as I described, our local kind of developers with an institutional partner. We've bought any number of value-add buildings. And typically, that's been a brand-new building that maybe 3 of us in the audience built with an institutional partner. And when we got certificate of occupancy, we would flip it to someone like EastGroup and we'll take the leasing risk. And we would get yields that weren't maybe quite as high as our development yields, but they were above core asset yields and with the demand for industrial out there, look, we'll find those opportunities hopefully here or there, but it's been interesting to watch the bidding on those value adds, so that there's very little difference between a leased core asset and a new vacant building today or even an entitled land site in a number of our markets that people -- I guess as we view it, aren't afraid of that vacancy the way they were maybe 24 months ago.

Is there an absolute price break point where cap rates change. So a $50 million asset is worth a $325 million versus a $150 million assets worth a 3 or something like that, where there's just -- the capital is different?

Yes, I don't know that I've -- we've seen it on asset size so much. And again, especially like we -- we've been on some things in Southern California and some other markets that have been incredibly prices per square foot that I didn't -- I'm not seeing where you're getting into the $500 to even $600 a square foot for industrial, which I used to think of as a nicer office building, a CBD office building type pricing. I do think the larger of the portfolio, maybe not building size, but if you cobble together enough mass, -- and it's really the institutions can put more capital to work. And that's -- we'll look at those. And at times, we've bid on them, but it is awfully hard to feel like for us to create value for you. If we go buy those because just the number of bidders and so many people are raising so much capital and you can put it to work at once. It's not -- but we were looking at an 80,000-foot building recently and it was any number of bids, and it will probably go at best to 3, if not below that in terms of the yield.

You mentioned sort of, I think, like a 3, maybe a 3.5 sort of back-of-envelope cap rate across the portfolio. Is that pretty consistent across markets or if people are in audience who are trying to build their NAV, should they be cognizant that some market is wildly off of that one way or the other?

It used to be more pronounced than it is today. I mean, there's one example that I don't -- not naming and violating our confidentiality agreement. This was a value add in Dallas last week that as we underwrote it at current market rents, and we dropped out of the -- bidding was about a 3. So to me, it's cap rates have compressed. There's not many undiscovered, unfortunately, industrial markets, at least in our geographic footprint. And where Los Angeles used to be that much lower than Denver, Phoenix, Las Vegas, those markets have pretty much caught up or within a range of those. And the same thing, if you flip within Dallas, Austin used to be a little bit higher, but those cap rates have come down. Orlando, Tampa, used to trail Atlanta, but they've caught up. So it's pretty competitive everywhere. And as we rationalize it a little bit as I think it's hard if we had raised a fund -- if I had raised a fund to underwrite work from home and what that means for office, what retail looks like, when does -- what's the next wave of COVID, how does that look. And so that's pushed more and more, and with the growth in e-commerce penetration and last mile delivery, buy online, pick up curbside, things like that, I just think it's that much more capital has gotten pulled towards industrial, mainly because other food groups are harder to underwrite than they were a couple of years ago.

Does that incentivize or inspire you to sell a little bit more? Or do you think it's appropriate across all those markets?

Yes. No, it does a little of both. I mean, I guess what I would say is -- what we've tried to do the last few years, look at -- and I'll use CBRE's phrase, if there's a global wall of capital that wants U.S. industrial, us having a checkbook really isn't a point of differentiation. So we'll buy things here or there, but we'd rather build it or finish creating it than outbid the 20 people in the room for it. So we'd rather build it and then you have seen us sell some things at the end of the year, and I've been surprised, John sold an older building, several buildings in Tampa for us that we had acquired in the '90s probably -- and both of these are about 40-year-old products, a little more service center in nature. One at the Tampa Airport or near it at under 4 yield, and then 1 if anybody knows Phoenix, it was up by Metro Center mall in Phoenix, it was Metro northwest side of town, Metro Mall probably failed in about 2000. It probably feels like a long time ago. It was 40 years on. And Both of those -- one was just under a 4 yield and one was right at a 4 yield. And look, and those buyers, I hope they do great with them. 2 years ago, I would have said if we had gotten a 6 yield, we would be doing well a 6 to a 7 yield on the sales. So again, it just shows that capital -- look, I like our broker in Phoenix with Cushman Wakefield that sold it, but when he said he could get a 4 yield on our Metro center, we kind of even internally kidded and said, we want to give him a listing just to see what he can do with it. I'm glad he's that much of a believer. And thankfully, we had a couple of buyers, then one came across the finish line, he was right. I was just -- so at times -- even though we're in it day-to-day, I still get surprised by the market. And we've got a few more things. We've got a couple of other properties under contract currently. So -- look, we don't have that much that we don't like and we do think rents are growing. But I think for our shareholders, we should always be kind of pruning and what we'll ask John and his 2 peers, one runs a Western region, one in Texas, you kind of can come up with your disposition list of -- if you came in, in the morning and you got a call that your tenant had gone bankrupt, which building do you want to get that call from the least. And that's pretty that simple. That helps you with your dispositions. And then the other market, that's a little bit of a outlier for us, but if you followed EastGroup over the years, we had a pretty heavy Houston concentration. And that scaled back from the low 20s to below 11% this year. We're in the 10s. And so there, we've got a good team. They've continued to -- if we can develop into the 6s and sell them in the 3s and kind of basically tread water there a little bit and manage our Houston size. So that's really been where our dispositions have been. So you might see us sell some more things in Houston this year because hopefully, because we're seeing some good development opportunities. We've got a pre-lease building under construction now, in fact, for 1 of the 3PLs up by the airport.

What's the environment like in Houston right now? I know that the changes in the oil markets have been quick and sudden but is there anything notable to share from Houston?

No, it feels early. I mean we've gotten that question yesterday and this morning of -- with oil prices shooting up. And I don't know -- I've thought does it take our federal government looking at domestic production a little bit more. And again, it will be a ripple effect. I've always thought on the flip side when oil was low and people would get nervous about Houston for us that we stayed. Maybe it's our product we stayed 95%, 96%, 97% leased whenever -- it wasn't our best market, but it wasn't terrible in 2020 when people were really concerned and it's recovering, and we'll see where oil and gas takes it. Right to date, no measurable impact that we could point to.

Maybe I'll throw one to Brent. In terms of guidance for the year, does the current equity price change at all? How much equity you plan to do? Or the amount of dispositions that you used to fund some of that growth?

Yes. It's something -- frankly, we've been a little bit spoiled with where the price has been and the premium that we've been able to issue at. If you followed us, we've been very active in the last 2 or 3 years, funding a lot of our growth via equity as opposed to debt, that has allowed us to really get a strong balance sheet and create a lot of runway, a lot of flexibility. We really internally keep a close eye on our internal calculation of NAV. We also kind of measure that against consensus NAV. And I would say that's probably more of our floor barometer of types that we look at. Prices traded down some. We still view it as an attractive source. We went out very early in the year and locked in 2 different loans, 1 for $100 million, 1 for $150 million and expectation that rates would rise. Each of those, we locked in at about 3. I think about 3.04%. So again, we view that as very attractive. Last fourth quarter, Marshall and I talking, we liked the price. We issued about $45 million more than we had budgeted for the quarter just, again, like in the pricing. So we basically view we've prefunded some of this year. But again, given Marshall's talked about guys in the field building to a 6.5 or 7, cap rates in the 3% to 3.5% at those margins, we view equity and debt. It was more attractive, but we still view it as attractive and it's not -- we're not capital constrained in any way. If we have to go a little heavier on that. We certainly have the runway to do it. But we're not -- we're still very much an offensive player in terms of our capital deployment in our markets versus being defensive because of the price as it is today.

Okay. Switching to a couple of our pre-prescribed questions here. What is your #1 ESG priority in 2022?

Yes, I would say, one, we're very pleased with the progress we've made. In the last few years, I would point out and remind people that we hired a Director of Sustainability last summer. She's been terrific and really somebody that's day in, day out, helping us not only improve and do things better, but also report what we were already doing. We're very pleased that some ratings, our social score has improved twofold on the ISS rating. We went social from an 8 to a 3, 1 being the highest. Our governance score being a 2. And probably the next step is to capture and report better on environmental information. That would include -- we've retained a couple of groups to help us with that data collection reporting. There's some inherent challenges there. We're not -- EastGroup ourselves we're not a big utility user per se. All our tenants, we have over 1,600 tenants. They're all individually metered. But we do have some things we can report and do better. So I would say our environmental score, we would want to do better, again, continued very transparent reporting for those that are interested and haven't seen our most recent corporate sustainability report that's posted on our website, something us and the Board talk about a lot and take very seriously, and we're pleased with the movement and the positive momentum we've had in that program.

Marshall, another question here on my list is, what is the biggest growth opportunity that you believe the market is not giving you credit for?

I think growth opportunity. I do think -- and I get it, sometimes at quarter end, we'll report, all of our peers will report, and it's easy to maybe compare same-store occupancy, re-leasing spreads. And look, those are all worthwhile kind of, I guess, as I picture it dashboard kind of items out there. I think what probably -- or maybe I don't articulate as well as I could. Our development spreads coming in, in the high 6s and even in the 7s last year. Those are 150 to 200 basis points higher than some of the big box yields. And I think, look, the portfolio is performing well, and I'm thrilled that we had over 30% GAAP rent increases last year. But with our development model and the profits, it's been able to generate the net asset value it's creating as we -- as Brent's phrased, kind of one more brick in the wall as we build our NAV. In the last few years I've seen our consensus NAV and really this last handful go from $60 a share to $180 a share. We had a 45% move in our consensus NAV last year. To me -- when I think of real estate is typically more of a long-term slower growth business. So that I think if we can keep finding value adds, which are tricky here and there, we'll find those, but really our development model, that's a lot of growth in our net asset value and incremental FFO per share as well.

Yes. I would add to that, Manny. We're excited when people can we do more in our development pipeline at year-end, we had $525 million in lease-up or under construction, meaning whether our stocks this year are 250, 300, 350, whatever they are, it's going to have more of an impact down the road. But entering the year, last year, we converted, as Marshall said 280 million. Having 525 million already [indiscernible] up, and at the pace we've been going, that's basically $1 billion worth of value. So the quicker that we can get that into operation, I think that's some of the upside there, maybe people have lagged a little bit on our guess what Marshall saying, maybe lagged in valuing our development side and how quickly and how lucrative that's been versus some of the other competitors.

If you wanted to significantly grow whether it be the development pipeline or development deliveries. Is that something you could do? Or is the lag time just too long? Like even if you said, okay, we're going to pay 20% more for land today. You've still got the entitlement process. If you wanted to bring that whether it be that pipeline or again, the deliveries, you want to double that? Like how long would that actually take to put into place? Is that a 3-year type event? Or could that come in 2023, if you really wanted it to, and I'm not saying you will.

It could come faster in the sense that we do have the 6 million square feet that I mentioned earlier. So you'd start eating your way through that. I guess if I'm answering your question correctly, Manny, that you could start pulling that, and that's really how our model works. So you could pull that fairly quickly, and we have been -- we had said when you think of the math where we kind of beat our development yields to death, but if we have about $125 million worth of land on our books, if you say the long-term debt cost or operating taxes, that's maybe $4 million to $5 million to carry that. Our average development is maybe $15 million going to $30 million. So as I think about, it's like, okay, you deliver 1 successful product, you've paid for the land carry. And we said that's the 1 item we can't pick up the phone, get on the computer and order is land. So we could pick that up fairly quickly. And then there's -- so there's 7 million on the books. There's another few million square feet that we have under contract that we'll try to move as quickly as we can and move. So look, last year we started the year forecasting $200 million in stocks and ended the year with $340 million in stocks. This year, we're starting at $250 million. And then maybe 1 other kind of -- EastGroup misunderstood or Marshall under-articulated, the way our model works, it would be run to -- it's really me. I'll get a call from John or 1 of his peers. So Manny and Chris call me and say, you've built -- and it's almost like you'd build a subdivision, we'll build 12, 14 buildings in our parks, and we're building Phase 3. So buildings 5 and 6 are 50% lease and they've got leases out. So it really manages our risk. It's -- we're ready to go with the next building based on the activity we have today. So it's not Brent and I incorporate pushing supply out in the market, although we know it's great when we can. It's really the teams in the field, and we've seen our average tenant size grows. So it's really where our multi-tenant buildings in many cases, are becoming single-tenant buildings, and we're trying to restock the shelves as fast as we can. And that's what's happened last year and that is run out of time, too. An interesting thing, if it's helpful for you all, what we're seeing is that tightness in the market where we're 98% leased, the market is pretty tight and supply delivery times have moved for John, say, from 6 months to 9 to 10 months because of the supply chain and things like that, that we don't see getting sorted through anytime quickly, that tenants are coming to us earlier in that development stage and leasing the building. So I think that's where our upside could be. One is maybe a little bit more starts this year, if there is or buildings, we'll typically build it, finish it and say it's 12 months to get completed and leased up. Where that velocity through our pipeline is set up a little bit because there's just not much space out there. The demand is here today and supply is not.

A question we get for a lot of your bigger box peers is how big of your tenant's total cost is real estate? And on the distribution side, that answer is typically 3% to 5%. Just curious if that's any different for your tenants because they're not doing that distribution and maybe the real estate is a bigger or smaller piece of what they do?

Yes. I think our -- it could be a little bit higher. But again, I think one thing people miss, and I guess within their how they would view it, their overall cost structure. In 2020, for example, and I'll try to make our timing work. One of the kind of concerns about EastGroup is your smaller spaces or credit is going to be worse. And we have large tenants that have local distribution. So our rent collection was actually is strong. If you put -- or people were putting out monthly collections, if you put us [indiscernible] to First Industrial, I don't know that you could pick EastGroup out versus our peers. Our rent collections were in that 97%, 98%, 99% per month. So for them, that 3% to 6% may hold. For example, we've got Amazon in Arizona and under 10,000 feet. We've got 0.5 million square feet in California, but they also have under 10,000 feet and saying that Best Buy and Home Depot and Lowe's, probably for our regional guys, it could be higher, but I still think their transportation costs. What we've read is a 1% rise in transportation cost equals about an 8% rise in their rents. And so that 3% to 6% probably is a little bit higher in our portfolio, but it's probably not much more than 10% or 12%. And it's really more their labor costs. And then I guess wrapping up, if you think about it or if I said if you forget what EastGroup does, for example, and just think supply/demand, last year, we spent the year -- our last 5 quarters have been our highest 5 quarters ever in terms of percent lease, between 98% and 99% leased. So that's kind of your demand side of the supply/demand. And we raised rents over 30%, which you think would lower if this were just an e-com 101 class would lower that demand and the tenants have hung in there. At some point, Manny, you could be right, we'll get that pushback, but we think it's so integral and it's still a lower cost model than brick-and-mortar and traffic or if it's services, traffic is just so bad in Dallas, Atlanta, Austin. If you're a restaurant and your HVAC is out, you need train air conditioning there and you're in Austin in July [indiscernible], it can't be on the edge of town. It's got to be those infill types. So far, the resilience to rent growth has been surprisingly low. Again, I hope it things in there. I feel for them with wage growth, transportation growth, rent growth, that's why we don't see inflation going away anytime soon either. I empathize with them. But that's kind of where the market is and land cost and construction costs going up, it means our existing product will be able to push rents or we should be there, too.

I have one question in the queue, and then we'll get to rapid fire. Are largest and private equity, very active in the multi-tenant industrial markets?

Well, I think private equity more than PLD. I guess we don't see them. John you're going to -- either one.

I agree. not a big clear in our shallow bay multi-tenant product or more bigger box on the outskirts of town.

I think Link certainly is active everywhere. When I think I guess, the largest private equity guys. We've seen them again, about everywhere in the country these days. It's a good company, but they're awfully active.

All right, rapid fire questions. What will same-store NOI growth be for the industrial sector overall in 2023?

2023, 4.5% to 5%.

What will the 10-year treasury yield be a year from today?

It will be definitely higher that say, maybe 2.5.

And will the industrial sites are more or fewer public companies a year from now?

I keep saying fewer just because there's so much private equity and every type of equity out there.

Thank you very much.

Good to see you.