Ladies and gentlemen, thank you for standing by. Welcome to Duke Realty earnings conference call. At this time, all participants are in listen-only mode. Later, we'll have an opportunity to you for your questions. If you should require assistance today, you may press star zero and operator will assist you offline. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Ron Hubbard. Please go ahead. Thank you, Amy. Good afternoon, everyone, and welcome to our second quarter earnings call. Joining me today are Jim Connor, Chairman and CEO; Mark Denien, Chief Financial Officer; Steve Schnur, Chief Operating Officer; and Nick Anthony, Chief Investment Officer. Before we make our prepared remarks, let me remind you that certain statements made during this conference call may be forward-looking statements subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. These risks and other factors could adversely affect our business and future results. For more information about those risk factors, we would refer you to our 10-K or 10-Q that we have on file with the SEC and the company's other SEC filings. All forward-looking statements speak only as of today, July 29, 2021, and we assume no obligation to update or revise any forward-looking statements. A reconciliation to GAAP of the non-GAAP financial measures that we provide in this call is included in our earnings release. Our earnings release and supplemental package were distributed last night after the market closed. If you did not receive a copy, these documents are available in the investor relations section of our website at dukerealty.com. You can also find our earnings release, supplemental package, SEC reports, and an audio webcast of this call in the investor relations section of our website. Now for our prepared statement. I'll turn it over to Jim Connor. Well, thanks, Ron, hello, everybody. The fundamentals of our business continue to be the best we've ever seen. We've now had three successive quarters of demand at or near all-time records, projected market level rent growth has risen from the 6%-7% range to the 10% range nationally, with some sub-markets as high as 25%. During the quarter, we began just under $200 million of new developments with strong value creation, raised our full-year guidance starts once again. Continued cap rate compression and rent growth have well outpaced material cost increases and allowed us to drive improved margins. Our core portfolio achieved record rent growth on second generation leasing, our total in-service portfolio is at an all-time high of 97.9% leased. We sold four assets in non-Tier 1 markets during the quarter for over $180 million. When coupled with the recently announced joint venture and the St. Louis market disposition, we've raised over $600 million of capital from portfolio management activities that also improved our Tier 1 geographic exposure. These quarterly results and our improved outlook for the balance of the year resulted in our raising key components of our 2021 guidance, including year-over-year Core FFO growth now expected to be at 12.5% and growth in AFFO per share of 11.6%. Mark will provide you more details and color in his prepared remarks. With that, I will turn it over to Steve to cover an operations update and outlook. Thanks, Jim. I'll first cover market fundamentals, then review our operational results. Industrial net absorption registered an impressive 85 million sq ft, which is the third highest quarter on record. This was more than enough to offset new supply as completions dipped to 52 million sq ft. This positive absorption over deliveries for the quarter reduced vacancy down to 4%. The strong fundamentals increased asking rents during the second quarter by 9.8% compared to the previous year. CBRE now projects demand for the full year to surpass 350 million sq ft and break the all-time 2016 record of 327 million sq ft. Completions are projected to be around 300 million sq ft for the year. With this setup, we expect national asking rents to grow over 10% on average in 2021, with a range of mid-single digits to the mid-20s in the best submarkets. This is consistent with what we're seeing on the ground in our own markets. Growth in retail sales and e-commerce sales across the two-month May and June period were up 20% and 9% year-over-year. Perhaps more notably when measured against the 2019 pre-pandemic timeframe, the recent May and June figures were up 19% and 37%. Continued strains in the supply chain caused the retail inventory to sales ratio to remain at a record low 1.1 level times. Demand by occupier type remains broad-based and very active, with 3PLs leading the way. 3PL activity nearly doubled the square feet absorbed year-to-date compared to a year ago. The general retailer and wholesaler categories were also up over 85% from a year ago. Of course, e-commerce is still exceptionally strong, and even with Amazon leasing 33 million sq ft, which is down some from a year ago, these data points are a very good indicator that demand is broadening out past pure e-commerce players. Turning to our own portfolio, we executed a very solid quarter by signing 7.6 million sq ft of leases. The strong lease activity for the quarter resulted in continued growth in rents in our portfolio, as we reported 19% cash and 36% on a GAAP basis, both of which were all-time records for our portfolio. About 35% of these deals were in coastal markets, which is higher than our historical run rate, but still lower than our current portfolio exposure to these markets of about 40%. As we've been saying, our lower rollover in these coastal markets compared to our portfolio exposure results in outsized future opportunities for rent growth, and this quarter certainly demonstrates this concept. We expect rollover in coastal markets for the remainder of the year to moderate to recent historical levels, but we still expect strong overall growth in rents to continue. We started $197 million of new development this quarter that consisted of five speculative projects. As we alluded to last quarter, given the strength across our submarkets and strategically located land, we believe these projects offered a great risk-adjusted return for us. In fact, within two months after starting construction, we've already signed a lease for 100% of the space at the Columbus project, totaling 582,000 sq ft, with an A-rated global 3PL customer at a rent well above our underwritten levels. Our development pipeline at quarter end is $1.4 billion, with 84% allocated to Tier 1 markets, an expected value creation of almost 50%. This pipeline was 49% pre-leased as of June 30th. This 49% moves up to 54% when you include the recently completed lease in Columbus I just mentioned. I'd also add that we have a land bank that continue to support these levels of new development going forward. Our teams have also taken critical steps to mitigate schedule risk related to materials. We believe we're well positioned and continue to lead our sector in growth through new development. Looking forward, our outlook for new development is as strong as it's ever been and is reflected by our revised guidance up $150 million from the midpoint. I'll now turn it over to Nick Anthony to cover the acquisitions and dispositions. Thanks, Steve. For the quarter, we sold $183 million of assets comprised of two facilities in Raleigh, one in St. Louis, and one in Columbus. The pricing in aggregate was at an in-place cap rate of 4.2%, partly from very strong credit and asset quality, but also from exceptionally strong fundamentals and investor demand, even in these non-Tier 1 markets. 766,000 sq ft submarket storage container in the Newark submarket of New Jersey. The expected stabilized yield across both projects is 4.4%, with IRRs expected in the mid 6% range. The 766,000 sq ft facility acquired is a unique big box asset in the IE West and has extra trailer parking and in a market with only 1% vacancy. The lease expires in approximately two years with current rents about 75% below market. The container facility is an irreplaceable location near the Port of Newark, the Newark Airport, and the New Jersey Turnpike, and leased for 12 years to a local investor and logistics firm. There is also a long-term redevelopment possibility on this site, yet in the interim, the investment will generate an excellent return as an income-producing logistics asset. I'll now share an update on two other large portfolio management transactions we've been talking about over the last few quarters. First, most of you saw the press release on Tuesday announcing that we formed a joint venture with CBRE Investment Management as part of our previously stated strategy to manage our exposure to Amazon. The initial tranche encompasses two facilities totaling 1.3 million sq ft and a 17-acre trailer lot, which in aggregate reduces exposure to Amazon from 8% to about 7.3%. It also generates approximately $141 million in capital, including new debt financing placed on the pool of assets. The second tranche consists of two facilities and one trailer lot in Baltimore, expect to close later in the third quarter. The third tranche consists of three facilities located in Pennsylvania, Seattle, and South Florida, which are expected to close in early 2022. The JV is expected to employ most leverage in the 50%-60% range. Secondly, last quarter, we announced our plan to exit the St. Louis market this year, and we closed on sales during the second quarter and early in the third quarter with a blended cap rate in the mid 5% range. If you include the St. Louis transaction and tranche one and two of the JV contributions, the NOI from our development pipeline, our Tier 1 market NOI exposure is 67%, and our coastal Tier 1 market exposure is 40%. I'll now turn it over to Mark to discuss our financial results and guidance update. Thanks, Nick. Good afternoon, everyone. Core FFO for the quarter was $0.44 per share, which represents nearly 16% growth over the $0.38 per share from the second quarter of last year. AFFO totaled $150 million for the quarter, compared to $135 million in the second quarter of 2020. We expect this level of high performance to continue through the remainder of 2021, as reflected in our revised guidance. Same property NOI growth on a cash basis for the three and six months ended 2021, compared to the same periods of 2020, was 5.5% and 6.2% respectively. The growth in the same property NOI for the second quarter of 2021 compares to the second quarter of 2020 was mainly due to rent growth and some free rent burn off, partially offset by a slight decrease in occupancy in our same property portfolio compared to the previous year. During the quarter, we generated $156 million of proceeds from the sale of 3.4 million shares under our ATM program. We also redeemed the remaining $84 million of our 3.9% unsecured notes that were set to mature in October of 2023. We finished the quarter with $265 million of outstanding borrowings on our line. Early in July, we also called for the redemption of $250 million of unsecured notes, which have a scheduled maturity in April of 2023 and bear interest in an effective rate of 3.7%. After this redemption, we do not have any significant debt maturities until late 2024. We'll use the proceeds from the July dispositions Nick just mentioned to repay our line of credit and fund this redemption, leaving us plenty of dry powder to fund our growing development pipeline. As a result of our operational execution through the first half of 2021, we announced revised Core FFO guidance for 2021 in a range of $1.69-$1.73 per share, compared to the previous range of $1.65-$1.71 per share. The $1.71 midpoint of our revised Core FFO guidance represents a 12.5% increase over 2020 results. We also announced revised guidance for growth in AFFO on a share adjusted basis to range between 10.1% and 13.0%, with a midpoint of 11.6%, compared to our previous range of 8%-12.3%. For same property NOI on a cash basis, we've increased our guidance in a range of 4.75%-5.25%. We continue to outperform underwriting assumptions for speculative developments, both in the timing of lease up and in the rental rates we're achieving. While we have maintained a solid list of build-to-suit prospects, as well as land sites in various stages of due diligence and entitlements. Based on these prospects, our revised guidance for development starts is between $1.1 billion and $1.3 billion, compared to the previous range of between $950 million and $1.15 billion. Our guidance for dispositions of properties has been revised to between $1.0 billion and $1.2 billion, compared to the previous range of $900 million-$1.1 billion. This increase in disposition guidance is primarily attributable to favorable pricing rather than additional asset sales. We've updated a few other components of our guidance based on our more optimistic outlook, as detailed in our range of estimates exhibit included in our supplemental on our website. I'll now turn it back to Jim for a few closing remarks. Thanks, Mark. In closing, I'm really proud of our team's execution through mid-year. Market fundamentals are exceptionally strong, and we're driving significant growth in rental rates, as well as capturing new development opportunities with new and existing customers. The year-to-date results and our outlook for the year have clearly exceeded our expectations from the beginning of the year. I'd also like to take this opportunity to point out our recently published annual Corporate Responsibility Report, which most of you should have received. If not, I would encourage everyone to review it on our website. It's an important element of our culture and strategy. We believe our ESG characteristics and initiatives are unique and a positive differentiator for Duke Realty investment proposition. Thank you for your interest and your support, and we'll now open up the lines for questions. I would ask that you limit your questions to one or perhaps two short questions. You're, of course, welcome to get back in the queue. Remember the prompt for Q&A is one zero, not star zero. One zero. Operator, we'll open it up and take questions. Thank you. If you'd like to ask a question, you may press one and then zero at this time. Our first question will come from John Kim. Please go ahead. Thank you. I was wondering on the CBRE joint venture, if you could disclose the total value of the three tranches and also the cap rate on the sale and if there was an Amazon premium. This is Nick. The total agreed value of all three tranches is just north of $700 million. The cap rate is a mid to upper 3% cap. Yes, Amazon deals do trade relatively well, along with a lot of other assets in this environment. So I- One moment here. Thank you. Our next question will come from Vince Tibone. Please go ahead. Hi. Good afternoon. Could you discuss the marketing process and pricing on the St. Louis deal? Based on your disclosure, it looks like that portfolio sold at a high 5% cap rate, which is maybe a little higher than I would've thought given just current trends in the transaction market and some other comps. Just any other additional color on that portfolio deal would be helpful. Yeah, Vince. This is Nick again. We broke that transaction into two pieces. One asset traded at a low 4% cap, and the other part of it traded at a mid to upper 5%, as you alluded to. Yes, the turnout was good. One difference on this portfolio, different from all the other assets, is the rents on the latter portfolio is a little bit above market, about 4%. I think that drove the pricing a little bit higher than probably what you might have expected. Got it. No, that makes sense. Why were they above market? Were these build to suits that had special build-outs and were above market? What was the reason they were above? Well, there's tax abatement in that market, and I think that's part of the reason why they were a little bit above market. I will tell you, the IRR on that transaction was still in the mid fives. Got it. That really helps. That makes a lot of sense on why it landed at that spot. Maybe one more from me. I just wanted to follow up on Jim's opening comments that certain submarkets could have up to as high as 25% rent growth this year. Can you provide a little bit more detail on where you're seeing the strongest fundamentals? Sure, Vince. This is Steve. I think it's no secret, Southern California, Northern New Jersey, Northern California are performing exceptionally well. I think I saw a report recently that CBRE said Northern New Jersey was north of 30% year-over-year. We're seeing it in our own portfolio. I think with the numbers we put up on a national basis, we're best in our sector, and if you broke it out by submarket, it tracks certainly with those three that I just outlined to you for being the top of the class. Makes sense. Thank you. Thank you. Next we'll go to Blaine Heck. Please go ahead. Your line's open. Great. Thanks. Good afternoon. Jim, can you talk a little bit more about the thought process behind forming a JV for the Amazon assets instead of an outright sale? I think past commentary from you guys pointed more towards selling the assets outright. Was there anything meaningful that kind of changed your mind there? No. If you go back to the conversations, I think we were trying to guide people towards a combination. There are a number of the assets when you look at our overall Amazon holdings that we determined we didn't want to own long-term, and those are the ones that we're selling outright, and, as Nick alluded to, getting unbelievable premium pricing. Other ones are in markets that we really would like to at least keep an interest in those properties. We also want to maintain as many of those as we can from a relationship perspective. It's a little bit of a balancing act, keeping some wholly owned, some in the joint venture, and then some selling outright. I think going forward, you'll continue to see us do all of the above. Some will be 100% wholly owned, some will go into the venture, and some will be sold outright. Yeah, that makes a lot of sense. Just as a quick follow-up, is there any type of right of first refusal that CBRE has on any other assets being sold beyond the three tranches you talked about, or any other agreements or stipulations within the JV that we should be aware of? No. Nick can give you some color. There's a little bit of close by property. Yeah Things like that. Blaine, this is Nick. We control our destiny there. If we want to sell something outright, we can sell it outright. If we want to hold something, we can hold it. Now, if we want to do something in another JV, then they do have some rights of first refusal, of course. Got it. Thanks, guys. Thank you. Our next question will come from Michael Carroll. Please go ahead. Your line's open. Thanks. Jim or Nick, I guess with the announced St. Louis sales, how's the company thinking about the geographic concentration today? Are there any other markets you want to exit or reduce your exposure to? I know Indianapolis has been something you talked about a little bit. I'm not sure if you're happy with that concentration today. How should we think about how that should change going forward? Mike, it's an ongoing evaluation. We've said for the last few years, we like our portfolio. We continue on an annual basis to try and be good stewards of the portfolio and look at asset allocation, look at the assets that are performing at the bottom of the list, whether it's below-market rent growth, rent escalations, the age and clear height of the asset, whatever the case may be. As we continue to focus on Tier 1 assets, we'll always be looking to prune out of the portfolio. Whether we do market-wide decisions like we did in St. Louis, and we have done before, or we continue to do smaller portfolios, simply remains to be seen based on the opportunities that we see in the marketplace. I don't know, Nick, if you have any additional color. No, I think that's right. I think that's always one of the capital-raising levers that we use. There's always going to be some lower-performing assets. Although the bar is getting higher and higher for those assets. We'll continue to look at it on an ongoing basis. Okay. I guess with the joint venture to reduce the Amazon exposure, is there a goal of what type of tenant concentration you're comfortable with? It's around 8% now. Do you want to get it down to 5%, or how should we think about that? We've had a stated goal of trying to keep it in the 4%-7% range on an ongoing basis. The challenge is as fast as Nick can push it out the back door in dispositions and joint ventures, Steve's guys are bringing it in the front door, by the Amazon Prime truckload. It's kind of the same answer as I used with Blaine. It's a bit of a balancing act. We want to be clear, the number's going to fluctuate up and down as we continue to do other deals in our partnership with Amazon. Look, they've been great partners, and we've done last mile facilities and sortation and fulfillment centers, and we hope to keep having more and more of those opportunities and we'll manage our exposure and manage the balance sheet accordingly. Thank you. Next we'll go to Dave Rogers. Your line is open. Good afternoon, everybody. Maybe wanted to talk about development for a second. Jim and Steve, probably for you, but I guess as you look at the development pipeline, about 1/2 of it goes in service in the third quarter, and then I think after that, you see the occupancy rate drop down a little bit. You start another $600 million or so in the back half of the year. If you start more on spec, how low could that kind of pre-leased component go? Obviously, you're leasing quite a bit at the same time, but I guess I'm just trying to think about where you might head in the second half of the year with that rate overall, and how many build-to-suits you might have in that pipeline. Yeah. Dave, I'll start, and Steve can give you a little bit of color. Starting at the June Nareit meetings, we started guiding people towards the 40%-50% range in the pipeline in the third quarter for the exact reasons that you outlined. Buildings coming in service and new projects that we're starting. I think the low point would be in the low 40%s. As Steve alluded to, given the volume of spec leasing so far in advance of buildings completing, I'm pretty confident we're not going to go. Effectively sitting here today, we're at 54%. Even with all the ins and outs, I don't think you're going to see us lose 15% of our pre-lease%. I don't know. Steve, you have any other color? Yeah, Dave, the only thing I'd add to your question is, I think you'll see us start more spec projects like we've outlined in the latter half of the year. The spec leasing pipeline, as Jim indicated, is strong. I don't see us fall off there. I do think some of the commentary around material shortages and things that we're dealing with, I do think you'll see build-to-suits maybe get a little tougher in the next six to 12 months as material shortages start to push that out a bit. Got you. That's helpful. Steve, maybe one last one for you. In terms of the size range of tenants or the size spaces, are you seeing a meaningful difference in terms of either demand or rent growth overall? Yeah. I tell you for us, 250-500 was the strongest sector. Next was 100-250. Call that 100-500 was our best category from a rent growth that also represented about 65% or 70% of our overall activity. Honestly, we don't have a lot of spaces available over 500,000 ft. I think that market, in the places we have space right now, is very hot. I wish we had more of it. Everything's doing well. It's all relative. I think for us, that 100-500 was the best performer in the second quarter. Great. Thank you. Thank you. Next, we'll go to Manny Korchman. Please go ahead. Hey. Good afternoon, everyone. Nick, you gave a little bit of color on the acquisitions you did, that you're confident in raising your acquisition guidance. Given where valuations have gone, is there anything special about the acquisitions that you're going to look at going forward? Same markets, different markets, different tenants. Anything we can glean from that? Yeah, Manny. We're going to continue to focus and lever our development teams on the ground, mainly in our coastal Tier 1 markets. Our pipeline right now is probably about $1 billion deep. We may not get any of those deals. We're looking at deals like the Doremus deal that we just did this quarter, the container yard. Deals like that are more lightly marketed, that we'd be more creative on, redevelopment plays. We still feel very good that we'll get there. It is challenging out there. Obviously, we've talked about this in the past. The broadly marketed stuff, Class A, 10-year leases, they're getting very expensive. We're starting to see a lot of sub-3% caps now. Just turning back to the JV discussion for a second. If you were to go and sell the next tranche of assets, so let's say assets eight through 15, is that something you've already discussed with a CBRE, or do you think you'd go to market and figure out if there's going to be a new partner or a different JV structure for that? No. We've got nine assets identified now that are going into the JV. We've got a pool of assets that we know that we're going to sell outright, and then we've got another pool that we know we're going to hold. Each new deal that we do, we have a discussion internally of what bucket that needs to go into. We'll make those decisions one by one. We've got a strategy for every asset that we hold today. Thank you. Thank you. Next, we'll go to Mike Mueller. Your line is open. Yeah. Hi. I was wondering, should we think of this year's disposition levels of a $1 billion+ as being a bit inflated to jumpstart the JV? Is this basically the new norm when you're running at about $1.3 billion of development starts? Hi, Michael, this is Nick. No, I think this is a bit inflated. We were doing a little bit of catch up on the Amazon exposure, was the primary reason behind it. We're taking into account that we didn't know what was going to happen with the tax environment. We are being a little bit cautious from that perspective as well. I wouldn't expect them to remain at this level on a go-forward basis. Got it. That was it. Thank you. Thank you. As a reminder, if you'd like to ask a question, you may do so by pressing one and then zero. You may remove yourself from queue by any time by pressing one and then zero again. Next, we'll go to Brent Dilts. Please go ahead. Your line is open. Great. Thanks. Hey, guys. In the prepared remarks, Steve talked about how a greater proportion of coastal renewals in 2Q led to a jump in rent growth, but said that mix is lower in the back half. Would you be able to quantify the coastal mix of upcoming renewals in the second half of this year and maybe into next year? Hey, Brent. This is Mark. I'll start, and then Steve can add in. We've been running at about 15%-20% of our rollover has been in the coastal markets prior to this quarter. This quarter, it did jump up to 35%, like we mentioned. The back half of the year, I think you'll see it back down in that 15 ± range, and the reason I'm not quoting exact numbers is we don't exactly know how many early renewals we'll pull forward. That's always the $1 million question, right? If we look at what we know that's coming at us, plus some slight early renewals we think we'll have, that coastal market rollover will probably be closer to 15%-20% in the back half of the year like it has been prior. The two things I would take out of that is a little bit of the record growth this quarter was driven because we had a little bit more exposure there. It's still not the exposure that our portfolio's at 40%. I think that gives us some really good comfort going into 2022 and beyond, that those numbers could even escalate further. It may moderate a little bit in the back half of this year, but we still think it's going to be very good. As we sit here today, we still think you're going to see mid-teens give or take on a cash basis and 30% ± on a GAAP. We're still getting good rent growths everywhere. Yeah. The only thing I'd add to that is, as Mark said, it's pretty broad-based. I'm just looking through some of our numbers here. Central Florida, Cincinnati, Indianapolis, Nashville, were all markets that were north of what we've reported at 16% or 19% cash. Very broad-based for us in what we're seeing on the growth side. Okay, perfect. Thanks. Last one here. On the tenants that haven't been renewing, what types of tenants are electing not to renew? Since you're backfilling so quickly, what types of tenants are immediately backfilling the space? On the renewal side, I will tell you the majority of the tenants we have either not renewed or lost, however you want to say it. The majority would be a space need, right? They either needed more space or different space than what we had. Right behind that would be, they didn't want to pay what we expected to get. On who's backfilling, I think the top segments right now for our portfolio, I mentioned in my remarks, 3PLs. The 3PL business has been on fire relative to supply chain, increased inventory levels, safety stock. We're seeing a lot of e-commerce requirements that need space quickly, turning to 3PLs to fulfill that need. E-commerce has been very active. Consumer products and retail has been very strong at the start of this year. Again, very broad based, but hopefully those were some specifics for you. Yeah. Appreciate that. Thanks, guys. Thank you. Next, we'll go Jamie Feldman. Please go ahead. Great. Thanks. I was hoping to ask a similar question to the one on dispositions, but on development starts. As you think about, you bumped your guidance for the year, is this something you think is sustainable into next year, this level, or are there pull forwards, or stuff that didn't start last year, you were able to start this year? How are you thinking about the run rate for starts? Yeah, Jamie, I would tell you, as my general counsel looks at me to make sure I don't give guidance for next year. We're pretty optimistic about our ability to maintain a run rate that's several $100 million higher than we've historically been. We'll see when we get to January, but as we look at the pipeline for the next 18 months, we're pretty optimistic about build to suit, about spec development. There's been a lot of discussion about land. We control our own destiny on the land for all of our 2022 pipeline. There's been a lot of talk about material. We've gotten way out ahead of that in terms of contract development, design, securing steel and precast spots. All in all, we feel pretty good about it and we look forward to sharing that optimistic guidance with you in January. Okay, thank you. How far ahead can you plan, and can you pre-buy? As we think about, you said over the next 18 months. Well, if you're talking about structural steel, you're pre-buying it virtually a year out right now. We can lock in material and production slots probably almost 18 months out. The newest one, we've talked about steel. Precast has gotten out there. Roofing materials are also in significant demand. That's the other one, the lead times and prices have gotten up there. We've been working diligently to secure all of those. What does that add to your development cost to do that ahead of time? Nothing. I don't have to pay for it until they deliver. Okay. All right. Great. Thank you. Thank you. Our next question will come from Nick Yulico. Please go ahead. Thanks. Hi, everyone. Just had a question in terms of cap rates that you did inch down the cap rate, I guess, in your development page in terms of your margin creation assumption there. Maybe you can give some perspective on how much you think cap rates have moved year-to-date and over the past year. Before Nick chimes in. Nick, I just want to add one thing there just to clarify. We don't adjust cap rates on our development projects once they're in a pipeline, unless there's a lease that gets signed with an Amazon or an A credit tenant that causes us to think the cap rate changed. The changes in the cap rate there is really due to population changes. It's new coastal markets that are getting started in a lower cap rate market than maybe projects that got placed in service. I just want to clarify our methodology first, and then I'll let Nick comment on the actual cap rate changes. Yeah. I would tell you, over the last six months, cap rates have probably compressed 50 to 65 basis points. A prominent brokerage group literally revised Their cap rates in NorCal, SoCal, New Jersey over the last two weeks to be sub 3% now. That's the first time I've ever seen published cap rates south of 3%, we're seeing comps in that level too. A lot of this can be attributed to just how fast rents are growing too, because as rent growth increases and in-place leases get below market, people are willing to lower their cap rates. It is moving very quickly, and it hasn't stopped yet. Okay, great. That's very helpful. Thanks. Then in terms of the guidance, I know you talked about this last quarter, but in terms of some of the slowdown in the back half of the year on same store, I think you said it was due to some burn-off of free rent, and as well, you had some occupancy comps that were tough in the back of the year. You did increase your occupancy guidance. I guess I'm just trying to still understand some of the nuances in the back half of the year we should be thinking about. Sure, Nick, I'll try. As you've just laid out, there's a lot of moving pieces here. A little bit of it is less uplift from free rent in the back half of the year compared to the first half of the year. Most of it is occupancy. When I talk about occupancy, I'm not talking about a decrease in our occupancy from the first half of 2021 to the back half. I'm talking about a tougher occupancy comp at 2021. For perspective, I have some numbers in front of me. If you look at the first half of this year, we actually had a 40 basis point favorable occupancy uplift from 2020 to 2021. We were 97.6 in the first half of 2020. We're 98.0 in the first half of 2021. That's a 40 basis point positive impact. When you look at the back half of the year, our occupancy comp in 2020 was 98.5. We think our occupancy will be pretty flat from the first half of 2021 to the back half, maybe call it 97.9. Even with occupancy flat from the first half to the back half because of that hard comp, we go from a + 40 basis points in the first half of the year to a - 60 in the back half. If you look at it that way, you really have a 100 basis point change in occupancy solely because of the comp period, not because of anything going bad in our portfolio now. That's the main driver here. I also think that sets us up good for next year, because next year won't have that 98.5% comp like we had this year. I know there were a lot of numbers there, but if you write all that down and follow it, hopefully that makes sense. Yeah. Thanks, Mark. Appreciate it. Just call Ron afterwards. Thank you. Our next question will from Caitlin Burrows. Please go ahead. Your line is open. Hi, there. Just a question on the land bank. I think you touched on it briefly before, but could you give us some detail on what you're seeing on the land buying process these days? I imagine it's rather difficult, and just being able to keep up that land bank to allow the development to continue. Caitlin, I can start, and then Steve can give you some color. My guys would tell you how difficult it is, and yet they're having no problem continuing to keep our land bank at over $300 billion. We actually anticipated to go up in the second half of the year. I'm not really worried. The old adage of they're not making it anymore. We continue to find opportunities. The challenge is finding the right opportunities where we can create value, particularly in the coastal Tier 1 markets, and managing the entitlement process. That's gotten a little bit more challenging. As we work our way through that affects the timing of when we can deliver sites for build-to-suits or spec development. That's really more the art of the deal that Steve and his guys are really good at. Yeah, Caitlin. I'll just add, our land bank today, 97% of our land bank is in coastal markets, which is great from the markets we want to develop in and grow rents in. They also happen to be the tougher entitlement markets, as Jim indicated. We're finding plenty of opportunities. We've got a lot of land under option agreement, under contract, can support us probably 15 million sq ft-20 million sq ft going forward. We won't close on all of that. We're working through due diligence and things on those sites. We feel very good about it. You look back over our last four years, we've averaged between $275 million and $400 million in our land bank, and we buy 300 a year. We monetize 300 a year. We've got very good teams, as Jim indicated, on the ground and feel confident about it. It's certainly one of the more challenging things we deal with day-to-day. It is. The last point that I would make, Caitlin, the perfect land acquisition from our perspective is we close on Tuesday, and we put it in production on Wednesday. You never see it hit the land bank at quarter end. We're successful in doing that a lot of the time. That, too, is getting a little bit more challenging given the constraints of the market out there. We're pretty efficient processors, and I know there's been some analysis done about the number of years of production or the amount of production you have in land inventory. I'm not worried about our development pipeline for the foreseeable future because we've got plenty of land that we own, we've got plenty of land that we control that we could close on. The coming years. I think we'll be fine from that perspective. That's a good point. Thanks. Maybe one more. You mentioned earlier in the call that probably one of the top reasons people move out is that they just need space, and you don't have it. I guess from the standpoint of tenants not wanting to pay the rents that you guys are commanding, how are you guys thinking about that balance between occupancy and rate at this point and being aggressive or not? It seems like aggressive on the rate side. We'll give you two answers. Jim will tell you we're not pushing high enough. Steve would tell you we're doing a great job because we just broke all the records and had our highest-ever cash and GAAP rent growth. It's a balancing act. I've used that expression, but it costs more to re-tenant a space. We try and keep people as much as we can, but we have a pretty good handle on what market rent is. If we continue to grow our rents at the level we are, I'm pretty satisfied that our guys are pushing. Thanks. Thank you. Next, we'll go to Richard Anderson. Please go ahead. Your line's open. Thanks. Good afternoon. On that topic, Jim, isn't it true, like 19% cash releasing spread, isn't that essentially you've given your tenant an interest-free loan for the life of their lease and they now are paying you back? It seems to me it's not a really efficiently run machine. I know it feels good to say 19%, but, in the interest of time value of money, it'd be better for Duke to have that money before the lease expires. I wonder what you think about that. If rent is not a pain point very much for customers, is there an angle to maybe at least have more of a rent escalation dialed into your leases as opposed to 10% market rents and a couple percentage points of rent escalation over the course of the lease? Well, I'll start out. That's a great theoretical question. I'm certainly not looking at it as an interest-free loan. I think, looking at the cash re-leasing spreads, and look at your own rent, on your own place. If your rent goes up effectively 20% from the end of your lease to the start of your new lease, that's a pretty healthy increase. You add in that we're getting 3%-3.5% annual rent escalation. That's how you get the GAAP rent growth number. Pretty good numbers compared to our historical numbers and all of our peers. No, I get it. Yes. It means the market is very healthy. If it were run efficiently, you would be getting your market rent more quickly rather than waiting for it. That's my only point. Yeah. I know it's a silly theoretical question, but I figured. No. That's a valid point. One of the things we've talked about is, one of the challenges of our portfolio, given the length of the lease terms, is we don't get the opportunity to get at the spaces as frequently as some of our peers do. Right. I think we all understand the value of lease term, particularly with the quality of credits that we have. That's why we're pushing when these things are rolling, and as Nick alluded to in that acquisition, we just bought a building with rent that's 75% under market. Somebody's gonna get a hell of a price increase in about two years. It feels, I just had a couple of comments, Rich, you touched on them, actually, well, first of all, I'd say the tenants are feeling this pain. To say that it's not painful for them is not really right. They're feeling the pain, number one. Number two, the market is the market. The market has moved from what was a 1.5%-2% escalator to now what's easily into the 3%s and pushing 4% in some markets. We're getting there, like I say, market's market. The last thing I would say is, there's a cost associated with shorter-term deals. The more often you're rolling deals, the more you're putting capital in those deals. There is a cost associated with that and a risk associated with that, too. You got to look at everything a little bit on a risk-adjusted basis, I'm sorry, and then also look at the totality of the cash flow stream. There is some savings to be had on the capital side by not rolling them as quick. It's a balancing act, but you got to factor all those in. Okay. The second question is: If you were a private company, would you be reducing or increasing your exposure to Amazon? In other words, you're owned by shareholders, and in some ways you are responding to a balance and all that sort of stuff. When you start reducing your exposure to Amazon, are you actually doing that and sort of cringing in a way because it's such a good company? No, Rich, I'll tell you, I'm a pretty substantial shareholder of this company, and I have input in all these decisions. I'll tell you, we're doing the prudent thing. Okay. Any good asset manager would tell you, having more than 10% of your exposure to any one tenant, even Amazon, who we love as a partner and who has a great profile, is probably taking on more risk than you should. We've looked at creative ways to reduce that, and limit our exposure, still giving us the opportunity to control the assets and maintain the relationship. Yeah, I would tell you, if we were a private company, I think we'd be doing the exact same thing. We might get greedy and monetize more of it sooner. That's a conversation for a bar the next time we're all together. I'll catch you in Las Vegas on that one. I'll be there. Thanks very much, guys. Thank you. Next, we'll go to William Crow. Please go ahead. Your line's open. Hey. Good afternoon, and thanks. I guess I'll apologize if you don't like philosophical questions, because I'm going to ask you one as well. It really centers on development economics. It just seems like over the last couple of years, it's become much more popular to focus on spreads and less on stabilized yields, which certainly makes sense if you're flipping Amazon boxes or a merchant fulfillment I know both metrics are intertwined and revolve around cost of capital, but I'm wondering, is there a point at which the development yields get so low that they don't make sense, despite the fact that the spreads may still be healthy? Yeah. In theory, there is. I don't know where that is or what that number is. We look at the value creation spreads, even though we're not monetizing the vast majority of the assets. We look at the spread on the stabilized yield and the five- or 10-year average yield over our cost of capital, and our ability to grow the top line and the bottom line. The alternative is the yields on acquisitions are probably on average 2 to 250 basis points lower. If you've got a healthy, strong company, and you've got a really strong growing economy and strong markets, I think you want to put as much money as you can into the development side, supplement that with strategic acquisitions, and that's really the best way to run the ship, which is what we're trying to do. Right. I guess you're right. Vis-a-vis acquisitions, certainly it makes a lot more sense. Maybe there's a time at which external growth just doesn't make as much sense. Maybe it takes trading at a discount to NAV or something like that to make that happen. Just a philosophical question. No, I mean, in theory, you're absolutely right. If land prices continue to rise, the entitlement process gets more and more challenging, material costs rise, and we get to some softening in the overall market, and yields, because of how we've got to underwrite the deals, get a lot thinner, then yeah, we would dramatically pull back on development. IRRs are still very strong on our development pipeline, and we do look at that as well. Yeah. Well, let's hope we don't get to that point. Congratulations on a good quarter, guys. Appreciate it. Thank you. Thank you. Next, we have a follow-up from John Kim. Your line's open. I think I hit star fingers. I didn't mean to do that. Apologies. That's okay. We have no further questions in queue at this time. Thanks, Amy. I'd like to thank everyone for joining the call. We look forward to engaging with many of you throughout the second half of the year. Operator, you may disconnect the line. Thank you. That does conclude your conference for today. You may now disconnect.