Ladies and gentlemen, thank you for standing by, and welcome to the Duke Realty Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll have a question- and- answer session. Instructions will be given at that time. If you should require assistance during today's call, please press star then zero. As a reminder, today's call is being recorded. Now, I'll turn the conference over to our host, Ron Hubbard. Please go ahead. Thank you. Good afternoon, everyone, and welcome to our fourth quarter and year-end earnings call. Joining me today are Jim Connor, Chairman and CEO, Mark Denien, Chief Financial Officer, Nick Anthony, Chief Investment Officer, and Steve Schnur, Chief Operating 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, January 27, 2022, 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 on 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, and good afternoon, everyone. Let me start by saying that 2021 was another outstanding year for Duke Realty. We met or exceeded all of our 2021 goals, including our revised guidance throughout the year. We also capped off the year with an excellent fourth quarter from an operational and financial perspective that sets us up for a great 2022 and beyond. Let me recap a couple of highlights from our outstanding year. We signed over 33 million sq ft of leases, which is an all-time record for us. We concluded the year with our in-service portfolio at 98.1% leased, a company record, and particularly impressive as it includes the delivery of 7.7 million sq ft of development projects in 2021. We renewed 75% of our leases or 90% when you include immediate backfills. We attained 35% GAAP rent growth and 19% cash rent growth on second-generation leases for the full year, respectively, both all-time records for us. We grew same-property NOI on a cash basis at 5.3%. We placed $1 billion of developments in service that were originally 39% leased at start dates, but are now 90% leased with a value creation of 69%. We commenced $1.4 billion in new developments across 33 projects, which was another all-time record. 61% of those projects were in coastal Tier 1 markets. We completed $1.1 billion of property dispositions and $542 million of acquisitions. We raised $950 million in green bonds with 10-year terms and an average coupon of 2%, and we increased our annual common dividend by 8.9%. Finally, we've continued to run our company in the most responsible manner with our ESG culture and our numerous corporate responsibility achievements, including our significant carbon neutrality goals, which were announced in November. Now let me turn it over to Steve to cover operations for the quarter and touch on some market fundamentals. Thanks, Jim. I'll first touch on overall market fundamentals. Fourth quarter demand was exceptional in the logistics sector with 122 million sq ft of absorption, about similar to last quarter and the third highest quarter on record. Demand exceeded supply by about 40 million sq ft, which dropped national vacancy rates to an all-time record low of 3.2%, which is over 300 basis points below long-term historical averages. For the full year, demand was 433 million sq ft compared to completions of 268 million sq ft. Lease activity was robust in nearly all user groups, with e-commerce, third-party logistics and retail representing the largest segments in the market as a whole, as well as in our own portfolio. National asking rental rates rose again in the fourth quarter, up 11% over this time last year. We see this trend continuing in 2022, with nationwide market rent growth on average expected to be around 10%. The reaction to supply chain bottlenecks continues to be in the early stages of a longer term boom for our sector. CBRE recently reaffirmed the just in case inventory restocking strategy will be a significant contributor to the 1.4 billion sq ft of projected aggregate demand over the next five years. In addition, consumer spending growth and the continued secular growth in online shopping are driving much of this demand. For the current year, we expect that demand and supply will be mostly in balance, even as large as the under construction pipeline currently is. I'll remind everyone on this call, we estimate about 65% of the current supply pipeline is not located in our submarkets. Turning to our own portfolio results, we executed a very strong quarter by signing 8.9 million sq ft of leases with an average transaction size of 122,000 sq ft. Rent growth for the fourth quarter leasing was again very strong at 21% cash and 41% GAAP. We expect growth in rents on second-generation leasing for the foreseeable future to be very strong. In our portfolio, we estimate our lease mark-to-market to be 39%. Turning to development, we had a tremendous quarter of starts, as Jim mentioned, breaking ground on nine projects totaling $466 million in cost. 80% of the fourth quarter development starts were in coastal Tier 1 markets, and six of the nine projects were redevelopments of existing site structures. Our development pipeline at year-end totaled $1.4 billion. This pipeline is 48% pre-leased with active prospects to bring this number even higher in the near term. We expect to generate value creation margins in the 65%-70% range for these projects. Looking forward, our prospect list for new development starts is very strong, and our land balance at year-end totaled $475 million, with an additional $173 million of covered land plays. Our current land holdings are above our levels the last few years and consistent with what we've recently communicated, as much of the land acquired late in 2021 has been under contract for several quarters. 94% of our land balance is located in coastal Tier 1 markets. We own or control land that can support roughly $1 billion of annual starts for the next four years, as long as the demand picture remains robust, which we believe it will. It's also important to note the market value of our land we own is about 2x our book basis, and on average, we've only owned this land for about two years. Our favorable land value will continue to support high development margins and very good long-term IRRs. We believe we are very well positioned to continue to lead the logistics sector and growth through new development. With that, I'll turn it over to Nick Anthony to cover acquisition and disposition activity for the quarter. Thanks, Steve. During the quarter, we closed on $206 million of acquisitions, most notably a 470,000 sq ft property in Northern New Jersey in an off-market transaction, as well as three facilities in Southern California, totaling 134,000 sq ft. As noted on the last call, early in the fourth quarter, we sold a recently completed project in Columbus, Ohio, which was 100% leased to Amazon, generating proceeds of $80 million. I would point out that this transaction was placed under contract in April 2021 as part of a forward takeout. For the full year, our capital recycling encompassed $1.1 billion of asset sales and $542 million of acquisitions. Combined with the development previously mentioned by Steve, this activity moves our coastal Tier 1 exposure to 43% of NOI and overall Tier 1 exposure to 68% of NOI. Also, earlier this month, we closed on the third tranche of assets to our joint venture with CBRE Global Investors, for which our share of the proceeds was $269 million. The other dispositions expected this year are primarily individual assets across multiple markets and are projected to close primarily in the second and third quarters of 2022. I'll now turn it over to Mark to cover earnings results and balance sheet activities. Thanks, Nick. Core FFO for the quarter was $0.44 per share compared to Core FFO of $0.46 per share in the third quarter and $0.41 per share reported for the fourth quarter of 2020. Core FFO decreased slightly from the third quarter of 2021 as we executed a significant volume of asset dispositions during the third quarter and did not fully redeploy the proceeds until late in the fourth quarter. Core FFO was $1.73 per share for the full year of 2021 compared to $1.52 per share for 2020, which represented a 13.8% increase. FFO, as defined by Nareit, was $1.65 per share for the full year of 2021 compared to $1.40 per share for 2020. AFFO totaled $589 million for the full year of 2021 compared to $517 million in 2020 and $148 million for the fourth quarter of 2021. Our annual results represented an 11.6% increase to AFFO on a share adjusted basis compared to 2020. Same-property NOI growth on a cash basis for the three months and 12 months ended 12/31/2021 was 5.2% and 5.3%, respectively. I would like to point out that we continue to generate substantial NOI and FFO growth outside of our same-property pool as net operating income from non-same store properties was 17.6% of total net operating income for the quarter. Same-property NOI growth on a net effective basis was 3.9% for the fourth quarter and 4.5% for the full year of 2021. As Nick mentioned, we closed on the third tranche of our contribution to our JV with CBRE Global earlier this month. We'll use the proceeds of this contribution along with mortgage financing proceeds received from the JV, both of which total just over $300 million, to fund the redemption next month of our $300 million, 3.75% unsecured notes, which were originally scheduled to mature in December of 2024. After this transaction closes, we will have no significant debt maturities until 2026 and ample liquidity to fund our growth. Looking into 2022, yesterday, we announced the range for 2022 Core FFO per share of $1.87-$1.93 per share, with a midpoint of $1.90, representing a 9.8% increase over 2021 results. We also announced growth in AFFO on a share adjusted basis to range between 8.4% and 12.3%, with a midpoint of 10.4%. Same-property NOI growth on a cash basis is projected in the range of 5.4% to 6.2%. In addition to realizing a full year of the impact of rental rate growth on leases we executed in 2021, we continue to expect strong rental rate increases in 2022. While on the surface it seems we have abnormally low lease expirations, we typically re-lease significantly more than is contractually set to roll with some pull-forwards of future expirations. For instance, a year ago, our expiration schedule said we had 7% expiring in 2021, but we actually rolled over 12%. In fact, in this environment, our customers and their brokers have been actively approaching us for early renewals. We expect proceeds from building dispositions in the range of $600 million-$800 million, and we have targeted assets with long lease terms and low annual rental escalations in our disposition strategy for the year. Development starts are projected in a range of $1.2 billion-$1.4 billion, with a continuing target to maintain the pipeline at a healthy level pre-leasing. Our 2022 development plans include a significant component of speculative projects in coastal Tier 1 markets, which we have consistently demonstrated a track record of quickly leasing and which we believe will allow us to take advantage of the continued rental rate increases in those markets. More specific assumptions and components of our 2022 guidance are available in the 2022 range of estimates document on the investor relations website. Now I'll turn it back over to Jim for a few final comments. Thank you, Mark. In closing, I'd like to reiterate what a great year 2021 was for Duke Realty. As I noted at the outset, we exceeded all of our beginning of the year expectations. As we look ahead into 2022, all of the demand drivers remain exceptionally strong. Demand is expected to roughly equal supply this year, which bodes well with our continued record low vacancy, strong pricing power to drive same-property NOI growth. We'll continue to see the added value created by our dominant development platform. As Mark noted, the midpoint of our FFO and AFFO guidance is roughly 10% over 2021, which is a level of growth that we believe we should be able to achieve on a consistent basis for the foreseeable future with our platform and the current market fundamentals. Finally, I'd be remiss if I didn't thank all of my colleagues at Duke Realty for all their hard work and dedication that allowed us to achieve the level of success we have. I also wanna thank all of our investors for their continued support and the recognition of our good stewardship of their invested capital. Now we'll open it up for questions. I would ask that you limit your questions to one or perhaps two short questions. Of course, you are always welcome to get back in the queue. Remember, the prompt for Q&A is one zero. Okay? Operator, we'll now take questions. Thank you. As just another reminder, if you do have a question for today's conference, please press one then zero on your touch-tone phone. Our first question will come from the line of Nick Yulico. Please go ahead. Thanks. Hi, everyone. In terms of the development starts, maybe you could just give us a feel for what's driving, you know, the range of starts this year, which is actually a bit lower than last year. What is, you know, the thought process there? What would be a situation where you would get even more comfortable increasing your development starts? Thanks, Nick. I'll start off, and then Steve can give you some color. I would say it's two things. You know, we've always had a solid build-to-suit pipeline, and I think if we can continue to do a number of those large build-to-suits like we have, I would see us work towards the high end of our guidance. The other thing ties back to our leasing. If we can continue to lease at the levels we have in 2001, I think we can accelerate speculative development as well, and I think that would push us up to the high end or potentially give us reason to raise guidance. I don't know, Steve, if you have any additional color you wanna add. Yeah, Nick, I would just say, I mean, you know, you look back at last year our budget going into the year was in the $850 million range. We did $1.4 billion. I mean, we, you know, we had a very strong year in 2021. I think heading into 2022, we feel very good about our prospects, but part of it is getting out of the right sites and entitled and getting them started. You know, the demand picture is strong. It's more about being able to find the opportunities to get them started. Okay, thanks. Just to follow up on the development pipeline and the margin that you're citing, you know, which went up versus last quarter, cap rate's down, but you know, yields compressing a bit on development new starts. I mean, how should we just think about that dynamic going forward about, you know, where cap rates could move, where development yields are penciling out over the next year? Hey, Nick, this is Nick from Duke Realty. I think we continue to see very strong rent growth in the markets that we're focused on. I think as long as we can continue to see that rent growth, that'll continue to help us achieve the above normal margins that we've been achieving historically. Yeah. I would just point out, Nick, that a little bit of the decrease in the stabilized yield in the pipeline from last quarter to this quarter, it's really a market mix situation. We placed some assets in service that were in lower barrier markets with higher yields and replaced that with new developments in more coastal markets that the initial yield may be a little lower, but it's a market mix. The value that we're creating actually went up. Yeah. I would tell you on cap rates, I mean, even though we still have not seen any increase in cap rates, even with interest rates going up, there's still very strong investor demand out there. We expect that to continue for the foreseeable future. Okay. Thanks, guys. Appreciate it. Thank you. Our next question will come from the line of Jamie Feldman. Please go ahead. Great. Thank you. I guess I know you touched on it a little bit, but can you just talk about more about the kind of big picture supply story? I mean, you see, you know, some of the projections coming out of the brokerage firms and, you know, 400-500 million sq ft range for the U.S. this year. Just, you know, how should we be thinking about the risk of, you know, the cycle ending early or just, you know, the exposure in your markets or just thinking about the largest pieces of that? You know, Jamie, we see the same data that you do, and we've been hearing these same stories for the last several years. I think there's a pretty substantial disconnect to this projected supply number and actual annual completions. You know, I'm sure the devil is in the detail on how some people count in terms of announced projects as opposed to actually really started projects. I think in today's world, the rising cost of building materials, the rising cost of land, the increased level of difficulty to get sites entitled and out of the ground, is you know placing a you know, if you will, an artificial damper on new supply. While everybody's saying supply and demand will be equal, I wouldn't be surprised if we were here a year from now, and we'd had another year like this where demand exceeded supply simply for those reasons I cited earlier. Okay. We keep hearing about for the supply we're seeing or that's being built and some of it's in more tertiary submarkets. What's your thought on, you know, that being competitive or putting pressure on rents in your portfolio or for your development projects? You know, are you seeing a real difference in pricing across different submarkets in the same market? No, Jamie. Go ahead. I'll start. I would tell you know, we're not seeing big variations between submarkets in the markets we're in. I mean, if you look at the under construction pipeline I mentioned that 65% of it is not in our markets or submarkets we operate in. Phoenix is an area that's got a lot of construction going on right now. We're not in that market. Greenville, right? Memphis, San Antonio, a lot of these markets that we don't own property in, that have big supply numbers. In terms of the markets that we own property in, the 19 markets we're in, I would say Houston is probably the one that, you know, we've talked about on a number of these calls that continues to be a little soft and not one that we will be starting to build in anytime soon. I guess even within the markets you are in where there is supply, you think rents are kind of constant across submarkets? Yeah. I mean, it varies, right? It's jumping all over, but in markets we're in, we're seeing strong rental growth. I mean, obviously, we've put up record numbers for ourselves this year. I think we went into this year into 2021 thinking that market rent growth in the U.S. was gonna be in that mid-single digits to maybe pushing double digits, and we were wrong again, and it ended at 11%. I think it's set up to do the same thing in 2022. Okay. All right. Thank you. Our next question will come from the line of Ki Bin Kim. Please go ahead. Thanks. Congrats to another great year. Just wanted to stick with the development topic. You know, with the total value notching down just a little bit, but if you think about the inflation that we've seen, it probably implies that the square footage or a number of projects that you're actually projecting to start on is lower than the dollar value. Can you just talk about that part of it and what yields you're expecting for your 2022 start? Go ahead, Steve. Sure. Ki Bin, it does depend on where we end up in that range, right? But I think it's safe to say that we'll do somewhere between, you know, 8 million-10 million sq ft of new development starts. As Jim or Mark alluded to early on, part of it is that, you know, the demand picture looks really good for us. You know, we've got a number of large projects we're working on, but it depends on some of that pre-leasing and how much risk we wanna take on. In terms of returns our stabilized returns, again, I think will be a little dependent on market mix, but assuming we're consistent with, you know, 60%-75% in our high barrier markets I think the returns in the low 5% stabilized is probably a reasonable expectation. I think our value creations, you know, considering where cap rates are still gonna be healthy as they are today. Yeah. The only other thing I would point out, Ki Bin, is you're right on. I mean, I think, you know, if you do theoretically the same dollar value development this year that you did last year, on a cost per square foot basis, it's going up, right? So you're probably developing less square feet because costs are going up. Part of it is also market mix once again, right? You know, we're gonna do smaller buildings per se, per dollar per square foot in these coastal markets, which is where more of our development continues to take place. Gotcha. On a separate topic, where do you think we are in terms of the infrastructure build-out to support e-commerce growth? And I'm curious if you think 2021 was a kind of pull-forward demand year and if the, you know, next couple of years look a little bit more normalized. Let me answer both of those. We've been asked a number of times in a number of different ways about how the infrastructure bill and infrastructure spending is gonna help. I've told people that I think you have to exercise reasonable expectations. The best example I can get is, remember we talked about the expansion of the Panama Canal for years. It took many years for it to get done and complete and fully operational before we started to see the effect. I think, you know, the legislation is still less than what, probably 90 or 120 days old. You gotta get projects, you know, approved and funded and started before you're gonna see that. I think it'll be several years before we'll see the full impact of that. I think that was the first question. What was the second part of your question, Ki Bin? I was actually talking more about the warehouse network build out for e-commerce, not the infrastructure bill. Yeah. Where we are in terms of innings, and if you think 2021 was like a pull-forward year, where maybe 2022, 2023 looks a little bit more normalized. Well, I would say, I think we believe 2020 was a pull-forward year. I think if you look at some of the big players in e-commerce and the traditional retailers that have moved very strong into e-commerce, their numbers for 2021 were down over 2020. I think you know, these are somewhat more normalized years that we're in. I think everybody believes we're still in the early innings in terms of the development of fulfillment centers and you know, e-commerce supply chain, last mile facilities for e-commerce retailer, as well as, you know, our traditional customers like FedEx and UPS continue to grow dramatically. I think we're in the early innings. I think you'll continue to see some ups and downs with you know, with the different aspects of business. I think we're gonna continue to see that sector grow at a very healthy rate. Okay, thank you. Our next question will come from the line of Dave Rodgers. Please go ahead. Yeah, good afternoon, everybody. Obviously the financial guidance you gave is pretty bullish for the year ahead, and I think largely expected by The Street. It seems like, and maybe we've all touched on it a little bit, the investment guidance is much more conservative. Lower acquisitions, lower dispositions, lower development starts than kind of where you were last year. I guess I wanted to understand that more and even Mark's comments about using asset sales to pay off debt, you know, as opposed to kind of growing and, you know, shrinking the balance sheet versus growing it. I guess I wanna understand, is there something that you're worried about? Do you have the ability to take development starts to $1.72 billion with the combination of land, entitlements, labor, you know, steel? Are there some natural barriers right now that you're coming up against in terms of being able to invest more capital more aggressively given the low vacancy rate? Well, let me start off and then others can chime in. No, we don't have any barriers, you know. I think if you look at where we started the year with guidance in 2021 of $850 million and where we ended up the year, I think, you know, those possibilities exist. As I said earlier about the development pipeline, you know, it's a function of some of the bigger build-to-suits and how many of those we signed during the year that would push us towards the higher end of guidance or to exceed our initial guidance, much like we did last year. It's continued leasing volume and the ability for us to accelerate more speculative development in most of those markets. We've ramped up our landholdings to support a significantly larger development pipeline going forward. I think we've indicated that we're gonna continue to be actively buying land. There's no hidden message. We're not managing. You know, I think, this is probably pretty consistent, you know, good, strong, but prudent guidance. You know, I hope to have the opportunity to tell you over the course of 2022 that we intend to raise guidance a few times. Yeah. Dave, and I would just add to your specific point on asset sales to pay the debt off that I did refer to. That's really a temporary thing. It's not like we went out and sold assets to pay back debt or to buy back debt early. That was really just to keep from having a bunch of cash sitting on our balance sheet here in the first quarter. The way we look at that, it just frees up our balance sheet to do even more debt now to fund this growth that Jim just went through without deteriorating our balance sheet any. That was really more just a temporary use of cash. Lastly, Dave, I would add on the acquisition side, I think last year we had a midpoint guidance of about $400 million. We did like $530 or $540. You know, acquisitions are tough. It depends on what the opportunities are. Frankly, the majority of our growth is gonna be through development because we like the risk-adjusted returns there better than the acquisitions. Great. Nick, maybe just stay with you for a follow-up on the cap rates for acquisitions and dispositions, realizing they're relatively small, but it's about a 120 basis point spread between acquisitions and dispositions last year. There was lots of kind of ins and outs, and it seems like this year might have some skew as well. Can you talk about that spread in 2022? You know, maybe kind of what that normalized looks like, ex Amazon. Yeah. I think those spreads will continue to be about the same. What I would point out, though, is the total returns or the IRRs, the spreads have expanded in the last 18 months. For 2021, we calculated the spread at about 250 BPS that our acquisition IRRs were 250 BPS higher than our disposition IRRs. Great. That's helpful. Thank you. Our next question will come from the line of Caitlin Burrows. Please go ahead. Hi there. I guess good afternoon. I guess, as you guys look at occupancy at end of the year, almost 98% occupied, and it seems like you generally expect that to stay flat or even increase at the mid or high end of your guidance. Just wondering if you can give some current thoughts on kind of ideal occupancy and recognize that not necessarily the key metric, but how occupancy that high makes you comfortable that you are indeed getting the strongest rent growth and same-property NOI growth, possible. Well, I'll start, Caitlin. I mean, I quite frankly like 100% occupancy. Jim's always talking about 96% or 97% and having some room, but as long as we're getting the best rents we can get, why wouldn't you want a lot of occupancy too? You know, I think I just go back and you look at our rent growth that we posted, and I think we'll be, you know, at or near the top of our peer group. As long as we're, you know, posting rent growth numbers that are at or near the top of our rent growth peer group, I'm sorry, having high occupancy levels is a good thing. You know, from a same-property perspective specifically, and we don't really give guidance on same-property occupancy, but I could actually see that even tick up a little bit, not a lot, but maybe 20-30 basis points from 2021 to 2022, and you know be in that kind of low- to mid-98% range. That's really what we're projecting. We don't have a lot of expirations, like I pointed out in our prepared remarks, but we will likely roll more of our portfolio than what's expiring. That doesn't do anything to occupancy, right? It's just keeping tenants in there, and it's getting to that rent stream even quicker. Got it. Maybe just a quick follow-up on kind of leasing trends. I know last quarter you guys gave some impressive stats on how leased spec properties were when they went into service at 90%, and that the average lease-up time since 2019 of your spec developments had been under two months from having been placed in service. Just wondering, I know it's only been a quarter, so they don't move that drastically that quickly. Wondering if you have any reason to believe that that lease-up timing could begin to take longer or if that's just not what you want. No, I would say as we sit here today, it's still we're pretty much right on the timing, I guess, that we've been at the last 12 months. Like if you look, for example, at the deliveries this quarter, they were 71% leased when they went in service. But they were actually 39% leased when we started those projects. So, you know, we almost, you know, kind of almost doubled the occupancy, if you will, before they were even placed in service. So we still continue, especially in markets like Southern Cal and Northern New Jersey, to lease most of these projects up before they even go in service. So, you know, in those markets, you're looking at 0 to 2 to 3 months of lease-up time on average. In the other markets, it's maybe, you know, six-nine months. We continually beat our underwriting, which is 12 months. I would say, as we sit here today looking at our pipeline that we just started and what's about to come in, what we plan on starting the next couple of quarters, I think it's going to look very similar. Yeah. The other metric that we point to is we've got in the portfolio a little under 6.5 million sq ft of vacant space, 75% of which is not in service yet. I think that speaks to the strength of the leasing activity that Steve's teams are seeing all across the country, and, you know, the opportunity for continued outperformance in that area. Yep. Got it. Thank you. Our next question will come from the line of Ronald Kamdem. Please go ahead. Hey, two quick ones for me. Congrats on a great year. Just sticking to sort of the previous question on the same store NOI guidance. You know, I think when I think about sort of the rent growth numbers that you're posting, obviously the rent bumps are what they are, potentially some occupancy tailwinds. When you think about why not higher, is it mostly because there's fewer leases rolling, as you mentioned, or is there anything else with free rent or anything else we should be aware of that maybe is keeping that number a little bit lower? No, it's really roll. I mean if you look at what I call deal quality, the rent growth we're getting, the overall rates we're getting on deals, I'll put our deals up against anybody. I think our deal quality is as good or better than anybody, any other peers out there. We do have less roll. I mean, that's a fact. I mean, so you got to look at on a risk-adjusted return, we're very happy with the guidance we put out. You know, the other thing I would just tell you on roll, like I mentioned in my prepared remarks, for 2021, we were supposed to have 7% of our leases roll. We actually rolled 12. If you look at 2022, that's in our supplemental, we're showing 5% roll. When we're all said and done, it'll probably be closer to 10% that we'll roll. If you take that, you really need to take those two years and average them together because you got to remember, a lot of the 2022 same-property growth will come from the 2021 leases we signed, and only part of 2022 will come from the 2022 leases we signed. Some of that will affect 2023. If you average 2021 and 2022 together, we're gonna call it roll 11% of our portfolio over that two-year period at a 20% cash rent growth number that we've been posting, that's a little over 2%. You add the rent bumps to that that are embedded in our portfolio, that gets you up close to 5%. Our guidance is close to six because the difference would be occupancy, free rent, things like that. Hopefully that kind of walks you through. Yeah. The other thing I would add, Ron, is the upside for us is, you know, what leases we can get our hands on early, quite candidly. And you know, at this point early in the year, I don't think Steve's guys across the country have a real good idea all of the total amount of leases we'll be able to pull forward and which ones they are. You know, 'cause it's early in the year and, you know, we're just in discovery dialogue with a lot of those. Depending how many we can pull forward will I think really dictate, you know, how close to the upper end we can get. The last point I would make, circling back to, I think it was Dave Rodgers' question to Nick on dispositions and maybe being a little higher. You know, the assets that we have targeted for disposition are assets, quite frankly, that we think we've really maximized the value on them. They're some of our, you know, assets that had longer term leases in it, quite frankly, lower rent bumps. We think we can get very attractive cap rates on those assets. We can sell those, where we think we've maximized the value, and it really just helps our same property pool looking forward more into 2023. You know, those kind of items will be more of an impact on 2023. We continue to get those lower growth assets out of our portfolio and replace them with higher growth assets. Great. Just to, if I could sneak in a quick one, just on the wage expenses, maybe can you talk about sort of what you're seeing on the ground with sort of the constructions and so forth, what you're hearing from tenants? Anything, any number you could throw around it? Is it up 7%, 8% year-over-year would be really helpful. Thank you. Was that question on wages for warehouse workers or construction costs? Well, for warehouse workers. Yeah. Thank you. I think it varies by region, but you've probably seen a 10%-20% increase in some wages depending on the areas. Look, our customers are. I think Caitlin asked a question earlier about these conversations with tenants and you know, this is a conversation that Jim has with the operating teams quite often, which is, are we pushing hard enough? Our customers are under a lot of pressure from a bunch of different points of their business, right? Between transportation costs are up significantly, wages are up. You know, rent continues to be a relatively small part of the overall logistics cost. You know, they're facing quite a few inflationary challenges out there. Rent continues to be a small part of it. Thank you. The next question now comes from the line of Emmanuel Korchman. Please go ahead. Hey, guys. This is one for, I don't know, a combination, I guess, Steve and Mark. You spoke about the 2021 pullback or not pullback, but the early renewals and then 2022. A couple questions. When you sign leases early, so the 2022 leases that you signed that were not expiring, do those rent bumps take place immediately? Mark, you spoke about the benefits to same-property NOI, but do the new rents become effective at the end of the lease or mid-lease because you're doing them early? It varies, Manny. Generally, they don't take effect until the current lease ends. There are some exceptions to that, but generally they don't take place till the new lease ends, or the current lease ends. Yeah, I would agree. I would say the one exception I have, Manny, is, you know, some of these conversations that take place around the tenant's needs, right? Whether they need something done to the building, some improvements, a lot of times we'll redo the lease at that point in time. As Mark said, I'd say 75% of them have to do with natural expiration. The only other point I would make is these are not, just to be clear, we do a few, but these are not generally leases that were expected to roll in two or three years from now. These are, you know, generally six-nine months early. Hey, Jim, it's Mike. Right. Mark, I guess the point I'm making is you talk about the big benefit to cash, you know, cash flow from doing them early. From a model perspective, from a cash flow perspective, the fact that you've signed them early and they're in your leasing stats doesn't really impact the cash flows, right? Your 2022 at this point is still gonna. Your natural lease expiration in 2022 is gonna be about the same because you've just done them six-nine months early, right? From a cash flow perspective. No, you're exactly right, Mike. That's why I said you really need to average the couple years together. Because what I was trying to say is the impact of a lot of the leases we signed in 2021 hit us now in 2022. That's why you need to really take a couple years and average them together. You're exactly right. I think you mentioned 20% of cash rental rate growth, when we do that average. Is that implying? Can we use that to imply what your 2022 rent growth is gonna be? Or do you wanna guide us to sort of where those numbers fall out? No, I think what we would say is we expect, as we sit here today, we expect 2022's rent growth numbers to look very similar to 2021, which is, call it, in that mid- to high-30% on a GAAP basis and high teens to low 20 on a cash. Yeah, it's right in that area. I think Michael had a follow-up. Hey, Jim, it's Blaine Heck. Just a question, as you think about longer term strategic planning, has anything changed in your mind or at the board level about either global expansion, you know, maybe diving deeper into the asset management business, taking advantage of all the significant capital out there. Obviously, you did the CBRE venture, but going deeper and then, you know, thinking about helping your tenants, you look at what Prologis is doing in their Essentials business. Does any of that start to rise up higher in your strategic thinking? You know, I'm sorry, Michael. Those are all topics that are consistently debated in our strategic planning efforts and at the board effort. We're not prepared to announce any of those. You know, they're all in the mix, and they're all certainly things that we're talking about today. You know, they're all things that given our size and scale, are opportunities for us. It sounds like I don't know if it's able to rank those three things, global asset management and essentials. Which one of them would be closer to potentially going first? Because I think your comments in the past have been, you know, you wanna be a U.S.-focused company. That's what distinguishes you relative to the peer set. You know, you don't wanna become a massive asset manager. You wanna sort of do small, you know, direct ventures when the time needs to not put pressure on you to sort of fill those buckets. Then the last one, being essential, seems like the most logical one, but I don't wanna put words in your mouth. I appreciate that. No, I think you're correct. The opportunity for goods and services for our customers, is very attractive. I think that presents an interesting opportunity. Back to your original two, international, you know, I would say sitting here today, we think we still have ample opportunity to grow in the U.S. markets, and we don't need to push to international to continue to maintain the level of growth that we had last year and that we're projecting, you know, into the coming years. You know, in terms of the asset management side, anytime we're doing a joint venture like the CBRE one or any of the other joint ventures, we have, you know, we still try and keep the leasing, the management, and the asset management. So it is a source of fee revenue for us, even when we do some of these ventures. I think it'll be a while before we're willing to take a big step and get purely into the third-party asset management business. Okay. I'll see you in Florida. Looking forward to it. Our next question will come from the line of Vince Tibone. Please go ahead. Hi. Good morning. How are you thinking about selling individual assets versus a portfolio deal? Are you seeing any differences in pricing or investor demand for single assets versus larger portfolios? Vince, it's Nick. Everything's very expensive. You know, from our perspective, specifically on the acquisition side, we almost exclusively, most of the transactions that we're executing on are lightly marketed or off-market transactions. The reality is, most of the portfolio deals are gonna be fully marketed. We look at them off-market and lightly marketed as well, but it is very challenging in the acquisition side right now. Fortunately, we've got a good team in place that's leveraging the local development teams to go find some of these interesting infill assets that we can buy at pretty good yields. What about on the sell side? I mean, do you think there's a portfolio premium today for, you know, a combination of assets and just so many institutions looking to get into the sector? Or is it still, you know, selling single assets kind of gets you the same overall execution as a bigger portfolio on the disposition side? That's always a tricky question, but I would answer is yes, there is a portfolio premium on the disposition side. You saw us do that on several transactions last year. You know, the reality is because investor demand is so strong, when you can get a bigger portfolio pulled together, a lot of times you can sort of leverage that transaction. Now, your buyer pool is gonna be smaller, so there's a balancing act there. But a lot of times you can really push pricing on some of these bigger deals. It makes sense. That's helpful color. One more for me. The book value of your development land bank is around $650 million. What do you think the market value of that land is today? 2x. Yeah, I think that we quoted that in our prepared remarks too. Vince may not have- Yep. We've been clear about that, but yeah, we think it's 2x what the book basis is. Great. You gotta keep in mind there's a lot of this land we've just recently put on our balance sheet, but it's been under contract in some cases for, you know, nine-12 months, and the market value has moved quite a bit in nine-12 months. Got it. Thank you. Yep. All right, next question will come from the line of Rich Anderson. Please go ahead. Hey, thanks. Good afternoon. I was looking at the same store projection for 2022 at midpoint 5.8% same store NOI. That's a different approach than what you've done in past years. In 2020, you started at 4% and then ended the year at 5%. In 2021, you started at 4%, ended the year at 5.3%. I'm curious if, given the fact that occupancy is so elevated, do you really see that there's upside to the five-eight in a similar manner that you've been able to produce in previous years? Or do you think that's a kind of a full number at this point, given all those inputs and outputs? Well, I would answer it this way, Rich. We're comfortable with the guidance we gave, which does have, you know, some room above the 5.8%. The 5.8%'s the midpoint. The guidance goes all the way up to, what is it? 6%. Two. Look at the number here. 6.2. I would tell you that, yeah, there's definitely, you know, some fuel in the tank, so to speak, to get to that 6.2. I'm not prepared to sit here this early in the year and tell you we're gonna get there. There is a path. Like 105% occupancy? Sorry, guys. Sorry. I'm sorry, Rich? No, never mind. I said, like 105% occupancy, but I was obviously. We're trying. I'm telling you, we're trying. Second question for me is, you mentioned supply-demand being in balance. We've heard that a lot in the past few years, again, in 2022, and that equates to 10% market rent growth, which is a nice position to be in. But since demand can, you know, shock and turn off much faster than supply, at what point does that sort of balance get you nervous in the sense that, okay, if supply is running x% above demand in the national view, do you, as a company, start to take a more cautious approach to your own development process? Yeah, Rich, I think we would. I think here's the fact of the matter. U.S. vacancy is 3.2%. If it goes up 100 basis points to 4.2, that's where we were in 2019, and we had a pretty good year in 2019. Now, you know, not quite as good as 2021, but, you know, I think anytime you've got U.S. vacancies under 5%, it's a landlord's market, and you'll continue to see us be able to put good value creation on the development side, both from build-to-suit and spec, and continue to grow rents. Right. Just a quick follow-up on the same topic. In Northern New Jersey, we're seeing a big spike in demand, and perhaps no surprise they support Manhattan as well, of course. Is there anything unique going on in Northern New Jersey that you're seeing that is particularly sort of eye-popping right now, or is there just sort of typical good, so solid performance? No, I think, Steve, you can talk about our demand is pretty much broad-based. I mean, I can't tell you there's one phenomenon in some industry that's driving it. Steve? Yeah, Rich, I would just tell you, I think the biggest thing happening around any of these large population centers is, you know, I think the whole e-commerce phenomenon is and online economy is translating to our business, right? There was a question in earlier about where we are and what inning, and I think Amazon might be in one inning and everybody else is sort of just getting done with warm-ups, right? I think that's a big part of it. I think, you know, Northern New Jersey in particular with the demand side is the assets that are needed today, you know, they're more modern assets for e-commerce fulfillment, and they don't have that in Northern New Jersey. You're seeing, you know, the lack of opportunities for greenfield development. You got a lot, you know, as we talked about in our remarks, six of our nine projects in the fourth quarter are redevelopment. That's causing a lot of that demand as well as the lack of available ready-to-go opportunities. Yeah. I mean, that's all that. I know under that. I just saw a particular spike in Northern New Jersey that caught my attention, but perhaps we could take it offline. Thanks very much, guys. All right. Our next speaker then will come from the line of Mike Mueller. Please go ahead. Yeah. Hi. Just a quick one. I'm curious, how did the bumps that you achieved with your 2021 leasing compare to the overall portfolio average? Our portfolio average is up now, Mike, to right at 2.8, and the bumps that we did in 2021 leasing were just over three. They continue to go north. Got it. I think earlier in the comments, you talked about a rent forecast. Rent growth forecast is about 10%. How do the Tier 1 coastal markets compare to that overall 10% average? I think you'll see the Southern California, Northern California, Northern New Jersey, you know, probably 3x that. The Inland Empire is at 0.5% vacancy right now. I mean, those numbers are astounding. The proposals we're quoting, you know, our activity and our new development pipeline is up significantly. You know, we're quoting proposals today with an end date of very near-term that we need to get a response on because of how quickly rents are changing in those markets. Got it. Okay. Thank you. Our next question will come from the line of Bill Crow. Please go ahead. Good afternoon. Thanks. Are you or should you be pushing up exit cap rates and underwriting given the kind of the advancement of the cycle, the increased longer-term supply deliveries, increased financing costs, et cetera? Do you perceive the private market is contemplating pushing up exit cap rates? This is Nick. No, I don't think so. Now, I will tell you, when we do our IR analysis, we do have a 5% annual bump in our projections, annually, but that's been pretty consistent over the years. The reality is, on our development projects, you know, we price the exit cap based on comps that are out there right now in the market. Yeah, I know interest rates have moved up a little bit, and that has some correlation to cap rates, but the other side of it is just the overall investor demand for industrial space. That still remains quite high, and I think that's gonna continue to keep a cap on cap rates going forward. All right. I wanna throw one in from left field here, which is, there was a little bit of attention focused on the industrial sector when we had the tornado disaster in the Kentucky and Indiana area. I'm just wondering whether there's been any follow-up discussions with tenants, or as you think about developing new buildings, whether there's any change to the structure itself that anybody's contemplating. No. Look, Bill, I'll tell you yes and no. Look, building codes change virtually every month across the country. You know, we're building state-of-the-art buildings to the top codes. We deal with earthquake issues and engineering around that. We deal with hurricane issues in Texas and South Florida and Eastern Seaboard. That's just the constant evolution, and our construction and development people deal with that every day. Okay. All right. Thanks. That's it for me. Our next question comes from the line of Anthony Powell. Please go ahead. Hi, good afternoon. Just a question on the long-term development start outlook. You know, some of your peers have given either targets as a% of enterprise value or given outright numbers. How should we think about, I guess, your development starts over the medium to long term, given kind of the overall strong environment? Well, Anthony, I guess I would tell you that it's consistent with the FFO growth numbers that we've given. We think we've positioned the company to grow at this level for the foreseeable future. I think you should expect us to continue to have development guidance in the, you know, the range that we've given this year, the levels that we were at last year. Pre-pandemic, we were well above $1 billion once before. You know, I think we're pretty comfortable committing that we can continue to operate at this level. Got it. Thanks. I've seen more macroeconomists call for or predict an inventory glut first half of this year as people restock, which could impact, I guess, the inventory to sales ratios that you and others quote. Do you worry about that? If that were to be the case, what do you think it would do to medium-term demand growth? Well, our customers would love to get their I/S ratios back up. You remember those. That number typically operates between 1.4 and 1.5, and that doesn't take into account, you know, the safety stock or the increased inventories that a lot of our customers are trying to build up. You can extrapolate from where the I/S ratio is today, and you're talking about $1 trillion of additional inventories. It's gonna take us, given the supply chain issues that we're all dealing with today, a while to get those levels back up. In spite of everything that everybody's trying, I think it's, you know, the supply chain issues are here for, you know, well into 2023. It's gonna take us a while. All right. Thank you. Next question will come from the line of Vikram Malhotra. Please go ahead. Thanks. Just two quick ones. Just with all the rent growth that you've outlined, where's portfolio mark-to-market today? 39% on a net effective basis, Vic. 29% on a cash basis. 29 on a cash. Okay, thanks. Then just where would I. I'm not asking you to, you know, give 2023 guidance, but if I were to sort of hypothesize and say rent's still growing, mark-to-market widening, occupancy flat, you arguably have maybe even more to re-release next year. You know, why won't same-property NOI, you know, growth accelerate from current levels next year? Where would you say, you know, I'm wrong? Vic, you broke up there. I didn't quite get that question. Could you repeat that, please? I was saying that if you look next year, you have more to lease. I know you do a lot of forward leasing, but just optically there's more to lease. Rent growth is still there this year. Arguably the spreads versus market, like you just outlined, on a cash basis are higher than what you're achieving today. Why would same-property NOI growth not accelerate next year versus this year? Where would I be wrong with that statement? I'm not looking for a specific number. I'm just like- We haven't given that. Trying to figure out like. We haven't given that guidance yet, Vic, but I don't see anything wrong with that statement. It's your statement, but I don't see an issue with it. Vic, that is perhaps the way anybody's ever asked us about 2023 guidance. Congratulations. Well, I'm the first, so. No, I was just wondering, you just outlined the cash rent b-to book or to mar to portfolio market. You're, you're- To market. That's the same thing. It seems like there's room. Yeah. No. Okay. We're not gonna say you're wrong. Okay. Thanks so much, guys. Yeah. Just as another reminder, if you do have a question, please press 1 then 0 at this time. We're gonna go to the line of John Kim. Please go ahead. Thank you. I was just wondering, with your development pipeline becoming increasingly spec, if we should think about the length of the stabilization periods extending at all. I'm looking at this quarter, your completions were 71% leased. I know demand's strong. I'm just wondering, does it take an extra few months to fully stabilize? Yeah. Well, I guess I'll start. I'll tell you, I don't know that it's a fair assessment to say it'll be increasingly more spec. I think it was, you know, the fourth quarter was a bit of an anomaly for us. I do think as these, you know, construction material delays impact our business overall, that may be a true statement going forward. Today, I don't know that that's necessarily true. I don't think our stabilization will change much. Our leasing has been strong in our portfolio and, you know, we've been leasing them on average two months after they were put in service. Given the pipeline today of prospects, I wouldn't see that changing for us. Okay. My second question is on Amazon and their strategy to own more of the real estate. Are you seeing a notable, noticeable shift in your markets as far as buying or leasing activity? Do you think other retailers or logistics providers are gonna follow suit and decide to go this route? I would tell you Amazon continues to be an active user. They've, you know, their level of activity has come down a bit, from what it was in 2020, and then down in 2021, and I think in 2022 will be down a little bit more. That was a good thing. That was a question everyone had for our sector. What happens when Amazon slows down a bit? We've answered that. I think on the ownership side, we've seen them more active on acquiring land. I heard a stat the other day, they acquired 1,300 acres of land this past year, which was similar to what they had acquired the year before. I think a lot of that is being done in markets and areas that we're not necessarily gonna compete with them in. You know, some of these Gen 4+ that are out in tertiary locations. You know, but we have. Look, we haven't had Amazon buy any of the assets we've sold with them in it. They've had an opportunity to do that. So I don't, you know, I can't speak for them, but I don't. We haven't seen it compete with us in any market. In terms of other customers, not anything we're hearing from anyone trying to follow in any sort of footstep of Amazon. Okay, great. Thank you. Thank you. At this time, we have no further questions in queue. Thanks, Sean. I'd like to thank everyone for joining the call today. We look forward to seeing many of you throughout the year at various industry conferences, as well as hopefully getting you out to physically visit some of our regional markets. Thanks again. Ladies and gentlemen, that will conclude our conference for today. Thank you for your participation for using AT&T Event Services. You may now disconnect.