Ladies and gentlemen, thank you for standing by, and welcome to the First Industrial 3Q 2021 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to Art Harmon, Vice President of Investor Relations and Marketing. Thank you. Please go ahead. Thank you, Shelby. Hello, everybody, welcome to our call. Before we discuss our third quarter 2021 results as well as updated guidance, let me remind everyone that our call may include forward-looking statements as defined by federal securities laws. These statements are based on management's expectations, plans, and estimates of our prospects. Today's statements may be time sensitive and accurate only as of today's date, Thursday, October 21st, 2021. We assume no obligation to update our statements or the other information we provide. Actual results may differ materially from our forward-looking statements, and factors which could cause this are described in our 10-K and other SEC filings. You can find a reconciliation of non-GAAP financial measures discussed in today's call in our supplemental report and our earnings release. The supplemental report, earnings release, and our SEC filings are available at firstindustrial.com under the Investors tab. Our call will begin with remarks by Peter Baccile, our President and Chief Executive Officer, and Scott Musil, our Chief Financial Officer, after which we will open it up for your questions. On the call today are Jojo Yap, our Chief Investment Officer, Peter Schultz, Executive Vice President, Chris Schneider, Senior Vice President of Operations, and Bob Walter, Senior Vice President of Capital Markets and Asset Management. Let me turn the call over to Peter. Thanks, Art, and thank you all for joining us. Our team continued its strong performance in 2021 by delivering another great quarter, highlighted by increased in-service occupancy, new development leasing, and continued strong growth in rental rates on new and renewal leasing. As importantly, we were also successful in readying land for new development starts and replenishing our pipeline with strategic land acquisitions. I'll discuss those successes in more detail shortly but let me first update you on the overall strength of the U.S. industrial market. Per CBRE EA, net absorption was a healthy 120 million sq f t in the third quarter, while completions came in at 79 million sq f t. Through the first three quarters of this year, net absorption was 292 million sq f t, significantly outpacing new supply of 193 million. In our portfolio, we grew occupancy 50 basis points to finish the third quarter at 97.1%. Cash same store NOI increased 6.9%. Cash rental rates for new and renewal leases were up 22.8%. Looking at rental rate growth for the full year, as of today, we have signed roughly 98% of the 2021 expirations, and including new leasing, our overall cash rental rate increase is 15.3%, which puts us on pace to top our previous company record of 13.9% in 2019. With respect to 2022 expirations, we're off to a great start with 29% of renewals signed at a cash rental rate increase of 19%. Let me move now to the primary driver of our external growth, our development program. As most of you know, as part of our underwriting process and risk management discipline, we operate with a self-imposed speculative leasing cap. Due to continued robust fundamentals in the industrial market, the strength of our balance sheet and growth in our portfolio, and the significant opportunities we have to create shareholder value through new investments, we've increased our speculative leasing cap by $175 million, bringing the total to $800 million. Now let me walk you through our recent land acquisitions, as well as three exciting new development starts that will put some of the incremental cap capacity to good use. During the third quarter, we closed on three development sites totaling 122 acres for $59 million. Two are in the Inland Empire East, and the third is in Denver. In total, these sites can accommodate up to 2.1 million sq ft of new development. At one of the new Inland Empire East sites, we are starting our First Pioneer Logistics Center, a 461,000 sq ft cross-dock facility. Our total projected investment is $73 million with a targeted cash yield of 6.8%. The Inland Empire continues to be one of the strongest logistics real estate markets in the U.S., helped by significant net absorption from activity related to the two largest ports in North America. Market vacancy in the Inland Empire is sub 2%, and market rents have grown more than 80% since we went under contract on this site in early 2020. We look forward to adding this prime asset to our Southern California portfolio, which represents approximately 23% of our rental income as of the end of the third quarter. Moving to the East Coast, we are starting another development in South Florida to serve the strong tenant demand we have experienced there with our recent leasing successes at First Park Miami and First 95 Distribution Center. FirstGate Commerce Center will be a 132,000 sq ft Class A distribution facility in the infill Coral Springs sub-market. Market rents in Broward County have grown 15%-20% since the end of 2019. Our total estimated investment is $24 million, and our targeted cash yield is 5.5%. In the fourth quarter, we acquired a site in Bordentown, New Jersey, just off of Exit 7 on the Jersey Turnpike for $8 million. We immediately started construction of First Bordentown Logistics Center, a 208,000 sq ft facility. We look to build upon our past successes in this location, where our two prior developments were leased near construction completion. The central New Jersey market has been exceptionally strong, with asking rents up 34% versus last year, according to a recent market report from CBRE. Our total projected investment is $33 million, with an estimated cash yield of 5.8%. In summary, these three planned fourth-quarter starts total approximately 800,000 sq f t, with an estimated investment of $130 million and a cash yield of 6.3%. Including these planned starts, our developments in process total 6.4 million sq f t, with a total investment of approximately $725 million. At a cash yield of 6%, our expected overall development margin on these projects is approximately 65%. With development as our primary driver of external growth, we're also focused on replenishing our land holdings. In the fourth quarter to date, in addition to the New Jersey site I just discussed, we also acquired a total of 10 acres in the Inland Empire and Northern California for a total of $10 million. As of today, adjusted for our planned fourth quarter starts and the aforementioned land acquisitions, our balance sheet land can support approximately 12.5 million sq f t of new development. Our share of the Phoenix Camelback joint venture is an additional 3.8 million sq ft. In total, that's north of 16 million sq ft and represents approximately $1.7 billion of potential new investment activity. Now, let me update you on our recent development leasing successes. We just leased the entire 548,000 sq ft at First Park @ PV303 in Phoenix at completion to a leading omni-channel retailer. As part of this lease, we are also expanding the building another 254,000 sq ft for a total of 802,000 sq ft. The total estimated investment for the project, including the expansion, is $72 million, and the estimated cash yield is 6%. The tenant is expected to take occupancy of the just completed space by year-end, with the expansion ready for use in the second quarter of 2020. We also leased 100% of our 303,000 sq ft First Wilson Logistics Center in the Inland Empire that will be completed in the first quarter of 2022. With a cash yield of 8.7%, we substantially outperformed our underwritten yield. This lease further showcases the rapid rental rate growth in the Inland Empire that I discussed earlier. We are pleased that we have land sites in this high-growth market that can support another 2.8 million sq ft of development. As another example of the strength of the Southern California market and our platform, we just leased our Laurel Park redevelopment project in the South Bay. This property is very well-suited for port-centric warehouse distribution users, given its great location and highly sought-after yard for surface use. Our first-year yield is 7.5% on our $21 million investment, which represents a margin of around 150%. Moving on to sales. During the quarter, we sold six properties and four units for $14 million, and in the fourth quarter, we have sold four additional buildings in Detroit totaling $7 million, bringing our year-to-date total to $126 million. Given current visibility on our disposition pipeline, we now expect sales for the year to total $175 million-$225 million, a $75 million increase from the prior midpoint of $125 million. With that, let me turn it over to Scott to walk through additional details on the quarter and updated guidance. Thanks, Peter. Let me start by summarizing our results and leasing stats for the third quarter. NAREIT funds from operations were $0.51 per fully diluted share, compared to $0.49 per share in 3Q 2020. Excluding approximately $0.04 per share of income related to the final settlement of an insurance claim, 3Q 2020 FFO was $0.45 per share. Our cash basis same-store NOI growth for the quarter, excluding termination fees, was 6.9%, primarily due to higher average occupancy, an increase in rental rates on new and renewal leasing, rental rate bumps, and lower bad debt expense, slightly offset by an increase in free rent. We commenced approximately 2.4 million sq ft of leases. Of these, 500,000 were new, 1.4 million were renewals, and 500,000 were for developments and acquisitions with lease up. Tenant retention by sq ft was 85%. Cash rental rates for the quarter were up 22.8% overall, with renewals up 21% and new leasing up 27.5%. On a straight-line basis, overall rental rates were up 36.2%, with renewals increasing 34.9% and new leasing up 39.5%. Moving on to some capital markets activity. As previously announced in early July, we closed on two financing transactions. First, we expanded our line of credit to $750 million and improved our pricing to LIBOR plus 77.5 basis points, a reduction of 32.5 basis points compared to our prior facility. The maturity is now pushed out five years, including our two six-month extension options. We also refinanced our $200 million term loan. The new term loan matures in July 2026 and has an interest rate of LIBOR plus 85 basis points, a reduction of 65 basis points in the spread compared to our prior facility. With our interest rate swaps in place, the new fixed interest rate on the term loan is 1.84%. On the equity side, through our ATM, we issued 1.1 million common shares at a weighted average price of $55.35 per share for total net proceeds of $59 million to help fund the new investments Peter spoke about. Moving on to our updated 2021 guidance per our earnings release last evening. Our guidance range for Nareit FFO is now $1.93-$1.97 per share, which is a $0.02 per share increase at the midpoint, reflecting our third quarter performance and an increase in capitalized interest due to our announced development starts. Key assumptions for guidance are as follows. In-service occupancy at year-end of 96.75%-97.75%. This implies a full-year quarter-end average in-service occupancy of 96.5%-96.8%, an increase of 15 basis points at the midpoint. Fourth quarter same-store NOI growth on a cash basis before termination fees of 6%-7.5%. This implies a quarterly average same-store NOI growth for the full year 2021 of 4.3%-4.7%, an increase of 25 basis points at the midpoint due to our third quarter performance. Please note that our full-year same-store NOI guidance excludes the impact of approximately $1 million from the gain from an insurance settlement. Our G&A expense guidance is now $34 million-$35 million, an increase of $1 million at the midpoint. Guidance includes the anticipated 2021 costs related to our completed and under-construction developments at September 30th, plus the expected fourth-quarter starts of First Pioneer Logistics Center, First Gate Commerce Center, and First Bordentown Logistics Center. In total, for the full year 2021, we expect to capitalize about $0.08 per share of interest. Other than previously discussed, our guidance does not reflect the impact of any future sales, acquisitions, or new development starts after this call, the impact of any future debt issuances, debt repurchases, or repayments after this call, and guidance also excludes the potential issuance of equity. Let me turn it back over to Peter. Thanks, Scott. Before we take your questions, let me thank our team for another great quarter. We're excited about our growth prospects as we continue to put into production our land holdings that can currently support more than 16 million sq f t of value-creating developments. We are also focused on replenishing our pipeline with new sites in higher-barrier markets. We continue to benefit from robust sector fundamentals that are reflected in strong net absorption, high occupancy levels, and increasing rents. With that, operator, would you please open it up for questions? As a reminder, if you would like to ask a question, you may do so by pressing star, then the number one on your telephone keypad. Again, that is star one if you would like to ask a question. Your first question is from Craig Mailman of KeyBanc Capital Markets. Hey, good morning, guys. Scott, maybe this one's for you. Just looking at the year-to-date FFO kind of implies a decel in the fourth quarter to get to the midpoint of your range. Could you just walk through that? Hey. Sure, Craig. I would say the two drivers there are one is we forecasted $500,000 of bad debt expense in the fourth quarter. Our actual in the third quarter was $25,000. Hopefully, we can do better in the fourth quarter than our $500,000. Also, the fourth quarter is being hit with a full quarter dilution related to the equity issuance where the third quarter was only partial. I would say those are the two drivers. Okay. Did you say that there's more equity included in the guidance going forward, or did I mishear you? No, no future equity, but what I'm saying is that the equity issued in the third quarter was more back-end in the third quarter. The fourth quarter, it's in for the entire quarter. You have a higher share count fourth quarter compared to third quarter. Got you. Just separately, Peter, you noted your spec cap is up $175 million. Can you just walk through as the balance sheet gets bigger over time, how we can maybe track the upside to this? What's the most important metric you guys use to set that cap? Sure. We put the cap in place back in 2012, and a little history here will give more context to the answer, because the answer's pretty straightforward. We put it in place in 2012. Obviously, we had a very different portfolio and a very different balance sheet. Back then, the formula was 9% of the total market cap of the company. As time has passed, we have adjusted the cap based on that formula, so we adjusted it in 2015 and 2018, and then again at the beginning of this year. We have not changed the multiplier. It's still 9%, notwithstanding the dramatically improved portfolio and balance sheet. You can say it's even more conservative today than it was back in 2012. It's pretty simple, Craig. It's just 9% of the total traded value plus debt of the company. Got you. Thank you. Your next question is from Ki Bin Kim of Truist. Thanks. Good morning. Sticking with the same line of questioning, I wasn't sure how you calculated how much you've eaten into that speculative cap because you also considered the vacancy in your existing portfolio. I guess first question, how much have you eaten into the cap? I can't remember if you use book value for your assets or market value to get to that calculation. Committed dollars. Any new development that we start that has less than 90% leasing, those dollars go in on a pro rata basis. If we were to do a forward with no tenant, those dollars go in. That's how the cap works. We have $279 million of capacity today, largely due to the great leasing on our new developments that we've just completed. Of the $800 million-$279 million is available. Does that answer your question, Ki Bin? It's based on book value, too, Ki Bin. Also, Ki Bin, it adds acquisition vacancy. If we acquire an empty building. Yeah. It goes into the spec cap. We treat that risk the same as development. When we lease any acquisition vacancy, it comes off the list. Finally, once an asset is 90% leased, it all comes off. Got it. When you think about that and the amount of good leasing that you've done in your portfolio, what is a practical range for development starts on an ongoing annual basis? I know you guys don't typically provide guidance, just looking for some type of ballpark figure. Right. Given the strength, and scale of our current land position, the spec cap and the pace at which we lease new developments ultimately are going to determine the development volume going forward. Of course, subject to profitability, as we always say, we're a profit shop, not a volume shop. You should see development levels, going forward are going to be at higher levels than in the past several years. Again, assuming fundamentals hold. Okay. As you think about funding that development pipeline that's growing, should we expect a kind of a steady state contribution from dispositions? Like $200 million that should ratchet up as the pipeline grows, or different sources? With respect to dispositions, I think the volumes that we've guided to the last few years are going to be similar going forward. Obviously, we just increased. That has a lot to do with quite often we'll get unsolicited offers on assets that are in markets where we want to dispose of more assets, and we'll take those offers. That's really what you see when we pop up from our original guidance. I think the guidance volumes going forward will be similar, Ki Bin, to what we've been giving. Okay. That's it for me. Thank you. Obviously, as we get bigger, that's a much lower percentage, dwindling percentage of the overall size of the company. Right. Thank you. Your next question is from Rob Stevenson of Janney. Good morning, guys. Just to follow up on Ki Bin's question. The fourth quarter disposition guidance is now roughly, I guess, $60 million-$100 million, given the full-year guidance. Are you seeing any meaningful change in the asset pricing there, or is that increase more of a reflection of the increases to the development pipeline and the need to fund that, and the attractiveness of dispositions as a funding source? No, I think the bottom line is we're getting really good pricing, again, in these markets. You all know that the markets that are outside our 15 target markets are the markets where we find lower growth, and we're going to be disposing of more of those assets. The market for assets in those sub-markets is very strong. That's really what drives it. We're really not looking to sell real estate to fund development. That's not the key driver. Obviously, it's a benefit, but it's not the key driver. With these $60 million-$100 million in the fourth quarter, you going to be exiting any markets as a result of that? Wholesale exit? I don't think so. Okay. Peter, there's been a lot of press on the continued supply chain issues and the cargo ships sitting off the coast. What impact is that having on your tenants and then their incremental demand for industrial space these days? If this continues through 2022, as many expect, what's the impact down to your business, you think? I'm going to give that to Jojo and Peter to give their thoughts on that. Sure. Basically, the net impact is that a lot of the tenants in our business, who need imported products, is really having a hard time getting products, and they cannot ascertain the availability nor the timing. The net effect is that they order more. They have to stock more, they have to put more inventory because it's so hard. The bigger loss is the sale of that product, and if they don't really know the timing, that creates a lot of issues. They're going out. The net effect to us is they're wanting to take more space. What's been happening is that we now have less space than the start of the year. What happens is that now rents have been rising because of that. In terms of 2022, we don't know. There's so many issues in the supply chain right now, and there's strong demand. We hope that this levels off for our tenants' sake, but the reality is that I don't think it will level off. I think the supply chain issues will continue and the rent pressure will continue because of the lack of space and increased demand. Hey, Rob, it's Peter Schultz. The other thing I'd add to that is we're seeing a marked increase of activity from the third-party logistics companies looking for space to help with the capacity constraints that a lot of our tenants and companies have. They are very active, looking for, as Jojo Yap said, a finite and declining amount of space today. Should we be thinking about this time period of elevated rental rates and increased demand as a pull forward, and then at some point, whether it's 2023, 2024, who knows, that there will be some sort of lull as the catch-up actually happens? Or you think that this sort of elevated level of demand winds up sticking around for a prolonged period of time as people are reluctant to go back to previous just-in-time inventory procedures? That's a very good question. In order to answer that question, we have to predict where e-commerce, as a percentage of total sales, will be in the market. If e-commerce in the next five, six years, I don't know, goes to 50%, then that's even going to be a bigger driver than supply chain issues. The supply chain issues will be very minimal compared to that long-term driver. That's the first thing. The second thing is that in terms of supply chain, it's hard to predict really when it's going, because you have offshore issues, you have inshore issues, you have shipper issues, you have labor issues, you have trucker driver issues. You have COVID still, a little bit, it's lessening, related efficiency issues in the ports. We don't know when that's all going to get fixed. Don't forget, the primary catalyst to these supply chain issues was COVID, where everything shut down, and then it opened up all at once. If anything, you're catching up more than you're selling forward, if you follow me. Okay. All right. Thanks, guys. Appreciate it. As a reminder, if you would like to ask a question, please press star one. That is star one if you would like to ask a question. Your next question is from Anthony Powell of Barclays. Hi, good morning. Question on the spec cap. You said that it's at 9% of the total, I guess, market value. That's conservative relative to where you used to be as a company given the increase of the size of the company and the increase of the quality of the portfolio. Given the strong fundamentals, why not be a bit more aggressive and increase that spec cap a bit more, just given what you're seeing in the market? Well, one thing that we're very focused on is making sure that we have a business strategy and a portfolio that's going to outperform through the cycle. While it is tempting in times like this to do what you just said, we think going forward we're going to be a lot better off if we just stick to the fundamental business plan that we've always had. We are working hard, as you can see, in terms of replenishing our pipelines, not only for land, but new developments and creating great margins there. We're mindful that trees don't grow to the sky. Trust me, we've discussed what you've said. At the end of the day, we really like the discipline for new leasing that the current cap structure demands. Got it. Thanks. I guess on the land side, you said you're replenishing your land bank right now. What are you seeing in terms of pricing on land, the competitive environment, and just competitive players for industrial land out there? Jojo? Very competitive. Land prices continue to increase. They're increasing a lot more on the coast than the middle part of the country. The reason for the bigger increase in the coastal market is because the rent growth there has been higher as well. We project that land prices will continue to increase. All right. Thank you. Your next question is from Rich Anderson of SMBC. Hey, thanks. Good morning. Just a follow-up on the supply chain question that got started with Rob's inquiry. Did you say that the issues that we're talking about are very small in terms of rent pressure upwards versus the broader commentary about e-commerce demand? Is that what you said? No. What I was saying is that when you look at the supply chain issues today, you don't really know what the long-term impact is if you don't know where e-commerce as a percent of total sales would go. What I said was that if e-commerce, as a percent of total sales, will go to 50, then that will actually make the supply chain issues kind of minimal. If today that's for 2025, and it goes to 50, that's a bigger driver than anything else that we're seeing. That's what I meant. Okay. I understand. Thank you for that. I don't know if you're able to quantify this, but would you be able to say if there's a $50 of rent, probably impossible question to answer, but how much of that is supply chain-related? How much of that is just basic demand related? Is there any way to answer that question? There's no way to answer it, but I would say that the demand side of that vastly exceeds the current pressure from the supply chain challenge. There just isn't enough space for the demand anyway. A lot of that has to do with the fact that everybody stopped building last year for seven or eight months. A lot of it has to do with the fact that it's difficult now, and this is a supply chain challenge, but it's difficult to get some commodity inputs. The demand is just very, very strong. You heard the net absorption numbers earlier relative to new deliveries, and that's really what's the primary driver of the very, very strong rent growth that we're experiencing. Rich, it's Peter Schultz. The other thing I'd add to that is, remember, occupancy costs are only in the 4%, 5%, 6%, 7% range of a company's operation. While rents are going up, we're seeing labor and transportation go up even more. The occupancy cost is still a very small percentage of the total. Got you. You mentioned that as a way to counter some of these stresses, that they're stockpiling more. How does that play into the shortage of truck drivers and moving things around? It just sounds like something's going to burst here. I don't know if that's good or bad for your business, but can you talk about how the shortage of truck drivers is impacting those types of decisions? Jojo? Well, when you look at one of the more successful operators right now, they're the LTL, less than truckload, because they're very, very busy, and they're actually raising rates, and they're very profitable. A lot of businesses in the transportation industry are naming their price, and they're getting their bids, and they're getting their prices. A lot of people in the fulfillment business are doing really well. A lot of them are our customers, too. I guess, the question is that, how is it going to affect the industry? I think my feeling is that some of the costs are going to be passed to consumers. There's an increased cost by businesses, and some of those are going to affect their margins, but some are going to be passed to the consumers. The thing is, they're not going to change. They're wanting to store more because they know they want to make the sales. Right now, they're already top of some importing for next year's season. That's how bad it is. Great. Thanks for that. Lastly from me, $0.08 of capitalized interest, I think, is in your numbers. How has that trended, and how do you see it trending into 2022 with all the development activity that you've got teeing up? I would say over the last several years, it's trended higher just because the development pipeline today is larger. I would say, next year, it's hard to say because we got to look at our starts and what gets leased up. My best guess at this point in time, it's going to be at least $0.08, if not more. Yep. Okay, thanks very much. Your next question is from Michael Carroll of RBC Capital Markets. Yep, thanks. How do you guys currently view your land bank? Right now it's fairly sizable. I know that you indicated that you're still looking for some attractive sites to buy to kind of add to that. What's kind of the reasoning behind that? Is that you're short of land in some of these higher-end markets that you want to be in, and that's going to be a short-term hold? If you do buy that land, you can start it right away? Can you talk a little bit about that? Sure. We're always looking for new land opportunities that are near-term developable. The definition of near-term has certainly changed over the last few years. Entitlement periods are more like 18 months now, and we talked a little bit earlier about some of the delays with respect to getting some of the commodity inputs, in particular steel. Our current land holdings, we estimate, would take about three - five years to build out. Remember, again, our land positions are never static. We're always sourcing and titling new sites, and we'll always have some land sales to users, such as some of the land in our JV out in Phoenix. Are there any markets that you're short on land that you're trying to aggressively acquire? I guess, is there any markets that you're focused on more than others right now? Well, we're focused on new investment focuses on the 15 markets that we talked about in our Investor Day about a year ago. Of course, we're always interested in new opportunities in the higher barrier markets. Those are the coastal markets. Okay, great. Can you provide an update on the former Pier 1 space? I don't remember if we talked about that on this call or not. I know it's the leasing expectations pushed out to 2022, is the leasing activity similar to what it has been, or has that changed at all? You're referring to our 644,000 sq ft cross-dock building at Old Post Road along I-95, North of Baltimore. With our portfolio occupancy over 97%, we continue to look for the right fit on a long-term basis for a single tenant for the building. We're one of two buildings that are available in that sub-market, the other being an 860,000 sq ft building that was delivered earlier this year. We continue to see rent growth in the market and the upside that that building provides. We have no further update today. Okay, great. Thank you. Your next question is from Dave Rodgers of Baird. Yeah. Good morning, everybody. You guys addressed a lot already, but I guess I just wanted to ask about the margins on your development starts. I think last year, what your 2020 stabilizations were around 100% margin. Your starts for the fourth quarter of this year, about 100% margin. What's in pipeline's about half of that. Not that we want to sneeze at a 50%-60% margin, but maybe more curious on kind of what the driver is. Are you having differences in land utilization? Is it just entirely rent growth? That would be the first question. I guess the second question is, if you guys are able to buy land, put it into service quickly in a development at 100% margin, despite the fact that you're saying land prices are up, how inefficiently is land priced today? What are land prices going to do in the next round of purchases at City? I'll start off with that, and Jojo and Peter can add their thoughts. As far as, I mean, land prices are going up rapidly, especially where we want to buy it, but rents are so far growing a little bit quicker. We're looking at land prices on a per square foot basis that we never thought we would see. In terms of the margin impact, again, rents are growing quicker than the cost of land, and cap rates obviously have continued to come down, and that contributes to the big margins that you're referring to. Jojo? Yeah, I would just, maybe just for me, it's the trifecta of higher yields. I would say it's really kudos to the platform for FR. One is that we work really hard on the basis. We don't bid on highly marketed deals. All the land that we bought is off market and direct deals and a result of assemblages. We hit the basis, we basically buy below market. The basis helps the yield. The second thing is that in almost every deal that we did, we underwrote conservatively. The rent projection, actually, the rent grew more than we projected. That helps our yield as well. Lastly, Dave, as you know, this year alone, there has been cap rate compression up to 50 basis points. If you put those three together, that's a formula for high returns. When you look at the in-process, just right here at the end of the third quarter, the relative lower margins on that, is that a function of when you bought that land? Is that a function of just location? When you look at the developments under construction, you do have some markets, like a Seattle market, you're correct. It's a function of a recently kind of acquired site that's lower than our average. That would be one example. The other example would be a large development, Central PA That's a function of a recent land pricing too. Yep. On that project, we bought and started immediately. Yeah. Where some of these projects, like the big margin project we spoke about in our remarks, we tied that land up in 2020, and the rents in that market grew tremendously, and cap rates compressed. That's why you saw the huge margin there. Yeah. That's helpful. Land is, we've been told, running about 30%-35% of kind of total building construction cost. Is that holding pretty consistent, it sounds like, from what you're saying? Overall, it's higher now, Dave. I would add about 10 percentage points to that. Great. That's helpful. Thank you. Thank you. Your next question is from Nick Yulico of Scotiabank. Hey, this is Greg McGinniss. I'm with Nick. All my questions have been answered, actually. Thank you very much. Your next question is from Connor Siversky of Berenberg. Hey, all. Thanks for having me. On the 2022 leases already signed, can you comment at all on what markets where you're seeing particular strength, and maybe what are the upper and lower bounds of what I assume to be a weighted average on that 19% spread figure? Well, I'll comment on the 29% that signed. It's pretty representative of the entire portfolio of the company. When you look at all of the expirations in 2022, it's pretty representative of the overall portfolio as well. The markets that we've been talking about in Q&A, and we mentioned in the script, those are the markets that we've been seeing some really strong rental rate growth in. Okay. That helps. What kind of escalators are baked into the new leases? Has there been any meaningful change from what you would've signed in 2020 or 2019? We're definitely seeing the escalators, across all our markets, in that 3%-4% range. You're definitely going to see those escalators going up in the next year or two. Okay, last one from me. Sorry if you guys already commented on this, I noticed there was a pretty big delta in the price per acre on the parcels acquired in the Inland Empire during the quarter. Can you provide any color as to what explains the difference? Sure. Well, different sub-markets have different rents and therefore, different bases. They're all increased from last year, and we project profitability in those. Of course, we still have to entitle those, but we think we are well below market and definitely well below market post entitlement. Okay. That helps. Thank you. Your next question is from Bill Crow of Raymond James. Good morning, Peter and team. We're now almost a year past your November 2020 Investor Day, and you offered some 2023 expectations that were really well-received. I'm just wondering how the past year's actualized results and the current fundamentals kind of impact your view towards 2023, and maybe specifically the $260 million AFFO target you threw out there. Sure. Scott? Hey, Bill. It's Scott. First thing I'll mention is rental rate growth or increase in rental rates on new and renewal leasing. You remember I had a question about it in Investor Day. I assume 12% this year, 8% in 2022, and I think 6% in 2023. I said at the time, I think we're going to beat it and it's conservative. I really believe that's the case today. Case in point, the 12% projection is going to be, we think, ±15% this year. I think there's upside in that. As far as progress on the AFFO goal, this year we'll think we'll be around $207 million ± $260 is our goal. Keep in mind that two of the drivers that we spoke about, lease-up of development and refinancing higher cost debt, the impact of that is going to be more 2022, 2023. I would say we're definitely on track, and I would say there's going to be some upside in Investor Day on growth and rental rates due to new and renewal leasing. Perfect. Thanks for the color. Your next question is from Mike Mueller of JP Morgan. Yeah. Hi. Just a couple of quick ones here. The three fourth quarter development starts, are they all expected to be completed in 2022? Yes. Yes. Yeah. Okay. Four. Okay. Yeah. It looks like you're going to have quite a bit of deliveries in 2022. If we're thinking out the next few years beyond that, should we think of 2022 as kind of being this anomaly on the big side, or do you think you can kind of replicate deliveries or something close to that? Well, we should. Yeah. Okay, the run rate, if you will, has been truncated or changed because we all stopped new projects last year for many months. You do see this phenomenon where we have a lot of starts and a lot of completions kind of delivering all at once. Over time, you ought to see completions or deliveries that are more consistent as we, quote, "earn into the new development volumes over time." Is that it? I think you kind of answered it without putting numbers out there. That was it. Thank you. Okay. Your next question is from Caitlin Burrows of Goldman Sachs. Hi. Good morning. Just one. I think earlier you mentioned when somebody asked about dispositions that you weren't looking to sell real estate to fund development. I was just wondering, as you think about that development activity going forward, is it that you just fund it with retained cash and then incremental equity where needed, or how are you thinking about that piece of it? What I was really saying is that our decisions to sell particular assets or groups of assets or volume relate only to maximizing the value of that decision and not to how we fund our development pipeline. It will be the case that as we execute sales going forward, we have the added benefit of using those proceeds to fund development, but we don't sit here and say, "Oh, we better go sell $500 million because we have a huge development pipeline." Because when you do that, you might tend to take lower prices than you should just to raise the proceeds. That makes sense. I guess would it be reasonable to assume, I know you mentioned in the beginning that equity issuance isn't assumed in your 2021 guidance going forward, but that going forward, equity will be one of the options for how you end up funding development? Certainly, based on the volumes that we're looking at today, that will be one of the options on the table. Great. That's all. Thanks. Your final question is from Tayo Okusanya of Credit Suisse. Yes. Good morning, everyone. A great, solid quarter. Question still around the supply chain issues. Again, still not 100% clear to me exactly how that's impacting the demand curve for industrial real estate. It sounds like a lot of the occupancy increases you guys have seen has just really been driven by not a lot of development in the past year or so and still pretty good demand. Maybe to an extent, there's some FOMO out there from all these companies saying, "I need space," because everyone's running out. Is that really the way we should think about it, versus the whole kind of collapse of the supply chain actually is causing some type of increased demand that probably could still be around until the supply chain issues are fixed? I guess for me, the simplest way to think about it is that companies do try to, at best, try to operate in just in time, meaning, they get the product and they have an order, they ship the product to minimize warehouse inventory because warehouse inventory has capital carrying costs. Today, they can't operate that way. Everybody's operating on a just in case. Why just in case? Basically, because they don't know when the product's coming, and they're not sure the product is coming, and in some, they don't know what cost is coming. They'd rather front load and order more because also remember, due to the increased demand, the inventory to sales ratio has dropped. Now they're just trying to go back to inventory, they call now a just in case, to basically increase their inventory. On the simplest impact, that requires more space when you're carrying more inventory. That is, by the way, the simplest way of looking at what's happening in the industry in the U.S. today, and that's creating demand for more warehouse space. I'd add to Jojo's point, though, we're seeing a lot of demand, not only for just in case, but just net growth, across a variety of industries around the country. Demand is really good, particularly from the larger companies in food and beverage and the transportation logistics field, as we said earlier, consumer products companies, traditional retailers. They're all growing in addition to trying to increase their inventories, as Jojo said. Got you. All right. I guess that's helpful. It's just, again, a lot of companies just kind of even still saying they don't have inventory at all. It's just interesting to me. I just kind of wonder sometimes if this whole issue is kind of overblown in the space, and it's kind of many other things that are really driving the increase in demand, not necessarily this one factor. Well, as I mentioned earlier, the primary driver is just good, solid demand. The consumption that is happening in this country is higher than it's ever been, largely due to COVID. Household savings are the highest they've been. Household debt levels are low. You've got all the right fundamentals for people to go out and, of course, try to celebrate life after a year off. Also, they have the capital to do it. That's what you're seeing. It's flat out strong demand, and all of the wrinkles in the supply chain have a lot to do with that exploding demand when we aren't fully back to work in a lot of these delivery chains. Just to finish up with what Peter said. We expect our customers who are fairly capitalized and really well-heeled in the industry because we've got very good customers. We expect them to be marginally more competitive than the small users in getting supply because they've got capital to spend. They got big relationships, you will notice that the larger suppliers out there are getting you goods. Give example, like Amazon. If you order from Amazon today, you'll probably get it quicker than from a small shipment company. Having good customers and tenants like ours is boding well in the industry today. As far as your concern is as whether people have inventory or not, we can tell you just from our portfolio that all of our spaces are fully being utilized. Got you. That's helpful. Thank you. There are no other questions in queue. I'd like to turn the call back over to Peter Baccile for any closing comments. Thank you, operator. Thank you all for joining us today. As always, please feel free to reach out to me, Scott, or Art with any follow-up questions. We look forward to talking with many of you during the NAREIT virtual conference in a few weeks. Be well. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.