Ladies and gentlemen, thank you for standing by, and welcome to the First Industrial Fourth Quarter Earnings Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during that time, please press star one on your telephone keypad. To withdraw the question, please press the pound key. Please be advised that today's conference call is being recorded. Thank you. At this time, I'll return the call over to Art Harmon, Vice President of Investor Relations. Sir, you may begin. Thank you very much, Valerie. Hello, everybody, and welcome to our call. Before we discuss our fourth quarter and full year 2021 results and our guidance for 2022, 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, February 10, 2022. We assume no obligation to update our statements or the other information we provide. Actual results may differ materially from 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'll open it up for your questions. Also on the call today are Jojo Yap, 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. Now let me turn the call over to Peter. Thank you, Art, and thank you all for joining us today. Our outstanding fourth quarter results capped another excellent year, as shown in our year-end occupancy rate of 98.1% and record cash rental rate growth of 16.2%. Thanks to every member of the First Industrial team for your commitment and many contributions to our success in 2021. We enter 2022 with great momentum and strong enthusiasm for our cash flow growth and value creation opportunities. Those opportunities are embedded within our portfolio and our sizable and highly profitable development pipeline, along with our well-located land positions that will be the source of significant future growth. I will touch on each of these areas shortly, but before I do, let me update you on the strength of the U.S. industrial market. Logistics real estate continued to enjoy very strong demand from users representing a wide range of businesses as they remain focused on expanding their competitive positions and optimizing supply chains. CBRE Econometric Advisors reported that net absorption for the fourth quarter was 121 million sq ft, compared to 81 million sq ft of completions. For the year, net absorption was 433 million sq ft, a new record well in excess of completions, which totaled 268 million sq ft. This supply-demand dynamic is contributing to significant rental rate growth across all of our markets, as shown in our progress to date with our 2022 rollovers. As of yesterday, we had taken care of 54% of our 2022 expirations at a cash rental rate increase of more than 19%. To capitalize on the many opportunities to serve tenant demand in our markets, we are announcing five more development starts this quarter, totaling 1.3 million sq ft with an estimated investment of approximately $168 million. In the Inland Empire, we will be adding to our Southern California portfolio with the 324,000 sq ft First Rider Logistics Center. Located just off the I-215, proximate to several of our other successful developments, we are excited to bring this project to a market which boasts a vacancy level of 0.5%. Total investment is $44 million, with a targeted cash yield of 9.5%. This outsized yield is due to our favorable basis and the rapid rent growth in Southern California. In South Florida, at our First Park Miami project, where we are experiencing significant tenant activity, we are launching our fifth building, a 198,000 sq ft. Including our planned future takedown of 59 acres, on which we can develop an additional 1.3 million sq ft, First Park Miami will total 2.5 million sq ft when fully built out over the next several years and serve as the centerpiece of our growing South Florida portfolio. Our projected investment for this new building is $37 million, and our targeted cash yield is 6.2%. In Denver, we will begin construction of our First 76 Logistics Center in an infill location in the sought-after I-76 corridor just north of downtown. The total estimated investment for the 200,000 sq ft building is $34 million with a projected cash yield of 5.6%. In the Lehigh Valley, we are starting the 105,000 sq ft First Lehigh Logistics Center, located adjacent to the airport and the new FedEx ground hub. Total investment is $16 million, and our projected cash yield is 5.3%. In Chicago, at our First Park 94 in Kenosha, we are moving forward with a 451,000 sq ft building that is expandable to 617,000 sq ft. Estimated investment is $38 million, and our target yield is 6.3%. These newly announced development starts average a cash yield of 6.9% and an estimated development margin of 96%-106%. Including these new development starts, our developments in process total 7.1 million sq ft, with a total investment of $802 million and are currently 32% leased. At a cash yield of 6.4%, our expected overall development margin is 75%-85%. We are also busy in the quarter adding new development sites to capitalize on the positive industrial real estate fundamentals. We purchased a total of 294 acres for $125 million. Adjusting for our newly announced development starts, in total, our balance sheet land today can support an additional 14.4 million sq ft. This represents more than $1.6 billion of potential new investment. That $1.6 billion is using today's estimated construction costs and the land at our book basis. In addition, our remaining joint venture can support up to 8.9 million sq ft, with our share around 3.8 million sq ft. We're very well positioned for future growth. Moving on to dispositions. In the fourth quarter, we sold 1.2 million sq ft for $125 million, which included our last two buildings in the Milwaukee market. Our sales for the year totaled $243 million, which was $43 million higher than the sales guidance midpoint discussed on our third quarter call. For 2022, we expect to sell a total of $100 million-$150 million, with the majority expected to close in the latter part of the year. Before turning it over to Scott, let me conclude by saying that through the efforts of our team, combined with the underlying strength of our portfolio and the future growth opportunities we highlighted for you, our board of directors has declared a dividend of $0.295 per share for the first quarter of 2022. This represents a 9.3% increase from the prior rate and a payout ratio of approximately 69% based on our anticipated AFFO for 2022, as defined in our supplemental. With that, I'll turn it over to Scott. Thanks, Peter. Let me recap our results for the quarter. NAREIT funds from operations were $0.52 per fully diluted share compared to $0.44 per share in Q4 2020. For the year, FFO per share was $1.97 versus $1.80 in 2020, which excluded income related to two insurance settlements, partially offset by a restructuring charge and accelerated retirement compensation related costs. Our cash same-store NOI growth for the quarter, excluding termination fees, was 8.6%, which contributed to a same-store growth rate of 5.3% for all of 2021. Fourth quarter same-store growth was helped by higher average occupancy, increases in rental rates on new and renewal leasing, rental rate bumps embedded in our leases and lower free rent. We finished the year strong with occupancy of 98.1%, up 100 basis points compared to 3Q 2021, and up 240 basis points from a year ago. Summarizing our leasing activity during the quarter, approximately 2.5 million sq ft of leases commenced. Of these, 800,000 were new, 1.2 million were renewals, and 600,000 were for developments and acquisitions with lease-up. Tenant retention by square footage was 65%. Fourth quarter cash rental rates were up 17.7% overall, with renewals up 10.6% and new leasing 29.8%. On a straight line basis, overall rental rates were up 32.2%, with renewals increasing 25% and new leasing up 44.3%. For the full year 2021, as Peter noted, cash rental rates were up 16.2%, and on a straight line basis, rents were up 29.3%. Moving on to the capital side. During the quarter, we issued 1.4 million shares via our ATM program at an average price of $60.99 per share, generating net proceeds of $86.8 million to help fund our very profitable development pipeline. In terms of upcoming maturities, we have a $260 million term loan and a $67 million mortgage loan that both come due in September. We are currently evaluating our options to refinance this debt, which include a new term loan or an unsecured bond offering. We will also continue to evaluate our additional capital needs throughout the year as we execute on our investments for growth. Moving on to our initial 2022 guidance per our earnings release last evening. Our guidance range for NAREIT FFO per share is $2.09-$2.19, with a midpoint of $2.14 per share. Key assumptions for guidance are as follows: Quarter end average in-service occupancy of 97.25%-98.25%. Same-store NOI growth on a cash basis before termination fees of 7.25%-8.25%, which reflects a $1 million bad debt assumption for full year 2022. Guidance includes the anticipated 2022 costs related to our completed and under construction developments at December 31, plus the expected first quarter ground breakings Peter discussed earlier. For the full year 2022, we expect to capitalize about $0.08 per share of interest. Our G&A expense guidance range is $33.5 million-$34.5 million. Other than previously discussed, our guidance does not reflect the impact of any other future sales, acquisitions, or new development starts after this call, the impact of any other 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. After another successful year, our team is excited to execute on the internal and external growth opportunities ahead. We continue to allocate additional capital to high-margin development opportunities in our target markets while growing cash flow across our portfolio. Our industry fundamentals remain exceptionally strong, supporting substantial rent growth, and the continued evolution of e-commerce and the global supply chain are catalysts for incremental logistics demand today and for the foreseeable future. Operator, with that, we're ready to open it up for questions. Thank you so much, sir. At this time, as a reminder, please press star one on your telephone keypad for questions at this time. Our first question comes from the line of Craig Mailman of KeyBanc Capital Markets. Hey, guys. Just a quick question. You guys noted in the release that on 54% of the 2022 roll, you already achieved kind of a 19% cash mark to market. Is there anything unique in the 54% that you guys re-signed that would make those spreads higher than potentially what you would get on the balance of the 2022 expiration or pull forward of 2023? Chris, you wanna take that? Yeah, Craig. Yeah, there's really nothing unique there. If you look at the full year, we're expecting to be on renewals, you know, between 18% and 21%. Very similar for the rest of the year too. Okay. Scott, as it pertains to 500 Old Post Road, kind of what's in guidance there for same store and/or FFO in terms of timing? Sure, Craig. It's late second quarter, so call it June 1 as the lease update. Seven months of FFO at about $300,000 per month. The lease assumption assumes three months of free rent, so about months of cash for same store, so about $1.2 million. I think that's about 40 basis points of impact from that. Okay. Do you guys have like, where are you on that process? Any LOIs or serious prospects? Peter? Yeah. Good morning, Craig. It's Peter. We are one of two buildings of that size range in that sub-market, the other being a recently completed 860,000 sq ft building. We have seen an increase in fresh activity in that size range since the beginning of the year. You know, there's very little in the supply pipeline behind that. In fact, the adjacent county to the north has imposed a moratorium on new industrial development. We continue to feel good about our opportunity to make the right decision for the asset. We'll keep you posted. Great. Thank you. Thank you. The next question will come from the line of Ki Bin Kim of Truist. Thanks. Good morning. You're assuming $0.08 of capitalized interest. You know, I thought that would have been a higher number just given the ramp-up in your development pipeline. Can you just help me better understand how you came to that $0.08 expectation or 8 expectation? Yeah. Hey, Ki Bin. It's Scott. The $0.08 is just on the developments we have in process and the handful of starts that we announced on the call. Obviously, that's what the guidance assumes. It doesn't assume any other new development starts throughout the year. We're going to start new developments throughout the year. As we do so, we will capitalize interest on those new development starts. I expect that number to ratchet up as the year goes by and as we announce new development starts. Got it. You know, this past quarter, it was interesting to see you guys sell $125 million of cash flowing real estate and buying non-cash flowing land. You know, if you normalize for some of these things, what do you think your FFO guidance would have been, just as a mental exercise? 'Cause I would look at your fundamentals that suggest, price suggests it was better than $2.14 FFO number. Ki Bin, you're asking what the flip-flop is between just the sales in the fourth quarter? Right. The impact. Yeah. Yes. All right. The $125 million is at a cap rate at sale of 4.6%. That's about, you know, $5.7 million, about $6 million. That's probably like 4+ cents a share. Reinvesting it in land at $125 million, obviously that's gonna be non-cash flowing. I think that's probably your beta is ±4 cents if you looked at that transaction like that. Okay. Thank you. The next question comes from the line of Rob Stevenson of Janney. Hi, good morning, guys. Although things have seemed to have gotten a little bit better, has there been any change in customers' incremental demand for Southern Cal location, given the continued issues at L.A. and Long Beach ports? Jojo, you wanna take that? Sure. There hasn't been. Demand continues to be strong. I mean, if you look at net absorption, it's significantly more than supply. Again, the demand for goods continues, not much change in goods. You know, we would have expected more net absorption, in fact, if the throughput was more efficient. You know, if you track the throughput year-over-year, containerized loaded only throughput was up about 11%-12%. In December, it dropped a bit. You know, so basically what happened was that we could have even more absorption. Right now, we're about 1.5%-1% vacancy in L.A. IE, just like Peter mentioned. The market could have been better if it was more efficient. Are any markets really benefiting from that you can tell in terms of, you know, having, you know, excess capability where people are sending the container ships to market X rather than L.A. and Long Beach and wait in that queue? No, we haven't seen that. I mean, a lot of throughput. I mean, the throughput change for the whole U.S. has not changed significantly. You know, Port of New York and you know, New Jersey continues to do well. The Gulf Coast continues to do well. Overall, by and large, all the ports reported increases. By the way, I just wanna mention, I mean, Port of L.A. and Long Beach is still by far the largest, you know, the largest, you know, port. I mean, you know, it has the largest market share, and it continues to well, get containers. Not much change. Thank you. Our next question will come from the line of Caitlin Burrows of Goldman Sachs. Hi, good morning. Maybe just starting on the strong leasing side of things and pricing to get an idea for how long that could last. Could you just go through what's the current spread between your portfolio's in-place rents and market rents and what you think that should tell us about strong demand and how long it lasts for? Yeah. I guess that's two separate questions. First, you know, you're asking a mark-to-market question. You know, we don't, as we've said many times, we don't track that mark to market. Our average lease term at signing is seven years. A lot can happen over long time frames like that. We think a better measure of what we're achieving in cash rental rate growth on new and renewal leasing in the current period. You've heard those statistics. They're quite robust. In terms of, you know, how long can this last? I mean, we've never been in a market this robust and industrial. If you look at the math and you look at the national vacancy rate now that's ticked down to 3.2%, obviously it's a very, very strong landlord's market. If you then go into the more coastal markets where we are most active, the vacancy rates are lower there. Jojo mentioned Inland Empire is 0.5%. You factor in functionality and use, and the vacancy factor there is even lower. We think it's gonna be a strong landlord's market for some time to come. Okay. Got it. Just following that on occupancy, realize you can't get above 100% occupancy. Given where you ended the year, it does look like that could come down some this year, which is fair. Could you give some more commentary on the occupancy guidance this year? Maybe what's known move-ins and outs and what the more general expectation or buffer? Caitlin, it's Peter Schultz. I would say there are really only two significant rollovers remaining for the year. One is in Chicago in the I-80/55 sub-market, about 393,000 sq ft. The other is in the Lehigh Valley in Pennsylvania. 341,000 sq ft. We're seeing good activity on both of those. The Chicago asset is in our guidance for Q3. The Lehigh Valley is in our guidance for Q4. To Peter's point, you know, demand continues to be robust, and very broad-based, and we feel good about the activity that we're seeing across the country in our portfolio and our development projects. Caitlin, this is Scott. If you look at our guidance, we expect to be ±98% occupied by the end of the year, just to give further context. Got it. Maybe just a quick follow-up on those. For one that you mentioned, one is the 3Q turnover expectation and one's a 4Q. Just considering the strong demand that is out there, what do you think is a reasonable amount of time to re-lease longer term? Maybe it's like 12 months, but today, for thinking of how long it could take, spaces like those to get backfilled and cash flowing again. Our guidance assumes only three to four months generally on the turnover of those spaces, so that should give you an indication of how we feel about the demand. Got it. Thanks. Thank you. The next question will come from the line of Michael Carroll of RBC Capital Markets. Yeah, thanks. I wanted to touch on the development land purchase this quarter. It looks like you acquired these sites at a pretty good basis in top-tier markets. I mean, where are these sites positioned in the metro areas? I guess, what type of submarkets? Is it in the core submarkets that everybody wants to be in? Could you break it down, and are these projects entitled, or do you need to do entitlement work? Jojo, you wanna start with that? Sure. You can add? Sure, absolutely. These are all core types of markets. 100% of these deals were off market. You know, thank you for noting that these are very favorable basis, and we're excited about these projects. If you look at NorCal, they're basically in the I-880 corridor, and that's our focus. We're very excited. As you all know, I-880 corridor or is the best corridor in East Bay, and these have great access to I-880. If you look at the IE, these are all, you know, within very, very close to our successful portfolio. If you look at, for example, First Wilson, that's East IE, 0.5% vacancy. If you look at Tamarind, that's actually bordering East IE and West IE, again, very close to your major corridors, which is the I-60 and I and the Two-Fifteen. Moving on, I would just turn it over to the two other locations, which is Central New Jersey and to Central Florida, to Peter. Mike, in Central New Jersey, that site is at Exit 7 on the New Jersey Turnpike. It's proximate to several other assets that we've had in successful development. Vacancy rate consistent with Jojo's comments about the West Coast, very, very low. Product in that market continues to lease at or near completion. The largest deal is in Central Florida in Orlando. This site is very proximate to the Orlando Airport. Obviously great labor profile, great highway access and frontage. Uniquely, this site gives us the opportunity to do some larger format buildings of 500,000-900,000 sq ft plus or minus, total of about 2.8 million sq ft. That's a product type that's really hard to find in that market with a limited pipeline. You have to really go out to Lakeland along the I-4 to find something of size. We're excited about our opportunity there. That site is entitled. To your question, but we do have to go through a number of permits and so forth. That's probably a 2023 start there after we finish that as the permitting process, as we all know, is slow and taking longer these days. Just to add, all of the California assets are unentitled, and we're basically batting 100% in terms of entitlement since you know, we started acquiring sites in California. To give them an idea for how long those entitlements might be. Entitlements right now for California is about two years. Okay, great. That was great detail. Thank you for that. Just a clarification on the spec leasing cap that you have. Is all of the 1Q 2022 planned development starts included in the cap that's in this update? Yeah, the balance of the cap, the available balance of the cap today is $154 million, and that is net of the new starts. Okay, great. Just last one for me on the expected asset sales in 2022. I mean, have you identified those assets? And if so, are those mostly coming from the non-core markets that you guys have identified that you plan on slowly exiting from? We've got a number of assets that we're considering. It all depends on the execution, so I can't be too specific on what exactly. Yes, they will all come from the non-coastal markets, primarily in the Midwest, the lower growing assets in the portfolio. Okay, great. Thank you. The next question will come from the line of Nick Yulico of Scotiabank. Thanks. Good morning. Peter, I just wanted to go back to when you were talking about earlier the balance sheet land and the $1.6 billion of potential investment. Can you just give us a feel for, you know, what you think that would pencil for a, you know, a yield standpoint if you were to start that all today based on, you know, current costs, current rents or even a expected profit margin? Yeah, that's difficult to do. I think the important thing about that capacity and the reason I specifically pointed out that it's at today's cost is because that land, as Jojo just mentioned, a bunch of the land we just bought is gonna take two years to entitle. Over that timeframe, we expect those costs to go up so the actual investment dollars will be higher than that $1.6. Then if you factor in, you know, we've been continually generating pretty significant margins for the last half a dozen years as competitive as the markets are because rent growth has exceeded everyone's expectations and been faster than the appreciation in land. If you factor in, you can pick the range, just look at the margins we've been generating over the last half a dozen years. If you add that to the total inflated cost of that, you know, you're looking at a very, very large number in terms of additional gross value to the FR balance sheet. Okay. In terms of the, you know, the NAV page where you give the developable land inventory number, roughly $760 million, can you just remind us, is that a fair market value number? Correct. That's fair value. Okay. Maybe you just talk about why that, you know, that number went up from the third quarter. Looks like it was $500 million in the third quarter. You bought $125 million of land. I guess some of that land would have gotten removed probably to put into development. I mean, is that just the rest of that increase just higher land values flowing through that number? It's definitely a mix. It's gonna be the acquisitions we made in the quarter, and it's gonna be increases in fair value of land, Southern and Northern California, coastal markets, Miami as well. That's gonna be the other piece, Nick. Okay. All right. Thanks, guys. Thank you. The next question will come from the line of Dave Rodgers of Baird. Good morning, everybody. Thanks for the additional details and the scoop on the development cap. I think it helped. With regard to sources and uses, you know, with the development pipeline kind of pushing that $800 million spending, you know, probably starts to push $500 million-$600 million a year, given the time to complete at some point soon, but you're only selling about $100 million-$150 million. Is that all equity to plug that gap? Talk about kind of that source and use as you look forward without additional asset sales. Yeah. Dave, it's you know, First is excess cash flow, as you well know, at $70 milliion-$80 million. We're guiding to $125 million of sales. That will help. We can issue more indebtedness. Our leverage is at 4.9 times, so we have some room there. The issuance of equity is gonna be a piece of that as well. When you look at the margins that we're getting in our in place developments right now, 75%-85%, we think the issuance of equity is a very good use to fund those developments due to the profitability. It's gonna be a mix of all four of those, Dave. Okay, thanks. That's helpful. Maybe on kind of that sustainability of margin, and maybe this is Jojo or Peter, but can you talk about kind of growth in separately land values, labor costs and hard costs and kind of what that's doing obviously overall? Any markets are outliers for you guys where, you know, margins might be coming down or margins are expanding dramatically, obviously related to rent growth. Peter, you can go. Sure. In terms of, you know, margins, you know, kind of just looking forward, you know, the good thing is that, you know, we've got a really good land inventory, so we've bought that land inventory significantly now below market. So that will, you know, for example, when Peter announced the 9.5% in IE, that is a function of both things. One is the basis in the land I just mentioned. Plus, you know, going forward, our view is that in the markets we're developing, rental rate growth and it has done in the past will exceed construction cost increases. If you put together our basis plus an assumption that rental rate increases slowly will go past construction cost increases, that's a formula for increasing margins. Now, you know, can't comment hard to comment in terms of cap rates, but that's another key. You know, overall cap rates came down this year, and it's actually not moving at all given even slight increases in long-term interest rates because investors are so plentiful and then they're coming in a big way, and the expectation for rent rate growth far exceeds the increases in the cost of capital. You know, it's looking good. David, Peter here, you asked about labor and materials, too. Materials are up more than labor. I would say it's really across a variety of components. The related matter to that is it's having a little bit of an impact on our delivery schedules because the timing and receipt of materials continues to be a challenge. It's added a couple of month Depending upon where in the country we're building to our schedule. We're keeping a close eye on that because we think there's still risk to the delivery of certain components throughout the year on our schedules, which everybody in our industry is seeing. You know, despite the fact that we continue to work with our construction partners and material providers on forward commitments and managing that continues to be a challenge. All right. Appreciate it, everyone. Thanks. Thank you. The next question comes from the line of Anthony Powell of Barclays. Hi. Good morning. Just a question on the margins that are very impressive for development starts in the first quarter. Is there any incremental market rent growth assumed those margins, or are those at current market rents? That's based on our underwriting and as against current market cap rates. Cash on cost. What about market rents versus current market rents, not cap rates? Those are, you know, based on rents that are achievable based on our projections right now. They are. If you look back, actually a couple of years and actually even last year, our underwriting rents have far lagged the actual rent growth in all of the markets we're in. Basically, we've been, you know, our rental rate projections have been conservative. Yep. Got it. Thanks. Maybe just one more on the speculative cap that we talked about a few times even last quarter. Given the strength of the market, strength of demand, any revisiting or thoughts of revisiting the cap, maybe increasing it given kind of what you're seeing? Yeah. You know, the value in the cap is not having the level of the cap necessarily be. Remember, it's a cap and not a target, first of all. The value in the cap is not having it be sensitive to a market that's incredibly strong. Meaning, it's a formula. It's based on the size of the company, and that is what helps us with a risk check, given that the vast majority of our new investment is through speculative development. Yes, the answer is yes, we will continue to more regularly revisit the level of the cap. That, of course, is a discussion with our board. Historically, it's been a three-year look, and going forward, we anticipate it'll be more like an annual discussion. All right. Thank you. Thank you. The next question will come from the line of Vince Tibone of Green Street. Hi, good morning. I'm hoping you could provide some additional color on the components of same property or same-store NOI growth guidance. Based on the leasing spread and occupancy trends, there would appear to be some other line items that are contributing to growth in 2022, maybe bad debt or free rent. Just, is there any commentary or clarifications you could share there? Sure, Vince. It's Scott. About 5 percentage points of the 7.75% midpoint is due to rental rate bumps and increasing rental rates on new and renewal leasing. The lion's share to get to the 7.75% are due to two other items, an increase in same-store occupancy of the portfolio. The old Post Road asset has to do with that and lower free rent in the portfolio as well. Those are the main components. No, that's really helpful. Just are you able to isolate just the free rent component? I mean, I'm sure I can do the math, but if you're able to, you know, give a number, that'd be helpful. Yeah. Vince, that number is about 90 basis points for the free rent. Perfect. Thank you. The next question will come from the line of Mike Mueller of JP Morgan. Yeah. Hi. I guess first, Scott, is the disposition guidance of $100 million-$150 million based on the current development pipeline, or does it contemplate additional starts throughout the year? The sales number is based on our objectives for disposing of some of the lower growing assets in the lower growth markets. It's not really tied to funding the development pipeline. Those are two separate decisions, we think, from a corporate finance standpoint. Got it. Okay. In terms of acquisitions, are you working on or are you anticipating buying any operating properties this year? Or should we think of acquisitions as really just being, you know, refilling the land bank and maybe buying vacancy where you can lease it up? Yeah, we're actively pursuing leased cash flowing acquisitions. You'll notice we don't do a whole lot every year based on where we want to invest and what we want to own. That limits the opportunities because we're kind of choosy. The pricing is also at a point now in most of these markets where we can add significantly more value, as you've heard thus far this morning with our yields and margins. We can add much more value for shareholders developing than we can buying. We're absolutely pushing hard to make some more acquisitions. It's just very, very competitive. At the end of the day, we have to take a look at how we're allocating capital. As I said, with the pricing that's in the markets today, our development program makes more money for our shareholders. Got it. Okay. Thank you. The next question will come from the line of Jon Petersen of Jefferies. Oh, great. Thanks. I guess I wanted to ask about all the supply chain disruption. You guys have a lot of concentration in Southern California in the Inland Empire. You know, everything we read, it indicates that, you know, one of the problems with the backup of, you know, ships and moving goods is just getting the truckers, I guess, to move the goods out of Southern California to the rest of the country. I'm sure this is true at most ports. I guess my question is, you know, I'm curious, how much demand do you think there is in Southern California, and maybe particularly the Inland Empire, just from goods that are probably sitting there for longer than they need to be? I guess another way to ask it is, like, if the supply chain eases up and we have kind of a more free-flowing, you know, flow of goods, does that, I guess, decrease the demand in that market, or is that a net positive in terms of warehouse demand? I think our thinking is it's a net positive because right now, I mean, the ports are not working properly, and there's actually more goods to be received. I mean, at any one point, I mean, and there was a point about a month ago where there's about a total of 100 container ships and waiting. Some near the port and, you know, the Port of L.A. and Long Beach already demanded that they stay about 40-50 mi away if you count all of that. If you assume they're anywhere from 10,000 to 15,000 TEUs, just imagine the amount of stuff waiting. Our general view is that if the ports are working well, that's really, really good for the market and really good for the economy. You are right that, yeah, you know what? If you can remove containers as quickly as you can, then, you know, it'll improve it. But that's only one variable. I mean, everything has to be in sync. The ocean freight lines, the actual manufacturer in Asia, the warehouses, you know. The warehouses landlords have to build more space because we're at 0.5% vacancy. The truckers have to come in and move those containers out of the ports. You know, I could come in and basically give you 12 other variables that affect the supply chain. We don't think it's gonna let up pretty soon. Okay. All right. I appreciate that color. Thank you. The next question will come from the line of Vikram Malhotra of Mizuho. Questions. Just a couple of clarifications. I think last week or the week before, Amazon sort of talked about potentially just slowing the growth across their portfolio. I'm just wondering if you can sort of maybe elaborate on two points. One, do you see or hear the potential for Amazon to be more discerning on the types of leases where they grow and where they may not or may not renew? Second, just if you can talk about what you're seeing in terms of other retailers catching up and building out their supply chain. Just any anecdotal examples would be great. Yeah, I mean, we saw what they said on the earnings call. A little bit difficult to interpret, as they said that they were going to slow or reduce their investment. As you know, they lease and they buy, and they own their own warehouses. As far as market activity goes, we have not seen any drop off. The demand today is very, very broad-based. You can say that their competitors are trying to catch up. They're certainly looking to improve their competitive positions. Jojo, do you wanna add some color to this? Sure, absolutely. You know, if you look at year-over-year market change in terms of competition of net absorption, the 3PLs led the charge in 2021, meaning that you know, 3PLs, you know, non-Amazon. I mean, this is non-Amazon. These are third-party logistics providers, you know. Just like Peter says, very broad-based. In addition to that, I mean, other competitors. You know, anecdotally, you know, I mean, there are a number of companies out there who are not even close to where Amazon, and they wanna be where Amazon's footprint is, I guess. Target growing, for example. Home Depot is still growing. Lowe's. Those are big, big companies. Walmart definitely doesn't have the fulfillment footprint that they have to announce they wanna be. Yeah, you're right. I mean, there are other... Your speculation is right. There are other retailers who really wanna grow and catch up. You know, we've long anticipated every business at some point begins to rationalize their space. We've long anticipated Amazon doing that, and that's why we have not chased them to the secondary and tertiary markets, and that's why we don't own any of their, you know, seven stories of mezz full of robotics, the special purpose properties. We've stuck to our disciplined focus on the coastal markets and delivering property that appeals to a much more broad set of potential tenants. There are still the final point I wanna make. There are a number of businesses where the SKUs the company said SKUs are significantly more like Amazon, like pet food. Everybody probably knows Chewy. They're killing it in that space. In terms of furniture, you know, there are a number of companies like, you know, a Wayfair that has a much more wider SKUs than Amazon, so they're gaining share there. There are some specialized products that you know I think are gonna outcompete Amazon unless you know they get bought. That's helpful. Just in terms of, you know, risk or you know, potential markets where we talked about a lot of development. There's a lot of opportunity. Your margins are great. Are there any sub-markets or markets where you're just sort of maybe pausing and rethinking, given maybe the entirety of supply that's underway or potentially yet to come? Any watchlist markets you'd call out? Well, again, we're very focused on allocating the vast majority of our new investment capital to the coastal markets. Right now they are all very strong. In fact, in all of the markets that we're in, including the markets that we don't intend to invest in anymore, vacancies are coming down and net absorption exceeds new supply. We don't see weaknesses across our markets. Okay, great. Then if I can clarify, sorry if I missed this. Your mark-to-market is clearly very strong and will continue to be so as you outlined on your same store. Can you just give us a sense of, like, if you took the portfolio today, what is the entirety of the mark-to-market opportunity as it stands today? Where is- Yes. Where is the portfolio versus market? We answered that question a little bit earlier this morning. We don't track that statistic. We can catch up with you offline on the rest of that answer. Okay, sorry about that. Thanks so much. Thank you. Again, ladies and gentlemen, to ask questions, please press star one on your pad at this time. Again, that is star one. We do have a question from the line of Rob Stevenson of Janney. Hey, guys, just a quick one. Scott, the G&A guidance looks to be down year over year. What's driving that? Where are you seeing upward and downward pressure on expenses just in general in 2022? Robert, Scott, it is down. Our midpoint G&A guidance is down, I think about $600,000 compared to 2021 actual. The main driver of that is incentive compensation. In our 2022 G&A guidance, we're assuming target incentive compensation. In 2021, we earned higher than target due to the fact of how the company did in 2021. That's gonna be the main driver in that. I would say that the larger increase in costs are gonna be just, you know, people costs. It's a very competitive market for talent, so that's gonna be probably the biggest driver of the increase in G&A costs now and in the future. The same-store NOI guidance, what type of expense growth are you anticipating driving that number? Oh, go ahead, Chris. You know, Rob, you know, certainly the one area that, you know, real estate taxes, you know, just because of the increasing values of the property, you know, there's some upward pressure on that. You know, that's almost 100% recoverable, so not much impact on the NOI. Okay, thanks, guys. All right. Well, thank you everybody. That's the last question for this morning. We very much appreciate you joining our call. Thank you, operator, and we look forward to connecting with many of you throughout the year. Be well. Thank you so much, sir. This concludes today's conference call. You may now disconnect.