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Duke Realty Corp  (NYSE:DRE)
Q4 2018 Earnings Conference Call
Jan. 31, 2019, 3:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Duke Realty Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode, and later we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions) And as a reminder, this conference is being recorded.

I will now turn the conference over to our host, Mr. Ron Hubbard. Please go ahead.

Ronald M. Hubbard -- Vice President-Investor Relations

Thank you, Josh. 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; and Nick Anthony, Chief Investment Officer.

Before we make our prepared remarks, let me remind you that statements we make today are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. For more information about those risk factors, we would refer you to our December 31, 2017, 10-K that we have on file with the SEC.

Now for our prepared statement I'll turn it over to Jim Connor.

James B. Connor -- Chairman and Chief Executive Officer

Thanks, Ron. Good afternoon, everyone.

Let me start by saying that 2018 was another outstanding year for Duke Realty. We've met or exceeded all of our 2018 goals, including our revised guidance throughout the year. We capped off the year with an excellent fourth quarter from an operational and financial perspective that sets us up for great 2019.

Let me recap some of the highlights from our outstanding year. We signed over 28 million square feet of leases, which is an all-time record for us. We improved in-service occupancy up 96.3%, which is up from 95.7% at year-end 2017, which is impressive when you consider we placed 4.5 million square feet of spec development in service during the year. We grew same property NOI at 4.3% and total industrial NOI at 15% over 2017. We attained over 25% GAAP rent growth and 10% cash rent growth on second generation leases for the full year, respectively up from 19% and 7% growth from the previous full year.

We commenced $862 million in new development starts that were 57% pre-leased. We completed $558 million of property dispositions and $353 million of acquisitions. We've refinanced $275 million of debt and reduced our overall borrowing costs by about 30 basis points. We grew FFO per share and AFFO on a share adjusted basis both by 7.3% and increased our regular quarter common dividend by 7.5%.

Now let me turn to some of our leasing and development results for the fourth quarter. We had our strongest quarter of the year with 8.1 million square feet of leases executed. We signed 21 leases in excess of 100,000 square feet, demonstrating the continued strong demand for mid-size and large spaces. Within this activity were lease transactions with customers such as Kraft Foods, Solo Cup, HD Supply, Amazon and RR Donnelley. We renewed 88% of our leases during the quarter, higher than normal because we pulled several leases forward from 2019 into the fourth quarter. Excluding these pull-forwards, our renewal percentage would have been closer to 70%. Nonetheless, rent growth on second generation was strong at 25% on a GAAP basis and 7% on a cash basis.

I'd also like to note something about our full year rent growth performance I mentioned in my opening remarks. Of the 185 second-generation leases we executed in 2018 at a 25% rent growth rate, only one of those transactions was located in California or New Jersey. Granted, we have primarily newer assets in these coastal markets and thus limited rollover. The point is the strong rent growth throughout 2018 was pretty much evident across all 20 of our markets, without the benefit of those two high growth markets.

I'd also like to touch on our first generation spec leasing in the fourth quarter. We placed four new projects in service late in the year, which increased our first generation space up to 2.5 million square feet, and our spec leasing was a little lighter in the fourth quarter. I'm pleased to report that since January 1st, we've signed 600,000 square feet of leases in spec space as well as we have 1.3 million square feet with leases in negotiation.

In summary, we've got a very strong prospect list for all of our projects and I expect we'll continue to maintain strong leasing volumes.

We started $101 million of development during the quarter across three projects that were 68% leased. Our development pipeline at year-end is $749 million and is 55% pre-leased and expected to generate GAAP yields of 6.5% with margins in excess of 20%.

Now let me turn it over to Nicky Anthony to cover our acquisition and disposition activity for the quarter.

Nicholas C. Anthony -- Executive Vice President and Chief Investment Officer

Thanks, Jim.

We had a light quarter on both acquisitions and dispositions, yet we executed consistent with our strategy. We acquired two projects totaling $143 million. One acquisition this quarter was a two-building, 512,000 square foot project in Seattle. The project is strategically located, a few miles from Sea-Tac International Airport and has excellent access to Interstate 5. This project is one of only four projects with a 36-foot clear height in the Kenvalley (ph) submarket and we expect it to produce solid rent growth going forward.

The second acquisition was in Miami, where we exercised (inaudible) offer at Countyline Corporate Park, where we already own over 1 million square feet of logistics properties. Coupled with other assets in the area, we now own 2 million square feet of the most modern facilities in the Medley submarket of Miami. Over a 10 year hold period, we expect to earn an IRR in the 6% to 7% range in these assets, which is in excess of the expected IRR from the dispositions we are using to fund these acquisitions.

Building disposition for the quarter totaled $78 million in the fourth quarter comprised primarily of the Sears building in Pennsylvania, which we announced on last quarter's call, as well as a few smaller non-strategic assets in Indianapolis and Atlanta.

As we've communicated throughout 2018, our acquisition strategy consists of selective acquisitions in high-barrier markets funded with dispositions from Tier 2 markets, with the effect of gradually increasing our geography toward greater Tier 1 exposure, which currently stands at about 60%. We expect this recycling to continue in 2019 with a number of assets currently being marketed in our Midwest market and expected to close during the first half of this year. The volume resizing will be much lower than in the past several years and expected to be modestly dilutive short-term but accretive long-term. Mark will discuss our expected acquisition and disposition volumes in his 2019 guidance remarks.

I'll now turn it over to Mark to cover his earning results and the balance sheet activities.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Thanks, Nick. Good afternoon, everyone.

I am pleased to report that core FFO for the quarter was $0.35 per share, which is consistent with core FFO of $0.35 per share in the third quarter and represented over a 16% increase over the $0.30 per share reported for the fourth quarter of 2017. We reported core FFO of $1.33 per share for the full year 2018 compared to $1.24 per share for 2017, which represents a 7.3% increase over the prior year. We reported FFO as defined by NAREIT of $1.34 per share for the full year 2018 compared to $1.25 per share for 2017. AFFO totaled $428 million for the full year 2018 and $100 million for the fourth quarter. Our annual results represented a 7.3% increase to AFFO on a share adjusted basis.

The growth in all these metrics is especially impressive when you consider that we had over half of a year of operations from our medical office business in our 2017 results. Since 2016, we've been able to achieve a compounded annual growth rate of approximately 5.5% for FFO and AFFO even after disposing of this $3 billion of assets and substantially deleveraging our balance sheet to provide funding for continued future growth.

Same property NOI growth on a cash basis for the three months and 12 months ended December 31, 2018, was 3.5% and 4.3% respectively. This growth is a result of increasing occupancy and rental rates. The fourth quarter was negatively impacted a bit by some free rent on a few of our 2019 pull-forward renewals that Jim mentioned earlier. On a GAAP basis, full year 2018 same property NOI was about 70 basis points higher than on a cash basis due to free rent and some straight-line rent bad debt adjustments.

We intend to fund growth in 2019 and beyond with an increasing level of annual funds available for reinvestment after dividends now in the range of $130 million to $140 million as well as funds from further non-strategic asset sales and $273 million of notes receivable that will mature at various points through January 2020. With our leverage levels, we also have the ability to further increase leverage to fund growth while still maintaining our leverage metrics well within the parameters of our current ratings level. We have no significant debt maturities until 2021 and finished 2018 with virtually all of our $1.2 billion line of credit available.

Now I'll turn the call back over to Jim to discuss our outlook on 2019.

James B. Connor -- Chairman and Chief Executive Officer

Thanks, Mark.

From a macro perspective, we expect the economic environment in 2019 to be relatively steady compared to 2018, with GDP forecast currently in the mid-2% range. We are aware of the current global and domestic political noise and will continue to monitor the situation. Yet at this time, we do not view this as a material risk. We believe demand trends in logistics real estate will remain very strong for the foreseeable future. Similar to the last few years, we believe moderate GDP growth, continued double-digit growth in e-commerce sales and the competitive pressures to modernize supply chains for all types of distribution, not just e-commerce, will drive outsized demand for modern industrial logistics facilities.

Now let me comment on a few key industrial fundamentals and data points. For the full year 2018, absorption was 230 million square feet, which was about 30 million square feet above new construction deliveries. Vacancy ended the year at 4.3%, a similar level to the last few quarters, with rent growth for 2018 at roughly 7.5%. Looking forward, the tone from our market is 2019 demand and supply should look relatively similar to 2018 and an expected rent growth estimate of 5% according to CBRE.

Other demand indicators for industrial real estate remain positive as well. Port container traffic and intermodal rail traffic were up 4% and 4.5% year-over-year and truck tonnage was up about 7.5% year-over-year. For 2019, we believe absorption will continue to outpace supply and vacancy will remain in the low 4% range. And we expect rent once again to grow in the mid-single digits.

Even if we are to reach equilibrium in supply and demand, overall fundamentals are still relatively tight and we'd still be able to drive portfolio rent growth, maintain our high occupancies and strong leasing volumes for the foreseeable future. And this favorable outlook is reflected in our 2019 guidance, which Mark will now cover in detail.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Thanks, Jim.

Yesterday we announced a range for 2019 core FFO per share of $1.37 to $1.43 per share, with the midpoint of $1.40. We also announced growth in AFFO on a share adjusted basis to range between 5.1% and 10.2%, with the midpoint of 7.6%. In addition, we announced a range for NAREIT defined FFO of $1.33 to $1.43 per share with the midpoint of $1.38. NAREIT defined FFO is expected to be negatively impacted by between $0.02 to $0.04 per share by the new lease accounting rules which will require us to expense a significant portion of the internal leasing costs that we previously capitalized and will tend to have a more negative impact on (technical difficulty) full in-house leasing function. For comparability purposes, we will exclude incremental expense from the new accounting standard from our core FFO definition.

Our average stabilized in-service portfolio occupancy range is expected to be 96.7% to 98.7%, down just slightly at the midpoint from the 98.2% record average that we experienced in 2018 and reflects the impact of the stabilization and lease-up of speculative properties. Same property NOI growth is projected in the range of 3.25% to 4.75%. The base case for this assumes continued rent growth and a slight occupancy decline from our current record levels.

In addition, we continue to expect strong rental rate increases from the leasing efforts on the approximately 5% of our total portfolio that expires during the year. This low level of expirations is a result of our leasing team's being able to accelerate early renewals at very favorable new rental rates. In these early renewals, we essentially capture the rent upside earlier which will have a positive impact in 2019, reduce our risk and allow us to focus on the lease-up of our newer spec space. In regards to overall NOI growth potential, keep in mind we have grown our industrial NOI by a compounded annual growth rate of 13% over the last two years when you include recently completed development projects that are not yet included in our same property population. For 2019, we believe we can grow total NOI in 2019 over 2018 in the high single digit to low double digit percentage range.

On the capital recycling front, we expect proceeds from building dispositions in the range of $350 million to $550 million. The majority of these dispositions will come from Midwest markets. Acquisitions are projected in the range of $100 million to $300 million focusing on Tier 1 markets, and development starts are projected in the range of $600 million to $800 million, with a continuing target to maintain the pipeline at about 50% pre-leased. Our pipeline of build to suit prospects continues to remain robust.

Our range of G&A is $57 million to $61 million with a midpoint of $59 million. This is effectively a 5% increase over 2018 G&A levels, which is a result of increased spending on technology, including a new ERP system, as well as additional investments in ES&G initiatives.

On the balance sheet side, we expect debt-to-EBITDA to be in the range of 5.0 to 5.5 times, which reflects a modest increase from 2018, well within the levels expected of our current credit ratings. More specific assumptions and components of our 2019 guidance are available in the 2019 range of estimates document on the Investor Relations website.

And now, I'll turn it back over to Jim for final comments.

James B. Connor -- Chairman and Chief Executive Officer

Thanks, Mark.

In conclusion, as we wrap this up and turn it over to Q&A, we believe our high quality assets, exceptional balance sheet and best-in-class operating team we have put us in a great competitive position to take advantage of attractive long-term industrial logistics fundamentals. As I alluded to last quarter, we feel more certain now that 2019 feels a lot like 2018, barring any material impact from global or domestic political uncertainties. With this, we're confident in continuing to drive long-term cash flow growth and annual dividend growth for our shareholders.

Before we open up the lines, I'd like to acknowledge the entire Duke Realty leadership team for its efforts in producing another great year of execution in our real estate operations and capital activities.

We will now open up the lines for questions, and I would ask that you limit it to one question or perhaps two short questions and you're always welcome to get back in the queue. Josh, you may open up the lines.

Questions and Answers:

Operator

(Operator Instructions) Our first question comes from the line of Manny Korchman. Please go ahead.

Emmanuel Korchman -- Citigroup -- Analyst

Hey, good afternoon, everyone. Guys, can we talk about the economics of the leases that you pulled forward from '19 into '18, especially rent growth and then what you're rent growth expectations are for the rest of leases that you have expiring in '19?

James B. Connor -- Chairman and Chief Executive Officer

Yeah, Manny, I'll try to cover that. I mentioned that -- the pull-forward of those leases did have a little bit of a negative impact on fourth quarter same property NOI as you give a even a month's worth of free rent to a tenant to induce them to pull forward, that is negatively impacting us probably 20 bps or so on same property. I would tell you the lease quality of the deals we signed are right in line with what we've been doing for the whole year. If you look at the average lease term of the deals we did in the fourth quarter, it's quite a bit higher or longer lease terms than what we had been operating at. So if you look at that from a cash rent growth perspective you maybe give $0.01 or $0.02 on the face rate to get them done, to get a longer term, but on a GAAP basis, it's just as high quality and the deals were all very good. And what it allows us to do is really take a lot of risk off the table from '19 and really focus on leasing up our spec space. So it's a long-winded answer for saying we think they are all really good deals and they'll really benefit us in '19.

Emmanuel Korchman -- Citigroup -- Analyst

And the rest of the expirations you have left, are they going to be similar to that or is there going to be some differential between those and what you've done?

James B. Connor -- Chairman and Chief Executive Officer

Yeah, I think that all the expirations we have in '19, it's only 5% of our portfolio is rolling in '19. I was just looking at (inaudible) of everything that's expiring over the next 18 months, about 10% to 13% of those were kind of trough deals, which is what we've been doing over the last year, so not a lot of difference there in the vintage leases. We'll, certainly as we get probably halfway through 2019, look to start pulling forward some 2020 leases and maybe achieve some rent upside. That's not yet in our expiration table for '19 and maybe try to pull some forward there. But I think that the deals that we're coming out of in '19 are very similar to what we experienced this year.

Emmanuel Korchman -- Citigroup -- Analyst

Maybe sticking with that point for a second, if we think about sort of the trend of pulling forward leases year-in, year-out, the impact you had from the free rents in 4Q, is that something that's repetitive? And we just haven't spoken about it in the past, so I guess the question is, if we're sitting here a year from now, are we talking about that the same topic for the 2020 leases impacting the 2019 same store?

James B. Connor -- Chairman and Chief Executive Officer

It's always there, I guess, but I think that we pulled forward more of this year and what we normally would do and probably more than what we would expect next year. So you know anytime you do something like that, it's likely you'll have a little bit of an impact but as we sit here today, I think the impact next year wouldn't be near as big as it was this year.

Emmanuel Korchman -- Citigroup -- Analyst

Okay. I'll wait here. Thank you.

James B. Connor -- Chairman and Chief Executive Officer

You're welcome.

Operator

Our next question is from the line of Jeremy Metz. Please go ahead.

Jeremy Metz -- BMO Capital Markets -- Analyst

Hey, thanks. I guess I just wanted to stick with that topic for one quick second here. Just -- Jim, given the strength you see in the market, you talked about your confidence and the fundamentals as you look out, I guess I'm wondering why even go ahead and give any extra free rent or even take a little bit lower rent versus just waiting a bit. It seems like you're very confident on what's out there. So why even give at all?

James B. Connor -- Chairman and Chief Executive Officer

Jeremy, you do it on a case-by-case basis and you evaluate bringing the lease forward, eliminating the risk, taking the -- expensing the capital this year. And as -- as Mark said, we probably did a little bit more this year than we've done in years gone by and I think 2019 will be less than it was in 2018. But they're all -- they're all judgment cases, and at the end of the day when you look at the overall long-term rent growth, we think we executed good transactions that took risk off the table.

Jeremy Metz -- BMO Capital Markets -- Analyst

All right. And I appreciate that. And then in terms of dispositions, it sounds like you're targeting some product in the Midwest. I think you used the term non-strategic in the press release. The total for 2019 is called $350 million to $550 million. So I'm wondering beyond this, how much additional of that non-strategic property do you see left in the portfolio at this point. And would you look to accelerate those sales if you're able to -- and build additional liquidity? Or would you only do that I guess if you found opportunities on the acquisitions or additional development starts?

James B. Connor -- Chairman and Chief Executive Officer

Well, Jeremy, let me answer the second part first and then I'll let Nick chime in and give a little bit of color. As we've built our business plan for the next few years and we've repeatedly told everybody we're going to significantly reduce our acquisition and disposition activity from the last five years. So we're really trying to rein that in and manage the dilution that comes from that. We do have a pretty good target list of those non-strategic assets, and I think going forward, without giving '20 guidance and '21 guidance, I think we've pretty consistently said you can expect the same kind of levels. And much like we did in 2018, if we find exceptional acquisition opportunities in some of the high-barrier markets, or more importantly, increased development opportunities, yes, we will accelerate dispositions much like we did in 2018. So, Nick, you want to give a little color (multiple speakers)?

Nicholas C. Anthony -- Executive Vice President and Chief Investment Officer

Yeah. At this point, Jeremy, our -- it's not about quality as far as the non-strategic assets. The reality is, it's more about geography. So we're really focused on markets where we're -- we've got over-allocated and redirecting that capital into markets where we are under-allocated. So that's what you'll see going forward for the most part. And yes, we are being proactive, so that if a development or an acquisition -- bigger opportunity exists, we can react quickly to it going forward.

Jeremy Metz -- BMO Capital Markets -- Analyst

Thanks, guys.

Operator

Our next question is from the line of Ki Bin Kim. Please go ahead.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Thanks. Just going back to your 2019 guidance for same store NOI. Can you help build up the high end of the guidance, the 4.75%? What are the different levers?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, I'll try that, Ki Bin. We've been saying that our average rent bump is in the 2% in the quarter to 2%, 3% range, give or take. So you kind of start with that. And then the these deals that we pulled forward, in addition to the 5% we had rolling where we think we're going to get tremendous rent growth, you combine the deals we pulled forward and the burn-off of some free rent from 2018 and the '19 and in the strong rent growth that we already achieved on deals we signed late in '18 and deals we expect to sign in '19, that's another -- call it 2.5% to 3%. So that gets you well above the top end of the guidance. But then we temper that down with an occupancy/bad debt, if you will, adjustment of, call it maybe 100 basis points at the midpoint. And that's a combination of -- coming off of record high occupancies, we don't think at this point in the year, it's prudent to expect that we can keep that. So there will probably be a little bit of retraction there. And then on top of that, we had virtually no bad debt expense in 2018. So we typically go in and budget more historical norms, it would be more like 40 basis points. So without that occupancy/bad debt adjustment, that's how you get to the top end and maybe even above the top end, but we certainly need to bake some of that into our numbers. So that's how I would answer that.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Okay. And in terms of your development start guidance, it's obviously down a little bit compared to what you did in 2018. Is that a -- is that just because it's hard to time those things or project it? Or is that more of a statement about your risk tolerance about development at this point of the cycle?

James B. Connor -- Chairman and Chief Executive Officer

Well, Ki Bin, it's a couple of things. It is down from both our '17 and '18 results, but we thought you could appreciate it's dramatically higher than the guidance we gave at the outset of 2018. It's kind of a good, middle of the road number. What drives that? Remember, our commitment to stay at or above 50% in the development pipeline is leasing the spec space and continuing to be able to sign build to suit transactions. So I think you'll see us have an opportunity to get ahead of that number if we can accelerate first gen spec leasing in the first half of the year or if we can sign a number of large build to suits and keep that development pipeline. So we do think we have some upside and that's what we're focused about trying to get a pretty optimistic outlook.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Okay, thank you.

Operator

Our next question is from the line of Nick Yulico. Please go ahead.

Nicholas Philip Yulico -- Scotiabank -- Analyst

Hey, thanks. I just want to follow up on the same-store NOI growth question. Mark, I'm still confused about this. If you guys did 4.3% same-store NOI growth cash basis last year and you got 60 basis points of occupancy growth, the midpoint for this year is 4% and you're talking about 100 basis points of negative impact from occupancy or bad debt. I'm struggling to see how those numbers make sense.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Well, I'm not sure if I could follow you, Nick. But I think a lot of it's got to do with the deals that we've already signed that were a negative impact to 2018 compared to '19. And just take, for example, I mentioned deals that got signed with free rent for one month, maybe. So you have zero rent in December of '18 and now you're going to have full rent in December of '19, plus, you're going to get the roll-up of the rents on all those deals. So that, like I said, will be significantly impactful to 2019 cash flow. So that's probably the main example. Same store is a bit of a Rubik's cube. You can't just look at expirations and do simple math on growth on rollover and things like that because it's -- can be a -- sometimes it's a leading indicator, sometimes it's a lagging indicator. So I appreciate the confusion on how you get to the numbers sometimes, because I get confused myself. It's a complicated formula. But I think a lot of that lies in the fact of the deals that we've already signed in late '18, it really had no impact on '17 to '18, they had significant impact from '18 to '19.

Nicholas Philip Yulico -- Scotiabank -- Analyst

Okay. So there's some extra -- some extra free rent burnoff benefit this year.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

In '19, there will be. Sure.

Nicholas Philip Yulico -- Scotiabank -- Analyst

Okay. And then just to be clear, the 100 basis point impact for occupancy bad debt, is that at the midpoint of the guidance for same store NOI growth?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, that's right around the midpoint, I would say.

Nicholas Philip Yulico -- Scotiabank -- Analyst

Okay, thanks. Appreciate it.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah.

Operator

Our next question is from the line of Jamie Feldman. Please go ahead.

James Colin Feldman -- Bank of America Merrill Lynch -- Analyst

Thank you. So Prologis commented on their call that they set their guidance and then two weeks before they released it, they took a more conservative cut to it. I'm just curious what was your process to come up with your guidance range and how you thought about kind of stretch versus super-conservative outlooks.

James B. Connor -- Chairman and Chief Executive Officer

Well, Jamie, Mark and I can both give you a comment. We have a rather -- like the ground-up budgeting process that we use and then we start to roll that up in great detail in November and December, work through it over the holidays and ultimately with the Board in January. I think the advantage of having our call 10 days later than our friends from the West Coast is we seem to be through some of the uncertainty that mid and the end of December cause and we were at a 52 week high yesterday. So I think there's a little bit more optimism and -- than there was perhaps 10 days or two weeks ago. So I think that's probably the biggest contributor.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, the only thing I would add to that, Jamie -- like Jim mentioned, there's obviously a lot of news and noise, but we continue to not really see it affect our business on the ground and we're still pretty bullish about that. The only thing I would say from a cautious tone, and I don't know if you call it cautious or prudent, I think it's just prudent, I just mentioned bad debt expense and budgeting and some things like that. We do have some of that in this budget and in our guidance numbers that are above 2018 levels. The 2018 levels were historically low, historically great, depending on what word you want to use. So we have some prudency in our numbers, but we had those in our numbers for the last couple of months through this process as, Jim mentioned.

James Colin Feldman -- Bank of America Merrill Lynch -- Analyst

Okay, that's helpful. And then I guess just thinking about the development pipeline, where do you think there is the most opportunity to do more starts? Like which markets and which markets you think are starting to see more supply and get fully built out?

James B. Connor -- Chairman and Chief Executive Officer

Well, Jamie, I guess, it's easier to tell you that the handful of markets that we're watching a little bit, and I am sure it comes as no surprise. We've talked about the south side Chicago, that RE market. There's a few too many big buildings and things are little bit slow down there. So I don't think you'll see us venture into that market with spec. South Dallas is -- and Dallas had a great year overall but South Dallas just continues to be a little bit small -- or a little bit soft, and there are too many barriers to entry. So there's a little bit too much product down there. I think Central PA is a little soft, right now. We haven't seen quite as good a demand in Central PA as we've seen. So those are probably the only three that we're somewhat cautious about. But we've got really good activity across all of our markets. So I think we continue to see opportunity for both spec development and build-to-suits in virtually all of our 22 markets.

James Colin Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. All right, thank you.

Operator

And our next question is from the line of Blaine Heck. Please go ahead.

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

Thanks. So, looking at your development pipeline, you guys have a lot of vacancy delivering in the first quarter. Jim, you talked about some of the leasing you've done since the end of the year. But even with those leases should we expect a drop in occupancy in Q1? And then, I know it's just one quarter, but can you comment on whether the pace of leasing has changed on spec development projects or is this more of a mix or maybe regional issue?

James B. Connor -- Chairman and Chief Executive Officer

No. I think, Blaine, this is more just simply a phenomenon of timing. I mean, I mentioned those four spec buildings. Three of those four spec buildings we literally delivered, literally at the very end of the year, within the last 10 days of the year. So we really didn't give ourselves much chance to impact leasing on those, given the timing. We think we will lose some occupancy in the first and second quarter as a result of the amount of spec that we have coming in service. But I would tell you, given the prospect list and what we've seen just in the first 30 days of January, I'm not -- I'm not the least bit concerned about that. I think it's really just timing, and I think the next time we're -- at the end of the first quarter, we'll be able to have good results, and we've got a number of projects coming in service in the first quarter. So we'll still have the same mountain to climb, but I think you'll see good leasing volume.

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

Yeah, that's helpful. And then just following up on the pull-forward of the renewals topic, can you just give a little color on those negotiations? Are you guys actively going out and approaching tenants ahead of their expiration or is it a case where the tenant approaches you and want to lock in for longer because they think in the near term, maybe they can get some free rent, but longer term rents are just going up from here? I guess just a little color on that conversation would be helpful.

James B. Connor -- Chairman and Chief Executive Officer

Yeah, Blaine, it's actually both. So our leasing and development people are out working 18 to 24 months in advance of lease expirations. And some companies just don't know and they want to wait right up until 90 days before the lease expires. And those are the companies that are paying the premium for that. Those that understand that they have a mission critical facility and that they know they want to be there for a long term tend to engage us a little bit sooner. And it's really a function of what the tenant needs, how long the lease is. They might be looking for some capital items. So some of those that Mark alluded to earlier that we elected to pull forward, we might have had capital to spend this year. So elected to take that -- sign the lease this year and take that charge this year. And as he said, sometimes there's a little bit of free rent to induce tenants to do that, but some of those lease renewal terms are 10 and 12 years, and that's a pretty small price to pay in order to get good long-term commitments when you want them from credit tenants.

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

Got it. Thanks a lot.

Operator

Our next question is from the line of Mike Carroll. Please go ahead.

Michael Albert Carroll -- RBC Capital Markets -- Analyst

Yeah, thanks. Nick, can you throw some color on the recent acquisitions? And where do you see the upside in buying those properties, albeit in great markets at a 4% cap rate? What does that provide Duke at those prices?

Nicholas C. Anthony -- Executive Vice President and Chief Investment Officer

What it provides to us, it allows us to diversify our geography. We were very under-allocated in NorCal and Seattle, two high-barrier Tier 1 markets. And we think that the overall risk profile will be better if we can diversify and get a greater exposure there and lower exposure in some of the other markets where we're exiting out of.

Michael Albert Carroll -- RBC Capital Markets -- Analyst

Can you talk about I guess your current platform in those markets? And I guess then what you're saying is that you've got some platform value by expanding in those markets and will help you continue to grow going forward?

James B. Connor -- Chairman and Chief Executive Officer

Yeah, Mike, I guess, let me add a comment to that. I think you're -- we've owned -- we've owned property in Northern California and Seattle. But we've -- in the second half of last year put boots on the ground. So we elected to acquire a couple of assets to give our local operating team a little bit of momentum in the marketplace. Our real priority is to build a development pipeline out there. But as you know in high barrier Tier 1 markets that takes some time. So we're hopeful we'll have some projects under way in the third or fourth quarter of 2019. But this is a way as Nick said to take Midwestern assets that had a lower than normal growth profile and reallocate that money into Tier 1 high barrier markets where we think we've got a better long-term growth profile.

Michael Albert Carroll -- RBC Capital Markets -- Analyst

Okay. Thanks, Jim.

Operator

Our next question is from the line of Eric Frankel. Please go ahead.

Eric Joel Frankel -- Green Street Advisors -- Analyst

Thank you. Mark, can you just help me -- help us understand with the leases you just signed on your development pipeline, how that affects your earnings guide and how much of a -- and how much lease-up of your -- of your un-stabilized properties is included in your FFO guidance?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, Eric. I mean, it's -- I'll start with a very general comment. We underwrite a one-year lease-up on all of our spec development. Just generally, in this budget guidance at the midpoint, it's more reflective of our run rate that we've been experiencing for the last couple years, which is closer to nine months. So on a lease-up basis, I would tell you on average the development pipeline that we had in here is getting leased up on the ninth or tenth month and on a commencement basis, a month or two behind that.

Eric Joel Frankel -- Green Street Advisors -- Analyst

Okay. So is it fair to say though that the 600,000 square feet of signed leases and 1.3 million square feet of leases negotiation, that's kind of part of where your -- that kind of the core point to where your midpoint is?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Sure. I mean, the -- when we put our guidance out there, we knew these leases were in process. So, yeah, that's part of our guidance.

Eric Joel Frankel -- Green Street Advisors -- Analyst

Okay, thanks. And just a quick follow-up question on capital allocation for next year, for anybody. Is there any thought that given this is where asset values are in kind of the state of the world that it's worth maybe even if your -- the credit rating agencies would allow you to increase leverage a little bit, just to keep leverage a little bit lower to have little more dry power -- dry powder, and in order to do that, maybe sell off a little bit more of the -- of your -- of the Midwest bucket?

James B. Connor -- Chairman and Chief Executive Officer

Well, I'll let Nick speak specifically to the asset sell side. But I would tell you from a balance sheet dry powder and credit market standpoint. We're effectively not moving our leverage metrics at all. I mean, maybe debt to EBITDA goes up 2 basis point, 0.02 (ph) or something like that. And the credit rating agencies are very, very happy with us. Our metrics right now are A levels, and when we talk about being able to moderately increase leverage to stay well within our current levels (inaudible) stay at the high, high BBB plus level. So I don't -- wouldn't view that we need more dry powder or anything like that. But I'll let Nick address the specifics to the asset sales themselves.

Nicholas C. Anthony -- Executive Vice President and Chief Investment Officer

Yeah, I would say -- I would say that we're very comfortable with the more moderate type activity on the acquisition/disposition side. The overall -- we're very happy with the overall quality of our portfolio. As you can -- as we mentioned earlier, we're getting great growth out of that portfolio. So we will be opportunistic. If we see some opportunities where we like we can always react to that and accelerate dispositions to fund that, but right now we're very comfortable with the volumes that we've been doing.

Eric Joel Frankel -- Green Street Advisors -- Analyst

Okay, thank you.

Operator

And our next question is from the line of John Guinee. Please go ahead.

John W. Guinee -- Stifel, Nicolaus & Company -- Analyst

John Guinee here. Nick, I have to ask you this. When you tell people with confidence that you're buying at a 4 (ph) cap and $200 a foot, can you do that without smiling and breaking out laughing?

Nicholas C. Anthony -- Executive Vice President and Chief Investment Officer

John, they're great assets. And also keep in mind that we're also getting great pricing where we're selling assets.

John W. Guinee -- Stifel, Nicolaus & Company -- Analyst

I know. I know. I know. All right. Hey, Jim, I took my eye off the ball and I noticed that land in the last 12 months went from a little under $200 million to $340 million, about a 70% increase. Can you talk about where and why and how quickly that gets monetized?

James B. Connor -- Chairman and Chief Executive Officer

Well, absolutely, John. As we've said, we've maintained that kind of the sweet spot for us is a land bank of $300 million to $400 million. And you will not see us go above $400 million. We might get close to it for a while. And I can tell you the biggest attributing factor without going line by line through the land inventory is our buying, development opportunity is in high barrier Tier 1 markets. So we're buying sites where we can do large logistics centers in Northern New Jersey. We're buying sites in Northern California that we can develop and infill in Southern California. And the key for us is our kind of just-in-time land practice. So I don't want to tie up sites, particularly large expensive sites and then ride them through the entitlement process for two or three years. So we're comfortable either paying the landowner or waiting it out. So you'll see us put a lot of that expensive land into production in the first half of the year. So we actually expect at the end of the first quarter that land inventory will go up slightly. And then I think you'll see in the third quarter that land inventory come way back down as we put a lot of those expensive larger projects into construction.

John W. Guinee -- Stifel, Nicolaus & Company -- Analyst

Great. Thank you very much.

Operator

Our next question is from the line of Dave Rodgers. Please go ahead.

David Rodgers -- Robert W. Baird & Co. -- Analyst

Yeah, good afternoon. Jim, you talked about positive absorption in 2019. At least, that's something that I took from your comments earlier. But you have guided down on occupancy and you've talked about kind of floor leasing and development which you explained recently. But I guess if you talk about 70% retention last year, excluding the pull-forward, what do you think that retention is this year? Is that weighing on it? And what are the factors that are kind of causing that rollover just given how tight the market is?

James B. Connor -- Chairman and Chief Executive Officer

Dave, I think you answered the question. It's the tightness of the market. The reality of it is when you've got vacancy at 4.3%, unless you in one of those very few submarkets, we've got around the country that were little soft with a number of large options out there, companies don't have a lot of options out there. And most of the options that are out there are new construction at today's new construction prices. So I think that's probably the biggest factor that allows us to continue to renew tenants and push rents. And as we -- we all know renewals are less expensive than new deals. We put less capital in, we pay less leasing commissions and there's no downtime. So as long as we can continue the strong performance in our rent growth metrics, I'm happy to renew 70% of our tenants.

David Rodgers -- Robert W. Baird & Co. -- Analyst

And what are the biggest reasons that you're losing the other 30%? I realize 70% is good. I'm just saying what the other reason is. Is it the new supply that you're losing out too?

James B. Connor -- Chairman and Chief Executive Officer

No, generally not. Probably the biggest problem we have in our in-service portfolio's 98% is we don't have available space for our clients that need additional space. Sometimes we'll get clients that have a degree of uncertainty about what they want to do and clients will say we need a six month extension or a 12 month extension and in today's marketplace we're not really interested in doing that. So we've had to park company with a few people that needed some more flexibility and we were committed to getting longer-term leases with good rent bumps. So it's really driven by the tightness of the market.

David Rodgers -- Robert W. Baird & Co. -- Analyst

And then maybe for Nick or Jim, sticking with you, with regard to non-strategic, give us a sense of kind of how you defined that or maybe redefined that. Is that purely regional geography, is that local geography, building, quality? What's driving that number to be a little bit higher I think than most of us expected?

James B. Connor -- Chairman and Chief Executive Officer

Yeah. I think maybe nonstrategic is a bit of a misnomer. I would tell you, we cleaned out the real non-strategic portfolio a number of years ago, and it's really geographic balancing. So as we're trying to kind of right-size some of our Midwestern markets, we're looking at the portfolios within those different cities and taking the -- what I would say is the worst our lowest performing components of that portfolio and selling it off, and then as Nick said, redeploying the asset. So again, it's really not nonstrategic. It's right-sizing markets and reallocating capital into the coastal and high growth markets that we want to be in.

David Rodgers -- Robert W. Baird & Co. -- Analyst

Great, thanks. Last from me. Mark, how much we build in for ATM issuance this year?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

We have nothing in here for that, Dave.

David Rodgers -- Robert W. Baird & Co. -- Analyst

All right. Great, thank you.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah.

Operator

Our next question is from the line of Michael Mueller. Please go ahead.

Michael Mueller -- JP Morgan -- Analyst

Yeah, hi. I have two quick Mark questions. First, I guess where in the income statement are the new lease accounting costs showing up? And then second, you mentioned about -- I think it was $120 million or $140 million of notes receivable. What's the interest rate on those?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, the -- first of all, the lease accounting we are going to make it as clear as we possibly can and it's going to be its own line. So it will be -- it's not a G&A item, it's not an NOI item, it's part of -- it's part of other expenses, so we'll put it on its own line and show exactly what the number is so it will be easy to find. As far as the second question, the interest rate on those notes is 4%.

Michael Mueller -- JP Morgan -- Analyst

Got it. Okay. That was it. Thank you.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah.

Operator

Our next question is from the line of Vikram Malhotra. Please go ahead.

Vikram Malhotra -- Morgan Stanely -- Analyst

Thanks for taking the questions. Just wanted to clarify and maybe get at a bit more color. When you talk about sort of your expectations for market rent growth in that 5% range, can you give us a bit more color, sort of what markets and what levels are sort of above that and then what's below that to get to you that average? And I just wanted to make sure there is no -- while there's no conservatism sort of baked into your guidance numbers, in that market number there you're not sort of hair cutting it at all.

James B. Connor -- Chairman and Chief Executive Officer

Thanks. We're chuckling because we always have to put a little bit of conservatism in there. But I would tell you, similar to our rent growth projections for the last several years, you -- we're -- you're seeing better rent growth in the coastal and the high barrier markets, so I think you'll see those probably in the mid to high single digits, and I think the second tier and smaller markets will probably be in the low to mid single digits and you average them all together and that's pretty consistently about 5%. And if the market holds and we continue to see demand outpace supply like we did in 2018, then we'll probably have a little bit better year than that, like we did in 2018.

Vikram Malhotra -- Morgan Stanely -- Analyst

Okay, great. And then just in your aim of sort of diversifying away geographically and getting out of some of the Midwest, can you talk about sort of the appetite to do larger, bigger portfolio transaction/entity transactions just sort of get -- achieving that goal sooner?

James B. Connor -- Chairman and Chief Executive Officer

Sure. We can give you a little color. I'd like to tell you we have the opportunity to look at every deal that's out there in the marketplace. Unfortunately, most of them don't line up like that. There to be more geographically diverse portfolio. So while we might be accelerating dispositions in some of our markets, we wouldn't be able to put it all back into the Tier 1 high barrier. The only deal that we've found in the last few years which was sizable and allowed us to do that was the Bridge portfolio that that we closed a couple of years ago. And there we were able to put just short of -- I don't know, $900 million into New Jersey, South Florida and Southern California. So that's one of the -- only one I think we've seen. And the other comment I guess I would make is real estate is really, really expensive out there. And particularly when you look at entity level, by the time you put a premium on top of that you're putting a pretty hefty price and you'd have to -- you'd have to be able to squeeze some pretty significant savings out to be able to demonstrate to the shareholders that you're creating value.

Vikram Malhotra -- Morgan Stanely -- Analyst

Great, thank you.

Operator

Our next question is from the line of Manny Korchman. Please go ahead.

Michael Bilerman -- Citigroup -- Analyst

Hey, it's Michael Bilerman here with Manny. So, Mark, I wanted to go back to the Rubik's cube, which, granted, as a kid I used to peel off the stickers. So maybe you can help me do that in terms of the same store NOI. So your guidance was 4.6%. You were trade -- you were trending at 4.6% at the nine months. So coming at 4.3% means you have about $1.3 million of missed (ph) and certainly on a quarterly basis that translates into, call it an almost $5.3 million of annualized NOI, assuming full quarter impact. Your lease roll for 2019 went from 10.1 million square feet down to 7.4 million square feet, so almost 3 million square feet of pull-forward if it's apples to apples. So give us a little bit more detail about what the real drag was, how much free rent was given on a -- on the term, how much impact was that? Just so that we can start to put all the colors together on this Rubik's cube.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Okay. Let me try, Michael. Couple of things. So I think the midpoint of our -- revised guidance, you're really focused on 2018 Q4 results, correct?

Michael Bilerman -- Citigroup -- Analyst

Yeah, I'm looking at -- your guidance for '18 had a midpoint of 4.6%, right? It was 4.2% to 4.8%. You're trending that way at the nine months and for the full year 2018 you came out with the results last night at 4.3%, which was toward the low end. You mentioned on the call it was free rent. It is about a $1.3 million of impact, but that's for the full year. Clearly, that would have a much more meaningful impact to 4Q results.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, so first of all, I think the midpoint was 4.5%, not 4.6%. So I think we missed it by 20 basis points. And it is just -- the number one, I would say is, it's a guidance number. You don't always hit the midpoint of your guidance. So I'll start with that. So whatever you have to really look at is 20 basis points. So there are certainly some extra free rent and I think if you look at our supplemental, you will see an increase in free rent in the quarter. That's the biggest factor. I mentioned bad debt expense. We had virtually zero in 2018. That is true. But everything that we did have was in the fourth quarter. Not that it was significant, but that's another contributing factor. So it's just a lot of little things. There's not one major thing I can point to that adds up to that 20 basis point difference between our result and the midpoint.

Michael Bilerman -- Citigroup -- Analyst

Okay. But just given how strong fundamentals were going and where you were at the nine months, one was expected to be at or above the midpoint. But if we just put that comment aside, on this pull-forward of leasing, how much square footage, is it 3 million square feet, how much free rent? Have you given like a month's free rent, few months free rent? And then is there a lag into 2019 if some of that free rent hit in the fourth quarter and some of that spills over to January or February?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

No spillover into January, and I would say, on average, it was about half a month.

Michael Bilerman -- Citigroup -- Analyst

On that -- on the leasing that was done?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Correct.

Michael Mueller -- JP Morgan -- Analyst

And then in terms of the bad debt, that's cash? Or that would have been a GAAP number because we're talking about cash same store NOI, not GAAP same store NOI.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

It's cash. It was cash.

Michael Bilerman -- Citigroup -- Analyst

And what amount of bad debt was it? $200,000, $300,000?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Sorry?

Michael Bilerman -- Citigroup -- Analyst

How much -- how much was it?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, about $300,000.

Michael Bilerman -- Citigroup -- Analyst

$300,000? So the $300,000, plus the combined of probably $0.5 million to $1 million of extra free rent definitely takes you down to that number.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah.

Michael Bilerman -- Citigroup -- Analyst

Okay. Thank you for solving it.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

I don't know if we solved it, Michael, but we try.

Michael Bilerman -- Citigroup -- Analyst

You came closer.

Operator

Our next question is from the line of Eric Frankel. Please go ahead.

Eric Joel Frankel -- Green Street Advisors -- Analyst

Thank you. So a quick follow-up on the acquisitions. Obviously, you guys already highlighted that you're -- you're trying to gain some scale in some of the markets. But can you clarify in the 4% cap rate, are those -- are those -- those are recently completed buildings, so the leases are relatively fresh, is that right? So that means there is really not that much embedded NOI growth baked into that cap rate.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

That's correct, Eric. They are all newly developed assets. The rents are slightly below market and there's good escalators in those leases.

Eric Joel Frankel -- Green Street Advisors -- Analyst

Okay. That's it. Thank you.

Operator

Our next question is from the line of Jamie Feldman. Please go ahead.

James Colin Feldman -- Bank of America Merrill Lynch -- Analyst

Hi, I'm sorry if I missed it, but did you guys talk about what you're expecting on the dispositions in terms of a cap rate?

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, the cap rate for 2019?

James Colin Feldman -- Bank of America Merrill Lynch -- Analyst

Yeah, what's in the guidance.

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Yeah, we (multiple speakers) to be consistent with the year we had in 2018.

James Colin Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. All right. Thank you.

Operator

(Operator Instructions) Our next question is from the line of Sumit Sharma. Please go ahead.

Sumit Sharma -- Morgan Stanely -- Analyst

All right, thank you for taking my question. Just wondering about what is your impression of the utilization level across your portfolio? So, one of your peers is actually giving out this number pretty consistently, and I just wanted to get a sense of where you guys stood particularly as you're property profile is different?

James B. Connor -- Chairman and Chief Executive Officer

Yeah, Sumit, I would tell you that I think our property utilization is above 90%. A lot of our clients as I -- in answering somebody else's question, had expansion needs that quite candidly, we can -- we can handle as we're able to build some more -- to build more product that we (inaudible) new build-to-suit. And across the system, we just got very, very few clients that have excess space or space that they still need to grow into. And we've had a number of clients over the course of the last couple of years say to us in hindsight when we've built, let's say, a 750,000 foot building, they wish they had the courage to build another 100,000 or 200,000 square feet because now they need it and they're going to have to figure out how to -- how to handle that expansion. So I think it's -- I think it's very high. It's as good as it's ever been.

Sumit Sharma -- Morgan Stanely -- Analyst

Okay. And if I may ask a follow-up which is completely different, what's -- what's the rate? Could you -- could you give us color on the rate of financing? So I'm looking for -- If you had to put a first mortgage on a warehouse, a group of warehouse, what's the spread to LIBOR that you're seeing or the LTV ask from your friendly banker or lender?

James B. Connor -- Chairman and Chief Executive Officer

Well, I'm not sure we are the best people to ask that question, to be honest, Sumit, because that's not how we finance things. I don't even actually want to speculate because we're strictly an unsecured borrower. But I would say it's -- I don't -- I'm not even going to say because (multiple speakers).

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Nick, do you have any thoughts based on dispositions? I mean, we're not giving any financing...

James B. Connor -- Chairman and Chief Executive Officer

And even our buyers are cash buyers. So...

Nicholas C. Anthony -- Executive Vice President and Chief Investment Officer

A lot of the buyers now are cash buyers and I've seen (inaudible) we're not assuming debt these days. So we just don't see as much (inaudible) privy of these debt financing terms on the sales.

Sumit Sharma -- Morgan Stanely -- Analyst

Okay. Thank you so much.

James B. Connor -- Chairman and Chief Executive Officer

Sure.

Operator

And we have no further questions at the moment.

Ronald M. Hubbard -- Vice President-Investor Relations

I want to thank everyone for joining the call today. We look forward to seeing many of you during the year at industry conferences as well as getting you out to visit our regional markets. Thank you.

Operator

And that does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference. You may now disconnect.

Duration: 58 minutes

Call participants:

Ronald M. Hubbard -- Vice President-Investor Relations

James B. Connor -- Chairman and Chief Executive Officer

Nicholas C. Anthony -- Executive Vice President and Chief Investment Officer

Mark A. Denien -- Executive Vice President and Chief Financial Officer

Emmanuel Korchman -- Citigroup -- Analyst

Jeremy Metz -- BMO Capital Markets -- Analyst

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Nicholas Philip Yulico -- Scotiabank -- Analyst

James Colin Feldman -- Bank of America Merrill Lynch -- Analyst

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

Michael Albert Carroll -- RBC Capital Markets -- Analyst

Eric Joel Frankel -- Green Street Advisors -- Analyst

John W. Guinee -- Stifel, Nicolaus & Company -- Analyst

David Rodgers -- Robert W. Baird & Co. -- Analyst

Michael Mueller -- JP Morgan -- Analyst

Vikram Malhotra -- Morgan Stanely -- Analyst

Michael Bilerman -- Citigroup -- Analyst

Sumit Sharma -- Morgan Stanely -- Analyst

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