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First Industrial Realty Trust Inc (NYSE:FR)
Q2 2019 Earnings Call
Jul 25, 2019, 12:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, my name is Chantal and I will be your conference operator today. At this time, I would like to welcome everyone to the First Industrial Second Quarter results call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Art Hartman, Vice President of Investor Relations, you may begin your conference.

Arthur J. Harmon -- Vice President of Investor Relations

Thanks, Chantal. Hello everyone and welcome to our call. Before we discuss our second quarter 2019 results and guidance, let me remind everyone that our call may include forward-looking statements as defined by Federal Securities Laws. These statements are based on management's expectations, plans and estimates of our prospects. Today's statements may be time sensitive and accurate only as of today's date, Thursday, July 25th, 2019. We assume no obligation to update our statements or the other information we provide. Actual results may differ materially from our forward-looking statements and factors which could cause this are described in our 10-K and other SEC filings. You can find a reconciliation of non-GAAP financial measures discussed in today's call in our supplemental report and our earnings release. The supplemental report, earnings release and our SEC filings are available at firstindustrial.com under the Investors tab.

Our call will begin with remarks by Peter Baccile, our President and Chief Executive Officer; and Scott Musil, our Chief Financial Officer, after which we will open it up for your questions. Also on the call today are Jojo Yap, our Chief Investment Officer; Peter Schultz, Executive Vice President; Chris Schneider, Senior Vice President of Operations; and Bob Walter, Senior Vice President of Capital Markets and Asset Management.

Let me turn the call now over to Peter.

Peter E. Baccile -- President and Chief Executive Officer

Thank you, Art, and thanks to everyone joining us today. Our team delivered another excellent quarter of strong operating results and investment for growth. Before we get into some of those details, let me provide you with a quick update on the state of the industrial market. On a national level, CBRE Econometric Advisors reported preliminary second quarter net absorption of 31 million square feet and new completions of $41 million. That brings the year-to-date total to 67 million square feet of net absorption and 84 million square feet of completions.

With high occupancy levels across our markets and continuing broad based tenant demand, the environment remains healthy for continued rent growth in the industrial market overall and in our portfolio. Our results are indicative of these continuing strong fundamentals. Occupancy at quarter end was 97.3% and cash rental rate growth for second quarter commencements was up 13.4%, the highest quarterly result in our history. The full-year picture is also very strong. As of today, we've now signed approximately 83% of our 2019 rollovers and a cash rental rate change of 13%. We continue to develop profitable, high quality facilities to meet pockets of underserved tenant demand. We're doing just that with several new starts, including a new build-to-suit for our repeat customer.

As we discussed on our last call, we signed a long-term lease for our 739,000 square foot First-Logistics Center at I-78/81 in Central Pennsylvania with Ferrero U.S.A., Inc. that will commence by the fourth quarter. We're pleased to announce that Ferrero will also be our tenant in a new build-to-suit in Phoenix that we started during the second quarter. We're building a 644,000 square foot facility on our site we acquired from our venture at the PV-303 Business Park. The building will be completed and occupied by year-end. Our total estimated investment is $48.6 million with a cash yield of approximately 6.6%.

Now, let me bring you up to date on leasing at some of our other developments during the second quarter. We're well underway on our two buildings 371,000 square foot First Grand Parkway Commerce Center in Houston slated for completion in the fourth quarter. We're off to a good start on leasing as we've already inked a deal for 57,000 square feet.

Our 126,000 square foot First 290 at Guhn Road Building in Houston is now fully leased. We also leased 68% of our 67,000 square foot First Glacier Logistics Center in Seattle. And we already informed you on our last call about the two leases that brought our six building Ranch project in Southern California to 100% occupancy and our partial lease at First Joliet in Chicago. Thus far, in the third quarter, we pre-leased 100% of our 120,000 square foot First Park at Central Crossing III in central New Jersey. We outperformed our underwriting to achieve a 6.4% cash yield on our total estimated investment of $12.7 million. The lease will commence at the start of the fourth quarter.

Summing up our development pipeline at June 30, we had a total of $449 million of completed developments in lease-up or under construction, comprised of 6 million square feet which is 64% leased as of today. For this batch of developments, our projected cash yield is 6.5% which would translate to an average margin of approximately 38% based on prevailing market cap rates for comparable leased assets.

To replenish our pipeline and drive future growth, we continue to seek out quality land sites. In the second quarter, we acquired 28 acres of land, adjacent to our First Park 121 in Dallas for $7.4 million. This will enable us to build an additional 434,000 square feet in that park. In the third quarter to date, we acquired a 6.9 acre site in an in-fill location in northeast Philadelphia for $2 million.

We've already commenced development of a 100,000 square feet building on the site with completion expected by the second quarter of 2020. Total estimated investment is $12.3 million and our targeted yield is 6.1%.

Moving on to acquisitions, during the quarter, we acquired a pair of buildings in the South Bay market of Los Angeles totaling 32,000 square feet for a purchase price of $7.1 million. Our in-place yield is 4.2% and we expect to achieve a yield of approximately 5% when we roll some near-term expirations to market. In Denver's I-70 corridor, we made a bolt-on acquisition of an 85,000 square feet building located near our first Aurora Park. Our purchase price was $9 million and our yield is 5.3%.

In addition to the Philadelphia development site I discussed, in the third quarter to date, we've also acquired two buildings and a land site in Southern California. The first building is a 44,000 square footer in the Inland Empire that we bought vacant for $5.6 million and leased up prior to closing to deliver a yield of 5.1%. The second is a 41,000 square foot vacant building in San Diego, we acquired for $7.3 million for which we are targeting a 5.9% stabilized yield. The land site is comprised of two acres in Fontana that we acquired for $1.6 million on which we can build approximately 40,000 square feet.

Moving to dispositions, we sold two units in Miami totaling 12,000 square feet for $1.6 million. Thus far in the third quarter, we sold a vacant 110,000 square feet building in Northeast Pennsylvania for $6 million and a small land parcel in New Jersey for $244,000. Our balance sheet sales target remains $125 million to $175 million and as we discussed on prior calls, will be back-end weighted.

In our Phoenix joint venture, as previously disclosed, we sold a 147-acre site to a user with our share of the sales price totaling $18.2 million. The venture also sold 39 acres to FR for the aforementioned build-to-suit. Today the venture of 269 of the 532 acres originally acquired and has returned 107% of the originally invested capital. We're very pleased with the economic performance of this partnership.

I'll turn it over to Scott in a minute to walk you through additional details in the quarter and our updated guidance. But I have one more item I'd like to note. We recently celebrated our 25th anniversary as a public company and we were honored to ring the closing bell at the New York Stock Exchange to commemorate the occasion. Reaching this milestone speaks volumes about the resiliency of our organization and the support of so many key stakeholders. Our First Industrial team, present and past, our customers, our business and financial partners, the communities in which we live and work and our investors, we thank you all for being an important part of what we've accomplished and are excited about our opportunities ahead.

With that, Scott, over to you.

Scott Musil -- Chief Financial Officer

Thanks, Peter. In the second quarter, diluted EPS was $0.31 versus $0.36 one year ago. NAREIT funds from operations were $0.43 per fully diluted share compared to $0.39 per share in 2Q 2018, primarily driven by an increase in NOI due to development lease up in same store growth. As Peter noted, quarter-end occupancy was 97.3%, flat from a quarter ago, and up 40 basis points from a year ago.

Regarding leasing volume, in the quarter, we commenced approximately 3.1 million square feet of long-term leases. Of these, 446,000 square feet were new, 1.9 million were renewals and 724,000 square feet were for developments and acquisitions with lease up. Tenant retention by square footage was 73.1%. Same-store NOI growth on a cash basis, excluding termination fees was 3%. This was driven by rental rate bumps and an increase in rental rates and leasing. This was partially offset by a slight decrease in average occupancy as well as real estate tax true-ups for markets paid in arrears predominantly in Denver as we have explained previously.

Lease termination fees totaled $443,000 and including termination fees, cash same-store NOI growth was 3.4%. Cash rental rates were up 13.4% overall with renewals up 14.1% and new leasing up 9.9%. On a straight-line basis, overall rental rates were up 27.3% with renewals increasing 29.5% and new leasing up 17.7%.

Moving now to the capital side. Just this week, we closed on our private placement of $150 million of senior unsecured notes. The notes have a 10-year maturity and an interest rate of 3.97%. Reflecting the related settlement of interest rate protection agreements, the effective interest rate is 4.23%. Recall that these proceeds essentially refinance $72 million of secured debt we paid off in the first quarter and $35 million of secured debt we will pay off in the second half of the year with an overall weighted average interest rate of approximately 7.7%. The remaining proceeds will be used to fund new investments.

Quickly moving on to a few balance sheet metrics. At the end of 2Q, our net debt plus preferred stock to adjusted EBITDA is 4.9 times. And at June 30th, the weighted average maturity of our unsecured notes, term loans and secured financings was 5.6 years with a weighted average interest rate of 4%. These figures exclude our credit facility.

Moving on to our updated 2019 guidance for our press release last evening. our NAREIT FFO guidance range is now $1.68 to $1.76 per share, with a midpoint of $1.72. This is an increase of $0.02 from what we discussed on our first quarter call, driven by better portfolio operations and an increase in capitalized interest. The key assumptions for guidance are as follows; average quarter-end occupancy of 96.75% to 97.75%. We increased the midpoint of our same-store NOI growth range 25 basis points and narrowed the range to 2% to 3%, reflecting our first half of the year outperformance. Our G&A guidance range remains $27.5 million to $28.5 million and guidance includes the anticipated 2019 costs, related to our completed and under construction developments at July 25th.

In total, for the full year 2019, we expect to capitalize about $0.04 per share of interest related to our developments. Our guidance does not reflect the impact of any future sales, acquisitions or new development starts after this earnings call, the impact of any future debt issuances, debt repurchases or repayments after this earnings call other than $35 million of expected secured debt payoffs, I discussed, the impact of any future gains related to the final settlement of two insurance claims from damaged properties and guidance also excludes the potential issuance of equity.

With that let me turn it back over to Peter.

Peter E. Baccile -- President and Chief Executive Officer

Thanks Scott, and thanks again to our team for another great quarter. Demand for Industrial continues to be strong and we are focused on capturing opportunities for rent growth and profitable new investments to further enhance our portfolio.

With that operator, would you please open it up for questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from Craig Mailman with KeyBanc. Your line is open.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Hey guys. Just a question, the cash rent spreads were impressive this quarter. I know it was more driven by renewals versus new. But as you guys, however you guys look at it, the 20 rollover portfolio-wide, give a sense of where the mark to market is going forward?

Peter E. Baccile -- President and Chief Executive Officer

Well, Craig. As you know, we don't really track mark-to-market. We think a great indicator of what's happening in our portfolio and with rents generally is looking at what we're doing with our current year rollovers. And as we mentioned, we're through 83% of the 2019 rollovers, we’re up 13%. So that's a strong result. The markets are very, very tight. Tenants don't have a lot of alternatives. It continues to be a landlord's market. So it's, -- I think you'll see that kind of performance in the future.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

And then just with the GLP portfolio going off in sort of that mid fours. You guys still kind of trade wide of that, you're one of the few. And I don't know if it's still kind of the perceived market footprint that you guys are in versus others. I'm just curious with kind of the portfolio premiums people are paying out there and that's the bid for industry overall. I know we've talked about this in the past but just curious if your thoughts have evolved on kind of packaging more of the non-core assets or markets into bigger portfolios to try to accelerate the transition to kind of narrow that gap relative to peers?

Peter E. Baccile -- President and Chief Executive Officer

Yes. So we've certainly looked at doing some of that. We explore all avenues for driving value and price maximization in our dispositions. And to date, we've been pretty successful and able to achieve strong values via the targeted sales that you've seen. And those sales have been largely the end users and 1031 buyers and the like. We're focused on driving value and if we think we can drive more value and using a different method we'll certainly do that.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Okay. But that doesn't sound like today, you feel like you're still getting better pricing on the one-offs?

Peter E. Baccile -- President and Chief Executive Officer

We have; that has been our experience so far. Yes.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Great, thank you.

Peter E. Baccile -- President and Chief Executive Officer

The assets that we're selling are not, they are in different markets. An asset here and there, they're not that conducive to getting the portfolio of premium that you talk about.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Got you. All right, that's helpful. Thank you.

Operator

Your next question comes from Rob Stevenson with Janney. Your line is open.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Hi. Good morning guys. Peter, the Cass Freight Index is dropped 5%, 6% the last couple of months -- in each of the last couple of months, have been negative for since the beginning of the year. Given that drops widespread across the truck, rail, air freight stuff, I was curious if you have any insights here from talking to your clients as to what's going on? Is this just China tariffs signaling something else or any of the clients starting to feel any of this in their business?

Peter E. Baccile -- President and Chief Executive Officer

What -- I couldn't hear what you said at the beginning?

Rob Stevenson -- Janney Montgomery Scott -- Analyst

The Cass Freight Index that came out -- that just came out.

Peter E. Baccile -- President and Chief Executive Officer

So this…

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Shows that the shipping is down.

Jojo Yap -- Chief Investment Officer

So Rob, this is Jojo with what we track is the loaded containerized cargo, the full, not the empties. We think that has the largest correlation to absorption in the port markets. So if you look at the biggest markets, whether it's port of LA, port of Long Beach or port of New Jersey. The loaded import containers are basically slightly up. During the first three months of the year to four months and then they leveled off, and then the last month, there were actually a little bit down. So year-over-year, what we saw in the loaded import containers was a decline of about 1.5% to 2%. Okay. So, I give you that because we don't think it's material number one.

Second of all, what's been drive -- we have not heard any issues from our tenants from the debt reduction of the loaded containerized cargo. Lastly, what we feel that drives really our absorption or rent growth is a tightest of these port markets. All the port markets where we invested are extremely tight. Tenants don't really have a lot of choices. That's why we've been able to continue to push rents. Last note, so despite the, for example, the slight decrease. I'll give you one example of a market, South Bay of LA, the occupancy rate, the market occupancy rate right now is sub 1%.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay. And then I know you guys did your typical dividend increase at the beginning of this year. But Scott, how close are you guys currently to minimum payout levels? And are you either going to be forced to raise the dividend more frequently and/or by a greater rate going forward given the strong growth if you guys continue to have?

Scott Musil -- Chief Financial Officer

Hey Rob, it's Scott. We grow our dividend with cash flow. And if you looked at our projected taxable income this year, our dividends, we have dividend cushion there. So we think we're in pretty good shape from that point of view.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay, thanks guys.

Operator

Your next question comes from Ki Bin Kim with SunTrust. Your line is open.

Ki Bin Kim -- SunTrust -- Analyst

Thanks and good morning out there. Can you talk about your same store NOI guidance? Basically you guys increased a little bit, but it does imply a little bit of a deceleration. I know you guys always try to bake in a little bit of conservatism with the bad debt assumptions. But how much of it is just being conservative versus you see some couple of leases that may fall out from a timing perspective.

Scott Musil -- Chief Financial Officer

Hey, Ki Bin, it's Scott. The 25 basis point increase in our midpoint same-store guidance, it’s first half outperformance and the lion's share of that was lower bad debt expense. Our bad debt expense for the first half of the year I think was about $180,000 compared to a $1 million per model. I think the second question, you're getting at is if you look at the first half of the year, our cash same-store is about 3% growth rate. That implies about a 2% growth rate for the last half of the year. You're right, one of the big reasons for that decline is we do have $500,000 per quarter in bad debt expense baked in the back half of the year. If our bad debt expense, if we're fortunate enough to have that come in at the back half of the year, the same as the front, that 2% the back half goes to about 2.5%. So we get a little bit back if we’re fortunate enough on that. The other two pieces have to do with a little less free rent burn off in the back half of the year and then in the back half of the year also average occupancy is declining a little bit more than the first half of the year. And Ki Bin remember, we had a really strong back half of 2018 with leasing. We ended the year 98.3%.

Ki Bin Kim -- SunTrust -- Analyst

Got it. Thanks for that. And turning to some of the deals that you've done this quarter and year-to-date, some interesting land acquisitions, small buildings in Southern California. You've done smaller deals but usually part of a business park. This looks a bit more one-off, anything to read into there? Are you kind of expanding, what you want to develop, the type of assets you want to develop at all?

Jojo Yap -- Chief Investment Officer

Ki Bin, hi, it's Jojo. Thanks for the question. In terms of the properties in South Bay, we actually own an additional eight other buildings within that, within about a two-mile radius. So we like that sub-market a lot the South Bay Rancho Dominguez, you're familiar with all of these. And then so we will continue to find one-offs in that area where we acquired the other building that's Inland Empire where you know we're a big investor in for the right -- for the right product in Inland Empire. So that's just a -- both of -- these are examples of just bolt-on acquisitions because we know the market. We feel very good about the rent growth and we'll continue to do this.

Peter Schultz -- Executive Vice President - East

And Ki Bin, it’s Peter Schultz on the site in Philadelphia. That's a very infill location in an area where we've owned assets in the past and that 100,000 square feet is not that different from the size, we've been building in Houston in Seattle and in some other markets. So it's not a shift. It's the right building, right location right time where we feel there are pockets of underserved demand as Peter commented.

Ki Bin Kim -- SunTrust -- Analyst

Okay. And just last question. The occupancy rate in Seattle for the past couple of quarters, it looks a little bit lower than your other markets, what's the story behind that?

Jojo Yap -- Chief Investment Officer

It’s just really one building. We have a small portfolio, Ki Bin, in Seattle and that's just one vacancy in one building that we're having good activity right now.

Ki Bin Kim -- SunTrust -- Analyst

All right, thank you.

Operator

[Operator Instructions] Your next question comes from John Guinee with Stifel. Your line is open.

John Guinee -- Stifel Nicolaus -- Analyst

Great, thank you. Couple of questions. It look like your opex was very, very low this quarter, was that abnormal? Or is your opex as a percent of rents going down because you're rent growth is so strong? And then second, I noticed that you haven't tapped the ATM this year, any thoughts on that Peter?

Peter E. Baccile -- President and Chief Executive Officer

So Chris, why don’t you handle the first part?

Christopher Schneider -- Senior Vice President Operations and Chief Information Officer

John this is Chris. As far as the opex, I think it's just on a quarter-by-quarter basis, you have some fluctuality. If you look at first quarter, we had some high capex or Opex related to snow removal, but it's not anything on the normal.

Scott Musil -- Chief Financial Officer

John, this is Scott. On the equity front, we look at our sources and uses. And if you look at the back half of this year, with sales and retained capital, we will have about $160 million coming in. Our development spend back half of the year is $140 million. So we’re in a good shape from that point of view, our leverage is low at 4.9 times. We’ve got plenty of liquidity on our line of credit. So I think we're going to be in a pretty good shape from a sources and uses point of view for the rest of 2019.

John Guinee -- Stifel Nicolaus -- Analyst

Perfect, thank you very much.

Operator

Your next question comes from Eric Frankel with Green Street Advisors. Your line is open.

Eric Frankel -- Green Street Advisors -- Analyst

Thank you. I just wanted to talk about here your asset recycling program in a little more detail. Obviously, you guys don't have explicit guidance on disposition. I guess your usual bogey is about $150 million in planned sale this year. It looks like you have to achieve a fair amount of sales in the back half of the year to achieve that. So I just wanted to stand [Phonetic] if your mindset is changing and you just have less asset to sell or the market for dispositions isn’t that strong as it was before and whether you can redeploy that as acquisition, so just wanted to get your thoughts?

Peter E. Baccile -- President and Chief Executive Officer

Sure. No, I mean there is really nothing to read into the where we are year-to-date in terms of sales. Our guidance range of $125 million to $175 is still the guidance range we feel comfortable with that, that we will be within, somewhere in that range. We've got a number of projects that we just took to market. We have others that we're going to take to market and it just so happens that the sales this year are going to be more back-end weighted that it even have been in the past. And we're really, Eric, focused on maximizing the value opportunity in these sales and less worried about what quarter they close in.

Eric Frankel -- Green Street Advisors -- Analyst

Okay, thank you. Just a final question. Obviously, market fundamentals seems quite strong nationally. But maybe you could touch upon your markets, are there any pockets or markets generally where there are problems, there might be some pretty stronger construction pipelines?

Scott Musil -- Chief Financial Officer

Peter, you want to.

Peter Schultz -- Executive Vice President – East

Sure, Eric. Good morning. It's Peter Schultz. I would say those sub-markets continue to be the same as what we've talked about in prior quarters. South Dallas, Northeast Atlanta, I80 in Chicago and Central and Eastern PA, and I would say that most of the supply pressure there and all those markets are the larger buildings. In Pennsylvania, as an example, by our count there are 12 900 or million square foot buildings up or under construction. And while there continues to be a fair amount of activity that still feels like a little bit of excess supply to us.

Scott Musil -- Chief Financial Officer

The other submarkets that we're active in are very, very tight though with rising rents. So those obviously are going to be the areas we focus our new investment dollars over the near term.

Eric Frankel -- Green Street Advisors -- Analyst

Got you. How about Denver, where obviously, you now have a pretty big land position? I mean, you have a pretty big building you’ve built there. Is there any concerns there?

Peter Schultz -- Executive Vice President - East

So, Eric, it's Peter Schultz, again. I would say Denver has a little bit elevated supply about 4 million square feet, it's spread out across the metro area Northeast, Northwest some on the south side, where our project is our Aurora Commerce Center project, where we're delivering our 555,000 square foot building later this quarter. I would say about half of the development is in that submarket and about half of that is build-to-suits. And there are two other existing buildings that we will be competing with and our size and a couple that are smaller. So we don't really view that as excessive, certainly not relative to other markets. Demand continues to be good there. We continue to see great, great rent growth there. And we'll look forward to reporting to on our progress on our project.

Eric Frankel -- Green Street Advisors -- Analyst

Okay, thank you.

Operator

[Operator instructions] Your next question comes from Caitlin Burrows with Goldman Sachs. Your line is open.

Caitlin Burrows -- Goldman Sachs

Hi. Hi, there. I guess I was just wondering on the kind of supply topic, but as it relates to you guys developing, in terms of buying land and getting entitlements, are you seeing anything to make you think that First Industrial wouldn't be able to keep its development volumes at least as high as they are today for next year as you go forward?

Peter E. Baccile -- President and Chief Executive Officer

So, for starters, we can build about 11 million square feet on land we currently own. That does not count the approximately 4 million square feet we can build in our Phoenix joint venture. And we're also working through our platform across the country of about 16 offices, and our team is constantly looking for new development sites. We feel confident in our ability to continue to drive value creation through our speculative development pipeline and we don't see anything right now that would cause us to worry about potential volume drop-offs in the future.

Caitlin Burrows -- Goldman Sachs

Great. And then maybe just one in terms of, I know you guys mentioned earlier that it is a landlord's market when we look at the leasing spreads that you guys recognized They were up, retention was down a little and that definitely can make sense. I guess I was wondering, are you trying to be tougher with pricing now than maybe you have been in the future? Is that just kind of the way the quarter worked out and that could change in the future?

Peter E. Baccile -- President and Chief Executive Officer

So our team is continually trying to maximize the value of every lease that we have and obviously there are several inputs there. Strong -- pushing hard on rent growth is certainly one of them, minimizing concessions, extending terms where possible. And we're also mindful that it costs four or five times more to have to re-tenant a building than to retain a tenant. But we're pushing rent strong. I think that's evident in the 2019 rollover number that we talked about. And again trying to maximize the value of every lease is kind of how we look at the big picture.

Caitlin Burrows -- Goldman Sachs

Got it. Okay, thanks.

Operator

Your next question comes from Michael Mueller with JPMorgan. Your line is open.

Michael Mueller -- JPMorgan -- Analyst

Yes, hi. So it looks like you break your portfolio up between bulk, regional, light and flex in terms of the major categories. So I'm just curious, are you seeing any notable cap rate differences as you move across those different categories?

Peter E. Baccile -- President and Chief Executive Officer

So overall, we don't see really any difference between the bulk, light and regional. The flex, which we own very little, trades a little bit higher cap rate.

Michael Mueller -- JPMorgan -- Analyst

Got it. And has that been pretty consistent even outside of the past six or nine months?

Peter E. Baccile -- President and Chief Executive Officer

Oh, yes. That has been consistent maybe over the past 10 to 30 years.

Eric Frankel -- Green Street Advisors -- Analyst

Okay.

Peter E. Baccile -- President and Chief Executive Officer

So it’s been like that.

Michael Mueller -- JPMorgan -- Analyst

Got it, okay. That was it. Thank you.

Peter E. Baccile -- President and Chief Executive Officer

Thank you.

Operator

[Operator Instructions] There are no further questions at this time, I will now turn the call back over to Peter Baccile.

Peter E. Baccile -- President and Chief Executive Officer

Thank you, operator, and thanks to everyone for participating on our call today. Please feel free to reach out to Scott, Art or me with any follow-up questions and enjoy your summer.

Operator

[Operator Closing Remarks]

Duration: 35 minutes

Call participants:

Arthur J. Harmon -- Vice President of Investor Relations

Peter E. Baccile -- President and Chief Executive Officer

Scott Musil -- Chief Financial Officer

Jojo Yap -- Chief Investment Officer

Peter Schultz -- Executive Vice President - East

Christopher Schneider -- Senior Vice President Operations and Chief Information Officer

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Ki Bin Kim -- SunTrust -- Analyst

John Guinee -- Stifel Nicolaus -- Analyst

Eric Frankel -- Green Street Advisors -- Analyst

Caitlin Burrows -- Goldman Sachs

Michael Mueller -- JPMorgan -- Analyst

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