Duke Realty Corp (DRE) Q4 2020 Earnings Call Transcript

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Duke Realty Corp (DRE)
Q4 2020 Earnings Call
Jan 28, 2021, 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 Earnings Conference Call. [Operator Instructions]

Now I'll turn the conference over to your host, Ron Hubbard. Please go ahead.

Ron Hubbard -- Investor Relations

Thanks, Sean. Good afternoon, everyone and welcome to our fourth quarter and year end 2020 earnings call. Joining me today are Jim Connor, Chairman and CEO; Mark Denien, Chief Financial Officer; Nick Anthony, Chief Investment Officer; and Steve Schnur, Chief Operating Officer.

Before we make our prepared remarks, let me remind you that 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, 2019 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 and good afternoon, everyone. We hope all of you joining us today as well as your families are safe and healthy. Let me start by saying that 2020 was another outstanding year for Duke Realty. Even amid the global pandemic and a major US recession, we exceeded all of our 2020 goals, including our original pre-pandemic operating and financial guidance metrics. We also capped off the year with fourth quarter leasing volume being the strongest quarter of the year, and just after quarter end, executed a significant debt transaction to bolster our balance sheet, which sets us up for a great start to 2021.

Let me recap the highlights of our outstanding year. When the pandemic hit, we engaged our business continuity plan to ensure the health and safety of our employees, our customers and our construction work sites. This was executed extremely well and I'm happy to resort cases at Duke Realty were very minimal. We signed nearly 21 million square feet of leases, we maintained the occupancy of our stabilized portfolio between 97% and 98% throughout the year, and our total portfolio which includes our under development pipeline ended the year at 96% leased, the highest level we've ever achieved. We renewed 70% of our leases for 83% when including immediate backfills and attained 29% GAAP rent growth and 14% cash rent growth on second generation leases throughout the year.

We grew same property NOI on a cash basis 5%, which included -- which exceeded our revised guidance expectations. We commenced $795 million in new developments that were 62% pre-leased, 67% of which were in coastal Tier 1 markets. We placed $730 million of developments in service that are now 94% leased. We completed $322 million of property dispositions and $411 million of property acquisitions. We raised $675 million of debt at an average -- at a weighted average term of 20 years and an average coupon of 2.4%. We increased our annual common dividend by 9.1%. And finally, we've continued to run our Company in the most responsible manner with our ESG culture and numerous ESG achievements.

Now let me turn it over to Steve Schnur to cover our operations for the quarter and touch on some market fundamentals.

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Thanks, Jim. I'll first touch on overall market fundamentals. The fourth quarter demand was exceptional in logistics sector with 104 million square feet of absorption, which was the highest on record. Demand exceeded supply for the quarter by about 30 million square feet which nudged national vacancy rates down to 4.6%, which is still roughly about 200 basis points below long-term historical averages. For the full year, demand was 225 million square feet, compared to a sly number of 265 million square feet. Even when adjusting for the significant amount of activity we saw from Amazon this year, the full year 2020 net absorption was still 12% higher than 2019. For transactions larger than 100,000 square feet, e-commerce users comprised 22% of total demand and 3PLs about 26%. Comparatively, e-commerce demand in our own portfolio represented about 20% of our total leasing square footage volume for the year.

This segment of the demand market, users over 100,000 square feet, continues to be the most active subset. To that end, we signed 29 deals in the fourth quarter over 100,000 square feet in our portfolio. Asking rental rates rose again in the fourth quarter, up 8.3% over this time last year. This rate of growth is about 100 basis points higher than the five-year historical average of 7.1%. We see this trend continuing in 2021 with macro rent growth levels in the mid-single digits.

In our own portfolio, we had our strongest quarter of the year with 9.7 million square feet of leases executed, which is our second highest quarter ever in our Company's nearly 50-year history. Our average transaction size was 104,000 square feet. In addition, the average lease term signed during the quarter was 7.5 years. On the rent collections side, we averaged 99.9% for the fourth quarter and 99.9% for the full year, arguably best-in-class in the entire REIT sector. These figures include a very small amount of deferral agreements and credit enhancement collections as detailed in the supplemental package.

Looking forward, our overall tenant credit quality is very strong. We do have a handful of tenants and industries most acutely impacted by COVID that are in financial difficulty, which Mark will touch on in a moment as to their minor impact on our 2021 financial numbers. We do have a strong prospect list of backfills for most of these spaces. So the longer term impact in the situation we believe will be positive.

At quarter end, our stabilized in-service portfolio was 98.1%. The lease activity for the quarter combined with the strong fundamentals I touched on led to another great quarter of rent growth of 13% cash and 27% GAAP. We also had a very strong quarter in first-generation leasing, in our speculative developments on our construction, we executed two significant leases in the quarter. The first was a 622,000 square foot lease in Northern New Jersey to a leading national home furnishings retailer looking to expand its supply chain network for inventory redundancy, often referred to as safety stock or referred to as increased inventory levels, for them to take 100% of the facility -- 100% of the space in that facility.

The second notable lease transaction in the spec project was 290,000 square feet lease we signed in the South Bay submarket of Southern California. This lease was a major -- was to a major national beverage distributor to take 100% of the space as well. It's important to note both these buildings are still under construction and not scheduled to be completed until the second and third quarters of this year.

Turning to development, we had a tremendous quarter starts, breaking ground on eight projects totaling $420 million in cost and 69% pre-leased. Some of these new developments were part of our detailed press release that we issued on December 7th, and then later in December, we started another project for about 146,000 square feet in the Mid-County submarket of Southern California. In total, nearly 70% of our fourth quarter development starts were in coastal Tier 1 markets and five of our eight projects were redevelopments of existing land and site structures.

Our development pipeline at year-end totaled $1.1 billion with 80% of this allocated to coastal Tier 1 markets. This is a larger pipeline than we had a year ago and the allocation to coastal Tier markets is also higher than a year ago. The pipeline is 67% pre-leased and we expect to generate margins in the 30% to 40% range. Looking forward, our prospect list for new starts in 2021 is very strong, and our land balance at year-end totaled $297 million, with nearly 80% of this allocated to coastal Tier 1 markets, setting us up very well for future growth.

I'll now turn it over to Nick Anthony to cover acquisitions and dispositions for the quarter.

Nick Anthony -- Executive Vice President and Chief Investment Officer

Thanks, Steve. We had a very active quarter on both dispositions and acquisitions. Consistent with our strategy to increase our exposure to coastal Tier 1 markets, we sold $276 million of assets in the fourth quarter, comprised of two facilities in the far Northwest submarket Indianapolis, one in the far Northeast market of Atlanta, one facility in the Western portion of the Lehigh Valley and an asset leased to Amazon in Houston.

In turn, we used these proceeds to acquire two assets in Southern California and a portfolio in Seattle for $305 million, that in aggregate are 74% leased, with an expected initial stabilized yield in the mid-4s and long-term IRRs -- unlevered IRRs in the mid-6s. The Seattle portfolio encompasses three buildings that are 69% leased in aggregate located in the DuPont submarket and adjacent to an existing facility we developed several years ago.

For the full year, our capital recycling encompassed $322 million of asset sales and $423 million of acquisitions. Combined with the development previously mentioned by Steve, this activity moves our coastal Tier 1 exposure to 41% of GAV and our overall Tier 1 exposure to 67%. We expect this recycling to continue in 2021 with dispositions primarily from the monetization of some of our Amazon assets, allowing us to manage our tenant exposure as well as some Midwestern assets to further refine our geography.

I'll now turn it over to Mark to cover our earnings results and balance sheet activities.

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

Thanks, Nick. Good afternoon, everyone. I am pleased to report the core FFO for the quarter was $0.41 per share compared to core FFO of $0.40 per share in the third quarter and represented a 7.9% increase over the $0.38 per share reported for the fourth quarter of 2019. Core FFO was $1.52 per share for the full year 2020 compared to $1.44 per share for 2019, which represents a 5.6% annual growth rate. FFO as defined by NAREIT was $1.40 per share for the full year 2020 which is lower than the core FFO due mainly to debt extinguishment charges.

We grew AFFO by 6.2% on a share adjusted basis compared to 2019. Same property NOI growth on a cash basis for the three months and 12 months ended December 31, 2020 was 3.3% and 5% respectively. Same property growth for the quarter was driven by continued strong rent growth and a 20-basis point increase in average commencement occupancy within our same property portfolio from the fourth quarter of 2019.

Net operating income from non-same-store properties was 17.3% of total net operating income for the quarter. Same property NOI growth on a GAAP basis was 3.1% for the fourth quarter and 2.8% for the full year 2020. Bad debt expense for the year was primarily related to non-cash straight-line reserves, which negatively impacted GAAP same property NOI.

We finished 2020 with $295 million outstanding on our unsecured line of credit, which we refinanced earlier this month with a $450 million, 1.75% 10-year green bond issuance which will bear interest at an effective rate of 1.83%. The pricing on this transaction was very attractive with our effective rate incorporating a 70-basis point spread over treasury rates which at the time was the lowest credit spread ever on a 10-year REIT bond offering. We intend to continue a robust pace of growth in 2021, which we anticipate to fund with the combination of asset dispositions, internally generated cash flow, short-term use of our line of credit and a potential unsecured bond issuance later in the year. Also, if additional growth opportunities arise, it's possible we issue a modest amount of equity through the ATM on an opportunistic basis.

From a macro outlook perspective, we expect the 2021 environment to be overall relatively strong and improving each quarter in light of the expected federal stimulus and vaccinations. Supply and demand are relatively in balance. The overall fundamentals picture is quite supportive of continued market rent growth and thus a positive setup for pricing power and new development starts. With this as a backdrop, yesterday, we announced the range for 2021 core FFO per share of $1.62 to $1.68 per share with a midpoint of $1.65, representing an 8.6% increase over 2020. We also announced growth in AFFO on a share adjusted basis to range between 5.8% and 10.1% with the midpoint at 8%.

Our average in-service portfolio occupancy range is expected to be 95.7% to 97.7%. Same property NOI growth on a cash basis is projected in a range of 3.6% to 4.4%%. Our guidance for same-property NOI includes the negative impact from a few tenants Steve mentioned that we expect to terminate in early 2021. We expect proceeds from building dispositions in the range of $500 million to $700 million, which we will use to fund our highly accretive development pipeline.

Acquisitions are projected in the range of $200 million to $400 million with a continued focus on infill coastal markets and facilities with the repositioning or lease-up potential. Development starts are projected in the range of $700 million to $900 million with a continuing target to maintain the pipeline at a healthy level of pre-leasing. Our pipeline of build-to-suit prospects continues to remain robust and the $800 million midpoint of our 2021 guidance is consistent with our actual development starts for 2020. More specific assumptions and components of our guidance are available in the 2021 range of estimates document on the Investor Relations website.

Now, I'll turn it back over to Jim for some final comments.

James B. Connor -- Chairman and Chief Executive Officer

Thank you, Mark. In closing, I'd like to reiterate what a great year 2020 was for Duke Realty amid the pandemic and a recession. As we look ahead into 2021, the demand drivers remain exceptionally strong. Supply and demand remain in balance and we anticipate another year of strong results. This is evidence that our 2021 guidance of $700 million to $900 million of expected new development starts, strong occupancy expected to remain elevated and most of all evident with our expected growth in FFO per share and AFFO of 8.6% and 8% in the midpoints respectively.

This level of growth is what we believe should be achievable on a consistent basis going forward. Our performance is the result of a decade of portfolio repositioning with a steadfast focus on quality, investing in selective submarkets and strengthening our balance sheet. We will continue to see added value created by our dominant development platform and we believe we can continue this level of growth well into the future.

Finally, I'd be remiss if I didn't thank all of my colleagues at Duke Realty for all their hard work and dedication that has allowed us to achieve the level of success that we have. I also want to thank our investors for their continued support and the recognition of our good stewardship of their invested capital.

Now we will open up the lines for questions. We would ask that you limit your questions to one or perhaps two short questions. You are, of course, welcome to get back in the queue. Also, please remember the prompt for our system is now one-zero. Sean, you may open up the lines for our first question.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question will come from line of Blaine Heck. Please go ahead.

Blaine Heck -- Wells Fargo Securities -- Analyst

Great, thanks, good afternoon. Steve or Jim maybe -- we've certainly seen a little bit of a population shift as a result of the pandemic, maybe even an acceleration of a trend that we saw pre-pandemic with people moving out of higher cost, high-density cities like New York and San Francisco and into Sunbelt and Texas cities, which has been very impactful to other real estate sectors. I'm wondering if you guys have seen or expect to see any impacts to the industrial markets in those cities as a result of those shifts in population and consumption?

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Yeah, Blaine, it's Steve. We are -- it is something we're monitoring and tracking. Obviously our sector is tied to population centers and population growth. I think what we've seen particularly as it relates to California, a little bit of net migration out, but at this point, it's not something that's been impactful to our business. It is something we'll keep an eye on going forward.

Blaine Heck -- Wells Fargo Securities -- Analyst

Okay, that's helpful and then just second question real quick. Nick, can you talk about your disposition strategy for the year. I appreciate the comments you made, but maybe get into a little bit more detail, if you can, how much of it will be portfolios versus one-off assets? And how much of the disposition goal or guidance is made up of those properties that are leased to Amazon?

Nick Anthony -- Executive Vice President and Chief Investment Officer

Yeah, I would tell you Blaine, most of them will be one-off transactions or maybe a couple of assets, two or three and a small portfolio going forward. And as for as mix, I would say, greater than 50% would probably be Amazon volume with a smaller amount of Midwestern assets mixed in. And in terms of volume, I think it'll be spread out pretty evenly throughout the year.

Blaine Heck -- Wells Fargo Securities -- Analyst

All right. Thanks, guys.

Operator

Thank you. Our next question will come from the line of Sumit Sharma. Please go ahead.

Sumit Sharma -- Morgan Stanley -- Analyst

Hey, good afternoon guys. Thank you for taking my question, and I did get the memo on the dial-in information, so one-zero was the code, I got that right this time. I guess my first question is, do you have any exposure to GameStop? No, that's not my first question. So could you give me more color on what are you seeing in Atlanta. I'm seeing a lot more marketing materials on in Atlanta warehouses that talk about tax incentives, labor shared data etc. and even pretty big books and so it does mean that these assets are not easy to lease, and I know that you guys sold an asset that was vacant this quarter, it's -- I understand it's de minimis and all of that, but I'm just getting a sense of how does all of these things, how does the recent sales perhaps place you in the submarket in terms of exposure? And are you looking to sell more from markets like this?

James B. Connor -- Chairman and Chief Executive Officer

Sure, I'll jump in. And Nick, you can add as well. I think -- Atlanta did see a significant amount of construction in the last couple of years and so it's been one of those, particularly in the Northeast side in the far south that we've had our eye on in terms of, we've talked about submarket level data, but you look back at 2020, Atlanta had a record year in absorption with, so I think 26 million square feet absorbed in 2020.

So we've seen very good activity come back in that market, I wouldn't say -- that it's out of balance on a macro level. Again, I think you won't see us investing in far South Atlanta as you move down 75 or far Northeast. The disposition we had there was a property in a market that we felt was a little soft, and we thought we could take opportunity and get our vacancy mode.

Nick Anthony -- Executive Vice President and Chief Investment Officer

Yeah. I wouldn't read too much into the disposition. We have very little exposure in the far Northeast submarket and we don't have any vacant land there right now, so just a couple of assets left.

Sumit Sharma -- Morgan Stanley -- Analyst

Thank you for that. And then interesting to understanding the level of interest on your asset on Rider Street, I think it's in Perris. It's about 30% of your development by square footage, so intrigued if you have any discussions on early takers, what kind of takers, and more importantly, what sort of free rent would you offer on an asset like this versus let's say a normal sort 500 square -- k square feet or below?

James B. Connor -- Chairman and Chief Executive Officer

Sure. Yeah, we do have very good activity on it and we're very early in the construction process. But as you've seen in any of the write-ups, California, particularly in the large size segment, has been very, very active. We've had great success. We've built I think nine buildings out there and eight of them have been leased before we finished construction in that submarket, so, I think we'll see similar results on this one. In terms of your question on concessions or free rent, there is really not much in terms of concessions in the market today. There might be a little bit on the front end with some deals where a tenant is investing a significant amount of money in this space and needs some fit-out time but that's usually factored in the overall lease term.

Sumit Sharma -- Morgan Stanley -- Analyst

Thank you.

Operator

Thank you. Our next question will come from the line of Dave Rodgers. Please go ahead.

Dave Rodgers -- Robert W. Baird -- Analyst

Yeah, good afternoon. Steve, I was wondering if we could just have a more robust discussion on the tenants that you will terminate in the first quarter -- the event space and other tenants. Could you dive maybe more into the size of that aggregate tenant base, the impact you expect on occupancy downtime and then you mentioned it was good long-term. So what are the leasing spread looks like on something like that. Just trying to get a gauge -- how much that's impacting same store in the overall results for the year.

James B. Connor -- Chairman and Chief Executive Officer

Yes, Dave. I'll start and Steve can add some color. It's about 25 basis points on both a revenue and an occupancy number more in the process thinking there is three or four tenants, none of them individually are significant like say they add up to about 25 basis points. We've been collecting rent on from all of them through security deposits. So I actually don't think it will be coded as bad debt when it's all said and done, it's part of our decreased occupancy guidance, and then probably will be toward the end of the first quarter by the time we get those tenants out and then I'll let Steve talk about the backfill prospects.

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Yeah, Dave. I'll just add that we do have good prospects. Central Florida, Atlanta, DC are the three areas where we've got a couple of smaller size tenants that we're dealing with. We prefer not to go through the eviction process and work to find a backfill and work out on a rearrangement with the tenant to get out of the space. So I think what you'll see us backfill probably half of that space in a fairly short fashion. And I'd say our rent growth on those will be consistent with what we've posted in this past year.

Dave Rodgers -- Robert W. Baird -- Analyst

Great. Then maybe just a follow-up on the occupancy, you finished the year really strong level. Can you talk about short-term leasing, if any, that you experienced in the quarter, how that might impact the roll forward into the first quarter. And just kind of what your experience has been with shorter-term leases and economics?

James B. Connor -- Chairman and Chief Executive Officer

Yeah, I'll start and anybody wants to add in. You asked this question, I think, early in '20 Dave and I think we thought it would start to fall off -- but I think as the pandemic drug out, it was a pretty consistent theme. So our short-term leasing this year was I think 14% or 15% of our overall volume, which is a little higher than what we did in '19 and again I think if you think about the uncertainty in the economy and some of the pace at which change was happening, that's kind of consistent with what you would expect, I would imagine it would normalize more toward that 10% as we get with the vaccine and things starting to level out.

Dave Rodgers -- Robert W. Baird -- Analyst

Okay, great, thanks.

Operator

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

Emmanuel Korchman -- Citigroup -- Analyst

Hey, guys. In terms of the tenant exposure metric, just wondering how much of arm wrestling competition was between Steve and Nick thinking about sort of we have too much exposure to this one single tenant, or this is a tenant that everybody wants to own and so we're going to get premium pricing for the assets. In which way sort of you guys were thinking about the situation?

Nick Anthony -- Executive Vice President and Chief Investment Officer

Well, I'll start and Steve can take away and hopefully won't hit any -- you know our -- and our strategy with tenant diversification, the field is encouraged to do as much business as they possibly can with Amazon. And then we'll take care of the exposure issue at the corporate level through one-off sales or potentially JVs in the future or something like that or whatever. So it is, we are not like not doing business with Amazon to manage our tenant exposure. We do all of this as we can. And then we'll just manage that on a go-forward basis.

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Yeah. And maybe the only thing I would add is I think Amazon, we know them very well, they know us very well. They understand that our requirements for where we want to build, where we want to own the types of assets we want to own have to work for us, as well as for them.

Emmanuel Korchman -- Citigroup -- Analyst

Got it, thanks. And then, Nick, to think about the opportunity set out there to buy stuff, obviously hard -- obviously a lot of capital chasing it. But are sale leasebacks potential opportunity to get to some assets or is that not a market that you guys have in your planning?

Nick Anthony -- Executive Vice President and Chief Investment Officer

No, it definitely is an opportunity for us, we've done a few of those. We did one in Seattle, we just did one in Southern California last quarter. Obviously we're very cognizant of the credit risk and sometimes we can mitigate that credit risk either through below market rents or perhaps some redevelopment opportunity down the road. So we look at them quite often. Obviously the fully marketed stuff -- we are not that competitive on given where pricing is. We feel like a better use of our capital is, some of this like more likely marketed stuff and then obviously our funding our development platform.

Emmanuel Korchman -- Citigroup -- Analyst

Great. Thanks a lot.

Operator

Our next question will come from the line of Michael Carroll. Please go ahead. Michael Carroll. Your line is open.

Michael Carroll -- RBC Capital Markets -- Analyst

Mark, I was hoping you could talk a little bit about the bond issuance that you guys just completed at pretty attractive rates. I mean, could you be more aggressive and maybe refinance some of the near-term debt maturities that have slightly higher interest rates to kind of take advantage of the rate environment right now? Is that something that you guys would pursue?

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

I guess, we took, Michael, but there is obviously a cost associated with that, I think a better use of our bond proceeds right now is the development pipeline quite honestly and we run our line of credit up to $300 million. So this really took that down, and gives us some excess cash to pay for some development early in the year. Our bond maturities are very, very minimal. So we get out to 2023. If we ever -- before we sit on cash for a long period of time, we could look at taking some of those out. Certainly, I think our average borrowing rate on the debt coming out of this has push it to 4% and we just did as the all 175. So there's certainly some upside there -- with make whole costs and things like that, it's -- there is a cost entire response.

Michael Carroll -- RBC Capital Markets -- Analyst

Okay and then just a follow-up on that real quick on the I guess the recent green bond issuance. I guess in the press release you kind of highlighted that you were able to make some eligible green project investments. Can you talk a little bit about those and how meaningful were those costs?

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

Yeah, you know going back and Steve, correct me if I'm wrong here, year and a half ago, we made a commitment that every new development we do is going to be LEED-certified. So really every development. We have started $800 million a year for the last year and a half are all qualifying projects. So it's quite easy for us to allocate this $450 million from this bond to all those eligible projects.

So it's not really a new thing. We've had -- I want to say push in 20 LEED projects before that commitment. But every commit -- every project we started in the last year and a half or so is LEED. So we've got well over $1 billion worth of qualifying projects. So this is just a little piece of that. It sets us up to just continue to do green bonds in the future, quite honestly.

Operator

Thank you. Our next question will come from the line of Caitlin Burrows. Please go ahead.

Caitlin Burrows -- Goldman Sachs -- Analyst

Hi, good afternoon. Maybe just first following up on the comments about the short-term leasing, you mentioned that in 2020 it was maybe 14%, 15% sort of volume and normal would be closer to 10%. Could you just go through, how long are these shorter-term leases that you do. And do you end up getting a premium in pricing? Or what makes that kind of the right decision for you guys in 2020 and going forward?

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

Sure. Yeah. We define short term as anything less than a year. So I would say they probably -- I don't have an average here but they probably average 8 months to 10 months, and typically it's -- a tenant needs to hold over longer than they intended to move out or it's short-term requirement for excess space, because as you imagine a lot of construction projects got delayed in the middle of the year because of the pandemic, so people who had excess supply, they needed to put in inventory into a warehouse. Yeah, you're usually able to get a premium. Obviously, you're not spending any capital. So near term it could help from a cash flow perspective, but it also helps at times with some of our existing clients to serve a solution for them and turn into a long-term deal for us. So there's a lot of different factors that weigh into our decision on it.

Caitlin Burrows -- Goldman Sachs -- Analyst

Got it. And then maybe just one on development in 2020, you guys started about $800 million of development, midpoint guidance for this year is similar. So just could you talk about the runway for this amount of activity to continue both from -- there is the demand side of it, but also just your ability to get the land and complete projects in the target geographies?

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

Sure. We had a very strong finish to 2020 over $420 million of projects. I would say activity starting out this year looks very strong. We've got every project, our whole budget of midpoint guidance of $800 million has got identified projects, we're very prudent about our pre-leasing percentage. So our toughest job is finding and securing build-to-suits to feed that pipeline as well as bring one in the spec projects.

It's getting harder and harder to find land sites and infill markets. Our teams are doing a nice job. But that's a governor not only for us, but for the overall market and I think that's helping to keep it in balance, but hopefully we're sitting here a year from now saying that we did better than we had thought we would do.

Caitlin Burrows -- Goldman Sachs -- Analyst

Okay, thanks.

Operator

Our next question comes from line of Rich Anderson. Please go ahead.

Rich Anderson -- SMBC Nikko Securities -- Analyst

Thanks team. Good afternoon. So, when you are formulating your outlook for 2021, I'm curious how much of an influence was perhaps the prospects of some economic disruption from increased taxes, the pull forward of demand that happened in 2020 and how that may be difficult to replicate in 2021? And how much you kind of kept an eye on the ball a little bit from the standpoint of expectations so that perhaps you can maybe -- not that you sandbag, but that you can maintain at least or beat as you go. So just curious how that -- how all those factors weighed into the outlook for 2021?

James B. Connor -- Chairman and Chief Executive Officer

Yeah, Rich, it's Jim. Let me give you a couple of observations. You know, I think we have not factored into our '21 guidance any real thoughts or outcomes on any of the proposed tax changes. I think it's obviously a little bit too early. I think the consensus is whatever gets done whether it's through budget reconciliation or it gets through both houses, it's probably going to take effect in 2022. So we'll have a little bit more clarity.

I think any conservatism that is baked into our budget for 2021 is just -- is us being conservative given where we are in the economic recovery and where we are in the pandemic, you know, we all had great expectations in the pandemic that so many more of us would be vaccinated by this time and things would be back to normal sometime in the second quarter and I think expectation is it's going to drag on a little bit longer and what last year's last round of stimulus is going to do, and is there going to be another round of stimulus? So I think the prudent course of action was to bake a little conservatism in there, but as I think we've discussed and you see it's consistent with pretty strong performance that we've had in ' 18, '19 and '20 and so we feel very comfortable we're able to achieve it. And as Steve just said a few minutes ago, I hope to be sitting here in April or July on the first or second quarter call, telling you that things are off to a really strong start, we're going to raise guidance.

Rich Anderson -- SMBC Nikko Securities -- Analyst

Okay. And just a curiosity question, are you guys involved at all in the distribution of the vaccines. I'm sure you don't have 70 -- minus 70-degree refrigeration systems or maybe two, but I'm just wondering if that's a short-term benefit at all to your business?

James B. Connor -- Chairman and Chief Executive Officer

We actually do have some really cold freezer space. But no, we are not involved in the vaccine. I think it's full of ice cream and French fries unfortunately.

Rich Anderson -- SMBC Nikko Securities -- Analyst

Sounds good to me. Thanks very much.

James B. Connor -- Chairman and Chief Executive Officer

Sure.

Operator

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

Vikram Malhotra -- Morgan Stanley -- Analyst

Thanks for taking the question. Just maybe building upon that last comment about raising guidance and just kind of hoping to be even a better position midyear. I'm just sort of -- want to get your sense a bit longer term in a post-COVID world, with higher e-commerce penetration and all the other dramatic trends we're hearing about. Where do you see sort of three year, four years sustainable same-store NOI growth even if it's high level at this point, we're not going to hold you to it, but I'm just sort of wondering kind of from a cycle and dramatic perspective what you -- how you view sort of the medium-term outlook from a same-store perspective?

James B. Connor -- Chairman and Chief Executive Officer

Don't kid us, you'll hold me to it, I know you will. Yeah, all kidding aside, I've said at the start of this call and other calls and other presentations, we think the next five years for our sector holds great opportunity. This is not just e-commerce as a result of the pandemic. We do believe that the growth in e-commerce sales further penetration more customers, more product will continue. That is not likely to reverse that trend. We've talked about nearshoring or onshoring of production and manufacturing and that driving more the need for more distribution space.

We've talked about safety stock and the inventory sales ratio as low as it is, major retailers and consumer products companies out in the last part of last year, at the beginning of this year, taking significant amounts of space, reverse logistics handling the returns efficiently from all of this increased e-commerce sales. All of those things along with just increased US consumption is -- create a very, very bright outlook for the next three years to five years.

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

And let me Vik just add some numbers, I can't believe you'd like to ask me bad debt, so I'll just kind of try to cover that right now. In our 4% number for this year. In short, I agree with John, I think the 4% guidance for this year is sort of a baseline to think about as we go forward, could go north of there because in the 4% guidance for this year, we've got 30 basis points of bad debt in that number. Our run rate has been well less than 10 basis points. So we got a little bit more bad debt baked in the number, for some of these tenants like we talked about. But I think that's a higher than normal run rate. In that 4% is about a 2.5% average rent bump number that we've been talking about for a few years now.

Yeah, we're doing all of our new deals at 3%. So that 2.5% continues to grow and then we're very bullish like Jim said on all those factors, we will continue to drive rent growth, close to where we've been, and if you think about it like Nick said 40% of our portfolio right now are in these coastal Tier 1 markets. Yeah, that was about 20% of our role, so that will continue to be a higher piece of the role as we move forward beyond 21 especially. So I think we're very bullish, 4% kind of a good way to think about a baseline, and we'll give -- we'll adjust guidance from time to time based on other factors, but just to give you some insight as to how we came up with 4% this year.

Vikram Malhotra -- Morgan Stanley -- Analyst

That's really helpful. You sort of took my second question. So thanks for that, I can ask you one more, just on the comments about nearshoring or reshoring, any actual evidence or anecdotes you can share with us across any markets in the US, we've heard from some of our own colleagues that cover industrial in Mexico of several examples. But I'm just wondering if you have any specific examples in the US of that phenomenon.

James B. Connor -- Chairman and Chief Executive Officer

Yeah, I would tell you, Steve can add some color, the earliest and the most prevalent ones that we've seen business that we're chasing has been in Texas. So I think that's a logical of more business that was portend perhaps in the far East moving to Mexico. I think a lot of people expected early on with the push from the federal government that medical devices, bio and pharma would be one of the first to make the move. A lot of the stuff that we're seeing is more consumer products. Industrial, automotive related. I don't know, Steve, if you could give some more color.

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Yeah, I would just add, I think we're not as close to the manufacturing side, but some of that has particularly down south and toward the Carolinas, I know there is a number of requirements in the marketplace for that, we've seen it on the auto side, there were some -- a lot of headlines around some plants that closed and ultimately ended up in the reshoring of supplies to the manufacturer that ended up in the US, there is a requirement with Nike that happen in the middle of the country that again as a reshoring of what those issues that used to come from overseas that they are now keeping one product line here and a warehouse in the middle of the country. So, yeah, there is more and more examples every day of that taking place.

Vikram Malhotra -- Morgan Stanley -- Analyst

Great, thank you so much.

Operator

Our next question will come from the line of Mike Mueller. Please go ahead.

Mike Mueller -- J.P. Morgan -- Analyst

Yeah. Hi can you talk about the cap rate expectations for the for sale assets for the dispositions? And for the second question, is there a three-year to five-year target for where you want that Amazon concentration to be?

Nick Anthony -- Executive Vice President and Chief Investment Officer

Hey, Michael. This is Nick. The cap rates are a little bit more dependent on obviously the asset, -- what is the asset, who is the tenant, what the term is, where the rent is to market, so it's a little bit all over the board and by geography and tenant, but I would tell you that it's -- it varies in the low-4s to mid-5s, I would say overall. And then as far as long-term Amazon exposure, we don't have any hard and fast numbers. Obviously we're not overly concerned given their credit profile. But yeah, we probably maintain somewhere around 4% to 8% on a go-forward basis.

Mike Mueller -- J.P. Morgan -- Analyst

Got it. Okay, that's it. Thank you.

Operator

Our next question will come from the line of Brent Dilts. Please go ahead.

Brent Dilts -- UBS -- Analyst

Hey guys, thanks. I'm mostly covered on questions. But I do have one on development guidance. You continue to highlight the strength of the build-to-suit pipeline. So how should we think about spec development this year given that has averaged 40% of your pipeline historically, but market demand is so strong.

James B. Connor -- Chairman and Chief Executive Officer

Well, Brent, let me give you a macro comment and then Steve can give you a little bit of detail. I would tell you, we have 3.7 million square feet of vacant spec in our entire portfolio, a great deal of that is not even completed yet. And for a company of our size, that's too little inventory in the markets strongest today.

So I would tell you, we expect to ramp spec development up. Now having said that, we are still committed to trying to maintain the pre-leasing percentage of that development pipeline at or about 50%. If we're going to dip below, we generally try and tell people what the result is if it's time or something like that, but we need to create some more inventory for ourselves around the system. We did so much leasing in the second half of the year that we need to fill the cupboard so to speak.

Brent Dilts -- UBS -- Analyst

Okay, great, thank you guys.

Operator

Our next question will come from the line of Nicholas Fran [Phonetic]. Please go ahead.

Nicholas Fran -- Analyst

Thank you for taking the question. It seems like there continues to be a lot of new investors coming into the industrial space. Could you maybe provide some color on what you're seeing with the transaction in secured debt markets. And could you possibly see cap rates compressing further from here?

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

I'll cover the secured debt market now and I'll let Nick to rush. I'm probably not the best person to talk to on secured debt market because we are entirely committed to be an unsecured borrower. But I would tell you that rates from what I hear and see out there are still very attractive in the -- call it give or take 3% range depending on the asset quality and geography and tenant make up and then I'll let Nick talk about.

Nick Anthony -- Executive Vice President and Chief Investment Officer

Yeah, yeah. And I think there is low interest rates and a ton of demand from investors, I think you just saw a recent transaction with Exeter where the investor there was not really in industrial and it moved to get more exposure to industrial. I think you're going to see more and more of that and I am not going to say, cap rates can't go any lower anymore because every time I do they do go lower. They are very low right now, but with this increased demand and all this good activity on the e-commerce side, I think that there is still downward pressure on cap rates as we move forward.

Nicholas Fran -- Analyst

All right. That's great. Thank you. That's all I have.

Operator

Our next question comes from line of John Kim. Please go ahead.

John Kim -- BMO Capital Markets -- Analyst

Thank you. Your development margins improved to 30% to 40% this quarter. I realize now you are expecting cap rates -- or you're taking that your assumption by four basis points, but can you provide the breakdown of the margin improvement between higher rents, lower cap rates and costs?

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

I'll start. I don't have the exact number for each of the categories you talk about, but I would tell you that it's really not cap rate driven. The reason the cap rates came down is just moving properties out of pipeline, put them in service, moving new projects into the construction and most of the construction we are doing are in the coastal Tier one markets that have lower cap rates. So it's not really too much related to a methodology change in the cap rate. It's just a mix, I mean in the overall reason that the margins you're coming down, you mentioned that it's low rates -- rates are better than we expected and we're leasing our assets up quicker than our original underwriting.

So when we start a project, we always underwrite 12 months of downtime and that's baked into our-- basis the carry cost of that 12 months and then we are typically not always, but a lot of these projects that are in there are getting lease before they even go on service. So you take a full year of carry cost out of that equation and that drives your margin up pretty quickly. So those are the two main drivers, Kim.

John Kim -- BMO Capital Markets -- Analyst

And on the Amazon asset that you sold during the quarter, can you comment on how deep the buyer pool was versus prior sales? And as a follow-up, can you remind us why you are reducing your Amazon exposure, is that's driven by credit-rating agencies or if there are other reasons, I mean, your highest credit side.

Nick Anthony -- Executive Vice President and Chief Investment Officer

Yeah, so as far as investor-buyer pool depth, it's very deep and it's very diverse, you've got domestic groups, some foreign groups and, yeah, there is no -- there is a plenty of supply, and we get a lot of reverse inquiries as well. You know the Amazon exposure is not driven by the rating agencies per se, it's just a matter of being prudent portfolio managers and maintaining good diversification, both in terms of geography and in terms of your tenant base. That's the real reason we're doing it. We do like Amazon as a tenant, they are obviously a great tenant and we'll continue to do a lot of business with them, but we do want to manage our exposure.

John Kim -- BMO Capital Markets -- Analyst

Great, thanks.

Operator

Our next question will come from line of Tayo Okusanya. Please go ahead.

Tayo Okusanya -- Mizuho Securities -- Analyst

Hi. Yes, good afternoon, everyone. Great quarter, great outlook. The top 20 tenant list. A couple of movement there. A couple of people moved on -- couple of people moved on, HD Supply and a couple of others. Could you just kind of talk a little bit about some of that movement? Is that because some assets were sold or big leases were signed. Just trying to understand some of that movement?

James B. Connor -- Chairman and Chief Executive Officer

It's all of the above. You know you can sell a 1 million square foot building. And that will move somebody from the top 10 to the next tier, you could sell a couple of buildings HD and HD supplies merger moved them up the list. So it's all of the above, we can talk specifically, if you have a question about who's new or who left and why, but there's all the normal reasons you would think.

Tayo Okusanya -- Mizuho Securities -- Analyst

That's -- but it wasn't -- there is no one leaving because they moved out or they went into bankruptcy or just a service...

James B. Connor -- Chairman and Chief Executive Officer

No, no, Tayo, the two big ones to move off the list was HD Supply, but they just moved into the Home Depot line because of the merger. And then the other one that moved out is to CNH and that was part of the Indianapolis assets that we sold.

Tayo Okusanya -- Mizuho Securities -- Analyst

Got you. Okay, that's helpful. And then my second question, again, so many great tailwinds for the overall business right now. specifically. And could you talk about the other side of the equation of kind of what could happen, to kind of impact -- to negatively impact the kind of very strong multi-year story -- of multi-year earnings growth story that we seem to have in front of us in regards to DRA? Like what would keep you -- the proverbial, what keeps you up at night question?

James B. Connor -- Chairman and Chief Executive Officer

And the other 160 million square feet in 20 markets. There's a lot of things that keep you up at night. But I would tell you first and foremost is the supply side of the equation, if you look back at any of the downturns in our sector, the vast majority of them have been driven by oversupply, which is why we keep such very close eye quarter over quarter on the supply demand metrics and where overall vacancy is. As you heard us talk about our strategy is really submarket based, so we tend not to be too concerned about macro numbers, we've talked about some of the soft markets around the country and how little exposure we have in them. So that would be first and foremost. And I think beyond that, it's some of the issues that we have been dealing with, trade tensions that would affect imports and exports, sub-sector of that could be trade tensions or tariffs that affect some of the construction materials, create shortages or spikes in prices, labor always is a -- it's a big one for our clients, but it's one that we watch as well. So those are probably the top three or four that you know that we watch on a regular basis.

Tayo Okusanya -- Mizuho Securities -- Analyst

Got you. All right, thank you.

Operator

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

Ki Bin Kim -- Truist Securities -- Analyst

Thanks, good afternoon, everyone. Can you just provide some details on your $300 million of land bank. I'm just curious about how much development it can support and if the rents are there in those markets to support development economically today?

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Sure. Our $300 million land bank is -- probably needs to be a little higher. We've got about, I'd say, that's about 18 months to 24 months of development supply for us at the pace we've been developing, as I think I indicated if I didn't 80% of the land we have in that bank is in coastal Tier 1 markets. So part of the land is one of the toughest things we do, right? It's very expensive in the markets we want to develop, it's tough to get entitled to work through the process. As I indicated my points on the call, a lot of it is redevelopment which adds -- typically adds environmental and risk like that that we need to weigh through. So yeah, we run with 18 months to 24 months of supply for our development pipeline. And that's a good pace to run at.

James B. Connor -- Chairman and Chief Executive Officer

Yeah, Kin Bin, I would add just a couple of comments. In addition to the roughly $300 million we have, we've got another, I think it's about $50 million or $60 million encumbered land plays. Those are land sites that are covered by leases that will work their way back into the pipeline in the future. But the other thing and Steve is absolutely right about this, the challenges with land today, but every one of the developments that we have slotted in to make up that $800 million budget guidance number, all but one of those is land that we already own. So we're in pretty good shape in terms of the near-term and in our land and being able to move forward with the development that we have in the budget.

Ki Bin Kim -- Truist Securities -- Analyst

And Jim your development pipeline the starts have hovered around $800 million for the past four years, and during that time obviously Duke has definitely grown bigger over that time. So the development as a percent of the Company is a smaller number. I'm curious if that at all comes into the equation when you're thinking about how much development you can do or how much development you want to do? Or is $800 million pretty much the pockets of demand that we see, here is what we're going build and comparing to the size of the Company doesn't really matter. I'm just curious what you're thinking about that?

James B. Connor -- Chairman and Chief Executive Officer

No, that's a factor. I I would tell you a couple of things. It's a very comfortable number that we know that we have the land, the balance sheet and the construction development resources to be able to manage. In 2019, we were just over 1 billion and then before that you'd have to go back, probably 10 years -- two or three years. So we have the ability to flex up and do volumes in excess of that. And if we had, if we find the right opportunities, we'd be happy to do that.

So I think it's a combination of the right opportunities in the marketplace, we've always said if we accelerate development and/or acquisitions, we've got a number of levers that we could pull, in order to fund that, we can take on additional debt, we can tap the equity markets and we can accelerate dispositions. So we've got the capacity. If we can find the right opportunities in the right markets, keep that development pipeline pre-leasing percentage where we want it to b, you'll see us accelerate development.

Ki Bin Kim -- Truist Securities -- Analyst

Great, thank you.

Operator

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

Elvis Rodriguez -- Bank of America -- Analyst

Hi, good afternoon, everyone. This is Elvis on for Jamie. Just a couple of questions. So in the opening remarks or during the Q&A, you mentioned 70% of your portfolio is non-same-store pool. What impact will that have in the future on the 4% baseline that Mark shared?

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

I don't have -- hey Elvis, this is Mark, I don't have the exact number, but the way it generally works is the year it comes into the pool, it's pretty accretive because generally, these are development projects you always have a little bit of free rent on a development project. So you have generally some free rent burn-off from the first year to second year, if that makes sense. By the time it gets into the second year of the pool, then it's just simply whatever the rent bump is. like say, most of the rent bumps we're doing on development projects, depending on the lease term and the tenant is somewhere between 2.5% and 3.5%.

Elvis Rodriguez -- Bank of America -- Analyst

Okay, that's helpful. And then, I have one more occupancy question. So, occupancy is expected declined 60 basis points at the midpoint of your range, but you're only losing 25 basis points from the tenants that are moving out in 1Q. Can you just sort of share where the other 35 basis point move-outs are coming from or is that just being conservative this early on?

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

So Elvis, could you just -- I want to make sure I answer your question right. Could you -- which numbers are you -- we disclosed so many of them...

Elvis Rodriguez -- Bank of America -- Analyst

I know. So you shared a range of 96.6 to 98.6, but you ended the quarter at 98.1 leased. And you mentioned in your opening remarks or in the Q&A that you will lose about 25 basis points from the three or four tenants that you're going to evict.

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

Correct. Okay. So yeah, going from 98.1 down to the 97.6, that's your question. So going down 50 basis points.

Elvis Rodriguez -- Bank of America -- Analyst

Correct. About 50 to 60 correct -- 50 basis points here.

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

Yeah, yeah. So we'll keep in mind the end of the year is one number, the 97.6 as an average number. Okay. So part of it is the 25 to 30 basis points of one tenant. And then the other part of it is most likely do with some the spec space that have been coming online and already some spec space in some of these acquisitions. So the -- if you look at all the components of the decrease is actually a little bit higher than the 50 basis points, but then we're very bullish on demand and backfilling a lot of that space, like I said, so that will get you back up, but part of the problem is, I think you're comparing an end of the year number to an average guidance number for the next year.

Elvis Rodriguez -- Bank of America -- Analyst

All right. That's fair. And since that weighed us along, I'll just ask one more, any early thoughts on Biden's climate change and any particular focus on the -- for the industrial sector there?

James B. Connor -- Chairman and Chief Executive Officer

Well, I can't tell you that you know that we see any of his initial actions or thoughts that are going to directly affect the industrial sector, other than his Buy America program, which is really a continuation of the previous administration and we've talked a little bit about what we think the impact of reshoring or nearshoring will be which is potentially a positive for us.

The other one is the uncertainty about tax changes and whether there is a major overhaul of the tax code or there is some smaller things done through the budget reconciliation. The other thing that obviously would be a concern to us is the elimination or further changes to [Indecipherable] tax free exchanges. And we monitor that situation, the Real Estate Roundtable and NAREIT consistently does a pretty good job working with the administration in both houses on what the impact would that -- that would be and that survived for many, many years. And so our hope is that we continue to survive.

Elvis Rodriguez -- Bank of America -- Analyst

Thanks, guys, great quarter. And good luck on the year.

James B. Connor -- Chairman and Chief Executive Officer

Thanks, Elvis.

Operator

[Operator Instructions] So we have a question from the line of Jamie Feldman. Please go ahead.

James B. Connor -- Chairman and Chief Executive Officer

I think -- operator, I think that was our last question.

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

Yeah, I think there is one more person in queue. I give 10 seconds, otherwise we'll end the call.

Operator

Right. We do have a question from the line of Emmanuel Korchman. Please go ahead.

Michael Bilerman -- Citigroup -- Analyst

Hey, it's Michael Bilerman here with Manny, how are you?

James B. Connor -- Chairman and Chief Executive Officer

Michael?

Michael Bilerman -- Citigroup -- Analyst

Yeah. That's me, can you hear me OK?

James B. Connor -- Chairman and Chief Executive Officer

Yes.

Michael Bilerman -- Citigroup -- Analyst

All right. Just under the wire. So I know you're terminating some of these event tenants that obviously have had their businesses affected by the pandemic, but I want to know are you seeing any green shoots out there. Obviously there's a lot of industries and a lot of tenants that have been negatively impacted by the pandemic, a number of which have industrial space, that has continued to pay because space that they probably couldn't get if they gave it up. So are you having any conversations with like retailers or anything in foodservice and catering or office furniture even like any entertainment based entertainment, like the event stuff that would use industrial where they're sort of looking at the next six months to 12 months, everyone's going to get vaccinated, things are going to reopen and they're going to want to get the space.

You may terminate -- want to terminate those event tenants. But I just wanted to know, are you seeing anything that gives you more, but as another demand driver, right. We all know about all the great things that you talked about earlier about industrial but could we see an even greater impact at a lot of these other businesses start to take it and I just didn't know if there is some color that you can share with us if that's at all happening in your conversations?

James B. Connor -- Chairman and Chief Executive Officer

Yeah, let me start at a high level, Michael. And then Steve can give you a little bit more color. That's actually conversations in a process that has been going on for virtually almost a year now, 10 months, which is the conversation with any of our clients that are in economic distress. We have very open candid conversations, we go overall of the financials and we decide if we think it's worthy of us giving them a short-term rent deferral to help them through this crisis, because we think underlying they have a good solid foundation of the business and as we reported, I think in the second quarter last year we did 85-ish rent deferral agreements with tenants across the country. I think our people have done an outstanding job in terms of making the decisions they did with the people they did because we're getting complete repayment on all those deferrals.

We've had a few people come back to us and say, you know, we thought six months was going to be enough and we need a little bit more time and we're working through that process again, but I don't know of anybody that is the industries that you outlined that can't pay today that we think is going to come back even stronger. I mean clearly convention, tourism, a lot of those businesses have been hugely negatively impacted and will come back someday. But we're not engaged. I don't think at least in individual tenant discussions. Steve, over to you.

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Sure. The only thing I'd add, I think we've seen some tenants pivot the way they're doing business and trying to adapt, and we work with some of those, I think in terms of a bright spot coming out of this, there is certainly been a number of mentioned, but we did -- I don't think we've touched on it on this call but reverse logistics continues to be a field that I think we'll see significant growth from. You think about Arturo, Happy Returns. UPS just acknowledge they were returning 9 million packages a week around the holiday season as we shift toward this digital economy I think that whole customer segment and how that, how those goods enter in back into the supply chain is a big demand driver for our segment.

Michael Bilerman -- Citigroup -- Analyst

Okay. Thanks for taking the time.

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Sure.

Michael Bilerman -- Citigroup -- Analyst

Thank you.

Operator

At this time, I have no further questions in queue.

James B. Connor -- Chairman and Chief Executive Officer

Thanks, Sean. I'd like to thank everyone for joining the call today. We look forward to seeing many of you in person at the various REIT industry conferences throughout the year. Thank you.

Operator

[Operator Closing Remarks]

Duration: 66 minutes

Call participants:

Ron Hubbard -- Investor Relations

James B. Connor -- Chairman and Chief Executive Officer

Steven W. Schnur -- Executive Vice President and Chief Operating Officer

Nick Anthony -- Executive Vice President and Chief Investment Officer

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

Blaine Heck -- Wells Fargo Securities -- Analyst

Sumit Sharma -- Morgan Stanley -- Analyst

Dave Rodgers -- Robert W. Baird -- Analyst

Emmanuel Korchman -- Citigroup -- Analyst

Michael Carroll -- RBC Capital Markets -- Analyst

Caitlin Burrows -- Goldman Sachs -- Analyst

Rich Anderson -- SMBC Nikko Securities -- Analyst

Vikram Malhotra -- Morgan Stanley -- Analyst

Mike Mueller -- J.P. Morgan -- Analyst

Brent Dilts -- UBS -- Analyst

Nicholas Fran -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Tayo Okusanya -- Mizuho Securities -- Analyst

Ki Bin Kim -- Truist Securities -- Analyst

Elvis Rodriguez -- Bank of America -- Analyst

Michael Bilerman -- Citigroup -- Analyst

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