Earnings Call: Q2 2020

Jul 29, 2020

Greetings, and welcome to the STAG Industrial Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt Spinard, Senior Vice President, Investor Relations. Thank you, sir. You may begin. Thank you. Welcome to STAG Industrial's conference call covering the Q2 2020 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at stagindustrial.com under the Investor Relations section. On today's call, the company's prepared remarks and the answers to your questions will contain forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward looking statements include statements relating to earnings trends, G and A amounts, acquisition and disposition volumes, retention rates, debt capacity, dividend rates, industry and economic trends and other matters. We encourage all of our listeners to review the more detailed discussion related to these forward looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non GAAP measures contained in the supplemental informational package, which is available on the company's website. As a reminder, forward looking statements represent management's estimates as of today. Kaggend. 2 assumes no obligation to update any forward looking statements. On today's call, you will hear from Ben Butcher, our Chief Executive Officer and Bill Crooker, our Chief Financial Officer. I will now turn the call over to Ben. Thank you, Mats. Good morning, everybody, and welcome to the Q2 earnings call for STAG Industrial. We are pleased to have you join us and look forward to telling you about our Q2 results. Presenting today, in addition to myself, will be Bill Crooker, our Chief Financial Officer, who will discuss the bulk of the financial and operational data. Also with me today are Steve Mecke, our Chief Operating Officer and Dave King, our Director of Real Estate Operations. They will be available to answer questions specific to their areas of focus. As we enter the month of August, there continue to be more questions than concrete answers around important items that have impact all of our daily lives. Will there be a second wave of COVID-nineteen? If so, how will this impact the reopening of our economy? Will students return to the classroom or be educated virtually? Will employees return to the office or continue to work from home? On top of these unanswered questions, we have the upcoming presidential election in November amid excessive levels of polarization. However, we do know that consumer behavior has been changed by necessity and the acceleration of already in place trends. Many of these changes are likely permanent as we settle into the post COVID new normal. The issue of whether an e commerce presence and associated supply chain are required is no longer a question for most businesses of size and the e commerce presence is required to compete effectively. Not surprisingly in this environment, Amazon continues to be our largest tenant. This dominant e commerce company now accounts for 2.5% of our annualized base revenue. This includes the recent leasing activity we have specifically discussed in conference calls and at conferences. Across our platform, we continue to see the build out of e commerce supply chain as a large and growing demand driver for industrial real estate. Let me now go over the leasing status for the 4 buildings that have been highlighted in our recent communications. Our building in Hampstead, Maryland, a 1,000,000 square foot building to be vacated by Solar Cup in July, has seen a healthy amount of leasing activity over the past 2 months. Our initial expectation was that it would take 12 to 18 months to accomplish the re leasing of this building. Based on current information, we expect to outperform that estimate. Our value add project in Taunton, Massachusetts, a 350,000 square foot building, was acquired last year subject to a short term lease to a known vacate tenant. The building received strong leasing interest from a variety of tenants, mostly for e commerce use. We are happy to report that we have signed an 11 year lease to a dominant e commerce tenant for the full building. In addition, we received a termination fee of over $500,000 from the vacating tenant. The resulting zero downtime and the achieved rent significantly outperformed our budget and expectations for these metrics. Our speculative development in Burlington, New Jersey, a 250,000 square foot building that sits in 1 the strongest strategic distribution markets on the East Coast, exit 6A of the New Jersey Turnpike. We're happy to confirm that we've executed a full building lease to a dominant e commerce tenant, again, outperforming our expectations on both rent and lease up time. Finally, we have determined the optimal path forward for our other building in Burlington, New Jersey, the 1,000,000 square foot building that GSA will vacate in December. You may recall this asset also includes 40 acres of land adjacent to the building with development potential of over 500,000 square feet. After evaluating multiple potential paths, we will be moving forward to release the existing building and to separately continue to pursue permitting of the development parcel. This decision was driven by the continued strong leasing velocity in the Exit 6A submarket. This strength has been evidenced by the multiple discussions we're having with potential full built in users. We look forward to updating everybody with details on both components in the near future. In short, on these assets and across the portfolio, some very solid performance by our experienced and capable asset management team. With that, I'll turn it over to Bill, who will discuss our 2nd quarter operational results and updates to our 2020 guidance. Thank you, Ben. Good morning, everyone. Core FFO was $0.47 for the quarter, an increase of 4.4% compared to the Q2 of 2019. Leverage remains at the low end of our guidance at quarter end, and we expect leverage to normalize as we increase our acquisition activity moving into the second half of the year. Net debt to run rate adjusted EBITDA is 4.3x prior to factoring in the outside forward equity proceeds related to our January equity offering and 3.9x when those proceeds are included. Acquisition volume for the 2nd quarter totaled $11,900,000 with stabilized cash and straight line cap rates of 6.4% and 6.8%, respectively. Year to date, our acquisitions totaled $131,300,000 As stated in our guidance, we expect acquisition volume to increase in the second half of the year. For the quarter, 2,700,000 square feet of operating leasing activity commenced with cash and straight line re leasing spreads of 1.6% and 9 point 6%, respectively. Note that the re leasing spreads within our disclosure exclude the impact of short term leasing. Additionally, we leased 482,000 square feet of value add buildings during the quarter. Retention was 100% for the quarter and is 95% for the year. Same store cash NOI grew by 2.1% for the quarter and 2.3% year to date, largely driven by a retention rate of 95%. For the quarter, we collected 98% of our base rental billings. Of the remaining 2% of uncollected rent, 1.4% has been deferred with repayment generally expected by year end. As of July 28, we have collected 90.9% of our July base rental billings, An additional 4.6% of July base rental billings yet to be received relates to investment grade tenants and tenants who pay in arrears. We expect these tenants to remit payments within the next 2 weeks, bringing the total to 95.5%. The timing of these expected payments is consistent with past practices. 2.8% of the remaining 4.5% of uncollected base rental billings has been deferred. The remaining uncollected base rental billings is associated with smaller tenants that have been impacted by the pandemic. To date, we have received rent relief requests totaling 5.3 percent of ABR or $21,100,000 Of the $21,100,000 of rent relief requested, we have granted rent relief of approximately $2,100,000 equal to 52 basis points of ABR. The general framework includes a period of rent deferral as opposed to abatement with the deferred rent amounts repaid within the next 12 months. As of today, we have 6 tenants on cash basis accounting given their financial situation and our view of their ability to pay due to the economic climate. We incurred a total of $1,500,000 of credit loss related to these 6 tenants. Approximately $900,000 of that loss related to the write off of straight line rent and approximately $600,000 of that loss relates to cash credit loss. The cash credit loss equates to 20 basis points of our current same store cash NOI credit loss guidance. These specific tenants account for approximately $4,200,000 of ABR. Our credit loss guidance for 2020 includes the impact related to these tenants. Moving to the capital market activity. On April 17, we refinanced Term 1s B and C, totaling $300,000,000 which were scheduled to mature this September March of next year. DAG, at its sole discretion, has the option to execute 2 1 year extension periods, which if both exercised would result in an outside maturity date in April of 2023. The term loan is fully swapped with an all in fixed rate of 1.78 percent through April 2023. As a result of this transaction, we have no debt maturing until March 2022 if we will exercise our rights to extend. We have updated guidance based on our view of the remainder of 2020. We acknowledge the continued uncertainty related to the health of the economy and will continue to update the market as warranted. Components of our updated 2020 guidance are as follows. We maintain the expected acquisition volume of between $300,000,000 $600,000,000 for 2020. We continue to expect all acquisitions to be stabilized assets with an expected cash cap rate range of 6.25 percent to 6.75%. Due to the expectation we will hold and not sell the GSA building in Burlington, New Jersey, We have reduced our disposition volume range to between $100,000,000 $150,000,000 We continue to expect retention to be within a range of 60% 70%. The drivers for the lower than historical retention include the known nonretentions with Solo Cup and GSA. We expect the 2020 annual same store pool's cash NOI growth to be between 0 100 basis points for the year. This range includes a credit loss range of 100 to 150 basis points. We continue to expect G and A to be between $39,000,000 $41,000,000 for the year. We expect to run leverage between 4.5x and 5.25x for the year with leverage increasing from the low end as we acquire more in the second half of the year. Capital expenditures per average square foot is still expected to be between $0.27 $0.31 for the year, and we continue to expect a range of core FFO per share between $1.80 $1.88 for the year. I will now turn it back over to Ben. Thank you, Bill. In closing, let me touch on 2 topics that have been at the forefront of national attention recently, the pandemic and the persistent issues of inequality in our society. Our office has been open for almost 2 months on a voluntary basis. However, for the most part, our employees have continued to work from home and work collaboratively and effectively. We are confident that the procedures we have in place will allow a safe return for all employees to our office when conditions permit. We've always been proud that STAG is a place of opportunity and that we are a company that always tries to on the side of doing the right thing. We have bad causes we believe in with both direct financial support and with paid volunteer hours. However, recent events have caused us to reflect and made us realize that we could and should do more, more as a company and for many of us, more as individuals. Some of the things we're doing as a company. We have significantly increased our annual budget for financial support and social causes. We are also expanding the opportunity for our employees to engage in volunteer work in the community. We will be providing educational opportunities for our employees to further awareness and understandings on these subjects. Our hiring practices are being modified to ensure a broader and more diverse applicant pool for both full time and intern hiring. We realize that as one small company, there's only so much we can do. We hope that the steps outlined above and others we are taking will add to the progress of making both our community and society more equitable and just. Thank you for your time this morning. And I'll turn it back to the operator for questions. Thank you. We will now be conducting a question and answer Thank you. Our first question comes from the line of Manny Korchman with Citi. Please proceed with your question. Good morning. This is Katie McConnell on for Manny. So just based on the high level of retention achieved year to date, can you walk us through the downside factored into your unchanged guidance range? And what degree of confidence do you have in retention for 3Q? So the retention numbers for the remainder of the year are down in large part because of the 2 known vacates that will occur in the 3rd Q4. The GSA building in Burlington, New Jersey and the Solo Cup building in Hampstead, Maryland. We're very confident of our operations and execution on those buildings, but those are the big factors that will result in lower retention over the remainder of the year. Okay, got it. And then can you discuss the percentage of leases that were signed on a short term basis this quarter and economic to those deals? Yes, I'll give you, I mean, obviously in a downturn or recession, you'll always see more short term leasing activity. I'll ask Dave to provide a little more detail. Anecdotally, there are some tenants who were looking to move to other buildings, build to suits, etcetera, that were delayed by COVID related work stoppages. So we benefited from that in terms of short term renewals. Our next question comes from the line of Sheila McGrath with Evercore. Please proceed with your question. Yes. Good morning. The value add project that you mentioned in Massachusetts and also the development project in New Jersey, the speculative one appeared to have had good outcomes. Any insights on how the yield on cost on these projects will shake out and how that compares to your typical acquisition yields? Well, the yield on cost is a little easier on the development project because just one product and it all goes in at one time. So the yield on cost there was, I would say, dramatically higher than expectations, near double digits straight yield on cost. So, a very successful project. The yield on cost on the baton facility is a little harder too because you're buying a building and then applying additional cost to it. So it gets split out between the 2, but certainly met our investment thresholds by actually by quite a wide margin. Those are both buildings that we expect to enjoy very solid cash flows from a long time for a long period of time. Okay, great. And then on acquisition guidance, that remains unchanged year to date you're at about $131,000,000 That would imply a very active 3rd and 4th quarter. Just wondering if the pipeline is shaping up to with a lot more acquisitions to occur pretty soon? So, Sheila, as you probably recall, the 3rd, Q4 are almost always our biggest quarters in normal times. So there's a little bit of that, but also we have seen our pipeline reduced during the first onset of the pandemic, but it's now filling back up again and we're very confident of the because of the fact that the pipeline is $1,800,000,000 today, it's still made up of a lot of individual assets and we're bidding on more assets. I think we're pretty confident of our ability to execute on Bill. Do you something to add to that or? Yes. In addition to that, our comp pipeline sits at $1,800,000,000 and we expect that to increase with more assets coming to market in August September. Sellers did pull some of their portfolios and larger assets during the onset and those are expected to come back to the market in the Q3. And do you think the forward is enough equity that to fund your current expectations or do you think it would require additional equity? This year, it's not our expectation that we'll be back in the equity markets given our current guidance. Leverage, as I said in the prepared remarks, leverage sits at 3.9 times when including the forward equity. So sufficient capital to acquire even the high end of our acquisition guidance and without hitting the equity markets. Okay, great. Thank you. Thanks, Joe. Thank you, Joe. Our next question comes from the line of James Feldman with Bank of America Lynch. Please proceed with your question. Good morning, guys. This is Elvis on for Jamie. Just touching upon Sheila's question there on funding and you're highlighting that potentially you'll do some more equity in the future. Can you talk about how much of the acquisition pipeline you think you can do? Or can you end up at the higher end of that range at the end of this year? Or is it just not enough product? Tal, the simple math is no, we're not limited by capital in our acquisitions. The simple math is we can do about we can stay inside the new guidance of upper end of the new guidance is 5.25 times for this year. Longer term, our guidance is as high as 6 times or 5.75 times. But we can stay inside that 5.25 times and still acquire $600,000,000 of assets over the remainder of the year from where we are today and that would be well above our total guidance for acquisitions for the year. That will be closer to $0.75 billion for the year. Got it. And is there anything that you're seeing that gives you sort of more confidence that maybe you could do more than what you're stating? Obviously, your stock price is back up at a level that makes it sort of accretive to continue to do these deals. So just trying to get an understanding of what can change here in the back half of the year given the strong industrial front. I think one of the things that we can look at the world and at the our little part of the world and say there's a lot of uncertainty. So developing a great degree of certainty, these are normal times. But as Bill has mentioned, we are expecting and have heard from numerous brokerage shops that the expectations are that assets that have been held in the market didn't come to market for whatever reason are going to start coming back in August, September. So we expect the supply to be enhanced. The pipeline that we have today will certainly, we believe strongly will get into our guidance numbers. But as that supply of assets to for us to evaluate comes back to market, we believe that that will allow us to move through the into the further into the range of our guidance. Okay. And just one more for me. So I know we've talked about this probably a little bit more offline than online, but just the benefits that you're starting to see in your portfolio or any early indication or signs of reshoring and tenants starting to talk about using your assets or markets to bring some manufacturing back to the U. S? Yes. I mean, I think it's still pretty early days on that. I think the big question mark on reassuring is at what cost. So I think there's I don't think the U. S. Consumer is going to agree to pay 2x or 3x times simply because it says made in USA on it. So I think the history has been reassuring, it's something that happens, but it happens gradually. And throw up a plant in a couple of days. There's a lot of planning and obviously development time is required to do that. So the process by which reshoring occurs is was ongoing before the pandemic, perhaps will be accelerated by the pandemic, almost certainly will be, but it still takes a fair amount of time. I mean, for instance, a lot of talk about bringing pharma back onshore. I've heard people talk about the lead time to develop have a pharma manufacturing plant could be 2 to 3 years. So it's not an instantaneous thing. Our assets are well positioned, they're around population centers, so they're well positioned to benefit from that when it happens, as well as being in traditional production areas like Wisconsin. Great. That's very helpful. Thanks, guys. Our next question comes from the line of Brendan Finn with Wells Fargo. Please proceed with your question. Hey guys, good morning. I guess, Ben, in your opening remarks, you talked a lot about e commerce. So I guess, can you just comment maybe on the trajectory of demand from e commerce tenants? It seemed like initially we had a pretty big surge in demand. But has that I guess, leasing velocity and demand from these types of tenants leveled off as we've gotten into later Q2 and early Q3? I mean, I think at a very high level, there's an expectation that maybe it will slow down. There was such a mad rush as the pandemic came on, but I think we're still seeing a lot of people position themselves for the further increases in e commerce activity that will ensue as we move hopefully out of the pandemic era, but certainly as we continue through the pandemic era. Bill, I'm assuming. Dave, do you have any other thoughts? I would say initially the e commerce share was very high because most other participants had receded from the market. As they've come back, the share has gone down. We do see broad based demand and I would say pretty close to normal demand in our vacancies and near term roles and it's across a wide variety of industries. Okay. Thanks, guys. And then just on deferrals, it looks like deferred rents picked up a little bit in July relative to your average monthly deferral rate for Q2. So I guess, is there any trends or can you talk about what types of tenants are now maybe receiving deferred rents that were not in Q2? Hey, Brendan, Bill. The tenants that received deferred rent in Q2 in July, it's the same population of tenants. The increase in July is really driven by some of those tenants paying April May rent and then agreeing to deferrals later in the quarter. I think Bill is correct. We haven't had any new deferral requests for some time or a very limited amount of deferral requests for some time. The total number of tenants who receive deferrals, Brennan, is about 8 is 8 tenants today. Got you. All right. Thanks, guys. Our next question comes from the line of Michael Carroll with RBC. Please proceed with your question. Yes, thanks. Ben, can you provide some more color on some of those larger blocks of available space that you highlighted? I guess, specifically, if you could start with Solo Cup. I know a few months ago, it sounded like you had a lot of tenants that are looking at that space. I mean, how should we think about a lease being signed? Is that could that occur relatively soon? And we can see that lease actually commenced before year end? I guess, what's the timing expectations there? So I mean without going too deeply into ongoing negotiations, we're very, very confident that we'll have a lease in place this year. Okay. And then I guess similarly with the GSA property, I guess can you talk a little bit about the it seems like you have a full several full building users. I know usually it takes about 12 months so that you underwrite 12 months of downtime. But since you started earlier, can we assume that those leases could occur much sooner than that typical 12 month downtime? Yes. I mean, there's a lot of activity around that building. We're very confident we'll get something done in a shorter timeframe than that. Great. And then can you remind us where in place rents are relative to market on that GSA property? Yes, obviously with the variability about lease term and TI and other things, pretty close to market, maybe slightly pretty classically, pretty close to market. Okay, great. And then the land parcel that's adjacent to that, what's your expectations there? I mean, I guess, I don't know if I missed this on prepared remarks. Do you plan on building or developing an asset on that parcel? And if so, would you pursue that on a spec basis? Well, our plan is to further the permitting to increase the viable land parcel and then evaluate whether we'll sell it to somebody else to build a dream or obviously we had a very good experience not very far away in terms of return on development, but we will continue to evaluate that opportunity. Important thing is to move it forward to get in a position where we or somebody else can build on it. So the market right now is reasonably full of activity on a speculative basis. So we're pretty sure that someone is going to want to build on it, whether it's us or somebody else. Okay. And then how long does it take for the entitlement process? I mean, are you able to start that right now? Or does the GSA lease kind of make it a little bit more difficult until that lease expires? We're able to start the process and indeed have started the process of permitting. The process is ongoing. Okay. And then lastly for me is, can you talk a little bit about the lease commencements at the Burlington site and the Massachusetts property? When does rent actually start hitting the P and L? Those are hitting the P and L already, Mike, just because I think one of them has 1 month of free rent, but that's coming in through straight line. So that's starting to hit in the P and L. The Taunton one was in Q2 and the Burlington one started in Q3. Okay, great. Thank you. You're welcome. Our next question comes from the line of Dave Rodgers with Baird. Please proceed with your question. Yes, good morning. I wanted to follow-up on something. I think Dave King had said earlier with respect to doing short term renewals for tenants that had planned to move out to build the suit. I mean, is that in kind of the solo cut nature or are these additional move outs we should be expecting 6 months down the road and in their tenant retention or is this an early 'twenty one where we'll see kind of a higher overall proportion of move outs as you push these leases out a little bit? Any more color would be helpful. That was just in reference to a couple of instances where we had tenants extend for a year because their projects were not ready and they're small 200,000, 150,000 foot leases. And there is also activity generally, I know we haven't seen as much of it, but there's also activity generally in light of the sort of the uncertainty with tenants doing shorter leases. We've actually one of the surprises I think to us operationally has been how much demand there has been for longer term leases in a recession. And again, typical recession playbook is everybody does the shorter leases, but we've seen pretty strong demand for longer leases as evidence of some of our activity. How would you, I guess, maybe in that same vein, Ben, how would you discuss kind of the rent negotiations with tenants and whether what's happened to market rates and spreads and concessions overall just on the transactions that you've been negotiating? Are we at pre COVID levels or have things taken a little bit of a pause in terms of growth? What have you seen in your markets? I think that there was certainly a pause at the outset, but I don't think there's been any great diminution. The trend line maybe flattened a little, but I don't think it certainly didn't turn down. Yes, I think the tenants are approaching this as a long term lease long term situation that might have a short term disruption. So I think pricing or rent levels haven't really moved much. The national absorption and supply numbers, supply and demand numbers are both supply and demand are forecast to be down. We have not seen evidence of that in the current leasing market. Maybe they'll be both be down in a level where it doesn't really impact pricing. Okay. And then maybe just last question for me with regard to acquisitions. Have you seen a change in pricing? It looks like your cap rate expectations largely similar to what they were before, but wondering if the product you're looking at today, if that's coming to market is less risky and that's keeping prices a little bit tighter or if you've seen any, again, diminution in pricing in terms of the bid ask spread for what you're looking to acquire here in the second half of the year? Yes, Dave. I mean, the bid ask spread is pretty narrow in industrial. We were able the 2 deals we closed in June, we were able to get some price deducts from pre COVID pricing, one of them as much as 2.6%. But we're expecting very similar pricings with a slight maybe discount going forward, but nothing material. I think your question as to RIC, I think the assets that continue to track along during the early parts of the pandemic are probably the lower risk assets, those things sort of sailed through and didn't have a whole lot of price adjustment. The assets we expect to come to market in August September probably are a wider range or different risk profiles than perhaps you saw in April March May. And your appetite been for those riskier assets at this point, it seems like that would be a good use of capital for you guys, but your thoughts? Yes. I mean, to not to beat the I mean, we're looking for overlays. We're looking to be paid, overpaid for the risks that we pay. So we're we have guardrails in there, so we're not taking too much risk, but we're certainly looking to be paid for risk. I mean, we're happy to buy a 10 year Amazon lease in Ontario, California, but we'd want a fixed cap. Well, probably not a fixed cap, but we certainly want to be paid more than what the market is for an asset like that. All right. Sure. Makes sense. Thank you. Our next question comes from the line of Mike Mueller with JPMorgan. Please proceed with your question. Hi. Just a quick one. I was wondering, can you give us a little color on the negative leasing spreads on the new leases during the quarter? Sure. I guess overall, the theme is that we the new leases are about 11.5 years in term and the comparable prior leases were about 3.5 years. So in the trade off between term and rate, which we've chosen the term and taken a bit of a hit on rate. And then in one instance, we had effectively an over market deal that benefited from a tax abatement that rolled off as anticipated and as we underwrote, and that accounts for about half of the delta in the lower new rents. Our next question comes from the line of John Massocca with Ladenburg Thalmann. Please proceed with your question. Good morning. Hey, John. Just touching on acquisitions and just given that we you guys didn't close anything subsequent to quarter end as of this point, I mean, how should we kind of think about cadence over the remainder of the year? Should it be I know 4Q is always your most robust quarter in terms of acquisitions, but it should be almost all weighted towards 4Q? Or would you kind of expect the kind of the pipeline you've been able to put in place since things reopened to kind of come to fruition here in the next 2 months or so? Yes. Expect some acquisitions to close at the end of Q3 and the bulk of the remaining acquisitions to close in Q4, the 2 that we did close in June, those were deals we had under either price agreement or contract and we put those deals on hold through middle of May and then we revisited those deals in the middle of May. We're able to close those in June. So, as more transactions started to come to market in May, we started to underwrite, evaluate and it takes at least 60 days to close those. So end of Q3 and into Q4. Okay, understood. And then, sorry if I missed this in the prepared remarks, but assuming there's no resumption of rent from the 6 leases that went to cash accounting, what kind of recovery are you expecting there? That's all baked into our credit loss guidance, our FFO guidance and our same store guidance for the year. But in terms of just either recovery on cost or new leases, I mean, what kind of Right now, it's close to 0 for this year. John, it's just a matter of getting those tenants whether they vacate the space and we can get those spaces back and release those, but for the remainder of the year, it's close to 0. Okay. That's it for me. Thank you very much. You're welcome. Our next question comes from the line of Bill Crow with Raymond James. Ben, stepping outside STAG for a second and looking big picture, how vital is new absorption from Amazon? And then how much attention do you pay to the second derivative of their leasing activity annually? Amazon obviously has been a huge, huge absorber of space this year and certainly at the end of last year. Their appetite is it can't I don't believe it can continue with the pace that it's at today. I've heard $1,500,000 a week or maybe it's a 1,500,000 a day, I don't know, it's some very large number. So the second derivative of Amazon's demand is certainly half to it has to turn down and they can't continue to absorb at that level forever. But they're not the only engine in town for e commerce, They're the most aggressive. But we're seeing other tenants with e commerce demand as part of the interest we've had in some of our big buildings and some of our smaller buildings. So although that's certainly something to watch and they're very important tenant, they're not the only game in town. Okay. That's all I had. Thank you. Thank you, Bill. Our next question comes from the line of Chris Lucas with Capital One. Please proceed with your question. Hey, good morning guys. Hey, Bill, just a couple of housekeeping questions for you. On the lease termination fee income, what was that specifically for the quarter? The cash or the GAAP side of it, the total termination income was $1,000,000 of which $740,000 was cash. Okay. And then you kind of lumped a couple of topics together in the adjusted EBITDA page. The solar income, is that a recurring stream or is that a one off stream? That's a recurring for GAAP purposes. It's amortized over the life of the contract and then for cash, it's one time. So for CAD purposes, there's about $400,000 included in CAD this quarter related to solar income and about $18,000 included in core FFO. So you can see how long those leases are that we're amortizing net income over. We have no further questions at this time. Mr. Butcher, I would now like to turn the floor back over to you for closing comments. Thank you, operator. So thank you all for joining us this morning. STAGS is in a really good place where as we've talked about our balance sheet is in great position, our employees are engaged and they're looking at a lot of opportunity, our asset managers are accomplishing great things on the leasing front. Despite the fact we've said in pretty unsettled times, both from the pandemic and the political turmoil, the industrial sector is well positioned, its value is extremely well positioned within the industrial sector. We're looking forward to a great second half of the year and to success beyond that. Thank you again. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time.