Greetings, and welcome to STAG Industrial's third quarter 2022 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Xiarhos, Vice President of Investor Relations. Thank you, sir. You may begin.
Thank you. Welcome to STAG Industrial's conference call covering the third quarter 2022 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at www.stagindustrial.com under the investor relations section. On today's call, the company's prepared remarks and 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 forecasts of core FFO, same-store NOI, G&A, acquisition and disposition volumes, retention rates and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters.
We encourage all 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 information package available on the company's website. As a reminder, forward-looking statements represent management's estimates as of today. STAG Industrial assumes no obligation to update any forward-looking statements. On today's call, you will hear from Bill Crooker, our Chief Executive Officer, and Matt Pinard, our Chief Financial Officer. Also here with us today is Steve Meggy, our Chief Operating Officer, and Mike Chase, our Chief Investment Officer, who are available to answer questions specific to their area of focus. I'll now turn the call over to Bill.
Thank you, Steve. Good morning, everybody, and welcome to the third quarter earnings call for STAG Industrial. We are pleased to have you join us and look forward to telling you about this quarter's results. STAG continues to have an extremely strong year operationally. These results are flowing to our bottom line Core FFO and cash available for distribution. Recent headlines have pointed to declining industrial fundamentals. Robust construction pipelines and building deliveries are applying upward pressure to availability rates. Despite these trends, the industrial sector continues to benefit from extremely low vacancy relative to history. As a result, we are still forecasting strong market rent growth for both our portfolio and for the market generally. The ongoing capital market volatility continues to weigh on the asset transaction market as sellers continue to seek price stability. Those sellers who are not forced to transact have taken a wait-and-see approach.
Potential acquirers have reset return expectations to reflect current market conditions. A fairly wide bid-ask spread has been the result. We expect attractive opportunities to develop as sellers become motivated by capital needs and upcoming debt maturities. These market dynamics have resulted in a more tempered acquisition and disposition guidance range for the remainder of the year. We now expect to acquire between $460 million and $525 million this year, with acquisition cash cap rates ranging between 5.2% and 5.4%. We expect disposition volume to range between $135 million and $150 million this year. The reduction in disposition guidance was also impacted by the ongoing price discovery. For the year, we expect an aggregate disposition Cash Capitalization Rate range of approximately 5.4%.
STAG was successful in closing attractive opportunities in the third quarter. These opportunities were sourced earlier in the year. We acquired these assets at a 5.4% Cash Capitalization Rate and expect to stabilize them at a 6.6% Cash Capitalization Rate within the next few years. Over the past several years, we have purposely transitioned the platform to generate greater and more sustainable cash flow from our in-place portfolio. Same-store growth has meaningfully accelerated, including increasing our 2022 guidance each quarter this year. We also generate a material amount of retained earnings, which further supplements our cash flow growth profile. We are in position to take advantage of investment opportunities with less reliance on the debt and equity capital markets. We are also seeing great opportunities to grow our cash flows next year.
We have addressed 45% of next year's expected leasing, approximately 6 million sq ft, achieving 27% cash re-leasing spreads. This is a material acceleration of our leasing spreads achieved this year. There's also upward pressure on our weighted average annual contractual rental escalators, as we are signing leases with 3%-4% annual escalators today. With that, I will turn it over to Matt, who will cover our remaining results for the quarter and provide an update to our 2022 guidance.
Thank you, Bill, and good morning, everyone. Core FFO per share was $0.57 for the quarter, an increase of 7.5% as compared to the third quarter of last year. Included in core FFO is a $1.3 million dollar settlement payment associated with a previous tenant, which was received this quarter. Cash available for distribution totaled $87 million for the quarter, an increase of 20.2% as compared to the prior period. Year to date through September thirtieth, we have retained approximately $57 million of free cash flow after dividends paid. These dollars are available for incremental investment opportunities, debt repayment, and other general corporate purposes. Leverage remains at the low end of our range with net debt to run rate adjusted EBITDA equal to 5x.
During the quarter, we commenced 23 leases totaling 2.8 million sq ft, which generated cash and straight-line leasing spreads of 13.6% and 25.1% respectively. Retention was 63% for the quarter and 86.1% when adjusted for instances of minimal downtime and immediate backfills. Cash same-store NOI grew 5.6% for the quarter and 5% year-to-date. Same-store growth continues to be driven by higher cash leasing spreads, shorter downtimes, and increases in same-store occupancy. On July 26th, we refinanced our $150 million Term Loan D, which was scheduled to mature in January 2023, and our $175 million Term Loan E, which was scheduled to mature in January 2024, with new term loans totaling $375 million.
These new term loans mature in January 2028 and bear a fixed interest rate inclusive of interest rate swaps at 3.32%. As a result of this transaction, we have minimal debt maturities through 2024. In addition to the term loan refinance, we upsized our revolving credit facility to a notional amount of $1 billion, which improved our liquidity profile. This represents an increase in revolver capacity of $250 million. On September 1, we fully repaid our legacy CMBS loan, the last material secured debt instrument on our balance sheet. We've made the following updates to our 2022 guidance. Due to the current uncertain macro environment, we've reduced our expectation for acquisition and disposition volume for the remainder of the year.
We have narrowed the range of expected acquisition volume from a range of $700 million-$1.1 billion to a range of $460 million-$525 million. Acquisition cap rates for the year are now expected to range between 5.2% and 5.4%. This range is driven by the material reduction in additional acquisition volume this year and largely reflective of acquisitions made year to date. Disposition volume decreased from a range of $200 million-$300 million to a range of $135 million-$150 million. Given the strength of our portfolio, we have once again raised our cash same-store for guidance to another historical high water mark.
We've increased our cash same-store NOI guidance from a range of 4.25%-4.75% to a range of 5%-5.25%. This increase is driven by the robust demand we're experiencing for our buildings and leasing results that have exceeded our initial expectations. We have reduced our 2022 G&A guidance from a range of $48-$50 million to a range of $47-$48 million. We have narrowed and decreased our leverage guidance to a new range of 5-5.25x net debt to annualized run-rate adjusted EBITDA. As a result of these revised guidance ranges, we now project core FFO per share to be between $2.19 and $2.21, an increase of two cents to the midpoint.
I will now turn it back over to Bill.
Thank you, Matt. Across the STAG platform, our employees are performing at a high level. This includes our leasing and other business operations as well as execution of our ESG initiatives. We recently received an A on our ESG public disclosures from GRESB, the leading evaluator of ESG efforts in the real estate industry. This A is an improvement from our earlier score and reflects our commitment to appropriate sustainability strategies in our operations. I am enormously proud of our entire team and the determination to deliver best in class results on a variety of fronts. We'll now turn it back to the operator for questions.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Our first question is from Craig Mailman at Citi. Please proceed with your question.
Hey, good morning, guys. Matt, maybe on guidance. I know you pointed out the $1.3 million settlement. That seems like about a penny of the beat in 3Q that's maybe non-recurring. Could you just walk through the decel from 3Q to 4Q that's implied in guidance?
Yeah, absolutely. Good morning, Craig. You're right, we benefited from $1.3 million dollar settlement payment this quarter, which had a $0.01 impact. I'm gonna point you to the G&A. The midpoint of our G&A guidance is $47.5 million. That implies an increase in G&A in Q4. This is driven by seasonality. Finally, you know, we also have a modest amount of credit loss budget in Q4 to be prudent. You know, although it's worth noting we've not experienced any credit loss this year through today.
On a per share basis, how much is that credit loss?
About half a penny. It's roughly $500,000.
Okay. All right.
Again, I do wanna reiterate, we haven't experienced any credit loss. It's not associated with any individual tenant. If you recall, at the beginning of the year, we had 40 basis points in credit loss baked into our preliminary budget. We just think, as we sit here today with the volatility, removing all credit loss from our guidance didn't make sense.
Okay. No, no, that's helpful. Just maybe moving on to the transaction market. I know you guys are slowing things down a bit, and you know, you highlighted some of the movement in fundamentals, which are still strong, but clearly there's a little bit of movement in the underlying fundamentals. I'm just kind of curious, as you guys have looked back at kind of cycles in your markets and your asset types, it just seems like kind of A's and B's this cycle have really compressed from a cap rate perspective. I'm just curious, you know, do you think that puts your assets at more risk for kind of spreads to blow out here maybe more than people have thought? Or do you feel like the rent growth that you have baked in maybe insulates you a bit?
Just kind of big picture thoughts.
Yeah. Thanks, Craig. I mean, I think the rent growth certainly insulates us a bit. When we think about our portfolio, we are in a lot of markets, some primary markets, some secondary markets. When we think about how our assets fit within those sub-markets, we're really happy with how we constructed the portfolio, and our assets generally in the markets they operate in outperform those particular markets. We really like our portfolio. We're seeing strong fundamentals. We think the rent growth, as I said, will insulate us from some of that.
It's not just what we're seeing today in the portfolio in terms of what we delivered this quarter, but as we mentioned in the prepared remarks, I mean, leasing 45% of our projected leasing, 6 million sq ft out of approximately 13 million for next year at 27% cash roll over leasing spreads. I mean, that's pretty strong fundamentals, so we're really excited where the portfolio is today.
You know, it seemed like when the gateway markets really got, you know, sub-4, sub-3 in some markets, some of that capital kind of migrated to some of the secondary markets where there was better opportunity. Are you guys still seeing that in the kind of competitive landscape there, or is some of that capital, kind of pulled back a bit?
Yeah. Similar to last quarter, the transaction market is pretty quiet right now, so it's hard for me to say whether it's pulled back a bit or not. I mean, there's just the market in general is in a price discovery mode here. We continue to evaluate transactions and bid on transactions, but at pricing that we view as extremely attractive and on a positive leverage basis. For those, for a number of reasons, the transaction market overall is quiet. It's hard for me to answer that question directly.
I guess maybe you guys are still a little bit active at the disposition market. Are you seeing less NDA signed, less people kind of just showing up to put final bids in? What's your experience been in the last six months relative to maybe a year ago?
Yeah. I mean, that market is also price discovery. We are executing some transactions, but we're not, like a lot of investors in today's market. We're not a distressed seller. Because the market is in price discovery, we did reduce our disposition volume this year, because of the market fundamentals today.
Great. Thank you.
Thanks, Craig.
Our next question comes from Blaine Heck with Wells Fargo. Please proceed with your question.
Great. Thanks. Good morning, Bill, just following up on the transaction market. Just wanted to ask how much you think pricing has changed since the beginning of the year in general. Then more specifically, have you seen any markets or building types or even lease durations that have changed significantly more than others?
Yeah. From the beginning of the year, cap rates have certainly expanded. Last quarter, we mentioned cap rates. We were seeing 25-75 basis points increase in cap rates depending on the characteristics of the transaction, including lease term, mark-to-market, geographies, et cetera. I would say today, we're seeing 50-100 basis points of cap rate expansion from that time period. That's. I mean, the primary driver of that is increased cost of capital for buyers. 10 years at or a little bit north of 4%. As I said, transaction characteristics really drive some of that cap rate expansion.
Okay, that's helpful. Thanks for the additional disclosure on 2023 leasing. I guess, how should we think about that in the context of same-store growth for next year as the cash rent spreads, as you pointed out, seem to be almost double what you guys have done this year? I guess if occupancy holds up and these spreads are consistent, is it feasible that you guys could see an acceleration in same-store growth for next year? Not asking for guidance, but just, you know, directionally.
Yeah. Well, there's a lot of factors and components of same-store. One is average occupancy. We had some average occupancy increases in our same-store pool this year. Another component is credit loss. As Matt said, we have not experienced any credit loss this year. As we budget at the beginning of the years, we always bake in some credit loss. Then, lastly, a big driver is the leasing spreads. As you know, the leasing spreads are almost double what they are this year. That's going to be a key driver. We're not giving same-store guidances today for next year, but when you look at all those components, you can pencil out some pretty strong same-store growth for next year.
Okay, that's helpful. Last one from me. Are there any markets that you guys have a presence in? I know you guys are very geographically diversified, but any markets that are or could be challenged due to oversupply?
I mean, there is one market that, you know, we're seeing some additional supply come online. That's Kansas City market. We have a small amount of exposure to that market. No material near-term lease rolls. But generally, the portfolio is holding up quite well. So if I was to point to any one market, that's probably what I'd point to. But we feel really good about where the portfolio is today.
Great. Thanks, guys.
Our next question comes from Dave Rodgers with Baird. Please proceed with your question.
Good morning. Matt, I wanted to follow up on that line of questioning about 2023. I think that's new and renewal leasing, so kind of the total leasing plan. I think in the third quarter, you had spreads of 19% and 9% for new and renewal. Next year's kind of 27% blended. Do you have that on a breakout basis, so we could kinda even do apples to apples on new versus renewal and see how those are trending?
Yeah, absolutely. You're referencing the 6 million sq ft associated with 2023 at the 27% cash leasing spreads. You know, as you'd expect, about 90% of that leasing is renewal leasing. Given the strength of the industrial market, tenants continue to commit to space well in advance of lease maturity. In terms of leasing spreads, you know, the 90% is roughly 20% on renewal, but the remaining 10%, the new leasing, we have a handful of leases there. Those spreads are in and around 70% to the positive.
All right. Appreciate the added detail there. Maybe on the acquisitions, Bill, maybe this is for you. You still have a pretty large pipeline, I think it was like $2.7 billion that you're underwriting looking at. It looked like in the third quarter you had a little bit more of a value add bent that allowed you to get those returns you're talking about stabilized to about 200 basis points better or so, or 150 better than going in, depending. I guess maybe the question is, do you have a more targeted value add strategy? Is that pipeline full of assets where you can do shorter term lease roll, get to returns faster, still deploy capital, but kind of goose those returns a bit more?
We certainly like the value add transactions. As you noted, we went from a 5.4 stay in place, and we're gonna stabilize that at what we're looking at today is a 6.6, and generally, our market rent growth assumptions have been, we've been outperforming those over the years. We look across all lease terms, look at value add. We've just been a little bit more successful in the value add lately, and we certainly like those assets. The $2.7 billion pipeline, a fair amount of assets. That pipeline, I think, got up to around $4 billion at one point. Historically, we closed about 10% of that pipeline, and it's a dynamic pipeline. Obviously, those numbers are a lot lower today.
Given the uncertainty with the debt capital markets, our underwriting is a little bit more conservative, and we're trying to find the most attractive opportunities of that pipeline.
All right. Thank you, guys.
Thanks, Dave.
Our next question comes from Vince Tibone with Green Street. Please proceed with your question.
Hi, good morning. On the occupancy side, are there any material known move-outs in 2023 we should be aware of? Just, you know, how long do you think occupancy could remain in this remarkable 98%-99% range?
No large move-outs that we should note. When we've had those move-outs in the past, we've communicated to the market well in advance of lease roll. If there is anything material, we will make sure to communicate it to the market. How long can occupancy levels stay where they are? It's a really good question. Demand continues to be there for industrial. There is a fair amount of supply coming online, you know, circa 3.5%-4%. Where that supply is coming online is. It's focused on some key markets, but really spread across the U.S. When we think about our portfolio and where our buildings fit in the respective submarkets, we like how our buildings and our portfolio matches up against the new supply.
New supply will obviously impact occupancy. After that, there's not a lot of new supply starting now. When you think about absorbing that new supply, and then the next stage, we feel like the fundamentals are gonna continue to be really strong. There's incremental demand drivers above just GDP for industrial. E-commerce continues to be a demand driver. We're starting to see and hear from tenants, nearshoring is a demand driver as well as where inventory levels are. Net-net, occupancy level is high. We think it can remain pretty high for at least the near to medium term.
No, thank you. It's all really helpful color. Then just, you know, with leasing spreads accelerating, are you having, you know, profitability with some of your tenants or more pushback around, you know, these much higher cash rents, especially in this environment? I'm curious to see, you know, how those conversations are trending or you think, you know, potentially retention could tick down here as you're pushing rate more successfully.
Yeah. Retention has ticked down this year, but part of the reason is rate, and we've been backfilling those spaces pretty quickly. Our relationships with our tenants, and we refer to them as customers internally, is strong. The buildings that are coming to market or the buildings that are coming up for lease renewal, those buildings are in markets where both sides have a pretty good understanding of where market rent is. So it's not an adverse or contentious or a tough negotiation between us and our customers.
Great. Thank you.
Thank you.
Our next question comes from Michael Mueller with JP Morgan. Please proceed with your question.
Yeah, hi. Two questions here. First, on the 2023 leasing spreads. Matt, do you happen to have the GAAP equivalent for that 27%? The second question is, where do you see your 10-year debt cost today? Just, you know, over a multi-year period, do you think that industrial cap rates can be below your debt costs?
Hey, Mike, thanks for the questions. I don't have the GAAP equivalent on hand. What I can say is the rental escalators associated with that 6 million sq ft that we've done for 2023 in and around the 3% range.
Okay.
Just to kind of give you a sense. In terms of, if we were to originate ten-year debt today, it's in the 6% area. You know, I'd note that we did fund our private placement notes, which were the last time that we originated long-term debt, is 175 basis points cheaper. There's been a pretty material move in the cost of long-term debt. With that being said, I do wanna point us back to the July debt transaction that we did. Part of the rationale and strategic reason for that debt transaction was to take care of near-term maturities. We don't have any material maturities through year-end 2024, and we have minimal balances on the revolver.
Our need for long-term debt as we look at 2023 is effectively 0 as we sit here today.
Mike, I'll take the last one in terms of our thoughts where cap rates can stabilize as it relates to stabilized 10-year debt rates. Over a long period of time, if you're thinking about a lease with a 10-year lease as compared to 10-year debt rates, you're gonna need positive leverage in that situation. A lot of the discussions of negative leverage come with shorter term leases or leases that have a strong mark-to-market opportunity, so effectively stabilize above the cost of debt.
Got it. Okay. That's it. Thank you.
Thanks, Mike.
Our next question comes from Wendy Ma with Evercore. Please proceed with your question.
Hi. Good morning, everyone. Thank you for taking my question. Given your updated guidance for 2020, we know that 4Q acquisition could be minimal, but given that you still have a big acquisition pipeline, should we assume like given the current market uncertainty, should we assume like that you put acquisitions currently on hold, should we assume this will continue through like early 2023? And also under what circumstance will you like consider to revisit your external growth plan? Thanks.
Hey, Wendy. I would just, I'll pass it over to Matt to kind of walk through how we're positioned and to take advantage of some opportunities in the future. Before I do that, as I said, we are in a price discovery phase that's continued through the summer. With bid-ask spreads being so wide, it's tough to forecast when the acquisition market is going to open up, which is why we dropped our acquisition volume with the low end of that range being effectively what we've acquired to date. Maybe, Matt, you can walk through kind of what we have from a capacity and cash flow standpoint.
Absolutely. Good morning, Wendy. You know, we're really well positioned to grow cash flow without incremental capital. The balance sheet's defensively positioned. Leverage is where we want it at the low end of our range. You know, going back to that debt transaction, again, you know, minimal debt maturities and significant amount of liquidity. You know, we don't have to raise long-term debt, and we're not interested in issuing equity in this market. You know, cash flow growth is expected to sustain at these levels. We're retaining between $75 million-$80 million of free cash flow after dividends every year, and we have the ability to recycle capital opportunistically. Long story short, we're very well capitalized to take advantage of investment opportunities that make sense. We anticipate attractive investment opportunities next year, and we aren't necessarily reliant on incremental capital.
Okay, great. Thanks. My second question is, do you have any specific tenants that are on the watch list or you have concerns about?
Hi, Wendy. I'll take this one as well. You know, we read the same headlines, but the headlines are not consistent with what we're experiencing, you know, called boots on the ground across our portfolio. No material increase in our watch list at all. Again, I just wanna reiterate, we have not experienced any credit loss through today for this year.
Okay, great. Thanks.
Our next question comes from James Allen Dillard with Ladenburg Thalmann. Please proceed with your question.
Good morning, guys.
Good morning.
Yeah, just to kind of follow up on previous questions. Is the 5% same-store NOI the new normal? Kinda what you're seeing in in-place rents versus the market. Is that number sustainable kinda on the long run or could it possibly go up even more, just kinda as in the world we live in today?
Yeah. Thanks for the question. I would say, we're really happy where our same-store is coming in this year. There's a lot of components with respect to same-store, including average downtimes, average occupancy, rollover rents, which we've noted and talked about on the call today, being you know taking care of 45% of our rents next year, 27% rollover, as well as tenant credit, and credit loss. We haven't incurred any credit loss this year. Next year, as we budget, we typically budget for some sort of credit loss. As you think about all those components, I mean, we're really happy where things stand today, and we'll give formal same-store guidance in our February call.
Yeah, that's great color. Thank you.
Thank you.
That's it.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Michael Carroll with RBC Capital Markets. Please proceed with your question.
Yeah, thanks. I wanted to touch on the leasing spreads. I mean, with renewal spreads at about 20%, and I believe I heard you correctly saying that the new spreads was about 70%. Can you provide some color on why the new leasing spreads are so high? I guess, what's going on with that number?
Yeah, it was. I mean, there's 5 leases that represented the 70% for next year. Obviously, the weighting of the leasing spreads next year so far are more highly weighted, 90% weighted to renewals. That's normal if you're leasing so far in advance, it's going to be more renewal leasing than new leasing. It's just really a mix of what's rolling in the markets where they're rolling.
With the new spreads at 70%, is there something unique with those buildings or, I guess, what markets are they in? I mean, where there is a lot of downtime, so the prior rent was not representative what the new rent is. It just seems like a fairly, sizable number.
Yeah. It's not a lot of downtime. It's not a lot of downtime. I think they ranged from 70%. There was one that was 30, 70, and a couple in the 80s. It was just strong demand for the warehouses. We had one lease that was expected to roll next year, I think in May and we leased it two months earlier for a 70% roll-up, and that was a big chunk of the space in the new leasing. It really is just strong demand for those buildings.
was there certain markets that those buildings were in? I mean, were they in like kind of some of those coastal California-type markets?
One was in Longmont, 1 was in Portland, and 1 was in Burlington. 2 were in Portland, 1 was in Burlington.
Okay. I think last quarter, Bill, I think in the Q&A, you mentioned that the mark-to-market within your entire portfolio was about 15%. I mean, do you have an updated number now? I mean, is it closer to 20%, kind of reflecting your current renewal spreads? I guess, where is that number standing at today?
I did say that, and I tried to correct it later on in the call. We don't give the mark-to-market on the entire portfolio. I think there's a mix-up with our peers of who gives it and who does not. I personally view the mark-to-market as a number that's helpful and indicative, but not as informative as what's rolling in this year and next year. If you think about where the trend is and what we're experiencing today, the renewal rents are doubling so far for next year. New rents are much higher than they were this year. So certainly an acceleration of where we can mark our leases to market from this year to next year, what we're experiencing right now.
Okay, great. Then just last one for me, I mean, how long do you think we'll be in this price discovery mode? I mean, do we need to see interest rates kind of stabilize before, cap rates for industrial assets start to kind of stabilize? I guess, how long does that typically take?
Yeah. It's a really good question. If you asked me in July, I thought things were gonna stabilize in the fourth quarter, and then we saw that CPI print in September, and then the Fed lifted rates, I think more than what the market expected. Typically there's a 6-9-month lag with a material increase in rates to where it starts to impact cap rates. Part of the lag is you've got ten thirty-one buyers that are in the market that hold the pricing up for a period of time, and then it takes a little bit of time for seller expectations to change. This market is a little different now because a lot of the ten thirty-one buyers are gone. They're already through their capital.
I think sellers are understanding where the market has changed. What I think is gonna open up the market is the Fed saying where they're gonna stop raising rates, and then that will help the banks lend a little bit more and then that should open up the market. I can't give you a timeframe of that, but that's what we're looking for.
Great. That's helpful. Thanks.
Thanks, Mike.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Camille Bonnell, Bank of America. Please proceed with your question.
Good morning. Following up on the leasing side, have the spreads you have been achieving, are they relatively even across your more core versus secondary market locations?
For this year, there's a large number of square feet. We've got about 9 million sq ft. It's pretty representative across the portfolio. Next year, so far it's 6 million. I think it's fair to say it's pretty representative on a portfolio basis.
Okay. I just wanted to ask you about your G&A. For several years, you've been able to improve this and while you scaled the business. This year in particular, there's been big improvement, whether you're looking at it based on NOI or revenues. Can you talk about how you've managed to control these costs as your business moves away from that single tenant exposure and becomes more operationally intensive?
Yeah. We've messaged for years the platform is scalable. We've continued to make improvements there. We also continue to invest in the business and invest in initiatives that are gonna pay dividends in the future. We believe G&A scalability. We can scale it even further as we grow the business and grow the portfolio.
Okay, thank you.
Thank you.
There are no further questions at this time. I would now like to turn the floor back over to Bill Crooker for closing comments.
Just wanna say thank you all for joining the call today. We look forward to seeing you all soon at some of the upcoming conferences. Have a great weekend. Thank you, everyone.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.