First Industrial Realty Trust Inc
NYSE:FR
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
45.42
56.97
|
| Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
First Industrial Realty Trust Inc
You don't have any saved screeners yet
Good morning. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Industrial First Quarter Results Conference Call. All lines have been placed in a mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]
Thank you. Mr. Art Harmon., Vice President of Investor Relations and Marketing. You may begin your conference.
Thanks, Christie. Hello, everybody, and welcome to our call.
Before we discuss our first quarter 2018 results and guidance, let me remind everyone that our call may include forward-looking statements as defined by Federal Securities Laws. These statements are based on management’s expectations, plans and estimates of our prospects.
Today’s statements may be time sensitive and accurate only as of today’s date, Wednesday, April 25, 2018. We assume no obligation to update our statements or the other information we provide.
Actual results may differ materially from our forward-looking statements, and factors which could cause this are described in our 10-K and other SEC filings. You can find a reconciliation of non-GAAP financial measures discussed in today’s call in our supplemental report and our earnings release. The supplement report, earnings release and our SEC filings are available at firstindustrial.com, under the Investors tab.
Our call will begin with remarks by Peter Baccile, our President and Chief Executive Officer; and Scott Musil, our Chief Financial Officer, after which we will open it up for your questions. Also, on our call today are Jojo Yap, our Chief Investment Officer; Peter Schultz, Executive Vice President; Chris Schneider, Senior Vice President of Operations and Bob Walter, Senior Vice President of Capital Markets and Asset Management.
Now, let me turn the call over to Peter.
Thank you, Art, and good morning everyone.
The first quarter of 2018 was a solid start to the year for First Industrial and for the industrial real estate market in general. Our occupancy at quarter end was 97.1%, up 130 basis points from a year ago and only at 20 basis points reduction in the year end, which is less than the typical first quarter dip.
We also delivered cash same-store NOI growth of 6.1% and cash run rate growth of 9.3%, reflecting the outstanding efforts of our team and the strength of our portfolio and the leasing markets.
As of today, we have signed approximately 70% of our 2018 rollovers at a cash run rate change of 7%. So, the rent growth picture for the year is a good one. National statistics for the first quarter continue to evidence a discipline market with good tenant demand. According to CBRE, account [ph] metric advisors preliminary first quarter report net absorption was 42 million square feet versus completions of 35 million square feet.
As we look across our markets, we continue to see strong broad-based demand, tenants are investing for growth and to reconfigure their supply chain in an ever-competitive marketplace. Given good overall demand for space, high market occupancy level and continued discipline with new construction tenants has fewer options.
Our team is focused on maximizing cash flow from all leases, which involves not only pushing rents but maximizing term while minimizing improvements and of course we are always mindful of credit quality.
On the development side, as discussed on our last call, in the first quarter we leased and placed in service, our 243,000 square foot, First Sycamore 215 Logistics Center in the Inland Empire. We currently have $291 million under construction, comprised of 4.2 million square feet with a projected cash yield of 7.2%.
At this cash return, our projected margin on this batch of development is north of 50% based on prevailing market cap rates for comparable leased assets. We plan on delivering each project over the next few quarters and we’re encouraged by the early leasing interest.
Of this group, we will shortly wrap up construction on our six-building project in Chinos [ph] known as The Ranch. We’re pleased to say that we just signed a lease for 100% of the 156,000 square foot building with an international parcel delivery company.
We will also complete our First Joliet Logistics Center in Chicago and our second building at PV303 in Phoenix by the end of the second quarter.
Staying with Phoenix for a moment, we are developing the second building at First Park at PV303 on the hills of our successful needs of our first building there, which serves as UPS' new regional hub.
We like the long-term position of the PV303 Park given a strategic location, which is already attracted several major corporate users and we think the presence of UPS will serve as an attraction for other prominent company.
Earlier this year, we became aware of the opportunity to acquire the remaining entitled industrial site totaling 532 net acres at the Park, inclusive of a site we already had under option. As I said, we love the PV303 sub-market and this site and wanted to capitalize on the opportunity to control its future development.
However, the investment represented significantly outsized allocation to Phoenix given the current size of our portfolio. Not wanting to lose the opportunity, we decided to find the project specific joint venture partner for this site.
We are very pleased to have engaged Diamond Realty, the U.S. real estate arm of Mitsubishi Corporation as our partner. Together, we acquired the site for $49 million in an all cash transaction with our interest at 49%.
The venture we're engaged in speculative development, as well as build-to-suit and one-off land sales to users for their own build-to-suit needs. At approximately $2 per land foot we believe we have a highly competitive basis. Target leverage for each speculative or build-to-suit project is 55% loan to cost and the venture will utilize non-recourse construction loans.
First Industrial will earn development, asset management, property management, disposition and leasing fees and we have the opportunity to earn and promote beyond an established return for the joint venture.
This joint venture will be accounted for under the equity method of accounting. Let me be clear that we don’t view this venture as a new line of business for us but rather a specific means to control that we believe to be the premier distribution part under development in Phoenix as it capitalizes on that opportunity with out-incurring outsize risk in that market.
Lastly, we will start our second building at our I7881 project in Pennsylvania in the coming weeks. We expect to complete this 250,000 square foot building in the first quarter of 2019 at our estimated total investment is $17.5 million. Moving to acquisitions we had an active quarter with $61 million in five buildings plus the land site. Our largest acquisition was a project we call First Park at Ocean Ranch II in San Diego. This is a 225,000 square foot portfolio of three distribution assets that we acquired for $36.7 million at the end of the quarter.
It’s adjacent to the successful three building development project of comparable design and quality that we stabilized in 2016 so we are glad to have a parkway concentration of low finished, distribution assets which are scarce and in high demand in this market.
As with many of our acquisitions this transaction has some complexity, which we used our platform to solve. We have a 67,000 square foot vacancy to lease up and then place rents are below market. We assume that $11.7 million loan at closing with a 4.17% interest rate that matures in 2028. Our pro forma stabilized deals are 5.4%.
Other acquisitions in the quarter included in addition to our Orlando portfolio are 94,000 square footer for $8.7 million as well as the 35,000 square foot purchase in Seattle for $5.6 million. The in-place cap rate on each of these acquisitions was 5.7%.
We also added a Dallas development site as discussed on our last call. Thus far in the second quarter we have closed on a 4.6 acres site in the in-land Empire West in Fontana for $3.3 million, where we can build a low coverage 77,000 square foot building. On the sales side we sold eight buildings and one land site for $42.4 million at a weighted average in-place cap rate of 7%.
Our largest sale was 322,000 square foot portfolio of primarily light industrial and flexes assets in Baltimore for $30 million. As a reminder, our sales target for the year is $100 million to $150 million so we’re off to a good start. We’re very pleased to begin 2018 with strong results and look forward to keeping apprise of our progress toward our goals as we look to create value and drive long term cash flow growth.
With that, I’ll turn it over to Scott.
Thanks, Peter.
Let me start with the overall results for the quarter. Diluted EPS was $0.30 versus $0.19 one year ago. NAREIT funds from operations were $0.38 per fully diluted share compared to $0.36 per share in 1Q 2017. Excluding the severance charge, we discussed in our fourth quarter call, and an impairment charge related to the anticipated sale of an excess land site first quarter 2018 FFO was $0.40 per share. This compares to $0.37 per share in 1Q 2017 before the loss from retirement of debt.
As Peter noted, occupancy was 97.1% down just 20 basis points from the prior quarter and up 130 basis points from a year ago. Regarding leasing volume, approximately 3.2 million square feet of long-term leases commenced during the quarter. Of these 727,000 square feet were new, $2.6 million were renewals and 305,000 square feet were for development or acquisitions with lease up. Tenant retention by square footage was 77%.
Same-store NOI growth on a cash basis, excluding termination fees was 6.1%. This was driven by rental rate dumps, increase in rental rate and leasing and increase in weighted average occupancy and lower free rent.
Lease termination fees totaled $93,000 and including termination fees, cash same-store NOI growth was 5.7%. Cash rental rate were up 9.3% overall with renewals up 9.1% and new leasing up 10.5%. On a straight-line basis, overall rental rates were up 18% with renewals increasing 16.6% and new leasing up 25.6%.
Moving now to the capital side. As disused on our last call, during the first quarter, we close on our private placement of $300 million of senior unsecured notes with the weighted average interest rate of 3.91% and an effective interest of 3.83% reflecting the treasury loss we settled in 4Q.
We paid off $158 million of mortgage loans at a weighted average interest rate of 4.5% in March 1st, bringing our secured debt as a percentage of growth assets ratio below 10% to approximately 8%.
During the quarter, we also receive some good news from the rating agencies. At the end of February, S&P global ratings upgraded our unsecured credit rating to BBB. So, both Fitch and S&P have as rated at BBB flat.
Quickly moving on to a few balance sheet metrics. At the end of 1Q, our net debt plus preferred stock to adjusted EBITDA is 5.3 times and then March 31st, the weighted average maturity of our unsecured notes, term loans and secured financings with 6.5 years with the weighted average interest rate of 4.41%. These figures exclude our credit facility.
Now moving on to our 2018 guidance from our press release last evening. Our main FFO guidance is now $1.53 to $1.63 per share with the midpoint of $1.58. Excluding the severance and the impairment charge, FFO per share guidance is $1.55 to $1.65 with the midpoint of $1.60. This midpoint is unchanged from our fourth quarter call.
The key assumptions for guidance are as follows. Average quarter and occupancy of 96.5% to 97.5%. We increased the midpoint guidance for same-store NOI growth on a cash basis by 25 basis points to 4.5% and near the range to 4% to 5% reflecting our first quarter performance.
Our G&A guidance range is $26 million to $27 million and this guidance range excludes the $1.3 million severance charge recognized in the first quarter.
Guidance includes the anticipated 2018 cost related to our completed and under construction developments at March 31st, and our newly announced start of our second building at our I-78/81 project. And total for the full year 2018, we expect to capitalize about $0.04 per share of interest related to our development.
Our guidance does not reflect the impacted any future sales, acquisition to development starts after this earnings call, other than the 250,000 square feet, second quarter start in Pennsylvania that Peter discuss, they impacted any future debt issuances, debt repurchase or repayments. The impact of any future gains related to the final settlement of two insurance claims from damaged properties. And guidance also excludes any future and every compliant gains or losses, the impact of impairments and the potential issuance of equity.
With that, let me turn it back over to Peter.
Thanks, Scott. 2018 is off to a strong start. We have a great opportunity to deliver value and cash flow growth from maximizing lease economics and through lease up in our development pipeline as we capitalize on the favorable fundamentals and long-term demand drivers in our sector.
With that operator, would you please open it up for questions?
[Operator Instructions] Your first question comes from the line of Ki Bin Kim with SunTrust. Please go ahead.
Thanks. Good morning, guys. First off congratulations on the BBB rating, I know that was a long time coming.
Thank you.
So, first question. The land site in Phoenix is obviously the potential is huge for per square footage and development dollars. Can you just give us more details on what the overall scope of the project looks like, what makes it what are the merits of this location that make it attractive to users' long-term? And some details like JV fees or promote some might be involved.
So, I'll start this and kick it over to Jojo for his input as well. But as you know it's 532 acres. The plan here and the vision that we share with our partners is to sell off some of the sites to other users for their own build-to-suite needs, develop some of the land on inspect as well as do build-to-suite. We like this market, we think we can develop to similar yield as we have already done in that marketplace. And so that's really the long-term plan. Jojo, you want to touch?
Sure. In terms of - Ki Bin in terms of national park, this is the best national park and servicing the Southwest, Phoenix market today. The Southwest Phoenix market today is the largest distribution and logistics submarket in the whole Phoenix area. And has garnered the most amount of that absorption over the last 10 years.
Why this is the best? We feel it's the best, because it has the best access and the least amount of congestion coming off straight from 10 and basically getting off 303, which is the major new highway.
This part that we now control, basically sits between two-fold interchanges which is Indian School Road [ph] in Campbell Back road. So, if you are a distributor, you cannot have better access than to this site servicing the whole Phoenix and the regional markets.
It has also garnered significant amount of blue-chip tenants in companies, UPS being one which leads our 618,000 square feet. Dicks Sporting Goods is there, Ball Corporation is there, REI the fast-growing other companies also there. So, you already see discriminating customers coming in there. Of course, we feel good about the future amenity that UPS will be providing tenants out there as well.
Nothing really more to add. As Peter said in terms of the plan, we will pursue strategic plans sales to users only, and that we will engage and build the suite and speculative development.
And then how about from JV.
And then in terms of fee bearing interest of JV. We like we said we are we cannot disclose the financial terms of the economics where we've disclosed so far of our 49% interest in the JV. We will earn as a management fees, leasing feels, development fees and property management fees. And potential incentive promotes over hurdle that's what we can disclose.
Okay. And as you build out the project, obviously your market exposure to that market will grow. Is there a certain kind of longer-term cap, where you want to limit the Phoenix market to grow as a percent of your portfolio? So maybe you would sell some these assets not as always hold long term?
So, as you know, we're going to own 49% of whatever is completed there by the venture. This is going to be an evolving think Ki Bin. We have 2.7 million square feet in Phoenix today that includes our UPS property as well as the building more about to finish up. This development site if you do the math you'll see and build several million square feet here. We’re unlikely to have that much exposure to Phoenix at the end of the day but again this is a five to seven-year project and that outcome will evolve overtime.
Okay. Thank you.
Your next question comes from the line of Craig Mailman with KeyBanc Capital Market. Please go ahead.
Hey Ron, this is Laura Dixon [ph] here for Craig. Can you discuss the leasing in the development pipeline you had the reset The Ranch this quarter, but can you elaborate on the earlier leasing interest you’re seeing on the rest of the space?
Sure, this is Jojo let’s say with Ranch for example we’re pleased to lease a 155,000 square foot on International Park delivery company. By the end of this quarter we would have completed all of the six buildings there and we are getting towards and inquiries on all of the buildings. And the demand for us is broad based.
You have three PLs, you have light industrial users, you have Omni channel retailers, you have e-commerce companies, you have food and beverage company and we are experiencing this in all the buildings [ph] excluding PVCL 40,000 square feet, first logistic center, the 7881 building, the 7881 split in PA and even in First [ph], which is our 1.4 million square feet in Napa East which we do not expect to complete until the end of this year including the 7881 we’re already getting towards an inquiries on that as well.
And don’t forget Gunrode which is in Houston that is in-site of - very-very little supply for a high quality smaller mid-size project there, 126,000 square feet. We’re getting a lot of inquiries on that as too.
Great. Appreciate the color. Can you also just discuss the construction cost trends in your markets?
Sure. Overall, we arranged from 4% to 5% nationally. The construction cost has increased a little bit more in the Coast and that’s because of subcontractor - increase in subcontractor margins. We’ve seen a little bit more increase in PIs when you go to the smaller projects because of the tightness of labor.
As you know steel has increased a bit on that but overall it hasn’t impacted the overall yield and investment because steel is becoming, is a really smaller component of our construction cost but overall as we invest more also in the Coast what we’re finding is that construction cost is becoming a smaller and smaller part of our total investment as land prices continue to increase.
Great. Thank you.
Your next question comes from the line of Eric Frankel with Green Street Advisors. Please go ahead.
Thank you. Scott can you just clarify the difference between your GAAP and cash same-store NOI growth results?
Well, a difference here primarily is going to have to do with free rent offer during the period and the rental rate bump stream in the new lease compared to the old lease.
That free rent burns off is that related to the developments that are contributed in same-store pool is that just within the operating portfolio?
That should just be in the operating portfolio because the development leasing would not be in the cash rent or rate increase number.
Okay, thank you. And then I’ll jump back in the queue quickly but just regard in the joint venture for the Phoenix development is there any particular reason why you only took a 49% ownership stake do you still have control what the venture does in the future?
Eric, this is Jojo. In terms of control as we made a decision is - have to be decided by both partners equally.
Okay, thanks. I’ll jump back in the queue.
[Operator Instructions] Your next question comes from line of Michael Mueller with JP Morgan. Please go ahead.
Thanks. Just following up on development leasing for the first part 94 building that’s 50% leased can you remind us when rent commenced or is expected to commence for that portion of it that’s leased?
Well, it’s 50% at this point of time, Mike what we have in the model is that the end of second quarter, we will lease up the remaining 50% of that project.
And the tenants that there came in at completion, original completion.
Yeah, so the original tenant came in end of first quarter early first quarter of last year.
Got it, got it, okay. And then Scott on the CapEx front, where do you see CapEx penciling up for 2018 for normal course leasing commissions maintenance?
We think that number could be between $35 million and $37 million for 2018, Mike and again as we continue to sell properties that number may change, but I think that’s a pretty good range at this point of time.
Got it, okay, that’s it. Thanks.
Your next question comes from the line of Dave Rodgers with Baird. Please go ahead.
Hey good morning guys. Maybe for Peter or Scott, you could split this one first. The last you talked a lot about the bad debt it was a benefit to your same-store number, but maybe a bigger question I think retail I don’t what the number is 90 to 100 million square feet of gone dark, there’s been a couple of additional high-profile bankruptcies or liquidation.
Do you have a watchlist that might be growing is it impacting your business at all, have you just been kind of lucky to avoid it? Just kind of a broader thoughts, that’s kind of where bad debts are impacts end of the issue?
So, we don’t have a big exposure to retailers, I guess our biggest exposure to be the best buy and they are actually doing pretty well and has adapted pretty strong e-commerce strategy. Other than that, we don’t really have a big watch list, we try to avoid poor credit and there are deals that we turned down all the time where we are not so high on the credit, so we don’t really have a long list of tenants that we’re keeping in close eye on. Scott if you have anything.
Dave, I would agree, we budgeted in our guidance $500,000 of bad debt expense in 1Q, it actually came in at $88,000, so again the trend continues with lower bad debt expense and as Peter mentioned, really no one that on our watch list at this point at time, and we look at our credit on a monthly basis.
We have an aging report as we go through every single tenant. We have quarterly operations calls as we go over, so we gather pretty good look down the road on potential issues that could come up.
It sounds like a good position to be in. Maybe Scott on the same-store expense increase, I think it was 9% this quarter, just some accruals in there, what hit that and how does that trend the rest of the year?
Well, the primarily the increases Dave are due to real estate taxes and snow removal costs, the taxes you probably see throughout the year, obviously the snow removal, you won’t see the next couple of quarters, maybe we’ll get some in the fourth quarter in 2018. The good news about the expense increases though Dave is that it was almost offset dollar for dollar in an increase in recoverable income, so that was very minimal if any leakage related to the increase in expenses.
Okay, great. That’s helpful. With regard to the development pipeline leasing, how much is in your guidance for revenue NOI FFO, how do you think about it for leasing up the development pipeline this year with the number of completions you have kind of second, third and fourth quarter. Do you have any…
For the developments, the $291 million we have nothing built in other than the 156,000 square foot lease, we just signed. We also have in the remaining lease-up of our First Park 94 building at the second quarter, that’s about a $0.05 of share for the year. So really the only thing that we need to get done for the remainder of 2018 to hit our plan as far as development is concern is to lease up the remaining 50% of our First Park 94 building B project.
Okay, great. Thank you, guys.
Your next question, comes from Zak [ph] with Mizuho Securities. Please go ahead.
Hi, thanks guys. Just looking at lease exploration, is there anything big in 2019 or 2020 that’s a non-renewal at this point?
For 2019 and 2020 typical exposure there about 16% or 17% of our leasing rolling for 2018 and the rest of the year as you heard very little rollover exposure as we are taking care about 70% of rollovers already.
And for 2019 and 2020 it’s not like we wouldn’t here at this point of time in the year if that – if the tenant wasn’t didn’t want to renew the space there will be conversations that we have in the upcoming quarters related to 2019 roll.
All right, perfect. And are you guys seeing any early impact on tax reform anything unexpected that you’ve come across?
No not really, not a big reaction on the part of the tenants. We do see some groups who want to own their properties that could be motivated by the tax changes but by and large no big impact.
All right. Thanks, guys.
[Operator Instructions] Your next question comes from the line of Ki Bin Kim with SunTrust. Please go ahead.
Thanks. So last quarter you guys said, you leased about 60% so use of that were said to expire this year at a 5.9% higher cash rent so since then what was kind of the surprises that led you to pose 9.3% cash rent growth in relative short time?
Kin Bin, this is Chris. If you look forward to the other renewals we’ve taken care for the 2018 rolls that number has signed us about 7% for the year so that number is a little bit better than expected. Then on newly seen just overall, we’ve done a little bit better than we anticipated.
And Kin Bin just remember on a quarterly basis when you see the number it’s the commence leases in the quarter, so when we report that in our press release and in our commentary during this call, it’s not commenced. So, we’re just giving you a little view point to the future there.
Okay. And is there any difference in demand for your different types of configurations for your warehouses or by age?
Ki Bin, its Peter Schultz. I would say not really, we continue to see pretty broad base demand across the country as Peter mentioned in his remarks across base sizes, across geography and great fundamentals and good demand from a broad base of industries, so now it hasn’t really been an age specific. Clearly, there is a lot of demand for new product in a number of markets including where we’re building as Jojo described.
Okay. Thank you again.
Your next question comes from the line of Eric Frankel with Green Street Advisors. Please go ahead.
Thank you for taking my follow-up questions. I know you don’t forecast dispositions or it’s not included in guidance, but can you clarify or estimate how many assets you’re probably going to put on market for sale this year or what you have in the market now?
Well, let me say this we guided $200 million to $250 million of sale it’s a bit of any typical quarter we don’t normally close that’s a high percentage of our sales in the first quarter it just happened more that way. And we feel good about being in that range at year end. I'm not sure I can really add anything to that, Eric.
Okay. And then Scott the first part 94 lease projections is that based on ongoing negotiations or is that just a budget estimate?
We have people looking at the space Eric obviously nothing assigned at this point in time, so I would say it’s probably in between of a forecast and assigned lease. But again, we have that forecast at the end of the second quarter.
Okay.
We don’t have anything assigned at this point in time.
Okay, thanks I kind of like one more final question there is going to be a couple of larger portfolios either they go in the market or they are on the market for sale can you talk about perhaps your appetite for growing your portfolio at a large transaction and what kind of parameters we need to be set for that to occur?
So, we like the strategy that we have in growing in our core markets. We will certainly look at anything that comes to market, but it has to fit into that strategy, so our interest will depend heavily on the makeup of any portfolio that might come to market and how it contributes to our ability to grow in the target markets that we want to grow in.
Okay. Thank you.
[Operator Instructions] There are no further questions at this time. Back to you Peter Baccile.
Thank you, operator and thank you all for participating on our call today. Please feel free to reach out to Scott, Art or me with any follow-up questions, and we look forward to seeing many of you at NAREIT in early June.
This concludes today's conference call. You may now disconnect.