STAG Industrial, Inc. Q3 FY2025 Earnings Call

Greetings, and welcome to the STAG Industrial Third Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Steve Xiarhos, Vice President, Investor Relations. Thank you. You may begin.

Thank you. Welcome to STAG Industrial's conference call covering the third quarter 2025 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 forecast 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 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'll hear from Bill Crooker, our Chief Executive Officer; and Matts Pinard, our Chief Financial Officer. Also here with us today are Mike Chase, our Chief Investment Officer; and Steve Kimball, our Chief Operating Officer, who are available to answer questions specific to their areas 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're pleased to have you join us and look forward to telling you about the third quarter 2025 results. Our year-to-date results continue to exceed internal projections. The outperformance year-to-date has allowed us to increase our core FFO guidance for the year to a range of $2.52 to $2.54 per share, a $0.03 increase at the midpoint. Industrial fundamentals remain stable and are improving. Leasing demand is improving with increased tours and RFPs. However, lease gestation periods remain elongated. The supply pipeline continues to decrease, and we are forecasting further decreases next year. While we expect national vacancy rates to be around 7% for the next 2 to 3 quarters, we anticipate those will improve materially in the back half of next year. Based on this, we believe our market rent growth for next year to be similar to the 2% market rent growth expected for 2025. We have accomplished 99% of our forecasted leasing for 2025 at levels consistent with our initial guidance, including cash leasing spreads of approximately 24%. Turning to next year, 2026 represents a record amount of square footage expiring in a calendar year for our company. I'm pleased to report that we've addressed approximately 52% of the operating portfolio square feet we expect to lease in 2026. This compares to 38% at the same time last year. We expect cash leasing spreads to be between 18% and 20% for 2026. This leasing success is a testament to the quality of our portfolio and a welcome sign of tenant engagement and commitment to their space. We've seen an increase in acquisition opportunities in the market, specifically with sellers eager to close by year-end. Acquisition volume for the third quarter totaled $101.5 million. This consisted of 2 buildings with cash and straight-line cap rates of 6.6% and 7.2%, respectively. Subsequent to quarter-end, we acquired one building for $49.2 million with a 6.5% cash cap rate. In addition to the $212 million of stabilized acquisitions we have closed so far this year, we have $153 million more under agreement slated to close before year-end. In terms of our development platform, we have 3.4 million square feet of development activity or recent completions across 13 buildings as of the end of Q3. 52% of this 3.4 million square feet are completed developments. These completed developments are 83% leased as of September 30. This includes a full building lease totaling 244,000 square feet, which commenced in Greer, South Carolina on September 1, with 3.75% annual rent escalations. Subsequent to quarter-end, we leased the remaining 91,000 square feet in our Nashville development. This project is now 100% leased with a cash stabilized yield of 9.3%. We stabilized this transaction 210 basis points higher than our initial underwriting and 6 months ahead of schedule. Including this transaction, our completed developments are currently 88% leased. I'm happy to announce a recently signed build-to-suit project on a fully entitled 40-acre parcel of land located in Union, Ohio. We'll develop a Class A 349,000 square foot warehouse with our development partner. The building is scheduled to be completed in Q3 2026. Upon completion, the building will be fully leased for 10 years with 3.25% annual lease escalations to a strong credit tenant. The project is estimated to cost $34.6 million and is expected to have a stabilized yield of 7%. With that, I will turn it over to Matts who will cover our remaining results and updates to guidance.

Thank you, Bill, and good morning, everyone. Core FFO per share was $0.65 for the quarter, an increase of 8.3% as compared to last year. During the quarter, we commenced 22 leases totaling 2.2 million square feet, which generated cash and straight-line leasing spreads of 27.2% and 40.6%, respectively. Additionally, executed leasing activity accelerated from 4.1 million square feet leased in the second quarter to 5.9 million square feet leased in the third quarter. 2025 is on track to be a record year in terms of leasing volume. Retention for the quarter was 63.4% and 78% for the year through September 30. We have accomplished 98.7% of the operating portfolio square feet we expected to lease in 2025, achieving 23.9% cash leasing spreads, demonstrating the strength of our portfolio. As mentioned by Bill, we have accomplished 52% of the square feet we currently expect to lease in 2026, achieving 21.8% cash leasing spreads. Same-store cash NOI grew 3.9% for the quarter and has grown 3.5% year-to-date. Included in the same-store cash NOI is 23 basis points of cash credit loss incurred this year as of yesterday. Moving to capital market activity. On September 15, we refinanced the $300 million Term Loan G, which was scheduled to mature in February 2026. It now matures March 15, 2030, with one 1-year extension option. The term loan bears an aggregate fixed interest rate, inclusive of interest rate swaps of 1.7% until February 5, 2026, and will then bear an aggregate fixed interest rate, inclusive of interest rate swaps of 3.94% from February 5, 2026, through initial maturity. Leverage remains low with net debt to annualized run rate adjusted EBITDA equal to 5.1x with liquidity of $904 million at quarter-end. As for guidance, we have made the following updates. We have decreased and narrowed the range of expected acquisition volume to a range of $350 million to $500 million. As a reminder, the impact of external acquisition volume has always been heavily weighted to the end of the year and has a minimal impact on our core FFO guidance. G&A expectations for the year have been reduced to a range of $51 million to $52 million, a decrease of $1 million at the midpoint. Cash same-store guidance has been increased to a range of 4% to 4.25% for the year, an increase of 25 basis points at the midpoint. These guidance changes contributed to a revised core FFO guidance range of $2.52 to $2.54 per share, an increase of $0.03 at the midpoint. I will now turn it back over to Bill.

Thank you, Matts, and thank you to our team for their continued hard work and achievement towards our 2025 goals. We're excited about the opportunities that are in front of us here at STAG. Activity is improving across all aspects of our platform, including acquisitions, operations, and development. These areas will all be key contributors to the future growth at STAG. We will now turn it back to the operator for questions.

Our first question comes from the line of Craig Mailman with Citi.

Bill, the progress on '26 is looking really positive and places you in a strong position for next year. I'm curious about the tenants approaching you. Could you explain what is driving that? Is there a higher concentration of maturities leaning towards the first half, making it a time when tenants are eager to finalize arrangements? Or are people coming to you earlier than expected? I would like more insight into what's influencing this trend. Also, what is the breakdown between renewals and new leases or backfills of vacated lease expirations?

Yes. Thanks, Craig. I'll just answer the second part first. The breakout between renewals and what you call new leasing is about 95% of that number is renewals, which makes sense just given where we are in the calendar, with 5% being new leasing. And then with respect to, are they coming to us or are we going to them? It really is a blend. We've been a little more proactive with our tenants, just given the larger than normal lease expirations we have in 2026. So we've been proactive. Our team has been proactive. But then also, we've had our larger sophisticated tenants reach out to us and engage earlier than normal because I think a couple of factors. One, they like their space. They view themselves in their space for the long term and they wanted to lock it up because, in some instances, they have a large investment in that space. This skews a little bit more towards the bigger suite sizes. So next year, we have 5 or 6 large lease expirations, so call it anything over 400,000 square feet. Of those, we've addressed all of them except for one with which we're in active negotiations. So that was a little bit of a different dynamic in '26 than we've had in previous years. So that also impacted the 52% versus prior years around 38%.

You mentioned the build-to-suit in Ohio. You completed projects in Greenville and Nashville. There's been discussion about a shift in tenant decision-making. Are people feeling more confident about investing, or is there some fear of missing out in markets with limited new supply compared to a few areas in the U.S. where it's more saturated? Can you explain the dynamics in your markets, highlighting both the strongest and the slowest in terms of activity?

You're good, Craig. I think that was 6 questions in one. But I'll do my best to try to address all of them. With respect to our markets and developments, we haven't had the volatility that they call the top 5 markets in the U.S. have with respect to vacancy. So our vacancy rates have held in there. Our occupancy rates in those markets have held in there a little bit better than others. So that's been beneficial to us and you can corroborate that through any third-party industry report. Is there FOMO for developing in our markets? I think to some degree, you could say that. We're certainly having a lot of success in our development platform. I've said in the past several quarters, our best use of incremental capital was the deployment of development. I'm really happy with the way that initiative is playing out. If you think about what our messaging has been in the last 2 quarters, it's been this degree of uncertainty in the market. Our messaging now is the stability in the market. It really has been a pretty big shift as we move into the last quarter of the year here. That's a great thing, and we knew this was going to start to come. Now, we say stability, but as I mentioned in the prepared remarks, you look at industry reports, national vacancy rates are around 7%. I think our number is maybe high 6s. When does that really start to tick down, and can you drive some additional market rent growth? It's probably another 2, 3 quarters. But overall, we feel really good about where our portfolio sits with respect to the markets they're in. Maybe I got 4 out of 6 there. I tried, Craig.

Our next question comes from the line of Nick Thillman with Baird.

Maybe talking on the '26 leasing and the progress there, just the sustainability of these spreads in the mid-20 is a little bit higher. You mentioned sort of the 4 large renewals. If we just look at the expiration schedule, it looks like the rents expiring here are around 15% below where they were at the beginning of this year. So just curious on what we're thinking for spreads for the remainder of the expirations?

Yes. Thanks, Nick. As I said in my prepared remarks, we're guiding to 18% to 20% cash leasing spreads for next year. If you look at where they were a few years ago, I think it was 30% and then it went to 24% this year, with a guidance of 18% to 20% next year. If you consider where our mark-to-market has been in those years, it's similar to what our escalators have been. So you haven't been driving additional mark-to-market opportunities. So naturally, similar degradation in spreads will happen. With respect to next year and those large tenants, what we've done is those tenants early renewed, as I mentioned earlier to Craig, much ahead of time. When you think about the spreads, what we've signed to date and what we're guiding to next year, there's a little bit of difference there. We usually don't get too much into the fixed renewal options, but they're part of our portfolio every year. The remaining 48% of incremental leasing next year, almost all of our fixed renewals are in that number, which is why the spreads are a little bit lower for the remaining non-leased asset plan for next year.

No, that's very helpful. And then just on maybe Matts on occupancy, you had a little bit of a headwind this year. As we think of building blocks for '26, good progress on the leasing. How are we feeling about sort of portfolio occupancy or potentially even growing that in the same-store pool next year?

Yes. Nick, I think as we sit here in October, we're going to provide 2026 guidance in February. So I don't think that we're prepared to start walking down the list of what guidance is going to be next year. I think Bill gave a lot of color in terms of the change from maybe a little bit of instability in the first half of the year into the third quarter to a much more stable environment now. Again, I just pointed out the fact that we did the 52% of what we expected to do last year, which is north of 10% higher than what we normally are at this point during the calendar year.

Our next question comes from the line of Eric Borden with BMO Capital Markets.

Bill, can you discuss your willingness to engage in new developments considering the improving demand environment and the possible vacancy shift in the latter half of '26? How are you feeling about potentially pursuing these developments to align deliveries with the better prospects?

Yes. We're bullish on development. We're trying to sign up the right developments. We are obviously very careful with our underwriting, and we still want to achieve at least that 7% going in yield. We're really happy with the Ohio build-to-suit deal we signed up and that we contracted at a 7% yield to a very strong credit. So, happy there. We're working on some others. We're trying to get more internal developments done, as well as some additional partner developments. As we sign those up, we'll announce those. It's certainly a great use of our capital. The market is stable now and looks to be improving certainly in the back half of next year. But one other change in terms of deploying capital, we're seeing a great opportunity to deploy capital on acquisitions right now, which is not what we saw earlier this year. If you look at where we are from an acquisition standpoint, we did lower the top end of our guidance. But we've closed $212 million to date. We've got another $150 million under contract and in LOI. So to get to our midpoint, we need to sign up another, call it, $60 million between now and Thanksgiving. We're underwriting a lot of deals. We're evaluating a lot of deals on a weekly basis. So we're hopeful that we can get to that midpoint this year. So that's been a pretty nice change that we've seen over the past couple of quarters.

I appreciate that. Just one on the guidance. You raised guidance $0.03 at the midpoint, but it implies a sequential deceleration from the third quarter to the fourth quarter. Maybe could you just talk about some of the offsetting factors in the fourth quarter that are driving that sequential drag?

Yes, absolutely. I'd say the easiest thing to point out here is credit loss. We've been outperforming our credit loss guidance, but we're not through the rest of the year. We do have some credit loss baked in on a speculative basis for the remainder of the year. To the extent we outperform that, and again, these are unforeseen, just call it, more of a modeling number, we would be at the higher end.

Yes, that's right. I think it depends on where we fall within that core flow range.

Our next question comes from the line of Blaine Heck with Wells Fargo.

Just following up on acquisitions, Bill, can you talk about what might have changed over the last 90 days to kind of pull back on your forecast, if there was anything specific that you noticed? And then this is probably difficult to forecast now, but given the trends you're seeing today that you just alluded to, how do you feel about your ability to make up for this 2025 decrease in 2026 and show a more significant increase in activity year-over-year?

That's a good one, Blaine. As Matts said, I think we'll handle all the remaining 2026 guidance in February. But certainly, if you look at the cadence throughout this year, it has been accelerating into year-end. What dynamics have changed? You've got a couple of things. You've got interest rates that have been stable. I think just a macroeconomic environment that's a little bit more stable. You've got some sellers that have pent-up demand. I think the ask prices are a little bit more reasonable. If you look at what happened last year, there were not a lot of transactions trading in the market compared to historical norms. This year, you had all the uncertainty as you move through the year. With this stability that's in the market, you have many sellers that want to get their deals done by year-end. So when you look at someone like us, who has a strong reputation in closing deals in a short period of time, we're the preferred buyer in many instances and some of them were not the high bidder. There is a preference to close by year-end, so that's another driver of our confidence with our Q4 transactions. But I don't know if there's anything else that you're seeing, Mike.

No. I mean, I think you hit on it. At the end of Q3, we started seeing a significant increase in deals coming to the market, particularly ones that wanted to close year-end. As you said, Bill, on those deals, surety of closure is almost as important as pricing and STAG has a great reputation for surety of closure. We're seeing a lot of deals, and we're cautiously optimistic that we'll have a good Q4 here.

Yes. We expected a lot of deals to come to market post Labor Day after the summer slowdown and the other uncertainty to happen this year. That's exactly what we saw.

Okay. That's helpful and makes a lot of sense. Just shifting gears to leasing. Can you talk about any leases you've signed that are directly or indirectly related to manufacturing projects or nearshoring and onshoring? And any markets that you think are particularly well positioned in your portfolio to benefit from some of those trends?

Yes, many of the markets we operate in will benefit from these trends. We've mentioned before that these include the Midwest and Southeast. Recently, we signed a direct onshoring lease for a building that transitioned from a regional distribution center to a supplier for a wood flooring manufacturing company that moved its operations closer to consumers. We are definitely seeing advantages from this. Additionally, we've signed several leases this year related to solar manufacturing plants and one that involves the production of generators for data centers, not just staging but actual generators. These are opportunities in our markets that might not have the same demand drivers found in other areas.

Our next question comes from the line of Vince Tibone with Green Street.

For the near-term acquisitions you're looking at, are you considering any value-add deals that will require lease-up or focusing more on stabilized assets? Just curious kind of where you find the best opportunity today and if there's any greater opportunities from some forced sellers with some spec projects that have not gone according to their underwriting, kind of hitting the market and allowing for any interesting opportunities for yourself?

Yes. We're seeing some of them. I would say we're not seeing a lot of value-add deals come to market or at least the ones that we have a desktop review of. They don't even make it to the full underwriting stage. But we will absolutely evaluate those transactions. It's what we do. We build buildings, we buy buildings, we lease buildings. If there is a developer that wants to take some chips off the table and has a vacant asset that they don't want to try to lease or that's not their core business, we'll absolutely take a look at that transaction and put in a bid to price that. But we're not seeing too many of those. I think what we're seeing now is probably skewed towards 3, 5, and kind of longer lease term transactions. Part of it is that the ones we are seeing, like I said, just don't pass that even initial desktop review with respect to where we would price those assets.

No, that's helpful color. Maybe just switching gears for a second. Just on the updated same-store guide for the year, it looks like it's implying decent acceleration in the fourth quarter. If you could just talk about kind of what's driving that? Are you expecting any sequential occupancy gains in the fourth quarter? What else may be at play that kind of gets, I think like the mid- to high 5s is what it implies for the fourth quarter, the updated same-store guide? Can you just touch on that? That would be helpful.

Yes, absolutely, Vince. Thank you for the question. So I'm going to walk you through, it's related to a tenant and some cash basis accounting. Number one, we've executed virtually all the leasing we expect for this year. In the third quarter, the metrics include the impact of moving one tenant to cash basis accounting and obviously, the associated impact of writing off AR balance. Well, after September and quite recently, we executed a repayment agreement that requires the tenant to come current during this quarter and also make the required rental payments. They have performed pursuant to the agreement through today. To the extent they become current by year-end, we'd expect to be near at the high end of our same-store guidance. Had we not written off the AR balance, the Q3 same-store would have been approximately 5% as opposed to where it is. Year-to-date, it would have been approximately 4%, right in line with our updated guidance. It is basically a matter of timing. The tenants catching up on past due payments in the fourth quarter. Q3 is lower due to the write-off, and the fourth quarter will benefit from the payments being made by the tenant as they become current. Just a little background, this customer is a supplier to the automotive industry and has an incredibly strong customer roster and is profitable. So it really is timing, Vince.

No, that's super helpful. And is there any color on occupancy? I mean, should we expect same-store occupancy to be around 97% in the fourth quarter, given it sounds like most of the leasing is done?

Yes. I mean our guidance, which we didn't change, is roughly 75 basis points of occupancy loss in the same-store for the full year. So we didn't change that.

Our next question comes from the line of Jon Petersen with Jefferies.

The $153 million of acquisitions that you have under agreement, can you give us a sense of the cap rates on those properties that we should be thinking about?

Yes, it's pretty consistent with what we've closed in the third quarter.

Okay. And then the new land that you bought in Union, Ohio, I believe that's near Dayton. Can you just talk about that market a little bit? It's maybe not one I'm super familiar with. So just what are you seeing from a demand and supply perspective that gives you confidence in doing a development there?

Yes. The land we purchased is for a build-to-suit project that I mentioned earlier, with a strong credit commitment for 10 years. Mike, do you want to elaborate on this?

Yes. I mean, Dayton is kind of, I would say, a market that is up and coming and emerging. It's 104 million square feet. It's about 4% vacant. They have less than 1 million square feet of construction going on right now. That said, we were very comfortable with acquiring that land and developing because we had a long-term build-to-suit lease signed up with a strong credit tenant. So that was an easy one for us to look at.

This property is near the airport.

Yes, this property is located right next to Dayton International Airport and a couple of miles away from the main interstate there.

If not the best submarket in the market, one of the best submarkets, right? The building fits the market really well. To the extent after the 10 years, the tenant does renew, we feel very comfortable with the leasability of that asset.

Okay. And then I know we're all trying to tease out 2026 same-store. So maybe I'll ask it one more way. Is there any known move-outs that we should be thinking about as we look into '26?

All right. I'll answer that one just because you're so direct with it. Nothing material. We call out the large known move-outs, anything over 400. As I said, I think there were 5 of them. We've addressed 4 of them, and we're in active negotiations with the last. So nothing to call out.

Our next question comes from the line of Michael Griffin with Evercore ISI.

Bill, I want to go back to your comment in your prepared remarks about lease gestation time frame remaining longer and maybe marrying that up to the execution you've had in your '26 leasing plan already, I mean, whether it's new leases or renewals? Like can you give us a sense, are tenants shopping around for a deal? Or does it seem like they're getting closer and closer and ready to sign on the dotted line, given the greater clarity and certainty that's out in the market?

Yes. And that's a good question. Just to clarify, it takes a couple of months for the negotiations that go on, maybe a little bit longer for normal negotiations with the lease. Historically, those are the numbers; maybe we're a little bit longer this year. But for example, in our Nashville lease that we got done, that was done from start to finish in weeks. I do expect those to remain elongated for a period of time, similar to tracking with vacancy rates, right? As I mentioned, in and around that 7% or high 6s mark for the next couple of 3 quarters. As those vacancy rates come down, naturally the lease gestation periods get reduced because there's fewer options, and tenants need to make decisions a little quicker. In Nashville, we had a really strong industrial market, not a ton of options; the tenant needed our space. We got the deal done start to finish in a matter of weeks. I think it's just a period of time for these to stay relatively elongated, and then those will start to shorten as vacancy rates come down.

I appreciate the color there. And then maybe you could just give us some insights into the demand of the 4 development projects that are going to be completed in the fourth quarter? I know there's probably some time until those stabilize, but what's the traction sort of looking like on that space? And would you be willing to give on concessions in order to get the projects leased up?

Yes. I'll let Steve answer the details there. Just as a reminder, we underwrite 12 months of lease-up for our development projects, but Steve can walk through the demand we're seeing for the ones that are going to be completed soon.

Yes, Michael, thank you for the question. We've made good progress on the current properties, but we still have some space to lease. Let me outline the five markets for you, as that might be the best approach. In Greenville and Spartanburg, we have a small vacancy of 70,000 square feet. The activity in that market has been strong with significant absorption over the last few quarters, and we have interest in that space. The office is built out and ready, and there are users considering it. The vacancy in that market has dropped to below 7%, showing a marked improvement from the double-digit figures we've mentioned before. Next is Tampa, where we have two buildings. One has been leased quickly to a single user, and one remains available at 140,000 square feet. The overall vacancy in the Tampa market is around 6.5%, and our specific submarket is below 5%. We have interest in that remaining building, so we're optimistic about Tampa. In the fourth quarter, we will deliver two buildings in the Charlotte market, each 200,000 square feet. This market currently has about an 8% vacancy rate and is showing positive momentum, particularly for larger spaces, which has helped lower the vacancy. Charlotte is improving, and we are adding product to this market. In our Concord submarket, the vacancy is about 5%. As we discussed previously, our project has advantages for users due to zoning issues related to sewer availability, allowing us to attract distribution and manufacturing tenants when some competitors cannot. Next is Reno, where we have two buildings coming online, one at 285,000 square feet and another at 76,000 square feet, both located in the North Valley submarket. This market has experienced slower absorption in the past six quarters, creating some challenges, but we anticipate improved absorption as we deliver these buildings. We have had interest in both, though we don't have further updates at this time. Lastly, there's Louisville, which I feel most optimistic about. This market has a 4% vacancy rate and is home to a Class A park just south of the area, which is well-established. We have strong interest in our building, and there's limited competition in this market. That covers the five markets where we have upcoming opportunities.

Our next question comes from the line of Nikita Bely with JPMorgan.

It looks like you are pretty bullish on both acquisitions and developments. Can you talk a little bit about how you rank them on a relative basis, one versus another? And as you start to ramp both of them up, it appears in 2026, how do you plan to fund it? And are we close enough to issue equity at these prices?

Nikita, it's Bill. Ranking opportunities is difficult, much like ranking your children since they are all unique. We assess development and acquisition opportunities based on returns and market conditions, and we can choose to pursue either or both. Our balance sheet and liquidity allow us to invest in both types of opportunities without having to prioritize one over the other. We have the processes, personnel, and systems in place to evaluate all options. This year, we have favored development for capital deployment, but acquisitions are gaining momentum, which is encouraging. As for financing these initiatives, I’ll hand it over to Matts to provide more details.

Yes. Nikita, as we sit here today, we're retaining north of $100 million of free cash flow. Our balance sheet is at the low end of our leverage target. So those are probably the 2 first sources. We have $47 million of unfunded forward equity, which would be the next source. We don't anticipate any deviation from our normal leverage levels, generally operating in the low 5x.

Our next question comes from the line of Brendan Lynch with Barclays.

You mentioned the fixed renewal options that are in place for some of the leases that are going to roll in 2026. Do you have a lot more of these? And are they mostly reflecting acquisitions that you've made and the contracts that were put in place by the prior owners?

Yes, they're almost all based on assuming leases. I would say they're not materially higher or lower than other years. They just happen to be in the remaining portion of the unleased space for next year. Generally, those renewal options have some sort of notice period. It could be as short as 3 months. Some of those are towards the back end of next year.

Okay. That's helpful. And then maybe kind of a strategy question. You seem to have an improving view on how the market is trending. And I think there's a lot of third-party data out there to support that. When you think about the acquisitions that you have made versus the ones that you passed on, do you get the sense that you could have been more aggressive in the past to make more acquisitions? And is that changing your calculus now as the market seems to be improving?

One of the things we look at for acquisitions is whether we're deploying capital accretively. That was part of the issue we were seeing earlier; we weren't able to do that with all of them. You can always Monday morning quarterback decisions. We try to evaluate decisions with the information that we have at the time and make the best informed decision at that point. I think we've made a lot of good decisions this year. I'm really happy with the acquisitions we've made this year, and really happy with the development decisions we've made this year. We'll continue to evaluate acquisitions and development opportunities with the information we know and try to make the best decision we can.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Crooker for any final comments.

I just want to thank everybody for joining the call and, as always, for the thoughtful questions. We look forward to seeing you all soon at the upcoming conferences. Take care.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.