Greetings, and welcome to STAG Industrial Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Steve Xiarhos, Associate Capital Markets and Investor Relations. Please go ahead.

Thank you. Welcome to STAG Industrial's conference call covering the second 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 Matts Pinard, our Chief Financial Officer. Also here with us today is Steve Mecke, our Chief Operating Officer; and Mike Chase, our Chief Investment Officer, who are available to answer questions specific to the area of focus. I will now turn the call over to Bill.

Thank you, Steve. Good morning, everybody, and welcome to the second 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. As we noted on our last earnings call, the industrial fundamental story is very much intact. We continue to see strong demand across our markets. We believe the short- and medium-term secular demand drivers, including e-commerce, supply chain reconfiguration and increases in inventory levels will continue to be a tailwind for some time. Additionally, nearshoring and onshoring should provide incremental demand in the medium term. Supply is coming online at a moderate pace, constrained by increased construction costs and supply chain backlogs. Vacancy rates remain low in our markets and market rents continue to grow at a strong rate. This positive industrial backdrop, coupled with our team's operational excellence resulted in another strong quarter. Core FFO per share was $0.56 this quarter, a 7.7% increase over the prior year. Our same-store NOI continues to be a big contributor of this growth. The capital markets remain quite volatile. The rapid rise in interest rates has caused the market to enter a period of price discovery that is ongoing. This has caused a general slowdown across the industrial capital markets and for STAG specifically. Even with this slowdown, our acquisition volume for the second quarter totaled $165.4 million. This consisted of 9 buildings with stabilized cash and straight-line cap rates of 5.2% and 5.7%, respectively. The acquisitions this quarter are consistent with our investment thesis. Our underwriting model allows us to adjust price to reflect current market conditions, and that is evidenced this quarter. Given the uncertainty in the capital markets, we have widened our acquisition volume range and reduced the midpoint for the back half of…

Thank you, Bill, and good morning, everyone. Core FFO was $0.56 for the quarter, an increase of 7.7% as compared to the second quarter of last year. Cash available for distribution totaled $87.2 million for the quarter, an increase of 16.6% as compared to the prior period. Leverage remains near the low end of our range with net debt to run rate adjusted EBITDA equal to 5.1x. We have not issued equity since the beginning of January. During the quarter, we commenced 22 leases totaling 3.2 million square feet, which generated cash and straight-line leasing spreads of 14.1% and 21.9%, respectively. Retention was 89.6% for the quarter. Cash same-store NOI grew 4% for the quarter and 4.7% year-to-date. Moving to capital market activity. On June 28, we funded our previously announced private placement notes. The 10-year notes totaled $400 million and beared weighted average interest rate of 4.12%. The proceeds were used to repay balances on the revolving credit facility. Subsequent to quarter end, on July 26, we refinanced term loan D which was scheduled to mature in January 2023 and Term Loan E, which was scheduled to mature in January 2021, 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 of 3.31% at close. In addition to the term loan refinance, we upsized our revolving credit facility to a notion of $1 billion, improving our liquidity profile. This represents an increase in revolver capacity of $250 million with no change to pricing or maturity date. In terms of guidance, we've made the following updates. We've widened the range of expected acquisition volume from a range of $1 billion to $1.2 billion to a range of $700 million to $1.1 billion, resulting a decrease in the midpoint to $900 million. Acquisition cap rates for the year are now expected to range between 5.25% and 5.5% as compared to the previous range of 5% to 5.25%. These revisions reflect the uncertain macro environment as we head into the second half of the year. We have increased our same-store guidance from a range of 4% to 4.5% to a range of 4.25% to 4.75%, an increase to the midpoint of 25 basis points. This increase is driven by the robust demand we are experiencing for our buildings and leasing results that have exceeded our initial expectations. Finally, we have adjusted guidance for net debt to run rate adjusted EBITDA from a range of 4.75 to 5.5x to a range of 5 to 5.5x for 2022. I will now turn it back over to Bill.

Thank you, Matts. A great quarter with a strong outlook for the remainder of the year. I want to thank our team for their continued hard work. Without them, none of this would be possible. Lastly, I want to thank Ben for everything he has done for STAG. Ben has created an amazing organization with a sound investment thesis that has resulted in extraordinary shareholder returns through the years. I'm excited to work with Ben in his new role as Executive Chairman and look forward to executing on the many opportunities that lie ahead. We will now turn it back over to the operator for questions.

[Operator Instructions]. Our first question is from Sheila McGrath with Evercore ISI.

Bill, I was wondering if you could comment on your underwriting for acquisitions, with your stock price lower and debt costs higher, have you increased your hurdle rate given the change in cost of capital? And is the market cooperating with cap rates moving higher?

Sheila, thanks. As part of our underwriting, cost of capital as an input that's in our underwriting model, inclusive of debt costs, forward interest rates, our stock price and because of that, our hurdle rates naturally increase, as I mentioned in the prepared remarks, price discovery in this market is real. There are less assets coming to market now given the uncertainty in the market, which is 1 of the reasons why we widened our acquisition guidance. And we expect once this price discovery period to normalize, we expect to return to our more normalized acquisition pace.

Okay. Great. And as a follow-up, I guess this is for Matts. Does your acquisition require more common equity at the higher end of the range? And just if you can comment on funding debt versus equity.

Absolutely. Sheila, it's a great question. We have not issued equity since the beginning of January. We don't need to issue equity this year, which is implied in our guidance. We increased the leverage range this quarter. We have strong internal growth. We have material retained cash from earnings now, and we have the opportunity to accretively recycle capital. We're going to continue to evaluate all options, but our guidance can be achieved without common equity this year.

Our next question comes from Craig Mailman with Citi.

You guys have, from a geographic standpoint, maybe a little bit different portfolio than some of your peers here. And I'm just kind of curious if you're seeing any kind of varying levels of demand as you go from some of the primary markets down to some of the tertiary markets and just whether some of this economic weakness or inflation is having an impact on demand? Or if the broad national trends are kind of holding tight?

Yes. Thanks, Craig. I mean the broad national trends are holding tight. Certainly, we have some markets that are stronger than others and some markets that are weaker than others. Generally, this last quarter, our markets rent -- market rent growth about 8%, so strong market rent growth. Some of the stronger markets we're seeing is Philadelphia, Central PA, El Paso, Sacramento. So overall, the trends are very strong, and you're seeing that flow through our operations, our leasing spreads mid-teens. And one thing that you saw in this quarter's results is occupancy pickup in our same-store pool. So that's a result of reduced downtime. So historical downtimes are probably coming in 6 months from long-term averages to what we're seeing today.

Okay. And gestation recent periods on leasing decisions, are those -- have you seen any shift in that from the beginning of the year to now?

It's a good question. It's something we look at. No material changes in the leases we've signed for gestation periods.

Okay. And then shifting to acquisitions. Clearly, you guys have kind of signaled tighter underwriting standards in that, so the change in acquisition guidance shouldn't have come as a surprise. But I'm just curious, as I look at the pipeline, you guys were down from $3.7 billion to $3 billion this quarter. Was that a function of just less transactions being pulled from the market or everything in the pipeline just didn't meet your criteria, so you kind of self-selected and removed some stuff? I'm just kind of curious what -- because that's a pretty -- it's like a 20% reduction.

It's a pretty big reduction, I would say. The pipeline is down more so for less assets coming to markets. Unless sellers need to sell, a lot of brokers are advising sellers just to wait and not put assets on the market during this volatile time and price discovery time, which we've, obviously, talked about and all of our peers have talked about. So I think that's part of it. I would say, a smaller component of the reduction is just stricter underwriting thresholds and inputs.

Okay. And then just last one for me. On the $82 million portfolio you just sold, I know relative to initial pricing, you're probably off 70 basis points, and that was a function of a longer on those assets. I guess if you kind of bucketed your portfolio, I know your wealth has come down over time. But how much of your portfolio do you think is seeing kind of some outsized cap rate movements just based on kind of lease duration versus less cap rate movement because it's just got better mark-to-market and the ability to get to it quicker?

It's an interesting question. It's a tough one to answer. I would say that portfolio, in particular, had lower escalators. The rents were at market. So really, it was a low growth to property portfolio. Our portfolio varies from some vacancy, short-term leases to long-term leases and even some of those longer-term leases are well below market. And when you start to do the math, those assets would not move from a cap rate perspective as much as this portfolio -- as much as this 2-property portfolio. So it's just a very difficult question to answer. Net-net, our portfolio is around 15% below market today. We continue to see strong market rent growth.

Our next question comes from Blaine Heck with Wells Fargo.

So you guys adjusted your expected cap rate on acquisitions with your guidance update, but I didn't see any mention of expected pricing on dispositions, which you guys had previously indicated would be around 4.5%. Can you talk about whether there's any change in expectation there?

Yes. Thanks, Blaine. We -- in the prepared remarks at the end of it, I did mention that we expect cap rates for dispositions to be 4.5% to 5%. It wasn't in our supplemental, something that we may add going forward. But -- so that implies a 25 basis point increase in acquisition cap rates similar to what we're seeing -- I mean, disposition cap rate, excuse me, similar to what we're seeing on the acquisition side.

Got it. And is there any kind of change in the composition of the bucket of assets sale this year as pricing has changed in order to kind of hit that cap rate target? I know it's up a little bit, 25 basis points, but are you changing kind of the buckets of assets that you're looking to sell?

I would say not materially changing the bucket. I would say what we're looking at are assets that we view are valued higher externally than what we value internally. So as we go through that analysis, that really drives what assets that we're willing to sell.

Okay. That's helpful. Bill, in response to Sheila's question, you talked about price discovery and not really having seen pricing normalize relative to the move we've seen in the cost of capital. I know this is probably a tough question to answer, but just want to get your thoughts on how long you think it will take for that appropriate pricing adjustment relative to what we've seen on the cost of capital side and maybe how far has pricing moved with respect to what you think would be justified relative to the movement in cost of capital?

Well, I agree with you. It is a tough question. I wish I knew the answer. I would say, generally, what we're seeing is anywhere from 25 to 75 basis points in cap rates, in some of our stronger markets with lower vaults, and you've got market rent increasing at a faster pace. Those cap rates are not moving as much. And then when you have assets like the portfolio we sold, where low escalators at market, long-term leases, those are moving a little bit more. So in that portfolio, for example, as Craig mentioned, that moved about 70 basis points.

Our next question comes from Michael Carroll with RBC Capital Markets.

Bill, earlier, you highlighted that the drop in the acquisition pipeline is in part due to stricter underwriting standards. Can you expand on that? Is that driven by just the cost of capital changes? Or is there lease up and rent adjustments that you're making there, too?

It's cost of capital primarily. And that's the minority reason why the pipeline decreased. I would say the primary reason is due to less assets coming to market because of the price discovery phase we're in.

Okay. Great. And then the 25 basis point cap rate increase, I believe that's your estimate of how much that they moved. I mean, how much does that vary by market, I guess, within your portfolio? I guess, what's some of the high and low ends of those cap rate moves by market?

Yes. I think that -- I mean, right now, again, we're in this price discovery phase. So it's -- I think you might get a different answer from us than others. I think everybody has provided a different answer so far. But I think the 25 to 75 range is a good range. And part of it is how soon can you access the role, what market it is, how long the lease term. So there's a number of reasons that drive the change in cap rates. So I think generally, 25 to 75 basis points is what we're seeing.

Okay. And then just last one for me. Can you talk a little bit about the, I guess, the 2023 lease expirations? I mean how are you -- I'm assuming you're in discussions with some of those tenants right now. How are those progressing compared to what has -- what you kind of put in thepast few quarters?

Yes. I mean those are progressing pretty well. We've taken care of 25% of our 2023 lease expirations. Rollover rents this year for 2022 is mid-teens, as you know. Next year, we're high teens. I think it's 18.5% to 19% so far on rollover rent and that's on a cash basis for the 2023 lease expirations that we've already taken care of.

Our next question comes from Jon Petersen with Jefferies.

I think you guys said the mark-to-market on your portfolio was 15%. I was just curious, is that on a cash or a GAAP basis?

That's cash. And I should have clarified this too, Jon. When we speak mark-to-market, it's really focusing on the next few years. We're not trying to predict what market rents are going to be for leases that are rolling 7, 8, 9, 10 years out. So really, in the next few years, we expect in that mid-teens, as I mentioned with Mike on the last question. Next year right now is trending higher than that, 25% of our leases have been taken care of at high teens.

Got it. All right. That's helpful. And then you guys have talked about capital recycling. Have you -- do you guys have any, I guess, different or evolving thoughts on doing joint ventures or maybe setting up investment funds or something like that, so you can kind of keep some of these portfolios in your managed business, but extract some capital?

I mean I would say no different than what we've discussed before. And right now, the business plan does not contemplate any type of joint venture structure. We're very comfortable operating our business plan, operating within our guidance ranges, as Matts said, this year. So right now, no change to that thought.

Okay. And then just last question for me. Anything different in the past few months on like the lease escalators you guys are negotiating whether there's any sort of inflation linked to it or just looking at where inflation is at and demand overall, how much higher are you able to push escalators now versus, I guess, even just a few quarters ago?

Yes. Well, I would say our leasing team starts every lease negotiation with trying to get CPI and that doesn't really go that well. We're signing 3-plus percent escalators in our portfolio, some markets we're seeing 4-plus. It really depends on the supply-demand dynamics in the market. But the escalators certainly are increasing with the leases we're signing.

Do you know what the average escalator is on your in-place leases today?

We do have some component of our leases that are CPI. So the escalators range anywhere from 2.3% to 2.5%. It's been increasing pretty significantly over the past couple of years just due to the new leases signing at 3% plus and some leases, 4% plus.

Our next question is from Bill Crow with Raymond James.

Maybe beating a dead horse here. But on the acquisition disposition guidance, does this imply because you just increased expectations, 25 basis points that you're going to focus on acquisitions with typically lower WALT than you have. And I assume if you redid that, the 9-year 5.2% cap rate deal that you did in the second quarter, I assume that would be significantly higher at this point?

Yes. And we're going to focus on deals that meet our investment thresholds, Bill. And sometimes that's longer-term leases and sometimes it's shorter. I mean, any given quarter, we could have 1-year leases and 10-year leases in there. So it really is a mix. A lot of the acquisitions in the second quarter, as you can see, were closed at the beginning of the quarter. The 3 that were closed at the end of the quarter, the cap were 25 to 30 basis points higher. And that's just based on the market moving a little bit.

Okay. But you did say the range could be, what, 75 basis points. I assume those are longer WALT.

We saw 70 basis points on the Midwest portfolio. Again, that's a portfolio that had long-term leases right around 2% escalators at market. The lease -- the acquisitions we signed in the second quarter were well below market, even long-term leases in nature, but still well below market.

Our next question is with Jamie Feldman with Bank of America.

I wanted to dig a little bit into tenant credit risk. Can you talk about your credit watch list and maybe bigger picture, how you're feeling about any occupancy risk as we -- whether we're in a recession or heading into a recession, whatever the next 6 to 9 months might bring?

Sure. Jamie, this is Matts. First, let's start off with our tenant profile. We have, call it, larger average building sizes. And I think about 80% of our portfolio is single tenant. That kind of lends itself to larger, more sophisticated tenants. North of 80% of our tenants have revenues greater than $100 million. North of 60% of our tenants have revenues greater than $1 billion. Now I'm not representing that as a credit stat, but those are large sophisticated tenants who are more likely to reorganize than to Chapter 11 and leave. In terms of our watch list, let's start with credit loss that we've received that has impacted us to date. We've had 0 credit loss through the first 6 months of the year. We do have some credit loss baked into our pro forma for same store, but we think that's prudent. But as we sit here today, our tenant watch list is shorter, not longer, and we're broadly diversified across industries.

And just on rent collections, the last couple of years, I think we're 99.6%, 99.8% rent collection over the last couple of years. So we have a pretty -- very strong credit profile in our portfolio.

And then are any regions or industry groups that you're seeing a change in leasing cadence?

Not particularly. I expected it maybe a little bit more pushback from some of the 3PLs in terms of pricing, just given how low the margins are. We inquire about that at our weekly leasing call, but we really haven't seen any trends that are occurring yet.

Our next question is with Vince Tibone with Green Street.

I wanted to continue the conversation on cost of capital a little bit. And typically, just how do you assess the attractiveness of issuing equity? And really what metrics or framework do you use whether -- when analyzing whether to issue debt or equity to fund external growth?

Yes. I mean there's a number of factors we look at Vince. A couple, is the opportunity accretive, both on a per share metric and on an NAV basis. And then is it a good long-term add to the portfolio. So I would say, I'm very proud of what we've done over the past 5, 6, 7 years with respect to being prudent allocated as a capital when the stock price is at a level that we're not comfortable issue equity. And I think we're doing that again now. Our guidance is we've reduced our acquisition guidance a bit, widened the range. Coming into the year, we had elevated disposition guidance as compared to prior years. So I think this is a time where we're going to be prudent. We're going to be -- we're going to watch the market, not overpay for assets and evaluate both opportunities on the acquisition and disposition side of things.

That's helpful. I just want to maybe follow up. So just like specifically, are you looking at maybe implied cap rates, like maybe when your implied cap rate comes back in, let's say, in the mid-5s, which is where your acquisition cap rate assumption is. Is that a level where you be comfortable issuing equity? Do you want your implied cap rates being side? Are you looking more on earnings metrics? Like I'm just trying to get a sense of as the both private and public markets move, at what level expect to you to start issuing equity again?

Yes. I mean there's a number of factors we look at, Vince. I would say, just going back to the guidance this year, we -- our guidance does not imply issuing equity this year just given where our balance sheet is, the liquidity we have, the internal growth we have. So as our EBITDA increases, our leverage decreases as well as the same store. I mean there's just a lot going our way this year in terms of the operations. So our guidance, there's no -- our guidance doesn't apply issuing equity this year. But there are a lot of factors that we consider when we do issue equity.

Okay. Maybe just 1 more for me, switching to operations a bit. Just could you talk a little bit about what drove the big occupancy increase quarter-over-quarter? And if that was a big positive surprise to you? Or just a little bit of color on kind of the leasing or what drove that?

Yes. It was a positive surprise on the leasing side. You saw our occupancy tick up both on the portfolio and the same-store portfolio. So it goes back to the earlier comment that just downtimes are shorter than what we were projecting. So really, it was occupancy pick up earlier in the year. And that was a big driver for the increase in the same-store guidance for the year.

Our next question comes from Nikita Bailey with JPMorgan.

Just from a high level, what's the early lead on 2023 investment game plan if your funding costs don't improve from here, like what happens next year?

So basically, it's the same sources of capital available to us next to that are available now. We have a good view on the internal growth over the next 24 months. We're comfortable same-store growth in the mid-4% area that you're seeing this year. As Bill mentioned earlier in the call, we have material retained earnings, approximately $70 million to $80 million per annum. And we continue to have the ability to recycle capital. We're constantly evaluating sources capital, but as shown this year, we do not have to issue equity.

Regarding your guidance, you had a pretty good quarter on the core side, especially in your of the guidance that way, but what made you decide not to raise the earnings guidance for the year despite the strong core growth? Is it really just the lower disposition -- or sorry, the lower acquisition volume? Or is there something else to it?

No. I think really, you can see the reason right in our guidance. So we've widened and decreased the midpoint of our net acquisition expectations for the year. And that's partially offset by an increase in the same-store guidance as well. So net-net, that kind of keeps us in the range. We did fund $400 million of private placement notes at the end of June, also factoring into our core FFO range.

Maybe 2 quick ones. On the spreads, we had pretty good spreads in the second quarter. Anything to read into why they were a little bit lower than the first quarter? I mean is there anything else, any color or comment that you could give us on that?

No color comment. It's broad-based. The leases we signed this quarter commenced this quarter, it's across 20-plus leases. So spreads are strong. You look over last year, our full quarter average continued to increase and our early outlook for 2023 is continue to increase in spreads.

Got it. And maybe last quick modeling question. You just issued debt at about low 4s interest rate. If we were to look out a quarter or 2 quarters from now, what would generally be modeling for your debt issuance later this year? Are we talking about mid 4s, high 4s, your kind of expectation?

Yes. So the 4.12% notes, those were originated in April. We funded those in June. We recently refinanced our term loans. We were able to all-in swap those at 3.31%. As we sit here today, it's a mix between private placement notes and term loans. I do want to note, we're effectively done in the debt capital markets this year. So this really is kind of a 2023 modeling. If you were to look at where we can issue in the private placement market today, it's in the mid- to high 4% range. As we sit here today, I don't expect that to change. So if you're going to model 2023 because, again, we've kind of accomplished everything we want to do on the debt capital side for this year using the mid- to high 4s for long-term debt makes sense.

I was just going to say, as Matts said in his prepared remarks, I mean, that we just closed had a weighted average interest rate of about 3.31%, inclusive of interest rate swaps.

All right. And the mid- to high 4s comment, that was still reflective of the recent Fed hike, right?

That's right. That's -- we have a current market where we would likely issue in the private placement market. But as you know, debt capital markets are fluid, and the answer may change shortly. But as we sit here today, that's our response.

[Operator Instructions]. Our next question comes from John Massocca with Ladenburg Thalmann.

So what is the outlook and appetite for maybe kind of a larger portfolio disposition or portfolio dispositions? And I know we're going through kind of price discovery on all kind of asset transactions. But is there still kind of an aggregator spread for selling larger portfolios versus granular assets?

John, I mean, the spread for portfolios has persisted since we've been in this business. I'd say right now, it's a hard question to answer because of the price discovery. I know a lot of the big private guys are on the sidelines now, just waiting to see where interest rates shake out, and that probably continues through the end of the summer. So right now, I can't give a good answer of where that portfolio premium would be. Historically, that's been anywhere from 75, 100, 150 basis points depending on what time frame we look at. It's hard to think that there's not a portfolio premium when the market settles down.

And I guess maybe your outlook for that type of a transaction, near-term, intermediate term?

Yes. I mean it's something that we've done over the years. It's something that we're open to doing going forward, right? We evaluate all of our sources of capital, portfolio disposition, individual dispositions as well as our other sources of capital, including debt capital and equity capital. So as we move through the year, as we move through the next couple of years, it's something we'll evaluate and if the opportunity is attractive, we'll execute on it.

Okay. And then on the investment side, in light of the Spartanburg development transaction started, what is the outlook for more development deals, especially in weighing kind of the pushes and pulls of underwriting return in the current environment?

Yes. I mean the development deals we've done so far, it's -- albeit a few has proved to be extremely successful. We certainly have the capabilities to execute on this. We're pro forming pretty strong returns for this development, which should be completed in about a year or so. And so it's in markets that we're comfortable in. It's markets that we really like. And this opportunity, as we see more of these, we'll execute on them. Over the years, it's been harder to find these opportunities. But it's one of these as once you start doing a couple those opportunities -- there's more of those opportunities. So we'll evaluate and if they're attractive, we'll execute on them.

Okay. And then maybe just bigger picture, any changes to the supply outlook for pockets of meaningful new product in some of your key markets?

Not -- no material changes, as I said. I mean, supply is coming online. It's moderated a little bit. There is a fair amount of supply in the pipeline. That supply just due to supply chain backlog is coming online at a slower pace. But the supply demand dynamics in our portfolio is extremely strong right now, and you're seeing that through our operating trends. You're seeing that through leasing spreads, our same-store, as Matts noted. Same-store is tracking to at least be similar next year as it is this year, leasing spreads right now for the 25% of leases we signed for next year are higher than they are this year. So supply-demand dynamics in our markets are very strong.

And maybe just kind of like broadly speaking, is there any divergence in supply between some larger coastal markets and some of the kind of secondary markets where you have exposure?

I would say there's a couple of our markets that have a little bit more supply. But again, nothing that we're overly concerned about. Overall, we feel really good about where the portfolio sits today.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to now turn the call back over to Bill Crooker, President and CEO, for closing comments.

I just want to thank everybody for joining the call today. I appreciate all the thoughtful questions. I hope everybody enjoys the rest of the summer, and we will talk to you all soon. Take care.

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