First Industrial Realty Trust Inc (FR) 2011 Q1 法說會逐字稿

Good morning -- afternoon, my name is Simon and I'll be your conference Operator today. At this time, I would like to welcome everyone to the First Industrial first quarter earnings conference call.

(Operator Instructions)

I would now like to turn the call over to Mr. Art Harmon, Senior Director of Investor Relations. Please go ahead, sir.

Thank you, Simon. Hello, everyone and welcome to our call. Before we discuss our first quarter 2011 results, let me remind everyone that the speakers on today's call will make various remarks regarding future expectations, plans and prospects for First Industrial, such as those related to our liquidity, management of our debt maturities, portfolio performance, our overall capital deployment, our planned disposition, our development and joint venture activities, continued compliance with our financial covenants and expected earnings. These remarks constitute forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

First Industrial assumes no obligation to update or supplement these forward-looking statements. Such forward-looking statements involve important factors that could cause actual results to differ materially from those in forward-looking statements, including those risks discussed in First Industrial's 10-K for the year ending December 31, 2010, filed with the SEC and subsequent reports on 10-Q. Reconciliations from GAAP financial measures to non-GAAP financial measures are provided in our supplemental report available at FirstIndustrial.com under the Investor Relations tab.

Since this call may be accessed via replay for a period of time, it is important to note that today's call may include time-sensitive information that may be accurate only as of today's date, April 28, 2011. Our call will begin by remarks by Bruce Duncan, our President & CEO and be followed by Scott Musil, our Chief Financial Officer who will discuss our results, capital position and guidance, after which we will open it up for your question. Also on the call today are Jojo Yap, our Chief Investment Officer, Chris Schneider, Senior Vice President of Operations and Bob Walter, Senior Vice President of Capital Markets. Now let me turn the call over to Bruce.

Thanks, Art and thank you, everyone, for joining us on the call today. The First Industrial team continued to execute our plan and make progress towards our goals in the first quarter. Our bottom line results were better than expected. Primarily benefiting from lower bad debt and landlord expense as well as lower interest costs. Our leasing results were in line with our expectations as occupancy was 84.7%, down slightly from 85% at year end as we telegraphed on our fourth quarter call. However, compared to the year-ago quarter, occupancy is up 330 basis points, indicative of the positive direction of the recovery in the industrial market.

Factoring in our first quarter results, before the impact of our first quarter equity rate, we are effectively raising full-year guidance for Funds from Operations before one-time items by $0.03 per share, which offsets the $0.03 per share of net dilution from the equity offering. So net-net, our full year FFO per share guidance range before one-time items is the same as we provided you in February. Scott will walk you through the details of our guidance.

In the quarter, we saw new demand across the spectrum of tenant sizes and industries, including traditional and internet retailers, consumer products and food-related companies, and 3PLs. Our forecast continues to be for improved demand and occupancy gains throughout the year given the expected GDP growth. Even if the first quarter was slower than some had forecasted.

Part of that growth is being driven by a resurgence in domestic manufacturing. From a fundamental point of view, demand is being helped as companies transition into growth mode, helped by record corporate profits. Businesses have been running with tight inventories and many are looking to gradually increase these levels to meet demand from the US consumer. These trends are reflected in moderately increasing retail sales and improving container traffic volumes. The consumer is also being helped by the improving employment picture.

While demand is positive, continued business and consumer confidence is important for growth in the economy and for industrial real estate. Major events like the unfortunate Japan earthquake, budget uncertainties in the United States, rising fuel costs, and the uncertainty around the end of QE2 are a few factors that will weigh in on prospective tenants' leasing decisions. The rental rate story remains the same since we spoke to you at the end of February. Rent is stabilized in most of our markets but since we're rolling off leases signed in better years, we anticipate roll-downs this year.

We came in at the better end of our expected range this quarter at minus 10%. This is primarily driven by our tenant retention which was very good at 78%. Most markets still need to see absorption of some vacancies before we will see market rent improve. Notable exceptions right now are the Inland Empire, Houston, and Salt Lake City, which are seeing some rent growth. Leasing activity remains good in most markets with the exception of Columbus, Dallas, and Denver, which continue to lag.

Moving now to the capital side of the business, where we have made great strides. Using a baseball analogy we're in the later innings of our deleveraging efforts and have a clear path to take care of our near term maturities. We successfully raised $100 million at $11.30 net through our March equity offering. We also put in place a new ATM program in March but did not issue any shares through it in the quarter.

We continue to progress on our disciplined sales of non-strategic assets with our focus on achieving appropriate pricing and value for our shareholders and refining our overall portfolio. During the first quarter, we completed $18.6 million in sales, all from our non-strategic pool. Importantly, based on dollar volume, about half of the sales were to users which helped us achieve total proceeds that exceeded the written down book value of those assets by about $4 million or about 25%.

I would like to spend a moment telling you a bit more about these sales as I believe they are indicative of our efforts to refine our portfolio quality to our asset management process. In total, we sold just under 700,000 square feet at an average price of approximately $27 per square foot. The average clear height was 18 feet and the average office percentage was 27%. The properties we sold were a flex building located in suburban Milwaukee, three manufacturing buildings located in Abilene, Texas, Stratford, Ontario and Grand Rapids, Michigan. A warehouse property in Wichita, Kansas, a light industrial facility in Detroit and a five-building flex complex in suburban Denver.

Second quarter-to-date, we have completed an additional $11.6 million of sales. These were two light industrial facilities in Detroit, and one manufacturing building in Cambridge, Ontario. We continue to work towards our $100 million goal for sales from our non-strategic pool in 2011, while ensuring we get appropriate value for these properties.

Moving on to discuss our progress towards our key leverage goal of debt to EBITDA of 6.5 to 7.5 times. If you annualize our first quarter EBITDA, we were at 7.9 times. Which improved from 8.3 times as we discussed on our last earnings call. We will look to continue to reduce that ratio by increase in our EBITDA via leasing of our vacancy and reducing our debt through property sales as well as equity which continues to be part of our plan. While we are benefiting from the current low interest rates, we will continue to position the balance sheet for long-term stability and growth. And equity will help us do that, both for deleveraging and capital for future investment.

While our main focus remains on enhancing the value of our Company through leasing and deleveraging, we have improved our capital position enough to more actively seek potential investment opportunities. We will target high-quality, distribution facilities in higher rent growth markets to generate long-term cash flow growth. We also have a few select land sites that we're preparing for development when appropriate. One, in the Inland Empire, is at the top of our list where the recovery in rents and value has been quite strong.

This is especially the case for large distribution centers greater than 600,000 square feet, which are in short supply and for which market rents have increased 30% over the past 12 months.

I want to conclude by thanking the entire FR team for their contributions and efforts. We have significantly strengthened our balance sheet, have achieved great things on the expense side, and continue to make progress in leasing. We will keep executing our plan to drive value for shareholders with our goal for part of that value to eventually be returned in the form of a common dividend. So with that, Scott.

Thanks, Bruce. First let me walk you through our results for the quarter which had a few one-time items. For the quarter, Funds from Operations were $0.20 per share compared to $0.11 per share in the year-ago quarter. FFO per share results were impacted by a few one-time items during the quarter. A $0.02 restructuring charge relating to the sublet of the portion of our corporate office space and a $0.01 loss on early retirement of debt.

Comparing 1Q 2011 before one time items to the year-ago quarter, excluding impairment charges on the balance sheet, gains and losses from debt repurchases and restructuring charges, as well as $0.01 of NAREIT compliant gains in the year-ago quarter, funds from operations were essentially flat at $0.23 per share. EPS for the quarter was a loss of $0.12 per share, versus a loss of $0.35 per share in the year-ago quarter.

Moving on to the portfolio. As Bruce discussed, our occupancy for our in-service portfolio was 84.7% versus 85% last quarter and 81.4% for the year-ago quarter. In the first quarter, we commenced 5.3 million square feet of leases on our balance sheet. Of these, 1.3 million square feet were new, 2.6 million were renewals an 1.4 million were short-term. Tenant retention by square footage was very good at 78%. For the remaining quarters of 2011, we expect retention to average approximately 65% to 70%.

Same store NOI on a cash basis was down 1% excluding lease termination fees. These results reflected new leasing, offset by rental rate declines. Termination fees totaled $300,000 in the quarter.

Rental rates were down 10% cash on cash, which was improved from last quarter, held by the higher percentage of renewals but still reflective of the competitive leasing market. On a GAAP basis, rental rates were down 6.9%. Leasing costs were $2.01 per square foot for the quarter, which was lower than our full year 2011 projection due to the mix of renewal versus new leasing. For 2011, we continue to expect leasing costs to be approximately $2.20, to $2.50 per square foot.

Moving on to our capital market activities and capital position. Bruce already discussed our March equity race. Next Monday we expect to close a secure debt package we previously discussed that is expected to generate approximately $175 million of proceeds. Recall that this commitment carries a 4.45% interest rate, 70% loan-to-value, a 7-year term and a 30 year amortization. Note that there could be no assurance that it will close or generate the proceeds we anticipate. As mentioned in our last call, part of our capital plan was to prepay mortgage debt prior to maturity where it made economic sense.

In the quarter, we paid off a 6.75%, $14.5 million mortgage loan. As we told you last time this was partially funded with a $8.6 million mortgage loan receivable payoff we received in the first quarter. In March we also paid off an $18.7 million mortgage loan with an interest rate of 7.5%. Subsequent to the end of the quarter, on April 1st, we paid off a $27.4 million mortgage loan that had an interest rate of 7.5%. In total, we have paid off and retired $60.6 million at an average rate of 7.3% with prepayment fees of approximately 2%.

In the second quarter, we also have executed a commitment to modify a $23.3 million existing mortgage loan which will lower the interest rate from a weighted average of 5.83% to 4.83% with a new five-year term subject to customary closing conditions. Bruce already walked you through the $18.6 million of the asset sales we completed in the first quarter, plus the $11.6 million of sales in 2Q to date.

On the uses side, focusing on our major capital requirements through early 2012, we have the $129 million of the 4.625% September 2011 converts remaining and $62 million of our 6.875% April 2012 notes. These maturities will essentially be covered by the anticipated proceeds from the secured financing I just discusses.

On the sources side, in addition do the secured financing, we expect to generate approximately a total of $81 million of sales in the last three quarters of 2011, which is based on our $100 million goal for the year. And as Bruce said, equity will continue to be part of our mix. So these sources exceed uses by $65 million.

As we think about our capital road map, reducing the amount outstanding under our credit facility remains a priority. We are targeting having a new facility in place by the end of first quarter of 2012. We believe continuing to reduce our leverage will better position our Company for the long-term and help when we renew our line as well for future capital market activities. Deleveraging is still a significant focus, but as Bruce noted, we are prepared to deploy some capital and new investments if we can find opportunities that meet our portfolio objectives.

Quickly summarizing our capital structure and current capital position, our weighted average maturity of our unsecured notes and mortgages is 7.2 years with a weighted average interest rate of 7.1%. These figures exclude our credit facility. Our cash position today is approximately $48 million, our credit facility balance stands at $339 million, and our debt to EBITDA ratio is approximately 7.9 times.

Before I review guidance, I would like to call your attention to one disclosure item. In our supplemental we provided a breakdown of our assets by property type classification, both distribution, regional distribution, light industrial, R&D flex and manufacturing, which I know some of you track. I would point out to you that we changed the classifications in about 50 of our properties since our 4Q supplemental. These changes were based on our asset management review related primarily to shifts in the tenant use and office build-outs since we acquired these facilities. These changes did not significantly change the relative percentages under each property type versus last quarter.

Moving on to our guidance. For our Press Release, our FFO guidance range for 2011 is now $0.78 to $0.88 per share, which is a $0.03 per share reduction from prior guidance. This is primarily due to $0.03 in charges related to the early retirement of mortgage debt as discussed earlier. For Bruce's comments, our results for the first quarter, we're ahead of our plan so despite the full year net dilution of $0.03 per share from our March equity offering, we are able to keep our guidance range for 2011 before one time items such as restructuring charges and losses from retirement of debt unchanged to $0.83 to $0.93 per share. Other key components of guidance are largely unchanged from last quarter.

We expect average occupancy of 85% to 87%. Same store NOI on a cash basis for the year is projected to be negative 1% to positive 1%. G&A up $23 million to $24 million. JV FFO of $1.3 million, primarily related to our net lease venture. This is up from the $1.1 million prior guidance due to additional economics in the first quarter related to joint ventures we wound down last year. JV FFO guidance assumes no property sales in this joint venture or additional economics from the concluded JV's. Guidance also assumes that we are able to issue the $175 million of secured debt mentioned earlier at an interest rate of approximately 4.45% in the second quarter. Guidance also reflects $0.02 per share of restructuring charges, we recognized in the first quarter, primarily related to the office space sublease I mentioned earlier. And $0.03 per share due to the losses from the early retirement of debt. Our 2011 guidance does not reflect the impact of any further debt issuances, property sales, nor any NAREIT compliance gains. Guidance also does not reflect any potential additional equity issuance. With that, let me turn it back over to Bruce.

Thanks, Scott. Before we open it up to questions, let me offer a few final comments. We had a good first quarter. Which enabled us to effectively increase our full year funds from operation guidance before one-time items by $0.03 per share offsetting the dilution from our March equity offering.

We've come a long way on the capital side in reducing our leverage, close to our targeted range of debt to EBITDA of 6.5 to 7.5 times. With occupancy just under 85%, we have a great opportunity to drive incremental cash flow from our portfolio. On a price per pound basis, we traded just $43 per square foot, substantially less than our peers and below replacement cost and private market sales comparables. And we have a valuable platform and team to drive value from our current portfolio through asset management as well as future investments. In sum, we're very excited about our future and look forward to keeping you up to date on our progress.

And with that, we would now be happy to take your questions. As a courtesy to other callers, we ask that you limit your questions to one, plus a follow-up in order to give other participants a chance to get their questions answered. Of course you're welcome to get back in the queue. And so now, Operator, could we please open it up for questions.

Steven Frankel with Green Street.

Just a few questions for the quarter. First of all, can you comment on the sales during the second quarter? I know the cap rate that was reported for 1Q was 8.2. What is the cap rate for the second quarter sales?

Well we would like to do it -- as we finish the whole quarter, but just as a general basis, it's pretty similar to the first quarter.

Okay. And that cap rate reflects to what is the end place occupancy or is it a stabilized kind of cap rate?

In place.

In place. Okay. You guys were mentioning also talking about doing potential acquisitions. I don't know if that's this year or that year is that because you have 1031 money or are you thinking about deploying new capital in addition to the 1031 money to go on the offensive?

We're thinking about deploying new money, not 1031 money. If we find the right opportunity, we would look to make an investment and I would say that we would open that we'll make an investment between now and the end of the year.

And this would be in coastal markets, predominantly, given your comments?

It would be market where we think there is good opportunities and good growth.

Is it going to have to be like a core building or what kind of quality are you looking at?

I would say it will be more core building.

Okay. Were there any kind of one-time expenses during the quarter? It looks like there was elevation. I don't know if it was attributable to weather, bad snow or anything?

Yes, Steve, this is Chris. The majority of that increase was snow removal costs. So that was where the increase was.

It was a bad winter.

Right. You know, you guys recently reduced the amount of space you have in your headquarters quite a bit. It looks like I think you only have about one-sixth the space you had a few years ago. You guys are talking about expanding the company potentially from here it sounds like with development and acquisitions. How does a reduction in headquarters space and putting all of this up for sublease reconcile with long-term plans for the Company?

I think if you look at our subleases where we are, we used to have three floors here in about 66,000 feet here in downtown Chicago but what we have now is about a little less than a third of that, if you will. And what we've also done is, again, we've moved some people out. We have an office building out in suburban Chicago, which we have (inaudible) would start. Our Chicago Midwest group plus some of our other people. So we have plenty of space and, again, even with the reductions that we've seen, we have capacity to grow our business.

Okay. And then finally my last question is just on joint ventures. Last year you were receiving payments from CalSTRS for selling assets on their behalf. Is that still something you could receive going forward?

No, what we said in the remarks is do not anticipate anything more than what you've seen in the first quarter.

And what we got in the first quarter was $200,000 to $300,000 of additional fees, Steve.

Great. Thank you.

You're welcome. Thank you. Next question, Operator.

Ki Bin Kim with Macquarie.

Thank you. Your comments about your debt to EBITDA if you annualize the first quarter, slightly under 8 and given that the momentum you're seeing in your occupancy rates and the fact that you're getting pretty attractive refinancing rates, I would expect that 7.9 to go to the low 7's or maybe even break 7 times by 2012. And that seems like a comfortable range. What do you think about that and how does that -- how does that -- what does that mean for how much equity appetite you have?

Well first, again, we do believe we can bring that ratio down by growing cash flow, growing -- by leasing up the space and that's our number one priority. And again, from our view point, the way business is tracking, is we're feeling good about getting within the ranges of where we want to get by the end of 2012. We are always mindful of dilution. So rest assured that it's in the forefront of our mind. But we do want to have it -- some capital for offensive acquisitions and potential development. So we're going to look at everything, but we are very mindful of dilutions and we're making good progress of getting our [debt] down of debt to EBITDA to the range we want.

And in terms of capital, would it be fully on balance sheet via FR or maybe partner up with a JV partner?

I think it depends on what we buy. But in terms of -- if we're buying one-off buildings so probably put on our balance sheet. If we buy a big portfolio, it would be in combination with a joint venture partner.

I was actually referring to -- you have some land holdings in L.A. And in the Inland Empire. Are those products you're talking about when you said there is development opportunity and things like that?

Yes. The development opportunity we have, again, we have a land portfolio of about just under $100 million which has some good land in it that would -- is great land to develop. If we develop it, I would hope we develop it ourselves, versus bringing in a partner because I think the returns will be pretty good.

Okay. And last question. Any trends in April you're seeing that could help us get a little more clarity in terms of leasing or occupancy?

I would say it's more of the same. I think that again there is -- I think all of the talk over QE2 ought to be interesting and see if that closes down people's decision-making process. But we're making progress and, again, our guidance shows that we think we're going to continue to increase leasing and occupancy over the balance of the year.

Okay. Thank you, guys.

Thank you.

Suzanne Kim with Credit Suisse.

Hi, I have a couple of questions. Regarding your dispositions, you said $81 million for the second half and I'm just wondering what is driving that second half number? Do you anticipate somebody to take out a lot of the properties at once or what sort of is giving you that sort of comfort level?

Well we said it again at the beginning of the year, our goal is to do $100 million of sales from our non-strategic pool and in the first quarter, as you see, we did $18 million. We've done $12 million or so in the second quarter to date, which is only one month in. So we're on track to do the $100 million. And again we're not looking to do packages or big packages of properties, we're doing one-off and, again, we're selling our non-strategic assets, assets we do not want to hold long-term and we feel comfortable with where we are. But again it's for the balance, it's the next 3 quarters, not just 1 quarter.

Well, given what the color that you've given, provided and your certain markets, for instance the Inland Empire and how your 4Q versus this quarter, your releasing spreads sort of came down remarkably. What do you expect for the next 3 quarters? Do you expect to get into the negative single-digits by the end of the year?

Well you know, we didn't change our guidance overall. We had a good first quarter in terms of we came in at the better range -- better end of our range, minus 10%. But that again was more function of our retention was so good at 78%. So we haven't changed guidance. We hope -- the world, if it continues to get better, we should do alright. But we haven't changed our guidance as it relates to that.

Okay. Great. Thank you so much.

You're welcome.

Dan Donlan with Janney Capital Markets.

Thank you. Just first question on the discontinued ops revenues versus expenses, if I do the math there to get to an NOI, it looks like the NOI went up first quarter versus the fourth quarter. But you guys sold some properties. Did you really see an increase in rents in the discontinued ops portfolio or what is going on there?

No, actually the discontinued operations would be lost NOI, meaning we took NOI out of the core and re-classed it down to discount, Dan.

Okay, and secondly on your acquisition or, excuse me, your dispositions for the quarter, were any of those properties vacant?

Yes, one property was vacant in Abilene, Texas.

If you striped it out, what was the cap rate?

I haven't done it. It wasn't that meaningful because --

The sale was so small?

Yes.

Okay. Perfect. And then, Bruce, in your comments you mentioned that you thought FR was in a significantly undervalued versus private market sales values on a price per square foot basis and probably a cap rate basis. Could you give us some examples of some certain sales. It just seems to be so spotty in the market. I guess where do you think replacement cost is for the portfolio and have there been any portfolio sales that you can point us to?

Again, it all depends. Our portfolio, again, nationwide, so certain markets -- I mean our properties in California, we built some of the ones over $110 a foot or something like that. So we have a great portfolio in Southern California, which is mid $15, $15 net rent. So it all depends on where you are. In the Midwest, Columbus, Ohio, rent values are low. It's hard to say. But if you look at what's been sold in terms of different packages, or -- I would look what our competitors are priced at per square foot as it relates to us, I think we're a good value. But beauty is in the eye of the beholder so you have to make that judgment. And I think if you look at what they sold, the package -- that big package in Minneapolis, I think it went for about a little over $50 a foot. So I think -- maybe it was $52 a foot. So again, you look at different points. But you all should look at that. I'm just saying one person's opinion, I think we're a good value.

Okay. That's helpful. I'll circle back in the queue.

Great. Thank you.

Dave Rogers with RBC Capital Markets.

It's Mike Carroll here. Longer term, how large would you like to see your development pipeline?

It depends on what the opportunity is. I don't think you should say we want to see it -- again, we do not want land to be more than maybe 10% of our portfolio. But from our standpoint, we have some good land now. We've already paid for it. And if we can sell it if the market comes back -- again I don't think you're going to see much new development around the country. There is only a few markets where it makes sense. But Southern California and the Inland Empire has come back pretty strong so that's a decent opportunity for us.

Hey guys, it's Dave here with Mike and I had a question. I missed some of the caller earlier, but, Bruce, your comments about the stock and the value, obviously something that might make that value better would be the return of the dividend and I think that is something you would like to do. Can you give us some context and color around the hurdles you would like to see to get there and be able to re-institute that dividend subject to Board approval?

Sure, I would say a couple -- we do want to get our debt to EBITDA down a little bit from where it is today. We want to get in terms of where we are with the ability to do that, we're making good progress on that. I would say that we want to make sure we have capital to do some acquisitions and developments and a little bit of that. But we are making progress on that and it is on the forefront of our mind to see what we need to do to make that happen.

The net result of the sales, I guess, how is the impact on I guess the overall leverage metrics of the Company, particularly the fixed charge coverage?

We sold $19 million in the quarter. It has an impact but it's not a massive impact from a leverage point of view. As far as the impact on fixed charge coverage, it's probably pretty close to a break-even, considering the debt that we paid down with those proceeds.

And will that be consistent with the rest of the year?

It depends on what price we sell them at.

Fair enough. Thank you.

(Operator Instructions)

Michael Mueller with JP

Great. Thanks. Scott, I think I missed this in the comments. When you were talking about the sources of cash being greater than the uses in 2011, by I think it was $65 million, was that before any additional equity raise?

Yes, I'll just run through them quickly again. The sources were $256 million, which is our $175 million secured financing that we are planning on closing on May 2nd. Another $81 million of sales, second quarter to the fourth quarter, that gets you your $256. $191million of uses which is $129 million of our 2011 converts and $62 million of our 2012 notes. That gets us down to an excess of about $65 million. As we passed our goal on our unsecured credit facility, was to get it down to about $300 million, we need about $39 million from where we stand today to do that. That gives another $26 million of excess proceeds that we can either reinvest in other assets, acquisitions or potentially development as we mentioned before. Or we can take those funds and pay down other debt.

Got it, got it, okay. And then the second question, you talked about CapEx, RTI leasing commissions being about $2.20, $2.50 a foot for this year in terms of a range. When we look at a gross number that factors in tenant improvements, leasing commissions, CapEx reserves, et cetera, I think last year the gross number was little north of $40 million, $42 million, $43 million. Where do you see that gross number penciling out for 2011?

Where we're going to end up probably about the same. On the building improvements we're going to be right in that range, about $0.20 to $0.25 a square foot. And TI's probably up a little bit up over they were the previous year but overall range we're going to be close to that same range in the CapEx.

Okay. Great. Thank you.

Thanks.

Stuart Hindley who is a shareholder.

Yes, thank you. If memory serves, it was just over a year ago that you got some rating agency bound rates and I was wondering if you could update, if you're if the process of having those annual reviews again and maybe what your goal is to get to, say, triple B and if you think you've done enough to get there? Thank you.

Sure. Stuart, this is Scott Musil. In the fourth quarter, 2 of the rating agencies, S&P and Fitch took us off of negative watch and put us on a positive outlook. In the first quarter Moody's put us on a positive outlook. That's where we stand there. As far as getting our rating back up to the investment grade level that we were at for 2008 and prior, it we like to say the rating agencies can take you down several notches in a very quick period. But to get back those notches, it's going to be a couple of year process. So we continually work with them and communicate with them on our deleveraging plans and we'll continue to do so and hopefully we'll see some traction at some point in the future on getting our rating back.

Dan Donlan with Janney Capital Markets. Your line is open.

Thank you. I guess as a result of the range is being so forward-looking, I guess, Scott. So just a quick question on the future asset sales, do you think you guys can maintain this -- you've sold pretty much everything between high 7's and kind of high 8's. Do you think you can maintain that cap rate range?

We anticipate we can but we'll let you know each quarter how we're doing. But again, we have a goal of $100 million and we usually try to meet our goals.

Okay. And then lastly, I would just like to say, keeping the supplemental below 30 pages was a welcome surprise so thanks. (laughter)

Thank you very much.

All right, thanks.

And there are no further questions at this time. I turn the call back over to our presenters.

Great. Thank you, operator. And thank you all for participating on our call today. Please feel free to call us if you have any questions and we look forward to seeing some of you at the NAREIT conference in June in New York City. Thanks a lot. We appreciate it.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.