Prompt:
Human: We'll begin with a brief strategic overview from Randy, Mike will review the Title business, Chris will review F&G, and Tony will finish with a review of the financial highlights.
There is significant uncertainty about the duration and extent of the impact of this pandemic.
Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected.
It will also be available through phone replay beginning at 3:00 p.m. Eastern Time today through November 12.
It is our goal to ensure the health and safety of our employees while maintaining the continuity and efficiency of our operations as we strive to meet our customers needs day in and day out.
We were able to accomplish these goals and achieve superior results in the third quarter while approximately 60% of our workforce continue to work remotely.
For the third quarter, we generated record adjusted pre-tax title earnings of $528 million compared with $407 million in the year ago quarter and a 21.2% adjusted pre-tax title margin compared with an 18.6% in the third quarter of 2019, and our best since the third quarter of 2003.
While our financial results were robust, we also made strong gains advancing our technology initiatives, which are focused on improving the security, transparency and overall closing experience for FNF's customers.
Mike will go into this in more detail, but we believe that our unmatched national footprint and strong local market relationships provide FNF with a significant competitive advantage that we can further leverage with technology.
Turning to our acquisition of FGL Holdings, F&G continues to execute on its growth strategy, producing excellent sales results in the quarter while maintaining pricing discipline.
F&G's recent entrance into the bank and broker-dealer channel has surpassed expectations, and we continue to see strong momentum into the fourth quarter.
Furthermore, F&G's investment portfolio continues to perform well in the current environment.
Chris and his team also had success during the third quarter, streamlining F&G's operations as they entered into an agreement to sell F&G Reinsurance to a Aspida Holdings, a subsidiary of Ares Management Corporation.
The rationale for this divestiture was largely tied to the tax advantage of this third-party offshore reinsurance platform, which was no longer available upon FNF's acquisition of F&G.
In connection with the transaction, F&G also entered into a mutually beneficial annuity flow reinsurance partnership.
The sale of F&G Reinsurance represents a terrific outcome for F&G, its clients, employees and FNF shareholders.
The transaction is expected to close prior to year-end.
Chris will go into more detail on F&G's third quarter results shortly.
Looking forward, we continue to be committed to creating meaningful long-term value for our shareholders through our capital allocation strategy.
Most recently, we announced a quarterly cash dividend of $0.36 per share, which reflects a fourth quarter dividend increase of 9%.
In conjunction with this announcement, we announced our plans for targeting $500 million in share repurchases based on market conditions over the course of the next 12 months.
As Randy mentioned, the third quarter was a record quarter for adjusted pre-tax title earnings and produced our best quarterly adjusted pre-tax title margin since the third quarter of 2003, as we benefited from the delayed spring selling season and sustained momentum in refinance.
For the third quarter, we generated adjusted pre-tax title earnings of $528 million, a 30% increase over the third quarter of 2019.
Our adjusted pre-tax title margin was 21.2%, a 260 basis point increase over the prior year quarter.
We had a 40% increase in direct orders closed, driven by an 87% increase in daily refinance orders closed and 8% increase in daily purchase orders closed offset by a 16% decrease in total commercial orders closed.
Total commercial revenue was $216 million compared with the year ago quarter of $301 million due to the 16% decrease in closed orders and a 14% decline in total commercial fee per file.
For the third quarter, total orders opened averaged 13,200 per day, with July at 13,300; August at 13,500; and September at 13,000.
For October, total orders opened were over 11,800 per day as we continue to see a strong recovery in purchase activity and continued strength in the refinance market.
Daily purchase orders opened were up 12% in the quarter versus the prior year.
For October, daily purchase orders opened were up 15% versus the prior year.
Refinance orders opened increased by 83% on a daily basis versus the third quarter of 2019.
For October, daily refinance orders opened were up 71% versus the prior year.
Lastly, total commercial orders opened increased by 4% over the third quarter of 2019.
We continue to see steady improvement in commercial open orders per day during the quarter, with the third quarter up 32% sequentially from the second quarter.
For October, total commercial orders opened per day were up 1% over October 2019.
Our third quarter was also marked by notable achievements as we continue to invest in our digital technology initiatives as Randy noted.
We have been investing in technology and innovation designed to further enhance our existing systems and improve our customers' experience working with FNF.
One example is our StartSafe initiative, which reached a significant milestone during the third quarter.
We passed 800,000 digital opening packages delivered to buyers and sellers of residential purchase and refinance transactions and are encouraged that 60% of all packages were completed.
This high completion rate is evidence that consumers are ready to adopt a new real estate experience and a new way of interacting with title companies.
Given the widespread pandemic and our current virtual environment, now is the time to accelerate this adoption.
Our focus will continue to be centered on utilizing technology to drive efficiencies across the title life cycle, which will not only better meet the needs of real estate agents and lenders, but also improve their productivity while reducing fraud and improving security.
Looking forward, we expect the fourth quarter to moderate seasonally from what was an unusually strong third quarter.
While it remains difficult to forecast the impacts of COVID-19 on our business, we will continue to aggressively manage our expense structure orders while investing in technology to further reduce costs and increase market share.
Our growth momentum continues here at F&G coming off the second quarter where we had record sales of fixed indexed annuities.
We again had strong sales in the third quarter while maintaining our pricing discipline.
Total retail sales of $1.1 billion in the third quarter were up 34% from the prior year, and core fixed index annuity or FIA sales were $815 million, up 38% from prior year.
We continue to see meaningful runway ahead of us as we continue to take market share in our primary independent agent channel, and we're gaining traction in new channels.
In late June, we successfully launched our expansion into the financial institutions channel with one of the largest independent broker dealers in the country, and our efforts are already bearing fruit.
In the third quarter, we generated $189 million in new annuity sales in this channel, and we believe we're just now scratching the surface of opportunities in the bank and broker dealer channels.
With solid sales results, we grew average assets under management, or AAUM, to $27 billion, driven by approximately $400 million of net new business flows in the period.
Regarding spread results, total product net investment spread was 261 basis points in the third quarter, and FIA net investment spread was 347 basis points.
Our spread results are above historical trends and demonstrate our continued pricing discipline to achieve targeted spread.
The solid spread result translated to adjusted net earnings of $74 million for the quarter.
Most importantly, our investment portfolio continues to perform very well.
As of September 30, the portfolio's net unrealized gain position grew to $1.2 billion, increasing by approximately $600 million in the quarter.
Credit quality within the portfolio also remained strong.
For the nine-month period ended September 30, we have taken credit-related impairments, which we view as true economic losses of only $17 million or six basis points of the total portfolio.
This is well below our product pricing assumption and demonstrates the portfolio is performing as expected.
We also remain confident in our capital position.
We came into the pandemic with a strong balance sheet, allowing us to effectively weather economic impacts while continuing to grow the business.
Year-to-date credit impairments have resulted in a modest 5-point decrease in our RBC ratio.
Additionally, rating downgrades have resulted in a manageable 14-point decline year-to-date and we would expect this ratings migration to reverse as markets recover over the long term.
Even with the anticipated cumulative effect of credit migrations and potential rating downgrades, we expect to end the year with a strong RBC ratio at or above our 400% target.
So in summary, our sales engine is firing on all cylinders.
We continue to consistently generate and manage stable net investment spread and earnings, and we're confident in our investment portfolio and capital position.
We generated $3 billion in total revenue in the third quarter.
With the Title segment producing approximately $2.5 billion, F&G producing $442 million and the Corporate segment generating $50 million.
Third quarter net earnings were $378 million, which include net recognized gains of $73 million versus net recognized gains of $4 million in the third quarter of 2019, primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether these securities were disposed of in the quarter or continue to be held in our investment portfolio.
Excluding net recognized gains, our total revenue was $2.9 billion as compared with $2.2 billion in the third quarter of 2019.
Adjusted net earnings from continuing operations were $435 million or $1.48 per diluted share.
The Title segment contributed $391 million, F&G contributed $74 million, and the Corporate and Other segment had an adjusted net loss of $30 million.
Excluding net recognized losses of $3 million, our Title segment generated $2.5 billion in total revenue for the third quarter compared with $2.2 billion in the third quarter of 2019.
Direct premiums increased by 11% versus the third quarter of 2019.
Agency revenue grew by 19%, and escrow title related and other fees increased by 14% versus the prior year.
Personnel costs increased by 7% and other operating expenses decreased by 2%.
All in, the Title business generated a 21.2% adjusted pre-tax title margin, a 260 basis point increase versus the third quarter of 2019.
Interest income in the Title and Corporate segments of $31 million declined $26 million as compared with the prior year quarter due to the reduction of short-term interest rates on our corporate cash balances in our 1031 exchange business.
In September, we closed an issuance of $600 million of 2.45% senior notes due March 15, 2031.
The net proceeds have been used to repay all outstanding indebtedness under the one-year term loan agreement that we signed in April, which allowed us to secure the additional financing needed to close the acquisition of F&G.
F&F debt outstanding was $2.7 billion on September 30 for a debt-to-total capital ratio of 27.1%.
Our title claims paid of $50 million were $27 million lower than our provision of $77 million for the quarter.
The carried title reserve for claim losses is currently $55 million or 3.7% above the external actuary central estimate.
We continue to provide for title claims at 4.5% of total title premiums.
Finally, our title investment portfolio totaled $5.3 billion at September 30.
Included in the $5.3 billion are fixed maturity and preferred securities of $2.5 billion with an average duration of three years and an average rating of A2.
Equity securities of $600 million, short-term and other investments of $300 million and cash of $1.9 billion.
We ended the quarter with just under $1 billion in cash and short-term liquid investments at the holding company level.
 Assistant:

Chosen response:
compname reports third quarter 2020 diluted earnings per share from continuing operations of $1.39 and adjusted diluted earnings per share from continuing operations of $1.48.
compname reports third quarter 2020 pre-tax title margin of 20.4% and adjusted pre-tax title margin of 21.2%.
q3 adjusted earnings per share $1.48 from continuing operations.
q3 revenue $3.0 billion versus $2.2 billion.


Prompt:
Human: With me on the call today are Seamus Grady, Chief Executive Officer and Csaba Sverha, Chief Financial Officer.
We had another record quarter with Q2 results that exceeded our guidance and support our longer-term optimism.
In fact, based on our current outlook, we are positioned to deliver another record quarter in Q3 with strength across all key areas of our business.
Revenue in the second quarter was a record $453.8 million, representing year-over-year as well as sequential growth.
We remain focused on driving efficiencies, which helped generate margins that were at their highest levels in over a year.
As a result, earnings per share also increased year-over-year and sequentially to a record $1.10.
Our second quarter played out largely as anticipated combined with an unexpected positive surprise from automotive programs, which represented the most significant driver of upside in the quarter.
In fact, automotive revenue grew more than 30% from the first quarter and more than doubled from a year ago.
We continued to see a recovery from traditional automotive customers and even stronger growth from new automotive programs such as LIDAR, which are beginning to contribute to our growth in a more meaningful way.
We are optimistic that this momentum in the automotive space will continue into the third quarter revenue.
Revenue from industrial lasers was approximately flat and was slightly better than expected.
We expect industrial laser revenue to improve in the third quarter and we remain optimistic about the longer-term potential for increased outsourcing from this market.
In optical communications, we had anticipated that continued telecom strength would offset continuing softness from datacom products that are deployed inside the data center.
In fact, we saw modest growth in optical communications revenue in the second quarter.
Datacom revenue did moderate as we anticipated.
However, this was more than offset by stronger telecom revenue.
We are optimistic that datacom revenue will show an improvement in the third quarter and that both datacom and telecom revenue should increase sequentially.
Part of our telecom growth was driven by our optical transport systems program at Cisco, which we have discussed on past calls.
This transfer has been progressing very well and is ahead of plan.
We had been anticipating that the transfer would be largely complete by the end of our fourth quarter and we now believe we are nearly a full quarter ahead of expectations.
This faster ramp will also contribute to our anticipated growth in optical communications revenue in the third quarter.
Due to the combination of the earlier Cisco ramp, growth from new automotive customers, and continuing optimism as we execute on our strategy, we are advancing our plans to expand our manufacturing footprint.
We recently broke ground on a new 1 million square foot building at our campus in Chonburi, Thailand.
This is twice the size of our originally contemplated expansion reflecting confidence in our ability to further scale our business over the longer-term.
This expansion will roughly triple our footprint in Chonburi and will increase our global footprint by approximately 50% to 3 million square feet, providing us with considerable capacity to serve our anticipated growth.
We expect construction to take approximately 1.5 years, which means we could start to see revenue from this facility in approximately two years.
To summarize, we are very pleased that our second quarter represented record revenue and earnings with results that once again exceeded our guidance.
Our continual focus on efficiency helped produce improvements in gross margin and operating margin in the quarter.
As we continue to expand on our market leadership, we are optimistic that Q3 will be another record-breaking quarter for the company and we believe that growth from new products and programs will continue to demonstrate the success of our growth strategy as we look ahead.
We were excited to deliver a record performance that exceeded our guidance ranges.
Revenue of $453.8 million was nearly $14 million above the high-end of our guidance range.
This was our strongest revenue beat in two years and a new record.
Optical communications was $347.8 million or 77% of total revenue, up 1% from Q1.
Non-optical communications revenue was $106 million or 23% of total revenue and increased 14% from Q1.
Within optical communications, telecom revenue was $273.2 million, up 5% from last quarter.
Datacom revenue was $74.6 million, down 10% sequentially.
While datacom revenue declined as expected, we were pleased to see growth in telecom more than offset this in Q2.
We are also optimistic that datacom revenue will return to growth in the third quarter.
Silicon photonics revenue was $101.8 million, down 6% from a very strong Q1, but up 24% from a year ago.
Revenue from 100-gig products saw a decline as faster data rate products saw very significant growth.
100-gig revenue of $128.2 million was down 50% from Q1 while revenue from 400-gig and faster was $104.2 million, up 50% from last quarter and more than doubled from a year ago.
Looking at our non-optical communications business, automotive has grown to become the largest category with record revenue of $47 million in the second quarter, up 34% sequentially and more than 100% from a year ago.
As Seamus mentioned, new automotive programs which include LIDAR saw strong growth and we continue to be optimistic in this market.
Industrial laser revenue was $33.7 million, down about 1 percentage point from Q1.
Sensor revenue was stable at $2.8 million and other non-optical communications revenue was up 5% to $22.5 million.
Now turning to the details of our P&L.
Gross margin was 12.1%, up from 12% in the prior quarter.
This improvement was the result of our ongoing focus on manufacturing efficiencies and cost reductions.
Operating expenses in the quarter were $12.8 million or 2.8% of revenue.
This produced record operating income of $41.9 million or 9.2% of revenue.
Taxes in the second quarter were $1 million and our normalized effective tax rate was 3%.
Due to tax incentives at our Chonburi facility, which represents a growing portion of our profit, we now expect our effective tax rate to be about 4% for the year.
Non-GAAP net income was also a record at $41.5 million or $1.10 per share.
On a GAAP basis, net income was $35.4 million or $0.94 per diluted share.
Turning to the balance sheet and cash flow statement.
At the end of the second quarter, cash, restricted cash and investments were $488.6 million.
Operating cash flow was an inflow of $6.8 million, a decrease from the prior quarter primarily due to increased working capital in support of our strong revenue growth.
With capex of $10.1 million, free cash flow was an outflow of $3.3 million in the second quarter.
As Seamus mentioned, we have already broken ground on a new building at our Chonburi campus.
We expect incremental capex of approximately $50 million over an estimated 1.5-year construction period.
This investment is in alignment with our capital allocation strategy to invest in our longer-term growth.
During the quarter, we repurchased approximately 102,000 shares at an average price of $69.64 for a total cash outlay of $7.1 million.
These repurchases are also consistent with our capital allocation strategy.
At the end of the quarter, we had 93 [Phonetic] million remaining in our share repurchase program.
I would now like to turn to our guidance for the third quarter of fiscal year 2021.
We are optimistic that the positive trends we have been experiencing will continue in the third quarter and we expect revenue growth across all key categories.
We expect optical communication to grow sequentially.
Telecom growth is being driven by continued demand at higher data rate products combined with the earlier than expected ramping of our Cisco transfer program.
We also believe that datacom trends are becoming more positive and we anticipate modest growth in this area.
In non-optical communications, we also anticipate sequential growth.
We expect trends we have seen with new automotive programs will continue in the third quarter.
We also anticipate industrial laser revenue to increase sequentially as well.
We expect total revenue in the third quarter to be between $455 million and $475 million and earnings per share to be in the range of $1.10 to $1.17 per diluted share.
In summary, we are pleased to deliver a record second quarter result and are optimistic that the third quarter will produce another record performance.
We are excited with the growth from new programs in multiple areas coupled with our ability to expand margins.
We continue to aggressively pursue new opportunities that will further our position and driving growing revenue and profitability and enhance long-term shareholder value.
 Assistant:

Chosen response:
compname reports q2 revenue $453.8 mln.
sees q3 revenue $455 million to $475 million.
q2 revenue $453.8 million.
sees q3 non-gaap earnings per share $1.10 to $1.17.
sees q3 gaap earnings per share $0.94 to $1.01.
q2 non-gaap earnings per share $1.10.
q2 gaap earnings per share $0.94.


Prompt:
Human: These statements are based on management's expectations plans and estimates of our prospects.
Today's statements may be time sensitive and accurate only as of today's date, Thursday, April 22, 2021.
We assume no obligation to update our statements or the other information we provide.
Our call will begin with remarks by Peter Baccile, our President and Chief Executive Officer; and Scott Musil, our Chief Financial Officer.
Also on the call today are Jojo Yap, Chief Investment Officer; Peter Schultz, Executive Vice President; Chris Schneider, Senior Vice President of Operations; and Bob Walter, Senior Vice President of Capital Markets and Asset Management.
We're very pleased with our first quarter performance and we're encouraged by the continuing strong economic growth supported by improving consumer confidence and significant government economic stimulus.
Similar to our fourth quarter call, we continue to see exceptionally strong fundamentals in the industrial market.
For the recent CBRE flash report, U.S. industrial net absorption totaled 100 million square feet in the first quarter.
This marks the first time ever that demand has exceeded 100 million square feet in consecutive quarters.
Net absorption also significantly exceeded first quarter completions of 57 million square feet.
As you would expect, in response to this demand, high-occupancy levels and strong rent growth, we are continuing to invest in new development projects, which I will discuss shortly.
Before I recap first quarter results and activity, let me start by updating you in a couple of items since our last call.
As we announced earlier this month, David Harker will be retiring as Executive Vice President of our Central Region effective June 30.
David has been a valued member of the FR team since 1998 when he joined the company as our Regional Director in Nashville.
He has served our company and our shareholders as Head of our Central region since 2009 helping to shape and grow our portfolio.
We will miss Dave's enthusiasm, tenacity, and energy, and wish him well in his retirement.
With David's departure, we will consolidate our regional structure into two regions with Jojo Yap and Peter Schultz each assuming responsibility, proportions of David's region.
Marcus is a director MCSI, Inc. and was most recently the Director of Equity and the Portfolio Manager at MFS Investment Management.
Now moving on to our portfolio results for the quarter.
Occupancy at quarter-end was 95.7% and cash same-store NOI growth was 2.2%.
For the quarter, we grew cash rental rates 10.4%.
And as of today, we have renewed approximately 72% of our 2021 expirations, with a cash flow rate increase of 12.7%.
Moving on to sales; during the quarter, we sold three properties and two condo units for $67 million at an in-place cap rate of approximately 8.4%.
The vast majority of the sales total related to two larger properties leased at significantly above market rents to tenants we expect to move out.
Thus far in the second quarter, we sold the land parcel for $11 million, bringing our year-to-date total to $78 million, well on our way to our sales guidance of $100 million to $150 million.
Turning now to new investments, as we continue to seek out profitable opportunities, development remains our primary means of new investment to drive future cash flow growth.
As most of you are aware, as part of our underwriting process and to manage risk, we operate with a self-imposed speculative leasing cap.
Based on the strong fundamentals, combined with the growth of our company, our balance sheet strength, portfolio performance and our significant future growth opportunities, we believe it is prudent to increase our speculative leasing cap by $150 million to $625 million.
When we first initiated this leasing cap nine years ago, it represented approximately 9% of our total market cap.
The new cap level represents a similar percentage.
Further, we are pleased to announce two new development projects scheduled to break ground in the second quarter.
These are in addition to the three first quarter starts in the Inland Empire, Nashville and Phoenix we told you about on our February earnings call.
The first project is at our First Park 121 in Dallas comprised of two buildings totaling 375,000 square feet with an estimated investment of $30 million and a targeted cash yield of 7%.
This is the third and final phase of our park in Lewisville, adding to the three previously completed buildings that totaled 779,000 square feet.
We pre-leased the 125,000 square foot building, so we're 33% leased on the new phase prior to groundbreaking.
The other start is the second building in our First Aurora Commerce Center project in the airport submarket of Denver.
It's a 588,000 square footer adjacent to the 556,000 square foot building we completed in the third quarter of 2019 which was 100% leased within a couple months of completion.
Estimated investment is $53 million with a targeted cash yield of 6%.
This new building position us well to serve a significant demand for larger spaces we are seeing in that market and we look forward to future growth at that park on our remaining land on which we can develop three additional buildings totaling approximately 700,000 square feet.
Including these two new developments starts, our developments in process today total 3.3 million square feet with a total estimated investment of $318 million.
At a cash yield of 6.2%, our expected overall development margin on these projects is a healthy 45% to 55%.
Moving on to acquisitions, during the quarter, we bought one building and three land sites for a total purchase price of $24 million.
The existing asset is a 62,000 square foot distribution facility in the Oakland submarket.
The total purchase price was $12 million and the expected stabilized cash yield is 4.8%.
The three new land sites total 16.6 acres and are located in the Lehigh Valley in Pennsylvania, the Inland Empire East and the Oakland market of Northern California.
Total purchase price was $12 million and these sites can accommodate up to 275,000 square feet of future development.
In total, our balance sheet land today can support more than 10 million square feet of new investments and our two joint ventures can support 11 million square feet with our share of around 5 million.
So, we're well-positioned for future growth.
As always we continue to utilize the strength of our platform to secure profitable new investments.
Our team is working around the clock to execute our capital deployment plan with a focus on growth.
Let me recap our results for the quarter.
Net refunds from operations were $0.46 per fully diluted share compared to $0.45 per share in 1Q 2020.
And our cash same-store NOYI growth for the quarter, excluding termination fees and a gain from an insurance settlement, was 2.2% primarily due to an increase in rental rates on new and renewal leasing, and rental rate bumps embedded in our leases partially offset by lower average occupancy.
Summarizing our outstanding leasing activity during the quarter, we commenced approximately 3.3 million square feet of leases.
Of these, 600,000 were new; 2.3 million were renewals and 500,000 were for developments in acquisitions with lease-up.
Tenant retention by square footage was 76.5%.
Cash rental rates for the quarter were up 10.4% overall, with renewals up 8.3%, and new leasing, 17.8%.
And on a straight-line basis, overall rental rates were up 21.4% with renewals increasing 17.6% and new leasing up 35.5%.
Now on to a few balance sheet metrics; in March 31, our net debt plus preferred stock to adjusted EBITDA is 4.8 times and the weighted average maturity of our unsecured notes, term loans, and secured financings was 6.1 years, with a weighted average interest rate of 3.6%.
Key assumptions for guidance are as follows: quarter-end average in-service occupancy of 95.75% to 96.75%, an increase of 25 basis points at the midpoint, helped by property sales in the first quarter; same-store NOI growth on a cash basis before termination fees of 3.5% to 4.5%, an increase of 50 basis points at the midpoint to the first quarter performance and property sales in the first quarter.
Please note that our same-store guidance excludes the impact of approximately $1 million from the gain from an insurance settlement.
Our G&A expense guidance remains unchanged at $33 million to $34 million.
In total, for the full year 2021, we expect to capitalize about $0.05 per share of interest.
And lastly, guidance also reflects the expected payoff of $58 million of secured debt in the third quarter, with an interest rate of 4.85%.
We're off to an excellent start in 2021.
Our team's focused on capitalizing on the positive momentum generated by the recovering economy and the continuing evolution and growth in the supply chain.
 Assistant:

Chosen response: q1 ffo per share $0.46.


Prompt:
Human: These statements are based on management's expectations, plans and estimates of our prospects.
Today's statements may be time-sensitive and accurate only as of today's date, Thursday, July 23, 2020.
We assume no obligation to update our statements or the other information we provide.
Also on the call today are Jojo Yap, our Chief Investment Officer; Peter Schultz, Executive Vice President; Chris Schneider, Senior Vice President of Operations; and Bob Walter, Senior Vice President of Capital Markets and Asset Management.
I hope that you and yours are maintaining your health as we all work through these challenging times.
Before we discuss the quarter, we would like to express our gratitude and bid farewell to an important member of the First Industrial family.
As we previously disclosed, Bruce Duncan has retired from our Board.
As many of you know, Bruce has taken on a new challenge as CEO of another REIT.
Bruce joined First Industrial as our CEO in 2009 during a difficult period and provided tremendous leadership to help stabilize and transform our business model and portfolio.
We wish Bruce well in his new role.
As you may also have seen, seasoned FR Director, Matt Dominski, has taken over as Chairperson.
Matt has been a highly productive member of our Board since 2010.
We are thrilled to have Matt as our new Chair and look forward to his continued counsel and leadership.
Moving now to the quarter.
We produced strong results demonstrated in several different areas, including collections, leasing, investment and capital markets.
Our regional teams have done a fantastic job in the second quarter on collections.
As of yesterday, we have collected 98% of 2Q monthly rental billings and so far, we've collected 97% of July billings, which is ahead of the pace we experienced in the second quarter.
If we include collections from government-related tenants that regularly pay at the end of the month, our collection rate for July would also be 98%.
About 65% of the outstanding monthly rental billings in the second quarter were in jurisdictions that have moratoriums on the landlord's right to evict, which we believe, is a contributing factor toward the open receivables for this group.
To be clear, in our calculation of this collections percentage metric, the numerator reflects cash collections and we do not give ourselves credit under our methodology for the application of security deposit.
In addition, the denominator reflects the total monthly rental billings and is not reduced for any reserves for bad debt expense or rent deferrals.
Including surrendered security deposits and bad debt reserves recognized in the second quarter, our outstanding accounts receivable related to our monthly rental billings in 2Q is only $550,000.
Rent relief requests have tapered off to a minimum.
During the COVID-19 crisis to-date, we have established rent deferment agreements with 14 tenants totaling $750,000 or about 18 basis points of annualized billings.
The average term for these deferrals is 1.3 months.
It appears the government stimulus has helped a number of our customers and business leaders in general are more optimistic about their prospects.
The industrial business continues to perform well as commerce continues to flow through logistics facility.
As you've seen, economic activity has improved since March and April and our customers and prospects are moving ahead with new space requirements albeit with caution, in some cases.
In its second quarter preliminary flash report, CBRE reported 19 million square feet of net absorption versus 56 million square feet of completion.
These figures should not be a surprise given the economic slowdown attributable to COVID and the resulting drop in Q2 leasing activity.
However, we are optimistic about our long term prospects given the acceleration of e-commerce adoption and the potential for additional safety stock, generating incremental demand for logistics space.
This view is supported by CBRE's recent forecast that annual net industrial absorption will total more than 333 million square feet by 2022.
If they are right, net absorption for the sector will exceed the high watermark, post a great financial crisis of 324 million square feet in 2016 and the all-time mark of 329 million square feet in 2000.
Despite completions exceeding net absorption nationally in the quarter, our portfolio occupancy increased to 97.7% at quarter-end.
We also achieved a big leasing win at our Nottingham Ridge Logistics Center in the I-95 North submarket in Baltimore.
We leased 100% of the 585,000 square foot Building A to a leading e-commerce provider on a long term basis, which commenced in late June.
Considering we purchased this asset in the first quarter, we leased this property significantly ahead of the 12-month lease-up budgeted in our guidance.
With just 54,000 square feet remaining to lease, we are now 93% occupied at this 751,000 square foot two-building project.
Looking more closely at our portfolio performance.
As of July 22nd, we have signed 83% of our 2020 lease expirations at a cash rental rate increase of 8.6%.
For the full year, we expect our cash rental rate change on new and renewal leasing to be approximately 10%.
The investment market has begun to awaken after a fairly quiet period in which we saw the bid-ask spread widen a bit.
Most offerings had been shelved as participants saw more clarity on the direction of the economy and asset values.
The federal government stimulus actions certainly helped to quell some of those concerns and based on what we are seeing and hearing, pricing has returned to pre-COVID levels and in some cases is higher.
We were able to make a few acquisitions during the quarter in some high barrier markets.
We acquired a 39,000 square-footer in Fremont in Northern California and added an adjacent building comprised of 46,000 square feet.
The aggregate purchase price was $17.8 million with a weighted average initial yield of approximately 4.6%.
We also added a 9.7-acre covered land investment in the Inland Empire for $3.5 million.
The site has a 3% in-place yield for the next several years, generating some cash for us as we entitled the site.
The site will accommodate a 155,000 square foot development.
Thus far in the third quarter, we have closed on a 6.6-acre site in Seattle for $6.1 million that can accommodate a 129,000 square foot building.
We are also excited to launch a new build-to-suit development at our First Nandina II site in the Inland Empire.
The building will be 221,000 square feet and it's leased on a long term basis to a manufacturer of material handling systems.
Total investment is $22.4 million and the initial cash yield will be approximately 6.2%.
We are proceeding with all of our developments in process, which totaled 1 million square feet and a total investment of $94.7 million at June 30th.
In addition to our on-balance sheet developments, construction on the 643,000 square foot spec building in our Phoenix joint venture at PV303 is progressing well.
Our portion of the investment is $21 million and our targeted yield is 7%.
Our on-balance sheet land holdings will accommodate approximately 13 million square feet of future developments, the vast majority of which is entitled and ready to go.
We continue to move ahead on infrastructure work at several sites so that we are prepared to launch when we think economic conditions in the specific submarkets justify new starts.
In the second quarter, we sold three buildings totaling 211,000 square feet for $14.6 million.
These were comprised of a building in Detroit, one in Chicago and our last asset in Indianapolis.
Year-to-date, we sold 437,000 square feet for a total of $41.1 million.
As a reminder, in the third quarter, we expect to close on the $55 million sale in Phoenix, in which the tenant exercised its purchase option in 2019.
Moving to our recent capital markets activity.
On July 7th, we entered into a private placement agreement to issue $300 million in total of 10 and 12 year notes with a weighted average interest rate of 2.81%.
On July 15th, we closed on an extension of our term loan that was scheduled to mature in January of 2021.
These two executions provide us additional capital for new investment and lengthen our maturity schedule.
So all in all, a successful and very busy quarter with great execution by our team.
I will begin with our earnings per share and FFO for the second quarter.
Diluted earnings per share was $0.28 versus $0.31 one year-ago and NAREIT funds from operations were $0.46 per fully diluted share compared to $0.43 per share in 2Q 2019.
Second quarter 2020 FFO includes approximately $500,000 of cash bad debt expense related to tenant accounts receivable and $400,000 of non-cash bad debt expense related to the write-off of certain deferred rent receivables.
Pier 1 has paid July rents and we are assuming they pay August rent, which in total represents a $500,000 pick up from our prior guidance.
Occupancy was strong at 97.7%, up 60 basis points from the prior quarter and up 40 basis points from a year-ago.
As for leasing volume during the quarter, we commenced approximately 2.9 million square feet of leases, 600,000 were new, 1.6 million were renewals and 700,000 were for developments and acquisitions with lease-up.
Tenant retention by square footage was 88.7%.
Same-store NOI growth on a cash basis, excluding termination fees, was 6.3% helped by increase in rental rates on new and renewal leasing, a decrease in free rent and rental rate bumps embedded in our leases.
This was partially offset by increase in bad debt expense and slightly lower average occupancy.
Cash rental rates were up 11% overall with renewals up 8.9% and new leasing 16.7%.
And on a straight-line basis, overall rental rates were up 32.4% with renewals increasing 30.6% and new leasing up 37.5%.
As Peter mentioned, we executed on two capital market transactions in the third quarter that extend and ladder our maturities at attractive rates.
First, we entered into an agreement to issue $300 million of fixed rate senior unsecured notes in a private placement offering.
The notes are comprised of two tranches, $100 million with a 10-year term at a rate of 2.74% and $200 million with a 12-year term at a rate of 2.84%.
We expect to close on the offering on or about September 17th of this year.
On an interim basis, we will use these funds to pay down our line of credit, which will give us more liquidity to fund new investment and a secured debt maturity in 2021.
We also refinanced our $200 million unsecured term loan, previously scheduled to mature at the end of January 2021.
The new loan has an initial maturity date of July 2021, which we can push to July 2023 via two one-year extensions exercisable at our option.
The loan features interest-only payments and bears an interest rate of LIBOR plus 150 basis points.
In conjunction with the new term loan, we entered into new interest rate swap agreements that convert the loan to a fixed interest rate of 2.49%, beginning in February 2021.
In 2021, we will realize about a penny per share of savings due to this refinancing.
After these two executions, one of our remaining 2021 maturities is the aforementioned $63 million of secure debt in the fourth quarter.
We can pay that off using our line, which will have additional capacity created by the proceeds from our private placement offering.
The other is our line of credit, which matures in October of 2021, but we can push that out another year through a one-year extension exercisable at our option.
Our leverage is also in good shape with our net debt plus preferred stock to EBITDA at 5.2 times at January -- at June 30th.
Our guidance range for NAREIT FFO and FFO before one-time items is now $1.76 to $1.84 per share with a midpoint of $1.80.
This is an increase of $0.02 per share compared to the midpoint of our guidance on our first quarter call.
The increase is primarily due to the early lease up of the 585,000 square foot building at the Nottingham Ridge Logistics Center as well as two months of additional rental income from Pier 1.
This is slightly offset by additional interest expense based on our assumption that we use the funds from our private placement offering to pay down our line of credit in the near term.
Our assumption for the average -- for the range of average quarter-end occupancy remains 96% to 97% and our cash bad debt expense assumption remains $900,000 for each of the third and fourth quarters.
Please note that guidance does not include any potential write-offs of deferred rent receivables related to tenants that are having financial difficulties.
Other key assumptions for guidance are as follows, same-store NOI growth on a cash basis before termination fees of 3.25% to 4.25%, an increase of 25 basis points at the midpoint and a tightening of the range.
Our G&A guidance range remains at $31 million to $32 million and guidance also includes the anticipated 2020 costs related to our completed and under construction developments at June 30th, plus the third quarter start of First Nandina II.
In total, for the full year 2020, we expect to capitalize about $0.04 per share of interest related to our developments.
The impact of any future gain related to the final settlement of one insurance claim from a damaged property.
And guidance also excludes the potential issuance of equity.
Our company is built for the long term and we are well positioned to drive cash flow growth for shareholders by serving logistics needs of a range of essential and emerging businesses, while capitalizing on the secular drivers of e-commerce.
With that, we will now move to the question-and-answer portion of our call.
 Assistant:

Chosen response:
compname reports second quarter ffo per share of $0.46.
q2 ffo per share $0.46.
q2 earnings per share $0.28.
2020 ffo guidance increased $0.02 at midpoint to $1.80 per share/unit primarily reflecting portfolio performance.


Prompt:
Human: These statements are based on management's expectations, plans and estimates of our prospects.
Today's statements may be time-sensitive and accurate only as of today's date, Thursday, February 11th, 2021.
We assume no obligation to update our statements or the other information we provide.
Also on the call today are Jojo Yap, our Chief Investment Officer; Peter Schultz, Executive Vice President; Chris Schneider, Senior Vice President of Operations; and Bob Walter, Senior Vice President of Capital Markets and Asset Management.
We hope you're doing well and staying healthy.
2020 was a year unlike any other and one which we would each like to put in our very distant memory.
Notwithstanding the turmoil, fear and uncertain operating environment, the FR team remain focused, executed the plan and performed admirably generating outstanding results for shareholders.
Our portfolio performance was strong.
We maintained high occupancy levels, grew cash rents and collected over 99% of build rents, more on that in a moment.
We capped off 2020 with an excellent fourth quarter.
We delivered year-end occupancy of 95.7%, up 70 basis points from the guidance midpoint provided on our third quarter call.
This was driven primarily by leasing at our developments and one of our replacement tenants in Southern California taking occupancy earlier than anticipated.
For the full year, we grew cash rental rates 13.5%, which is the second highest in our company's history, just behind the 13.9% growth we achieved in 2019.
These metrics reflect consistently strong tenant demand for high-quality logistics space.
In our markets, we're seeing well located and highly functional space being absorbed by e-commerce and other traditional users and their efforts to optimize supply chain.
The positive fourth quarter leasing statistics nationally are consistent with our own experience as CBRE's preliminary figure for net absorption is 104 million square feet, the highest quarterly result in the last four years and exceeding the 69 million square feet of 4Q completions.
For the full year, net absorption was 224 million square feet, 15% higher than 2019.
Completions were 265 million square feet, an increase of 10% over 2019.
In 2021, we expect to capitalize on our current land holdings as well as new acquisitions to generate more growth and value creation.
We're also focused on making progress in realizing the three-year cash flow growth opportunity we laid out for you at our Investor Day this past November.
I'm pleased to say we're off to a strong start as we've signed leases for approximately 54% of our 2021 rollovers and a cash rental rate increase of approximately 13%.
This early performance is consistent with the 10% to 14% increase we expect on our new and renewal leasing for the full year 2021.
Our expirations for the balance of 2021 are fairly granular with our largest remaining rollover now a 400,000 square footer where the tenant is expected to vacate in May.
I'd like to highlight several big leasing wins and some of our developments.
As evidence of the strength of the South Florida market, we're pleased to announce we have signed a long-term lease for 100% of the three-building First Cypress Creek Commerce Center with a single e-commerce tenant.
This project totals 377,000 square feet and the lease commenced right at completion on February 1st.
Our total investment is $37.1 million and our first year stabilized cash yield is 6.6%.
In the Inland Empire at our First Redwood project, we signed and commenced leases for both the 358,000 and the 72,000 square foot facilities in the fourth quarter.
And just this week, we fully leased the remaining 44,000 square foot building.
Given our own experience and the strong market dynamics reflected in CBRE's fourth quarter update report, which shows the Inland Empire vacancy rate at 1.9%.
We're excited to be readying our next start in that market, which I will discuss shortly.
Also in the fourth quarter in Dallas, we signed two leases at First Park 121 to bring a pair of buildings there to 100% occupancy.
The first was for the remaining 101,000 square feet at the 434,000 square foot Building E and the second was a 25,000 square foot expansion at Building B. Each of these leases is a reflection of the continued strong demand for high-quality logistics space and the effort and talent of our leasing teams across the country.
Turning to new development starts.
We've broken ground PV 303 Building C in Phoenix on our wholly owned site.
This 548,000 square foot cross-dock facility is our fourth speculative development in this highly sought after size range since 2017.
Each of our prior projects in this market was fully leased at or near completion.
Total investment for this new development is approximately $42.6 million with a targeted cash yield of 6.6%.
Turning now to the new project in the Inland Empire I referenced.
We are planning to break ground in the coming weeks on First Wilson I, a 303,000 square foot facility in the I-215 corridor of the Inland Empire.
This is a $30.2 million development with a targeted completion at the end of December and a projected cash yield of 6.3%.
Lastly, we will be starting a 500,000 square foot development in Nashville known as First Rockdale IV.
The site is located within a park where we have successfully developed buildings over the years.
Tennessee was among the fastest growing states in the US during 2020 and Nashville is its largest city.
We've seen increased absorption and leasing activity for large distribution centers in this sub-market and are excited about this opportunity.
Total investment is approximately $26.8 million with a targeted cash yield of 7.2%.
Summing up our development activity in 2020, we placed in service 10 buildings totaling 2.5 million square feet with an estimated investment of $222 million.
These assets are 79% leased at an estimated cash yield of 7.2% upon full lease up.
This represents an expected overall margin of 58% to 68%, which is about a $1 per share of NAV.
One additional item of note regarding our highly successful JV in Phoenix.
As we discussed on our third quarter call, we successfully leased the 644,000 square foot spec building at PV 303 to a single tenant.
Upon completion in the fourth quarter, we negotiated the acquisition of our partners' interest in the building, reflecting a total purchase price of $42.6 million, which is net of our $5.2 million share of the joint venture's gain on sale and incentive fee.
Moving now to dispositions.
During the quarter, we sold 15 properties for $97.1 million at an in-place cap rate of approximately 6.4%.
In 2020, excluding the previously reported purchase option related sale in Phoenix, we sold 1.9 million square feet for a total of $153.4 million, essentially at the midpoint of our target sales guidance range for the year.
For 2021, our guidance for sales is $100 million to $150 million.
In the coming weeks, we anticipate selling a 664,000 square foot building in Houston at a sales price of approximately $42 million.
Given its very high probability of closing, we are including the impact of this sale in 2021 guidance.
Aside from the first quarter sale I just mentioned, we expect the majority of the remaining 2021 sales to be back-end loaded.
Based upon our strong 2020 performance and 2021 outlook, which Scott will discuss shortly, our Board of Directors has declared a dividend of $0.27 per share for the first quarter of 2021.
This is a $1.08 per share annualized, which equates to an 8% increase from 2020.
This dividend level represents a payout ratio of approximately 69% of our anticipated AFFO for 2021 as defined in our supplemental.
To wrap it up, we had an excellent quarter to end the year on a high note.
We're very excited about the strength of our platform and our future development pipeline, both of which position us well to benefit from continued strong fundamentals in the industrial market and to take advantage of the growth opportunities that are to come in 2021.
Let me recap our results.
NAREIT funds from operations were $0.44 per fully diluted share compared to $0.45 per share in 4Q 2019.
For the full year, NAREIT FFO per share was $1.84 versus $1.74 in 2019.
I remind you that our full year 2020 includes income related to the final settlement of two insurance claims for damaged properties recognized in prior quarters.
This was partially offset by a restructuring charge in costs related to the accelerated vesting of equity awards for retirement eligible employees.
Excluding the impact of approximately $0.04 per share related to these items, 2020 FFO per share was $1.80.
Now a quick update on our collection experience.
We have collected 99% of the 2020 monthly rental billings every month since April.
And effectively it would be 100% if we factored in reserves.
We are also pleased to announce all tenants with deferral agreements and paid back those obligations in full and we currently have no other agreements outstanding.
In another bit of good news, we have closure on one of our last tenants on the watchlist that we discussed in our last call.
This tenant occupied a 137,000 square foot building in the Chino submarket of the Inland Empire West and vacated on December 31st.
Due to the great work of our Southern California team, we were able to lease 100% of the building on a long-term basis with only one month of downtime at a cash rental rate increase of 28%.
In the fourth quarter, we also wrote off the $1.1 million of cash in straight-line rent receivable related to this tenant.
In doing so, we have taken care of the last material accounts receivable exposure related to our COVID-related watchlist.
Summarizing our outstanding leasing volume during the quarter, we commenced approximately 4.4 million square feet of leases.
Of these, 700,000 square feet were new, 1.6 million square feet were renewals and 2.1 million square feet were for developments and acquisitions with lease up.
Tenant retention by square footage was 80.6%.
For the quarter, same-store NOI growth on a cash basis, excluding termination fees, was 1.3% helped by an increase in rental rates on new and renewal leasing and rental rate bumps embedded in our leases, partially offset by lower average occupancy and an increase in free rent.
For the full year 2020, cash same-store NOI growth before lease termination fees was 4.4%.
Cash rental rates for the quarter were up 10.4% overall with renewals up 8.6% and new leasing 12.8%.
On a straight-line basis, overall rental rates were up 25.5% with renewals increasing 25.9% and new leasing up 25.1%.
For the year, cash rental rates were up 13.5%, which as Peter mentioned is the second highest in the company's history.
On a straight-line basis, they were up 29.7%.
Now on to a few balance sheet metrics.
At December 31st, our net debt plus preferred stock to adjusted EBITDA is 4.8 times and the weighted average maturity of our unsecured notes, term loans and secured financings was 6.3 years with a weighted average interest rate at 3.7%.
Our guidance range for NAREIT FFO is $1.85 to $1.95 per share with a midpoint of $1.90.
Key assumptions for guidance are as follows; quarter end average in-service occupancy for the year of 95.5% to 96.5%; our cash bad debt expense assumption for 2021 is $2 million, consistent with last year's pre-pandemic assumption.
Same-store NOI growth on a cash basis before termination fees of 3% to 4%.
We expect our G&A expense to approximate $33 million to $34 million.
In total, for the full year 2021, we expect to capitalize about $0.05 per share of interest related to these developments.
Guidance reflects the impact from the $42 million sale in Houston, expected to close in the first quarter that Peter discussed, which could be as much as $0.02 per share of FFO impact in 2021 depending on redeployment of the anticipated proceeds.
The guidance also reflects the expected pay off of $58 million of secured debt in the third quarter with an interest rate of 4.85%.
Other than previously discussed, our guidance does not reflect the impact of any other future sales, acquisitions or new development starts, the impact of any future debt issuances, debt repurchases or repayments and guidance also excludes the potential issuance of equity.
Before we open it up to questions, let me congratulate our team for their outstanding performance in 2020.
It was the kind of year that is impossible to prepare for.
There is no training for how to manage the business through a pandemic, especially one accompanied by social and political unrest not seen in decades.
The true leaders emerged during a crisis and when they have managed well and the crisis has passed, to most it may not have felt like a crisis at all.
This is what we experienced within our company across every role in every region.
I couldn't be more proud to work with such a talented group of people nor more excited about the opportunities ahead.
With that, we will now move to the question-and-answer portion of our call.
 Assistant:

Chosen response: q4 ffo per share $0.44.2021 ffo guidance initiated at a range of $1.85 to $1.95 per share/unit.


Prompt:
Human: I'm going to give a very brief overview of our first quarter results and afterward I'll pass the call to George for his comments.
We reported funds from operations or FFO of $18 million or $0.17 per share for the first quarter of 2021.
Turning to our balance sheet at March 31, 21, we had a total of $947.5 million of unsecured debt outstanding, including $27.5 million drawn on our line of credit.
At quarter end, between cash on hand and availability on our line, we had a total liquidity of about $577 million.
As a reminder, all of our debt is unsecured and we have no debt maturities until November 30, '21 when $155 million of term loans will become due.
Our debt is at fixed rates, other than the $27.5 million that sits on our line of credit, which is a floating rate.
As the vaccinations against COVID-19 continue to steadily rise in the U.S., so too, are we seeing a slow but steady increase in existing office tenants personnel returning to work at our properties and corporate decision makers more actively considering there are future locational office space needs.
Trying to determine the ultimate strength, timing and longevity of the post-pandemic U.S. and global economic reopening is a significant challenge for companies trying to make intelligent new leasing decisions today.
But real on the ground, very early activity surrounding potential new leasing prospects that FSPs portfolio properties has not been this robust since before the start of the COVID-19 pandemic.
As 2021 progresses, assuming continued successful vaccination efforts against the virus, FSP is optimistic that one of its two major objectives for 2021, that is leasing progress, will achieve positive results.
Our other primary objective for 2021 is debt reduction.
From a debt reduction perspective, we are actively working on the potential sale of select properties that we believe have their near-term value objectives, and where we believe such value may not be fully reflected in our share price.
We are reaffirming our previously announced 2021 disposition guidance to be in the range of $350 million to $450 million in aggregate gross proceeds.
Disposition proceeds are intended to be used primarily for debt reduction.
If successful in our property disposition efforts during 2021 and along with our previously achieved sale of our f Emperor Boulevard property in the fourth quarter of last year, FSP is projecting it will reduce its total indebtedness by approximately 35% to 50% by the end of the year.
And while losing some of the current positive FFO spread that is generated between rental constance and debt constance from the property disposition debt pay down plan, we believe shareholders should maintain our NAV per share with less risk to their NAV from lower debt levels capitalizing the remaining property portfolio, while the company gains more overall flexibility in it's ongoing real estate investing activities.
We also believe that along with meaningful dividends that may be distributed during 2021, the remaining lower leverage property portfolio moving into a post-COVID 2022, has a significant value-add proposition associated with it, that if achieved, could meaningfully enhance shareholder NAV values further from 2021 levels.
At this time, due primarily to the uncertainty surrounding the timing and the amount of proceeds from property dispositions, we are continuing suspension of net income and FFO guidance.
FSP remains committed to its Sunbelt and Mountain West office focus that emphasizes markets and properties with compelling long-term population and employment growth potential.
We continue to look forward 2021with anticipation and optimism.
At the end of the first quarter, the FSP portfolio including redevelopment was approximately 81% leased.
The average leased occupancy of the portfolio for calendar 2020 was approximately 83.6%.
Rent collections were greater than 99.5% for the first quarter of 2021.
The physical occupancy of the majority of office buildings continues to increase with suburban assets leading the way, particularly in the Sunbelt markets.
The typical occupancy in FSPs suburban office buildings now exceeds 20%, with some buildings approaching 40%.
Urban buildings in FSPs markets has not exceeded 20% occupancy on average yet.
However, we expect that to change during the summer months as the new school year arrives in the fall.
The number of announcements for large companies that are inviting employees back to the offices by July have been increasing during the past month.
These are all positive signs and we expect this trend to continue.
We are extremely encouraged by meaningful growth in FSPs pipeline of prospective tenants.
During the last two months, FSP has witnessed a significant increase in property tours, submitted RFPs and counter proposals.
FSP is currently tracking approximately 800,000 square feet of new prospective tenants that have shortlisted FSP assets compared to approximately 300,000 square feet last quarter.
FSP has been engaged with existing tenants and sub tenants for approximately 250,000 square feet of renewals and expansions.
Barring any surprises, the potential for aggregate net absorption over the next six months to 12 months is approximately 600,000 square feet.
These figures are the highest we have witnessed since the first quarter of 2020.
During the past six months, FSP has finalized renewals and expansions with tenants exceeding 870,000 square feet.
As a result, we have reduced the near-term rollover exposure of expiring leases through 2023 to approximately 18% of the total portfolio.
This equates to roughly 6% of annual lease expirations from 2021 through 2023.
Coupled with improving demand in FSPs office markets, the foundation appears to be set for FSP to make meaningful progress regarding net absorption and higher leased occupancy.
We here at Franklin Street Properties hope that everyone remains safe and healthy.
I wanted to discuss FSPs disposition goals for 2021 and our in-progress work to achieve these objectives and then shift gears to provide some insight as to what we are seeing on the ground at this early stage of our price discovery work in the marketplace.
First, though, FSP is reaffirming our guidance of between $350 million and $450 million of select dispositions for calendar year 2021.
The objective of our disposition plan once again is primarily to pay down debt in order to gain greater financial flexibility and to position for stronger value and returns for our shareholders.
The key determinant for any dispositions will be an assessment of whether a property has met its respective near-term value objectives, which we also believe has the potential to capture embedded value for our shareholders that may not be accurately reflected within our current share price.
We also would like to reemphasize that FSP remains committed to our Sunbelt Mountain West strategic market focus, where we continue to believe long-term business and population growth has the potential to exceed the national average.
Looking at potential dispositions for 2021, at this time, FSP is working on the following properties; River Crossing in Indianapolis, Timberlake Corporate Center in Greater St. Louis, Meadow Pointe in Northern Virginia, Innsbruck Corporate Center in Greater Richmond, Laven Tech Center in Northern Virginia, One & Two Ravinia Drive, and One Overton Park, all in the Greater Atlanta.
For both competitive purposes and reasons of confidentiality, we will not be discussing specific property pricing or targets, cap rates or related information at this time.
However, we do anticipate that if we are successful with our efforts under way, that FSP would satisfy our disposition guidance for 2021.
Lastly, we wanted to share what we are seeing at least in an aggregate sense within the investment marketplace at this early stage of our price discovery process work, especially since the volume of office sales nationally has declined over recent quarters due to the pandemic, as FSP and our associated professionals work on price discovery, we have experienced solid initial interest.
Feedback is generally fallen within three basic views with respect to investment in office properties.
One view is from a segment of investors who have a generally positive view of office at this time.
And this group of investors are by and large bullish on the reopening of the economy and the potential power that the vaccine rollout across the nation and globe can have on office assets.
Generally, these investors, while selective, are looking at both multi-tenant and single-tenant profile assets in high-quality buildings and some also appear to be selectively underwriting value add upside potential.
A second view comes from investors who are also interested in an office investment, but was a bit less conviction and our accordingly more focused on fully stabilized properties with compelling weighted average lease terms and high quality.
We are currently seeing interest from both of these two profiled groups via confidentiality agreements as well as from property tours, and largely coming from an array of mostly private investors.
And we recognize and appreciate that interest is only their interest, it has not defined pricing yet, and certainly not actual closing numbers, but it is at least a gauge of potential activity at this early stage of our price discovery process work and so should be viewed within that context.
A third segment of investors also exists, who're yet to be convinced of economic stabilization from the pandemic and so are reluctant to commit to investment at this time.
These three views are all being seen in our disposition work and show us that there is indeed a market to be made for price discovery and over the coming months, we will continue to keep the market posted as we learn more about true pricing and actual demand.
And at this time, we'd like to open up the call for any questions.
 Assistant:

Chosen response:
q1 ffo per share $0.17.
maintains 2021 disposition guidance.


Prompt:
Human: I'm Ian Hudson, the company's Chief Financial Officer.
Also with me on the call today is Jennifer Sherman, our President and Chief Executive Officer.
These documents are available on our website.
In addition, we will file our Form 10-Q later today.
I'm going to begin today by providing some detail on our second quarter results before turning the call over to Jennifer to provide her perspective on our performance, market conditions and thoughts on the rest of the year.
In summary, we delivered another outstanding quarter with operating results exceeding our expectations despite dramatic increases in commodity costs and ongoing supply chain disruption, including factors linked to the global shortage in semiconductors.
As a reminder, in the prior year quarter, we also took several cost saving actions in response to the uncertainty created by the pandemic, which reduced our costs in Q2 last year by approximately $14 million.
While most of these savings were either temporary cost reductions or volume related, some were more permanent actions.
In Q2 this year, the return of many of these costs represented a year-over-year expense headwind of approximately $5 million.
Consolidated net sales for the quarter were $335 million, up $65 million or 24% compared to last year.
Consolidated operating income for the quarter was $38.5 million, up $7.2 million or 23% compared to last year.
Consolidated adjusted EBITDA for the quarter was $51.9 million, up $6.5 million or 14% compared to last year.
That translates to a margin of 15.5% in Q2 this year compared to 16.8% last year.
Net income for the quarter was $29.7 million, up from $21.4 million last year.
That equates to GAAP earnings per share for the quarter of $0.48 per share, up 37% from $0.35 per share last year.
On an adjusted basis, earnings per share for the quarter was $0.50 per share, an improvement of 19% compared to $0.42 per share last year.
Order intake for the quarter was again outstanding with orders of $361 million representing an increase of $159 million or 79% compared to Q2 last year.
Consolidated backlog at the end of the quarter set a new company record at $437 million.
That represents an increase of $104 million or 31% compared to Q2 last year and an increase of $133 million or 44% from the end of last year.
In terms of our group results, ESG's net sales for the quarter were $281 million, up $67 million or 31% compared to last year.
ESG's operating income for the quarter was $38.5 million, up $9.9 million or 35% compared to last year.
ESG's adjusted EBITDA for the quarter was $50.6 million, up $9.7 million or 24% compared to last year.
That translates to an adjusted EBITDA margin for the quarter of 18% at the high end of our current target range but down a 110 basis points compared to last year.
ESG reported total orders of $300 million in Q2 this year, an improvement of $142 million or 90% compared to last year.
SSG's net sales for the quarter was $53 million compared to $56 million in Q2 last year, which included a large fleet sale of public safety equipment to a customer in Europe.
SSG's operating income for the quarter was $7.8 million compared to $10.4 million last year.
SSG's adjusted EBITDA for the quarter was $8.7 million compared to $11.7 million last year.
Adjusted EBITDA margin for the quarter was 16.3% compared to a record margin of 20.9% in Q2 last year, which included favorable sales mix and lower operating expenses.
SSG's orders for the quarter were $61 million, up $17 million or 39% compared to last year, with most of the improvement resulting from higher demand for public safety equipment in both domestic and international markets.
Corporate operating expenses for the quarter were $7.8 million compared to $7.7 million last year.
Turning now to the consolidated income statement, where the increase in sales contributed to an $11.3 million improvement in gross profit.
Consolidated gross margin for the quarter was 24.4% compared to 26% last year.
As a percentage of sales, our selling, engineering, general and administrative expenses for the quarter were down a 100 basis points from Q2 last year.
Other items affecting the quarterly results include a $1.3 million reduction in restructuring charges, a $2.3 million decrease in other expense and a $700,000 reduction in interest expense.
Tax expense for the quarter increased by $1.9 million, largely due to the increase in pre-tax income levels, partially offset by higher excess tax benefits from stock compensation activity.
Including the effects of these higher tax benefits, our effective tax rate for the quarter was 21.2% compared with 22.2% last year.
At this time, we expect our full year effective tax rate to be approximately 23%.
On an overall GAAP basis, we therefore earned $0.48 per share in Q2 this year compared with $0.35 per share in Q2 last year.
To facilitate earnings comparisons, we typically adjust our GAAP earnings per share for unusual items recorded in the current or prior year quarters.
In the current year quarter, we made adjustments to GAAP earnings per share to exclude acquisition-related expenses, pension-related charges, coronavirus-related expenses and purchase accounting expense effects.
On this basis, our adjusted earnings for the quarter were $0.50 per share compared with $0.42 per share last year.
Looking now at cash flow, where we generated $13 million of cash from operations during the quarter, bringing the year-to-date operating cash generation to $39 million.
During the quarter, we elected to accelerate the timing of certain tax payments to preserve tax planning flexibility in the event of a possible increase in U.S. corporate tax rate.
With this approach, we expect to see lower tax payments in the third and fourth quarters, while at the same time, creating the potential for future tax savings.
In addition, in Q2 last year, our cash flow benefited from certain deferrals that were permitted under the CARES Act.
We have also increased investments in our rental fleet, given the improving utilization levels we are experiencing.
For the rest of the year, we are expecting strong cash flow generation, and we continue to target cash conversion of approximately 100% on a net income basis.
We ended the quarter with $169 million of net debt and availability under our credit facility of $268 million.
Our current net debt leverage remains low.
With our financial positioning rate remaining strong, we have significant flexibility to pursue strategic acquisitions, invest in organic growth initiatives and return cash to stockholders through dividends and opportunistic share repurchases.
On that note, we paid dividends of $5.5 million during the quarter, reflecting a dividend of $0.09 per share, and we recently announced a similar dividend for the third quarter.
I'd like to start my comments with a quick update on a subject that we've been talking about for a long time, an infrastructure bill.
The reports from late yesterday were encouraging.
It finally appears that infrastructure legislation is likely.
Some components reported to be part of the deal, which includes a total of $550 billion in new federal investment in U.S. infrastructure include: $110 billion for roads; $73 billion for power infrastructure; $65 billion to expand broadband access; $55 billion for water infrastructure; $46 billion for environmental resiliency; and $11 billion for transportation safety.
We are optimistic that an infrastructure package in these areas would provide funding that would support the use of the majority of our product offerings, including equipment sales and rentals of dump trucks and trailers, safe digging trucks, road marking equipment, sewer cleaners and street sweepers.
Turning now to our performance in the quarter.
Our teams again delivered impressive results with meaningful growth in both the top and bottom line, while achieving adjusted EBITDA margin toward the high end of our target range despite widespread supply chain disruptions and an unprecedented commodity cost environment.
Top line growth was largely across the board, with particular strength in the sales of dump truck bodies and trailers, which were up around $15 million from Q2 last year.
Over the last several years, we have successfully diversified our revenue streams and end market exposures through a combination of organic growth initiatives in M&A, and that helped us to partially mitigate the impact of these factors during the second quarter.
Another area of notable strength during the second quarter was in our aftermarkets business.
While the second quarter is typically a seasonally strong period for aftermarkets, we originally had some concerns entering the quarter that rental activity in Canada would be adversely impacted by various shutdown measures taken in response to the pandemic.
Rental activity and demand for used equipment was higher-than-expected with rental utilization in Canada exceeding our targets and returning to pre pandemic levels.
Rental utilization in the U.S. is also improving.
For example, rental utilization of our Jetstream water blasting equipment exceeded the levels we saw in 2019.
The improved utilization followed a strong spring shutdown cleaning season, which has historically been a leading indicator of industrial end market recovery.
In June, with a combination of high rental utilization and strong used equipment sales, our JJE rental business reported the highest monthly revenue in its history.
Those favorable trends have continued into July as well.
Overall, our aftermarket revenues in Q2 this year were up $26 million or 46% year-over-year growing to represent a higher share of ESG revenues for the quarter at around 30%.
That shift in mix helped to partially mitigate the impact of higher commodity costs and production-related inefficiencies associated with supply chain disruption, helping ESG to deliver an adjusted EBITDA margin at the high end of the current range.
As we mentioned on our last call, following the suspension of chassis production at one of our suppliers, we made the decision to temporarily shut down production at our facility in Streator, Illinois for a two-week period around the 4th of July holiday.
The team worked tirelessly to mitigate the impact of this short-term disruption by effectively managing production schedules to meet record customer demand.
With the expansion of our Streator facility now complete, our production in May approached a record levels we experienced in 2019, helping us to deliver more units than anticipated ahead of the shutdown despite the inefficiencies associated with supply chain constraints.
Like many companies, we are also experienced increased freight charges as we expedited the supply of certain components and higher commodity costs.
As they have done in the past, our procurement teams took several proactive measures, including securing availability of certain steel and locking in pricing based on forecasted needs.
We also work diligently to mitigate the impacts by implementing several price increases and surcharges.
Despite these actions and with demand being significantly higher than we had expected, we experienced unfavorable price cost year-over-year headwind of approximately $3 million during the quarter, mostly within our dump truck and trailer business.
In Q2, we also realized the benefits from strategic investments we had made in prior quarters in building additional stock units and procuring additional chassis so that we had greater flexibility to meet customers' needs.
These investments have enabled us to deliver on customer expectations, in some cases, supplying chassis when they were unable to procure the chassis, which resulted in a higher concentration of low-margin chassis that we supplied as opposed to customer-supplied chassis.
Although this unfavorable impact on margins this quarter, we are playing the long game by prioritizing customer deliveries and satisfaction.
We continue to believe that in these challenging times, the strong will get stronger, and we've seen this happen.
While the current widespread macroeconomic factors could have some impact on our margins in the near term, we are taking this opportunity to try to leverage our competitive advantage to gain market share.
Demand for our product offerings continues to be strong as demonstrated by our outstanding second quarter order intake of $361 million.
Our teams are energized as we enter the second half of the year with a record backlog, reflecting strength across our end markets and continued confidence in a post pandemic recovery.
This sentiment has been widely shared by our customers and dealer partners and seems to be further solidified by recent economic stimulants.
As a reminder, the American Rescue Plan, COVID relief package passed earlier this year included $1.9 trillion of economic stimulus with approximately $350 billion earmarked for state, local and territorial governments for a variety of purposes, including the maintenance of essential infrastructure, such as sewer systems and streets.
In May, the first $175 billion tranche started to be distributed by the treasury department with a second tranche expected in 2022.
Recent market planning sessions with our dealer channel highlighted early indications that the first tranche was starting to be allocated to essential service purchases.
As a provider of equipment used for these essential services like sewer cleaning and Street sweeping, we stand to benefit from additional aid that may be provided to state and local sources for these purposes.
On the municipal side, demand for sewer cleaners and street sweepers remains high.
Within our SSG public safety businesses, we are seeing benefits from new product introductions and our ability to meet customer demand.
We believe we are in a stronger position than many of our competitors and are gaining share.
We've also seen a notable uptick in our industrial end markets with improved orders for our Guzzler and Jetstream products.
Orders within our dump body and trailer business in Q2 this year were more than double last year's orders with growth across all end markets resulting in a record backlog.
This is another area where we believe we are gaining share that will position us well for the future.
While our backlog is at a record high, there are a few headwinds that we are -- we, like many other industrial companies will continue to monitor closely during the second half of the year.
The first factor that many of you will be aware of is the continued impact of the global semiconductor shortage, which is causing significant disruption regarding chassis delivery.
This situation changes weekly.
Because we do not rely on any one single chassis manufacturer and with the proactive actions we took, we have so far been able to pivot to alternative suppliers to minimize the financial impact.
However, the situation remains fluid and ongoing chassis delivery delays are almost universal due to component shortages.
Beyond chassis, we are experiencing other supply chain tightness ranging from reduced availability of paint epoxy within our road marking business to cylinders that are used in certain trucks.
So far this year, we've been able to successfully navigate through the difficulty, but it remains a challenging situation.
The second factor relates to the current commodity cost environment.
We currently expect the price cost impact in Q3 to be in the same neighborhood as we saw this quarter.
But with the pricing actions we have taken, we are expecting to see improvement beginning in the fourth quarter with more price realization expected as our backlog turns.
On a more positive note, we continue to have relatively good access to labor at many of our facilities, which has recently been an issue for many companies.
Our ongoing commitment to environmental, social and governance initiatives is positioning us well in the communities in which we operate and is a differentiating factor in our ability to attract labor at many of our facilities.
We are still getting multiple quality applicants for open positions at our largest facility, and certain of our TBEI locations are starting to see traction from its recently introduced School of Weld program.
Overall, our access to labor remains good.
Further, our companywide efforts to raise awareness about vaccines assist eligible employees and gaining access to vaccines and encourage participation levels are paying off with a companywide vaccination rate of approximately 50%.
Domestically, about 2/3 of our businesses have achieved vaccination rates that are higher than the relevant state average.
We have also had notable improvements in Canada during the second quarter with greater vaccine accessibility.
COVID related disruptions have diminished as vaccination [Technical Issues].
And most importantly, 100% of our employees that have been affected by COVID has since recovered.
I now want to take a few minutes to provide an update on some of our strategic growth initiatives.
On the organic front, I've already touched on the success of our aftermarket initiative.
We also remain bullish about safe digging prospects and with noted industrial end market recoveries and infrastructure spend optimism throughout the channels, we are confident safe digging trends will continue to improve.
Our TRUVAC safe digging product line portfolio includes a complete range of truck-mounted safe digging equipment, which can be used in a broad range of applications, included expanded application in utility markets.
As an example, one of the nation's largest utility companies recently announced plans to bury 10,000 miles of its power lines to reduce the risk of California wildfires.
Use of safe digging technologies significantly minimizes chances of damaging underground infrastructure during the digging process and provides significant environmental benefits by minimizing damage to tree roots.
We've included a picture of our safe digging equipment in action while preserving trees at the same time in the accompanying slides.
The technology has also been utilized in recent bridge resurfacing infrastructure projects with the vacuum capabilities providing added efficiencies in the cleanup of related debris.
TRUVAC product demonstrations for the quarter were up 4% from last year, and our education efforts are also having a positive impact on sewer cleaner demand with the inclusion of the optional safe digging package turning our sewer cleaners into a multipurpose vehicle.
On the new product development front, our R&D efforts continue to drive organic growth.
As an example, approximately 75% of our air sweeper orders in June were associated with recent product introductions.
In Q2, our SSG team launched the new low-cost ultra-low profile Reliant light bar as part of the group's strategic initiative to gain market share through the expansion of Lights & Sirens product offerings in the value tier.
The Reliant provides customers with an ultra-low profile light bar that is competitively priced while providing advanced programming features and excellent optical performance that enhances the warning effectiveness and appearance of the emergency vehicle.
Our sales team is currently showing the Reliant to customers that are supplying distribution with sample bars for customer demonstrations.
Initial feedback from the market has been excellent, and we've received orders and are currently shipping the new product to customers in the U.S. and Mexico.
We have several product launches in the pipeline with street sweeper electrification remaining a key area of focus.
We are actively working on our next vehicle in our electrification new product development road map.
We've also recently identified an additional battery partner and are continuing to receive positive feedback from customer demonstration.
As we have said before, M&A will continue to contribute meaningfully to our future growth.
We are pleased with the progress we are making at integrating OSW, and the teams are energized by the opportunities identified during the 80/20 improvement training sessions we recently have.
Our current M&A pipeline continues to be very active.
As Ian noted in his comments, our financial position and liquidity are strong enabling us to pursue strategic acquisitions, and there are several M&A opportunities that our teams are currently reviewing.
Although we may experience some temporary challenges in the near term, we have positioned federal signal in a manner in which we will fully participate in the economic recovery by increasing capacity within our facilities, investing in new product development and gaining market share.
Turning now to our outlook for the rest of the year.
Demand for our products continues to be high with our second quarter order intake, up 79% compared to the prior year, resulting in a backlog entering the second half of the year, which is at a record level.
The strength of our second quarter earnings, our record backlog and improving aftermarket demand in North America gives us increased confidence in the year.
Assuming no significant delays in our receipt of chassis from our supplier, we are increasing our adjusted earnings per share outlook for the year to a new range of $1.78 to $1.9 from the prior range of $1.73 to $1.85.
We are also encouraged by the long-term opportunities that infrastructure legislation would create for almost all of our businesses.
With our recent capacity expansions, we would be well positioned to meet the associated increase in demand for our products.
 Assistant:

Chosen response:
federal signal raises full-year outlook.
federal signal raises full-year outlook after reporting 79% increase in orders and record backlog in strong second quarter; expecting long-term benefits from infrastructure legislation.
q2 adjusted earnings per share $0.50.
q2 gaap earnings per share $0.48.
q2 sales $335 million versus refinitiv ibes estimate of $302.5 million.