But we’ve only got 10 tenants that have a reserve balance that still occupy their space in total out of over 1,600. So that really hasn’t changed much, our collections remain strong. So the uptick for the year was really driven more by those occurrences first quarter and just in our internal projections, we really didn’t increase our second, third and fourth quarter budgeted amounts that we had in our initial guide. So the overall — for the year really just driven by that — mainly driven by that one particular tenant. But there is nothing there that’s jumping out to us, giving us pause or concern other than just sort of being in a capital environment with 1,600 tenants, there is going to be somebody with something going on.
William Crow: Understood. Thanks for the time.
Marshall Loeb : Thank you.
Operator: Your next question comes from the line of Mike Keller of JPMorgan. Your line is now open.
Mike Keller: Yeah, hi. I was wondering, what’s the game plan now that you’ve entered Raleigh? Do you anticipate growth over the next few years coming primarily from acquisitions or building a development pipeline?
Marshall Loeb: Good morning. Mike, good question. I would say, we’re excited about going to Raleigh. And if you think maybe a two part answer. We — you saw us this quarter we sold all that one, and we’ll get the last one out the door of our Jackson assets. kind of 40-year old buildings, and they were all well-leased and have performed well over time, but they don’t have the growth profile that we view a Raleigh or Nashville that we entered a couple of quarters ago as well. And kind of as we try to always be pruning our portfolio and kind of moving our capital into better position for growth. We had one suburban office building left in LA, that we were — was a long sales process, but we were able to get that closed. Again, it was a 40-year old, but fully leased office building in suburban LA.
We sold some land that we picked up and a portfolio acquisition. So moving all that capital, I view it as you’re kind of consistently trying to move the median of your portfolio up each quarter. And I think — that’s a slow process, but we are doing it. And then the way I — we typically talk is just or think about it is where the market opportunities of late, we’ve — and sometimes they find you. We felt like the acquisition market suddenly opened up and we were getting more yeses than we were historically. So we’ve said let’s buy things that are accretive, that are — they’ve all been just over a year old. So they’re very high functionality, the right part of town near the consumer. We’re excited. Raleigh and Nashville both fit that state capital, large university presence, technology presence, the topography makes it difficult to build there.
So hopefully, we’ll keep — we want to grow in both markets. And if the market presents that usually we go in with an acquisition or two, is a lower risk way to learn a market, to kind of learn the rents. And this is probably our — I’m trying to guess the number fifth or sixth building we’ve bid on in Raleigh and Nashville and not one. So even losing your offers is a good way to kind of learn the submarkets and get to know the brokerage community. So if we can find the right land sites in both markets and I’ll be in Nashville this week actually, too, we will turn over a lot of stones and be patient, but we’d like to grow in both markets. There the markets we’re in that we would be under-allocated in a little bit, like you saw us last year in Las Vegas, where we were able to acquire some assets.
We’re still light probably in allocation to Las Vegas, but we like that market a lot. And we were able to grow and move to self-management and do some other things. So that’s hopefully the same plan that you’ll see play out for Raleigh and Nashville is kind of two rapidly growing markets with a lot of promising dynamics. And if we can pull capital, whether it is from accretive uses of equity that we raised or selling really from the bottom-end of our portfolio, which continues to get better. But it’s – there is always something that’s the bottom end of the portfolio. So that’s — I hope that’s helpful. Sorry for the long-winded response.
Mike Keller: Yeah, great answer. Thank you.
Marshall Loeb: You’re welcome.
Operator: Your next question comes from the line of Todd Thomas of KeyBanc. Your line is now open.
Todd Thomas: Hi, thanks. Marshall, I just wanted to circle back to the company’s capital deployment initiatives, I guess acquisitions, specifically, which I think I heard you comment that pricing you are seeing is in sort of the low to mid-6% range in terms of a cash cap rate that you think you can achieve. Does anything change for the company here as you look at your current cost of capital just given the pullback in your stock in an industrial REIT shares in the last few months? And then have you — or would you change your return hurdles at all for new acquisitions? Is that being contemplated?
Marshall Loeb: Yes. I mean we could probably wouldn’t change the return hurdles. I mean, — I think if you did that, you probably — if it were you and I — I’d say we’re really — you’re trading down in quality. So we will try to maintain that long-term growth. And look, if the market allowed us, we’ll grab it. But we don’t want to lower the quality. And our stock price today isn’t very useful in terms of issuing equity or going to find acquisitions. But it’s — but we said it’s also very — it’s been very volatile. So debts available and equity are available. They’re just not at great opportunities. And look, we’ll have internal growth. And look, if the capital markets weren’t available, I’m glad, we have internal growth. And where we do get that window that’s where we’ve tried to be more thoughtful about before we had a luxury of ATM for a long time.
And then Brent, the team layered in a forward ATM late last year and we’ve even — just all the different alternatives, we’ve talked about something — we haven’t done an overnight offering or a block trade and forever. But we — it’s kind of looking at new markets. I think we should always be aware of it and we certainly saw where one of our peers did a convertible debt offering. So there is — you just want to know what’s on the menu and what kind of matches up. We need the uses first and just kind of see where everything shakes out in the market. And now it is been a pretty volatile market all along the way. Look, we’ve maintained our guidance in spite of that we will have 100 million less in starts this year than we had last year. And that’s a hit to our development fees that we earn each year, but we think that is the right long-term decision, and that’s I’m glad we’re maintaining our guidance in spite of a perch going bankrupt in San Diego and some things like that — that we can kind of weather through that.
And we’ll just see where the windows are. And if we need to sit on our hands on acquisitions for a little bit, we will although — and we did that last fall. We pulled away from a handful rather than, I don’t want to worry people, we won’t run up the line of credit, buying assets and just assume we can issue debt later, that’s not an attractive option either.
Todd Thomas: Okay. And then if I could just follow up, Marshall, I think you mentioned that the accretion from acquisitions was about a dime, I don’t know, if that was sort of rough back of the envelope math. But can you clarify which acquisitions that comment corresponded to specifically? And Brent, can you discuss or clarify what amount of accretion is embedded in the guidance from this year’s acquisition and equity issuance that’s assumed?
Marshall Loeb: Okay. I’ll take the first part and Brent I’m [let the full] (ph), yes, probably I did the calculation, so it probably is back of the envelope or take it. But what I was looking back, the way we did it was — I guess the first acquisition we made really probably right at a year ago was Craig Corporate Center in Las Vegas. So if you kind of starting with that one, which is really when it felt like we saw the acquisition and window opening up and then we bought about another six buildings. We haven’t closed on Raleigh yet, but are reasonably close on it. Those total a little under $280 million, and then our math was to take the GAAP yield since that’s what we’ll report and compared it to the cost, basically our equity cost assigned that quarter when we had closing to match it.
So if you take that delta between the GAAP yields we earn less the equity investment that we raised of that near-term cost, it adds over our latest share count. So that’s probably understating it a little bit since our share count has grown over the year, and this is a lot of math to walk you through on the phone, but it adds a dime to recurring FFO ignoring, any rent bumps and re-leasing and things like that. And the average age is just a little over one year on those buildings. So I think what we’ve been — our strategy has been, look, the development window is there, but it’s not going — blazing the way it was for a few years where we were really trying to keep up with demand, but the acquisition window was open. So let’s go with that. And in terms of accretion I guess Brent, I would say that dime is on a full year run rate, and two of those buildings, Spanish Ridge that we bought in Las Vegas, we bought in first quarter and Raleigh, we haven’t closed yet.
So those are adding the two of those up, that’s a little over $100 million of the $280 million. We don’t quite have — we won’t have on a full year run rate, if that helps, Todd.
Todd Thomas: Yes, that does. Okay. So it is last year — all of last year’s acquisitions plus Spanish Ridge, plus what’s under contract. Okay. Got it. So turning the line.
Marshall Loeb: Really, it felt like to me maybe I should have said it earlier. It was kind of going back where we first noticed of — okay, wait a minute, something’s changed in the market when we say we have the ability to close in about a month, 30 days to 40 days. We are getting yeses from buyers and our batting average in terms of acquisition offers, not that we haven’t lost out on a bunch, especially on the portfolio side or the bigger dollars, our batting average got a lot better. And we said, okay, this is — this is a new market. We weren’t able to buy new buildings in kind of the mid-to-high 5s cash, and maybe the low to mid-6s on a GAAP basis, those would all been for yields or below back in ’21 early ’22.
Brent Wood: Yes. And just to finish the thought up there. Todd agree with what Marshall said. In terms of budget, obviously all that prior acquisitions and the budget of these couple of acquisitions are dialed into our guidance. And the only — out of our $160 million in acquisition guidance, there’s only $50 million of that — that’s not either that’s not earmarked. So we’ve got — we baked in $25 million in the third quarter and $25 million in the fourth quarter, just kind of acquisition placeholders, if you will. But — so again, not overly dependent on that. So if we can do better than that, and that’s beyond Raleigh and the other acquisition. So we’ve got a little bit dialed into the back end of the year, but not a lot. So if we were able to hit some opportunities early in the year that would be accretive to the way we’ve got it underwritten.
Todd Thomas: Okay, that’s helpful. Thank you.
Operator: Your next question comes from the line of [Aditi Bawa Chandran] (ph) of RBC. Your line is now open.
Unidentified Analyst: Hi, thank you. Just a question regarding the tenant. So I guess what exactly are they doing to compensate for delaying decisions on needed space as you have talked about? And I guess, are they just running higher capacity through existing property.
Marshall Loeb: Yes. I think it’s more as they gain business. I think, they’re trying to — they’re making do they may be crammed in their space, but they’re making it work for as long — I’ll say as long as they can, but for a little bit longer, at least rather than saying. And it’s usually the way it goes is and a lot of the conversations, the local warehouse manager or people like that are ready, they are saying they need more space, but corporate is putting that on hold for a bit. So I think, they may do as best they can and have that pent-up demand for space, and it’s really probably get stuck at corporate saying, we’re going to wait a little bit longer. So that’s really the trend or — and they’ve been out touring space, some have leases in hand, some we’re working towards letters-of-intent.
It is just sometimes you have prospects that want to get in the first day of the next month, and sometimes it drags out 90 days. So that is a little bit where it is. And I think a lot of them are just putting their expansion plans on hold until they feel a little better that we really need this space long-term, and it is not a short-term need that we need the space. And that — we’re going to lose some business because the economy is going to deteriorate on the back end. So I think that’s where it’s they need. And I’m making assumptions a little more sturdy-footing on the economy than where people probably feel right now. And I think, they were fee on it until the March interest rate cut went away and then it sounds like the June interest rates cut went away and things like that.
Unidentified Analyst : Understood. Thanks.
Operator: Your next question comes from the line of Jason Belcher of Wells Fargo. Your line is now open.
Jason Belcher: Good morning. Marshall, you mentioned near-shoring and on-shoring briefly in your prepared remarks. Just wondering if you could give us an update on what you’re seeing there? And maybe if you could touch on any leasing activity that you’ve seen within your portfolio that’s been driven by on-shore or nearshore.
Marshall Loeb: No, Good morning — I think a good question. We still see strength where — I think Arizona, where 100% leased there Phoenix. Tucson, El Paso, it’s been the best market. We’ve been there probably 25 years. I’m looking at Brent used to have El Paso for us. And probably the last three years have been the best three years of those 25 years. And really even California, where we have seen some struggles, as people talk about, I’ve mentioned LA, and others and the Bay Area you’ve had some negative absorption there as well. But San Diego has been stronger, at least for us than LA, or San Francisco and the majority of our product in San Diego and where we’re seeing the most strength is really the Otay Mesa area, which is really right along the border.
So I think, those continue to be strong. I read a stat the other day that over the last five years, and I think these are long-term decisions as a percentage of our imports kind of Mexico and into Central America are up 130 basis points, while China is down 250 basis points. And then as I was kind of thinking about that. That’s from 2019 to 2023, my amateur analysis would be post-COVID that — that’s when people really got push to come up with a China Plus One manufacturing plan. And so I think it’s a long-term trend that we’re seeing play out. You certainly see a lot of the chip plants and things like that, that we fund it — so much manufacturing has gone to Dallas and Phoenix, where we want get those manufacturers, but we’ll pick up the suppliers to that.
So we feel good long term about that we’re going to — that kind of San Diego through Arizona to El Paso has been really strong markets for us, and continue to be. We looked at an acquisition recently even in Tucson and we’re shocked at how aggressive the cap rate. We thought we had a good opportunity, and it lasted — I don’t think it probably has not closed yet, but it quickly surpassed the pricing we thought we’d see in a market like Tucson.
Jason Belcher: That’s helpful thanks. Thanks very much for the update.
Marshall Loeb: You’re welcome.
Operator: Thank you. Your next question comes from the line of Ronald Kamdem of Morgan Stanley. Your line is now open.
Ronald Kamdem: Hi, just a quick one on the guidance on the same-store NOI. So you reiterate it, but if you think about sort of the 7.7% in 1Q, there is a decent amount, 230 basis points of decel I guess asking the demand question another way. Is that — are you guys sort of billing conservatism? Is it sort of the demand slowdown? Just a little bit more color on sort of the rest of the year on that same-store front.
