Plymouth Industrial REIT(PLYM)2024-11-12 13:54Portfolio and Leasing - The company owns 158 industrial properties comprising 223 buildings with an aggregate of approximately 34.9 million square feet as of September 30, 2024[104] - The company's portfolio was approximately 94.2% occupied as of September 30, 2024[108] - 37.0% of the annualized base rent leases in the company's portfolio are scheduled to expire between October 1, 2024, and December 31, 2026[109] - Renewals accounted for 73.1% of total square footage with a 13.0% increase in rent, while new leases accounted for 26.9% with a 27.3% increase in rent during the nine months ended September 30, 2024[110] - The company's rental revenue depends on occupancy levels, lease rates, and the ability to lease available space, with property expenses partially controlled by triple net or modified gross lease expense reimbursement provisions[112] Investment Strategy and Diversification - The company is evaluating diversifying its portfolio to include mortgage, bridge, or mezzanine loans collateralized by properties that meet investment criteria similar to its existing real estate portfolio[105] - The company's core investment strategy focuses on acquiring industrial properties in primary and secondary markets across the U.S., aiming for attractive initial yields and strong cash-on-cash returns[106] - The company intends to pursue joint venture arrangements with institutional partners, which could provide management fee income, residual profit-sharing income, and the ability to purchase properties out of the joint venture over time[107] Financial Performance and Metrics - Net income for the three months ended September 30, 2024, was a loss of $15,345, compared to a gain of $10,400 in the same period in 2023, representing a 247.5% decrease[118] - Rental revenue increased by $1,696 to $51,432 for the three months ended September 30, 2024, compared to $49,736 in 2023, driven by a $787 increase in the Same Store Portfolio and a $909 increase in Acquisitions, Dispositions, and Other[118] - Property expenses increased by $1,620 to $17,374 for the three months ended September 30, 2024, compared to $15,754 in 2023, primarily due to a $1,235 increase in the Same Store Portfolio[118] - Depreciation and amortization expense decreased by $1,871 to $21,010 for the three months ended September 30, 2024, compared to $22,881 in 2023, mainly due to a $2,332 decrease in the Same Store Portfolio[118] - Total revenues for the nine months ended September 30, 2024, increased by $1,721 to $150,785, compared to $149,064 in 2023, with a 1.7% increase in the Same Store Portfolio[122] - Property expenses for the nine months ended September 30, 2024, decreased by $187 to $47,585, compared to $47,398 in 2023, with a $980 increase in the Same Store Portfolio offset by a $793 decrease in Acquisitions, Dispositions, and Other[122] - Net income for the nine months ended September 30, 2024, was a loss of $7,731, compared to a gain of $4,430 in 2023, representing a 274.5% decrease[122] - Interest expense increased by $776 to $29,368 for the nine months ended September 30, 2024, compared to $28,592 in 2023[122] - Loss on financing transaction for the nine months ended September 30, 2024, was $14,657, compared to no loss in 2023[122] - Gain on sale of real estate decreased by $3,467 to $8,645 for the nine months ended September 30, 2024, compared to $12,112 in 2023[122] - Depreciation and amortization expense decreased by $5,373 to $64,725 for the nine months ended September 30, 2024, compared to $70,098 for the same period in 2023, primarily due to a net decrease of $5,251 for the Same Store Portfolio and $122 within Acquisitions, Dispositions, and Other[123] - General and administrative expenses increased by $240 to $10,826 for the nine months ended September 30, 2024, compared to $10,586 for the same period in 2023, primarily due to an increase in professional fees of $213[123] - Gain on sale of real estate was $8,645 for the nine months ended September 30, 2024, including a net gain of $7,796 from a tenant's purchase option and $849 from the sale of a 221,911 square foot property in Kansas City, MO[124] - Loss on financing transaction for the nine months ended September 30, 2024, was $18,746, partially offset by a net unrealized gain of $15,437 due to changes in the fair market value of Warrants and Forward contract assets[124] - Net operating income (NOI) for the nine months ended September 30, 2024, was $102,686, compared to $101,608 for the same period in 2023[127] - EBITDAre for the nine months ended September 30, 2024, was $92,374, compared to $91,080 for the same period in 2023[129] - Funds from operations (FFO) is a non-GAAP measure used to evaluate the operating performance of the company's property portfolio, excluding non-cash items such as depreciation[129] - Core FFO adjusts FFO for items such as dividends paid to preferred stockholders, acquisition-related expenses, and non-cash operating expenses, providing a more consistent comparison of operating performance[131] - Net income (loss) for the three months ended September 30, 2024 was $(15.345 million), compared to $10.4 million in the same period in 2023[132] - FFO (Funds From Operations) for the nine months ended September 30, 2024 was $48.349 million, compared to $62.416 million in the same period in 2023[132] - Core FFO for the nine months ended September 30, 2024 was $62.58 million, compared to $60.064 million in the same period in 2023[132] - AFFO (Adjusted Funds From Operations) for the nine months ended September 30, 2024 was $61.242 million, compared to $54.818 million in the same period in 2023[133] - Net cash provided by operating activities for the nine months ended September 30, 2024 decreased by $9.214 million to $54.045 million, compared to $63.259 million in the same period in 2023[135] - Net cash used in investing activities for the nine months ended September 30, 2024 increased by $79.89 million to $(88.201 million), primarily due to an increase in real estate acquisitions of $101.387 million[135] Liquidity and Debt - As of September 30, 2024, the company had available liquidity of approximately $179.8 million, including $26.2 million in cash and $153.6 million in borrowing capacity[136] - Total secured debt as of September 30, 2024 was $243.668 million, with interest rates ranging from 2.97% to 4.35%[138] - Total unsecured debt as of September 30, 2024 was $448.465 million, with interest rates ranging from 3.00% to 4.40%[138] - The company has $750 million available for issuance under the 2024 $750 Million S-3 Filing and $200 million available under the 2024 $200 Million ATM Program[139][140] - The company has $646,400 thousand of outstanding variable rate debt as of September 30, 2024, with all but $96,400 thousand fixed through interest rate swaps[144] - The fair value of five interest rate swaps is approximately $13.2 million in an asset position, while three swaps are in a liability position of approximately $1.1 million as of September 30, 2024[144] - The company estimates an additional $10,653 thousand will be reclassified as a decrease to interest expense over the next twelve months[144] - The KeyBank unsecured line of credit had a weighted average interest rate of 6.85% during the nine months ended September 30, 2024, with $100,000 thousand of its $196,400 thousand balance fixed through interest rate swaps[144] - A 25 basis point increase in the average interest rate on weighted average borrowings would have increased the company's interest expense by approximately $76 thousand for the nine months ended September 30, 2024[144] - The company has entered into eight interest rate swap agreements as of September 30, 2024, with notional values ranging from $25,000 thousand to $200,000 thousand[143][144] - Derivative valuations are classified in Level 2 of the fair value hierarchy, with credit valuation adjustments utilizing Level 3 inputs but deemed insignificant to overall valuation[144] - The company uses interest rate swap agreements to manage interest rate risk, with changes in fair value either offset against hedged items or recognized in other comprehensive income[143] - The ineffective portion of a derivative's change in fair value is immediately recognized in earnings[143] - Market risk, particularly interest rate risk, is the primary market risk the company is exposed to, managed through derivative financial instruments like interest rate swaps[145] Accounting and Valuation - The company's critical accounting estimates include the valuation of warrant liability using a Monte Carlo model, with changes in fair value recorded in the condensed consolidated statement of operations each reporting period[114] - The company classifies conditionally redeemable preferred units as mezzanine equity and adjusts the carrying value to the redemption value if redemption is probable[116]