LXP(LXP) - 2025 Q2 - Quarterly Results

Company Overview LXP Industrial Trust is a REIT specializing in Class A warehouse and distribution properties in Sunbelt and lower Midwest markets, pursuing growth through various transactions About LXP Industrial Trust LXP Industrial Trust is a publicly traded REIT focused on acquiring, developing, and managing Class A warehouse and distribution properties in strategic U.S. regions - LXP Industrial Trust is a REIT focused on Class A warehouse and distribution investments in the Sunbelt and lower Midwest[20] - LXP's growth strategy includes acquisitions, build-to-suit transactions, sale-leaseback transactions, and development projects[20] Second Quarter 2025 Performance Highlights LXP achieved solid FFO, strong same-store NOI growth, a major development lease, and reduced leverage through strategic asset and debt transactions CEO Commentary CEO T. Wilson Eglin reported solid FFO, strong same-store NOI growth, a significant development lease, and successful leverage reduction efforts - LXP delivered solid funds from operations (FFO) and strong same-store NOI growth in Q2 2025[4] - A significant milestone was reached with the lease of a 1.1 million square foot development facility in Greenville/Spartanburg, projected to add approximately $3.7 million to FFO in 2025[4] - LXP sold an industrial asset at a 4.3% cash capitalization rate and repurchased $28 million of floating-rate Trust Preferred Securities at a 5% discount, reducing leverage and increasing hedged/fixed-rate debt to 99% for 2025 and 2026[4] Key Operational and Financial Achievements LXP reported increased net income, stable Adjusted Company FFO, robust same-store NOI growth, and strategic capital management in Q2 2025 Q2 2025 Key Financial Performance | Metric | Value | | :------------------------------------------------ | :------------------- | | Net Income attributable to common shareholders | $27.5 million | | Net Income per diluted common share | $0.09 | | Adjusted Company FFO available to all equityholders | $47.3 million | | Adjusted Company FFO per diluted common share | $0.16 | | Same-Store NOI growth (YoY) | 4.7% | | Trust Preferred Securities repurchased | $28.1 million | | Warehouse facility disposed | $39.6 million | - LXP leased a 1.1 million square foot development project with an initial Cash Base Rent of $5.50 per square foot[5] - Year-to-date, LXP extended 1.3 million square feet of leases, increasing Base and Cash Base Rents by 41.5% and 46.2% respectively In Q2 alone, 120,000 square feet of leases were extended, with Base and Cash Base Rents increasing by 18.2% and 18.1%[5] Financial Results LXP reported increased total gross revenues and a significant rise in net income for Q2 2025, with stable Adjusted Company FFO and consistent dividend declarations Revenues Total gross revenues for Q2 2025 increased to $87.7 million, driven by acquisitions, rent increases, and stabilized development projects Total Gross Revenues (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | | :----------------- | :----------------- | :----------------- | :----- | | Total Gross Revenues | $87.7 | $85.8 | +$1.9 | - The increase in revenues is mainly due to acquisitions, rent increases, and stabilized development projects, partially offset by property sales[6] Net Income Attributable to Common Shareholders Net income attributable to common shareholders significantly increased to $27.5 million, or $0.09 per diluted share, in Q2 2025 Net Income Attributable to Common Shareholders (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | | :------------------------------------------ | :----------------- | :----------------- | :----- | | Net Income attributable to common shareholders | $27.5 | $3.8 | +$23.7 | | Net Income per diluted share | $0.09 | $0.01 | +$0.08 | Adjusted Company FFO Adjusted Company FFO for Q2 2025 was $47.3 million, or $0.16 per diluted share, a slight increase from the prior year Adjusted Company FFO (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | | :------------------------------------------ | :----------------- | :----------------- | :----- | | Adjusted Company FFO | $47.3 | $46.9 | +$0.4 | | Adjusted Company FFO per diluted share | $0.16 | $0.16 | $0.00 | Dividends LXP declared a regular quarterly common share dividend of $0.135 and a Series C Preferred Stock cash dividend of $0.8125 for Q2 2025 Q2 2025 Dividends Declared | Dividend Type | Amount per Share | Payment Date | Record Date | | :------------------------------------ | :--------------- | :----------- | :---------- | | Common Share Dividend | $0.135 | July 15, 2025 | June 30, 2025 | | Series C Preferred Stock Cash Dividend | $0.8125 | August 15, 2025 | July 31, 2025 | Transaction Activity LXP strategically disposed of a warehouse facility, initiated new redevelopment projects, and holds significant land for future industrial development Property Disposition LXP disposed of one warehouse facility for $39.6 million in Q2 2025, contributing to $74.6 million in year-to-date dispositions Q2 2025 Property Disposition | Location | Price ($000) | Month of Disposition | % Leased | GAAP Cap Rate | Cash Cap Rate | | :--------------- | :------------- | :------------------- | :------- | :------------ | :------------ | | Chillicothe, OH | $39,621 | April | 100% | 4.5% | 4.3% | - Total consolidated year-to-date 2025 property disposition volume was $74.6 million, with aggregate weighted-average GAAP and Cash capitalization rates of 5.6% and 4.1%, respectively[11] Ongoing Development and Redevelopment Projects LXP initiated two redevelopment projects in Orlando and Richmond totaling over 600,000 square feet, with estimated completion in 1Q 2026 Ongoing Redevelopment Projects (as of June 30, 2025) | Project | Market | Sq. Ft. | Estimated Project Cost ($000) | GAAP Investment Balance ($000) | Estimated Completion Date | % Leased | | :---------------- | :----------- | :-------- | :---------------------------- | :----------------------------- | :------------------------ | :------- | | Orlando (100%) | Central, FL | 350,990 | $9,400 | $14,303 | 1Q 2026 | —% | | Richmond (100%) | Richmond, VA | 252,351 | $3,700 | $11,244 | 1Q 2026 | —% | | Total | | 603,341 | $13,100 | $25,547 | | | - The Orlando redevelopment project began in Q2 2025 after the tenant vacated the building[13] - The Richmond redevelopment project, converting a vacated building into a standalone warehouse, commenced in Q1 2025[13] Land Held for Industrial Development LXP holds 445 acres of consolidated land and 69 acres of non-consolidated land for industrial development, with a combined GAAP investment balance of $95.2 million Land Held for Industrial Development (as of June 30, 2025) | Project Type | Market | Approximate Acres | GAAP Investment Balance ($000) | LXP Amount Funded ($000) | | :-------------------------- | :----------- | :---------------- | :----------------------------- | :------------------------- | | Consolidated Projects | | 445 | $82,945 | $80,745 | | Reems & Olive (95.5%) | Phoenix, AZ | 315 | $75,352 | $74,239 | | Mt. Comfort Phase II (80%) | Indianapolis, IN | 116 | $5,861 | $4,738 | | ATL Fairburn (100%) | Atlanta, GA | 14 | $1,732 | $1,768 | | Non-Consolidated Projects | | 69 | $12,252 | $14,757 | | Etna Park 70 (90%) | Columbus, OH | 48 | $9,871 | $11,695 | | Etna Park 70 East (90%) | Columbus, OH | 21 | $2,381 | $3,062 | Leasing Activity LXP executed a major new first-generation lease and extended existing second-generation leases with significant rent increases, maintaining strong portfolio occupancy New Leases LXP executed one significant new first-generation lease for 1.1 million square feet in Greer, SC, during Q2 2025 Q2 2025 New Leases - First Generation | Location | Lease Expiration Date | Sq. Ft. | | :--------- | :-------------------- | :-------- | | Greer, SC | 05/27 | 1,091,888 | Lease Extensions LXP extended 119,580 square feet of second-generation leases in Q2 2025, with year-to-date rent increases of over 40% Q2 2025 Lease Extensions - Second Generation | Location | Prior Term | New Lease Expiration Date | Sq. Ft. | | :--------------- | :--------- | :------------------------ | :-------- | | Adairsville, GA | 09/25 | 11/30 | 100,960 | | Minneapolis, MN | 12/25 | 12/35 | 18,620 | | Total | | | 119,580 | - During the six months ended June 30, 2025, LXP entered into 2.4 million square feet of first-generation and extended second-generation leases[16] - Base and Cash Base Rents on second-generation leases increased by 41.5% and 46.2%, respectively, year-to-date[16] Portfolio Occupancy LXP's stabilized portfolio was 94.1% leased as of June 30, 2025, rising to 98.4% when excluding first-generation space Portfolio Occupancy (as of June 30, 2025) | Metric | Occupancy Rate | | :------------------------------------------------ | :------------- | | Stabilized portfolio leased | 94.1% | | Stabilized portfolio leased (excluding first-generation space) | 98.4% | Balance Sheet & Capital Structure LXP maintained a net debt to Adjusted EBITDA ratio of 5.8x, strategically repurchased Trust Preferred Securities, and managed a consolidated debt of $1.5 billion Key Balance Sheet & Capital Metrics (as of June 30, 2025) | Metric | Value | | :------------------------------------ | :---------------- | | Net debt to Adjusted EBITDA | 5.8x | | Trust Preferred Securities repurchased | $28.1 million | | Discount on repurchase | 5% | | Total consolidated debt | $1.5 billion | | Weighted-average term to maturity | 5.0 years | | Weighted-average interest rate | 3.9% | 2025 Earnings Guidance LXP updated its 2025 earnings guidance, narrowing the estimated ranges for net income and Adjusted Company FFO per diluted common share 2025 Earnings Guidance (per diluted common share) | Metric | Estimated Range | | :------------------------------------------ | :-------------- | | Net income attributable to common shareholders | $0.13 to $0.15 | | Adjusted Company FFO | $0.62 to $0.64 | - The guidance is forward-looking, excludes the impact of certain items, and is based on current expectations[18] Conference Call Information LXP hosted a conference call on July 30, 2025, to discuss Q2 2025 results, with a replay available for a limited period - LXP held a conference call on July 30, 2025, at 8:30 a.m. ET to discuss Q2 2025 results[19] - Conference call replay was available until August 6, 2025, via dial-in numbers and a webcast link on www.lxp.com[19](index=19&type=chunk) Non-GAAP Financial Measures Definitions This section defines key non-GAAP financial measures used by LXP, including Adjusted EBITDA, FFO, NOI, and various rent and cost metrics Adjusted EBITDA Adjusted EBITDA is a non-GAAP measure derived from EBITDA, adjusted for specific non-cash and non-recurring items to reflect operational performance - Adjusted EBITDA is defined as EBITDA (earnings before interest expense, taxes, depreciation, and amortization) modified by various adjustments including gains/losses on real estate sales, impairment charges, and non-cash items[25] - LXP considers net income as the most directly comparable GAAP measure to Adjusted EBITDA[25] Base Rent Base Rent is a non-GAAP measure adjusting GAAP rental revenue by excluding tenant reimbursements and lease termination income, and including ancillary income - Base Rent adjusts GAAP rental revenue by excluding billed tenant reimbursements and lease termination income, and including ancillary income[26] - Base Rent excludes reserves/write-offs of deferred rent receivable[26] Cash Base Rent Cash Base Rent is a non-GAAP measure that removes GAAP rental income adjustments, providing an indication of an investment's ability to fund cash needs - Cash Base Rent removes the impact of GAAP required adjustments to rental income (e.g., straight-line rents) from GAAP rental revenue[27] - It excludes billed tenant reimbursements, non-cash sales-type lease income, and lease termination income, but includes ancillary income[27] Company Funds Available for Distribution (FAD) FAD is a non-GAAP measure adjusting Adjusted Company FFO for non-cash items and cash expenditures related to tenant improvements and lease costs - FAD is calculated by adjusting Adjusted Company FFO for items like straight-line adjustments, lease incentive amortization, non-cash interest, and cash paid for second-generation tenant improvements and lease costs[28] - FAD is a non-GAAP measure and should not be viewed as an alternative to net income or net cash flows from operating activities, or as a measure of liquidity[28] First-Generation Costs First-Generation Costs are cash expenditures for tenant improvements, leasing costs, and acquisition-contemplated expenses for newly acquired vacant properties - First-Generation Costs are cash expenditures for tenant improvements, leasing costs, and acquisition-related expenses for newly acquired vacant properties[29] Funds from Operations (FFO) and Adjusted Company FFO FFO, a Nareit-defined non-GAAP measure, and Adjusted Company FFO provide insights into REIT performance by excluding certain real estate-related items - FFO, as defined by Nareit, is net income excluding real estate depreciation/amortization, gains/losses from certain real estate asset sales, and impairment write-downs[31] - FFO provides a performance measure reflecting trends in occupancy, rental rates, operating costs, and development activities without including depreciation and amortization[30] - Adjusted Company FFO further adjusts FFO for items not indicative of LXP's real estate portfolio's operating results and not comparable from period to period[32] GAAP and Cash Yield or Capitalization Rate GAAP and Cash Yields or Capitalization Rates are estimated operating performance measures for investments, calculated by dividing annualized NOI by cost or sale price - GAAP and cash yields/capitalization rates are measures of operating performance for individual investments, calculated by dividing annualized NOI by the acquisition/completion cost or sale price[34] - Stabilized yields assume 100% occupancy and the payment of estimated costs to achieve 100% occupancy, excluding developer incentive fees[34] Net Operating Income (NOI) NOI is a non-GAAP measure of operating performance for individual investments, representing operating revenues less property operating expenses - NOI is defined as operating revenues (rental income adjusted for GAAP rent adjustments, non-cash income, and lease termination income, plus other property income) less property operating expenses[35] - NOI excludes general and administrative expenses, interest expense, depreciation and amortization, and gains/losses from property dispositions[35] - LXP believes net income is the most directly comparable GAAP measure to NOI[35] Same-Store NOI Same-Store NOI measures operating performance for a consistent set of consolidated properties, excluding changes from acquisitions, expansions, or dispositions - Same-Store NOI includes NOI for consolidated properties owned, stabilized, and in the portfolio from January 1, 2024, through the current reporting period[36] - It excludes changes in NOI from acquired, expanded, disposed of properties, and properties with significant casualty loss, to highlight operating trends[36] - LXP believes net income is the most directly comparable GAAP measure to Same-Store NOI[36] Second-Generation Costs Second-Generation Costs refer to cash expenditures for tenant improvements and leasing costs incurred to maintain revenues at existing stabilized properties - Second-Generation Costs are cash expenditures for tenant improvements and leasing costs aimed at maintaining revenues at existing properties[37] - These costs are a component of the FAD calculation and are viewed as an investment in existing stabilized properties[37] Stabilized Portfolio The Stabilized Portfolio includes all real estate properties except non-stabilized ones, with stabilization occurring at 90% occupancy or one year post-construction - The Stabilized Portfolio includes all real estate properties except non-stabilized ones[38] - Stabilization occurs at the earlier of 90% occupancy or one year from the cessation of major construction activities[38] Condensed Consolidated Financial Statements This section presents LXP's condensed consolidated financial statements, including statements of operations, balance sheets, earnings per share, and FFO/FAD reconciliations Statements of Operations The condensed consolidated statements of operations detail LXP's financial performance for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (Unaudited, in thousands, except share and per share data) | Metric | Three months ended June 30, 2025 (Thousands) | Three months ended June 30, 2024 (Thousands) | Six months ended June 30, 2025 (Thousands) | Six months ended June 30, 2024 (Thousands) | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rental revenue | $86,744 | $84,768 | $174,637 | $169,975 | | Total gross revenues | $87,719 | $85,786 | $176,582 | $172,037 | | Depreciation and amortization | $(49,362) | $(48,347) | $(99,874) | $(95,856) | | Property operating | $(15,875) | $(15,482) | $(33,004) | $(30,670) | | General and administrative | $(9,630) | $(9,248) | $(20,020) | $(18,741) | | Interest and amortization expense | $(16,467) | $(17,603) | $(32,747) | $(34,587) | | Gain on sale or disposal of real estate, net | $31,320 | $8,352 | $55,955 | $8,352 | | Net income | $28,397 | $4,801 | $46,559 | $4,246 | | Net income attributable to common shareholders | $27,450 | $3,775 | $44,729 | $1,844 | | Net income per common share diluted | $0.09 | $0.01 | $0.15 | $0.01 | Balance Sheets The condensed consolidated balance sheets present LXP's financial position as of June 30, 2025, compared to December 31, 2024 Condensed Consolidated Balance Sheets (Unaudited, in thousands) | Asset/Liability/Equity | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :------------------------------------ | :-------------- | :---------------- | | Real estate, net | $3,444,731 | $3,536,346 | | Cash and cash equivalents | $70,976 | $101,836 | | Total assets | $3,717,130 | $3,843,312 | | Mortgages and notes payable, net | $52,260 | $54,930 | | Term loan payable, net | $248,615 | $297,814 | | Senior notes payable, net | $1,090,411 | $1,089,373 | | Trust preferred securities, net | $100,074 | $127,893 | | Total liabilities | $1,630,956 | $1,722,529 | | Total shareholders' equity | $2,064,355 | $2,098,292 | | Total equity | $2,086,174 | $2,120,783 | | Total liabilities and equity | $3,717,130 | $3,843,312 | Earnings Per Share This section provides a detailed breakdown of basic and diluted earnings per common share for the three and six months ended June 30, 2025, and 2024, along with weighted-average common shares outstanding Earnings Per Share (Unaudited, in thousands, except share and per share data) | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common shareholders | $27,450 | $3,775 | $44,729 | $1,844 | | Weighted-average common shares outstanding - basic | 291,872,243 | 291,403,985 | 291,789,613 | 291,346,184 | | Net income per common share basic | $0.09 | $0.01 | $0.15 | $0.01 | | Weighted-average common shares outstanding - diluted | 292,208,168 | 291,615,350 | 292,253,680 | 291,451,866 | | Net income per common share diluted | $0.09 | $0.01 | $0.15 | $0.01 | Adjusted Company FFO & Company Funds Available for Distribution This section provides the reconciliation and calculation of Funds from Operations (FFO) and Adjusted Company FFO, as well as Company Funds Available for Distribution (FAD), for the three and six months ended June 30, 2025, and 2024 FFO, Adjusted Company FFO & FAD (Unaudited, in thousands, except share and per share data) | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common shareholders | $27,450 | $3,775 | $44,729 | $1,844 | | FFO available to common shareholders - basic | $46,698 | $44,818 | $91,060 | $91,959 | | FFO available to all equityholders - diluted | $48,380 | $46,469 | $94,441 | $95,272 | | Adjusted Company FFO available to all equityholders - diluted | $47,275 | $46,904 | $93,686 | $95,702 | | Company Funds Available for Distribution | $42,309 | $38,718 | $90,433 | $83,956 | | FFO per common share diluted | $0.16 | $0.16 | $0.32 | $0.32 | | Adjusted Company FFO per common share diluted | $0.16 | $0.16 | $0.32 | $0.32 | 2025 Earnings Guidance Reconciliation This table provides a reconciliation of LXP's estimated net income attributable to common shareholders per diluted common share to its estimated Adjusted Company FFO per diluted common share for the year ending December 31, 2025 2025 Earnings Guidance Reconciliation (Twelve Months Ended December 31, 2025) | Metric | Range (per diluted common share) | | :------------------------------------------ | :----------------------------- | | Estimated Net income attributable to common shareholders | $0.13 to $0.15 | | Depreciation and amortization | $0.68 | | Impact of capital transactions | $(0.19) | | Estimated Adjusted Company FFO | $0.62 to $0.64 |