Plymouth Industrial REIT(PLYM) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), changes in redeemable non-controlling interest and equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $1,583,742 | $1,368,418 | | Total Liabilities | $962,161 | $781,299 | | Redeemable non-controlling interest | $76,123 | $1,259 | | Total equity | $545,458 | $585,860 | Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total revenues | $47,204 | $48,686 | $92,775 | $98,914 | | Total operating expenses | $38,433 | $38,796 | $76,617 | $81,170 | | Net income (loss) | $(4,536) | $1,328 | $2,471 | $7,614 | | Net income (loss) attributable to common stockholders | $(6,195) | $1,220 | $(440) | $7,344 | | Basic EPS | $(0.14) | $0.03 | $(0.01) | $0.16 | | Diluted EPS | $(0.14) | $0.03 | $(0.01) | $0.16 | Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income (loss) | $(4,536) | $1,328 | $2,471 | $7,614 | | Unrealized (loss) gain on interest rate swaps | $(2,862) | $(870) | $(7,465) | $4,817 | | Comprehensive income (loss) attributable to Plymouth Industrial REIT, Inc. | $(8,926) | $453 | $(7,629) | $12,297 | Condensed Consolidated Statements of Changes in Redeemable Non-controlling Interest and Equity - Redeemable non-controlling interest significantly increased from $1,259 thousand at December 31, 2024, to $76,123 thousand at June 30, 2025, primarily due to the issuance of Series C Preferred Units[8][17] - The company repurchased and retired 805,394 shares of common stock during the six months ended June 30, 2025, impacting total stockholders' equity[17] | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Common stock | $448 | $454 | | Additional paid in capital | $572,496 | $604,839 | | Accumulated deficit | $(43,507) | $(43,262) | | Accumulated other comprehensive income | $10,133 | $17,517 | | Total stockholders' equity | $539,570 | $579,548 | Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $38,978 | $36,477 | | Net cash used in investing activities | $(280,212) | $(811) | | Net cash provided by (used in) financing activities | $235,082 | $(25,741) | | Net (decrease) increase in cash, cash held in escrow, and restricted cash | $(6,152) | $9,925 | - Net cash used in investing activities significantly increased in 2025 due to $271.5 million in real estate acquisitions[23][220] - Financing activities shifted from a net cash outflow of $25.7 million in 2024 to a net cash inflow of $235.1 million in 2025, driven by proceeds from the line of credit and financing transactions[23][221] Notes to Condensed Consolidated Financial Statements 1. Nature of the Business and Basis of Presentation - Plymouth Industrial REIT, Inc. is a Maryland corporation structured as an UPREIT, owning substantially all assets and conducting business through its Operating Partnership, in which it held a 98.9% equity interest as of June 30, 2025[25] - As of June 30, 2025, the Company wholly owned 148 industrial properties (226 buildings, 32.1 million square feet) and a 35% non-controlling equity interest in a joint venture accounted for using the equity method[26] 2. Summary of Significant Accounting Policies - The Company's interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include adjustments of a normal and recurring nature[27] - The fair value hierarchy categorizes financial instruments into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (significant unobservable inputs)[39][40][41] | Balance Sheet Line Item | Fair Value as of June 30, 2025 (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :------------------------ | :------------------------------------------ | :--------------------- | :--------------------- | :--------------------- | | Interest rate swaps - Asset | $10,295 | $— | $10,295 | $— | | Interest rate swaps - Liability | $(174) | $— | $(174) | $— | | Warrant liability | $(32,502) | $— | $— | $(32,502) | | Forward contract asset | $— | $— | $— | $— | - The forward contract to issue Series C Preferred Units was fully settled on May 28, 2025, upon the issuance of the remaining 79,090 units[43][123] - The FASB issued ASU 2024-03, 'Disaggregation of Income Statement Expenses,' effective for annual periods beginning after December 15, 2026, which the Company is currently evaluating[62] 3. Real Estate Properties, Net | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Real estate properties, net | $1,393,447 | $1,156,697 | - The Company acquired 19 properties totaling 2,852,714 square feet for $269,725 thousand during the six months ended June 30, 2025, with no acquisitions in the prior year period[64][66] - A net gain of $301 thousand was recognized from the sale of a 33,688 square foot property in Memphis, TN, during the six months ended June 30, 2025, compared to an $849 thousand gain in the prior year[67] 4. Investment in Unconsolidated Joint Ventures - The Company holds a 35% non-controlling equity interest in the Isosceles Joint Venture, accounted for using the equity method, with a carrying amount of $44,886 thousand as of June 30, 2025[70] - An investment of $2,221 thousand in AIP OP represents approximately 42% ownership, also accounted for as an equity method investment, with maximum exposure to loss limited to the equity interest[72] - Both joint ventures use the hypothetical-liquidation-at-book-value (HLBV) method to determine equity in earnings due to varying liquidation and distribution priorities[71][73] 5. Leases | Rental Revenue Component | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Income from leases | $35,560 | $37,321 | $69,373 | $74,212 | | Straight-line rent adjustments | $168 | $(1,044) | $376 | $(1,029) | | Tenant recoveries | $11,022 | $11,759 | $22,127 | $24,618 | | Total Rental Revenue | $47,058 | $48,329 | $92,476 | $98,412 | - As a lessee, the Company has operating lease liabilities of approximately $4,504 thousand (weighted-average remaining term of 7.9 years, 4.0% incremental borrowing rate) and a financing lease liability of $2,302 thousand (30.5 years, 7.8% incremental borrowing rate) as of June 30, 2025[82][87] 6. Indebtedness | Debt Type | Outstanding Balance at June 30, 2025 (in thousands) | Outstanding Balance at December 31, 2024 (in thousands) | | :-------------------------- | :-------------------------------------------- | :---------------------------------------------- | | Secured debt, net | $174,485 | $175,980 | | Unsecured debt, net | $448,102 | $447,741 | | Borrowings under line of credit | $214,200 | $20,000 | | Total carrying value | $836,787 | $643,721 | - The Company was in compliance with all financial covenants for its secured and unsecured debt and unsecured revolving line of credit as of June 30, 2025[93] 7. Derivative Financial Instruments - The Company uses interest rate swaps as cash flow hedges to manage exposure to interest rate movements, aiming for stability in interest expense[97] | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Interest rate swaps - Asset | $10,295 | $17,760 | | Interest rate swaps - Liability | $(174) | $(520) | - An estimated $11,672 thousand will be reclassified as a decrease to interest expense from accumulated other comprehensive income over the next twelve months[102] 8. Common Stock | Quarter | Cash Dividends Declared per Share | Aggregate Amount (in thousands) | | :---------------- | :-------------------------------- | :------------------------------ | | Q1 2025 | $0.2400 | $10,964 | | Q2 2025 | $0.2400 | $10,827 | | Total 2025 (6 months) | $0.4800 | $21,791 | | Total 2024 | $0.9600 | $43,685 | - The Board authorized a $90.0 million share repurchase program on February 26, 2025. During the six months ended June 30, 2025, the Company repurchased 805,394 shares for $13,110 thousand at an average price of $16.28 per share, with $76.9 million remaining under the program[116][117][251] - The Company has approximately $200,000 thousand available for issuance under its 2024 $200 Million ATM Program, with no shares issued in the first six months of 2025[113][233] 9. Non-Controlling Interests - Operating Partnership Units (OP Units) outstanding remained at 490,299 as of June 30, 2025, with holders entitled to distributions concurrent with common stock dividends[119] - On May 28, 2025, the Company issued the remaining 79,090 Series C Preferred Units for $78,956 thousand in net proceeds, settling the forward contract asset[123] - Series C Preferred Units outstanding increased from 60,910 at December 31, 2024, to 140,000 at June 30, 2025, classified as redeemable non-controlling interests due to a redemption feature outside the Company's control[124] | Series C Preferred Unit Distributions | Q1 2025 (in thousands) | Q2 2025 (in thousands) | Total 2025 (6 months) (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :----------------------------------- | | Cash Dividends | $623 | $928 | $1,551 | | PIK Dividends | $455 | $691 | $1,146 | 10. Incentive Award Plan | Restricted Stock Activity | Shares | | :------------------------ | :----- | | Unvested at Dec 31, 2024 | 369,675 | | Granted (6 months 2025) | 199,326 | | Forfeited (6 months 2025) | (3,500) | | Vested (6 months 2025) | (147,672) | | Unvested at June 30, 2025 | 417,829 | - Equity-based compensation expense for restricted stock was $1,675 thousand for the six months ended June 30, 2025, with $6,932 thousand unrecognized and expected to be recognized over 2.9 years[140] - 194,712 Performance Stock Units (PSUs) were granted on April 24, 2025, subject to performance-based criteria over a three-year period, with a fair value of $2,274 thousand[141][142] 11. Earnings per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common stockholders | $(6,195) | $1,220 | $(440) | $7,344 | | Basic EPS | $(0.14) | $0.03 | $(0.01) | $0.16 | | Diluted EPS | $(0.14) | $0.03 | $(0.01) | $0.16 | - All unvested restricted shares and warrants were deemed anti-dilutive for the three and six months ended June 30, 2025, due to the net loss attributable to common stockholders[145] 12. Warrant Liability - The Operating Partnership issued warrants to purchase up to 11,760,000 OP Units in three tranches, which are accounted for as derivative liabilities and remeasured at fair value[148][150] | Warrant Tranche | Adjusted Strike Price per Unit (June 30, 2025) | | :---------------- | :--------------------------------------------- | | First tranche | $23.93 | | Second tranche | $24.88 | | Third tranche | $25.83 | - The warrant liability decreased from $45,908 thousand at December 31, 2024, to $32,502 thousand at June 30, 2025, reflecting an unrealized gain of $13,406 thousand[159] 13. Commitments and Contingencies - The Company has employment agreements with key executives, providing for base salaries, discretionary awards, and termination provisions[160] - The Company is not currently party to any material legal proceedings[161] 14. Subsequent Events - No subsequent events requiring adjustment or disclosure were identified through the filing date of the Quarterly Report on Form 10-Q[162] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business, factors influencing future results, critical accounting policies, detailed analysis of operating results, supplemental earnings measures, cash flow, liquidity, capital resources, off-balance sheet arrangements, and exposure to inflation and interest rate risks Cautionary Note Regarding Forward-Looking Statements - The report contains forward-looking statements subject to various risks and uncertainties, including inflation, financing risks, competitive environment, real estate fluctuations, and potential defaults[164][169] Overview - The Company is a vertically integrated REIT focused on acquiring, owning, and managing single and multi-tenant industrial properties in primary and secondary U.S. markets[167] - As of June 30, 2025, the portfolio included 148 wholly-owned industrial properties (226 buildings, 32.1 million square feet) and a 35% non-controlling equity interest in a joint venture[168] - The Company is evaluating diversifying its portfolio to include origination or acquisition of mortgage, bridge, or mezzanine loans collateralized by properties meeting similar investment criteria[170] Factors That May Influence Future Results of Operations - The core investment strategy focuses on acquiring industrial properties in primary and secondary U.S. markets to achieve attractive initial yields and strong cash-on-cash returns[172] - As of June 30, 2025, the Company's portfolio was approximately 94.6% occupied[175] | Lease Activity (6 months ended June 30, 2025) | Square Footage | % of Total | Expiring Rent ($/SF/YR) | New Rent ($/SF/YR) | % Change | | :-------------------------------------------- | :------------- | :--------- | :---------------------- | :----------------- | :------- | | Renewals | 2,700,379 | 69.4% | $4.66 | $5.23 | 12.2% | | New leases | 1,190,645 | 30.6% | $4.69 | $4.89 | 4.3% | | Total/weighted average | 3,891,024 | 100.0% | $4.67 | $5.12 | 9.6% | - 46.9% of annualized base rent leases are scheduled to expire between July 1, 2025, and December 31, 2027, providing an opportunity to increase rents[176] Critical Accounting Policies - The preparation of financial statements requires significant estimates and assumptions, particularly for real estate acquisitions, impairments, stock-based compensation, and fair value of warrants and forward contracts[181][182] - There were no material changes to the Company's critical accounting policies during the six months ended June 30, 2025[183] Results of Operations | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------- | :--------- | | Total revenues | $47,204 | $48,686 | $(1,482) | (3.0%) | | Total operating expenses | $38,433 | $38,796 | $(363) | (0.9%) | | Interest expense | $(7,454) | $(9,411) | $1,957 | (20.8%) | | Loss in investment of unconsolidated joint ventures | $(7,222) | $— | $(7,222) | (100.0%) | | Net income (loss) | $(4,536) | $1,328 | $(5,864) | (441.6%) | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :--------- | :--------- | | Total revenues | $92,775 | $98,914 | $(6,139) | (6.2%) | | Total operating expenses | $76,617 | $81,170 | $(4,553) | (5.6%) | | Interest expense | $(14,303) | $(19,009) | $4,706 | (24.8%) | | Loss in investment of unconsolidated joint ventures | $(15,270) | $— | $(15,270) | (100.0%) | | Net income (loss) | $2,471 | $7,614 | $(5,143) | (67.5%) | - Rental revenue decreased by $1,591 thousand (3.3%) for the three months and $6,363 thousand (6.4%) for the six months ended June 30, 2025, primarily due to the contribution of Chicago properties into a joint venture and dispositions in 2024, partially offset by Same Store Portfolio increases[186][197] - General and administrative expenses increased by $991 thousand (25.5%) for the three months and $1,750 thousand (24.2%) for the six months, mainly due to higher professional fees and non-cash compensation[190][200] Supplemental Earnings Measures | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | NOI | $33,323 | $35,080 | $64,032 | $68,628 | | EBITDAre | $30,817 | $31,237 | $59,791 | $61,459 | | FFO | $23,847 | $21,826 | $59,299 | $42,450 | | Core FFO | $20,859 | $21,826 | $41,008 | $42,450 | | AFFO | $19,941 | $22,297 | $38,854 | $42,769 | - FFO increased significantly for the six months ended June 30, 2025, to $59,299 thousand from $42,450 thousand in 2024, while Core FFO and AFFO saw slight decreases[214][218] Cash Flow | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $38,978 | $36,477 | | Net cash used in investing activities | $(280,212) | $(811) | | Net cash provided by (used in) financing activities | $235,082 | $(25,741) | - Net cash used in investing activities increased by $279,401 thousand, primarily due to $271,507 thousand in real estate acquisitions[220] - Net cash provided by financing activities increased by $260,823 thousand, driven by proceeds from the line of credit facility ($269,200 thousand) and financing transactions ($78,956 thousand)[221] Liquidity and Capital Resources - As of June 30, 2025, the Company had $299.0 million in available liquidity, comprising $13.2 million in cash and $285.8 million in borrowing capacity on its KeyBank unsecured line of credit[226] - The Company anticipates sufficient liquidity to meet current obligations and scheduled debt maturities, and is in compliance with all financial covenants[226][229] - The Company has $750,000 thousand available for issuance under its 2024 $750 Million S-3 Filing and $200,000 thousand under its 2024 $200 Million ATM Program[231][233] Off-Balance Sheet Arrangements - The Company has an investment in an unconsolidated joint venture with 35% ownership, accounted for using the equity method[234] - The joint venture has approximately $174,205 thousand in aggregate non-recourse debt, with the Company's proportionate share being $60,972 thousand as of June 30, 2025[234] Inflation - The majority of leases include triple net or tenant recovery provisions for property expenses and fixed rent increases, which are expected to partially offset inflationary increases[237] - Inflation has not had a material impact on the Company's historical financial position or results of operations[237] Interest Rate Risk - The Company uses interest rate swap agreements to manage interest rate risk, with all outstanding variable rate debt fixed through maturity, except for the $214,200 thousand balance under the KeyBank unsecured line of credit[238][243] | Interest Rate Swap Counterparty | Notional Value (June 30, 2025, in thousands) | Fair Value (June 30, 2025, in thousands) | | :------------------------------ | :------------------------------------------- | :--------------------------------------- | | Capital One, N.A. | $200,000 | $6,331 | | JPMorgan Chase Bank, N.A. | $100,000 | $2,447 | | JPMorgan Chase Bank, N.A. | $75,000 | $759 | | Wells Fargo Bank, N.A. | $37,500 | $379 | | Capital One, N.A. | $37,500 | $379 | | Wells Fargo Bank, N.A. (de-designated) | $50,000 | $(86) | | JPMorgan Chase Bank, N.A. (de-designated) | $25,000 | $(44) | | Capital One, N.A. (de-designated) | $25,000 | $(44) | - A 25 basis point increase in the average interest rate on variable rate borrowings would have increased interest expense by approximately $57 thousand for the six months ended June 30, 2025[243] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk This section reiterates that the Company's primary market risk exposure is interest rate risk, which is managed through derivative financial instruments, and refers to the detailed discussion in Item 2 - The primary market risk the Company is exposed to is interest rate risk, managed through derivative financial instruments like interest rate swaps[246] ITEM 4. Controls and Procedures Management, under the supervision of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of June 30, 2025. No material changes to internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[247] - There have been no material changes in internal control over financial reporting during the quarter ended June 30, 2025[248] PART II. OTHER INFORMATION ITEM 1. Legal Proceedings The Company is not currently involved in any material legal proceedings, beyond routine litigation in the ordinary course of business - The Company is not subject to any material litigation[249] ITEM 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[250] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's common stock repurchase activities during the quarter ended June 30, 2025, under its authorized program | Period | Total number of shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased under the program | | :------------------------------------ | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------------- | | May 1, 2025 - May 31, 2025 | 314,382 | $16.01 | $84,965,875 | | June 1, 2025 - June 30, 2025 | 491,012 | $16.45 | $76,890,083 | | Total for the three months ended June 30, 2025 | 805,394 | $16.28 | | - The Board authorized a $90.0 million share repurchase program on February 26, 2025[251] ITEM 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - No defaults upon senior securities[252] ITEM 4. Mine Safety Disclosures The Company has no mine safety disclosures to report - No mine safety disclosures[253] ITEM 5. Other Information No other information requiring disclosure was reported, including any Rule 10b5-1 trading arrangements by directors or executive officers - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[254] ITEM 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications, contracts, and financial information in Inline XBRL format - Exhibits include certifications by the CEO and CFO (31.1, 31.2, 32.1, 32.2) and financial information formatted in Inline XBRL (101, 104)[259] SIGNATURES The report is duly signed by Jeffrey E. Witherell, Chief Executive Officer and Chairman of the Board of Directors, and Anthony Saladino, President and Chief Financial Officer, on behalf of Plymouth Industrial REIT, Inc - The report was signed by Jeffrey E. Witherell (CEO and Chairman) and Anthony Saladino (President and CFO) on August 6, 2025[261]