Plymouth Industrial REIT (PLYM) Q1 2025 Earnings Call May 02, 2025 09:00 AM ET Speaker0 Please note today's event is also being recorded. I would now like to turn the conference call over to John Wilfong, Investor Relations. Sir, please go ahead. Speaker1 Thank you, and good morning. Welcome to the Plymouth Industrial REIT conference call to review the company's results for the first quarter of twenty twenty five. Yesterday afternoon, we issued our earnings release and posted a copy of our prepared commenta ...

Core Insights - Plymouth Industrial reported revenue of $45.57 million for the quarter ended March 2025, a decrease of 9.3% year-over-year [1] - The company's EPS was $0.44, significantly higher than $0.14 in the same quarter last year [1] - Revenue fell short of the Zacks Consensus Estimate of $47.51 million, resulting in a surprise of -4.07% [1] - The EPS also missed the consensus estimate of $0.45, with a surprise of -2.22% [1] Revenue Breakdown - Management fee revenue and other income amounted to $0.15 million, below the two-analyst average estimate of $0.19 million [4] - Rental revenue was reported at $45.42 million, compared to the two-analyst average estimate of $47.87 million, reflecting a year-over-year decline of 9.5% [4] Stock Performance - Shares of Plymouth Industrial have declined by 8.9% over the past month, while the Zacks S&P 500 composite saw a change of -0.7% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - Plymouth Industrial REIT had a strong start to 2025 with robust leasing activity and the acquisition of $65 million in Class B industrial assets, positioning the company for future growth [3][4][5] - The company reported a net income of $5.8 million for Q1 2025, a slight decrease from $6.1 million in Q1 2024, primarily due to the deconsolidation of the Chicago Portfolio [4][5] - Total revenues for Q1 2025 were $45.6 million, down from $50.2 million in the same period last year [5] - The company affirmed its full-year 2025 guidance for Core FFO per share and updated its net income guidance [21][22] Financial Performance - Net income attributable to common stockholders for Q1 2025 was $5.8 million, or $0.13 per share, compared to $6.1 million, or $0.14 per share, in Q1 2024 [4][10] - Core Funds from Operations (Core FFO) for Q1 2025 was $20.1 million, or $0.44 per share, down from $20.6 million, or $0.45 per share, in Q1 2024 [9][10] - Adjusted Funds from Operations (AFFO) for Q1 2025 was $18.9 million, or $0.41 per share, compared to $20.5 million, or $0.45 per share, in Q1 2024 [10][44] - Net Operating Income (NOI) for Q1 2025 was $30.7 million, down from $33.5 million in Q1 2024, primarily due to the deconsolidation of the Chicago Portfolio [6][43] Leasing and Occupancy - Same store NOI increased by 1.1% on a GAAP basis for Q1 2025 compared to Q1 2024, with a cash basis increase of 2.0% [7][8] - Leases commencing in Q1 2025 totaled 2,437,267 square feet, with rental rates reflecting a 9.6% increase on a cash basis [17][19] - Total portfolio occupancy as of March 31, 2025, was 94.3%, with same store occupancy at 94.7% [18][19] Acquisition and Disposition Activity - The company acquired six industrial buildings totaling 801,241 square feet for $65.1 million, with a weighted average initial NOI yield of 6.8% [15][16] - Plymouth sold a 33,688-square-foot flex building in Memphis, TN, for $2.4 million, which was part of a portfolio acquired in July 2024 [15][16] Liquidity and Capital Markets - As of April 29, 2025, the company had a cash balance of approximately $8.0 million and $415.5 million capacity under its existing unsecured line of credit [12] - The board authorized a share repurchase program for up to $90 million of the company's outstanding common stock [7][12] Guidance for 2025 - The company updated its guidance for net income per weighted average common share and units, while affirming the Core FFO guidance range of $1.85 to $1.89 per share [21][22]

LXP Industrial Trust (NYSE:LXP) Q1 2025 Earnings Conference Call May 1, 2025 8:30 AM ET Company Participants Heather Gentry - Investor Relations Will Eglin - Chief Executive Officer Brendan Mullinix - Chief Investment Officer James Dudley - Executive Vice President Nathan Brunner - CFO Conference Call Participants James Kammert - Evercore John Petersen - Jefferies James Kammert - Evercore ISI Operator Good morning. My name is Aaron, and I will be your conference operator for today. At this time, I would lik ...

Financial Data and Key Metrics Changes - Adjusted company FFO for Q1 2025 was $0.16 per diluted common share, totaling approximately $46 million, consistent with expectations [13] - Same store NOI growth was 5.2% during the quarter, with the same store portfolio 99.2% leased at quarter end [13] - The company maintains its 2025 same store NOI growth range of 3% to 4% and adjusted company FFO range of $0.61 to $0.65 per diluted common share [13] Business Line Data and Key Metrics Changes - The company leased approximately 1,100,000 square feet in Q1 2025, including two lease extensions with an average annual escalator of 3.6% [14] - Significant lease renewals included a five-year renewal in Phoenix with a 59% cash rental increase and a two-year extension in Atlanta with 4% escalators [14] Market Data and Key Metrics Changes - US net absorption was 23 million square feet in Q1 2025, with 19 million square feet in the company's 12 target markets [8] - The construction pipeline in the 12 target markets is approximately 87 million square feet, down nearly 75% from the 2022 peak of 330 million square feet [8] Company Strategy and Development Direction - The company focuses on increasing occupancy, enhancing returns, and executing a 12-market investment strategy in the Sunbelt and Lower Midwest [7] - The investment strategy is concentrated in markets with favorable demographics, employment, and population growth exceeding the national average [10] - The company has opportunistically sold two industrial assets for approximately $75 million at an average cash capitalization rate of 4.1% [11] Management's Comments on Operating Environment and Future Outlook - Management remains cautious in the near term due to trade policy uncertainties affecting tenant decisions, but leasing outcomes have been favorable [9] - The company believes its asset quality, tenant credit strength, and portfolio footprint align with onshoring initiatives, positioning it well for future growth [19] Other Important Information - The company repaid $50 million of the unswapped portion of a $300 million term loan, with a net debt to adjusted EBITDA ratio of 5.9 times at quarter end [16] - Approximately 47% of the company's ABR comes from tenants with investment-grade rated parent companies, indicating high credit quality [17] Q&A Session Summary Question: Known move outs and headwinds for future expirations - Management indicated it is too early to tell about known move outs for 2026 and 2027, but they are optimistic about tenant renewals due to high-quality properties [21][22] Question: Current yields and rents for large boxes - There has been slight markdown in market rents, but overall, face rates have remained stable with increased tenant improvements and concessions [24][26] Question: Future disposition plans - The company is currently on pause regarding disposition activity due to market uncertainty but has a long-term objective to concentrate on the 12 target markets [27][28] Question: Impact of redevelopment on guidance - The redevelopment project was anticipated and excluded from same store NOI growth guidance, with no impact on Q1 results [32][33] Question: Expected yield following redevelopment - The expected yield on the redevelopment is projected to be in the mid-teens, with significant incremental rent anticipated [36] Question: Market excitement for leasing spreads - Management expressed optimism about the Sunbelt markets, particularly in Dallas and Phoenix, for potential mark-to-market opportunities [41] Question: Demand from larger e-commerce players - There is increased activity from major retailers, including Amazon, which could positively impact leasing for the company's large boxes [46]

LXP Industrial Trust (LXP) Q1 2025 Earnings Call May 01, 2025 08:30 AM ET Speaker0 Good morning. My name is Aaron, and I will be your conference operator for today. At this time, I would like to welcome everyone to the LXP Industrial Trust First Quarter twenty twenty five Earnings Call and Webcast. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question and answer session. With that, I'm pleased to turn our call over to Heather Gentry, Ex ...

Portfolio Highlights - LXP Industrial Trust has gross assets of $4.9 billion[7] - The portfolio consists of 118 properties[7] and is 100% industrial real estate[7] - Approximately 85% of the portfolio is concentrated in 12 target markets[7, 31] - Around 91% of the properties are classified as Class A[7] Financial Performance & Growth Drivers - The company achieved same-store NOI growth of 5.2% in the first quarter of 2025[14] - Leases expiring through 2030 have an estimated mark-to-market opportunity of approximately 18%[17, 53, 63] - The average annual rental escalators are trending up, with a rate of 2.8%[17, 58] and 3.6% on leases signed in 2025[53, 58] - The company estimates $25 million in initial annual cash rent from available leases, equivalent to $0.08 per share or 13% of FFO[53] Balance Sheet & Strategy - LXP's leverage stands at 5.9x Net Debt to Adjusted EBITDA[14, 71, 107] - The company sold one property for approximately $35 million at a cash capitalization rate of 3.8%[14] and another for ~$40 million at a cash capitalization rate of 4.3%[14]

Financial Data and Key Metrics Changes - Cash basis NOI grew by nearly 2% year over year, while normalized FFO increased 43% year over year and 52% sequentially [7][15] - NOI for the quarter was reported at $87,500,000, with cash basis NOI at $83,800,000 and adjusted EBITDAre at $85,300,000, all showing increases year over year and sequentially [16] - Interest expense decreased to $69,800,000, reflecting a reduction in interest rate cap costs [16] Business Line Data and Key Metrics Changes - The company executed over 2,300,000 square feet of total leasing activity with an occupancy rate of 94.6%, reflecting a sequential increase of 20 basis points [7] - The Mainland properties accounted for nearly 80% of renewal activity, with significant leases signed with major tenants [11] - In Hawaii, 492,000 square feet of renewals were signed at rental rates 18.2% higher than prior rents [9] Market Data and Key Metrics Changes - The company is monitoring the evolving landscape surrounding global tariffs, which may impact tenant demand and the overall leasing environment [10] - The leasing pipeline includes 32 deals for more than 7,400,000 square feet, with anticipated roll-ups in rent of 20% on the Mainland and 30% in Hawaii [13] Company Strategy and Development Direction - The company aims to maximize mark-to-market growth opportunities, maintain strong tenant retention, and lease vacancies, particularly in undeveloped land parcels [10] - There is a focus on evaluating opportunities to improve the balance sheet and reduce leverage, potentially through refinancing existing debt and strategic property dispositions [10][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's ability to withstand short-term volatility due to its high-quality assets and diversified tenant roster [10] - The company anticipates that tariffs may positively impact tenant demand, leading to higher tenant retention in the short term [38] Other Important Information - The company reported a strong start to the year with solid financial performance and steady demand for industrial real estate [17] - The company has no debt maturities until 2027, with all debt currently carried at fixed rates [17] Q&A Session Summary Question: Details on bad debt recovery impact - The financial impact from bad debt recovery in the first quarter was around $750,000, which is reflected in revenues [20][21] Question: Insights on leasing timelines - Leasing timelines have elongated, with tenants looking to start renewal processes earlier due to more stakeholders involved in lease decisions [22][23] Question: Status of notable vacancies in Hawaii and Indianapolis - Activity has been seen for the Hawaii property, with proposals out, while the Indianapolis property is actively being marketed with proposals but no finalized leases yet [24][26] Question: Motivation for leverage reduction and property sales - The company is evaluating unsolicited offers for properties, particularly from owner-users, which may lead to higher valuations [28][30] Question: Impact of tariffs on tenant decisions - Tariffs are anticipated to be beneficial for tenant demand, with some tenants opting to stay in place rather than relocate due to concerns about construction costs [37][38] Question: Exposure of Hawaii portfolio to inbound travel - The portfolio's exposure to inbound travel is minimal, as tenants generally serve the local economy rather than relying on tourism [39]

Financial Data and Key Metrics Changes - Core FFO per share was $0.61 for the first quarter, an increase of 3.4% compared to the previous year [15] - Cash available for distribution totaled $106.5 million, an increase of 8.5% compared to the prior period [15] - Leverage remains low with net debt to annualized run rate adjusted EBITDA equal to 5.2 times [15] - Same store cash NOI growth was 3.4% for the quarter, driven by leasing spreads of 27.3% and annual escalators of 2.8% [17] Business Line Data and Key Metrics Changes - The company signed 36 leases totaling 5 million square feet during the quarter, generating cash and straight line leasing spreads of 27.3% and 42.1% respectively [16] - Retention for the quarter was 85.3%, with 78.5% of the operating portfolio square feet expected to lease in 2025 already leased [16][19] - The company achieved cash leasing spreads of 25.1% for the leases commencing in 2025 [8][16] Market Data and Key Metrics Changes - The national under construction pipeline decreased more than 16% sequentially since the fourth quarter [11] - The company noted healthy tenant activity in various markets, with strong demand in the Midwest and Sunbelt regions, while some weakness was observed in Atlanta and San Diego [9][28] Company Strategy and Development Direction - The company aims to benefit from geographic diversity and focus on CBRE Tier one markets, viewing tenant supply chain diversification as a net positive [9] - The company has a strong balance sheet and ample liquidity, positioning itself for sustainable growth in 2025 [20] - The company is evaluating a broad mix of assets for acquisition, including long-term and short-term leases, and is open to opportunities in the current market environment [58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about leasing activity despite macroeconomic uncertainties, noting that tenants are still making decisions albeit at a slower pace [27][36] - The company maintains its 2025 credit loss guidance of 75 basis points, with minimal credit loss experienced in the first quarter [19][60] - Management highlighted ongoing discussions with tenants for early lease renewals, indicating strong demand in the system [29][34] Other Important Information - The company completed acquisitions totaling $43 million in the first quarter, with cash cap rates averaging 6.87% [11] - A significant lease of 500,000 square feet was executed in the Savannah market with zero downtime and a 25% cash leasing spread [10] - The company has approximately 2.5 million square feet of development activity across 11 buildings, with 50% under construction and 16% pre-leased [14] Q&A Session Summary Question: Clarification on new leasing activity - Management confirmed that 1 million square feet of new leases were signed in the last 30 to 60 days, with a mix of new and renewal leases [25][26] Question: Demand across different submarkets - Management noted healthy demand in Midwest markets and the Sunbelt, with some weakness in Atlanta and San Diego, but overall tenant activity remains strong [27][28] Question: Trends in the private transactions market - Management observed that while the private market remains strong, some portfolios have been pulled from the market due to pricing volatility [42][44] Question: Update on credit loss and American Tire - Management stated that American Tire is current on rent, and the guidance for credit loss remains unchanged at 75 basis points [60][61] Question: Insights into leasing activity and concessions - Management indicated that while some concessions may be offered, they are generally holding out for the best net effective rent [106] Question: Update on development pipeline demand - Management reported good activity in development projects, although new leasing for new developments is slower due to macroeconomic factors [72][74]

Financial Data and Key Metrics Changes - Cash basis NOI grew by nearly 2% year over year, while normalized FFO increased 43% year over year and 52% sequentially [7][16] - As of March 31, 2025, NOI was $87,500,000, cash basis NOI was $83,800,000, and adjusted EBITDAre was $85,300,000, all showing increases year over year and sequentially [17] - Interest expense decreased to $69,800,000, reflecting a reduction in interest rate cap costs [17] Business Line Data and Key Metrics Changes - The company executed over 2,300,000 square feet of total leasing activity with an occupancy rate of 94.6%, reflecting a sequential increase of 20 basis points [7] - The top 10 tenants account for 47% of annualized rental revenues, with over 76% coming from investment-grade rated tenants or secure Hawaii land leases [8] - In Hawaii, 492,000 square feet of renewals were signed at rental rates 18.2% higher than prior rents [9] Market Data and Key Metrics Changes - The Mainland properties accounted for nearly 80% of renewal activity, with significant leases signed with major companies [12] - The company is tracking 32 deals in its pipeline for over 7,400,000 square feet, anticipating a near-term conversion of 500,000 square feet [14] Company Strategy and Development Direction - The company aims to maximize mark-to-market growth opportunities, maintain strong tenant retention, and lease vacancies, particularly in Hawaii and Indianapolis [10] - There is a focus on evaluating opportunities to improve the balance sheet and reduce leverage, potentially through refinancing existing debt and strategic property dispositions [10][30] Management's Comments on Operating Environment and Future Outlook - Management is monitoring the evolving landscape surrounding global tariffs, believing the portfolio is well-positioned to withstand short-term volatility [10] - The company anticipates that tariffs may positively impact tenant demand, leading to higher tenant retention in the short term [38][39] - Management expressed confidence in the long-term value of the Hawaii land despite current leasing challenges [31] Other Important Information - The company reported a one-time benefit of $0.01 per share related to a required remediation payment for a scheduled lease termination in the second quarter [20] - The company has no debt maturities until 2027, with all debt currently carried at fixed rates [17] Q&A Session Summary Question: Details on bad debt recovery impact - The financial impact from bad debt recovery was around $750,000 in revenues [22] Question: Insights on leasing timelines - Leasing timelines are elongated, with tenants starting renewal processes earlier due to more people involved in decision-making [24][25] Question: Status of notable vacancies in Indianapolis and Hawaii - Activity has been seen in Hawaii with proposals out, while negotiations in Indianapolis did not materialize, and the property is actively being marketed [26][28] Question: Motivation for leverage reduction and property sales - The company is seeing unsolicited offers from owner-users, which are usually at higher valuations, prompting consideration for property sales [30] Question: Impact of tariffs on tenant decisions - Tariffs are anticipated to be beneficial for tenant demand, with some tenants opting to stay in place rather than relocate due to concerns over construction costs [38][39] Question: Exposure of Hawaii portfolio to inbound travel - The portfolio's exposure to inbound travel is minimal, as tenants generally serve the local economy rather than relying on tourism [40]