LXP(US:LXP)2020-08-06 17:41Financial Data and Key Metrics Changes - The company reported adjusted company FFO for the quarter at approximately $51 million or $0.19 per diluted common share, maintaining a conservative adjusted company FFO payout ratio of 55.3% [23] - Revenues for the second quarter were approximately $82 million, reflecting a 2% increase compared to the same period in 2019 [23] - Cash-based rent collections for the second quarter were over 99.5%, with 99.4% of July collections received to date [11][24] Business Line Data and Key Metrics Changes - The company leased over 3 million square feet during the quarter, raising industrial renewal cash base rents nearly 22% [12] - Overall portfolio leased was 97.3% at quarter end, showing a slight increase compared to the previous quarter [12] - The company disposed of approximately $45 million of assets during the quarter, contributing to a year-to-date total of $141 million in consolidated property disposals [14][15] Market Data and Key Metrics Changes - The company closed on $164 million of new warehouse distribution purchases in select target markets, with average GAAP and cash cap rates of 5.6% and 5.3% respectively [12] - The average age of the industrial portfolio improved to 12.2 years following the acquisition of six warehouse distribution properties totaling 1.9 million square feet [18] Company Strategy and Development Direction - The company is focused on completing its transition to an industrial REIT and capitalizing on external growth opportunities [10] - The portfolio mix has improved, increasing industrial exposure to almost 85% of gross real estate assets [16] - The company plans to dispose of or market for sale up to $500 million of primarily office properties, with some closings likely pushed into 2021 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's strong balance sheet, favorable liquidity position, and robust investment pipeline despite market uncertainties due to COVID-19 [16] - The company tightened its 2020 adjusted company FFO guidance to a range of $0.74 to $0.76 per common share, mainly due to balance sheet deleveraging [16] Other Important Information - The company raised over $201 million through an equity offering and strategic use of its ATM program during the quarter [13] - The company has no significant debt maturities before 2023, with consolidated debt outstanding at approximately $1.3 billion and a weighted average interest rate of approximately 3.7% [27] Q&A Session Summary Question: Is the $164 million per quarter acquisition pace something to expect for the remainder of the year? - Management indicated that while the market opportunity is large, only a $29 million asset is currently under contract, suggesting a cautious outlook on acquisition pace [31] Question: Did the company update the bad debt guidance? - Management confirmed that 150 basis points of bad debt is still included in the guidance [33] Question: What are the sources of capital going forward? - Management noted that disposition proceeds will be an important source of capital, along with the availability of the credit line and potential use of the ATM program [35] Question: Can you provide an update on the $500 million office sales? - Management mentioned that there are roughly $55 million of assets with accepted offers, but timing for other sales may be less predictable due to COVID-19 [38] Question: How is the current cost of capital compared to yields? - Management stated that the cost of capital has improved significantly, making external growth easier, with market opportunities ranging between 4.5% and 5.5% [42] Question: Has the company changed its approach to property acquisitions? - Management affirmed that the logistics-oriented focus remains strong, with expectations to benefit from structural demand drivers in the current environment [46]