LXP(US:LXP)2026-02-12 14:32Financial Data and Key Metrics Changes - Adjusted company FFO for Q4 was $0.79 per diluted common share, totaling approximately $47 million, while for the full year, it was $3.15 per diluted common share, or $187 million [14] - The company provided 2026 adjusted company FFO guidance of $3.22-$3.37 per common share, indicating a 4.6% growth at the midpoint [15] - Net debt to adjusted EBITDA improved from 5.9 times to 4.9 times [5][21] Business Line Data and Key Metrics Changes - The company leased nearly 5 million sq ft in 2025, achieving attractive mark-to-market outcomes of approximately 28% on a cash basis, excluding fixed-rate renewals [5] - Portfolio occupancy increased to 97.1% at year-end 2025, up from 93.6% at year-end 2024 [16] - Same-store NOI growth for the full year was 2.9%, with a flat performance in Q4 compared to the same period in 2024 [16] Market Data and Key Metrics Changes - The target markets contributed over 66% of the overall U.S. net absorption of about 54 million sq ft [6] - Larger users favored facilities exceeding 500,000 sq ft built within the last 5 years, with significant demand in markets like Phoenix, Indianapolis, Fort Worth, and Houston [7] Company Strategy and Development Direction - The company plans to focus on disciplined investment and external growth opportunities, particularly in its land bank, while executing opportunistic share repurchases [10] - The development program has yielded a 7.1% weighted average stabilized yield on first-generation leases, with 15 facilities developed since 2019 [10] - A new 1 million sq ft spec project is set to break ground in Phoenix, with completion anticipated in the first half of 2027 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving market fundamentals and the potential for significant value creation in the land bank [9][12] - The company is focused on leasing remaining vacancies and generating robust mark-to-market outcomes in 2026 [12] - Management noted that concessions are expected to recede as the market becomes more landlord favorable [37] Other Important Information - The company exited five non-target markets in 2025, prioritizing investments in 12 target markets that account for 87% of gross book value [8] - Total disposition volume for the year was $389 million, with an average cash capitalization rate of 5.7% on stabilized assets sold [8] - The company repaid approximately $220 million of debt in 2025, including $140 million of senior notes due 2028 [21] Q&A Session Summary Question: Inquiry about planned development in Phoenix - Management indicated that the supply-demand equation is favorable, and there is interest in the facility even before completion [27] Question: Clarification on same-store NOI growth - Management explained that the variance from guidance was primarily due to higher property expense leakage across several properties [32] Question: Discussion on concessions and market environment - Management noted that concessions are expected to decrease as the market improves, leading to a more favorable environment for landlords [37] Question: Future transaction activity and capital allocation - Management mentioned ongoing negotiations for $200 million of assets in non-target markets, which could provide capital for redeployment [39]