INDT - Earnings call transcript Q4 2020

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Operator

Good morning, and welcome to INDUS Realty Trust Fourth Quarter and Fiscal 2020 Earnings Webcast. [Operator Instructions] It's now my pleasure to turn the program over to Ashley Pizzo, Director Investor Relations and Capital Markets at INDUS.

Ashley Pizzo

Thank you, and good morning, everyone. Welcome to our fourth quarter 2020 earnings webcast.

In addition to regularly available earnings materials, INDUS has also published a supplemental presentation this quarter, which is available on our website at indusrt.com, under the Investors tab. Exchange to under this the Reform federal of the like contain call Securities Act also and XXXX, statements XXXX forward-looking securities Securities of would XXXX. mention Securities conference that will Act the I Private of Litigation Act laws, including These based as well management's expectations, and assumptions. on estimates the projections about as statements and INDUS the operates are market industry current and in which beliefs

with growth shareholder by respect of include, our developments, may limited and variety a guarantees are results timing performance value landholdings. impacts our and creation, plans, but dispositions, and expectations business occupancy operating to and on of around value statements Forward-looking factors. expectations to, of of the not business not plans, acquisitions statements and affected market are be These factors actual those of expectations levels may external and

a For most refer the our risks those in listed filing. please list of XX-K to recent factors,

turn we'll hear in begin? market in Gamzon, will cover leasing the Galici, detail. page who activity, to the for Additionally, such supplemental our E Michael. at core core fourth provided please quarter Michael real results additional Michael, FFO, NOI, the EBITDA Investor EBITDA estate NOI, quarter estate FFO, NOI hear This the of from on which and as Regulation available item also Anthony morning, financial over with FFO, and Regulation we CEO, from cash for that and same-property website XX will We'll our in financial CFO, development are those are updates G cover And who call real measures. pipelines. With have measures our to that, our a and contain conditions accordance presentation recent will adjusted materials, cash I'll reconciliation and you fourth results press SK, in release measures of our non-GAAP published indusrt.com.

Michael Gamzon

at for to from corporate all Trust our thank completed Good to of a Realty Realty Thank We recently INDUS, there Industrial you, families United series weather. and that you months your into a rebranding company. in to Griffin challenging continued We associated what year including and has Ashley. instrumental and you over morning, our this and some our year. of going INDUS interest and host to changes, to efforts be whose starting it safety in commitment we pandemic exciting well, on We first later, have our change will been taxed but States, of touch that this symbol still many team as more been COVID-XX lost not are left colleagues and success REIT a these continue on stakeholders. year. the tenants, demanding to calendar hope your INDT, us details, remain our I safe call I'll before ticker a the nearly the into thank wanted is election and and and in X the

rent One sector period. We only tenant brief thus we square X keep not since with To material XX,XXX collection seeking small foot year. with have continued last announcements, as Connecticut, agreements out tenants strong Hartford, meeting this the on is deferral who from obligations. has have experience signed updates our resilient was we fortunate on in and call, and we any industrial reporting collection far, operate rent close to a occupancy comments to in relief. are our COVID-related had to our have tenants that the remained a reiterate its previous I'll rent

part would under an XX% what X-year rent for X only of in strong of revenue. we fiscal credit. other XXXX a renewal deferrals company, renewal Fortune-XXX a was early these otherwise accounted completed other X-year at any with X.X% lieu as of provided Combined, months incentives agreement of The granted a with you subsidiary who of have

to As quarter year, activities. highlights fourth we move development from and focus the on the on I'll our initially

in own Charlotte, have and X As with contract in and development on X Valley previously Orlando. are and parcels in in to that we we X Lehigh our in projects the X land X other pipeline. on purchase, the the Lehigh announced, Valley we our that Beginning own.

some our I'm on a outside is behind is this modified working delays permitting corridor that The warehouse speculative due Valley project, final both Lehigh developments for strong townships absorption. I-XX and underway. back I-XX, experience in Valley, and Pennsylvania the to the to But did in construction square in the our XXX,XXX confirm Lehigh foot environments where QX rank agencies. first we to us, On the receiving we're facility this in absorption COVID-related is for overall experience demand top-tier new and to track in continues pleased total and continues delivery. The the and

the of accommodate that updates. that build-to-suit last exciting some previously that own mile speculative where secured Charlotte, a land. site RE agreement, parcel XXX,XXX totaling to under we the we logistics industrial the Subsequent project we leading to other square the a we for company. The in XX-acre We construct entitlements buildings commenced to fiscal preliminary feet indicated is e-commerce facility have year-end, on the a redesign

And the development for the calculated rate lease will total would only the parking utilize the project requirement While $XX the building site's of of and XX-year XXX,XXX enter close X at project designed total the estimate areas, is including getting million, could the slated back cost We would the in I buildings this range feet, costs. while budget a constructed cost. proposed be what we is the development into the XX-acre between agreements property $XX of square additional the plan. land proposed the a combined Under separate percentage for to we to a terms, for rental facility. design. warehouse to the the million that we of had that we an potential. site development a building foot land proposed extensive property, acres all distribution as underwrote is a tenant as to fairly if parking construct for that's original which proposed the X of the contract. originally ever us our tenant land comment being the Lehigh now In develop build-to-suit, also project intend we were have we vacate have purchase still Switching square X to on original under XXX,XXX a the Valley, XX

receive land to this expect on the middle close our seek building towards and sometime XXXX. would and later We the year to of deliver entitlements the

quarter in which million development sector, demand, under close strong logistics portfolio our All growth square XXX,XXX or We XXX,XXX to project plans on quarter are be also X XXXX. bringing market, the Orlando we in in completion, would pipeline on positive the square by to this experience industrial our in aided totaling will hospitality logistics the upon feet complement in the in, existing feet. great market. buildings the population. logistics of square second industrial expect in X.X existing total a contract We continues or XX feet believe would to despite to add industrial year, The footage third with this Orlando, slowdown the deliver our our holdings of first in to square acres to tourism XX%

will and have inclusive stabilize work of building which of $XX.X buildings tenant for end. improvements total the land cost We XXXX $XX.X million the site needed to these of Shell as million, fiscal spent be construction, expect we year

cash established year NOI analyzed and a stabilized of targeted refer process, then underwriting initial our and cash NOI project standard yields, development range target cash each yields. a to we development part initial full a and As stabilized of stabilized NOI full and year yield for underwritten acquisition which as acquisition

compared I'd our into developments them calculation. average into to to we portfolio you underwritten good XX-K assets. for look as these be which behind receive NOI provides forward yield contribution NOI X adding We these up. the a cash believe stabilized details our rates incremental the in the between the more for projects weighted these X% on to this lease the from we point cap and have methodology market We will range to margin X.X%, development

which evaluate to of contribute logistics We acquisition also quickly buildings more can NOI. to actively in-place continue opportunities potentially our industrial existing

generate real time. To group compete, levels. by good and strong to demand the industrial tailwinds continue markets sector than pushed over will we in of higher opportunities brokers, pricing assets have believe make reported and pre-pandemic many a or we markets returns for deep small estate be will into As identify to that equal to dives target

Our focus are feet centers service the square evaluate in end XX,XXX vacant up we flexibly to supply-constrained of population markets economies leased modern between will remain up growing that way buildings the properties. utilize can and all expertise existing delivery uses national fully range designed local and select XXX,XXX with our that and will development buildings and to And distribution. from of value-add to from full on

Next, I'd in a portfolio. like current moment spend on the to industrial our logistics vacancies

As leased XXX% are buildings. of essentially November in but all we XX, X

vacant. XXXX. and built The first quarter leased spec fourth these drive X which XX% on drive, in which XXX in is of international late international over the Both Charlotte, are and XXX of remains were delivered

foot. which XXXX. is little in XXX an we renovation leased XX% which a bought at Portland We third about acquisition in completed totaled March a the some recently $XX.XX Orlando, was The at square per of was only XXX it value-add time over building extensive and Sunport,

by assets underwriting. major for are activity the our encouraged at And of current in initial all are We negotiations the tenant believe properties. will vacancies. stabilize We form X all above rents on lease some these

leases However, we these terms, under if note will current there's all. guarantee execute the we no at

to building quarter million, the front, disposition in sell under contracts square office land the separate for foot the vacant X On a acres still we're across flex sites Connecticut. of total and $X.X sale we completed XXX XXX,XXX of during

have X solar Waterside we project XX to properties. a to out of sale as million agreement X sale And these entered a of our to Meadowood laid Crossing, undeveloped million announced Southwick, which our $X.X an year, a But sell a sale end sometimes as Massachusetts. the organization. these called this sell of process land into in land did residential XXX,XXX see million potential development agreement that conservation I a when subsequent marketing remaining commercial for quarter, You'll X $X.X X we in sell use to under closing the buyer office X the and Last materials contract opens. acres of $X and undeveloped door the land sites to one Farms. And were Unfortunately, the relaunched to under properties, feet. planned, another a we complete totaled parcels Stratton multistorey our our in not closes, square user,

due diligence close would of We that of buyer transaction a this half contingencies. million. the expect its and For XXXX, second price $X.XX to purchase the will clearing subject in

Anthony, announced our Both a private start Lastly, a first before February provided time leading It In through we acquisitions also disclosure and provided of on increasing shares quarterly key as that, we growth path our busy public estate Conversing announced to It Maryland million calendar the as just placement but our effective and we a reporting a addition participated areas for I'll for guidance a from to package and and of Trust corporate efforts the in albeit for they completed investor snapshot first I'll time. and November, disclosures I'd grow we us, company. also Corp., and earnings year yesterday of in XX-year XXXX in of Realty Industrial team our along expertise. company a external equity represented comparability over our accessed our for we getting year, and first real also we Investor director. and Capital, in for Gordon value. and issued our an conference $XX.X was and history released This partner, and to to October, with transaction we insights additional we've total new supplemental have milestones. and to from REIT INDUS' issuance, March, are March, of our effort information Molly you virtual, INDUS increase the information as to start who passing of warrant first, today. of the vision that with some their NAREIT's In shareholder our and release the respective over With logistics in equity of rebranded is it demonstrating the XXXX I'll raising becoming Day our their this to us encourage X Griffin help announced where review our the a In we was and to supplement resilience evening. hosted important the appreciate our highlights, highlight to year. North when board; This an August, conversion In valuable market. proceeds. REIT DuGan reincorporation In INDUS Chairman Orlando turn as step that Anthony. December our announced footprint in Realty I the peers.

Anthony Galici

Thanks, Michael.

to no stub I transition in stub expenses. An REIT which reported that the into are I our period NOI have status quarter we results, first March as and XXXX, in and This included our expense transition statements, on will Form our sales. renamed is XX-Q these with the from for new cash leasing the in November provide disclosures the with more other change NOI for along changed moment of to XX, revenues than sales take that asset additional fiscal January leaves how our due in XX, to get to on quarterly remind for a began fourth report to costs and Beginning our individual cash Before to related income a results. on a electing on December and this with of year-end XXXX note line year-end NOI XXXX, be fourth us that fiscal change want quarter single in XXXX, income December November quarter expected XX XXXX to now fiscal to a now revenue we financial leasing XXXX. we detail This calendar beginning and X-month statement. I XX. show ending you as fiscal The asset and will part simply I year-end we later be results report X-month item in beginning bit year, period. Historically, items the our is X, NOI period new a filed net, between we these our year. our

Our fourth XX.X% quarter. third logistics from end the was portfolio the industrial at leased of the unchanged quarter,

on cash In past lease, leasing X in renewals and and terms we feet at respectively. totaling the positive approximately XXX,XXX XX.X% spreads of both leasing with logistics activity this X.X%, new signed a square and portfolio basis X quarter, industrial straight-line

we've As we previous XXXX addressed majority leasing role. have in the mentioned calls, of our

under to office over calendar occupying signed leases package the expire we square approximately to XXX,XXX XX was XX% November supplemental X and remaining for approximately other for expire renewal industrial shows to leased feet. across which this are year, set expirations with quarter There Charlotte, square expiring square fourth totaling Our feet XXXX, in X XX Hartford, a leases in of Subsequent X-year year-end, and portfolios. the XXX,XXX footage. was in accounts the scheduled with in X XXXX scheduled fledged XXXX logistics tenant square feet XXX,XXX December industry

our on these supplement. tendency in information, and disclosures role additional lease our For by year future

quarter, year's fourth X.X% fourth million the cash for from up logistics quarter. $X.X was industrial Our NOI last

lease-up $XX.X building initial lease-up These a the building majority in in from NOI by Valley in earlier the $XXX,XXX completed year, year, benefits cash portfolio, $XX.X and most lesser improved impacted XXXX required the lease little XXX,XXX renewed in very market, X industrial occupancy it's of square North the in renewal a tenant this in cash partially of Florida which Carolina, into cash recently and logistics costs. from X of logistics improvement in the XXXX. were Orlando, a the that about free extent, the Industrial to space in tripled completed NOI notably, existing Lehigh of rent and from impact expansion Griffin's rates. and the to spec with million addition quarter. X.X% million increases the and up rent and free was feet For of leases new The tenant with to acquisitions rental related periods during this a to offset benefited NOI

square portfolio in feet XXX,XXX totals total square footage. square This makes of disposition XX,XXX XX portfolio X.X% foot fourth of South office/flex the Griffin quarter. up Our approximately the reflects by Road and our

Waterside for our relaunched and have process we marketing mentioned, Michael X As X Crossings.

grow We logistics the decrease industrial of to our office/flex portfolio expect continue our we portfolio. as to percentage

quarter. options related INDUS a the increase to similar in million, terminated fiscal to of related $X.X XXXX administrative million in fiscal XXXX, largest approximately to expenses to our incentive had when part the expenses in end an needs reflecting General and be decision remain we X primarily operate the in he portfolio from office/flex legal that to the of their fourth Waterside based Waterside commitments more to properties Our was book value the the pandemic. especially recent continue office and a occupancy X XXXX. fiscal the fees, approximately to of to charge Crossing, initiatives. $XX which and sale of on challenged, effective Chairman. compensation X, portion believe delay increased XX.X% this agreement which space we third related growth valuation. the by $X.XX of line provided We million what In X a on A have result the tied quarter, an former January subsequently of as XXXX million option took party companies leased will stock at fourth impairment X noted at market to we of onetime rethink $X.X in making and was long-term This any million in expenses, and anticipate brings with and $X.X as XXXX, fourth was also grant REIT quarter. DuGan of buildings the in for impairment a value as buyer In the became increase significant

leases XXXX. costs instead capitalizing fiscal as fees required lease start XXXX new will the from I previously, done expenses of in accounting have our in were that as the refer also INDUS at on XXXX fiscal an had increase our additional of details fiscal expense. G&A added also expensed We you related G&A period. of fourth adopted other that to we supplement, the where Page those provided legal XX been in new incurred quarter standard to These G&A under and $XXX,XXX to

X to I for XXXX, relates items. out to want it point As G&A,

The corporate continue reconversion to experience part will first to our of first we and the is year. the expenses organization, in particularly, related that

expenses will We supplement. these show and XX-Q in continue to our

this construction change is will the our we that Into that approximate a our amount an have changes of completed rather capitalize number and they personnel in we'll is income treatment is contingent costs, and second projects second peers. we year, estimate private number compensation. was the quarter instruments, G&A. $XXX,XXX this value that We that the the called work where costs per August. warrant fair mostly the of issued of statement past reflects value is subject fully is million placement to expense and as believe their appropriate, the in We their which this to the accounting This expense conditions. than fair for could The part most where on shown capitalized of change $XXX,XXX development although consistent value which with rights financial of in were

a statement. expense XXXX, For $X this showed on the up fiscal income as billion

away that to will associated prior be under the liability, inflation, with required worth will of the ASC upon the end despite should recorded is financial of instruments note quarter. third value and a also on million. which the that cash, be private will As XXXX also reminder, were the are I of pay liabilities maximum noting amount in the balance be to XXX-XX. accounting which would the being again as anniversary that $X It's the as warrant they go continued derivative if classified settled liabilities rates these first sheet the there warrant treatment INDUS our warrant,

that non-GAAP As estate, EBITDA in real we In we FFO, report. core measures will and REIT XXXX, to core as be metrics a presentation, are our for the cash elect calculated such real EBITDA we taxed continuing of FFO. supplemental as typically FFO additional for estate, adjusted disclosure we

for and a calculation U.S. will the quarter through our we presentation metrics that the As also to same-property property to be point same-property and industrial which appendix NOI, NOI begin portfolio. cash amounts consistent current of XX supplemental our for been level are NOI quarter, will same-property of section purposes you can is and calculations the fourth of Slides the the the of X and of months' supplement. portfolio a same-property the cash I definitions property calculated, prior difference The have for logistics with added of properties in NOI service part trailing stabilized periods. these found NOI this I have basis. that limited with on industrial XX of these growth appropriate both year GAAP our metrics is on reporting to which reconciliations owned logistics portfolio of and those

the needed NOI same-property December Growth ended X.X% properties XXXX, over XXXX logistics included. be current X, X.X%, of as year was XXXX, the same-property owned of cash assets. all stabilized portfolio in limits NOI for in industrial same-property to fiscal to be XXXX. This portfolio XX% For to respectively, and and fiscal same-property order and our in our

cash Our trailing impacted most -- NOI stoped again. during it same-property the was

was of accounted by the property for square associated NOI XX X which most portfolio. transactions, November our over same-property ended XX, same cash XXXX, with X% footage free during the months rent impacted trailing of Our

limited future growth is we XXX% forward, same-property leased and Looking of property escalations, to as renewals that the and near-term believe portfolio is year-end.

the prior and as activities periods lease-up of result peers. the we normal with properties and newly the benefit our XXXX. of not be tanker as case the year same-property of also cost same-property that a the will properties swings consistent both include the don't developed until capture expect NOI With in portfolio stabilize to from current will we was abated I to rent in as note for leasing

I The is focus core like would on FFO. other metric to

$X as are I chunky of as conversion from for related FFO the consistent expenses G&A mentioned is for REIT defined well add-back either in fair noncash from instruments XXXX FFO $XX.X XXXX. million which have in The adjustment XXXX FFO in FFO was that over core those up to Core value NAREIT earlier nonrecurring noncash step the million further nonrecurring in XXXX, growth FFO million after to to We and year. for X.X% taxes. I mentioned goes charges the Core plus $XX driven recent regions finance $X.X Orlando. I relatively interest by was was X higher which the X change NOI portion or earlier, for with acquisitions that that but in financial the higher principally income expense to by to offset in cost adjust year of mentioned related borrowings the of costs, a earlier, was million of was expenses FFO for

to Our costs Lehigh million and square consisted related building development payments proven infrastructure which Valley $X.X XXX foot Charlotte; side for in including million $X generation square was primarily disruption, developments million new reflecting final principally space first building related the in design for of XX% work, expenditures the and to costs our XXX,XXX of $X.X and XXXX of which XXX,XXX or million totaled related costs in for international $XX.X improvements, for XXX and international. foot capital to and and leasing, million in fiscal $X.X were tenant construction

total in to international X revolving the had end to both facilities the million Webster million items. $XX.X under terms line Bank and $XX.X final our and $XX amongst end the the Webster, of our XXX from $XX other fiscal million expected liquidity, on Webster $XX.X collateral have with aggregate. XXXX, $XX.X million Bank. agreed Webster million with increase approximately drive international to line, million, under subject cash million collateral the available drive acquisition pool to million increase Charlotte by from of appraisals $XX of the to in is to of of hand of of Combined XXX on capacity the comprised fiscal XXXX, add receipt facilities with to $XX in Subsequent availability we and credit we credit borrowing As new of to

for to contain on certain with X, and extend to XXXX, option Our credit months, mature Bank facilities an September Webster XX additional conditions. an subject

maturity registration Beyond only X Waterside the have February limited One as buildings, as sale, approximate very on upon credit mortgage liquidity shelf period units the a and Form sell that during consists previously debt of SEC. X, $XXX statement X common On stock, we of office facilities, on depository million X INDUS. and our prior near-term any being such for debt filed effective XX with shelf, up marked The SX future including mentioned. of maturities. and our X-year securities universal shelf. stock, we million an of the may are Under shares, INDUS the preferred combination variety update date to it the for more universal or X.X which offer Crossing, the multistorey to to liquidity securities, a warrants, relates commences of other universal

we under will effective, by briefly As terms make any will I all. leverage cannot that at metrics. to just issue of the touching be or wrap the date our -- and overall of at able make this call, the shelf guarantees been has up not favorable we shelf on yet

which value time of an acquisitions, reflects rather develop book substantial below depreciation we most significantly we than over As of their market basis. on and our buildings, our believe value that the accumulated through portfolio aggregate recent

we holdings holdings. for Page believe have undeveloped worth our to more and I details land our this on generate that value also quarter's of significantly little We XX than land refer book earnings. you supplement

to book to debt-to-enterprise due We at based our and our believe of metric current evaluate leverage. that percentage much that these of G&A The metrics. approximately a our value factors useful leverage recognize larger comprise which impact income we our a size, our currently NOI stands value, combination than peers. is Additionally, expenses XX%,

metrics. you supplemental leverage of additional size, of presentation. place of forward, debt, closing infrastructure metrics that to our growth a infrastructure with I and our as levels to which going be are to it to we to flow better we in quarter's overall comfortable also of some for note for now back XX we and will schedule other should the in turn expect through believe through point In Ashley as I summary, over these to have of able our most company leverage For remarks. indebtedness well complete we expenses Slides future support our operating a XX but portfolio debt-to-EBITDA this

Ashley Pizzo

you, Thank Anthony.

we information available call. e-mail For INDUS phone fiscal concludes listeners, www.indusrt.com. fourth for appreciate our on This our your our XXXX quarter But we interest always, or website, time are at and contact the Realty questions follow-up in via earnings and as listed Trust.

INDUS Realty Trust (INDT) 19 Feb 212020 Q4 Earnings call transcript