PLYM - Earnings call transcript Q3 2019 | Plymouth Industrial REIT, Inc.

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Operator

Hello, and welcome to the Plymouth Industrial REIT Third Quarter 2019 Earnings Call. [Operator Instructions]. Please note, this event is being recorded. I now would like to turn the conference over to your host today, Tripp Sullivan of Investor Relations. Please go ahead.

Tripp Sullivan

Officer; Jeff and and Wright, Management. Chief President Chief be Pen Executive Executive will Executive and President Connolly, White, Investment Financial Difficulty] Witherell, of Chief Chairman Officer; Vice Vice [Technical President Jim Asset and Officer; Dan

results website, in earnings along filed Form and which this with press Investor Relations with morning on supplemental, be our found the released the section were release, Our our can of SEC. our XX-Q

after replay this the to press of A in call call The available shortly the of will through conclusion replay November numbers be the to are earnings XXXX. XX, access release. the provided

XXXX For this of remarks and this be those updated that call. replay as the to made you who the call, herein we X, of will subsequent listen not to remind are November today,

our statements related activities. During within statements to current and uncertainties laws, this meaning deemed call, comments this judgment of Plymouth's the potential of future certain to make future our including may are as be from dividends materially the forward-looking actual we of represent acquisitions statements and prescribed date All call portfolio, cause securities results to statements can pipeline other by of the and forward-looking risk the that and subject expectations. and differ our conference investments, performance financing

the the Investors are with urged and other risk by including disclosed to disclosures information the company, various carefully filings SEC. review the in company's made

discuss adjusted also certain including, not and EBITDAre. will We AFFO measures, to, but limited non-GAAP FFO,

SEC. Please turn call reconciliations most with included to our comparable now the GAAP Definitions the the are of in Jeff. these go measures measures filings over to ahead. and non-GAAP I'll

Jeffrey Witherell

you everyone. us for afternoon, today. Good joining Tripp. Thank Thanks,

Connelly, our Dan here to Wright Counsel and In is White, Pen Anne Hayward, Jim with us. General addition

of our third was segments across an active company. quarter all The one

estate company. focus to fundamentals as the us operating continue a to are on that important real We

portfolio Our spreads. strong rental had

our to markets set growth balance sheet. our expect finish sourcing to that have And closing We to and and move continue we as us for been attractive the and activity and quarter, XXXX. acquisitions, we fuel strong capital successful in up fourth improve well the should

rental demonstrating XXXX, To With X.X for we activity markets completed of portfolio Jim are leasing, feet million and a XXXX in on average fundamentals. date, with leases spreads and square the in XX.X%. quarter we walk the renewals. cash where and ahead we've will strong well-located with value built getting are properties through the basis of on you third in the XXXX of

were year, our of work. care that I'm also Creekside proud this getting and to team a in to space great taken longer We in term August fee we on largest leases. were We late of NOI. Columbus, the accomplished in with a the vacancy able of the Volvo sub-leased space our what capitalize expecting of has to reflected led lease example our two converted one-time the leasing termination in which is entire the leased the quarter, lease at standards

third acquisitions. momentum close a quarter. acquisitions added with portfolio up year-end. well properties that And XX will the discuss moment, by the we've Pen fourth to in expect shaping to with during agreement the As is we the quarter maintained under We several

$XXX a follow-on markets the and of of ATM quarter use in closing the facility, stock. announced activity Our the capital the our concluded previously credit of offering million common

net the to acquisitions. are used $XX million of offering, replenish that fund raised in proceeds ATM the the the line and being we With nearly

we is in the supporting to like have team call factor out, our I'd growth, Another assembled. that

and real up finance, of very here estate, and at Boston are accounting home professionals. legal team Our offices office and in Jacksonville, Florida, our Columbus in regional in talented made

This results enhances total White. the responsible and over we this mentioned before, Pen their as great compensation a enough. standing again stock meaningful are time of long-term Everyone to this emphasize at I've Plymouth for my portion drives call grants. position and that of delivered the but know producing. I shareholders. are turn can't by employees I They've restrictive I'll

Pendleton White

afternoon. acquisitions to quarter $XXX million of the in quarter. the in fourth and completed third We Good date

million XX our Our portfolios of well to of in were Memphis, in feet, was also square and Chicago, touched new under square-foot under property a in that smaller and properties, we as contract as existing the were portfolios X.X%. call, Cincinnati totaled with in X.X initial yields and one-off mixture a Columbus, and XXX,XXX markets on X.X% On that range contract. last

well. of These transactions are third our some the subsequently and additions of all benefit over more multi-tenant single asset ahead that rent favorable these type. of pricing at schedule know rolls buildings, year and worked We these on existing We on in industries markets we significant able scale These each that a couple had these our to with across great tenants new diversity in a all from saw of these to actually provide our a were closed and ago, revisit them of results. opportunities quarter terms. and expand

completed a suburb for end million, approximately Atlanta with was an This in opportunity $XX.X to of Peachtree industrial due is of building projected initial off-market five of leased with weighted of and the October, relationship lease This XXX% was a we years. a of average result in City the multi-tenant At established property yield presence of acquisition the market. the X.X%. Atlanta our term an

consistent opportunities our over million Our with with remains new totaling with pipeline projections. $XXX robust previous now yields

in as these we well have already of of as likely Most have $XX portfolios small totaling opportunities As year and acquisitions consist million about transactions. are agreement, earlier, that one-off under presence, we to we will expecting a Jeff we where are end. noted by markets additional of close

it now over activities. leasing turn through the I'll to Jim to walk

James Connolly

third continued Good afternoon. strong Leasing activity pace. during the at quarter a

and square Columbus a XXX,XXX leases quarter, XXX,XXX the square renewals or third that property in locations and during longer, logistics leases two leases square with to renewal factory Significant lease XXX,XXX feet at square-foot of new included square-foot feet leases. the six Popcorn our The spot were comprised leases XX quarter at Chicago. Creekside XXX,XXX commenced During XXX,XXX the commencing of feet. of months included in

had a we Year-to-date, leases in leases months. on a over with commenced prior have rental X XX.X% in rates rent a cash on prior leases. seen Overall, increase over increase we duration a basis over XX.X%

far from month-to-month new feet square year, feet included and we a leases lease leases square So lease square QX, a feet renewals that this have related executed five which conversion The to during additional square of commence to with a renewals first logistics feet lease. XXX,XXX totaling associated to tenants. year with will XXX,XXX XXX,XXX XXX,XXX of was

feet two that that subtenants for over with existing September XX. tenants the lease took Volvo new square The X,XXX terminated included

been Eagle as points have their years, restoration working our for that and guidance. which with QX, XX Worthington agreements. in We projected XX.X%, and puts exit occupancy with year these securing up the agreement range Portfolio as past was occupancy basis the full us subtenants, Logistics squarely wide, at for from Volvo XX negotiating and had September well we

Only XX,XXX the year vacant. start XX been already renewal QX square space September square in square expect XXX,XXX been feet remain XX% balance feet of XXXX at feet occupancy acquisitions, in to million And has the XX, to would XXXX, leased. XX.X% expirations Through the scheduled a of we square vacant has Excluding through addressed to rate. the X.X X.X of expire XX% of September feet million remain the of the with year. for the the

well. In already as in square XXX,XXX the have addition, scheduled expirations of has XXXX of feet the to made we XXXX, progress approximate expire renewed, square X.X some million in and feet been good

growth remains over leasing Our gives confidence pace drive very next us and the years. two could that rates strong we NOI and rental

point, to this discuss over turn results. At financial to it Dan our

Daniel Wright

you, Thank Jim.

The results last third factored two as equity the offerings. were line were in from in expecting the quarter impact what operating we we with

again, occupancy. Our year-over-year with operating once sequential year, the strong continue improvements same-store coverage to Dividend for and in strong, will and spreads forecast. on growth, metrics remain basis, were be our based on up, the leasing and our NOI a

The provide additional results outline and our and third quarter earnings release details. supplemental

projected the AFFO. the quarter, a from at thus We far one expense, more our contribution month AFFO. drove close factors experienced closed progression million by last EBITDAre, acquisitions third end primary quarter results completed our an worth in this of we had August. expectations that year NOI, year-over-year full significant and of amortization representing that the approximately is year-end, second others of week, $XX expect of The driving FFO to transaction one the planned, as noncash our third year. $XXX,XXX revenues, With of we've and quarterly acquisition to quarter For in acquisitions full stock and G&A activity quarter guidance the were line this from includes contribution continue. adjustment with to and compensation previous in was

unit, a second $X.XX September offering. a in when a the unit offering by ATM by per count to in we quarter ago year count August weighted and completed is in was compared XXX% with expected $X.XX follow-on the share quarter. we in the and average The our compared which to impact XX% That line with share AFFO, per in share, with the and activity FFO and what impact increased

worth We have the were factored the quarter current highlighted guidance. in NOI. into results few other our in A our higher items share count

we As approximately termination Volvo Jim the a earlier, Jeff received both on one-time $XXX,XXX. of lease and noted fee

a Creekside. cost partially the same-store new offset one-time quarter with related the were NOI, along related related from a that. assessment and to one by benefit received was property to XXXX tax that in benefited our month expenses It in at the lease These Cincinnati

to additional increase year and that outlook XX anticipating and than agreement to by we're second for acquisitions our reflect reflecting previous Despite include forecast we've any team. XXXX, quarter, other million expecting additional we at year-end. our Looking acquisitions not the guidance the acquisitions made G&A to the to we've complete leverage since acquisitions time. kept are to The EBITDAre full assumptions revenues, completed, of from underlying full are NOI the year of from the that range impact does under their unchanged, our $XXX additions adjustments

and estimated outstanding Our capital on and any the current and to share guidance, to range not weighted-average activity to to share presently. year in count FFO new the unit now we state count. unit, X.XX which unit. the of steady There in assumes a for markets AFFO of with our share these outstanding. per the units assumptions $X.XX be the full to the potential range be confusion XX.XX $X.XX $X.XX We currently do some per $X.XX in be be date, factoring million common this shares in in expect forecast are on in in After and increase range million to appears to share

let some offer remarks. clarifying So me

sticking all wanted full with quarters. by guiding remain than a have rather consistent We year range to by year

XX.XX and million note outstanding that QX. for is assumptions full year outlook X.XX the Our for shares year average weighted the million on of based

range, million the FFO approximately to For million. attributable $XX $XX.X of equate full year FFO that would

we've the million For to in million of on leave math year-to-date million result QX. attributable, to that QX shares Doing the QX. million period, for for already $X.XX a for FFO $X.X $X.X implying the reported XX.XX in would per-share available FFO with basis range $X.XX outstanding, a would that, $XX.XXX

For that $XX.X available to equate the million would AFFO AFFO $XX.X to million. full-year range of

leaving for period, the we've $X.X already dividend million attributable, $X.XX covering per share same on above $X.XX QX to $X.X million in year-to-date QX million $XX.XXX $X.XXX range to result would of per for For Clearly reported basis Doing share. in math our the a QX. as in available. a AFFO of AFFO

in had we X place balance the our end, years Regarding X.XX%. quarter XXX% with at debt approximately fixed X for of next interest at to our rates sheet

activities, end, with At will been new our provide our it that on credit continue opportunities. a and - flexibility from we've as pay had down borrowings we to our no able to markets capital outstanding pursuing growth quarter substantial facility

to bring down are incrementally. leverage We continuing overall

range At Our over the of were on once second leverage value time we recent a gross a points use with be end previously. we again, asset work as is additional have compared down to with at time. We of of few as XX.X% reasonably capital acquisition and quarter, to timing our heavily activity the expect levered activity the bring it goal end, the leverage stated at mid-XX% down XX% is we proceeds. a in our quarter would the which by markets influenced

the our and end at of end, to driving a in on XXXX. debt progress third structure X.XXx made by of our quarter been our lot allocation, We've capital quarter disciplined critical growth was on quarter. capital upper X.XXx in staying with annualized At net the a compared second EBITDA factor it's

any I'll this happy questions during be ready take questions. Operator, to answer to the additional on question-and-answer. we're

Operator

Gaurav from Mehta question comes Securities. our with And Instructions]. National [Operator

Gaurav Mehta

on guidance. your question First

of any to was And on did guidance up leased of portfolio Creekside guidance the XX% have as XX% wondering So that now side? Creekside, as I has occupancy impact and include your the far it you lever? same-store did change been unchanged, not why recall, not I

Jeffrey Witherell

completely Look I'm question. not sure understood I the

You're regarding change why didn't guidance wondering what? our

Gaurav Mehta

side. occupancy the On

So I on just Creekside is occupancy that is occupancy. not last that the now And up guidance. that's call, for lease included the like, you leased recall up, had in unchanged said still the guidance

So assuming guidance includes the the up Creekside, I'm of that lease means current right?

Jeffrey Witherell

the The for guidance should year was which to is be rest the a XX% bit. the XX%, of on up XX% same-store before. It

Gaurav Mehta

guess, viewing the how was issuing under I shares capital could, hoping offering? on versus if Okay. side, you you're about All right. markets maybe, And follow-on ATM I talk

Jeffrey Witherell

future market comment can't Yes. far I mean, of that's as activity on as concerned. we

disclosed queue. as ATM in We the have used the

capital. our it's all REITs as cost - out efficient way For very us, a across, attractive can of you business. very pretty see increasing It's much, And there, of doing it's that's liquidity. a the

we ATMs And the happy that so So future, are in at the we're continuing work way that. - would the anticipate far. we

in far can't As additional comment activity the capital as we you. on Thank future, that. markets

Operator

Barry comes And with Davidson. from D.A. Oxford our next question

Barry Oxford

look seeing Jeff might you rate and Pen, X-plus-percent some when as guys XXXX, are the in we marketplace at see move the you we over compression. the do enough horizon into you Or with think are stuff cap rate? cap still

more spread Although think But necessarily? down, of, so not of good. your capital still into going you X.XX% going cost be to, is kind or your dip we're do would

Pendleton White

our from of the year properties - I see really full cap pipeline rates rate last have are we - Barry, that that is so. change that range here. the We're Pen in experienced it's standpoint. cap over too don't much or

rates cap only know story. you acquire rates we properties, of As when tell the part cap a

acquisition anticipate for that more large, that. the always average, we But part, in the to X.X% horizon, acquisitions X.X%, some into goes But - between the initial NOI's the in there's at that acquisitions most as on we by cap to rates do in our anomalies in yield. So addition or out there's and look of, kind range. pursuing again, and

Barry Oxford

want gets talking you Exactly. window plans, OA the capital Exactly. of, to, you have achieve kind Jeff, let's markets and tighter at a acquisition say, of, in to Would able Or you not maybe? anything, little achieve XXXX a what just tight. stuff. you like, back XXXX? still get it Right. be would look maneuver or when kind about, but little your [indiscernible] I'm dial to to,

Jeffrey Witherell

you've Well, own Barry, I think question. that's - I your answered mean

Gaurav Mehta

Right. Yes, of course.

Jeffrey Witherell

- The we've we're continues. So think demonstrated. think continues. we've thing. there. is I look at not a I yield mean, growth that Industrial specifically NOI point same look every We the We the other think, you that at achieved, REIT the saying spreads portfolio. you are that But that at

the wide Our rates open. on debt are debt come have down markets significantly The side.

we couple shape. have of years, a now, that growth are the achieve great our NOI at If the are over in covering we we again, So point we dividends embedded substantially. we're last

the listen we to about Plymouth's put are you're fake been it. morning on to going excited demise. news, headlines that all But I out see have year, next wouldn't this and

think, it. I really going you're to see

in offering, We we think the it's which institutionally last morning you last offering. stats XX% I - we But I the should have - this I - it the if probably on at - the focused didn't with remarks, it put offering news. was subscribed, me in brought bring have so look - the was I opening

investors consider, added that met investors. long-term these came We've transaction. we significant that would three We what in institutional with new,

They like be there will to - the have listened We to They I think us. story. for continue them.

fragmented about that we've grow. market, The There's size talked to apply opportunity to that that other gotten our things reason have the all certain scale see to doesn't and REITs They profitably. no us.

Barry Oxford

Right.

Okay.

Jeffrey Witherell

to way So long that's a answer.

Barry Oxford

No. to, appreciate a that in hidden it. But out agenda it appreciate I of, way, was And I that. kind Jeff, you. of pull

Jeffrey Witherell

that. appreciate We

Barry Oxford

to Dan, into Dan. going up set? or some, when one you you, accountant, have all another talking are you're - then in kind G&A look more to, personnel the of, about, set your higher I'm hire from of, level are looking at a growth to of, but guys people keep your maybe, And with - Yes. adding for XXXX, kind you going as or not kind

Jeffrey Witherell

out. to had Dan step So He's...

Barry Oxford

Okay. ahead. Go I apologize.

Jeffrey Witherell

in a week. We poll this put

just back he for now him didn't going in, stepped So so to I'm let hear. answer question he We answer question you. can your that

that you coming some number some properties for these on are under if positions prepared at holes So holes, if we - new in, in are we operating are more the Pen got put certain the we've And of added heard out a that remarks there, property will, level, contract. properties have really that filled level. the the through you significant

And where in existing we mostly, - existing markets. have

office our high-level So ground and office, things management operations, needed. even it's we've Columbus we that's the some a not to Jacksonville added never in do. and fancier support in our the and there But people for that repairs question the property beyond

But last of just the team. property I a will accountant, adding outlined recruited to our think We don't great we've the the at come IPO, growth out got we've just we're a most And of yes, really we need we side. that. of that as add to the properties, operating day. years executive other couple since add

right about excited the team And we're very we're in; our together. on; G&A So putting track. numbers, we're

as we is coming go the We G&A bigger, get as revenue to continue up, down. - to may percentage

Barry Oxford

That's what driving Right. I'm Jeff, at yes. That's really my that's - question.

Jeffrey Witherell

we're right And Yes. on plan.

feel So it. we - about we are good

Barry Oxford

was That's at what a revenue. of I that's yes, - as Perfect. percentage Great. driving

Operator

O'Neill. And Instructions]. comes question from next with the [Operator Goldfarb Alexander Sandler

Alexander Goldfarb

fourth the for comments Dan, appreciate the quarter. quarterly guidance

modeling appreciate third - estimates. But there's consensus, a you for the $XXX,XXX through rate think quarter. to and are see say as of estimate? the and just you What would you variety going about the us quarterly Just can who the FFO run is you that benefit Volvo lease,

than guys what So not talked. have anything including other you

the the million, activities all on. closed you $XX go So

So everything the partial. in our XXXX think the you range fourth would of talked about if a we a fourth $X.XX rate a build of sort and as about be for to $X.XX a What quarter of, steady quarter. state, That's to sort closes sort run from?

Jeffrey Witherell

get of the is continue that statement. the quarter one is going that at quarter think, the forecast FFO the thing, we're the on fourth the Alex, basis. I as end left to first of in annualized Obviously, the an quarter, to off you work fact becomes Well, the third - annual

So that's probably be to to will, guidance time going first a quarterly the if actually you're calculate, figure. you

We - the Makes given program triple continue this be year. we'll the company base difficult accelerated very at to in basis will it accordingly. probably size to capital have solid quarter-to-quarter a on growth, just literally this see, over the of very, to a point time, hamstrung of in and

of basis on basis reporting of before we've is quarter quarter plus quarter, during the math different versus Particularly up earnings with end explain of the you a course One this second quarter. to what weighted-average a call. plus a which - third tried result,

Operator

O'Neill. from Sandler question Santos And comes next Daniel the with

Alexander Goldfarb

It's answering. don't what know when Alex. were I cut happened, you my line off

So I from line. heard Dan's the response

core NOI - say is, as simply we talked And the is of, about from then sort roll the portfolio. a NOI growth as the portfolio, question yet expected should from the about the not embedded over that your would lot in you've should what leases I from growth you just, but or additions. you next think past the, far So Pen, that either expected side in commenced think, the not growing

James Connolly

in question. Jim. was we've Right have date I'll to Yes. a now, increase This that address before. the signed is place XX.X% what over leases

a that year, year. going That So to continue we're will that number growth next on this to up that's come into But down we carry going NOI year. built next bit. have into

Jeffrey Witherell

The net result of the...

Alexander Goldfarb

Okay. And then...

Jeffrey Witherell

That in of probably you're number, off existing that embedded right your cash portfolio. the result - net results, through think around flow you an onto to going see... the NOI, that's basis, The X% somewhere strictly of

Alexander Goldfarb

helpful. Okay. That's

yes, sorry, mean Jim. Dan, a helpful. yes, is maybe Okay, that's then question Dan, - final And I

versus your look at new renewals. your lease we As

dynamic they were the something and new it of bunch about we're Your of out is a like where there digit, the single new are lot you're are to great going are hey, to ones when getting tenants noticing, renewals some Is in that on, bumps understand the you rent going guys - it, to go buying the lease, replacing that's sharply? but know Just of the going we drivers get big lower. the you're older therefore, trying are are tenants there are different up spreads, who that. renewals nature the maybe, or

James Connolly

things there that several are influence a on there those basis. So quarter-to-quarter numbers

was For this expiring five slightly instance, the one one to year a renewals year that lease from included they were that going lease lease. but down quarter, was a

higher one on deal the lease, year was So one and down the came down lease, additionally, seven came that there and or rent was that it a X% And like was year so X%. much another lease then to X%. it year a went

So there's some of that.

sample, So the looking a each you small portfolio quarter at have be skewed. because yield, could entire percentages don't only

Alexander Goldfarb

year-to-date Yes. the as know was quite I looking year-to-date. be all actually quarter-to-quarter volatile. referring we the just was okay... But to I at can because

James Connolly

to the before - number that that up might Wait, wasn't there leased space previously the higher. might similar we're saying what new same, drive be a again, the but some there's is some little leases,

Operator

would this for And Jeff I any closing floor to to the time, like Witherell comments. at return

Jeffrey Witherell

Yes. Thank you.

LA. thank We again. always, And to us afternoon. you, for forward joining everyone, next So follow-up of as questions. look in in this for Thanks available we'll weekend seeing NAREIT you be many

Operator

Thank The concluded. today's you Thank you. conference attending for has presentation. now

You may your disconnect now lines.

Plymouth Industrial REIT (PLYM) 7 Nov 192019 Q3 Earnings call transcript