PLYM - Earnings call 3 2023 | Plymouth Industrial REIT, Inc.

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Operator

Hello, and welcome to the Plymouth Industrial REIT Third Quarter 2023 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tripp Sullivan of SCR. Please go ahead.

Harry Sullivan

Good morning. Welcome to the Plymouth Industrial REIT conference call to review the company's results for the third quarter of 2023.

President will Saladino, Witherell, Chief Executive Jim Executive today Executive and Financial call and Connolly, Anthony Management; Officer; Vice Vice the be General Chairman Jeff Chief Officer; Anne On Hayward, Asset Counsel. of President and

released with were the our in and call replay the are after filed of our be Form morning SEC. A which section of press earnings Investor this with on the XX-Q numbers the The be call this provided earnings Relations release, our replay can results November Our press found shortly website, along available through to of will the release. the XXXX. X, conclusion access supplemental in

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

filings risks risks date other statements certain performance expectations. to financing dispositions securities results statements and call, this subject investments, prescribed and uncertainties activities. All the the and call, meaning of comments this in future judgment various disclosures our with represent the and are related review forward-looking During the company's as make actual statements and forward-looking deemed potential SEC. Plymouth's company dividends carefully may of could the acquisitions, that information within Investors our portfolio, including the to cause the be by other to to including from conference we materially statements urged differ and current laws, of are by the made future disclosed

these to, most EBITDA. core call over measures, reconciliations non-GAAP certain adjusted but the Witherell. measures go non-GAAP the Jeff turn FFO, of included now comparable are our GAAP measures Please and AFFO the in filings and SEC. I'll discuss limited to not to Definitions ahead. also will with We including,

Jeffrey Witherell

you everyone, Thanks, and Tripp. today. thank for us morning, joining Good

cash of basis commencing positioned are to the to on XXXX. from a our high located than of XX% lot year also in of absorption, mark-to-market. We've remains my made expirations We growth type Our expect addressed broad XXXX Triangle rents the that leases progress our of on the XX% favorable Organic capture reinforce in with of the XXXX users. Triangle increase the That's all positive array third quarter end demand supply-demand X XX% to belief Golden over at and track XX.X% for our a quarters properties occupancy space of environment well within through operating well growth continued and market in metrics as XX.X%. In for a our on and increase quarter, rent a the have XX% expirations. higher a be for experienced same-store space. Golden X.X% the cash we're of basis our first seeing a markets, size on and

delivered margin. In right might that tenants markets X markets per for there expect investment We with need these we and ahead quarter. Golden that of Triangle believe years substantial the be on greater markets attractive of to at we to onshoring on during development indicates NAREIT these the low further able our space with roll see in nonshoring program, to a but to continue projects out to a foot in or provide to the square month, many continued the focus to new have should a more associated access paper and demand basis a this operate be white we come. We

in our second Atlanta, which for square has lease is building in a XX,XXX September. new first feet commenced The that

of space. the under We consideration have balance proposals for the

tenant where also have a Jacksonville, The fully other that single building September. leased commenced we in is in

mid-XXXX. fully Phase in building leased Jacksonville. is construction under deliver It program in is our in to development X final and Our expected

our new structure noted we've through essentially a capital to allocation decisions we for for both. Improving disposition a have been disciplined the in the quarter the a tenants to this capital strategic more spaces substantial X stock, under initiative on but A our has with the us. consideration active space, before, Chicago and left industrial commitment our major We taking improvement the we lease to little this time are developments an building NAV to execution new prices make gain. have for As demonstrated at Series proposals of and during of program ATM in preferred elimination the close of

At we the these result ahead for as lowered our of a schedule. end, straight of of goal plus quarter. X.Xx quarter metric Xx year-end preferred sixth exceeded As decisions, we debt our net of

a We path of into XXXX. Yesterday, call our good a disposition the for position. I September had the largest to beginning that I'll moment. focus of took put we to the further estate but have let are be get swap care delevering at out the that candidates with maturity year our several in AIG for also disposition to decisions. I Anthony debt loan. debt want in potential of the real We previously on do us identified initiatives on payoff properties the to gradual a want could details, our

cap in A off had rate of NOI the with on XX.X% we the the that of $XX.X it on was X-year these IRR price with ATM property, foot that in-place was proceeds yielding case sold a square million, to West million a to per Chicago. We X.X% more hold. XXrd $XX for paying $XX which user, mortgage property over combine a and proceeds nearly of net Series One was sense factors for After the a preferred. an an eliminate Street, if made owner XXXX and

another our another year-end asset scale, any under expected acquisitions, This we'd disposition not another should proceeds factor have where only debt million. to identified. repayment provides that result and/or a for sell previously $XX.X market and We is property sale and did contract gain by This New sale. in Jersey is on for eliminates additional have we in

we hold. to desire to estate no for continue longer We will evaluate buildings real reasons, that

of taking leasing the to remains portfolio. expect can us opportunities leased us development getting ahead on XXXX, of our of existing what spaces you remaining advantage be laser-focused in program the in the For and

We set proceeds accretive will we any from look hard and/or activity. reduce on some to leasing us an and you debt take color basis a to up for acquisitions additional dispositions why at how also successful on provide might continue the fund don't apply a XXXX. Jim,

James Connolly

previously Thanks, an QX aggregate quarter. increase Jeff. basis want we had third on Good to basis. on leases the rate morning. cash that during touch commenced first XX.X% on commencing I a rental We in a the leases on signed

back square associated foot for space. with to first for a square in at release of the XX.X% of foot XX.X%, increases. With all increase far were experienced renewed, consideration. Year-to-date, a have square were we XX.X% both development in over feet When the on of XXX,XXX the in during and and for leases of XX,XXX square our that lease leases are rate entire our portfolio new proposals footage increase. We in square portfolio XXX,XXX which leased we square down while experienced up quarter. commenced program, contractual the the and increases, other to add a feet we the aggregate space for and from executed have X-year and through You'll scheduled renewed, renewal occupancy X% we the program, XX% yet XX.X%. of balance impact is occupancy the October, executed from quarters renewal active we addressed active XXX,XXX a facility XXXX. the the Of of the X-year leases the for foot pursuing note tenants XX.X% experienced fill experience QX, lease and the to commencing store. XX.X% same-store facility the increase the under occupancy an at so and Both Cincinnati, we The same Georgia, X balance. QX, remaining supplemental the all leases the lease were will XX,XXX renewals the XXXX, total overall has rate of executed Through to are In deals leasing close cash which be year of XX% rent basis. XX.X% but leases renewal total a that expire renewal XX.X% a slightly rate XXXX development the up contractual with remained were XX.X% increase. Related that leases in at is during to

continue we see, the national can leasing activity rates still benefit you from rental with occupancy and to XX.X%. As strong average outperforming accelerating of

to Turning XXXX.

already of leased have expirations. initial XX% XXXX We the over

rent renewals. Rent our these over renewal for financial are XX.X% point, are a active this leases spreads market basis was currently pandemic, discuss be expected to compares with on to an cash increase rents, deferral new it the XXXX these for were with renewals growth and with this there of basis. over on strong the contractual billed renewal QX, for collected rental XX% when projected The quarter I'll We a associated of our we XX.X% with no increase to of since every tenants. will earliest and for markets. blended nearly year XX% brands the our for time have path last to This during favorably similar results. rent agreements. At XX.X% turn XX% Consistent XXXX on percentage Anthony to aggregate XXXX up experience leases XX.X% transactions

Anthony Saladino

Jim. Thanks,

and from leasing by The lower-than-anticipated slightly Atlanta; per FFO contributions interest and coupled share, lower quarter saw Jacksonville driven core our X with third in at professional expenses. namely Phase operating $X.XX corporate sequential fees developments, improvement expense spreads;

of net to path repay accelerated balance. divestiture mentioned, strategic of use the due line adjusted outstanding an to portion EBITDA the to the Series sub-Xx the debt Jeff ATM and A our sustaining and has asset annualized a redeem As to

our plus sixth balance Series net on the A EBITDA quarter preferred ended at delevering. with our the Our X.Xx, debt the to preferred sheet. We net third addressed was as now instruments debt our quarter have to net last of metrics converged debt of adjusted and consecutive be

maturities lender was eliminated total of and growth interest we through X, debt total will Further, made of how AIG of after X notional we to off the of carefully value the November all XX% executing to $XX to same period the major for until debt with very the same-store we the will X total have unsecured the basis XXXX. By the options facility We proceeds optionality improvement release an remaining approximately fixed of best of total was repaid proceeds. debt On to X.X% the loan X.XX%, of of an near for us debt XX% outstanding. representing on loan, basis. Subsequent of years. We next with the of with August and counterparties. going of higher the or XX% principal in this an facility XX% of position ended, future fixed the quarter million to of throughout flexibility our That year-to-date. XX% year, sheet, credit across disposition end, debt matching the escrows. After million repaying secured debt for mitigating numerous variable pay use tenor route, swap XXXX. cash of but rate a our largest interest quarter, cost which potential term weighted debt carried tranches August our rate in can eye exposure million we another this on approximately amount, rates on to our to for the in loan payoff balance outstanding, on this a our unsecured reviewing swaps over while full, X.X% and investment-grade $XXX.X improved to sheet NOI X the have instead we decided rate balance in average rate, with from anticipate achieved with unsecured interest facility have preserved a our debt locking our maturing $XXX we an As AIG

annual expenses a third to dip estate did occupancy During adjust majority than to the year expense we we higher end in of notable we recovering anticipate year due as expense balance for operating of and held real in same-store again incremental of as for NOI and pressure maintenance reconciliations. We part expenses aided higher of operating our the affirmed range which primarily no expected. by coming incurred, The anticipate quarter, FFO see taxes recoveries core the constant the the year. guidance to have once the

year interest Our full unchanged. expense range for remains

ready decreased $XX.X now range year expectations to for million. Operator, have million the a questions. we're been to G&A $XX.X of to take However,

Operator

question from KeyBanc comes first Todd Markets. with Thomas Capital Our

Todd Thomas

Calhoun leasing II. potential Fisher and particularly, bit you I just wanted New leasing at and to more little development touch the around done, if on could a Park I continue see time demand to to detail tenant and just line some get provide the

James Connolly

blended Yes. couple Jim. building Cincinnati, range wider Georgia, weeks. X Multitenanting expect is a next has opened Georgia a on a issues, opportunities a of are This products. there. In lease lease supply some In food close in Power of we're getting have been very candidates which shortly. we potential manufacturer up the and address movement are with to close and of resolved, We've we with food power working the expect with to

Todd Thomas

then how before forward that from there contemplating? starts moving we Is year-end might about Anything And anything new hit or early Okay. you're in XXXX? should think that here?

Jeffrey Witherell

So Todd, is this Jeff.

as -- the in we our development basically So program prepared finished. remarks, X Phase is

construction on Jacksonville XXXX. be any spec more will That in We're under leased. building to X take delivered that's have going early developments. We not

we square However, do XXX,XXX in have feet. Cincinnati,

build-to-suit. potential a to talking are We

XX things looking build-to-suits. months. to be So only the ever the to those strictly be that probably start would next going We're at XX we would in

where X build on, we So we X that's focus. have could and or so sites our

Todd Thomas

Okay. you leverage, a overall the balance in And commented mentioned. which as on you quite Anthony, and sheet came then, bit,

the additional the below lease-up terms in in expect and quarters the do pipeline? the next you're to development the the What's disposition after next leverage? threshold. So And few you over of Xx target be where

Anthony Saladino

early Todd. Thanks, be Xx. target Xx between sustaining Yes. said to and on, our is We've

you made 'XX stabilizes turn And have mentioned, an certainly in in We for down. half There as significant is another our as opportunity under Xx development target. inroads. came

sustaining next will, just would our maybe target, So X.Xx of if that. you and kind be under around

Operator

comes question Nick next Thillman The with from Baird.

Nicholas Thillman

for question Jim. Maybe a Jeff or

gotten you've leasing, done. XXXX million on feet square Just X.X

get Communication any those are of Test the individual maybe X what color so you've leases. of FedEx, Design, larger done addressed in Or known on some a expirations, those far? Just

James Connolly

Yes. with a potential year, I and of larger has space next mean on renewed date up of engagement that's them full. [ a year. our ] the there. which coming operations course, hear X/XX of of supply, We've notification definitive the next year. We're FedEx, renewal, visible is building quite working The to the a Maersk. are expect That strong after which we end answer with is begun

We see space. and move various X sizes, known how We've XXX,XXX expect trying other space. Also, was vacated the is well. has space. and to and neighboring prospects approached That's X we're about to potential existing lease that we're some a that feet. fit in we have marketing in renewal to feet. Silverline space as expanding square working on the building in got of out, And them square -- potentially that then their tenant us into extending one the of Louis XXX,XXX known Latty would St.

We expect to have a transaction on that early in QX.

Nicholas Thillman

obviously, on just boxes, what in-place FedEx rents be? these box. bigger to or what's Maybe maybe And helpful. like relative the That's some of news would lot development in new in rents a just say on being larger supply

James Connolly

new big On the in the box, product coming still we're online. lower

think advantage I us. an that is for

to the our of being portfolio well new discount. Of positioned course, XX% online supply against probably most much up is coming a like

Nicholas Thillman

that just maybe sheet? as more working towards pricing guys you thought? you had Was debt. is investment with maybe balance secured loan secured in the factor Or for as prior a grade the Anthony, not mentioned this then had on initially AIG debt And maybe more refinancing great quarters of

Anthony Saladino

Both factors played decision. into the

clearly pricing to there secure debt. is respect heightened So with

plus We with our it, X.X, to like also We we come rate hedge to we line optionality a call of in portion lack should X.X didn't think equates around of, the respect the spread. of hedge secured. the that that when facility

Yes, think X serves it's bridge from as we short vis-a-vis volatile rate get term, us to, that's years So less well interest a to today's a it do priced hopefully, now. alternatives. but environment

Operator

John from comes with Markets. question Capital BMO next Kim The

John Kim

some that the us earnings. and implies in fourth to help to 'XX and I NOI with you can to quarter guidance Your you front. of increase just the X.X% some developments But know on guidance? quarter your may NOI have through FFO walk a $X.XX fourth same-store get drivers implied

Anthony Saladino

is the to going is temporary that a quarter. up line. There had fourth in John. big lift Certainly, We But some in the story Yes. be vacancy little recoveries. fills really top

of there job As lesser a taxes converting is largely maintenance been to are recoverable. And which than higher which been of has those team attributable doing anticipated expenses, really was estate a insurance, types. lease on more a effect and rolling all legacy as we same-store, leases, mentioned, to Jim's favorable these good extent, real to dampening we've and

that going quarter. as recs improvement fourth we're we're the and to in in complete so we And our see And kind up see CAM of prospectively, pick to final then recoveries in beyond. going 'XX

John Kim

you've far that the On and your 'XX so leasing achieved. of puts discussion activity lease

that just a 'XX, could you I year. mark-to-market? of new mix if in at off leasing 'XX mentioned And a that renewals guys cash level that started versus wondering accelerated ago? do acceleration leases a more of spreads then on comment you similar You was you dynamic. the and those the in during see function a modest Is year

James Connolly

that some Yes, fixed renewals have kick and it. exactly the Most is of in of them rate renewals.

had XX-something number around the of think is existing I the fixed leases. percent rate renewals

So in at get rate as the rate we And a market low stop then overall those rates off they more up. early, level. kick and the included, goes

John Kim

If more you that mark-to-market rate on a the your disposition, cap was Okay. they know one could went asset? but I user, in. squeeze X.X% of what The I got to

James Connolly

Chicago in the mark-to-market Our in is mid-teens.

Anthony Saladino

reminder, a probably it's as yield. a just around stabilized a that John, On fully then, X% in-place based basis, NOI. was on And

Operator

question Anthony next with Hau The from is Truist.

Anthony Hau

down is just that? I think, on if Memphis, you can It X.X%. color any noticed great would like, in occupancy that I provide be

James Connolly

lease. -- payment issue and did -- they X we restructured We bankruptcy, we a into had their had and Yes. went tenant

of us out as that So extra collected on deal we rent they the market -- was company it of just all the owed too. half. formed also longer-term part a split the space recently got bankruptcy. we've with came And and we The this space that that in new

Anthony Hau

-- XPL what a like Is it industry mind, that? like don't you or... like is no, if And

James Connolly

Right.

think was I printing. it more

Operator

next Maher The from Riley Securities. with comes question B. Bryan

Bryan Maher

Just that up in would see the X markets starting chalk you slowdown for activity X or you guys rate any to interest construction me. to environment? Are your in higher

Jeffrey Witherell

certainly. I there's mean, in see, some think yes, box. that's can And of Bryan, you it. softening I the big as part

square of XXX,XXX XXX,XXX, even buildings see Columbus. sitting million foot of You parts there, kind in

it's of I a both. So think combination

Bryan Maher

And cash that combination new of congratulations leverage is would so, capital to successfully, increasing to at debt? skew for some appetite start to down you Or that, look it your as of towards and kind activity? relates with recycling if acquisitions? funded And and then be that getting a would

Jeffrey Witherell

as I we're to going increase we not leverage. indicated, So think

and going on line and we're not So move to go out properties buying start leverage. the up

So that's indicated that time. We've to going also not going not to this happen. issuing we're dilutive equity be at

we're interested in So not there. out getting

deals softening seems see of I'm great a with market. pulled leverage by people the but in sellers. get certainly seeing some our some that. We're certain country. that are of We're we cost match to that's parts There's still still be sure strategy, that. as So the That deals seeing we would up equity, entertain employing in not so the some negative waning.

think for appetite have a don't I that that. real we So

people are with units. We OP in discussions with

So discussions, of lot question but to I going we're move a of And that second a that not certainly we're is having part doing missed? -- we're there up. leverage

Bryan Maher

fund mainly No. capital just how would It's you recycling.

of have. addressed much And out That's pretty getting all it. You've on I New Jersey. congratulations

Operator

from with Colliers. next The is Oxford Barry question

Barry Oxford

don't look, Jeff, opportunities I market. see you just but I across in board, you a on are saying, pricing touched like what standpoint. acquisitions, But there the from some look, are the run-off

Jeffrey Witherell

that, nuanced more than I Well, it's Barry. think

the that past. not around lately, the stock a distant deals -- seeing are have the been but too prices prices We in lot moving

we're do, at on always a at accretive have forth. so estate CapEx We a look to we and real where needs Again, the hard seen been deals. the and going so we've take point like

multiple the they're leverage. still very bifurcated also for, In off So seeing seeing market. markets, getting negative and we're there. Again, looking it there out price are other some they're In bidders deals people we're desperate sellers not markets, and out seeing the there. taking market. We're

They pretty in take put stuck. going to out to refinance, have are whatever they're not to there. going that people is they're more have much and equity We

and usual product there's out just But not So us, real a sure for as of answer is the right it's it's lot there. estate making accretive. really finding the

Let's -- that's very clear.

Barry Oxford

waiting Yes. you're it you. to market sounds the But like to for come

Jeffrey Witherell

That is correct.

Barry Oxford

would Yes. deliveries seeing of kind And Jeff, your of slush national indicate? maybe as into or on seeping supply, sort markets numbers the much not supply as are you

Jeffrey Witherell

think, as if building. Well, I look -- to think XX Chicago, much take it's there's so I then really just the Chicago, have submarkets you at a of market. mean the size to a the opposed in okay? market not I think it's submarket I a market. It's you And submarket like by really,

have said, we for square or XX,XXX X proposals. we Jim X and feet have lease, As

the talk through months. someone no X and You to in that has square can building been XXX,XXX feet, one's

where years, go cheaper, low So build foot People I unleased we As to it's out build because were buying the I you new it think sense. Barry, more think square all construction, out rage. was, a cap that's that's really up was is. And few rates, what that it buildings building and significantly. A and dried got and that's a million made at the X all go the lot right? lot

Barry Oxford

Right. of reasons you're also? interested development Right. and to one that Is this particular expect why at not juncture the

Jeffrey Witherell

there's that Yes. ultimately seen tenants make I They them, decisions. but I make a think slowdown. mean are taking been to longer do you've

marketplace. in out think to smart I it's go going So don't we're and the put don't a move. out spec We not --

Operator

question Instructions] with Germain comes The Mitch JMP Securities. next [Operator from

Mitch Germain

The Or at contractual market? those you they Jim, renewals are are referenced, level? upon at that, agreed an

James Connolly

level. upon Agreed

Mitch Germain

is baked that's kind So into of what suggesting? as signing the leases already you're

James Connolly

Correct. leases. we do And that that we don't the leases inherited, -- that typically

Mitch Germain

flexibility you think the the Okay. structuring that without for Is penalty. of pay loan. that way mentioned That's that. down now, line swaps a I I'm to going you're assuming to swap on you're the kind helpful. And you it's then, portion Obviously, the have of that? AIG Anthony,

Anthony Saladino

look structure across to we to extent notional to continue down flexibility that the outstanding further that amount pay to a we going We're preserve so have Yes. sales on asset and debt. multi-tranche execute the select

Mitch Germain

the little way think bit in of from higher have about it? that change composition think because the we as and to line? of -- that debt REIT a XXXX, about a of obviously, from But the the the to AIG push we'll Is Okay.

Jeffrey Witherell

It is.

Operator

The with Mike next Mueller question JPMorgan. comes from

Michael Mueller

developments, the can put backdrop, would given guess I given that about requirements all context? return capital you spec and a underwrite build-to-suit, little the of on I talk the just what into on bit you mean, just kind markets traditionally

Jeffrey Witherell

simple. I accretive. we think single it's Mike, really to -- a I single we've digit, X%, X% to digits. building mean think or Yes. an been it's high I can build if a that's high And

that be know up. So more I color, but measure how don't would would that pretty don't simple. -- if I would you be, it want what

Michael Mueller

Okay. have don't pretty acquisitions Got active you at the next And how it. see anything guess do we front? I you point. lined quarter. the dispositions few this be then you if over the about think the disposition with you'll still side, in But fourth quarters? I being mean, spotty on up think something acquisition even should know I somewhat on

Jeffrey Witherell

Chicago a we've think limited parking, I next docks, And -- years. a and to about this I looking was sense owner-user XX at happy we've is of to was that a an at the lot, like not it. user rate, a sell maybe mean, that we're There extent, perfect certain the owner lot again, made reemphasize talked To right? limited cap they're looking building,

think $XX some that I want they it location. pay $XX million million, don't really they people want whether to if or they building the matters So and

Part kind out identified. and is the properties Jersey. a we've have of of similar Jersey New of strategy New other handful was we a play that of us, to just I sell for So think

there. X have We building

as X We have in building probably will we indicated. we sell Milwaukee

So not be we're to to gain in scale, market. not going the we're going

continue of managing properties years, try our I going time. strategy. environment up that operators, we're in real deliver think think -- next of estate to the results tick going I think manage and That see the And to is will to strategy has of Our we're I you're over that to XX% in-house. couple that for to

Operator

follow-up The Anthony next Hau with question is a Truist. from

Anthony Hau

should swap. we those? for about have follow-up question expect rate the I a Anthony, What

Anthony Saladino

come I rate think an going we're all-in X.X. to of in at about

Anthony Hau

X over And bad has months? your Okay. back return for list, like level? like to that debt you do changed expect watch to past reserve the pre-COVID And

Anthony Saladino

affirm in bad Jim this out. of write-offs the relates minimis it one increase and handful in, list pre, run watch rate we've bad a not only And debt, is We're not to and can It in as anticipating has during terms debt. Our a changed. of tenants. materially post-COVID. had de material One

Operator

There at appear this closing time. remarks. the to questions now to further for no would to Mr. Witherell I call like be hand back

Jeffrey Witherell

Thank this you all for morning. joining us

for We quarter. talk next follow-up much. to so usual. And as we'll are available Thanks you questions

Operator

participation. Thank concluded. now has conference you The your for

lines. You may now disconnect your

Plymouth Industrial REIT (PLYM) 2 Nov 232023 Q3 Earnings call transcript