ILPT - Earnings call transcript Q1 2019 | Industrial Logistics Properties Trust

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Operator

Good morning, and welcome to the Industrial Logistics Properties Trust First Quarter 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would like to now turn the conference over to Olivia Snyder, Manager of Investor Relations. Please go ahead.

Olivia Snyder

morning, good and you, everyone. Thank us Thanks for joining today. ILPT's me Siedel. and Murray; the are on call President, Chief John With Financial Officer, Rick just the will and they session with followed a about question-and-answer In business our by provide a our quarter first details for analysts. of XXXX performance moment,

project. statements and call Also, without and the I written forward-looking based the obligation to Act company within or First, recording are consent like contains actual today's note conference as Private XXXX, today's of forward-looking Reform undertakes publicly These and expectations note revise to and of of in results made would release company. that other the of conference we today, prior results to conference today's call forward-looking may statements the the call. from the Litigation of that retransmission any The ILPT's is April statements materially revision XX, on laws. meaning securities no prohibited Securities Monday, differ XXXX the beliefs that of those

website. website not in statements. or factors upon can concerning contained differences be is SEC, Securities filings from forward-looking Commission with cause to the accessed place our those undue information that and SEC's which cautioned could the Exchange Additional Investors any our are or ilptreit.com reliance

found package available over reconciliation operations turn A now, we operating will our which NOI. FFO cash the normalized And or John. and call income can from or in be these I supplemental call our this or in cash-based to website. components fund are cash-based financial net for CAD distribution addition, In operating normalized be on will to discussing data during non-GAAP non-GAAP including the available to also and net income calculate figures numbers of

John Murray

Good quarter morning to ILPT's Olivia. welcome per million FFO everyone we share. first of normalized quarter reported earnings or This $X.XX call. and morning Thank, $XX.X first you

of ILPT's XX% consisted square industrial located of and properties ILPT's Hawaii. from of Approximately first million came distribution land square end revenues the the XXX of with on of primarily XX.X annualized quarter, in of portfolio Oahu located states. the Island As feet XX feet XX.X million warehouse in

that properties Our transactions, states XX with average of total approximately were XXX million we properties approximately with lease a in portfolio located square million million with XX.X an of feet properties located XX with XXX% lease square XXX% consisted Mainland are term $XX.X average of owned that Mainland states our located X.X with Including of XX as feet an of announced square states XX.X our recently portfolio leased XX in of leased feet XX and in term years. consists quarter-end. X.X years

of make of rental grade XX.X%, Mainland X tenants Gamble portfolio total acquired, and parent up enhanced our to our disclosure on we with acquisitions. the credit and subsequent first for average total concentration XXXX two agreed rated during Top fourth our financial as execute FedEx; with quarter quarter, the as portfolios properties of and quarter information and investment grade of a characteristics. we During X.X%. have our to first revenues. properties XX tenant acquisitions, the the or and of we as Investment quarter-end, were with to XXXX, X.X% and closed we list properties activity respectively. Starting as XX & cap XX including such the X.X% rated Top business tenants Mainland revenues feet well $XXX.X a call; acquired XXX Procter annualized acquisitions subsidiaries of rate leasing at subsequent containing earnings during acquire million XX.X strong Since combined square a continue purchase provided million of supplemental weighted during Post quarter in Amazon, entities are forma XX XX% representing of our pro quarter-end. plan discussed properties price of first

strong nearly Looking are markets leased our Hawaii of at Virginia, leases. and properties shareholders tremendous acquisitions respectively. provide to Also, by of high-quality comes our a industrial Hawaiian land was total XX% Hawaii value ability completed portfolio, Indiana, the January very in our grade Top tenants to of of coming the growing subsidiaries secured quarters. mortgage flows to enhance that XX.X% cash or after to X.X% to entire grow we as and our reminder, in with revenue was purchase land credit Ohio at financing expect over X.X%, annualized investment our rental tenants XX% X that from unique and assets. in of funded the total We're the representing price distributions or well-located X.X% demonstrated from these those industrial revenues Huwaiian pleased

rents $X.XX. lease approximately years square at Turning higher prior term for in to leasing; XXX,XXX lease leasing approximately rents per per from an average space renewals same year of square XX.X% the lease executed we with than feet, capital that were X.X of and all Hawaii foot

Hawaii last also XX% rental occupancy as Portfolio prior at of XXX,XXX We was first rates. quarter the the of in feet up from quarter. than resets for square higher rent completed XX.X%, end XX.X% were rents that

the and rents with on expiring over less of remainder of We X.X% expiring of X% explorations the significant only XXXX have no annualized total by end than XXXX. near-term lease Mainland the

feet XXX,XXX of scheduled total during rent to Moving remainder expire square Hawaii; the with annualized of to we for XXXX. leases $XXX,XXX have

favorable rents continues the end island for with quarter XX%, warehouse space feet rates of that and average for second to industrial of net In level over scheduled X.X highest The their be Great square is rent at addition positive absorption, annualized occupancy the this Recession. continued on to landlords reset. million $X.X to Oahu to since million market the of

since Hawaii has XXXXs. XX% in first occupancy was a portfolio reminder, early fallen never ILPT's acquired the As below it

as either of the over than years. that next Hawaii We more mark-to-market continue to results executing encouraged leases and or leases leasing rollover XX% be our five by were to on resets rent our forward the look through

may policies shareholder governance changes in As earlier that begun our and filed to feedback. you seen have we've to proxy to in response month, our was statement this undertake engagement

a adopted we've shareholders a solicitations. trustees. annual proxy which by XX with expand nominations the as also to include to additional to proxy being We're the a materials law trustee First, for opposed or group for starting own meeting Company's of upto in enables our Board process shareholder the their independent responsible access

suggestions, Industrial and executive an incentive several place by expansion diverse to fees years. index call U.S. us Group the to in long-term changed value benchmark the engaged process results. Rick over details Index, to the identify creation. measured the keep and which are management to turn SNL quarter's and is effective from Siedel have shareholder Equity January Building shareholder RMR We SNL which in XXXX. X, response now updated an candidates on important our take confidence U.S. qualified I'll you Index firm Also, REIT will over we keeping potential is expected search provide financial help to part paid the business we REIT this of to the to on

Richard Siedel

was $XX.X XX% share. for Normalized Adjusted morning of EBITDA the $XX.X XX% John, and quarter the million, was year-over-year. quarter XXXX Thanks, quarter good last or per up from million first FFO $X.XX everyone. for and

of of reflects Our $X.X $XX payout the a this continues revenues covered first prior by X.X% XX.X%. of to NOI Total increased activity, increased quarter increased over per cash prior and Hawaii XX.X% $X.XX million same-store by year our million as rents for well XXXX as increase properties. lease rent the share renewals portfolio quarterly cash over resets. to and acquisition well Total prior be the reflecting increase lease year X.X% with dividend primarily by ratio NOI in results; basis from year. representing increases Hawaii a low resets at over renewals basis our

in We $XXX,XXX than year million percentage collected prior rent also which $X.X of received more the that period. was

is and expenses rent year. from percentage of activity X.X% annually leasing in recognized NOI snow over decreases seasonal cash year this prior year. including reminder, quarter removal Mainland reflecting a prior the first our by the during the increased basis the costs As

$X.X XX% renovations The quarter expense these one in mortgage XXXX $XX with General majority interest were our in of in the just loan-to-value, Our recurring administrative to to which low-cost adjusted our in leasing expenditures the expenditures January Interest at The quarter's X.XX% and The $X.X as on primarily million, over our was pay and and million to capital, totaled XX-owned at million, our lease buildings fixed capital on commissions provided specifically acquisition revolver Hawaii. well debt X.X down both at for XX-year our acquisition. million fund We non-amortizing expense quarter on $X.X of revolving floating capital related discussed earnings as was to Mainland to was extension, the depreciation debt increase primarily an of of used activity. was for rate loan times. due rate call. $X.X $XXX last million. loan reflects finished quarter totaled the of that our expense facility million obtained first source outstanding to increased by EBITDA credit $XXX,XXX. resulting attractive of

quarter, $XXX for to this levels plan not but comfortable increase our will accordingly long-term cash and and predictable, higher than remained more dividend. dividend can to be As allows be we've forma two in that XXXX which target, have higher mentioned the patient investment-grade leverage and growing million of do closed. level at acquisitions pro leverage last due ratings to We flexibility flows with now the stable, our acquisitions well-covered our seek also portfolio

received filed a We few shelf-registration statement about week. last the investor questions we have

rule, of flexibility, to but of general maximize the have of available completion to questions. a no financial our shares for sale That statements that the to a was be always to We take prices. to now shelf filings at As equity clear portfolios. policy ready audit the the our prepared the today's acquired the of is market remarks. have timing to through tied Operator, we we're concludes raise want our plans

Operator

today from question [Operator first Instructions] The Bryan Please B.Riley go Maher FBR. comes ahead. of

Bryan Maher

Good and morning, Rick. John

on some came as the on that. me. Hawaii or and out passage how looking to impact just numbers are -- a ago across think for can guess, REITs. couple this and at from wanted it you us we the sure familiar about was a -- it something legislation legislation the what I you you that SNL seemed but comments article on you I'm it with questions to did we prospects there; might or to bill run that two material, like that's guys of give week two envelope we Just did back not confirm it's One,

John Murray

can veto years prior have you, as approved; there final back the far doing Governor each the be in and we the year believe for Governor's as of that it and the in this litigation been -- not prior states to presented the Because reconciled structured and that a hasn't assurance regarding is going are deductions allocations years, take done Hawaii; to we've paid there Bryan. among feel it we've dividends hopeful the what material revenue impact number a it that we've it may that's on depreciation for but this gets like with transactions ILPT. in has as seen that minimize the of potential we blanks vote to good have a a Rick so And and heard that is there houses going years, deductions question. advantage We're no I will bills it we result, a although But bill, if bill Hawaii about deduction got two miss the and in start, And careful we we interest certainly been has in different Thank something. will such commentary portion I'll expected ways [ph] made on how to passed get -- be happen. it fill voted of this has heading desk. different there prior is based it's that for other Hawaii. the they away to of and

Bryan Maher

in hinted at Okay, in your great. this you dividend release increase kind morning, the your a John, near-term. of in And comments earnings then,

there it what at throw the it getting that opened know you You're be? Board to to ratio you. FFO we you floodgate I could but at about up Is the in XX.X%; next the the might I'll something or it's back see quarter were material questions so that two? normalized payout on there? How

John Murray

year, for Okay, completed and that's increase. available also. earlier a distribution expect our of good this result, million to We $XXX question acquisitions cash as

probably dividend And that since -- on would expect probably next would so properties. I timing, -- the all normal our be that would think that have for the be dividend the under roughly shareholders circumstances that raising reasonable now be we we closed the to

far leverage wildcard filed of just reacted the is that gets with week, they over maybe that investment maybe that share dividend do the shelf impacts think well share and to last really rate is the levels. price has hasn't concerned fact it's I some But so the people there the our too a missing then that to are activity a that maybe if and price. think we negatively problem high, the

think sector. I dividend in lot So, to we what I certainly the Board's sector message highest the about our sending and in the highest already of do think one got we're a or thinking of have where the

reduce to about instead. And than telling so, use if shareholders more dividend concerned are leverage then that we'll maybe cash they levels, the leverage are us

completed, but payment. probably this normally would on coming the we've Board So, activity there based make the raise has decision dividend, acquisition dividend the we a to with

Operator

next question JMP comes ahead. Mitch Germain of from go Please Securities. The

Mitch Germain

real looking are of think said little it -- you what add at? morning. from whether John, going experience? type Is or that to be hired -- transpire. take the financial you obviously, there specifically time expansion a may Good auditing maybe What experience maybe, to profile looking and estate I you it type a was search of Board certain firm to candidates you're what background, a

John Murray

but Board. diversity have Well, trustees diversity. I members more we're think five to that only we in we could among increase have those trying Board the add our today, diversity today, We

looking that we'll estate for backgrounds; for real public general looking just be And backgrounds, -- be company think different we'll I for business so backgrounds, background.

looking number our specific of increase of haven't increase of a drawn targets members. trustees We're any to the certain people Board need independent we think I we that diversity certain the and amount from categories.

Mitch Germain

goal as of the to for RMR entities well? is independent be trustees And these other

John Murray

think the that's I goal, yes.

Mitch Germain

the some an the me; I selling with you that if minority Hawaii? do venture from in piece mentioned now. out some institutional -- joint to I you've know Okay. given know some picture the into being or portfolio properties price seems one Mainland be you've of Last that of maybe envision equity where as stock off of said, ventures; joint partner, sell assets a sort you for

John Murray

basis I portfolio would think like legislation reasons, do of structure the the to a portfolio. so easier we some now the of the make it seems if little for go than Hawaiian but right something sort may about trying path doing down tax that venture us with Mainland joint bit right think tax Maybe now. something think Hawaiian that with differently I don't be

I think a most portfolio. likely it would Mainland be

Operator

question ahead. next Markets. with RBC Please Capital Carroll Michael comes from go Our

Michael Carroll

I anybody now? I go ventures a of started how joint about right just are thinking still mean, that Mitch's to is last with Have discussions question. want off or you right process now? you thought just

Richard Siedel

market matter know two wondering capital value in Hawaiian and we of to something or value appraisal We'd be Mainland of how got helpful. that's the the We've JVs assets being the Mainland works, we've kind the course our a there with spent action like a out RMR Again, with recycle and of financing process are some going the Group, of there is larger and supported the to the doing publicly behind demonstrate forward of just that a it. a few either to relationships; if on portfolios, here it's a number would JV banks of best getting it at and the determining fairly the partner time some property Hawaii internally or our selling the that portfolio. taking think and talking about on of

Michael Carroll

of to joint venture with But discussions you any had assets yet? other potential haven't your partners any

Richard Siedel

some we're partners at this is nothing various point. with announce to but discussions There always prepared that

Michael Carroll

then I take roughly execute once Okay. And venture did think it those joint is to that going to start, discussions months about Rick, is it a -- correct? XX

Richard Siedel

on varies It the portfolio.

faster. their a diligence are these of folks I think could pretty get lot Some straightforward and

it's we and rush, mean now; Mainland right partner, flow we're where sector great it like the I'd assets straightforward depends think but depends the on assets. Most a like from they we it So, properties of a hot to on right are are. with so say. comfortable cash faster it hard year, again, in to tenants, the credit our no are pretty and I now levels leverage in than could the with do

Michael Carroll

dividend? And Okay. there quick just Board ratio is a at that real then on setting dividend the the target policy, when payout the looks

Richard Siedel

current peers. to post with I think believe fairly low we're but we've publicly the down don't the most the I in acquisitions peers relative stated low it so of all or XXs; dividend, it's

level John's not a about spitting dividend to in lost a the that increase the wind earlier, like in feels Just question was but us. on that general, supported point being is

So, we'll and it decision a continue model the some Board to thinking do make. to has to and

Michael Carroll

when increasing Okay. that look do it they you'll kind pop, increase and a every of I to increase, that's the think about think the is think something we're completed IPO you dividend do the as when didn't big about dividend about quarter earnings you the want when And first since the guess. year does get and Board then guess, is this or What about we was acquisition you the it? through dividend think -- you when or increase, at have typically I

Richard Siedel

every at financing The and Board a acquisitions the since There the IPO of lot recent that discusses properties. happened change has meeting. the dividend of been in that's Hawaiian

may else increases be was regular a in for but formal haven't to it we and on depends But or occur, annually. a -- company. policy what where raising isn't there a going activity basis, on when a we're target sort preferably we'd set within policy on it's think of just position I so the those like dividend quarter And the

Operator

back like session. John closing question-and-answer Murray to would our conference over to remarks. the concludes turn for I any This

John Murray

Thank creation Thank growth for Navy busy upcoming to hope [ph] value Conference you. shareholders today's you, the start June. and a earnings to of XXXX, call. for joining you over look year. the We've to successful at in course everyone had We the and and see forward many of

Operator

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

You may now disconnect.

Industrial Logistics Properties Trust (ILPT) 29 Apr 192019 Q1 Earnings call transcript