ILPT - Earnings call transcript Q1 2021 | Industrial Logistics Properties Trust

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Operator

Good morning. And welcome to Industrial Logistics Properties Trust First Quarter 2021 Financial Results Conference call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions.] Please note, this event is being recorded. to Investor conference Relations. like Barry, to now of Manager would turn over the Kevin I Please ahead. go

Kevin Barry

question-and-answer Good followed morning, Chief and our everyone and a today. first Murray; With moment and the Financial our Chief thank by you on Chief analysts. of session provide Duffy. quarter call performance for Operating the they Officer, with for are In Rick will sell-side business ILPT's Officer, Executive a Yael John me Officer, XXXX Seidel; joining just us about details

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

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

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

John Murray

a Kevin. our of Rick morning, quarter you results. solid and thank earnings provide activity performance portfolio quick overview everyone, with activity details, us. a I'll through XXXX leasing commitment and and leasing began to acquire statistics, you, Thank financial first and the Yael Good We distribution and growth, will run property. for high-quality joining then

First our quarter normalized maintain X.X% to share. from or remained new our Also, to prior quarter growth. growth. to and regular portfolio occupancy FFO $X.XX $X.XX XX.X%. renewal We XX% per board executed in decided XXX,XXX for at share $X.XX healthy increased leases feet at this quarterly month, year distribution achieving And earlier per square the shareholders

with Our in modern cash to assets diversified margins. strong invest acquisition rental stable and high-quality growth strategies flows

properties We to opportunities offer the land. top access are primarily properties in focused with on markets as expansion XX that well as well-located industrial develop

buy a driver a XXX,XXX future for In Rickenbacker high-quality a includes development drive be potential intermodal Although the cap square reflects expand agreed leased XXX% growth seven ILPT's evaluate acres newly years portfolio. for meantime, to fee credit in price likely support rate. term, tenant our a March, in industrial approximately The million. Purchase of building and terminal on land expansion not to the $XX.X over Class property's X.X% be to feet. we XXX,XXX the airport of A or for In foot land Ohio, to can will in that the near continue vacant for will growth. Columbus, primary near and primary acquisitions square the built we build XX a

portfolio and growth $XXX with We capacity million targets have an the acquisition liquidity than of active pipeline and of leverage. fund moderate attractive more to

remains million. The aggressive, first properties X%. especially a more for industrial properties with quarter, nine combined ILPT portfolio to which buildings averaging than for submitted value rates targets with for of cap newer intent credit its the currently we for below long-term $XXX lease During e-commerce of tenants letters competition

I'll call Now, turn review ILPT's for the quarter. over to operating the results to Yael

Yael Duffy

morning good activity leasing for portfolio summarize ILPT's with an I'll of quarter. John, then and everyone. begin Thanks overview the and our first

As of and XXX XX states ILPT's XX portfolio were square totaling properties distribution March in XXXX of approximately XX, consisted that leased. million feet warehouse XX.X%

XX XX feet representing with The XX in portfolio Hawaii investment properties industrial rental mainland Mainland that grade Amazon, top and balance land of revenue mainland quarter is end. ILPT's of and XXX% XX% Hardware, XX% X% make of respectively. are revenues XX rated total more Investment XX occupancy represents grade of and total improved feet. Our the includes top at annualized million tenants totaling states square million of Restoration a to portfolio FedEx entities properties were leased. XX%, square half parent rental our than and of up approximately subsidiaries revenues. tenants annualized rated of comprised X%

revenue are land approximately rated from subsidiaries investment a comes and Looking has grade remaining our of average The more portfolio term portfolio, of XX% years. lease secured from at those tenants total the weighted total nine Hawaii leases. than

quarter, approach reflective ahead of leasing lease our XX early in During achieved of strong the engaging proactive of renewal to discussion, months first we results is expiration. XX which

rates renewal Hawaii term year. of rental signed for per In feet square and years. average foot First XX in XX% We higher XXXX rates per than commitments were were total, XX capital that rental an XX% $X.XX leasing at than quarter years prior were leases square for of lease of in with included which XX in scheduled rates leasing for lease XXX,XXX lease prior for with higher activity expire of leases XX rates an term XXX,XXX leases XX% feet to average XXXX. and new square

we approximately the XX,XXX to occupancy. mainland, term our square remaining of a released vacancy for five-year last a feet On XXX% achieve

a with recognized roll-up executed experiencing Additionally, at was fee We’ve $XXX,XXX X% tenant with we termination the hardship. early lease a new the rent. tenant a termination Minnesota and agreement in reach financial an a in that simultaneously XX-year

rental minimal year. this to expire total are X% expirations scheduled revenues near-term ahead, Looking with annualized of approximately

such, roll of end on focus annualized continue mainly of expirations XXXX. coming is over was of year while In lease by XXXX, at to total the XX% in the renewal. XX.X% by revenues annualized revenue approximately As X% scheduled driven are rolling of ILPT's portfolio for we Hawaii to

are with management services Our maximize minimize tenants asset real-estate downtime. proactively rent to teams potential engaging and growth and any

negotiations on early expirations most XXXX, of in to the will discussions encouraged leasing in to begun were drive and We continue Beyond mainland that tenants the engage activity. coming have several quarters. renewal expect our

X.X current on now the on position. for feet deals to square details turn provide call X.X of over square mainland. consists million XX X.X deals to Our financial portfolio in for million the including feet deals quarter's I'll results and pipeline million and XX XX for the feet across this square Rick Hawaii

Rick Seidel

And morning, good Thanks, everyone. Yael.

the expense the more administrative tenants along Adjusted the the portfolio give and lower Our combined contributed last $XXX,XXX to came the and as ended EBITDA modest quarter at NOI during quarter year-over-year in NOI our required joint property X.X% Total improve a and property in rental per million amended QX in compared due X% free share we the for decreased properties decreases at quarter discussed for $XX.X one we unconsolidated $X.XX a that XXXX. mainland general lease reported share interest in all of decreased The as cash reported the the following share same permits were performance in our for property quarter year than ago. rent side growth first year-over-year XX quarter with and venture returned EBITDA same FFO decrease getting to we $X.XX what our than the additional to of slightly they due first XXX% or of at occupancy and normalized cash joint debt and X.X substantially a than $XX.X with two ago. perspective, to we in per million we lower venture expense expenses deconsolidation Hawaii including which from lease order to basis income delayed a Yael to termination to fourth of FFO year-over-year the income occupancy moment From excluding times turns with in our COVID-XX. in land the properties same to of the is of recognized property year. less quarter during

quarterly quarter. dividend costs and leasing had Our yield of we distribution from during approximately capital represents portfolio regular minimal of approximately to month, expenditures is our handful closing properties. improvements declared on a X.X% the requirements annualized point. first spent $X.X which an share yesterday's We at million level the property building based related on primarily this per prior unchanged Earlier of shareholders capital and $X.XX

remains well-covered north at normalized just XX%. dividend ratio FFO Our payout a of

availability cash million. our revolving on Operator, up of million of $XXX have please at we XX, facility March line $XX.X remarks. and total on That including hand of questions. for million credit the $XXX liquidity prepared concludes open As our

Operator

Bryan question from ahead. go B. first Riley Our is Maher Securities. Instructions] [Operator with Please

Bryan Maher

morning, Good everyone.

a that consider forward? our Just for generated at to a me. questions modeling and in look you the you of FFO be Well, run the would from couple EBITDA first decent when the rate quarter, from JV going

Rick Seidel

is and a good don’t Bryan. there is quarter. JV the anything this think the particularly or fourth Thanks, of JV quarter this unique That's in Yes, interesting I activity question. I mean

fair So EBITDA I FFO from that's that perspective. an and think

Bryan Maher

XXXX? I an Great. guys for you CapEx you, do got while have And for Rick, outlook

Rick Seidel

tick for expect Well, QX. than tell it we QX higher that be typically don’t provide would guidance to a but I you we

from units some we'll lot a and parking there that is likely top Just some improvements, works seasonal perspective, replace. roof concrete

to would on probably end. the in QX So is X higher I the range; expect million it X million

Bryan Maher

and going. Okay. the are ahead market And do light tenants what and try all, of they've discussions rate Hawaii congratulations lease experienced you the a in expirations drive as maybe discussions higher in of Yael. how getting But renewals. with particularly going XXXX? as And in for first the How all particularly on of

Yael Duffy

scarcity on is they continue That's and I any rent. actually on to tenants is really if a good that these pushback that market that there land rents parcels the We've the to need know they gotten this think haven’t of a available operating pay want such market question. because the

be some and the or might agreeing tenants So a of have tenants might two of the I granted think previously besides not to are rent concessions increased been with maybe free renewals month had rents. we for the minimal the asking which but the

Bryan Maher

of with with construction what's on industrial uplift the guys to are And for But cap the property, a Columbus little when in is but cap cap of much What rate in bit the industrial little maybe we that you that that light new shed coming at the X% the or asset that? because market e-commerce how of I my with are land so the certainly assets in think Can putting surprised thinking you bits down more mentioned a Okay. maybe low kind on the XXXX. demand X.X% and in and in go for about a with on acquisitions, just Not $XX saw XXXX. John crescendo of little with got you one many seeing you Yael, guess going probably came rate I lower you with guys you it. and away it's the going was rates, million. look

John Murray

industrial development as new individuals are and healthy properties been or Thanks, their chasing still it's to Sure. be desirable has net very generally invested that There industrial rates traditionally properties players transactions of players typical Bryan. but just form in a well. after today continues the worth not all traditional the high And real-estate transaction. in net the having lease investing absorption are investing

transactions So to no backwards. place in have point properties or cap seen going a in of where there's the running properties four and number investing going below be traded in you're we've a where

for in the transactions bid price we've were round property just by the south this all map quarter of credit we just too has The where we a us of excess growth chase did in east second Columbus five So in that for because we've Columbus round though potential, to years the tenant. -- aggressive. and it’s we're the the buy transaction brokers a now. into these not that even then to had in the number because to invited expectations of first development market section been the was agree attracted X% solid Its

airports than cargo Norfolk so, And stacked and from take the most the access of intermodal great great to got trailers access less that one country in day. Norfolk double can Port active it's to a of the southern center in

market largest feel and a so that's we very in XX that think good and pretty strong market. I So about the we country the it's feel

So willing cap that's why pay aggressive we're rate to an there.

Bryan Maher

Okay, all That's me. thanks. from

Operator

Please Lynch. America [Operator with is instructions] Jamie The next Merrill question Feldman go Bank from ahead. of

Jamie Feldman

you hoping also, leasing are. understand CapEx, And talk you. think I then the cash just leasing can provide with spreads on I in just just only. your GAAP you you Thank color elevated Sticking economics, could like to trying the a about better was what quarter. I'm little deal more costs provide

Yael Duffy

Jamie. Hi,

this commissions which So done had as you in the leasing leasing we improvements don’t know typically on CapEx have in mainland Hawaii. includes the we quarter the tenant usually

we one deal where the So expiring back in did we lease. that Minnesota sell

per had And $X.XX year. a square so that deal per foot lease

kind this guess based elevated for cash for purposes quarter. per be So our of price model the said you foot the just on of driver that as really we would usually I was GAAP high And appropriate. $X.XX modeling your could disclose then, single-digits square spreads you've

Jamie Feldman

that's for That's what you're rest quarter the thinking year? of what they first were the in or the

Yael Duffy

that were have leases we're and rent X.X% X.X% to they first what we've That's growth Most and typically our X.X% for between X.X%. what on the what seen. were. of in mainland Hawaii That's doing quarter. the they That's

Jamie Feldman

that's Okay, property and given style potential any rates types the high mean, just or about to here opportunities little more guess kind And to new cap to creative the about get mean you of prior terms but you're helpful. at? it's so get done, for so kind find in a following all I I just looking right, markets business keep are platform. you I the assets of core just it's whether how to then, different willing low or growing are up a deals question of competition the and thinking thoughts drift growing

John Murray

it's question, strong newly a markets. built we XX top look and the is aren’t that properties because That's those or And lot about that rent Jamie, we in internally. have property at maybe been topic consider willing a good talk growth to a because that markets good in but

outside Class today but could of We good bit and getting into box. tertiary high yield the B We go day C quality a lesser a a and little isn’t real-estate, have end the been looking markets buildings at our of strategy. long-term on

-- we're So that down going hole. [indiscernible] rat

may platform land across excess relationships where within looking properties existing we beyond just where not but whether are have at could maybe even We excess land. develop we ILPT's more

at than a over achieve are it's But out different what may you work. quality yields. historically. going ways trying little is development first, subpar new time ways is look something So at remain more seen to we see figure to to But our higher bit rates on looking us from real-estate we are focus to make as it that cap tough to

Jamie Feldman

helpful. that's Okay,

about, or And development that so talking that -- property warehouse could just to other the development that you're types? confirm or is be

John Murray

properties. Yes, industrial warehouse

Jamie Feldman

industrial warehouse. kind port got of I think entity? about still about It's business, is know this of years think I that guys of focused RMR tangential, what I like business, platforms operating ago. business I kind mean other other truck its be all TPG stuff under morning Hey, industrial port could into side you types saw the And putting this up that's

John Murray

to business I'd present we're plan. time type the modification of not our the say considering at

Jamie Feldman

Okay.

John Murray

I never. say

over we' continue the time and diversified ILPT that's but to group the anything right, You're RMR don’t in I horizon. have on within see likely

Jamie Feldman

all right, thank Okay you.

Operator

Next Please from question ahead. BTIG. Catherwood is go Tom with

Tom Catherwood

looking But is Excellent. you Thank for on taking during questions juicy or of had How to and cap the returns Obviously a the that fees venture up that to joint couple with for good kind at as that especially even more running a a rates of portfolio do as months past you much that into there? you're put buying you and some some think morning. been joint going being so venture calls it's kind of the and lower able here. the for deals at source question of portfolio. John, assets capital within mentioned there you forward. opportunity of

John Murray

the that venture is for partners. are from be potential joint properties Well, equity we -- our evaluate might capital venture in good that portfolio source of for do think fit growth. capital that joint time-to-time the do -- a we a our useful And

potential we're existing regular And well our discussions properties acquisitions. as venture the joint in as about so with and partners

our we're quite issue has price it although equity. makes think, to I So from away improved, common sense share still where

equity So joint priced more venture. still much to it's attractively the is while

where we net For value. can that capital, equity get essentially asset

near we own homework I would do contributions upfront. acquire So could we the currently the that some close that to to of the expect would term venture. sales could in we And if venture we consider we properties properties and joint joint enough close, into

although out, rule working not anything on would like I that So that we're currently.

Tom Catherwood

joint right. the the from that renewal -- expiration And Was see extended or of in then to leasing lease quarter XXXX. the XXXX you maybe Amazon like Didn’t kind or from on in appreciate any just a That's out I It in up picking prior a the question that new? Indiana there. portfolio. that, venture looks is assets XX John. mentioned something

Yael Duffy

Tom, XX-year extended we --. Hi it's leasing We talk just deconsolidated, didn’t, did the we JV. in that -- the in Yes, We so the don’t renewal & as Proctor dint lease. and is Gamble Ohio with this we a Yael. about -- it's

Tom Catherwood

Got Thank leasing. two for front? on lease last on understood. of the active were negotiations Yael. to of any with in you progress that of updated follow-up that thoughts mentioned I it, expire kind you one that, kind the you tenants. XXXX, kind in Any know quarter that And or of on

Yael Duffy

in now. LoI both them right actually Yes, of status are

working So amendments. lease through we're the

Tom Catherwood

that's Thanks, Excellent, it everyone. from me.

Yael Duffy

you. Thank

Operator

is go from Markets. ahead. with Jason question Please Idoine next Capital The RBC

Jason Idoine

you're that some maybe core those wondering those compare if the how are targeting with will with opportunities potential good kind morning you guys. I located Hey, development opportunities and on was of markets of acquisitions? touch could where

John Murray

excess in in we markets. The where the on have variety property acquired a properties year develop presently to access City late Kansas property land. of Columbus. excess land There's on land there's last different in has one We pursuing

parcel have center had a development the Dallas We as properties travel currently well. looking as we're formally And other around for a in market do at been possible that country well. that industrial

So they are all over.

Jason Idoine

you see And going and do expect reasonable this to of market? to it, in any, develop through was that be would just have I to guess I what just follow-on, Got --. then guys type rental yield

John Murray

and maybe think developed can that cases then the size building. on its building of market-by-market be I that depends or some in existing the expanding it

other be specific would So give I'd you say than than reluctant of buying. to to be rate a better

Jason Idoine

Oh yes, thanks.

Operator

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

John Murray

Thank us you very much joining for today.

Operator

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

may disconnect. You now

Industrial Logistics Properties Trust (ILPT) 27 Apr 212021 Q1 Earnings call transcript