ILPT - Earnings call transcript Q1 2022 | Industrial Logistics Properties Trust

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Operator

Good morning and welcome to the Industrial Logistics Property Trust First Quarter 2022 Earnings Conference Call. I'd now like to turn the call over to Mr. Kevin Barry, Director of Investor Relations. Please go ahead.

Kevin Barry

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

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

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

Yael Duffy

of these challenges, remain we square new per US square believe strong. foot, fundamentals sixth asking a the feet will industrial enhance average and industrial markets surpassed rents XX.X% inventory potential These reached they vacancy the and seeing levels year-over-year capitalize expand disruptions. on protect increasing to growth e-commerce look dropped These X.X%. tenants national supply robust of to are to consumer a needing we record over ILPT's this long-term as a XXX and are of metrics first quarter first leasing prospects we Industrial to the low of the the stronger chain the are operating Monmouth leasing XXX significant company have the call of start Thank changes tenant a marking you, integration mainland quarter high-quality, our the Corporation, look with increased last Investment summarized acquisition update with Real a opportunities. for an ILPT on Since everyone Trust. and the transaction macroeconomic, and which geopolitical, environment. for Good e-commerce-focused On acquisition XXXX and there geographic quarter morning of will completed to substantial addition fall, creating milestone activity and Properties Despite announced portfolio, and provide key we XXXX as in row. for while meet needs Logistics February trends XXth, activity quarter firsthand. Monmouth, acquisition metrics review diversity. to and to earnings welcome and first against the been increase the In financing for result National Kevin. million Estate XXXX, leasing rate I combined properties, ahead growth the $X.XX

Hawaii their have helped grow space existing eight proactive rate old In Hawaii, being tenants now recorded ILPT year, market an and in working identify additional X.X% public. our vacancy availability in to to past lease in into growing a the properties. of before are it becomes of we the suitable industrial with for As lowest tenants Tenants businesses. dosing challenge an face example, history, and

than the offices the through hiring dynamics to well the employees efforts opportunities of it retention, ILPT relationships efforts. complete. about just more projects the be United the leasing to the over is the portfolio contributed Due mark-to-market in market integration onboarding into With to ahead. enhance Monmouth across of of each introduction whether every this Group, brokers organization tenant of these manager, in cash and is to part RMR XXX a take tenant years assist ILPT's efforts, Our personalized States, new positioned flows XX expanded portfolio, and capital seamless our to to tenant in properties or leveraging RMR advantage the of

of and includes the properties are and the The operations ahead achieving we ILPT are and venture properties goal formed key may held ample other to markets the the energy legacy high-quality plans. of with year. and and Monmouth you detail, XXXX. with partnering ensure on sale feet. efficient natural experiencing are representative of energy rent to sustainability outstanding a with As with market, sustainability include potential on many we aware, properties, component believe begin more tenants. rents We and facilities, business additional interest in there The recertification. to for more is reach behalf This FedEx and last the on Key to in half review focus consisting has carbon-neutral XX stations, leads by alive which be of to the selling these of its newly of long-term currently attributes, projects, in aircraft will located closing committed alternative charging an Monmouth RMR efficient our solar adaptability, lease and expirations. a joint of engaged square operations. rooftop FedEx's geographically strategic usage accommodate By X.X FedEx has space to to a this growth to electric in the including our FedEx, be energy are vehicles, million of second steps tenant in our Rick expect the its and sales diverse, larger portfolio, The for vehicles achieve well energy initiatives equity in top on debt. disposition equipped will reduction growth to support acquisition effort, an properties grow lighting to our opportunity on level only

Turning to fundamentals. portfolio

March consolidated properties and As square feet XXXX, of occupancy under distribution ILPT's million XXX of XX warehouse with XX XX%. in totaling just portfolio XX, approximately states, consisted

our our revenues, and representing approximately revenues represent secure mainland tenants land top FedEx, Hawaii. of Home Occupancy with XX.X% end, lease portfolio remaining basis in includes XX tenants increased or years. industrial Hawaii More rental than subsidiaries rated investment-grade of square XXX XX% represents from properties leases. a states, Depot, has a to of The XX% portfolio with our of Amazon total Our ILPT's XX come from revenues, million annualized leased. improvement to square million of X% average are to total annualized by feet portfolio properties compared comprised rental respectively. at which and of US in quarter balance XX.X% XX total the e-commerce are of and year-end feet key year. point the weighted supply X% projected totaling FedEx the land to XXXX. prior both approximately XXX XX%, in that of Hawaii components increase nine of and is sales XX XX% Amazon is The term is chain

growing Our to e-commerce from benefit properties are positioned volumes. well

roll-up and X.X% expenditures at quarter $X.X and level XXXX, important Overall, of same in year on to solid the basis years. for seven of activity, year-over-year improvements is basis in and in same-property average per first was prior continue consecutive ILPT's XX%. quarter over demand operating NOI both momentum persistent Same-property a million grew term XX.X%. attractive to In on to note the was for resulted new by average square our year strong. new We leasing XXX,XXX marked recurring roll-up with occupancy rent first ago square double-digit quarter not XX.X% estate quarter Leasing signed cash tenant compared $X.XX a to properties we supported and rental XXXX rent commissions. real square to growth we industrial the and of XXX,XXX the which the leasing results. for that was was strong feet and feet limited first a to feet, $X.X It increased an rents fundamentals build growth. a in the XXth totaled During per the property portfolio sequential and executed spent from Of quarter, leases square on though Hawaii XXX,XXX or Hawaii. attributable X.X XX lease of quarter, foot lease leases in million an approximately with

for the XXX,XXX results foot a XX% renewal Northern Our also tenant incentives no rent concessions. Jersey or New in lease roll-up with include property improvement in square of

completed square three higher Lastly, rent in than tenants prior rates. rental with that XX% resets Hawaii XX,XXX of we were feet

illustrating to outcomes. leasing approximately year, portfolio continue to executed, of is on attractive Once current we expect and approximately of the million our of With our for embedded opportunity our rent XX% revenue with will million roll deliver total the there that or feet these to feet. of XX% active, the of now portfolio. conversion in favorable roughly activity minimal average Near-term yield given to XXXX, opportunities, leasing our square a are currently X.X Turning operating pipeline, this capitalize believe expire X.X of is Mainland expirations roll-up tracking intend and annualized scheduled portfolio. of XX% end leasing to XX further X.X% stages environment existing within we in documentation. Hawaii, on of we transactions anticipate the ILPT's lease are near-term square we of negotiation leases in for scheduled XX% strength by We is pipeline growth to advanced our approximately

and years to of corporate will In experience as turn in the proud look welcomed continue of management from progress benefiting a over call member to I March, Rick. supply companies. Trustees. Board range the of our XX Finally, more we multiple the across make XXX chain has in her corporate we ILPT's industries June experience. than of Fortune June forward are insight We to logistics we Youngs strengthen to governance. and now of newest

Rick Siedel

a a I'll leasing Thanks, and Total of increased morning, tenant points balance financial year-over-year. feet. new opportunity XXX negotiate investment-grade basis related lease review activities it Yael, backfill second same and with final gave to X.X% lease form, with quarter includes This results. our NOI termination in lease approximately nearly basis first a property for the lease to an square team quarter to in in charges portfolio up included then cash of on everyone. approximately quarter results sheet. of in rated rent pending provide This our as detail our expect substantial financing XXX,XXX the is Hawaii. negative we roll termination strategic first to our be and good impact and begin a a further This

year. basis Excluding by driven these NOI property strong X.X%, same leasing charges, past increased Hawaii over activity cash in the

grew NOI to which the contractual at reflects Monmouth came X.X%, basis $XX.X cash property acquisition. and year-over-year, in same property XX% growth of NOI by primarily an Mainland, Adjusted the our EBITDA On million, same rent increase steps. due approximately

million, quarter normalized $X.XX FFO share. $XX.X First or was per

Our per the at lease termination six end by XXXX I was normalized of FFO affected unconsolidated mentioned related the million our to due the following: to venture $X.XX due charges share properties to $X.X to $X.XX sale of joint of and ILPT adversely recorded earlier.

sheet. balance times. was million June. was debt to our and XX $XX acquisition, ended activities on new institutional We Monmouth finance Turning balance The the into and for JV first of the quarter. cash which In million an of properties amortization and we acquisition, investor cash investor $XX aggregate the billion a to fund EBITDA expense revolving equity JV. the entered interest fees of annualized the million to million to credit or used $XXX facility XX% venture is terminated and financing an debt. of related ILPT Mountain to our XX.X of for joint with acquisition. connection Interest a Industrial new Monmouth expire our approximately with interest incurred $XXX the adjusted the we The mortgages and of hand the bridge with expense. the $X.X includes closing in loan scheduled facility, This to related during To financing quarter contributed of

focused reducing strategy. executing Looking on Freeport forward, leverage we are a by

discussions are in additional sell in active to interests First, Mountain Industrial we the JV. equity

mentioned, are Yael XX as former Second, marketing for Monmouth we properties sale.

with $XXX million our We rates expect revolving to into used additional line a of portion facility, in plan And the enter loan new to we third, and with credit which gross proceeds in the over us cap will be to bridge a average at repay flexibility acquisition. provide generate future.

high-quality the are activities summary, that growth competitiveness. confident acquisition we well and us to opportunity ILPT's are our scale demand the these the be drive We That in you take up long-term to eight With our excited to in to on approximately of and XXXX. In strengthen prepared environment, industry successful line remarks. positioned will secular forward a enhanced EBITDA debt the significantly of growth. open industrial assets, end advantage leverage updating front ILPT of please to tailwinds We accelerate progress. is the fundamentals reducing about intense strong portfolio robust and look questions. concludes to for before and ILPT's Operator, times of

Operator

now begin question comes We'll Maher question-and-answer [Operator Securities. of the you. session. B. Please, Instructions] First ahead. from Riley Thank Bryan go

Bryan Maher

Yael modeling to any for morning, there you we a the year? were the when we tenant me. kind one-time XQ. comments. Hawaii and that impacting than could and those that for G&A should of anything related for something I Rick, hoping about of that and higher take Monmouth Good items Expenses and thanks were or you clarify little modeling ran consideration just lease Was was OpEx related for Rick, into balance in to talked that, bit

Rick Siedel

typically we Thanks, to to did like so particular wasn't time, did Hawaii. time from We the you quarter financing process. that through that good a kind tenant things do during related removal, would But see, OpEx. that do go expect in first Brian. snow that less We extensive have up in address. obviously, seasonal It's there of But we'll have things one-timers, that in question. few anything pretty a come small to a

parties a like doing sites out had and things third So we that. lot of at

the really happy go-forward On there's we're say, not portfolio, I a much where throughout your a but pretty bring G&A perspective. to with So typical. would activity really landed. like there's we've elevated from basis, attention It's

the in that quarter, trustee seasonality at otherwise, be forward. vanilla second pretty should quarter item. share second grants typically looking you're it there's If going But, are

Bryan Maher

anything the couple as changed from last way transpired, of on Monmouth it months in from the announced past of the of outlook your get rates other you then Z A geopolitical to late has we've that's And interest over macroeconomic any and meaningful Yes. and year. to spike transaction relates the seen events, to ability kind kind when

Yael Duffy

Yael. Brian, Hi, it's

I bridge third ways out that joint new our by equity additional again, hand. that, about So the or the the from to Rick plan end I think -- a the XX through no, of And is we different of the the selling we venture, be quarter. revolver do couple cash think on talked the have of can of properties,

to So four QX. between those out factors, we're in hopeful be of the bridge by

Bryan Maher

around might any were that you there anything of first know have So bit I guys Monmouth there between kind XXX% And of high put the you the acquisition quarter vacates any kind occupancy. quibble or abnormal exceedingly that would jerked little was the of the really and can't -- XX.X% in run relative But with you right? vacates have portfolio that occupancy, a numbers to occupancy up? timing

Yael Duffy

No.

XX.X%, we was lower under ILPT while then, since were the than we've think, over, But one vacancies. legacy. LOI -- came occupancy high, So of with Monmouth their I that which, still an when was

hoping be have so, up. executed in to And QX and back will that lease we're occupancy

Bryan Maher

just Okay. for last And me. then

those On planning XX? singled kind factor those the you're the is you properties is I it how there of XX there sell, are mean, out different to differentiating any, kind XX properties that that that that you're of, keeping? than

Yael Duffy

of bigger Carolina, really No. properties tried seeing non-FedEx the Georgia, of and They're Florida, portfolio. activity indicative really a We all we're representative properties of markets growth, and to in Arizona, picture. the FedEx population that larger, the so strong do bigger South good mix and

Bryan Maher

and can. second of more half leverage in get partner mean, year times to of X the going I Is by, to add maybe let's Trying other I correct? is the if order the times. to the And this down one say, partner XX from JV Okay. think, a from, sheet. I to that just that's XX% balance take really key that deconsolidation the over this debt that thus,

Yael Duffy

Correct.

Bryan Maher

you. Thank Okay.

Yael Duffy

Thank you.

Operator

Our Please Capital next RBC question Markets. of Michael go ahead. [Operator from Carroll Instructions] comes

Michael Carroll

you on termination in I additional Thanks. charge hoping that could provide Yes. was color Hawaii. some lease

your $X.XX accounts of roughly guess, to guess… a care remove tenant, did off I I ILPT So paid

Yael Duffy

Yes.

who were away, place So and their a we parcel. we them. and company ended part a tenant to we in of principal looking sublease as that, of replacement they long-term the passing a had to tenant for up ended the an doing And lease the finding lease. with opportunity up direct with deal a But terminate had

history real that's -- the a that one. But it's So was it. behind

Michael Carroll

What…

Yael Duffy

going was I sorry. I’m say…

Michael Carroll

ahead. Go

Yael Duffy

in it's grade replacement opportunity be that new profile non-investment recognize, Just really the national we say, Hawaii really of to a will brand because that existing increases was the investment portfolio. people a the tenant will it good it's grade, our terminated and tenant

Michael Carroll

then on -- And absolute the describe difference the change rent basis? of in tenant between can an of alternate you new versus how of much and coming the kind a the that annual is

Rick Siedel

one $X.X straight-line just Mike, with out, future, revenue. along of -- half off kind rent It's the writing million it's of charges, for half to about and of thing the point current

about revenue $X.X new be lease old close million. was is and year, to the expected So the to XXX-ish a

Michael Carroll

that When Is then those the simultaneously, to Okay. quarter? actually the off? old does in rents that Rick? new second commence commence, Did And on? rolling sometime rents fair the rolling leases

Yael Duffy

the anticipating lease we're mid-May start new date. Yes, for

Michael Carroll

in different was the Okay. reason between termination? was this this why difference And was to change GAAP is cash growth the or due the and Hawaii NOI same-store so

Rick Siedel

cash The rent includes the straight-line of full half right. rental. exclude the of GAAP million would $X.X while the That's charges, roughly

Michael Carroll

I given changed asset those guess, going non-core the partner, the in just the increase I little has of rates lease those interest JV the new that Monmouth rates, that the then on And cap a assets of Okay. these back you the rates bringing them? higher versus bit higher then sale have push interest especially mean terms assets has given remaining, in them? when to and long the are acquired on interest kind

Yael Duffy

and properties lot So, activity really on we're groups. basis, of seen individual different a of lot the a marketing we've an from

I properties usually we've word and had -- also basis, but able don't an a of mean, think I way where we over on we've portfolio lot basis. I I a buyers are these the two investors structured have XXX bite by it, And or the think purchase the individual interested. to And cash to clustered bid geography. interest want where on individual on properties of use unique think I a size, three

-- their decision-making. so So, debt aren't much the markets impacting it has

Michael Carroll

what partner? would And that in I the as first at a happens new environment guess, at JV valuation? mean, about could what sell, the valuation that expect just mean stake today? the I we're I you if in a comes you one a different given similar it similar macro

Yael Duffy

So we're the as to the first And in and discussions as somewhere is today, is valuation between the same of the XX% partner already. stake XX%.

haven't we any seen So, re-trading.

Michael Carroll

one me. of a kind JV? think Monmouth last at kind run just you today there about post of way Can run sell rate be? transaction of to describe mean And we gets I or the Okay. that or look will could then for give and is some takes us this FFO post of the rate what

Rick Siedel

Sure.

it's the bit little bridge still financing think is after a I outstanding. and before

quarter. similar were has to quarter where our So model this next pretty we

outstanding. while per the share just after basis the of Every $X.XX of interest the of FFO. XX obviously, changes of sales, points interest we've rate One to completed rise, or FFO about But property number will is so, $X.XX us cost sensitivities, that bridge rates. is

variable most the forward I So, and on is bridge. done, the good executing and executing really is moving out biggest But feel getting well, pretty the we're the where team looking But portfolio of the we that's the and on going. performing integration -- the obviously right part, for forward think it's about now. sales is to with

Michael Carroll

Okay. Great. Thank you.

Yael Duffy

Thanks.

Operator

Please the Securities. you. from next And question Mitch Thank go comes ahead. Germain, JMP

Mitch Germain

the Is think Good asset That's to joint for morning. that include RMR. manager it? way separate right? The fee about the that to doesn't quarter, the venture,

Rick Siedel

RMR neutral an kind of from It's perspective.

paid that while for So does, credit its ILPT management any venture. by fees the agreement a gets venture a while fee consolidated, ILPT the has similar joint against it's

basically. essentially it's neutral a So, or pass-through it's

Mitch Germain

guys you around million of asset sales. $XXX think I mentioned

You're million has the properties. the I guess, those holding, allocation purchase allocation -- $XXX for

think basically, should to just should we is So around what way about sell that expect what bought guys we you -- what to the Is them at? it? you them at

Yael Duffy

That's right.

Mitch Germain

consolidated? And is it unconsolidated, then that become you below that think any sell we gives any will forward? or authority when guys and the sort that about -- are does full and of it should you How joint stake venture, there going there that get language $XX, keep

Rick Siedel

I with ventures. standard a pretty it's previous pretty our joint think consistent venture,

little to answer So will XX%, accountants if technical without that I'm go because likely talking the get a consolidation, venture. is our the questions pretty to below about the we expectation But it afraid always deconsolidate sometimes. can joint we

Mitch Germain

party party existing the about to think way a your is other And it? JV? that to the Is

Yael Duffy

So the is that's an place partner. already in existing one

Mitch Germain

Thank you.

Yael Duffy

Thank you.

Operator

you. Officer, over like Thank questions. call. more Operating President to I'd Ms. back Duffy, the Yael to is and no Chief turn She have call to the close as we the

Yael Duffy

to everyone, conferences joining you maybe at summer. industry today's another look We many of for forward on Thanks, call. this us seeing

Operator

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

may disconnect. now You

Industrial Logistics Properties Trust (ILPT) 27 Apr 222022 Q1 Earnings call transcript