Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Industrial Logistics Properties Trust Fourth Quarter 2022 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Kevin Barry, Director of Investor Relations. Please go ahead, sir.

Kevin Barry

thank joining and today. everyone, morning, you us for Good Donley. President call Operating Financial With Brian the ILPT's Officer and Treasurer, Chief me on and are Chief Duffy Officer, and Yael

details In about for just four XXXX, with question-and-answer of by quarter they sell-side a will analysts. the our and our moment, business performance a session followed provide

company. First, like to prior retransmission call conference today's without I note the and would is consent written the of of that the prohibited recording

company forward-looking statements XXXX the Also the today's XXXX, or results February and laws. undertakes today's note as call contains of from Wednesday, Litigation results may on of that the of obligation actual those of call. to in revision statements publicly Act These based made Securities expectations materially forward-looking and revise to project. within conference Private beliefs are conference the meaning release XXth, securities and ILPT's today, differ no forward-looking any Reform statements The other that we

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

operating In net from income be call, or operations addition, this basis EBITDA discussing funds cash-based we cash will including or adjusted normalized non-GAAP during numbers and normalized FFO, NOI.

our income to can and of also financial our components found package, cash and net reconciliation for figures be available the data to also distribution in operating A on supplemental these non-GAAP available calculate are website. which

over to turn the Yael. I call will now

Yael Duffy

review then provide will portfolio call I to turn of results. on ILPT's and to operating you, Thank and and Kevin morning. update financial Brian begin over our the performance an with good a

subsidiaries was of XX% remaining land and Depot, distribution nine year-end and revenues warehouse Occupancy years. secure XXX a XX.X%. Amazon investment of average at represent weighted XX our from feet states, includes FedEx, our from approximately totaling come XX% in their properties term portfolio revenues Hawaii consolidated of lease annualized Home million and or square or our XX with rental ILPT's tenants leases. grade-rated approximately

We finished the consistent the portfolio we our with trends for XXXX. strong high-quality saw throughout with year demand

is cash the achieved activity at for rates same square that weighted ability an XXXX. in record For The revenue, we rental year, X.X prior activity were space. take flow of full million leasing rental more higher organic of effect this of or annual increase impact two-third average than to maintaining feet of rental XX.X% rates XXXX generate while portfolio annualized our showcase results million will $XX.X stability. in which These the

term we leases total quarter, a XX and in eight lease activity and at our of on new resulted rent activity. a reset of feet weighted fourth entered the X.X% average X.X leasing This respectively. one years. drove of for most and leasing GAAP in XX.X% cash square of the million Mainland During renewal spreads Renewals

X.X% roll-up market were Iowa, a rent. able spreads renewal in a leasing XXX,XXX a foot Our in to square where in we only tertiary achieve include

Excluding spreads and XX.X% GAAP XX.X% this and renewal, respectively. were cash leasing

square million Mainland XX scheduled feet end primarily driven XXXX, the approximately XX% of ahead, roll by to Looking ILPT's by portfolio properties. is of or our

in these Mainland, XX% in feet. deals expect currently Hawaii, our the yield and on of We we executed, will X.X strength the our leases portfolio. are rent tracking XX further square in illustrating roll-ups for million Once XX% of pipeline average

on leverage. focused Lastly, past, the we have ILPT's as improving in we are communicated

continue flowing and opportunities. patient ILPT capital uncertainty near-term portfolio However, given evaluate the in ongoing will to no our for maturities a unknown. addressing timeline markets, these is as With the be priorities cash we debt

turn Brian. over call now will to the I

Brian Donley

the FFO XXXX, consolidated operations in compared normalized NOI. $XX.X quarter normalized year drivers prior financial major Good $X.XX interest Yael. everyone. were offset you, million per increase the to The quarter impacting share, $X.X quarter. with our prior million decline of was funds year a morning, for a of from million partially fourth Starting higher by Thank over results $XX or the expense,

EBITDAre reserves rents to a fourth increased changes the of year-over-year. portfolio basis The for XX% negatively included acquisition $XX.X reduction $X.X in financing Monmouth, of result year million, Adjusted our increased These impacting same-property of and cash comparisons. points prior approximately year-over-year basis XX for NOI million. quarter uncollectible earlier a Total to related activities were the XXXX.

rate rent million leasing Excluding interest these rate Interest have our and charges, the consolidated cap $XX.X and rate expense mid-November. year $X.X the primarily strike quarter, the contractual steps. joint to due floating to The floating rate entire we in crossed a prior for for our in activity over the strike CMBS loan cash-based $X.X same-property consolidated fourth exceeded loan the rate venture increased X.X%, billion our NOI cap billion increased quarter.

to rates non-cash of levels our current expense, the including interest costs, expense and continue approximately financing run fixed amortization Assuming interest will consists This of cash million current interest $XX rise at of quarterly short-term $XX million remain or million. rate rate at interest remain caps. estimated $XX of

with balance maturities to our options Turning debt average ILPT's maturity extension until Including is years weighted no sheet. six XXXX.

fixed cash a of weighted We our escrowed through debt currently the X.X%. a interest either our XX, joint our rate excluding $XX carrying venture on rate average or held amounts agreements. total cash total interest by of rate caps under consolidated hand, with December of and was have As fixed debt million

building $X.X and Capital costs. expenditures for tenant including were million $X.X leasing fourth $X.X of million, costs, $X.X the development quarter improvements million of and improvements of million

tenant from estate. operations exceptional ILPT across that rents high-quality and portfolio, strong we with and benefit industrial for closing, expect near rising an our our real continue roster, demand full will to In remain occupancy, industry

details components joint portfolio, ventures that we've well we insight stakeholders. the turn disclosures additional our this over additional and in as that be we the to supplemental financial out believe our provides to to like different that I'd and may point package Before as helpful operating call data our into Q&A, included quarter of

for That please concludes Operator, the our remarks. open prepared questions. line

Operator

you. Thank

session. comes the B. [Operator The ahead. Instructions] Riley Maher from begin question-and-answer We will Please FBR. go question first Bryan with now

Bryan Maher

Yes. for should Brian. me, know, Good up? Yael let's say, to re-engagement might comments potential currently? have be partners in you couple briefly comes the sales. Monmouth dialogue, any the questions and on with it when and for this when morning, discussions JV Are you about upon touched I Yael do a that of that? your but any of How opening thinking A JV heat thoughts we there asset

Yael Duffy

in transaction availability market. It's haven't of sales pretty the the the so -- the form interest morning quiet for we Good Bryan much would property really financing. you you rates been could the for I with as and rising expect think seen as

I So, to data we're like. looking kind see really turn to, see of, to look rates think what cap more the

that's to the answer think that. I So,

partner in in of joint potential -- his Mountain, venture we've not our with prepared discussions remarks the In the we're additional conversations data terms in put alluded any supplemental. we're having for Brian to currently.

the that look you would not hard you'll very currently until interest decrease. If venture, to in that rates us partner to for be see joint joint venture second find we're cash it so that flowing

Bryan Maher

for from XX.X. quarter maybe Brian the Thanks. from And then third we that leverage Okay. the noticed went

went to like it I think XX.X. down

good have two? or take run a rate that don't deconsolidate give sales the bp you maybe Assuming Mountain or asset or JV a is

Brian Donley

morning. Yes, Bryan great and question good

see XX continue things passes rent down throughout of I the come low be XXXX. where high and think it we marginally expect as effect That's sort will time to to of the but roll-ups XX range. we

Bryan Maher

year we to roughly lease activity that and for was occupancy? the vacancies? portfolio expect and upon touched like where strengths the pretty over you weaknesses continue XXXX. runs XX% leasing two decent. any should seeing or fourth you the a quarter XXXX solid are just years And potential And strong It any or very at pretty in there full But seemed are this a known next renewals,

Yael Duffy

So, this think a year an We had exceptional I lot in year for leasing us. Hawaii. of was

into leasing the focused So, a the will XXXX of XXXX lot we go think I be and on Mainland. as

year so I going is for in not estimate. -- I sure XX% we're XXXX. XX% to a see And But think the I'm roll-up good think

that those able we've In terms have or two. we of about vacancies, Hawaii. a re-lease quarter been couple a Generally know known to within we in

no think think good there's will XX% turn out. think to a XX% for I there. concerns is I the -- think occupancy And So, we I estimate where

Bryan Maher

you then out just last for extensions for for any And me XXXX to that there from that exercising of foresee prohibit Brian anything Okay. extensions? would financings Is could on the covenants debt anything those maybe two or XXXX. MNR-related in the you from the

Brian Donley

requirement only expiration of add the upon rate new replace path a or we current maturity. the interest that No, is

instruments debt rate interest extension we'll a of get the have those foresee which each to new So period in we XXXX cap problem. for for don't a

Bryan Maher

me. Thank all you. That’s great. Okay, for

Yael Duffy

you. Thank

Operator

Mitch ahead. from Please Instructions] with [Operator comes Our Germain JMP question Securities. next go

Mitch Germain

be Will morning. Good do year? When it we wait next calendar change? until the the new quarter, does same-store pool or

Brian Donley

Same-store acquisition include would be in QX. the meaning that to Monmouth

Mitch Germain

Okay.

little Okay. anything a there? want there rents is guys flat, growth. specific out higher, And not of about of performance you sort that a occupancy the talking just in pool, same-store to Is bit lot that point

Yael Duffy

XX% benefit feet we this this XXXX. Yes, which were that in we we year. And actually XXXX until effect earlier Home roll-ups X.X the really about see of doesn't million we Depot, we the leasing of year, cash leases square -- either did into talked And XXXX. until And go of that NOI about about in talked talked we or won't two did with it pretty rent. significant

of made some hasn't into think XXXX. just activity I its that So way

that we start of think I as year, So we'll seeing growth. start some the

Mitch Germain

had pool the me. reconsidering Monmouth that or question -- now table, everything sales, about has the for you And scrapped you you'll original potential you? we and just last will that is or of to been it that are back be then based what on on market asset When opportunistic assets, think is give considered some

Yael Duffy

see We're within our everything at opportunities looking portfolio have. we to what really

XX So any to by we marry the not originally the brought market. we're to properties out means

potential would I sense, disposition our think a any in if we portfolio. of property it makes consider

Mitch Germain

you. you. Got Thank

Yael Duffy

you. Thank

Operator

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

Michael Carroll

that Yes. indicate marketing for you're currently you now? portfolios not Did Yes. sale right any Thanks.

Yael Duffy

Correct.

Michael Carroll

what to to do time there interest thinking marketing to a you properties point Is ready rates about lower? in at market? I you Now need the in move see you're point start time something bring when sale? mean, do for

Yael Duffy

really brokers -- see bring don't different I across out we to groups. generally have both something We're in that it's to we early a XXXX. in And still ongoing discussions criteria. kind more everybody I transaction set don't volume. think major mean, broker think just I need I of agrees with

properties, the as going comfortable already back and feel don't more the out to and see same we'll a again. there we'll the process and we started think hopefully, pulled Where thing closing I activity, year, progress to will we we've transaction be through So market. want the do transactions

Michael Carroll

Okay. sales at sales, some could to assume traditional when more that that you're valuations it outright fair JVs doing? the better about been is that And generate you asset versus maybe then thinking bigger I have looking mean, you're

Yael Duffy

the of us think to be I open think, I we're highest Again, brings either proceeds, those we'd to whatever options. evaluate. willing

Michael Carroll

willing this Are sell you Hawaiian assets at point? some to

Yael Duffy

that know lever we We pull. can that's the

in So incredible value -- there's Hawaii. and

we So consider it. would

Michael Carroll

Okay. Great. Thank you.

Yael Duffy

Thank you.

Operator

turn would conference This ahead. for over to closing go to like concludes our question-and-answer any Yael Duffy session. remarks. I Please back the

Yael Duffy

Thanks you We today. to Okay. for us soon. speaking look again joining everyone forward with

Operator

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

now all disconnect. may You

Industrial Logistics Properties Trust (ILPT) 15 Feb 232022 Q4 Earnings call transcript