ILPT - Earnings call 3 2023 | Industrial Logistics Properties Trust

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Operator

Good morning, and welcome to Industrial Logistics Properties Trust Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the call over to Stephen Colbert, Director of Investor Relations. Please go ahead.

Stephen Colbert

Good morning.

call Tiffany Duffy, and Sy, today's Operating and Treasurer. on and Officer; Chief me are President Yael Chief Joining Financial Officer

question-and-answer consent of today's Today's followed call is note presentation the the conference company. the session prior without a written that retransmission call Please the with and by recording prohibited analysts. of includes by management,

securities statements Reform forward-looking that of the meaning based note Also Act XXXX beliefs as within of statements and that forward-looking from actual today's XX, of conference the may laws. and ILPT's on today, those other Securities differ project. materially are XXXX, call Litigation These results contains expectations we Private and October

forward-looking revise publicly conference obligation company today's results statements call. no The the release made or undertakes in of to the to any revision

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

reconciliation or figures will financial basis addition, found available results cash numbers including presentation, call, can basis our this information EBITDA operations which non-GAAP operating our FFO, funds discussing be to on from net net income In income during normalized or A and non-GAAP financial NOI. normalized be of in we these adjusted cash is and supplemental website.

turn With over Yael. that, I'll the to call

Yael Duffy

morning. good and Stephen, you, Thank

like to X. Financial I Tiffany would Chief October Officer ILPT we Before on our who Treasurer begin, welcome Sy, joined and as

call review performance then an financial call, to our I activity on before over ILPT's and discuss Tiffany and today's begin our operating with leasing results. to update On will turning the disposition

$XX.X reported properties, to are we million. that under of aggregate an X Last agreement that sales X price we quarter, sell for encumbered had

that difficulties our face discussed release economic while debt agreements. ILPT the in this given challenging under dispositions additional environment, also are property We may provisions

buyer in to was as unable fell to line. property business, due required time licensing of transaction needed its to process, diligence operate delays the the the out terminated During receive the agreement X another and

continues to million. The unencumbered, is third property, be for which sell under $XX.X to agreement

to performance. and our Turning operating leasing

XX, September and our of NOI the respectively, XXXX. consists basis compared same-property properties cash and X.X% warehouse of distribution third growth achieved quarter XXX NOI and of As which XXXX, X%, portfolio, to of

million beginning finally of are leasing the We last see completed impact square over we X.X positive the of to year. the feet

total expire activity $X.X a is As rental we this generate revenue, flow is reference, million in revenue. feet to set square annualized to of ILPT's organic cash XX.X million impact point of increase opportunity which believe growth. annualized the of With of continued there X% an XXXX, represents through

leases leasing quarter. typically impact XX.X% the is what executed The of than of we new years, nearly of X.X lease annualized $XXX,XXX rental modest XXX,XXX of this of GAAP square in spreads and for resulting We respectively. These strategically feet, report. and a average to which weighted XX term cash leases is shorter have XX.X%, and activity Turning renewal increase revenues. an

conditions. selectively in of in completed We tenant, roll-up our are certain renewals renewals completing Illinois increase, advantage short-term rent tenants XXX,XXX X rents asking As we square totaling to largest a Georgia FedEx. of Highlighted continued continue is take market ILPT's from to feet at and with demand results in Texas, XX.X%.

teams its with through through their discussions engaged asset and management been FedEx initiatives, they works DRIVE have As our long-term decision work as makers in FedEx plans. leasing program

basis across revenue. that which feet includes pipeline to annualized points less leasing with X X.X properties XX is square only FedEx represents specific XXXX, XX known vacates million Our through than of

minimal our and and activity timing function leasing portfolio this beyond. is quarter expirations feet. as is million long-term Hawaii just lease annualized a given it secure, XX% our associated XXXX with XX,XXX muted was of this square square in of feet. believe Hawaii $XX We million FedEx with currently over in pipeline X is Furthermore, the Leasing over revenue in exceeds

the leverage, last we year. past, which are on communicated Lastly, X.Xx as since ILPT's declined improving focused has we have in

the However, given maximizing rent organic. short capital reducing markets, improvement operating tenant focus no flowing the be debt any ongoing and the With will will continue a to cash expenses. and opportunities growth uncertainty on term mark-to-market in in near-term ILPT maturities retention, portfolio,

now over Tiffany. I'll call turn the to

Tiffany Sy

for at quarter. with was Adjusted per Starting increase $X.X our $XX.X operations third $X.XX funds Thank year-over-year Good both was quarter on EBITDAre sequential share, XXXX, compared quarter a million, you, on basis. sequential or Yael. a results decline the to million and basis of quarter the consolidated an morning, from everyone. financial flat normalized year a prior

Our quarter. $X.X third same-property generated cash for offset in on NOI activity property million of in basis same X% which partially operating increases or increases the of million basis a cash or expense year-over-year, net resulted in $X.X leasing a increase rent by X.X% XX.X%,

$XX.X increase full Interest the quarter, of mortgage a we in impact the sequentially refinanced reflects May. million expense and was $X.X loans an million of for quarter's

amortization quarter Our cash financing and including interest $X costs. $XX rate $XX benefit expense, interest expense of approximately estimated with the interest the was from our cap million fourth of million, of million in-the-money consisting noncash

debt a with assets to our XX.X% sheet. net Turning year-over-year ratio quarter debt to And basis. compared ratio ILPT to a total ended ago. the of XX.Xx year balance net XX.Xx coverage XX.X% a on declined to compared to our

ILPT debt interest a rate a through weighted has X.XX%, with All carried of of currently fixed is until debt fixed a average no extension interest maturities rate at or total rate XXXX. cap, our including options,

Our under would cap. in replacement replacement floating related the XXXX, million. subject occurs first of our rate March billion Based interest million the to venture to option loan pricing, today's $XX rate joint the range a $X.X from $XX consolidated on on extension cap

XX, we million $XXX joint approximately cash As cash consolidated of hand and restricted million September $XX our on of had of in venture.

opportunities evaluate continue to to will and reduce we earlier, our mentioned build liquidity. leverage Yael As

sale. properties have currently we However, to no plans market for

that environment benefit our compelling, exceptional high-quality challenges, continue the we ILPT our will roster, demand and while industrial that for remains from rising like portfolio its full across portfolio, closing, tenant ours. estate to expect rents near real has occupancy, current and In economic

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

Operator

[Operator Instructions] comes from Riley Maher question FBR. Bryan first with B. Our

Bryan Maher

a catch did Maybe caps for that you $XX sticking minute. was say million? to $XX the to Tiffany, or quite million with $XX million I million didn't $XX that.

Tiffany Sy

but today's price. said I based strike That to pricing, $XX the $XX our of million expectations is million. on also

So as there's range there well. some

Bryan Maher

for And of was the that Or the both of caps? was for XXXX caps? that one

Tiffany Sy

caps. That is the one for of

Bryan Maher

the was in does that to how that loan put back compare pricing cap cost And on XXXX? that

Tiffany Sy

purchased million. That and that 'XX, that much of $XX out -- of price. recent terms was most cap strike was the we lower September was Well, in

will but apple-to-apples, since However, and a X-year it's slightly increased It's say not has pricing last that period. also time we the necessarily I purchased.

Bryan Maher

I or That's else I Okay. bit? XX.Xx Yael should come it's a little mentioned you a that XX months, XX.Xx. deleveraging, see being the do when organic think, to, mentioned Or next of equal, similar helpful. organic moderates that that down Should you And about think think we all over we think then from deleveraging? suspect we amount

Tiffany Sy

pay a I down mean decline fashion. good No, rate. proxy to we run a continue in to will as I continue should for that steadily our think mortgages, it it's

Bryan Maher

said for properties? I you marketing X. X are some think And what And inbound just on how are actively asset going receiving the you progressing? then properties. weren't that dispositions. those of maybe on I you said the still inquiries Okay. Yael your to you into But caught all And

Yael Duffy

have unsolicited will offers So I think slowed it's in -- I we have the that quarter so. or say been the last --

review do with to sense each we sell. it so And offer we really if get, that makes

And things of collateral it XXX% I of the to of given is proceeds. from collateral out last of pool the us greater on allocated the sale the talked must pools, value the quarter's -- call. amount sell think really hard loan the this net be the it's for to we've release about XXX% property or prior, the But

And on service to have ratio. that, also of coverage so top required maintain we debt

what on the And when we the today of closed in agree we on all valuations. shift think So some loan. the look with I value there's to have at value been property closed really, that we the versus can we

math hard So it's to work. make the

target have when underperforming. we if to it our yield from but it's we're that's underperforming to we a it's collateral debt for remove sale, And improve to hard pool, the hard property properties sell -- going then to

that's it, lot do a into and right if there's into but it's it. we'll going the is So far opportunity makes sense, But between. been it

Bryan Maher

I powder think focus paying for it's little? just one just the to there out mean taking $X.XX that when down being, dividend CAD me, a last you're on and quarter I keeping costs? debt $X.XX. dry or rolling at dividend. trailing is Is paying so we up look Or X thought and the And on Okay. solely the basically cap maybe for quick even a any

Tiffany Sy

leverage. Currently, to part... that like to at -- And latter. discussion consideration a we but then on the we I or It's mean, [indiscernible]. are it reducing a least have We'd can I lower real, level, our think, focusing get

Bryan Maher

that. leverage before down XX I'm sorry. get say ] to catch didn't to you I Did you [ you want that? rethink

Yael Duffy

Yes.

right or have us a partner liquidity Board and we also really, have FedEx it, wants coming lot I that to project, have run have parking that's to to if we I But make sure then is to their we I needs. to we caps mean, think leasing need expansion with to tenants to do make some the up the the liquidity our that Bryan. and building liquidity the now, to want meet looking business. we to think at sure and a then buy comes if

Bryan Maher

the starts about slight helpful for that of [ crazy, the to you company food where there as out the the of think but anyways, model it, bogey But before we Right. could kind XXXX, process standpoint be nothing our thought thought. a kind Board where hit ] of from that's XX and extent increase, dividend that through is now to

Operator

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

Mitch Germain

Can you hear me?

Tiffany Sy

Yes.

Mitch Germain

You were other Are there FedEx had mentioned any move-outs the XXXX. year? in move-outs for some known there that

Yael Duffy

Indiana. expires feet property have XXX,XXX June in we one of that square had sell That's agreement to XXXX. and we So lease property the a that under in

to So tenant build-to-suit is moving location. we a know that

Hawaii, We construction on but that's the are was one in really delayed, in it parcel That end the coming talked for their back has I million leased about discussions square to us as so of past, renewal feet, will previously then, potentially major a been Depot. them we've be And X.X the to think because the Home short-term the QX. Mainland. the with in at one

Mitch Germain

that, had some there mentioned there activity was on I think that that. update? quarter, Is On any last you

Yael Duffy

but be able we'll along that that feel see continue I good minimal confident do -- activity, far to We to downtime. enough to nothing we lease do announce, with

Mitch Germain

the one last And Okay. me. from

during leasing rental has new think shorter explained the I changes quarter. because anything to you the Is here. attribute the there quarter-over-quarter can changed lease the new on term we that also

Yael Duffy

long No, think the it's we've really have GAAP just bigger I quarters, in of in lease resulted which terms, rent past increases. some had

And our which negatively previously was leased had robust property, would we to roll so we're not that in FedEx -- was their strike seeing with same the amortizing at because shorter did also we increase. say, it it rent inflating numbers. I one TI, rent But re-lease which down waltz, impacted results a had and

would that XX% without we if of, kind roll-up. excluded be So at we that, XX%, property

outlier this quarter. was So the of that part

Operator

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

Yael Duffy

us. day. Have a joining good for Thanks

Operator

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

disconnect. now may You

Industrial Logistics Properties Trust (ILPT) 26 Oct 232023 Q3 Earnings call transcript