ILPT - Earnings call 4 2023 | Industrial Logistics Properties Trust

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Operator

Good morning, and welcome to the Industrial Logistics Properties Trust Fourth Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference 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 a 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 February

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, those Exchange and accessed the or factors Additional contained with filings in the from differences that or be cause can Securities concerning our website. our SEC, which Commission, SEC's ilptreit.com is

cautioned undue are to place any reliance not forward-looking Investors statements. upon

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

turn over Yael. to call will the I that, with And

Yael Duffy

Tiffany and our an begin and objectives. XXXX expirations you, discuss will of On as Thank will quarter our the call, portfolio, with over as the fourth call I to there, results. look XXXX overview morning. summarize Stephen, and to turn activity well good to ILPT's From I financial ahead leasing lease for today's

XX%, portfolio consisted has properties in which XX.X in no was million over feet warehouse XX, industrial and December Since portfolio totaling approximately distribution of at square ILPT's of maintained in properties XXX XXXX, feet XX includes of ILPT exception square XX.X%. this Hawaii. land million quarter inception As and XXXX, occupancy XX states, and ILPT's

of X.X% portfolio business land come total well-recognized X.X revenues annualized revenues, tenants Amazon has nearly from ILPT's from Home half rated term strong X.X% revenue tenants or by XX.X% remaining top total XX% by brands anchored and tenant, lease rental e-commerce. to FedEx and and leases. largest years, account The at investment-grade XX Depot of from that annualized ILPT's of of continue followed revenues our of benefit respectively. tenants or a secured annualized and Hawaii our with subsidiaries weighted our is representing average profiles for

the of X volumes. rates X.X% prior and During rental we of year. for entered NOI million rent higher XX were rental XXXX, basis this prior $X.X and to cash is XX.X% leases which compared renewal X.X% NOI than X.X is space. XX% Rents increased square than impact an same-property the Same-property XXXX line take XXXX. in activity with leasing effect in new and increase revenue, will which and more in resets annualized feet, of The same for million

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

costs. as million. were enhance of this of X XX%. results average Proceeds our now which Also lease for our $XXX million, were renewals unencumbered of price which, to for liquidity, cash are quarter, at spreads in X largest XXX,XXX Included includes these properties, sales $XX.X both aggregate year-end, tenant sold closing we feet of square of an FedEx, over weighted with unrestricted used excluding

prior and on on future covenants. to given pricing discussed operating disposition opportunities the and our metrics is transact have impact calls, dependent our be debt we to ability we expect to limited As

ahead, by expirations million in before the foot XXXX. Looking feet end XX.X revenue Included that lease annualized roll right the agreed termination from Hawaii to square square these is Depot in XXXX. X.X of million or ILPT's its land to had is scheduled XX.X% parcel exercising Home us of in

we ahead We we replacement have not of the lease And to have the expect marketing site. actively March have tenant been interest, do a while XX seen expiration.

asking vacancy site. see meaningful Hawaii, in low expect in tenant historical continued for identify Given roll a we a we the once in we rents will and up the rise rents

pipeline. leasing our to Turning

are in a in anticipate of we negotiation documentation. XX% expect Hawaii, and square these will portfolio. for XX% illustrating X.X rents yield million or leases million XX% given roll-ups advanced stages of X.X feet executed, average Once that Mainland in our the of strength on lease of of our tracking the square and We is pipeline activity XX pipeline, near-term conversion of We than current more currently deals feet. our further

we operating I opportunities year. to like reiterate over continued has flow and the are retention, we Accordingly, leverage we focused generate cash opportunities believe reduce are mark-to-market As there declined growth XXXX, head expenses. that growth which XX.Xx from last into rent on organic XX.Xx would and tenant maximizing reducing to to

to I over Tiffany. turn will now the call

Tiffany Sy

million XX.X%. normalized for everyone. million, XXXX and $XXX.X was cash good prior the perspective, Thank an increase XX.X% million, with From funds you, EBITDAre was compared operations $XX.X to full morning, our basis Yael, year our XXXX. was Starting million results results of $XX.X compared year. to increase from $XXX.X financial in NOI Adjusted a of and an

were $XX.X the ended cash or share. basis per $XX.X million funds of For of which $X.XX the with fourth line of million quarter's while the $X.X normalized million, same XXXX. all in NOI EBITDAre previous to of Adjusted we increasing and from of year quarter compared with the operations quarter, results

$X.X properties million. quarter, of generating Yael sale closing as sold a proceeds X we gain million, earlier, of excluding the Additionally, on mentioned during and costs $XX.X

$XX at amortization that $X million interest including million of the remain our interest to expense, $XX financing sequential was with costs. cash first of flat interest level on million. at expense quarter estimate of noncash Interest rate and quarter from expense cap basis our benefit a We

our to balance Turning sheet.

to to to to of As XX.X% compared XX, And net our continued our ratio our declined the XX.Xx amortizing ago. compared improvement our adjusted XX.Xx net debt on a X year ratio by total assets coverage basis, in EBITDAre was December and of paydown debt the XX.X% debt. year-over-year driven

through our to extension billion currently first debt the maturities held rate March, In no interest of until our of fixed X.XX%. or debt total is cap floating ILPT Including our All on venture. average rate joint consolidated rate interest has $X.X fixed weighted options, XXXX. option a a with extension at carried exercise loan we intend rate by

Based rate interest pay In connection we're with required expect to to on cap. replace the we $XX pricing, today's the extension, million to approximately existing cap. the

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

will In to to reduce build opportunities closing, we continue and evaluate our leverage liquidity.

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

with Our occupancy, across full rising portfolio strong investment-grade rents and tenants our nearly remains portfolio.

to for estate. We expect continue from industrial high-quality its that ILPT will the demand real benefit

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

Operator

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

Bryan Maher

the Maybe a sticking second, with Tiffany. caps for

quarters. replace to X million So so by divide the cap let's that $XX --

to assuming is the quarter, $X over million that going how a upcoming we're So I'm amortize year.

Tiffany Sy

That's right.

Bryan Maher

current change? that keep rate? that at the Or rate X.XX% does does And you

Tiffany Sy

we to what changes the based rate expect rate on new be. The strike

than be be we that would X.XX%. X%. Currently, it less strike So expect rate to

our So X.XX% where is think so $X.XX plus is spread we'll X.XX%, million the be. we

Bryan Maher

there I done the were sales, Is in sales. what the it Great. as we helpful. out those back the common X a were the X, X on you And That's circling thinking? your that look calls? expect heard Were there? to Okay. in not Was property? in -- somewhere to asset Is Maybe marketed comments denominator much of are properties? when inbound way XXXX, between? asset we But it quarter, they to

Yael Duffy

dispositions, actually -- our Bryan, then to of an imminent highway. the property it the property in and the the to the X in so other development domain was Texas. for a The Mesquite, Department And North taking was expand X is using X ind Carolina. structure Transportation for

And so that property group part and marketing offer process. from for got another the we lease an had been as we of

in assume would be there as that will none. then it XXXX, to dispositions think I safe for be And

consider we need is I think really lot we to the a need it selling of release there's consider we properties of from talked when about, as to the we've part And pool. property now. right collateral

of greater when the XXX% It properties loan. be net value versus of needs proceeds of XXX% the of the sale or today on to the and the value closed we the loan allocated

that has market think the all I we know shifted.

don't math I so works. the know And that

think anything. comes we're being, I think, unless something -- at I the for some along, time marketing actively don't least great offer So

Bryan Maher

Tiffany. for Maybe And X just for me. more ones quick Okay.

growth As XX.X% the number -- cash end past barring at you XXs anything from ends low think of that about the XXXX over that, from rent the deleveraging happening. do XXXX where and to up roll-ups year unusual you think organic

Tiffany Sy

joint good $X debt on a -- of amortization in $XXX our have the that's that continued question. pay that. do That's We the amortizing of about million quarter of the upwards venture. We we have, in million debt consolidated a

deleveraging organic that kind we'll natural So happening. have of

presentation like in The said adjusted the component, is I EBITDAre. other

like really it Like I to feel level EBITDAre. really not decline. not do expect so sure to would there. roll-ups of the don't not sure to -- whether guidance, because I'm expect adjusted deleveraging to with said, related whether -- naturally going And same we're we'll giving I or not give decline. I'm the guidance I'm is that I not we But continue don't forward-looking see or to not we continue rent we factor to there say not it but -- or

Bryan Maher

mean the to put on there. Sorry, I spot you didn't

your for and Yael. you to don't in in would expect this to words occupancy year but for in say, the you product. your for this mouth, think demand I your want When your to pipeline, maybe lease wouldn't -- you? you and XX.X%, below last put me general about Just expirations year Suffice dip in for it

Yael Duffy

not Hawaii, Well, occupancy. I X% annualized a for parcel it's it's portion our actually It in revenue, of significant less does X%. account of the think over while than

until up, QX, in So parcel expect XX%. that we to think will probably I occupancy around lease see we

Bryan Maher

is do by the that that third that, re-leased you with property and temporary; comfortable a, But being b, are you that how quarter? think

Yael Duffy

with far aren't We enough X any prospect. along

opportunity you the it's by to have need right least to the aggressive large to -- not early third So for I in then if parcel. parcel. it think million a quarter, would And hopefully, is willing it a foot QX, a is find X.X we'll It person who into but XXXX. tenant, square that think also while a unique take at hopefully, be

take a I us think little it's to going time.

Operator

[Operator BTIG. from Tom with Instructions] Our Catherwood is next question

William Catherwood

X to Bryan's back questions asset on going maybe Yael, of sales.

this portfolio Is serves I think that the correct? If contract in what X under my that building this had correctly, was I that operating memory went had within that that was expires a that back change transaction? the quarter. XQ June. And you believe into lease me

Yael Duffy

That's correct.

diligence that actually property we the fell having released getting of So because some debt. out were the from delays

to And so the just tenant willing wait. wasn't

William Catherwood

expires as lease include expectations? Got we in square-foot June, you. as XXX,XXX-plus And that's, well, so of occupancy again, that our should that

Yael Duffy

that along again, Correct. that property. tenant expires. we'll we have think We're before enough But far don't anything replacement marketing we the a lease have

William Catherwood

range. to Got $X.X would it. be coming look $XX have in would When million up for that up, we the that the that $XX on extension Then the loan billion-plus thank caps, $X.X October, for also billion out million the you loan. on assume heads we you

we flow mentioned are in generally to available organic all you all to seems your cash going Is delevering these our distributions of that. math go and after cash off caps to there? year? And line this like EBITDA But through us are base? and Or it

Yael Duffy

do we have mean, up cash -- are our I So reserves. we building

-- $XX mean still I So than the XX have if caps, have we're excess more million for liquidity. we we'll anticipating

William Catherwood

to breakdown generating we shareholders? CAD you consider on key and even look unlock would earnings by Page portfolio negative off not sup, that Hawaii driver Got the for you. you have FFO of the on portfolio obviously with that the then if value is the both XX And the spinning is assets of Or the mainland table? the -- Hawaii earnings at

Yael Duffy

on if anything, not table. I the That's we value I of understand the Hawaii. mean, think

joint a plans So properties, maybe but there's about off. spin that no for down think those the line, we could to venture

Operator

Securities. from Citizens Your of JPM Mitch is next question Germain

Mitch Germain

mentioned you unencumbered. were think had I the properties X sold were that guys

are -- that you properties curious any unencumbered? I'm other are that So own there

Yael Duffy

X others. have We .

Mitch Germain

you -- if opportunistic. So potentially be sell could them want to

Yael Duffy

Yes, we could.

that's We a unencumbered. have Hawaii in large parcel

So that solid now some needed unlock the if to. could value be down long-term It's leased we line and NOI. of producing right

been So considered. we haven't

Mitch Germain

you. Got

size, the for try Depot, interesting opportunity Home a I divide increase The know occur the Great. of pretty possibly that is could population it space? that but and leasing given to Okay. it's potential to

Yael Duffy

into X an easily parcels, we been it Yes, have and at easily it would we option. that's marketing divide could -- that, softly least

to So opposed we aren't that.

Mitch Germain

Okay. Great.

noise I that think JV Is the we give us to be in earnings line need of a there? little statement. there on the aware anything

Tiffany Sy

earnings? in equity the mean You

Mitch Germain

Yes.

Tiffany Sy

All value consolidate fair Yes. basis. a JV. We that measure on

So in is the seeing of there -- you're reflection change a what value. fair the the

Mitch Germain

you. Got

want of million the said in square pipeline way about is that make to think the -- stages, than around little less to you that And just of Okay. around X I sure that feet late is leasing and a X/X sort of got it?

Yael Duffy

Exactly. Yes.

Mitch Germain

Okay.

space to about for -- there versus a there like of that how new -- is way breakdown is So renewal? think the

Yael Duffy

Yes.

relates and the prospects . as So for the them of the XX renewal -- deals, the for in renewals. remainder new of And stage XX% of to activity. advanced the XX are

Mitch Germain

know have guidance, associated Okay. and they tenant, associated do ended that headwinds where of moving it March likely property like for in have of March you to other safe but well we -- don't say midyear, lease that to Depot in below Home if with out property I are is it seeing -- move-out tailwinds know to looks and rents, sorry, your results -- give was in come year? this but the potentially sale to end a the happening I you -- then

Yael Duffy

very Depot small for I a ILPT's I parcel, reiterate than annualized Yes. a parcel, less -- X%. the to of large I but just it's for guess fraction it's again, want Home -- the

impact. occupancy, but It results. it have won't meaningful to not have impact will a So an to the

Operator

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

Yael Duffy

joining and Thank interest for your ILPT. today in you us

Operator

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

You disconnect. may now

Industrial Logistics Properties Trust (ILPT) 21 Feb 242023 Q4 Earnings call transcript