ILPT - Earnings call transcript Q2 2024 | Industrial Logistics Properties Trust

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Operator

Good morning, and welcome to the Industrial Logistics Properties Trust Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kevin Brady, Director of Investor Relations. Please go ahead.

Kevin Brady

Thanks, Nick. morning. Good

Today's today's Chief President Tiffany a Financial Vice Marc on Officer, Chief Sy; question-and-answer are presentation President, Duffy; a Yael Officer Krohn. session call with me followed and ILPT's Operating and by analysts. Joining management, includes by call and Treasurer,

Securities XXXX These Litigation meaning and conference other statements forward-looking today's consent the note we July company. results and of of Please statements of today's Also, the that within conference beliefs those without prohibited please actual and XX, project. recording is that as Act that call ILPT's the forward-looking contains the the of note may Reform retransmission of call from securities differ XXXX, and are laws. based prior Private expectations materially today, written on

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

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

or we and or normalized financial call call, non-GAAP In funds NOI. will be the adjusted basis cash which cash FFO, earnings measures this from during will reconciliation addition, found basis of discussing turn A these net to on income that, operations normalized EBITDAre non-GAAP including operating income is can be presentation, I website. measures in our Yael. net available to our With over

Yael Duffy

and Kevin, you, morning. Thank good

over today's leasing upcoming portfolio Tiffany President overview joined to our to on results. Krohn, review start with our call Vice an ILPT review to lease turning our I second call, start, Before will would who like Marc the before and quarter I we June financial expirations results X. On of as welcome

X.X% cash leasing year, portfolio, of activity the has benefited enter we half ILPT's solid high-quality by from the of second XXXX, we average increased cash Compared same than at and flow which In that square space. NOI totaling demand the growth. for feet normalized continued encouraged same last XX.X%. weighted for we rental the increased prior FFO to the higher basis XX.X% rates and year, signed remain were leases million organic As the X.X rental XX first rates period half

in impact million in rental half revenue, The are increase second $X.X $X.X which given has dates or the effective is of realized more activity of this to yet in of XXXX. an million be than the XXXX of annualized

portfolio feet XX and feet, and As XX.X industrial of June approximately XX, includes million XX properties warehouse of ILPT's consisted distribution XXX in properties in land square XXXX, of states, square totaling which million Hawaii.

average weighted cash profiles strong ILPT's leases. for rental and remaining Hawaii tenants a secure or XX% revenues of stable has our half account nearly tenants X.X top anchored and lease years, revenues by business investment-grade with land rated term from our come portfolio from ILPT's tenants of of flows. annualized our total

average lease During renewal new years. of at XXX,XXX weighted term approximately feet and quarter, for the square XX a X.X entered leases we

This leasing renewal activity of with and feet of average at in spreads approximately cash square owned rent GAAP X.X%, in weighted wholly leasing XX.X% Leasing strong X.X%. portfolio resulted our and was total Mainland of XXX,XXX in roll-up respectively.

is new including rental totaling opportunities of than new average weighted mark-to-market X XX leases construction. We X% XX.X%. prior portfolio minimal been executed there our in that from were We within vacancy benefit square to continue feet, increases leases Hawaii XX,XXX rents, has XX.X% rent and where rates market higher at

Hawaii land April the to X X.X occupancy saw became we square million long have in parcel declined as XX.X%. we the on As quarter, that of foot telegraphed, vacant this impact

ILPT's of of total X.X% than X% rental annualized accounted the While for it less revenues. property occupancy, represents

are lease. marketing the for actively We site

Looking ahead upcoming ILPT's lease expirations. to

the For leased of approximately In Indianapolis square is annualized expire. This tenant a X% of X.X% XX accounted set X.X distributor beverage foot ILPT's annualized basis XXX,XXX or for revenue $X or to XXXX, of a revenue vacant. million to of feet East occupancy ILPT's July, previously submarket ILPT's became square property remainder of and in million. the points

Accordingly, this the half second our move will results out impact in year. of the

XXXX is or feet million we total set As revenue to and square look to expire. annualized of ILPT's ahead X.X XX.X% XXXX,

in engaging Our leasing and tenants. are management these teams asset renewal with proactively discussions

of we benefit progress, from strong our conversations tenant a track expect retention of choice. to record as proven landlord As reputation and

remains leasing Our pipeline active.

of for on over XX pipeline tracking our is XX% that Indianapolis of as earlier, update our documentation. feet, in stages are proposals progress parcel Included advanced we evolve. million will We square Hawaii the X square lease X.X the negotiation and property you million deals which land for are and mentioned I in feet or discussions or

that reiterate year. continued turn there has over cash growth call I is reduce to XX.Xx Before organic I generate to from we would and leverage, Tiffany, which the last opportunity the declined like flow to believe to XX.Xx over

tenant such, evaluate operating Tiffany? reduce growth maximizing As expenses. on rent to focused retention, mark-to-market opportunities remain we to and continuing

Tiffany Sy

an and the $XX.X NOI Yael. morning, million of basis normalized to EBITDAre the by increasing in and million a X.X% increase quarter XXXX. while increased quarter million, same of ago. per X.X% million year-over-year, or Good second year we $X.XX adjusted you, compared of share, $XX.X were everyone. X.X% and $XX.X cash to Thank quarter Yesterday, same XX.X% FFO reported $X GAAP representing compared

bad in of expense As same period it's related fees that noting GAAP second $X.X we compared million were our the $XX.X to ago Interest nonrecurring on a year approximately quarter look million and basis basis. $X onetime included and revenues worth quarter quarter, third cash recoveries of by million increased results. sequential a $XXX,XXX towards approximately debt the to and

of costs. of During and we of of received $XX.X expense, financing amortization rate the second rate recognized million cash $XX.X noncash we cap interest quarter, from interest and net the cash paid interest our caps million

line We with expect remain our expense second quarter. to third the quarter in interest

sheet. our balance Turning to

As ago, debt net of of to total an the XX, to coverage net by driven debt our EBITDAre ratio basis in to improved was our points XX a compared XX.X%, debt. and of while paydown XX.Xx, assets points XX an increase our by basis ratio June amortizing improvement adjusted year

at rate rate currently our All fixed caps or is of average a through X.XX%. is carried weighted of fixed debt interest rate with

ILPT X maturing today, billion the debt extension of we As no XXXX, on until XXXX. our intend has including in to first our of $X.X exercise extension X-year options, maturities loan options October

June growth million $XX of of cash million, total including XX, cash cash, approximately over $XXX representing total million approximately past year. As restricted was of $XXX the

pay retention use for grade-rated loan tenant to positioned support and questions. is a on cap tenant future our closing, expect cash to benefit rising rental leasing please fund rates, continues replacement In to profile open our billion strategic rate portfolio $X.X objectives. from interest That the for overall ILPT's to We to and this Operator, well remarks. investment and prepared line concludes high our obligations.

Operator

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

Bryan Maher

couple a me today. Just for

Or be Home where Indianapolis from more I properties, like advise as it on standpoint, some possibly Depot slot of quarter? that Could the it and in But the advanced in? information modeling a that and helpful your would was is early as first On fourth you the stages. that are we understand half XXXX? leasing both pipeline,

Yael Duffy

XXXX. I second want to conservatively of model half the

Bryan Maher

would so long? And it take why

Yael Duffy

have negotiations aren't we take We proposals out aren't And a so time. -- advanced yet. in sites, lease any quite time X some we for while in by it both we we and probably document with the it, negotiate -- tenant will

Bryan Maher

the the have might this When you And since to maybe what thoughts there then rates your on interest has earnings cost we October, in -- spoke changes, Tiffany. given for be? any last on Okay. our upcoming declined extension cap have the call, been

Tiffany Sy

to million. the cost expecting million be we're $XX $XX now, between Right and

Bryan Maher

might actually be when And executed? that

Tiffany Sy

I would close very XX. to say September

Bryan Maher

not debt over then And to progression or months? be should a leverage, some Should partner net on upcoming I'm your EBITDA, similar pace deleveraging asset via saw XX the JV the the current XX past some What we to adding over it we think what of deleveraging? there's transaction given about sales. months assuming

Tiffany Sy

estimate, a that's yes. think fair I

Bryan Maher

then your you million. about decent, especially me, at $XX have to stuff for million paying cap position I think don't to Yael, Okay. to going some or know you answer that and this know, just And last cash be able $XX to when you the not, is mean do. I tenant And for I you're but had

ratio has at all thought this you is I the But ratio payout any little, conservative. really to CAD to time? any even at Board the given ratcheting the consideration a Is payout giving up that Board mean CAD look and at dividend dividend when the

Yael Duffy

cash So discuss to currently, And the the continue business. of do it meetings. at the just is plan preserve each Board run to to we

Operator

Investor. Private from -- the next question Again, Mitch Germain, comes

Mitch Germain

a got I Interesting, new job.

the wanted I and the talk some leasing kind about ins and Yael, outs. just So of pipeline to of

bit. You way square were a square quarter. feet last about million Is I down million at said? X.X did mistake that it feet? it's seems in X Is the to it? you what Or It think like

Yael Duffy

leasing So quarter, last also did that leasing execute feet we so quarter, XXX,XXX million but of of feet out. it was -- X.X square gets square new this backed

is outs So we execute ins leasing. as there some and

Mitch Germain

what kind that on pipeline of historically? on I kind the -- of kind asking in of terms was rate of That's execution Right. the what's

Yael Duffy

next. pipeline So what net of to of quarter XXX,XXX was so square from a X.X%, it's positive new the in we the feet executed X

Mitch Germain

proposal then it out And it's of maybe Is quarter through your there? well? commentary even Great. guess now and to a last of negotiations under on customer still fell suggested the that, are back space. out Or safe others and you had as you say that with Okay. that kind Hawaii I kind

Yael Duffy

so have Hawaii the parcels, and site. for Mitch, for then the land site out half one couple we a proposals time, the for one entire multiple do

kind not that of we an -- we're yet. we're enough And far so but LOI to have negotiating, say

parcel take to little it's No, a reason -- the just Hawaii going lot diligence sorry. of that undertake think take land. for Hawaii who's I homework -- any big the there's to And it, tenant to part a tenant So while, do I do a they in. our we lot parcel. of I'm of for going have come to they piece think before to It's of a

Mitch Germain

just million dark X square feet it And went on not I was or then Locking XX? task. remember. can't Indi easy July X is July an

Yael Duffy

they it -- for Indianapolis held early actually so July. in days, couple was over of The property, a

Mitch Germain

it, about safest July right? think to X way the is Basically,

Yael Duffy

Correct. Yes.

Mitch Germain

then to And Great. last the see kind how -- for some momentum, things the of this in potential locking where potentially it, term? you're is you more the has there? Is cuts and see where period maybe around to in going discussion existing something nearer viewing your of let we're Obviously, debt? is playbook go? to refinance rates where team it call me. rates possibly become view gaining market Okay. favorable one How kind kind of look Or of toward advantageous do take do you just the of settle an kind the

Yael Duffy

beneficial we're are before So exercise it's the would we we evaluating cap to instead. refinance evaluating, ever if

that analysis is So ongoing.

Operator

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

Yael Duffy

everyone, the Thank call joining you, on today. for us

Operator

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

disconnect. now may You

Industrial Logistics Properties Trust (ILPT) 31 Jul 242024 Q2 Earnings call transcript