LXP - Earnings call transcript Q2 2020

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Operator

Good morning. And welcome to the Lexington Realty Trust Second Quarter 2020 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the call over to Heather Gentry, Investor Relations. ahead. go Please

Heather Gentry

are the Welcome Private SEC furnished a conference operator. distributed Realty Form second section, quarterly may Trust morning this www.lxp.com website Litigation Thank future the regarding call expected in of on and to webcast. believes XXXX Investors X-K. supplemental and release results call both during will XXXX. the reasonable was on the that are The events quarter forward-looking constitute meaning our and Reform Act at be you, and within the these Lexington available to statements conference earnings this Securities based Certain statements of assumptions. and Lexington made on statements release

not today’s update However, Lexington certain from implied could differ to by earnings Any refer call statements. press reports flows. quarter of from duty provide comparable reconciled I Chairman described those adjusted available call, of are with and or the performance measure. statements. directly Dudley Executive non-GAAP disclosure and Chief as these intended holders filed the CFO; cause supplemental today’s Lexington to in Except be or financial as viewed and financial factors results. time that Lexington’s operations over in will James those Eglin, Lexington’s of to all equity and on release risks, measure now to investment forward-looking Wil commentary and or in materially Boulerice, SEC expressed financial a to included Vice during FFO second on Brendan Lexington will press all from fully position package, will portion most future any a the results a time, law, our the Mullinix, and quarterly earnings Beth measures basis. available release GAAP business the holders not adjusted to funds In company call. Lara references documents numerical such historical to does actual including presenting undertake Presidents; by to required those has cash and performance, update Wil. and measures to On a diluted an Johnson and recent individual turn Officer unit Investment CEO; question-and-answer Operating be company

Wil Eglin

morning, performed Thanks the very have had challenges and COVID-XX. Heather for by second and good many everyone. quarter well strong despite We created a

advantage our industrial any Our our top a focus the to remains have pandemic successfully an on The impacts virtual external and we health business plan safety of of mitigate taking continued to opportunities. potential our completing REIT, to And on be working environment. execute of to transition growth and priority. a business, working continues in our employees

start strong the of operations collections with pandemic. have monthly rent well portfolio very from Our the fared

over collections industrial Second XX%. We quarter date. million approximately and to raising XX.X% cash received nearly collections quarter, XX.X% square cash rent leased X during base the of been feet rents July is base renewal have over

Our end, at to compared quarter. quarter portfolio slightly overall last XX.X% was up leased

partners acquisition merchant time the a act on front our continued capital active have We and provider during uncertainty. stay market to builder to as of a

build-to-suit GAAP overall respectively. cap rates More first GAAP and to and volume rates acquisitions to Savannah of and we X.X% X.X% year X% As in select narrow pricing opportunity on purchases said, In markets of These quality our distribution a of for and industrial $XXX That a half currently favorable average there during pricing to were front. warehouse be among and under on in amount support closed able average we new $XXX at an investment increased our and the second cap be appear million. approximately contract and quarter, of capitalize Dallas of result, equity back for rates to window the we of growth quarter. ATM million cash property cash the most strategic and respectively. pre-pandemic X.X% others To one initiatives million over use ample quarter, our target And to cases. offering million $XX marketplace considerable of the we brought on assets cap recently reviewing the and in program. existing through raised compressed with $XXX transactions continues during are have the a to

fund was leverage capital most Additionally, from we down activity to million approximately to credit assets. facility, net remainder our to X.Xx adjusted of of reducing mainly X.Xx the acquisition EBITDA. debt with disposed $XX pay used of This to used revolving

We access to disposition with while continue credit. retained proceeds and initiatives investment to our augmenting to access flow, appropriate expect capital when markets cash

Our disposition several a primarily COVID-XX debt over transactions was in markets, of as caused months, market. the result a plan impacted has by slowdown the somewhat uncertainty the past in which

We includes $XX progress consolidated disposed a NOI of July. generated combined million. assets good are making year-to-date, million properties which under in million and $X.X circumstances of of the These have annualized $XXX

we Additionally, million optimistic approximately joint progress we make We remainder assets year-to-date. will year. that of through remain in disposed meaningful the have $XX venture of the

push involve disposing Jackson, Office would Our properties, marketing up into primarily for consider of continues $XXX Chemical to plan Lake of XXXX. Texas. significant some are property our The XXXX office closings sale Dow sale or likely but million most disposition to in to

in to distribution industrial the sold we to we value Oak to during Alabama and from opportunistically and our Creek, industrial harvest time, office expect addition In assets quarter in into modern Moody the capital to subsequent similar and time redeploy sales, Wisconsin warehouse two product. portfolio to more

industrial mix portfolio gross our estate XX% our improved exposure to activities quarter increasing assets. real almost of our second Our

current in average favorable liquidity weighted the balance payout robust be pipeline; investment continue ratio. healthy We with sheet, position, well term conservative environment our positioned and to lease strong

certain While an made market on exceptional our long-term factors completing and our plan of business remain industrial could have on transition XXXX we affect progress initiatives, our aspects focused REIT. to

to change guidance our of company This balance who to commentary XXXX a Brendan activity. share, per call range As will $X.XX is announced adjusted mainly the subject are deleveraging I'll performance our of FFO detailed acquisition over tightening sheet. to morning, the that of turn on $X.XX to we over this portfolio provide the With due to our balance depending common year. the on

Brendan Mullinix

Thanks million totaling square the property per acquired approximately square square feet distribution six We XXX,XXX term quarter Wil. footage average the average X.X X.Xyears, with during an warehouse lease weighted properties of and of feet.

industrial of of All average improving were our recently the to years. facilities XX.X the constructed, age portfolio

Dallas market Fort continue We and presence large like stable strong growth. the corporate both industrial given the employment of Worth population and tenants to

are annual the and its XX low leased as lease is rate foot Unis, market purchased are five I-XX market in attractive Separately, brand square properties Georgia. proximity direct bumps facility Class facility a The square a due industrial square bumps A XXX,XXX vacancy. approximately third-party XX to high leased XXX,XXX purchased X%. Packaging for annual port years to an properties over logistics and the of seven X%. and of is a Savannah rental provider square to of in I-XX portfolio I-XX, approximately in foot properties with foot the to of acquired with recently the with logistics is Mauser both access years property Class for newly A have we I- warehouses Our quarter over This absorption we months been average for XXX,XXX completed to leased new adding logistics is East. XX,XXX of term and Three were recent years. comprised acquired to company. foot facility a to each The Two a facility, close

square portfolio of a two-property addition, to agreed the we property southeast foot during of units closed properties which the This purchase XXX,XXX to quarter. in In submarket of leased the is one Houston. second

our just a Terminal in miles port for the half has weakness market Houston Industrial and Bayport at our some Park. located park Bayport and three property South Houston seen the right market. second investment While Container the acquisition is This in is from size recently, represents a

The Winchester in relocating a years. distribution the We third within A market recent facilities Virginia quarter. currently Winchester close along corporate two leased XXX,XXX tenants and X.X facility Class leased foot large own scheduled park. average has are new to industrial with corridor, the in growth experienced is Houston in properties Positioned on years. facilities Both bulk second for the logistics there Mercury other I-XX brand rental the positive to Winchester, property, Paper square the

leased most facility of of for overall recent is in square revenue. on for Our was e-commerce I-XX years. to purchase our now increasing accounts property portfolio The our XXX our to a X% strategy newly foot Amazon Class offering access A and exposure. Tampa developed with supports Florida XXX, frontage over and Orlando Amazon easy XX Ocala,

turn spec add the continue development number to Wil mentioned, of existing discuss to and development pipeline. over our results. we I'll work reviewing actively Beth build-to-suit to to a to financial projects on now are call opportunities and As

Beth Boulerice

share FFO company in line $XX the for million was diluted or Thanks our quarter $X.XX common approximately and Adjusted expectations. Brendan. with per

We expected to G&A expenses and in expenses were with NOI same rental rent total continue of Property our was throughout a rental receivable adjusted tenant a time down million the and approximately $XX was just were same company was million. were very G&A reimbursement. is X.X% a which been in write-off of to increase FFO expense consolidated collections down during revenues mentioned, estimated of store This quarter XX.X%. million, deferred cash-based quarter $XX the for of $XXX,XXX second to As to operating after be range $XX within up have million to offset Revenues quarter Year-over-year the pandemic. debt X.X%, XX% the strong related $XX a receivable. XXXX we of accounts attributable to were same ratio bad when about the million maintain $X.X period approximately store payout although the compared our X% occupancy conservative XXXX. tenant Wil

of received Specifically rent; XX.X% April second rent. the of quarter, to and XX.X% XX.X June we May of rent %

XX.X% we rent. today, of as Additionally, have of received July

To from either continue an impact terms. we collections in our have Philadelphia consolidated COVID-XX, or our relief are granted portfolio, collection one evaluating collections. historical small rent favorable requests solid Rent renewal minimal two currently office immaterial only be and not retail from minimal with our a we obtained be considered should tenant extension requests rent expected and indication building. which remained we request in rent of relief future have tenant to were date, While an

in during revolving down to our raised continue restricted we approximately million capacity. the borrowing decrease with available and to to had to of the facility credit $XXX The credit to paying supported the cash remains on X.Xx quarter our have EBITDA. sheet; position financial strong At leverage quarter adjusted and contributed and liquidity million approximately ample $XX capital revolving end, Turning facility. debt unsecured cash we net our balance including

unencumbered debt our of unencumbered is X.Xx to portfolio XX% and Our at about unsecured NOI end. quarter represented NOI

At quarter outstanding With was average our a XXXX. interest before We seven weighted average weighted turn have maturities end, consolidated Wil. of over no billion the with a I'll significant approximately debt rate term approximately years. to call $X.X back debt and X.X% that of

Wil Eglin

Thanks Beth. of turn call I will to will now operator, the conduct who the the call. question-and-answer portion over the

Operator

ahead. with Instructions] Mailman Craig first question KeyBanc. from Please Our [Operator comes go

Unidentified Analyst

Good morning, on everyone. This is Artie Craig. Cameron for

one remainder of the of Is of $XXX quick per forward. kind a going expect something kind we year? pace the regarding the Just quarter can acquisitions million for

Wil Eglin

opportunity Well under of the contract. the right has existing is large, pipeline $XX but asset now our market million just

we market over moment. year. at $XX only the active said, be of the as can But So contract we balance I the think in under that million there's quite the

Unidentified Analyst

you I basis that debt. call missed Thank bad sorry had here one bad it. guidance. debt did guys on And Got into I'm remember the the of mentioned baked XXX you today? it, last you. I if just but points guys update more you

Wil Eglin

CFO. I'll think over our turn I Beth that Boulerice, to

Beth Boulerice

that debt we XXX our But, put Artie. did of in baked prepared yes, into guidance. do points Yes, Hey, bad we our not have remarks. basis

Operator

go Feldman comes Merrill Bank Please Our next America question with of from Lynch. Jamie ahead.

Jamie Feldman

guess morning. just forward. think you or understand us Thank you. kind can of just just through capital I of your sources going help Good

sources forward? you about we or say raise and you're you the uses next were thinking how need time capital Let's think to how do million, than going the find just to $XX deals larger about

Wil Eglin

we a derivative can had and well the balance on do disposition can we year. well quite bit Jamie. think of how the Well think that a July front, do will we of quite bit the We success of over we've be in

bit, of a an proceeds is important our line We credit we obviously, capital have use redeployment expect pipeline program we we but disposition be in specified large standpoint. us. ATM to our that may available little So a unless to size. from use have on; use visibility equity will any And wouldn't a

Jamie Feldman

confidence get may why mentioned give you What in think out do discussions? Can year? pushed $XXX that? How had sales you And office an you next of on Okay then gives and million the we till some update saying that? next just what's about year.

Wil Eglin

runs Johnson plan. our Lara Yes. disposition

to So, Laura, that suited one. answer you may be best

Lara Johnson

morning. Good Sure.

million present or So an of offer contract. at we have roughly with $XX assets accepted

COVID. that. conclusive office to The timings market But assets in be the point. predictable in are We however, of on plan there just don't have asset, anything the that definitive among a variety of is would with assets we report that the or pipeline So this course we have of and the will [Gadal] or on do, are less in have to be and discussions have do we as in in at market. the then that number result other a and of that market we those asset market a chief are

indicated we that why push may for they into XXXX closings. that's So

Jamie Feldman

you far to underwriting? on the for what general moves do side and like sense pricing their Does have anyone especially you're trying a of any Okay office so rethought in sell?

Lara Johnson

-- and an obviously that's is is seller -- Sure issue that everyone, it's dealing with. that every

being think office sales. roughly so XX%, for let's that office say nature estate really terms for lease our indications tenant least much quality I the net sales half on term; of real first first It or depends lenders. et as are XXXX credit XXXX not half down are the the the the cetera of selective the investors asset; of more quality of in

interest right among community seeing. the their the we're than important depends investors are underwriting points private and what now. on the more So of coming looking a sponsorships back folks There's investor and seeing to and it renewal on But is selectivity standards board really institutional we put lending in as But asset. the XXXX, well; community that's higher are more ever. in

Jamie Feldman

suburban and office acquisitions? points on office campus even you're board on seeing Okay the or

Lara Johnson

don't market. we have we any with. yes, yes, renewed seeing But, the out interest in the -- we're We on campuses are assets

Jamie Feldman

the about your of how capital the low Okay on versus about then think talked yields? acquisitions. do mid-Xs, you and I think you current mid-Xs cost had to

Wil Eglin

see I location lease Yes. on credit ranging and and mean market. between sort the we X.X characteristics X.X of depending market opportunity

going to from for is a capital most XXXX improved sales. part needs of exchange But made acquisitions growth So easier. has drive lot the what's external cost and our

Operator

comes question go Jon Please Petersen next Our from with Jefferies. ahead.

Jon Petersen

Thanks. Great.

three changed. I'm pipeline, in just the a curious months, acquisition to lot the your of over last things four terms In have of world

If you trying of I changed acquire. inventory. locations talk where the to properties more the approach any business you're your of acquire and and businesses into guys to chain how a There's trying where been just about you're properties? have that of lot re-shoring to works a wonder holding types supply

Wil Eglin

Yes.

take at I a you want do think shot one? to Brendan, that

Brendan Mullinix

access favorable excellent a likely markets to those in generally from and to in trends; that and we oriented of the benefit to that is Well, Midwest that Yes, think strategy our tenants offer drivers We also perspective; focus focus environments. investment think resiliency. focus, demand most logistics excellent in that of on-shoring for in e-commerce geographies current the well from near believe infrastructure; when the accelerated adoption very and that their We the in we're are moved are attractive an business morning. we shoring, business demand very sure. chain strong will about our that, think potential expect I environment. for and because country markets do increased the the logistics also positioned friendly southeast to or very good our oriented from benefit. the And Hi, by structural are companies from Sunbelt to benefit those disproportionately have inventories demographics, supply lower to benefit reference cost you

the to expect we've that summarize; So been active. in to to we continue invest markets

Jon Petersen

in? any development All sense. And in you if the Okay. seen RFPs are or increase if I have recently? seen question you what right. have with; any same that I'm That deal have mean but makes guess builders seeing And the the in in maybe I of you you curious you the those terms of geographies guys market kind pipeline; merchant

Brendan Mullinix

look of activity; strong has -- leasing it's for bulk across if quite activity that So absorbed And a at the large bulk we you distribution our leasing been lot space. distribution modern market. have, has the

in been most has been inquiries pause seeing development. markets I a well build-to-suit the more last side we would the And point speculative saw at say year. there that's that's were as also So partly in you on than side, this as on -- what has demand supply

So buildings as to space companies been build-to-suit demand. larger order look to satisfy those needs space companies, we spec need larger absorbed; or in we'll some have anticipate to these that of

Jon Petersen

Okay, yes, [Geotis] we mean missed guys And schedule a portfolio? outs this, list your and at sense. sorry one if you've number then left have I for I expecting XXXX in in industrial but that maturity the I'm with office only look guess lease same and makes you I large you got any in that the if upcoming move XXXX. are

Wil Eglin

I'm Asset ask sure his might our Head give Jon, view I of that. on to Dudley, James Management

James Dudley

Yes. Sure.

move discussions as property's market; backfill out to that a DFW we has of And that the already of quickly rental XXXX side move established. that's property; great be Westlake sub-tenant backfill. on the and anticipate trying then else multiple a tenants the [Geotis] quality only that's the the a high the a going of being industrial. years it's known we that's its is tenants property visibility that and out other this that able part in on mixed-use And be with location high most in we is on parking and at for we're we're Dana. ratio; kind released well that that going to been We're keep of near-term pipeline have with Texas, space to then known we're very working a because hopeful Schwab office, functional is it Everything affluent in And office as the vacating amount Statesville; asset. the able industrial for been just outs, the over in have tenants. property to area So move very within in to point, that to

Operator

At back additional the to I any no for questions. turn closing this are conference Eglin time, remarks. would over Wil to like there

Wil Eglin

would Heather contact website Yes. for Please quarterly morning. visit materials. joining Thanks our you again this us to or if Gentry, receive our like

In or again members contact a questions. senior of have any as me the management always day. may addition, with great other you Thanks and

Operator

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

now disconnect. may You

LXP Industrial Trust (LXP) 6 Aug 202020 Q2 Earnings call transcript