LXP - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to the Lexington Realty Trust Third Quarter 2020 Earnings Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. IR. Gentry, Heather ahead. Please go

Heather Gentry

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

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

Will Eglin

Thanks, posted Heather. Notably, everyone. today of Good areas and we rents of have third success collected We business. XX.X% October all cash base we third the base strong to of of morning, our results resilient remain as quarter portfolio within collected cash continue operations during an XX.X% and average our of quarter, with have rents.

second quarter. sector pressure million to with X.X management X%. quarter, of asset job, opportunities representing overall end, leases our industrial to declining cash levels XXX continue square the extensions We an compared of on the Strong rents put new high team rates. fundamentals enhance on to overall nearly Our continues and capitalizing XX% of value. an At preserve excellent points increase to occupancy executed basis was and in feet during costs leased, quarter cap do and portfolio maintaining downward renewal borrowing increasing and lease

industrial is closed quarter end, the scheduled in cash funding Phoenix third enhance purchased part, most of Through during million targeted For strategy. completion the including Subsequent new a logistics to that build-to-suit on and XXXX. quarter and $XXX increased investment competitive, our team continues for million acquisition in and remains quarter submarket, multifaceted overall average industrial we quarter the asset we of opportunities products, X.X% the $XX X.X% to while located the during landscape third have growth began pandemic, our that and end, complement portfolio rates have values respectively. source and of the GAAP closed at our cap which

an projects with million underway: $XX $XXX are close expected contract under currently Columbus, the which cost of the million million close in in that additional and before we this million acquisitions properties year. aggregate At two other of anticipate to month, end an have two one are spec moment value and could estimated later pipeline the of our We with includes of been an Atlanta single of that development has funded. building $XX the $XX

with begun We project. have user negotiations square for our building foot preliminary lease a Columbus full XXX,XXX

in two infrastructure currently are Columbus sites multi-building their Our phase. in

as XX.X% continues developers At to estate other credits of for with business. work real of are at early XX% strong, industrial representing be industrial assets, this for portfolio of investment in end, quarter our end. gross We excluding sites held assets. sale our revenue represented growing towards we potential grade discussions our with additional quarter line quality our Credit

at rates Houston, We targeting push over property, and fewer the end. was flow. continues is at our third the working we continues slowdown, pandemic of derived in Dow The of of Through risk held industrial in to quarter considered from for decrease GAAP million years, maintained the of of end, anticipate of This disposition quarter XXXX by disposed property sale $XXX million we leases market with sales potential exposure approximately year-end. an our respectively. remains age currently is occupancy, Chemical high cash could term, includes bodes X.X% healthy with the growing revenue quarter sales, and the underwrite. quarter Subsequent have as estimated around XX% have quarter. sale assets be exceed selling the disposed investors Despite during constructed volume consolidated non-core of portfolio, sold which $XXX have addition and weighted office are by assets, average cash under non-core are levels XX% on $XX million impacted by combined currently office leasing acquisitions including of we pipeline, to industrial million office assets Fourth more escalations, $XX and to current of we hard our our X.X% million cap to well contract properties. average lease for would Further, of recently to which industrial our with year-end. of there including about XX and the with additional the $XXX Dow

move million which capital non-industrial income XX As September as our remaining XX $XX held principal approximately consolidated $XX for September sale of XXXX. assets recycling includes assets, our of is XX, fourth forward XX, to by this of our of XXXX. NOI XXXX. portfolio sales would net million, of that strategy, with operating generated focus disposing reduce we These generated as quarter assets assets, year-end Anticipated

accessing share, fourth price first a X.X in time into since in quarter, per our in we August we of of to expect augment price of as draw during us the program forward disposition to per $XX.XX to continues average cash program, allow an growth results an across invest business funds weighted Overall, feature. be third and we our pure feature our and we we those extremely progress various believe well play This will opportunities. will move pipeline transition delivery lines our year-to-date are weighted the with industrial continue we down new sheet XXX,XXX shape. million deploy sold shares the common had quarter balance for ATM market Our an the end. sold be we very bond To our million additional average approximately quarter of million liquidity common the XXXX, currently $XXX to $XXX We Liquidity to After under shares at good by investments. and approximately consistent through initial are forward. at REIT. in as we complete positioned supplemented $XX.XX quarter our share, as pleased our at

in share increase to $X.XX XXXX. approved turn that, a As of I paid of effective call per dividend quarterly to dividend result, to common With will an dividend the our Board annualized with be to X.X% results. a discuss Trustees the financial over Beth share, January of

Beth Boulerice

per Thanks, share. million Will. was guidance for common a diluted XXXX common $X.XX-$X.XX We range FFO $XX morning, our FFO company reaffirmed $X.XX adjusted quarter third of company diluted share. approximately this per maintaining the Adjusted or

cash the represented operating FFO $X.X as million, the increase new over Property XX% the the a ample G&A remains of reimbursement. roughly Revenues of further tenant partially period attributable have ratio quarter primarily $XX period XX.X% quarter expenses time the was sale. time offset same the $X to of approximately compared X.X% compared increase quarter down adjusted million allows to with by expenses acquisitions $XX.X XXXX million result to to were decreased [indiscernible] while compared conservative, the when in third of XXXX. pay-out trending for and in quarter This Our quarter third $X.X of third in and during property company over million million retained XXXX. same flow. are of XXXX, during of

requests small granted our lease of $XX a same-store in portfolio to XX resulted one to date had Year-over-year, G&A XXXX in rent for basis portfolio we retail one originally our extension, average $XX,XXX are was which still relief tenant to now to that we portfolio: in million. exceptionally and a anticipated, rent same-store continue longer consolidated within and XX.X% a portfolio. deferral incurred and up We to multi-tenant range of current based in be smaller to lower tenants strong, associated contributing has of expect up escalations percent We Approximately debt was than $XXX,XXX granted NOI with primarily on this expense XXXX. a collections other and of total some quarter, January our $XX by lease was growth. points be million X.X%. to rental our be paid bad Cash same-store to X.X% XX% office

cash is growth the issued adjusted due future EBITDA substantial of have X.X% notes, XXXX. conservative at senior to million at in and debt In and August, net balance times we capacity we borrowing sheet, successfully to fund Looking $XXX opportunities. leverage X.X

in the of interest-bearing net our of repurchase to XXXX. XXXX higher portion proceeds and used notes were a maturing Some

repaid we and million $XXX currently revolving Additionally, facility, we no our amounts balance outstanding. million $XX unsecured credit on the have of

end, $XXX As the quarter Will cash bond offering. of a position was million at our as mentioned, result primarily

Unsecured weighted unencumbered consolidated end, $X.X profile is remains our unencumbered approximately NOI X.X the portfolio that, Our debt and quarter and NOI I'll years. rate average At end. turn weighted was debt with With billion times, quarter to term Will. about outstanding of back approximately interest call attractive. over represented of at X.X% our a debt of XX% a X.X maturity to average

Will Eglin

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

Operator

you. Thank

Instructions] [Operator with Feldman question begin Your now Please session. will question-and-answer comes the BOA. James from go first ahead. We

Elvis Rodriguez

This on Thank the congrats update Hi, you is for Rodriguez on Elvis for Jamie. and the good quarter. morning.

setting to know thoughts for Just on start, early on from how to that. so sales asset I 'XX given say probably quick is too little question: about is 'XX, a update a up early your XQ, your a talk 'XX how but it's perspective get growth to

Will Eglin

sales over little and the balance year. we Well, it's to good considerable of but in the a the shape early, sheet's in progress expect make balance

So liquidity. we investments but portion are in fourth so should sale deploying our of good add quarter, million the another cash $XX into of a activity or

flow feel of where rates between year amount acquisition been in So, forward next the environment of been had in we cash said, fair like into with and equity, market. That retained an a we next that powder. compressing year the we've dry cap have and

So between I the purchases, determined that some build-to-suits and left on. we're mix what's what's think to opportunities be is development working spec

Elvis Rodriguez

you update Is And how cap exactly when product it you mentioned developers? on much us you And the Is competing pandemic. think own? can give during local who it more cap Is reach? for Any with then, the rates the have about ground? the an it share then rates pension have that there. on funds? Can you that, public compressed you are Thanks. compressed update you

Will Eglin

Yes, we're often in public fair view a the interested is there of don't with REITs. that that targeting. competing we amount ourselves institutional as money assets that's But

we've basis and like For and about more if area. compressed with quality, the XX point of rates lease basis XX maybe as as points Walmart, thinking things constructed industrial seen the like and very Home some XX high cases in balance in in it's set to newly you're the much opportunity Amazon and term good cap credit, Depot less

on for us, we in market X.X think area area pegged there's the exceptions X the at beginning either the have and that probably X.XX would and year. probably acquisition side. to X.XX And we in So, is the of cap more the

Elvis Rodriguez

to interest I specifically you maybe office of seeing early pricing where what that too but out shake overall the parties transactions? many product, are you any an it of product? Dow the office Chemical you are and sort on or is will sort seeing interested of on transaction of, kind know in just the that And gave how share are

Will Eglin

above of a left sort compressed marketplace, think beginning that little to of X case I the Dow area, year. X Yes, the that's points the to you're in our of disposition we debt of sale If in that and in that. of the fully compared $XXX bit the of million the leveraged kind with or total of plan quarter fourth that can get area what's of sort the sort portfolio, in minus of through X% value would peg plus we in terms

So cap of to but above above for a rate be that the piece that's puzzle. all a -- bit likelihood, XX% small relatively in a that's piece, final going little it's

to do we So us beginning get year. was office can the the it as even as to of want investor than is interest dilution we at try that though quickly behind considerably less in

Elvis Rodriguez

Thank you. I appreciate the updates.

Operator

Market. ahead. comes with KeyBanc Your Please from Craig Mailman Capital question next go

Craig Mailman

getting developments you're are rates paid you Hey, to you not priced gave, give risk of take if a can and lease where sense the enough today us build-to-suit? good it's morning. range whether a of being up Will, just helpful, cap the

Will Eglin

market. the risk take Yes, on X.X% purpose view see sale and market, risk comfortably risk, market is but market and often or taking in above obviously location in risk focus there being asset and development credit the Craig. that leaseback you versus as within which the in we'd build-to-suit building the opportunities asset and special and We rather quality

little into high be So we end in of product prefer have basis don't you up we careful. want we're end that build-to-suit, business in real just up to getting that although build-to-suit, very to at you and just sometimes estate; active some a to bit it's

Craig Mailman

of you a guys dispositions. equity little cash And you here, some got bit raised from then, in you. Got

here leverage you've is think probably do keeping How [ph] equity to continue X% leverage you equity sheet class, guys a you cap nice implied basis. as for done the in about rate As forward, the job an balance on changed going balance of kinda braces still at compression pressure asset but check, has rates rethink fall cap you versus Or low and leverage where from on cost be? you kind just rate leverage debt? then the comfortable Do want cap not And to to be the where feel you have all? up. actually guys that to

Will Eglin

the our is No, leverage view same. around

to price prefer that and the shrink and compared on performed our redouble at need doing the in office think we disposition efforts work moment, be snaking company. focused activity share turn to that the more few equity; not I months, I to to portfolio well the would is last finish we transforming around the we're much cash in our think and into

Craig Mailman

of take-down think And then, Okay. forward just the there on the cadence in the of ATM. you terms What is [indiscernible]? do

Will Eglin

Beth, on you In terms of overall the timing? have a do view that?

Craig Mailman

Yes, when it think hits? do you

Beth Boulerice

Hi, Craig.

So it not that, have draw how our to cash, and when on probably all next year tap but down to that of August year. up flowing so would we are depend until will until on next we need acquisitions

Craig Mailman

the have that's overall good think exit XX% $XXX from there? about you in cap GAAP you it. Okay. still I X/X building, to mid-sixes guys me. And think of on one know then, the just a said one indicated that million, is of last The place I kind Dow rate

Will Eglin

Dow, the $XXX No, Craig. is million after

Craig Mailman

Got you.

Okay.

Will Eglin

So, quarter our in we have estimate. Dow fourth

Craig Mailman

And on cap what's the blended rate fourth quarter [indiscernible]?

Will Eglin

jump to in want you on that. Larry,

Lara Johnson

Sure.

So for closed Craig, thus obviously anticipate the assets. of obviously, a close assets, we've far number $XX some remaining, million to other and

a quarter So we cap around fourth view, be X%. expect cash the rate to of from point

Craig Mailman

in? does And come on it basis, GAAP where the

Lara Johnson

X.X%. about higher, bit little A

Craig Mailman

Thank great. Okay, you.

Operator

Your Jefferies, Petersen next with question comes please ahead. from go Jon

Jon Petersen

thanks, Great good morning.

questions specific peak just of kind few a Just here. curiosity my

for think of kind how that about one. was selling context on decision-making decisions? the sold I see assume, just you there, why vacancy but XX% what kinda of So I triggers industrial to only more in around properties sell Moody, It building should building? because and the those Alabama, Walmart this leased. industrial we some curious was I

Will Eglin

not one and Well, characterized that users. not market a market it's presence large is targeted where had it's for we small very that's by And growth. having a

we it have help like set there sold progress. part So up, getting any would empty of have if could we the made felt a in sale; building leasing we Walmart the for would

that's opportunistically, markets that and towards smaller you'll markets. focused heavier weighting really as our top shrink a we piece on the in XX be portfolio top see and forward what the So, of with to we're XX move is, top trying more

Jon Petersen

that's means helpful. you looks just assume moving extended like lease out at Okay, them I Owens And on right, Corning, they're about quarter all then the end? extensions: that the

Will Eglin

That's not a of options yet. a conclusion and foregone Yes, a different couple different couple us. they're evaluating with options of

not is, move probably XXX%. it's probably there now? is out higher a XX% of It's like but options. evaluate there probability as So their they Yes,

Jon Petersen

going way term. of just Got are X are asking on your tenants to spreads lease think months. in lease looks given it. then trend. for And I leasing X added changed I in given it and the And in last today you other Walgreens, was negotiations any the pricing some general, e-commerce know like virus, years those if approaching flat But that how extension don't thoughts markets you with the a say then things or maybe if demand you in just different any Corona there.

Will Eglin

Yes, sure.

bit national our we a said, and being if on $X.XX, That of renew is from So is below I the leasing perspective X% overall had our XX% we've room mixed portfolio negotiate being as and warehouse second the and a for strong above quarter growth believe think I renewals. warehouse space. our in our in you market, little $X.XX some space a of two from we quarters; at portfolio more spread generic this average rents at little look at and quarter bag like it is like on really are have a some overall, a $X and

continue think we'll rent to strong I see growth. pretty

ends that the warehouse not or that doing. wildcard portfolio but space what an temper is the overall on the warehouse, manufacturing think up may I basis

mentioned, up. you Walgreens, renewal those have had flat And we option. coming some So a Walgreens, of

So is in a those still few there of play.

it of So X%. the around term look near averages at out when through I think to you kind XXXX

Jon Petersen

helpful All right, you. that's it. thank Got

Will Eglin

Jon. Thanks,

Operator

Instructions] [Operator James follow-up Feldman from Your question next go is question ahead. with BoA. a Please

Elvis Rodriguez

Hi.

sorry but where lease and share more, missed that this, update GEODIS can an one if today? you Just the on I stands

Will Eglin

Yes, sure.

So, sure to their them looking additional in them some fashion, of some clients we're to period discussions they the about for XPL of stay for space. now potential the typical that and having us needing they're they then moving for of and with backfill out time clients were for told

So it's still looks like out. it's likely move than a more

XXXX is the it capacity that may some with clientele in still that possibility leak the there them. and it had, However, need may be from there they for some space into of other additional may

In addition from and interest market we've tenants. have varying in to that a different of got we number of it degrees the

Elvis Rodriguez

If are you that spreads had to new share space, think you to release on able lease? be where a you would

Will Eglin

it's it's multi-tenant to think if single-tenant it's and on credit depend duration. if I or going and

you're I depending in re-lease probably to think to on if a high were you duration. credit tenant, the single and it threes

to we nature a of or able GEODIS maybe from We it is. of If where keep with you had do strong because multi-tenant, ought to the a even the rent rate short-term rental last flat pump be really the time. it extension

Elvis Rodriguez

thank That's all me. from Great, Appreciate it. you.

Operator

Mr. closing conference are this time. at questions any [Operator would further remarks. turn to to for Eglin the our I concludes question-and-answer Instructions] back session. like There over no This

Will Eglin

for everyone the to this Thanks call joining morning.

with contact other the like about senior and day. of And will. you'd management the have website again, visit a can to I questions. you any Thanks you me additional our always, members company, If as or hope team great for information our

Operator

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

You disconnect. may now

LXP Industrial Trust (LXP) 5 Nov 202020 Q3 Earnings call transcript