LXP - Earnings call transcript Q2 2021

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Operator

Good morning and welcome to the Lexington Realty Trust Second Quarter 2021 Conference 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 Heather Gentry Investor Relations. ahead. go Please

Heather Gentry

are Dudley Litigation Welcome Conference operator. distributed statements will events Certain and within may forward-looking Realty Second quarterly Trust's morning during section expected the website believes assumptions, Thank are Securities Form Lexington and Reform risks financial measures holders FFO be to refer directly performance and to package, individual not today's holders these in an update Act available Webcast. factors now unit I will SEC those over and commentary second XXXX the supplemental, certain James release Lexington equity of In quarterly the including the to disclosure portion reasonable a a that that described and as call release press of Call Vice on Eglin, call. and statements and both available funds on On was diluted press financial viewed Lexington's all on included The financial CEO; from Quarter reports to today's Beth all turn Will. in the our adjusted intended Operating and, XXXX. of in CIO adjusted earnings the Lexington future call, documents these based furnished of to comparable company you, results investment such to provide most the Lexington statements. quarter results. measures during Brendan not presenting available measure and those will be as recent our will Investors Mullinix, Lexington this earnings performance, statements this fully basis. Private meaning operations numerical however, to CFO; SEC the conference cause a to Q&A materially on non-GAAP be X-K. has undertake made and to release future position files could business of or a any supplemental regarding the a differ to on constitute GAAP law, or measure. call reconciled time Boulerice, references Lexington's release and Except by President, those results earnings cash statements. with expressed forward-looking and Any implied company duty does flows. from the time required Chairman Executive update by or are to actual Will historical from in

Will Eglin

everyone. with morning, Good Heather. We in second of results all Thanks, terrific excellent areas a quarter our business. had

of funds per continues our from in further net is costs dividend, steadily asset debt the increasing of construction to values particularly property and attractive spot strong a growing, be higher. for our Leasing rent Our us activity. business bright well leasing operations to of of quality growth, excess our approximately July and produce strong four drive and feet and base value continues square evidence the strong feet share in sector. financing with increasing and is a the on fundamentals rents roughly another industrial proved million month and with exceptionally X lease industrial be square cash portfolio base in X.X respectively to We extensions. quarter X% million industrial of over XX% leased

the square lease Statesville, five cash escalations. with foot new We annual our tenant X% lease base Carolina a vacant previously X.X% distribution year rent prior a with at have secured XXX,XXX North in over and facility warehouse increase

of is asset capabilities. footage competitive to square win rent base market, our new X.X X.X% with a industrial term foot also year Mississippi. increase three lease over prior bumps. square rent in management downtime little transaction Olive a with this testament and With to X.XX% The our tenant cash Branch, lease a the a big represents We lot a at annual a secured facility in new million a

new continue leasing opportunities XXXX facilities year one extended rollover. we with as rent proactively a one overall a replaced This We With move-out a our forward as XX.X in term. the that at create just lease lease approximately was signed our increased we expirations, tenant cash address of a of the to base a was we XX% risk, the tenant distribution great Cincinnati outcome market. and lease warehouse

strategy roughly addition, feet In property advantage industrial XXX,XXX of first to purchase rents we demand and of square X% leased annual In new space to of XX%. Florida. respect starting we rising great vacancy with vacant and industrial Lakeland, buildings. provide The outcome as occupancy with a had bumps for the from square yields of tenant term compared attractive, acquired a July, a $X.XX our with five-year with a an a to representing was quarter XX,XXX XX% part rent to in our more fully increase feet foot stabilized take in of leased investing to

of strong behind company our XXXX to a penny low adjusted and range end share. leasing a primary by range FFO per Our new of the $X.XX are outcomes guidance $X.XX high to common increasing driver diluted both

at quality three X% close $XXX in quarter at another is with the July and range activity later sales rates cap just million to and substantial operating Alto of non-industrial as has of and underway attractive The active close GAAP date X.X% and stabilized $X of expected South sub-markets in continue X.X% $XXX $XXX projects leaving during been a capture our three approximately six and net industrial respectively. of asset. yields first with and million robust million Investment of the legacy XXXX income to generated Carolina properties and of the million months $XXX These office of closed Palo contract other our lease quarter. we quarter-end, remaining been dispositions our excluding $XXX at to million industrial June our XX these to within XX competitive we development the the fully and under has quarter. At value and completion in during These approximately opportunities million Subsequent $XXX start of X.X% our estimated XX to at In to GAAP million. cash of properties second we million market, disposed sales currently dispositions; cap and valued markets. project total the Atlanta assets development building million. Central for and a that cash June product $XXX $XX achieved totaled included of we Laurens, sold is to quarter view as target Indianapolis property. of purchase ground respectively. stabilized Moving volume XX, in Construction projects the Florida properties compelling vacancy for rates consolidated third base also two currently during office assets

and responding have we to are strong RFPs. committed the a opportunity development quarter, at leasing to facility, Subsequent We Spartanburg. prospects in to currently this Greenville,

quality $XXX equity industrial development are transition our require XX% our our have funding Our we well approximately now portfolio the match warehouse of of through over call million our for and recent in portfolio assets to continues the portfolio we're the nearly forward of held Brendan and the estate high Class-A markets. product to gross extremely perform expected shaped completed work to The with With development discuss with for We've distribution our of sale up how assets. modern the on be funding in sales portfolio representing to investments purchase and pipeline. off our progress I'll has projects excluding and these turn in target development projects. real pleased done paid that,

Brendan Mullinix

Will. Thanks,

X.X% rates and Second of estimated a quarter million, and X.X% acquisitions GAAP included seven stabilized cash industrial facilities cap for respectively. $XXX

third to and of a due its the During area in Business the two to by. facilities Container located like quarter, Bayport XXX,XXX in Bayport We the Barbours added we with located and our square stabilized also the in three-property built Park. Bayport distribution this portfolio industrial and totaling our Houston the park of Terminals. close feet. North three complements the portfolio were All This Cut South acquisition proximity Port facility in the centers holdings close portfolio to XXXX of two Houston of to Southeast properties specs with the purchase modern Houston

feet is located property constructed in acquired presence in where from purchased foot Lakeland of own additional in Florida, Adding our property Central space. The X.X marketing Road acquired the West The A we a Class feet business square master million we Cross Line North plan we square stabilized in square we Additionally, that shell County is we in XXX,XXX distribution an to in lease. park I-XX are the quarter. on XXX,XXX recently facility for facility Lakeland first Cincinnati. currently right

partially As been to location. has earlier, this Will positive facility promising we at stabilized leasing noted activity at begun activity have see that and

to We approximately towards stabilized yield are working forecasted be the cash X%.

Park in the both in acquisitions located the are in Smiths Industrial Spartanburg two Our market Farms new Greenville, Greer.

opportunity facilities and these most the located square approximately Greenville, us West and XXX feet to to largest XX,XXX off stabilize Spartanburg's vacancy Greenville are in rate of buildings rental property Port, manufacturing a Airport. BMW's Spartanburg providing Spartanburg and Greer in largest proximity I-XX, primary the rising the One fully Highway productive environment. Inland of with plant submarket has The the International

in approximately of to been RFPs four-property year. is the strategic location about to of end. of portfolio the and are to in the responding Atlanta by vacant partial market Charlotte. markets vacant consists the the Greer metropolitan had building the within access conviction X Savannah have square and this three both two we a built with of currently We've subsequent earlier the that users. Additionally, stabilized further two considerable quarter of of Charleston Port is full of property. purchase this hours closed the The market's and built one major All space tenant within for the and four, interest evidenced Port facilities newest million several for years the and the allows nearby portfolio ease A foot and properties of last facility,

Goodyear we activities; our to deals Phoenix development progress of to expect the year. build-to-suit active four our this have in in completed submarket Spec and Turning later we be currently

reached Atlanta Will interested the square active substantial Atlanta, rates. positive building with As that the facility the is on submarket full the as well base as in second strong building. post our foot absorption prospects in completion quarter leasing continue record seen activity the highlighted, to XXX,XXX multiple project located, has

Subsequent project Spartanburg Comfort. square we Park. Greenville million The submarket project to Spec quarter's have still staggered the of development further X.X mentioned will quarter in located site $XX Central with consist host trailer ample XXX-acre half Florida, Mt. that and last in The roughly first million. to the site Like facilities reach to of in will approximately the footprint the is in feature began of and Atlanta, totaling column is the plans, also feet. second the our Smith three warehouse foot XXXX. the building funding of the is Class-A a Indianapolis Farms cost Industrial in course parking meet in commenced an square we specs to the market market efficient and Greenville expected in depths, of truck demands facility The million court distribution in car users. cost Indianapolis heights, XXXX The quarter, facilities of to quarter of $XXX Spartanburg. deliveries our with substantial over leading of will this this development estimated spacing depths a excited projects clear our We're development million. projects estimated As logistics X.X on at expand second call, completion of respect

call in Spec projects Beth projects. XXX% the provide in to With We'll progress of which estimated these are payment projected partner results. the Our on yield low that, of promoter. be our to over in range, I'll to assumes regular mid to continue our updates occupancy stabilized to the X% financial discuss turn cash

Beth Boulerice

XX% second to $XX of range Brendan. now expenses approximately to property reimbursements. G&A million. adjusted share. Revenues per and was approximately quarter million dollars with be roughly a company were million diluted $X.X quarter, which In $X.XX Thanks, $XX.X of million for expect to was attributable $XX we within tenant our the million the of G&A $XX XXXX we of FFO generated million or common $XX operating

XX.X% which leases have approximately average excluding XX% would escalations at NOI same-store NOI our increased leased quarter-end, excluding portfolio been X.X% At and an X.X% X% with Our same-store Industrial vacancy. X.X% our increasing X.X%. single-tenant same-store industrial approximately quarter-end would portfolio of had rate of was overall with single-tenant been have vacancy.

for in have front, during million into contracts of and sale entered markets quarter, capital a equity initial XX shares settled the we the the approximately XXXX. common On forward shares not for of mature May amount yet the contracts raise. settlement million in These $XXX

$X.X the unsettled This forward gave units of and the control $XXX non-core to our ATM our approximately we holdings the common quarter, had connection to shares XX.X operating we the those quarter with partnership, share simplify further subsequent partnership and sale XX of operating in our Subsequent common referenced. disposition including Will redeemed million reduced three June under of transaction million structure. As that million legacy or program. to further the full flexibility properties of us our contracts

Our times million debt end. to at XX%. have quarter strong net balance outstanding. EBITDA outstanding had leverage end, $XXX remains quarter remains at $XXX high on unsecured million sheet At and our revolving facility credit approximately currently at X.X with Unencumbered NOI we adjusted

to rate six X.X% Thanks. a consolidated average debt years. weighted Our approximately average the back that, $X.X turn over was of approximately interest With I'll billion outstanding with of term a Will. and weighted call

Will Eglin

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

Operator

question-and-answer is go from first Rodriguez Bank Instructions] We Please now ahead. begin will of question the America. The session. Elvis of [Operator

Elvis Rodriguez

thanks taking and details how able Good share the an the update prior on yields? maybe Are versus question. morning on looking to and you quarters today pipeline for is some acquisition

Will Eglin

the in to area. the see moment substantial. the value respect sort opportunity set is and to billion $X of the area, we're on is is X.X dollar which we that sort The pipeline transactions number very in the X.X acquisition of Sure. of right of with of kind at Most working

quite this over So XX of there's cap a rate and last obviously been sort of compression months. year the bit

we've the sort very year. months on got we're that So with the of body books first work seven the of happy the for of very,

the a of mathematical in cap little sort context return. cautious. low a in bit posture is, would of acquisition work market standpoint I not say to transactions say Our total that the That's don't from rate

rents quality of driven you're is you in conviction little a pretty costs and time, have well. of market financing math the return probably digits, a that may will bit X.XX. building by looking XX-year like; sticker where still period for of cap that but And total if grow in mid-single of at location the costs that have if financing considerable below of high can about rates, Some really market and have sort shock a rents the we work we

Elvis Rodriguez

are acquired so today underwriting And to then a What bring You rates underwrite, are on you vacant XX maybe to exit you get to of low relative six months today example, to good up do a like How sort point six cap how you lease underwriting, relative up, last ago? yields? target yields year. what for lease month you asset month up. underwriting are your you also

Will Eglin

do Brendan, one? in on that jump to you want Sure.

Brendan Mullinix

of holders. would and guess that sure. I Yes, underwriting first terms long-term say Well, in I residuals, we are the

points something say analysis and very going do would that, and we're the focused add of is we focus we XX the total I So out think but and today going do like basis your base would including whole points factors market on the basis base going where of XX host is and rental we see I more forward. evaluate probably likely basis on that's rental to We returns. really typically IRR well. something anywhere - basis rental most Historically, and when a those as in

Elvis Rodriguez

Great. for more maintenance just then modeling Beth, question. one And a

for payment Dallas 'XX. a termination January added that So supplemental, you you're going million Worth in an income receive lease $X.X Fort - in building in to your office

about or just we payment Just for to modelling up, wanted next you should bring to wanted year? highlight before. any - How that there sell building this is I to are going reason think

Beth Boulerice

payment in then. received occurred first we the The quarter, actually payment the where

that income year. that will over the So termination be recognized for

out they will be January, XXXX. into at end So the of

Elvis Rodriguez

That's you. helpful. very Thank

Operator

is go of next Morgan. Paolone Anthony JP from The question ahead. Please

Anthony Paolone

good of single just in those? was the activity you morning. in tenants underwritten full-building underwriting in Okay, the Atlanta. - a talk looking always the in for and development spec on these three maybe the thanks, square leases, how just what's long-term you about pipeline Can at I those multi-tenant properties, your million like it each expectation?, foot was for about what warehouses talked lease were

Brendan Mullinix

is This Brendan.

spoke a building demand years, demand When ensure of typically the facilities. into is designing we need we on couple is significant about single-tenant. of satisfy it there to very we marketing these of to the see buildings just all very look them. careful side, of side attributes if multi-tenanted side lack the the markets very, it what position with very as have them last and the that be we - from supply often the over analyze take the underwriting base that of very projects, those our advantages and bulk divide as is, the all building large single-tenant are In of for - we our to to portions that gives and for have often competitive the we competing demand is continued that with could see cases, interest kind at them, could and in But, as well, distribution modern we're start the with use. buildings building be. as we I that I users that but building needs the So large go just That tenant some us opportunities said, that to preference approach users projects developments, negotiating. And because for from keep anticipation many we to competitive spec are are attractive for of

holding for So, single-tenancy. our is bias towards

of I think that, your Tony? question, did I anything miss

Anthony Paolone

covers it. that think I No,

think that would get of than X.X single in will market the then. talked duration though longer you that presumably size, curious, be X.X when the in you to you about given market if kind that level cap tenant where there be Just a rates like lease

the development against mid they sense Just Xs that spread get [indiscernible]? to a trying yield word of

Brendan Mullinix

Yes.

So we're values are in buildings those the in seeing same our what those markets, on ranges.

like in below now well. certainly be Florida as Central and our So an is a would breaking today it X, X Atlanta in this point cap, right asset Atlanta, appears projects Indianapolis at and

Anthony Paolone

Got it.

is, Okay, other question thanks. think my perhaps just last only was before. the one I And then maybe, it quarter, in

You a you clear sounds good. as non-core just the is last think Do really the maybe out some it activity trough think and prospects you up your trough next a 'XX the deal be bumped should today, or you guidance year? is your mentioned XXXX there or stuff, earnings little having like still bit you of pretty growth that is

Brendan Mullinix

still trough. as I view a it

real the the of just One but posture up, stuff right have think a until we question how visibility development around some of conservative is we have some quickly outcomes. would those now leases I

Anthony Paolone

great. Okay, Thank you.

Brendan Mullinix

Thanks, Tony.

Operator

Craig is ahead. KeyBanc Markets. The of Capital next question from Mailman Please go

Craig Mailman

Hi, more units million that? of redeemed, good on the everybody. to clarification tied $X.X where just Maybe little you color those Could morning assets. mechanics the OP the kind of transaction give specifically a about just those a

Beth Boulerice

great Craig. this morning, Beth. Yes, great Good transaction Sure. it's for is us. - a

had operating limited that certain partners over consent transactions. had we there Our certain rights partnership

So done for shares, I that redeemed although XX% consolidated rights, could rights units we've units three about those of are the these and consent course rights, is with represents we longer because around there. units the consent OP we what we the properties had, these X.X no those structure now OP million mean consent of everything was

merger kind get to the mass or a property. no amount [ph] have of any of consent their for So, we sale longer of

merge are we in structure our because it partnership that the some So to XXXXs operating have We simplify still ongoing. us. can will

of once and there it the it's of positive So we'll particular to is, assets was take one will in up merge that be time between of will maybe and it management any but not our it less consuming, KXs, of to lot sort for it those the checks we tied a things free people, other thing end XXXX, that it's distribution things.

Craig Mailman

this And a what stock we buyback, is right. like - just should - basically

it So what price at? was done

Beth Boulerice

length. had assets It the an arm's was it $XX pricing, three million. Well, an length a arm's of value was

Will Eglin

X.XX-cap about a lease rate included was course. and that of that [ph], in Craig,

very we're it Just we the outcome. to with overall perspective, so - happy put in

Craig Mailman

was Okay. of for X.X of in different apologies million And a or count this is mean the share question, the I unit? kind OP kind

Beth Boulerice

in our it's no, No, diluted count.

Craig Mailman

all on to just Okay, same-store. right. And the moving then

of did guys six quarters kind X.X% So get. for the first you I

a the always you this You are now term, - maybe to the industrial industrial It what going shorter the you're from on out portfolio. of seems know, vacancy, are, out X% target terms. the you're kind and where the What X.X% internally have what would be the to think lease getting at it's if guys X%, growth now some look you back relative these. like potential getting point vacancy better, On some but going of as escalators is you do peers are? you with longer

Will Eglin

forecast quite speculative quarter-to-quarter sort Talking where land thing might we a on a good I or Craig, start of in and two to the have with an our a XX% of where this mark-to-market growth our quarter to Well, structures, Close easier we're we've to built to right. quarter same-store have to you lease about have rent see. we them advance, know, quarter think for it's now escalations to I to basis. numbers, sort putting of for but escalators just leases into in have you us we, tiny still up have as think started bit

it everything out we same-store was impact directionally given but a this vacancy you're where what occupancy is going we fact did that So were to able point rate extremely has a to disproportionate outcome. well. the the good land quarter, correct was that on And

Craig Mailman

to of, that rent asset some kind of to X% there, like bigger Mississippi be and the you be and X% I there you you with building you guys have of X.X% this this this get mark-to-market of you of disparate quarter. X% that because are kind embedded in yet marks stuff but portfolio trying a potential to what just you others I'm spread grower? getting X% has kind get kind going think mean the assets enrolled or some to for that have more growth sense a are do X% are could is guys to

a to think would to basis? kind landscape group just of sense on portfolio of a So in the where I'm trying longer-term industrial the get fit this you of

Will Eglin

Well, which so we warehouse of modern the may sort conservative be that of the of just to represent would distribution tend the that of has on portfolio growth I the market best very X% context X% That's underwriting, to the part of for enterprise portfolio a the that, Part sort the prospects value. reflects rent new or sensible. and of in more moment. at XX% of think ours, of lot is

We of the generate lot a for and portfolio also market manufacturing, which to be light right, in assets have higher-yielding still, storage for rent but portion cold of assets flow have manufacturing fair, a less cash in prospects growth. are reinvestment, to probably free

it's deeply portfolio appreciate dynamics. of I looking just sort the have of think into rent kind growth really you - to to So, look the

Craig Mailman

is earnings the with NAV ability given from more and start up mid-Xs on metric Okay, let's buying that's perspective are a cap cap can Kind how return when market going you? and from from the how initial And an the going you low it and of totally at total point right implied are fit to kind just mid at in rate you buying underwriting and grow in the of rents kind of helpful. your the also the appreciate basis underwriting to to now, get for some returns least looking But assets long say more you what's yields. the me. implied - rate, question it is guys then, I on recoup about your one clearly of an it may dilution, important circling somewhere Xs your is these? where to your back AFFO earlier if take or in in

Will Eglin

and Yes. way some both where lot right. I and FFO we're growth the There's produce have trade we looking stabilization, we've best to making a opportunity what we've fund been right, upon the spread to value okay I development think right high equity we're it issuing asset good right, mean, we a net is; compression in of we're own. and at been

our retained and really the of been from and cash of match flow has about the recycling capital, side funding sort that's equity So around more thought been business capital acquisition dispositions.

it's other, to one So of not important both really Craig, both are - us. the

Craig Mailman

Great, thanks.

Operator

question Please is from Jefferies. go of The ahead. Petersen next Jon

Jon Petersen

thanks. Great, I little left on color for office where wanted cap do. trending have a you more just to the sales are to be rates that

last also I and XX% remaining in and quarter more the alive like gave towards seems cap one are that on the remaining, about before kind digits guys you the talked I well on high-single past, think some or trending think rate you it of single-digit numbers, guys seem the you what's but properties high range.

those seen So, on months the part curious you rates gap, or bridge - office if historically kind cap that's like, that I of compressed conservatism for have guess just properties? is that your in past few for that

Will Eglin

talked about office the we've when the disposition on effort. be I overall conservative outcome we've to tended think

gave of gets pretty a As smaller, outcomes. pool range the wide we

once have portfolio of and sort small of Just the probability gets because assets you disparate that outcomes a is higher pool of smaller.

that a cap we've the which from been rate about. area the around of sort So than less XX-ish is standpoint talking X%, midpoint is

but tighten portfolio that of outcomes it shrinks, as sort be much and some outcomes, we'll cases as also up range visibility, smaller, random in whatever gets of better the are. So that able more to gap

Jon Petersen

Okay.

on industrial what I is your you would way, this think the sense rents? have at portfolio on I of any but look mark-to-market do

Will Eglin

we it talk a to of what We publicly sort amount looking We rents our about do think in relation market. is. don't at of fair work

distribution was to or about but as our strong of a - we're quite I position very talking before, less about talk XX they're I trying portfolio, opportunities, so beyond in legacy think the the in warehouse and clearly very, about cautious XX sort portfolio. mark-to-market I of there mark-to-market modern is part We're think months forward.

to continue others. produce less rather portfolio try ability is to term, than I - When weighted future. just predict than in your longer good So, - far average so think lease into the guess, I mark-to-market to we'd outcomes a that has

not and to to our bit I predictive try So, overly just it's in at think point. be this mind cautious a little be

Jon Petersen

question them, one from acquisitions, The Okay. vacant. Last was them couple of of a me.

of you was some for some to like versus I'm percent going think them hair stabilized it are of more only add willing partially One deals, forward kind stuff just you type - value what your leased. maybe acquisition curious streams? with more on do income guess strategy as I

Will Eglin

Sure. offer to on want commentary Brendan, that? do you

Brendan Mullinix

have Yes, that at rather would but wouldn't sure. opportunities we identified opportunistically making have see we we just a sense. that I them the we where that say look percentage

own well, comfortable in as specs shell concentrations in our seeing fully underwriting vacancy with previously. leased opportunity can currently opportunities you're compelling. comfortable our the be very that stabilized, we markets rate assets, environment deepened and where we're underwriting we cap lease-up buy As just of the with projects we're target had for And to started far and this the than more

Jon Petersen

Great. Thank you.

Will Eglin

John. Thanks,

Operator

The next go Thalmann. from is of Ladenburg John question Please Massocca ahead.

John Massocca

Good morning.

Will Eglin

John. Hey,

John Massocca

Maybe of you kind kind and pipeline potential. of sticking with the development

partners, pricing of versus As you are Have at they upward potential as cost kind kind what year? transactions are or future the development work you these look square your you inflationary some with of for on and deals? development foot this stabilized putting types gross price pressure of pressures on per basis on earlier seeing cost of still

Will Eglin

both there there and is pricing that is availability pressure the is there materials. say of would there is elements I is there two to upward it, - the and continued also

development pricing yields. potential course the has increased to impact of So your

has continued on growth, this been discussing offset in cost on helped seeing seeing been rent is then been stabilized we've which healthy rent inflation. addition as Fortunately call, some markets very rate assets. also compression what significant cap of And we've across we've that growth,

things of compelling the respect of availability at then like materials, even with that to and for the you're on, So our of able the pricing the we cost. element ahead projects supply. if makes with one your the about materials With of that sense value secure underwriting, working to other we're setups development still a is the increased puts that that us competing

ahead that. started deliver which the think allow in basis competing those us be will just than be but matter I of a other lot market down could function should a a of in the be of will So, some we it have who slowed later others, better supply, supply availability of it than to pricing, a in of materials, had cases,

John Massocca

I we've certainly upward first kind an hasn't of upward it and at about mean, of some kind since trend other is, in input it first and of that earlier initial kind I about year, these as roofing costs and kind your you felt this all trend, abated there I upward talking spikes development for it like was trend costs? steel guess input think maybe - been of was of

Will Eglin

on the the don't but locked it - item our for roofing and then dynamics our back, I'll pull have it's moderated, around hasn't pressures rent single and materials, say that one even has a we same we growth. we rental steel - would so that tended pricing but issues and to been some also where from those see then little existing our in projects still a healthy hasn't It standpoint I Spec where it's rent with sounds it's It's the those outcomes and growth helpful and we've has time, shifted we in it at should it we've components be portfolio bit. seen materials, for overall, insulation our say again, package. which ceased negative, - where started competitive but it stock moderate cost and and basic think

John Massocca

so in of $XX like any It for that, feel be or maybe pretty spend. somewhere kind helpful? this - was if commission would below much coming maybe the I seems missed update there Understood. spend. expectation potential but the so in call, million in I leasing just update, you're correctly if I'm year, you like Apologies for in in any can earlier improvement it's Feels on the the remembering provide earlier expectations like

Beth Boulerice

John of it's to matter are when timing getting as really done. projects

the So tenant we we $XX to million improvement. $XX the based things sometimes longer million on come going of but for year take into think do the when are still do happen, what some to could range to tenants

it lapse into - forecasting but heavier second we'll next may have they year, I'm So still half.

John Massocca

on transaction. the last And OP just one understood. Okay, then, one unit

repurchased of OP, issued basically OPs kind selling assets purchased Essentially make of was of had purchased essentially you that, just selling those OPs that on what kind reversal you issued the assets, when those assets, to is those you part of fully sure like properties? I had as of when you those those understand so as the Just of you part originally going there.

Beth Boulerice

were No. of were units And to value these selected have are they for transaction being these of were at legacy, along be were portfolio made they our were units that OP for several redeemed these were that assets the time a that properties, different this non-core. been and different part just assets way. in years. These the sense They were the purchased

John Massocca

me. helpful. very that's that's you from Thank very much. And it Okay,

Will Eglin

John. Thanks,

Operator

[Operator Instructions] from ahead. The Evercore. of next Ma Please question is Wendy go

Wendy Ma

- you you taking morning. good my Hi, question. Thank for thank

are the industrial in we and Thank that just So that cap rate reason asset what's property what's and you these an key was the industrial curious sell for high? the one sale you. sold XQ also you driver

Will Eglin

really now. standpoint with investing just from and Wendy, that sort of - an Sure. standpoint didn't what location fit age asset in we're spec and doesn't

which and had obsolescence it was facility, an some older it. in So obsolescence risk further

the a square strategy. from But it foot, looking per didn't good current at as with outcome. I think, So was, our just just as a fit said investment I of sale price really, really it standpoint

Wendy Ma

Okay, good. Thank you.

I if this last a year but to operating higher for the compared seems little sorry before, to and XQ. expense And XQ compared missed

were that? So reason there any special behind

Beth Boulerice

expenses tenants - are really Hi property lot entering of the the from into. and new we function reimbursed get leases a now them. A Wendy, then we are it's operating of for responsible we that

check operating would in the get had rent. a the So net where deals pay we would and we a expenses tenants just of directly for for past, lease lot the

us. operating are paying we they're Now and reimbursing for expenses

as a income presented on the so driver. gross that's the So it's primary statement; basis

Wendy Ma

you. thank Okay, question. my That's

Operator

Bank a The of from ahead. next question Rodriguez Elvis of is follow-up America. Please go

Elvis Rodriguez

Just me. a couple more of quick for

assets. understanding relative the the the the is assets? categorize the would to portfolio today much to legacy, on sits XX% legacy XX%, trying So you XX%? How of where of industrial legacy get as portfolio, Just industrial

Will Eglin

the cold legacy, as so. that legacy mean that's portfolio, I think some Yes, well. storage would we manufacturing then about And warehouse XX% things and light in characterize as all distribution we is know the or manufacturing there's to

of XX% being added context in thinking ago. to sort XX% years maybe older So five vintage to the portfolio portfolio the the of over of

Elvis Rodriguez

sort And and funding forward? of should we going for newer development consider acquisitions these be source assets potential could

Will Eglin

as might handful maybe would have of warehouse from We manufacturing a storage is we a legacy of manufacturing alternative as cold regional light we like building distribution where and There capital market view outside now. necessarily, little and be at little to liquidity bit footprint into markets those and just growth standpoint, less high-yielding turn than lot. of different a our cases a portfolio sort look the that opportunities context bit source don't, portfolio They and of term. But the that the in right longer aggregate terms and would we're we little the I we're bit a in of how I dollars. heavy rent be not activity that a and of more that an don't liquidity amount to would and a of disposition the shaping think that characteristics to buildings with adding the have things

Elvis Rodriguez

equity, able just equity just forward the line Beth, from get obviously deploy how of of And how the to that understanding then quarter and for plan Great. end Thanks. increased one plan you you to to are throughout deploy the trying credit share you year? more to

Beth Boulerice

Sure.

contracts that on year. a we they're forward a So have basis, the good for

along. development that, look be go our when funding as So we'll at we we

this tranche few So the coming first weeks. in will due August a be

basis point, So earnings bringing one to our that you're we'll earnings. now, It's diluting is those balancing of and line until a really. May in share up as attractive shares month financing the share lion's our when borrowing really XXXX when it bringing now you - points, at XX good which you is think the right line, about right LIBOR but it, act where be the count into on in

Elvis Rodriguez

in sense. us And deploying be can many will shares you makes That how you remind Thanks. August?

Beth Boulerice

It's in August. so million. that's tranche first the X.X Sure, and about

Elvis Rodriguez

Thank you much. so

Operator

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

Will Eglin

morning. like receive joining everyone our appreciate contact quarterly you our visit website us Gentry to We Heather Please would or if this materials.

our one senior always, as hope addition, to have and team feel to again Thanks us, with and of us we great joining any a any management free In questions. day. reach you'll out for

Operator

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

disconnect. You may now

LXP Industrial Trust (LXP) 5 Aug 212021 Q2 Earnings call transcript